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AIRCRAFT LEASE AGREEMENT
Dated as of February 26, 1999
Between
FIRST SECURITY BANK, N.A.,
As Owner Trustee,
Lessor
and
FRONTIER AIRLINES, INC.
Lessee
One Boeing Model 737-200A Aircraft
Bearing Manufacturer's Serial Number 23004
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Items marked with "*" have been omitted pursuant to a request for confidential
treatment.
CERTAIN PROCEEDS OF THIS LEASE ARE SUBJECT TO A SECURITY INTEREST IN FAVOR OF
NATIONSBANK, N.A., AS AGENT, AND ANY SUCCESSOR AGENT, FOR ONE OR MORE FINANCIAL
INSTITUTIONS
AIRCRAFT LEASE AGREEMENT
THIS AGREEMENT dated February 26, 1999 ("Lease"), between FIRST SECURITY
BANK, N.A., not in its individual capacity but solely as owner trustee
("Lessor"), and FRONTIER AIRLINES, INC., a Colorado corporation ("Lessee").
Lessee desires to lease from Lessor and Lessor is willing to lease to
Lessee the aircraft described herein upon and subject to the terms and
conditions of this Lease. In consideration of the mutual promises herein, Lessor
and Lessee agree as follows:
SECTION 1
DEFINITIONS
Terms used in this Lease have the respective meanings specified in Exhibit
A.
SECTION 2
LEASE AND CONDITIONS
(1) Lessor hereby agrees, subject to satisfaction of the conditions set forth
herein, to lease the Aircraft to Lessee, and Lessee hereby agrees to lease the
Aircraft from Lessor, on the terms of this Lease.
(2) Lessor's obligation to lease the Aircraft hereunder to Lessee shall be
conditioned upon (i) the absence of any Default hereunder and the absence of any
materially adverse change in Lessee's financial condition or prospects from the
date hereof to the Delivery Date, and (ii) the receipt by Lessor of the
following documents on or before the Delivery Date, all of which shall be
reasonably satisfactory in form and substance to Lessor: (1) a Lease Supplement
executed by Lessee, and effective as of the Delivery Date; (2) such officer's
certificates and legal opinions relating to due authority to enter into, the
enforceability of, and absence of Defaults under this Lease as Lessor shall
require; (3) an Approved Insurance Broker's report as to the due compliance with
the insurance provisions of Section 11 hereof; (4) a certificate of an Approved
Insurance Broker evidencing the insurance as required by Section 11 hereof; (5)
a certificate in the form of Exhibit D completed, executed and delivered by
Lessee setting forth the status of the Aircraft and Engines on the Delivery
Date; and (6) such other documents and matters incident to the foregoing as
Lessor may reasonably request. (1)
SECTION 3
DELIVERY AND ACCEPTANCE; TERM
(3) Delivery; Place of Delivery and Acceptance. The Aircraft is expected to be
available for delivery on or about the Estimated Delivery Date, and shall be
delivered to and accepted by Lessee at the Delivery Location.
(4) Casualty to the Aircraft Preceding Delivery; Excusable Delay. Upon a
Casualty Occurrence taking place prior to delivery of the Aircraft to Lessee,
this Lease shall terminate. If an Excusable Delay prevents the delivery of the
Aircraft beyond April 15, 1999, Lessor shall notify Lessee in writing thereof,
and at the option of Lessee, this Lease shall terminate. Lessor shall not be
responsible for the failure to deliver the Aircraft hereunder due to an
Excusable Delay.
(5) Pre-Delivery Check Flight. Prior to the Delivery Date, Lessee shall be
permitted to assign up to two representatives (one of whom may sit in the jump
seat in the cockpit) to participate as observers in a functional check flight of
not more than two (2) hour's duration, at Lessor's expense, to enable Lessee to
verify that the Aircraft satisfies the conditions set forth in Exhibit E hereto.
Lessor will provide the pilots and insurance for the functional check flight.
(6) Correction of Deficiencies. If the pre-delivery check flight reveals that
the Aircraft does not fulfill the conditions described in Exhibit E, Lessor and
Lessee shall attempt in good faith to agree upon a list of deficiencies with
respect to the Aircraft. If the parties are unable to agree upon such list, then
this Lease shall terminate. If the parties are able to agree upon such list,
then Lessor shall cure such deficiencies listed thereon during which time Lessee
may have a reasonable number of representatives to observe such corrections
being made. Upon correction of such deficiencies, Lessee shall promptly
re-inspect the Aircraft and if the Aircraft is then in compliance with the
conditions described in Exhibit E, Lessee shall accept delivery of the Aircraft.
(7) Acceptance of Aircraft. Except as may otherwise be expressly provided
pursuant to the terms of this Lease, the Aircraft is to be leased to Lessee "AS
IS," "WHERE IS" and SUBJECT TO EACH AND EVERY DISCLAIMER OF WARRANTY AND
REPRESENTATION AS SET FORTH IN SECTION 5(a) HEREOF. Upon tender of the Aircraft
for delivery hereunder by Lessor, if the Aircraft is in the condition specified
in Exhibit E, Lessee shall immediately accept delivery of the Aircraft. Upon
acceptance of the Aircraft Lessee shall thereupon indicate and confirm its
irrevocable acceptance of the Aircraft by delivery to Lessor of a duly executed
Lease Supplement, dated the Delivery Date.
(8) Term of Lease. The Term of this Lease shall commence on the Delivery Date
and shall continue until the Expiration Date; provided that this Lease may be
earlier terminated or renewed pursuant to the provisions hereof. Throughout the
Term and until redelivery of the Aircraft in accordance with Section 12 hereof,
Lessee shall bear all risks of loss, theft, damage and destruction of or to the
Aircraft and every Part thereof, and no such loss, theft, damage or destruction
nor any other event, circumstance or change in Law shall impair, discharge or
frustrate any obligation of Lessee under this Lease (including, without
limitation, as to Rent or other payments), so that all such obligations shall,
save as expressly provided in Section 10 hereof, continue in full force and
effect.
SECTION 4
RENT AND RESERVES
(9) Rent. Lessee covenants and agrees to pay to Lessor, or its assigns: (i) the
Initial Basic Rent Payment Amount on the Delivery Date, (ii) Basic Rent in
consecutive installments on each Basic Rent Payment Date; (iii) the Final Basic
Rent Payment Amount on the Final Basic Payment Date; and (iv) Supplemental Rent
as the same becomes due. If a Basic Rent Payment Date shall fall on a day which
is not a Business Day, any payment due on such Basic Rent Payment Date shall be
made on the next succeeding Business Day. All Rent and other amounts payable
under this Lease shall be paid in immediately available funds, at the Payment
Location or at such other location as Lessor shall designate in writing.
(10) Reserves. Separate reserve accounts shall be established by Lessor for the
Airframe, each Engine and each landing gear. On the tenth (10) calendar day of
each month during the Term, Lessee shall pay Lessor an amount calculated as the
product of the number of Flight Hours of operation during the prior calendar
month, and the Airframe Reserve Rate, Landing Gear Reserve Rate and Engine
Reserve Rate, as applicable. Subject to receipt of satisfactory invoices, Lessor
shall use amounts deposited in each reserve account to reimburse Lessee for the
actual out-of-pocket costs incurred by Lessee in completing a "C7"Check (or its
equivalent) in the case of the Airframe, overhaul or replacement in the case of
landing gear, and Engine Overhauls in the case of an Engine; provided, however,
such reimbursable costs shall not include, without limitation, costs associated
with the auxiliary power unit. Lessee shall provide Lessor with written evidence
reasonably satisfactory to Lessor as to completion of such check or overhaul in
accordance with the Maintenance Program. No portion of any reserve shall be
applied to the cost of repairing damage resulting from any accident or incident,
abuse or misuse, foreign object damage or to the cost of complying with any FAA
airworthiness directive. Lessee shall bear the cost of any check or overhaul to
the extent such cost exceeds the balance then available in the applicable
reserve; provided, however, (A) in the event the Aircraft requires a "C7" Check
within the first two and one-half (2 1/2) years of the Term, or (B) in the event
an Engine is removed within the first fifteen (15) months following the Delivery
Date due to a condition which would require such removal in accordance with the
Engine Manufacturer's maintenance manual, Lessor shall bear the cost of any "C7"
Check or the first Engine overhaul of such Engine, as the case may be, only to
the extent that such cost exceeds the balance then available in the applicable
reserve. Lessor shall be entitled to commingle money held in the reserve
accounts from time to time with its other assets and Lessee shall not be
entitled to any interest on such amounts. Any amounts remaining in the reserve
accounts at the Return Occasion shall be applied first to reduce any payment
obligation of Lessee pursuant to Exhibit C (with the balance of any reserve
account available only to offset a payment obligation with respect to the check
or overhaul for which such reserve was established), and then the balance shall
be retained by Lessor. Lessee agrees that if Lessee Defaults have occurred or
are occurring, Lessor shall be entitled, but not required, to apply any amounts
held as reserves against such default.
(11) Prohibition Against Setoff, Counterclaim, Etc. This Lease is a net lease,
and Lessee, except as otherwise expressly provided herein, shall be responsible
for the cost of delivery, possession, importation, registration, use, operation,
management, return, maintenance, repair and modification of the Aircraft and
compliance with applicable laws, regulations and airworthiness directives from
the Delivery Date until the Aircraft is returned to Lessor in accordance with
Section 12 hereof. Lessee's obligation to pay all Rent hereunder shall be
absolute and unconditional and shall not be affected or reduced by any
circumstances whatsoever (including, without limitation any right of setoff,
counterclaim, recoupment, defense or other right which Lessee may have against
Lessor, the Manufacturer, the Engine Manufacturer, any seller of or person
providing services with respect to the Aircraft or any other Person, for any
reason whatsoever), it being the express intention of Lessor and Lessee that all
Rent payable hereunder shall be payable in all events, unless the obligation to
pay the same shall be terminated pursuant to the express provisions of this
Lease. Lessee hereby waives, to the extent permitted by applicable Law, any and
all rights which it may now have or which at any time hereafter may be conferred
upon it, by Law or otherwise, to terminate this Lease or any obligation imposed
upon Lessee hereunder or in relation hereto except upon the terms expressly set
forth in this Lease. Nothing contained in this Section shall be construed as a
waiver of Lessee's right to seek a separate recovery of any payment of Rent
which is not due and payable in accordance with the terms of this Lease or
monies or payments which are due and payable by Lessor under the terms of this
Lease.
SECTION 5
REPRESENTATIONS AND WARRANTIES
(12) Warranties and Disclaimer of Warranties. EXCEPT AS SET OUT IN SECTION
5(b)(i), LESSOR HAS NOT AND SHALL NOT BE DEEMED TO HAVE MADE OR GIVEN AND LESSOR
HEREBY SPECIFICALLY DISCLAIMS, ANY TERM, CONDITION, COVENANT, REPRESENTATION OR
WARRANTY, EXPRESS OR IMPLIED, AS TO THE TITLE, AIRWORTHINESS, VALUE, QUALITY,
DURABILITY, DESCRIPTION, CONDITION, DESIGN, OPERATION, MERCHANTABILITY, OR THE
ABSENCE OF ANY INFRINGEMENT OF ANY PATENT, COPYRIGHT, DESIGN, OR OTHER
PROPRIETARY RIGHT, OR FITNESS FOR USE FOR A PARTICULAR PURPOSE OF THE AIRCRAFT,
THE ABSENCE THEREFROM OF LATENT, INHERENT OR OTHER DEFECTS, WHETHER OR NOT
DISCOVERABLE, OR AS TO ANY OTHER REPRESENTATION OR WARRANTY WHATSOEVER, EXPRESS
OR IMPLIED (INCLUDING ANY IMPLIED WARRANTY ARISING FROM A COURSE OF PERFORMANCE
OR DEALING OR USAGE OF TRADE), WITH RESPECT TO THE AIRCRAFT; AND LESSEE HEREBY
WAIVES, RELEASES, RENOUNCES AND DISCLAIMS EXPECTATION OF OR RELIANCE UPON ANY
SUCH WARRANTY OR WARRANTIES, IT BEING UNDERSTOOD THAT ALL CONDITIONS, WARRANTIES
AND REPRESENTATIONS (OR OBLIGATION OR LIABILITY IN CONTRACT OR IN TORT) IN
RELATION TO ANY OF THOSE MATTERS, EXPRESSED OR IMPLIED, STATUTORY OR OTHERWISE,
ARE, EXCEPT AS PROVIDED IN SECTION 5(b)(i), EXPRESSLY EXCLUDED.
(13) LESSOR REPRESENTS AND WARRANTS (IN LIEU OF ALL OTHER EXPRESS OR IMPLIED
WARRANTIES WHATSOEVER) THAT: (i) title to the Aircraft is vested in Lessor and
the Aircraft is free and clear of any and all Lessor's Liens; (ii) Lessor is a
corporation duly organized and validly existing under the Laws of the State of
Utah and is a "citizen of the United States" as defined in section 40102 of the
Transportation Code, and has the power and authority to perform its obligations
under this Lease; (iii) the making and performance by Lessor of this Lease have
been duly authorized by all necessary corporate action on the part of Lessor and
will not violate any provision of Law or its charter documents; and (iv) this
Lease has been duly entered into and delivered by Lessor, and that this Lease
does, and the Lease Supplement when executed and delivered hereunder will,
constitute legal, valid and binding obligations of Lessor, enforceable in
accordance with their respective terms.
(14) Manufacturers' Warranties. Lessor hereby authorizes Lessee to exercise for
the account of Lessor such rights as Lessor may have under any warranty, express
or implied, with respect to the Aircraft to the extent that the same may be
assigned or otherwise made available to Lessee; provided, however, that upon an
Event of Default all such rights shall immediately revert to Lessor including
all claims thereunder whether or not perfected.
(15) Lessee's Representations and Warranties. Lessee hereby makes the following
representations and warranties, which representations and warranties shall
survive the execution and delivery of this Lease and the delivery of the
Aircraft: (i) Lessee is a corporation duly organized, existing and in good
standing under the Laws of Colorado and has the corporate power and authority to
carry on its business as presently conducted and to perform its obligations
under this Lease; (ii) this Lease has been duly authorized by all necessary
corporate action on the part of Lessee, and neither the execution and delivery
hereof nor the consummation of the transactions contemplated hereby nor
compliance by Lessee with any of the terms hereof will contravene any applicable
Law or result in any breach of, or constitute any default under, or result in
the creation of any Lien upon any property of Lessee under, any credit agreement
or instrument, corporate charter or by-law or other agreement or instrument to
which Lessee is a party or by which Lessee or its properties or assets are bound
or affected; (iii) Lessee has received every consent, approval or authorization,
and has given every notice, that is required for Lessee to execute and deliver
this Lease, and to perform the transactions contemplated hereby and all of which
remain valid and effective; (iv) this Lease has been duly executed and delivered
by Lessee, and this Lease does, and the Lease Supplement when executed and
delivered by Lessee will, constitute legal, valid and binding obligations of
Lessee, enforceable in accordance with their respective terms, but subject to
bankruptcy, insolvency, or other similar laws affecting creditors' rights
generally; (v) the consolidated financial statements of Lessee, including the
balance sheets and unaudited statements of income and retained earnings of
Lessee, for the current year and if available, the immediately preceding fiscal
year, copies of which have been furnished to Lessor, are prepared in accordance
with generally accepted accounting principles, and present fairly the financial
position and operations of Lessee, and subsequent to the conclusion of the last
such period, there has been no material adverse change in such position or
operations; (vi) the chief executive office or chief place of business (as such
terms are used in Division 9 of the Uniform Commercial Code) of Lessee is
located at ▇▇▇▇▇ ▇. ▇▇▇▇ ▇▇▇▇▇▇, #▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇; (vii) each of
this Lease and any other document, certificate or statement furnished to Lessor
by or on behalf of Lessee in connection with the transactions contemplated
hereby or thereby does not contain any untrue statement of a material fact or
omit to state a material fact necessary in order to make the statements
contained herein and therein not misleading; and there is no fact, to the best
knowledge of Lessee, which has not been disclosed to Lessor in writing on or
before the date of execution of this Lease and which materially adversely
affects or will materially adversely affect the ability of Lessee to carry on
its business or to perform its obligations under this Lease; and (viii) Lessor
shall be entitled to the benefits of a lessor under Title 11 U.S.C.
Section 1110 as in effect on the date hereof.
SECTION 6
POSSESSION, USE AND MAINTENANCE
(16) Sublease, Assignment and Transfer. Without Lessor's prior written consent,
Lessee will not assign this Lease or sublet or transfer possession of the
Aircraft, Airframe or any Engine or install any Engine or permit any Engine to
be installed on any airframe other than the Airframe, provided that so long as
no Default shall have occurred and be continuing then Lessee, without the prior
written consent of Lessor, may: (i) deliver possession of the Aircraft, the
Airframe or any Engine to any organization for service, repair, maintenance,
testing or overhaul work; (ii) install an Engine on an airframe (other than the
Airframe) owned by Lessee free and clear of all Liens except Permitted Liens and
those which by their terms would not attach to such Engine; and (iii) install an
Engine on an airframe leased to Lessee or owned by Lessee subject to a
conditional sale or other security agreement, provided, that: (A) such airframe
is free and clear of all Liens except the rights of the parties to the lease or
conditional sale or other security agreement covering such airframe and except
Permitted Liens and the lien of any mortgage which by its terms would not apply
to such Engine; and (B) the lessor or secured party of such airframe has made an
agreement substantially similar in effect to the agreement of Lessor in Section
6(b) below whereby such lessor or secured party agrees that neither it nor its
successors or assigns will acquire or claim any right, title or interest in any
Engine by reason of such Engine being installed on such airframe. The rights of
any transferee that receives possession by reason of a transfer permitted by
this Section 6(a) shall be subject and subordinate to all the terms of this
Lease; Lessee shall remain primarily liable hereunder for the performance of all
of the terms of this Lease to the same extent as if such transfer had not
occurred; and no relinquishment of possession pursuant to the terms of this
Section 6(a) shall in any way discharge or diminish any of Lessee's obligations
to Lessor hereunder.
(17) Reciprocal Recognition of Rights. In the event Lessee shall have received
from the lessor or secured party of any airframe leased to Lessee or owned by
Lessee subject to a conditional sale or other security agreement a written
agreement complying with Section (B) of Section 6(a)(iii) hereof, and such lease
or conditional sale or other security agreement covering such airframe also
covers an engine or engines owned by the lessor under such lease or subject to a
security interest in favor of the secured party under such conditional sale or
other security agreement, Lessor hereby agrees for the benefit of such lessor or
secured party that Lessor will not acquire or claim, as against such lessor or
secured party, any right, title or interest in any such engine as the result of
such engine being installed on the Airframe at any time while such engine is
subject to such lease or conditional sale or other security agreement and owned
by such lessor or subject to a security interest in favor of such secured party.
Lessor also hereby agrees for the benefit of the mortgagee under any mortgage
complying with Section (A) of Section 6(a)(iii) hereof, that Lessor will not
acquire or claim, as against such mortgagee, any right, title or interest in any
engine subject to the lien of such mortgage as the result of such engine being
installed on the Airframe at any time while such engine is subject to the lien
of such mortgage.
(18) Lawful Insured Operations. Lessee will not permit the Aircraft to be
maintained, used or operated in violation of any Law of any Governmental Entity,
or in violation of any airworthiness certificate, or license or registration
issued by any such authority, or contrary to the Manufacturer's or Engine
Manufacturer's operating manuals or instructions for the Aircraft or the
Engines. In the event that any such Law requires alteration of the Aircraft,
Lessee shall ensure compliance therewith and shall ensure that the Aircraft is
maintained in proper condition for operation under such Laws. Lessee agrees not
to operate the Aircraft or permit the Aircraft to be operated during the Term
unless the Aircraft is covered by insurance as required by the provisions
hereof.
(19) Maintenance. Lessee shall, at its own expense: (i) perform all mandatory
service, inspections, repair, maintenance, airworthiness directives, overhaul
and testing, (A) as may be required under applicable FAA rules and regulations
for compliance therewith during the Term and for a period of one hundred eighty
(180) days thereafter and in compliance with the Maintenance Program, (B) in the
same manner and with the same care as shall be the case with similar aircraft
and engines owned by or operated by or on behalf of Lessee without
discrimination and (C) so as to keep the Aircraft in as good operating condition
as when delivered to Lessee, ordinary wear and tear excepted; provided, however,
in the event the cost of performing, or causing the performance of, an
inspection resulting in the modification or terminating action being performed
pursuant to any Airworthiness Directive exceeds one hundred thousand dollars
($100,000), Lessor will reimburse Lessee for an amount equal to the AD Sharing
Formula for such cost, provided that (A) no Event of Default has occurred and is
continuing, and (B) Lessee provides evidence satisfactory to Lessor of payment
and completion of the relevant work; (ii) keep the Aircraft in such condition as
is necessary to maintain the airworthiness certification of the Aircraft in good
standing; and (iii) maintain all records, logs and other materials required by,
and in a manner acceptable to, the FAA.
(20) Registration and Insignia. The Aircraft shall be and shall remain
registered under the Transportation Code in the name of Lessor or such Person as
Lessor may designate. Upon delivery of the Aircraft, Lessee agrees to place the
Lease Identification in the cockpit in a prominent location and to place the
Lease Identification on each Engine. Lessee agrees to make such changes to the
Lease Identification as Lessor may request from time to time. Lessee will not
exercise any control or dominion over the Aircraft or operate or permit to be
operated the Aircraft until such Lease Identification has been so placed
thereon. Lessee will promptly replace any such marking which has been removed,
defaced or destroyed.
(21) Replacement of Parts. Lessee will promptly replace all Parts which may from
time to time become worn out, lost, stolen, seized, confiscated, damaged beyond
repair or permanently rendered unfit for use for any reason whatsoever. In
addition, Lessee may remove any Parts, whether or not worn out, damaged beyond
repair or permanently rendered unfit for use, provided that Lessee replaces such
Parts as promptly as practicable. All replacement Parts shall be free and clear
of all Liens, other than Permitted Liens, and shall be in as good an operating
condition as, and have a utility value and remaining warranty reasonably
approximating, the Parts replaced (assuming such replaced Parts were in the
condition and repair in which they were required to be maintained by the terms
hereof). All Parts owned by Lessor which are at any time removed from the
Aircraft shall remain the property of Lessor and subject to this Lease until
such time as such Parts shall be replaced by Parts which have been incorporated
or installed in to the Aircraft and which meet the requirements for replacement
Parts specified above. Immediately upon any replacement Part becoming
incorporated or installed into the Aircraft as above provided, (i) title to the
removed Part shall thereupon vest in Lessee, free and clear of all rights of
Lessor, (ii) title to such replacement Part shall thereupon vest solely in
Lessor and (iii) such replacement Part shall become subject to this Lease and be
deemed a Part for all purposes hereof to the same extent as the Part which it
has replaced.
(22) Alterations, Modifications and Additions. Lessee shall make such
alterations and modifications and additions to the Aircraft as may be required
from time to time to meet the applicable standards of the FAA or to comply with
any Law, rule, directive, bulletin, regulation or order of any Governmental
Entity or of the manufacturer of the Aircraft, Engines or Parts. Lessee may from
time to time make alterations and modifications in and additions to the
Aircraft, provided no such alteration, modification or addition diminishes the
remaining warranty, value or utility, or impairs the condition or airworthiness,
of the Aircraft. Title to all Parts incorporated or installed in or attached or
added to the Aircraft as the result of such alteration, modification or addition
shall vest immediately in Lessor and become subject to this Lease, without the
necessity for any further act of transfer, document or notice.
SECTION 7
INFORMATION AND INSPECTION
Lessee agrees to furnish Lessor: (a) within one hundred twenty (120) days
after the close of each fiscal year of Lessee, its audited balance sheet, profit
and loss statement, and statement of stockholders' equity of Lessee (prepared on
a consolidated basis), as of the close of such fiscal year; (b) within ten (10)
calendar days following the end of each calendar month during the Term, an
Airframe Usage Report; and (c) from time to time such other information as
Lessor may reasonably request, including interim, unaudited financial
information regarding Lessee and information concerning the location, condition,
use and operation of the Aircraft. Lessee shall permit Lessor or its designee on
three (3) days' prior written notice to visit and inspect the Aircraft, its
condition, use and operation and the records maintained in connection therewith.
During such inspection, Lessor may take copies of the Aircraft Documents and
other operational records relating to the Aircraft. Lessor shall have no duty to
make any such inspection. Lessor's failure to object to any condition or
procedure observed or observable in the course of an inspection hereunder shall
not be deemed to waive or modify any of the terms of this Lease with respect to
such condition or procedure.
SECTION 8
CERTAIN COVENANTS OF LESSEE
(23) Maintenance of Existence, Status and Consents. Lessee will (i) preserve and
maintain its corporate existence and such of its rights, privileges, licenses
and franchises in any jurisdiction where failure to obtain such licensing or
qualification would have a material adverse effect upon Lessee; (ii) maintain
and operate the Aircraft at all times as a Certificated Air Carrier and be
otherwise certificated and registered to the extent necessary to provide to
Lessor the benefits contemplated by Section 1110 of Title 11 of the United
States Code or any successor provision thereof; and (iii) maintain in full force
and effect all governmental consents, licenses, authorizations, approvals,
declarations, filings and registrations obtained or effected in connection with
this Lease and take such additional action as may be proper or advisable in
connection herewith. Lessee further undertakes to obtain or effect any new or
additional governmental consents, licenses, authorizations, approvals,
declarations, filings or registrations as may become necessary for the
performance of any of the terms and conditions of this Lease. Without the prior
written consent of Lessor, which consent shall not be unreasonably withheld,
Lessee shall not consolidate with, merge with or merge into any other Person or
convey, transfer or lease substantially all of its assets as an entirety to any
other Person. Without prior written notice to Lessor, Lessee will not change its
principal place of business or chief executive office.
(24) Payment of Taxes. Lessee will pay or cause to be paid all Taxes which are
payable by Lessee upon any property belonging to it, prior to the date on which
penalties attach thereto and prior to the date on which any lawful claim, if not
paid, would become a Lien upon any of the material property of Lessee.
(25) Liens. Lessee shall not directly or indirectly create, incur, or suffer to
exist any Lien on the Aircraft or any Engine or any interest therein, except:
(a) the respective rights of Lessor and Lessee as herein provided; (b) Lessor's
Liens; (c) Liens for Taxes either not yet due or being contested in good faith
by appropriate proceedings and so long as adequate reserves are maintained with
respect to such Liens; and (d) inchoate materialmen's, mechanics', workmen's,
repairmen's, employees' or other like Liens arising in the ordinary course of
business, which either are not delinquent or are being contested in good faith
by Lessee, so long as the Aircraft or such Engine is not in danger of being
lost, sold, confiscated, forfeited or seized as a result of any such Lien.
Lessee shall promptly take such action as may be necessary to duly discharge any
Lien (except for the Liens referred to in Sections (a) and (b) above) arising at
any time with respect to the Aircraft or any Engine. Lessee shall promptly pay
and discharge when due, or make adequate provision for all debts, claims,
liabilities or obligations whatsoever created by it, or arising as a result of
any matter concerning it, which may give rise to any Lien.
(26) Perfection of Title and Further Assurances. If the filing or recording of
this Lease or any other document or instrument is reasonably necessary to
protect the interest of Lessor, Lessee, at its own cost and expense and upon
request by Lessor, shall cause the same to occur. At the request of Lessor,
Lessee shall furnish to Lessor an opinion of counsel or other evidence
satisfactory to Lessor of each such filing or refiling and recordation or
re-recordation. Lessee will promptly and duly execute and deliver to Lessor such
further documents and assurances and take such further actions as it may from
time to time reasonably request in order to more effectively carry out the
intent and purpose of this Lease and to establish and protect the rights and
remedies created or intended to be created in favor of Lessor hereunder.
SECTION 9
INDEMNIFICATION
(27) General Indemnity. Lessee agrees to defend, indemnify and hold harmless the
Indemnitees on demand from and against any and all Expenses (regardless of when
the same are made or incurred): (i) which may at any time be suffered or
incurred directly or indirectly as a result of or connected with (A) the
possession, performance, management, ownership, registration, control,
maintenance, condition, service, repair, overhaul, leasing, use or operation of
the Aircraft, any Engine or any Part, (B) the delivery or redelivery of the
Aircraft, any Engine or Part, or (C) the occurrence of any Default, whether or
not the Expenses may be attributable to any defect in the Aircraft, any Engine
or any Part or to its design, testing or use or otherwise, and regardless of
whether they arise out of or are attributable to any act or omission of any
Indemnitee; and/or (ii) which may at any time be suffered or incurred as a
consequence of any design, 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 in respect of any of the
matters referred to in this paragraph; but excluding any Expenses in relation to
a particular Indemnitee to the extent that such Expenses (A) are covered
pursuant to another indemnity provision of this Lease or (B) arise solely as a
result of the gross negligence or wilful misconduct of that Indemnitee or (C)
arise solely as a result of a Lessor Lien. The foregoing indemnities will
continue in full force following the Expiration Date notwithstanding any breach
or repudiation by Lessor or Lessee of this Lease or any termination of the
leasing of the Aircraft hereunder.
(28) Tax Indemnity.
(1) Indemnity. All payments by Lessee to or on behalf of any Indemnitee
shall be free of withholdings of any nature whatsoever (including,
without limitation, withholding taxes, monetary transfer fees, sales,
use and excise taxes, VAT, income taxes (other than that, on the net
income of Lessor) and any similar taxes and charges) and in the event
any withholding is required, Lessee shall pay an additional amount
such that the net amount actually received by the person entitled to
receive such payment will under any circumstances and in any event,
after such withholding, equal the full amount of the payment then due.
Lessee shall pay when due and indemnify and hold each Indemnitee
harmless from all Taxes, howsoever levied or imposed, whether levied
or imposed upon or asserted against Lessor, Lessee, the Aircraft or
any part thereof or interest therein, or otherwise, by any federal,
state or local taxing authority in the United States of America or by
any government or taxing authority of or in a foreign country or of or
in a territory or possession of the United States or by any
international taxing authority, upon or with respect to or based upon
or measured by or as a result of or in connection with (i) the
Aircraft or any part thereof or interest therein, (ii) the use,
operation, maintenance, possession, condition, control, occupancy,
servicing, installation, transportation, storage, substitution, sale,
recording, documentation, importation, exportation, modification,
location, repair, abandonment, replacement, delivery, registration,
deregistration, repossession, improvement, ownership, leasing,
subleasing, manufacture, rental, settlement of any insurance claim,
return, transfer of title, transfer of possession, or other
disposition of the Aircraft or any part thereof or interest therein,
(iii) the rentals, receipts, earnings or gains arising from the
Aircraft or any part thereof or interest therein, (iv) any amount
payable pursuant to the Lease or any related agreement, (v) the Lease
or any related agreement or any future amendment, supplement, waiver
or consent with respect to any thereof, or the execution, delivery,
recording or performance of any thereof or (vi) otherwise arising
from, with respect to or in connection with the transactions
contemplated by the Lease or any related agreement, except to the
extent provided in Section 9(b)(ii) hereof. Each payment or indemnity
payable hereunder shall include any amount necessary to hold the
recipient of the payment or indemnity harmless on an after-tax basis
from all Taxes required to be paid by such recipient with respect to
such payment or indemnity.
(2) Exclusions. Lessee shall not be required to pay any indemnity pursuant
to Section 9(a) with respect to any of the following: (i) any Tax to
the extent attributable solely to an event or circumstance occurring
prior to the Delivery Date; (ii) any Tax imposed as a result of a
voluntary transfer, assignment or other disposition by Lessor of the
Aircraft or the Lease unless such transfer, assignment or other
disposition shall occur (x) at any time when an Event of Default under
the Lease shall have occurred and be continuing (or would be
continuing but for the exercise of remedies), or (y) in connection or
as a result of with any termination of the Lease; (iii) any Tax to the
extent attributable solely to any event, circumstance or period of
time that occurs after the Aircraft has been redelivered to Lessor
pursuant to Section 12 hereof (under circumstances not involving a
repossession pursuant to Section 13(b) hereof) unless any such act or
event shall itself result from or be attributable to an act or
omission of Lessee which occurred prior to or concurrently with the
redelivery of the Aircraft and the discharge of Lessee's obligations
under the Lease; and (iv) any Tax that is imposed by any state or
local government or taxing authority in the United States and that is
imposed on or measured by the gross or net income, gross or net
receipts, capital or net worth of an Indemnitee; provided that the
exclusion described in this subparagraph (iv) shall not apply to (A)
Taxes that are or are in the nature of sales, use, rental,
value-added, license, excise or property Taxes, or (B) any Tax to the
extent incurred by such Indemnitee as a result of (1) the use or
location of the Aircraft or any Engine or any part of any thereof in
the jurisdiction imposing the Tax or (2) the situs of organization,
any place of business or any activity of Lessee, any affiliate of
Lessee or any Person having custody, possession or use of the Aircraft
or any Engine or any part of any thereof through Lessee in the
jurisdiction imposing the Tax or (3) the execution, delivery, filing,
registration, recording or enforcement of the Lease, or any
instrument, certificate or other document executed pursuant to the
Lease, in the jurisdiction imposing the Tax.
(3) Payment. All Taxes indemnified under this Section 9(b) shall be paid
by Lessee (to the extent permitted by applicable Law, unless otherwise
directed by the relevant Indemnitee) directly to the appropriate
taxing authority on or before the time (and in the manner) prescribed
by applicable Law. All other amounts shall be paid to the relevant
Indemnitee within 30 days after receipt of a written demand therefor
from such Indemnitee accompanied by a written statement describing in
reasonable detail the Taxes that are the subject of such indemnity and
the computation of the indemnity being demanded.
(4) Miscellaneous. In case any report or return is required to be made
with respect to any Tax for which Lessee would be required to
indemnify an Indemnitee under this Section 9(b), Lessee will either
make such report or return in such manner as will show the ownership
of the Aircraft in Lessor and send a copy of such report or return to
the affected Indemnitee or will notify the affected Indemnitee of such
requirement and make such report or return in such manner as shall be
reasonably satisfactory to such Indemnitee. If actual notice is given
by any taxing authority to Lessor that a report or return is required
to be filed with respect to any such Taxes referred to in this Section
9(b), Lessor shall promptly notify Lessee of such required report or
return. Lessor agrees to respond to any reasonable request of Lessee
for information within the control of Lessor with respect to the
filing of any report or return, but Lessee agrees to pay any
reasonable costs, fees or other charges of independent counsel or
independent accountants incurred in connection with such request.
Lessee agrees that within sixty (60) days after the close of each
fiscal year of Lessor it shall provide Lessor with any information
reasonably requested by Lessor, including information regarding the
use and location of the Aircraft during such fiscal year.
SECTION 10
CASUALTY OCCURRENCES
(29) Casualty Occurrence with Respect to the Airframe. Within five (5) days
after a Casualty Occurrence with respect to the Airframe and any Engine then
installed thereon, Lessee shall give Lessor written notice of such occurrence.
On or before thirty (30) days after the date of the Casualty Occurrence with
respect to the Aircraft, Lessee shall pay to Lessor in immediately available
funds the sum of (i) the Casualty Value of the Aircraft computed as of the date
of payment less an amount equal to the daily equivalent of Basic Rent (computed
on the basis of a 365-day year) for each day during the period commencing with
the day after payment of such Casualty Value and extending to, but excluding,
the Basic Rent Payment Date immediately following payment of such Casualty
Value, and (ii) all Supplemental Rent, other than amounts paid pursuant to
Section (i), computed as of the date of payment. Upon such payment (A) the
obligation of Lessee to make further payments of Basic Rent hereunder shall
terminate, (B) this Lease shall terminate with respect to the Aircraft and (C)
Lessor will transfer to Lessee, without recourse or warranty, all of Lessor's
right, title and interest, if any, in and to the Airframe and Engines (if any)
suffering the Casualty Occurrence, as well as all of Lessor's right, title and
interest in and to any Engine constituting part of the Aircraft but not
installed thereon at the time of the Casualty Occurrence.
(30) Casualty Occurrence with Respect to an Engine. Upon a Casualty Occurrence
with respect to an Engine only, Lessee shall give Lessor prompt written notice
thereof and shall, within forty-five (45) days after such occurrence, convey to
Lessor, as replacement for the Engine suffering a Casualty Occurrence, title to
a Replacement Engine. Each Replacement Engine shall be free of all Liens (except
Permitted Liens). Upon full compliance by Lessee with the terms of this
paragraph, Lessor will transfer to Lessee title to the Engine which suffered the
Casualty Occurrence. Prior to or at the time of any such conveyance, Lessee, at
its own expense, will promptly (i) furnish Lessor with a full warranty ▇▇▇▇ of
sale, in form and substance reasonably satisfactory to Lessor, with respect to
such Replacement Engine; (ii) cause a supplement hereto, in form and substance
reasonably satisfactory to Lessor, subjecting such Replacement Engine to this
Lease, to be duly executed by Lessee, and recorded pursuant to applicable Law;
(iii) furnish Lessor with such legal opinions and other documents as Lessor may
reasonably request in connection with the consummation of the transactions
contemplated by this Section 10(b), in each case in form and substance
satisfactory to Lessor. Upon full compliance by Lessee with the terms of this
Section 10(b), Lessor will transfer to Lessee all of the right, title and
interest in the Engine which suffered the Casualty Occurrence, and such
Replacement Engine shall be deemed an "Engine" as defined herein.
(31) Application of Proceeds and Payments. Any payments received at any time by
Lessor or by Lessee from any insurer under any policy of insurance (other than
liability insurance) shall be applied in the manner specified in Sections 11(m),
11(n) or 11(o) hereof as applicable. Any payments received at any time by Lessor
or Lessee with respect to a Casualty Occurrence will be applied as follows: (i)
if such payments are received as a result of a Casualty Occurrence with respect
to the Aircraft, such payment up to the amount of the Casualty Value shall be
paid to Lessor, or if Lessee has already paid Lessor the Casualty Value, such
payment shall be applied by Lessor to reimburse Lessee; or (ii) if such payments
are received as a result of a Casualty Occurrence with respect to an Engine
which is being replaced pursuant to Section 10(b), such payments shall be paid
over to, or retained by, Lessee if Lessee shall have fully performed the terms
of Section 10(b) hereof.
(32) Application in Default. Any amount referred to in Section (i) or (ii) of
Section 11(c) which is otherwise payable to Lessee shall not be paid to Lessee,
or, if it has been previously paid to Lessee, and not yet applied by Lessee as
permitted or required hereunder, shall be delivered from Lessee to Lessor, if at
the time of such payment a Default shall have occurred and be continuing. In
such case, all such amounts shall be paid to and held by Lessor as security for
the obligations of Lessee, or, at the option of Lessor, applied by Lessor toward
payment of any of Lessee's obligations at the time due hereunder, as Lessor may
elect. At such time as there shall not be continuing any such Default, all such
amounts at the time held by Lessor in excess of the amount, if any, which Lessor
has elected for application as provided above, shall be paid to Lessee.
SECTION 11
INSURANCE
(33) Obligation to Insure. From the Delivery Date until the termination of the
Lease and redelivery of the Aircraft to Lessor, Lessee shall, at its own cost
and expense, effect and maintain or cause to be effected and maintained in full
force and effect insurances with respect to the Aircraft that comply with the
provisions of this Section 11. Lessee agrees that such insurances shall be
carried with Approved Insurers. Lessee further agrees that such insurances shall
reflect prudent practices in the international aviation insurance market for air
carriers operating the same type of aircraft as the Aircraft on similar routes.
(34) Public Liability and Property Damage Insurance. Lessee will carry and
maintain in effect, at its own expense, comprehensive public liability insurance
covering aircraft liability including bodily injury and property damage,
passenger, baggage, cargo and mail, and general liability (including products
and completed operation) for a combined single limit on any one occurrence of
not less than the amount applicable to similar passenger aircraft and engines
which comprise Lessee's fleet, and in any event not less than the amount under
"Public Liability and Property Damage Insurance" as set forth on Exhibit A
hereto (or such higher amounts as Lessor may from time to time reasonably
require). Lessee shall not discriminate against the Aircraft in providing such
insurance.
(35) Required Policy Designations Relating to Comprehensive Public Liability
Insurance. The policies evidencing the insurance required under Section 11(b)
shall be endorsed to include paragraph 2 of AVN67B with each Indemnitee and
Lender named as a contract party in AVN67B, shall cover "war risks and allied
perils" in accordance with extended coverage endorsement AVN52C and shall to the
extent not in conflict with AVN67B:
(1) provide that all the provisions thereof, except the limits of
liability, shall operate to give each Additional Insured the same
protection as if there were a separate policy covering each insured;
and
(2) be primary and without right of contribution from other insurance that
may be available to any other Additional Insured or Lessee.
(36) Insurance with Respect to the Aircraft. Lessee, at its own expense, will
maintain in effect:
(1) "hull all risks" insurance for loss of or damage to the Aircraft
(including all flight and ground risks) on an agreed value basis in an
amount not less than the Casualty Value;
(2) "all risks" and "war risks and allied perils" insurance on the Engines
and Parts while not installed on the Airframe on an agreed value basis
in an amount not less than their full replacement value; and
(3) "hull war and allied perils" insurance on the Aircraft covering risks
excluded from the "hull all risks" policy to the fullest extent
available from the leading international insurance markets, including
confiscation or requisition by the state of registration, on an agreed
value basis for an amount not less than the Casualty Value.
(37) Required Policy Designations and Provisions Relating to Insurance Against
Loss or Damage. Each and any policy of insurance obtained and maintained
pursuant to Section 11(d), and each and any policy obtained in substitution or
replacement for any such policies, shall be provided by policies that shall be
endorsed to include paragraph 1 of AVN67B with Lessor and Lender as contract
parties and shall to the extent not in conflict with AVN67B:
(1) include a loss payable clause that provides that all insurance
proceeds in the event of a Casualty Occurrence shall be payable to
Lessor or its designee and that all other insurance proceeds shall be
paid in accordance with the terms of this Lease to such parties as may
be necessary to repair the Aircraft;
(2) provide in the event of separate insurances being arranged to cover
the "hull all-risks" insurance and the "hull war-risks" insurance that
the underwriters subscribing to such insurance agree that in the event
of any dispute as to whether a claim is covered by the "hull
all-risks" or "hull war-risks" policy, such claim be settled on a
50/50 claim funding basis in accordance with AVS103 (or its
equivalent) or under either the "hull all-risks" or "hull war-risks"
policy;
(3) be subject to such exclusions and deductibles as Lessor may reasonably
approve, provided that in no event shall the deductible under the
"hull all-risks" and "hull war-risks" insurance exceed the Deductible
Amount; and
(4) provide that all insurance proceeds shall be payable in Dollars.
(38) Revised Policy Designations and Provisions Relating to All Insurance. The
policies evidencing the insurance required under this Section 11 shall be
endorsed to include paragraph 3 of AVN67B with Lessor and Lender with respect to
hull insurance and each Additional Insured with respect to liability insurance
be named as contract parties in AVN67B, shall name the Additional Insureds and
shall, to the extent not in conflict with AVN67B:
(1) designate the Additional Insureds as additional insureds and loss
payees;
(2) provide that the insurance shall not be invalidated, so far as
concerns any Additional Insured, by any action or inaction or omission
(including misrepresentation and nondisclosure) of any person or party
that results in a breach of any term, condition or warranty of such
policy; provided, that the Additional Insured so protected has not
caused, contributed to or knowingly condoned the action, inaction or
omission, as the case may be;
(3) specifically reference this Lease;
(4) provide for worldwide coverage (subject only to such exceptions as are
customary in insurance coverage carried by air carriers operating
aircraft of the same type as the Aircraft);
(5) provide that upon payment of any loss or claim to or on behalf of any
Additional Insured, the respective insurer shall to the extent and in
respect of such payment be thereon subrogated to all legal and
equitable rights of the Additional Insured indemnified hereby (but not
against any other Additional Insured); provided, that such insurer
shall not exercise such rights without the consent of the indemnified
Additional Insured, such consent not to be reasonably withheld;
(6) provide that neither Lessor nor Lender shall be liable for any
premiums in respect thereof and that the insurers shall waive any
right of set-off or counterclaim against Lessor or Lender except in
respect of unpaid premiums in respect of the Aircraft; and
(7) provide that the insurers shall promptly notify Lessor and Lender in
the event of cancellation of, or any material change in, the insurance
or any act or omission or any event that might invalidate or render
unenforceable the insurances or in the event that any premium shall
not have been paid when due and that the insurances shall continue
unaltered for the benefit of each Additional Insured for at least
thirty (30) days after written notice by registered mail of such
cancellation, change, event or non-payment of premium thereof shall
have been received by Lessor and Lender except in the case of war
risks for which seven (7) day notice (or such period as may be
customarily available in respect of war risks or allied perils) will
be given.
(39) Information.
(1) On or before the Delivery Date and promptly after each renewal of the
insurances, Lessee shall provide Lessor and Lender with certificates
of insurance and a broker's letter of undertaking that (i) name each
of Triton Aviation Services V LLC, First Security Bank, N.A.,
NationsBank, N.A., and their respective officers, directors,
shareholders, agents and employees and their respective successors and
assigns as "additional insureds", (ii) evidence to the satisfaction of
Lessor that the insurances are and will continue in full force after
the Delivery Date or the renewal date (as the case may be) for such
period as shall then be stipulated and (iii) contain such other
certifications and undertakings as are customarily provided to lessors
and mortgagees by insurance brokers acting for air carriers.
(2) Lessee shall from time to time upon request from Lessor (i) provide to
it evidence reasonably satisfactory to it that any and all premiums
payable in respect of the insurances have been paid in accordance with
the terms of the relevant policy and (ii) provide or cause its broker
to provide a list of the insurers with whom the insurances are carried
and the coverages provided by each of them.
(3) Lessee shall furnish such information regarding the status of renewal
negotiations as may from time to time be reasonably requested by
Lessor. In addition, Lessee shall arrange for its brokers (i) to
confirm to Lessor not later than five (5) days prior to the renewal
date of the insurances, that negotiations for such renewal are at an
advanced state and that there is no reason to suppose that the
insurances will not be renewed at the relevant date in terms that will
comply with the provisions of this Lease and (ii) to furnish to Lessor
on or prior to the renewal date, the renewal certificates of
insurance, reinsurance (if applicable) and brokers' letters of
undertaking, each in English and in form and substance satisfactory to
Lessor.
(4) Lessee shall furnish, or cause to be furnished, to Lessor and Lender
on the Delivery Date and thereafter as and when required by Lessor and
upon each transfer of the Aircraft or assignment of rights hereunder
as permitted by this Lease, certificates and brokers letter of
undertaking (and, if further requested, of its insurers) that confirm
that the requirements of this Section 11 are being complied with.
(5) Lessee shall, at the request of Lessor, make copies of the policies
and endorsements and any amendments thereto with respect to the
insurance available to Lessor (or its authorized representatives) for
inspection by any representative of Lessor at the office of Lessee or
its insurance brokers during normal business hours.
(40) Additional Insurance; No Lien.
(1) Lessee shall not, without the prior written consent of Lessor,
maintain insurances with respect to the Aircraft or any Engine, other
than as required under this Lease if it would prejudice recovery under
the insurance required hereunder.
(2) Lessor may from time to time require Lessee at no cost to Lessor to
effect such other insurances, or such variations to the terms of the
existing insurances, as Lessor may reasonably require in order to
fully protect the interests of the Additional Insureds.
(3) Lessee shall not create or permit to exist any Lien over the
insurances required by this Lease, or its interest therein, save as
constituted by this Lease.
(41) Failure to Insure. If at any time Lessee fails to maintain in full force
and effect insurances in compliance with any provision of this Section 11,
Lessor shall be entitled but not obligated (without prejudice to any other
rights that it may have or acquire under this Lease by reason of such failure):
(1) to pay any premiums due or to effect or maintain insurances
satisfactory to Lessor or otherwise remedy such failure in such manner
as Lessor considers appropriate, and Lessee shall immediately
reimburse Lessor in full for any amount so expended by Lessor; and/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 Lessor until such failure is remedied.
(42) Assignment. If Lessor transfers the Aircraft or assigns its rights
hereunder as permitted by this Lease, Lessee will, upon request, promptly
procure that the transferee or assignee (including, without limitation, any
lender) shall be added as a further named insured to any of the insurances
referred to in this Section 11 so as to enjoy the same rights and protection as
Lessor may have from time to time under such insurances. In addition, if Lessor
transfers the Aircraft or such rights and thereafter ceases to be Lessor (a
"Transferor"), Lessee shall, at the request of such Transferor and at Lessees
expense, effect and maintain for the benefit of such Transferor the insurance
required by Section 11(c) for such period (not exceeding two years) as in
Transferor may request and shall ensure that the Transferor shall be named as an
additional insured thereunder.
(43) Reinsurance. Any reinsurance will be maintained with reinsurers and brokers
approved by Lessor. Such reinsurance will contain each of the following terms
and will in all other respects (including amount) be satisfactory to Lessor.
(1) the same terms as the original insurance;
(2) a cut through and assignment clause satisfactory to Lessor; and
(3) payment will be made notwithstanding (A) any bankruptcy, insolvency,
liquidation or dissolution of any of the original insurers and/or (B)
that the original insurers have made no payment under the original
insurance policies.
(44) Settlement of Claims. Lessee will not settle or permit settlement of any
claims arising under any of the insurances referred to in Section 11 without the
prior written consent of Lessor or its designee and will not settle or permit
settlement of any claims under such insurance without such consent if an Event
of Default has occurred and is continuing.
(45) Application of Insurance Proceeds for a Casualty Occurrence. It is agreed
that insurance payments which arise from any policy of insurance carried by
Lessee and received as the result of the occurrence of a Casualty Occurrence
shall be applied as follows: (i) if such payments are received with respect to a
Casualty Occurrence relating to the Airframe and Engines or engines installed on
the Airframe, so much of such payments as shall not exceed the amounts due under
Section 10(a) hereof shall be paid to Lessor, and the balance to Lessee; and
(ii) if such payments are received with respect to a Casualty Occurrence
relating to an Engine under circumstances contemplated by Section 11(d) hereof,
such payment shall be adjusted with Lessee (provided that Lessee has not
breached any warranty, declaration or condition contained in the applicable
insurance policy) and paid over to Lessee, provided that Lessee shall have fully
performed the terms of Section 10(b) hereof.
(46) Application of Insurance Proceeds for Other than a Casualty Occurrence. The
insurance payments for any property damage loss to the Airframe or any Engine
not constituting a Casualty Occurrence, or to any Part, will be held by Lessor
until Lessee furnishes Lessor with satisfactory evidence that the repairs or
replacement property Lessee is required to perform or obtain in accordance with
the terms of Section 6(f) of this Lease have been made or obtained by Lessee.
Upon receipt of such evidence of repair or replacement, Lessor shall pay Lessee
the amount of the insurance payment received with respect to such loss.
(47) Application in Default. Any amount referred to in Sections 11(e)(i), 11(m)
or 11(n) which is otherwise payable to Lessee shall not be paid to Lessee, or,
if it has been previously paid to Lessee, and not yet applied by Lessee as
permitted or required hereunder, shall be delivered by Lessee to Lessor, if at
the time of such payment, a Default shall have occurred and be continuing. In
such case, all such amounts shall be held by Lessor as security for the
obligations of Lessee, or, at the option of Lessor, applied by Lessor toward
payment of any of Lessee's obligations at the time due hereunder. At such time
as there shall not be continuing any such Default, all such amounts at the time
held by Lessor in excess of the amount, if any, which Lessor has elected for
application as provided above, shall be paid to Lessee.
SECTION 12
RETURN OF AIRCRAFT AND RECORDS
(48) Return. On the Expiration Date, Lessee, at its own expense, shall return
the Aircraft to Lessor in the condition specified on Exhibit C hereto at the
Return Location, fully equipped with all required Parts and Engines, duly
installed thereon, together with the Aircraft Documents and records which are
complete and acceptable to the FAA, and at no cost to Lessor, all service
bulletin kits furnished without charge by a manufacturer for installation on the
Aircraft which have not been so installed.
(49) Records. Six months prior to the Expiration Date (and in an updated form
upon the Return Occasion), Lessee will provide Lessor with a technical report in
form and substance reasonably requested by Lessor, and, in addition, upon
Lessor's request, will make copies of (i) drawings of the interior configuration
of the Aircraft both as it presently exists and as it will exist at return, (ii)
the airworthiness directive status list, (iii) service bulletin incorporation
list, (iv) rotable controlled, hard-time and life limited component listings,
(v) listing of Lessee-initiated modifications and alterations, (vi) interior
material burn certificates, (vii) Maintenance Program, (viii) complete work
scope for the checks, inspections and other work to be performed prior to
return, (ix) current Engine disk sheets and (x) any other data which is
reasonably requested by Lessor. In addition to the foregoing, upon the Return
Occasion, Lessee shall deliver to Lessor all Aircraft Documentation.
(50) Final Inspection. Upon the Return Occasion, Lessee shall make the Aircraft
available to Lessor for a functional check flight and detailed inspection, at
Lessee's expense, in order to verify that the condition of the Aircraft complies
with the requirements set forth herein (the "Final Inspection"). Lessee shall
give Lessor not less than ten (10) days prior written notice of the commencement
date of the "C" Check required by Exhibit ▇. ▇▇▇▇▇▇ shall have the right to
appoint a representative who may observe (i) the Final Inspection, (ii) any
inspections conducted in accordance with Exhibit C, and/or (iii) the maintenance
conducted in connection with or as a consequence of any such inspections. The
functional test flight shall be conducted, at Lessee's expense, using a
qualified pilot and not more than three (3) technical representatives selected
by Lessor (one of whom may sit in the jump seat in the cockpit), in conjunction
with Lessee's flight crew, shall be up to two (2) hours duration, shall conform
with Lessee's standard operation check flight procedures, shall be covered by
Lessee's insurance policy required pursuant to Section 11, and shall otherwise
be of such scope as is necessary to demonstrate the airworthiness of the
Aircraft and proper functioning of all systems and components. The Final
Inspection shall commence on or before the Expiration Date and shall continue on
consecutive days until all activity required above to be conducted during the
Final Inspection has been concluded. To the extent that any portion of the Final
Inspection extends beyond the Expiration Date, the Term shall be deemed to have
been automatically extended, and the obligation to pay Rent hereunder continued
on a daily basis until the Final Inspection shall have been concluded.
(51) Corrections and Subsequent Corrections. If the Aircraft or any Engine fails
upon the Return Occasion to conform to any requirement imposed by this Lease,
Lessor, at its option, may continue the Lease in effect in the manner provided
for in Section 12(c) above with regard to automatic extension until such time as
the Aircraft is brought up to the condition required by this Lease, or accept
the return of the Aircraft and thereafter have any such nonconformance
corrected. Any expense incurred by Lessor for such correction shall become
Supplemental Rent payable by Lessee upon demand. Lessee's obligations to pay
such Supplemental Rent shall survive the passage of the Expiration Date or other
termination of this Lease.
SECTION 13
DEFAULT AND REMEDIES
(52) Events of Default. Any one or more of the following occurrences or events
shall constitute an Event of Default: (i) Lessee shall fail to make any payment
of Rent to Lessor when due and such payment shall be overdue for a period of two
(2) Business Days; (ii) Lessee shall fail to obtain and maintain any insurance
required under the provisions of Section 11 hereof, or shall operate the
Aircraft outside of the scope of the insurance coverage so maintained; (iii) any
representation or warranty made by Lessee herein or in any document or
certificate furnished Lessor in connection herewith or therewith or pursuant
hereto is incorrect at the time given in any material respect; (iv) any
bankruptcy, insolvency or similar proceeding is commenced by or against Lessee;
or (v) Lessee shall fail to perform or observe any other covenant, condition or
agreement hereunder and such failure shall continue for a period of five (5)
Business Days after written notice thereof is given by Lessor to Lessee.
(53) Remedies. Upon the occurrence of any Event of Default Lessor may, at its
option and without notice to Lessee, exercise one or more of the following
remedies as Lessor in its sole discretion shall elect: (i) demand that Lessee,
and Lessee shall upon the written demand of Lessor and at Lessee's expense,
immediately return the Aircraft to Lessor in the manner specified in such
notice; (ii) enter upon the premises where the Aircraft is located and take
immediate possession of and remove the same; (iii) cancel Lessee's leasehold
interest in the Aircraft under this Lease effective upon dispatch of written
notice to Lessee, and store, sell or lease to others the Aircraft, all free and
clear of any rights of Lessee; (iv) demand that Lessee, and Lessee shall upon
the written demand of Lessor, pay as damages for the breach hereof an amount
equaling the sum of: (1) all Rent due and payable hereunder; (2) all Expenses
incurred by Lessor as a result of Lessee's breach of this Lease; and (3) such
additional amount as shall be sufficient to place Lessor in the same economic
position, on an after-tax basis, as Lessor would have been in if Lessee had
timely performed each of its obligations under this Lease; and/or (v) proceed by
appropriate court action or actions, either at Law or in equity, to enforce
performance by Lessee of the applicable covenants of this Lease and to obtain
the benefit of any remedies available to Lessor hereunder or under applicable
Law for breach hereof.
In addition to the foregoing, Lessor shall be entitled to exercise such
other rights and remedies as may be available under applicable Law and Lessee
shall be liable on an after-tax basis for, and shall pay Lessor on demand: (1)
interest on all unpaid amounts at the Interest Rate, from the due date until the
date of payment in full; (2) all reasonable legal fees and other reasonable
costs and expenses incurred by Lessor by reason of the occurrence of any Event
of Default or the exercise of Lessor's remedies with respect thereto; and (3)
all reasonable expenses, disbursements, costs and fees incurred in (A)
repossessing, storing, preserving, shipping, maintaining, repairing and
refurbishing the Aircraft, the Airframe, any Engine or Part to the condition
required by Section 12 hereof and (B) preparing the Aircraft, the Airframe, an
Engine or Part for sale or lease, advertising the sale or lease of the Aircraft,
the Airframe, an Engine or Part and selling or releasing the Aircraft, the
Airframe, an Engine or Part.
No remedy referred to in this Section 13(b) is intended to be exclusive,
but, to the extent permissible hereunder or under applicable Law, each shall be
cumulative and in addition to any other remedy referred to above or otherwise
available to Lessor at Law or in equity; and the exercise or beginning of
exercise by Lessor of any one or more of such remedies shall not preclude the
simultaneous or later exercise by Lessor of any or all of such other remedies.
No express or implied waiver by Lessor of any Default or Event of Default shall
in any way be, or be construed to be, a waiver of any future or subsequent
Default or Event of Default.
SECTION 14
ALIENATION
Lessor shall have the right to assign, sell or encumber any interest of
Lessor in the Aircraft or this Lease and/or the proceeds hereof subject to the
rights of Lessee under the provisions of this Lease; provided, however, in the
case of assignment for security, Lessee shall be reimbursed for any costs
reasonably incurred by Lessee in connection therewith. To effect or facilitate
any such assignment, sale or encumbrance, Lessee agrees to provide such
agreements, consents, conveyances or documents as may be reasonably requested by
Lessor, which in the case of an assignment other than for security shall include
an unrestricted release of Lessor from its obligations hereunder. Lessee
acknowledges that an assignment, sale or encumbrance of Lessor's interest
hereunder would not have the effect of altering the terms of this Lease relating
to the rights and obligations of Lessee. Lessee agrees that it will not assert
against an assignee any claim or defense which it may have against Lessor. The
agreements, covenants, obligations, and liabilities contained herein including,
but not limited to, all obligations to pay Rent and indemnify each Indemnitee
are made for the benefit of each Indemnitee and their respective successors and
assigns.
SECTION 15
MISCELLANEOUS
(54) Severability and Construction. Any provision of this Lease which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof. To the extent permitted by Law,
Lessee hereby waives any provisions of Law which renders any provisions hereof
prohibited or unenforceable in any respect. This Lease shall constitute an
agreement of lease, and nothing herein shall be construed as conveying to Lessee
any right, title or interest in the Aircraft or any Engine or Part except as a
lessee only. Lessor and Lessee agree that this Lease is to be treated as a lease
for U.S. federal income tax purposes.
(55) Governing Law; Jurisdiction. This Lease shall in all respects be governed
by, and construed in accordance with, the Laws of the State of California.
Lessee hereby irrevocably consents that any legal action or proceeding against
it or any of its assets with respect to the Lease may be brought in any
jurisdiction where Lessee or any of its assets may be found, or in any court of
the State of California or any Federal court of the United States of America
located in San Francisco, California, as Lessor may elect, and by execution and
delivery of this Lease, Lessee hereby irrevocably submits to and accepts with
regard to any such action or proceeding, for itself and in respect of its
assets, generally and unconditionally, the jurisdiction of the aforesaid courts.
Lessee further irrevocably consents to the service of process out of any of the
aforementioned courts in any such action or proceeding by the mailing of copies
thereof by registered or certified airmail, postage prepaid, to Lessee at its
address set forth on Exhibit A hereto. The foregoing, however, shall not limit
the rights of Lessor to serve process in any other manner permitted by Law or to
bring any legal action or proceeding or to obtain execution of judgment in any
jurisdiction. Lessee hereby irrevocably waives, to the fullest extent permitted
by Law, any objection which Lessee may now or hereafter have to the laying of
venue of any suit, action or proceeding arising out of or relating to this Lease
brought in the State of California, and hereby further irrevocably waives any
claim that any such suit, action or proceeding brought in the State of
California has been brought in an inconvenient forum.
(56) Notices. All notices required under the terms and provisions hereof shall
be in writing, shall be sent to Lessor or Lessee at their respective addresses
set forth on Exhibit A hereto (or such other addresses as the parties may
designate from time to time in writing) and, except as otherwise provided
herein, shall become effective upon the earlier of actual receipt or (i) in the
case of a letter, the fifth day following posting, and (ii) in the case of a
facsimile transmission on the day immediately following the date of dispatch.
(57) Lessor's Right to Perform for Lessee. If Lessee fails to perform or comply
with any covenant, agreement or obligation contained herein, Lessor shall have
the right but not the obligation to so perform or comply for Lessee, and the
reasonable expenses of Lessor incurred in connection therewith, together with
interest thereon at the Interest Rate, shall be payable by Lessee to Lessor (as
Supplemental Rent) upon demand. The taking of any such action by Lessor shall
not constitute a waiver or release of any obligation of Lessee under this Lease,
nor a waiver of any Default which may arise out of Lessee's nonperformance of
such obligation, nor an election or waiver by Lessor of any remedy or right
available to Lessor hereunder.
(58) Counterparts. This Lease may be executed in two or more counterparts, each
of which shall be deemed an original, but all of which together shall constitute
one and the same instrument. To the extent, if any, that this Lease constitutes
chattel paper (as such term is defined in the Uniform Commercial Code as in
effect in any applicable jurisdiction) no security interest in this Lease may be
created through the transfer or possession of any counterpart other than the
counterpart which has been marked "Original" on the signature page thereof.
(59) Quiet Enjoyment. Lessor covenants that so long as an Event of Default shall
not have occurred and be continuing, Lessee shall quietly enjoy the Aircraft and
all rents, revenues, profits and income thereto, without interference by Lessor,
or by any Person lawfully claiming by or through Lessor.
(60) Brokers. Neither Lessor nor Lessee have utilized the services of any agent,
broker or similar third party representation in connection with the transactions
contemplated by this Lease and each party agrees to indemnify and hold the other
harmless from and against any and all claims, suits, damages, costs and expenses
(including, but not limited to reasonable attorneys' fees) asserted by any
agent, broker or other third party for any commission or compensation based upon
the lease of the Aircraft, if such claim, damage, cost or expense arises out of
any action or alleged action by the indemnifying party, its employees or agents.
(61) Time is of the Essence. Time and strict and punctual performance are of the
essence with respect to each provision of this Lease.
(62) DISCLAIMER OF CONSEQUENTIAL DAMAGES. LESSEE AGREES THAT IT SHALL NOT BE
ENTITLED TO RECOVER, AND HEREBY DISCLAIMS AND WAIVES ANY RIGHT THAT IT MAY
OTHERWISE HAVE TO RECOVER, CONSEQUENTIAL DAMAGES (AS SUCH TERM IS DEFINED IN
SECTION 10520(B) OF THE CALIFORNIA UNIFORM COMMERCIAL CODE) AS A RESULT OF ANY
BREACH OR ALLEGED BREACH BY LESSOR OF ANY OF THE AGREEMENTS, REPRESENTATIONS OR
WARRANTIES OF LESSOR CONTAINED IN THIS LEASE OR THE OTHER RELATED AGREEMENTS.
(63) Security Deposit. Lessor hereby acknowledges the receipt of an initial
security deposit in the Initial Amount and Lessee hereby agrees to deposit with
Lessor on or before thirty (30) days prior to the Estimated Delivery Date, a
final installment of the security deposit in the Further Additional Amount
(collectively, the "Security Deposit"). The Security Deposit shall be
non-refundable during the Term hereof; provided that the Security Deposit shall
be promptly refunded by Lessor to Lessee in the event that Lessor shall fail to
tender the Aircraft for delivery in accordance with Section 3 of this Lease on
or prior to May 30, 1999, despite Lessee's satisfaction of all conditions to
such tender, and Lessee elects to terminate this Lease. Such sums are received
by Lessor as security for the timely and faithful performance by Lessee of all
of Lessee's obligations under this Lease, and Lessee hereby grants Lessor a
security interest therein and in all other sums deposited under this Section
15(j). Lessor shall be entitled to commingle the Security Deposit with its other
funds, and Lessee shall not be entitled to any interest or other earnings
thereon. If Lessee is in Default hereunder, in addition to all other rights
Lessor shall have under the California Uniform Commercial Code as a secured
party, Lessor may use, apply or retain all or any portion of the Security
Deposit in partial payment for sums due to Lessor by Lessee, to compensate
Lessor for any sums it may in its discretion advance as a result of a Default by
Lessee, or to apply toward losses or expenses Lessor may suffer or incur as a
result of Lessee's Default. If Lessor uses or applies all or any portion of such
Security Deposit, such application shall not be deemed a cure of any Defaults,
and Lessee shall within five days after written demand therefore deposit with
Lessor in cash an amount sufficient to restore the Security Deposit to its
original sum and the failure of Lessee to do so shall be a material breach of
this Lease by Lessee. Provided Lessee is not in Default under this Lease, the
principal amount of such Security Deposit, without interest, and less any costs
incurred by Lessor in connection with the termination of the Lease or return of
the Aircraft and any amounts owed by Lessee to Lessor under this Lease or
otherwise, shall be returned to Lessee on the Expiration Date, provided that
Lessee shall have returned the Aircraft in compliance with Section 12 hereof.
(64) Costs. Except as otherwise provided herein, Lessor and Lessee each shall
pay its own costs and expenses incurred in connection with the negotiation,
documentation and performance of its obligations under this Lease.
(65) Entire Agreement; Modification or Revision. This Lease is intended to be a
complete and exclusive statement of the terms of the agreement of the parties
hereto, and this Lease supersedes any prior or contemporaneous agreements,
whether oral or in writing. Neither this Lease nor any term of this Lease may be
modified, rescinded, changed, waived, discharged or terminated except by a
writing signed by the party to be charged. Lessor and Lessee acknowledge their
agreement to the provisions of this Section 15(l) by their signatures below.
IN WITNESS WHEREOF, Lessor and Lessee, each pursuant to due authority,
have each caused this Lease to be executed by their duly authorized officers as
of the day and year first above written.
LESSOR:
FIRST SECURITY BANK, N.A.,
not in its individual capacity
but solely as owner trustee
By:____________________________
Name:__________________________
Its:_____________________________
LESSEE:
FRONTIER AIRLINES, INC.
By:______________________________
Name:____________________________
Its:______________________________
CERTAIN PROCEEDS OF THIS LEASE ARE SUBJECT TO A SECURITY INTEREST IN FAVOR OF
NATIONSBANK, N.A., AS AGENT, AND ANY SUCCESSOR AGENT, FOR ONE OR MORE FINANCIAL
INSTITUTIONS
EXHIBIT A
to
Aircraft Lease Agreement
DEFINITIONS AND VALUES
Part I -- General
Additional Insureds shall mean Lessor, Beneficiary, Lender and their respective
officers, directors, shareholders, agents and employers and their respective
successors and assigns.
Aircraft shall mean the Airframe together with (a) the Engines, whether or not
installed on the Aircraft, (b) all Parts or components thereof, (c) spare parts
or ancillary equipment or devices furnished with the Aircraft under this Lease,
(d) all Aircraft Documents, and (e) all substitutions, replacements and renewals
of any and all thereof.
Aircraft Documents shall mean the items identified on Schedule 2 to Exhibit D,
together with all additions and replacements.
Airframe shall mean (a) the Boeing model 737-200A aircraft having Manufacturer's
serial number 23004, but not including any engine installed thereon, and (b) any
and all Parts so long as the same shall be incorporated or installed on or
attached to the Airframe, or so long as title thereto shall remain vested in
Lessor in accordance with the terms hereof, after removal from the Airframe.
Airframe Usage Report shall mean a monthly report furnished to Lessor by Lessee
in substantially the form attached hereto as Exhibit F showing the number of
Flight Hours of operation for the Aircraft during the preceding month.
Approved Insurance Broker shall mean any reputable aviation insurance broker of
internationally recognized responsibility and standing approved by Lessor in its
sole discretion.
Approved Insurer shall mean any reputable aviation underwriter of
internationally recognized responsibility and standing approved by Lessor in its
sole discretion.
Basic Rent Payment Date shall mean the 5th calendar day of each month during the
Term commencing with the date of the first occurring calendar day of the Term
but excluding the Final Basic Rent Payment Date.
Beneficiary shall mean Triton Aviation Services V LLC, a California limited
liability company, and its successors and assigns.
Business Day shall mean any day other than a Saturday, Sunday or other day on
which banking institutions in San Francisco, California are authorized or
required by Law to be closed.
"C" Check shall mean a "C" check in accordance with the Maintenance Program.
"C7" Check shall mean the heaviest maintenance inspection, complete block
overhaul, including the twenty thousand (20,000) hour structural inspection
items. For purposes of this Lease, the "C7" Check shall be the equivalent of a
"D" check.
Casualty Occurrence shall mean any of the following events with respect to the
Aircraft, Airframe or any Engine: (a) the actual or constructive total loss of
such property (including any damage to such property 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); (b)
such property being destroyed, damaged beyond repair or permanently rendered
unfit for normal use for any reason whatsoever; (c) the requisition of title, or
other compulsory acquisition, capture, seizure, deprivation, confiscation or
detention for any reason of such property by any Governmental Entity or
purported Governmental Entity (whether de jure or de facto); or (d) the
hijacking, theft, condemnation, confiscation, seizure or requisition for use or
hire of such property which deprives any Person permitted by this Lease to have
possession and/or use of such property of such possession and/or use for more
than 30 days. A Casualty Occurrence with respect to the Aircraft shall be deemed
to have occurred if a Casualty Occurrence occurs with respect to the Airframe. A
Casualty Occurrence with respect to any Engine shall not, without loss of the
Airframe, be deemed a Casualty Occurrence with respect to the Aircraft.
Certificated Air Carrier means any Person (except the United States Government)
that is a citizen of the United States of America (as defined in Section 40102
of the Transportation Code) holding an air carrier operating certificate issued
pursuant to Chapter 447 of the Transportation Code for the operation of aircraft
capable of carrying ten or more individuals or 6,000 pounds or more of cargo.
Component shall mean each time controlled, cycle controlled or calendar
controlled component of the Aircraft.
Default shall mean an Event of Default or event which would constitute an Event
of Default but for the lapse of time or the giving of notice or both.
Delivery Conditions shall mean the conditions in respect of the Aircraft set
forth on Exhibit E.
Delivery Date shall mean the date on which the Aircraft is delivered to and
accepted by Lessee for purposes of this Lease.
Delivery Location: Dalfort Aerospace in Dallas, Texas.
Dollars shall mean lawful currency of the United States of America.
Engine shall mean each of the two (2) ▇▇▇▇▇ & Whitney model JT8D-15A engines
installed on or furnished with the Aircraft on the Delivery Date, bearing Engine
Manufacturer's serial numbers 709066 and 717107, respectively, and any
Replacement Engine which may from time to time be substituted therefor pursuant
to Section 10; together in each case with any and all Parts incorporated or
installed in or attached thereto or any and all Parts removed therefrom so long
as title thereto remains vested in Lessor in accordance with the terms hereof
after removal from such Engine. Except as otherwise set forth herein, at such
time as a Replacement Engine shall be so substituted, such replaced Engine shall
cease to be an Engine hereunder. The term "Engines" means, as of any date of
determination, all Engines then leased hereunder.
Engine Manufacturer: ▇▇▇▇▇ & ▇▇▇▇▇▇▇.
Engine Overhaul shall mean a complete overhaul (hot section or cold section
refurbishment and life limited part replacement) of an Engine.
Estimated Delivery Date: April 15, 1999.
Event of Default shall have the meaning specified in any one or more clauses in
Section 13(a).
Excusable Delay shall mean any of the following causes: (a) act of God or the
public enemy, (b) fires, floods, explosions, earthquakes, strikes, epidemics or
quarantine restrictions, (c) inability of a maintenance facility to complete its
maintenance activities, or (d) any other cause to the extent it is beyond the
control of Lessor and not occasioned by its fault or negligence, but only for
such length of time as the delivery of the Aircraft is reasonably prevented by
such cause or causes.
Expenses means any claims, proceedings, losses, liabilities, damages (whether
direct, indirect, special, incidental or consequential), suits, judgments,
costs, expenses, fees, penalties or fines (whether civil or criminal) of every
nature and kind, including any of the foregoing arising or imposed with or
without Indemnitee's fault or negligence, whether passive or active or under the
doctrine of strict liability.
Expiration Date shall mean the fifth (5th) anniversary of the Delivery Date.
FAA shall mean the Federal Aviation Administration of the United States
Department of Transportation or any successor.
Final Basic Payment Date shall mean the last occurring 5th calendar day of the
Term.
Flight Hours shall mean (i) in the case of the Airframe and landing gear, the
actual number of hours or fractions thereof that the Aircraft is in flight (from
takeoff to landing) as recorded in the Aircraft's log book, and (ii) in the case
of an Engine, the actual number of hours or fractions of thereof that such
Engine is in operation (from takeoff to landing of the Airframe on which such
Engine is installed) as recorded in the Aircraft's log book.
Governmental Entity shall mean and include (a) any national government, or
political subdivision thereof or local jurisdiction therein; (b) any board,
commission, department, division, organ, instrumentality, court, or agency of
any entity described in (a) above, however constituted; and (c) any association,
organization, or institution of which any entity described in (a) or (b) above
is a member or to whose jurisdiction any such entity is subject or in whose
activities any such entity is a participant but only (except for purposes of
defining Law below) to the extent that any of the preceding have jurisdiction
over the Aircraft or its operations.
Indemnitee shall mean Lessor, Beneficiary, each affiliate and Tax Affiliate of
Lessor and Beneficiary, each successor and assign of each of the foregoing and
each director, officer, employee and agent of each of the foregoing.
Law shall mean and include (a) any statute, decree, constitution, regulation,
order, judgment or other directive of any Governmental Entity; (b) any treaty,
pact, compact or other agreement to which any Governmental Entity is a signatory
or party; (c) any judicial or administrative interpretation or application of
any Law described in (a) or (b) above; and (d) any amendment or revision of any
Law described in (a), (b) or (c) above.
Lease shall mean this Lease, each Lease Supplement, and any and all amendments,
revisions, supplements and modifications thereto.
Lease Identification: "OWNED BY AND LEASED FROM FIRST SECURITY BANK, N.A., AS
OWNER TRUSTEE AT ▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, U.S.A., AND
SUBJECT TO SECURITY INTEREST IN FAVOR OF NATIONSBANK, N.A., AS AGENT, AND ANY
SUCCESSOR AGENT, FOR ONE OR MORE FINANCIAL INSTITUTIONS."
Lease Supplement shall mean the Lease Supplement, substantially in the form of
Exhibit B hereto, entered into between Lessor and Lessee.
Lender shall mean NationsBank, N.A., as agent, and any successor agent, for one
or more financial institutions.
Lessee's Address: Frontier Airlines, Inc.
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▇▇▇▇▇ ▇. ▇▇▇▇ ▇▇▇▇▇▇, #▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attn: Director, Aircraft Mgmt.
Lessor's Address: First Security Bank, N.A.
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▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attn: Corporate Trust Department
with a copy to: Triton Aviation Services V LLC
c/o Triton Aviation Services Ltd.
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attn: ▇▇. ▇▇▇▇ ▇. ▇▇▇▇▇
Lessor's Liens shall mean Liens arising as a result of (a) claims against Lessor
not related to the transactions contemplated by this Lease; or (b) acts of
Lessor, not contemplated and expressly permitted under this Lease; or (c) Taxes
imposed against Lessor which are not indemnified against by Lessee pursuant to
Section 9(b); or (d) claims against Lessor arising out of the voluntary transfer
by Lessor of all or any part of its interests in the Aircraft or this Lease,
other than a transfer pursuant to Sections 10 or 13(b) of this Lease.
Lien shall mean any mortgage, pledge, lien, charge, encumbrance, lease, exercise
of rights, security interest, claim or right of detention or sale.
Maintenance Program shall mean Lessee's FAA approved maintenance program as in
effect from time to time for the Aircraft.
Manufacturer: The Boeing Company.
Parts shall mean all appliances, components, parts, instruments, appurtenances,
accessories, furnishings and other equipment of whatever nature (other than
complete Engines or engines), which may now or from time to time be incorporated
or installed in or attached to the Airframe or any Engine. Except as otherwise
set forth herein, at such time as a replacement part shall be substituted for a
Part in accordance with Section 10 hereof, the Part so replaced shall cease to
be a Part hereunder.
Payment Location: Bank of America Illinois, ▇▇▇ ▇▇▇▇▇ ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇ ▇▇▇▇▇, for the account of Triton Aviation Services V LLC, Account No.
79-51523, ABA 071-000039.
Permitted Liens shall mean Liens which are permitted by Section 8(c) hereof.
Person shall mean and include any individual person, corporation, limited
liability company, partnership, trust, estate, unincorporated organization,
association or Governmental Entity.
Rent shall mean the Initial Rent Payment Amount, Basic Rent, the Final Basic
Rent and Supplemental Rent collectively.
Replacement Engine shall mean an engine of the same Engine Manufacturer and
model, and having equivalent value, utility, modification and remaining warranty
status as the Engine it is intended to replace under Section 10(b) hereof, or,
at Lessee's option, an engine of the same Engine Manufacturer as such Engine but
of an improved model, and otherwise of an equivalent value and utility and
suitable for installation and use on the Airframe without impairing the value or
utility of the Airframe.
Return Location: such location as may be agreed to between Lessor and Lessee.
Return Occasion shall mean the event that occurs when possession of the Aircraft
is returned from Lessee to Lessor at the end of the Term of this Lease or upon
Lessor taking possession pursuant to Section 13(b).
Security Deposit has the meaning ascribed thereto in Section 15(j).
Supplemental Rent shall mean any and all amounts, liabilities and obligations
(other than Basic Rent) which Lessee assumes or agrees to pay hereunder to
Lessor, including without limitation, (a) any payment of Casualty Value; (b) any
payment of indemnity required by Section 9 hereof; (c) any payment of reserves
pursuant to Section 4(b) hereof; and (d) to the extent permitted by applicable
Law, interest accruing daily at the Interest Rate (all computations of interest
under this Lease to be made on the basis of a 365-day year for the actual number
of days elapsed, compounded monthly) calculated: (i) on any part of any
installment of Basic Rent not paid on the due date thereof for the period the
same remains unpaid and (ii) on any Supplemental Rent not paid when due
hereunder until the same is paid.
Tax Affiliate shall mean (a) in the case of the entity that is the Beneficiary
on the Delivery Date and in the case of any successor or direct or indirect
transferee thereof that is (or is treated as) a partnership for the United
States Federal income tax purposes, each general partner, limited partner or
member (as the case may be) of the Beneficiary and (b) in the case of any such
general partner, limited partner or member which itself is (or is treated as) a
partnership for United States Federal income tax purposes, each general partner,
limited partner or member thereof (as the case may be).
Taxes shall mean any and all present and future taxes, levies, assessments,
duties, imposts, fees, withholdings and other government charges or of any
nature, together with any penalties, additions to tax, fines, charges and/or
interest thereon or computed by reference thereto.
Term shall mean the term of this Lease specified in the Lease Supplement,
commencing on the Delivery Date and ending on the Expiration Date.
Transportation Code means Title 49 of the United States Code.
Part II -- Certain Proprietary and Confidential Terms and Values.
AD Sharing Formula shall be as follows: P=(C x (N-R))/N
Where "N" equals the Term in months; "R" represents the
remainder of the Term in months after completion of the
modification/termination action; "C" equals the cost of the
modification/termination action in excess of $* and "P" equals
the Lessor's share of any cost.
Airframe Reserve Rate: * per Airframe Flight Hour.
Basic Rent Payment Amount: * per month in advance.
Casualty Value: *
Deductible Amount: *
Engine Reserve Rate: * per Engine, per Engine Flight Hour.
Final Basic Rent Payment Amount: The Dollar amount obtained by multiplying the
Per Diem Rent Rate by the number of days from and including the Final Basic Rent
Payment Date to and including the Expiration Date.
Further Additional Amount: * payable in cash but as may be exchanged by Lessee
at any time prior to the day immediately preceding the Delivery Date for a
letter of credit of equal amount issued from a financial institution acceptable
to Beneficiary.
Initial Amount: * paid in cash, receipt of which is hereby acknowledged by
Lessor, but as may be exchanged by Lessee at any time prior to the day
immediately preceding the Delivery Date for a letter of credit of equal amount
issued from a financial institution acceptable to Beneficiary.
Initial Basic Rent Payment Amount: The Dollar amount obtained by multiplying the
Per Diem Rent Rate by the number of days from Delivery Date to the first Basic
Rent Payment Date.
Interest Rate: Citibank, N.A.'s prime rate plus 3% per annum, but not to exceed
the maximum amount permitted by Law.
Landing Gear Reserve Rate: * per Airframe Flight Hour.
Per Diem Rent Rate: *
Public Liability and Property Damage Insurance: *
EXHIBIT B
to
Aircraft Lease Agreement
LEASE SUPPLEMENT NO. 1
LEASE SUPPLEMENT NO. 1, dated , 1999, between FIRST SECURITY BANK, N.A.,
not in its individual capacity but solely as Owner Trustee ("Lessor"), and
FRONTIER AIRLINES, INC., a Colorado corporation ("Lessee").
Lessor and Lessee have previously entered into that certain Aircraft Lease
Agreement dated as of February 26, 1999 (herein called the "Lease" and the
defined terms therein being hereinafter used with the same meaning). The Lease
provides for the execution and delivery from time to time of a Lease Supplement
substantially in the form hereof for the purpose of leasing the aircraft
described below under the Lease as and when delivered by Lessor to Lessee in
accordance with the terms thereof.
The Lease relates to the Aircraft, Parts and Engines as more precisely
described below. A counterpart of the Lease is attached hereto and this Lease
Supplement and the Lease shall form one document.
In consideration of the premises and other good and sufficient
consideration, Lessor and Lessee hereby agree as follows:
1. Lessor hereby delivers and leases to Lessee under the Lease and Lessee
hereby accepts and leases from Lessor under the Lease, that certain Boeing model
737-200A commercial jet aircraft, comprised of the Airframe having
Manufacturer's serial number 23004 and the two ▇▇▇▇▇ & Whitney JT8D-15A Engines
having Engine Manufacturer's serial numbers 709066 and 717107, respectively
(collectively, the "Delivered Aircraft").
2. The Delivery Date of the Delivered Aircraft is the date of this Lease
Supplement set forth in the opening paragraph hereof.
3. The Term for the Delivered Aircraft shall commence on the Delivery Date
and shall end on the Expiration Date, which shall be , 2004. The Initial Basic
Rent Payment Amount is due and payable on the date hereof and the Final Basic
Rent Payment Date shall be _________________ 5, 2004.
4. Lessee hereby confirms to Lessor that (i) the Delivered Aircraft and
each Engine installed thereon or belonging thereto have been duly marked in
accordance with the terms of Section 6(e) of the Lease, (ii) Lessee has accepted
the Delivered Aircraft for all purposes hereof and of the Lease, and (iii)
Lessee has inspected the Delivered Aircraft and the Delivered Aircraft satisfies
the conditions set forth in the Lease.
5. All of the terms and provisions of the Lease are hereby incorporated by
reference in this Lease Supplement to the same extent as if fully set forth
herein.
6. This Lease Supplement may be executed in any number of counterparts,
each of such counterparts, except as provided in Section 15(e) of the Lease,
shall for all purposes be deemed to be an original; and all such counterparts
shall together constitute but one and the same Lease Supplement.
IN WITNESS WHEREOF, Lessor and Lessee have caused this Lease Supplement
No. 1 to be duly executed as of the day and year first above written.
LESSOR,
FIRST SECURITY BANK, N.A.
not in its individual capacity
but solely as owner trustee
By:___________________________
Name:_________________________
Its:__________________________
LESSEE,
FRONTIER AIRLINES, INC.
By:___________________________
Name:_________________________
Its:__________________________
CERTAIN PROCEEDS OF THIS LEASE ARE SUBJECT TO A SECURITY INTEREST IN FAVOR OF
NATIONSBANK, N.A., AS AGENT, AND ANY SUCCESSOR AGENT, FOR ONE OR MORE FINANCIAL
INSTITUTIONS
EXHIBIT C
to
Aircraft Lease Agreement
RETURN CONDITION REQUIREMENTS
A. Certificate of Airworthiness Matters.
Upon the Return Occasion, the Aircraft shall possess a valid FAA
Certificate of Airworthiness and meet the requirements for U.S. domestic
operation under FAR Part 121, without restriction (including, without
limitation, compliance with Stage III requirements).
B. General Condition of Aircraft At Return.
(1) All Aircraft documentation will have been maintained in English and in
accordance with the rules and regulations of the FAA.
(2) The Aircraft shall be in working order, with all pilot discrepancies
and deferred maintenance items cleared.
(3) The Aircraft interior will be clean by scheduled commercial airline
standards and shall otherwise be returned in the same condition as at
the Delivery Date. The cockpit shall be "touched up" in accordance
with standard international airline practice and placards replaced as
required.
(4) The Aircraft will be airworthy and all airworthiness directives
requiring compliance prior to return and for a period of one hundred
eighty (180) days thereafter will have been performed on the Aircraft
prior to the Expiration Date.
(5) The Aircraft will be in full compliance with the Manufacturer's
Corrosion Prevention and Control Program ("CPCP") specified for the
model type by the Manufacturer.
C. Checks Prior to Return. Immediately prior to the return of the Aircraft to
Lessor, Lessee at its expense will:
(1) At the option of Lessor, either (i) perform at an FAA-approved repair
station, the next due full and complete zonal, systems and structural
check ("C" or its equivalent) in accordance with the Maintenance
Program, sufficient to clear the Aircraft for operation until the next
scheduled full and complete zonal, systems and structural check under
the Maintenance Program, or (ii) pay Lessor an amount in Dollars
representing the average of two (2) bids given for the cost of
conducting such check(s) from two (2) independent FAA repair stations.
(2) Remove Lessee's exterior markings, including all exterior paint, by
stripping (or, at Lessor's option, pneumatically scuff/sanding) the
paint from the Airframe and properly strip, clean, reseal, refinish,
prepare (including application of alodine or another corrosion
inhibitor) and prime the surfaces to be painted, all in accordance
with the Manufacturer's and paint manufacturer's recommendations.
Lessee will then repaint the Airframe white. Such painting will be
accomplished in such a manner as to result in a uniformly smooth and
cosmetically acceptable aerodynamic surface. As an alternative to
repainting the Airframe white as required hereunder, Lessee may
instead elect to pay an amount equal to the cost of such repainting.
All external placards, signs and markings will be properly attached,
free from damage, clean and legible.
(3) Clean the exterior and interior of the Aircraft.
(4) Perform full and complete hot section and cold section video borescope
on each Engine and its modules in accordance with the Engine
Manufacturer's maintenance manual, with Lessor or its representatives
entitled to be present. Lessee will provide evidence (photographic or
video) to Lessor's satisfaction that such inspection does not reveal
any condition which would cause the Engine or any module to be
unserviceable. Lessee will, at its expense, correct any discrepancies
which may be discovered during such inspection in accordance with the
guidelines set out by the Engine Manufacturer. No Engine will be on
watch for any reason.
(5) If the Engine historical and technical records and/or condition trend
monitoring data, of any Engine (including the auxiliary power unit),
indicate an acceleration in the rate of deterioration in the
performance of an Engine or an increase in oil consumption, Lessee
will correct, to Lessor's satisfaction, such conditions which are
determined to have exceeded Engine Manufacturer's maintenance manual
tolerances or otherwise be causing such accelerated rate of
deterioration.
(6) In accordance with Manufacturer's maintenance manual, accomplish a
maximum power assurance run on the Engines and accomplish condition,
acceleration and bleed valve scheduling checks on the Engines. Lessee
will record and evaluate the Engine performance with Lessor and/or its
representative entitled to be present. The performance and all
operating parameters of each Engine will be within the limits
specified in the Manufacturer's maintenance manual so as to ensure
that the Engine can be operated on-wing for a period of at least as
great a duration as that shown with respect to such Engine on the
Delivery Status Certificate as of the Delivery Date, regardless of the
operating environment of the Engine.
(7) In the event the Engine historical and technical records, borescope
inspection, trend monitoring and other checks specified in paragraphs
(5), (6) and (7) above result in a dispute with respect to whether an
Engine meets the requirements of this Lease, Lessee and Lessor will
consult with the Engine Manufacturer and follow the Engine
Manufacturer's recommendations (including the accomplishment of an
Engine test cell operational check) with regard to determining if such
Engine complies with the requirements of this Lease and the manner in
which any discrepancies from the requirements of this Lease will be
rectified.
D. Part Lives. The condition of the Aircraft and installed systems will be as
follows:
(1) The Aircraft shall be returned with no more time since the last "C7"
Check including the 20,000 hour structural inspection items or the
equivalent heaviest maintenance inspection (complete block overhaul)
as provided at the Delivery Date. Lessee may return the Aircraft with
more time since last "C7" Check provided Lessee pays Lessor the
difference between the time since the last "C7" Check upon delivery
and the actual time since "C7" Check upon return, times the Airframe
Maintenance Reserve Amount. However, in no event shall the Aircraft
have less than one "C" Check interval remaining until the next "C7"
Check. Airframe Maintenance Reserves may be used to offset this
amount.
(2) Each Engine shall be returned with the same time remaining or more
time remaining until the next restriction as at the Delivery Date.
Each Engine shall have no more time since last heavy shop visit, last
hot section refurbishment and last cold section refurbishment as at
the Delivery Date. Engine disk sheets shall be used for reference.
(3) Each landing gear will be serviceable. Each landing gear shall be
returned with the same amount of time remaining or more time remaining
until the next restriction as at the Delivery Date. Lessee may return
a landing gear with less time remaining until the next restriction
provided Lessee pays Lessor the difference between the time remaining
until the next restriction upon delivery and the time remaining until
the next restriction upon return times the Landing Gear Reserve Rate.
Landing Gear Reserves may be used to offset this amount. However, in
no event shall any single landing gear have less than one (1) "C"
Check interval remaining.
(4) Each APU will be returned in serviceable condition and shall pass
borescope.
(5) Each Component (excluding the Engines but including any components
thereon) will be returned in serviceable condition with at least 3,000
hours or cycles or twelve (12) months remaining, whichever is more
limiting.
EXHIBIT D
to
Aircraft Lease Agreement
CERTIFICATE AS TO STATUS OF AIRCRAFT
FIRST SECURITY BANK, N.A., not in its individual capacity, but
solely as owner trustee ("Lessor"), and FRONTIER AIRLINES, INC., a Colorado
corporation ("Lessee"), hereby certify as follows:
1. Lessor and Lessee are parties to that certain Aircraft Lease
Agreement dated February 26, 1999 (the "Lease"), with respect to the Boeing
737-200A commercial jet aircraft bearing manufacturer's serial number 23004 and
current Federal Aviation Administration registration number N234TR. Capitalized
term not otherwise defined herein shall have the meanings assigned to them in
the Lease.
2. Lessor and Lessee acknowledge and agree that the status of the
Airframe and the Engines on the Delivery Date are as set forth in Schedule 1
hereto, that the Aircraft, together with the Aircraft Documents described on
Schedule 2 hereto, are delivered by Lessor to Lessee in accordance with the
Lease on the date of this Certificate and that the Aircraft and Aircraft
Documents have been technically accepted by Lessee in accordance with the
provisions of the Lease.
INWITNESS WHEREOF, Lessor and Lessee have caused this Certificate
to be duly executed as of this day of , 1999.
LESSOR,
FIRST SECURITY BANK, N.A.,
not in its individual capacity
but solely as owner trustee
By:__________________________
Name:________________________
Its:_________________________
LESSEE,
FRONTIER AIRLINES, INC.
By:__________________________
Name:________________________
Its:_________________________
SCHEDULE 1
TO
CERTIFICATE AS TO STATUS OF AIRCRAFT
Aircraft Status
on The Delivery Date
Airframe Heaviest Check ("C7" Check or Equivalent):
Interval: _____ Hrs. (____ months)
Time Remaining: _________ Hrs.
Airframe "C" Check (or Equivalent):
Interval: ______ Hrs.
Time Remaining: ______ Hrs.
Landing Gear Overhaul:
Interval:
______ cycles Left Gear
______ cycles Right Gear
______ cycles Nose Gear
______ cycles Center Gear
Time Remaining:
_____ cycles Left Gear
_____ cycles Right Gear
_____ cycles Nose Gear
_____ cycles Center Gear
Engines Time Remaining to First Restriction:
See attached engine disk sheets attached as Schedule 3 for Engines
delivered on the Delivery Date.
APU TT ▇▇ ▇▇▇
SN P_____ _____ hr _____ cy ____ hrs
CSO Limiter
----- ----------------
----------------
Fuel on Board at Delivery:
_____ Gal. U.S.
SCHEDULE 2
TO
CERTIFICATE AS TO STATUS OF AIRCRAFT
AIRCRAFT DOCUMENTS (Estimated)
A. CERTIFICATES
o FAA Certificate of Airworthiness
B. AIRCRAFT STATUS RECORDS
o Log Books
o Airframe Maintenance Status Report
o Supplemental Structural Inspection Document Status
(if applicable)
o Manufacturer's Service Bulletin Status Report
o Airworthiness Directive Compliance Report
(terminated and repetitive)
o Modification Status Report List
(documents will be provided upon request)
o Last Weighing Report
o List of Life Limited Components with remaining
hours/cycles
C. AIRCRAFT MAINTENANCE RECORDS (last heavy maintenance visits)
o Test Flight Reports
o X-ray pictures
o Last annual check and heaviest maintenance check Work Cards
D. AIRCRAFT HISTORY RECORDS
o Aircraft Maintenance History Cards
o Service Difficulty Report
o Accident or Incident Report (Major Structural Repair)
E. ENGINE RECORDS (for each engine)
o Engine time and cycle records
o Last overhaul and repair documents
(including FAA Forms 337)
o Airworthiness Directive Compliance Report
(terminated and repetitive)
o Manufacturer's Service Bulletin Status Report
o List of Time Controlled Components with remaining
hours and cycles
o Modification Status Report
o Engine Disc Sheets
o Engine Build Specifications
F. APU RECORDS
o Last Overhaul and Repair Documents
(including modification status)
o Airworthiness Directive Compliance Report
(terminated and repetitive)
o Manufacturer's Service Bulletin Status Report
o List of Time Controlled Components with remaining
hours/cycles
o Modification Status Report
G. COMPONENT RECORDS
o Time Controlled Component Historical Records with Installation
and Serviceability Tags
H. MANUALS
o Airplane Flight Manual
(Manufacturer Approved, FAA Approved)
o Flight Crew Operating Manual
o Weight and Balance Manual
o Wiring Diagram Manual
(microfilm and hard copy if available)
o Illustrated Parts Catalog (microfilm)
o Aircraft Maintenance Manual (microfilm)
o Manufacturer's Engine Maintenance Manual and any
approved engineering changes, as applicable
I. MISCELLANEOUS TECHNICAL DOCUMENTS
o Maintenance Program Specifications
o Interior Configuration Drawings
o Original Delivery Documents
o Loose Equipment Inventory
SCHEDULE 3
TO
CERTIFICATE AS TO STATUS OF AIRCRAFT
EXHIBIT E
to
Aircraft Lease Agreement
DELIVERY CONDITION REQUIREMENTS
On the Delivery Date, the Aircraft shall be delivered in "as
is" condition; provided, however, the Aircraft shall meet the following
conditions:
(1) The Aircraft shall be in compliance with the requirements for domestic
operation in the United States, will meet the requirements of FAA Part 121,
shall have a current and valid FAA Certificate of Airworthiness, will have LGW
Stage III (Nordam hushkit) installed thereon, and will have flight data recorder
systems installed which conform to the requirements of FAR 121.344(b)(1) or
(b)(2), as applicable.
(2) The records required for Lessee to operate the Aircraft and bridge the
Aircraft onto Lessee's maintenance program will be in English.
(3) The Aircraft will be in working order with all pilot discrepancies and
deferred maintenance items cleared.
(4) The Aircraft will be airworthy and all AD's requiring compliance on the
Delivery Date and for a period of one hundred eighty (180) days thereafter, will
be accomplished. The Aircraft will be in full compliance with the CPCP program.
(5) The Aircraft shall be clean by scheduled commercial airline standards. The
interior will be delivered in a one hundred nineteen (119) seat standard class
passenger configuration with a minimum seat pitch of 31 inches. Lessor will
install galleys recommended by Lessee subject to timing and availability
thereof.
(6) The Aircraft shall have next scheduled "C" Check performed in accordance
with the Boeing MPD maintenance program. The Aircraft will be bridged onto the
Boeing MPD maintenance program.
(7) Each Engine shall be delivered in serviceable condition. Each Engine shall
have at least three thousand (3,000) hours or cycles (whichever is more
limiting) of life remaining as described on the engine disk sheets.
(8) Each Engine shall have had a full and complete hot section and cold section
video borescope performed on such Engine and its modules in accordance with the
Engine Manufacturer's maintenance manual. Lessor will provide evidence
(photographic or video) to Lessee's satisfaction that such inspection does not
reveal any condition which would cause the Engine or any module to be
unserviceable. Lessor will, at its expense, correct any discrepancies which may
be discovered during such inspection in accordance with the guidelines set out
by the Engine Manufacturer. No Engine will be on watch for any reason.
(9) If the Engine historical and technical records and/or condition trend
monitoring data, of any Engine (including the auxiliary power unit), indicate an
acceleration in the rate of deterioration in the performance of an Engine or an
increase in oil consumption, Lessor will correct, to Lessee's satisfaction, such
conditions which are determined to have exceeded Engine Manufacturer's
maintenance manual tolerances or otherwise be causing such accelerated rate of
deterioration.
(10) In accordance with Manufacturer's maintenance manual, accomplish a maximum
power assurance run on the Engines and accomplish condition, acceleration and
bleed valve scheduling checks on the Engines. Lessor will record and evaluate
the Engine performance with Lessee and/or its representative entitled to be
present. The performance and all operating parameters of each Engine will be
within the limits specified in the Manufacturer's maintenance manual so as to
ensure that the Engine can be operated on-wing for a period of at least as great
a duration as that shown with respect to such Engine on the Delivery Status
Certificate as of the Delivery Date, regardless of the operating environment of
the Engine.
(11) In the event the Engine historical and technical records, borescope
inspection, trend monitoring and other checks specified in paragraphs (8), (9)
and (10) above result in a dispute with respect to whether an Engine meets the
requirements of this Lease, Lessee and Lessor will consult with the Engine
Manufacturer and follow the Engine Manufacturer's recommendations (including the
accomplishment of an Engine test cell operational check) with regard to
determining if such Engine complies with the requirements of this Lease and the
manner in which any discrepancies from the requirements of this Lease will be
rectified.
(12) Each landing gear shall have no less than three thousand (3,000) hours
remaining to the next scheduled overhaul and no landing gear component shall
have less than fifteen thousand (15,000) cycles remaining life.
(13) Each APU will be delivered in serviceable condition and shall pass
borescope inspection.
(14) Each Component (excluding the engines but including any components thereon)
will be delivered in serviceable condition with at least three thousand (3,000)
hours or cycles or twelve (12) months remaining, whichever is more limiting.
(15) The Aircraft shall be delivered painted in Lessee's livery.
(16) Lessor will increase the MTOW to one hundred twenty thousand (120,000)
pounds and the MLW to one hundred seven thousand (107,000) pounds (the "Weight
Increases"). It is understood the Weight Increases are produced by Manufacturer
and may not be available on the Delivery Dates. Lessor will use best efforts to
obtain the Weight Increases (which were ordered by Lessee in November, 1998) in
a timely fashion.
EXHIBIT F
to
AIRCRAFT LEASE AGREEMENT
AIRFRAME USAGE REPORT
dated __/__/__
in respect of the period from
__/__/__ to __/__/__
Number of Hours Operated Number of Cycles Operated
Airframe
Engine # 1
Serial Number:___________
Engine #2
Serial Number:___________
Landing Gear
TABLE OF CONTENTS
SECTION 1 DEFINITIONS...............................................1
SECTION 2 LEASE AND CONDITIONS......................................1
SECTION 3 DELIVERY AND ACCEPTANCE; TERM ............................2
SECTION 4 RENT AND RESERVES.........................................3
SECTION 5 REPRESENTATIONS AND WARRANTIES............................4
SECTION 6 POSSESSION, USE AND MAINTENANCE...........................6
SECTION 7 INFORMATION AND INSPECTION ...............................9
SECTION 8 CERTAIN COVENANTS OF LESSEE ..............................9
SECTION 9 INDEMNIFICATION .........................................10
SECTION 10 CASUALTY OCCURRENCES.....................................13
SECTION 11 INSURANCE................................................15
SECTION 12 RETURN OF AIRCRAFT AND RECORDS...........................21
SECTION 13 DEFAULT AND REMEDIES.....................................22
SECTION 14 ALIENATION...............................................23
SECTION 15 MISCELLANEOUS............................................24
EXHIBIT A...................................................................A-1
EXHIBIT B...................................................................B-1
EXHIBIT C...................................................................C-1
EXHIBIT D...................................................................D-1
EXHIBIT E...................................................................E-1
EXHIBIT F...................................................................F-1