CERTAIN PORTIONS OF THIS EXHIBIT HAVE BEEN OMITTED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO
A REQUEST FOR CONFIDENTIAL TREATMENT
Exhibit 10.4
AIRCRAFT LEASE AGREEMENT
(MSN 29048)
DATED AS OF
OCTOBER 1, 1998
BETWEEN
FIRST SECURITY BANK, NATIONAL ASSOCIATION,
AS
LESSOR
AND
COMPANIA PANAMENA DE AVIACION, S.A. (COPA)
AS
LESSEE
IN RESPECT OF
ONE BOEING MODEL 737-71Q AIRCRAFT
MANUFACTURER'S SERIAL NUMBER 29048
TABLE OF CONTENTS
1. INTERPRETATION
1.1 Definitions............................................................. 1
1.2 Construction............................................................ 17
2. REPRESENTATIONS AND WARRANTIES
2.1 Lessee's Representations and Warranties................................. 18
2.2 Repetition.............................................................. 22
2.3 [Intentionally omitted.]................................................ 22
2.4 FSB's Representations and Warranties.................................... 22
3. CONDITIONS PRECEDENT
3.1 Conditions Precedent to Lessor's Obligations............................ 23
3.2 Further Conditions Precedent to Lessor's Obligations.................... 27
3.3 Conditions Precedent to Lessor's Obligation to Request Deregistration... 27
3.4 Waiver.................................................................. 28
3.5 Conditions Precedent to Lessee's Obligations............................ 28
4. DELIVERY
4.1 Scheduled Delivery Month and Scheduled Delivery Date.................... 28
4.2 Commencement............................................................ 28
4.3 Delayed Delivery........................................................ 29
4.4 Acceptance of Aircraft.................................................. 29
4.5 Delivery................................................................ 30
4.6 Post-Production Modification............................................ 30
4.7 Deregistration.......................................................... 30
5. PAYMENTS
5.1 Cash Deposit, Deposit Letter of Credit and Supplemental Rent
i
Letter of Credit........................................................ 31
5.2 Rent.................................................................... 32
5.3 Supplemental Rent....................................................... 33
5.4 Payments................................................................ 34
5.5 Gross-up................................................................ 35
5.6 Taxes and Other Payments................................................ 35
5.7 Value Added Tax......................................................... 35
5.8 Information............................................................. 36
5.9 Taxation of Indemnity Payments.......................................... 36
5.10 Default Interest........................................................ 37
5.11 Contest................................................................. 37
5.12 Computations............................................................ 38
5.13 Payments Absolute....................................................... 39
6. MANUFACTURERS' WARRANTIES
6.1 Benefit of Warranties................................................... 39
6.2 Parts................................................................... 40
6.3 Reassignment............................................................ 40
7. LESSOR'S COVENANTS
7.1 Quiet Enjoyment......................................................... 40
7.2 End Payment............................................................. 40
7.3 Manufacturer Credit and Product Support................................. 41
7.4 Airworthiness Directive Cost Sharing.................................... 42
8. LESSEE'S COVENANTS
8.1 Duration................................................................ 42
8.2 Further Covenants....................................................... 42
ii
9. INSURANCE
9.1 Insurances.............................................................. 42
9.2 Requirements............................................................ 43
9.3 Change.................................................................. 43
9.4 Insurance Covenants..................................................... 43
9.5 Failure to Insure....................................................... 45
9.6 Continuing Indemnity.................................................... 45
9.7 Application of Insurance Proceeds....................................... 45
9.8 Insurance for Lessee's Own Accounts..................................... 46
10. INDEMNITY
10.1 General................................................................. 46
10.2 Duration................................................................ 47
10.3 Exceptions.............................................................. 47
11. EVENTS OF LOSS
11.1 Pre-delivery............................................................ 48
11.2 Post-delivery........................................................... 48
11.3 Engines................................................................. 49
11.4 Requisition............................................................. 49
12. REDELIVERY OF AIRCRAFT
12.1 Notification............................................................ 50
12.2 Redelivery.............................................................. 50
12.3 Redelivery Acknowledgment............................................... 50
12.4 Short Term Storage...................................................... 50
12.5 Expenses................................................................ 50
12.6 Warranty Transfer....................................................... 51
iii
12.7 Non-Compliance.......................................................... 51
12.8 Export.................................................................. 51
12.9 Late Redelivery......................................................... 51
13. DEFAULT
13.1 Events.................................................................. 52
13.2 Rights.................................................................. 56
13.3 Export.................................................................. 57
13.4 Default Payments........................................................ 57
13.5 Survival................................................................ 58
14. ASSIGNMENT, NOVATION
14.1 Lien.................................................................... 58
14.2 Lease Assignment/Novation............................................... 58
15. ILLEGALITY...................................................................... 59
16. DISCLAIMERS AND WAIVERS
16.1 Exclusion and Waiver.................................................... 59
16.2 Certificate of Acceptance............................................... 60
17. MISCELLANEOUS
17.1 Waivers, Remedies, Cumulative........................................... 61
17.2 Delegation/Agency Agreement............................................. 61
17.3 Certificates............................................................ 61
17.4 Appropriation........................................................... 62
17.5 Currency Indemnity...................................................... 62
17.6 Set-off................................................................. 62
17.7 Severability............................................................ 63
17.8 Remedy.................................................................. 63
iv
17.9 Expenses................................................................ 63
17.10 Time of Essence......................................................... 64
17.11 Notices................................................................. 64
17.12 Law and Jurisdiction.................................................... 65
17.13 Sole and Entire Agreement............................................... 66
17.14 Indemnities............................................................. 66
17.15 Counterparts............................................................ 66
17.16 Language................................................................ 66
17.17 Modification............................................................ 66
17.18 Owner Trustee........................................................... 67
SCHEDULE 1 DESCRIPTION OF AIRCRAFT
Part 1 Description of Aircraft
Part 2 General Features
Part 3 Lessee's Options
Part 4 Lessee's Post Production Modification
Part 5 Documents
Part 6 Records
SCHEDULE 2 CERTIFICATE OF ACCEPTANCE
Part 1 Certificate of Acceptance
Part 2 Aircraft Delivery Conditions
SCHEDULE 3 LESSEE'S COVENANTS
Part 1 Information
1. General Information
2. Technical Information
3. Financial Information
Part 2 Lessee General Covenants
4. General
5. Third Party
v
6. (Intentionally Left Blank)
Part 3 Operation and Inspection
7. Lawful and Safe Operation
8. Protection
9. Sub-Leasing
10. Inspection
Part 4 Title, Pooling
11. Title
12. Title on Equipment Changes
13. Pooling of Engines and Parts
Part 5 Technical Covenants
14. Maintenance and Repair
15. Removal of Engines and Parts
16. Installation of Engines, Landing Gear and Parts
17. Non-Installed Engines, Landing Gear and Parts
18. Equipment Changes
19. Documents and Records
SCHEDULE 4 AIRCRAFT REDELIVERY
SCHEDULE 5 INSURANCE REQUIREMENTS
SCHEDULE 6 FORM OF LEGAL OPINION
SCHEDULE 7 FORM OF REPORT - AIRFRAME AND ENGINE STATUS REPORT
vi
AIRCRAFT LEASE AGREEMENT
(MSN 29048)
This Aircraft Lease Agreement (MSN 29048) is made as of the 1st day of October,
1998 between:
(1) FIRST SECURITY BANK, NATIONAL ASSOCIATION, not in its individual capacity,
except as otherwise expressly provided herein, but solely as Owner Trustee, a
national banking association whose principal place of business is ▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇ ("Lessor"); and
(2) COMPANIA PANAMENA DE AVIACION, S.A. (COPA), a company incorporated under the
laws of Panama whose registered office is at Avenida ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ y ▇▇▇▇▇ ▇▇,
▇▇▇▇▇▇ ▇, ▇▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇ ("Lessee");
WHEREAS, Lessor wishes to lease to Lessee and Lessee is willing to lease from
Lessor the Aircraft subject to the terms and conditions of this Agreement upon
completion of the manufacture of the Aircraft by The Boeing Company;
IT IS AGREED as follows:
1. INTERPRETATION
1.1 DEFINITIONS
In this Agreement the following expressions have the following meanings:
AFFILIATE With respect to a specified person, any other
person directly or indirectly controlling or
controlled by or under direct or indirect
common control with such person. For the
purposes of this definition, "control,"
"controlling" and "controlled" when used with
respect to any specified person means the power
to direct the management and policies of such
person, directly or indirectly, whether through
the ownership of securities having ordinary
voting power for the election of directors, by
contract or otherwise.
AGREED MAINTENANCE PERFORMER Lessee, Continental Airlines, Inc., a
maintenance performer approved from time to
time by Continental Airlines, Inc. for its own
aircraft, or any other person agreed to from
time to time in writing by Lessor, such
agreement not to be unreasonably withheld.
AGREED MAINTENANCE PROGRAM The continuous airworthiness Boeing Model
737-700 maintenance program, which shall be
PAGE 1
substantially the same as that used by
Continental Airlines, Inc. for its own Boeing
Model 737-700 aircraft and which shall be
approved by the FAA and the Air Authority for
use by Lessee, encompassing scheduled
maintenance, condition monitored maintenance,
and/or on-condition maintenance of Airframe,
Engines and Parts, including but not limited to
servicing, testing, preventative maintenance,
repairs, structural inspections, system checks,
overhauls, corrosion control, inspections and
treatments.
AGREED VALUE As defined in Annex A.
AGREEMENT This Aircraft Lease Agreement (MSN 29048),
including all annexes, schedules and exhibits
hereto, as modified, supplemented and amended
from time to time.
AIR AUTHORITY During that portion of the Term extending from
the Delivery Date to the Deregistration Date,
the FAA or any successor thereof, and during
that portion of the Term extending from the
Deregistration Date to the Redelivery Date, the
Directorate of Civil Aeronautics of the
Republic of Panama or any successor thereof.
AIRCRAFT The aircraft described in Part 1 of Schedule 1,
which includes the Airframe, the Engines, and
(unless the context does not permit) the
Documents and Records, as it may be modified
pursuant to the terms of Clause 4.6.
AIRFRAME The Aircraft including Parts, modules, APU,
appliances, components, equipment and
furnishings, but excluding the Engines and
Documents and Records.
APU The auxiliary power unit installed on the
Aircraft on the Delivery Date and any
replacement auxiliary power unit installed in
accordance with this Agreement.
BASELINE SPECIFICATION The Baseline Specification referred to in Part
1 of Schedule 1.
BENEFICIARY Tombo Aviation Inc., a Delaware corporation.
PAGE 2
BUSINESS DAY A day (other than a Saturday or Sunday) on
which banks are open for business in New York,
New York, and, in respect of payments to be
made by Lessee hereunder, Panama.
CASH DEPOSIT As defined in Annex A.
C-CHECK Scheduled Airframe systems and structural
checks described as a "C" Check in the Agreed
Maintenance Program.
COPA HOLDINGS COPA Holdings S.A.
CYCLE (i) In relation to the Airframe, one take-off
and landing of the Aircraft, and (ii) in
relation to each Engine, the APU and the
Landing Gear, one take-off and landing of the
airframe (including the Airframe) on which such
Engine, APU or Landing Gear, as the case may
be, is from time to time installed.
DAMAGE NOTIFICATION THRESHOLD As defined in Annex A.
D-CHECK Those items of maintenance characterized by the
Agreed Maintenance Program as a D-Check.
DEFAULT Any Event of Default and any event which with
the giving of notice, lapse of time, or
fulfillment of any other applicable condition
or any combination of the foregoing would
constitute an Event of Default.
DELIVERY DATE The date on which the Aircraft is tendered for
delivery by Lessor to Lessee in accordance with
this Agreement.
DELIVERY LOCATION Manufacturer's facility in Seattle, Washington,
USA or such other airport or location as agreed
upon by Lessor and Lessee.
DEPOSIT LETTER OF CREDIT The letter of credit in respect of the deposit
referred to in Clause 5.1 and issued pursuant
to Clause 5.1, and any replacement or renewal
of such letter of credit issued in accordance
with the terms of this Agreement.
DEPOSIT LETTER OF CREDIT As defined in Annex A.
DELIVERY AMOUNT
PAGE 3
DEPOSIT LETTER OF CREDIT As defined in Annex A.
EXECUTION AMOUNT
DEREGISTRATION DATE The date the FAA deregisters the Aircraft upon
the request of Lessor following satisfaction of
the conditions precedent set forth in Clause
3.3.
DEREGISTRATION POWER OF The deregistration power of attorney given by
ATTORNEY Lessee to Lessor in form and substance
reasonably satisfactory to Lessor.
DOCUMENTS (i) The Aircraft, Engine, and Part manuals,
certificates, and other documentation listed in
Part 5 of Schedule 1 to this Agreement; (ii)
other manuals (including without limitation,
operations, maintenance, repair, overhaul or
parts manuals), data, drawings or other
documents that are required to be maintained
during the Term under the terms of this
Agreement or by the Air Authority, and those
that are provided to Lessee with respect to the
Aircraft, and (iii) any revisions, additions,
renewals, or replacements from time to time
made by Manufacturer and/or Lessee in
accordance with this Agreement and to comply
with applicable laws and documentary
requirements of the FAA under FAR Part 129 or
FAR Part 145, as the case may be.
DOLLARS AND $ The lawful currency of the USA.
ENGINE Whether or not installed on the Aircraft,
(1) each engine of the manufacture and model
specified in Part 1 of Schedule 1
installed on the Aircraft on the Delivery
Date, such engines being described as to
serial numbers on the certificate of
acceptance to be executed by Lessee upon
delivery of the Aircraft; or
(2) any engine which has replaced such Engine,
having clear and unencumbered title which
has, or should have, passed to Lessor in
accordance with this Agreement;
PAGE 4
and in each case including all modules and
Parts from time to time belonging to or
installed in an Engine, but excluding any
properly replaced engine, title to which has,
or should have, passed from Lessor pursuant to
this Agreement.
ENGINE MANUFACTURER CFM International, Inc.
EQUIPMENT CHANGE Any modification or addition to the Aircraft,
excluding structural changes.
EVENT OF DEFAULT An event specified in Clause 13.1.
EVENT OF LOSS With respect to the Aircraft, the Airframe or
any Engine:
(1) the actual or constructive total loss of
the Aircraft, the Airframe or Engine
(including any damage to the Aircraft, the
Airframe or Engine which results in an
insurance settlement on the basis of a
total loss, or requisition for use or hire
which results in an insurance settlement
on the basis of a total loss); or
(2) it being destroyed, damaged beyond
economic repair or permanently rendered
unfit for normal use for any reason
whatsoever; or
(3) the requisition of title, or other
compulsory acquisition, capture, seizure,
deprivation, confiscation or detention for
any reason of the Aircraft, the Airframe
or Engine by any Government Entity
(whether de jure or de facto), but
excluding the events described in clause
(4) below; or
(4) the hi-jacking, theft, condemnation,
confiscation, seizure or requisition for
use or hire of the Aircraft, the Airframe
or Engine which deprives any person
permitted by this Agreement to have
possession and/or use of the Aircraft, the
Airframe or Engine of its possession
and/or use for more than 120 days or
PAGE 5
such shorter period within which insurers
consider an event of loss has taken place
as a result of those events.
EXCUSABLE DELAY With respect to the delivery of the Aircraft
from Lessor to Lessee, delay or non-performance
due to or arising out of any delay or failure
in delivery of the Aircraft by the Manufacturer
for any reason whatsoever (other than as a
result of any act or omission of Lessor or any
Person claiming by, through or under Lessor
that is not permitted or otherwise anticipated
by the terms of this Agreement); or any natural
disaster, civil war, insurrection or riot,
fire, flood, explosion, earthquake, accident,
epidemic, quarantine restriction, nuclear or
radioactive contamination, any act of
government, governmental priority, allocation,
regulation or order affecting directly or
indirectly, the Aircraft, any manufacturer, any
maintenance performer or Lessor or any
materials or facilities, strike or labor
dispute causing cessation, slowdown or
interruption of work; inability to procure
equipment, data or materials from manufacturers
or suppliers in a timely manner; damage,
destruction, loss or the necessity for service
or repair; or any other cause to the extent
that such cause is beyond the reasonable
control of Lessor whether above mentioned or
not and whether or not similar to the
foregoing.
EXPIRY DATE Subject to Clause 4.6, the day falling sixty
(60) months plus fourteen (14) days after the
Delivery Date or such earlier date on which:
(1) the Aircraft has been redelivered in
accordance with this Agreement;
(2) this Agreement has been terminated in
accordance with its terms; or
(3) Lessor receives the Agreed Value following
an Event of Loss.
FAA The Federal Aviation Administration of the USA
and any successor thereof.
PAGE 6
FAR The USA Federal Aviation Regulations.
FINAL INSPECTION The series of inspections to be conducted by
Lessor or Lessor's representative during the
course of the Redelivery Check and up to
Redelivery of the Aircraft.
FINANCIAL INDEBTEDNESS As defined in Annex A.
FLIGHT HOUR (i) In relation to the Airframe, each hour or
part thereof (rounded to two decimal places)
elapsing from the moment the wheels of the
Aircraft leave the ground on take off until the
wheels of the Aircraft next touch the ground,
and (ii) in relation to each Engine, the APU
and the Landing Gear, each hour or part thereof
(rounded to two decimal places) elapsing from
the moment the wheels of the airframe
(including the Airframe) on which such Engine,
APU or Landing Gear, as the case may be, is
from time to time installed leave the ground on
take off until the wheels of such airframe next
touch the ground.
FSB First Security Bank, National Association, not
in its capacity as Owner Trustee, but in its
individual capacity.
GOVERNING LAW The laws of the State of New York, USA.
GOVERNMENT ENTITY (1) any national government, political
subdivision thereof, or local jurisdiction
therein;
(2) any instrumentality, board, commission,
court, or agency of any thereof, however
constituted; and
(3) any association, organization, or
institution of which any of the above is a
member or to whose jurisdiction any
thereof is subject to or in whose
activities any of the above is a
participant.
HABITUAL BASE Panama City, Republic of Panama.
PAGE 7
INDEMNITEES Lessor and Beneficiary, including any of their
respective successors and assigns, and any
shareholders, Affiliates, directors, officers,
servants, agents, representatives and employees
thereof, and the Manufacturer.
INSURANCE DEDUCTIBLE AMOUNT As defined in Annex A.
INSURANCES The insurances in respect of the Aircraft as
further described in Clause 9.1.
JURISDICTION OF INCORPORATION Republic of Panama.
JURISDICTION OF REGISTRATION During that portion of the Term extending from
the Delivery Date to the Deregistration Date,
the USA, and during that portion of the Term
extending from the Deregistration Date to the
Redelivery Date, the Republic of Panama.
LANDING GEAR The nose and main landing gear assemblies of
the Aircraft, excluding any rotable components
such as wheels, tires and brakes, and
consumable items.
LESSEE DOCUMENTS This Agreement, the Lessee Assignment, any
other agreement or document signed by Lessee,
relating to this Agreement and delivered on the
Delivery Date, and any other agreement or
document which Lessor and Lessee agree in
writing to be a Lessee Document.
LESSOR LIEN (1) Any Lien whatsoever from time to time
existing created by Lessor, Beneficiary or
any Person claiming by, through or under
Lessor or Beneficiary in connection with
the financing or refinancing of the
Aircraft;
(2) Any Lien which results from the acts of,
omissions of or claims against Lessor,
Beneficiary, or any Person claiming by,
through or under Lessor or Beneficiary not
related to the transactions contemplated
by or permitted under this Agreement,
including, without limitation,
post-delivery modifications performed on
the Aircraft;
PAGE 8
(3) Any Lien for or in respect of Lessor
Taxes; or
(4) Any Lien arising as a result of or in
connection with any voluntary or
involuntary sale, assignment, transfer,
conveyance or other disposition
(collectively, a "Transfer") by the
Lessor, the Beneficiary, any transferee of
the Lessor or the Beneficiary or any
successor or assign of the Lessor or
Beneficiary of the Aircraft, this
Agreement or any part of their respective
right, title and interest in or to the
Aircraft or this Agreement.
LESSOR TAXES (1) Taxes imposed by any federal, state, local
Government Entity, any subdivision or
department thereof or therein or any
international or other taxing authority
whether of the United States or any other
country or political subdivision thereof
(each a "Taxing Authority") against Lessor
or Beneficiary or any Person lawfully
claiming by, through or under Lessor or
Beneficiary or all or any part of the
Aircraft unrelated to (A) the licensing,
location, installation, acceptance,
delivery, registration, recordation of
title, possession, repossession, control,
operation, use, maintenance, repair,
replacement, return, abandonment, storage,
redelivery, leasing, subleasing,
modification, importing or exporting of
the Aircraft or any part thereof, (B) the
rentals, receipts or earnings from any
transactions contemplated by this
Agreement, or (C) any other amount paid or
payable pursuant to this Agreement or any
document related thereto;
(2) Taxes (i) that are based upon, measured by
or with respect to the gross or net
income, capital, gains, profits, net
worth, franchise or conduct of business
PAGE 9
of Lessor or Beneficiary or any Person
lawfully claiming by, through or under
Lessor or Beneficiary (including, without
limitation, minimum taxes or alternative
minimum taxes), other than Taxes in the
nature of sales, use, rental, license,
VAT, ad valorem or property Taxes,
("Income Taxes") and (ii) that are imposed
on Lessor, Beneficiary or any Person
lawfully claiming by, through or under
Lessor or Beneficiary by (A) the United
States federal government, (B) in the case
of Lessor or any Person lawfully claiming
by, through or under Lessor, the state and
local taxing jurisdictions and authorities
in the United States in which the Lessor
maintains its principal office or
principal place of business, (C) in the
case of Beneficiary or any Person lawfully
claiming by, through or under Beneficiary,
the state and local taxing jurisdictions
and authorities in the United States in
which Beneficiary maintains its principal
office or principal place of business, (D)
any other state or local taxing
jurisdiction or authority in the United
States in which Lessor or Beneficiary or
any Person lawfully claiming by, through
or under Lessor or Beneficiary, as the
case may be, would be subject to Income
Tax without regard to the transactions
contemplated by this Agreement, and (E)
any foreign government or any political
subdivision or taxing authority thereof,
any territory or possession of the United
States, or any international authority in
which Lessor or Beneficiary or any Person
lawfully claiming by, through or under
Lessor or Beneficiary, as the case may be,
would be subject to Income Tax without
regard to the transactions contemplated by
this Agreement;
PAGE 10
(3) Taxes imposed on Lessor or Beneficiary or
any Person lawfully claiming by, through
or under Lessor or Beneficiary to the
extent imposed as a result of (i) the
willful misconduct or gross negligence of
Lessor or Beneficiary or any Person
lawfully claiming by, through or under
Lessor or Beneficiary, (ii) any breach by
Lessor, Beneficiary or any person claiming
by or through Lessor or Beneficiary of any
representations, warranties, covenants or
obligations contained in this Agreement or
any other document or instrument delivered
under or in connection with this Agreement
or the transactions contemplated herein,
(including, without limitation, any breach
by Lessor, Beneficiary or other person
claiming by or through Lessor or
Beneficiary of any covenant of quiet
enjoyment set forth herein or in any
document or instrument delivered pursuant
to or in connection with this Agreement);
(4) Taxes imposed on Lessor or Beneficiary or
any Person lawfully claiming by, through
or under Lessor or Beneficiary as a result
of a sale, assignment, transfer or other
disposition, whether voluntary or
involuntary, (each a "Transfer"), by
Lessor or Beneficiary or any other Person
other than Lessee, of the Aircraft or any
legal or beneficial interest in the
Aircraft, this Agreement or any portion
hereof or thereof; provided however, that
such Transfer does not result from the
exercise of any remedy provided for in
this Agreement or at law during the
continuance of an Event of Default, in
connection with the termination of this
Agreement or otherwise in connection with
this Agreement; and
(5) Taxes imposed on Lessor or Beneficiary or
any Person lawfully claiming by,
PAGE 11
through or under Lessor or Beneficiary
with respect to any period commencing or
event occurring (i) prior to the Delivery
of the Aircraft, (ii) after the Redelivery
of the Aircraft in conformity with the
applicable provisions of this Agreement
and (iii) at any time during which Lessee
shall have been deprived of the use or
possession of the Aircraft as a result of
a breach by Lessor or any Person claiming
by, through or under Lessor of Lessee's
rights of quiet and peaceful use and
possession of the Aircraft as set forth in
Clause 7.1 hereof or in any other
instrument or document delivered in
connection with this Agreement or the
transactions contemplated herein.
LETTER(S) OF CREDIT The Deposit Letter of Credit, the Supplemental
Rent Letter of Credit, or both, as the case may
be.
LIBOR The offered rate appearing on page 3750 of the
Telerate screen (or any replacement page) which
displays the British Bankers Association
Interest Settlement Rates for deposits in
Dollars at or about 11:00 a.m. (London time)
for the required period for value on the due
date, or the preceding Business Day if such due
date is not a Business Day.
LIEN Any mortgage, pledge, lien, charge, claim,
encumbrance, hypothecation, assignment, right
of set-off, agreement, arrangement, lease or
security interest affecting the title to or any
interest in property.
LIFE LIMITED PART A part or component on the Aircraft having a
life limit identified in either the Aircraft's
FAA Type Certificate, applicable manufacturers'
documents and manuals, or by Airworthiness
Directive, alternatively referred to as "LLP."
MAJOR CHECKS Any C-Check, multiple C-Check or D-check or
equivalent heavy maintenance visit or segment
PAGE 12
thereof as set out in the Agreed Maintenance
Program.
MANUFACTURER The Boeing Company.
MINIMUM LIABILITY COVERAGE As defined in Annex A.
MODIFICATION LIMIT As defined in Annex A.
NEW OPERATOR CREDIT As defined in Annex A.
OWNER TRUSTEE First Security Bank, National Association, not
in its individual capacity, except as expressly
provided herein, but solely as owner trustee
under the Trust Agreement.
OWNER TRUSTEE DOCUMENTS This Agreement, the Trust Agreement and the
Purchase Agreement Assignment.
PART Whether or not installed on the Aircraft:
(1) any appliance, component, furnishing or
equipment (other than a complete Engine)
furnished with the Aircraft on the
Delivery Date; and
(2) any other appliance, component, furnishing
or equipment (other than a complete
Engine) title to which has, or should
have, passed to Lessor pursuant to this
Agreement;
but excluding any such items title to which
has, or should have, passed from Lessor
pursuant to this Agreement.
PAYMENT ACCOUNT As defined in Annex A.
PERMITTED LIEN (1) The rights of Lessor and Lessee provided
in this Agreement;
(2) any Lessor Lien;
(3) any lien for Taxes of Lessee not yet
assessed or, if assessed, not yet due and
payable, or being contested in good faith
by appropriate proceedings and not
material in the aggregate; and
PAGE 13
(4) any lien of a repairer, mechanic, carrier,
hangar keeper, airport, air navigation
authority or other similar lien arising in
the ordinary course of business or by
operation of law in respect of obligations
of Lessee or any permitted sublessee which
are not overdue or are being contested in
good faith by appropriate proceedings;
but only if, in the case of both (3) and (4),
(a) adequate reserves have been provided by
Lessee for the payment of such Taxes or
obligations; and (b) such proceedings, or the
continued existence of the lien, do not give
rise to any material risk of the sale,
forfeiture or other loss of the Aircraft or any
interest therein or of criminal liability on
the part of Lessor.
PERSON OR PERSON Any individual, firm, partnership, joint
venture, trust, trustee, Government Entity,
organization, association, corporation,
government agencies, committees, departments,
authorities and other bodies, corporate or
incorporate, whether having distinct legal
status or not, or any number of any of the
foregoing.
PURCHASE AGREEMENT Purchase Agreement No. 1906, dated May 2, 1996,
between Manufacturer and Beneficiary, pursuant
to which Manufacturer has agreed to sell and
Beneficiary has agreed to purchase the
Aircraft.
PURCHASE AGREEMENT ASSIGNMENT That certain Purchase Agreement Assignment (MSN
29048), dated as of October 1, 1998, between
Beneficiary and Lessor.
RECORDS (1) the Aircraft, Engine, APU, Landing Gear
and Part records, reports, and other
documentation listed in Part 6 of Schedule
1 to this Agreement;
(2) records relating to the service,
inspection, maintenance, modification,
testing, overhaul and repair of the
Aircraft and all Parts installed therein
or thereon that are required to be
PAGE 14
maintained during the Term under the terms
of this Agreement, by the Air Authority,
by the Agreed Maintenance Program, or
those that are provided to Lessee or
otherwise maintained during the Term with
respect to the Aircraft (including,
without limitation, the Airframe, any
Engine, the APU and Parts), other than
replaced or superseded records that are
permitted to be disposed of by the FAA;
and
(3) daily or periodic updates, as the case may
be, to comply with applicable law and with
record keeping requirements of the FAA for
FAR Part 129 operation or FAR Part 145
operation, as the case may be.
REDELIVERY The return of the Aircraft with all associated
Documents and Records from Lessee to Lessor at
the Redelivery Location, in the condition and
manner required by Clause 12 and the other
provisions of this Agreement.
REDELIVERY CHECK The final exit full block "C" check, as defined
in Appendix J of Manufacturer's Maintenance
Planning Document, performed on the Aircraft
prior to Redelivery in accordance with Clause
2.1 of Schedule 4.
REDELIVERY DATE The date on which Lessor has accepted
Redelivery of the Aircraft evidenced by
executing an acknowledgment of Redelivery in
accordance with Clause 12.3.
REDELIVERY LOCATION An airport in the continental USA identified by
Lessor or other location mutually agreed
between Lessor and Lessee.
RENT As defined in Annex A.
RENTAL PERIOD Each period ascertained in accordance with
Clause 5.2.2.
RENT DATE The first day of each Rental Period, except in
the case of the first Rental Period, the
fifteenth (15th) day of such Rental Period.
PAGE 15
SCHEDULED DELIVERY DATE The date within the Scheduled Delivery Month as
advised by Lessor from time to time in
accordance with Clause 4.
SCHEDULED DELIVERY MONTH March, 1999.
SHOP VISIT In relation to Engines and APU, an engine or
APU removal where engine maintenance entails
separation of mating engine case flanges and/or
the removal of engine modules, requiring
internal repairs or the replacements of a disk,
hub or spool.
SISTER LEASE Any aircraft lease agreement between (i)
Lessor, Beneficiary, any Affiliate of
Beneficiary, or any trust in which Beneficiary
or any Affiliate of Beneficiary is the
beneficiary under such trust, and (ii) Lessee
for an aircraft, including the Aircraft Lease
Agreement (MSN 29047) between Lessor and Lessee
dated as of the date hereof in respect of a
Boeing Model 737-71Q aircraft bearing
Manufacturer's serial number 29047.
SUBSIDIARY (1) In relation to any reference to accounts,
any company whose accounts are
consolidated with the accounts of Lessee
in accordance with Panamanian generally
accepted accounting principles; and
(2) for any other purpose an entity from time
to time:
(a) of which another has direct or
indirect control or owns directly or
indirectly more than fifty per cent
(50%) of the voting share capital; or
(b) which is a direct or indirect
subsidiary of another under the laws
of the jurisdiction of its
incorporation.
SUPPLEMENTAL RENT All amounts payable under Clause 5.3.
PAGE 16
SUPPLEMENTAL RENT LETTER OF The letter of credit in respect of Supplemental
CREDIT Rent issued pursuant to Clause 5.1, and any
replacement or renewal of such letter of credit
issued in accordance with the terms of this
Agreement.
SUPPLEMENTAL RENT LETTER OF As defined in Annex A.
CREDIT AMOUNTS
TAX OR TAXES All taxes, fees, duties, governmental charges
and assessments, of any nature whatsoever,
including interest, fines additions to tax, and
penalties thereon, imposed by any taxing
authority with respect to the Aircraft, on its
ownership, delivery, possession,
transportation, operation, rental, return to
Lessor, transfer of title, registration, or
otherwise with respect to or in connection with
the transactions contemplated by this
Agreement, including, but not limited to, any
value-added taxes, sales and use taxes,
property taxes and all license and registration
fees; provided, however, that "Taxes" shall not
include Lessor Taxes.
TERM The period commencing on the Delivery Date and
ending on the Expiry Date unless otherwise
hereinafter provided.
TRUST AGREEMENT That certain Trust Agreement (MSN 29048), dated
as of October 1, 1998, between First Security
Bank, National Association, and Beneficiary.
USA United States of America.
1.2 CONSTRUCTION
1.2.1 In this Agreement, unless the contrary intention is stated, a
reference to:
(1) each of "Lessor" or "Lessee" or any other person includes,
without prejudice to the provisions of this Agreement, any
successor in title to it or, as the case may be, them and
any permitted assignee or transferee;
(2) a "person" includes, without limitation, any individual,
corporation, company limited liability company, judicial
entity, statutory body, partnership, joint venture, trust,
estate, unincorporated association,
PAGE 17
group or organization or any political sub-division, court,
regulatory body, authority, ministry, bureau, legislative
body, department or agency therein or thereof (including,
without limitation, the central bank or any taxing or fiscal
or other monetary authority or ministry thereof or therein);
(3) words importing the plural shall include the singular and
vice versa;
(4) any document shall include that document as amended, novated
or supplemented;
(5) a law (a) includes any statute, decree, constitution,
regulation, order, judgment or directive of any Government
Entity; (b) includes any treaty, pact, compact or other
agreement to which any Government Entity is a signatory or
party; (c) includes any judicial or administrative
interpretation or application thereof; and (d) is a
reference to that provision as amended, substituted or
re-enacted; and
(6) a Clause or a Schedule is a reference to a clause of or a
schedule to this Agreement.
1.2.2 The headings in this Agreement are to be ignored in construing
this Agreement.
1.2.3 In this Agreement references to the "winding up", "dissolution",
"examination" or "court protection" of a company or corporation,
or the appointment of a "liquidator", "receiver", "examiner" or
"administrator" shall be construed so as to include any
equivalent or analogous proceedings or officer under the law of
the jurisdiction in which such company or corporation is
incorporated or established or any jurisdiction in which such
company or corporation carries on business, including the seeking
of liquidation, winding-up, reorganization, dissolution,
administration, examination, arrangement, adjustment, protection
or relief of debtors.
1.2.4 Reference to this Agreement includes reference to the Schedules.
2. REPRESENTATIONS AND WARRANTIES
2.1 LESSEE'S REPRESENTATIONS AND WARRANTIES
Lessee represents and warrants to Lessor that:
(1) STATUS: Lessee is a company duly incorporated and validly
existing under the laws of Panama and has the corporate power to
own its assets and carry on its business as it is being conducted
and to perform its obligations under this Agreement and each
other Lessee Document, and Lessee is the holder of all necessary
air transportation licenses required in connection therewith and
PAGE 18
with the use and operation of the Aircraft, and Lessee is duly
qualified to transact intrastate business and is a foreign
corporation in good standing in each jurisdiction in which
failure to be so qualified would have a material adverse effect
on Lessee's ability to perform its obligations hereunder;
(2) POWER AND AUTHORITY: Lessee has the power to enter into and
perform, and has taken all necessary action to authorize the
entry into, performance and delivery of, this Agreement and each
other Lessee Document and the transactions contemplated by this
Agreement and each other Lessee Document;
(3) LEGAL VALIDITY: Assuming the due authorization, execution and
delivery by all of the other parties thereto, each of this
Agreement and each other Lessee Document constitutes Lessee's
legal, valid and binding obligation, enforceable against Lessee
in accordance with its terms, except as such enforceability may
be limited by bankruptcy, insolvency, reorganization,
receivership, moratorium or other similar laws affecting the
rights of creditors generally and general principles of equity,
whether considered at a proceeding at law or in equity;
(4) NON-CONFLICT: The entry into and performance by Lessee of, and
the transactions contemplated by, this Agreement and the other
Lessee Documents do not and will not:
(a) conflict with any laws binding on Lessee; or
(b) conflict with the organizational or constitutional documents
of Lessee; or
(c) conflict with or result in default under any document which
is binding upon Lessee or any of its assets nor result in
the creation of any Lien over any of its assets other than
as otherwise expressly provided herein;
(5) AUTHORIZATION: Subject to Clause 2.4(5), all authorizations,
consents, registrations and notifications (including with respect
to any Government Entity) required in connection with the entry
into, performance, validity and enforceability of this Agreement
and the other Lessee Documents and the transactions contemplated
by this Agreement and the other Lessee Documents, have been (or
will have been on or before the Delivery Date) obtained or
effected and are (or will be upon being obtained or effected) in
full force and effect and no exchange control or central bank
authorizations will be required;
PAGE 19
(6) NO IMMUNITY:
(a) Lessee is subject to civil commercial law with respect to
its obligations under this Agreement and the other Lessee
Documents, including without limitation the civil commercial
law of Panama;
(b) neither Lessee nor any of its assets is entitled to any
right of immunity and the entry into and performance of this
Agreement, and the other Lessee Documents by Lessee
constitute private and commercial acts; and
(c) to the extent that Lessee or any of its assets becomes
entitled at any time to any immunity, based on sovereignty
or otherwise, from any legal action, suit or proceeding,
from set-off or counterclaim, from the jurisdiction of any
competent court, from service of process, from attachment in
aid of execution, or from execution prior to judgment, or
other legal process in any jurisdiction, Lessee for itself
and its assets does hereby irrevocably and unconditionally
waive, and agrees not to plead or claim, any such immunity
with respect to its obligations, liabilities, or any other
matter under or arising out of or in connection with this
Agreement and the other Lessee Documents or the subject
matter hereof; such agreement shall be irrevocable and not
subject to withdrawal in any and all jurisdictions;
(7) ACCOUNTS: The audited accounts (or, for any period Lessee's
accounts are not audited, Lessee's unaudited accounts used by
Lessee's management) of Lessee and its Subsidiaries most recently
delivered to Lessor:
(a) have been prepared in accordance with Panamanian generally
accepted accounting principles and practices consistently
applied; and
(b) fairly represent the financial condition of Lessee and its
Subsidiaries as at the date to which they were drawn up;
(8) ALLOWANCES: Lessee has not claimed and will not claim any capital
or depreciation deductions or allowances in respect of the
Aircraft for any purpose (including for tax purposes);
(9) NO DEFAULT:
(a) no Default has occurred and is continuing or might result
from the entry into or performance of this Agreement and the
other Lessee Documents; and
(b) no other event has occurred and is continuing which
constitutes (or with the giving of notice, lapse of time, or
the fulfillment of any other applicable condition or any
combination of the foregoing, might
PAGE 20
constitute) a material default under any document which is
binding on Lessee or any assets of Lessee, including a
Sister Lease;
(10) REGISTRATION:
(a) other than registering the Aircraft, filing this Agreement
for recordation with the FAA, and filing UCC-1 financing
statements in the state of Florida and the District of
Columbia for the period from the Delivery Date through the
Deregistration Date, and other than registering the Aircraft
and filing this Agreement with the Panamanian Directorate of
Civil Aeronautics, and recording this Agreement and the ▇▇▇▇
of sale evidencing Lessor's title to the Aircraft with the
Office of the Public Registry of Panama for the period from
the Deregistration Date through the end of the Term and
Redelivery, it is not necessary or advisable under the laws
of the Jurisdiction of Incorporation, the Jurisdiction of
Registration or the Habitual Base in order to ensure the
validity, effectiveness and enforceability of this Agreement
and the other Lessee Documents, or to establish, perfect or
protect the property rights of Lessor in the Aircraft or any
Engine or Part that this Agreement or any other instrument
relating thereto be filed, registered or recorded or that
any other action be taken or if any such filings,
registrations, recordings or other actions are necessary or
advisable, the same have been effected or will have been
effected or all steps that can at such time reasonably have
been taken to effect same will have been taken on or before
the Delivery Date or Deregistration Date, as the case may
be; and
(b) under the laws of the Jurisdiction of Incorporation, the
Jurisdiction of Registration and the Habitual Base, the
property rights of Lessor in the Aircraft have been, or on
or before the Delivery Date or the Deregistration Date, as
the case may be, shall be fully established, perfected and
protected, and this Agreement and the other Lessee
Documents, other than as provided with respect to Lessee's
obligations thereunder in 2.1(12), will have priority in all
respects over the claims of all creditors of Lessee;
(11) LITIGATION: No litigation, arbitration or administrative
proceedings are pending or to its knowledge threatened against
Lessee before any court, administrative agency or arbitral
tribunal which, if adversely determined, would have a material
adverse effect upon its financial condition or business or its
ability to perform its obligations under this Agreement;
(12) PARI PASSU: The obligations of Lessee under this Agreement and
the other Lessee Documents rank at least pari passu with all
other present and future unsecured and unsubordinated obligations
(including contingent obligations) of Lessee, with the exception
of such obligations as are mandatorily preferred by law,
including, without limitation, the Governing Law, and not by
virtue
PAGE 21
of any contract, which obligations have been disclosed to and
itemized for Lessor;
(13) MATERIAL ADVERSE CHANGE: There has been no material adverse
change in the financial condition or prospects of Lessee and its
Subsidiaries since the date to which the accounts most recently
provided to Lessor on or prior to the date of the execution of
this Agreement were drawn up;
(14) TAXES AND OTHER PAYMENTS: Lessee has delivered all necessary
returns and made all payments, other than Taxes of Lessee not yet
assessed or, if assessed, not yet due and payable, or being
contested in good faith by appropriate proceedings and not
material in the aggregate, due to (i) the tax authorities in the
Jurisdiction of Incorporation, the Jurisdiction of Registration
and all applicable states, provinces and municipalities thereof,
(ii) the Habitual Base and all applicable subdivisions thereof
and (iii) airport and other aviation authorities, and Lessee is
not required by law to deduct or withhold any Taxes from any
payments under this Agreement and the other Lessee Documents;
(15) INFORMATION: The financial and other information furnished by
Lessee in connection with this Agreement and the other Lessee
Documents does not contain any untrue statement or omit to state
any facts, the omission of which makes the statements therein, in
the light of the circumstances under which they were made,
misleading, nor omits to disclose any material matter to Lessor
and all forecasts and opinions contained therein were made in
good faith on reasonable grounds by Lessee; and
(16) CURRENT MAINTENANCE PROGRAM: As of the Delivery Date, the Agreed
Maintenance Program is approved by the Air Authority.
2.2 REPETITION
The representations and warranties in Clause 2.1 will survive the
execution of this Agreement and the other Lessee Documents. The
representations and warranties contained in Clause 2.1 will be deemed
to be repeated by Lessee on the Delivery Date and on each Rent Date as
if made with reference to the facts and circumstances then existing.
The representation and warranty in Clause 2.1(13) shall be deemed to
be given or repeated on each Rent Date with respect to the audited
financial statements of Lessee last furnished pursuant to Schedule 3.
2.3 [Intentionally omitted.]
2.4 FSB'S REPRESENTATIONS AND WARRANTIES
FSB represents and warrants to Lessee that:
(1) STATUS: FSB is a national banking association duly organized,
validly existing and in good standing under the laws of the USA,
is duly authorized
PAGE 22
to do business as a national banking association with banking
authority to execute and deliver, and to perform its obligations
under, the Owner Trustee Documents;
(2) POWER AND AUTHORITY: FSB has taken, or has caused to be taken,
all necessary action to authorize the execution and filing by FSB
in its individual capacity and as Owner Trustee, of each of the
Owner Trustee Documents, and its performance of its obligations
thereunder, and Owner Trustee holds such title to the Aircraft as
was conveyed to it by Manufacturer;
(3) LEGAL VALIDITY: The Owner Trustee Documents constitute the legal,
valid and binding obligation of FSB, in its individual capacity
and as Owner Trustee, and, assuming the due authorization,
execution and filing thereof by the other party or parties
thereto, are enforceable against FSB, in its individual capacity
and as Owner Trustee, in accordance with the respective terms
thereof, except as such enforceability may be limited by
bankruptcy, insolvency, reorganization, receivership, moratorium
and other similar laws affecting the rights of creditors
generally and general principles of equity, whether considered in
a proceeding at law or in equity;
(4) NON-CONFLICT: The entry into and performance by FSB, in its
individual capacity and as Owner Trustee, of, and the
transactions contemplated by, this Agreement and the other Owner
Trustee Documents do not and will not:
(a) conflict with any federal USA banking or Utah state laws
binding on FSB, in its individual capacity or as Owner
Trustee; or
(b) conflict with the organizational or constitutional documents
of FSB; or
(c) conflict with any document which is binding upon FSB, or any
of its assets; and
(5) AUTHORIZATION: Subject to Clause 2.1(5) so far as concerns the
obligations of Lessor, all authorizations, consents,
registrations and notifications required in connection with the
entry into, performance, validity and enforceability of, and the
transactions contemplated by, this Agreement by Lessor have been
(or will have been on or before the Delivery Date) obtained or
effected (as appropriate) and are (or will be upon being obtained
or effected) in full force and effect.
3. CONDITIONS PRECEDENT
3.1 CONDITIONS PRECEDENT TO LESSOR'S OBLIGATIONS
Lessor's obligation to deliver and lease the Aircraft under this
Agreement is subject to satisfaction of each of the following
conditions.
PAGE 23
3.1.1 CASH DEPOSIT/DEPOSIT LETTER OF CREDIT: The delivery by Lessee to
Lessor of the Cash Deposit and the Deposit Letter of Credit
pursuant to Clause 5.1.
3.1.2 CERTAIN RECEIPTS AT EXECUTION OF AGREEMENT: Receipt by Lessor
from Lessee upon execution of this Agreement of the following in
form and substance (including but not limited to execution,
notarization and translation where appropriate) satisfactory to
Lessor:
(1) CONSTITUTIONAL DOCUMENTS: A copy of the organizational and
constitutional documents of Lessee;
(2) RESOLUTIONS, AUTHORITY: A copy of a resolution of the board
of directors of Lessee approving the terms of and the
transactions contemplated by this Agreement and the other
Lessee Documents, resolving that it enter into this
Agreement and the other Lessee Documents and related
agreements, including without limitation any amendments
hereto, and authorizing a specified person or persons to
execute this Agreement and the other Lessee Documents on its
behalf, together with such other evidence of the authority
of such person or persons to execute this Agreement and the
other Lessee Documents as Lessor may reasonably request,
including but not limited to extracts or certificates from
Government Entities or commercial registries;
(3) PROCESS AGENT: A letter from the process agent appointed by
Lessee in this Agreement accepting that appointment in a
form acceptable to Lessor;
(4) CERTIFICATE: A certificate of a duly authorized officer of
Lessee:
(a) setting out a specimen of each signature referred to in
Clause 3.1.2(2); and
(b) certifying that each copy of a document specified in
this Clause is correct, complete and in full force and
effect;
(5) ACCOUNTS: The latest available accounts of Lessee as
described in Schedule 3, Part 1, Section 3;
(6) OPINIONS: A signed original of the opinion substantially in
the form of Schedule 6, or otherwise acceptable to Lessor,
and from independent legal counsel acceptable to Lessor in
the Jurisdiction of Registration, the Habitual Base and the
Jurisdiction of Incorporation and as to matters applicable
with respect to, among other things, Lessee's execution and
delivery of this Agreement and the other Lessee Documents
and the performance by Lessee of its obligations as
contemplated hereunder and thereunder; and
PAGE 24
(7) PAYMENTS: The Cash Deposit and the Deposit Letter of Credit,
in the required amounts, due upon execution of this
Agreement as more fully described in Clause 5.1.
3.1.3 CERTAIN RECEIPTS AT DELIVERY DATE: Unless otherwise delivered at
execution of this Agreement, receipt by Lessor from Lessee not
later than the Delivery Date of the following in form and
substance (including but not limited to execution, notarization
and translation where appropriate) satisfactory to Lessor:
(1) CONSTITUTIONAL DOCUMENTS: Confirmation that the copy of the
organizational and constitutional documents of Lessee
already provided by Lessee have not changed, and if so a
copy of any changes;
(2) RESOLUTIONS, AUTHORITY: A copy of resolutions of the board
of directors of Lessee authorizing a specified person or
persons to execute any other documentation relating to
delivery of the Aircraft to Lessee and the transaction
contemplated hereby, together with such other evidence of
the authority of such person or persons to execute the same
as Lessor may reasonably request, including but not limited
to extracts or certificates from Government Entities or
commercial registries;
(3) [Intentionally omitted.]
(4) CERTIFICATE: A certificate of a duly authorized officer of
Lessee:
(a) setting out a specimen of each signature referred to in
Clause 3.1.3(2); and
(b) certifying that each copy of a document specified in
this Clause is correct, complete and in full force and
effect;
(5) OPINIONS: A signed original of the opinion substantially in
the form of Schedule 6, or otherwise acceptable to Lessor,
and from independent legal counsel acceptable to Lessor in
the Jurisdiction of Registration, the Habitual Base and the
Jurisdiction of Incorporation and as to matters applicable
to the performance by Lessee of its obligations as
contemplated hereunder;
(6) APPROVALS: Evidence of the issuance of each approval,
license and consent which may be required in relation to, or
in connection with, the remittance to Lessor in Dollars of
all amounts payable under this Agreement and the other
Lessee Documents or the performance by Lessee of any of its
obligations hereunder or thereunder (including, without
limitation, obtaining from all applicable Panamanian
PAGE 25
aviation and other authorities including the FAA all
applicable approvals, licenses, consents and
authorizations);
(7) EXPORT: Any required consent from the applicable Panamanian
aviation and other authorities to the export of the Aircraft
from the Habitual Base upon the termination of the leasing
of the Aircraft under this Agreement;
(8) IMPORT: Evidence that any required import license, and any
customs formalities, relating to the import of the Aircraft
into the Habitual Base have been obtained or complied with,
and that the import of the Aircraft into the Habitual Base
is exempt from Taxes;
(9) LICENSES: Copies of Lessee's air transport license, air
operator's certificates and all other licenses, certificates
and permits required by Lessee in relation to, or in
connection with, the operation of the Aircraft;
(10) [Intentionally omitted.]
(11) PAYMENTS: All sums due to Lessor under this Agreement on or
before the Delivery Date including, without limitation, the
first payment of Rent and the Cash Deposit;
(12) LETTERS OF CREDIT: The Deposit Letter of Credit and the
Supplemental Rent Letter of Credit, in the required amounts,
due upon delivery of the Aircraft as more fully described in
Clause 5.1;
(13) INSURANCES: Certificates of insurance (and reinsurance as
applicable), an undertaking from Lessee's insurance broker
(and from reinsurers as applicable) and other evidence
reasonably satisfactory to Lessor that Lessee has taken the
required steps to ensure due compliance with the provisions
of this Agreement as to Insurances with effect on and after
the Delivery Date, in each case in form and substance
complying with the requirements of Clause 9 and Schedule 5
hereto;
(14) REGISTRATION AND FILINGS: Evidence that on the Delivery Date
the Aircraft has been validly registered under the laws of
the Jurisdiction of Registration and that all filings,
registrations, recordings and other actions have been taken
which are necessary or advisable to ensure the validity,
effectiveness and enforceability of this Agreement and the
other Lessee Documents and to protect the property rights of
Lessor in the Aircraft, including, but not limited to,
filing UCC financing statements executed by Lessee in the
state of Florida and the District of Columbia;
PAGE 26
(15) MAINTENANCE PROGRAM: Evidence that Lessee's current
maintenance program for maintenance of the Aircraft has been
approved by the FAA for use by Lessee; and
(16) GENERAL: Such other documents and information as Lessor may
reasonably request.
3.2 FURTHER CONDITIONS PRECEDENT TO LESSOR'S OBLIGATIONS
The obligations of Lessor to deliver and lease the Aircraft under this
Agreement are subject to the further conditions precedent that:
(1) the representations and warranties of Lessee under Clauses
2.1 and 2.2 are correct and would be correct if repeated on
delivery of the Aircraft under this Agreement; and
(2) no Default has occurred and is continuing or would result
from the leasing of the Aircraft to Lessee under this
Agreement.
3.3 CONDITIONS PRECEDENT TO LESSOR'S OBLIGATION TO REQUEST DEREGISTRATION
The obligation of Lessor to request the FAA to deregister the Aircraft
is subject to satisfaction of each of the following conditions
precedent:
3.3.1 POST-PRODUCTION MODIFICATION: Receipt by Lessor of evidence
satisfactory to Lessor that the post-production modifications
described in Part 4 of Schedule 1 have been (a) completed, (b)
paid for, to the extent invoices in respect thereof are then due
and payable, as provided in Clause 4.6, and (c) approved by the
FAA;
3.3.2 REGISTRATION AND RECORDING IN PANAMA: Receipt by Lessor of
evidence satisfactory to Lessor that as of the Deregistration
Date the Aircraft has been, or is concurrently being, validly
registered with the Air Authority and under the laws of the
Jurisdiction of Registration and that all filings, registrations,
recordings and other actions have been taken, in Panama and any
other jurisdiction which are necessary or advisable to ensure the
validity, effectiveness and enforceability of this Agreement and
the other lessee Documents and to protect the property rights of
Lessor in the Aircraft, including, but not limited to, recording
this Agreement and the ▇▇▇▇ of sale evidencing Lessor's title to
the Aircraft with the Office of the Public Registry of Panama;
and
3.3.3 DEREGISTRATION POWER OF ATTORNEY: Receipt by Lessor of the
Deregistration Power of Attorney.
PAGE 27
3.4 WAIVER
The conditions specified in Clauses 3.1 and 3.2 are for the sole
benefit of Lessor and may be waived or deferred in whole or in part
and with or without conditions by Lessor in its sole discretion. If
any of those conditions are not satisfied on the Delivery Date and
Lessor nonetheless agrees to deliver the Aircraft to Lessee, Lessee
will ensure that those conditions are fulfilled within 15 days after
the Delivery Date and Lessor may treat as an Event of Default the
failure of Lessee to do so.
3.5 CONDITIONS PRECEDENT TO LESSEE'S OBLIGATIONS
The obligations of Lessee to lease the Aircraft on the Delivery Date
are subject to satisfaction of each of the following conditions
precedent:
3.5.1 BENEFICIARY QUIET ENJOYMENT LETTER: The delivery by Beneficiary
to Lessee of a letter from Beneficiary agreeing to Lessee's right
to quiet enjoyment of the Aircraft in substantially the same
manner as in Clause 7.1; and
3.5.2 WARRANTY ASSIGNMENTS: Assignments by Lessor to Lessee of
warranties with respect to the Aircraft and the Engines made by
the Manufacturer and the Engine Manufacturer, respectively, duly
acknowledged by the Manufacturer and the Engine Manufacturer.
4. DELIVERY
4.1 SCHEDULED DELIVERY MONTH AND SCHEDULED DELIVERY DATE
Lessor has advised Lessee that, as of the date of this Agreement, the
anticipated month of delivery of the Aircraft to Lessor, either
directly or indirectly, from Manufacturer (or a Manufacturer group
company) is the Scheduled Delivery Month. Lessor will notify Lessee
promptly after Lessor has received notice from Manufacturer of a more
specific Scheduled Delivery Date (approximately 30 days prior to the
Scheduled Delivery Month and approximately 7 days prior to the actual
date of delivery of the Aircraft under the Purchase Agreement), and
from time to time of any significant anticipated and actual delays in
delivery as advised by Manufacturer.
4.2 COMMENCEMENT
Subject to the terms and conditions of this Agreement, Lessor will
offer the Aircraft for delivery and Lessee will accept delivery of the
Aircraft on or about the Scheduled Delivery Date in accordance with
Schedule 2 of this Agreement at the Delivery Location. Lessor will
lease the Aircraft to Lessee and Lessee will take the Aircraft on
lease in accordance with this Agreement for the duration of the Term.
PAGE 28
4.3 DELAYED DELIVERY
If Lessor delays delivery or fails to deliver the Aircraft under this
Agreement as a result of:
(1) any Excusable Delay;
(2) notification of any defect or non-conformity pursuant to Clause
3.5 of Schedule 2, Part 2;
(3) any delay associated with Lessor not being able to receive all
the approvals, consents and acceptances which are necessary for
Lessor to deliver the Aircraft including those described in
Clause 3.1.3(13) and making an acceptance flight under Clause 3.3
of Part 2 of Schedule 2, despite Lessor's reasonable and
continuous efforts; or
(4) any delay caused by any modification required on the Aircraft or
agreed to in writing by Lessor and Lessee, which results in the
Lessor not being able to receive all regulatory approvals,
consents and acceptances which are necessary for Lessor to
deliver the Aircraft;
then:
(a) Lessor will not be responsible for any losses, including
loss of use, damages (including consequential or incidental
damages) costs or expenses suffered or incurred by Lessee
arising from or in connection with such delay or failure;
and
(b) Lessee will not be entitled to terminate this Agreement or
to reject the Aircraft when tendered for delivery by Lessor
on the grounds of any such delay unless the Aircraft is not
tendered for delivery within 12 months beyond the Scheduled
Delivery Month, as such date may be further extended by
mutual agreement of the parties, and upon any such
termination neither Lessor nor Lessee will have any further
obligation to the other under this Agreement other than as
expressly set out in this Agreement, except that Lessor will
return any Cash Deposit, Deposit Letter of Credit and any
other amounts theretofore received by Lessor from Lessee
hereunder.
4.4 ACCEPTANCE OF AIRCRAFT
If Lessee fails to accept delivery of the Aircraft when tendered for
delivery by Lessor in accordance with this Agreement, Lessee will
indemnify Lessor for all actual costs and expenses incurred by Lessor
as a result of such failure by Lessee, and will also be liable to make
payment to Lessor of Rent commencing on the date and otherwise as
provided in Clause 5.2.
PAGE 29
4.5 DELIVERY
Lessor and Lessee expressly acknowledge that delivery of the Aircraft
to Lessee is subject to and conditioned upon (1) delivery of the
Aircraft to Lessor, either directly or indirectly, from Manufacturer
and (2) Lessee having fulfilled all of the conditions precedent to
delivery set out in Clause 3. Lessee will effect acceptance of the
Aircraft by execution and delivery to Lessor of the duly completed and
executed Certificate of Acceptance substantially in the form of Part 1
of Schedule 2. After delivery of the Aircraft to Lessee, Lessee will
bear all risk of loss, theft, damage or destruction to the Aircraft
from any causes whatsoever until the Aircraft is redelivered to Lessor
(including, for the avoidance of doubt, during the installation or
completion of any "Post-Production Modifications" listed in Part 4 of
Schedule 1 after such delivery).
4.6 POST-PRODUCTION MODIFICATION
Promptly following delivery of the Aircraft to Lessee hereunder,
Lessee shall cause to be accomplished the post-production
modifications described in Part 4 of Schedule 1. Such post-production
modifications shall be made pursuant to a written agreement and by an
entity that are reasonably satisfactory to Lessor. The cost of such
post-production modifications for which Lessor shall be responsible
shall be a fixed amount set forth in the written agreement which
amount shall be subject to the Modification Limit. While such
post-production modifications are being made, all of the terms of this
Agreement, including Lessee's obligation to pay Rent, shall be and
remain in full force and effect. Upon completion of such
post-production modifications and submission of related invoices and
other documentation reasonably requested by Lessor, Lessor shall
either pay such invoices directly or, if already paid by Lessee,
reimburse Lessee for the cost thereof, in either case up to the
Modification Limit less the net costs of the modifications described
in Part 3 of Schedule 1.
4.7 DEREGISTRATION
Upon satisfaction of all the conditions precedent set forth in Clause
3.3, Lessor shall request the FAA to deregister the Aircraft. Lessee
shall be responsible for the prompt payment of all Taxes, fees, costs
and expenses, including Lessor's reasonable legal fees, relating to
all actions taken in connection with the deregistration of the
Aircraft with the FAA and with the registration of the Aircraft with
the Directorate of Civil Aeronautics of Panama, and the recordation of
this Agreement and of Lessor's title to the Aircraft with the Office
of the Public Registry of Panama, up to a maximum amount of $50,000.
PAGE 30
5. PAYMENTS
5.1 CASH DEPOSIT, DEPOSIT LETTER OF CREDIT AND SUPPLEMENTAL RENT LETTER OF
CREDIT
5.1.1 Lessee shall deliver to Lessor the Cash Deposit. This Agreement
shall be cross-collateralized with any Sister Lease, with respect
to the Cash Deposit and with respect to any such collateral under
any such Sister Lease.
5.1.2 Upon execution of this Agreement, Lessee shall provide Lessor
with the Deposit Letter of Credit in the amount of the Deposit
Letter of Credit Execution Amount, payable in favor of Lessor,
issued or confirmed by a first class American or European bank
reasonably acceptable to Lessor, and drawable in the USA. At any
time after the Deregistration Date, at Lessee's option, the
amount of the Deposit Letter of Credit may be increased by the
amount of the Cash Deposit; the Cash Deposit shall be returned to
Lessee promptly after any such increase in the amount of the
Deposit Letter of Credit becomes effective. The Deposit Letter of
Credit shall be further increased on or prior to the Delivery
Date by an amount equal to the Deposit Letter of Credit Delivery
Amount. The Deposit Letter of Credit shall be irrevocable, and
shall be in form and substance reasonably acceptable to Lessor.
5.1.3 Lessor may upon the occurrence of an Event of Default which is
continuing apply all or any portion of the Cash Deposit and/or
draw down the Deposit Letter of Credit in accordance with its
terms in whole or in part at any time or times until the later of
10 Business Days after Redelivery and until all of Lessee's
obligations under this Agreement have been fulfilled to satisfy
any liabilities of Lessee to Lessor under this Agreement and
under any Sister Lease.
5.1.4 Prior to delivery of the Aircraft hereunder, Lessee shall
provide Lessor with the Supplemental Rent Letter of Credit in the
initial amount specified in the definition of Supplemental Rent
Letter of Credit Amount, payable in favor of Lessor, issued or
confirmed by a first class American or European bank reasonably
acceptable to Lessor, and drawable in the USA. The Supplemental
Rent Letter of Credit shall be increased on the dates and in the
amounts specified in the definition of Supplemental Rent Letter
of Credit Amount. The Supplemental Rent Letter of Credit shall be
irrevocable, and shall be in form and substance reasonably
acceptable to Lessor.
5.1.5 If Lessee shall fail to pay Supplemental Rent due and owing
hereunder on the Expiry Date, or if Lessee shall fail to comply
with the requirements of Clause 12 and Schedule 4 upon the
expiration or the earlier termination of the Term as provided
hereunder, Lessee may draw down the Supplemental Rent Letter of
Credit in whole or in part to satisfy such obligations of
PAGE 31
Lessee hereunder. The Supplemental Rent Letter of Credit may be
drawn solely for the purposes set forth in this Clause 5.1.5.
5.1.6 In the event that any amount of the Cash Deposit is applied or
the Deposit Letter of Credit is drawn down by Lessor, Lessee
shall within 10 Business Days of receipt of notice of any such
application of the Cash Deposit or draw down provide for the
delivery of additional amounts of Cash Deposit and/or an
additional letter of credit or an amendment to the Deposit Letter
of Credit complying with the above requirements so as to restore
the amounts of the Cash Deposit and/or the amount undrawn under
the Deposit Letter of Credit to the original amount.
5.1.7 Clauses 4.3(4)(b), 5.1.2, 7.3 and 11.1 set forth the separate
obligations of Lessor to return to Lessee the Letters of Credit
and to refund to Lessee amounts in respect of the Cash Deposit in
certain circumstances.
5.1.8 Lessee agrees that subject to Clauses 4.3(4)(b), 5.1.2, 7.2 and
11.1 and to Lessee's rights at law and in equity, all right,
title and interest in any Cash Deposit paid by Lessee to Lessor
pursuant to this Clause 5 shall vest in the recipient absolutely,
irrevocably and unconditionally free and clear of any liens,
claims, charges or encumbrances or any other interest of Lessee
or of any third person.
5.1.9 Any interest earned with respect to the Cash Deposit or any draw
down of a Letter of Credit shall be for Lessor's account, free
and clear of any claims, charges or any interest of Lessee.
5.1.10 Lessee shall cause the Letters of Credit, in the respective
amounts then required to be maintained by the terms of this
Agreement, to be replaced or renewed from time to time in order
that they remain in full force and effect through the date
fifteen (15) days after the Expiry Date as required hereunder,
and shall deliver to Lessor a replacement or renewal letter of
credit at least 10 days prior to the date on which a Letter of
Credit is to expire. If Lessee shall fail to deliver to Lessor a
replacement or renewal letter of credit at least 10 days prior to
the date on which the applicable Letter of Credit is to expire,
Lessor may drawdown the full amount of such Letter of Credit and
hold it for application in the same manner as in the case of the
Cash Deposit. In any such case, if Lessee delivers a replacement
letter of credit satisfying the requirements of this Agreement,
Lessor shall return to Lessee the principal amount of such
drawdown, so long as no Default or Event of Default has occurred
and is continuing.
5.2 RENT
5.2.1 TIME OF PAYMENT: Lessee will pay to Lessor or its order Rent on
the first Rent Date and in advance on each subsequent Rent Date.
Payment must be initiated adequately in advance of each Rent Date
to ensure that Lessor
PAGE 32
receives credit for the payment of Rent payable on such Rent
Date, or on the immediately preceding Business Day if such Rent
Date is not a Business Day.
5.2.2 RENTAL PERIODS: The first Rental Period will commence on the
Delivery Date and end on the fourteenth (14th) day of the second
month following the Delivery Date. The second Rental Period will
commence on the fifteenth (15th) day of the second month
following the Delivery Date, with each subsequent Rental Period
commencing on the fifteenth (15th) day of each subsequent month
for the duration of the Term. The last Rental Period shall end on
the Expiry Date.
5.3 SUPPLEMENTAL RENT
5.3.1 PAYMENT: Upon Redelivery of the Aircraft to Lessor at the time
and in the manner provided hereunder, Lessee shall make a single
payment to Lessor of Supplemental Rent in respect of Aircraft
usage during the Term.
5.3.2 CALCULATION:
(1) Not less than six (6) months prior to the scheduled Expiry
Date, Lessee shall provide to Lessor sufficient industry
estimates, reasonably satisfactory to Lessor, to enable
Lessor and Lessee to calculate the estimated amount of
Supplemental Rent payable by Lessee on Redelivery, such
estimates to be based on Lessee's actual utilization of the
Aircraft during the first 54 months of the Term. Such data
shall include bona fide, arm's length market estimates from
not fewer than three (3) mutually acceptable,
internationally recognized aircraft maintenance providers of
the cost of providing to Lessor or to another third party,
other than Lessee or Continental Airlines, Inc., (i) a block
D-Check, including a lower level check on the Airframe, (ii)
a full restoration shop visit of each Engine, and (iii) a
complete overhaul of the APU and the Landing Gear, including
in each case all routine and non-routine work, material,
labor and reasonable handling charges prevailing at the
time, but excluding the cost of any replacement of Life
Limited Parts (each of the Airframe, each Engine, the APU
and the Landing Gear referred to as a "Component," and each
of the respective costs described in subclauses (i) through
(iii) referred to as a "Check/Overhaul Cost," for purposes
of this Clause 5.3.2). Prior to the Expiry Date, Lessor and
Lessee shall discuss in good faith, and agree on, the
applicable Check/Overhaul Cost for each Component.
(2) On the Expiry Date, Lessee shall pay to Lessor Supplemental
Rent in respect of each Component in an amount equal to the
product of (i) the Check/Overhaul Cost, times (ii) the
result of (A) the time since such Component was new or since
such Component had a full
PAGE 33
restoration shop visit or complete overhaul, divided by (B)
the mean time between overhaul ("Interval") for such
Component as defined or estimated by the manufacturer of
such Component, adjusted for the actual utilization of such
Component by Lessee during the last six (6) months of the
Term and as provided in clause (3) below.
(3) The amount of Supplemental Rent calculated in accordance
with clause (2) above shall be adjusted by deducting from
the aggregate amount so calculated an amount equal to the
sum of the Check/Overhaul Cost allocable to the first 20% of
the Interval for each Component, provided that any such
aggregate adjustment shall not result in a negative number
and in no event shall Lessor be obligated to make any
payment to Lessee under this Clause 5.3.2.
(4) On the Expiry Date, if the time remaining on the life of any
Life Limited Part is less than 80%, Lessee shall pay to
Lessor an amount equal to the product of (i) the actual cost
to replace such Life Limited Part, times (ii) the
difference, expressed as a percentage of the life of such
Life Limited Part, between (A) 80% and (B) the time
remaining on the life of such Life Limited Part expressed as
a percentage. If the time remaining on the life of any Life
Limited Part is more than 80%, Lessee shall receive a credit
against any amounts then owing by it under clauses (2) and
(3) above in an amount equal to the product of (i) the cost
to replace such life Limited Part as determined above, times
(ii) the difference, expressed as a percentage of the life
of such Life Limited Part, between (A) 20% and (B) the time
used on such Life Limited Part since new, expressed as a
percentage.
5.4 PAYMENTS
5.4.1 All payments by Lessee to Lessor under this Agreement will be
made for value on the due date in Dollars, and if in relation to
amounts incurred by Lessor other than in Dollars, in the Dollar
equivalent advised by Lessor's bankers, and in same day funds
settled through the New York Clearing House System or such other
funds as may for the time being be customary for the settlement
in New York City of international payments in Dollars by
telegraphic transfer to the Payment Account. Lessee shall make
all arrangements in advance to ensure that payment is received as
above by Lessor on the due date.
5.4.2 All payments by Lessor to Lessee under this Agreement will be
made by telegraphic transfer to the Payment Account in Dollars,
and if in relation to amounts incurred by Lessee other than in
Dollars, in the Dollar equivalent advised by Lessor's bankers.
PAGE 34
5.5 GROSS-UP
5.5.1 All payments by Lessee under or in connection with this
Agreement will be made without set-off or counterclaim, free and
clear of and without deduction for or on account of any or all
Taxes.
5.5.2 All Taxes in respect of payments under this Agreement shall be
for the account of and will be paid by Lessee prior to the date
on which penalties apply, except to the extent that such payment
is being contested in good faith by appropriate proceedings, in
respect of which adequate reserves have been provided by Lessee
and non-payment of which does not give rise to any material
likelihood of the Aircraft or any interest therein being sold,
forfeited or otherwise lost or of criminal liability on the part
of Lessor.
5.5.3 If Lessee is compelled by law to make payment subject to any Tax
and Lessor or Beneficiary does not actually receive for its own
benefit on the due date a net amount equal to the full amount
provided for under this Agreement, Lessee will pay all necessary
additional amounts to ensure receipt by Lessor of the full amount
so provided for.
5.6 TAXES AND OTHER PAYMENTS
Except as may be otherwise expressly provided herein, Lessee will
promptly pay, or promptly after demand indemnify Lessor and
Beneficiary against:
(1) all Taxes and other fees or charges of any nature imposed by any
Government Entity or other person including any airport or
provider of service with respect to this Agreement, including
without limitation the delivery, leasing, possession, use,
operation, maintenance, storage, return or replacement of any
Engine or Part or any other disposition or dealing by Lessee with
or relating to the Aircraft during the Term; and
(2) all rent, fees, charges, Taxes and other amounts in respect of
any premises where the Aircraft or any Part thereof is located
from time to time;
except to the extent that such payment is being contested in good
faith by appropriate proceedings, in respect of which adequate
reserves have been provided by Lessee and non-payment of which does
not give rise to any material likelihood of the Aircraft or any
interest therein being sold, forfeited or otherwise lost or of
criminal liability on the part of Lessor.
5.7 VALUE ADDED TAX
5.7.1 For the purposes of this sub-clause:
(1) "VAT" means value added tax and any sales or turnover tax,
imposition or levy of a like nature (other than Lessor
Taxes); and
PAGE 35
(2) "supply" includes anything on which VAT is chargeable.
5.7.2 Lessee will pay to Lessor or the relevant taxing authority, as
the case may be, the amount of any VAT chargeable in respect of
any supply for VAT purposes under this Agreement.
5.7.3 Each amount stated as payable by Lessee under this Agreement is
exclusive of VAT (if any) and is accordingly to be construed as a
reference to that amount plus any VAT in respect of it.
5.8 INFORMATION
If Lessee is required by any applicable law, or by any third party, to
deliver any report or return in connection with any Taxes, Lessee
will, to the extent the same shall be pertinent, state therein that
Lessee is exclusively responsible for the use and operation of the
Aircraft and for any Taxes arising therefrom and Lessee will on
request supply a copy of the report or return to Lessor. Lessor shall
provide Lessee with such information in the possession of Lessor or
otherwise reasonably available to it as Lessee may reasonably request
to fulfill its tax filing requirements under this Clause 5.8 and any
audit information request arising in connection with the Taxes subject
to this Clause 5. If any report or return is required to be made with
respect to any obligations of Lessee under this Clause 5, Lessee will
make such report or return, provided that Lessee shall have no
obligation to file any such return or report if (A) Lessor, after
Lessee's written request therefor, shall have failed to furnish Lessee
with such information as is peculiarly within the control of, or
reasonably available to Lessor and is necessary for the filing of such
report or return, or (B) such return or report would or should have
been filed by Lessor even if it had not entered into this Agreement.
5.9 TAXATION OF INDEMNITY PAYMENTS
5.9.1 If and to the extent that any sums payable to an Indemnitee by
Lessee under this Agreement by way of indemnity are insufficient,
by reason of any Taxes payable in respect of those sums, for such
Indemnitee to discharge the corresponding liability to the
relevant third party (including any taxation authority), or to
reimburse such Indemnitee for the cost incurred by it to a third
party (including any taxation authority), Lessee will pay to such
Indemnitee such sum as will after the Tax liability has been
fully satisfied leave such Indemnitee with the same amount as it
would have been entitled to receive in the absence of that
liability, together with interest on the amount of the deficit at
the rate of interest stated in Clause 5.10 (both before and after
judgment) in respect of the period commencing on the date on
which the payment of the Tax is finally due until payment by
Lessee.
5.9.2 If and to the extent that any sums constituting (directly or
indirectly) an indemnity to an Indemnitee but paid by Lessee to
any person other than
PAGE 36
such Indemnitee are treated as taxable in the hands of such
Indemnitee, Lessee will pay to such Indemnitee, within 5 Business
Days of a written demand accompanied by reasonable evidence of
liability, such sum as will after the tax liability has been
fully satisfied indemnify such Indemnitee to the same extent as
it would have been indemnified in the absence of such liability.
5.10 DEFAULT INTEREST
If Lessee fails to pay any amount payable under this Agreement or
another Lessee Document on the due date, Lessee will pay on demand
from time to time to Lessor or such other party as shall have a right
thereto interest (both before and after judgment) on that amount, from
the due date to the date of payment in full by Lessee to Lessor or
such other party, at the rate calculated by Lessor to be 3% per cent
per annum plus LIBOR at the rate quoted for the period closest to the
length of time from such due date to such payment date. All such
interest will be compounded monthly and calculated on the basis of the
actual number of days elapsed and a 360 day year.
5.11 CONTEST
If a claim is made in writing against any Lessor (whether on audit or
otherwise) or if Lessee disputes the amount of any Tax payable by
Lessor for which Lessee is required to reimburse or indemnify
hereunder for any Taxes that Lessee is required to pay or indemnify
against pursuant to Clause 5.6, Lessor shall notify Lessee in writing
within 10 Business Days of the receipt of such claim, provided that a
failure to so notify will not diminish or relieve Lessee of any
obligations under Clause 5.6, except to the extent Lessee is entitled
to contest or to cause Lessor to contest such Taxes and Lessee's or
Lessor's successful defense of such claim is materially prejudiced or
precluded thereby. If the amount of the claim exceeds $25,000 and if
requested by Lessee in accordance with this Clause 5.11 and in writing
within 30 Business Days after receipt by Lessee of the notice
described in the preceding sentence, Lessor shall in good faith and
with due diligence contest (including pursuing administrative and
judicial appeals) in the name of Lessor or, if permitted by law and
requested by Lessee in the name of Lessee, the validity, applicability
or amount of such Taxes in appropriate administrative or judicial
proceedings to be determined by Lessor, provided that (1) prior to
taking such action, Lessee shall have agreed to pay Lessor all
out-of-pocket costs and expenses that Lessor may incur in connection
with contesting such claim, including, without limitation, all
reasonable legal and accountant's fees and disbursements and costs of
administrative and judicial proceedings, and the amount of any
interest or penalties that may be attributable to and payable as a
result of contesting such claim (or, at Lessor's request, Lessee shall
advance to Lessor funds with which to pay the foregoing amounts, and
Lessor's obligation to contest any Tax shall be suspended during any
period Lessee does not advance sufficient funds to pay such amounts as
they accrue or become payable), (2) if such contest is to be initiated
by the payment of, and the claiming of a refund for such Taxes (and
any interest and penalties that also must be paid), Lessee shall have
advanced Lessor sufficient funds (on an interest-free basis)
PAGE 37
to make such payment, (3) no Event of Default has occurred and is
continuing, (4) the action to be taken will not result in a material
risk of sale, forfeiture or loss of Lessor's title to the Aircraft
(unless Lessee provides a bond or other security satisfactory to
Lessor), (5) at Lessor's request, Lessee shall provide to Lessor a
written opinion in form and substance reasonably satisfactory to
Lessor of independent legal counsel reasonably satisfactory to Lessor
that there is a reasonable basis for such contest and (6) Lessee
acknowledges and agrees, in writing, that in the event such contest is
unsuccessful Lessee shall fully indemnify Lessor against such Taxes
(and any related interest and penalties). Notwithstanding that the
conditions set forth in clauses (1), (2), (3), (4), (5) and (6) above
may have been satisfied, Lessor, after consulting in good faith with
Lessee, may elect not to pursue any contest or proceeding pursuant to
the preceding sentence or elect to discontinue (by settlement or
otherwise) any such contest or proceeding commenced pursuant to the
preceding sentence, but such election shall constitute a waiver by
Lessor of any right to payment or indemnification pursuant to Clause
5.6 with respect to the adjustment that was the subject of such
proposed contest or proceeding (and any other adjustment the contest
of which is precluded by such failure to contest) and, if Lessee has
theretofore paid or provided Lessor with funds to pay any amount with
respect to such adjustment, Lessor shall promptly repay such amount to
Lessee. If Lessor shall obtain a refund in whatever form of all or any
part of any Taxes that Lessee shall have paid or reimbursed to Lessor
hereunder, Lessor shall, provided that no Event of Default shall have
occurred and be continuing, pay to Lessee an amount that is equal to
the sum of the amount of such refund or credit, plus any interest
received on such refund fairly attributable to any Taxes paid by or
with funds provided by Lessee prior to receipt of such refund, reduced
by any Taxes incurred by Lessor by reason of the receipt or accrual of
such refund and interest and net of any expenses described above that
have not been previously reimbursed, and increased by any Tax benefit
realized by Lessor as a result of any payment by Lessor made pursuant
to this sentence, provided further that, if, at the time of such
payment an Event of Default shall have occurred and be continuing,
Lessor shall hold the amount of such payment as security for the
obligations of Lessee to Lessor under the Lease, and at such time as
there shall not be continuing any such Event of Default, shall pay
such amount to the Lessee. Lessor hereby agrees that it will inform
Lessee of the time and place of, and Lessor will not object to
Lessee's presence at, any proceeding conducted pursuant to this clause
5.11, provided that Lessor shall be entitled to conduct any
proceedings in respect of taxes for which Lessee is not obligated to
indemnify Lessor outside the presence of Lessee and Lessee's presence
also must be allowed by applicable law and provided further that the
conditions set forth in clauses (1), (2), (3), (4), (5) and (6) above
shall have been, and shall continue to be, satisfied.
5.12 COMPUTATIONS
At Lessee's request, the computation by Lessor of any amount payable
by Lessee pursuant to this Clause 5 shall be verified by an
independent accounting firm of national reputation selected by Lessor.
The fees of such accountants shall be paid by Lessee unless such
accountants determine that the amount payable to Lessee is at
PAGE 38
least 25% more, or the amount payable by Lessee is at least 25% less,
than the amount computed by Lessor, in which case such fees shall be
payable by Lessor.
5.13 PAYMENTS ABSOLUTE
Lessee's obligations under this Agreement as to payment are absolute
and unconditional irrespective of any contingency whatsoever including
(but not limited to):
(1) any right of set-off, counterclaim, recoupment, defense or other
right which either party to this Agreement may have against the
other;
(2) any unavailability of the Aircraft for any reason, including, but
not limited to, a requisition of the Aircraft or any prohibition
or interruption of or interference with or other restriction
against Lessee's use, operation or possession of the Aircraft;
(3) any defect in airworthiness, merchantability, fitness for any
purpose, condition, design, or operation of any kind or nature of
the Aircraft for any particular use or trade, or for registration
or documentation under the laws of any relevant jurisdiction, or
any Event of Loss in respect of, or any damage to, the Aircraft;
(4) any insolvency, bankruptcy, reorganization, arrangement,
readjustment of debt, dissolution, liquidation, examination or
similar proceedings by or against Lessee;
(5) any invalidity or unenforceability or lack of due authorization
of, or other defect in, this Agreement; and
(6) any other cause which but for this provision would or might
otherwise have the effect of terminating or in any way affecting
any obligation of Lessee under this Agreement.
Nothing in this Clause 5.13 shall be construed to prohibit Lessee from
separately pursuing any claim that it may have from time to time
against Lessor or any other Person with respect to any matter,
provided that any such claim shall not contest the applicability or
enforceability of the foregoing provisions of this Clause 5.13.
6. MANUFACTURERS' WARRANTIES
6.1 BENEFIT OF WARRANTIES
Unless an Event of Default shall have occurred and be continuing,
Lessor agrees to make available to Lessee such rights as Lessor may
have under any warranty with respect to the Aircraft of any Engine
made by the Manufacturer or the Engine Manufacturer, respectively,
pursuant to their respective standard assignment forms. To the extent
that any warranties and/or rights (if any), express or implied, with
PAGE 39
respect to or otherwise related to the Aircraft, any Engine or any
Part from the Manufacturer, the Engine Manufacturer or any other
manufacturer, vendor, subcontractor or supplier to Lessor, are not
directly assignable by Lessor to Lessee, Lessor agrees to extend to
Lessee, at Lessee's cost, the benefit of each such warranty and right
to the extent possible.
6.2 PARTS
Except to the extent Lessor otherwise agrees in a particular case,
Lessee will procure that all engines, components, furnishings or
equipment provided by the manufacturer, vendor, subcontractor or
supplier in replacement of a defective Engine or Part pursuant to the
terms of any warranty will be installed promptly by Lessee and that
title thereto vests in Lessor free of Liens. On installation those
items will be deemed to be an Engine or Part, as applicable.
6.3 REASSIGNMENT
At the expiration or earlier termination of the Term as provided
herein, Lessee shall reassign to Lessor, or its designee, without
recourse or warranty, the benefit of any subsisting warranty and right
assigned by Lessor to Lessee pursuant to this Agreement or otherwise.
Lessee at its own cost and expense will do all such things and execute
such documents as may reasonably be required for this purpose.
7. LESSOR'S COVENANTS
7.1 QUIET ENJOYMENT
Lessor covenants that so long as an Event of Default shall not have
occurred and be continuing, (i) Lessee shall quietly enjoy, in
accordance with the terms hereof, the Aircraft and all rents,
revenues, profits and income thereof, without interference from
Lessor, or from any Person lawfully claiming by or through Lessor
(including, without limitation, any Person providing financing or
refinancing for the Aircraft), and (ii) neither Lessor nor any Person
lawfully claiming by or through Lessor shall take or cause to be taken
any action contrary to such right of quiet enjoyment. Lessor shall
cause any Person providing financing or refinancing for the Aircraft
to provide to Lessee a comparable covenant of quiet enjoyment.
7.2 END PAYMENT
7.2.1 Promptly following:
(1) Redelivery of the Aircraft to Lessor in accordance with and
in the condition required by this Agreement; or
(2) payment to Lessor of the Agreed Value following an Event of
Loss after the delivery Date;
PAGE 40
or, in each case, such later time as Lessor is satisfied Lessee
has paid to Lessor all amounts which may then be due and payable
under this Agreement, Lessor will:
(a) pay to Lessee the amount of any Rent received in
respect of any period falling after the Redelivery Date
or payment of the Agreed Value, as the case may be;
(b) return to Lessee any remaining Cash Deposit, subject to
any application and reduction by Lessor pursuant to
Clause 5.1; and
(c) return the Letters of Credit to Lessee, subject to any
drawings pursuant to Clause 5.1.
7.2.2 If, at the end of the Term, an Event of Default has occurred and
is continuing, the rebate and payments and return of the Letters
of Credit, contemplated above will only be made following (1) any
cure by Lessee to Lessor's reasonable satisfaction of such Event
of Default, and (2) any set-off by Lessor hereunder, but any such
rebate and return of the Letters of Credit or payment shall only
be to the extent of the applicable balance remaining following
such set-off.
7.3 MANUFACTURER CREDIT AND PRODUCT SUPPORT
7.3.1 Lessor shall, on or prior to delivery of the Aircraft hereunder,
assign or shall cause to be assigned or otherwise provided to
Lessee a new operator credit memorandum in the amount of the New
Operator Credit to be issued by Manufacturer under the Purchase
Agreement at the time of delivery of the Aircraft under the
Purchase Agreement, such credit memorandum to be used in
accordance with the terms thereof for the purchase of spare parts
or training from Manufacturer or for the cost of certification to
comply with applicable requirements of the Panamanian aviation
authorities.
7.3.2 Lessor shall, on or prior to delivery of the Aircraft hereunder,
assign or cause to be assigned to Lessee training, product
support and onsite technical assistance applicable to the
Aircraft and to the Engines to be furnished by Manufacturer
pursuant to the Purchase Agreement and by the Engine manufacturer
pursuant to its agreements with Lessor or Beneficiary, as the
case may be, respectively.
7.3.3 Lessee shall provide directly to Manufacturer or to Lessor, as
the case may be, all indemnities and insurance coverage, and
perform all related obligations, required by Manufacturer or the
Engine manufacturer in connection with such training, product
support and onsite technical assistance, and shall otherwise
indemnify and hold harmless Lessor from and against all claims
and liabilities of any kind related thereto.
PAGE 41
7.4 AIRWORTHINESS DIRECTIVE COST SHARING
Where the cost of any single non-repetitive airworthiness directive to
be accomplished pursuant to Clause 14.8 of Schedule 3 or which Lessee
is otherwise required by the terms of this Agreement to accomplish
exceeds US$**Material Redacted**, Lessor shall pay to Lessee, as long
as no Default has occurred and is continuing, an amount calculated in
accordance with the following formula:
C x (N - R) / N
Where
N = **Material Redacted**
R = the number of complete months remaining in the Term after
completion of the modification
C = the cost of the modification in excess of US$**Material
Redacted**.
8. LESSEE'S COVENANTS
8.1 DURATION
Subject to Clause 10.2, the undertakings of Lessee under this
Agreement will:
(1) except as otherwise stated, be performed at the expense of
Lessee; and
(2) remain in force until the earlier to occur of (a) Redelivery of
the Aircraft to Lessor in accordance with this Agreement either
at the end of the Term, or earlier as provided herein, and
payment of all obligations of Lessee hereunder or (b) receipt by
Lessor of the Agreed Value pursuant to an Event of Loss.
8.2 FURTHER COVENANTS
Lessee also covenants to Lessor to perform the covenants set out in
Schedule 3.
9. INSURANCE
9.1 INSURANCES
Lessee will maintain in full force during the Term insurances in
respect of the Aircraft in form and substance reasonably satisfactory
to Lessor and in conformity with and covering such risks as are set
forth in Schedule 5 hereof (the "Insurances," which expression
includes, where the context so admits, any relevant re-insurance(s))
through such brokers, with such lead underwriters being subject to
such exclusions as may be approved by Lessor, such approval not to be
unreasonably withheld, and in such amounts and having such deductibles
as are set forth in Schedule 5 hereof. The Insurances will be effected
either:
PAGE 42
(1) on a direct basis with insurers of recognized standing who
normally participate in aviation insurances in the leading
international insurance markets and led by reputable
underwriter(s) approved by Lessor (such approval not to be
unreasonably withheld or delayed); or
(2) with a single insurer or group of insurers approved by Lessor who
does not retain the risk but effects substantial reinsurance with
reinsurers in the leading international insurance markets and
through brokers each of recognized standing and acceptable to
Lessor for a percentage acceptable to Lessor of all risks insured
(such acceptance not to be unreasonably withheld or delayed).
9.2 REQUIREMENTS
Lessor's current requirements as to required Insurances are as
specified in this Clause 9 and in Schedule 5. Also, Lessor may request
the addition of additional insureds, as appropriate.
9.3 CHANGE
Lessor shall be entitled to revoke its approval of Lessee's broker or
lead underwriter(s) provided that: (i) there shall have occurred after
the date hereof, any event or series of events which in Lessor's
reasonable opinion, after consultation with Lessee and such broker or
underwriter(s), has adversely affected such broker's or underwriter's
ability to perform its obligations with respect to the Insurances
required to be maintained hereunder; (ii) a majority of Lessee's other
lessors of aircraft consent to the resulting change in broker or lead
underwriter(s); and (iii) similar insurance is then generally
available through other brokers and underwriters in the major
international insurance markets upon terms substantially similar to
the then current policy or policies.
9.4 INSURANCE COVENANTS
Lessee will:
(1) ensure that all legal requirements as to insurance of the
Aircraft, any Engine or any Part which may from time to time be
imposed by the laws of the Jurisdiction of Registration, the
Jurisdiction of Incorporation, or any state to, from, or over
which the Aircraft may be flown, insofar as they affect or
concern the operation of the Aircraft, are complied with and in
particular those requirements, compliance with which is necessary
to ensure that:
(a) the Aircraft is not in material risk of detention or
forfeiture;
(b) the Insurances remain valid and in full force and effect;
and
(c) the interests of the Indemnitees in the Insurances and the
Aircraft, any Engine or any Part are not thereby prejudiced;
PAGE 43
(2) not use, cause or permit the Aircraft, any Engine or any Part to
be used for any purpose or in any manner not covered by the
Insurances or outside any geographical limit imposed by the
Insurances;
(3) comply with the terms and conditions of each policy of the
Insurances and not do, consent or agree to any act or omission
which:
(a) invalidates or may reasonably be expected to invalidate the
Insurances; or
(b) renders, or may reasonably be expected to render, void or
voidable the whole or any part of any of the Insurances; or
(c) brings any particular liability within the scope of an
exclusion or exception to the Insurances;
(4) [Intentionally omitted.]
(5) commence renewal procedures in due time prior to expiry of any of
the Insurances and provide to Lessor:
(a) if requested by Lessor, a written status report of renewal
negotiations 10 days prior to each expiry date;
(b) facsimile or telexed confirmation of completion of renewal
together with summary of conditions prior to each expiry
date; and
(c) certificates of insurance (and where appropriate
certificates of reinsurance) and broker's (and any
reinsurance brokers') letter of undertaking in a form
reasonably acceptable to Lessor in accordance with the
provisions of this Clause 9, in English, detailing the
coverage and confirming the insurers' (and any reinsurers')
agreement to the specified insurance requirements of this
Agreement within 7 days of renewal;
(6) [Intentionally omitted.]
(7) [Intentionally omitted.]
(8) not make any modification or alteration to the Insurances
material and adverse to the interests of any of the Indemnitees;
(9) be responsible for any deductible under the Insurances; and
(10) provide any other insurance and reinsurance related information
in respect of the Insurances as Lessor may reasonably require.
PAGE 44
9.5 FAILURE TO INSURE
If Lessee fails to maintain the Insurances in compliance with this
Agreement, each of the Indemnitees will be entitled but not bound
(without prejudice to any other rights of Lessor under this
Agreement):
(1) to pay the premiums due or to effect and maintain insurances
satisfactory to it or otherwise remedy Lessee's failure in such
manner (including, without limitation to effect and maintain an
"owner's interest" policy) as it considers appropriate. Any sums
so expended by it will become immediately due and payable by
Lessee to Lessor (or an Indemnitee) together with interest
thereon at the rate specified in Clause 5.10, from the date of
expenditure by it up to the date of reimbursement by Lessee; or
(2) at any time while such failure is continuing, to require the
Aircraft to remain at any airport or to proceed to and remain at
any airport designated by it until the failure is remedied to its
satisfaction.
9.6 CONTINUING INDEMNITY
Lessor may require Lessee to effect and to maintain insurance after
the Expiry Date with respect to its liability under the indemnities in
Clause 10 for such period as Lessor may reasonably require (but in no
event for a period longer than the earlier to occur of two years
following the Expiry Date or the next D-check, or equivalent) and
which provides for each Indemnitee to be named as additional insured.
Lessee's obligation in this clause shall not be affected by Lessee's
ceasing to be Lessee of the Aircraft and/or any of the Indemnitees
ceasing to have any interest in respect of the Aircraft.
9.7 APPLICATION OF INSURANCE PROCEEDS
As between Lessor and Lessee:
(1) all insurance proceeds, other than proceeds of insurance
described in Clause 9.8, received as the result of an Event of
Loss occurring during the Term will be paid to Lessor;
(2) all insurance proceeds of any property, damage or loss to the
Aircraft, any Engine or any Part occurring during the Term not
constituting an Event of Loss and in excess of the Damage
Notification Threshold shall be paid to Lessor and applied in
payment (or to reimburse Lessee) for repairs or replacement
property upon Lessor's being satisfied that the repairs or
replacement have been effected in accordance with this Agreement.
Insurance proceeds in amounts below the Damage Notification
Threshold may be paid by the insurer directly to Lessee or
repairers in respect of repairs or replacements only;
PAGE 45
(3) all insurance proceeds in respect of third party liability will
be paid by the insurers to the relevant third party in
satisfaction of the relevant liability or to Lessor or Lessee in
reimbursement of any payment so made by them with the agreement
of the insurers; and
(4) notwithstanding Clauses 9.7(1), (2) or (3), if at the time of the
payment of any such insurance proceeds a Default has occurred and
is continuing, all such proceeds will be paid to or retained by
Lessor as security for the performance of Lessee's obligations
hereunder and may be applied toward payment of any amounts which
may then be payable by Lessee under this Agreement or any Sister
Lease in such order as Lessor reasonably sees fit. The amount so
retained or the balance thereof after application of any portion
thereof as provided in this Clause 9.7(4) shall be paid to Lessee
at such time as such Default shall have ceased to exist.
9.8 INSURANCE FOR LESSEE'S OWN ACCOUNTS
Nothing herein shall be deemed to prevent Lessee, at its sole expense,
from carrying insurance covering the Aircraft, the Airframe, the
Engines or any engine or engines from time to time installed on the
Airframe or any Part in addition to the Insurances required under this
Clause 9, or in amounts greater than those required under this Clause
9 (any such insurance "Additional Insurance"), provided that such
Additional Insurance does not adversely affect the rights of Lessor,
Beneficiary or any other Additional Insured to make any claim or
obtain recovery or coverage in full under any of the Insurances
required to be maintained pursuant to this Clause 9. The proceeds of
any such Additional Insurance shall be paid directly to and shall be
deemed the sole property of Lessee.
10. INDEMNITY
10.1 GENERAL
Except as set forth in Clause 10.3, Lessee agrees to defend, indemnify
and hold harmless the Indemnitees from and against any and all claims,
proceedings, losses, liabilities, suits, judgment, costs (including
attorneys' fees and related costs), expenses, penalties or fines (each
a "Claim") (where any such Claim relates to an occurrence suffered,
incurred, or arising out of an event the happening of which was during
the Term or prior to redelivery of the Aircraft, but not before the
Term) regardless of when the Claim is made whether or not it arises
out of or is attributable to any act or omission, negligent or
otherwise, of any Indemnitee:
(1) which may at any time be suffered or incurred directly or
indirectly as a result of or connected with the possession,
delivery, performance, management, registration, control,
maintenance, condition, service, repair, overhaul, leasing, use,
operation or return of the Aircraft, any Engine or Part (either
in the air or on the ground) whether or not the Claim may be
PAGE 46
attributable to any defect in the Aircraft, any Engine or any
Part or to its design, testing or use or otherwise;
(2) which arises otherwise from or in connection with the leasing of
the Aircraft to Lessee under this Agreement and any act or
omission of Lessee;
(3) which arises out of any act or omission which invalidates or
which renders voidable any of the Insurances; or
(4) which, except as to the Manufacturer, may at any time be suffered
or incurred as a consequence of any design, production, article
or material in the Aircraft, any Engine or any part or its
operation or use constituting an infringement of patent,
copyright, trademark, design or other proprietary right or a
breach of any obligation of confidentiality owed to any person;
but excluding any Claim to the extent that the Claim is covered
pursuant to another indemnity provision of this Agreement or to the
extent it arises solely as a result of Lessor Taxes or a Lessor Lien.
10.2 DURATION
The indemnities contained in this Agreement will continue in full
force after the Expiry Date.
10.3 EXCEPTIONS
Notwithstanding anything to the contrary herein, Lessee shall not be
required to indemnify any Indemnitee in respect of any Claim arising
from or otherwise attributable to:
(1) acts or events which occur prior to execution of this Agreement
or after Redelivery of the Aircraft to the Lessor in the manner
and in the condition required hereunder, provided that nothing
herein shall be deemed to release Lessee from any of its
obligations hereunder that provide for performance after
termination of the Term;
(2) the gross negligence or willful misconduct of such Indemnitee;
(3) Lessor Taxes;
(4) Lessor Liens;
(5) ordinary and usual operating or overhead expenses of such
Indemnitee other than arising in connection with a Default or an
Event of Default hereunder;
(6) the financing of the Aircraft or any voluntary or involuntary
assignment, transfer, conveyance or other disposition
(collectively a "Transfer") of all or any interest of such
Indemnitee in or to the Aircraft, any Engine or Part or
PAGE 47
this Lease by any Person other than the Lessee unless such
Transfer arises in connection with the exercise by Lessor of any
available remedies during the existence of an Event of Default);
and
(7) as to the Manufacturer, any breach by Manufacturer or Engine
Manufacturer of any of their respective warranties as set forth
in the Purchase Agreement or any other agreement or instrument
between Manufacturer, Engine Manufacturer or any vendor, supplier
or subcontractor of Manufacturer or Engine Manufacturer, or as a
consequence of any design or production defect.
Lessee shall be subrogated to the rights and remedies which any
Indemnitee may have against the Manufacturer, the Engine Manufacturer
or any supplier, vendor, subcontractor or other manufacturer of any
Part or any other Person claiming against such Indemnitee, provided
Lessee shall have satisfied its indemnification obligations hereunder.
If any Indemnitee obtains a recovery of all or any portion of any
indemnity amount which Lessee has paid in full to such Indemnitee,
provided that at such time as no Default has occurred and is then
continuing, such Indemnitee shall pay to Lessee the net amount
recovered by such Indemnitee within ten Business Days after receipt
thereof.
11. EVENTS OF LOSS
11.1 PRE-DELIVERY
If an Event of Loss occurs prior to delivery of the Aircraft to
Lessee, this Agreement will immediately terminate and except as
expressly stated in this Agreement neither party will have any further
obligation or liability under this Agreement other than pursuant to
Clause 17.9, except that Lessor will return to Lessee the Cash Deposit
and the Deposit Letter of Credit.
11.2 POST-DELIVERY
If an Event of Loss occurs in respect of the Aircraft after delivery
of the Aircraft to Lessee, Lessee will pay the Agreed Value to Lessor
on or prior to the earlier of (1) 90 days after the Event of Loss and
(2) the date of receipt of insurance proceeds in respect of that Event
of Loss. Subject to the rights of any insurers and reinsurers or other
third party, upon irrevocable payment in full to Lessor of that amount
and all other amounts which may then be payable to Lessor under this
Agreement, Lessor will without recourse or warranty (except as to
Lessor's Liens) and without further act, be deemed to have transferred
to Lessee all of Lessor's rights to any Engines and Parts not
installed when the Event of Loss occurred, all on an as-is, where-is
basis, and will at Lessee's reasonable expense (including Taxes, if
any), execute and deliver such bills of sale and other documents and
instruments as Lessee may reasonably request to evidence (on the
public record or otherwise) the transfer and the vesting of
PAGE 48
Lessor's rights in such Engines and Parts in Lessee, free and clear of
all of Lessor Liens.
11.3 ENGINES
If an Event of Loss occurs with respect to any Engine not then
installed on the Aircraft, or upon any Event of Loss with respect to
an Engine installed on the Aircraft not involving an Event of Loss of
the Aircraft occurring after delivery of the Aircraft to Lessee,
Lessee shall give Lessor prompt written notice thereof and Lessee
shall replace such Engine as soon as reasonably possible by duly
conveying to Lessor title to another engine owned or to be acquired by
Lessee, which engine shall be free and clear of all Liens other than
Permitted Liens, and shall be of the same make or model or an improved
or advanced version, in such operating condition and of such value and
utility as the Engine which sustained the Event of Loss was (or would
have been if it had been maintained in accordance with the terms
hereof). Such replacement engine shall be deemed an "Engine" as
defined herein. Lessee agrees to take such action as Lessor may
reasonably request in order that any such replacement Engine shall be
duly and properly titled in Lessor and leased hereunder to the same
extent as the Engine replaced thereby. Lessee's obligation to pay the
Rent hereunder shall continue in full force and effect, but Lessee
shall be entitled to be reimbursed by Lessor the amount of insurance
or condemnation proceeds, if any, received by Lessor with respect to
such replaced Engine, subject to insurers' rights.
11.4 REQUISITION
During any requisition for use or hire of the Aircraft, any Engine or
Part which does not constitute or has not matured into an Event of
Loss and provided always that it does not arise out of any act or
omission of Lessor, Beneficiary or any Person claiming by or through
Lessor or Beneficiary:
(1) the Rent and other charges payable under this Agreement will not
be suspended or abated either in whole or in part, and Lessee
will not be released from any of its other obligations under the
Agreement (other than operational obligations with which Lessee
is unable to comply solely by virtue of the requisition); and
(2) so long as no Default has occurred and is continuing, Lessee will
be entitled to any hire paid by the requisitioning authority in
respect of the Term, but if a Default has occurred and is
continuing, Lessor will be entitled to such hire to be held as
security for Lessee's obligations hereunder and paid over to
Lessee at such time as such Default shall not be continuing, if
not applied in full or partial satisfaction of such obligations.
Lessee will, as soon as practicable after the end of any such
requisition, cause the Aircraft to be put into the condition
required by this Agreement. Lessor will be entitled to all
compensation payable by the requisitioning authority in respect
of any change in the structure, state or condition of the
Aircraft arising during the period of requisition, and Lessor
will apply such compensation in
PAGE 49
reimbursing Lessee for the cost of complying with its obligations
under this Agreement in respect of any such change, but so that,
if any Default has occurred and is continuing, Lessor may apply
the compensation or hire in or towards settlement of any amounts
owing by Lessee under this Agreement.
12. REDELIVERY OF AIRCRAFT
12.1 NOTIFICATION
Lessee will notify and provide Lessor with a schedule for the
Redelivery of the Aircraft not later than 30 days prior to the
commencement of the Redelivery Check, and Schedule 4 shall apply in
relation to the Redelivery Check.
12.2 REDELIVERY
On the Expiry Date or termination of the leasing of the Aircraft under
this Agreement, unless an Event of Loss has occurred, Lessee will, at
its expense, redeliver the Aircraft including all Documents and
Records to Lessor at the Redelivery Location in a condition complying
with this Agreement and in particular Schedule 4, free and clear of
all Liens and Permitted Liens (other than Lessor Liens).
12.3 REDELIVERY ACKNOWLEDGMENT
Provided Lessee has complied with its obligations under this
Agreement, upon redelivery of the Aircraft by Lessee to Lessor at the
Redelivery Location, Lessor will deliver to Lessee an acknowledgment
confirming that Lessee has redelivered the Aircraft to Lessor in
accordance with this Agreement.
12.4 SHORT TERM STORAGE
At the election of Lessor, the Lessee shall store the Aircraft either
at Lessee's facility or, at Lessee's option, at another facility that
is satisfactory to Lessor for a period of up to 30 days following
Redelivery of the Aircraft by Lessee to Lessor, so long as Lessor has
given Lessee 30 days' written notice of such storage intent prior to
the Redelivery Date. If Lessor gives Lessee written notice of its
intent to store the Aircraft less than 30 days prior to the Redelivery
Date, Lessee shall only be obligated to provide such storage if space
is available in the Lessee's storage facilities. Lessee will maintain
the Aircraft per the Manufacturer's recommended storage program, and
Lessor shall pay all actual and reasonable expenses of such storage
and maintenance.
12.5 EXPENSES
All expenses associated with the Redelivery Check, in accordance with
this Clause 12 and Schedule 4, and any other Redelivery requirement,
will be at the expense of the Lessee, unless specifically noted in
this Agreement, or otherwise mutually agreed in writing.
PAGE 50
12.6 WARRANTY TRANSFER
Any warranties remaining from work accomplished by outside vendors or
Parts installed on the Aircraft will be transferred to Lessor. For any
component repair or overhaul performed by Lessee's internal shops,
warranties will be transferred to Lessor on the understanding that
Lessee's warranty is substantially the same as the industry standard
of that component.
12.7 NON-COMPLIANCE
To the extent that at the time of Final Inspection and demonstration
flight, the Aircraft does not comply with the Redelivery condition of
this Agreement, Lessee will at Lessor's option:
(1) immediately rectify the non-compliance at Lessee's expense and to
the extent the non-compliance extends beyond the Expiry Date, the
Term will automatically be extended and this Agreement will
remain in force until the non-compliance has been rectified to
the mutual satisfaction of both parties, or
(2) redeliver the Aircraft to Lessor and indemnify Lessor, and
provide to Lessor's satisfaction security for such indemnity,
against the cost of putting the Aircraft into the condition
required by this Agreement, and pay to Lessor such actual and
reasonable costs to troubleshoot and repair the non-compliant
item as incurred by Lessor within 5 business days after the
receipt of Lessor's invoice therefor, provided that all such
repairs shall be completed within 90 days of Redelivery.
12.8 EXPORT
At Redelivery, Lessee will provide to Lessor all documents necessary
to export (if applicable) the Aircraft from the Redelivery Location if
outside the USA (including without limitation, a valid and subsisting
export license for the Aircraft). Lessee will also provide to Lessor
all necessary assistance to enable the Lessor to obtain customs
clearance and any other permissions and documentation relevant to
exportation from the Redelivery Location if outside the USA and pay
any Taxes incurred in respect of the exportation of the Aircraft from
the Habitual Base.
12.9 LATE REDELIVERY
If the Aircraft is not duly redelivered on the Expiry Date due to
delays not caused by Lessor and unforeseen or foreseen in meeting
return conditions, Lessee will be liable to Lessor (1) during the one
month period following the Expiry Date, for Rent on the basis of the
applicable Rent in the preceding Rental Period, and (2) thereafter for
150% such Rent. If in the reasonable judgment of Lessor the delay
could have been avoided by the prudent planning of Lessee, Lessee will
be liable to Lessor for Rent in the amount of 150% of the otherwise
applicable Rent commencing on the fifteenth (15th) day following the
scheduled Expiry Date. In each case, Rent will be prorated
PAGE 51
on a daily basis in an amount equal to 1/30th of the monthly Rent and
payable on a weekly basis, in advance, for each day following the
Expiry Date, until the Aircraft is duly redelivered. Following
redelivery of the Aircraft, Rent will be adjusted for the actual
number of days between the Expiry Date and the actual Redelivery Date.
Any excess amounts paid will be returned to Lessee upon satisfaction
of all open items associated with the Redelivery. During this extended
period, all of the Lessee's other responsibilities and obligations
will remain in full force and effect and Lessee will use its best
commercially reasonable efforts to redeliver the Aircraft as soon as
possible.
13. DEFAULT
13.1 EVENTS
Each of the following events will constitute an Event of Default and a
repudiation of this Agreement by Lessee:
(1) NON-PAYMENT: Lessee fails to make any payment under this
Agreement or another Lessee Document on the due date and such
failure shall continue for a period of 5 Business Days; or
(2) INSURANCE: Lessee fails to comply with any provision of Clause 9
or Schedule 5 or any insurance required to be maintained under
this Agreement is canceled or terminated or otherwise fails to
remain in full force and effect; or
(3) BREACH: Lessee fails to comply with any other provision of this
Agreement or another Lessee Document and, if such failure is in
the reasonable opinion of Lessor capable of remedy, the failure
continues for 30 days after notice from Lessor to Lessee; or
(4) REPRESENTATION: Any representation or warranty made (or deemed to
be repeated) by Lessee in or pursuant to this Agreement or
another Lessee Document, or in any document, certificate or
statement, is, or proves to have been, incorrect in any material
respect when made or deemed to be repeated and, to the extent
that the same are capable of remedy the circumstances giving rise
to such representation or warranty being incorrect are not
remedied within 30 days after notice from Lessor to Lessee; or
(5) CROSS DEFAULT:
(a) any Financial Indebtedness of Lessee or COPA Holdings is not
paid when due, after giving effect to any applicable grace
period; or
(b) any such Financial Indebtedness becomes due or capable of
being declared due prior to the date when it would otherwise
have become due; or
PAGE 52
(c) the security for any such Financial Indebtedness becomes
enforceable; or
(d) under any Sister Lease, any "Event of Default" as therein
defined occurs; or
(6) APPROVALS: Any consent, authorization, license, certificate or
approval of or registration with or declaration to any Government
Entity in connection with this Agreement and the other Lessee
Documents, including, without limitation:
(a) any authorization required by Lessee to obtain and transfer
freely Dollars (or any other relevant currency) out of any
relevant country; or
(b) any authorization required by Lessee to authorize, or which
may be related to, the execution, delivery, validity,
enforceability or admissibility in evidence of this
Agreement or the performance by Lessee of its obligations
under this Agreement; or
(c) the registration of the Aircraft; or
(d) any airline license or air transport license;
is materially and adversely modified or is withheld, or is
revoked, suspended, canceled, withdrawn, terminated or not
renewed, or otherwise ceases to be in full force and Lessor
reasonably determines, which determination shall be conclusive,
that there is a material risk that such withholding, revocation,
suspension, cancellation, withdrawal, termination or non-renewal
or cessation will materially and adversely prejudice its rights
under or in connection with this Agreement and the other Lessee
Documents, have a material adverse effect on Lessee's ability to
perform its obligations hereunder, jeopardize the interests of
Lessor in the Aircraft, or give rise to any criminal liability on
Lessor; or
(7) INSOLVENCY:
(a) Lessee or COPA Holdings is, or is deemed for the purposes of
any relevant law to be, unable to pay its debts as they fall
due or to be insolvent, or admits in writing inability to
pay its debts as they fall due; or
(b) Lessee or COPA Holdings suspends making payments on all or
any class of its debts or announces an intention to do so,
or a moratorium is declared in respect of any of its
indebtedness; or
PAGE 53
(c) a creditor applies for the suspension of payments of Lessee
or COPA Holdings, and such application is not dismissed
within sixty (60) days after the filing thereof; or
(8) LIQUIDATION, BANKRUPTCY OR SIMILAR PROCEEDINGS:
(a) a meeting of the shareholders or directors of Lessee or COPA
Holdings is convened to consider a resolution to present an
application for a moratorium, administration order, or any
such resolution is passed; or
(b) any step (including petition proposal or convening a
meeting) is taken with a view to composition, assignment or
arrangement with any of its creditors of, or the
rehabilitation, administration, custodianship, liquidation,
or dissolution of Lessee or COPA Holdings; or any other
involuntary insolvency proceedings involving Lessee or COPA
Holdings are commenced and remain undismissed for a period
of sixty (60) days; or
(c) any order is made or resolution passed for any such
composition, assignment, arrangement, rehabilitation,
administration, custodianship, liquidation, dissolution or
insolvency proceedings, of Lessee or COPA Holdings becomes
subject to or enters into any of the foregoing; or
(d) any order, judgment or decree is entered by any court of
competent jurisdiction finding Lessee or COPA Holdings to be
a bankrupt or authorizing the liquidation, reorganization,
bankruptcy, composition or readjustment of debts of Lessee
or COPA Holdings; or
(9) RECEIVER:
(a) an administrative or other receiver or manager is appointed
in respect of Lessee or COPA Holdings or any part of its
assets; or
(b) Lessee or COPA Holdings requests any person to appoint such
a receiver or manager; or
(c) any sequestration of any substantial part of the assets of
Lessee or COPA Holdings that remains in force undismissed,
unstayed and unvacated for a period of 60 days; or
(10) FINAL ADVERSE JUDGMENT: A final judgment for the payment of money
in excess of $3,000,000 that is not covered by insurance shall be
rendered against Lessee and the same shall remain unpaid,
unstayed or undischarged for a period of 60 days; or
PAGE 54
(11) OTHER JURISDICTION: There occurs in relation to Lessee or COPA
Holdings any event anywhere which, in the reasonable opinion of
Lessor, corresponds with any of those mentioned in Clauses
13.1(8) or (9); or
(12) UNLAWFUL: It becomes unlawful for Lessee to perform any of its
obligations under this Agreement or this Agreement becomes wholly
or partly invalid or unenforceable, subject to the provision in
Clause 15.1; or
(13) SUSPENSION OF BUSINESS: Lessee or COPA Holdings suspends or
ceases or threatens to suspend or cease to carry on all or a
substantial part of its business or that of any of its material
subsidiaries as currently conducted and any such partial
suspension or cessation would materially adversely affect
Lessee's ability to perform its obligations under this Agreement;
or
(14) DISPOSAL: Lessee or COPA Holdings disposes or threatens to
dispose of all or a material part of its operating fixed assets
(including, but not limited to, aircraft and spares), whether by
one or a series of transactions, related or not, other than for
the purpose of a reconstruction or amalgamation, the terms of
which have received the previous consent in writing of Lessor,
which consent will not be unreasonably withheld, and any such
disposition would materially adversely affect Lessee's ability to
perform its obligations under this Agreement; or
(15) RIGHTS: The existence, validity, enforceability or priority of
the rights of Lessor as Lessor in respect of the Aircraft are
challenged by Lessee or any other person claiming by or through
Lessee; or
(16) CHANGE OF OWNERSHIP: Any person or group of persons, excluding
the shareholders of Lessee or COPA Holdings and any Affiliate or
Subsidiary thereof, acquires, after the date hereof, more than
50% of the equity share capital of Lessee, or control of Lessee,
without the consent of Lessor, which consent shall not be
unreasonably withheld, and such acquisition of equity or control
shall have a material adverse affect on Lessee's ability to
perform its obligations hereunder. For the purposes of this
Clause 13.1(16), "control" means the power to direct the
management and policy of Lessee whether by control of the
composition of the board of directors (or similar governing body)
of Lessee, or by contract or otherwise; or
(17) DELIVERY: Lessee fails to accept delivery of the Aircraft when
validly tendered by Lessor pursuant to this Agreement; or
(18) ADVERSE CHANGE: Any event or series of events occurs (exclusive
of events affecting the airline industry generally) which, in the
reasonable opinion of Lessor, shall have had a material adverse
effect on Lessee's ability to perform its obligations hereunder
and such event (or series of events) shall continue unremedied
for a period in excess of 60 days.
PAGE 55
(19) LETTERS OF CREDIT:
(a) the issuer of either Letter of Credit fails to make any
payment under any Letter of Credit when due and Lessee fails
to procure the making of such payments within 3 Business
Days after notice from Lessor to Lessee; or
(b) either Letter of Credit is not in full force or, for any
reason ceases to constitute the legal, valid and binding
obligation of the issuer; or
(c) Lessee fails to provide and deliver replacement, renewal or
further Letters of Credit pursuant to Clause 5.1; or
(d) any of the events listed in sub-clauses 13.1(7), (8) or (9)
apply to that issuer (references in those sub-clauses to
Lessee being deemed to be to the issuer) and Lessee has not
provided to Lessor other letters of credit in the principal
amount and in substantially the same form of the Letters of
Credit issued or confirmed by a bank reasonably satisfactory
to Lessor in Lessor's sole discretion, within 10 days of the
occurrence of that event.
13.2 RIGHTS
If an Event of Default occurs and is continuing, Lessor may at its
option (and without limitation or prejudice to any other rights and
remedies that may be available to Lessor under this Agreement or at
law or equity), at any time thereafter:
(1) by notice to Lessee and with immediate effect unilaterally and as
a matter of law terminate the lease of the Aircraft hereunder
(but without prejudice to the continuing obligations of Lessee
under this Agreement), whereupon all rights of Lessee under this
Agreement shall cease without any further action or judicial
order; and/or
(2) proceed by appropriate court action or actions to enforce
performance of this Agreement and/or to recover damages for the
breach of this Agreement; and/or
(3) terminate the lease of the Aircraft hereunder as a matter of law
and without further action or judicial order by either:
(a) taking possession of the Aircraft, for which purpose Lessor
may enter any premises belonging to or in the occupation of
or under the control of Lessee where the Aircraft may be
located, or cause the Aircraft to be redelivered to Lessor
at an airport designated by the Lessor (or such other
location as Lessor may require), and Lessor is hereby
irrevocably by way of security for Lessee's obligations
under this Agreement appointed attorney for Lessee in
causing the redelivery or in directing the pilots of Lessee
or other pilots to fly the Aircraft to
PAGE 56
that airport and will have all the powers and authorizations
necessary for taking that action; or
(b) serving notice requiring Lessee to redeliver the Aircraft to
Lessor at an airport designated by the Lessor in the USA.
13.3 EXPORT
If an Event of Default occurs and is continuing and Lessor terminates
this Agreement pursuant to Clause 13.2, Lessor may sell or otherwise
deal with the Aircraft as if this Agreement had never been made and
Lessee will at the request of Lessor take all steps necessary to
effect (if applicable) export of the Aircraft from the country where
the Aircraft is then situated and any other steps necessary to enable
the Aircraft to be immediately redelivered to Lessor in accordance
with this Agreement. Lessee hereby irrevocably and by way of security
for its obligations under this Agreement appoints Lessor as its
attorney to execute and deliver any documentation and to do any act or
thing required in connection with the foregoing, including, but not
limited to, filing any documents and taking any actions necessary for
the purpose of requesting cancellation of the registration of the
Aircraft with the Air Authority.
13.4 DEFAULT PAYMENTS
If:
(1) Default occurs and is continuing; or
(2) the Aircraft is not delivered on the proposed Delivery Date by
reason of failure of Lessee to satisfy any conditions to that
delivery except in the event of an Excusable Delay;
Lessee will indemnify Lessor on demand against any loss (including
loss of profit), damage, expense, cost or inability which Lessor may
sustain or incur directly or indirectly as a result thereof including
but not limited to:
(a) any loss of profit suffered by Lessor because of Lessor's
inability to place the Aircraft on lease with another lessee
on terms as favorable to Lessor as this Agreement or because
the following are not as profitable to Lessor as such lease
would have been but for such Default or non-delivery
referred to in (1) and (2) above, namely (i) whatever use if
any to which Lessor is able to put the Aircraft as an
alternative to the Lease under this Agreement or (ii) any
consequent sale or disposal by Lessor of the Aircraft and
the funds arising upon such sale or disposal; and
(b) any loss, cost, expense, or liability sustained or incurred
by Lessor owing to Lessee's failure to redeliver the
Aircraft on the date, at the place and in the condition
required by this Agreement.
PAGE 57
13.5 SURVIVAL
All the representations, warranties, indemnities and unperformed
covenants and Lessor's rights contained in this Agreement shall
survive and continue in full force after the Expiry Date,
notwithstanding the termination of this Agreement or the lease of the
Aircraft for any reason whatsoever.
14. ASSIGNMENT, NOVATION
14.1 LIEN
Lessee will not assign, or create or permit to exist any Lien, other
than Permitted Liens, over, any of its rights under this Agreement,
the other Lessee Documents or the Insurances.
14.2 LEASE ASSIGNMENT/NOVATION
Subject at all times and in all cases to Lessee's rights under this
Agreement and such other restrictions as are set forth herein, Lessor,
at its sole cost and expense, may sell, assign, pledge, transfer or
convey (in each case a "Transfer") to any Person (each a
"Transferee"), any or all of Lessor's rights, title and interest in,
to and under this Agreement and in respect of the Aircraft; provided
however, that no such Transfer shall, directly or indirectly, (i)
materially increase Lessee's obligations, duties or liabilities under
this Agreement or in respect of the Aircraft in any manner whatsoever,
(ii) diminish or adversely affect Lessee's rights under this Agreement
or in respect of the Aircraft; (iii) be made to any airline, or (iv)
otherwise cause Lessee to incur any obligations, cost or expense in
excess of those for which it would have been responsible in the
absence of such Transfer; provided further however, that (a) any
Transferee, whether of all or any part of Lessor's interest in and to
this Agreement or the Aircraft, shall have executed and delivered to
Lessee written confirmation in form reasonably satisfactory to Lessee
that such Transferee agrees to be bound by all of the terms and
conditions of this Agreement and (b) any Transferee, whether of all or
any part of Lessor's interest in and to this Agreement or the
Aircraft, shall have executed and delivered to Lessee, a letter of
quiet enjoyment, in form and substance substantially equivalent to
Clause 7.1 hereof. Notwithstanding the foregoing, in the case of any
Transfer of this Agreement or the Aircraft as security for any
obligations of Lessor (whether in respect of any financing
arrangements made by Lessor in respect of the Aircraft or otherwise),
Lessor shall remain fully liable to Lessee for the prompt and due
payment and performance of all of its duties, liabilities and
obligations under this Agreement to the full extent as if no such
Transfer had been made. Lessee acknowledges and agrees that should
Lessor sell, assign transfer or convey to a Transferee, other than by
way of security, all of Lessor's interest under this Agreement and in
the Aircraft, Lessor shall thereupon be relieved of all of its
obligations hereunder and Lessor's Transferee shall succeed to all of
Lessor's rights, interests and obligations under this Agreement,
subject however to Lessor's compliance with the terms and provisions
of this Clause.
PAGE 58
Subject to compliance by Lessor with this Clause 14.2, lessee shall
execute and deliver, at Lessor's sole cost and expense, any and all
instruments or documents reasonably requested by Lessor and shall
otherwise reasonably cooperate with Lessor in connection with and to
effectuate any such Transfer.
15. ILLEGALITY
If, notwithstanding the provisions of Clause 17.7, it becomes unlawful in
any jurisdiction for Lessor or Lessee to give effect to their respective
obligations as contemplated by this Agreement, the affected party shall
notify the other in writing. Lessor and Lessee will consult in good faith
as to any steps which may be taken to restructure the transaction to avoid
that unlawfulness but neither party will be under no obligation to take any
such steps. Notwithstanding the foregoing, as Lessor in its discretion
considers appropriate or advisable while any such illegality exists and
prior to any such cure thereof, Lessor may by notice in writing to Lessee
terminate the leasing of the Aircraft under this Agreement. Upon any such
termination, Lessee will immediately redeliver the Aircraft to Lessor as
follows: (i) if the illegality causing such termination relates to the
rights or powers of Lessee and is attributable to the laws or regulations
of the Republic of Panama or any other jurisdiction with jurisdiction over
the rights or powers of Lessee, Lessee shall redeliver the Aircraft to
Lessor in accordance with the requirements of Clause 12 and Schedule 4;
(ii) if the illegality causing such termination relates to the rights or
powers of Lessor or Beneficiary and is attributable to the laws of the USA
or any other jurisdiction with jurisdiction over the rights or powers of
Lessor or Beneficiary, Lessee shall return the Aircraft to Lessor in
accordance with the requirements of Clauses 12.2, 12.4 12.5 12.6 and 12.8
of this Agreement, together with Clauses 1.0, 2.4, 2.8, 2.14, 2.15, 3.1,
4.1, 4.3 and 5.1 through 5.5 of Schedule 4.
16. DISCLAIMERS AND WAIVERS
16.1 EXCLUSION AND WAIVER
AS BETWEEN LESSOR AND LESSEE, THE AIRCRAFT IS BEING DELIVERED AND
LEASED TO LESSEE UNDER THIS AGREEMENT "AS IS, WHERE IS" AND, EXCEPT
FOR LESSOR'S REPRESENTATIONS AND WARRANTIES SET FORTH IN CLAUSE 2.4 OF
THIS AGREEMENT, NEITHER LESSOR NOR ANY OTHER INDEMNITEE (OTHER THAN
MANUFACTURER) MAKES ANY WARRANTIES OR REPRESENTATIONS WHATSOEVER.
LESSOR'S REPRESENTATIONS AND WARRANTIES SET FORTH IN CLAUSE 2.4 ARE
EXCLUSIVE AND IN SUBSTITUTION FOR, AND LESSEE, FOR THE BENEFIT OF
LESSOR AND ANY OTHER INDEMNITEE (OTHER THAN MANUFACTURER), HEREBY
WAIVES, RELEASES AND RENOUNCES ALL OTHER WARRANTIES, PATENT AND OTHER
INDEMNITIES, OBLIGATIONS AND LIABILITIES OF LESSOR AND ANY OTHER
INDEMNITEE (OTHER THAN MANUFACTURER), AND ANY AND ALL RIGHTS, CLAIMS
AND REMEDIES OF LESSEE, ITS SUCCESSORS OR PERMITTED ASSIGNS, EXPRESS
OR IMPLIED, ARISING BY LAW OR OTHERWISE, WITH RESPECT TO ANY
NONCONFORMANCE OR DEFECT IN THE AIRCRAFT, ANY PART THEREOF OR ANY
OTHER THING
PAGE 59
DELIVERED, LEASED, CHARTERED, SOLD OR TRANSFERRED UNDER THIS LEASE,
INCLUDING, BUT NOT LIMITED TO:
(1) ANY WARRANTY AS TO THE DESCRIPTION, CONFORMITY TO THE PROVISIONS
OF THE PURCHASE AGREEMENT, AIRWORTHINESS, VALUE, CONDITION,
DESIGN, OPERATION OF, OR QUALITY OF THE MATERIAL OR WORKMANSHIP
IN, OR ANY DEFECT IN, THE AIRCRAFT, THE AIRFRAME, ANY ENGINE, ANY
PART, ANY DOCUMENTS, ANY RECORDS, ANY DATA OR ANY OTHER THING
DELIVERED, SOLD OR TRANSFERRED HEREUNDER;
(2) ANY IMPLIED WARRANTY OF MERCHANTABILITY OR FITNESS FOR USE OR FOR
A PARTICULAR PURPOSE;
(3) ANY EXPRESS OR IMPLIED WARRANTY AS TO TITLE;
(4) ANY IMPLIED WARRANTY ARISING FROM COURSE OF PERFORMANCE, COURSE
OF DEALING OR USAGE OF TRADE;
(5) ANY OBLIGATION OR LIABILITY WITH RESPECT TO ANY ACTUAL OR ALLEGED
INFRINGEMENT OF ANY PATENT, TRADEMARK, COPYRIGHT OR OTHER
INTELLECTUAL PROPERTY;
(6) ANY OBLIGATION, LIABILITY, RIGHT, CLAIM OR REMEDY IN TORT,
WHETHER OR NOT IN STRICT OR ABSOLUTE LIABILITY OR ARISING FROM
THE NEGLIGENCE OF LESSOR OR ANY OTHER INDEMNITEE, WHETHER ACTUAL
OR IMPUTED, ACTIVE OR PASSIVE;
(7) THE ABSENCE OF LATENT OR OTHER DEFECT OR NONCONFORMANCE IN THE
AIRFRAME, ANY ENGINE, ANY PART, ANY DOCUMENTS, ANY RECORDS, ANY
DATA OR ANY OTHER THING DELIVERED, SOLD OR TRANSFERRED HEREUNDER,
WHETHER OR NOT DISCOVERABLE; AND
(8) ANY OBLIGATION, LIABILITY, RIGHT, CLAIM OR REMEDY FOR LOSS OR
DAMAGE TO THE AIRCRAFT, THE AIRFRAME, ANY ENGINE, ANY PART, ANY
DOCUMENT, ANY RECORD, ANY DATA OR ANY OTHER THING DELIVERED,
LEASED OR TRANSFERRED HEREUNDER, FOR ANY LIABILITY OF LESSEE TO
ANY THIRD PARTY OR FOR ANY LOSS OF USE, REVENUE OR PROFIT OR FOR
ANY OTHER DIRECT, INCIDENTAL OR CONSEQUENTIAL DAMAGES.
16.2 CERTIFICATE OF ACCEPTANCE
DELIVERY BY LESSEE TO LESSOR OF THE CERTIFICATE OF ACCEPTANCE WILL BE
CONCLUSIVE PROOF AS BETWEEN LESSOR AND
PAGE 60
LESSEE THAT LESSEE HAS EXAMINED AND INVESTIGATED THE AIRCRAFT, THAT
THE AIRCRAFT AND THE DOCUMENTS AND RECORDS ARE SATISFACTORY TO LESSEE
AND THAT LESSEE HAS IRREVOCABLY AND UNCONDITIONALLY ACCEPTED THE
AIRCRAFT FOR LEASE HEREUNDER WITHOUT ANY RESERVATIONS WHATSOEVER
EXCEPT AS MAY BE STATED THEREIN.
17. MISCELLANEOUS
17.1 WAIVERS, REMEDIES, CUMULATIVE
The rights of Lessor under this Agreement:
(1) may be exercised as often as necessary;
(2) are cumulative and not exclusive of its rights under any law; and
(3) may be waived only in writing and specifically.
Delay in the exercise or non-exercise of any such right will not
constitute a waiver of that right.
17.2 DELEGATION/AGENCY AGREEMENT
Lessor may delegate to any person or persons all or any of the trusts,
powers or discretions vested in it under this Agreement and any such
delegation may be made upon such terms and conditions and subject to
such regulations (including power to sub-delegate) as Lessor
determines in its absolute discretion, provided that Lessor shall
remain responsible for the performance of any such trusts, powers and
discretions so delegated.
Pursuant to the Purchase Agreement, certain obligations remain to be
performed by Lessor in connection with the manufacture, fabrication
and completion of the Aircraft by Manufacturer, which obligations,
including the furnishing of certain equipment for the Aircraft, will
be performed by Lessee. Lessee will act as Lessor's agent with respect
to such matters as set forth in, and pursuant to, the terms of an
agency agreement to be entered into by Lessor and Lessee in form and
substance reasonably satisfactory to Lessor and Lessee. Lessee will
perform its obligations as set forth in such agency agreement and
provide the Aircraft equipment which must be provided by Lessee within
the time periods required by Manufacturer, save for excusable delay.
17.3 CERTIFICATES
Except as expressly provided in this Agreement, any certificate or
determination by Lessor as to any rate of interest or as to any other
amount payable under this Agreement will, in the absence of manifest
error, be conclusive and binding on Lessee provided that the same
shall be accompanied by a written explanation, or
PAGE 61
reasonable detail, as to the calculation or determination of any
amount stated to be payable therein.
17.4 APPROPRIATION
If any sum paid or recovered in respect of the liabilities of Lessee
under this Agreement is less than the amount then due, Lessor may
apply that sum to amounts due under this Agreement in such proportions
and order and generally in such manner as Lessor may reasonably
determine.
17.5 CURRENCY INDEMNITY
17.5.1 If Lessor receives an amount in respect of Lessee's liability
under this Agreement or if such liability is converted into a
claim, proof, judgment or order in a currency other than the
currency in which the amount is expressed to be payable under
this Agreement (the "contractual currency"), then:
(1) Lessee will indemnify Lessor as an independent obligation
against any loss arising out of or as a result of such
conversion;
(2) If the amount received by Lessor, when converted into the
contractual currency (at the market rate at which Lessor is
able on the relevant date to purchase the contractual
currency with such other currency) is less than the amount
owed in the contractual currency, Lessee will, immediately
on demand, pay to Lessor an amount in the contractual
currency equal to the deficit; and
(3) Lessee will pay to Lessor on demand any exchange costs and
Taxes payable in connection with the conversion.
17.5.2 Lessee waives any right it may have in any jurisdiction to pay
any amount under this Agreement in a currency other than the
contractual currency.
17.6 SET-OFF
Lessor may set off any matured obligation owed by Lessee under this
Agreement, any Sister Lease or any other agreement between Lessor (or
any affiliate or subsidiary of Lessor) and Lessee (each an "Other
Agreement") in respect of which an Event of Default (or similar event)
has occurred and is continuing (to the extent beneficially owned by
Lessor) against any obligation (whether or not matured) owed by Lessor
to Lessee, regardless of the place of payment or currency. If the
obligations are in different currencies, Lessor may convert either
obligation at the market rate of exchange available for the purpose of
the set-off. If an obligation is unascertained or unliquidated, Lessor
may in good faith estimate that obligation and set off in respect of
the estimate, subject to the relevant party accounting to the other
when the obligation is ascertained or liquidated. Lessor will not be
obliged to pay amounts to Lessee under this Agreement or any Other
Agreements in respect of
PAGE 62
which an Event of Default has occurred and is continuing so long as
any sums which are then due to Lessor by Lessee under this Agreement
remain unpaid and any such amounts which would otherwise be due will
fall due only if and when Lessee has paid all such sums except to the
extent Lessor otherwise agrees or sets off such amounts against such
payment pursuant to the foregoing.
17.7 SEVERABILITY
If any provision hereof shall be held invalid, illegal or
unenforceable in any respect in any jurisdiction, then to the extent
permitted by law, (a) all other provisions hereof shall remain in full
force and effect in such jurisdiction and (b) such invalidity,
illegality or unenforceability shall not affect the validity, legality
or enforceability of such provision in any other jurisdiction. If,
however, any law pursuant to which such provisions are held invalid,
illegal or unenforceable may be waived, such law is hereby waived by
the parties hereto to the full extent permitted, to the end that this
Agreement shall be deemed to be a valid and binding agreement in all
respects, enforceable in accordance with its terms.
17.8 REMEDY
If Lessee fails to comply with any provision of this Agreement, Lessor
may, without being in any way obliged to do so or responsible for so
doing and without prejudice to the ability of Lessor to treat the
non-compliance as a Default or an Event of Default, effect compliance
on behalf of Lessee, whereupon Lessee shall become liable to pay
immediately any sums expended by Lessor, together with all costs and
expenses (including legal costs) in connection therewith.
17.9 EXPENSES
17.9.1 Whether or not the Aircraft is delivered to Lessee pursuant to
this Agreement unless any failure to effect delivery results from
an act or omission to act by Lessor or Beneficiary not
anticipated or otherwise permitted under this Agreement, Lessee
will pay to Lessor on demand all reasonable expenses (including
investigation and appraisal expenses, attorneys' fees and other
costs) payable or incurred by Lessor in connection with the
enforcement of or preservation of any of Lessor's rights under
this Agreement or any related agreement, or in respect of the
repossession of the Aircraft pursuant to Clause 13.2. 17.9.2 Each
party shall bear all other expenses (including legal,
professional, and out-of-pocket expenses) incurred or payable by
such party in connection with the negotiation, preparation, and
execution of this Agreement and/or the other documents
contemplated hereby.
17.9.3 All expenses payable pursuant to Clause 17.9.1 will be paid in
the currency in which they are incurred by Lessor.
PAGE 63
17.10 TIME OF ESSENCE
The time stipulated in this Agreement for all payments payable by
Lessee to Lessor and for the performance of Lessee's other obligations
under this Agreement will be of the essence.
17.11 NOTICES
All notices under, or in connection with, this Agreement will, unless
otherwise stated, be given in writing by letter delivered by courier
or by facsimile. Any such notice is deemed to be given as follows:
(1) if by letter, when delivered; and
(2) if by fax, when transmitted and full transmission has been
separately notified by telephone by the transmitting party.
The address, telephone numbers and facsimile numbers of Lessee and
Lessor and Beneficiary are as follows (or such other address,
telephone number or facsimile number notified by the relevant party):
Lessee: Address: ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇ ▇▇▇▇▇ ▇▇
▇▇▇▇▇▇ ▇, ▇▇▇▇▇▇▇▇ of Panama
Attention: Executive President
Facsimile: ▇▇▇-▇▇▇-▇▇▇▇
Telephone: ▇▇▇-▇▇▇-▇▇▇▇
Lessor: Address: ▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇ ▇▇▇
Attention: Corporate Trust Department
Facsimile: ▇▇▇-▇▇▇-▇▇▇▇
Telephone: ▇▇▇-▇▇▇-▇▇▇▇
with a copy to:
Beneficiary: Address: ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇
Attention; Contracts Director
Facsimile: ▇▇▇-▇▇▇-▇▇▇▇
Telephone: ▇▇▇-▇▇▇-▇▇▇▇
PAGE 64
17.12 LAW AND JURISDICTION
17.12.1 This Agreement shall in all respects be governed by, and
construed in accordance with, the internal laws of the State of
New York, inclusive of all matters of construction, validity and
performance.
17.12.2 Lessee and Lessor hereby irrevocably submit to the
jurisdiction of any New York state or federal court sitting in
New York City in any action or proceeding arising out of or
relating to this Lease, and hereby irrevocably agree that all
claims in respect of such action or proceeding may be heard and
determined in such New York state court or, to the extent
permitted by law, in such federal court. Lessee and Lessor hereby
irrevocably waive, to the fullest extent they may effectively do
so, the defense of an inconvenient forum to the maintenance of
such action or proceeding. Lessor hereby irrevocably appoints CT
Corporation System, with an office on the date hereof at ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, and Lessee hereby irrevocably
appoints Greenberg, Traurig, Hoffman, Lipoff, ▇▇▇▇▇ & ▇▇▇▇▇▇▇,
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ (the "Process Agents"),
as their respective Process Agents to receive on their behalf
proper service of copies of the summons and complaint and any
other process that may be served in any such action or
proceeding. Such service may be made by mailing or delivering a
copy of such process to Lessee or Lessor, as the case may be, in
care of their respective Process Agents at such Process Agent's
above address, and Lessee and Lessor hereby irrevocably authorize
and direct their respective Process Agents to accept such service
on their behalf. Lessee and Lessor agree that a final
non-appealable judgment 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. Nothing in
this Clause 17.12.2 shall affect the right of any Person to serve
legal process in any other manner permitted by law or affect the
right of any other party to bring any action or proceeding
against Lessee or Lessor, or their respective properties in the
courts of other jurisdictions. LESSEE AND LESSOR HEREBY WAIVE
TRIAL BY JURY IN ANY JUDICIAL PROCEEDING TO WHICH THEY ARE
PARTIES INVOLVING, DIRECTLY OR INDIRECTY, ANY MATTER ARISING OUT
OF OR RELATING TO THIS LEASE.
17.12.3 Lessee agrees that any final non-appealable judgment or order
of a Federal or State court located in the State of New York in
connection with this Agreement and the other Lessee Documents is
conclusive and binding on it and may be enforced against it in
the courts of any other jurisdiction.
17.12.4 Lessee irrevocably and unconditionally:
(1) agrees that if Lessor brings legal proceedings against it or
its assets in relation to this Agreement and the other
Lessee Documents, no immunity from such legal proceedings
(which will be deemed to
PAGE 65
include without limitation, suit, attachment prior to
judgment, other attachment, the obtaining of judgment,
execution or other enforcement) will be claimed by or on
behalf of itself or with respect to its assets;
(2) waives any such right of immunity which it or its assets now
has or may in the future acquire; and
(3) consents generally in respect of any such proceeding to the
giving of any relief or the issue of any process in
connection with such proceedings including without
limitation, the making, enforcement or execution against any
property whatsoever (irrespective of its use or intended
use) of any order or judgment which may be made or given in
such proceedings.
17.13 SOLE AND ENTIRE AGREEMENT
This Agreement (including all Schedules hereto) is the sole and entire
agreement between Lessor and Lessee in relation to the leasing of the
Aircraft, and supersedes all previous agreements in relation to that
leasing.
17.14 INDEMNITIES
All rights expressed to be granted to each Indemnitee under this
Agreement (other than Lessor) are given to Lessor on behalf of that
Indemnitee.
17.15 COUNTERPARTS
This Agreement may be executed in counterparts each of which will
constitute one and the same document.
17.16 LANGUAGE
All notices to be given under this Agreement will be in English. All
documents delivered to Lessor pursuant to this Agreement will be in
English, or will be accompanied by a certified English translation. If
there is any inconsistency between the English version of this
Agreement and any version in any other language, the English version
will prevail.
17.17 MODIFICATION
No modification, change, waiver or amendment to this Agreement or any
related letter agreements shall be deemed to be made unless in writing
signed by the party to be charged.
PAGE 66
17.18 OWNER TRUSTEE
(1) Except as expressly provided in this Agreement, Lessee
acknowledges (i) that this Agreement is executed by First
Security Bank, National Association, not in its individual
capacity, but solely as owner trustee, except as otherwise
expressly provided herein, under the Trust Agreement with
Beneficiary as grantor, in the exercise of the power and
authority conferred and vested in it as such owner trustee, (ii)
this Agreement is intended to bind only the Trust Estate (as
defined in the Trust Agreement) except to the extent of the
representations and warranties made herein by First Security
Bank, National Association in its individual capacity, and (iii)
that nothing herein contained shall be construed as creating any
liability on First Security Bank, National Association,
individually or personally, to perform any agreement herein, all
such liability, if any, being expressly waived by Lessee and by
each and every person now or hereafter claiming by, through or
under Lessee, except with respect to the negligence or willful
misconduct of First Security Bank, National Association.
(2) If First Security Bank, National Association shall cease to be a
"citizen of the United States" within the meaning of 49 U.S.C.
Section 40102 and the rules and regulations of the FAA
thereunder, First Security Bank, National Association, in its
individual capacity, agrees to give Lessee and Beneficiary prompt
notice thereof, upon an officer of First Security Bank, National
Association becoming aware thereof, and agrees to cooperate with
the efforts of Beneficiary promptly to replace it as owner
trustee of the trust owning the Aircraft and as Lessor hereunder
with a person who is such a "citizen of the United States."
[This space intentionally left blank.]
PAGE 67
ANNEX A
**Material Redacted**
**3 pages**
PAGE 68
ANNEX A
CERTAIN TERMS
Defined Term Definition
[Intentionally omitted from the
version of this document filed with the FAA and the
Directorate of Civil Aeronautics
and recorded with the Office of the Public Registry
as containing confidential financial information.]
PAGE 69
SCHEDULES
Page 1
SCHEDULE 1
PART 1
DESCRIPTION OF AIRCRAFT
AIRCRAFT
MANUFACTURER: The Boeing Company
MODEL: 737-71Q
SERIAL NUMBER: 29048
GENERAL FEATURES (subject to change and offer ability by Boeing): As set out in
Part 2 of Schedule 1
AIRCRAFT SPECIFICATION
The Aircraft specification is as per Boeing Detail Specification Documents
(D6-38808-27) ("Tombo Baseline Specification") (including such production
improvements as may be incorporated into the Aircraft), as further modified to
incorporate any change orders accepted by Manufacturer in respect of the
Aircraft, and any further changes as agreed from time to time, together with
Documents and Records.
ENGINES
ENGINE TYPE AND NO: Two (2) CFM56-7B24 engines rated at 24,000 lbs of thrust.
EACH OF THE ENGINES IS 750 OR MORE RATED TAKE-OFF HORSEPOWER OR ITS EQUIVALENT.
MANUFACTURER: CFM International, Inc.
SERIAL NOS: As set out in the Certificate of Acceptance
Page 1
SCHEDULE 1
PART 2
GENERAL FEATURES
The following are to be incorporated on delivery in each case subject to
confirmation by Boeing after signature of this Agreement that Boeing will
incorporate them in the Aircraft on delivery, which Lessor shall request after
signature.
0310MP3528 MTW/MTOW 153,500/153,000 LBS
7200CG3255 24,000 LBS THRUST
DUAL MMR -ILS/GPS
ENHANCED GPWS 3446 MK 3244
PREDICTIVE WINDSHEAR/WX RADAR
Page 2
SCHEDULE 1
PART 3
LESSEE'S OPTIONS
This listing represents changes assumed to accommodate the desired Lessee
configuration and is subject to confirmation on availability and agreed effect
on lease pricing and delivery schedule.
I.
2210CG3197 G/S CAP INHIBIT BEFORE LOC (ADD)
2210CG3198 DFCS - CWS WARN (DELETE)
2210CG3232 DFCS - ALT ALERT 200/900 FT (DELETE)
2210CG3235 DFCS - ALT ALERT 300/900 (ADD)
2350CG3147 CW INTERPHONE SW - SPRING LOAD TO OFF W/LOCK (DELETE)
2350CG3158 CW INTERPHONE SW - SPRING LOAD TO OFF (ADD)
2350CG3153 FLT COMP AUDIO MUTE REVISION - ONE SIDE MUTING (ADD)
2350CG3163 DIG. AUDIO REMOTE ELECT. UNIT - DEL HEADSET AURAL (ADD)
3162CG3018 ENHANCED MACH / A/S DISPLAY (DELETE)
3162CG3019 R/A DISPLAY - ROUND DIAL (ADD)
3162CG3020 R/A ABOVE ADI (DELETE)
3162CG3021 R/A BELOW ADI (ADD)
3162CG3025 R/A ALERT 2,500 FT (DELETE)
3162CG3026 ALT. COMPARATOR - STEADY (ADD)
3162CG3027 ALT. COMPARATOR - FLASHING (DELETE)
3162CG3036 AUTOTUNED NAVIDS - DISPLAYED (ADD)
3162CG3037 AUTOTUNED NAAIDS - SUPPRESSED (DELETE)
3162CG3104 ENG INSTR DISPLAY - SIDE BY SIDE (ADD)
3162CG3105 ENG INSTR DISPLAY - OVER & UNDER (DELETE)
3162CH3135 ADDED T/O BUG - NOT DISPLAYED (ADD)
3162MP3186 WX RDR RANGE IND - RANGE MARKS IN LIEU ARCS (ADD)
3446CG3120 GPWS ACT OF DESCENT BELOW MIN (MODE 6) (DELETE)
3446CG3127 GPWS R/A CALLOUTS (100, 50, 30, 20, 10) (ADD)
3446MP3172 GPWS VOICE "HALF VOL" IN LIEU "FULL VOL" (ADD)
3461CG3432 THRUST REDUCTION ALT - T/O PROFILE (ADD)
3461CG3498 FMC ACTIVATION - 1 MEG DATA BASE (ADD) $77,300
3461CH3562 FMC ACTIVATION - RETENTION OF WAYPOINT AFTER DIRECT TO $9.900
Page 3
II.
P/N SWAP CONTINENTAL TOMBO
-------- ----------- -----
1 SSCVR LORAL/▇▇▇▇▇▇▇▇▇ 2100-1010-00 ALLIED SIG
2370MP3215 2370CH3199
2 FLASHLIGHT DME P2-07-0001-215 P2-07-0001-214
2564MP3127
3 DFDAU 223300-83 TELEDYNE DFDMU
3131MP3883, 3131MP3999 3131CH3935
RR97155-26,-29
4 SSDFDR LOCKHEED
3131MP3847 ?
5 NOSE & MLG WHLS/BRAKES ▇▇ ▇▇▇▇▇▇▇▇ ALLIED SIGNAL
3240CG3235 3240CG3226
6 MLG TIRES H44.5 X 16.5 X ▇▇ / ▇▇ ▇▇▇ ▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇ 3245CG3030
▇ ▇▇ ▇▇▇ ▇/▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇-▇▇▇▇-▇▇▇ ALLIED SIGNAL
3443MP3264 3443CG3184
8 WX RDR SPLIT FUNC C/P ▇▇▇▇▇▇▇ ▇▇▇-▇▇▇▇-▇▇▇
3443MP3259 ?
9 TCAS II 622-8971-500 ▇▇▇▇▇▇▇ ALLIED SIG
3445MP3289 3445CG3169
10 ATC/TCAS CONT. PNL GABLES G6992-40 ?
3445MP3332
11 FMC CDU (MULTI-PURPOSE) FMC/ACARS/FDAU FMC CDU ONLY
3461CG3465 3461CG3464
▇▇ ▇▇▇▇ ▇▇ ▇▇▇▇▇▇ 114 CU FT 76 CU FT
3510CE3098 3510CG3097
13 POT H20 VOL. 60 GAL 40 GAL
3810CG3V31 COLLECTOR
14 RADOME REV. M&N AEROSPACE BAC STD
5352MP3015
15 EVM ENDEVCO W/TRIM BAL VIBROMETER
7731CG3038 7731MP3045
16 COOL WHITE LIGHT 3320MP3039 STD
17 PERMANENT NO SMOKE LITE 3324MP3018
Page 4
III.
BOEING ADD & DEL
1124CG3V02 EXIT TACTILE LOCATOR (ADD)
3450MP3006 REMOVAL ADF
DELETE 144 ALL COACH SEATS
INSTALL CONTINENTAL G1/G4B GALLEYS
DELETE DRAPE MAT
INSTALL CONTINENTAL CARPET AND FLOORING
DELETE G2 GALLEY
INSTALL CO EMERGENCY EQUIPMENT LOCATION
INSTALL CO F/C CLOSET
IV.
BOEING PAPER CHANGES
2528CG3V10 MAGAZINE SORAGE RACK
2528CG3V20 O/H BIN WITH BULL NOSE FOR B737-700
0220MP3368 HI ALT AIRPORT
0225CH3026 ETOPS
V.
MISC.
0160MS3209 A/C I.D.#'S FDRS/MODES/REGISTRY
1110MP3354 COURTAULD H.S. PAINT (COPA) 9/25/98 DEADLINE
Page 5
SCHEDULE 1
PART 4
LESSEE'S POST-PRODUCTION MODIFICATIONS:
PDM
1 DUAL H.F. (▇▇▇▇▇▇▇) Z311MP3553
2 THIRD VHF COMM (▇▇▇▇▇▇▇) Z312MP3529
3 PA HANDSET INSTL IN FLT DECK AISLESTAND 2331CH3179
4 PAVES VIDEO SYSTEM (INSTL HARDWARE ONLY) 2332MP3742
5 AUDIO SELECT PNL MOVE O/B 2350CH3206
6 INTERPHONE BFE MIC/HANDSETS/HEADPHONES 2350CH3207
7 30 MIN STBY PWR WITH ADDED LOAD 2433CH3150
8 12/112 INTERIOR CONFIG (KOITO SEATS) 2520CH3816, 3818, 2523CG3V16
9 ▇▇▇▇▇ ▇▇▇▇ ▇▇, ▇▇, ▇▇▇ ▇▇▇▇▇▇▇ & INSERTS 3450CG3V09, 3450CG3V14, 3V28,
2528CG3V20, 2530CH3635, 2530CH3636, 5620CG3V02
10 ADD CLASS DIVIDER 2524CG3V16
11 ADD F/C CLOSET 2524MP3605
12 CONNECT SEAT MOUNT AISLE LITE 3351MP3049, 3351CH3030
13 INSTL FLOORING (CARPETS/LONCOIN) 2527MP3134
14 INTL DRAPES 2524CG3V20
15 BILINGUAL PLACARDS & SIGNS 2523MP3176, 2523CG3V05, 2523CG3V10
16 DELETE 2ND OBSERVER'S SEAT
17 G2 HARD POINTS RELOCATION
18 LIQUID SOAP DISP 2541CH3043
19 EMERG EQUIP P/N & RELOCATION 2502CG3V09, 3V10, 3V12, 2564CG3V03, 2564MP3136
20 ADD PAX LIFE VESTS 2562CG3V11
21 ADD LIFE RAFT 46 MAN X 3 EA 2562MP3225
22 RETRACTABLE EMERG EQ PNL 2564CH3095
23 PARK BRAKE WARNING LITE
24 STERILE C/P LITE 3310CH3020
25 PERMANENT NO SMOKE SIGNS 3324MP3018
26 EXTERNAL POS LIGHT SW INSTL 3343MP3044
27 GPWS FLAP WARNING INHIBIT ONLY 3446CH3128
28 BFE NAV DATA BASE 3461CG3403
29 2ND FMC 3461CG3496
30 JET 254 2900MP3035
31 TOTAL MISC PARTS
32 LIFELINE INSTL @ OVERWING EXIT 2560CG3V08
33 APU FIRE FIRE BOTTLE 224 IN3 RR97155-21
34 P.A. ▇▇▇▇▇▇▇ P/N ARINC 700 RR97155-22
35 SELCAL GABLES P/N 6959-06 RR97155-24
Page 6
SCHEDULE 1
PART 5
DOCUMENTS
The Documents listed below, include, but are not limited to, the following:
AIRCRAFT CURRENT OPERATING AND STATUS RECORDS.
1. Certified Interior Drawing (LOPA) with STC (FAA approved).
2. Certified Emergency Equipment Drawing certified by FAA.
3. List of Oil and Fluids.
4. Cockpit Installation Drawings.
5. Avionics Equipment List.
6. Copy of exemptions/deviations granted by the NTSB/FAA.
7. Airframe and Engine Ownership Placards.
8. Airplane Flight Manual (FAA Approved).
9. Flight Crew Operating Manual.
10. Minimum Equipment List, with Procedures (▇▇▇).
11. Configuration Deviations List Manual (CDL).
12. All required Cockpit Manuals, Documents, and Checklists.
13. Weight and Balance Manual, with last Weighing Report.
14. Loading and Control Manual.
15. Fuel Measuring Document Manual.
16. Boeing Detailed Specification (D6-38808-27).
17. Boeing Aircraft Readiness Log.
18. Boeing Significant Rework Log (SRL).
19. Boeing Miscellaneous Brochure.
20. Boeing PRR Listing.
21. Boeing Life Limited Landing Gear Parts Report.
22. Boeing FAA Airworthiness Directive Compliance Record Status Report.
23. Boeing Service Bulletin Compliance Record Status Report.
24. Boeing Rigging Brochure.
25. Boeing Delivery Exceptions, Equipment, Shortages and Aircraft Condition
Items Letter.
26. Aircraft Logbooks and certification (Manufacturer Documents).
27. Operator Maintenance Program and Requirements.
28. Aircraft Maintenance Manual.
29. Aircraft Illustrated Parts Catalogue.
30. Wiring Diagram Manual, Including Equipment List, Termination and Hook-Up
Charts.
31. Structural Repair Manual (SRM).
32. Fault Reporting Manual.
33. Interior Furnishings Manual, including Galley, Seat, and IFE Manuals.
34. Engine Data Submittal Sheets and Manufacture Documentation (CFMI).
Page 7
CERTIFIED LETTERS AND CERTIFICATES
1. Redelivery Letter certifying status, time and cycles of the Airframe,
Engine and APU, time to next check or inspections, and time to next
inspection/removal of engines and components.
2. Quality Assurance Statements.
(a) Status and History of Major Repairs and Alterations.
(b) Computerized Record System.
(c) Accident, Incident, and Damages.
(d) Assistance in acquiring outstanding records with contractual release
assigned to Lessors.
(e) Deferred Item Status.
(f) Installation of Non-Lessor or Lessee equipment on Aircraft.
3. Upon request of Lessor, identification of signatures, stamps, initials
utilized in the verification and authentication of Records.
4. Copy of FAA Approval of Maintenance and Inspection Program (FAA Form 1014
or equivalent).
5. Inventory List of Documents and Records transferred with the Aircraft.
6. Original Export Certificate of Airworthiness.
7. Current, or last, Certificate of Airworthiness.
8. Current, or last, Registration.
9. Current, or last, Radio License.
10. Current Export Certificate of Airworthiness, if available.
11. Supplement Type Certificates.
12. Galley Certificate of Sanitary Construction.
Page 8
SCHEDULE 1
PART 6
RECORDS
The Records listed below, include, but are not limited to, the following:
AIRCRAFT MAINTENANCE RECORDS
1. Aircraft Logbooks: Flight, Maintenance, and Cabin, as applicable to the
Operator.
2. Aircraft Maintenance and Flight Log Sheets for prior 12 months in service
(minimum).
3. Complete cycle of all "Letter" Checks.
4. All Time Controlled Inspection/Task (out of phase) Maintenance Records.
5. Component Airworthiness Approval Tags (FAA 8130-3 Form or JAA-1 Form or
equivalent) with indication of work performed at shop.
6. Time Controlled Component (hard time) records back to last overhaul,
including all intermediary Repair Records.
7. Life Limited Part (LLP) Records providing status and traceability to origin
and manufacturer, including installation records of each component.
8. Airworthiness Directive Records and Compliance Documentation (Airframe and
Appliances) including Alternate Means of Compliance Approval.
9. Service Bulletin Status and Method of Compliance records.
10. [Intentionally omitted.]
11. Listing of all FAR revision compliance, including date of accomplishment
and record of proof of compliance.
12. Accident and Incident Report Records.
13. Major Structural Damage Reports and Repair Records with necessary
approvals.
14. Major Repair/Alteration Compliance Records with FAA 337 Form (or its
equivalent).
15 Major and Minor Repair Records.
16. Records of current Engine, Landing Gear, and APU Installation.
17. Modification Records, copies of all engineering orders and related
engineering drawings and STCs which have been accomplished on the Aircraft,
components, Engines, and APU, including documentation for work accomplished
by the previous owner(s) and operator(s).
AIRCRAFT CURRENT OPERATING AND STATUS RECORDS
1. Provide the following Status and Summary Report (or Reports) that furnish
the following types of data and information regarding the Certified Status
of the Aircraft and Engines.
(a) Aircraft Time & Cycle Report, including daily utilization recordings.
(b) Aircraft Description & Status Summary.
(c) Aircraft Maintenance Inspection & Status Report, including total time,
interval, time-to-go, and last compliance times for all items of the
Agreed Maintenance Program.
(d) Component Status and Listing Report (H/T, O/C, C/M, and LLP).
(e) Airworthiness Directive Status and Summary Report (airframe, engines,
and appliances).
Page 9
(f) Service Bulletin Status and Compliance Report.
(g) Listing of all Major Repairs/Alterations and STCs.
(h) Aircraft Life Limited Component Status Report.
(i) Deferred Item (non-▇▇▇, long term) and Engineering Deviations
Listings.
2. Current Weighing Report, including current Operational Weights and Weight &
Balance changes since last actual weight (delta weight change).
3. Accident, Incident and Damage Report.
4. Sampling Programs, history and status.
5. Record of Last Compass Swing.
6. Record of Last Altimeter and Transponder Certification.
7. Record of Last Flight Recorder Certification.
8. Flight Control Balance Records.
ENGINE AND APU RECORDS (FOR EACH ENGINE)
1. Overhaul and Repair Records, at a minimum, back to the last overhaul of
each Module (or New Manufacture). In the case of the APU back to last
overhaul and HSI (minimum).
2. Component Status Report and Records, with Airworthiness Tags and Work
Orders.
3. Time Controlled Component Records back to last overhaul, including all
intermediary Repair Records.
4. Time Controlled Inspection Records.
5. Borescope and Isotope Inspection Records (including NDT Records & Videos).
6. Airworthiness Directive Records and Compliance Documentation.
7. Life Limited Part Status and traceability to origin and manufacture, with
installation records.
8. Service Bulletin Status and Method of Compliance Instructions.
9. Current (Last) Test Cell Report.
10. Engine Condition Monitoring Reports.
11. Engine Logbooks and Manufacture Delivery Records.
12. Current Installation Records.
13. All Records, Technical Orders, STC, Major Repairs, alterations and other
relevant events.
NOTES:
All records will be delivered as original hard copy, "dirty finger print"
records. Computerized records will be supported with original hard copy records.
Any records not identified within this Schedule 1, Part 6 "Records" that become
required due to regulatory change, FAA requirement, or export requirements shall
be provided as part of the return.
All computerized reports and summaries will be certified and signed by the
Director of Quality Assurance (or Authorized Official of the airline). In the
case of computerized reports and summaries issued on behalf of Lessee by
Lessee's third party approved maintenance provider, the Lessee will make a
certified statement in writing that identifies the authenticity of such reports
made on behalf of the Lessee.
Page 10
SCHEDULE 2
PART 1
CERTIFICATE OF ACCEPTANCE
This Certificate of Acceptance is delivered, on the date set out below, by
Compania Panamena de Aviacion, S.A. (COPA) ("Lessee"), to First Security Bank,
National Association, not in its individual capacity but solely as Owner Trustee
("Lessor"), pursuant to the Aircraft Lease Agreement (MSN 29048) dated as of
October 1, 1998 between Lessor and Lessee (the "Agreement"). The capitalized
terms used in this Certificate shall have the meaning given to such terms in the
Agreement.
1. DETAILS OF ACCEPTANCE
Lessee hereby confirms to Lessor that Lessee has at ________ o'clock on
this day of _______________, ____________, at _____________________,
accepted the following, in accordance with the provisions of the Agreement:
(1) AIRCRAFT:
Airframe Manufacturer's Serial No.:
TSN ________________________
CSN ________________________
(2) ENGINES:
Engine Number Manufacturer's Serial No.:
1 __________ TSN __________
CSN __________
2 __________ TSN __________
CSN __________
(3) LANDING GEAR:
NOSE MAIN LEFT MAIN RIGHT
---- --------- ----------
TSN:
CSN:
Page 1
(4) APU:
MSN:
TSN:
CSN:
(5) FUEL STATUS: ______________ Pounds
(6) LOOSE EQUIPMENT CHECK LIST: as per list signed by Lessor and Lessee and
attached hereto.
(7) DOCUMENTS AND RECORDS: as per list signed by Lessee and attached hereto.
(8) DAMAGE CHART: as per the diagram signed by Lessor and Lessee and attached
hereto.
2. CONFIRMATION
Lessee confirms to Lessor that as of the time indicated above, being the
Delivery Date:
(1) the representations and warranties contained in Clause 2 of the
Agreement are hereby repeated;
(2) the Aircraft is insured as required by the Agreement;
(3) Lessee confirms that there have been affixed to the Aircraft and the
Engines the fireproof notices of the type and in the locations
required by the Agreement;
(4) Lessee's authorized technical experts have inspected the Aircraft to
ensure the Aircraft conforms to Lessee's requirements. The Aircraft is
in accordance with the specifications of the Agreement and
satisfactory in all respects.
IN WITNESS WHEREOF, Lessee has, by its duly authorized representative,
executed this Certificate on the date in paragraph 1 above.
COMPANIA PANAMENA DE AVIACION,
S.A. (COPA)
By:
------------------------------------
Title:
---------------------------------
Page 2
ATTACHMENTS
"Loose Equipment Checklist":
Documents and Records:
Damage Chart:
etc.
-------------------------------------
Signed by Lessee and Lessor
Page 3
SCHEDULE 2
PART 2
AIRCRAFT DELIVERY CONDITIONS
1.0 AIRCRAFT SPECIFICATION AT DELIVERY
1.1 The Aircraft shall be a Boeing Model 737-700 airplane with two CFM56-7B24
engines rated at 24,000 lbs of thrust. The Aircraft and attached Engines
shall be delivered new from the Manufacturer.
1.2 The physical specification of the Aircraft is as defined in Parts 1, 2 and
3 of Schedule 1.
1.3 The Documents and Records that comprise part of the Aircraft and are
delivered with the Aircraft at delivery are defined in Parts 5 and 6 of
Schedule 1.
2.0 CONDITION OF AIRCRAFT
2.1 Except as otherwise specified in this Agreement, as between Lessor and
Lessee the Aircraft will be delivered "as is, where is".
2.2 The Aircraft will have a Standard FAA Certificate of Airworthiness or FAA
Export Certificate of Airworthiness as the case may be. The Aircraft will
be suitable for immediate operation in commercial service except for
specific items which the Air Authority may require of Lessee for
registration, certification and operation in the Jurisdiction of
Registration (this may include but is not limited to language placards and
operational requirements).
2.3 The Aircraft will be delivered in Lessee's external livery provided that
Lessee shall provide sufficient information, such as paint specification
and paint drawing, to and when required by Manufacturer.
3.0 INSPECTIONS AND CORRECTIONS
3.1 During the course of final assembly of the Aircraft, Lessee or Lessee's
representative will be provided reasonable access for inspection of the
Aircraft, subject to conditions as may be set forth by the Manufacturer, to
ensure conformity with this Agreement, including being provided with the
Tombo Baseline Specification, a copy of which will be made available to
Lessee.
3.2 Prior to Aircraft delivery, Lessee or Lessee's representative will be
provided an opportunity to perform a walk around inspection and system
checks.
3.3 Lessor will provide Lessee or Lessee's representative (up to 2 persons
including any personnel from the Air Authority) the opportunity to
participate as observers in an acceptance demonstration flight as made
available to Lessor pursuant to the Purchase Agreement.
Page 4
3.4 Lessee will notify Lessor promptly and prior to the Delivery Date of any
defect or non-conformity with Manufacturer's specifications, noted during
the above inspections or demonstration flight. Lessor will correct or
procure the correction of the defect or non-conformity as promptly as
practicable subject to provisions available to Lessor in the Purchase
Agreement.
3.5 In the event that remedy to the noted defect or non-conformity will delay
delivery of the Aircraft, subject to Clause 4.3 of the Agreement, (i)
Lessor may postpone the delivery to the date which Lessor notifies Lessee
that the defect or non-conformity has been rectified or (ii) provided that
the Aircraft is airworthy, Lessor may elect to deliver the Aircraft but
will be responsible to rectify, or cause Manufacturer to rectify, the
defect or non-conformity promptly after the Delivery Date at the earliest
practicable date in cooperation with the Lessee. In the case of (ii) in the
preceding sentence, when such defect or non-conformity has been (a)
rectified to the reasonable satisfaction of the Lessee, or (b) in the event
there is no reasonable remedy available for such defect or non-conformity
and to the extent that it has no material adverse effect on the use,
operation and maintenance of the Aircraft, such defect or non-conformity
issue will be deemed closed and Lessor will have no further responsibility
to rectify such defect or non-conformity.
4.0 ACCEPTANCE AND DELIVERY
4.1 As between Lessor and Lessee, Lessee acknowledges that in accepting the
Aircraft, Lessee is relying on its own inspection and knowledge of the
Aircraft in determining whether it meets the requirements of this
Agreement.
4.2 The on-board fuel provided to the Lessee at delivery will be that amount as
provided by the Manufacturer in accordance with the Manufacturer's standard
allowance at delivery.
4.3 Lessee will at its expense obtain all licenses, permits, and approvals
which may be necessary to export and/or ferry the Aircraft from the
Delivery Location. Lessor will furnish to Lessee any data and information
available to Lessor and provide assistance to Lessee as may be reasonably
required by Lessee to obtain such licenses, permits or approvals.
Page 5
SCHEDULE 3
LESSEE'S COVENANTS
Sub-Index
PART 1 INFORMATION
1. General Information
2. Technical Information
3. Financial Information
PART 2 LESSEE GENERAL COVENANTS
4. General
5. Third Party
6. [Intentionally omitted.]
PART 3 OPERATION AND INSPECTION
7. Lawful and Safe Operation
8. Protection
9. Sub-Leasing
10. Inspection
PART 4 TITLE, POOLING
11. Title
12. Title on Equipment Changes
13. Pooling of Engines and Parts
PART 5 TECHNICAL COVENANTS
14. Maintenance and Repair
15. Removal of Engines and Parts
16. Installation of Engines, Landing Gear and Parts
17. Non-Installed Engines, Landing Gear and Parts
18. Equipment Changes
19. Documents and Records
Page 1
PART 1 INFORMATION
1. GENERAL INFORMATION
Lessee will:
(1) notify Lessor promptly of the occurrence of any Default or any other
event which would reasonably be expected to have a material adverse
affect on Lessee's ability to perform any of its obligations under
this Agreement; and
(2) furnish any information or other documents to be provided to Lessor
under this Agreement in English.
2. TECHNICAL INFORMATION
Lessee will:
(1) provide Lessor with reports in English not later than the 10th day of
the end of each six-month period of the Term in the form containing
the information set out in Schedule 7 in relation to the matters
reportable in each reporting period;
(2) promptly notify Lessor of:
(a) any loss, theft, damage or destruction to the Aircraft, Engines,
APU or any Part or any repair or modification to the Aircraft if
the potential cost may exceed the Damage Notification Threshold;
(b) any claim or other occurrence likely to give rise to a claim
under the Insurances (but in the case of hull claims only in
excess of the Damage Notification Threshold) and reasonable
details of any material negotiations with the insurance brokers
over any such claim;
(c) any extended periods (exceeding 7 days) of the Aircraft being out
of service for any cause other than scheduled maintenance;
(d) any change in any engine installed on the Aircraft;
(3) use reasonable efforts to give Lessor not less than 30 days prior
written notice as to the time and location of all Major Checks; and
(4) promptly furnish to Lessor all information Lessor from time to time
reasonably requests regarding the Aircraft, any Engine or any Part,
its use, location and condition including, without limitation, the
hours available on the Aircraft and any Engine until the next
scheduled check, inspection, overhaul or Shop Visit, as the case may
be.
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3. FINANCIAL INFORMATION
3.1 Lessee will provide to Lessor:
(1) within sixty (60) days after the end of the relevant quarter, the
unaudited, management prepared accounts of Lessee and COPA Holding, in
each case comprising balance sheet and profit and loss statements and
cash flow statement and in the original language and in English
prepared for each quarter of their respective financial years prepared
in accordance with Panamanian generally accepted accounting principles
applicable to Lessee and to COPA Holding and consistently applied;
(2) as soon as available and not more than 120 days after the last day of
each financial year starting with 1998 of Lessee and COPA Holding in
each case in English, their audited balance sheets and the audited
consolidated balance sheet as of such day and their audited profit and
loss statements and the audited consolidated profit and loss statement
for the year ending on such day;
(3) at the same time as it is issued to the creditors of Lessee, a copy of
each notice or circular issued to Lessee's creditors generally;
(4) on request from time to time, such other information regarding Lessee
and COPA Holding and their respective business as if not proprietary
and as Lessor may reasonably request;
(5) on request, not more frequently than annually unless a Default is
continuing, evidence reasonably satisfactory to Lessor that all Taxes
incurred by Lessee with respect to the Aircraft have been paid and
discharged in full, except to the extent that such payment is being
contested in good faith by appropriate proceedings, in respect of
which adequate reserves have been provided by Lessee and non-payment
of which does not give rise to any material likelihood of the Aircraft
or any interest therein being sold, forfeited or otherwise lost or of
criminal liability on the part of Lessor; and
(6) on request during any continuing Default, evidence satisfactory to
Lessor that all charges incurred by Lessee affecting the Aircraft,
including without limitation all payments due to any air traffic
control authorities, airports, fuel suppliers, maintenance and repair
shops and other suppliers of services have been paid and discharged in
full or are being contested in good faith by appropriate proceedings
and are not material in the aggregate.
3.2 Lessee shall meet with Lessor at Lessor's request no more frequently than
every six months in order for Lessee to explain its financial and business
position and general planning overview, and at such meeting Lessee shall
discuss with Lessor Lessee's operational statistics, RPMs, ASMs, CASMs,
load factors and yields; Lessor shall treat all such information as
confidential.
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PART 2 LESSEE GENERAL COVENANTS
4. GENERAL: Lessee will not make any substantial change in the nature of the
business in which it is engaged and will preserve its corporate existence
(other than in connection with a solvent reconstruction, the terms of which
have been approved by Lessor, such approval not to be unreasonably
withheld); and
5. THIRD PARTY: Lessee will procure that no person acting on behalf of Lessee
(other than Lessor) will act in any manner inconsistent with its
obligations under this Agreement and that all such persons will comply with
those obligations as if references to "Lessee" included a separate
reference to those persons.
6. [INTENTIONALLY OMITTED]
PART 3 OPERATION AND INSPECTION
7. LAWFUL AND SAFE OPERATION: Lessee will ensure that:
(1) the law in effect in any country or jurisdiction which may be
applicable to the Aircraft, its maintenance and condition or, relating
to the use and operation of the Aircraft is complied with, any
required modification or alteration to the Aircraft, any Engine or
Part will be made and all reasonable steps will be taken to ensure
that the Aircraft is not used for any illegal purpose;
(2) the Aircraft is not used in any manner contrary to any recommendation
of the relevant manufacturer of the Aircraft, any Engine or any Part
or any recommendation or regulation of the Air Authority or for any
purpose for which the Aircraft is not designed or reasonably suitable;
(3) the crew and engineers employed in connection with the operation and
maintenance of the Aircraft have the qualifications and hold the
licenses required by the Air Authority and applicable law;
(4) the Aircraft is used solely in commercial or other operations duly
authorized by the Air Authority and applicable law;
(5) the Aircraft is not used for the carriage of:
(a) whole animals, living or dead, except in the cargo compartments
according to I.A.T.A. regulations, and except domestic pet
animals carried in a suitable container to prevent the escape of
any liquid and to ensure the welfare of the animal;
Page 4
(b) acids, toxic chemicals, other corrosive materials, explosives,
nuclear fuels, nuclear wastes, or any nuclear assemblies or
components, except as permitted for passenger aircraft under the
"Restriction of Goods" schedule issued by I.A.T.A., from time to
time, and provided that all the requirements for packaging, or
otherwise contained therein, are fulfilled;
(c) any other goods, materials or items of cargo which would
reasonably be expected to cause damage to the Aircraft and which
would not be adequately covered by the Insurances; or
(d) any illegal item or substance;
(6) the Aircraft is not utilized for purposes of training, qualifying or
re-confirming the status of cockpit personnel except for the benefit
of Lessee's cockpit personnel, and then only if the use of the
Aircraft for such purpose is not disproportionate to the use for such
purpose of other aircraft of the same type operated by Lessee;
(7) the Aircraft is not caused or permitted to proceed to, or remain at,
any location which would for the time being violate any law, order or
regulation of:
(a) any Government Entity of the State of Registration or the
Habitual Base; or
(b) any Government Entity of the country in which such location is
situated; or
(c) any Government Entity having jurisdiction over Lessor or the
Aircraft, and Lessor will notify Lessee as soon as reasonably
practicable after Lessor becomes aware of any such prohibition
order (or any similar order or directive) of the application of
same;
(8) there are obtained and maintained in full force all certificates,
licenses, permits and authorizations required for the use and
operation of the Aircraft for the time being, and for the making of
payments required by, and the compliance by Lessee with its other
obligations under, this Agreement;
(9) a current certificate of airworthiness (in the appropriate category
for the nature of the operations of the Aircraft) is maintained in
good standing for the Aircraft issued by the Air Authority, except
where the Aircraft is undergoing maintenance, modification or repair
required or permitted by this Agreement, and Lessee will from time to
time provide to Lessor a copy on request;
Page 5
(10) the Aircraft is operated and maintained in accordance with the
Documents and the Records, including for the redelivery of the
Aircraft hereunder, to specified contractual standards, Manufacturer's
specifications and type design, and any other rules and regulations as
may be applicable to ensure that the Air Authority transport category
certificate of airworthiness and aircraft registration shall remain
legal and valid throughout the Term, permitting commercial passenger
and cargo revenue service in accordance with the rules and regulations
of the Air Authority and, in addition, to a standard equivalent to
that required for a USA operator to comply with all rules,
regulations, and restrictions issued by the FAA for operation in
accordance with FAR (including, but not limited to, Part 121 and any
other rules and regulations of the FAA as may be applicable to
passenger category aircraft of the same manufacture and model);
(11) any Part installed on the Aircraft complies with FAA fire resistance
regulations and U.S. TSO requirement, as applicable; and
(12) no change occurs in the Habitual Base of the Aircraft without the
prior written consent of Lessor, and Lessee shall pay to Lessor on
demand any reasonable legal or other costs of Lessor relating to the
consideration of such change whether or not Lessor consents thereto.
Any consent of Lessor may be subject to such conditions as Lessor may
require to protect its rights and interests in the Aircraft.
8. PROTECTION: Lessee will ensure that:
(1) the registration of the Aircraft is maintained with the Air Authority
reflecting (so far as permitted by applicable law) the interests of
Lessor and the Lessee shall not do or allow anything to be done which
might adversely affect that registration; and
(2) subject to Clause 14 of the Agreement and, in respect of Clause (a)
below, at Lessor's sole cost and expense, and otherwise at Lessee's
sole cost and expense, all acts and things are done (including,
without limitation, making any filing or registration with the Air
Authority or any other Government Entity) and executing and delivering
all documents (including, without limitation, any amendment of this
Agreement) as may reasonably be required by Lessor:
(a) following any change or proposed change in the ownership or
financing of the Aircraft; or
(b) following any modification of the Aircraft, any Engine or any
Part or the permanent replacement of any Engine or Part in
accordance with this Agreement, so as to ensure that the rights
of Lessor under this Agreement and the other Lessee Documents in
respect thereof, apply with the same effect as before; or
(c) to establish, maintain, preserve, perfect and protect the rights
of Lessor under this Agreement, in the Aircraft and the other
Lessee Documents; and
Page 6
(3) Lessee obtains all documents, data, and records relating to
maintenance, inspection or repair performed by Lessee's contractors
employed for such purpose.
9. SUB-LEASING:
9.1 Lessee will not without the prior written consent of Lessor, which consent
will not be unreasonably withheld, sub-lease, sub-charter or otherwise part
with possession of the Aircraft, the Engines or any Part, except that:
(1) Lessee may part with possession with respect to the Aircraft, the
Engines or any Part to the relevant manufacturer for testing or
similar purposes or to the Agreed Maintenance Performer for service,
repair, maintenance or overhaul work, or alterations, modifications or
additions to the extent required or permitted by this Agreement;
(2) wet leasing and chartering, being cases where Lessee retains full
operational control and its own aircrew, are permitted; and
(3) Lessee may sublease the Aircraft for a period not to extend beyond the
end of the Term to Continental Airlines, Inc. pursuant to a sublease
agreement reasonably satisfactory in form and substance to Lessor.
9.2 Where Lessee wishes to dry sub-lease the Aircraft, which shall be subject
to the consent of the Lessor in its absolute discretion, Lessee shall give
notice to Lessor of its request and pay to Lessor a fee of $10,000 for
Lessor to assess the proposed arrangements, such notice only to be
effective upon confirmation by Lessor of its receipt of that fee, and in
any event Lessee shall pay on demand any reasonable legal or other costs of
Lessor relating to the evaluation of any wet-lease, dry sub-lease or
charter whether or not Lessor consents thereto. Any consent of Lessor may
be subject to such conditions as Lessor may require to protect its rights
and interests in the Aircraft.
10. INSPECTION:
10.1 Lessor and any person designated by Lessor may, upon reasonable notice and
at reasonable times that do not unreasonably interfere with Lessee's normal
business and maintenance operations, inspect and survey the Aircraft, any
Engine, the APU, any Part or the Documents and Records and for such purpose
may, subject to any applicable Air Authority regulation, travel on the
flight deck as an observer on any non-revenue test flights as allowed by
the applicable air authority, and Lessee shall ensure that all reasonable
arrangements are made for Lessor and any designated person. Lessor reserves
the right to perform an inspection at least once each year and preferably
during the accomplishment of a C-Check, such inspection shall be a ground
inspection and shall not require the opening of any panels additional to
those already opened in the course of any ongoing maintenance.
10.2 In the case of inspection of Documents and Records, Lessee shall use
commercially reasonable efforts to prepare them for inspection by Lessor
within 2 weeks after notice from Lessor.
Page 7
10.3 Lessor will:
(1) have no duty to make, or liability arising from any such visit,
inspection or survey; and
(2) for so long as a Default has not occurred and is continuing, not
exercise such right other than on reasonable notice so as not to
disrupt unreasonably the commercial operations of Lessee.
PART 4 TITLE, POOLING
11. TITLE: Lessee will ensure that:
(1) it shall not do or permit to be done, or omit to be done or permit to
be omitted to be done, any act or thing which might reasonably be
expected to jeopardize the rights of Lessor as owner of the Aircraft;
(2) on all occasions when the ownership of the Aircraft, any Engine or any
Part is relevant, it is made clear to third parties that title is held
by Lessor;
(3) at any time (a) Lessor is not represented or held out as carrying
goods or passengers on the Aircraft or as being in any way connected
or associated with any operation or carriage (whether for hire or
reward or gratuitously) which may be undertaken by Lessee or (b) it
shall not pledge, or allow to be pledged, Lessor's credit;
(4) there is always affixed, and not removed or in any way obscured, a
fireproof plate (having dimensions of not less than 10 cm x 7 cm) in a
reasonably prominent position on the Aircraft and on each Engine
stating:
"This Aircraft/Engine which is owned by First Security Bank,
National Association, not in its individual capacity but solely
as Owner Trustee (Lessor), is leased to Compania Panamena de
Aviacion, S.A. (COPA) and may not be operated by any other person
without the prior written consent of Lessor";
(5) there is not created or permitted to exist any Lien upon the Aircraft,
any Engine or any Part other than Permitted Liens;
(6) it shall not do or permit to be done anything which may reasonably be
expected to expose the Aircraft, any Engine or any Part to penalty,
forfeiture, impounding, detention, appropriation, damage or
destruction and without prejudice to the foregoing, if any such
penalty, forfeiture, impounding, detention or appropriation, damage or
destruction occurs, give Lessor notice and use commercially reasonable
efforts to procure the immediate release of the Aircraft, any Engine
or the Part, as the case may be;
(7) the Aircraft, the Engine or any Part is not abandoned;
Page 8
(8) there is paid and discharged when due and payable, or adequate
provision is made by way of security, or otherwise, for all debts,
damages, claims and liabilities which have given or might give rise to
a Lien (other than Permitted Liens) over or affecting the Aircraft,
any Engine or any Part;
(9) it shall not attempt, or hold itself out or permit any other Person to
hold itself out as having any power, to sell, lease or otherwise
dispose of the Aircraft, any Engine or any Part; and
(10) all charges relating to navigation and charges of airports, fuel
suppliers, maintenance and repair shops and other suppliers of
services are paid when due.
12. TITLE ON EQUIPMENT CHANGES:
12.1 Title to all Landing Gear, APU and Parts installed on the Aircraft,
excluding engines whether by way of replacement, as the result of an
Equipment Change, or otherwise (except those installed pursuant to Clause
16(1)(b) of this Schedule 3), will on installation, without further act,
vest in Lessor subject to this Agreement free and clear of all Liens other
than Permitted Liens. Lessee will at its own expense take all such steps
and execute, and procure the execution of, all such instruments as Lessor
may require and which are necessary to ensure that title so passes to
Lessor according to all applicable laws. At any time when requested by
Lessor, Lessee will provide evidence to Lessor's satisfaction (including
the provision, if required, to Lessor of one or more legal opinions) that
title has so passed to Lessor.
12.2 Any Landing Gear, APU or Part at any time removed from the Aircraft will
remain the property of Lessor until a replacement has been made in
accordance with this Agreement and until title in that replacement has
passed, according to applicable laws, to Lessor subject to this Agreement
free of all Liens, whereupon title to the Landing Gear, APU or Part will,
provided no Default has occurred and is continuing, pass to Lessee.
12.3 Engines shall remain the property of Lessor even after any removal from the
Airframe unless the Engine or Engines are:
(1) deemed to be the subject of an Event of Loss and title to a
replacement Engine passes to the Lessor pursuant to Clause 11.3; or
(2) removed from the Aircraft in accordance with Clause 15 of this
Schedule 3 and it is impractical to reinstate them, and Lessee
installs a substitute engine or engines in accordance with Clause 16
of this Schedule 3, title to which was transferred to Lessor in
accordance with Clause 16, provided that the obligations under Clause
16(1)(a) shall apply absolutely and not subject to Lessee's using its
reasonable efforts to ensure their application, and that title shall
be transferred to Lessor in accordance with the terms of Clause 16.
Page 9
13. POOLING OF ENGINES AND PARTS:
13.1 Lessee shall not enter into any pooling agreement or make any pooling
arrangement in respect of Engines without the prior written consent of the
Lessor, it being understood that (i) as of the date hereof, Lessee and
Continental Airlines, Inc. are contemplating an engine pooling or sharing
agreement that Lessor agrees to duly consider, and (ii) Lessee shall not
enter into the foregoing engine pooling or sharing agreement in respect of
the Engines without the prior written consent of Lessor, which consent
shall not be unreasonably withheld.
13.2 Lessee may make pooling arrangements in respect of Parts pursuant to a
pooling agreement with the Agreed Maintenance Performer which may be
inspected by Lessor on request, provided that the obligations under Clause
16.1 of this Schedule 3 shall be absolute and not subject to Lessee using
its reasonable efforts to ensure their application.
PART 5 TECHNICAL COVENANTS
14. MAINTENANCE AND REPAIR
14.1 Lessee will insure compliance with this Part 5 subject to the requirements
of the Air Authority and standards equivalent to that of a United States
operator in compliance with FAA requirements under FAR 121 and otherwise in
compliance with this Schedule 3.
14.2 The Aircraft shall be kept airworthy in all respects and in good repair and
condition, ordinary wear and tear excepted.
14.3 MAINTENANCE PROGRAM
14.3.1 The Aircraft shall be maintained through an Agreed Maintenance Performer
in accordance with applicable rules and regulations of the FAA and the Air
Authority, and in compliance with the Agreed Maintenance Program and the
Agreement.
14.3.2 [Intentionally omitted.]
14.3.3 The Agreed Maintenance Program shall include an anti-fungus/biological
growth and contamination prevention, control and treatment program of all
fuel tanks if required by Manufacturer documents in accordance with the
Manufacturer's approved procedures and specifications.
14.3.4 Lessee shall provide Lessor with reasonable access to the Agreed
Maintenance Program throughout the Term.
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14.4 MAINTENANCE STANDARDS
14.4.1 Lessee shall at a minimum ensure that the Aircraft shall at all times be
treated and receive the same level of attention, maintenance and
improvements as Lessee affords the balance of its fleet, including but not
limited, to Service Bulletin incorporation, improvements, repairs,
cleanliness and correction of items of a cosmetic nature, such as, but not
limited to, hail damage, except where the terms of this Agreement dictate
higher standards.
14.4.2 Lessee shall, if required by the Air Authority, maintain a current
certificate as to maintenance, issued by or on behalf of the Air Authority
to Lessee or the Agreed Maintenance Performer in respect of the Aircraft
and will from time to time provide to Lessor a copy on request.
14.4.3 In the event the Aircraft is out of service for any period exceeding 2
weeks, other than for scheduled maintenance in accordance with the Agreed
Maintenance Program, Lessee shall maintain the Aircraft in accordance with
Lessee's or Manufacturer's storage maintenance program.
14.5 REPAIRS
Lessee shall act as follows in respect of repairs to the Aircraft or any
part thereof:
14.5.1 In the event the Aircraft requires repair, all repairs will be classified
as "Major" or "Minor", in accordance with FAA regulations or its
equivalent.
14.5.2 All Major repairs shall be accomplished in accordance with Manufacturer
approved data as specified in Manufacturer's Structural Repair Manuals and
other Manufacturer's applicable FAA approved manuals or if not contained in
such manuals, provided with FAA Designated Engineering Representative
approval.
14.5.3 In the event Major repair instructions are not listed in FAA approved
Manufacturer Repair Manuals and other Manufacturer's applicable FAA
approved manuals, Manufacturer approval and appropriate substantiating
documents, including all drawings, calculations, materials list, and any
other pertinent data, as available, will be provided.
14.6 [Intentionally omitted.]
14.7 SERVICE BULLETINS: Lessee shall procure all applicable service bulletin
kits which are offered "No charge" by or claimable under warranty from the
Manufacturer, prior to the expiration of the "No charge" warranty period.
Page 11
14.8 AIRWORTHINESS DIRECTIVES
14.8.1 Lessee shall accomplish all airworthiness directives issued by the FAA
and all rules and regulations and directives of the Air Authority in
accordance with specific instructions issued by the Air Authority at any
time during the Term, including all routine and non-routine requirements as
applicable to the Aircraft, Engines, including all Parts and the APU.
14.8.2 All documentation necessary to establish the source data, method of
compliance, verification of accomplishment, Quality Assurance approval and
all schedules for recurring action, including Air Authority approved data
used to substantiate compliance with Air Authority airworthiness
directives, rules and regulations and all mandatory inspection and
modification requirements shall form a permanent part of the Documents and
Records.
15. REMOVAL OF ENGINES, LANDING GEAR, APU AND PARTS
15.1 Lessee will ensure that no Engine, Landing, Gear, APU or Part installed on
the Aircraft is at any time removed from the Aircraft other than
(1) if replaced as expressly permitted by this Agreement; or
(2) if the removal is of an obsolete item and is in accordance with the
Agreed Maintenance Program; or
(3) (a) during the course of maintaining, servicing, repairing,
overhauling or testing that Engine, Landing Gear, APU, Part or
the Aircraft, as the case may be; or
(b) as part of a normal rotation program; or
(c) for the purpose of making such modifications to the Engine,
Landing Gear, APU, Part or the Aircraft, as the case may be, as
are permitted under this Agreement; and then in each case only if
it is reinstalled or replaced by an engine or part complying with
Clause 16(1) of this Schedule 3 as soon as practicable and in any
event by the earlier of within 30 days after completion of any
off-Aircraft maintenance or by the Expiry Date.
15.2 Subject to Clause 11.3 of the Agreement, Lessee shall procure promptly the
replacement of any Engine, Landing Gear, APU or Part which has become time,
cycle or calendar expired, lost, stolen, seized, confiscated, destroyed,
damaged beyond repair, unserviceable or permanently rendered unfit for use
or whose removal is required under the Agreed Maintenance Program, with an
engine or part complying with the conditions set out in Clause 16.1 of this
Schedule 3.
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16. INSTALLATION OF ENGINES, LANDING GEAR, APU AND PARTS
Lessee will:
(1) subject to Clause 16(2) of this Schedule 3, ensure that, except as
permitted by this Agreement, no engine or part is installed on the
Aircraft unless:
(a) ENGINES, LANDING GEAR AND APU: it is in airworthy condition, is
the same model, thrust rating, modification status, service
bulletin and airworthiness directive compliance and incorporation
status, or an improved or advanced version of the Engine
(including all modules), Landing Gear or APU it replaces.
The replacement engine, including all modules, Landing Gear or
APU, shall be in airworthy condition, certified serviceable, in
the same or better operating condition than the installed part
prior to its failure or removal, including all manufacturer's
performance parameters.
(b) PARTS: it is in airworthy condition, is the same model,
modification, status, service bulletin and airworthiness
directive interchangeability status, or an improved or advanced
version of the item it replaces and meets all FAA TSO
requirements.
The replacement item shall be in airworthy condition, certified
serviceable, in the same or better operating condition than the
installed part prior to its failure or removal.
The replacement item shall have substantially equivalent value,
utility and airworthiness as the replaced Part.
(c) Subject to (2) below, in each case, it has become and remains the
property of Lessor free from Liens other than Permitted Liens and
on installation on the Aircraft will without further act be
subject to this Agreement; and
(2) if no Default has occurred which is continuing, be entitled to install
any engine or part on the Aircraft by way of replacement,
notwithstanding (1) above, if:
(a) there is not available to Lessee at the time and in the place
that engine or part is required to be installed on the Aircraft,
a replacement engine complying with the requirements of (1)
above;
(b) it would result in an unreasonable disruption of the operation of
the Aircraft and/or the business of Lessee to ground the Aircraft
until an engine or part, as the case may be, complying with (1)
above becomes available for installation on the Aircraft;
(c) such engine or part is of the same model, is in airworthy
condition and is serviceable; and
Page 13
(d) as soon as the Engine becomes available to be reinstalled on the
Aircraft but in any event by the earlier of (i) the next
scheduled D-Check, (ii) 45 days after completion of any
off-aircraft maintenance of the Engine or (iii) the Expiry Date,
Lessee removes any such engine or part and replaces it with the
Engine or Part replaced by it or by an engine or part, as the
case may be, complying with (1) above.
17. NON-INSTALLED ENGINES, LANDING GEAR, APU AND PARTS
Lessee will:
(1) ensure that any Engine, Landing Gear, APU or Part which is not
installed on the Aircraft (or any other aircraft as permitted by this
Agreement) is, except as expressly permitted by this Agreement,
properly and safely stored, and kept free from Liens other than
Permitted Liens;
(2) not be permitted to install any Engine (except as permitted in clause
(3) below or elsewhere in the Agreement), Landing Gear, APU or Part on
another aircraft, or in the case of a Part, another engine;
(3) notwithstanding the foregoing provisions of this Clause 17, be
permitted if no Default has occurred and is continuing, to install any
Engine on an aircraft operated by Lessee; and
(4) on Lessor's request procure that any person to whom possession of an
Engine, APU or Landing Gear is given, acknowledges in writing to
Lessor, in form and substance satisfactory to Lessor, that it will
respect the interests of Lessor in the Engine, APU or Landing Gear and
will not seek to exercise any rights whatsoever in relation thereto;
provided that:
(a) upon Lessor's request, Lessee shall notify Lessor from time to
time of the details of that aircraft or engine and of the lessor
under such lease, the seller under such conditional sale
agreement, the owner of such aircraft or engine or the holder of
such Lien as the case may (in this Clause 17 being "interested
parties"); and
(b) the terms of any such lease, conditional sale agreement or a Lien
will not have the effect of prejudicing the interests of Lessor
in that Engine, Landing Gear, APU or Part.
Page 14
18. EQUIPMENT CHANGES
18.1 Lessee will not make any modification or addition to the Aircraft, except
for an Equipment Change which is permitted by this Agreement, has the prior
written approval of Lessor and which does not materially diminish the
value, utility, condition, or airworthiness of the Aircraft, or is required
by the Air Authority, Manufacturer or Engine manufacturer.
18.2 So long as a Default has not occurred and is continuing, Lessee may remove
any Equipment Change if it can be removed from the Aircraft without
materially diminishing or impairing the value, utility, condition or
airworthiness of the Aircraft.
18.3 At Redelivery, Lessee may elect to remove any Equipment Change and restore
the Aircraft to its condition prior to that Equipment Change.
18.4 In the event the Aircraft requires modification or alteration, all
modifications and alterations will be classified as "Major" or "Minor" in
accordance with FAA regulations.
18.5 No modification or alteration costing more than $100,000 shall be
accomplished without the Lessor's prior consent.
18.6 All Major modifications and Major alterations incorporated throughout the
Term which deviate from the Aircraft certified specifications, type design,
or configuration shall be accomplished in accordance with Manufacturer's
recommendations and instructions, as approved in any event by the Air
Authority, and where they deviate from the certified configuration of the
Aircraft, shall be covered by a FAA Supplemental Type Certificate ("STC")
as well as by approval from the Air Authority; if an STC is not obtained,
Lessee shall provide all and complete data which Lessor deems necessary to
obtain an STC and such approval.
18.7 Any Part or equipment removed from the Aircraft pursuant to the terms
hereof may be shipped by Lessee to Lessor for proper storage by Lessor.
Upon Redelivery, if Lessor shall elect to have such Part or equipment
reinstalled on the Aircraft, :Lessor shall ship such Part or equipment to
Lessee for reinstallation on the Aircraft. If Lessor does not so elect, at
Lessee's written request and at Lessee's reasonable expense, Lessor shall
ship such Part or equipment to Lessee and, without further action, such
Part or equipment shall become Lessee's property.
19. DOCUMENTS AND RECORDS
19.1 Documents and Records shall at a minimum meet all Air Authority
requirements and shall be prepared and maintained in accordance with FAR
121 and 145 and any other FAR applicable from time to time.
Page 15
19.2 All documents and data as required by the FAR (including technical and
engineering data, calculations and drawings) evidencing compliance with any
of the requirements or procedures set out in Clause 14 above shall form a
permanent part of the Documents and Records. All manufacturer and vendor
manuals and documents which are affected by a Major repair, compliance with
a Service Bulletin, modification or alteration, including the
Manufacturer's Weight & Balance manual, shall be revised to reflect the
current specification and configuration of the Aircraft.
19.3 The Documents and Records shall be maintained in the English language or
accompanied by a certified translation thereof. All Documents and Records
shall be in plain language and all coded forms must have cross references,
including but not limited to parts numbers, engineering order numbers and
Service Bulletin numbers.
19.4 All records included in the Documents and Records shall be original hard
copy "dirty fingerprint" records. Documents and Records produced by
Electronic Data Processing (EDP) or other computers are not acceptable,
except as summary documents, without accompanying substantiating records
and documents reasonably approved by Lessor, providing the means of
verification of accomplishment. In addition, these summary documents shall
include instructions for interpretation of the information provided.
19.5 All Computerized Reports and Summaries will be certified and signed by the
Director of Quality Control or an authorized official of the Lessee.
19.6 Documents and Records and in particular serialized shop record including
all airworthiness approval tags (JAA-1 Form or FAA 8130 Form) and
serviceable ("yellow") tags shall form a permanent part of the Documents
and Records.
19.7 Life Limited Parts as specified by the Aircraft and Engines types
certificates shall be provided with appropriate documents and records that
identify current status, life history (removal and installation), total
time in service, authenticity and origin back to manufacturer.
19.8 Time controlled Parts as identified by the Agreed Maintenance Program,
shall be provided with all records necessary to establish documentation,
expressed in Flight Hours, Cycles, or calendar time, back to overhaul
(including all interim repair records since overhaul).
19.9 Lessee shall be responsible for maintaining a revision service for all
manufacturers and operators manuals, reports and documents which shall at
all times contain the latest issued revisions, and reflect the current
specification, configuration and status of the Aircraft and Engines, which
includes APU, systems, assemblies and components. Lessee will have all
modifications, wiring changes, and engineering orders (or equivalent)
incorporated into the relevant manuals.
Page 16
SCHEDULE 4
AIRCRAFT REDELIVERY
1.0 GENERAL CONDITION
1.1 The Aircraft will be in the same configuration (except as per Clause 1.5 of
this Schedule 4) and operating condition as at delivery to Lessee,
including post-delivery modifications as defined in Schedule 1, Parts 1
through 4, ordinary wear and tear excepted and be clean by international
commercial airline standards for an aircraft exiting a C-Check (or as the
case may be D-Check) and ready for flight with all of the equipment,
components and systems fully functional and operating within limits and/or
guidelines established by the relevant manufacturers and the FAA..
1.2 The Aircraft will have installed the full complement of Engines, APU,
equipment, components, furnishings and loose equipment as when originally
delivered to Lessee and shall not have installed thereon any engines, APU,
components, parts, equipment and furnishings which are owned by any person
other than the Lessor or the Lessee.
1.3 The Aircraft will have a current legal and valid transport category
certificate of airworthiness issued by the Air Authority, or if required by
Lessor, an export certificate of airworthiness, if available, for export to
the USA. In such case, the Aircraft will be deregistered from the country
registered at Lessee's cost upon the Redelivery.
1.4 Subject to Lessee's consent, Lessor may elect to retain certain Equipment
Changes incorporated on the Aircraft by Lessee during the Term of this
Agreement, excluding leased equipment. In this event any equipment or
components that were removed from the Aircraft, not substituted by way of
such Equipment Change, and not shipped to Lessee for storage, will be
returned in a serviceable and airworthy condition to Lessor with the
Aircraft.
1.5 The Aircraft will be in a condition as to immediately be eligible to
receive a USA certificate of airworthiness issued by FAA in accordance with
FAR part 21, and to be placed on the operating certificate of a USA airline
in accordance with FAR 121.
1.6 The Aircraft will be free of Liens other than Lessor Liens.
2.0 AIRCRAFT CONDITION
2.1 The Aircraft will be fresh out of the next scheduled full and complete
zonal, systems and structural C-Check (including all segments if segmented)
or equivalent type maintenance check, in accordance with Appendix J of the
then latest Boeing Maintenance Planning Document ("MPD"). This check will
clear all lower level checks including "A", "B" and service checks. Should
Lessee be required to perform any tasks in respect of the Agreed
Maintenance Program in addition to the tasks required to be performed
pursuant to the block C-Check in accordance with Appendix J of the MPD,
such tasks shall be performed by Lessee and the reasonable costs and
expenses incurred by Lessee in connection therewith shall be promptly paid
for by Lessor.
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2.2 The Aircraft will be weighed prior to Redelivery and have a current weight
and balance report in form acceptable to the FAA.
2.3 The Aircraft will be in compliance with all Airworthiness Directives, FAR
revisions and other mandatory orders issued by the FAA requiring compliance
during or within 90 days or 750 Flight Hours or 500 Cycles (whichever is
most limiting) after Redelivery of the Aircraft. If any waivers, extensions
or other special dispensations were granted by the Air Authority (except
for such waivers, extensions or dispensations granted to the industry as a
whole) with respect to any Airworthiness Directive, FAR revision or other
mandatory order, Lessee shall incorporate the required Airworthiness
Directives, FARs or other mandatory order as if such waiver, extension or
dispensation had not been granted.
2.4 All "No Charge" service bulletin kits procured by Lessee but not installed
on the Aircraft will be returned to Lessor with the Aircraft.
2.5 The Aircraft will have all open and deferred items, including maintenance
and temporary repair items (except those deferred to the next D-Check, in
which case financial adjustments shall be negotiated at that time, but in
no case shall Lessee have any repair or financial obligations for items
deferred beyond the next D-Check), ▇▇▇/CDL items, and pilot/cabin/engine
logbook items, rectified on a terminating action basis. Any waivers,
extensions or dispensations granted to this Aircraft by the manufacturers,
the FAA, or the Air Authority (except for such waivers, extensions or
dispensations granted to the industry as a whole) which require
incorporation of special operations, inspections or maintenance tasks to
this Aircraft will be treated as if such waivers, extensions or
dispensations had not been granted.
2.6 The Aircraft (excluding Engines) will have any and all maintenance items,
including inspections and replacements of life limited/time controlled
parts, required by the Agreed Maintenance Program and the MPD cleared for
3,000 Flight Hours or 2,000 Cycles, whichever is more limiting, and 12
months beyond the Redelivery Check. In the event that an item is due more
often than the periods noted above, that item will be cleared for its
maximum interval.
2.7 All tires and brakes will have at least 50% of full service life remaining.
2.8 All repairs made to the Aircraft will be in accordance with the
Manufacturer's FAA Structural Repair Manual (SRM) or otherwise traceable to
FAA or FAA DER approval.
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2.9 The Aircraft will be properly stripped, corrosion protected and painted per
Manufacturer's specifications in such external livery as advised by Lessor.
This shall include corrosion protection and painting of fuselage,
empennage, wings, vertical/horizontal stabilizer, flight control surfaces,
engine cowling/nacelle and wheel ▇▇▇▇▇. Control surfaces will be rebalanced
as required. Prior to painting the Aircraft, all previous exterior
markings, logos, or other distinctive insignia will be removed in
accordance with Manufacturer's instructions and recommendations. All
fairings and skin laps seams will be properly refinished and resealed. The
repaint of the Aircraft will be of high quality; free from flaking,
overspray, peeling, drips or other cosmetically unacceptable items and
Lessor shall be responsible for the actual costs of repainting the
Aircraft, provided that Lessee shall use its reasonable efforts to ensure
that the costs are not in excess of industry practice.
2.10 The Aircraft, both interior and exterior, will have no evidence of
untreated or uncorrected corrosion or delamination.
2.11 The Landing Gear assemblies or the Aircraft will have a minimum of 12
months remaining to its next expected overhaul.
2.12 No Engine, Landing Gear or APU will have more than 130% of the total Flight
Hours or Cycles on the Aircraft.
2.13 No Aircraft LLP (see Clause 3.2 for Engine LLPs) will have less than 3,000
Flight Hours, 2,000 cycles or 12 months remaining to useful life
replacement.
2.14 All fuel tanks will be at least as full as at delivery of Aircraft. All oil
and fluid tanks will be full.
2.15 All "loose equipment", galley inserts, cargo containers will be returned
with the Aircraft in good and serviceable condition, ordinary wear and tear
excepted..
3.0 ENGINES AND APU CONDITION
3.1 Each Engine will be installed on the Aircraft and will be the Engine
originally installed at delivery, unless such Engine was the subject of an
Event of Loss and has been replaced in accordance with Clause 11.3, or
unless such Engine has otherwise been replaced with a suitable replacement
Engine in accordance with Clause 16 of Schedule 3.
3.2 The Engines will have no less than 3,000 Flight Hours and 2,000 Cycles
remaining on the "mean time between unscheduled removals" as determined by
the applicable manufacturer ("MTBUR"). There will be no LLP replacement
scheduled within 2,000 Cycles of life remaining.
3.3 The Engines will not be "on-watch", nor have records or Engine Monitoring
Program trend data that based on the Engine manufacturer's experience would
require Engine removal or maintenance for any cause within 3,000 Flight
Hours or 2,000 Cycles of operation.
Page 3
3.4 Immediately prior to Redelivery of the Aircraft, each Engine will have a
full hot and cold section video borescope and a maximum power assurance
(MPA) run in accordance with the Manufacturer's procedures.
3.5 The APU will be in serviceable condition, fresh from a hot section
inspection or borescope, and with a full APU performance run per
manufacturer's procedures. The APU will not have less than 3,000 Flight
Hours remaining on the MTBUR.
4.0 REDELIVERY INSPECTION AND DEMONSTRATION FLIGHT
4.1 During the Redelivery Check and at Redelivery, Lessor or its
representatives will have an opportunity to inspect the Aircraft and
Documents and Records and participate in and review all aspects of the
Redelivery Check to ensure to Lessor's satisfaction that Redelivery
conditions are met.
4.2 During the course of the Redelivery Check and Final Inspection, if
corrosion or other problems are detected, Lessee will open adjacent areas
as required to ensure that the detected problem is rectified in accordance
with Manufacturer's specifications.
4.3 Prior to the Redelivery of the Aircraft, Lessee will perform a
demonstration flight of not less than two hours of the Aircraft in
accordance with the Lessee's post-C-Check Flight Functional Acceptance
Procedures. The demonstration flight will show that the Aircraft, its
Engines, and its various components and systems are fully operational and
capable of full rated performance throughout the operational envelope of
the Aircraft. Lessor's representative(s) will be allowed on the flight to
monitor compliance. The demonstration flight will be at Lessee's expense.
Any squawks found in the flight will be corrected at Lessee's cost and
expense. Lessee and Lessor will reasonably cooperate to combine this
demonstration flight with the flight to the Redelivery Location.
5.0 DOCUMENTS AND RECORDS
5.1 The Documents and Records will be made available to Lessor or Lessor's
representative not less than 10 Business Days prior to scheduled Redelivery
Date. Lessor or Lessor's representative will review and inventory to
determine that the Documents and Records are in compliance with the
requirements specified in this Agreement.
5.2 Upon request of Lessor, Lessee will provide a current and complete copy of
the Agreed Maintenance Program. Lessor shall use and retain the copy of the
Agreed Maintenance Program on a strictly confidential basis, and shall
return said Document to Lessee after integrating the Aircraft into the next
operator's maintenance program.
5.3 Lessee shall return all Documents and Records delivered to Lessee at
delivery (as specified in Parts 5 and 6 of Schedule 1). All Documents and
Records shall reflect the Redelivery condition and current status of the
Aircraft at time of Redelivery, including all modifications and maintenance
activity performed on the Redelivery Check.
Page 4
5.4 In the event of missing, incomplete, or otherwise unacceptable Documents or
Records, Lessee will take all necessary steps to replace such Documents or
Records (whether by reaccomplishing tasks, recreating documents,
reverifying, or otherwise).
5.5 Lessee will provide assistance as reasonably required by Lessor or Lessor's
representative to locate and inventory the Documents and Records and to
ensure their accuracy and completeness.
5.6 Lessee will provide a work scope detailing all scheduled maintenance and
other activities (including any alterations, modifications, Airworthiness
Directives, component changes, service bulletin and engineering order
incorporation) to be accomplished during the Redelivery Check.
5.7 Lessee will provide Lessor with a final audited copy of all work
accomplished during the Redelivery Check at Redelivery.
Page 5
SCHEDULE 5
INSURANCE REQUIREMENTS
The Insurances required to be maintained are on the basis of AVN 67B and as
follows:
1. HULL ALL RISKS of Loss or Damage whilst flying and on the ground with
respect to the Aircraft on an "agreed value basis" for the Agreed Value and
with a deductible not exceeding the Insurance Deductible Amount, or such
other amount agreed by Lessor from time to time, and to include deductible
insurances, if necessary, to achieve that limit.
2. WAR AND ALLIED PERILS, being such risks excluded from the Hull All Risks
Policy to the fullest extent available from the leading international
insurance markets including confiscation and requisition by the
Jurisdiction of Incorporation for the Agreed Value.
3. ALL RISKS (INCLUDING WAR AND ALLIED RISK except when on the ground or in
transit other than by air) property insurance on all Engines and Parts when
not installed on the Aircraft or an "agreed value" basis for their full
replacement value and including engine test and running risks.
4. AIRCRAFT THIRD PARTY, PROPERTY DAMAGE, PASSENGER, BAGGAGE, CARGO AND MAIL
AND AIRLINE GENERAL THIRD PARTY (INCLUDING PRODUCTS) LEGAL LIABILITY for a
Combined Single Limit (Bodily Injury/Property Damage) of an amount not less
than the Minimum Liability Coverage for the time being any one occurrence
(but in respect of products and personal injury liability this limit may be
an aggregate limit for any and all losses occurring during the currency of
the policy). War and Allied Risks are also to be covered under the Policy
to the fullest extent available from the leading international insurance
markets.
5. All required hull and spares insurance (as specified above), so far as it
relates to the Aircraft will:
(1) name Lessor as sole loss payee up to the Agreed Value; (2) provide
that any loss will be payable in Dollars, and:
(a) in respect of any claim that becomes payable on the basis of an
Event of Loss, settlement shall be made to or to the order of
Lessor up to the Agreed Value;
(b) in respect of any other claim, settlement (net of any policy
deductible) shall be made with such party(ies) as may be
necessary to repair the Aircraft unless otherwise agreed after
consultation between the insurers, Lessee and, where the loss
exceeds the Damage Notification Threshold, Lessor; and
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(c) if separate Hull "all risk" and "war risks" insurances are
arranged, include a 50/50 provision in accordance with market
practice (AVS. 103 is the current market language).
6. All required liability insurances (specified above) will:
(1) include Lessor, and its successors and assigns and their respective
shareholders, subsidiaries, directors, officers, agents, employees and
Indemnitees as additional insureds for their respective rights and
interests, warranted, each as to itself only, no operational interest;
(2) operate in all respects as if a separate policy had been issued
covering each party insured, but shall not include any claim under
hull and spares insurances (as specified above); notwithstanding the
foregoing, the total liability of insurers shall not exceed the limits
of liability stated in the policy; and
(3) contain a provision confirming that the policy is primary without
right of contribution and the liability of the insurers will not be
affected by any other insurance of which Lessor or Lessee have the
benefit so as to reduce the amount payable to the additional insureds
under such policies.
7. All Insurances will:
(1) be in accordance with normal industry practice of persons operating
similar aircraft in similar circumstances;
(2) provide cover denominated in Dollars and any other currencies which
Lessor may reasonably require in relation to liability insurance;
(3) operate on a world-wide basis subject to such limitations and
exclusions as Lessor may reasonably agree;
(4) provide that, in relation to the interests of each of the additional
assureds the Insurances will not be invalidated by any act or omission
(including misrepresentation and non-disclosure) of any other person
or party which results in a breach of any term, condition or warranty
of the policy, provided that the additional insured party so protected
has not caused, contributed to or knowingly condoned the said act or
omission;
(5) provide that upon payment of any loss or claim to or on behalf of any
additional assureds, insurers shall to the extent and in respect of
such payment be thereupon subrogated to all legal and equitable rights
of that additional assured indemnified hereby (but not against any
additional assureds). Insurers shall not exercise such rights without
the consent of those indemnified, such consent not to be unreasonably
withheld. At the expense of insurers such additional assureds shall do
all things reasonably necessary to assist the insurers to exercise
said rights;
Page 2
(6) provide that the additional assureds will have no obligation or
responsibility for the payment of any premiums due and that the
insurers will not exercise any right of set-off or counter-claim in
respect of any premium due against the respective interests of the
additional assureds other than outstanding premiums relating to the
Aircraft, any Engine or Part which is the subject of the relevant
claim;
(7) provide that, except in respect of any provision for cancellation or
automatic termination specified in the Policy or any endorsement
thereof, cover provided by the Insurances may only be cancelled or
materially altered in a manner adverse to the additional assureds by
the giving of not less than 30 days (7 days or such less period as may
be customarily available in respect of war risks and allied perils)
notice in writing to the appointed broker, who shall undertake to
notify Lessor promptly. Notice shall be deemed to commence from the
date such notice is given by the insurers. Such notice will not,
however, be given the normal expiry date of the Policy or any
endorsement; and
(8) reinsurance will (a) be on the same terms as the original insurances
and will include the provisions of this Schedule, (b) provide that
notwithstanding any bankruptcy, insolvency, liquidation, dissolution
or similar proceedings of or affecting the reinsured that the
reinsurers' liability will be to make such payments as would have
fallen due under the relevant policy of reinsurance if the reinsured
had (immediately before such bankruptcy, insolvency, liquidation,
dissolution or similar proceedings) discharged its obligations in full
under the original insurance policies in respect of which the then
relevant policy of reinsurance has been effected; and (c) contain a
"cut-through" clause in the following form (or otherwise, satisfactory
to Lessor): "The Reinsurers and the Reinsured hereby mutually agree
that in the event of any claim arising under the reinsurances in
respect of a total loss or other claim where as provided by the
Aircraft Lease Agreement (MSN 29048) dated as of October 1, 1998 and
made between Lessor and Lessee such claim is to be paid to the person
named as sole loss payee under the primary insurances, the Reinsurers
will in lieu of payment to the Reinsured, its successors in interest
and assigns pay to the person named as sole loss payee under the
primary insurances effected by the Reinsured, that portion of any loss
due for which the Reinsurers would otherwise be liable to pay the
original Reinsured (subject to proof of loss), it being understood and
agreed that any such payment by the Reinsurers will (to the extent of
such payment) fully discharge and release the Reinsurers from any and
all further liability in connection therewith" subject to such
provisions not contravening any law of the Jurisdiction of
Incorporation.
Page 3
SCHEDULE 6
FORM OF LEGAL OPINION
To: First Security Bank, National Association
Tombo Aviation, Inc.
Date: _____________
Dear Sirs,
1. You have asked us to render an opinion in connection with the transaction
governed, inter alia, by the under mentioned documents. Words and
expressions used herein will bear the same meanings as defined in an
Aircraft Lease Agreement (MSN 29048) (the "Lease") dated as of October 1,
1998 between First Security Bank, National Association, not in its
individual capacity, except as otherwise expressly provided herein, but
solely as Owner Trustee, and Compania Panamena de Aviacion, S.A.:
(1) the Lease;
(2) the constitutional documents comprising [______] of Lessee; and
(3) all other documents, approvals and consents of whatever nature and
wherever kept which it was, in our judgment and to our knowledge,
necessary or appropriate to examine to enable us to give the opinion
expressed below.
2. Having considered the documents listed in paragraph 1 above, and having
regard to the relevant laws of Panama, we are pleased to advise that in our
opinion:
(1) Lessee was duly constituted in accordance with the laws of Panama on
[______] as [__________] and is a validly existing separate legal
entity, is subject to suit in its own name, and, to the best of our
knowledge, no steps have been, or are being, taken to appoint a
receiver or liquidator over, or to dissolve, Lessee;
(2) Lessee has the corporate power to enter into and perform, and has
taken all necessary corporate action to authorize the entry into,
performance and delivery of, the Lease and the transactions
contemplated by the Lease;
(3) the entry into and performance by Lessee of, and the transactions
contemplated by, the Lease do not and will not:
(a) conflict with any laws binding on Lessee;
(b) conflict with the constitutional documents of Lessee; or
Page 1
(c) conflict with or result in default under any document which is
binding upon Lessee or any of its assets nor result in the
creation of any Lien over any of its assets.
(4) no authorizations, consents, licenses, approvals and registrations
(other than those which have been obtained and of which copies are
attached hereto) are necessary or desirable to be obtained from any
governmental or other regulatory authorities in the Jurisdiction of
Incorporation to enable Lessee:
(a) to enter into and perform the transactions contemplated by the
Lease;
(b) to import the Aircraft into Panama for the duration of the Term;
(c) to operate the Aircraft for the transport of fare-paying
passengers; or
(d) to make the payments provided for in the Lease in the currency,
in the accounts and otherwise in accordance with the terms and
conditions provided in the Lease;
(5) other than(i) registering the Aircraft and filing this Agreement with
the Panamanian Directorate of Civil Aeronautics, and (ii) recording
this Agreement and the ▇▇▇▇ of sale evidencing Lessor's title to the
Aircraft with the Office of the Public Registry of Panama, it is not
necessary or desirable, to ensure the priority, validity and
enforceability of all the obligations of Lessee under the Lease that
the Lease be filed, registered, recorded or notarized in any public
office or elsewhere or that any other instrument relating thereto be
signed, delivered, filed, registered or recorded, that any tax or duty
be paid or that any other action whatsoever be taken under the laws of
Panama; accordingly, upon completion of the registration and recording
set forth above, pursuant to the Lease, Lessor will be deemed to be
the full legal and beneficial owner of the Aircraft and all rights and
interests with respect thereto, Lessee shall not be deemed to have
acquired any interest in the Aircraft other than the leasehold
interest contemplated by the Lease, and such leasehold interest of
Lessee at all times shall be subject to the terms and conditions
provided in the Lease;
(6) no other steps beyond (i) registering the Aircraft and filing this
Agreement with the Panamanian Directorate of Civil Aeronautics, and
(ii) recording this Agreement and the ▇▇▇▇ of sale evidencing Lessor's
title to the Aircraft with the Office of the Public Registry of Panama
are necessary or desirable to record or perfect Lessor's interest in
the Aircraft in Panama;
(7) on termination of the Lease (whether on expiry or otherwise) as
contemplated in the Lease, Lessor would be entitled:
(a) to repossess the Aircraft; and
(b) to export the Aircraft from Panama;
Page 2
without requiring any further consents, approvals or licenses from any
governmental or regulatory authority in Panama;
(8) the Lease has been properly signed and delivered on behalf of Lessee
and the obligations on the part of Lessee contained therein, assuming
them to be valid and binding according to the Governing Law, are valid
and legally binding on and enforceable against Lessee respectively
under the laws of Panama;
(9) the events described in Clause 13.1(7), (8) and (9) of the Lease
comprise an accurate and complete statement of all events and
situations provided for by the laws Panama which may lead to the
cessation of activities, winding up or dissolution of Lessee, and upon
the occurrence of any such described events, and the Lessor's exercise
of its rights to affect a termination of the Lease based on such
Events of Default: the Lease shall terminate; Lessee shall have no
further interest in the Aircraft; the Aircraft shall be excluded from
any reorganization or other legal proceedings with respect to the
Lessee; no receiver, trustee, liquidator, administrator, judicial
official or other Person shall have any interest in or rights under or
with respect to the Lessee or the Aircraft; and Lessor shall be
entitled to immediate return and unrestricted possession and control
of the Aircraft free and clear of any liens, claims or other
encumbrances and without any liability to Lessee or any other Person;
(10) Upon Lessor's giving the type of notice to Lessee set forth in Clause
13.2(1) following an Event of Default of the type set forth in Clause
13.1(8)(d), the Lease shall terminate (but without prejudice to the
continuing obligations of Lessee under the Lease) without the need of
any further action or judicial order; Lessee shall have no further
interest in the Aircraft; the Aircraft shall be excluded from any
liquidation or other legal proceedings with respect to the Lessee; no
receiver, trustee, liquidator, administrator, judicial official or
other Person shall have any interest in or rights under or with
respect to the Lessor or the Aircraft; and Lessor shall be entitled to
immediate return and unrestricted possession and control of the
Aircraft free and clear of any liens, claims or other encumbrances and
without any liability to Lessee or any other Person;
(11) the obligations of Lessee under the Lease rank at least pari passu
with all other present and future unsecured and unsubordinated
(including contingent) obligations of the Lessee upon an Event of
Default or other breach by Lessee of the Lease, Lessor at all times
shall be entitled without restriction to set off any damage suffered
or amounts owing by Lessee against any obligation of Lessor to return
any deposits or other funds or otherwise make any payments or
performance to Lessee or any Person claiming by, through or on behalf
of Lessee;
(12) there is no withholding tax or other Tax to be deducted from any
payment whatsoever or which may be made by Lessee pursuant to the
Lease; with respect to any withholdings, the provisions of Clauses
5.5, 5.6 and 5.9 of the Lease are fully effective; and the
arrangements contemplated by the Lease do not give rise to any charge
whatsoever to Taxes in Panama;
Page 3
(13) there is no applicable usury or interest limitation law in Panama
which may restrict the recovery of payments in accordance with the
Lease;
(14) there are no registration, stamp or other taxes or duties of any kind
payable in Panama in connection with the signature, performance or
enforcement by legal proceedings of the Lease;
(15) Lessor will not violate any law or regulation in Panama nor become
liable to tax by reason of entering into the Lease with Lessee, or
performing its obligations thereunder;
(16) it is not necessary to establish a place of business in Panama in
order to enforce any provisions of the Lease;
(17) the choice of the Governing Law to govern the Lease will be upheld as
a valid choice of law in any action in the Courts of Panama;
(18) the consent to jurisdiction by Lessee contained in the Lease is valid
and binding on Lessee and not subject to revocation;
(19) any judgment for a definite sum given by an arbitration proceeding or
court as provided in the Lease against Lessee would be recognized and
accepted by the Courts of Panama without re-trial or examination of
the merits of the case;
(20) Lessee is subject to civil commercial law with respect to its
obligations under the Lease, and neither Lessee nor any of its assets
is entitled to any right of immunity, and the entry into and
performance of the Lease by Lessee constitute private and commercial
acts;
(21) there are no circumstances under the law of Panama whereby Lessee may
be deprived of the Aircraft by any Government Entity or any other
person; and
(22) The Republic of Panama has ratified the Geneva Convention without any
reservations or limitations thereto, and all requirements set forth in
Article XXI of the Geneva Convention for Panama to become incorporated
as a member of the Geneva Convention have been completed.
3. We do not purport to be experts on, and do not purport to be generally
familiar with or qualified to express legal opinions based on, any law
other than the laws of Panama and accordingly express no legal opinion
herein based upon any law other than the laws of Panama.
Yours faithfully,
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Paragraph 2 (1) of Schedule 3
SCHEDULE 7
FORM OF REPORT
AIRFRAME AND ENGINE STATUS REPORT
FOR EACH SIX-MONTH PERIOD ("PERIOD")
Report for the Calendar Period Ended: _______________________
Aircraft Type: _______________________
Manufacturer Serial/Registration Number: _______________________
1. AIRCRAFT UTILIZATION
Aircraft Total Hours: ____________________
Aircraft Total Cycles: ____________________
Flight Hours for Period: ____________________
Cycles for Period: ____________________
2. DELIVERED ENGINE STATUS
ENGINES POS. 1 POS. 2
------- ------- -------
Serial No. of Present Engine: _______ _______
Serial No. of Delivered Engine: _______ _______
Current Location of Delivered Engine: _______ _______
Flight Hours Since New : _______ _______
Cycles Since New: _______ _______
Flight Hours for Period: _______ _______
Cycles for Period: _______ _______
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The following sections need be reported only if one of the following events has
taken place during the foregoing Period:
(A) D-Check or equivalent - Complete Section 3
(B) C-Check or equivalent - Complete Section 3
(C) Engine Change or Shop Visit - Complete Section 4
3. MAJOR CHECK REPORT
Date of Check: _____________ Total Hours: _____________ Total Cycles: __________
Location: ________________ Agent: _________________ Downtime: ___________Days
Type of Check: _______________________________________________
MODS / ADs / SBs Accomplished During Check: ____________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
Next Check Due In: _______________________________ Hours / Months / Years
Estimated Date: _________________
4. ENGINE REMOVAL AND SHOP VISIT REPORT
For Removed Engine: _____________________________________ ____________________
Serial Number: ___________________ Date of Removal: ___________________________
Position: ________________________ Airframe Total Hours at Removal: ___________
Engine Total Hours: ______________ Airframe Total Cycles at Removal: __________
Engine Total Cycles: ______________
Reason for Removal: ____________________________________________________________
Repair Agent: __________________________ Location: _____________________________
Intended Workscope: ____________________________________________________________
MODS / ADs / SBs to be Accomplished: ___________________________________________
Or Installed Engine: ___________________________________________________________
Serial Number: ________________ Time Since Last Shop Visit: ____________________
Position: _____________________ Last Shop Visit Description: ___________________
Engine Total Hours: _____________ Next Limiter: ________________________________
Engine Total Cycles: ____________ Time to Next Limiter: ________________________
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