EXHIBIT 10.27
THE RIGHTS OF LESSOR UNDER THIS SECOND AMENDED AND RESTATED LEASE AGREEMENT AND
IN EACH AIRCRAFT COVERED HEREBY HAVE BEEN ASSIGNED TO, AND ARE SUBJECT TO A
SECURITY INTEREST IN FAVOR OF, TCW SPECIAL CREDITS, AS AGENT, UNDER A MORTGAGE
AND SECURITY AGREEMENT DATED AS OF FEBRUARY 25, 1986, AS AMENDED AND RESTATED BY
AN AMENDED AND RESTATED MORTGAGE AND SECURITY AGREEMENT DATED AS OF AUGUST 31,
1987, AND AS FURTHER AMENDED AND RESTATED BY A SECOND AMENDED AND RESTATED
MORTGAGE AND SECURITY AGREEMENT DATED AS OF SEPTEMBER 29, 1995. SEE SECTION 22
HEREOF FOR INFORMATION CONCERNING THE RIGHTS OF HOLDERS OF THE VARIOUS
COUNTERPARTS.
================================================================================
SECOND AMENDED AND RESTATED
LEASE AGREEMENT
Dated as of
September 29, 1995
between
WILMINGTON TRUST COMPANY,
not in its individual capacity but
solely as Owner Trustee,
as Lessor
and
EVERGREEN INTERNATIONAL AIRLINES, INC.,
as Lessee
================================================================================
One Boeing 747-273C Aircraft
and
Three McDonnell Douglas DC-9-33F Aircraft
TABLE OF CONTENTS
TO SECOND AMENDED AND RESTATED LEASE AGREEMENT
Section 1. Definitions..................................................... 2
Section 2. Confirmation of Purchase and Acceptance of Leased Property...... 11
Section 3. Term and Rent................................................... 12
(a) Term................................................................... 12
(b) Basic Rent, etc........................................................ 12
(c) Minimum Rent........................................................... 12
(d) Supplemental Rent...................................................... 12
(e) Manner of Payment...................................................... 13
(f) [RESERVED]............................................................. 13
Section 4. Lessor's Representations and Warranties; Limited Liability of
Lessor.................................................................. 13
Section 5. Return of Aircraft.............................................. 14
(a) Condition Upon Return.................................................. 14
(b) Return of Engines...................................................... 15
(c) Fuel; Manuals.......................................................... 16
(d) Storage Upon Return.................................................... 16
(e) Overhaul............................................................... 16
(f) Aid in Lease or Sale................................................... 16
(g) Assignment............................................................. 17
Section 6. Liens........................................................... 17
Section 7. Registration, Maintenance and Operation; Possession; Insignia... 18
(a) Registration, Maintenance and Operation................................ 18
(b) Possession............................................................. 18
(c) Insignia............................................................... 21
(d) Aircraft Inspection.................................................... 22
Section 8. Replacement of Parts; Alterations, Modifications and Additions.. 22
(a) Replacement of Parts................................................... 22
(b) Pooling of Parts....................................................... 23
(c) Alterations, Modifications and Additions............................... 24
Section 9. Voluntary Termination........................................... 25
Section 10. Loss, Destruction, Requisition, etc............................ 26
(a) Event of Loss with Respect to the Aircraft............................. 26
(b) Event of Loss with Respect to an Engine................................ 27
(c) Requisition for Use by the U.S. Government of the Airframe............. 28
(d) Requisition for Use of an Engine....................................... 28
(e) Application of Payments from Governmental Authorities for Requisition
of Title............................................................ 29
(f) Application of Payments During Existence of Event of Default........... 29
Section 11. Insurance...................................................... 30
(a) Public Liability and Property Damage Insurance......................... 30
(b) Insurance Against Loss or Damage to the Aircraft....................... 31
(c) Reports, etc........................................................... 34
(d) Insurance by Lessor.................................................... 34
Section 12. Inspection..................................................... 35
Section 13. Assignment..................................................... 35
Section 14. Events of Default.............................................. 35
Section 15. Remedies....................................................... 35
Section 16. Further Assurances and Financial Information; Financial
Covenants; Meetings..................................................... 41
(a) Financial Information.................................................. 41
(b) Financial Covenants.................................................... 41
(i) Consolidated Tangible Net Worth.................................... 41
(c) Meetings............................................................... 42
Section 17. Notices........................................................ 42
Section 18. No Set-off, Counterclaim, etc.................................. 42
Section 19. Purchase and Renewal Option.................................... 43
Section 20. Substitution of Collateral..................................... 44
Section 21. Assignee Lessors............................................... 45
Section 22. Security for Lessor's Obligation to Holders of the Note........ 45
Section 23. Lessor's Right to Perform for Lessee........................... 46
Section 24. Service of Process; Waiver of Immunities....................... 46
Section 25. Ownership by Lessor; Lessee's Quiet Enjoyment.................. 47
Section 26. Miscellaneous.................................................. 48
THE RIGHTS OF LESSOR UNDER THIS SECOND AMENDED AND RESTATED LEASE AGREEMENT
AND IN EACH AIRCRAFT COVERED HEREBY HAVE BEEN ASSIGNED TO, AND ARE SUBJECT
TO A SECURITY INTEREST IN FAVOR OF, TCW SPECIAL CREDITS, AS AGENT, UNDER A
MORTGAGE AND SECURITY AGREEMENT DATED AS OF FEBRUARY 25, 1986, AS AMENDED
AND RESTATED BY AN AMENDED AND RESTATED MORTGAGE AND SECURITY AGREEMENT
DATED AS OF AUGUST 31, 1987, AND AS FURTHER AMENDED AND RESTATED BY A
SECOND AMENDED AND RESTATED MORTGAGE AND SECURITY AGREEMENT DATED AS OF
SEPTEMBER 29, 1995. SEE SECTION 22 HEREOF FOR INFORMATION CONCERNING THE
RIGHTS OF HOLDERS OF THE VARIOUS COUNTERPARTS.
SECOND AMENDED AND RESTATED
LEASE AGREEMENT
This SECOND AMENDED AND RESTATED LEASE AGREEMENT (this "Lease" or this
"Agreement"), dated as of September 29, 1995, between WILMINGTON TRUST COMPANY,
a Delaware banking corporation, with its principal place of business located at
Rodney Square North, 1100 North Market Street, Wilmington, Delaware 19890, not
in its individual capacity but solely as Owner Trustee under the Trust Agreement
(as defined in Section 1 hereof), and its successors and assigns ("Lessor"), and
EVERGREEN INTERNATIONAL AIRLINES, INC., an Oregon corporation, with its
principal place of business at 3850 Three Mile Lane, McMinnville, Oregon 97128
("Lessee").
W I T N E S S E T H:
WHEREAS, the parties have heretofore entered into that certain Lease
Agreement dated as of February 25, 1986, as amended by Amended and Restated
Lease Agreement dated as of August 31, 1987, counterparts of which, along with
each of the Lease Supplements thereto, have been recorded by the FAA and
assigned conveyance numbers as set forth in Schedule 1 hereto (the "Original
Lease");
WHEREAS, pursuant to the terms of the Amended and Restated Mortgage
and Security Agreement dated as of August 31, 1987, which amended and restated
the Mortgage and Security Agreement dated as of February 25, 1986 (as so amended
and restated, the "Original Mortgage"), as amended and restated by the Second
Amended and Restated Mortgage and Security Agreement dated as of September 29,
1995, which is being filed with the FAA contemporaneously herewith, the Loan
Participant, as assignee of Security Pacific Equipment Finance Inc., has made
certain loans to Lessee, and a counterpart of the Original Mortgage, along with
each of the Trust Agreement and Mortgage Supplements thereto, was recorded by
the FAA and assigned conveyance numbers as set forth in Schedule 1 hereto;
WHEREAS, Lessor, Lessee, Loan Participant and Owner Participant desire
to amend and restate the Original Lease, the Original Mortgage and the other
Operative Documents in order to restructure Lessee's obligations to the Loan
Participant pursuant to a Restructure Agreement dated concurrently herewith
("Restructure Agreement"); and
WHEREAS, Lessor and Lessee desire to amend and restate the Original
Lease to incorporate certain terms, conditions and provisions contemplated by
the Restructure Agreement and have agreed to the execution of this Second
Amended and Restated Lease Agreement;
NOW, THEREFORE, in consideration of the premises, Lessor and Lessee
agree that the Original Lease, as amended, is hereby amended and restated in its
entirety to read as follows:
Section 1. Definitions. Unless the context otherwise requires, the
following terms shall have the following meanings for all purposes of this Lease
Agreement and shall be equally applicable to both the singular and the plural
forms of the terms herein defined and, except as otherwise indicated, all the
agreements or instruments herein defined shall mean such agreements or
instruments as the same may from time to time be supplemented or amended or the
terms thereof waived or modified to the extent permitted by, and in accordance
with, the terms hereof and thereof and of the Participation Agreement and the
Mortgage:
"Affiliate" means, with respect to any party hereto, any person
directly or indirectly controlling or controlled by such party or any
other person under direct or indirect common control with such party.
"Aircraft" means the 747 Aircraft and each DC-9 Aircraft leased
hereunder. The term "Aircraft" also means, as of any date of
determination, if the context so requires, all Aircraft then leased
hereunder.
"DC-9 Aircraft" means each DC-9 Airframe leased hereunder
together with the two DC-9 Engines installed on each such DC-9
Airframe on the date hereof, and any DC-9 Engine substituted for any
of such DC-9 Engines hereunder, whether or not any of such initial or
substituted DC-9 Engines may from time to time no longer be installed
on such DC-9 Airframe or may be
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installed on any other DC-9 Airframe or any other aircraft. The term
"DC-9 Aircraft" also means, as of any date of determination, if the
context so requires, all DC-9 Aircraft leased hereunder.
"747 Aircraft" means the 747 Airframe leased hereunder together
with the four 747 Engines installed on such 747 Airframe on the date
hereof, and any 747 Engine substituted for any of such 747 Engines
hereunder, whether or not any of such initial or substituted 747
Engines may from time to time no longer be installed on such 747
Airframe or may be installed on any other 747 Airframe or on any other
aircraft.
"Airframe" means the 747 Airframe and each DC-9 Airframe. The
term "Airframe" shall mean, as of any date of determination, if the
context so requires, all Airframes then leased hereunder.
"DC-9 Airframe" means (i) the three (3) McDonnell Douglas D-9-33F
aircraft (except DC-9 Engines or engines from time to time installed
thereon) as more particularly described on Exhibit D attached hereto;
(ii) any airframe that may from time to time be substituted pursuant
to the provisions of Section 20 for a DC-9 Airframe leased hereunder;
and (iii) any and all Parts so long as the same shall be incorporated
or installed on or attached to such aircraft, or so long as title
thereto shall remain vested in Lessor in accordance with the terms of
Section 8 after removal from such aircraft. The term "DC-9 Airframe"
also means, as of any date of determination, if the context so
requires, all DC-9 Airframes leased hereunder.
"747 Airframe" means: (i) the Boeing 747-273C aircraft (except
747 Engines or engines from time to time installed thereon) as more
particularly described on Exhibit D attached hereto; (ii) any airframe
that may from time to time be substituted pursuant to the provisions
of Section 20 for a 747 Airframe leased hereunder; and (iii) any and
all Parts so long as the same shall be incorporated or installed on or
attached to such aircraft, or so long as title thereto shall remain
vested in Lessor in accordance with the terms of Section 8, after
removal from such aircraft.
"Avitas" means Avitas, Inc., an independent aircraft appraisal
company selected by the Loan Participant.
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"Basic Rent" means the rent payable for the Leased Property
pursuant to Section 3(b) during the Initial Term.
"Business Day" means any day other than a Saturday, Sunday or
holiday on which commercial banks are permitted or obligated to close
in The City of New York, New York, Portland, Oregon, Wilmington,
Delaware or Los Angeles, California.
"Concord/ABN-AMRO Loan Agreement" means the Amended and Restated
Loan Agreement dated concurrently herewith between Lessee and Loan
Participant.
"Consolidated Subsidiary" means a Subsidiary of Evergreen whose
financial statements are prepared on a consolidated basis with those
of Evergreen in accordance with generally accepted accounting
principles.
"Delivery Date" means, with respect to any Aircraft, the date on
which the purchase price for such Aircraft is made in respect thereof,
which date shall be the date the Aircraft is delivered to, and
accepted by, Lessor under the 747 Purchase Agreement or the DC-9
Purchase Agreement, as the case may be, as conclusively evidenced by
the date of the Lease Supplement relating to such Aircraft.
"Dollars" or "S" means lawful currency of the United States of
America.
"D Check" means a complete structural examination and restoration
of an Airframe, including any necessary component replacement and
structural restoration work performed in accordance with Lessee's
periodic maintenance and inspection program, being the most extensive
such examination and restoration then authorized by the FAA for
Lessee.
"Default" means an event which, after the giving of notice or
lapse of time, or both, would mature into an Event of Default.
"Engine" means each of the 747 Engines and each of the DC-9
Engines. The term "Engines" means, as of any date of determination, if
the context so requires, all Engines then leased hereunder.
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"Event of Default" has the meaning assigned to such term in the
Restructure Agreement.
"DC-9 Engine" means (i) each of the six (6) Pratt Whitney engines
described on Exhibit D attached hereto (each of which having 750 or
more rated takeoff horsepower or the equivalent) whether or not from
time to time thereafter no longer installed on the DC-9 Airframe or
installed on any other airframe or on any other aircraft; and (ii) any
engine which may from time to time be substituted pursuant to the
provisions of Section 10(b), for a DC-9 Engine leased hereunder;
together in each case with any and all Parts removed therefrom so long
as title thereto shall remain vested in Lessor in accordance with the
terms of Section 8 after removal from such DC-9 Engine. The term "DC-9
Engines" means, as of any date of determination, all DC-9 Engines then
leased hereunder.
"747 Engine" means: (i) each of the four (4) Pratt & Whitney
JT9D-7F engines described on Exhibit D attached hereto (each of which
having 750 or more rated takeoff horsepower or the equivalent),
whether or not from time to time thereafter no longer installed on the
747 Airframe or installed on any other airframe or on any other
aircraft; and (ii) any engine which may from time to time be
substituted pursuant to the provisions of Section 10(b), for a 747
Engine leased hereunder; together in each case with any and all Parts
incorporated or installed therein or attached thereto or any and all
Parts removed therefrom so long as title thereto shall remain vested
in Lessor in accordance with the terms of Section 8 after removal from
such 747 Engine. The term "747 Engines" means, as of any date of
determination, all 747 Engines then leased hereunder.
"Event of Loss" with respect to any property means any of the
following events with respect to such property: (i) loss of such
property or the use thereof due to theft or disappearance for a period
of 120 days, (ii) loss due to destruction, damage beyond repair or
rendition of such property permanently unfit for normal use for any
reason whatsoever; (iii) any damage to such property which results in
an insurance settlement with respect to such property on the basis of
a total loss; (iv) the condemnation, confiscation or seizure of, or
requisition of title to or use of, such property (other than a
requisition for emergency or other use by the United States or any
agency or instrumentality thereof)
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for a period of more than 120 days; (v) as a result of any rule,
regulation, order or other action by any governmental body (including
any court) having jurisdiction, the use of such property in the normal
course of the business of air transportation of Lessee shall have been
prohibited for a period of six consecutive months, unless Lessee,
prior to the expiration of such six-month period shall have undertaken
and shall be diligently carrying forward all steps which are necessary
or desirable to permit the normal use of such property by Lessee or,
in any event, if such use shall have been prohibited for a period of
12 consecutive months; and (vi) any divestiture of title or
installation deemed to be an Event of Loss pursuant to the provisions
of Section 7(b)(i). An Event of Loss with respect to any Aircraft
shall be deemed to have occurred if an Event of Loss occurs with
respect to the Airframe comprising part of such Aircraft.
"Event of Loss Termination Value" means with respect to any
Aircraft for any Lease Period Date during the Basic Term, the amount
determined in accordance with Exhibit C hereto.
"Events of Default" has the meaning specified in Section 14.
"Evergreen" means Evergreen International Aviation, Inc., an
Oregon corporation.
"Evergreen Guaranty" means the Second Amended and Restated
Guaranty and Subordination Agreement dated as of the date hereof among
Lessee, certain affiliates and Subsidiaries of Lessee and Lessor, as
Owner Trustee, amending and restating the Amended and Restated
Guaranty and Subordination Agreement dated as of July, 31, 1987 among
such parties.
"FAA" means the Federal Aviation Administration or any successor
agency thereto.
"Federal Aviation Act" means the Federal Aviation Act of 1958, as
amended and recodified in Subtitle VII of Title 49 of the United
States Code.
"Junior Lien" means the Lien by the Lessor in favor of the Loan
Participant created pursuant to the Second Priority Chattel Mortgage
and Security Agreement dated concurrently herewith.
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"Lease Agreement", "this Lease Agreement", "this Lease", "this
Agreement", "herein", "hereunder", "hereby", or other like words mean
this Second Amended and Restated Lease Agreement as originally
executed or as modified, amended or supplemented pursuant to the
applicable provisions hereof, including, without limitation,
supplementation hereof by one or more Lease Supplements entered into
pursuant to the applicable provisions hereof.
"Lease Period" means each of the consecutive periods during the
Term ending on a Lease Period Date, the first commencing on and
including the date of this Lease Agreement.
"Lease Period Date" means the last day of each calendar month
throughout the Term hereof, as set forth in Exhibit B hereto.
"Lease Supplement" means a Lease Supplement, substantially in the
form of Exhibit A hereto, to be entered into between Lessor and Lessee
for the purpose of leasing any of the Aircraft under and pursuant to
the terms of this Lease Agreement, including, without limitation, the
Lease Supplements described in Schedule 1 attached hereto and any
amendment thereto entered into subsequent to the Delivery Date
corresponding to such Lease Supplement.
"Leased Property" means all Aircraft, collectively, as leased
from time to time hereunder to Lessee pursuant to one or more Lease
Supplements.
"DC-9 Leased Property" means the DC-9 Aircraft as leased
hereunder to Lessee.
"747 Leased Property" means the 747 Aircraft as leased hereunder
to Lessee.
"Lessor Liens" means Liens remaining undischarged for more than
60 days and arising as a result of (i) claims against Lessor (not in
its individual capacity) not related to its interests in any Aircraft,
the Trust Estate or any part thereof, or (ii) claims against Lessor
arising out of the voluntary transfer by Lessor (without the consent
of Lessee) of its interests in any Aircraft, the Trust Estate or any
part thereof at any time an Event of Default shall not have occurred
and be continuing, other than a transfer of any Aircraft
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pursuant to or as permitted by Section 10, 11 or 20 hereof.
"Lien" means any mortgage, pledge, lien, charge, encumbrance,
lease, exercise of rights, security interest or claim of any nature
whatsoever.
"Loan Participant" means each of the entities listed in Annex I
of the Mortgage acting through TCW Special Credits, a California
general partnership, as general partner, attorney-in-fact or
investment manager, and its successors and assigns including any
subsequent holder of the Note from time to time.
"Mortgage" means the Second Amended and Restated Mortgage and
Security Agreement, dated as of the date hereof, between Lessor and
the Loan Participant, as originally executed or as amended, modified
or supplemented, amending and restating the Original Mortgage. The
term "Mortgage" shall also include, where the context so requires,
each Trust Agreement and Mortgage Supplement entered into pursuant to
the terms of the Mortgage.
"Note" means the promissory note defined as "Note" in the
Mortgage.
"Operative Documents" means the Participation Agreement,
this Lease, the Mortgage, the Trust Agreement, the Restructure
Agreement, the Evergreen Guaranty, the Purchase Documents, the Note,
the Lease Supplement covering each Aircraft, the Trust Agreement and
Mortgage Supplement covering each Aircraft and any other document
which may be delivered in connection herewith herewith or therewith.
"Orignal Mortgage" means the Amended and Restated Mortgage and
Security Agreement dated as of August 31, 1987 between the Loan
Participant, as secured party, and Lessor, as Mortgagor, amending and
restating the Mortgage and Security Agreement dated as of February 25,
1986.
"Owner Participant" means with respect to the 747 Leased
Property, 747 Inc., an Oregon corporation, Delford M. Smith, a natural
person, his successors, heirs and assigns, and King, Christian Inc., a
Nevada corporation, and their respective successors and assigns and,
with respect to the DC-9 Leased Property,
- 8 -
747, Inc., an Oregon corporation, and its successors and assigns.
"Owner Trustee" means Wilmington Trust Company, not in its
individual capacity, except as otherwise provided in the Operative
Documents to which it is a party, but solely as trustee pursuant to
the Trust Agreement.
"Participants" means the Loan participant and the Owner
Participants.
"Participation Agreement" means that certain Second Amended and
Restated Participation Agreement, dated as of the date hereof, among
Lessee, the Participants and Lessor, amending and restating the
Amended and Restated Participation Agreement dated as of August 31,
1987.
"Parts" means all appliances, parts, instruments, appurtenances,
accessories, furnishings and other equipment of whatever nature (other
than complete Engines or engines) which may from time to time be
incorporated or installed in or attached to any Airframe or any
Engine.
"Past Due Rate" means a rate of interest per annum equal to the
rate applicable to overdue principal under the Note.
"Permitted Liens" has the meaning specified in Section 6.
"Present Value" means, as of any date of determination with
respect to any lease payments, the value thereof determined by
discounting such rental or lease payments at either (x) the implicit
rate of interest under such lease, if known, or (y) the average cost
of Evergreen's commercial funding, in each case as determined pursuant
to guidelines set forth in FASB 13.
"DC-9 Purchase Agreement" means the Aircraft Purchase Agreement,
dated as of July 23, 1987, between the DC-9 Seller, as seller, and
Lessee, as buyer, providing, among other things, for the sale to
Lessee of the DC-9 Aircraft, as such Aircraft Purchase Agreement may
from time to time be amended, modified or supplemented or the terms
thereof waived or modified, to the extent permitted by, and in
accordance with, the terms of the Mortgage.
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"747 Purchase Agreement" means the Aircraft Purchase Agreement,
dated October 25, 1985, between the 747 Seller, as seller, and Lessee
and Cargolux Airlines International S.A., as buyers, as heretofore
amended, modified and supplemented, providing, among other things, for
the sale to Lessee of the 747 Aircraft, as such Aircraft Purchase
Agreement may from time to time be amended, modified or supplemented
or the terms thereof waived or modified, to the extent permitted by,
and in accordance with, the terms of the Mortgage.
"Release Price" shall mean $15,000,000, payable in cash to the
Loan Participant.
"Rent" means both Basic Rent and Supplemental Rent.
"Subordinated Indebtedness" means all Indebtedness and
liabilities created or incurred by Lessee, Evergreen and the
Consolidated Subsidiaries to any person which is subordinate and
junior in all respects to creditors of Lessee, Evergreen and the
Consolidated Subsidiaries.
"Subsidiary" means, with respect to any person, any corporation
of which such person, whether directly, or indirectly through one or
more intermediaries, owns shares of any class or classes (however
designated) of Voting Stock having in the aggregate the power to elect
at least a majority of the members of the board of directors (or other
governing body) of such corporations.
"Supplemental Rent" means all amounts, liabilities and
obligations (other than Basic Rent) which Lessee assumes or agrees to
pay hereunder or under the Participation Agreement to Lessor or
others, including, without limitation, (i) any additional amounts
payable pursuant to recalculations of the Basic Rent pursuant to
Section 3(f), (ii) Termination Value payments (and amounts calculated
by reference to Termination Value), (iii) all amounts required to be
paid by Lessee under the agreements, covenants and indemnities
contained in the Participation Agreement and the Lease, (iv) all
amounts required to be paid by Lessee upon the exercise of its early
termination option pursuant to Section 9, (v) any repayment or
prepayment amounts required to be made by Lessor pursuant to the
Mortgage, (vi) any amounts for reimbursement of costs and expenses
incurred by the Owner Participant or amounts required
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to be paid to it as a return on investment required to be paid by
lessee, and (vii) any and all liabilities, obligations, losses,
damages, penalties, taxes, claims, actions, suits, costs, expenses or
disbursements (including legal fees and expenses) of any kind and
nature whatsoever which may be imposed upon, incurred by or asserted
against Lessor by reason of the failure of Lessee duly to perform its
obligations under the Participation Agreement or this Lease.
"Term" means the term for which the Leased Property is initially
leased hereunder pursuant to Section 3(a) hereof.
"Termination value" means the amount necessary to pay in full as
of such Lease Period Date (after giving effect to the installment of
Basic Rent due on that date), the aggregate unpaid principal amount of
the Note outstanding with respect to such Aircraft at the close of
business as of such Lease Period Date together with any accrued and
unpaid interest thereon.
"Trust Agreement" means that certain Second Amended and Restated
Trust Agreement dated concurrently herewith between the Owner
Participant and Lessor, which amends and restates the Amended and
Restated Trust Agreement dated as of August 31, 1987, amending and
restating the Trust Agreement dated as of February 25, 1986, or as
modified, amended or supplemented pursuant to the applicable
provisions thereof, including, without limitation, supplementation
thereof by one or more Trust Agreement and Mortgage Supplements
entered into pursuant to the applicable provisions thereof.
"Trust Agreement and Mortgage Supplement" means a supplement to
the Trust Agreement and the Mortgage, substantially in the form of
Exhibit 2 to the Mortgage.
"Trust Estate" means the Trust Estate as that term is defined in
the Trust Agreement.
"Unmatured Lessor Lien" means a Lien which with the passage of
time would constitute a Lessor Lien.
Section 2. Confirmation of Purchase and Acceptance of Leased Property.
Lessor hereby confirms that it has purchased and accepted delivery of the Leased
Property, which Leased Property is being leased to Lessee hereunder.
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Section 3. Term and Rent.
(a) Term. Except as otherwise provided herein, the Term with respect
to the Leased Property shall commence on the date of this Lease and, unless
earlier terminated by the provisions of this Lease or otherwise extended by the
Lessor and the Lessee pursuant to an amendment permitted hereby, shall continue
for a period of forty-eight (48) months;
(b) Basic Rent, etc. Lessee agrees to pay Basic Rent for the Leased
Property in advance in consecutive monthly installments on each Lease Period
Date during the Term, each installment to cover the Lease Period immediately
following the date on which it is due in such amounts as set forth in Exhibit B
hereto; provided that if Lessee shall pay the Release Price in full, in cash,
prior to September 29, 1996 and the other conditions in Section 3(b) of the
Restructure Agreement are satisfied, the Lessee shall receive a credit on Basic
Rent and any Supplemental Rent in the amount of Two Million Dollars
($2,000,000), and Exhibits B and C hereto shall be revised accordingly.
(c) Minimum Rent. Anything herein contained to the contrary
notwithstanding, each installment of Basic Rent for each Aircraft, together with
any amount of Supplemental Rent paid pursuant to Section 3(d) hereof payable on
any Lease Period Date hereunder shall be, under any circumstances and in any
event, in an amount at least sufficient to pay in full, as of such Lease Period
Date, the payments then required to be made on account of the principal of, and
interest on, the Note then outstanding.
(d) Supplemental Rent. Lessee also agrees to pay to Lessor, or to
whomsoever shall be entitled thereto, any and all Supplemental Rent promptly as
the same shall become due and owing in funds consisting of lawful currency of
the United States of America, and in the event of any failure on the part of the
Lessee to pay any Supplemental Rent, Lessor shall have all rights, powers and
remedies provided for herein or by law or equity or otherwise in the case of
nonpayment of Basic Rent. Lessee will also pay to Lessor, on demand, as
Supplemental Rent, to the extent permitted by applicable law, interest in funds
consisting of lawful currency of the United States of America at the Past Due
Rate, on any part of any installment of Basic Rent not paid when due (following
the expiration of any applicable grace period) for any period for which the same
shall be overdue and on any payment of Supplemental Rent not paid when demanded
by Lessor for the period until the same shall be paid. The expiration or other
termination of Lessee's obligation to pay
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Basic Rent hereunder shall not limit or modify the obligations of Lessee with
respect to Supplemental Rent.
(e) Manner of Payment. So long as the Note shall remain outstanding,
Basic Rent shall be paid to the Loan Participant at the office at which the Note
is then payable pursuant to Section 2.1 of the Mortgage, in immediately
available funds not later than 11:00 A.M. (local time in the city in which such
office is located) on the date due. Whenever a Lease Period Date on which an
installment of Basic Rent is due hereunder is not a Business Day, such payment
shall be made (in the manner specified above) on the next succeeding Business
Day and interest shall accrue thereon from such Lease Period Date to the date of
payment at the rate of interest generally applicable to the Note (i.e., other
than on overdue payments). Lessee shall give Lessor, if such payments are not
made directly to it, confirmation of each payment of Basic Rent hereunder. All
other amounts payable hereunder shall be paid to Lessor at its address set forth
in Section 17 (or such other office of Lessor as it shall designate in writing
to Lessee from time to time) in either such case in immediately available funds
not later than 11:00 A.M. (local time in the city in which such office is
located) on the date due.
(f) [RESERVED].
Section 4. Lessor's Representations and Warranties; Limited Liability
of Lessor.
(a) LESSOR SHALL NOT BE DEEMED TO HAVE MADE ANY REPRESENTATION OR
WARRANTY, EXPRESS OR IMPLIED, AS TO THE TITLE, AIRWORTHINESS, VALUE, CONDITION,
DESIGN, OPERATION, MERCHANTABILITY OR FITNESS FOR USE OF THE LEASED PROPERTY, 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 ANY
OTHER REPRESENTATION OR WARRANTY WHATSOEVER, EXPRESS OR IMPLIED, WITH RESPECT TO
SUCH LEASED PROPERTY, except that Lessor warrants that on each Delivery Date
Lessor shall have received whatever title was conveyed to it by the seller
thereof and Lessor warrants that such Leased Property shall be free of Lessor
Liens and Unmatured Lessor Liens attributable to it, other than the respective
rights of Lessor and Lessee as herein provided.
(b) It is expressly understood and agreed by the parties that (i) this
Agreement is executed and delivered by Wilmington Trust Company not in its
individual capacity but solely as trustee under the Trust Agreement in the
exercise of the powers and authority conferred and vested in it hereunder, (ii)
each of the representations, warranties, undertakings,
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covenants and agreements herein made on the part of the Owner Trustee is made
and intended not as a personal representation, warranty, undertaking, covenant
or agreement by Wilmington Trust Company but is made and intended for the sole
purpose of binding the Trust (as defined in the Trust Agreement), (iii) nothing
herein contained shall be construed as creating any liability on Wilmington
Trust Company, in its individual capacity, to perform any obligation of the
Trust either expressed or implied contained herein, all such liability, if any,
being expressly waived by the parties hereto and by any person claiming by,
through or under such parties and (iv) under no circumstances shall Wilmington
Trust Company be liable, in its individual capacity, for the payment of any
indebtedness or expenses of or incurred on behalf of the Trust or for the breach
or failure of any obligation, representation, warranty, undertaking, covenant or
agreement made or incurred by the Trust under this Agreement or any other
Operative Document to which the Trust is a party; provided, however, that this
Section 4(b) shall not limit the ability of any person to look to the Trust
Estate for satisfaction of such liability or responsibility.
Section 5. Return of Aircraft.
(a) Condition Upon Return. Upon the expiration or earlier termination
of this Lease as to any Leased Property, Lessee will return, at Lessee's own
risk and expense, such Leased Property by delivering the same to Lessor at
Evergreen Air Center Inc.'s facilities at Pinal Air Park, Marana, Arizona, or at
such other location as shall have been agreed upon by Lessor and Lessee, (i) in
the case of the 747 Airframe fully equipped with four 747 Engines, or other
Pratt & Whitney JT9D-7F engines (or engines of the same or another manufacturer
of the same or an improved model and suitable for use on the 747 Airframe) owned
by Lessee, duly installed thereon and (ii) in the case of any DC-9 Airframe
fully equipped with two DC-9 Engines, or other Pratt & Whitney JT8D-9A engines
(or engine of the same or another manufacturer of the same or an improved model
and suitable for use on the DC-9 Airframe) owned by Lessee, duly installed
thereon. At the time of such return each Airframe and Engines or engines (i), in
the case of such Aircraft, shall be duly certified as an airworthy aircraft by
the Federal Aviation Administration; (ii) shall be free and clear of all Liens
(other than Lessor Liens and Unmatured Lessor Liens); (iii) shall be in as good
operating condition as when delivered to Lessee hereunder, ordinary wear and
tear excepted, or, in the case of any such engines owned by Lessee, shall have a
value and utility at least equal to, and shall be in as good operating condition
as required by the terms hereof with respect to the Engines; (iv) in the event
that Lessee does not, use a progressive overhaul program in which no
out-of-service phase with respect to the Airframe
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exceeds 120 hours and Lessee adopts a time-related overhaul program with respect
to such Airframe, such Airframe shall have at least the number of the allowable
hours of operation remaining to the next D Check as the number of hours of
operation remaining to the next D Check immediately after the Delivery Date with
respect to such Aircraft; and (v) in the event that Lessee has adopted an on
condition maintenance program with respect to all engines in its fleet similar
to the Engines or engines being returned, Lessee shall have maintained the
Engines or engines being returned in accordance with such program, and in the
event that Lessee shall, in lieu of an on condition maintenance program have
adopted a scheduled shop visit or modular change maintenance program with
respect to the Engines or engines, the Engines or engines shall have at least an
average number of allowable hours between scheduled shop visits or module change
remaining (based on a 12-month running average) to next scheduled removal as the
average number of such hours to the next scheduled removal of the Engines on the
related Delivery Date, but in no case less than, in the case of the 747 Engine,
2,000 hours or 500 cycles remaining on any one 747 Engine to next scheduled
removal or, in the case of the DC-9 Engines, 1,000 hours or 1,000 cycles
remaining on any one DC-9 Engine to next scheduled removal. If for reasons
beyond the control of Lessee it is unable to comply with clause (i) of the
second sentence of this Section 5(a) upon the return of such Leased Property, it
will immediately give Lessor notice thereof describing the circumstances in
detail and shall either, as directed by Lessor at its option, (i) return such
Leased Property as nearly as possible in compliance with this Section 5(a) or
(ii) retain possession of such Leased Property until it is able to comply with
this Section 5(a) at which time Lessee shall comply with this Section 5(a) as
promptly as possible. If Lessee retains possession of such Leased Property, the
provisions of this Lease and the Participation Agreement (including, without
limitation, Section 11 hereof and Section 7 of the Participation Agreement)
shall continue to apply except Lessee will not be obligated to pay Basic Rent
with respect to such Leased Property, provided that during such period Lessee
shall have no right to use such Leased property.
(b) Return of Engines. In the event that any engine not owned by
Lessor shall be delivered with any returned Airframe as set forth in paragraph
(a) of this Section 5, Lessee, concurrently with such delivery, will, at its own
expense and at no cost to Lessor, convey title to such engine to Lessor,
provided that each of such engines shall be of the same or improved
manufacturer's type and model, and furnish Lessor with a full warranty bill of
sale, in form and substance satisfactory to Lessor, with respect to each such
engine and with an opinion of Lessee's counsel to the effect that, upon such
return, Lessor will acquire full title to such engine, and Lessee shall take
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such other action as Lessor may reasonably request, and thereupon Lessor will
transfer to Lessee, without recourse or warranty (except as to Lessor Liens and
Unmatured Lessor Liens attributable to it), all Lessor's right, title and
interest in and to an Engine not installed on such Airframe at the time of its
return.
(c) Fuel; Manuals. Upon the return of any Aircraft, (i) each fuel
tank and oil tank shall contain the same quantity of fuel or oil as was
contained in the fuel and oil tanks when such Aircraft was delivered to Lessee
(such quantities at the time of delivery to be set forth in the related Lease
Supplement), or, in the case of differences in any such quantities, an
appropriate adjustment will be made by payment at the then current market price
of fuel or oil, as the case may be; and (ii) Lessee shall deliver to Lessor all
logs, manuals and data, and inspection, modification and overhaul records
required to be maintained with respect thereto under applicable rules and
regulations.
(d) Storage Upon Return. Upon any termination of this Lease referred
to in paragraph (a) of this Section 5, upon written request of Lessor, Lessee
will provide Lessor with free storage facilities for the Leased Property for a
period not exceeding one calendar year at the location in the United States used
by Lessee for the parking or storage of aircraft as Lessee may select; and at
the request of Lessor, Lessee will provide storage facilities at such location
at the Lessor's expense for an additional period not exceeding 31 days. At the
end of any period of storage under this paragraph (d) (or at such earlier time
as Lessor may request), Lessee will, at Lessor's cost, fly such Aircraft from
such place of storage to a reasonable location chosen by Lessor in the United
State or in Europe.
(e) Overhaul. Immediately prior to the return of each Airframe and
Engines or engines at the end of the Term, Lessee, upon the written request of
Lessor, will overhaul or cause to be overhauled such Airframe and Engines or
engines. Such overhaul or work shall be done in the same manner and with the
same care as used by Lessee with similar Airframes and engines of its own, and
Lessor shall reimburse Lessee for Lessee's actual costs in connection with such
overhaul or work.
(f) Aid in Lease or Sale. Lessee agrees that during the last six
months of the Term with respect to any Leased Property it will cooperate in all
reasonable respects with the efforts of Lessor to lease or sell such Leased
Property, including aiding potential lessees or purchasers in inspecting such
Leased Property and the records relating thereto, provided that Lessee shall not
be required for such purpose to materially
- 16 -
interfere with the use of the Aircraft which is part of such Leased Property or
incur out-of-pocket expenses for which it is not reimbursed.
(g) Assignment. Lessor may assign its rights under this Section 5, its
rights under Section 12 and any rights it may have for the failure of Lessee to
have maintained the Leased Property in accordance with the terms hereof to any
person who leases or purchases the Leased Property from Lessor at or after the
end of the Term with respect to such Leased Property.
Section 6. Liens. Lessee will not directly or indirectly create,
incur, assume or suffer to exist any material Lien on or with respect to the
Leased Property or any part thereof, title thereto, or any interest therein or
in this Lease except: (i) the respective rights of Lessor and Lessee as herein
provided and the rights of the Participants under the Mortgage and the
Participation Agreement, (ii) the rights of others under agreements or
arrangements to the extent expressly permitted by the terms of Sections 7(b) and
8(b), (iii) Lessor Liens or Unmatured Lessor Liens, (iv) Liens for taxes either
not yet due or being contested in good faith (and for the payment of which
adequate reserves have been provided) by appropriate proceedings so long as such
proceedings do not involve any danger of the sale, forfeiture or loss of the
Leased Property or any part thereof or interest therein, (v) materialmen's,
mechanics', workmen's, repairmen's, employees' or other like Liens arising in
the ordinary course of business for amounts the payment of which is either not
yet delinquent or is being contested in good faith (and for the payment of which
adequate reserves have been provided) by appropriate proceedings so long as such
proceedings do not involve any danger of the sale, forfeiture or loss of the
Leased Property or any part thereof or interest therein, (vi) the Junior Lien,
(vii) Liens arising out of the maintenance of court actions being defended in
good faith (and as to which adequate reserves have been provided) and Liens
arising out of judgments or awards against Lessee with respect to which at the
time an appeal or proceeding for review is being prosecuted in good faith (and
for the payment of which adequate reserves have been provided) by appropriate
proceedings and with respect to which there shall have been secured a stay of
execution pending such appeal or proceeding for review and (viii) the Lien of
Congress Financial Corporation (or any other secured party having an interest in
Lessee's spare parts) on Parts removed from any Aircraft and/or Engine
("Permitted Liens"). Lessee will promptly, at its own expense, take such action
as may be necessary duly to discharge any such Lien not excepted above if the
same shall arise at any time.
- 17 -
Section 7. Registration, Maintenance and Operation; Possession;
Insignia.
(a) Registration, Maintenance and Operation. Lessee, at its own cost
and expense, shall: (i) forthwith upon the delivery thereof hereunder, cause
each Aircraft to be duly registered, and, except as otherwise provided in this
Section 7(a), at all times thereafter to remain duly registered, in the name of
Lessor, under the Federal Aviation Act, and shall not register such Aircraft
under the laws of any other country; (ii) maintain, inspect, service, repair,
overhaul and test each Aircraft so as to keep such Aircraft in as good operating
condition as when delivered to Lessee hereunder, ordinary wear and tear
excepted, and in such condition as may be necessary to enable the airworthiness
certification of such Aircraft to be maintained in good standing at all times to
the extent required under the Federal Aviation Act; (iii) maintain all records,
logs and other materials required by the FAA; (iv) comply with all applicable
maintenance, service, repair and overhaul manuals and mandatory service
bulletins published by or on behalf of the manufacturer of such Aircraft, or
cause the same to be complied with; (v) upon request, promptly furnish to Lessor
statements regarding the condition and state of repair of such Aircraft, in such
detail as Lessor may reasonably request; and (vi) promptly furnish to Lessor
such information as may be required to enable Lessor to file any reports
required to be filed by Lessor with any governmental authority because of
Lessor's ownership of such Aircraft. Lessee agrees that each Aircraft will not
be maintained, used, operated or maintenance in violation of any applicable laws
or in violation of any airworthiness certificate, license or registration
relating to such Aircraft. Lessee also agrees not to operate or locate each
Aircraft, or suffer any Aircraft to be operated or located, in any area excluded
from coverage by any insurance required by the terms of Section 11, except in
the case of a requisition or a call-up under the Civil Reserve Air Fleet by the
government of the United States where Lessee obtains an indemnity in lieu of
such insurance from the government of the United States against the risks and in
the amounts required by Section 11 covering such area.
(b) Possession. Lessee will not, without the prior written consent of
Lessor (which consent shall not be unreasonably withheld), sublease or otherwise
in any manner deliver, transfer or relinquish possession of any part of the
Leased Property, pursuant to a sublease or otherwise, or install any Engine or
permit any Engine to be installed, in any airframe other than any Airframe
covered hereby, provided that, so long as no Default or Event of Default shall
have occurred and be continuing and so long as Lessee shall comply with the
provisions
- 18 -
of Section 11, Lessee may, without the prior written consent of Lessor:
(i) subject any Engine and to normal 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 one
or more American or Western European certificated air carriers; and
only if such agreement or arrangement does not contemplate or require
the transfer of title to such Engine; provided, that subject to the
terms of any such agreement or arrangement promptly after completion
of the overhaul or other service for which each Engine was delivered
to another person pursuant to such agreement or arrangement, such
Engine shall be returned to Lessee, and; provided, further, that if
Lessor's title to any such Engine shall be divested under any such
agreement or arrangement, such divestiture shall be deemed to be an
Event of Loss with respect to such Engine and Lessee shall comply with
Section 10(b) in respect thereto;
(ii) deliver possession of any Airframe or any Engine to the
manufacturer thereof for testing or other similar purposes or to any
organization for service, repair, maintenance or overhaul work on such
Airframe, Engine or any part thereof or for alterations or
modifications in or additions to such Airframe or Engine to the extent
required or permitted by the terms of Section 8(c);
(iii) install any Engine on an airframe registered under the laws
of the United States of America and owned by Lessee free and clear of
all Liens (other than 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);
(iv) install any Engine on an airframe registered under the laws
of the United States of America and leased to Lessee or purchased by
Lessee subject to a conditional sale or other security agreement;
provided that such airframe is free and clear of all Liens except (x)
the rights of the parties to the lease or conditional sale or other
security agreement covering such airframe, (y) Liens which insofar as
they relate to such Engine are subordinate and junior in all respects
to the rights of Lessor hereunder and (z)
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Liens of the type permitted by subparagraph (iii) of this paragraph
(b);
(v) to the extent permitted by Section 8(b) hereof, subject any
appliances, Parts or other equipment owned by Lessor and removed from
such Airframe to any pooling arrangement referred to in Section 8(b)
hereof;
(vi) sublease the 747 Aircraft, any DC-9 Aircraft or any Engine
to (a) any affiliate of Lessee, (b) any air carrier listed on Exhibit
E hereto, or (c) any other Person reasonably acceptable to Lessor;
(vii) sublease or deliver possession of any Aircraft, any
Airframe or any Engine to any other person or persons (A) pursuant to
a lease pursuant to which Lessee retains full operational control of
such Aircraft, provided that there is no change in the registration
of such Aircraft, or (B) with the prior written consent of Lessor,
which consent will not be unreasonably withheld; and
(viii) make available any Aircraft for use by the U.S. Department
of Defense in the Civil Reserve Air Fleet, as defined in 10 U.S.C.
9511(7) ("CRAF") as provided for and in accordance with applicable
Federal law, regulations and executive orders, subject always to the
terms and conditions of this Lease except that the Term may be
extended during any period of an airlift emergency or an activation of
such Aircraft in effect on the date the Term would otherwise end (such
extension to be to the date on which such airlift emergency or
activation shall end), provided that Lessor shall at all times retain
and be entitled to exercise its remedies or any of them as provided
for under the terms of this Lease in case an Event of Default shall
have occurred and be continuing, including the right to withdraw such
Aircraft from CRAF, subject only to the condition that the Lessor give
the Administrative Contracting officer ("ACO") under the Lessee's
contract in respect to CRAF at least thirty (30) days notice in
writing of such Event of Default by registered or certified air mail;
and provided, further, that the rights of any transferee who receives possession
by reason of a transfer permitted by this paragraph (b) shall be subject and
subordinate to, and any sublease permitted by this paragraph (b) shall be
subject and subordinate to, all the terms of this Lease and of the Trust
- 20 -
Agreement, including, without limitation, the covenants contained in Section
7(a) and Lessor's rights to repossession pursuant to Section 15 and to avoid
such sublease upon such repossession and the Loan Participant's right to
repossession under Article V of the Mortgage, and Lessee shall remain primarily
liable hereunder for the performance of all of the terms of this Lease to the
same extent as if such sublease or transfer had not occurred, and that any such
sublease shall include appropriate provisions for the maintenance and insurance
of such Aircraft subleased thereby; and provided, further, that any such
instrument of transfer of sublease shall contain a provision comparable to that
set forth in Section 23 hereof. No pooling agreement, sublease or other
relinquishment of possession of any Airframe, or any Engine shall in any way
discharge or diminish any of Lessee's obligations to Lessor hereunder.
In the event Lessor shall have received from the lessor or secured
party of any airframe leased to Lessee or purchased by Lessee subject to a
conditional sale or other security agreement a written agreement whereby such
lessor or secured party expressly agrees that neither it nor its successors or
assigns will acquire or claim any right, title or interest in any Engine by
reason of such Engine being installed on such airframe at any time while such
Engine is subject to this Lease or is owned by Lessor, and the lease or
conditional sale or other security agreement covering such airframe also covers
an 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, Lessor hereby agrees for the benefit of such lessor or
secured party that Lessor will not acquire or claim, as against such lessor or
secured party, any right, title or interest in any such engine as the result of
such engine being installed on the Airframe at any time while such engine is
subject to such lease or conditional sale or other security agreement and owned
by such lessor or subject to a security interest in favor of such secured party.
(c) Insignia. Lessee agrees to affix and maintain in the cockpit of
each Airframe adjacent to the airworthiness certificate therein and on each
Engine a metal nameplate bearing the inscription "WILMINGTON TRUST COMPANY,
as OWNER TRUSTEE, LESSOR; TCW SPECIAL CREDITS, as AGENT, MORTGAGEE". Except as
above provided, Lessee will not allow the name of any person, association or
corporation to be placed on any Airframe, any Engine as a designation that might
be interpreted as a claim of ownership; provided that nothing herein contained
shall prohibit Lessee or any sublessee permitted by Section 7(b) from placing
its customary color and insignia on such Airframe or any Engines.
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(d) Aircraft Inspection. During the Term hereof, Lessee shall furnish
to the Loan Participant and Lessor such information concerning the location,
condition, use and operation of each Aircraft as any of them may reasonably
request. The right of the Loan Participant or Lessor to inspect any Aircraft
during any Major Checks (being herein defined as a "C" or "D" check or
equivalent) performed by or on behalf of Lessee during the Term hereof shall be
absolute and Lessee shall inform the Loan Participant of such Major Checks by
providing sixty (60) days' prior written notice thereof as to time and location
of such Major Checks. During such Major Checks, Lessee agrees to provide
sufficient manpower to enable the Loan Participant or its representative to
inspect any area of an Aircraft which would normally be required during such a
Major Check. Lessee shall, at its own cost and expense, repair or replace any
item which is found not to meet the requirements of this Lease. All costs and
expenses relating to such inspection shall be for the account of Lessee. Lessee
shall, in addition to the foregoing, permit the Loan Participant or its
representative to visit and inspect all Aircraft, its condition, use and
operation and the records maintained in connection therewith, at any reasonable
time, provided that, so long as no Default or Event of Default shall have
occurred and be continuing, such inspection as to such Aircraft shall be limited
to once during any twelve-mouth period during the Term hereof. The reasonable
actual out-of-pocket costs and expenses incurred by the Loan Participant and the
other reasonable costs and expenses of the Lessee associated with the
inspections relating to the inspections of all Aircraft as described in the
preceding sentence shall be paid for, or reimbursed, by the Lessee. The Loan
Participant and Lessor shall have no duty to make or to have made such
inspection and shall not incur any liability or obligation by reason of not
making any such inspection.
Section 8. Replacement of Parts; Alterations, Modifications and
Additions.
(a) Replacement of Parts. Lessee, at its own cost and expense, will
promptly replace all Parts, which may from time to time be incorporated or
installed in or attached to any 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 paragraph (c) of this Section 8. In addition,
Lessee may, at its own cost and expense, remove on 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, except as otherwise
provided in paragraph (c) of this Section 8, will,
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at its own cost and expense, promptly replace such Parts. A11 replacement parts
shall be free and clear of all Liens (except for pooling arrangements to the
extent permitted by paragraph (b) of this Section 8 and other 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. All
Parts at any time removed from any Airframe or any Engine shall remain the
property of 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
such 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 any 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 rights of Lessor, and shall no longer be
deemed a Part hereunder, (ii) title to such replacement Part shall thereupon
vest in Lessor (subject only to a pooling arrangement to the extent permitted by
paragraph (b) of this Section 8 and other Permitted Liens) and (iii) such
replacement Part shall become subject to this Lease and be deemed part of such
Airframe, such Engine for all purposes hereof or the same extent as the Parts
originally incorporated or installed in or attached to such Airframe or such
Engine.
(b) Poolinq of Parts. Any Part removed from any Airframe or any Engine
as provided in paragraph (a) to this Section 8 may be subjected by Lessee to a
normal pooling arrangement customary in the airline industry entered into in the
ordinary course of Lessee's business with American or Western European
certificated air carriers; provided that the Part replacing such removed Part
shall be incorporated or installed in or attached to such Airframe or such
Engine in accordance with such paragraph (a) as promptly as possible after the
removal of such removed Part. In addition, any replacement Part when
incorporated or installed in or attached to any Airframe or any Engine in
accordance with such paragraph (a) may be owned by an American or Western
European certificated air carrier subject to such a normal pooling arrangement;
provided that Lessee, at its expense, as promptly thereafter as possible, either
(i) causes title of such replacement Part to vest in Lessor in accordance with
such paragraph (a) 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 such replacement Part by incorporating or
installing in or attaching to the Airframe, 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 such paragraph (a).
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(c) Alterations, Modifications and Additions. Lessee, at its own
expense, will make such alterations and modifications in and additions to each
Airframe and each Engine, as may be required from time to time to meet the
standards of the Federal Aviation Administration or any other applicable laws.
In addition, Lessee, at its own expense may from time to time make such
alterations and modifications in and additions on each Airframe and each Engine
as Lessee may deem desirable in the proper conduct of its business, including,
without limitation, removal of Parts (for purposes of this paragraph (c), called
"Obsolete Parts") which Lessee deems obsolete or no longer suitable or
appropriate for use in such Airframe or such Engine; provided that no such
alteration, modification or addition shall diminish the value or utility of such
Airframe or such Engine, or impair the condition or airworthiness thereof,
materially below the valued utility, condition and airworthiness thereof
immediately prior to such alteration, modification or addition assuming such
Airframe or such Engine were then of the value or utility and in the condition
and airworthiness required to be maintained by the terms of this Lease
Agreement, except that the value (but not the utility, condition or
airworthiness) of the Airframe may be reduced by the value of obsolete Parts
which shall have been removed if the aggregate value of all Obsolete Parts
removed from such Airframe and not replaced shall not exceed $1,000,000.00. So
long as no Default or Event of Default shall have occurred and be continuing,
Lessee may, at any time during the Term of the Lease, remove any Part (for
purposes of this paragraph (c), called a "Removable Part") (i) which is in
addition to, and not in replacement of or substitution for, any Part originally
incorporated or installed or attached to any Airframe or any Engine at the time
of delivery thereof hereunder or any Part in replacement of or substitution for
any such Part, (ii) which is not required to be incorporated or installed in or
attached or added to such Airframe or such Engine pursuant to the terms of this
Section 8 and (iii) which can be removed from such Airframe or such Engine
without causing material damage to such Airframe or such Engine or diminishing
or impairing the value, utility, condition or airworthiness which such Airframe
or such Engine would have had at such time had the addition of such Part not
occurred. Title to all Parts incorporated or installed in or attached or added
to any Airframe or any Engine as a result of the alterations, modifications or
additions under this paragraph (c), except Removable Parts, shall, without
further act, vest in Lessor. Title to any Removable Parts shall not vest in
Lessor, and upon the removal by Lessee of any Removable part as above provided,
such Removal part shall no longer be deemed part of any Airframe or any Engine
from which it was removed. Any Removable Part not removed by Lessee as above
provided prior to the return of any Airframe or any Engine to Lessor hereunder
shall become the property of Lessor at the time of such return.
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Section 9. Voluntary Termination. So long as no Default or Event of
Default shall have occurred and be continuing, Lessee shall have the right, at
its option, on at least three months' prior written notice to Lessor and the
Loan Participant, to terminate this Lease with respect to all of the Aircraft.
Such termination shall be effective on the Lease Period Date specified in such
notice and upon payment in full, in cash, to the Lessor of the Termination value
as of such date and all amounts of Basic Rent and Supplemental Rent owing as of
such date.
Section 10. Loss, Destruction, Requisition, etc.
(a) Event of Loss with Respect to the Aircraft. Upon the occurrence
of an Event of Loss with respect to any Aircraft or Airframe, Lessee shall
forthwith (and, in any event, within 15 days after such occurrence) give Lessor
written notice of such Event of Loss, and, on the third Business Day following
receipt of casualty insurance proceeds with respect thereto, but in no event
more than 90 days following the date of the occurrence of such Event of Loss,
Lessee shall pay to Lessor, in addition to any installment of Basic Rent then
otherwise due and payable, in funds of the type specified in Section 3(c)
hereof, the Event of Loss Termination Value for such Aircraft, together with any
costs and expenses incurred by the Loan Participant incurred by unwinding and
breaking fixed funds loaned in connection with financing such Aircraft. In the
event of payment in full of such Event of Loss Termination Value and such costs
and expenses, (1) the obligation of Lessee to pay Basic Rent with respect to
such Aircraft for any Lease Period commencing after that in which such Event of
Loss occurs shall terminate; provided that Lessee shall remain liable for all
payments of Basic Rent due and payable before the date of such payment of
Termination Value, (2) the Term shall end with respect to such Aircraft and (3)
upon payment of all Rent then due hereunder, Lessor will transfer to Lessee,
without recourse or warranty (except as to the absence of Lessor Liens and
Unmatured Lessor Liens, in each case attributable to it), all Lessor's right,
title and interest, of any, in and to such Airframe and Engines related to
such Airframe. Such transfer to Lessee will not affect or limit in any way any
obligations of Lessee hereunder not specifically discharged by such payment of
Event of Loss Termination Value and Rent including, but not limited to, payments
of Supplemental Rent. Without limitation to the foregoing, upon the occurrence
of an Event of Loss with respect to an Aircraft in which event the entire
insurance proceeds are applied in reduction of the Note outstanding related to
such Aircraft, the excess insurance proceeds, if any, shall be applied in
reduction of any other principal amounts of the Note.
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(b) Event of Loss with Respect to an Engine. Upon the occurrence of
an Event of Loss with respect to an Engine under circumstances in which there
has not occurred an Event of Loss with respect to an Airframe, Lessee shall give
Lessor and the Loan Participant prompt written notice thereof and shall, within
60 days after the occurrence of such Event of Loss, duly convey to Lessor, as
replacement for the Engine with respect to which such Event of Loss occurred,
title to another Pratt & Whitney Model JT9D-7F Engine (or engine of the same or
another manufacturer of the same or an improved model and suitable for
installation and use on the related Airframe) owned by Lessee free and clear of
all Liens not excepted in Section 6 and having a value and utility at least
equal to, and being in as good operating conditions as, the Engine with respect
to which such Event of Loss occurred, assuming such Engine was of the value and
utility and in the condition and repair as required by the terms hereof
immediately prior to the occurrence of such Event of Loss. Prior to or at the
time of any such conveyance, Lessee, at its own expense, will (i) furnish Lessor
with a bill of sale, in form and substance satisfactory to Lessor and the Loan
Participant, with respect to such replacement engine, (ii) cause a supplement
hereto, in form and substance satisfactory to Lessor and the Loan Participant,
subjecting such replacement engine to this Lease, to be duly executed by Lessee,
(iii) furnish Lessor and the Loan Participant with such evidence of compliance
with the insurance provisions of Section 11 with respect to such replacement
engine as Lessor may reasonably request and (iv) furnish Lessor and the Loan
Participant with such evidence of title as Lessor may reasonably request to the
effect that, upon such conveyance, Lessor will acquire full title, free and
clear of all Liens, except Permitted Liens, to such replacement engine and that
it will be leased hereunder to the same extent as the Engine replaced thereby.
Upon full compliance by Lessee with the terms of this paragraph (b), Lessor will
transfer to Lessee, without recourse or warranty (except as to the absence of
Lessor Liens and Unmatured Lessor Liens attributable to it), all of Lessor's
right, title and interest, if any, in and to the Engine with respect to which
such Event of Loss occurred. For all purposes hereof, each such replacement
engine shall, after such conveyance, be deemed part of the property leased
hereunder, shall be deemed an "Engine" as defined herein, as the case may be,
and, if such replacement engine is in replacement for an Engine, shall be deemed
part of the related Aircraft. No Event of Loss with respect to an Engine under
the circumstances contemplated by the terms of this paragraph (b) shall result
in any reduction in Basic Rent. If for reasons beyond the control of Lessee it
is not possible for Lessee to comply fully with this Section 10(b) within 90
days after the Event of Loss (or within an additional thirty (30) days
thereafter if Lessee is diligently pursuing such compliance), Lessee shall on
such 90th or 30th day,
- 26 -
as applicable, deposit with the Loan Participant, so long as the Mortgage shall
be in effect, and thereafter with Lessor, an amount equal to 5% of the Event of
Loss Termination Value of the related Aircraft computed as of the next Lease
Period Date, such amount to be returned to Lessee upon full compliance with this
Section 10(b), it being understood that notwithstanding such deposit Lessee
shall continue to be required to comply with the other provisions of this
Section 10(b) as soon as possible.
(c) Requisition for Use by the U.S. Government of the Airframe. In the
event of the requisition for emergency or other use by the United states or any
agency or instrumentality thereof (for purposes of this Section 10(c) and
Section 10(d) hereof called the "Government") of any Airframe and the Engines or
engines installed on such Airframe during the Term, Lessee shall promptly notify
Lessor and the Loan Participant of such requisition and all of Lessee's
obligations under this Lease Agreement shall continue to the same extent as if
such requisition had not occurred, provided that if such Airframe and Engines or
engines are not returned by the Government prior to the end of the Term, Lessee
shall be obligated to return such Airframe and Engines or engines to Lessor
pursuant to, and in all other respects comply with the provisions of, Section 5
promptly upon their return by the Government. All payments received by Lessor or
Lessee from the Government for the use of such Airframe and Engines or engines
during the Term shall be paid over to, or retained by, Lessee; and all payments
received by Lessor or Lessee from the Government for the use after the Term of
such Airframe and Engines or engines shall be paid over to, or retained by, the
Loan Participant, so long as the Mortgage shall be in effect, and thereafter to
Lessor unless Lessee shall have purchased such Aircraft from Lessor, in which
case such payments shall be paid over to, or retained by Lessee.
(d) Requisition for Use of an Engine. In the event of the requisition
for use by the Government of any Engine under the circumstances contemplated by
Section 10(c), Lessee will replace such Engine hereunder by complying with the
terms of Section 10(b) to the same extent as if an Event of Loss had occurred
with respect to such Engine, and any payments received by the Loan Participant,
Lessor or Lessee from the Government with respect to such requisition shall be
paid over to, or retained by, Lessee upon replacement of such Engine pursuant to
Section 10(b).
(e) Application of Payments from Governmental Authorities for
Requisition of Titles. Any payments (other than insurance proceeds the
application of which is provided for in Section 11) received at any time by the
Loan Participant, Lessor or by Lessee from any governmental authority or other
person with respect to any Event of Loss resulting from the condemnation,
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confiscation, theft or seizure of, or requisition of title to or use of, the
Leased Property or any part thereof will be applied as follows:
(i) in the case of an Event of Loss with respect to the Leased
Property or any part thereof, after reimbursement of Lessor for costs
and expenses, so much of such payments remaining as shall not exceed
the Event of Loss Termination Value required to be paid by Lessee
pursuant to paragraph (a) of this Section 10 (plus any other amounts
of Basic and Supplemental Rent then due and payable), shall be applied
in reduction of Lessee's obligation to pay such Event of Loss
Termination Value (plus any such other amounts of Basic and
Supplemental Rent), if not already paid by Lessee, or, if already paid
by Lessee, shall be applied to reimburse Lessee for its payment of
such Event of Loss Termination Value (plus any such other amounts of
Basic Supplemental Rent), and the balance, if any, of such payments
remaining thereafter will be paid over to, or retained by, Lessor; and
(ii) if such payments are received with respect to an Engine
under circumstances contemplated by paragraph (b) of this Section 10,
so much of such payments remaining after reimbursement of Lessor for
costs and expenses shall be paid over to, or retained by, Lessee;
provided that Lessee shall have fully performed the terms of paragraph
(b) of this Section 10 with respect to the Event of Loss for which
such payments are made.
(f) Application of Payments During Existence of Event of Default. Any
amount referred to in clause (i) or (ii) of paragraph (c) of this Section 10
which is payable to Lessee shall not be paid to Lessee if at the time of such
payment a Default or an Event of Default shall have occurred and be
continuing, but shall be held by the Loan Participant, so long as the Mortgage
shall be in effect, and thereafter by Lessor as security for the obligations of
Lessee under this Lease and at such time as there shall not be continuing any
such Default or Event of Default, such amount shall be paid to Lessee pursuant
to the terms hereof. In addition, if an Event of Default has occurred and is
continuing, the Loan Participant shall be entitled to receive all amounts, other
than Excluded Payments, payable in connection with an Event of Loss,
irrespective of such amounts being in excess of the Event of Loss Termination
Value; provided, that if an Event of Loss occurs with respect to the 747 Leased
Property, in no event shall such amounts be less than the aggregate unpaid
principal amount of the Note outstanding with respect to such Aircraft.
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Section 11. Insurance.
(a) Public Liability and Property Damage Insurance. Lessee will carry
at its own expense public liability (including, without limitation, passenger
and cargo legal liability) insurance and property damage insurance (exclusive of
manufacturer's product liability insurance) with respect to the Leased Property
(i) in amounts which are not less than the higher of (x) $400,000,000 with
respect to the 747 Aircraft and $250,000,000 with respect to the DC-9 Aircraft
and (y) the amounts of public liability and property damage insurance applicable
to similar aircraft and engines operated by major American international air
carriers, (ii) of the type usually carried by corporations engaged in the same
or a similar business, similarly situated with Lessee, and owning or operating
similar aircraft and engines and which covers risks of the kind customarily
insured against by such corporations and (iii) which is maintained in effect
with insurers of recognized responsibility reasonably satisfactory to Lessor and
the Loan Participant. Any policies of insurance carried in accordance with this
paragraph (a) and any policies taken out on substitution or replacement for any
of such policies (A) shall be amended to name Lessor, individually and as Owner
Trustee, as owner of the Aircraft and each Participant as additional named
insureds as their respective interests may appear, (B) shall provide that in
respect of the respective interests of Lessor and of each Participant in such
policies the insurance shall not be invalidated by any action or inaction of
Lessee or any other person (other than of Lessor and of such Participant, as the
case may be) and shall insure Lessor regardless of any breach or violation of
any warranty, declarations or conditions contained in such policies by Lessee or
any other person (other than by Lessor), (C) shall provide that if the insurers
cancel such insurance for any reason whatever, the same is allowed to lapse for
nonpayment of premium or such insurance coverage thereof changed in any
materially adverse way to any named insured, such cancellation, lapse or change
shall not be effective as to Lessor or any Participant for 30 days (and with
respect to war risk insurance, such shorter period as shall be customary for
major American international air carriers) after receipt by Lessor of written
notice by such insurers to Lessor and each Participant of such cancellation,
lapse or change, and (D) shall provide that there shall be no recourse against
Lessor or any Participant for the payment of premiums, commissions, club calls,
assessments or advances. Each liability policy (1) shall be primary without
right of contribution from any other insurance which is carried by Lessor or any
Participant to the extent that such other insurance provides it with contingent
and/or excess liability insurance with respect to their respective interests as
such in the Leased Property, (2) shall expressly provide that all of the
- 29 -
provisions thereof, except the limits of liability, shall operate in the same
manner as if there were a separate policy covering each insured and (3) shall
waive any rights to set-off, counterclaim or other deduction against each named
insured. Lessee shall arrange for appropriate certification as to the Leased
Property as to the satisfaction of the requirements set forth above in this
Section 11(a) to be made to Lessor and each Participant as soon as is
practicable (and in any case by the Delivery Date) by each insurer with respect
thereto; provided that all information contained therein shall be held
confidential by Lessor and each Participant and shall not be furnished or
disclosed by it to anyone (other than counsel and any other representatives)
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.
(b) Insurance Against Loss or Damage to the Aircraft. Lessee shall
maintain in effect, at its own expense with insurers of recognized
responsibility reasonably satisfactory to Lessor and the Participants, all-risk
ground and flight aircraft hull insurance covering each Aircraft, and fire and
explosion coverage, including lightning and electrical damage, with respect to
any Engines or Parts while removed from the Aircraft, which is payable in
Dollars in the United States and is in not less than the amount usually carried
by corporations engaged in the same or similar business and similarly situated
with Lessee; provided that such insurance shall at all times while each Aircraft
is subject to this Lease be for an amount which when paid will be not less than
the Event of Loss Termination Value from time to time (determined as of the next
following Lease Period Date). Lessee shall additionally maintain in effect, at
its own expense, with insurers of recognized responsibility satisfactory to
Lessor and the Participants, (i) insurance with respect to risks relating to
strikes, riots, civil commotions, labor disturbances, any malicious act or act
of sabotage, hi-jacking or any unlawful seizure or wrongful exercise of control
of any Aircraft or crew in flight (including any attempt at such seizure or
control) made by any person or persons on board such Aircraft acting without
consent of Lessee with respect to each Aircraft in a face amount not less than
the Event of Loss Termination Value with respect to all Aircraft from time to
time (determined as of the next following Lease Period Date), which shall be in
full force and effect at all times during the Term of this Lease while such
Aircraft are operated or maintained within the continental United States, and
(ii) war risk, hi-jacking (air piracy), governmental confiscation and
expropriation insurance with respect to each Aircraft in a face amount not less
than the Event of Loss Termination Value with respect to an Aircraft from time
to time (determined as of the next following Lease Period Date) at any time such
Aircraft is operated outside of the continental United
- 30 -
States. Any policies carried in accordance with this paragraph (b) covering the
Leased Property or any part thereof and any policies taken out in substitution
or replacement for any such policies (i) shall be amended to named Lessor,
individually and as trustee, as owner of such Aircraft, and the Participants, as
additional insureds, as their respective interests may appear, (ii) shall be
made payable to the Loan Participant in the event of any loss in excess of
$2,000,000.00 so long as the Mortgage shall be in effect and thereafter to
Lessor, individually and as trustee, (iii) shall provide that if the insurers
cancel such insurance for any reason whatever, the same is allowed to lapse for
nonpayment of premium or such insurance coverage is changed in any materially
adverse way to any named insured, such cancellation, lapse or change shall not
be effective as to Lessor or any Participant for 30 days (and with respect to
war risk insurance, such shorter period as shall be customary for major American
international air carriers) after receipt by Lessor or any Participant of
written notice by such insurers to Lessor of such cancellation, lapse or change,
(iv) shall provide that in respect of the interest of Lessor or of any
Participant in such policies the insurance shall not be invalidated by any
action or inaction of Lessee or any other person (other than of Lessor or such
Participant) and shall insure Lessor's interest regardless of any breach or
violation of any warranties, declarations or conditions contained in such
policies by Lessee or any other person (other than by Lessor); provided, that
Lessee may self-insure against any breach or violation of any warranty,
declaration or condition contained in any such policies by way of deductible
provisions on the applicable policies in an aggregate amount not exceeding
$1,000,000 with respect to the 747 Aircraft and $500,000 with respect to each
DC-9 Aircraft, for any 12-month policy year, (v) shall waive any rights to
set-off, counterclaim or other deduction against each named insured, (vi) shall
be in an amount sufficient to prevent Lessee from becoming a co-insurer and
(vii) shall provide that there shall be no recourse against Lessor or any
Participant for the payment of premiums, commissions, club calls, assessments,
or advances. Lessee shall arrange for appropriate certification as to the
satisfaction of the requirements set forth above in this Section 11(b) to be
made promptly (and in any case by the First Delivery Date and on each subsequent
Delivery Date) to Lessor and each Participant by each insurer with respect
thereto; provided that all information contained therein shall be held
confidential by Lessor and each Participant and shall not be furnished or
disclosed by it to anyone (other than counsel and any other representatives)
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 or
pursuant to the request of any regulatory or governmental authority or any
auditors of Lessor and each Participant.
- 31 -
Subject to the provisions of the last sentence of Section 10(a), as
between Lessor and Lessee it is agreed that all insurance payments received
under policies required to be maintained by Lessee hereunder as the result of
the occurrence of an Event of Loss with respect to the Leased Property will be
applied as follows:
(x) so much of such payments remaining after reimbursement of
Lessor for costs and expenses as shall not exceed the Event of Loss
Termination Value required to be paid by Lessee pursuant to Section
10(a) (plus any other amounts of Basic and Supplemental Rent then due
and payable) shall be applied in reduction of Lessee's obligation to
pay such Event of Loss Termination Value (plus any such other amounts
of Basic and Supplemental Rent), if not already paid by Lessee, or, if
already paid by Lessee, shall be applied to reimburse Lessee for its
payment of such Event of Loss Termination Value (plus any such other
amounts of Basic and Supplemental Rent), and the balance, if any, of
such payment remaining thereafter will be paid over to, or retained
by, Lessee; and
(y) if such payments are received with respect to an Aircraft or
Engine under the circumstances contemplated by Section 10(b) or
Section 20, so much of such payments remaining after reimbursement of
Lessor for costs and expenses shall be paid over to, or retained by,
Lessee; provided that Lessee shall have fully performed the terms of
Section 10(b) or Section 20 with respect to the Event of Loss for
which such payments are made.
As between Lessor and Lessee the insurance payments received under
policies required to be maintained by Lessee hereunder with respect to any
property damage loss to the Leased Property or any part thereof not constituting
an Event of Loss with respect thereto will be applied in payment for repairs or
for replacement property in accordance with the terms of Sections 7 and 8
(including the making of down payments), if not already paid for by Lessee (or
to reimburse Lessee for such repairs or replacements already paid for by
Lessee), and any balance remaining after compliance with such sections with
respect to such loss shall be paid to Lessee. Any amount referred to in the
preceding sentence or in clause (x) or (y) of the preceding paragraph which is
payable to Lessee shall not be paid to Lessee if at the time of such payment a
Default or an Event of Default shall have occurred and be continuing, but shall
be held by the Loan Participant, so long as the Mortgage shall be in effect, and
thereafter by Lessor as security for the obligations of Lessee
- 32 -
under this Lease and at such time as there shall not be continuing any such
Default or Event of Default, such amount shall be paid to Lessee.
(c) Reports, etc. On or before the Delivery Date with respect to each
Aircraft, and concurrently with the renewal of each insurance policy (but in no
event less frequently than each calendar year beginning with the year 1995),
Lessee will furnish to Lessor and the Loan Participant a report of an authorized
representative of the insurers, addressed to Lessor and the Participants,
describing in reasonable detail the insurance then carried and maintained on the
Leased Property by Lessee as required hereunder and certifying that such
insurance complies with the terms hereof; provided that all information
contained in such report shall be held confidential by Lessor and the
Participants, and shall not be furnished or disclosed by it to anyone 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 or pursuant to
the request of any regulatory or governmental authority or any auditors of
Lessor addressed to Lessor and the Loan Participant. Lessee will advise Lessor
in writing promptly of any default in the payment of any premium and of any
other act or omission on the part of Lessee which might invalidate or render
unenforceable, in whole or in part, any insurance on the Leased Property or on
any part thereof. Lessee will also advise Lessor in writing at least 30 days
prior to the expiration or termination date of any insurance carried and
maintained on the Leased Property pursuant to this Section 11. In the event that
Lessee shall fail to maintain insurance as herein provided, Lessor may at its
sole option provide such insurance and, in such event, Lessee shall, upon
demand, reimburse Lessor, as Supplemental Rent, for the cost thereof, without
waiver of any other rights Lessor may have.
(d) Insurance by Lessor. Lessor may at its own expense carry insurance
with respect to its interest in the Leased Property, provided that such
insurance does not prevent Lessee from carrying insurance required by this
Section 11 or adversely affect such insurance or the cost thereof. Any insurance
payments received from policies maintained by Lessor shall be retained by Lessor
which maintained such policy without reducing or otherwise affecting Lessee's
obligations hereunder.
Section 12. Inspection. At all reasonable times Lessor or its duly
authorized representative and Avitas, as authorized pursuant to Section 7(d) may
inspect any Aircraft and the books and records of Lessee relative thereto. Upon
the request of Lessor or Avitas, as the case may be, Lessee shall deliver to
Lessor or Avitas, as the case may be, copies or printouts of such logs, manuals
and data, and inspection,
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modification and overhaul records relating to the Aircraft as Lessor or Avitas,
as the case may be, shall specify. Unless an Event of Default shall have
occurred and be continuing, Lessor shall reimburse Lessee for its reasonable
costs in assembling and copying such material. Lessor shall not have a duty to
make any such inspection and Lessor and Avitas shall not incur any liability or
obligation by reason of not making any such inspection.
Section 13. Assignment. Except as otherwise provided in Section 7(b)
hereof, Lessee will not, without prior written consent of Lessor and the Loan
Participant, assign any of its rights hereunder. Lessor agrees that it will not
assign or convey its rights, title and interest on and to this Lease and the
Leased Property, except as contemplated by or provided in the Participation
Agreement and the Trust Agreement. The terms and provisions of this Lease shall
be binding upon and inure to the benefit of Lessor and Lessee and their
respective successors and assigns.
Section 14. Events of Default. The occurrence and continuance of any
Event of Default under the Restructure Agreement.
Section 15. Remedies. Upon the occurrence of any Event of Default in
Section 7(e) or (f) of the Restructure Agreement, the Lease shall be in default
without further act, or notice of any kind, all of which are hereby waived, and
in the case of any other Event of Default, Lessor may, at its option, declare
this Lease Agreement to be in default; and in either case at any time or
thereafter, so long as Lessee shall not have remedied all outstanding Events of
Default, Lessor may do one or more of the following with respect to all or any
part of the Leased Property as Lessor in its sole discretion shall elect, to the
extent permitted by, and subject to compliance with any mandatory requirements
of, applicable law then is effect:
(a) 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 Leased Property, as Lessor may so
demand, to Lessor or its order in the manner and condition required
by, and otherwise in accordance with all the provisions of, Section 5
as if the Leased Property were being returned at the end of the Term,
or Lessor, at its option, may enter upon the premises where all or any
part of the Leased Property is located and take immediate possession
of and remove the same by summary proceedings or otherwise, all
without liability accruing to Lessor for or by reason of such entry or
- 34 -
taking of possession or removing whether for the restoration of damage
to property caused by such action or otherwise, and Lessor may
institute proceedings to foreclose upon or repossess all or any part
of the Leased Property in any jurisdiction where the same may be
located;
(b) sell all or any part of the Leased Property at public or
private sale, as Lessor may determine, or otherwise dispose of, hold,
use, operate, lease to others or keep idle all or any part of the
Leased Property as Lessor, in its sole discretion, may determine, all
free and clear of any rights of Lessee except as hereinafter set forth
in this Section 15 and without any duty to account to Lessee with
respect to such action or inaction or for any proceeds with respect
thereto;
(c) whether or not Lessor shall have exercised, or shall
thereafter at any time exercise, any of its rights under paragraph (a)
or paragraph (b) above with respect to all or any part of the Leased
Property, Lessor, by written notice to Lessee specifying a payment
date which shall be a Lease Period Date and not later than 90 days
from the date of such notice, may cause Lessee to pay to Lessor, and
Lessee shall pay Lessor, in the Lease Period Date specified in such
notice, as liquidated damages for loss of a bargain and not as a
penalty (in lieu of the Basic Rent for the Aircraft due for Lease
Periods commencing after the Lease Period Date specified for payment
in such notice), any unpaid Basic Rent due for Lease Periods prior to
and including the Lease Period commencing with or including the Lease
Period Date specified in such notice plus whichever of the following
amounts Lessor, in its sole discretion, shall specify in such notice
(together with interest on such amount at the Past Due Rate from such
specified payment date until the date of actual payment of such
amount): (i) an amount equal to the excess, if any, of the Termination
Value for the Leased Property or part thereof, computed as of the
Lease Period Date specified in such notice, over the aggregate fair
market rental value (computed as hereafter in this Section provided)
of the Leased Property or part thereof for the remainder of the Term,
after discounting such aggregate fair market rental value to present
worth as of the Lease Period Date specified in such notice at the Past
Due Rate; or (ii) an amount equal to the excess, if any, of the
Termination Value for the Leased Property or part
- 35 -
thereof on the Lease Period Date specified for payment in such notice
over the fair market sales value of the Leased Property or part
thereof (computed as hereafter in this Section provided) as of the
Lease Period Date specified in such notice, in either case, and all
costs and expenses of the Loan Participant, if any, incurred by
unwinding and breaking fixed funds loans in connection with financing
the Leased Property;
(d) in the event Lessor, pursuant to paragraph (b) above, shall
have sold all or any part of the Leased Property, Lessor, in lieu of
exercising its rights under paragraph (c) above with respect to the
Leased Property or part thereof, may, if it shall so elect, cause
Lessee to pay Lessor, and Lessee shall pay to Lessor, on the date of
such sale, as liquidated damages for loss of a bargain and not as a
penalty (in lieu of the Basic Rent for the Aircraft for Lease Periods
after the Lease Period in which such sale occurs), any unpaid Basic
Rent due for Lease Periods up to and including the Lease Period in
which such sale occurs plus the amount of any deficiency between the
net proceeds of such sale and the Termination Value of the Leased
Property or part thereof, computed as of the Lease Period Date for the
Leased Property next following the date of such sale, together with
interest, at the Past Due Rate in the amount of such deficiency from
the Lease Period Date as of which such Termination value is computed
until the date of actual payment, and all costs and expenses of the
Loan Participant, if any, incurred by unwinding and breaking fixed
funds loans in connection with financing the Leased Property;
(e) by notice to Lessee, Lessor may require Lessee to pay on
demand to Lessor and Lessee hereby agrees that it will so pay to
Lessor, immediately upon demand, as liquidated damages for loss of a
bargain and not as a penalty (in lieu of Basic Rent for any Lease
Period commencing after the date of such notice) any and all unpaid
Basic Rent for any Lease Period accrued prior to such notice, plus an
amount equal to Termination Value computed as of the next Lease Period
Date, together with all costs and expenses of the Loan Participant and
the Lessor, if any, incurred by unwinding and breaking fixed funds
loans in connection with financing the Leased Property; and upon such
payment of liquidated damages and the payment of all other Rent then
due hereunder, the Lessor shall proceed to exercise its best efforts
promptly to sell the
- 36 -
Leased property and shall pay over to Lessee the net proceeds of such
sale (after deducting from such proceeds, all costs and expenses
whatsoever incurred by the Lessor in connection therewith and all
other amounts which may become payable to Lessor) up to the amount of
Termination Value actually paid; and/or
(f) Lessor may terminate this Lease Agreement as to all or any
part of the Leased Property, or may exercise any other right or remedy
which may be available to it under applicable law or proceed by
appropriate court action to enforce the terms hereof or to recover
damages for the breach hereof.
For purposes of subparagraphs (c) and (d) above, "Termination Value",
as of any Lease Period Date therein referred to, for any part of the Leased
Property means a portion of the Termination Value, computed as of such Lease
Period Date, which bears the same ratio to such Termination Value as the fair
market sales value of such part bears to the fair market sales value of the
Leased Property (in each case computed as hereafter in this Section provided).
In addition, Lessee shall be liable, except as otherwise provided
above, for any and all unpaid Rent due hereunder before, after or during the
exercise of any of the foregoing remedies and for all reasonable 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 Leased Property
in accordance with the terms of Section 5 or in placing the Leased Property in
the condition and airworthiness required by such Section; provided that if
Lessee is required to return or surrender possession of all or any part of the
Leased Property in accordance with this Section 15 and Lessor does not within
360 days after the date of such return or surrender exercise its rights under
paragraph (c), paragraph (d) or paragraph (e) above with respect to the Leased
Property or part thereof, there shall be deducted from each payment of Basic
Rent becoming due after the expiration of such 360-day period an amount equal to
the quotient obtained by dividing the aggregate fair market rental value
(computed as hereafter in this Section provided) of the Leased Property or part
thereof, for the remainder of the Term after the expiration of such 360-day
period (computed as of the date of such expiration), by the number of Basic Rent
installments remaining after the expiration of such 360-day period to the end of
the Term. For the purpose of paragraph (c) above, and the preceding sentence,
the "aggregate fair market rental value" or the "fair market sales value" of the
Leased
- 37 -
Property or part thereof shall be the value which would be obtained in an
arm's-length transaction between an informed and willing lessee-user or
buyer-user (other than a lessee currently in possession or a used equipment
dealer) 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 specified in an appraisal prepared and delivered in New York City,
New York, mutually agreed to by two recognized independent aircraft appraisers,
one of which appraisers shall be chosen by Lessor and one by Lessee, or, if such
appraisers cannot agree in the amount of such appraisal, an appraisal arrived at
by a third independent appraiser chosen by the mutual consent of such two
appraisers. If either party shall fail to appoint an appraiser within 30 days of
notice by Lessor or if such two appraisers cannot agree on the amount of such
appraisal and fail to appoint a third appraiser within 30 days, then either
party may apply to any court in New York City, New York having jurisdiction to
make such appointment. At any sale of the Leased Property or part thereof
pursuant to this Section 15 any affiliate of Lessor may bid for and purchase
such property. Except as otherwise expressly provided above, no remedy referred
to in this Section 15 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. No express or implied
waiver by Lessor of any Event of Default shall in any way be, or be construed to
be, a waiver of any future or subsequent Event of Default. To the extent
permitted by applicable law, Lessee hereby waives any rights now or hereafter
conferred by statute or otherwise which may require Lessor to sell, lease or
otherwise use the Leased Property or part thereof in mitigation of Lessor's
damages as set forth in this Section 15 or which may otherwise limit or modify
any of Lessor's rights or remedies under this Section 15.
Upon termination of this Lease pursuant to this Section 15, Lessee
hereby appoints Lessor Lessee's irrevocable agent and attorney-in-fact to
execute all documents deemed necessary to release, terminate and void Lessee's
interest in each Aircraft leased hereunder and to file said documents for
recordation with appropriate agencies, provided that an Event of Default has
occurred, and Lessor in its discretion, reasonably exercised, deems use of this
agency necessary to mitigate its damages.
In accordance with the provisions of Section 1110 of Title 11 of the
United States Code, neither the title of Lessor to the Aircraft nor any right of
Lessor or the Loan Participant to take possession of the Aircraft or Spares in
compliance with
- 38 -
the provisions hereof or of the Mortgage shall be affected by the provisions of
Section 362 or 363 of Title 11 of the United States Code, as amended from time
to time, except as provided for in such Section 1110. Lessee hereby waives to
the extent now or hereafter permitted by applicable law, for itself and for its
successors and assigns, any and all rights Lessee or Lessee's successors or
assigns may have under any bankruptcy, insolvency or similar laws, rules or
regulations with respect to the continued possession or use of each Aircraft or
payment of Rent therefor, or with respect to this Lease and Lessee hereby agrees
that, notwithstanding any provision of the Federal Bankruptcy Code, as amended
from time to time, the title or interest of Lessor to such Aircraft and any
right of Lessor to take possession of such Aircraft in compliance with the
provisions of this Lease shall not be affected by the provisions of the Federal
Bankruptcy Code, as amended from time to time.
As security for the due and punctual payment of all Rent under this
Lease and the performance and observance by Lessee of all covenants made by it
under this Lease, any other Operative Document or in any agreement, document or
certificate delivered in connection herewith or therewith, Lessee hereby assigns
and grants to Lessor a security interest in all of Lessee's right, title and
interest in and to any sublease of each Aircraft and any other part of the
Leased Property, together with all renewals of such sublease executed or in
effect from time to time, and all payments, including, without limitation, all
payments of rent, all insurance proceeds (other than public liability insurance
proceeds) and all other amounts due and to become due thereunder. It is
understood and agreed that the payment of rent and all other amounts due and to
become due under any sublease of each Aircraft and any other part of the
Property shall be made to Lessee unless and until Lessor or the Loan Participant
shall have given written notice to the sublessee thereunder that an Event of
Default has occurred and is continuing hereunder, from the time of which notice
payment of such rent and other amounts shall be made to the Loan Participant so
long as the Mortgage shall be in effect and to Lessor after the Mortgage shall
have been discharged pursuant to the terms thereof, in each case, until such
sublessee shall have received written notice from the Loan Participant or
Lessor, as the case may be, that such Event of Default has been cured.
Section 16. Further Assurances and Financial Information; Financial
Covenants; Meetings.
(a) Financial Information. Lessee will promptly and duly execute and
deliver to Lessor such further documents and assurances and take such further
action as Lessor or the Loan Participant may from time to time reasonably
request in order
- 39 -
more effectively to carry out the intent and purpose of this Lease and to
establish and protect the rights and remedies created or intended to be created
in favor of Lessor hereunder, including, without limitation, the execution and
delivery of supplements or amendments hereto, in recordable form, subjecting to
this Lease any replacement engine and the recording or filing of counterparts
hereof, in accordance with the laws of such jurisdictions as Lessor or the Loan
Participant may from time to time deem advisable. The Lessee at its own expense
and without need of any prior request from Lessor or the Loan Participant, shall
take such action as may be reasonably necessary (including any action specified
in the preceding sentence), or as Lessor or the Loan Participant shall
reasonably request, in order to maintain the perfection of any security
interests provided for hereunder and/or under the Participation Agreement.
Lessee also agrees to furnish Lessor and the Loan Participant the following:
(i) any financial statements, reports or other financial information
that Lessee files with the Securities and Exchange Commission, to be
delivered to Lessor and the Loan Participant concurrently with the delivery
of such information to the holders of the 13 1/2% Senior Notes of Evergreen
International Aviation, Inc.; and
(ii) with reasonable promptness, such other data and information as
from time to time may be reasonably requested by Lessor or the Loan
Participant.
(b) Financial Covenants. Lessee agrees and covenants throughout the
term of this Lease and so long as the Note remain outstanding, the following:
(i) Consolidated Tangible Net Worth. Lessee, Evergreen and the
Consolidated Subsidiaries at all times shall have and maintain an
aggregate level of consolidated tangible net worth of not less than
Thirty Million Dollars ($30,000,000). For purposes hereof, the term
"tangible net worth" shall mean an amount equal to stockholders'
equity less intangibles, all as determined in accordance with
generally accepted accounting principles, consistently applied.
(c) Meetings. Upon the request of the Loan Participant, Lessee shall
schedule quarterly meetings at Lessee's offices or such other place may be
mutually agreed between senior management executives and officers of Lessee,
Evergreen and the Consolidated Subsidiaries at such times as may be mutually
convenient for the Loan Participant and such executives and officers. The
purpose of such meetings shall be for discussions relating, but not limited, to
(i) financial performance by
- 40 -
Lessee, Evergreen and the Consolidated Subsidiaries, (ii) cash flow performance
by Lessee, Evergreen and the Consolidated Subsidiaries, (iii) liquidity of
Lessee, and (iv) capital resources of Lessee, Evergreen and the Consolidated
Subsidiaries, in each case as affected by areas of operation of Lessee's
business.
Section 17. Notices. All notices required under the terms and
provisions hereof shall be by facsimile, shall become effective when received,
and shall be confirmed in writing mailed by regular mail postage prepaid,
addressed (i) if to Lessee, at 3850 Three Mile Lane, McMinnville, Oregon 97128,
telecopier no. (503) 434-4217, attention: Corporate Secretary, or to such other
address as Lessee shall from time to time designate in writing to Lessor, (ii)
if to Lessor, at Rodney Square North, 1100 North Market Street, Wilmington,
Delaware 19890, telecopier no. (302) 651-8882, attention: Corporate Trust
Administration, or to such other address as Lessor shall from time to time
designate in writing to Lessee, and (iii) if to the Loan Participant, care of
Oaktree Capital Management L.L.C., 550 South Hope Street, 22nd Floor, Los
Angeles, California 90071, telecopier no. (213) 694-1599, attention: Kenneth
Liang, Esq., Senior Vice President, or such other address as the Loan
Participant shall from time to time designate in writing to Lessee.
Section 18. No Set-off, Counterclaim, etc. All Rent shall be paid by
Lessee to Lessor in funds of the type and in the manner specified in Section
3(c). Lessee's obligation to pay all Rent payable hereunder shall be absolute
and unconditional and shall not be affected by any circumstance, including,
without limitation, (i) any set-off, counterclaim, recoupment, defense or other
right which Lessee may have against Lessor or anyone else for any reason
whatsoever, including, without limitation, any breach by Lessor of its
warranties contained in Section 4(a) hereof and Section 8 of the Participation
Agreement, (ii) any defect in the title, airworthiness, condition, design,
operation, or fitness for use of, or any damage to or loss or destruction of,
any Aircraft or any other part of the Leased Property, or any interruption or
cessation in the use or possession thereof by Lessee for any reason whatsoever,
(iii) any insolvency, bankruptcy, reorganization or similar proceedings by or
against Lessee, (iv) Lessee at any time having immunity from suit, prejudgment
attachment, attachment in aid of execution or execution on the grounds of
sovereignty or otherwise, which immunity, if any, Lessee hereby expressly
waives, or (v) any other circumstance, happening, or event whatsoever, whether
or not similar to any of the foregoing. If for any reason whatsoever this Lease
shall be terminated in whole or in part by operation of law or otherwise except
as specifically provided in Sections 9 and 10 herein, Lessee nonetheless agrees
to pay to
- 41 -
Lessor all Supplemental Rent as provided hereunder and an amount equal to each
Basic Rent payment at the time such payment would have become due and payable in
accordance with the terms hereof had this Lease not been terminated in whole or
in part. Lessee hereby waives, and hereby agrees to waive at any future time at
the request of Lessor, to the extent now or then permitted by applicable laws,
any and all rights which it may now have or which at any time hereafter may be
conferred upon it, by statute or otherwise, to terminate, cancel, quit or
surrender this Lease except in accordance with the express terms hereof. Each
payment of Rent made by Lessee to Lessor shall be final as to Lessor and Lessee.
Lessee will not seek to recover all or any part of any such payment of Rent from
Lessor for any reason whatsoever.
Section 19. Purchase and Renewal Option.
(a) Upon not less than 180 days' prior written notice from Lessee to
Lessor, Lessee may, on the last Business Day of the Term for the Leased Property
(provided that on such date no Event of Default hereunder shall have occurred
and be continuing and that the last payment of Rent required to be paid
hereunder on such date shall have been made), purchase all or any portion of the
Leased Property from Lessor by paying to Lessor in cash on such day an amount
equal to the then fair market sales value of such Leased Property. For the
purpose of this Section 19(a), "fair market sales value" of Leased Property
shall be determined on the basis set forth in Section 15. Any sale of Leased
Property by Lessor to Lessee pursuant to this Section 19 (a) shall be made
without any recourse to or warranty of Lessor whatsoever, except as to its own
acts.
(b) Provided that this Lease has not been terminated and provided that
the Note has been paid in full and no Event of Default shall have occurred and
be continuing hereunder, Lessee shall have the option to extend the term of this
Lease with respect to all or any portion of the Leased Property on the date this
Lease expires (the "Expiration Date") with respect to such Leased Property for a
period of ten months begining on the Expiration Date, at a rental equal to the
Fair Rental Value thereof, determined as of the Expiration Date for such Leased
Property.
(c) Not less than 90 nor more than 180 days prior to the Expiration
Date for such Leased Property, Lessee may indicate, by written notice to Lessor
and the Loan Participant, Lessee's interest in exercising Lessee's lease
extension option described above, which notice shall set forth Lessee's estimate
of the Fair Rental Value of such Leased Property as of the Expiration Date.
After a determination of the Fair Rental Value of such Leased Property has been
made in accordance with
- 42 -
paragraph (c) hereof, Lessee may exercise its option to extend the term of this
Lease with respect to such Leased Property for the Fair Rental Value thereof by
delivering irrevocable written notice of such exercise to Lessor and the Loan
Participant not less than 120 days prior to such Expiration Date.
(d) Except as otherwise provided in this Lease, whenever used herein,
the term "Fair Rental Value" for the Leased Property shall mean an amount
determined on the basis of, and shall be equal in amount to, the value which
would be obtained in an arm's-length transaction between an informed and willing
lessee under no compulsion to lease and an informed and willing lessor under no
compulsion to lease. Except as otherwise provided herein, whenever such Fair
Rental Value is required to be determined under this Lease it shall be
determined by the mutual agreement of Lessor and Lessee in accordance with the
preceding paragraph and the consent of the Loan Participant, which consent shall
not be unreasonably withheld.
Section 20. Substitution of Collateral. Notwithstanding anything
contained herein or in the Mortgage to the contrary, Lessee may, at any time and
from time to time, substitute for any Leased Property as determined by Loan
Participant subject to this Lease, cash and/or other collateral having a value
at least equal to the Leased Property being substituted and otherwise being
reasonably acceptable to the Loan Participant (taking into account the value and
utility of the proposed replacement collateral, the expected value and utility
of the proposed replacement collateral during the remaining term and the at the
maturity of the obligation, the similarity of the proposed replacement
collateral to any remaining original collateral and such other factors as the
Loan Participant reasonably considers to be relevant to its determination);
provided that the Loan Participant shall have received the following:
(a) A written request from the Lessee, requesting such release
and describing the Airframe or Engine so to be released;
(b) A certificate signed by a senior officer of the Lessee
stating the following:
(i) a description of the Airframe or Engine to be released,
which shall be identified by manufacturer's serial number;
(ii) a description of the replacement airframe or engine to
be received as consideration for the Airframe or Engine to be
released;
- 43 -
(iii) that such release, in the opinion of such senior
officer, will not impair the security of this Lease in contravention
of the provisions of this Lease; and
(c) The appropriate instruments transferring title to the
replacement airframe or engine to be received as consideration for the Airframe
or Engine to be released to the Lessee, subjecting such replacement airframe or
engine to the Lease and subjecting such replacement airframe engine to the lien
of the Mortgage including, but not limited to, the execution, delivery and
filing with the FAA of a Lease Supplement or a Trust Agreement and Mortgage
Supplement covering such replacement airframe or engine, and an opinion of FAA
counsel in form and substance acceptable to Loan Participant with respect to any
substitution or release of an Airframe.
Section 21. Assignee Lessors. Lessee agrees that in the case of any
assignment by Lessor of its interest herein and of the Leased Property, pursuant
to the terms of the Trust Agreement, such assignee Lessor shall, upon written
notice by such assignee Lessor to Lessee, succeed to all the rights, powers and
title of Lessor hereunder and shall be deemed to be Lessor and the owner of the
Leased Property for all purposes hereof without the necessity of any consent or
approval by Lessee and without in any way altering the terms of this Lease or
Lessee's obligations hereunder. One such assignment shall not exhaust the right
to reassign such interest and retransfer any of the Leased Property, pursuant to
the Trust Agreement, but such right may be exercised repeatedly as long as this
Lease shall be in effect.
Section 22. Security for Lessor's Obligation to Holders of the Note.
In order to secure the indebtedness evidenced by the Note and the promissory
note evidencing Lessee's indebtedness to Loan Participant under the
Concord/ABN-AMRO Loan Agreement, Lessor pursuant to the Mortgage and the Junior
Mortgage has granted to the Loan Participant a security interest in all of its
right, title and interest hereunder (except as therein specified). Lessee
acknowledges receipt of a copy of the Mortgage and consents to all the terms
thereof.
In order to secure the indebtedness evidenced by the Concord/ABN-AMRO
Loan Agreement and the promissory note issued thereunder, Lessor pursuant to the
Junior Mortgage has granted to the Loan Participant a second security interest
in all of its right, title and interest hereunder (except as therein specified
and subject only to the Mortgage). Lessee acknowledges receipt of a copy of the
Junior mortgage and consents to all the terms thereof. To the extent, if any,
that this Lease constitutes chattel paper (as such term is defined in the
Uniform Commercial
- 44 -
Code as in effect in any applicable jurisdiction) no security interest in this
Lease may be created through the transfer or possession of any counterpart other
than the original counterpart, which shall be identified as the counterpart
marked "Original" on its front and on each counterpart signature page. All other
counterparts hereof shall be marked either "Duplicate Original" or "Duplicate".
Section 23. Lessor's Right to Perform for Lessee. If Lessee fails to
make any payment of Supplemental Rent required to be made by it hereunder or
fails to perform or comply with any of its agreements contained herein, Lessor
may itself make such payment or perform or comply with such agreement and the
amount of such payment and the amount of the reasonable expenses of Lessor
incurred in connection with such payment for the performance of or compliance
with such agreement, as the case may be, together with interest thereon at the
Past Due Rate, shall be deemed Supplemental Rent, payable by Lessee upon demand.
Section 24. Service of Process; Waiver of Immunities. Lessee (a)
hereby irrevocably submits itself to the nonexclusive jurisdiction of the
Supreme Court of the State of New York, New York County, of the United States of
America, and to the jurisdiction of the United States District Court for the
Southern District of New York, for the purposes of any suit, action or other
proceeding arising out of this Lease or the subject matter hereof or any of the
transactions contemplated hereby brought by Lessor or its successors or assigns,
(b) hereby irrevocably agrees that all claims in respect of such action or
proceeding may be heard and determined in such New York State court or, to the
fullest extent permitted by law, in such Federal court, and (c) to the extent
that Lessee has or hereafter may acquire any immunity from jurisdiction of any
court or from any legal process, hereby waives such immunity and agrees not to
assert, by way of motion, as a defense, or otherwise, in any such suit, action
or proceeding, any claim that it is not personally subject to the jurisdiction
of the above-named courts, that it is immune from any legal process (whether
through service or notice, attachment prior to judgment, attachment in aid of
execution, execution or otherwise) with respect to itself or its property, 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 Lease or the
subject matter hereof may not be enforced in or by such court. Lessee hereby
generally consents to service of process at its offices at 3850 Three Mile Lane,
McMinnville, Oregon 97128, and additionally irrevocably designates and appoints
CT Corporation System, with offices on the date hereof at 818 Seventh Street,
Suite 1004, Los Angeles, California 90017 (hereinafter in this Section 24 called
the "Agent"), as its Agent to receive service of process in such
- 45 -
action, suit or proceeding, it being agreed that service of process upon such
Agent shall constitute valid service upon Lessee or its successors or assigns.
Lessee agrees that (x) the sole responsibilities of the Agent shall be (i) to
receive such process, (ii) to send a copy of any such process so received to
Lessee, by registered airmail, return receipt requested, at the address listed
for Lessee in Section 17 hereof, or at the last address filed in writing by
Lessee with the Agent, and (iii) to give prompt telegraphic notice of receipt
thereof to Lessee at such address and (y) the Agent shall have no responsibility
for the receipt or nonreceipt by Lessee of such process, nor for any performance
or nonperformance by Lessee or Lessor or their successors or assigns. Lessee
hereby agrees to pay to the Agent such compensation as shall be agreed upon from
time to time for services hereunder. Lessee further agrees that a final judgment
against Lessee in any such action or proceeding shall be conclusive, and may be
enforced in other jurisdictions by suit on the judgment or in any other manner
provided by law, a certified or true copy of which final judgment shall be
conclusive evidence of the fact and of the amount of any indebtedness or
liability of Lessee therein described; provided that nothing in this Section 24
shall affect the right of the Lessor or its successors or assigns to serve legal
process in any other manner permitted by law or affect the right of the Lessor
or its successors or assigns to bring any action or proceeding against Lessee or
its property in the courts of other jurisdictions. Lessee further covenants and
agrees that so long as this Lease shall be in effect, Lessee shall maintain a
duly appointed agent for the service of summonses and other legal processes in
Los Angeles, California.
Section 25. Ownership by Lessor; Lessee's Quiet Enjoyment. Each
Aircraft and each other part of the Leased Property is and shall at all times
remain the sole and exclusive property of Lessor. The only interest Lessee shall
have in any Aircraft and any other part of the Leased Property is that of a
lessee hereunder. It is understood and agreed by Lessee and Lessor that, so long
as the Mortgage shall be in effect, the rights of Lessee and Lessor under this
Lease shall be subject and subordinate to the rights of the Loan Participant
under the Mortgage, provided that during the Term, so long as no Event of
Default has occurred and is continuing hereunder, Lessee shall be entitled to
possession, use and quiet enjoyment of each Aircraft and each other part of the
Leased Property hereunder; provided that the foregoing shall not be deemed to
have modified the obligations of Lessee pursuant to Section 19 hereof, which
obligations are absolute and unconditional and, provided, further that neither
Lessor nor the Loan Participant shall be responsible for the actions of any
Person (other than itself) which
- 46 -
interrupts in any manner Lessee's use of any Aircraft or any other part of the
Leased Property.
Section 26. Miscellaneous.
(a) Any provision of this Lease which is prohibited or unenforceable
in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent
of such prohibition or unenforceability without invalidating the remaining
provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction. (The preceding sentence shall not be deemed to be included
herein for the purposes of validating (i) representations, (ii) warranties and
(iii) opinions, in each case as to the legal, valid and binding effect and
enforceability hereof.) To the extent permitted by applicable law, Lessee hereby
waives any provision of law which renders any provision hereof prohibited or
unenforceable in any respect.
(b) No term or provision of this Lease may be changed, waived,
discharged or terminated orally, but only by an instrument in writing signed by
both parties hereto and consented to by the Loan Participant.
(c) This Lease shall constitute an agreement of lease, and nothing
herein shall be construed as conveying to Lessee any right, title or interest in
the Leased Property except as a lessee only.
(d) The Section and paragraph headings in this Lease and the table of
contents are for convenience of reference only and shall not modify, define,
expand or limit any of the terms or provisions hereof and all references herein
to numbered sections, unless otherwise indicated, are to sections of this Lease.
(e) THIS LEASE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH,
THE LAWS OF THE STATE OF NEW YORK (WITHOUT REGARD TO ANY CONFLICT OF LAWS RULE
WHICH MIGHT RESULT IN THE APPLICATION OF THE LAWS OF ANY OTHER JURISDICTION).
EACH OF THE PARTIES HERETO HEREBY SUBMITS TO THE NONEXCLUSIVE JURISDICTION OF
THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK AND ANY
NEW YORK STATE COURT SITTING IN NEW YORK, NEW YORK, FOR THE PURPOSES OF ALL
LEGAL PROCEEDINGS ARISING OUT OF OR RELATING TO THIS LEASE OR ANY TRANSACTION
DESCRIBED IN THIS LEASE. EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES,
TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY OBJECTION THAT IT MAY
NOW OR HEREAFTER HAVE TO THE LAYING OF THE VENUE OF ANY SUCH PROCEEDING BROUGHT
IN SUCH A COURT AND ANY CLAIM THAT
- 47 -
ANY SUCH PROCEEDING BROUGHT IN SUCH A COURT HAS BEEN BROUGHT IN AN INCONVENIENT
FORUM.
(f) This Lease and the covenants and agreements contained herein shall
be binding upon, and inure to the benefit of, Lessor and its successors and
assigns and, subject to the provisions of Section 8(o) of the Participation
Agreement, its successors and assigns.
(g) This Lease, together with the Restructure Agreement and the other
Operative Documents, constitutes the entire agreement with the parties with
respect to the subject matter hereof. This Lease amends, restates and supersedes
the Original Lease in all respects.
(h) This Lease may be executed by the parties hereto in separate
counterparts, each of which when so executed and delivered shall be an original,
but all such counterparts shall together constitute but one and the same
instrument.
- 48 -
IN WITNESS WHEREOF, Lessor and Lessee have each caused this Second
Amended and Restated Lease Agreement to be duly executed as of the day and year
first above written.
WILMINGTON TRUST COMPANY, not
in its individual capacity,
but solely as Owner Trustee,
as Lessor,
By /s/ Thomas P. Larkans
--------------------------
Name: Thomas P. Larkans
Title: Vice President
EVERGREEN INTERNATIONAL
AIRLINES, INC.,
as Lessee,
By /s/ Bob Cantrell
--------------------------
Name: Bob Cantrell
Title: Treasurer
- 49 -
SCHEDULE 1 TO SECOND AMENDED AND RESTATED
LEASE AGREEMENT
Original Lease
Lease Agreement dated as of February 25, 1986 between Wilmington Trust
Company, as owner trustee under Trust Agreement dated as of February 25, 1986,
as lessor, and Evergreen International Airlines, Inc., as lessee, which was
recorded by the Federal Aviation Administration on April 4, 1986 and assigned
Conveyance No. E87496, as supplemented, amended and amended and restated by the
following described instruments:
Date of FAA FAA
Instrument Instrument Recording Date Conveyance No.
- ----------------------- ---------- -------------- --------------
Lease Supplement No. 1 03/18/86 04/04/86 E87496
Amendment Number as of
One 07/31/87 08/06/87 B75125
Amended and Re-
stated Lease
Agreement between
Wilmington Trust
Company, as owner
trustee under
Trust Agreement
dated as of
February 25, 1986,
as amended and
restated, as
lessor, and Ever-
green International
Airlines, Inc., as of
as lessee 08/31/87 10/15/87 L54296
Lease Supplement No. 2 08/31/87 10/15/87 L54296
Lease Supplement No. 3 08/31/87 10/15/87 L54296
Amendment Number as of
One 08/31/88 01/18/89 S81666
Lease Supplement No. 4 01/12/89 01/18/89 S81669
Date of FAA FAA
Instrument Instrument Recording Date Conveyance No.
- ---------- ---------- -------------- --------------
Lease Supplement No. 5 01/19/89 01/20/89 P89172
Lease Supplement No. 6 02/03/89 02/06/89 Y31971
Amendment Number Two as of
02/20/90 03/02/90 M22456
Lease Supplement No. 7 04/27/90 05/14/90 V80359
Amendment Number Three as of
11/09/90 11/26/90 I46618
Lease Supplement No. 8 08/13/93 08/24/93 ZZ003954
Lease Supplement No. 9 12/31/93 03/03/94 JJ10762
Lease Supplement No. 10 03/08/95 06/02/95 E19709
Original Mortgage
Mortgage and Security Agreement dated as of February 25, 1986 between
Wilmington Trust Company, as owner trustee under Trust Agreement dated as of
February 25, 1986, as mortgagor, and Security Pacific Equipment Finance (Europe)
Inc., as mortgagee, which was recorded by the Federal Aviation Administration on
April 4, 1986 and assigned Conveyance No. E87495, as supplemented, amended
and amended and restated by the following described instruments:
Date of FAA FAA
Instrument Instrument Recording Date Conveyance No.
- ---------- ---------- -------------- --------------
Trust Agreement and
Mortgage Supplement 03/18/86 04/04/86 E87495
Date of FAA FAA
Instrument Instrument Recording Date Conveyance No.
- ---------- ---------- -------------- --------------
Amended and Restated
Mortgage and Security
Agreement between
Wilmington Trust
Company, as owner
trustee under Trust
Agreement dated as of
February 25, 1986, as
amended and restated,
as mortgagor, and
Security Pacific
Equipment Finance
(Europe) Inc., as of
as mortgagee 08/31/87 10/15/87 L54295
Trust Agreement and
Mortgage Supplement
No. 2 08/31/87 10/15/87 L54295
Trust Agreement and
Mortgage Supplement
No. 3 08/31/87 10/15/87 L54295
FAA Assignment and
Assumption between
Security Pacific
Equipment Finance
(Europe) Inc., as
assignor, and Security
Pacific Equipment
Finance Inc., as as of
assignee 11/22/88 12/01/88 R40411
Amendment Number as of
One 08/31/88 01/18/89 S81665
Trust Agreement and
Mortgage Supplement
No. 4 01/12/89 01/18/89 S81668
Trust Agreement and
Mortgage Supplement
No. 5 01/19/89 01/20/89 P89171
Trust Agreement and
Mortgage Supplement
No. 6 02/03/89 02/06/89 Y31970
Amendment Number as of
Two 02/20/90 03/02/90 M22455
Date of FAA FAA
Instrument Instrument Recording Date Conveyance No.
- ---------- ---------- -------------- --------------
Trust Agreement and
Mortgage Supplement
No. 7 04/27/90 05/14/90 V80358
Amendment Number as of
Three 11/09/90 11/26/90 I46617
Amendment Number as of
Four 06/22/92 08/04/92 JJ05785
Trust Agreement and
Mortgage Supplement
No. 8 08/13/93 09/09/93 ZZ004051
Trust Agreement and
Mortgage Supplement
No. 9 12/31/93 03/03/94 JJ10761
Assignment Agreement
from Security Pacific
Equipment Finance Inc.,
as assignor, and TCW
Special Credits Trust,
TCW Special Credits
Fund IIIb, TCW Special
Credits Trust IIIb,
Delaware State
Employees Retirement
Fund and TCW Special
Credits Fund III, as
assignee, acting
through TCW Special
Credits, as general
partner, attorney-in-
fact or investment as of
manager 05/31/94 07/26/94 S093052
Trust Agreement and
Mortgage Supplement
No. 10 03/08/95 06/02/95 E19708
EXHIBIT A
to
Second Amended and Restated
Lease Agreement
THE RIGHTS OF LESSOR UNDER THIS LEASE SUPPLEMENT AND THE AIRCRAFT
LEASE AGREEMENT REFERRED TO BELOW AND IN EACH AIRCRAFT COVERED HEREBY
HAVE BEEN ASSIGNED TO, AND ARE SUBJECT TO A SECURITY INTEREST IN FAVOR
OF, TCW SPECIAL CREDITS, AS AGENT, UNDER A MORTGAGE AND SECURITY
AGREEMENT DATED AS OF FEBRUARY 25, 1986, AS AMENDED AND RESTATED BY AN
AMENDED AND RESTATED MORTGAGE AND SECURITY AGREEMENT DATED AS OF
AUGUST 31, 1987, AND AS FURTHER AMENDED AND RESTATED BY A SECOND
AMENDED AND RESTATED MORTGAGE AND SECURITY AGREEMENT DATED AS OF
SEPTEMBER 29, 1995. SEE SECTION 22 HEREOF FOR INFORMATION CONCERNING
THE RIGHTS OF HOLDERS OF THE VARIOUS COUNTERPARTS. THIS LEASE
SUPPLEMENT HAS BEEN EXECUTED IN COUNTERPARTS. SEE SECTION 10 HEREOF
FOR INFORMATION CONCERNING THE RIGHTS OF HOLDERS OF THE VARIOUS
COUNTERPARTS.
LEASE SUPPLEMENT No.
-----
Under Lease Agreement
dated as of February 25, 1986
as amended by
Amended and Restated Lease Agreement
dated as of August 31, 1987
as further amended by
Second Amended and Restated Lease Agreement
dated as of September 29, 1995
LEASE SUPPLEMENT No. , dated , 19 ,
---------- --------------------- ---
between WILMINGTON TRUST COMPANY, not in its individual capacity but solely as,
Trustee ("Lessor"), and EVERGREEN INTERNATIONAL AIRLINES, INC. ("Lessee").
WITNESSETH:
Lessor and Lessee have heretofore entered into that certain Lease
Agreement dated as of February 25, 1986, as amended by Amended and Restated
Lease Agreement dated as of August 31, 1987 and as further amended by Second
Amended and Restated Lease Agreement dated as of September 29, 1995, relating to
and certain other property (herein called the
- -------------------
"Lease Agreement" and the defined terms therein being hereinafter used with the
same meanings). The Lease Agreement provides for the execution and delivery of
one or more Lease Supplements for the purpose of leasing the Leased Property
under the Lease Agreement as and when delivered by Lessor to Lessee in
accordance with the terms thereof. Except as otherwise defined herein, the terms
used herein shall have the same meanings as set forth in the Lease Agreement.
*The Lease relates to the engines and other property described below,
and a counterpart of the Lease is attached hereto and made a part hereof, and
this Lease Supplement, together with such attachments, is being filed for
recordation on the date hereof with the Federal Aviation Administration as one
document.
**The Lease relates to the engines and other property described below,
and a counterpart of the Lease which was attached to and made a part of Lease
Supplement No. dated , 19 , has been recorded by the Federal
-- ------------ ---
Aviation Administration as more particularly described on Annex I attached
hereto.
NOW, THEREFORE, in consideration of the premises and other good and
sufficient consideration, Lessor and Lessee hereby agree as follows:
*1. Lessor hereby delivers and leases to Lessee under the
Lease Agreement, and Lessee hereby accepts and leases from Lessor under the
Lease Agreement, the following described Boeing 747-273C aircraft (the
"Delivered Aircraft") which Delivered Aircraft as of the date hereof consists of
the following components:
(i) airframe: U.S. Registration No. ;
-----------------------
manufacturer's serial no. ;
------------------
(ii) four (4) Pratt & Whitney engines bearing,
-------------
respectively, manufacturer's serial nos. , , and
------ ------ ------
(each of which engines has 750 or more rated takeoff horsepower
------
or the equivalent of such horsepower); and
- ----------
* This language for Lease Supplement No. 1.
** This language for all other Lease Supplements.
- 2 -
(iii) all appliances, parts, instruments, appurtenances,
accessories, furnishings or other equipment or property installed on
or attached to said airframe and engines.
*2. Lessor hereby delivers and leases to Lessee under the Lease
Agreement, and Lessee hereby accepts and leases from Lessor under the Lease
Agreement, the following property:
(i) one (1) used Pratt & Whitney Model engine bearing
manufacturer's serial no. (which engine has 750 or more rated takeoff
horsepower or the equivalent of such horsepower) (the "Spare Engine");
and
**1. Lessor hereby delivers and leases to Lessee under the Lease
Agreement, the following described McDonnell Douglas DC-9-33F aircraft (the
"Delivered Aircraft") which Delivered Aircraft as of the date hereof consists of
the following components:
(i) airframe: U.S. Registration No. ; manufacturer's
----------
serial no. ;
----------
(ii) two (2) Pratt & Whitney JT8D-9A Series engines bearing,
respectively, manufacturer's serial nos. and
---------- ----------
(each of which engines has 750 or more rated takeoff horsepower or the
equivalent of such horsepower); and
(iii) all appliances, parts, instruments, appurtenances,
accessories, furnishings or other equipment or property installed on
or attached to said airframe and engines.
3. The Delivery Date of the Delivered Aircraft is the date of this
Lease supplement set forth in the opening paragraph hereof.
4. The Basic Term for the Leased. Property shall commence on the
Delivery Date and shall continue for * .
----
5. Lessee hereby confirms to Lessor that the Delivered Aircraft and
each Engine installed thereon have been duly marked in accordance with the terms
of Section 7(c) of the Lease Agreement and that Lessee has accepted the
Delivered Aircraft and for all purposes hereof and of the Lease Agreement as
being airworthy, in accordance with specifications, in good working order and
repair and without defect or inherent vice in title, condition, design,
operation or fitness for use, whether or not discoverable by Lessee as of the
date hereof, and free and
- 3 -
clear of all Liens except Lessor's Liens; provided that nothing contained herein
or in the Lease Agreement shall in any way diminish or otherwise affect any
right Lessee or Lessor may have with respect to the Delivered Aircraft against
the seller or the manufacturer thereof, or any subcontractor or supplier of the
seller or the manufacturer thereof, under the applicable Purchase Agreement or
otherwise.
6. All of the terms and provisions of the Lease Agreement are hereby
incorporated by reference in this Lease Supplement to the same extent as if
fully sent forth herein.
7. This Lease Supplement may be executed in any number of counterparts
and by the different parties hereto on separate counterparts. The single
executed original of this Lease Supplement marked "Original" shall be the
"Original" and all other counterparts hereof shall be duplicates and be marked
"Duplicate" or "Duplicate Original". To the extent that this Lease Supplement
constitutes chattel paper, as such term is defined in the Uniform Commercial
Code as in effect in any applicable jurisdiction, no security interest in this
Lease Supplement may be created through the transfer or possession of any
counterpart other than that marked "Original".
8. Lessee is an air carrier certified under 49 U.S.C. (S) 44705 of the
Federal Aviation Act.
9. This Lease Supplement has been negotiated and delivered in the
State of New York and shall be governed by and construed according to the laws
of the State of New York.
- 4 -
IN WITNESS WHEREOF, Lessor and Lessee have caused this Lease
Supplement to be duly executed as of the day and year first above written.
WILMINGTON TRUST COMPANY, not
in its individual capacity,
but solely as Owner, Trustee,
as Lessor,
By
--------------------------
Title:
EVERGREEN INTERNATIONAL
AIRLINES, INC.,
as Lessee,
By
--------------------------
Title:
- 5 -
EXHIBIT B
to
Second Amended and Restated
Lease Agreement
Basic Rent Schedule*
A. 747 Leased Property
Amount of Basic Rent
Lease Payment Payable on a Lease
Date Period Date
- ----------------------- --------------------
(1) September 29, 1995 $ 5,000,000.00
(2) October 29, 1995 $ 350,000.00
(3) November 29, 1995 $ 350,000.00
(4) December 29, 1995 $ 350,000.00
(5) January 29, 1996 $ 350,000.00
(6) February 29, 1996 $ 350,000.00
(7) March 29, 1996 $ 350,000.00
(8) April 29, 1996 $ 350,000.00
(9) May 29, 1996 $ 350,000.00
(10) June 29, 1996 $ 350,000.00
(11) July 29, 1996 $ 350,000.00
(12) August 29, 1996 $ 350,000.00
(13) September 29, 1996 $ 350,000.00
(14) October 29, 1996 $ 350,000.00
- ----------
* The amount of Basic Rent shall be adjusted by an amount determined from
time to time by the Lessee and consented to by the Loan Participant necessary to
equal the income tax payments to be paid by the Owner Participant on the amount
of each month's Basic Rent.
(15) November 29, 1996 $ 350,000.00
(16) December 29, 1996 $ 350,000.00
(17) January 29, 1997 $ 350,000.00
(18) February 28, 1997 $ 350,000.00
(19) March 29, 1997 $ 350,000.00
(20) April 29, 1997 $ 350,000.00
(21) May 29, 1997 $ 350,000.00
(22) June 29, 1997 $ 350,000.00
(23) July 29, 1997 $ 350,000.00
(24) August 29, 1997 $ 350,000.00
(25) September 29, 1997 $ 350,000.00
(26) October 29, 1997 $ 350,000.00
(27) November 29, 1997 $ 350,000.00
(28) December 29, 1997 $ 350,000.00
(29) January 29, 1998 $ 350,000.00
(30) February 28, 1998 $ 350,000.00
(31) March 29, 1998 $ 350,000.00
(32) April 29, 1998 $ 350,000.00
(33) May 29, 1998 $ 350,000.00
(34) June 29, 1998 $ 350,000.00
(35) July 29, 1998 $ 350,000.00
(36) August 29, 1998 $ 350,000.00
(37) September 29, 1998 $ 350,000.00
(38) October 29, 1998 $ 350,000.00
(39) November 29, 1998 $ 350,000.00
- 2 -
(40) December 29, 1998 $ 350,000.00
(41) January 29, 1999 $ 350,000.00
(42) February 28, 1999 $ 350,000.00
(43) March 29, 1999 $ 350,000.00
(44) April 29, 1999 $ 350,000.00
(45) May 29, 1999 $ 350,000.00
(46) June 29, 1999 $ 350,000.00
(47) July 29, 1999 $ 350,000.00
(48) August 29, 1999 $ 350,000.00
(49) September 29, 1999 $26,955,000.00**
B. DC-9 Leased Property
Basic Rent for each DC-9 Leased Property shall be an amount to be
determined from time to time by Lessee and Lessor.
- ----------
** This amount shall be reduced by the amount of any prepayments of Basic
Rent, but shall in no event be less than the aggregate unpaid principal amount
of the Note outstanding together with any accrued and unpaid interest thereon.
- 3 -
EXHIBIT C
to
Second Amended and Restated
Lease Agreement
EVENT OF LOSS TERMINATION VALUE SCHEDULE
Leased Property Termination Value
- --------------- -----------------
747 Leased Property 100% of the amount necessary to pay in full as of such
Lease Period Date (after giving effect to the installment
of Basic Rent due on that date), the aggregate unpaid
principal amount of the Note outstanding at the close of
business as of such Lease Period Date together with any
accrued and unpaid interest thereon.
DC-9 Leased Property For each of the DC-9 Leased Property, 10% of the amount
necessary to pay in full as of such Lease Period Date
(after giving effect to the installment of Basic Rent due
on that date), the aggregate unpaid principal amount of
the Note outstanding at the close of business as of such
Lease Period Date together with any accrued and unpaid
interest thereon.
EXHIBIT D
to
Second Amended and Restated
Lease Agreement
DESCRIPTION OF AIRFRAME AND ENGINES
-----------------------------------
747 Airframe
- ------------
One (1) Boeing 747-273C aircraft bearing manufacturer's serial no. 20651
and U.S. Registration No. N471EV
747 Engines
- -----------
Four (4) Pratt & Whitney JT9D-7A, manufacturer's serial nos. P662205CN,
P662254, P685607 and P689542
Dc-9 Airframe
- -------------
one (1) McDonnell Douglas DC-9-33F aircraft bearing manufacturer's serial
no. 47191 and U.S. Registration No. N933F
One (i) McDonnell Douglas DC-9-33F aircraft bearing manufacturer's serial
no. 47194 and U.S. Registration No. N944F
One (1) McDonnell Douglas DC-9-33F aircraft bearing manufacturer's serial
no. 47279 and U.S. Registration No. N945F
DC-9 Engines
- ------------
Five (5) Pratt & Whitney JT8D-9 aircraft engines bearing manufacturer's
serial nos. 665815, P666715, P666937, P653895 and 666348, and one (1) Pratt
& Whitney JT8D-7 aircraft engine bearing manufacturer's serial no. P656041
EXHIBIT E
to
Second Amended and Restated
Lease Agreement
PERMITTED SUBLESSEES
Federal Express
UPS
DHL
Emery
Qantas
JAL
SAS
Singapore
KLM
British Airways
Air France
Alitalia
Air India
Varig
Lufthansa
Cathay Pacific
All Nippon Airways
Iberia
Saudia Airlines
Avianca
Southern Air Transport, Inc.