DRAFT - 10/31/02
AIRCRAFT LEASE
(N601NB)
DATED AS OF OCTOBER __, ▇▇▇▇,
▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇,
as Lessor
and
DRIVETIME CREDIT CORPORATION,
as Lessee
AS SET FORTH IN SECTION 12 OF THIS LEASE, CERTAIN OF THE RIGHT, TITLE AND
INTEREST OF THE LESSOR IN AND TO THIS LEASE HAS BEEN ASSIGNED TO AND IS SUBJECT
TO A SECURITY INTEREST IN FAVOR OF GENERAL ELECTRIC CAPITAL CORPORATION
("SECURED PARTY") UNDER THE LOAN AND AIRCRAFT SECURITY AGREEMENT DATED AS OF THE
DATE HEREOF, BETWEEN LESSOR AND SECURED PARTY, AS AMENDED, MODIFIED OR
SUPPLEMENTED FROM TIME TO TIME.
THIS LEASE HAS BEEN EXECUTED IN SEVERAL COUNTERPARTS. 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 OF
POSSESSION OF ANY EXECUTED COUNTERPART OTHER THAN THE ORIGINAL EXECUTED
COUNTERPART, WHICH SHALL BE IDENTIFIED AS THE COUNTERPART THAT CONTAINS THE
RECEIPT THEREFORE EXECUTED BY THE SECURED PARTY ON OR IMMEDIATELY FOLLOWING THE
SIGNATURE PAGE THEREOF.
TABLE OF CONTENTS
Page
SECTION 1. Lease and Acceptance of Aircraft......................................................................1
SECTION 2. Conditions to Closing.................................................................................1
SECTION 3. Term and Rent.........................................................................................1
SECTION 4. Title; Quiet Possession and Use.......................................................................3
SECTION 5. Disclaimer and Assignment of Warranties...............................................................4
SECTION 6. Representations, Warranties and Agreements of Lessee..................................................5
(a) Due Organization...........................................................................................5
(b) Due Authorization; No Violation............................................................................5
(c) Enforceability.............................................................................................5
(d) Financial Statements.......................................................................................5
(e) Furnishing of Information..................................................................................5
(f) Name, Location of Chief Executive Offices and Organizational Identification Number.........................6
(g) Documents on Board.........................................................................................6
(h) Litigation.................................................................................................6
(i) No Adverse Mortgages.......................................................................................6
(j) Taxes......................................................................................................6
(k) Possession and Liens.......................................................................................6
(l) Good Title.................................................................................................7
(m) Records....................................................................................................7
(n) Claims.....................................................................................................7
(o) Addenda, Exhibits and Riders...............................................................................7
(p) U.S. Citizen...............................................................................................7
(q) Engines....................................................................................................7
(r) Incidental Use.............................................................................................7
SECTION 7. Net Lease.............................................................................................8
SECTION 8. Taxes..................................................................................................8
SECTION 9. Compliance and Use.....................................................................................9
SECTION 10. Loss or Damage......................................................................................10
(a) Event of Loss with Respect to the Aircraft................................................................10
(b) Event of Loss with Respect to an Engine...................................................................11
(c) Risk of Loss..............................................................................................12
SECTION 11. Indemnification.....................................................................................12
SECTION 12. Assignment and Sublease.............................................................................13
SECTION 13. Events of Default...................................................................................15
SECTION 14. Remedies............................................................................................17
SECTION 15. Notices.............................................................................................19
SECTION 16. Transaction Expenses................................................................................19
SECTION 17. Miscellaneous.......................................................................................19
SECTION 18. Amendments..........................................................................................22
SECTION 19. Truth in Leasing....................................................................................22
EXHIBIT A - Definitions
Lease Supplement ▇▇. ▇
▇▇▇▇▇▇▇▇ ▇▇. ▇ to Lease Supplement ▇▇. ▇
▇▇▇▇▇▇▇▇ ▇▇. ▇ to Lease Supplement No. 1
Schedule No. 2-A to Lease Supplement ▇▇. ▇
▇▇▇▇▇▇▇▇ ▇▇. ▇ to Lease Supplement No. 1
Lease Supplement No. 2
Special Tax Indemnity Rider
Insurance Addendum
Maintenance and Return Addendum
AIRCRAFT LEASE
This AIRCRAFT LEASE (together with all Supplements, Exhibits, Riders and
Addenda hereto, the "Lease") is made and entered into as of October ___, 2002 by
and between VERDE CAPITAL CORPORATION, an Arizona corporation ("Lessor"), with a
place of business at ▇▇▇▇ ▇. ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇, ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇, and
DRIVETIME CREDIT CORPORATION, an Arizona corporation ("Lessee"), having its
principal place of business and chief executive office at ▇▇▇▇ ▇. ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇. Certain capitalized terms as used in this Lease are
defined in Exhibit A hereto, and such definitions are hereby incorporated herein
and made a part hereof as though set forth herein in full.
SECTION ▇.▇▇▇▇▇ and Acceptance of Aircraft.
Lessor has purchased the Aircraft for the purpose of it being leased to the
Lessee. Lessor hereby agrees to lease the Aircraft to Lessee and Lessee hereby
agrees to lease the same from Lessor for the Basic Term hereof pursuant to the
terms and conditions of this Lease. The sale of the Aircraft to Lessor shall
include all of Supplier's right, title and interest in and to the Aircraft.
The execution by Lessee of Lease Supplement No. 1 shall evidence that the
Aircraft is leased under, and is subject to all of the terms, provisions and
conditions of, this Lease and constitute Lessee's unconditional and irrevocable
acceptance of the Aircraft for all purposes of this Lease. Except as may be
expressly set forth herein, this Lease is non-cancelable and non-terminable by
Lessee.
SECTION 2. Conditions to Closing.
(a) Conditions Precedent. Lessor's obligation to lease the Aircraft to
Lessee shall be subject to and conditioned upon all of the following conditions
being satisfied:
(i) Secured Party has received the Closing Documents set forth on
Lease Supplement No. 2 hereto.
(ii) No material adverse change in the financial condition of Lessee
has occurred since the date of the last financial statements furnished to
Lessor as set forth on Schedule No. 2 to Lease Supplement No. 1.
(iii) Lessee's acceptance of the Aircraft on or before the Acceptance
Date.
(iv) In addition to the above listed conditions precedent, Lessee
covenants and agrees that upon Lessor's acknowledgment that all conditions
to the lease as aforestated have been satisfied, Lessee shall authorize the
release from escrow to Lessor of the documents held by FAA Counsel on
behalf of Lessee and shall authorize FAA Counsel to file and record all
appropriate documentation with the FAA on the Acceptance Date.
(b) Conditions Subsequent. Lessee shall comply with the Conditions
Subsequent set forth in Lease Supplement No. 2 hereto.
SECTION 3. Term and Rent.
(a) The leasing of the Aircraft by Lessor to Lessee shall commence on the
Acceptance Date and end on the Expiration Date each as set forth on Schedule No.
2 to Lease Supplement No. 1, unless this Lease shall have been earlier
terminated, cancelled or extended.
(b) Lessee shall pay to Lessor (or Secured Party, pursuant to Section 3(d)
below) as basic rent (herein referred to as "Basic Rent") the following:
(i) On the Acceptance Date, an amount equal to the Daily Lease Rate,
multiplied by the number of days elapsed from and including the Acceptance
Date with respect to the Aircraft to but excluding the Rent Commencement
Date.
(ii) On the First Basic Rent Date and on each Basic Rent Date
thereafter, to and including the Last Basic Rent Date, an amount equal to
the Basic Rent set forth on Schedule 2-A to Lease Supplement No. 1.
(iii) After the Expiration Date until the Aircraft is returned to the
Lessor in accordance with the terms and conditions of this Lease, an amount
equal to the Basic Rent. Such amount shall be payable from and after the
Expiration Date until the return of the Aircraft to the Lessor as provided
under this Lease. Such amount shall be payable on the same dates and with
the same frequency as Basic Rent was payable during the Term.
(c) In addition, Lessee shall pay to Lessor (or Secured Party, pursuant to
Section 3(d) below) the following amounts (herein referred to as "Supplemental
Rent" and, together with all Basic Rent, collectively as "Rent"): (i) any other
amount payable hereunder which Lessee assumes the obligation to pay, or agrees
to pay, under this Lease to Lessor or others; (ii) on the date provided herein,
any amount payable hereunder as Casualty Value and/or any amounts due pursuant
to any Rider or Addendum hereto plus any and all amounts regarding the same; and
(iii) interest at the lesser of the Late Payment Rate or the highest rate of
interest permitted by applicable law for the number of days actually elapsed on
any amount payable hereunder not paid when due, plus, if not paid when due, as
an administrative and late charge, an amount equal to the Administrative Charge.
The expiration, cancellation or other termination of Lessee's obligation to pay
Basic Rent hereunder shall not terminate, limit or modify the obligations of
Lessee with respect to Supplemental Rent, which shall survive such expiration,
cancellation or other termination of the Lease.
(d) Except as provided in the next sentence of this Section 3(d), all
payments of Rent or other amounts required hereunder shall be made to Lessor in
immediately available United States funds on the date payable hereunder at the
address designated by Lessor for payment, by wire transfer to an account
specified by Lessor or at such other address or to such other Person as Lessor
may direct by notice in writing to Lessee. Anything herein or in any other Lease
Document to the contrary notwithstanding, so long as the Secured Note is
outstanding and the Lien of the Loan Agreement has not been discharged, (i)
Lessor hereby irrevocably directs, and the Lessee agrees, that all payments of
Rent payable to the Lessor hereunder or under any of the other Lease Documents
shall be paid directly to the Secured Party at the time and in the funds of the
type specified in this Section 3(d) by transferring such funds to the Secured
Party at its account at Banker's Trust, ▇▇▇ ▇▇▇▇▇▇'▇ ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇
▇▇▇▇▇, Account Name: General Electric Capital Corporation, Account # ▇▇▇▇▇▇▇▇,
ABA # ▇▇▇▇▇▇▇▇▇ (the "Secured Party's Account") or to such other place in the
United States of America as the Secured Party shall notify the Lessee in
writing; provided, however, so long as no Loan Event of Default has occurred,
and Lessee has first paid to Lessor that certain portion of each Basic Rent
payable on any Rent Payment Date during the Basic Term that is equal to the
principal, interest and other amounts then due under the Note (the aggregate
amount thereof, the "Note Installment"), Lessee shall pay directly to Lessor the
remaining portion of such Basic Rent payment ("Lessor's Retained Rent"), in
accordance with the first sentence of this Section 3(d), but at all times from
and after the occurrence of a Loan Event of Default, Lessee will pay the full
amount of each Basic Rent payment (including any and all payments of Lessor's
Retained Rent) directly to Secured Party; and (ii) without limiting the
provisions of Sections 7 or 12(b), any and all Rent and other payments payable
to Secured Party pursuant to this Section 3(d) shall be made directly to Secured
Party without Abatement for any reason or under any circumstances whatsoever,
whether attributable to any act or omission of Lessor, including any breach by
Lessor of any of its obligations under or relating to this Lease, any of the
transactions contemplated herein, the occurrence of any event of the type
described in Sections 13(f), (o) or (p) of this Lease, or any rejection or
assumption and assignment by Lessor of this Lease, or any present or future
claims against Lessor or its successors or assigns (except that Lessee shall
have the right to bring an independent cause of action against Verde Capital
Corporation with respect to any such claims). As an accommodation, and not as a
condition to Lessee's obligation to pay any amount hereunder, Secured Party will
provide Lessee with notice of the amount of the Note Installment payable on the
next Rent Payment Date, and if Lessee does not receive Secured Party's written
notice specifying such amount, Lessee shall pay the entire Basic Rent payment to
Secured Party, and, after applying such amount in the manner provided in the
Loan Agreement, Secured Party will remit any balance remaining to Lessor (if and
to the extent provided in the Loan Agreement).
(e) If any Rent is due on a day that is not a Business Day, payment thereof
shall be made on the next succeeding Business Day with the same effect as if
made on the date on which such payment was due.
SECTION 4. Title; Quiet Possession and Use.
Title to the Aircraft shall at all times remain in Lessor (or such other
entity as Lessor shall designate) and at no time during the Term shall title
become vested in Lessee. Lessee shall acquire no right, title or interest in or
to the Aircraft except the right to use the Aircraft pursuant to the terms of
this Lease.
Lessor warrants that during the term of this Lease, so long as no Event of
Default or Default has occurred and is continuing hereunder, Lessee's possession
and use of the Aircraft shall not be divested or interfered with by Lessor or
anyone claiming by, through or under Lessor, except by Secured Party pursuant to
its rights hereunder, or under the Loan Agreement or any of the other Loan
Documents.
The warranty set forth hereinabove is in lieu of all other warranties of
Lessor, whether written, oral or implied, with respect to this Lease or the
Aircraft, and Lessor shall not be deemed to have modified in any respect the
obligations of Lessee pursuant to Section 7 hereof, which obligations are and
shall remain absolute, irrevocable and unconditional under all events and
circumstances whatsoever.
SECTION 5. Disclaimer and Assignment of Warranties.
LESSEE EXPRESSLY ACKNOWLEDGES THAT IT HAS SELECTED THE AIRCRAFT WITHOUT ANY
ASSISTANCE FROM LESSOR, SECURED PARTY, THEIR RESPECTIVE AGENTS OR EMPLOYEES AND
LESSEE EXPRESSLY AGREES THAT IT IS LEASING THE AIRCRAFT FROM LESSOR IN AN "AS
IS" CONDITION. LESSEE FURTHER ACKNOWLEDGES THAT NEITHER LESSOR NOR SECURED PARTY
HAS MANUFACTURED OR SUPPLIED THE AIRCRAFT AND THAT THE LESSOR ACQUIRED OR WILL
ACQUIRE THE AIRCRAFT AND/OR THE RIGHT TO POSSESSION THERETO IN CONNECTION WITH
THIS LEASE. NEITHER LESSOR NOR SECURED PARTY SHALL BE DEEMED TO HAVE MADE, AND
LESSOR HEREBY EXPRESSLY DISCLAIMS, ANY REPRESENTATION OR WARRANTY (EXCEPT FOR
THE WARRANTY OF QUIET POSSESSION AND USE), EITHER EXPRESS OR IMPLIED, AS TO THE
AIRCRAFT, ANY PART THEREOF, ANY RECORDS, OR ANY MATTER WHATSOEVER, INCLUDING,
WITHOUT LIMITATION, THE DESIGN, CONDITION, CAPACITY OR DURABILITY OF THE
AIRCRAFT, ITS MERCHANTABILITY OR ITS FITNESS FOR ANY PARTICULAR PURPOSE, USE OR
OPERATION, THE QUALITY OF THE MATERIALS OR WORKMANSHIP OF THE AIRCRAFT, ITS
VALUE OR AIRWORTHINESS, TITLE, SAFETY, THE ABSENCE OF ANY PATENT, TRADEMARK OR
COPYRIGHT INFRINGEMENT OR LATENT DEFECT (WHETHER OR NOT DISCOVERABLE BY LESSEE),
COMPLIANCE OF THE AIRCRAFT WITH THE REQUIREMENTS OF ANY LAW, RULE, REGULATION OR
STANDARD PERTAINING THERETO, OR THE CONFORMITY OF THE AIRCRAFT TO THE PROVISIONS
AND SPECIFICATIONS OF ANY PURCHASE DOCUMENT RELATING THERETO OR ANY INTERFERENCE
OR ANY COURSE OF PERFORMANCE, COURSE OF DEALING OR USAGE OF TRADE, NOR SHALL
LESSOR OR SECURED PARTY BE LIABLE, REGARDLESS OF ANY ACTUAL OR ALLEGED
NEGLIGENCE OF LESSOR OR SECURED PARTY, FOR ANY DEFECTS, EITHER PATENT OR LATENT
(WHETHER OR NOT DISCOVERABLE BY LESSEE), IN THE AIRCRAFT OR ANY PART THEREOF OR
ANY DIRECT OR INDIRECT DAMAGE TO PERSONS OR PROPERTY RESULTING THEREFROM OR FOR
ANY DIRECT, INDIRECT, INCIDENTAL, SPECIAL OR CONSEQUENTIAL DAMAGES OR FOR STRICT
OR ABSOLUTE LIABILITY IN TORT. WITHOUT LIMITING THE GENERALITY OF THE FOREGOING,
LESSEE HEREBY WAIVES ANY CLAIM (INCLUDING ANY CLAIM BASED ON STRICT OR ABSOLUTE
LIABILITY IN TORT OR INFRINGEMENT) IT MIGHT HAVE AGAINST LESSOR OR SECURED PARTY
FOR ANY LOSS, DAMAGE OR EXPENSE (INCLUDING, WITHOUT LIMITATION, DIRECT,
INDIRECT, INCIDENTAL, SPECIAL OR CONSEQUENTIAL DAMAGE, ANY LOSS OF BUSINESS OR
PROFITS OR ANY INTERRUPTION OR LOSS OF SERVICE OR USE THEREOF) CAUSED BY THE
AIRCRAFT OR BY LESSEE'S LOSS OF USE THEREOF FOR ANY REASON WHATSOEVER.
If the Aircraft is not delivered, does not operate as warranted, becomes
obsolete, or is unsatisfactory for any reason whatsoever, Lessee shall make all
claims on account thereof solely against the Manufacturer or Supplier and not
against Lessor or Secured Party, and Lessee shall nevertheless pay all Rent and
other sums payable hereunder.
So long and only so long as an Event of Default or Default hereunder shall
not have occurred and be continuing, and so long and only so long as the
Aircraft shall be subject to this Lease and Lessee shall be entitled to
possession of the Aircraft hereunder, Lessor assigns to Lessee and authorizes
Lessee, at Lessee's expense, to assert for Lessor's account, all rights and
powers of Lessor under any manufacturer's, vendor's or dealer's warranty on the
Aircraft or any part thereof, (including, without limitation, any warranty of
Manufacturer or Supplier). Notwithstanding the foregoing, Lessee shall not
attempt to enforce any such performance in the name of Lessor by legal
proceeding without Lessor's prior written approval. Lessor reserves the right to
approve all pleadings and legal process bearing its name.
SECTION 6. Representations, Warranties and Agreements of Lessee.
Lessee represents, warrants and agrees as follows:
(a) Due Organization. Lessee has the form of business organization
indicated in the caption of this Lease and is duly organized and existing in
good standing under the laws of the state listed in the caption of this Lease
and is duly qualified to do business wherever necessary to carry on its present
business and operations, including, without limitation, the Primary Hangar
Location, and to own its property.
(b) Due Authorization; No Violation. This Lease and all of the other Lease
Documents have been duly authorized by all necessary action on the part of
Lessee consistent with its form of organization, do not require any further
shareholder, member, manager or partner approval, do not require the approval
of, or (with the exception of the notice required by Section 91.23 of the FAR
and which notice has been or shall be given concurrently with the terms thereof)
the giving notice to, any Federal, state, local or foreign governmental
authority and do not contravene any law binding on Lessee, any affiliate, or
member including, without limitation, the ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act of 2002 (including
Section 402 of said act) and the Securities Exchange Act of 1934, as amended
(including Section 13 of said act) or contravene any provision of, or constitute
a default under any certificate or articles of incorporation or organization or
by-laws or partnership certificate or agreement, or any agreement, Loan
Agreement, or other instrument to which Lessee is a party or by which it may be
bound.
(c) Enforceability. This Lease and each of the other Lease Documents have
been duly executed and delivered by authorized representatives of Lessee and
constitute the legal, valid and binding obligations of Lessee enforceable in
accordance with their respective terms.
(d) Financial Statements. Upon the request by Lessor or Secured Party,
Lessee agrees to furnish a copy of the balance sheet of Lessee and related
statements of income and retained earnings of Lessee, all in reasonable detail
prepared in accordance with generally accepted accounting principles
consistently applied and certified by an independent certified public accounting
firm of recognized standing and which is reasonably acceptable to Lessor and
Secured Party, each on a comparative basis with corresponding statements for the
prior fiscal year or corresponding period of the prior year, as specified by
Lessor or Secured Party, all in reasonable detail and certified by the treasurer
or principal financial officer of Lessee. All credit, financial and other
information provided by Lessee or at Lessee's direction is, and all such
information hereafter furnished will be, true, correct and complete in all
material respects.
(e) Furnishing of Information. Lessee agrees that it shall furnish from
time to time to Lessor and Secured Party such information relating to Lessee,
its subsidiaries and/or affiliates as such party shall reasonably request.
(f) Name, Location of Chief Executive Offices and Organizational
Identification Number. Lessee warrants that Lessee's exact legal name as shown
on its certificate or articles of incorporation or by-laws, or certificate of
articles of organization, each as amended as of the date of this lease; Lessee's
state-issued organizational identification number (if any); and the address of
Lessee's mailing, chief executive offices and principal place of business are
all correct as set forth in Schedule No. 2 to Lease Supplement No. 1. Lessee
agrees (i) that it shall not change its legal name without prior written notice
to Lessor and Secured Party and (ii) that it shall give Lessor and Secured Party
thirty (30) days' prior written notice of any relocation of said chief executive
offices or principal place of business from its present location. Within the
previous six (6) years Lessee has not changed its name, done business under any
other names, changed its chief place of business from its present location or
merged or been the surviving entity of any merger other than the change of its
name from Ugly Duckling Credit Corporation to DriveTime Credit Corporation and
the relocation of its chief place of business from ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇
▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ to ▇▇▇▇ ▇. ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇.
(g) Documents on Board. A current and valid Registration Application or
Certificate of Aircraft Registration and Standard Airworthiness Certificate (FAA
Form AC 8100-2) pertaining to the Aircraft and a copy of this Lease and the
Lease Supplements, will be kept on board the Aircraft at all times during the
Term. In addition, for all operations outside the continental United States, the
Lessee shall maintain either a permanent Certificate of Registration or
"fly-time wire" (FAA Standard Form 14) on board the Aircraft.
(h) Litigation. There are no proceedings pending or, so far as the officers
of Lessee know, threatened against or affecting Lessee or any of its property
before any court, administrative officer or administrative agency which would,
directly or indirectly, adversely affect or impair the title of Lessor to, or
the Lien of Secured Party against, the Aircraft, or which, if decided adversely,
affect the financial condition or operations of Lessee or the ability of Lessee
to perform its obligations under this Lease.
(i) No Adverse Mortgages. Neither Lessor's right, title and interest in and
to the Aircraft and the Rent, nor Secured Party's Lien thereon, will be
adversely affected or impaired by the terms of any mortgage, loan agreement or
Loan Agreement or any other contract, agreement or instrument to which Lessee is
a party, or under which it or any of its property is or may become bound. In
addition, no mortgage, deed of trust, or other Lien which now covers or affects,
or which may hereafter cover or affect, any property or interest therein of
Lessee, now attaches or hereafter will attach to the Aircraft, the Airframe or
any Engine, or in any manner affects or will affect adversely Lessor's and
Secured Party's respective rights, title and interests therein.
(j) Taxes. Lessee has filed or caused to be filed and will continue to file
all Federal, state and local tax returns which are required to be filed, and has
paid or caused to be paid and will continue to pay all taxes shown to be due and
payable on such returns or (except to the extent being contested in good faith
and for the payment of which adequate reserves have been provided) on any
assessment received by Lessee, to the extent that such taxes have heretofore or
in the future become due and payable.
(k) Possession and Liens. Lessee will not sell, convey, transfer, exchange,
lease or otherwise relinquish possession or dispose of the Aircraft, Engine or
Part (except for delivery of possession of the Aircraft or any Engine or Part to
another Person for testing, service, repair, maintenance, overhaul or, to the
extent permitted hereby, alteration or modification), or attempt or offer to do
any of the foregoing. Lessee will not directly or indirectly, voluntarily or
involuntarily, create, incur, assume or suffer to exist any Liens on or with
respect to the Aircraft or any Part, Lessor's title thereto or any interest of
Lessor therein (and Lessee will promptly, at its own expense, take such action
as Lessor deems necessary or advisable to duly discharge any such Lien), except
Permitted Liens. In the event that Lessee fails to take action to discharge or
remove any such Lien, Lessor or Secured Party may take such action as it deems
necessary or appropriate to discharge or remove such Lien. Lessee shall
reimburse Lessor or Secured Party, as the case may be, on demand for any costs
incurred by such party in connection with such action together with interest at
the Late Payment Rate. Lessor's and Secured Party's rights hereunder are in
addition to, and not in derogation of, any other rights which Lessor or Secured
Party may have hereunder, at law or in equity.
(l) Good Title. Lessor will be the owner of the Aircraft as of the
Acceptance Date and will have good and marketable title to the Aircraft, free
and clear of all Liens other than any Liens created in favor of Lessor under
this Lease, and the Lien of the Secured Party.
(m) Records. Lessee has reviewed all Records with respect to the operation
and maintenance of the Aircraft prior to the Acceptance Date and such Records
have been kept in accordance with the requirements of the FAR and industry
standards. Lessee shall maintain all such Records during the Term in accordance
with the requirements of the FAA, and any manufacturer's instructions for
continued airworthiness and inspection and maintenance programs or requirements
as the requirements of this Lease.
(n) Claims. Lessee has no pending claims, and does not have knowledge of
any facts upon which a future claim may be based, against any prior owner, the
Manufacturer or Supplier of the Aircraft or of any Engine or part thereof for
breach of warranty or otherwise.
(o) Addenda, Exhibits and Riders. Lessee shall perform all of its
agreements, undertakings and obligations set forth in the Addenda, Exhibits and
Riders hereto and shall comply with all of the terms and conditions set forth in
such Addenda, Exhibits and Riders.
(p) U.S. Citizen. Lessee is and will continue to be a "citizen of the
United States" within the meaning set forth in 49 USC Section 40102 (a) (15).
(q) Engines. Each of the Engines has 750 or greater rated takeoff
horsepower or the equivalent of such horsepower.
(r) Incidental Use. The operation of the Aircraft by Lessee is incidental
to a business purpose of Lessee (other than the business of transportation by
air), and although the Aircraft can be used occasionally for personal use by any
person or persons affiliated with Lessee (subject to the insurance, legal
compliance and other provisions of this Lease), the predominant use of the
Aircraft shall be for business or commercial purposes.
SECTION 7. Net Lease.
This Lease is a net lease, and Lessee acknowledges and agrees that Lessee's
obligation to pay all Rent hereunder and the rights of Lessor in and to such
Rent, shall be absolute, irrevocable and unconditional and shall not be subject
to cancellation, termination, modification or repudiation by Lessee or any
abatement, reduction, setoff, defense, counterclaim or recoupment (collectively,
"Abatements") for any reason or under any circumstance whatsoever, including,
without limitation, Abatements due to any present or future claims of Lessee
against Lessor, its successors and assigns whether under this Lease or
otherwise, Secured Party, the Manufacturer, the Supplier or any other Person for
whatever reason. Lessee hereby waives any and all existing and future claims to
any Abatement against such Rent, and agrees to pay all such Rent regardless of
any Abatement which may be asserted in connection with this Lease, the Aircraft
or otherwise. Except as otherwise expressly provided herein, this Lease shall
not terminate, nor shall the obligations of Lessee be affected, by reason of any
defect in or damage to, or any loss or destruction of, the Aircraft or any part
thereof from whatsoever cause, or the invalidity or unenforceability or lack of
due authorization of this Lease or lack of right, power or authority of Lessor
to enter into this Lease, or for any other cause, whether similar or dissimilar
to the foregoing, any present or future law or regulation to the contrary
notwithstanding, it being the express intention of Lessor and Lessee that all
Rent payable to Lessor (or as provided herein, to Secured Party) hereunder shall
be, and continue to be, payable in all events unless and until the obligation to
pay the same shall be terminated pursuant to the express provisions of this
Lease. Lessee, to the maximum extent permitted by applicable law, waives all
rights now or hereafter conferred by statute or otherwise to quit, terminate or
surrender this Lease. All payments by the Lessee of Rent made hereunder as
required hereby shall be final absent manifest error, and the Lessee shall not
seek to recover any such payment or any part thereof for any reason whatsoever,
absent manifest error. If for any reason whatsoever this Lease shall be
terminated by operation of law or otherwise except as expressly provided herein,
then, to the extent not previously paid in connection with such termination or
otherwise, the Lessee shall nonetheless pay to Lessor (or as provided herein, to
Secured Party) an amount equal to each Rent payment at the time and in the
manner that such payment would become due and payable hereunder if this Lease
had not been terminated.
SECTION 8. Taxes.
Lessee agrees to: (i) file directly with all appropriate taxing authorities
all declarations, returns, inventories and other documentation with respect to
any sales, use, or personal property taxes (or any other taxes in the nature of
or imposed in lieu of property taxes) due or to become due with respect to the
Aircraft and shall pay on or before the date when due all such taxes assessed,
billed or otherwise payable with respect to the Aircraft directly to the
appropriate taxing authorities, and (ii) (a) pay when due as requested by Lessor
or Secured Party, and (b) defend and indemnify Lessor and Secured Party against
liability for all license and/or registration fees, assessments, and sales, use,
property, excise, privilege and other taxes (including any related interest or
penalties) or other charges or fees now or hereafter imposed by any governmental
body or agency upon the Aircraft or with respect to landing, airport use,
manufacturing, ordering, shipment, purchase, ownership, delivery, installation,
leasing, operation, possession, use, return, or other disposition thereof or the
rentals hereunder, or with respect to any of the Loan Documents, or any of the
transactions contemplated therein, other than taxes on or measured solely by the
net income of Lessor (the items referred to in (i) and (ii) above being referred
to herein as "Impositions"). Any Impositions which are not paid when due and
which are paid by Lessor or Secured Party shall, at such party's option, become
immediately due from Lessee to the party making such payment. Notwithstanding
the foregoing, Lessee shall pay, indemnify Lessor for and hold Lessor harmless
on a net after-tax basis from and against, all Impositions on or measured by the
net income of Lessor imposed against Lessor by any local or foreign government
or other local or foreign taxing authority if and to the extent that Lessor
would not have incurred such Impositions but for the operation or presence of
the Aircraft within the jurisdiction asserting an Imposition.
The liability of Lessee to make indemnification payments and otherwise
perform its obligations under this Section 8 shall, notwithstanding any
expiration, cancellation or other termination (whether voluntary, as the result
of a Default or Event of Default, or otherwise) of this Lease, continue to exist
until such indemnity payments are irrevocably made in full by Lessee and such
payments are received by the Indemnitee to whom such payments are to made, and
all such other obligations are fully performed, pursuant to this Section 8. If
any Claim is made against Lessee or any Indemnitee, the party receiving notice
of such Claim shall promptly notify the other, but the failure of the party
receiving notice to so notify the other shall not relieve Lessee of any
obligation hereunder.
SECTION 9. Compliance and Use.
Lessee agrees to comply with all laws, regulations and governmental orders
related to this Lease and/or the Aircraft, its use or possession. The Lessee
acknowledges that this is a commercial transaction. The Aircraft shall be used
in furtherance of Lessee's business or other objectives, provided, however, that
the Aircraft shall be used for the purposes warranted in Section 6(r), but in
any event, predominantly for business and commercial purposes. The Aircraft
shall be used solely in a passenger configuration that is supported by a
properly completed FAA Form 337. Lessee will not operate or permit the Aircraft
to be operated at any time or in any geographic area when or where insurance
required by the provisions hereof shall not be in effect. Lessee will not
operate or permit the Aircraft to be operated in a manner, for any time period,
such that Lessor or a third party (except, where expressly permitted hereunder,
an air carrier or air taxi operator certificated under Part 121 or Part 135 of
the Federal Aviation Regulations) shall be deemed to have "operational control"
of the Aircraft. Lessee shall not operate or permit the Aircraft to be operated
under Part 135 of the Federal Aviation Regulations. Throughout the Term, the
possession, use and maintenance of the Aircraft shall be at the sole risk and
expense of Lessee and the Aircraft shall be based at the Primary Hangar Location
set forth in Schedule No. 2 to Lease Supplement No. 1. The Aircraft will, at all
times be operated by at least two duly qualified pilots having (a) the required
FAA type rating for the Aircraft, (b) the required FAA pilot certificates and
ratings, (c) a valid FAA Medical Certificate, (d) satisfied all security
requirements imposed by any governmental authority having jurisdiction and (e)
met any and all requirements established and specified by (i) the FAA, the
Transportation Security Administration and any other applicable governmental
authority and (ii) the insurance policies required under this Lease. IN
ADDITION, EXCEPT AS EXPRESSLY PERMITTED BY THE FOLLOWING PARAGRAPH, THE AIRCRAFT
SHALL NOT BE OPERATED, USED OR LOCATED OUTSIDE THE CONTINENTAL UNITED STATES.
Notwithstanding the foregoing, Lessor agrees that the Aircraft may be flown
temporarily to any country in the world in connection with the conduct of
Lessee's business; provided, however, that in no event may the Aircraft
temporarily fly, be operated, used or located in, to or over any such country or
area (1) which is excluded from coverage by any insurance policy in effect with
respect to such Aircraft or by any insurance policy required by the terms hereof
or any country or area not specifically and fully covered by such insurance; (2)
in a recognized or threatened area of hostility unless fully covered to Lessor's
and Secured Party's satisfaction by hull, political, expropriation, hijacking
and war risk insurance; (3) with which the United States of America does not
maintain favorable diplomatic relations; or (4) in a manner that causes it to be
deemed to have been used or operated "predominantly" outside of the United
States, as that phrase is used in Section 168(g)(1)(A) of the Code. Lessee
further agrees that it shall not operate the Aircraft, or permit the Aircraft to
be operated in any manner unless the insurance coverages set forth herein are in
full force and effect.
Without limiting Lessee's indemnities and other agreements under this
Lease, Lessee hereby: (i) expressly assumes sole responsibility for the
determination and implementation of all security measures and systems necessary
or appropriate for the proper protection of the Aircraft (whether on the ground
or in flight) against theft, vandalism, hijacking, destruction, bombing,
terrorism or similar acts directly or indirectly affecting the Aircraft, any
part thereof, or any persons who (whether or not on board the Aircraft) may
sustain any injury or damage as a result of any such acts, and (ii) agrees to
provide to Lessor promptly upon request with evidence of Lessee's compliance
with its obligations under this Section 9 (but in no event shall Lessor, in its
capacity as lessor, owner or otherwise, be deemed to have any duty with respect
to any security measures imposed by this Lease or applicable law, whether or not
complied with by Lessee, as the full and exclusive assumption of responsibility
by Lessee of such responsibility is of the essence of this Lease, and a
condition to Lessor's participation in the transactions contemplated herein).
Lessee agrees that it shall be solely responsible for any fines, penalties,
or forfeitures arising out of the operation and use of the Aircraft hereunder
(except for those fines, penalties, or forfeitures that may be levied directly
against a crewmember or certificate maintenance provider).
SECTION 10. Loss or Damage.
(a) Event of Loss with Respect to the Aircraft. Upon the occurrence of any
Event of Loss with respect to the Airframe and/or Aircraft, Lessee shall notify
Lessor and Secured Party of any such Event of Loss within five (5) days of the
date thereof. On the next Basic Rent Date following the date of such notice (or,
if such Event of Loss occurs after the Last Basic Rent Date, within thirty (30)
days after such notice), Lessee shall pay to Lessor any Rent then due, plus the
Casualty Value of the Aircraft determined as of the Basic Rent Date immediately
following the date of such notice, together with interest at the Late Payment
Rate for the period (if any) from the Basic Rent Date following the date of such
notice through the date of payment. Upon making such payment and all Rent due
and owing, Lessee's obligation to pay further Basic Rent for the Aircraft
subsequent to such payment shall cease, but Lessee's obligation to pay
Supplemental Rent as well as any other amounts due under this Lease, if any, for
the Aircraft shall remain unchanged. Except in the case of loss, permanent
disappearance, destruction or Return to Manufacturer, and unless possession
thereof is required to be delivered to a third party insurance carrier in order
to settle an insurance claim, Lessor shall be entitled to recover possession of
the Aircraft and Lessor shall be entitled to any salvage value in excess of the
Casualty Value paid to Lessor. Any amounts received at any time by the Lessor,
Secured Party or Lessee as a result of the occurrence of an Event of Loss
(whether insurance proceeds or payments made in connection with a Return to
Manufacturer or Requisition for Use) shall be applied as follows: (i) all such
payments received at any time by Lessee shall be promptly paid to Lessor or if
the Lien of the Loan Agreement shall not have been terminated or discharged, to
Secured Party, for application pursuant to the Loan Agreement, and, thereafter,
pursuant to the provisions of this Section 10; (ii) any balance then remaining
after such application by Secured Party, up to the amount of the Casualty Value
required to be paid by Lessee pursuant to this Section 10(a), shall be applied
in reduction of Lessee's obligation to pay such amount if not already paid by
Lessee or, if already paid by Lessee, shall be applied to reimburse Lessee for
its payment of such amount; and (iii) the balance shall be retained by Lessor.
Notwithstanding the foregoing provisions of this Section 10(a), so long as any
Event of Default or other Loan Event of Default shall have occurred and be
continuing, any amount that otherwise would be payable to or for the account of,
or that otherwise would be retained by, Lessee or Lessor pursuant to this
Section 10 shall be paid to Secured Party so long as the Aircraft is subject to
the Lien of the Loan Agreement (and after such Lien is discharged in accordance
with the Loan Agreement, to Lessor) as security for the obligations of Lessor
under the Loan Documents and Lessee under this Lease and, applied first to
Lessor's obligations under the Loan Documents, and thereafter, any balance then
remaining shall be applied against Lessee's payment obligations hereunder when
and as they become due and payable and, at such time thereafter as no Event of
Default or other Loan Event of Default shall be continuing, such amount shall,
to the extent not theretofore applied as provided herein or in the Loan
Agreement, be paid promptly to Lessee or as it may direct. Lessor shall be under
no duty to Lessee to pursue any claim against any Person in connection with an
Event of Loss, but Lessee may at its own cost and expense and with Lessor's
prior written consent pursue the same on behalf of Lessor in such manner as may
be reasonably acceptable to Lessor.
(b) Event of Loss with Respect to an Engine. Upon an Event of Loss with
respect to any Engine under circumstances in which there has not occurred an
Event of Loss with respect to the Airframe upon which such Engine was installed,
Lessee shall give Lessor prompt written notice thereof and shall within thirty
(30) days after the occurrence of such Event of Loss, duly convey to Lessor
title to a similar or better engine of the same make and model number as the
Engine suffering the Event of Loss. Such engine shall be free and clear of all
Liens, have a value, utility, and useful life at least equal to, and be in as
good an operating condition as, the Engine suffering the Event of Loss, assuming
such Engine was of the value and utility and in the condition and repair
required by the terms hereof immediately prior to the occurrence of such Event
of Loss. In connection with any such replacement, Lessee shall (i) furnish
Lessor with a ▇▇▇▇ of sale with respect to the replacement engine, (ii) cause a
Lease Supplement (having a form and substance acceptable to Lessor and Secured
Party), subjecting such replacement engine to this Lease, and duly executed by
Lessee, to be delivered to Lessor for execution, (iii) cause a supplement to the
Loan Agreement (having a form and substance acceptable to Lessor and Secured
Party) for such replacement engine, to be delivered to Lessor and to Secured
Party for execution and, upon such execution, to be filed for recordation in the
same manner as provided for the Loan Agreement, (iv) furnish Lessor and Secured
Party with an opinion of the Lessee's counsel to the effect that (A) each of the
▇▇▇▇ of sale and Lease Supplement required above constitutes a legal, valid,
binding and enforceable obligation of the Lessee (subject to customary
qualifications as to bankruptcy and equitable principles), and (B) all filings,
recordings and other action necessary or appropriate to perfect and protect the
Lessor's and the Secured Party's respective interests in the replacement engine
(and any other collateral securing the Secured Note) have been accomplished, (v)
furnish Lessor and Secured Party with an Officer's Certificate of Lessee
certifying that as of the date of the substitution of the replacement engine,
and upon consummation of the substitution, (1) no Event of Default has occurred
and is continuing, and (2) the replacement engine conforms to the requirements
of this Lease, (vi) furnish Lessor and Secured Party with an appraisal in form
and substance satisfactory to both parties, from an independent appraiser
satisfactory to both parties, that the replacement engine has a fair market
value, utility, condition, remaining economic useful life and estimated residual
value at least equal to the Engine replaced (assuming such Engine had not
suffered an Event of Loss and was in the condition required to be maintained by
the terms of this Lease), and (vii) furnish such other documents and evidence as
the Lessor or Secured Party may reasonably request in connection with any such
substitution. Upon full compliance by Lessee with the terms of this paragraph,
Lessor will transfer to Lessee, without recourse, representation or warranty of
any kind whatsoever other than as to Lessor's Liens, all of Lessor's right,
title and interest, if any, in and to the Engine suffering the Event of Loss.
SUCH TRANSFER SHALL BE "AS-IS, WHERE-IS" AND LESSOR SHALL NOT BE DEEMED TO HAVE
MADE, AND LESSOR HEREBY DISCLAIMS, ANY REPRESENTATION OR WARRANTY, EITHER
EXPRESS OR IMPLIED, AS TO THE ENGINE SO TRANSFERRED TO LESSEE other than as to
Lessor's Liens. Each such replacement engine shall, after such conveyance be
deemed an "Engine" as defined herein and shall be deemed part of the same
Aircraft as was the Engine replaced thereby. No Event of Loss with respect to an
Engine shall result in any reduction or delay in the payment of Basic Rent or
relieve Lessee of any obligation under this Lease.
(c) Risk of Loss. Except as otherwise specifically provided in this
Section, Lessee shall bear the risk of loss, damage or partial destruction of
the Aircraft and shall not be released from its obligations hereunder in the
event of any damage to the Aircraft or any part thereof or any Event of Loss
relating thereto.
SECTION 11. Indemnification.
Lessee assumes liability for, and hereby agrees to indemnify, protect,
save, defend and keep harmless Lessor and Secured Party, their respective
agents, employees, officers, directors, shareholders, subsidiaries, affiliates,
successors and assigns (each, an "Indemnitee"), on a net after-tax basis, from
and against any and all liabilities, obligations, losses, damages, penalties,
claims (including, without limitation, claims involving or alleging product
liability or strict or absolute liability in tort), actions, suits, demands,
costs, expenses and disbursements (including, without limitation, legal fees and
expenses) of any kind and nature whatsoever ("Claims") which may be imposed on,
incurred by or asserted against such Indemnitee, whether or not such Indemnitee
shall also be indemnified as to any such Claim by any other Person, in any way
relating to or arising out of this Lease, any of the other Lease Documents or
any documents contemplated hereby, or any of the Loan Documents, or any of the
transactions contemplated therein, or the performance or enforcement of any of
the terms hereof or thereof, or in any way relating to or arising out of the
assertion or enforcement of any manufacturer's, vendor's or dealer's warranties
on the Aircraft or any part thereof, (including, without limitation, any
warranty of any Manufacturer or Supplier), the manufacture, inspection,
construction, purchase, pooling, interchange, acceptance, rejection, ownership,
titling or re-titling, delivery, lease, sublease, possession, use, operation,
maintenance, management, condition, registration or re-registration, sale,
return, removal, repossession, storage or other disposition of the Aircraft or
any part thereof or any accident in connection therewith (including, without
limitation, latent and other defects, whether or not discoverable, and any Claim
for patent, trademark or copyright infringement). Notwithstanding the foregoing,
Lessee shall not be required to indemnify an Indemnitee for any Claim caused
solely and directly by the gross negligence or willful misconduct of such
Indemnitee (unless imputed by applicable law).
The liability of Lessee to make indemnification payments shall,
notwithstanding any expiration, cancellation or other termination (whether
voluntary, as the result of a Default or Event of Default, or otherwise) of this
Lease, continue to exist until such indemnity payments are irrevocably made in
full by Lessee and received by the Indemnitee to whom such payments are to made
pursuant to this Section 11. If any Claim is made against Lessee or any
Indemnitee, the party receiving notice of such Claim shall promptly notify the
other, but the failure of the party receiving notice to so notify the other
shall not relieve Lessee of any obligation hereunder.
SECTION 12. Assignment and Sublease.
(a) LESSEE SHALL NOT SELL, TRANSFER, ASSIGN, CHARTER, SUBLEASE (WITH OR
WITHOUT CREW, CONVEY, PLEDGE, MORTGAGE OR OTHERWISE ENCUMBER ITS OR LESSOR'S
INTEREST IN AND TO THE LEASE OR THE AIRCRAFT, AND ANY SUCH SALE, TRANSFER,
ASSIGNMENT, CHARTER, SUBLEASE, CONVEYANCE, PLEDGE, MORTGAGE OR ENCUMBRANCE,
WHETHER BY OPERATION OF LAW OR OTHERWISE, WITHOUT THE PRIOR WRITTEN CONSENT OF
LESSOR SHALL BE NULL AND VOID. IN ADDITION, LESSEE SHALL NOT ENTER INTO ANY
INTERCHANGE AGREEMENT AFFECTING THE AIRCRAFT OR RELINQUISH POSSESSION OF THE
AIRFRAME OR ANY ENGINE OR INSTALL ANY ENGINE OR PART, OR PERMIT ANY ENGINE OR
PART TO BE INSTALLED, ON ANY AIRFRAME OTHER THAN THE AIRFRAME LEASED HEREUNDER
EXCEPT AS EXPRESSLY SET FORTH HEREIN. In addition, the foregoing shall not be
deemed to prohibit the delivery of possession of the Aircraft, any Engine or
Part to another Person for testing, service, repair, maintenance, overhaul or,
to the extent permitted hereby, alteration or modification. No acceptance,
assignment, subletting, relinquishment or installation shall in any event
relieve Lessee of primary, absolute and unconditional liability for its duties
and obligations under this Lease.
(b) In order to secure the indebtedness evidenced by the Secured Note and
certain other obligations as provided in the Loan Agreement (the
"Indebtedness"), the Loan Agreement provides, among other things, for the
assignment by Lessor to Secured Party of Lessor's right, title and interest in,
to and under this Lease and each of the other Lease Documents to the extent set
forth in the Loan Agreement (but none of Lessor's obligations hereunder or
thereunder), and for the creation of a security interest in the Aircraft in
favor of Secured Party. Lessee hereby consents to such assignment and to the
creation of such security interest pursuant to the terms and provisions of the
Loan Agreement and to any assignment or other transfer which may occur pursuant
to the exercise of any remedy set forth in the Loan Agreement. Lessee (i)
acknowledges that, to the extent provided in the Loan Agreement, such assignment
and security interest provides Secured Party with the exclusive right (but
without any obligation) to exercise all rights of Lessor hereunder or under any
of the other Lease Documents to modify, terminate or cancel any of the Lease
Document or to give any consents, approvals, waivers, notices or the like, to
make any elections, demands or the like or to take any other discretionary
action hereunder or with respect to any other Lease Documents; (ii) acknowledges
receipt of an executed counterpart of the Loan Agreement as in effect on the
date hereof (and agrees that it will not take any action under, or enter into
any agreement relating to this Lease, that conflict with the Loan Agreement or
this Section 12); (iii) acknowledges that any such assignment does not, and will
not, materially change its duties or materially increase its burdens or risks
hereunder and that any such assignment shall be permitted even if the assignment
would be or is deemed to materially affect Lessee's interests hereunder; (iv)
acknowledges that, notwithstanding the provisions of Section 4 or any implied
warranty of quiet use, possession or enjoyment under any applicable law, the
rights, title and interests of Lessee (and any party claiming through Lessee) in
and to the Aircraft, and hereunder (including with respect to all amounts that
are otherwise payable to Lessee hereunder), are subject and subordinate in all
respects to Secured Party's rights, title and interests in the Aircraft,
including, all of Secured Party's rights and remedies under the Loan Agreement
and the other Loan Documents, and, as collaterally assigned by Lessor,
hereunder; and (v) agrees that, to the extent provided in the Loan Agreement,
Secured Party shall have all the rights of the Lessor hereunder and under the
other Lease Documents and, in exercising any right or performing any obligation
of Lessor hereunder or thereunder, shall be subject to the terms hereof.
(b) Without limiting any term of this Lease or the Loan Agreement, upon the
occurrence of any Loan Event of Default (whether or not arising hereunder),
Secured Party shall have the right at its sole election to exercise any and all
of the following remedies (i) Secured Party may exercise all of its rights,
powers and remedies under the Loan Agreement, including, without limitation, its
right to repossess or demand return of the Aircraft, notwithstanding any rights
or interests Lessor, Lessee or any other such party may have; (ii) pursuant to
Section 3(d), Secured Party may notify Lessee to make all payments of Lessor's
Retained Rent payable to Lessor hereunder directly to Secured Party, and in such
event Lessor agrees not to collect any such payments thereafter; (iii) Secured
Party may enforce, modify or terminate this Lease and any sublease; and (iv)
Secured Party may exercise remedies against or with respect to the Collateral;
and (v) Secured Party may exercise any other remedy available to it pursuant to
applicable law. All rights granted hereunder shall be cumulative and not
alternative, shall be in addition to and shall in no manner impair or affect
Secured Party's rights under the Loan Documents, or any other agreement, statute
or rule of law. Each of Lessor and Lessee agrees to cooperate with Secured
Party's exercise of any such rights, powers and remedies, including the return
of the Aircraft to Secured Party upon demand. Lessee and Lessor shall be jointly
and severally liable for any costs, charges or expenses incurred by Secured
Party in enforcing or protecting its rights under this Lease.
(c) Subject to the Loan Agreement, Lessor may not otherwise mortgage, grant
a security interest in or otherwise transfer, sell or assign all or any part of
its interest in this Lease, any of the other Lease Documents or the Aircraft or
any Rent or other sums due or to become due hereunder or thereunder. Secured
Party (whether as collateral assignee or otherwise) may at any time, with or
without notice to Lessee, mortgage, grant a security interest in or otherwise
transfer, sell or assign all or any part of its interest in this Lease, any of
the other Lease Documents (including any Rent or other sums due or to become due
hereunder or thereunder) or the Aircraft, and Lessee shall perform all of its
obligations under this Lease for the benefit of such assignee, Secured Party,
creditor, mortgagee, transferee or Person (hereinafter an "Assignee"). Lessee
further agrees, if so directed in writing, to, among other things, pay all sums
due or to become due hereunder directly to the Assignee or any other party
designated in writing by Secured Party or any such Assignee. Upon the request of
Secured Party or any Assignee, Lessee also agrees (i) to promptly execute and
deliver to Secured Party or to such Assignee an acknowledgment of assignment in
form and substance satisfactory to the requesting party which, among other
things, reaffirms the basic terms and conditions of this Lease and (ii) to
comply with the reasonable demands of any such Assignee in order to perfect any
such assignment or transfer.
(d) This Lease, including all agreements, covenants, representations and
warranties, shall be binding upon and inure to the benefit of, and may be
enforced by (i) Lessor and its successors, and Secured Party, and Secured
Party's successors, assigns, agents and servants and (ii) Lessee and its
successors and, to the extent expressly permitted by Lessor, assigns.
SECTION 13. Events of Default.
The term "Event of Default", wherever used herein, shall mean any of the
following events or circumstances (whatever the reason for such Event of Default
and whether it shall be voluntary or involuntary, or come about or be effected
by operation of law, or be pursuant to or in compliance with any judgment,
decree or order of any court or any order, rule or regulation or any
administrative or governmental body):
(a) Lessee shall fail to make any payment of Rent, Casualty Value, if
applicable, and/or any amount due pursuant to any Rider, Exhibit or Addendum
hereto within ten (10) days after any or all of the same shall become due and
payable, or, upon demand, any other amount required to be paid herein or under
any other agreement with Lessor or Secured Party; or
(b) Lessee shall fail to keep in full force and effect any of the insurance
required hereunder, or shall operate the Aircraft at a time when, or at a place
in which, such insurance shall not be in effect; or
(c) Lessee shall fail to perform or observe any covenant, condition or
agreement, (other than those specifically referred to in this Section) required
to be performed or observed by it under this Lease or any Rider, Exhibit or
Addendum hereto or any other agreement, document or certificate delivered by or
on behalf of Lessee in connection herewith, and such failure shall continue for
ten (10) days after written notice thereof from Lessor or Secured Party to
Lessee; or
(d) Lessee shall default in the payment or performance of any indebtedness
or obligation to Lessor, Secured Party, or any affiliated person, firm or entity
controlling, controlled by or under common control with Lessor or Secured Party,
under any loan, note, security agreement, lease, guaranty, title retention or
conditional sales agreement or any other instrument or agreement evidencing such
indebtedness with Lessor, Secured Party or such other affiliated person, firm or
entity affiliated with Lessor or Secured Party; or
(e) any representation or warranty made by Lessee herein or in any
certificate, agreement, statement or document hereto or hereafter furnished to
Lessor in connection herewith, including without limitation, any financial
information disclosed to Lessor or Secured Party, shall prove to be or to have
been false or incorrect in any material respect; or
(f) the commencement of any bankruptcy, insolvency, arrangement,
reorganization, receivership, liquidation or other similar proceeding by or
against Lessee or any of its properties or businesses, (which, in the case of a
proceeding commenced against Lessee, has not been dismissed within sixty (60)
days of the filing thereof) the appointment of a trustee, receiver, liquidator
or custodian for Lessee or any of its properties or businesses, if Lessee
suffers the entry of an order for relief under Title 11 of the United States
Code or the making by Lessee of a general assignment or deed of trust for the
benefit of creditors; or
(g) Lessee shall default in any payment or other obligation to any third
party and any applicable grace or cure period with respect thereto has expired;
or
(h) Lessee sells, transfers or disposes of all or substantially all of its
respective stock, assets or property, merges with or into any other entity or
engages in any form of limited liability company or corporate reorganization,
becomes the subject of, or engages in, a leveraged buy-out or the Lessee shall
terminate its existence by merger, consolidation or sale of substantially all of
its assets or otherwise; or
(i) if Lessee is a privately held corporation, and more than 50% of
Lessee's voting capital stock or effective control of Lessee's voting capital
stock issued and outstanding from time to time is not retained by the holders of
such stock on the date of this Lease; or
(j) if Lessee is a publicly held corporation, there shall be a change in
the ownership of Lessee's stock such that Lessee is no longer subject to the
reporting requirements of the Securities Exchange Act of 1934, as amended, or no
longer has a class of equity securities registered under Section 12 of the
Securities Act of 1933, as amended; or
(k) Lessee shall generally fail to pay its debts as they became due and
such failure shall continue for three (3) Business Days after written notice by
Lessor or Secured Party or Lessee shall admit its inability to pay its debts or
obligations generally as they fall due; or
(l) Lessor or Secured Party shall determine, in such party's sole
discretion and in good faith, that there has been a material adverse change in
the business, operations or financial condition of the Lessee since the date of
this Lease or that Lessee's ability to make any payment hereunder promptly when
due or otherwise comply with the terms of this Lease or any other agreement
between Lessor and Lessee is materially impaired; or
(m) the failure to return the Aircraft to Lessor at the end of the Term in
accordance and in compliance with the terms and conditions hereof, the Aircraft
shall be abused, substantially damaged (without being repaired in accordance
with the provisions hereof) or destroyed (without payment of the applicable
Casualty Value in accordance with the terms and conditions hereof); or
(n) Lessee shall or shall attempt to remove, sell, transfer, charter,
interchange, convey, pledge, mortgage, encumber, part with possession of, assign
or sublet (with or without one or more crewmembers) the Aircraft or any part
thereof, use the Aircraft for an illegal purpose or permit the same to occur or
Lessee shall create, incur, assume or suffer to exist any Lien (other than
Permitted Liens) with respect to the Aircraft, this Lease or Lessor's interests
thereunder; or
(o) (i) there is a default under either of the Lease Guaranties or there is
any repudiation of either of the Lease Guaranties by the Lease Guarantors or any
allegation or determination that either Lease Guaranty is unenforceable in any
material respect; or (ii) any event or condition set forth in subsections (b)
through (l) of this Section shall occur with respect to any guarantor or other
person responsible, in whole or in part, for payment or performance of this
Lease; or
(p) any event or condition set forth in subsections (d) through (j) of this
Section shall occur with respect to any affiliated person, firm or entity
controlling, controlled by or under common control with Lessee; or
(q) solely for the benefit of Secured Party (as Lessor's collateral
assignee, as provided in Section 12), unless and until the Indebtedness is
indefeasibly paid in full to Secured Party in accordance with the Secured Note,
the Loan Agreement and the other Loan Documents and the Lien of the Secured
Party has been discharged pursuant to the Loan Agreement, any Loan Event of
Default shall occur (a "Cross Default").
Lessee shall promptly notify Lessor and Secured Party of the occurrence of
any Default or Event of Default.
SECTION 14. Remedies.
(a) Upon the occurrence of any Event of Default and so long as the same
shall be continuing, Lessor may, at its option, declare this Lease to be in
default (provided that no such declaration shall be a condition to any suit
against Lessee for specific performance of a defaulted covenant or for damages
in respect of such default upon such occurrence or at any time thereafter), and
at any time thereafter, whether or not such Event of Default shall be
continuing, Lessor may exercise any one or more of the following remedies, as
Lessor in its sole discretion shall lawfully elect (except that, without
limiting the provisions of Section 12(b), Secured Party shall have all the
rights of the Lessor, exclusively, hereunder, under the Lease Guaranties and
under the other Lease Documents, unless and until the Indebtedness is
indefeasibly paid in full to Secured Party in accordance with the Secured Note,
the Loan Agreement and the other Loan Documents and the Lien of the Secured
Party has been discharged pursuant to the Loan Agreement):
(i) Proceed by appropriate court action, either at law or in equity,
to enforce performance by Lessee of the applicable covenants of this Lease
or to recover damages for breach thereof.
(ii) By notice cancel or terminate this Lease, whereupon all rights of
Lessee to the use of the Aircraft or any part thereof shall absolutely
cease and terminate but Lessee shall remain liable as hereinafter provided
and thereupon (A) if so requested by Lessor, Lessee shall at its expense
promptly return the Aircraft to the possession of Lessor at such place as
Lessor shall designate and in the condition required upon the return
thereof pursuant to and in accordance with the terms of this Lease, (B)
Lessor, at its option, may enter upon the premises where the Aircraft is
located and take immediate possession of and remove the same, together with
any Engines and Parts by self-help, summary proceedings or otherwise
without any liability of any kind whatsoever on the part of Lessor for or
by reason of such entry or taking of possession and Lessee hereby waives
any cause of action it may have arising from, or in connection with, the
foregoing and/or (C) Lessee will provide storage as set forth in this
Lease. In addition, upon the written request of Lessor, Lessee, at its
expense, will replace any engine installed on the Airframe with an Engine.
Lessee shall, without further demand, forthwith pay to Lessor an amount
equal to any unpaid Rent due and payable for all periods up to and
including the Basic Rent Date following the date on which Lessor has
declared this Lease to be in default (plus all costs, charges and expenses
including, legal fees and disbursements incurred by Lessor and/or Secured
Party by reason of the occurrence of any Event of Default or the exercise
of any of Lessor's remedies with respect thereto or otherwise).
(iii) Demand and recover from Lessee the Liquidated Damages and other
Rent whenever the same shall be due. Without limiting the generality of the
foregoing, (A) upon the occurrence of an Event of Default, Lessor may,
among other things, demand and recover from Lessee the applicable
Liquidated Damages (in lieu of future Basic Rent, and not as a penalty) and
other Rent then due, and/or demand that Lessee return the Aircraft in
accordance with this Lease; and (B) if Lessee returns the Aircraft, and
after Lessor disposes of it, Lessor will determine the amount, if any, of
any credit or reimbursement or deficiency, as applicable, with respect to
its obligation to pay such Liquidated Damages (all as contemplated in the
definition of such term).
(b) If any Default or Event of Default occurs or if Lessee fails to perform
or comply with any of its agreements contained herein, Lessor shall have the
right, but shall not be obligated, to effect such performance or compliance and
the amount of any out-of-pocket expenses and other reasonable expenses of Lessor
or Secured Party incurred in connection with the performance of or compliance
with such agreements, as the case may be, together with interest thereon at the
Late Payment Rate, shall be payable by Lessee promptly upon demand, and any such
action by Lessor or Secured Party shall not be deemed a cure or waiver of any
Default or Event of Default hereunder. Without limiting the foregoing, Lessee
shall be liable for all costs, charges and expenses, including legal fees and
disbursements, incurred by Lessor or Secured Party by reason of the occurrence
of any Event of Default, the exercise of any of Lessor's rights or remedies with
respect thereto (whether by Lessor, or Secured Party, as collateral assignee
thereof) or otherwise.
(c) Lessee hereby waives, to the maximum extent now or hereafter permitted
by applicable law, for itself and for its successors or assigns any and all
rights Lessee or Lessee's successors or assigns may have following an Event of
Default under any bankruptcy, insolvency or similar laws, rules or regulations
with respect to the continued possession or use of the Aircraft or relief from
the payment of Rent therefor or otherwise with respect to this Lease. Rejection
of this Lease by any bankruptcy trustee or debtor-in-possession shall entitle
Lessor to the immediate return of the Aircraft and to the Liquidated Damages
calculated in the manner provided for in the definition of that term (as set
forth herein).
(d) No right or remedy referred to herein is intended to be exclusive, but
each shall be cumulative and in addition to any other right or remedy referred
to above or otherwise available to Lessor or Secured Party at law or in equity,
including, without limitation, such rights and/or remedies as are provided for
in the UCC. No express or implied waiver by Lessor or Secured Party of any
Default or Event of Default hereunder shall in any way be, or be construed to
be, a waiver of any future or subsequent Default or Event of Default. The
failure or delay of Lessor or Secured Party in exercising any rights granted it
hereunder upon the occurrence of any of the contingencies set forth herein shall
not constitute a waiver of any such right upon the continuation or reoccurrence
of any such contingencies or similar contingencies, and any single or partial
exercise of any particular right by Lessor or Secured Party shall not exhaust
the same or constitute a waiver of any other right provided for or otherwise
referred to herein. All remedies set forth herein shall survive the expiration
or other termination of this Lease for any reason whatsoever.
(e) To the extent permitted by applicable law, Lessee hereby waives any
rights now or hereafter conferred by statute or otherwise which may require
Lessor to sell, lease or otherwise use the Aircraft in mitigation of Lessor's
damages as set forth in this Section or which may otherwise limit or modify any
of Lessor's or Secured Party's rights or remedies under this Section. To the
extent permitted by applicable law, Lessee waives any and all rights and
remedies conferred upon a lessee by Section 2A-508 to 2A-522 (inclusive) of the
UCC, including, without limitation, any rights of Lessee (a) to cancel or
repudiate this Lease or any supplement or any document relating thereto, (b) to
reject or revoke acceptance of the Aircraft or any component thereof and (c) to
recover from Lessor or Secured Party any general or consequential damages, for
any reason whatsoever.
SECTION 15. Notices.
All communications and notices provided for herein shall be in writing and
shall become effective (i) upon hand delivery, (ii) upon delivery by an
overnight delivery service, (iii) upon two (2) Business Days after being
deposited in the United States mail with proper postage for first-class mail
prepaid, sent by registered or certified mail, return receipt requested, and
addressed to Lessor or Lessee at their respective addresses set forth under the
signatures hereto, or to Secured Party at its address in Section 15 of the Loan
Agreement, or such other address as any such party may hereafter designate by
written notice to the other or (iv) or when sent by telecopy (with customary
confirmation of receipt of such telecopy) on the Business Day when sent or upon
the next Business Day if sent on other than a Business Day.
SECTION 16. Transaction Expenses.
Lessee shall pay all actual and reasonable fees, costs and expenses
incurred by Lessor or Secured Party in connection with this Lease, whether or
not the transactions contemplated hereby are consummated, including, without
limitation, appraisal fees, inspection fees, Lessor's and Secured Party's
respective internal and external counsel fees and expenses and FAA Counsel fees
and expenses, and FAA and UCC title and lien searches, reports, filing and
recording fees, charges and taxes. Lessee also agrees to pay all fees and
expenses of Lessor's and Secured Party's respective counsels, FAA Counsels and
all other third parties who are engaged by Lessor or Secured Party to enforce
Lessor's or Secured Party's rights and/or remedies hereunder, to update any FAA
or UCC title and/or lien reports and/or to review, file and record any and all
documents and instruments as required by Lessor or Secured Party or the FAA
during and after the Term of this Lease.
SECTION 17. Miscellaneous.
Each of Lessee and Lessor hereby acknowledges and agrees that Secured Party
is an express third party beneficiary of all of the representations, warranties,
acknowledgments, agreements and indemnifications made herein for the direct
benefit of Secured Party, or for its benefit as collateral assignee thereof
pursuant to the Loan Agreement.
Any provision of this Lease which may be determined to be prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction. To the extent permitted by applicable law, Lessee hereby
waives any provision hereof prohibited or unenforceable in any respect.
This Lease may be executed in any number of counterparts and by each of the
parties hereto on separate counterparts, all such counterparts together
constituting but one and the same instrument, with the counterpart containing
the receipt therefore executed by Secured Party on or immediately following the
signature page thereof being deemed the "original executed counterpart" and all
other counterparts being deemed duplicates. The division of this Lease into
sections, the provision of a table of contents and the insertion of headings are
for convenience of reference only and shall not affect the construction or
interpretation of this Lease. The actual dates of execution hereof by the
parties hereto are respectively the dates set forth under the signatures hereto,
however this Lease shall be effective as of the date first above written.
In order to secure the prompt and full payment and performance as and when
due of any and all obligations and indebtedness of Lessee to Lessor, now
existing or hereafter created of any kind whatsoever, Lessee hereby grants and
conveys to Lessor, a security interest in and lien on all of Lessee's right,
title and interest in and to this Lease and any present and future subleases,
management agreements, interchange agreements, charter agreements and any other
present and future agreements of any kind whatsoever relating to the Aircraft or
any part thereof and any and all proceeds of any and all of the foregoing,
including insurance, goods, accounts, chattel paper, documents, instruments,
general intangibles, investment property, deposit accounts, letter of credit
rights and supporting obligations, and all present and future books and records
relating to any of the foregoing and/or the Aircraft (including, without
limitation, all tapes, cards, computer programs, computer runs and computer data
in the possession or control of the Lessee, any computer service bureau or other
third party); provided, however, that the foregoing grant of a security interest
and lien shall not of itself be a factor in determining whether this Lease is
one intended as security (or that this Lease is a grant of a security interest).
Notwithstanding anything to the contrary contained herein or otherwise, should a
court of competent jurisdiction determine that this Lease is one intended as
security (or that this Lease is a grant of a security interest), then solely in
that event and for the expressly limited purposes thereof, and in order to
secure the prompt and full payment and performance as and when due of any and
all obligations and indebtedness of Lessee to Lessor, now existing of hereafter
created of any kind whatsoever, Lessee shall be deemed to have hereby granted
and conveyed, and for such express purposes Lessee hereby grants and conveys to
Lessor, a security interest in and lien on the Aircraft, and all present and
future parts, accessories, accessions and attachments thereto, and all present
and future replacements, substitutions and exchanges (including trade-ins) for
such goods, together with proceeds of all the foregoing, including goods,
accounts, chattel paper, documents, instruments, general intangibles, investment
property, deposit accounts, letter of credit rights and supporting obligations,
and all of Lessee's rights in and to any of the foregoing. The security
interests and liens granted herein shall survive the termination, cancellation
or expiration of this Lease for any reason whatsoever and shall remain in full
force and effect until such time as Lessee has no further obligations of any
kind whatsoever under this Lease, and without limiting the generality of Section
12(b) of this Lease, each of Lessee and Lessor hereby acknowledges that Lessor's
rights under and with respect to each such grant has been collaterally assigned
to Secured Party pursuant to the Loan Agreement.
Lessee will promptly and duly execute and deliver to Lessor and Secured
Party, and any assignee of Secured Party, such other documents and assurances,
including, without limitation, such amendments to this Lease as may be
reasonably required by Lessor or Secured Party(and by any assignee of Secured
Party), and UCC financing statements and continuation statements and control
agreements, and will take such further action as Lessor and Secured Party, and
any assignee of Secured Party, may from time to time reasonably request in order
to carry out more effectively the intent and purposes of this Lease as specified
by the terms and conditions herein and to establish and protect the rights and
remedies created or intended to be created in favor of Lessor and Secured Party,
and any assignee of Secured Party. Lessee irrevocably authorizes Lessor or
Secured Party to file and record, and irrevocably appoints Lessor and Secured
Party (and any assignee of Secured Party), its attorney-in-fact to act in
Lessee's name and on its behalf (i) at any time to make, execute, deliver, file
and record any UCC financing statements or UCC amendments and to take any action
as Lessor or Secured Party (or any assignee of Secured Party) deems necessary or
appropriate to carry out the intent of this Lease or any agreements, documents
or instruments related thereto as to the execution, delivery, filing and/or
recording of any such UCC financing statements or UCC amendments, and (ii) upon
the occurrence of an Event of Default, to make, execute, deliver, file and
record any instruments or documents (other than any UCC financing statements or
UCC amendments which are authorized and permitted to be executed, delivered,
filed or recorded at any time pursuant to the terms of subclause (i) above) and
to take any other actions as Lessor or Secured Party (or any assignee of Secured
Party) deems necessary or appropriate to carry out the intent of this Lease or
any agreements, documents or instruments related thereto as to any instruments
or documents (other than any UCC financing statements or UCC amendments which
are authorized and permitted to be executed, delivered, filed or recorded at any
time pursuant to the terms of subclause (i) above). Lessee hereby further
irrevocably ratifies the foregoing authorization and appointment with regard to
the execution, delivery, filing and recording of any instrument or documents
(including, without limitation, any UCC financing statements or UCC amendments)
and the taking of any action as Lessor or Secured Party (or any assignee of
Secured Party) deems necessary or appropriate to carry out the intent of this
Lease or any agreements, documents or instruments related thereto. To the extent
appropriate or permissible under applicable law, such appointment is coupled
with an interest, shall be irrevocable and shall terminate only upon payment in
full of the obligations set forth in this Lease and/or any agreements, documents
or instruments related thereto. Lessee hereby further covenants and agrees that
it shall not file any corrective or termination statements with respect to any
UCC financing statements, amendments or assignments filed or recorded by or for
the benefit of Lessor with respect to the Aircraft or any other property or
collateral related to the Aircraft or this Lease or on behalf of the Lessor
without Lessor's and Secured Party's prior written consent. Lessee hereby
further agrees that any signature, execution and delivery of any document or
instrument may by satisfied, in Lessor's or Secured Party's (where applicable)
sole discretion and to the extent permitted by the UCC, by authentication of
such document or instrument as a record within the meaning of Article 9 of the
UCC.
Time is of the essence in the payment and performance of all of Lessee's
obligations under the Lease. For purposes of 49 USC Section 44108 (c), Lessor
and Lessee intend, by virtue of the Lessor having countersigned and accepted the
Lease in Connecticut and by virtue of this Lease being delivered for closing
purposes to Lessor in Connecticut, that this Lease has been executed and
delivered in Connecticut. In all respects, this Lease shall be governed by, and
construed in accordance with, the laws of the State of Connecticut, without
giving effect to principles of conflicts of law or choice of law, including all
matters of construction, validity and performance. Lessee hereby irrevocably
consents and agrees that any legal action, suit or proceeding arising out of or
in any way in connection with this Agreement may be instituted or brought in the
courts of the State of Connecticut or the United States District Court for the
District of Connecticut, as Lessor may elect, and by execution and delivery of
this Lease, Lessee hereby irrevocably accepts and submits to, for itself and in
respect of its property, generally and unconditionally, the non-exclusive
jurisdiction of any such court, and to all proceedings in such courts. To the
extent permitted by applicable law, this Lease shall be deemed a "finance lease"
under Section 2A-103(g) of the UCC. LESSEE ACKNOWLEDGES AND AGREES THAT THIS
LEASE IS A COMMERCIAL TRANSACTION. LESSOR AND LESSEE ALSO HEREBY KNOWINGLY AND
FREELY WAIVE ALL RIGHTS TO TRIAL BY JURY IN ANY LITIGATION ARISING HEREFROM OR
IN RELATION HERETO.
SECTION 18. Amendments.
This Lease, and each related instrument, document, agreement and
certificate, collectively constitute, and are intended to collectively
constitute, the complete and exclusive statement of the terms of the agreement
between Lessor and Lessee with respect to the purchase and leasing of the
Aircraft. The Lease cancels and supersedes any and all prior or contemporaneous
oral or written understandings, memoranda, negotiations, communications and
agreements with respect thereto including, without limitation, any proposal
letter, commitment letter and/or term sheet delivered to the Lessee by Lessor,
unless, with respect to any such written materials only, any term and/or
condition thereof expressly supersedes any term and/or condition of this Lease.
NO TERM OR PROVISION OF THIS LEASE MAY BE AMENDED, ALTERED, WAIVED,
DISCHARGED OR TERMINATED, EXCEPT IN A WRITING SIGNED BY A DULY AUTHORIZED
OFFICER OF THE PARTY AGAINST WHOM THE ENFORCEMENT OF THE AMENDMENT, ALTERATION,
WAIVER, DISCHARGE OR TERMINATION IS SOUGHT.
SECTION 19. Truth in Leasing.
LESSOR CERTIFIES THAT DURING THE 12 MONTHS PRECEDING THE EXECUTION OF THIS
LEASE, THE AIRCRAFT HAS BEEN MAINTAINED AND INSPECTED UNDER PART 91 OF THE FAR.
LESSEE CERTIFIES THAT THE AIRCRAFT WILL BE MAINTAINED AND INSPECTED UNDER PART
91 OF THE FAR FOR OPERATIONS TO BE CONDUCTED UNDER THE LEASE. UPON EXECUTION OF
THIS LEASE, AND DURING THE TERM HEREOF, THE LESSEE, WHOSENAME AND ADDRESS ARE
SET FORTH IMMEDIATELY BELOW, ACTING BY AND THROUGH THE SIGNATORY HERETO, WHO
EXECUTES THIS SECTION SOLELY IN HIS CAPACITY OF THE LESSEE SET FORTH BELOW HIS
SIGNATURE, CERTIFIES THAT LESSEE SHALL BE RESPONSIBLE FOR THE OPERATIONAL
CONTROL OF THE AIRCRAFT UNDER THE LEASE. LESSOR AND LESSEE FURTHER CERTIFY THAT
EACH UNDERSTANDS ITS RESPONSIBILITIES FOR COMPLIANCE WITH APPLICABLE FAR. AN
EXPLANATION OF FACTORS BEARING ON OPERATIONALC ONTROL AND PERTINENT FAR CAN BE
OBTAINED FROM THE NEAREST FEDERAL AVIATION ADMINISTRATION FLIGHT STANDARDS
DISTRICT OFFICE.
The execution hereof on behalf of Lessee and Lessor shall be deemed to
constitute the acceptance by Lessee and Lessor of the terms and conditions of
Exhibit A hereto and each and every Addendum set forth hereto as if each of such
Exhibit A and Addendum was separately and individually executed on behalf of
such party hereto.
[SIGNATURES ON NEXT PAGE]
IN WITNESS WHEREOF, the parties hereto have caused the Lease to be duly
executed by their respective officers thereunto duly authorized.
Lessor: Lessee:
VERDE CAPITAL CORPORATION DRIVETIME CREDIT CORPORATION
By: _________________________ By: __________________________
Title: Title: _________________________
Print Name: _________________ Print Name: ____________________
Date: _______________________ Date: __________________________
Address: ▇▇▇▇ ▇. ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇ Address: ▇▇▇▇ ▇. ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Receipt of the original executed counterpart of the foregoing Aircraft
Lease is hereby acknowledged on this __ day of October, 2002.
GENERAL ELECTRIC CAPITAL CORPORATION,
as Secured Party
By:
------------------------------------
Name:
Title:
EXHIBIT A
Definitions
(a) All References in the Lease to designated Sections and other
subdivisions are to such designated Sections and other subdivisions only, and
the words "herein," "hereof" and "hereunder" and other words of similar import
refer to the Lease as whole and not to any particular Section or other
subdivision.
(b) Except as otherwise indicated, all the agreements and instruments
defined herein or in the Lease shall mean such agreements and instruments as the
same may from time to time be supplemented or amended, or as the terms thereof
may be waived or modified to the extent permitted by, and in accordance with,
the terms thereof.
(c) The terms defined herein and in the Lease shall, for purposes of the
Lease and all Lease Supplements, Schedules and Exhibits thereto, have the
meanings assigned to them and shall include the plural as well as the singular
as the context requires.
(d) The following terms shall have the following meanings for all purposes
of the Lease:
Basic Rent Date, Daily Lease Rate, Expiration Date, First Basic Rent Date,
Last Basic Rent Date, Permitted Deductible, Primary Hangar Location, and Rent
Commencement Date shall have the meanings set forth in Schedules 2 and 2-A to
Lease Supplement No. 1 to the Lease.
Abatements shall have the meaning set forth in Section 7 of the Lease.
Acceptance Date shall mean the date (which date shall be no later than the
date designated as the "Last Acceptance Date" on Schedule No. 2 to Lease
Supplement No. 1) on which Lessee irrevocably and unconditionally accepts the
Aircraft for lease under the Lease as evidenced by the execution and delivery of
Lease Supplement No. 1 relating thereto dated such date.
Additions shall have the meaning set forth in the Maintenance and Return
Addendum hereto.
Adjusted Interest Rate shall have the meaning set forth on Schedule 2-A to
Lease Supplement No. 1.
Administrative Charge shall mean an amount equal to five percent (5%) of
the amount payable to which such charge applies.
Alterations shall have the meaning set forth in the Maintenance and Return
Addendum hereto.
Aircraft shall mean (i) the Airframe, (ii) the Engines, and (iii) to the
extent applicable, the Records, and all accessories, additions, accessions,
alterations, modifications, Parts, repairs and attachments now or hereafter
affixed thereto or used in connection therewith, and all replacements,
substitutions and exchanges (including trade-ins) for any of the foregoing..
Airframe shall mean (i) the Aircraft described in Schedule No. 1 to Lease
Supplement No. 1, and shall not include the Engines and (ii) any and all Parts
from time to time incorporated in, installed on or attached to such Aircraft and
any and all Parts removed therefrom so long as title thereto shall remain vested
in Lessor in accordance with the applicable terms of this Lease after removal
from the Aircraft.
Basic Rent shall have the meaning set forth in Section 3 of the Lease.
Basic Term shall mean the number of months set forth on Schedule No. 2 to
Lease Supplement No. 1.
Business Day shall mean any day other than a Saturday, Sunday or other day
on which banks located in Stamford, Connecticut are closed or are authorized to
close.
Casualty Value for any Basic Rent Date shall be the amount equal to the
Lessor's Cost multiplied by the factor set forth on Schedule No. 3 for such
Basic Rent Date except that, in the case of an Event of Loss covered by the
insurance covering loss or damage to the Aircraft required to be maintained by
Lessee pursuant to the Lease (or which would have been covered by such
insurance, had such insurance been maintained as required), Casualty Value shall
mean the higher of Fair Market Value or the amount equal to the Lessor's Cost
multiplied by the factor set forth on Schedule No. 3 to Lease Supplement No. 1.
Claims shall have the meaning set forth in Section 11 of the Lease.
Closing Documents shall mean the documents identified as such on Lease
Supplement No. 2 and such other documents as Lessor shall consider necessary or
advisable in order to convey to Lessor title to the Aircraft as contemplated
under the Lease, which documents shall be in form and substance satisfactory to
Lessor.
Default shall mean an event or circumstance which, after the giving of
notice or lapse of time, or both, would become an Event of Default.
Engine shall mean (i) each of the engines and, the auxiliary power unit
described and listed by manufacturer's serial numbers in Schedule No. 1 to Lease
Supplement No. 1 and currently installed on the Airframe covered by such Lease
Supplement, whether or not thereafter installed on such Airframe or any other
airframe from time to time; (ii) any engine and/or auxiliary power unit which
may from time to time be substituted, pursuant to the applicable terms of this
Lease, for an Engine leased hereunder and (iii) in each case set forth in
clauses (i) and (ii) hereof, with any and all Parts incorporated in or installed
on or attached to such Engine, engine and/or auxiliary power unit or any and all
Parts removed therefrom so long as Lessor shall retain an interest therein in
accordance with the applicable terms of this Lease after removal from such
Engine. The term "Engines" means, as of any date of determination, all Engines
leased hereunder.
Event of Default shall have the meaning set forth in Section 13 of the
Lease.
Event of Loss with respect to the Aircraft, the Airframe or any Engine
shall mean any of the following events with respect to such property (i) loss of
such property or the use thereof due to theft, disappearance, destruction,
damage beyond repair or rendition of such property permanently unfit for normal
use for any reason whatsoever; (ii) any damage to such property which results in
an insurance settlement with respect to such property on the basis of a total
loss or constructive total loss; (iii) the condemnation, confiscation or seizure
of, or requisition of title to or use of, such property by the act of any
government (foreign or domestic) or of any state or local authority or any
instrumentality or agency of the foregoing ("Requisition of Use"); (iv) as a
result of any rule, regulation, order or other action by any government (foreign
or domestic) or governmental body (including, without limitation, the FAA or any
similar foreign governmental body) having jurisdiction, the use of such property
shall have been prohibited, or such property shall have been declared unfit for
use, for a period of six (6) consecutive months, unless Lessee, prior to the
expiration of six-month period, shall have undertaken and, in the opinion of the
Lessor, shall be diligently carrying forward all steps which are necessary or
desirable to permit the normal use of such property by Lessee or, in any event,
if use shall have been prohibited, or such property shall have been declared
unfit for use, for a period of twelve (12) consecutive months; (v) with respect
to an Engine, the removal thereof from the Airframe for a period of six (6)
consecutive months or longer, whether or not such Engine is operational or (vi)
an Engine is returned to the Manufacturer, other than for modification in the
event of patent infringement or for repair or replacement (any such return being
herein referred to as a "Return to Manufacturer"). The date of such Event of
Loss shall be the date of such theft, disappearance, destruction, damage,
Requisition of Use, prohibition, unfitness for use for the stated period,
removal for the stated period or Return to Manufacturer. An Event of Loss with
respect to the Aircraft shall be deemed to have occurred if an Event of Loss
occurs with respect to the Airframe. An Event of Loss with respect to any Engine
shall not, without loss of the Airframe, be deemed an Event of Loss with respect
to the Aircraft.
FAA shall mean the United States Federal Aviation Administration and/or the
Administrator of the Federal Aviation Administration and the Department of
Transportation, or any person, governmental department, bureau, authority,
commission or agency succeeding the functions of any of the foregoing.
FAA Counsel shall mean McAfee & ▇▇▇▇, Two Leadership Square, Tenth Floor,
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, or such other counsel as
Lessor may designate.
FAR shall mean the regulations of the FAA contained in 14 CFR Parts 1
through 199.
Fair Market Value shall mean the amount which would be obtained in an arm's
length transaction between an informed and willing buyer-user or lessee, as the
case may be, (who is neither a lessee in possession nor a used equipment dealer)
and an informed and willing seller or lessor, as the case may be, under no
compulsion to sell or lease, as the case may be, and in such determination costs
of removal of the Aircraft from its then location shall not be a deduction from
such amount and it shall be assumed (whether or not the same be true) that the
Aircraft has been maintained in accordance with the provisions of this Lease and
would have been returned to Lessor in compliance with the requirements hereof.
Impositions shall have the meaning set forth in Section 8 of the Lease.
Late Payment Rate shall mean the lesser of a rate equal to 1.5% per month
or the highest rate permitted by applicable law. The Late Payment Rate shall be
computed on the basis of a 360 day year and a 30 day month.
Lease Documents shall mean the Lease, the Lease Guaranties and any and all
other instruments, documents and agreements now or hereafter executed and
delivered by Lessee, either Lease Guarantor or any other Person at any time in
connection with the Lease.
Lease Guaranties shall mean the Guaranties dated as of the date hereof, by
Lease Guarantors in favor of Lessor.
Lease Guarantors shall mean DriveTime Automotive Group, Inc., a Delaware
corporation, and DriveTime Sales And Finance Corporation, an Arizona
corporation.
Lease Supplement shall mean a supplement to the Lease to be entered into as
of the Acceptance Date by Lessor and Lessee, which supplement shall be
substantially in the form as attached to the Lease and identified as either
Lease Supplement No. 1 or Lease Supplement No. 2 both of which are attached to
the Lease and made a part thereof.
Lessor's Cost shall have the meaning set forth in Schedule No. 2 to Lease
Supplement No. 1 to the Lease.
Lessor's Liens shall mean any Liens created or granted by Lessor with
respect to Lessor's purchase or financing of the Aircraft or resulting from
claims against Lessor not related to Lessor's ownership of the Aircraft.
Lien of Secured Party shall mean that certain security interest, mortgage,
collateral assignment and other related rights and interests granted to Secured
Party with respect to the Lease, the Aircraft and other collateral under the
Loan Agreement.
Liens shall mean all liens, charges, security interests, and encumbrances
of every nature and description whatever, including, without limitation, liens,
charges, security interests and encumbrances with respect to Impositions, (other
than Lessor's Liens) and rights of third parties under management, pooling,
interchange, overhaul, repair or other similar agreements or arrangements.
Liquidated Damages shall mean the liquidated damages (which damages, Lessee
hereby acknowledges, are damages to be paid in lieu of future Basic Rent and are
reasonable in light of the anticipated harm arising by reason of an Event of
Default, and are not a penalty) in a stipulated amount calculated as the
Casualty Value of the Aircraft (determined as of the next Basic Rent Date after
the date of the occurrence of the subject Event of Default), together with all
other Rent due hereunder as of such determination date. If Lessor eventually
recovers and sells the Aircraft, any proceeds of such disposition by Lessor, to
the extent received in good and indefeasible funds, shall be applied by Lessor
(A) first, to pay all costs, charges and expenses, payable pursuant to Section
14, (B) second, to pay to Lessor an amount equal to any unpaid Rent due and
payable, together with the liquidated damage amounts specified herein, to the
extent not previously paid, (C) third, to pay to Lessor any interest accruing on
the amounts covered by the preceding clauses, at the Late Payment Rate, from and
after the date the same become due and payable pursuant to the terms hereof
through the date of payment, and (D) fourth, to reimburse Lessee for such
amounts to the extent paid by Lessee as liquidated damages pursuant hereto (up
to the amount of the Casualty Value calculated as provided herein). Any amount
remaining thereafter shall be retained by Lessor as owner of the Aircraft.
Lessor shall have no obligation to make any of the remittances to Lessee that
are contemplated in any part of this definition if Lessor has paid such amounts
to any guarantor or other Person having a right of subrogation with respect to
such amounts, or such guarantor or other Person has demanded the payment of such
amount.
Loan Agreement shall mean that certain Loan and Aircraft Security
Agreement, dated as of the Acceptance Date, together with all supplements and
attachments thereto, entered into between Secured Party and Lessor.
Loan Documents shall have the meaning set forth in Exhibit A of the Loan
Agreement.
Loan Event of Default shall mean each of the events described in Section 6
of the Loan Agreement as an "Event of Default".
Manufacturer shall mean the manufacturers identified on Schedule No. 1 to
Lease Supplement No. 1 to the Lease and their respective successors and assigns.
Operational Control shall have the meaning given to that term in Part 1 of
the FAR.
Parts shall mean all appliances, avionics, parts, instruments,
appurtenances, accessories, furnishings and other equipment of whatever nature
(other than additions or complete Engines) that may from time to time be
incorporated or installed in or attached to the Airframe or any Engine or any
and all such appliances, avionics, parts, instruments, appurtenances,
accessories, furnishings and other equipment removed therefrom so long as Lessor
or Secured Party shall retain an interest therein in accordance with the
applicable terms of this Lease after removal.
Permitted Liens shall mean (a) the respective rights of others under
agreements or arrangements to the extent expressly provided and permitted by the
terms of Section 12 of the Lease, (b) Lessor's Liens and (c) Liens for taxes
either not yet due or being contested by Lessee in good faith and inchoate
materialmen's, mechanic's, workmen's, repairmen's, employee's or other like
Liens arising in the ordinary course of business of Lessee for sums not yet
delinquent or being contested in good faith (and for the payment of which
adequate assurances and/or security have, in Lessor's sole judgment, been
provided to Lessor) with due diligence and by appropriate proceedings, if
counsel for Lessor shall have determined in its sole opinion that the nonpayment
of any such tax or Lien or the contest of any such payment in such proceedings
does not and will not adversely affect the title, property or rights of Lessor.
Person shall mean any individual, partnership, corporation, limited
liability company, trust, association, joint venture, joint stock company, or
non-incorporated organization or government or any department or agency thereof,
or any other entity of any kind whatsoever.
Pilot in Command shall have the meaning given that term in part 1 of the
FAR.
Records shall mean any and all logs, manuals, certificates and date and
inspection, modification, maintenance, engineering, technical and overhaul
records (including all computerized data, records and materials of any kind
whatsoever) with respect to the Aircraft, including, without limitation, all
records required to be maintained by the FAA or any other governmental agency or
authority having jurisdiction with respect to the Aircraft or any Manufacturer
or Supplier of the Aircraft (or any part thereof) with respect to the
enforcement of warranties or otherwise, which Records shall be at all times the
property of the Lessor after the Acceptance Date.
Rent shall have the meaning set forth in Section 3 of the Lease.
Requisition of Use shall have the meaning set forth in the Event of Loss
definition contained herein.
Return to Manufacturer shall have the meaning set forth in the Event of
Loss definition contained herein.
SEC shall mean the Securities and Exchange Commission.
Secured Note shall mean that certain Promissory Note executed and delivered
by Lessor to and in favor of Secured Party pursuant to the Loan Agreement.
Secured Party shall mean General Electric Capital Corporation, and its
successors and assigns.
Supplemental Rent shall have the meaning set forth in Section 3 of the
Lease.
Supplier shall mean the "Supplier" or "Suppliers", as the case may be,
identified as such on Schedule No. 1 to Lease Supplement No. 1 and their
respective successors and assigns.
Term shall mean the Basic Term together with the period, if any, from and
including the Acceptance Date through, but not including, the Rent Commencement
Date.
UCC shall mean the Uniform Commercial Code as in effect in the applicable
jurisdiction.
Warranty ▇▇▇▇ of Sale shall mean a warranty ▇▇▇▇ of sale as Lessor in its
sole discretion shall deem satisfactory.
LEASE SUPPLEMENT NO. 1
(Acceptance Certificate)
AIRCRAFT LEASE dated as of October __, 2002, (the "Lease") by and between
VERDE CAPITAL CORPORATION, as lessor ("Lessor"), and DRIVETIME CREDIT
CORPORATION, as lessee ("Lessee").
(a) The Aircraft.
Lessee hereby acknowledges, agrees and certifies that the Aircraft as set
forth and described in Schedule No. 1 hereto is in Lessee's possession, has been
inspected by Lessee to its complete satisfaction, has been found to be airworthy
and in good working order, repair and condition and fully equipped to operate as
required under applicable law for its purpose, is of a size, design, capacity
and manufacture selected by Lessee and suitable for Lessee's purposes, and is,
as of the date set forth below, unconditionally, irrevocably and fully accepted
by Lessee for lease under the Lease. Lessee hereby further unconditionally and
irrevocably reaffirms its acknowledgments and agreements in the Lease. All
capitalized terms used herein which are not otherwise defined herein shall have
the meanings given to such terms in the Lease.
(b) Representations by Lessee.
Lessee hereby represents and warrants to Lessor that on the date hereof:
(1) The representations and warranties of Lessee set forth in the
Lease and all certificates and opinions delivered in connection therewith
were true and correct in all respects when made and are true and correct as
of the date hereof, with the same force and effect as if the same had been
made on this date.
(2) Lessee has satisfied or complied with all conditions precedent and
requirements as set forth in the Lease and Lease Supplements which are
required to be or to have been satisfied or complied with on or prior to
the date thereof.
(3) No Default or Event of Default under the Lease has occurred and is
continuing on the date hereof.
(4) Lessee has obtained, and there are in full force and effect, such
insurance policies with respect to the Aircraft as are required to be
obtained under the terms of the Lease.
(5) Lessee has furnished no equipment for the Aircraft other than as
stated on Schedule No. 1 hereto or permitted as an Addition thereto
pursuant to the Lease.
(6) The facts, terms, information, description and costs set forth in
the attached Schedules ▇▇. ▇, ▇▇. ▇ and No. 2-A hereto are true, complete,
accurate and correct.
(7) The Lease shall be deemed a "finance lease" under Section 2A-103
(g) of the UCC.
Date of unconditional, irrevocable and final acceptance by Lessee:
________, 2002.
IN WITNESS WHEREOF, Lessee has caused this Lease Supplement No. 1 to be
duly executed by its officer thereunto duly authorized.
DRIVETIME CREDIT CORPORATION
By: _____________________
Title: __________________
Date: ___________________
SCHEDULE NO. 1
TO
LEASE SUPPLEMENT NO. 1
Description of Aircraft
1988 Canadair Ltd. Model CL-600-2B16 Challenger 601-3A aircraft which consists
of the following components:
(a) Airframe bearing FAA Registration ▇▇▇▇ N601NB and manufacturer's
serial number 5024.
(b) Two (2) General Electric CF34-3A engines bearing manufacturer's serial
numbers 350266 and 350280, (each of which has 750 or more rated
takeoff horsepower or the equivalent of such horsepower).
(c) Standard accessories and optional equipment and such other items
fitted or installed on the Aircraft and as may be more particularly
described hereinafter:
See Schedule A which is attached hereto and made a part hereof.
(d) Those items of Lessee furnished equipment described in a ▇▇▇▇ of sale
or bills of sale therefor (copies of which may be appended hereto),
delivered by Lessee to Lessor which constitute appliances and
equipment which will be installed on the Aircraft.
(e) One (1) ▇▇▇▇▇▇▇ GTCP 36-100E auxiliary power unit bearing
manufacturer's serial number P312.
Manufacturer of Airframe: Bombardier Aerospace Corporation
Manufacturer of Engines: General Electric
Supplier: G.M.C. Holdings, LLC
SCHEDULE A TO
SCHEDULE NO. 1 TO
LEASE SUPPLEMENT NO. 1
1988 CHALLENGER 601-3A
Reg. No. N601NB Serial No. 5024
SPECIFICATIONS October 1, 2002
o Airframe: 4138 Hours since New
o 3939 Landings
Engines:
2394 TSN. ....415 TSHOT (100% EMS)...3861 Time to O'haul (62% EMS)
4138 TSN...1490 TSHOT (100% EMS)...1192 Time to O'haul (38% EMS)
APU: ▇▇▇▇▇▇▇ GTCP 36-100E SNo. P312...2531 TSN...ON EMS Complete (100%)
Avionics:
o Dual ▇▇▇▇▇▇▇ VIR-22D Comms w/8.33 & FM Immunity
o Dual ▇▇▇▇▇▇▇ VHF-32 Navs
o Dual ▇▇▇▇▇▇▇ DME-42s
o Dual ▇▇▇▇▇▇▇ ADF-462s
o Dual ▇▇▇▇▇▇▇ TDR-94Ds
o Honeywell EDZ-800 EFIS
o Honeywell Primus 650 Color Radar
o Honeywell DFZ-800 Autopilot System
o Dual Honeywell AZ-810 Digital Airdata Computers
o Sundstrand CVR A100 and FDR F800
o Dual ▇▇▇▇▇▇▇ ▇▇ 9030s w/Dual Selcal
o Dual Honeywell Laseref II IRS'
o Dual Honeywell ▇▇ ▇▇▇▇ FMS'
o Dual Honeywell 12 Channel GPS'
o Honeywell TCAS 2000 w/Change 7
o Honeywell AFIS
o Allied Signal EGPWS
Features:
o RVSM, MNPS
o RNP 5, RNP 10
o Magnastar C-2000 Flite Fone
o Serpintine Blades
o 4200/600/300/100 Hour Inspections @ 4129.6 Total Time - September,
2002 by Gulfstream
o 6/12/36/60/180 Month Inspections @ 4129.6 Total Time - September, 2002
by Gulfstream
Interior:
10/12 Passenger interior with a forward four place club in charcoal leather, aft
two place club in black leather and a four place divan in cream/black fabric.
Second divan is interchangeable with two place club. Headliner & dado in cream
ultrasuede, 604 "S" galley, microwave, aft 604 lav. Flat screen tv, vcr, cd,
airshow 400. 1998 "8".
Exterior: Overall white w/royal blue and gold stripes 1997 "8".
SCHEDULE NO. 2
TO
LEASE SUPPLEMENT NO. 1
Financial Terms
---------------
Rent Commencement Date: November 1, 2002
Basic Rent Dates: 60 months commencing with the Rent Commencement Date
through and including the Expiration Date
Basic Rent Dates: the 1st day of each and every calendar month from and
including the First Basic Rent Date through and
including the Last Basic Rent Date
First Basic Rent Date: December 1, 2002
Last Basic Rent Date: November 1, 2007
Expiration Date November 1, 2007
Lessee's Exact Legal Name DriveTime Credit Corporation
Lessee's Organizational
Identification Number: ▇▇-▇▇▇▇▇▇▇
Lessee's Chief Executive Offices and Principal Place of 4020 E. Indian School Road
Business: Suite A
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Primary Hangar Location: Phoenix Sky Harbor International Airport
c/o Cutter Aviation
▇▇▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Acceptance Date: October __, 2002
Last Acceptance Date: October __, 2002
Date of Last Financial Statements: June 30, 2002
Lessor's Cost: $9,500,000.00
SCHEDULE NO. 2-A
TO
LEASE SUPPLEMENT NO. 1
Financial Terms (continued)
Daily Lease Rate: .036445%
Permitted Deductible: $0 per occurrence
Estimated Annual Hours: 500
Basic Rent: $150,000
Initials:
Lessee: _______
Lessor: _______
SCHEDULE NO. 2-A
TO
LEASE SUPPLEMENT NO. 1
(continued)
PAYMENT DATE PRINCIPAL INSTALLMENT
------------ ---------------------
10/30/2002 $ 0.00
11/1/2002 $ 0.00
12/1/2002 $ 64,601.44
1/1/2003 $ 64,868.47
2/1/2003 $ 65,136.58
3/1/2003 $ 65,405.82
4/1/2003 $ 65,676.16
5/1/2003 $ 65,947.62
6/1/2003 $ 66,220.21
7/1/2003 $ 66,493.91
8/1/2003 $ 66,768.76
9/1/2003 $ 67,044.74
10/1/2003 $ 67,321.85
11/1/2003 $ 67,600.12
12/1/2003 $ 67,879.53
1/1/2004 $ 68,160.10
2/1/2004 $ 68,441.82
3/1/2004 $ 68,724.72
4/1/2004 $ 69,008.79
5/1/2004 $ 69,294.02
6/1/2004 $ 69,580.43
7/1/2004 $ 69,868.03
8/1/2004 $ 70,156.83
9/1/2004 $ 70,446.80
10/1/2004 $ 70,737.98
11/1/2004 $ 71,030.37
12/1/2004 $ 71,323.96
1/1/2005 $ 71,618.76
2/1/2005 $ 71,914.79
3/1/2005 $ 72,212.04
4/1/2005 $ 72,510.51
5/1/2005 $ 72,810.22
6/1/2005 $ 73,111.17
7/1/2005 $ 73,413.37
8/1/2005 $ 73,716.81
9/1/2005 $ 74,021.50
10/1/2005 $ 74,327.46
11/1/2005 $ 74,634.67
12/1/2005 $ 74,943.17
1/1/2006 $ 75,252.94
2/1/2006 $ 75,563.98
3/1/2006 $ 75,876.31
4/1/2006 $ 76,189.93
5/1/2006 $ 76,504.85
6/1/2006 $ 76,821.07
7/1/2006 $ 77,138.60
8/1/2006 $ 77,457.43
9/1/2006 $ 77,777.60
10/1/2006 $ 78,099.07
11/1/2006 $ 78,421.89
12/1/2006 $ 78,746.03
1/1/2007 $ 79,071.51
2/1/2007 $ 79,398.34
3/1/2007 $ 79,726.52
4/1/2007 $ 80,056.06
5/1/2007 $ 80,386.95
6/1/2007 $ 80,719.22
7/1/2007 $ 81,052.86
8/1/2007 $ 81,387.88
9/1/2007 $ 81,724.29
10/1/2007 $ 82,062.07
11/1/2007 $5,193,591.07
RENEWAL TERM
PAYMENT DATE PRINCIPAL INSTALLMENT
------------ ---------------------
12/1/2007 $ 84,120.86
1/1/2008 $ 84,445.86
2/1/2008 $ 84,772.12
3/1/2008 $ 85,099.64
4/1/2008 $ 85,428.42
5/1/2008 $ 85,758.48
6/1/2008 $ 86,089.80
7/1/2008 $ 86,422.41
8/1/2008 $ 86,756.31
9/1/2008 $ 87,091.49
10/1/2008 $ 87,427.98
11/1/2008 $ 87,765.75
12/1/2008 $ 88,104.83
1/1/2009 $ 88,445.23
2/1/2009 $ 88,786.94
3/1/2009 $ 89,129.96
4/1/2009 $ 89,474.33
5/1/2009 $ 89,820.00
6/1/2009 $ 90,167.03
7/1/2009 $ 90,515.39
8/1/2009 $ 90,865.10
9/1/2009 $ 91,216.15
10/1/2009 $ 91,568.57
11/1/2009 $ ,091,922.35
Initials:
Lessee: _________
Lessor: _________
SCHEDULE NO. 3 TO LEASE
SUPPLEMENT NO. 1
CASUALTY VALUES
The Casualty Value of the Aircraft for any Basic Rent Date shall be an
amount equal to the Lessor's Cost multiplied by the factor set forth opposite
the rental payment number due on such Basic Rent Date. Upon the exercise of any
option to renew the Term by Lessee, Lessor shall provide to Lessee a new
Schedule No. 3 to Lease Supplement No. 1 setting forth the Casualty Values for
the Renewal Term.
BASIC BASIC
RENT CASUALTY RENT CASUALTY
DATE VALUE DATE VALUE
------ ---------- ---------- ----------
Dec-02 106.222 Jun-05 83.009
Jan-03 105.490 Jul-05 82.188
Feb-03 104.756 Aug-05 81.363
Mar-03 104.019 Sep-05 80.536
Apr-03 103.280 Oct-05 79.705
May-03 102.537 Nov-05 78.871
Jun-03 101.792 Dec-05 78.034
Jul-03 101.043 Jan-06 77.193
Aug-03 100.292 Feb-06 76.349
Sep-03 99.538 Mar-06 75.502
Oct-03 98.781 Apr-06 74.652
Nov-03 98.021 May-06 73.798
Dec-03 97.258 Jun-06 72.941
Jan-04 96.492 Jul-06 72.081
Feb-04 95.723 Aug-06 71.217
Mar-04 94.952 Sep-06 70.350
Apr-04 94.177 Oct-06 69.479
May-04 93.399 Nov-06 68.606
Jun-04 92.618 Dec-06 67.728
Jul-04 91.834 Jan-07 66.848
Aug-04 91.048 Feb-07 65.963
Sep-04 90.258 Mar-07 65.076
Oct-04 89.465 Apr-07 64.185
Nov-04 88.669 May-07 63.290
Dec-04 87.869 Jun-07 62.392
Jan-05 87.067 Jul-07 61.491
Feb-05 86.262 Aug-07 60.585
Mar-05 85.453 Sep-07 59.677
Apr-05 84.642 Oct-07 58.765
May-05 83.827 Nov-07 57.850
Initials:
Lessee: _________
Lessor: _________
RENEWAL TERM
The Casualty Value of the Aircraft for any Basic Rent Date shall be an amount
equal to the $5,111,195.00 multiplied by the factor set forth opposite the
rental payment number due on such Basic Rent Date. Upon the exercise of any
option to renew the Term by Lessee, Lessor shall provide to Lessee a new
Schedule No. 3 to Lease Supplement No. 1 setting forth the Casualty Values for
the Renewal Term.
BASIC BASIC
RENT CASUALTY RENT CASUALTY
DATE VALUE DATE VALUE
---- ---------- ---------- ----------
Dec-07 105.114
Jan-08 103.342
Feb-08 101.563
Mar-08 99.778
Apr-08 97.987
May-08 96.189
Jun-08 94.385
Jul-08 92.574
Aug-08 90.757
Sep-08 88.933
Oct-08 87.102
Nov-08 85.265
Dec-09 83.421
Jan-09 81.571
Feb-09 79.714
Mar-09 77.850
Apr-09 75.979
May-09 74.102
Jun-09 72.218
Jul-09 70.327
Aug-09 68.429
Sep-09 66.525
Oct-09 64.613
Nov-09 62.700
Initials:
Lessee: _________
Lessor: _________
LEASE SUPPLEMENT NO. 2
(Closing Terms)
AIRCRAFT LEASE dated as of October __, 2002, (the "Lease") by and between
VERDE CAPITAL CORPORATION, as lessor ("Lessor"), and DRIVETIME CREDIT
CORPORATION, as lessee ("Lessee"). All capitalized terms used herein which are
not otherwise defined herein shall have the meanings given to such terms in the
Lease.
Aircraft Documents:
On or prior to the Acceptance Date, the following Aircraft Documents have
been delivered to Secured Party or Lessor, as determined by Secured Party:
1. A copy of the Standard Airworthiness Certificate (FAA Form 8100-2)
issued by the FAA for the Aircraft.
2. Certificates, executed by the secretary or other authorized
representative for each of the Lessee and Lease Guarantors certifying: (A) that
execution, delivery and performance of this Lease, the Lease Guaranties, and all
ancillary documentation and the entrance by Lessee and Lease Guarantors into the
transactions contemplated hereby and thereby have been authorized and (B) the
names of the persons authorized to execute and deliver such documents on behalf
of Lessee and Lease Guarantors, as applicable, together with specimen signatures
of such person.
3. A certificate of insurance as to the coverage required under the Lease
accompanied, if requested by Lessor or Secured Party, by the applicable policies
and reports of insurance brokers or underwriters pursuant thereto as to the
conformity of such coverage with such requirements.
4. Evidence that FAA Counsel has received in escrow: (A) such documents as
are necessary, in the opinion of Lessor's or Secured Party's counsel and/or FAA
Counsel to vest good title to the Aircraft in the name of Lessor, and to perfect
and give first priority to the Lien of Secured Party and (B) executed duplicates
of the Lease, all Riders hereto requiring separate execution, and Lease
Supplements No. 1 and 2, all the foregoing (except for the Warranty ▇▇▇▇ of
Sale) being in proper form for filing with the FAA.
5. UCC financing statements executed by Lessee, with respect to the
Aircraft and the Collateral (and, where needed, assignment, release and/or
termination statements with respect to UCC financing statements of record
evidencing an interest in the Aircraft and/or Collateral) in all places which
are, in Lessor's or Secured Party's opinion, necessary or appropriate to protect
Lessor's interest therein.
6. An opinion of FAA Counsel satisfactory to Lessor and to Secured Party
that title to the Airframe is vested in Lessor, Secured Party has a valid and
perfected interest in the Lease and the Aircraft and other collateral securing
the Indebtedness and that the Aircraft (including, without limitation the
Airframe and Engines) is free and clear of all other liens and encumbrances of
record.
7. If requested by Lessor or Secured Party, an opinion of counsel for each
of Lessee and Lease Guarantors in form and substance satisfactory to such
requesting party.
8. If requested by Lessor or Secured Party, certificates of good standing
for Lessee and Lease Guarantors from the states of their organization and the
states where the Primary Hangar Location, chief executive offices and principal
places of business of Lessee and Lease Guarantors are located.
9. The Lease Guaranties duly executed by the Lease Guarantors.
10. Such other documents, certificates and opinions, and evidence of such
other matters, as Lessor, Secured Party, Lessor's or Secured Party's respective
counsels or FAA Counsel may reasonably request.
Conditions Subsequent:
On or subsequent to the Acceptance Date, but not later than the date of the
Aircraft's first flight under the leasehold conveyed herein, Lessee shall
provide written confirmation to Lessor that copies of the Registration
Application and Standard Airworthiness Certificate (FAA Form AC 8100-2)
pertaining to the Aircraft have been properly placed on the Aircraft.
In addition, if the Aircraft is more than 12,500 pounds maximum
certificated takeoff weight, prior to the date of the Aircraft's first flight
under the Lease, Lessee shall provide Lessor with written confirmation that:
1. a copy of the Lease, including Lease Supplements No. 1 and No. 2, has
been properly placed on the Aircraft;
2. a copy of the Lease, including Lease Supplements No. 1 and No. 2
thereto, was mailed, within 24 hours following execution thereof, to the Flight
Standards Technical Division of the FAA; and
3. Lessee has notified the FAA (such notification to have been given by
facsimile transmission, telephone or in person to the FAA Flight Standards
District Office nearest the airport where such flight will originate) concerning
the first flight of the Aircraft under this Lease at least 48 hours prior to
takeoff.
IN WITNESS WHEREOF, effective as of October __, 2002, the parties hereto
have each caused this Lease Supplement No. 2 to be duly executed by their
respective officers, thereunto duly authorized.
VERDE CAPITAL CORPORATION
By: _________________________
Name: _______________________
Title: Banking Officer
DRIVETIME CREDIT CORPORATION
By: _________________________
Name: _______________________
Title: ______________________
Special Tax Indemnity Rider ("Tax Rider") to Aircraft Lease (N610NB) dated as of
October __, 2002, (the "Lease") by and between Verde Capital Corporation, as
lessor ("Lessor"), and DriveTime Credit Corporation, as lessee ("Lessee").
All capitalized terms used herein which are not otherwise defined herein
shall have the meanings given to such terms in the Lease. Upon execution and
delivery hereof, this Tax Rider shall be deemed to be a part of the Lease.
Except as set forth herein, all of the terms and conditions of the Lease and any
supplements, schedules, addenda, exhibits or the like entered into pursuant to
the Lease remain in full force and effect.
For good and valuable consideration, the receipt of which is hereby
acknowledged, the parties hereto hereby agree to amend the Lease by the addition
of the following provisions:
(a) Assumed Tax Benefits. In entering into the Lease and the transactions
contemplated thereby, Lessor has assumed that it would be entitled, for Federal,
state and local income tax purposes, to the tax benefits set forth in paragraph
(f) below (collectively referred to as the "Assumed Tax Benefits"). Lessor has
also assumed that its income would be taxed for Federal, state and local
corporate income and franchise tax purposes at an effective combined tax rate of
__________% (the "Assumed Tax Rate").
(b) Lessee's Tax Representations and Warranties. Lessee represents and
warrants to Lessor that upon delivery and acceptance of the Aircraft under the
Lease and throughout the Term, the Aircraft will qualify for the Assumed Tax
Benefits in the hands of Lessor and Lessee and each member of any group of
corporations with which Lessee files consolidated, combined or unitary income or
franchise tax returns will file such returns, execute such documents and take
such other action as the Lease may require or Lessor may reasonably request to
facilitate the realization by Lessor of the assumptions stated in this Tax
Rider.
(c) Indemnity. If
(A) by reason of (i) any act or failure to act of Lessee (regardless
of whether any such act or failure to act is permitted or
required by the terms of the Lease or otherwise) or (ii) the
breach of or inaccuracy in law or in fact of any of Lessee's
representations and warranties set forth in paragraph (b) of this
Tax Rider or the breach of any of Lessee's representations and
warranties set forth in the Lease, any certificate or document
delivered by Lessee in connection with the delivery and
acceptance of the Aircraft;
(B) for Federal, foreign, state or local income tax purposes, any
item of income, loss or deduction with respect to the Aircraft is
treated as derived from, or allocable to, sources outside the
United States (whether or not any foreign income taxes imposed as
a result thereof may be credited against Federal, state or local
income taxes of Lessor);
(C) there shall be included in Lessor's gross income for Federal,
state or local income tax purposes any amount on account of any
addition, modification or improvement to or in respect of the
Aircraft made or paid for by Lessee;
(D) there shall be included in Lessor's gross income for Federal,
state or local income tax purposes any amount in respect of Rent
before such Rent has accrued under the terms of the Lease or
(E) as a result of any change in the Code or the regulations
promulgated thereunder or any administrative or judicial
interpretations thereof, including, without limitation, a change
in one or more of the marginal tax rates taken into account in
computing the Assumed Tax Rate, a change in any state tax law,
the regulations promulgated thereunder or any administrative or
judicial interpretations thereof,
Lessor shall lose, shall not have the right to claim or shall suffer a
disallowance or recapture with respect to, or shall receive a lower than
anticipated economic benefit from, all or a portion of the Assumed Tax Benefits
with respect to the Aircraft (any such loss, failure to have or loss of the
right to claim, disallowance, recapture, delay, treatment, inclusion or economic
detriment referred to in any of the foregoing clauses (A) through (E) of this
paragraph (c) being hereinafter called a "Tax Loss"); Lessee shall pay to Lessor
at Lessor's option either: (i) an amount or amounts that, after reduction by the
net amount of all Federal, state and local taxes required to be paid by Lessor
with respect to the receipt of such amount or amounts, equals the aggregate
additional Federal, state and local income taxes payable by Lessor as a result
of such Tax Loss plus an amount equal to any interest, fines, additions to tax
or penalties as a result of such Tax Loss or (ii) additional Rent on each Basic
Rent Date in such amounts as are necessary to maintain Lessor's after-tax
economic yield and overall net after-tax cash flow. The amount payable by Lessor
with respect to a Tax Loss shall be calculated with the assumption that Lessor
is subject to Federal, state and local tax at the Assumed Tax Rate. In the event
any indemnity payments shall be paid to Lessor under this Tax Rider with respect
to the Aircraft, the Casualty Value, Upgrade Option Amount, Early Purchase
Option Amount and/or Termination Amount, if applicable, of the Aircraft shall be
adjusted appropriately.
(d) Consolidated Tax Returns; Lessor's Assigns. For purposes of this Tax
Rider, the term "Lessor" will include the corporation constituting Lessor, its
successors in interest, each assignee and each of their respective successors in
interest and assigns and any Consolidated Group (hereinafter defined) of which
Lessor or any such assignee or any of their respective successors in interest or
assigns is, or may become a member, and each member of such Consolidated Group
and the term "Consolidated Group" means an affiliated group (within the meaning
of Section 1504 of the Code) that files consolidated returns for Federal income
tax purposes and any group filing combined, unitary or consolidated returns
pursuant to the rules of any state taxing authority.
(e) Miscellaneous. The indemnification obligations of Lessee under this Tax
Rider shall survive the expiration, cancellation or termination of the Lease and
the Term and shall remain in full force and effect until such time as Lessee has
no further obligations of any kind whatsoever under the Lease. Provided that
Lessee performs its indemnification obligations under this Tax Rider in a timely
manner, Lessor shall have no additional remedies with respect to the occurrence
of a Tax Loss.
(f) Assumed Tax Benefits. For purposes of this Tax Rider, the term "Assumed
Tax Benefits" shall mean the following:
Cost Recovery Deductions:
A. Depreciation Method: (commencing in Lessor's taxable year which
includes the Acceptance Date) 200% declining balance method,
switching to straight line method for the first taxable year for
which using the straight line method with respect to the adjusted
basis as of the beginning of such year would yield a larger
allowance.
B. Recovery Period: five years
C. Basis: 100% of Lessor's Cost.
(g) Additional Definitions. For purposes of this Tax Rider the term "Code"
shall mean the Internal Revenue Code of 1986, as amended.
(SIGNATURES ON NEXT PAGE)
IN WITNESS WHEREOF, the parties hereto have each caused this Tax Rider
to be duly executed by their respective officers, thereunto duly authorized.
VERDE CAPITAL CORPORATION
By: __________________________
Name: ________________________
Title: Banking Officer
Date: _________________________
DRIVETIME CREDIT CORPORATION
By: ___________________________
Name: _________________________
Title: __________________________
Insurance Addendum ("Insurance Addendum") to Aircraft Lease (N610NB) dated as of
October __, 2002, (the "Lease") by and between Verde Capital Corporation, as
lessor ("Lessor"), and DriveTime Credit Corporation, as lessee ("Lessee").
All capitalized terms used herein which are not otherwise defined herein
shall have the meanings given to such terms in the Lease. Except as set forth
herein, all of the terms and conditions of the Lease and any supplements,
schedules, addenda, exhibits or the like entered into pursuant to the Lease
remain in full force and effect. Execution of the Lease by Lessee and Lessor
shall be deemed to constitute execution and acceptance of the terms and
conditions hereof, whereupon this Insurance Addendum shall be deemed to be a
part of the Lease.
The following provisions are hereby incorporated into the Lease:
Insurance.
(a) Lessee agrees to maintain at all times, at its own cost and expense,
with insurers of recognized responsibility reasonably satisfactory to Lessor and
Secured Party (but in no event having an A.M. Best or comparable agency rating
of less than "A-"):
(i) (A) comprehensive aircraft and general liability insurance against
bodily injury or property damage claims including, without limitation,
contractual liability, premises damage, public liability, death and
property damage liability, public and passenger legal liability coverage,
and sudden accident pollution coverage, in an amount not less than
$100,000,000.00 for each single occurrence, (B) personal injury liability
in an amount not less than $25,000,000.00, and (C) such other property
damage insurance (exclusive of manufacturer's product liability insurance)
with respect to the Aircraft as is of the type and in the amounts usually
carried by companies engaged in the same or a similar business as Lessee,
similarly situated with Lessee, and owning or operating similar aircraft
and engines, and that covers risks of the kind customarily insured against
by such companies,
(ii) "all-risk" ground, taxing and flight hull insurance covering the
Aircraft, including foreign object damage, fire and explosion coverage
resulting from a collision, cargo, environmental (limited to pollutants
released because of a crash or collision of the Aircraft or related to an
emergency causing abnormal operation of the Aircraft), damages resulting,
from ingestion and lightning and associated electrical damage and
comparable insurance with respect to any Engines or Parts while removed
from the Aircraft, and with respect to any engines or parts while
temporarily installed on the Aircraft, provided that such insurance shall
at all times be in an amount not less than the Casualty Value of the
Aircraft (such amount determined at the Rent Commencement Date and at each
anniversary thereof for the next succeeding year throughout the Term).
(iii) war risk and allied perils (including confiscation,
appropriation, expropriation, terrorism and hijacking insurance) in the
amounts required in paragraphs (i) and (ii), as applicable; provided,
however, so long as war risk coverage with respect to the risks covered by
paragraph (i) is not commercially available for the full amount required in
paragraph (i), Lessee may obtain war risk coverage with respect to such
risks covered in paragraph (i) in an amount that is no less than
$50,000,000.00.
(b) Lessor and Secured Party as Additional Insureds; Notice. Any policies
of insurance carried in accordance with this Insurance Addendum and any policies
taken out in substitution or replacement of any such policies (i) shall be
amended to name Lessor as the owner of the Aircraft and Lessor and Secured Party
as additional insureds as their respective interests may appear(but without
responsibility for premiums), (ii) with respect to insurance carried in
accordance with paragraphs (a)(i) and (ii) of this Insurance Addendum covering
the Aircraft, shall provide that any amount payable thereunder shall be paid
directly to Lessor as sole loss payee thereof (except that so long as the
Secured Note is outstanding and the Lien of the Loan Agreement has not been
discharged, Lessor hereby irrevocably directs, and the Lessee agrees, that any
and all amounts payable under the policies required by this Insurance Addendum
shall be paid directly to the Secured Party, as sole loss payee, and not to
Lessor or Lessee jointly, or otherwise; and, so long as no Event of Default has
occurred, such amounts shall be disbursed by Lessor to Lessee or other
appropriate Persons in payment of the costs actually incurred with respect to
repairs made to the Aircraft so as to restore it to the operating condition
required by the M&R Addendum, or shall be disbursed by Lessor as otherwise
required by the Lease), (iii) shall provide for thirty (30) days written notice
by such insurer of cancellation, change, non-renewal or reduction, (iv) shall
include a severability of interest clause providing that such policy shall
operate in the same manner as if there were a separate policy covering each
insured, (v) waive any right of set-off against Lessee, Lessor or Secured Party,
and any rights of subrogation against Lessor or Secured Party, (vi) shall
provide that in respect of the interests of Lessor or Secured Party in such
policies, the insurance shall not be invalidated by any action or inaction of
Lessee or any other Person operating or in possession of the Aircraft regardless
of any breach or violation of any warranties, declarations or conditions
contained in such policies by or binding upon Lessee or any other Person
operating or in possession of the Aircraft, and (vii) shall be primary, not
subject to any co-insurance clause and shall be without right of contribution
from any other insurance. All of the coverages required in this Insurance
Addendum shall be in full force and effect worldwide throughout any geographical
areas to, in, or over which the Aircraft is operated. Lessee agrees that it
shall obtain and maintain such other insurance coverages, or cause adjustments
to be made to the scope, amount or other aspects of the existing insurance
coverages, promptly upon Secured Party's request, as and when Secured Party
deems such additional insurance coverages or modifications to be appropriate in
light of any changes in Applicable Law, prudent industry practices, the
insurance market, Lessee's anticipated use of the Aircraft or other pertinent
circumstances. Lessee shall arrange for appropriate certification as to the
satisfaction of the requirements set forth above in this Insurance Addendum to
be delivered to Lessor and Secured Party not later than the Acceptance Date by
each such insurer or underwriter therefor, which certification shall
specifically acknowledge that the insurance is in conformity with this Insurance
Addendum. Notwithstanding the foregoing, Lessee shall promptly provide Lessor
and Secured Party with a copy of each policy of insurance required hereunder if
it so requests.
(d) Reports, etc. Annually on the anniversary of the Acceptance Date,
Lessee shall furnish to Lessor and Secured Party an insurance certificate
evidencing that Lessee has obtained the insurance coverages required hereby for
the twelve (12) month period commencing from and after such anniversary date,
and if Lessor or Secured Party shall so request, a copy of each applicable
policy. Lessee will also advise Lessor and Secured Party in writing at least
thirty (30) days prior to the expiration or termination date of any insurance
carried and maintained on or with respect to the Aircraft pursuant to this
Section. In the event Lessee shall fail to maintain insurance as herein
provided, Lessor or Secured Party may, at its option, provide such insurance,
and Lessee shall, upon demand, reimburse such party for the cost thereof,
together with interest at the Late Payment Rate from the date of payment through
the date of reimbursement.
(e) Agreed Value. Anything herein to the contrary notwithstanding, at all
times while the Aircraft is subject to this Lease, the insurance required
hereunder shall be for an amount on an "agreed value" basis not less than the
Casualty Value.
(f) No Right To Self-Insure. Lessee shall not self-insure (by deductible,
premium adjustment, or risk retention arrangement of any kind) the insurance
required to be maintained hereunder. Lessee agrees to give Lessor and Secured
Party prompt notice of any damage to or loss of, the Aircraft, or any part
thereof.
(g) Attorney-in Fact. Effective upon the occurrence of an Event of Default
or Default, Lessee irrevocably appoints Secured Party (and any assignee), its
attorney-in-fact to act in Lessee's name and on its behalf to make, execute,
deliver and file any instruments or documents, settle, adjust, receive payment,
make claim or proof of loss, endorse Lessee's name on any checks, drafts or
other instruments in payment of such claims and to take any action as Secured
Party (and any such assignee) deems necessary or appropriate to carry out the
intent of this Insurance Addendum or any agreements, documents or instruments
related thereto and to endorse Lessee's name on any checks, drafts or other
instruments in payment of claims. To the extent appropriate or permissible under
applicable law, such appointment is coupled with an interest, shall be
irrevocable and shall terminate only upon payment in full of the obligations set
forth in this Lease and/or any agreements, documents or instruments related
thereto.
Maintenance and Return Addendum ("M&R Addendum") to Aircraft Lease (N601NB)
dated as of October __, 2002, (the "Lease") by and between Verde Capital
Corporation, as lessor ("Lessor"), and DriveTime Credit Corporation, as lessee
("Lessee").
All capitalized terms used herein which are not otherwise defined herein
shall have the meanings given to such terms in the Lease. Except as set forth
herein, all of the terms and conditions of the Lease and any supplements,
schedules, addenda, exhibits or the like entered into pursuant to the Lease
remain in full force and effect. Execution of the Lease by Lessee and Lessor
shall be deemed to constitute execution and acceptance of the terms and
conditions hereof, whereupon this M&R Addendum shall be deemed to be a part of
the Lease.
The following provisions are hereby incorporated into the Lease:
I. Maintenance of Aircraft.
(a) Maintenance and Operation. During the Term, Lessee, at its own cost and
expense, shall (i) maintain, inspect, service, repair, overhaul and test the
Airframe and each Engine in accordance with the FAR, FAA-approved Instructions
for Continued Airworthiness, and the Manufacturers' recommended inspection and
maintenance programs; (ii) maintain (in the English language) all Records and
(iii) promptly furnish to Lessor such information as may be required to enable
Lessor to file any reports required by any governmental authority as a result of
Lessor's ownership of the Aircraft. All maintenance procedures shall be
performed in accordance with all FAA and Manufacturer's standards and procedures
by properly trained, U.S. licensed, and certified maintenance sources and
maintenance personnel utilizing replacement parts approved by the FAA or the
Manufacturer, so as to keep the Airframe and each Engine and Part in good
operating condition, ordinary wear and tear alone excepted, and to enable the
airworthiness certificate for the Aircraft to be continually maintained.
In the event any Engine is damaged or is being inspected or overhauled and
provided no Event of Default or Default has occurred and is continuing, Lessee,
at its option, may substitute another engine of the same make and model as the
Engine being repaired or overhauled provided such Engine is approved by the FAA
and the manufacturer of the Airframe for use on the Aircraft (any such
substitute engine being hereinafter referred to as a "Loaner Engine") during the
period of such repair or overhaul and provided further (x) installation of the
Loaner Engine is performed by an FAA certificated and manufacturer designated
maintenance facility or mechanic with respect to an aircraft of the type of the
Aircraft, (y) the Loaner Engine is removed and the repaired or overhauled
original Engine is reinstalled on the Airframe promptly upon completion of the
repair or overhaul of the original Engine but in no event later than the
expiration, cancellation or earlier termination of the Term and (z) the Loaner
Engine is free and clear of all Liens and is maintained in accordance herewith.
(b) Additions, Alterations and Replacement Parts. Lessee shall be entitled
from time to time during the Term to acquire and install on the Aircraft at
Lessee's own cost and expense (and Lessor hereby appoints Lessee to be Lessor's
agent for such purpose, so long as no Event of Default or Default has occurred
and is continuing), any additional accessory, device or equipment as may be
available at such time ("Additions") but only so long as such Additions (i) are
ancillary to the Aircraft; (ii) are not required to render the Aircraft complete
for its intended use by Lessee; (iii) will not impair the originally intended
function or use of the Aircraft or diminish the value of the same; (iv) can be
readily removed without causing material damage to the Aircraft and (v) in the
event that Lessee has executed a Special Tax Indemnity Rider to the Lease, do
not result in a "Tax Loss" as such term is defined in such Special Tax Indemnity
Rider. All such additions shall become part of the Aircraft and shall be subject
to the provisions of this Lease throughout t the Term. Title to each Addition
which is not removed by Lessee prior to the return of the Aircraft to Lessor
shall vest in Lessor upon such return and, so long as the Indebtedness remains
outstanding, subject to the Lien of the Secured Party.
Any alteration or modification ("Alterations") with respect to the Aircraft
that may at any time during the Term be required to comply with any applicable
law or any governmental rule or regulation, including, without limitation, any
airworthiness directives, shall be made at the expense of Lessee. All such
Alterations so made will become part of the Aircraft, the property of Lessor,
and subject to the terms of this Lease.
Lessee, at its own cost and expense, will promptly replace all Parts which
may from time to time become worn out, lost, stolen, taken, destroyed, seized,
confiscated, requisitioned, damaged beyond repair or permanently rendered or
declared unfit for use for any reason whatsoever.
Lessee shall repair all damage to the Aircraft resulting from the
installation and removal of Additions, Alterations and/or replacement parts so
as to restore the Aircraft to its condition prior to installation, ordinary wear
and tear excepted.
Alterations and/or replacement parts shall be deemed accessions, and title
thereto shall be immediately vested in Lessor, and so long as the Indebtedness
remains outstanding, subject to the Lien of the Secured Party, without cost or
expense to Lessor or Secured Party.
(c) Aircraft Marking. Lessee agrees, at its own cost and expense, to (i)
cause the Airframe and the Engines to be kept numbered with the identification
or serial number therefor as specified in Schedule No. 1 to Lease Supplement No.
1 hereof; (ii) prominently display on the Aircraft that "N" number, and only
that "N" number, specified in Schedule No. 1 to Lease Supplement No. 1 or such
other "N" number as has been approved in writing by the Lessor and duly recorded
with the FAA; (iii) notify Lessor in writing thirty (30) days prior to making
any change in the configuration, appearance or coloring of the Aircraft from the
time the Aircraft is accepted by Lessee hereunder (other than changes in
configuration mandated by the FAA or changes which are reasonably consistent
with the configuration, appearance and coloring of the Aircraft as of the
Acceptance Date) and in the event of any such change or modification of
configuration, coloring or appearance, (other than as permitted hereby) at the
request of Lessor to restore the Aircraft to the configuration, coloring and/or
appearance of the Aircraft as of the Acceptance Date or, at Lessor's option to
pay to Lessor an amount equal to the reasonable cost of such restoration and
(iv) affix and maintain in the Airframe adjacent to the airworthiness
certificate and on each Engine a two-inch by four-inch plaque made of metal or
other permanent material or permanently painted stencil bearing the following
legend:
"This property is subject to a mortgage and security interest in favor of
General Electric Capital Corporation, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇. Any removal, alteration, disposal or other change in the
condition or location of this property must be approved by the
Owner-Lessor."
and such other markings as from time to time may be required by law or otherwise
deemed necessary or advisable by Lessor in order to protect the title of Lessor
to the Aircraft and the rights of Lessor under this Lease.
II. Return of Aircraft.
(a) Condition Upon Return. Unless purchased by Lessee, upon the expiration,
cancellation or other termination of the Lease (whether following an Event of
Default or otherwise), Lessee, at its own expense, will return the Aircraft
(together with all Records) to Lessor at a location specified by the Lessor
within the continental United States and in the condition in which the Aircraft
is required to be maintained pursuant to this M&R Addendum and any other
applicable provisions of the Lease. The Aircraft shall be fully equipped with
the Engines or the same number, make and model number of engines as are set
forth on Schedule No. 1 to Lease Supplement No. 1, which shall fully comply with
this M&R Addendum, and which, in the opinion of Lessor, have the same or
improved utility, value, useful life, performance, and efficiency (normal wear
and tear excepted) as the Engines had on the Acceptance Date and are suitable
for use on the Airframe and owned by Lessor and properly installed thereon.
Lessee shall not be relieved of any of its duties, obligations, covenants, or
agreements under the Lease (including, without limitation, its obligation to pay
Rent) prior to the return of the Aircraft in the manner and condition required
with respect to such return. The Aircraft, at Lessee's expense, upon redelivery
pursuant hereto (i) shall have a currently effective FAA airworthiness
certificate; (ii) shall be free and clear of all Liens other than the Lease and
any Lessor's Liens; (iii) shall be in the same configuration and in the same
operating condition, ordinary wear and tear excepted, as when delivered to
Lessee on the Acceptance Date; (iv) shall be in good operating condition, in
good physical condition and good appearance (ordinary wear and tear excepted)
with all systems operating normally; (v) shall have no damage history
(including, without limitation, any damage history required to be reported on a
FAA Form #337 or pursuant to any other governmental reporting requirement),
unless such damage has been repaired in accordance with the provisions hereof,
and after the making of such repairs, the Fair Market Sales Value of the
Aircraft has not been negatively affected (or in the event that the Fair Market
Sales Value of the Aircraft continues to be negatively affected after such
repairs, Lessee may avoid any Default that might otherwise result therefrom by
paying to Lessor an amount equal to the difference between the Fair Market Sales
Value of the Aircraft without such history and the Fair Market Sales Value of
the Aircraft with such history); (vi) shall have no open (and shall be in
compliance with) all mandatory service bulletins, manufacturer's directives or
airworthiness directives and all other applicable service, maintenance, repair
and overhaul regulations issued by the FAA and/or any Manufacturer, and (vii)
shall be otherwise in the condition and repair required under the Lease. For
purposes of clause (v) of the preceding sentence, the existence and the extent
of any diminution in Fair Market Sales Value contemplated therein shall be
determined by mutual agreement, and if no such agreement is reached between the
parties within ten (10) Business Days of Lessor's notice that it desires a
valuation with respect to such damage history (the "Damage History Notice"), the
parties will use the appraisal process set forth in Paragraph (c) of the Option
Addendum to determine the existence and extent of such diminution. The parties
will use their best efforts to complete such valuation as promptly as
practicable, but, in any event, within thirty (30) Business Days after the
Damage History Notice. A final determination regarding the existence and extent
of any diminution shall be binding and conclusive on both parties. Upon Lessor's
request, Lessee shall assign to Lessor Lessee's rights under any manufacturer's
or servicer's maintenance service contracts and/or extended warranties for the
Aircraft, the Engines and/or any Parts. If at the time of the return of the
Aircraft to Lessor, the actual average annual flight hours accumulated with
respect to the Airframe (such product, the "Actual Annual Hours") for the period
from the Acceptance Date to such return date (such period, the "Operating
Period"), is greater than the Estimated Annual Hours (as defined below), then,
Lessor and Lessee shall consult for the purpose of determining the Fair Market
Sales Value and the Excess Use Amount (as defined below) of the Aircraft as of
the return date, and any values agreed upon in writing shall constitute such
Fair Market Sales Value and Excess Use Amount of the Aircraft for the purposes
of this M&R Addendum. If Lessor and Lessee fail to agree upon such values within
30 days after the return date, then Lessor and Lessee shall follow the appraisal
procedure set forth in paragraph (c) of the Option Addendum to the Lease for the
purpose of determining the Fair Market Sales Value and Excess Use Amount of the
Aircraft. Lessee shall then pay to Lessor within ten (10) days of Lessor's
written demand therefor (which demand shall, unless determination of the amount
payable is otherwise agreed upon by Lessor and Lessee without consulting with an
appraiser, be accompanied by a copy of an appraiser's report containing such
determination), an amount equal to the Excess Use Amount. For the purposes of
this M&R Addendum, (A) "Excess Use Amount" shall mean the amount by which the
Aircraft's Fair Market Sales Value has been diminished as a result of the Actual
Annual Hours accumulated with respect to the Airframe during the Operating
Period being greater than the Estimated Annual Hours per annum on average; and
(B) "Estimated Annual Hours" shall mean the anticipated number of average annual
flight hours as shown on Schedule 2-A to Lease Supplement No. 1.
(b) Mid-Life Condition. At the time of such return (i) each Engine shall
have available operating hours until both the next scheduled "hot section"
inspection and the next scheduled major overhaul of not less than fifty percent
(50%) of the total operating hours available between such "hot section"
inspection or major overhaul, as the case may be; (ii) the Airframe shall have
remaining not less than (aa) fifty percent (50%) of the available operating
hours allowed between major airframe inspections; and (bb) fifty percent (50%)
of number of available operating months allowed between major airframe
inspections until the next scheduled major airframe inspection; and (iii) all
life limited parts and components shall have remaining not less than fifty
percent (50%) of the available hours, cycles and/or months, as the case may be,
until the next scheduled replacement. In addition to the requirements set forth
in clauses (i), (ii) and (iii) above, all inspections and scheduled maintenance
required to be performed on the Airframe, Engines and all life limited parts and
components within one hundred twenty (120) days of the date of return and/or one
hundred hours (100) of additional operation shall have been performed by Lessee.
(c) Engines. In the event that any Engine does not meet the conditions set
forth in Section II (b) (i) above, for each such Engine Lessee shall pay Lessor
an amount equal to the sum of (i) the current estimated cost of the next
scheduled "hot section" inspection (including in such estimated cost, all
required replacements of life limited parts) multiplied by the fraction wherein
the numerator shall be the greater of (A) zero and (B) the remainder of (x) the
actual number of operating hours since the previous hot section inspection,
minus (y) 50% of the total operating hours allowable between hot section
inspections, and the denominator shall be the total operating hours allowable
between hot section inspections, plus (ii) for each such Engine, the product of
the current estimated cost of the next scheduled major overhaul (including in
such estimated cost, all required replacements of life limited parts) multiplied
by the fraction wherein the numerator shall be the greater of (A) zero and (B)
the remainder of (x) the actual number of hours of operation since the previous
major overhaul minus (y) 50% of the total operating hours allowable between
major overhauls, and the denominator shall be the total operating hours
allowable between major overhauls.
Notwithstanding the foregoing, the requirements of Section II (b)(i) above
and the final sentence of Section II (b) above (but solely with respect to the
Engines) shall be deemed to have been satisfied if at the time of return of the
Engines (x) the Engines being returned to Lessor shall be covered by a service
and maintenance contract in form and substance satisfactory to Lessor which
provides for the maintenance and/or overhaul of the Engines ("Maintenance
Contract"), (y) either (i) adequate reserves for future required maintenance
and/or overhaul shall have been provided for pursuant to such Maintenance
Contract or (ii) all amounts due and payable pursuant to such Maintenance
Contract shall have been paid in full through the date of return and (z) the
entity which provides the maintenance and/or overhaul services under such
Maintenance shall either (i) recognize the transfer by Lessee to Lessor of the
rights and interests of Lessor (or its designee) under such Maintenance Contract
or (ii) acknowledge the rights and interests of Lessor (or its designee) under
such Maintenance Contract.
(d) Airframe. In the event that the Airframe does not meet the conditions
set forth in Section II (b) (ii) above, Lessee shall pay Lessor an amount equal
to the sum of the product of the current estimated cost of the next scheduled
major airframe and pressure vessel inspection (including in such estimated cost,
all required replacement of life limited parts) multiplied by the fraction
wherein the numerator shall be the greater of (i) zero and (ii) the remainder of
(x) the actual number of respective operating hours or months of operation since
previous major airframe and pressure vessel inspection, minus (y) 50% of the
respective total operating hours or months of operation allowable between
scheduled major airframe and pressure vessel inspections, and the denominator
shall be the respective total operating hours or months of operation between
scheduled major airframe and pressure vessel inspections.
(e) Parts and Components. In the event any life limited part or component
does not meet the conditions set forth in Section II (b)(iii) above, Lessee
shall pay to Lessor with respect to each part or component for which said
requirement is not met the dollar amount obtained by multiplying (i) the ratio
that the life expended in excess of fifty percent (50%) of the available hours,
cycles and/or months, as the case may be, until the next scheduled replacement
bears to the total allowable life (measured in hours, cycles and/or months, as
the case may be) for such part or component by (ii) Lessor's cost of replacement
of such part or component. Lessor's cost of replacement of a part or component
shall include Lessor's then current cost of purchasing the part or component
itself and all of Lessor's then current costs associated with the replacement.
(f) Treatment of Charges. All prorated inspection and/or overhaul charges,
if any, shall be payable as Supplemental Rent and shall be due upon presentation
to Lessee of an invoice setting forth in reasonable detail the calculation of
such amounts due, including the names of all sources used for the required cost
estimates. Unless both Lessor and Lessee agree to an alternative source, the
Manufacturers of the Airframe and Engines shall be used as the sources for all
cost estimates.
(g) Fuel and Records. Upon the return of the Aircraft in accordance with
the terms and conditions hereof; (i) each fuel tank shall contain no less than
fifty percent (50%) of its full capacity or, in the case of differences in such
quantity, an appropriate adjustment will be made at the then current market
price of fuel and (ii) Lessee shall deliver all Records to Lessor. In the event
any Records are missing or incomplete, Lessor shall have the right to cause any
such Records to be reconstructed at the expense of Lessee.
(h) Storage. Upon the expiration, cancellation or other termination of the
Lease, Lessee will, if requested by Lessor, permit Lessor to store the Aircraft
at the Primary Hangar Location. During such storage period Lessee will, at its
own cost and expense, keep the Aircraft properly hangared, and will permit
Lessor or any Person designated by Lessor, including the authorized
representatives of any prospective purchaser, lessee or user of the Aircraft to
inspect the same. Lessee shall not be liable, except in the case of negligence,
gross negligence or intentional misconduct of Lessee or of its employees or
agents, for injury to, or the death of, any Person exercising, either on behalf
of Lessor or any prospective purchaser, lessee or user, the rights of inspection
granted hereunder. Lessee shall bear the risk of loss and shall pay any and all
expenses connected with insuring and maintaining the Aircraft during such
storage period. Notwithstanding the foregoing, upon the expiration of the Term
for any reason other than an expiration, cancellation or termination which
occurs as a result of an Event of Default, the storage period provided for in
this paragraph and the obligation to hangar and insure the Aircraft shall be
limited to fifteen (15) days.
(i) Replacement Engines. In the event that any engine not owned by Lessor
shall be installed on the returned Airframe as set forth in Section II (a)
hereof, then Lessee will, concurrently with such delivery, at its own expense,
furnish Lessor with a full warranty ▇▇▇▇ of sale, in form and substance
satisfactory to Lessor, with respect to each such engine and with a written
opinion of FAA Counsel to the effect that, upon such return, Lessor will acquire
a valid and perfected interest in such engine free and clear of all Liens
(except Lessor's Liens). Thereupon, unless a Default or Event of Default shall
have occurred and be continuing, Lessor will transfer to Lessee, on an "AS-IS,
WHERE-IS" BASIS WITHOUT ANY REPRESENTATION OR WARRANTY BY, OR RECOURSE OR
WARRANTY TO, LESSOR, all of Lessor's right, title and interest in and to any
Engine not installed on the Airframe at the time of the return of such Airframe.
(j) Inspections. Not more than ninety (90) days prior to the expiration
of the Lease, upon the written request of Lessor, Lessee shall, at its expense,
review the maintenance records of the Aircraft to determine if the Aircraft is
in the condition required by this M&R Addendum. Following such review, Lessee
shall certify to Lessor that such Aircraft is in the condition required by this
M&R Addendum according to the maintenance records for such Aircraft, or, if the
maintenance records so indicate, indicate what maintenance or repair is needed
to bring the Aircraft to the specified condition.
Lessor shall have the right, but not the duty, to inspect the Aircraft, any
component thereof and/or the Records, at any reasonable time and from time to
time, wherever located, upon reasonable prior written notice to Lessee. Upon
request of Lessor, Lessee shall confirm to Lessor the location of the Aircraft
and shall, at any reasonable time and from time to time, upon reasonable prior
written notice to Lessee, make the Aircraft and/or the Records available to
Lessor for inspection.
(k) Survival. The provisions of this M&R Addendum shall survive the
expiration, cancellation or other termination of the Lease and the return of the
Aircraft for any reason whatsoever.
(l) Injunctive Relief. Without limiting any other terms or conditions of
the Lease, the provisions of this M&R Addendum are of the essence of the Lease,
and upon application to any court of equity having jurisdiction, Lessor shall be
entitled to a decree against Lessee requiring specific performance of the
covenants of Lessee set forth herein.
Renewal Option Addendum ("Option Addendum") to Aircraft Lease (N601NB) dated as
of October __, 2002 (the "Lease") by and between Verde Capital Corporation, as
lessor ("Lessor"), and DriveTime Credit Corporation, as lessee ("Lessee").
All capitalized terms used herein which are not otherwise defined herein
shall have the meanings given to such terms in the Lease. Except as set forth
herein, all of the terms and conditions of the Lease and any supplements,
schedules, addenda, exhibits or the like entered into pursuant to the Lease
remain in full force and effect. Execution of the Lease by Lessee and Lessor
shall be deemed to constitute execution and acceptance of the terms and
conditions hereof, whereupon this Option Addendum shall be deemed to be a part
of the Lease.
The following provisions are hereby incorporated into the Lease:
(a) Renewal Option. So long as (i) no Default or Event of Default shall
have occurred and be continuing under the Lease, (ii) Lessee shall not have
exercised its purchase option pursuant to paragraph (a) hereof and (iii) the
Lease shall not have been earlier terminated, Lessee shall be entitled, at its
option, to extend the Term of the Lease with respect to the Aircraft at the
expiration of the Basic Term for an additional period as set forth below. A
Renewal Term shall commence at the expiration of the Basic Term. Lessee's option
to renew the Lease for a Renewal Term shall be exercisable by giving written
notice to Lessor at least one hundred fifty (150) days but no more than two
hundred forty (240) days prior to the expiration of the Basic Term. All of the
provisions of the Lease shall be applicable during the Renewal Term, except
that, during the Renewal Term, the Basic Rent shall be an amount equal to the
amount of the Basic Rent during the Basic Term and the Expiration Date shall be
changed to the date the last day of the Renewal Term. During the Renewal Term,
Basic Rent shall be payable monthly in advance on the same day of each month as
Basic Rent was payable during the Basic Term, which dates shall be deemed "Basic
Rent Dates" for purposes of the Lease.
(b) Additional Definitions. For purposes of this Option Addendum and the
Lease, the following terms shall have the following meanings:
Renewal Term shall mean a period of twenty-four months.