EXHIBIT 10.55
AIRCRAFT LEASE AGREEMENT
Dated as of November 21, 2001
between
FIRST UNION NATIONAL BANK
not in its individual capacity
but solely as Trustee
Lessor
and
CSI AVIATION SERVICES, INC.
Lessee
and
AIRLEASE LTD.
Owner Participant
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ DC-9-Series 82 Aircraft
Aircraft Reg. No. N806US
Manufacturer's Serial No. 48038
AIRCRAFT LEASE AGREEMENT, dated as of November 21, 2001,
between FIRST UNION NATIONAL BANK (successor to Meridian Trust Company), a
national banking association organized and existing under the laws of the United
States of America, not in its individual capacity but solely as Trustee under
the Trust Agreement defined in Section 1 below ("Lessor"), CSI AVIATION
SERVICES, INC., a New Mexico corporation ("Lessee"), and AIRLEASE LTD., a
California limited partnership ("Airlease")],
W I T N E S S E T H:
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WHEREAS, Lessee desires to lease from Lessor and Lessor is
willing to lease to Lessee the aircraft described herein upon and subject to the
terms and conditions of this Lease.
NOW THEREFORE, in consideration of the mutual promises herein,
Lessor and Lessee agree as follows:
Section 1. DEFINITIONS.
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Unless the context otherwise requires, the following terms
shall have the following meanings for all purposes of this Lease and shall be
equally applicable to both the singular and the plural forms of the terms herein
defined. Any agreement referred to below shall mean such agreement as amended,
supplemented and modified from time to time.
"Act" means the Federal Aviation Act of 1958, as amended from
time to time.
"Aircraft" means the Airframe, together with the two Engines
initially installed on such Airframe when delivered and leased hereunder and all
applicable current manuals and records relating thereto (or any Replacement
Engine substituted for any of such Engines hereunder), whether or not any of
such initial or Replacement Engines may from time to time thereafter be
installed on such Airframe or may be installed on any other airframe or on any
other aircraft.
"Airframe" means (i) the ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ DC-9-Series 82
aircraft (excluding Engines or engines from time to time installed thereon)
manufactured by Manufacturer in 1981 and currently bearing United States
registration number N806US and manufacturer's serial number 48038 leased
hereunder by Lessor to Lessee and (ii) any and all Parts so long as the same
shall be incorporated in such aircraft and any and all parts removed from such
aircraft so long as title thereto shall remain vested in Lessor in accordance
with the terms hereof.
"Airframe Payment Amount" has the meaning provided in Schedule
2.
"Airframe Payments" has the meaning provided in Section 3.5.
"APU Payment Amount" has the meaning provided in Schedule 2.
"APU Payments" has the meaning provided in Section 3.5.
"Basic Rent" means the rent identified as Basic Rent in and
payable pursuant to Section 3.2.
"Basic Rent Amount" has the meaning provided in Schedule 2.
"Business Day" means any day other than a Saturday, Sunday or
other day on which banking institutions in San Francisco, California or
Wilmington, Delaware are authorized or required by law to be closed.
"Cycle" means one take-off and landing of the Aircraft or, in
respect of any Engine or Part temporarily installed on another aircraft, of that
other aircraft.
"Delivery Date" means the date of the Lease Supplement
relating to the Aircraft, which date shall be the date on which the Aircraft is
leased to Lessee hereunder.
"Delivery Flight" is defined in Section 2.5.
"Delivery Location" means Lake City, Florida, or other
location in the United States agreed by Lessor and Lessee.
"DOT" means the United States Department of Transportation or
any governmental person, agency or authority succeeding to the functions of such
Department of Transportation.
"Engine" means (i) each of the two ▇▇▇▇▇ & ▇▇▇▇▇▇▇ JT8D-217
engines identified by manufacturer's serial number on the Lease Supplement
subjecting the Aircraft to this Lease and originally installed on the Airframe
on delivery thereof pursuant to this Lease, whether or not from time to time
thereafter installed on such Airframe or installed on any other airframe, and
(ii) any Replacement Engine, whether or not from time to time thereafter
installed on the Airframe or any other airframe, together in each case with any
and all Parts incorporated in such Engine and any and all Parts removed from
such Engine so long as title thereto shall remain vested in Lessor in accordance
with the terms hereof. At such time as a Replacement Engine shall be substituted
hereunder and the Engine for which the substitution is made shall be released,
such replaced Engine shall cease to be an Engine hereunder. The term "Engines"
means as of any date of determination, all Engines then leased hereunder.
"Engine Payment Amount" has the meaning provided in Schedule
2.
"Engine Payments" has the meaning provided in Section 3.5.
"Event of Loss" means, in relation to the Aircraft, the
Airframe or any Engine: (a) its actual, constructive, compromised, arranged or
agreed total loss (including any damage thereto or requisition for use or hire
which results in an insurance settlement on the basis of a total loss); or (b)
its destruction or damage beyond repair or being rendered permanently unfit for
normal use for any reason whatsoever; or (c) its requisition (other than a
requisition for hire by the Government not extending beyond the earlier of the
last day of the Term and the 180th day after the commencement of such
requisition), confiscation, sequestration, detention, forfeiture, compulsory
acquisition or seizure; or (d) its hijacking, theft or disappearance resulting
in loss of possession by Lessee for a period of 30 consecutive days or longer or
extending beyond the last day of the Term.
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"Expiry Date" means October 31, 2006.
"FAA" means the United States Federal Aviation Administration
or any governmental person, agency or other authority succeeding to the
functions of the Federal Aviation Administration.
"FAR" means the regulations promulgated by the FAA pursuant to
the Act.
"Flight Hour" means the number of hours including fractions
thereof between the moment the Aircraft (or other aircraft in the case of Parts
or Engines temporarily installed on such other aircraft) first leaves the ground
for the purpose of flight until the moment the Aircraft (or such other aircraft)
touches ground after such flight.
"Gear Payment Amount" has the meaning provided in Schedule 2.
"Gear Payments" has the meaning provided in Section 3.5.
"Government" means the federal government of the United States
of America or any instrumentality or agency thereof.
"Indemnitee" means Lessor, in its individual and trust
capacities, Owner Participant, Airlease, the Lenders and each of their
respective successors, assigns, transferees, directors, partners, officers,
employees and agents.
"Lease", "this Lease", "this Agreement", "hereby", "herein",
"hereof", "hereunder", or other like words mean this Aircraft Lease Agreement,
as amended or supplemented in accordance with the terms hereof, including by way
of one or more Lease Supplements.
"Lease Default" means any event or condition which, with
notice or lapse of time, or both, would constitute a Lease Event of Default.
"Lease Event of Default" is defined in Section 14.
"Lease Supplement" means a supplement to this Lease
substantially in the form attached as Exhibit A hereto, subjecting an Aircraft,
Engine or other property to this Lease.
"Lender" means one or more banks or financial institutions or
other persons notified in writing to Lessee that may from time to time provide
financing to Lessor in relation to acquisition or continuing ownership of the
Aircraft and shall include any person acting as agent or security agent or
trustee for one or more Lenders; provided that any requirement in this Agreement
to give notices to or receive consents from the Lender shall be disregarded
until such time as the Lender has been granted a security interest in or
mortgage over the Aircraft and Lessee is so notified.
"Lessee" means CSI Aviation Services, Inc., a New Mexico
corporation, and its permitted successors and assigns hereunder.
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"Lessee Documents" means this Lease, the Lease Supplement, the
USMS Agreement, the Maintenance Agreement, any acknowledgment of the Security
Documents, the Other Lease Documents and all notices, consents, certificates,
confirmations and other documents from time to time issued or entered into by
Lessee pursuant to or in connection with any thereof.
"Lessor" means First Union National Bank (successor to
Meridian Trust Company), not in its individual capacity but solely as Trustee
under the Trust Agreement, and its permitted successors and assigns thereunder
and hereunder.
"Lessor Liens" means Liens of any Person claiming by, through
or under Lessor or any prior owner or user of the Aircraft, which arise as a
result of (i) claims not related to the transactions contemplated by this Lease,
(ii) any act or omission of Lessor or any prior owner or user of the Aircraft
which is not related to the transactions contemplated by this Lease, or any act
of Lessor which is in violation of any of the express terms of this Lease, or
(iii) claims arising out of any transfer by Lessor of the Aircraft in violation
of the express terms of this Lease.
"Lien" means any mortgage, pledge, lien, encumbrance, security
interest or claim of rights affecting title to or any possessory or ownership
interest in property.
"Life Limited Part" means a Part having an accepted or
recommended Manufacturer or FAA limitation on the use of such Part.
"Loan Agreement" means any agreement from time to time entered
into between Lessor and one or more Lenders providing financing to Lessor in
relation to the acquisition or continuing ownership of the Aircraft.
"Maintenance Agreement" means the agreement between Lessee and
Spirit dated as of November 21, 2001 regarding the maintenance of the Aircraft
and any replacement maintenance and operation agreement entered into by Lessee
and a Maintenance Provider which agreement is approved in writing by Lessor.
"Maintenance Provider" means a solvent IAR Part 121 certified
air carrier approved in writing by Lessor, or Spirit.
"Maintenance Document" means the Manufacturer's recommended
maintenance program.
"Maintenance Program" is defined in Section 8.1.
"Manufacturer" means (i) with respect to the Airframe, The
Boeing Company, a Delaware corporation, and (ii) with respect to the Engines,
United Technologies Corporation, a Delaware corporation, ▇▇▇▇▇ & Whitney
Aircraft Commercial Engine Business, and their respective successors and
assigns.
"Officer's Certificate" means a certificate signed by the
Chairman, the President, any Vice President, the Treasurer, any Assistant
Treasurer, the Secretary or any Assistant Secretary of the Person providing such
certificate.
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"Other Lease" means that certain Aircraft Lease Agreement
entered into, or to be entered into, between Lessor and Lessee in respect of
that certain ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ DC-9-Series 82 Aircraft bearing manufacturer's
serial number 48039.
"Other Lease Documents" means the Lessee Documents as defined
in the Other Lease.
"Overdue Interest Rate" means a rate of interest per annum
equal to the rate Bank of America, N.A. announces to be in effect from time to
time as its prime rate plus three percent calculated on the basis of a 365/366
day, as appropriate, year and actual number of days elapsed.
"Overhaul Payment Date" means the tenth day of each calendar
month during the Term commencing in the calendar month after the calendar month
in which the Delivery Date occurs and the Termination Date.
"Overhaul Payments" shall have the meaning provided in Section
3.5.
"Owner Participant" means Airlease and its successors and
permitted assigns under the Trust Agreement.
"Parts" means all appliances, parts, components, instruments,
appurtenances, accessories, furnishings and other equipment of whatever nature
(other than complete Engines or engines) (i) which may from time to time be
incorporated in the Airframe or any Engine (other than a replaced Part to which
title has vested in Lessee pursuant to Section 8.2 hereof) or (ii) so long as
title thereto shall remain vested in Lessor in accordance with Section 8.2
hereof after removal therefrom, (and "Part" means any of the foregoing) .
"Permitted Lien" means any Lessor Lien and the Security
Documents.
"Person" means any individual, corporation, partnership, joint
venture, association, joint-stock company, trust, unincorporated organization or
government or any agency or political subdivision thereof.
"Redelivery Location" shall have the meaning provided in
Section 5.1.
"Rent" means Basic Rent and Supplemental Rent.
"Rent Payment Date" means the Delivery Date, the tenth day of
each calendar month during the Term and the last day of the Term.
"Replacement Engine" means an engine which shall have been
substituted for an Engine leased hereunder pursuant to Section 10.2 and shall be
of the same make and model (or an improved model engine suitable for
installation and use on the Airframe).
"Security" shall have the meaning provided in Section 3.6(a).
"Security Documents" means any and all assignments by way of
security or mortgage entered into by Lessor of any or all of Lessor's right,
title and interest in and to the
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Aircraft, this Agreement and/or the other Lessee Documents from time to time
granted by Lessor in favor of any Lender.
"Stipulated Loss Value" with respect to the Aircraft means an
amount equal to Nine Million U.S. Dollars ($9,000,000).
"Spirit" means Spirit Airlines, a Delaware corporation.
"Supplemental Rent" means all amounts, liabilities and
obligations (other than Basic Rent) which Lessee assumes or agrees to pay to
Lessor or any other Person hereunder, including, without limitation, Stipulated
Loss Value.
"Tax Indemnitee" means the Indemnitees (other than the
Lenders) and each of their respective successors, assigns, transferees,
directors, officers, employees and agents.
"Taxes" means all present and future taxes, levies, imposts,
duties, withholdings, fees or charges of any nature whatsoever, and wheresoever
imposed, including, without limitation, value added tax, consumption tax or any
other tax in respect of added value or any income (including, without
limitation, gross income, minimum, alternative minimum, capital gains income,
gross receipts and net receipts), franchise, transfer, sales, use, business,
occupation, excise, personal property, real property, stamp or other tax imposed
by a taxing authority of any country, or governmental subdivision thereof or
therein or by any international authority, together with any penalties,
additions to tax, fines or interest with respect to any of the foregoing; and
"tax" and "taxation" shall be construed accordingly.
"Term" means the period commencing on the Delivery Date and
expiring on the Termination Date.
"Termination Date" means the Expiry Date, or, if earlier, (i)
the date when Lessor receives the Stipulated Loss Value together with any other
amounts then due and unpaid under the Lessee Documents following a Total Loss of
the Aircraft, (ii) the date when Lessor terminates the leasing of the Aircraft
to Lessee pursuant to the terms hereof, or (iii) the date on which the leasing
of the Aircraft is terminated pursuant to Clause 3.1(b) or (c).
"Trust Agreement" means the Trust Agreement dated as of July
10, 1986, between the Owner Participant, Trust Company and Airlease Management
Services, Inc., as such Agreement has been amended or supplemented in accordance
with its terms.
"Trust Company" means First Union National Bank (successor to
Meridian Trust Company), in its individual capacity.
"USMS" means the United States Marshals Service.
"USMS Agreement" means the Award/Contract dated October 2,
2001 between USMS and Lessee relating to the Aircraft.
Section 2. DELIVERY AND ACCEPTANCE.
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2.1. DELIVERY AND LEASE OF AIRCRAFT. Subject to the
conditions and pursuant to the terms of this Lease, Lessor hereby agrees to
deliver the Aircraft on the Delivery Date and simultaneously to lease to Lessee
hereunder, and Lessee hereby agrees to lease and accept from Lessor hereunder,
the Aircraft. The Aircraft shall be delivered on or before November 24, 2001.
Delivery and acceptance of the Aircraft shall occur at the Delivery Location.
Lessor shall not be responsible for any loss or expense or any loss of profit
arising from any delay in the delivery of, or failure to deliver, the Aircraft
to Lessee under this Lease.
2.2. CONFIRMATION; ACCEPTANCE BY LESSEE. By execution and
delivery of the Lease Supplement in respect of the Aircraft after the Delivery
Flight, Lessee will confirm to Lessor that Lessee has accepted the Aircraft for
all purposes hereof as being in good working order and repair and without defect
in condition, design, operation, merchantability or fitness for use, whether or
not discoverable by Lessee as of the date thereof, subject to any discrepancies
set forth on the list of mutually agreed discrepancies referred to in Section
2.5 hereof.
2.3. LESSOR'S CONDITIONS TO LEASE. Lessor's obligation to
lease the Aircraft to Lessee shall be subject to the receipt by Lessor of the
following documents or other items on or before the Delivery Date for the
Aircraft, all of which shall be reasonably satisfactory in form and substance to
Lessor:
(a) a Lease Supplement in the form of Exhibit
"A" hereto, duly authorized, executed and delivered by Lessee and
effective as of the Delivery Date;
(b) copies of all documents evidencing corporate
action taken by the Lessee with respect to this Lease, the Lease
Supplement and the other Lessee Documents, and each other document
required to be executed and delivered by the Lessee in accordance with
the provisions hereof and thereof, and a copy of the resolutions of the
board of directors of the Lessee, certified by the Secretary or
Assistant Secretary thereof, evidencing the due authorization of the
execution, delivery and performance of each such document, together
with an incumbency certificate as to the person or persons authorized
to execute and deliver such documents and the signature or signatures
of such persons;
(c) an Officer's Certificate of Lessee stating
that:
(i) the representations and warranties
contained in Section 4.4 hereof and in the other Lessee
Documents are true and correct on and as of such date as
though made on and as of such time (except to the extent that
such representations and warranties relate solely to an
earlier date); and
(ii) no event has occurred and is continuing, or
would result from the lease of the Aircraft, which constitutes
a Lease Default or Lease Event of Default;
(d) an opinion or letter signed by an independent
insurance broker or by an insurer acceptable to Lessor as to the due
compliance with the insurance provisions of Section 11 hereof with
respect to the Aircraft, together with certificates evidencing the
insurance as required by Section 11 hereof;
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(e) an opinion of ▇▇▇▇▇ & ▇▇▇▇▇▇▇ or other
counsel experienced in federal aviation matters, as to the due filing
for recordation of the Lease and the Lease Supplement and as to such
other matters as Lessor may reasonably request, addressed to Lessor;
(f) Basic Rent due on the Delivery Date;
(g) the USMS Agreement,duly authorized, executed
and delivered by all parties thereto and effective as of the Delivery
Date;
(h) the Maintenance Agreement shall have been
duly authorized, executed and delivered by all parties thereto and
effective as of the Delivery Date; and
(i) such other documents, opinions and
certificates incident to the foregoing as Lessor may reasonably
request.
2.4. LESSEE'S CONDITION TO LEASE. Lessee's obligation to
lease the Aircraft from Lessor shall be subject to the following:
(a) the Aircraft shall have been tendered for
delivery on the Delivery Date pursuant to Section 2.1, shall be
registered in the United States and shall be in a condition to be put
on an FAA Part 121 operators certificate;
(b) the Aircraft shall have undergone
immediately prior to the ferry flight contemplated by Section 2.5, the
current phase of C-Check as defined in the Maintenance Document;
(c) the Delivery Flight shall have been
completed as described in Section 2.5.
(d) the Aircraft shall have no deferred
maintenance items and shall be in compliance (without regard to
permitted in compliance extensions) with all regulations, mandatory
maintenance directives, airworthiness directives and Federal Air
Regulations or other instructions of the FAA or other United States
Governmental Authorities having jurisdiction in each case that are
required with respect to the Aircraft;
(e) the Aircraft shall be free and clear of all
Lessor Liens, other than the Lien of the Trust Agreement;
(f) the Aircraft shall be equipped as provided
in Schedule 1, Part A, and the Aircraft shall be in serviceable
condition with all Parts fully functional;
(g) Lessee shall be reasonably satisfied with
any correction of discrepancies found during the Delivery Flight or if
such discrepancies do not affect airworthiness and are not corrected
prior to delivery, a list of such discrepancies shall be attached to
the Receipt for Lease Aircraft which is attached hereto as Exhibit B;
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(h) Lessor shall have tendered for delivery to
Lessee all logs, manuals, drawings, and data and inspection,
modification and overhaul records in respect of the Aircraft specified
in Schedule 1, Part B; and
(i) the USMS Agreement shall have been duly
authorized, executed and delivered by all parties thereto and effective
as of the Delivery Date.
2.5. INSPECTION; DELIVERY FLIGHT. Prior to the Delivery
Flight, Lessor shall make the Aircraft, records and logbooks available to Lessee
at the Delivery Location, so that Lessee may conduct, at Lessee's expense, a
ground inspection which shall include a technical inspection of the Aircraft,
records and logbooks. Promptly following the Ground Inspection, Lessor shall
conduct, at Lessor's cost and expense, a delivery check flight (the "Delivery
Flight") pursuant to standard test flight procedures, or other such procedures
as the parties agree. Lessee shall be permitted three representatives on the
Delivery Flight which shall not exceed two hours in length. The Delivery Flight
may be performed in conjunction with the ferry flight from the Delivery Location
to Alexandria, Louisiana. At the conclusion of the Delivery Flight, Lessor and
Lessee shall prepare a list of mutually-agreed discrepancies, if any, arising
during the Delivery Flight. Lessor shall either promptly correct such
discrepancies or if the discrepancies do not affect the airworthiness of the
Aircraft a list of such discrepancies may be attached to the Receipt For Lease
Aircraft which is attached hereto as Exhibit B. Upon completion of the Delivery
Flight and satisfaction or waiver of the conditions precedent set forth in
Sections 2.3 and 2.4, Lessee shall execute and deliver the Receipt for Lease
Aircraft and Lessee and Lessor shall execute the Lease Supplement, evidencing
Lessee's acceptance of the Aircraft hereunder.
If the Delivery Flight reveals any discrepancies or damage,
and the cost of correcting any single discrepancy or item of damage would exceed
$10,000 or the cost of correcting all discrepancies and damage would exceed
$50,000, Lessor may, at its option, elect to terminate this Lease. If Lessor
elects to terminate the Lease pursuant to the preceding sentence it shall
reimburse Lessee for its reasonable expenses incurred in connection herewith.
Section 3. TERM AND RENT; OVERHAUL PAYMENTS.
3.1. TERM.
(a) The Aircraft shall be leased hereunder for the Term.
(b) Lessee shall have the right to terminate the leasing
of the Aircraft under this Lease on stated termination date of the USMS
Agreement (as such termination dates shall be extended from time to time) by
delivering to Lessor not later than 30 days before either such termination date
a written notice specifying such termination date and stating that it is
exercising its right to terminate the leasing of the Aircraft pursuant to this
Section 3.1(b).
(c) Lessor shall have the right to terminate the leasing
of the Aircraft under this Lease on any date on which the USMS Agreement
terminates by delivering to Lessee a written notice stating that it is
exercising its right to terminate the leasing of the Aircraft pursuant to this
Section 3.1(c).
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(d) Any notice delivered pursuant to Section 3.1(b) or
(c) shall be irrevocable, and shall be effective to terminate the leasing of the
Aircraft pursuant to the terms hereof.
(e) Lessee shall use all commercially reasonable efforts
to extend the term of the USMS Agreement through the Expiry Date; it being
understood that Lessee shall not be obligated to extend the term of the USMS
Agreement (i) if the expected revenues under the USMS Agreement during the
extended term thereof are not reasonably expected to be sufficient to cover the
reasonably expected costs of maintaining and insuring the Aircraft, to pay the
Basic Rent (or such lesser amount determined by Lessor in its sole discretion)
and Supplemental Rent (without duplication of the cost of maintaining the
Aircraft) and to provide a reasonable return to Lessee during such extended
term. If Lessee elects to terminate the leasing of the Aircraft under Section
3.1(b), for a period of one year after completion of the Term, Lessee will not
bid to directly or indirectly supply aircraft to USMS unless Lessee shall make a
good faith effort to lease an aircraft of the type or size acceptable to USMS
from Owner Participant on terms substantially similar to the terms of this
Agreement and at a fair market value for such aircraft prior to entering into
lease negotiations with any other Person.
3.2. BASIC RENT.
Lessee hereby agrees to pay to Lessor Basic Rent in advance by
paying to Lessor on each Rent Payment Date the Basic Rent Amount; provided that
(i) the Basic Rent due on the Delivery Date shall be an amount equal to the
product of the Basic Rent Amount and a fraction, the numerator of which is the
number of days from and including the Delivery Date to but excluding the next
Rent Payment Date and the denominator of which is 30 and (ii) the Basic Rent due
on the Termination Date shall be an amount equal to the product of the Basic
Rent Amount and a fraction, the numerator of which is the number of days from
and including the last Rent Payment Date before the Termination Date to but
excluding the Termination Date and the denominator of which is 30.
3.3. SUPPLEMENTAL RENT.
Lessee also agrees to pay to Lessor, or to whomsoever shall be
entitled thereto, any and all Supplemental Rent when and as the same shall
become due and owing. Lessee shall also pay to Lessor, or to whomsoever shall be
entitled thereto, as Supplemental Rent, to the extent permitted by applicable
law, interest at the Overdue Interest Rate on any part of any installment of
Basic Rent not paid when due for any period from the date on which the same was
due to but excluding the date of payment in full and on any payment of
Supplemental Rent not paid when due to Lessor, or to whosoever shall be entitled
thereto, as the case may be, for the period from and including the date on which
the same was due to but excluding the date of payment. The expiration or other
termination of Lessee's obligation to pay Basic Rent hereunder shall not limit
or modify the obligations of Lessee with respect to Supplemental Rent.
3.4. PAYMENTS.
Payments of Rent, Overhaul Payments and any and all other
amounts payable to Lessor hereunder shall be paid by wire transfer prior to 1:00
p.m., New York time, on the due date therefor, in immediately available funds of
the United States of America, to Bank of
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America, NT&SA, ABA No. ▇▇▇▇▇▇▇▇▇, Account No.: 12331-34432, Account of:
Airlease Ltd. Regarding: CSI Lease Payment, or as otherwise directed by Lessor
in writing. Except as otherwise expressly provided herein, whenever any payment
of Rent or other payment to be made hereunder shall be due on a day which is not
a Business Day, such payment shall be made on the next preceding day which is a
Business Day.
3.5. OVERHAUL PAYMENTS.
On or before each Overhaul Payment Date, Lessee shall pay to
Lessor as Supplemental Rent the following amounts (such amounts, the "Overhaul
Payments"):
(i) the Airframe Payment Amount for each Flight
Hour the Airframe is operated during the last calendar month before
that Overhaul Payment Date ("Airframe Payments");
(ii) the APU Payment Amount for each Flight Hour
the Airframe is operated during the last calendar month before that
Overhaul Payment Date ("APU Payments");
(iii) the Engine Payment Amount for each Flight
Hour for each Engine during the last calendar month before that
Overhaul Payment Date (each, an "Engine Payment"); and
(iv) the Gear Payment Amount in respect of the
ship set of landing gear for each Flight Hour during the last calendar
month before that Overhaul Payment Date ("Gear Payments");
provided that the Overhaul Payments due on the Termination Date shall also
include Overhaul Payments for operations carried by Lessee during the period
commencing at the end of the calendar month preceding the Termination Date
through to the Termination Date.
Upon receipt of the Overhaul Payments, Lessor shall transfer the same
by wire transfer of immediately available funds of the United States of America
not later than 1:00 p.m., New York time on the due date thereof to the account
of Airlease at Bank of America, NT&SA, ABA No. ▇▇▇▇▇▇▇▇▇, Account No.:
12331-34432, Account of: Airlease Ltd., Reference: CSI Aviation or as otherwise
directed by Airlease in writing.
At the time Lessee pays the monthly Overhaul Payments to
Lessor, Lessee shall concurrently deliver to Lessor and Lessor an operating
report in the form attached as Exhibit D hereto.
3.6. SECURITY.
(a) INITIAL DELIVERY.
On or before the Delivery Date, Lessee shall provide to Lessor
an irrevocable letter of credit satisfying the requirements of clause (c) of
this Section, (such letter of credit
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together with all other and further payments made to Lessor under this Section,
the "Security"). No interest will accrue or be paid to Lessee in respect of the
Security.
(b) APPLICATION. If Lessee fails to comply with any of
its obligations under any of the Lessee Documents or is otherwise in default
thereunder and, in either case, any applicable grace periods referred to in
Section 14 have expired, Lessor may apply all or any portion of the Security in
or towards satisfaction of any sums due to Lessor by Lessee or to compensate
Lessor for any sums that it may in its discretion advance or expend as a result
of any such failure or default by Lessee. If Lessor applies all or any portion
of the Security, it shall not be deemed a cure or waiver of any such failure or
default, and Lessee shall immediately, upon written demand therefor, pay to
Lessor as Supplemental Rent an amount equal to the amount so applied.
(c) LETTER OF CREDIT.
The letter of credit provided as Security shall (i) be in a
stated amount equal to $250,000.00 aggregate for security under this Agreement
and under the Other Lease, (ii) permit multiple drawings thereunder in an
aggregate amount not to exceed such stated amount for application as provided in
this Section, (iii) have a term of not less than twelve months and (iv)
otherwise be substantially in the form of Exhibit E. Any such letter of credit
shall be issued by, or if confirmed, confirmed by, a financial institution whose
long-term unsecured debt is rated "A" or better by ▇▇▇▇▇'▇ Investors Service or
Standard & Poors and must be presentable for drawing in New York. Not later than
fourteen days before the expiration date of any letter of credit held as
Security, Lessee shall either (i) pay to Lessor Supplemental Rent equal to
$250,000.00 or (ii) provide to Lessor a replacement letter of credit satisfying
the requirements of this clause (c) or an amendment to such letter of credit in
form and substance acceptable to Lessor extending the term thereof for not less
than twelve months. If either Moody's Investor's Service or Standard & Poor's
withdraw or suspend the ratings on the long-term unsecured debt of the financial
institution issuing the letter of credit or downgrade such debt to any rating
category below "A", not later than fourteen days after any such suspension,
withdrawal or downgrading, Lessee shall either pay to Lessor $250,000.00 or
provide to Lessor a replacement letter of credit satisfying the terms of this
clause (c), and upon receipt thereof, Lessor shall return the original letter of
credit to Lessee.
3.7. SET-OFF.
At any time after the occurrence of a Lease Event of Default
and as long as the same is continuing, Lessor may set off any matured obligation
owed by Lessee under this Agreement or the other Lessee Documents against any
obligation (whether or not matured) owed by Lessor to Lessee, regardless of the
place of payment or currency. If the obligations are in different currencies,
Lessor may convert either obligation at the market rate of exchange available in
New York or at its option London for the purpose of the set-off. If an
obligation is unascertained or unliquidated, Lessor may in good faith estimate
that obligation and set off in respect of the estimated amount, in which case
when the obligation is ascertained or liquidated Lessor or Lessee may make a
payment to the other (as appropriate) in respect of any amount by which the
ascertained or liquidated amount differs from the estimated amount. Lessor will
not be obliged to pay any amounts to Lessee under this Agreement so long as any
sums which are then
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due from Lessee to Lessor under this Agreement or other Lessee's Documents
remain unpaid or any Lease Event of Default or Lease Default is continuing, and
any such amounts which would otherwise be due will fall due only if and when
Lessee has paid all such sums and cured to Lessor's satisfaction all such Lease
Events of Default or Lease Defaults, except to the extent that Lessor otherwise
agrees or sets off such amounts against such payment pursuant to the foregoing
provisions.
Section 4. LESSOR'S WARRANTIES AND COVENANTS;
DISCLAIMER; LESSEE REPRESENTATIONS AND WARRANTIES.
4.1. WARRANTIES OF LESSOR. Lessor warrants that:
(a) Trust Company is a national banking association duly
organized and validly existing under the laws of the United States of America,
and this Lease has been executed by an officer of Trust Company who is duly
authorized to do so in accordance with the terms of the Trust Agreement.
(b) The Trust Agreement is in full force and effect and
Lessor is duly and properly authorized to execute and deliver this Lease under
the Trust Agreement.
(c) Lessor has received and has complied with every
necessary consent, approval, order, or authorization of, or registration with,
and has given any prior notice to, any federal, state or foreign governmental
authority having jurisdiction to the extent required for the Lessor to execute
and deliver this Lease and the Lease Supplement to be executed and delivered on
the Delivery Date and to lease the Aircraft hereunder and thereunder.
(d) This Lease has been, and upon execution and delivery
of the Lease Supplement to be executed and delivered on the Delivery Date such
Lease Supplement will be, duly executed and delivered by Lessor and constitutes
or will constitute the legal, valid, and binding obligations of Lessor,
enforceable in accordance with their respective terms.
(e) There are no suits or proceedings pending or, to the
knowledge of Lessor, threatened in any court or before any regulatory
commission, board or other administrative governmental agency against or
affecting Lessor, which, if adversely determined, will have a materially adverse
effect on the ability of Lessor to lease the Aircraft.
4.2. LESSOR COVENANTS.
(a) QUIET ENJOYMENT. So long as Lessee shall not be in
default under the terms and provisions of this Lease, Lessor will not disturb,
and will not permit anyone claiming by, through or under Lessor to disturb, the
Lessee's quiet, peaceful use and enjoyment of the Aircraft.
(b) LESSOR OBLIGATIONS FOLLOWING TERMINATION DATE. Within
five Business Days after (i) redelivery of the Aircraft to Lessor in accordance
with and in the condition required by this Lease, or (ii) payment to Lessor of
the Stipulated Loss Value following an Event of Loss, or in each case such later
time as Lessor is satisfied that Lessee has irrevocably paid all amounts which
may then be outstanding or become payable under this Lease and the other Lessee
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Documents, Lessor will return the Security paid or delivered to Lessor less
amounts applied pursuant to Section 3.6(b).
(c) LESSOR OVERHAUL CONTRIBUTIONS. Lessor shall pay to
Lessee:
(i) in respect of a Q-Check performed in
accordance with the Maintenance Program during the Term, the lesser of (x) the
actual cost of performing such Q-Check and (y) the amount, if any, by which the
total Airframe Payments received by Lessor prior to the performance of such
Q-Check exceed the total amount, if any, previously paid to Lessee under this
clause (i);
(ii) in respect of a full performance restoring
shop visit of an Engine and, the scheduled replacement of life-limited Parts for
an Engine, in each case performed in accordance with the Maintenance Program
during the Term, the lesser of (x) the actual cost of performing such shop visit
and life-limited Part replacement and (y) the amount, if any, by which the total
Engine Payments in respect of that Engine received by Lessor prior to the
performance of such shop visit and/or replacement exceeds the total amount, if
any, previously paid to Lessee in respect of that Engine pursuant to this clause
(ii) provided that any such payment in respect of life-limited Parts shall be
reduced pro-rata to reflect the value of the remaining life of the replaced
Parts;
(iii) in respect of a full performance restoring
shop visit for the APU performed in accordance with the Maintenance Program
during the Term, the lesser of (x) the actual cost of performing such shop visit
and (y) the amount, if any, by which the total APU Payments received by Lessor
prior to such shop visit exceed the total amount, if any, previously paid to
Lessee pursuant to this clause (iii); and
(iv) in respect of the scheduled overhaul of the
landing gear performed in accordance with the Maintenance Program during the
Term, the lesser of (x) the actual cost of performing such scheduled overhaul
and (y) the amount, if any, by which the total Gear Payments received by Lessor
prior to such scheduled overhaul exceed the total amount, if any, previously
paid to Lessee pursuant to this clause (iv).
Lessor's obligation to make any payments under this Clause
4.2(c) shall be conditioned upon receipt by Lessor within two months after the
Termination Date of invoices and proper documentation, satisfactory in form and
substance to Lessor, in support of the invoices and verifying that the work was
completed in accordance with the Maintenance Program. No payment shall be made
under this Clause 4.2(c) in respect of (i) work, repairs or replacements caused
by ingestion, faulty maintenance or installation, improper operations, misuse,
neglect or accidental cause, (ii) any cost which is recoverable under insurance
(deductibles being for the account of Lessee), manufacturer's or servicer's
warranties, guarantees, concessions or credits or from any third parties after
due diligence in affecting recovery or (iii) removal, installation, maintenance
and repair of QEC (Quick Engine Change).
Lessor has appointed Owner Participant as agent for the
purpose of administering the Lessor's overhaul contributions. Owner Participant
shall maintain records reflecting receipt of Airframe Payments, the Engine
Payments for each Engine, the APU Payments and the Gear
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Payments and amounts paid under this clause (c). Owner Participant's records
shall be deemed correct absent manifest error.
4.3. DISCLAIMER. (a) GENERAL. THE AIRCRAFT, WHEN DELIVERED
AND LEASED BY LESSOR TO LESSEE HEREUNDER, WILL BE LEASED "AS IS" AND "WHERE IS."
NEITHER LESSOR NOR OWNER PARTICIPANT HAS MADE AND SHALL NOT BE DEEMED TO HAVE
MADE, BY VIRTUE OF HAVING LEASED THE AIRCRAFT UNDER THIS LEASE OR HAVING DONE OR
FAILED TO DO ANY ACT OR ACQUIRED OR FAILED TO ACQUIRE ANY STATUS UNDER OR IN
RELATION TO THIS LEASE, AND LESSOR AND OWNER PARTICIPANT HEREBY SPECIFICALLY
DISCLAIM, ANY GUARANTY, REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, AS TO
THE TITLE (EXCEPT AS HEREINBELOW PROVIDED), AIRWORTHINESS, VALUE, CONDITION,
DESIGN, OPERATION, MERCHANTABILITY, OR FITNESS FOR USE FOR A PARTICULAR OR ANY
PURPOSE OF THE AIRCRAFT, OR AS TO THE QUALITY OF THE MATERIAL OR WORKMANSHIP OF
THE AIRCRAFT, THE ABSENCE THEREFROM OF LATENT OR OTHER DEFECTS WHETHER OR NOT
DISCOVERABLE, THE ABSENCE OF ANY INFRINGEMENT OF ANY PATENT, TRADEMARK OR
COPYRIGHT OR AS TO ANY OTHER GUARANTY, REPRESENTATION OR WARRANTY WHATSOEVER,
EXPRESS OR IMPLIED, WITH RESPECT TO THE AIRCRAFT, INCLUDING WITHOUT LIMITATION
ANY LIABILITY IN TORT, OBLIGATION OR LIABILITY ARISING FROM NEGLIGENCE, STRICT
LIABILITY, ANY IMPLIED WARRANTY ARISING FROM COURSE OF PERFORMANCE OR DEALING OR
USAGE OR TRADE, OR LOSS OR INTERRUPTION OF USE, PROFIT, OR BUSINESS, OR OTHER
CONSEQUENTIAL DAMAGES; AND LESSEE HEREBY WAIVES, RELEASES, RENOUNCES AND
DISCLAIMS EXPECTATION OF OR RELIANCE UPON ANY SUCH GUARANTY, REPRESENTATION OR
WARRANTIES. NONE OF LESSOR, OWNER PARTICIPANT AND ANY OTHER INDEMNITEE SHALL
HAVE ANY RESPONSIBILITY OR LIABILITY TO LESSEE OR ANY OTHER PERSON, REGARDLESS
OF ANY NEGLIGENCE (OTHER THAN ITS OWN GROSS NEGLIGENCE OR WILLFUL MISCONDUCT
WHICH IS NOT ATTRIBUTABLE TO ITS INTEREST IN THE AIRCRAFT) OF LESSOR, OWNER
PARTICIPANT OR ANY OTHER INDEMNITEE, AND LESSEE HEREBY WAIVES, RELEASES,
RENOUNCES AND DISCLAIMS ANY RIGHTS OR REMEDIES, WITH RESPECT TO (i) ANY
LIABILITY, LOSS OR DAMAGE CAUSED OR ALLEGED TO BE CAUSED DIRECTLY OR INDIRECTLY
BY THE AIRCRAFT OR BY ANY INADEQUACY THEREOF OR DEFICIENCY OR DEFECT THEREIN OR
BY ANY OTHER CIRCUMSTANCE IN CONNECTION THEREWITH, (ii) THE USE, OPERATION OR
PERFORMANCE OF THE AIRCRAFT OR ANY RISKS RELATING THERETO, (iii) ANY
INTERRUPTION OF SERVICE, LOSS OF BUSINESS OR ANTICIPATED PROFITS OR DIRECT,
INCIDENTAL OR CONSEQUENTIAL DAMAGES OR (iv) THE DELIVERY, OPERATION, SERVICING,
MAINTENANCE, REPAIR, IMPROVEMENT OR REPLACEMENT OF THE AIRCRAFT. WITHOUT
LIMITING THE FOREGOING, THE WARRANTIES AND REPRESENTATIONS EXPRESSLY SET FORTH
BELOW IN THIS SECTION 4.3 ARE EXCLUSIVE AND IN LIEU OF ALL OTHER REPRESENTATIONS
OR WARRANTIES WHATSOEVER WITH RESPECT TO THE AIRCRAFT, EXPRESS OR IMPLIED, AND
LESSOR SHALL NOT BE DEEMED TO HAVE MADE ANY OTHER IMPLIED WARRANTIES, OR
GUARANTEES, INCLUDING BUT NOT LIMITED TO, ANY IMPLIED WARRANTY OF
MERCHANTABILITY, ANY IMPLIED WARRANTY ARISING
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FROM COURSE OF PERFORMANCE, COURSE OF DEALING OR USAGE OF TRADE, OR ANY IMPLIED
WARRANTY OF FITNESS FOR A PARTICULAR OR ANY USE, EXCEPT THAT: Lessor represents
and warrants that, on the Delivery Date, Lessor shall have the right to lease
the Aircraft hereunder.
(b) DEFICIENCIES AND DELAYS. Lessee agrees that, from and
after the Delivery Date, Lessor shall not be liable for any liability, claim,
proceeding, loss, damage, fee, cost or expense of any kind caused directly or
indirectly by, or associated with, the Aircraft or any part thereof, any
inadequacy of the Aircraft for any purpose or any deficiency or defect therein,
the use or performance of the Aircraft, any maintenance, repairs, replacement or
modification to the Aircraft, any interruption or loss of service or use of the
Aircraft or any loss of business or other consequential damage or any damage
whatsoever, howsoever caused.
(c) REPAIRS AND REPLACEMENT. If the Aircraft or any part
thereof is lost, confiscated, damaged, destroyed or otherwise rendered unfit or
unavailable for use on or after the Delivery Date, Lessor shall not be liable to
repair the same or to supply any equipment in substitution therefor.
4.4. LESSEE'S REPRESENTATIONS AND WARRANTIES. Lessee
hereby makes the following representations and warranties:
(a) Lessee is a corporation duly organized and validly
existing in good standing under the laws of the State of New Mexico and has the
corporate power and authority to carry on its business as presently conducted
and to perform its obligations under the Lease, the Lease Supplement and the
other Lessee Documents to be executed and delivered on or before the Delivery
Date and is duly qualified to do business as a foreign corporation in each
jurisdiction in which the nature of its business makes such qualification
necessary;
(b) this Lease, the Lease Supplement and the other Lessee
Documents have been duly authorized by all necessary corporate action on the
part of Lessee, do not require any approval of the stockholders of Lessee or any
trustee or any holder of any indebtedness of Lessee, and neither the execution
and delivery hereof or thereof nor the consummation of the transactions
contemplated hereby or thereby nor compliance by Lessee with any of the terms
and provisions hereof or thereof will contravene its organizational documents or
any law or governmental rule or regulation applicable to Lessee or result in any
breach of, or constitute any default under, or result in the creation of any
Lien upon any property of Lessee under any indenture, mortgage, credit agreement
or other agreement or instrument to which Lessee is a party or by which Lessee
or its properties or assets may be bound;
(c) Lessee has received and has complied with every
necessary consent, approval, order, or authorization of, or registration with,
and has given any prior notice to, any federal, state or foreign governmental
authority having jurisdiction to the extent required for the Lessee to execute
and deliver this Lease, the Lease Supplement and the other Lessee Documents to
be executed and delivered on or before the Delivery Date and to perform its
obligations hereunder and thereunder;
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(d) this Lease has been, and upon execution and delivery
of the Lease Supplement and the other Lessee Documents to be executed and
delivered on or before the Delivery Date such Lease Supplement and other Lessee
Documents will be, duly executed and delivered by Lessee and constitutes or will
constitute the legal, valid, and binding obligations of Lessee, enforceable in
accordance with their respective terms;
(e) there are no suits or proceedings pending or, to the
knowledge of Lessee, threatened in any court or before any regulatory
commission, board or other administrative governmental agency against or
affecting Lessee, which, could be reasonably expected to have a materially
adverse effect on the current business or financial condition of Lessee or an
adverse effect on the ability of Lessee to perform its obligations under the
Lessee Documents;
(f) Lessee has filed or caused to be filed all tax
returns which are required to be filed by it, and has paid, caused to be paid or
provided for all taxes shown to be due or payable on said returns or on any
assessment received by Lessee, to the extent that such taxes have become due and
payable unless protected by appropriate legal proceedings;
(g) no action, including any filing or recording of any
document or taking possession thereof, is or will be necessary or advisable in
order to establish and perfect Lessor's title to and interest in the Aircraft in
any applicable jurisdiction within the United States of America;
(h) the chief executive office of Lessee is located at
▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇ ▇▇, ▇▇▇▇▇ ▇, ▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, and Lessee will give
Lessor 30 days' prior written notice of any change in such office;
(i) none of the documents furnished by Lessee to Lessor
or Owner Participant in connection with the transactions contemplated by this
Lease contain any untrue statement of a material fact or omit to state a
material fact necessary to make the statements contained therein, as of the date
made, not misleading. There is no fact known by Lessee which Lessee has not
disclosed to Lessor or Owner Participant in writing which materially adversely
affects or, as far as Lessee can now reasonably foresee, can reasonably be
expected to materially adversely affect, the ability of Lessee to carry on its
business and perform its obligations under the Lessee Documents;
(j) Lessee is not in breach of any agreement to which
Lessee is now a party which breach can reasonably be expected to have a material
adverse effect on the business or financial condition of Lessee or an adverse
effect on the ability of Lessee to perform its obligations under this Lease; and
(k) no Lease Event of Default or Lease Default has
occurred and is continuing.
Section 5. RETURN OF AIRCRAFT.
5.1. GENERAL CONDITION UPON RETURN. Unless an Event of Loss
with respect to the Airframe shall have occurred, in which case Section 10.1
hereof shall apply, at the end of the Term, Lessee will return the Aircraft to
Lessor by delivering the same to Kansas City or such
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other site as shall be mutually agreed between Lessee and Lessor (the
"Redelivery Location"). All costs and expenses associated with the return of the
Aircraft and compliance with this Section 5 shall be for the account of Lessee,
except as otherwise expressly provided herein. At the time of such return, the
Aircraft:
(a) shall be in compliance with the terms of this Lease
in such condition as qualifies it, without necessity of any repair, modification
or maintenance for (i) immediate issuance of a current and valid certificate of
airworthiness by, and registration with, the FAA, and (ii) immediate operation
in the United States in full compliance with United States Federal Aviation
Regulations Part 121;
(b) shall have undergone, immediately prior to
redelivery, the current phase of a C-Check as defined in the Maintenance
Document in accordance with Maintenance Program and all inspections required
under the Maintenance Document shall have been accomplished, and any
deficiencies, including, without limitation, routine items, non-routine items
and all corrosion, known prior to or revealed during such inspection will be
corrected in accordance with
manufacturer's limits, guidelines and specifications;
(c) shall be free and clear of all Liens (except Lessor
Liens);
(d) shall be in the interior configuration providing
seating for 140 passengers and in condition suitable for operation in and
compatible with scheduled commercial airline passenger service in the United
States, shall be clean by United States commercial airline standards with all
Parts, systems and components operable and shall be in as good operating
condition as when delivered to Lessee hereunder, ordinary wear and tear
excepted, and the seats shall recline and the tray tables and ashtrays shall be
installed;
(e) shall have installed thereon all Engines and each
such Engine has not less than 2,500 Flight Hours, 2,500 Cycles or one year
(whichever is less) remaining to the next expected removal for a shop visit, and
no Engine or module thereon shall be "on watch", subject to special or reduced
inspection internals or exhibit any adverse trends or indicate a rate of
acceleration in performance deterioration that is higher than normal based on
Lessee's maintenance experience;
(f) shall have had accomplished the ongoing corrosion
prevention procedures set forth in the Maintenance Program;
(g) shall be equipped with a full complement of Parts,
accessories and equipment as delivered, and (i) each and every hour/cycle
limited component or Part (including Life Limited Parts) shall have at least
2,500 Flight Hours or 2,500 Cycles remaining until the next expected shop visit
or scheduled renewal under Maintenance Program, whichever is the more limiting
factor, (ii) each and every calendar-limited component or Part shall have one
year or one hundred percent of its total approved life remaining, whichever is
less; and (iii) "on-condition" and "conditioned monitored" components shall be
serviceable.
(h) shall at the time of such return have no deferred
maintenance items and shall be in compliance (without regard to permitted
compliance extensions) with all regulations, mandatory maintenance directives,
service bulletins, airworthiness directives and Federal Air
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Regulations or other instructions of the FAA or other United States governmental
authorities having jurisdiction in each case that have an effective date for
compliance prior to the Termination Date or falling due within twelve months (or
the equivalent number of Flight Hours or Cycles based on Lessee's utilization
for the prior twelve months) thereafter, and, in the event that any such
directives, service bulletins, regulations or instructions require terminating
action as the only option of compliance, Lessee shall have completed such
termination action; and
(i) shall have any markings of Lessee or any sublessee
painted over in a workmanlike manner and the exterior shall be cleaned to U.S.
commercial airline standards.
5.2. MANUALS, ETC. At the expiration or termination of
this Lease, Lessee shall deliver or cause to be delivered to Lessor all logs,
manuals, drawings and data and inspection, modification and overhaul records in
respect of the Aircraft, referred to in Schedule 1, Part B, any records required
to be maintained hereunder and under applicable rules and regulations of the FAA
and any other records maintained by Lessee. Such logs, manuals, drawings, data
and records shall be sufficient to permit (i) immediate issuance of a current
and valid certificate of airworthiness by, and registration with the FAA and
(ii) immediate operation in the United States in full compliance with FAR Part
121.
5.3. FAILURE TO RETURN AIRCRAFT OR ENGINES. If Lessee
shall, for any reason whatsoever, fail to return the Aircraft or any Engine at
the time specified herein, the obligations of Lessee as provided in this Lease
shall continue in effect with respect to the Aircraft or such Engine until such
Aircraft and such Engine is redelivered and accepted by Lessor in the condition
required by Section 5, except that Basic Rent shall be payable on demand for
each day on and after the time specified herein for return in an amount equal to
the Basic Rent Amount plus fifty percent divided by thirty. This Section 5.3
shall not be construed as permitting Lessee to fail to meet its obligations to
return the Aircraft or such Engine in accordance with the requirements of this
Lease or constitute a waiver of a Lease Default or Lease Event of Default.
5.4. INSPECTION FLIGHT. Prior to return of the Aircraft to
Lessor, Lessee shall make the Aircraft, records and log books available to
Lessor at the location where the redelivery C-Check is performed, and Lessor
shall be entitled to conduct, at Lessor's expense, a ground inspection of the
Aircraft and, at Lessor's expense, a borescope inspection of each of the
Engines. In the event that such borescope inspection reveals any damage to any
Engine, the Lessee shall, at Lessee's expense, promptly correct or have
corrected any such damage. Lessee shall also conduct, at its expense, a test
flight of the Aircraft, which flight shall not exceed two hours in length, which
at Lessee's sole discretion may be the positioning flight to the Redelivery
Location or a storage location. Lessor shall be permitted to have three of its
representatives present on such flight. The test flight shall be flown using the
standard flight test procedures referred to in Section 2.5 (or such other
procedures as the parties shall agree) for checking the operation of aircraft
and engines of such types and their systems. If such flight test reveals any
discrepancies from the condition required by this Section 5 (other than such
discrepancies which were waived by Lessee on the Delivery Date and indicated on
the Receipt for Lease Aircraft signed on the Delivery Date), Lessee shall, at
its expense, promptly correct or have corrected any such discrepancies which are
specified in writing by Lessor.
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5.5. STORAGE. At the end of the Term, at the written
request of Lessor, Lessee will assist Lessor in arranging storage facilities for
the Aircraft. Lessor will bear all costs of storage.
Section 6. LIENS.
Lessee will not directly or indirectly create, incur, assume
or suffer to exist any Lien on or with respect to the Aircraft, the Airframe or
any Engine, title thereto or any interest therein or in this Lease or any
interest of Lessor in any Rent or other amounts payable by Lessee hereunder
except Permitted Liens. Lessee will promptly take (or cause to be taken) such
action as may be necessary duly to discharge any such Lien not excepted above if
the same shall arise at any time.
Section 7. REGISTRATION, OPERATION, POSSESSION, SUB-
LEASING AND RECORDS.
7.1. REGISTRATION AND OPERATION.
(a) REGISTRATION. Lessee shall insure that at all times
during the Term the Aircraft will remain duly registered in the name of Lessor
with the FAA; PROVIDED, that the Lessee shall have no obligation under this
Section 7.1(a) to the extent such failure to remain so registered is
attributable to the Lessor's failure to be a "citizen of the United States"
within the meaning of Section 101(16) of the Act. Lessor agrees that it will not
reregister the Aircraft in another jurisdiction during the Term and that it will
not sell, assign or transfer any of its rights hereunder in or to any Person if,
as a result of such sale, assignment or transfer, the Aircraft would no longer
be owned by a "citizen of the United States" within the meaning of Section
101(16) of the Act.
(b) NAMEPLATE. Lessor agrees to affix and Lessee agrees
to maintain in the cockpit of the Aircraft and on each Engine in a clearly
visible location, a nameplate bearing the following legend: "Owned by First
Union National Bank, not in its individual capacity but solely as Trustee, Owner
and Lessor," or such other legend as may be required by Lessor.
(c) COMPLIANCE WITH LAWS. Lessee agrees that it will not
use or operate, or permit the use or operation of, the Aircraft, Airframe or any
Engine in violation of any law or any rule, regulation or order of the FAA or
any federal, state or foreign governmental authority having jurisdiction or in
violation of any airworthiness certificate, license or registration relating to
the Aircraft, Airframe or any Engine issued by any such authority.
(d) OPERATION; INSURANCE REQUIREMENTS. Lessee agrees to
operate, use and locate the Aircraft, or permit the aircraft to be operated,
used and located, only in charter operations in those areas not precluded by
aviation or United Nations Sanctions or prohibited by United States laws and
further agrees not to operate, use or locate the Aircraft, Airframe or any
Engine, or suffer the Aircraft, Airframe or any Engine to be operated, used or
located, (i) in any area excluded from coverage by the insurance required by the
terms of Section 11, or (ii) in any recognized or threatened area of hostilities
unless fully covered by war-risk insurance satisfying the terms of Section 11,
or (iii) in any country with which the United States does not maintain normal
diplomatic relations, unless it shall have received the prior written consent of
Lessor.
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7.2. POSSESSION. i) EXCEPT AS PROVIDED IN THE USMS
AGREEMENT OR THE MAINTENANCE AGREEMENT, LESSEE WILL NOT, WITHOUT THE PRIOR
WRITTEN CONSENT OF LESSOR, SUBLEASE OR OTHERWISE IN ANY MANNER DELIVER, TRANSFER
OR RELINQUISH POSSESSION OF THE AIRCRAFT, AIRFRAME OR ANY ENGINE OR INSTALL ANY
ENGINE, OR PERMIT ANY ENGINE TO BE INSTALLED, ON ANY AIRFRAME OTHER THAN THE
AIRFRAME; provided, however, that, so long as no Lease Default or Lease Event of
Default shall have occurred and be continuing, Lessee may, without such prior
written consent:
(i) TESTING AND SERVICE. Deliver possession of any
Aircraft, Airframe or Engine, or Part thereof, to the Manufacturer for testing
or other similar purposes, to any organization for service, or for alterations
or modifications in or additions to the Aircraft, Airframe or any Engine,
provided that all maintenance, repair, overhaul, alteration and modification
work shall be performed by FAA - approved organizations using FAA - approved
source material;
(ii) INSTALLATION OF ENGINES. Install or permit to be
installed an Engine on an airframe owned by Lessee free and clear of all Liens,
except Permitted Liens and those which apply only to the engines (other than
Engines), appliances, parts, instruments, appurtenances, accessories,
furnishings and other equipment (other than Parts) installed on such airframe
(but not to the airframe as an entirety);
(iii) INSTALLATION OF ENGINES ON OTHER AIRFRAMES. Install
or permit to be installed an Engine on an airframe leased to, or purchased by,
Lessee subject to a lease, conditional sale, trust indenture or other security
agreement, but only if (A) such airframe is free and clear of all Liens, except
the rights of the parties to the lease, conditional sale, trust indenture or
other security agreement covering such airframe and Permitted Liens and (B)
Lessor shall have received from the lessor, conditional seller, indenture
trustee or secured party of such airframe an agreement (which may be the lease,
conditional sale, trust indenture or other security agreement covering such
airframe) whereby such lessor, conditional seller, indenture trustee or secured
party expressly agrees that neither it nor its successors or assigns will
acquire or claim any right, title or interest in any Engine by reason of such
Engine being installed on such airframe at any time while such Engine is subject
to this Lease or is owned by Lessor;
(iv) TRANSFER TO THE UNITED STATES GOVERNMENT. Transfer
possession of the Airframe or any Engine to the United States or any
instrumentality or agency thereof in accordance with the Civil Reserve Air Fleet
Program authorized under 10 U.S.C. Sec. 9511 ET SEQ.; and
PROVIDED FURTHER WITH RESPECT TO THIS SECTION 7.2 (OTHER THAN A TRANSFER
PURSUANT TO CLAUSE (IV) ABOVE) THAT:
(1) the rights of any transferee who receives possession
by reason of a transfer permitted by this Section 7.2 shall be subject and
subordinate to all the terms of this Lease and to Lessor's rights, powers and
remedies under this Lease, including the rights to repossession pursuant to
Section 15 hereof;
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(2) Lessee shall remain primarily liable hereunder for
the performance of all the terms of this Lease to the same extent as if such
transfer had not occurred;
(3) no permitted transfer or other relinquishment of
possession permitted hereunder shall affect the registration of the Aircraft or
shall permit any action not permitted under this Lease; and
(4) all necessary action shall be taken which is required
to continue the perfection of Lessor's title and interest in and to such
Aircraft, Airframe and Engines, and Lessor's rights under this Lease.
Lessor hereby agrees for the benefit of any lessor, conditional seller,
indenture trustee or secured party of any engine leased to or purchased by
Lessee which may be installed on an Airframe that Lessor will not acquire or
claim, as against such lessor, conditional seller, indenture trustee or secured
party, any right, title or interest in any engine (other than an Engine) as the
result of such engine being installed on the Airframe at any time while such
engine is subject to such lease, conditional sale, trust indenture or other
security agreement and owned by such lessor or conditional seller or subject to
a trust indenture or security interest in favor of such indenture trustee or
secured party. Lessee agrees that it will give the Lessor prior written notice
of its intent to (A) remove any Engine from the Airframe or (B) install any
engine on the Airframe.
(b) Except to the extent inconsistent with the rules and
regulations applicable to the Civil Reserve Air Fleet Program, Lessee will cause
the USMS Agreement and any sublease or other agreement relating to the operation
or use of the Aircraft to which Lessor has consented pursuant to Section 7.2(b)
to contain a clause substantially to the effect of the following:
"Anything in this agreement to the contrary notwithstanding,
the sublessee's rights hereunder to the possession, use and enjoyment of the
Aircraft shall be subject and subordinate to the Aircraft Lease Agreement dated
as of November 21, 2001 (the "Primary Lease") among First Union National Bank,
as Trustee (in this Section __ called the "Primary Lessor"), Airlease Ltd. and
the sublessor hereunder, in respect of the Aircraft, and the sublessee confirms
and agrees that this agreement is in all respects subject and junior to the
Primary Lease. Upon notice to the sublessee hereunder by the Primary Lessor that
a Lease Event of Default (as defined in the Primary Lease) has occurred and is
continuing, the Primary Lessor may terminate this agreement and require prompt
delivery by the sublessee of the Aircraft to the Primary Lessor, in accordance
with the provisions of Section 5 of the Primary Lease. Unless the sublessee
shall have received any such written notice from the Primary Lessor terminating
this sublease, the sublessee shall be and remain fully obligated hereunder
notwithstanding the continuance of any Lease Event of Default under the Primary
Lease."
7.3. RECORDS AND REPORTS. Lessee shall:
(a) RECORDS. Maintain or cause to be maintained in
English all records, logs and other materials generally required by the FAA and
any other governmental authority having jurisdiction to be maintained in respect
of the Aircraft, the Airframe and each Engine; and
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(b) INFORMATION AND REPORTS. Promptly furnish or cause to
be furnished to Lessor such information as may be required to enable Lessor to
file any reports, including tax returns, required to be filed by Lessor with any
governmental authority because of Lessor's ownership of the Aircraft, Airframe
or any Engine or because of receipt of Rent.
Section 8. MAINTENANCE; REPLACEMENT AND POOLING OF
PARTS; ALTERATIONS, MODIFICATIONS AND ADDITIONS.
8.1. MAINTENANCE.
Lessee shall maintain, service, repair, overhaul, alter,
modify, add to and test or cause to be maintained, serviced, repaired,
overhauled, altered, modified, added to and tested the Aircraft, the Airframe
and each Engine, and each other engine installed from time to time on the
Airframe, in accordance with a maintenance program for the Aircraft, Airframe
and Engines which shall comply with the Maintenance Document (the "Maintenance
Program"), so as to keep the Aircraft, the Airframe and each Engine in as good
operating condition as when delivered to Lessee hereunder, ordinary wear and
tear excepted, in the same manner as used by Lessee with other aircraft owned or
operated by Lessee and so as to keep the Aircraft in such operating condition as
may be necessary to enable the airworthiness certificate for the Aircraft to be
maintained in good standing at all times under the applicable rules and
regulations of the FAA and any other applicable law. Lessee will procure
compliance with all service, inspection, maintenance, repair and overhaul
regulations, directions and instruments which are made mandatory by the FAA or
any other governmental authority upon operation of ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ DC-9-Series
82 aircraft and/or ▇▇▇▇▇ & Whitney JT8D-217 engines. Lessee further agrees that
the Aircraft, Airframe and Engines will be maintained in compliance with all
laws, rules, regulations and orders of each government or governmental authority
having jurisdiction over the maintenance of the Aircraft and in compliance with
each applicable airworthiness certificate, license and registration relating to
the Aircraft, Airframe or any Engine issued by any such authority. In addition,
Lessee will procure that the Aircraft is maintained such that it would qualify
for immediate operation in the United States under FAR Part 121.
8.2. REPLACEMENT OF PARTS. Lessee, at its sole cost and
expense, will promptly replace or cause the replacement of all Parts which may
from time to time be incorporated in the Aircraft, Airframe or any Engine and
which may from time to time become worn out, lost, stolen, destroyed, seized,
confiscated, damaged beyond repair or permanently rendered unfit for use for any
reason. In addition, Lessee may remove in the ordinary course of maintenance,
service, repair, overhaul or testing any Parts as permitted by Section 8.1,
whether or not worn out, lost, stolen, destroyed, seized, confiscated, damaged
beyond repair or permanently rendered unfit for use; provided, however, Lessee,
at its own cost and expense, will replace such Parts as promptly as possible.
All replacement Parts shall be free and clear of all Liens (except for Permitted
Liens) and shall be in good operating condition and have a value and utility at
least equal to the Parts replaced assuming such replaced Parts were in the
condition and repair required to be maintained by the terms hereof. All Parts at
any time removed from the Aircraft, Airframe or any Engine shall remain the
property of Lessor no matter where located, until such time as such Parts shall
be replaced by Parts which have been incorporated in the Aircraft, Airframe or
such Engine and which meet the requirements for replacement Parts specified
above. Immediately upon any replacement Part which satisfies the requirements
for replacement Parts
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specified above becoming incorporated in the Aircraft, Airframe or such Engine
as above provided, without further act, (i) title to the replaced Part shall
thereupon vest in Lessee free and clear of all rights of Lessor and the replaced
Part shall no longer be deemed a Part hereunder, (ii) title to such replacement
Part shall thereupon vest in Lessor (subject only to Permitted Liens), and (iii)
such replacement Part shall become subject to this Lease and be deemed part of
an Aircraft, Airframe or such Engine for all purposes hereof to the same extent
as the Parts originally incorporated in such Aircraft, Airframe or Engine.
8.3. POOLING OF PARTS. Any Part removed from the Aircraft,
Airframe or any Engine as provided in Section 8.2 may be subjected by Lessee to
a normal pooling arrangement customary in the U.S. commercial airline industry
entered into in the ordinary course of business of Lessee, so long as a Part
replacing such removed Part shall be incorporated in such Aircraft, Airframe or
Engine in accordance with Section 8.2 as promptly as possible after the removal
of such removed Part. In addition, any replacement Part when incorporated in
such Aircraft, Airframe or such Engine in accordance with Section 8.2 may be
owned by any air carrier subject to such a normal pooling arrangement, so long
as Lessee, as promptly thereafter as reasonably possible, either (i) causes
title to such replacement Part to vest in Lessor in accordance with Section 8.2
by Lessee acquiring title thereto for the benefit of, and transferring such
title to, Lessor free and clear of all Liens (except Permitted Liens), or (ii)
replaces such replacement Part by incorporating in the Aircraft, Airframe or
such Engine a further replacement Part owned by Lessee free and clear of all
Liens (except Permitted Liens) and by causing title to such further replacement
Part to vest in Lessor in accordance with Section 8.2.
8.4. ALTERATIONS, MODIFICATIONS AND ADDITIONS. Lessee
shall make or cause to be made, at its own expense, such alterations and
modifications in and additions to each Aircraft, Airframe and Engine as may be
required from time to time to meet the standards of the FAA or other
governmental authority (domestic or foreign) having jurisdiction and to enable
the airworthiness certificate for the Aircraft to be maintained in good standing
at all times under the applicable rules and regulations of the FAA and any other
governmental authority having jurisdiction. In addition, upon written consent of
Lessor, Lessee, at it own cost and expense, may, from time to time make such
alterations and modifications in and additions to the Aircraft, Airframe or any
Engine as Lessee may deem desirable in the proper conduct of its business,
including without limitation, removal of Parts which Lessee deems obsolete or no
longer suitable or appropriate for use in the Aircraft, Airframe or such Engine;
provided, however, that no such alteration, modification or addition shall
diminish the value, remaining useful life, or utility of the Aircraft, Airframe
or such Engine, or impair the airworthiness thereof, below the value, remaining
useful life, utility, and airworthiness thereof immediately prior to such
alteration, modification or addition assuming the Aircraft, Airframe or such
Engine was then of the value or utility and in the condition required to be
maintained by the terms of this Lease. Title to all Parts on the Aircraft,
Airframe or Engine as the result of such alteration, modification or addition
shall, without further act, vest in Lessor. Notwithstanding the foregoing
sentence of this Section 8.4, so long as no Lease Default or Lease Event of
Default shall have occurred and be continuing, Lessee may, at any time during
the Term, remove any Part if (i) such Part is in addition to, and not in
replacement of or substitution for, any Part originally incorporated in any
Aircraft, Airframe or Engine at the time of delivery thereof hereunder or any
Part in replacement of or substitution for any such Part, (ii) such Part is not
required to be incorporated in such Aircraft, Airframe or Engine pursuant to the
terms of this Section 8, and (iii) such Part can be
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removed from such Aircraft, Airframe or Engine without diminishing or impairing
the value or airworthiness required to be maintained by the terms of this Lease
which the Aircraft, Airframe or such Engine would have had at such time had such
alteration, modification or addition not occurred. Upon the removal by Lessee of
any Part as above provided, title thereto shall, without further act, vest in
Lessee and such Part shall no longer be deemed part of such Aircraft, Airframe
or Engine from which it was removed. Any Part not removed by Lessee as above
provided prior to the return of such Aircraft, Airframe or Engine to Lessor
hereunder shall remain the property of Lessor.
Section 9. INDEMNIFICATION.
9.1. GENERAL INDEMNITY.
(a) Lessee agrees to indemnify, reimburse, and hold
harmless each Indemnitee from and against any and all claims, damages, losses,
liabilities (including, without limitation, any claim or liability for strict
liability in tort or otherwise imposed), obligations, demands, suits, judgments,
causes of action, legal proceedings, whether civil, criminal or administrative,
penalties, fines, other sanctions, and all costs and expenses of any nature
whatsoever, including attorney's fees and expenses (any and all of which are
hereafter referred to as "Losses") which in any way at any time may result from,
pertain to, or arise out of, the Aircraft, this Lease or any other Lessee
Document, the lease of the Aircraft by Lessor to Lessee under the Lease, the
breach of any representation, warranty or covenant made by Lessee hereunder or
the condition, ownership, manufacture, purchase, delivery, non-delivery,
acceptance, rejection, possession, return, disposition, subleasing, use or
operation, maintenance, service, repair, overhaul, construction, design
(including, without limitation, latent and other defects whether or not
discovered or discoverable by the Indemnitee, and, with respect to any Part
installed on the Aircraft by Lessee, any claim for patent, trademark or
copyright infringement), or acceptance (in each and every case) of the Aircraft
or Airframe, any Engine or Part either in the air or on the ground, or any
defect in the Aircraft arising from the material or any articles used therein or
from the design, testing or use thereof or from any maintenance, service,
repair, overhaul or testing of the Aircraft or any Airframe, Engine or Part
regardless of when such defect shall be discovered, whether or not such Aircraft
or any Airframe, Engine or Part is at the time in the possession of Lessee and
whether it is in the United States of America or any other country.
The indemnities contained in this Section 9.1 shall continue
in full force and effect notwithstanding the expiration or other termination of
the Lease and are expressly made for the benefit of and shall be enforceable by
each Indemnitee.
(b) The indemnity set forth above shall not extend to any
Loss with respect to any Indemnitee (A) to the extent that such Loss is caused
by acts or events which occur after the end of the Term provided that Lessee has
fully complied with all the terms of the Lease and such Loss is unrelated to
acts, omissions, events, incidents or circumstances occurring or existing before
the end of the Term, (B) which is a Tax, whether or not Lessee is required to
indemnify therefor pursuant to Section 9.2, (C) to the extent such Loss is
attributable to any Lessor Lien or the gross negligence or wilful misconduct of
an Indemnitee (other than any negligence imputed to such Indemnitee as a result
of its interest in the Aircraft or the acts or omissions of any person other
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than such Indemnitee) or from any misrepresentation or breach of or failure to
comply with or perform any obligations of such Indemnitee contained in this
Lease, (E) resulting from any disposition by an Indemnitee of any of its
interest in the Aircraft, the Airframe, any Engine or the Lease other than a
disposition resulting from the exercise of remedies under the Lease by Lessor
while a Lease Event of Default has occurred and is continuing, or (F) to the
extent such a Loss actually occurred prior to the commencement of the Term and
is unrelated to acts, omissions, events, incidents or circumstances occurring or
existing after commencement of the Term and before Aircraft ceases to be subject
to the Lease.
(c) The Lessee further agrees that, notwithstanding the
exceptions in paragraph (b) above, any indemnity under Section 9.1 shall include
any amount necessary to hold the Indemnitee harmless from all Taxes required to
be paid by such Indemnitee with respect to the receipt or accrual of such
indemnity.
(d) If any Indemnitee entitled to indemnity hereunder has
knowledge of any liability hereby indemnified against, it shall give prompt
written notice thereof to Lessee, but the failure to give such notice shall not
affect the obligations of Lessee hereunder (except to the extent that Lessee is
materially prejudiced in the exercise of its right to contest and prevail in the
contest of such claim as a result of such failure). If Lessee has actual
knowledge of any liability hereby indemnified against, it shall give prompt
written notice thereof to the party entitled to be indemnified, but the failure
to give such notice shall not affect the obligations of Lessee hereunder. Lessee
shall be entitled, at its sole cost and expense, acting through counsel
reasonably acceptable to the respective Indemnitee, to assume responsibility for
and control of such judicial or administrative proceeding. Notwithstanding the
foregoing, Lessee shall not be entitled to assume responsibility for and control
of any such judicial or administrative proceedings, but shall nonetheless be
responsible for the costs thereof, (w) while a Lease Event of Default under the
Lease shall have occurred and be continuing, (x) if such proceedings will
involve any material danger of the sale, forfeiture or loss of the Aircraft or
any part thereof, (y) if in the written opinion of counsel to such Indemnitee an
actual or potential material conflict of interest exists where it is advisable
for such Indemnitee to be represented by separate counsel or (z) if such
Indemnitee has been indicted or otherwise charged in a criminal complaint and
such Indemnitee desires to be represented by separate counsel. The Indemnitee
may participate at its own expense and with its own counsel in any judicial
proceeding controlled by the Lessee pursuant to the preceding provisions.
(e) Upon payment of indemnification of any amount
pursuant to this Section 9.1, Lessee shall be subrogated to any claims the
Indemnitee may have relating thereto. The Indemnitee agrees to cooperate with
Lessee to permit Lessee to pursue such claims.
(f) In the event that Lessee shall have paid an amount to
an Indemnitee pursuant to this Section 9.1, and such Indemnitee subsequently
shall be reimbursed in respect of such amount from any other Person, such
Indemnitee shall promptly pay to Lessee an amount equal to the amount of such
reimbursement net of all expenses incurred in obtaining the same (but in no
event shall this amount paid by an Indemnitee be in excess of the payment by
Lessee pursuant to this Section 9.1).
9.2. GENERAL TAX INDEMNITY.
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(a) Lessee agrees that each payment of Rent shall be free
of any withholdings whatsoever, and in the event that any withholding is
required, Lessee shall pay an additional amount of Rent such that after the
deduction of all amounts required to be withheld, the net amount of Rent
actually received by each Tax Indemnitee shall equal, on an after tax basis, the
amount of Rent that would be due absent such withholding. Lessee further agrees
on written demand to pay, and to indemnify and hold each Tax Indemnitee harmless
from, all Taxes (and all costs and expenses incurred in connection with the
payment or contest of Taxes) which are imposed by any Federal, state or local
government or taxing authority in the United States of America or by any foreign
government or any taxing authority or governmental subdivision of a foreign
country or of a territory or possession of the United States or any
international authority upon Lessor, Lessee or the Aircraft with respect to,
based upon or measured by (i) the cost or value of the Aircraft or any Part
thereof, or interest therein, (ii) the manufacture, purchase, ownership,
delivery, leasing, possession, use, operation, sale, subleasing, rental,
retirement, abandonment, registration, preparation, installation, modification,
repair, maintenance, replacement, transportation, storage, transfer of title,
return or other disposition of the Aircraft, the Airframe, any Engine, or any
Part thereof or interest therein, (iii) the rentals, receipts or earnings
arising from the Lease or (iv) otherwise in connection with this Lease and the
transactions contemplated hereby. Notwithstanding the preceding sentence, Lessee
shall have no liability to a Tax Indemnitee pursuant to this Section 9.2 with
respect to:
(A) Taxes based on or measured by the net income
of such Tax Indemnitee; provided, however, that, notwithstanding the foregoing
exclusion, there shall not be excluded any Taxes imposed by any jurisdiction
(other than the United States Federal Government unless due to the replacement,
repair or pooling of any part of the Aircraft) which are imposed directly as a
result of the activities in or payments being made from such jurisdiction of
Lessee or any operator, sublessee or other user of the Aircraft, the presence of
the Aircraft in such jurisdiction, or the Lessee's incorporation or tax
residence or domicile in such jurisdiction, or
(B) any Taxes imposed as a result of a
disposition by such Tax Indemnitee of the Aircraft, any Engine, or any Part, or
any interest in any of the foregoing, or any interest in the Rent, unless such
disposition shall have occurred at any time while a Lease Default or a Lease
Event of Default shall have occurred and be continuing or results from any
exercise of any of the remedies as provided in or permitted by this Lease or
applicable law or results from a replacement of the Airframe or Engines or any
Part pursuant to this Lease.
(b) The Lessee further agrees that, notwithstanding the
exceptions in paragraph (a) above, any indemnity under Section 9.1 or this
Section 9.2 shall include any amount necessary to hold the Tax Indemnitee
harmless from all Taxes required to be paid by such Tax Indemnitee with respect
to the receipt or accrual of such indemnity.
(c) In case any report or return is required to be made
with respect to any obligation of Lessee under this Section 9.2, Lessee either
shall make such report or return in such manner as will show the interest of the
Lessor in the Aircraft, or shall promptly notify the Lessor of such requirement
and shall make such report or return in such manner as shall be directed by the
Lessor. All costs and expenses (including legal and accountants' fees) of
preparing any such return or report shall be borne by Lessee. Lessee further
agrees to promptly provide each Tax
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Indemnitee with any information reasonably requested by such Tax Indemnitee in
connection with preparation of such Tax Indemnitee's tax returns.
(d) Contest.
(1) NOTICE OF CLAIM. If a written claim is made against a
Tax Indemnitee for Taxes with respect to which the Lessee is or may be liable
for payment or indemnity hereunder (a "Claim"), such Tax Indemnitee shall give
the Lessee prompt written notice of such Claim after its receipt and shall
furnish the Lessee with any requests for information it receives with respect to
such Claim. Without prejudice to any other rights the Lessee may have in
connection therewith, the failure of a Tax Indemnitee to provide such notice
shall not affect the Lessee's obligations hereunder except to the extent that
such failure prevents the Tax Indemnitee or the Lessee from contesting such
Claim.
(2) MANNER OF CONTEST. If the Lessee within thirty (30)
days after notification requests in writing, the Tax Indemnitee shall in good
faith, with due diligence and at Lessee's expense, contest in the name of the
Tax Indemnitee, or if permitted by law and so requested by the Lessee, permit
the Lessee to contest in the name of the Lessee but only if (i) the tax is not
(x) reflected in a return with other taxes of the Tax Indemnitee unrelated to
the transactions contemplated by the Operative Documents or (y) an income tax,
(ii) the contest may be brought solely in the Lessee's name, (iii) no tax return
of such Tax Indemnitee will be held open as a result of such contest, and (iv)
such contest does not involve any material risk of the sale, forfeiture or loss
of the Aircraft, the validity, applicability or amount of such Claim by:
(a) resisting payment thereof, if practical;
(b) not paying the same, except under protest;
(c) if payment is to be made, using diligent
efforts to obtain a refund thereof in appropriate administrative or judicial
proceedings; or
(d) taking such other actions as are reasonably
requested from time to time by Lessee; provided, however, that no Tax Indemnitee
will be required to contest any Claim unless (w) it has received a written
acknowledgment from Lessee of Lessee's Liability for such Taxes; (x) it has
received a written opinion of its tax counsel (who shall be reasonably
acceptable to Lessee) that a realistic possibility of success (as set forth in
ABA Formal Opinion 85-352) exists for contesting such Claim (or in the case of
an appeal of an adverse judicial decision, that it is more likely than not that
such decision will be reversed or substantially modified); (y) the Claim would
require the Lessee to make an indemnity payment to such Tax Indemnitee in excess
of $25,000; and (z) such contest does not involve any material risk of the sale,
forfeiture or loss of the Aircraft. In no event will a Tax Indemnitee appeal or
defend any appeal of any adverse judicial decision with respect to a Claim to
the United States Supreme Court.
(e) TAX BENEFIT. If Lessor determines in its
sole discretion that it has actually realized a tax benefit or refund as a
result of any Taxes paid by Lessee or against which Lessor has been indemnified
by Lessee under this Section 9.2, Lessor shall (to the extent in its sole
discretion that it can do so without prejudicing the retention of the amount of
such benefit or refund and without prejudice to the right to any other relief or
allowance which may be available
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to it) pay to Lessee, promptly after actual realization of such tax benefit or
refund or receipt of such other compensation, an amount that is equal to the
amount of such benefit or refund or other compensation; provided, however, that
no such payment exceed (x) the amount of all prior payments by Lessee to Lessor
under this Section 9.2 minus (y) the amount of all prior payments by Lessor
pursuant to this clause (e). If Lessor shall have paid Lessee any amounts under
this clause (e) and it is subsequently determined that Lessor was not entitled
to a tax benefit or refund, such determination shall be treated as the
imposition of a Tax for which Lessee is obligated to indemnify Lessor pursuant
to the provisions of Section 9.2 without regard to the exclusions set forth in
Section 9.2(a).
9.3. PAYMENTS. Any payments made pursuant to this Section
9 shall be made in U.S. dollars directly to the Person entitled thereto or to
Lessee, as the case may be, in immediately available funds at such bank or to
such account as specified by the payee in written directions to the payor, or,
if no such direction shall have been given, by check of the payor payable to the
order of the payee and mailed to the payee by certified mail, postage prepaid at
its address as set forth in this Agreement. Any amount payable to any Indemnitee
or Tax Indemnitee pursuant to Section 9.1 or Section 9.2 is to be paid to such
party on the later of (i) the tenth day after receipt of a written demand
therefor from such party and (ii) the date on which such Indemnitee or Tax
Indemnitee is required to pay such amount to a third party, or, in the case of
Section 9.2, on the date of payment of the indemnified Taxes by the Tax
Indemnitee to the appropriate taxing authority, if earlier.
9.4. SURVIVAL. All indemnities, obligations, adjustments
and payments provided for in this Section 9 shall survive, and remain in full
force and effect, notwithstanding the expiration or other termination of this
Lease.
Section 10. LOSS, DESTRUCTION, REQUISITION, ETC.
10.1. EVENT OF LOSS WITH RESPECT TO AIRFRAME. Upon the
occurrence of an Event of Loss with respect to the Aircraft, Lessee shall give
Lessor prompt written notice thereof and within five (5) Business Days following
the date of the occurrence of such Event of Loss. On or before the Business Day
next preceding the earlier of (i) the 61st day following the date of the
occurrence of such Event of Loss, or (ii) five days following the receipt of
insurance proceeds with respect to such occurrence, Lessee shall pay to Lessor
(A) the Stipulated Loss Value for the Aircraft and (B) any other Rent which is
due and payable through and including such date. In the event of payment in full
of the Stipulated Loss Value for such Aircraft pursuant to this Section 10.1 and
all other Rent and amounts then due and payable hereunder by Lessee, the
obligation of Lessee to pay Basic Rent hereunder with respect to such Aircraft
for any period commencing after the date of such payment of Stipulated Loss
Value shall terminate (but Lessee shall remain liable for all payments of Rent,
including Basic Rent for such Aircraft, due or accrued through and including the
date of such payment of Stipulated Loss Value), the Term for such Aircraft shall
end, and Lessor will transfer the Aircraft to Lessee on an "as-is, where-is"
basis, free and clear of Lessor Liens, but otherwise without recourse,
representation or warranty, express or implied.
10.2. EVENT OF LOSS WITH RESPECT TO AN ENGINE.
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(a) EVENT OF LOSS. Upon the occurrence of an Event of
Loss with respect to an Engine under circumstances in which there has not
occurred an Event of Loss with respect to an Airframe, Lessee shall give Lessor
prompt written notice (and in any event within three days after such occurrence)
thereof and shall, as promptly as possible and in any event within 60 days after
the occurrence of such Event of Loss, convey or cause to be conveyed to Lessor
as replacement for the Engine with respect to which such Event of Loss occurred,
all legal and beneficial title to a Replacement Engine free and clear of all
Liens, other than Permitted Liens, and having a value, remaining useful life and
utility at least equal to the Engine with respect to which such Event of Loss
occurred, assuming such Engine was of the value and utility and in the condition
and repair required by the terms hereof immediately prior to the occurrence of
such Event of Loss.
(b) CONDITIONS; LESSEE'S OBLIGATIONS. Prior to or at the
time of any such conveyance, Lessee will promptly (all writings referred to
below to be reasonably satisfactory in form and substance to Lessor):
(i) furnish Lessor with a full warranty ▇▇▇▇ of sale duly
conveying to Lessor each Replacement Engine together with such
evidence of title as Lessor may reasonably request;
(ii) cause a Lease Supplement subjecting each such
Replacement Engine to this Lease, duly executed by Lessee, to
be delivered to Lessor for execution and, upon such execution,
to be filed for recordation;
(iii) furnish Lessor with such evidence of compliance with
the insurance provisions of Section 11 with respect to each
such Replacement Engine as may be reasonably requested;
(iv) furnish Lessor with a certificate or certification of
a qualified independent aircraft appraiser reasonably
satisfactory to Lessor certifying that each such Replacement
Engine has a value and utility at least equal to, and is in at
least as good operating condition as, the Engine so replaced
(assuming each such Engine was in the condition and repair
required by the terms hereof immediately prior to the
occurrence of such Event of Loss);
(v) furnish Lessor with an Officer's Certificate of
Lessee certifying that, upon consummation of such replacement,
no Lease Event of Default will exist hereunder; and
(vi) furnish such other certificates or documents to
effect such replacement as Lessor may reasonably request.
(c) RECORDATION AND OPINIONS. In the case of any
Replacement Engine conveyed under this Section 10.2, promptly upon the
recordation of the Lease Supplement covering such Replacement Engine pursuant to
the Act, Lessee will cause to be delivered to Lessor an opinion of counsel
experienced in federal aviation matters and satisfactory to Lessor as to the due
recordation of such Lease Supplement as Lessor may require.
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(d) CONVEYANCE; REPLACEMENT ENGINE. Upon full compliance
by Lessee with the terms of this Section 10.2, Lessor will transfer the Engine
with respect to which such Event of Loss occurred to Lessee on an "as-is,
where-is" basis, free and clear of Lessor Liens, but otherwise without recourse,
representation or warranty, express or implied.
(e) NO REDUCTION OF BASIC RENT. No Event of Loss with
respect to an Engine under the circumstances contemplated by the terms of this
Section 10.2 shall result in any reduction of Basic Rent.
10.3. APPLICATION OF PAYMENTS FROM GOVERNMENTAL AUTHORITIES
FOR REQUISITION OF TITLE. Any payments received at any time by Lessor or Lessee
from any governmental authority or other Person with respect to any Event of
Loss, other than a requisition for use by the Government not constituting an
Event of Loss, will be applied as follows:
(a) REPLACEMENT OF ENGINE. If such payments are received
with respect to an Engine that has been or is being replaced by Lessee pursuant
to Section 10.2, so much of such payments remaining after reimbursement of
Lessor for reasonable out-of-pocket costs and expenses shall be paid over to, or
retained by, Lessee, provided Lessee shall have fully performed or, concurrently
therewith, is fully performing the terms of Section 10.2 with respect to the
Event of Loss for which such payments are made.
(b) NONREPLACEMENT. If such payments are received with
respect to an Airframe and any Engines installed thereon so much of such
payments remaining after reimbursement of Lessor for reasonable costs and
expenses shall be applied in reduction of Lessee's obligation to pay the
Stipulated Loss Value and other amounts required to be paid by Lessee hereunder,
if not already paid by Lessee, or, if already paid by Lessee, shall be applied
to reimburse Lessee for its payment of such Stipulated Loss Value and other
amounts. The balance, if any, of such payment remaining thereafter shall be paid
to Lessee.
10.4. APPLICATION OF PAYMENTS DURING EXISTENCE OF DEFAULT.
Any amount referred to in this Section 10 which is payable or creditable to or
retainable by Lessee shall not be paid or credited to or retained by Lessee if,
at the time of such payment, credit or retention, a Lease Default or Lease Event
of Default shall have occurred and be continuing hereunder but shall be paid to
and held by Lessor as security for the obligations of Lessee under this Lease
and, if Lessor declares this Lease to be in default pursuant to Section 15 or it
shall otherwise become in default in accordance with its terms, applied against
Lessee's obligations hereunder as and when due and at such time as there shall
not be continuing any such Lease Default or Lease Event of Default, such amount
shall be paid to Lessee to the extent not previously applied in accordance with
the preceding sentence.
Section 11. INSURANCE.
11.1. PUBLIC LIABILITY AND PROPERTY DAMAGE INSURANCE.
Lessee shall at all times maintain or cause to be maintained, at its expense,
public liability insurance as follows:
(a) TYPE, FORM AND AMOUNT. Such insurance shall be of a
type and form reasonably satisfactory to Lessor, maintained in effect with
insurers of recognized responsibility
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satisfactory to Lessor and carried in an amount not less than U.S. $100,000,000,
combined single limit per occurrence.
(b) COVERAGE. Such insurance shall include, but not be
limited to, public liability insurance, passenger liability insurance and
property damage liability insurance, and War and Allied Risks are also to be
covered under such insurance to the fullest extent available from the leading
international insurance markets or under government insurance or indemnity
programs. Lessee shall not be permitted to self-insure with respect to this
coverage.
(c) ADDITIONAL PROVISIONS. Any policies of insurance
carried in accordance with this Section 11.1 shall (A) name each Indemnitee as
an additional insured, (B) provide that in respect of the interest of each
Indemnitee in such policies the insurance shall not be invalidated by any action
or inaction of Lessee and shall insure each Indemnitee, regardless of any breach
or violation of any warranty, declaration or condition contained in such
policies by Lessee or any other Person, (C) provide that if such insurance is to
be cancelled for any reason whatever, or any material change is to be made in
the coverage which materially adversely affects the interest of any Indemnitee
or if such insurance may be allowed to lapse for nonpayment of premium, such
cancellation, change or lapse shall not be effective as to any such Indemnitee
for thirty (30) days (seven (7) days or such shorter period as may be generally
available in case of any war risk and allied perils coverage) after written
notice is received by Lessor from such insurers of such cancellation, change or
lapse, (D) be effective with respect to both domestic and international
operation, (E) provide that the insurers shall waive any right to any setoff,
recoupment or counterclaim or any other deduction, by attachment or otherwise,
(F) provide that all of the insurance under such policy shall operate in the
same manner as if there were a separate policy covering each insured, (G)
provide that no Indemnitee shall be liable for any insurance premium, (H) be
primary and without right of contribution from other insurance which may provide
coverage to any Indemnitee and (I) expressly provide that the insurers shall
waive any rights of subrogation against any Indemnitee.
11.2. INSURANCE AGAINST LOSS OF OR DAMAGE TO AIRCRAFT AND
ENGINES. Lessee shall at all times maintain or cause to be maintained at its own
expense insurance against loss of or damage to the Aircraft, Airframe and
Engines as follows:
(a) TYPE, FORM AND AMOUNT. "All-risk" insurance on the
Aircraft and "all-risk" coverage on each Engine and on Parts while removed from
the Aircraft or Engines, "foreign object damage" engine insurance on each
Engine, and "war-risk" insurance, maintained in effect with insurers of
recognized responsibility satisfactory to Lessor, which is of the type and form
maintained by major air carriers operating on the routes on which the Aircraft
is operated by Lessee and, in any case, carried by Lessee on similar equipment
owned or leased by Lessee. Such insurance shall at all times be maintained on an
"agreed value basis" for an amount not less than the Stipulated Loss Value.
(b) CERTAIN REQUIREMENTS. The insurance policies required
by this Section 11.2 shall (A) provide that Lessor, Owner Participant and the
Lenders are additional insureds thereunder and that such Persons are named as
loss payees thereunder as their interests may appear, provided that the Lenders
shall be the sole loss payees from such time that Lessor notifies the insurers
that the Security Documents are in effect until such time as the Lenders notify
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the insurers that the Lien of the Security Documents has been discharged; (B)
provide that all payments shall be payable directly to Lessor (or Lenders during
any period during which they are the sole loss payee); provided that unless
Lessor or a Lender shall provide notice to such insurers that a Lease Default or
Lease Event of Default has occurred and is continuing, any payment not in excess
of $100,000 may be paid directly to Lessee; (C) provide that if such insurance
is to be cancelled for any reason whatever, or any material change is to be made
in the coverage which adversely affects the interest of Lessor, Owner
Participant or any Lender or, if such insurance may be allowed to lapse for
non-payment of premium, such cancellation, change or lapse shall not be
effective as to such Person for thirty (30) days (seven (7) days or such shorter
period as may be generally available in case of any war risk and allied perils
coverage) after written notice is received by such Person from such insurers of
such cancellation, change or lapse; (D) provide that in respect of the interest
of Lessor, the Owner Participant and the Lenders in such policies the insurance
shall not be invalidated by any action or inaction of Lessee or any other Person
and shall insure Lessor, the Owner Participant and the Lenders regardless of any
breach or violation by Lessee or any other Person of any warranty, declaration
or condition contained in such policies; (E) provide that the insurers shall
waive any rights of subrogation against Lessor, the Owner Participant and the
Lenders; (F) provide that the insurers shall waive any right to any set-off,
recoupment or counterclaim or any other deduction, by attachment or otherwise;
(G) provide that all the provisions thereof, except the agreed values and limits
of the liability of the insurer under such policy, shall operate in the same
manner as if there were a separate policy covering each insured; (H) provide
that none of Lessor, Owner Participant and any Lender shall be liable for any
insurance premium; (I) be effective with respect to both domestic and
international operation; and (J) be primary and without right of contribution
from other insurance which may provide coverage to Lessor, Owner Participant and
any Lender.
(c) DEDUCTIBLES. The insurance required by this Section
11.2 may provide in respect of damage not constituting an Event of Loss for
deductibles which are reasonably acceptable to Lessor, but in any event not in
excess of US$100,000 per occurrence.
11.3. APPLICATION OF INSURANCE PROCEEDS. As between Lessor
and Lessee, any insurance proceeds received under policies pertaining to the
Aircraft required to be caused to be maintained by Lessee pursuant to Section
11.2 as a result of the occurrence of an Event of Loss with respect to any
Aircraft, Airframe or Engine will be applied in accordance with Section 10.3(a)
or 10.3(b), as the case may be. All insurance proceeds in respect of any
property damage loss not constituting an Event of Loss with respect to any
Airframe or Engine will be applied in payment for repairs or for replacement
property in accordance with the terms of Section 8, if not already paid for by
Lessee, and any balance remaining after compliance with such Section with
respect to such loss shall be paid to Lessor. The provisions of Section 10.4
shall apply to amounts referred to in this Section 11.3. If Lessor shall have
received insurance proceeds in excess of $100,000 pursuant to Section 11.2(b)(B)
hereof and Lessee shall have performed repairs in accordance with Section 8,
upon five (5) Business Days of Lessor's receipt of written notice thereof,
Lessor shall make such insurance proceeds available to Lessee.
11.4. CERTIFICATES; REPORTS, ETC. With respect to any
insurance policy required hereunder, Lessee shall cause to be furnished to
Lessor on or prior to the Delivery Date and on or prior to expiration of such
policy, certificates of the insurer or insurers (or their authorized
representatives) providing insurance pursuant to the requirements of this
Section 11 confirming
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the existence and effectiveness of the insurance provided hereunder. On or
before the Delivery Date of the Aircraft, Lessee shall cause to be furnished to
Lessor a report signed by a firm of independent aircraft insurance brokers,
appointed by Lessee and reasonably satisfactory to Lessor stating the opinion of
such firm that the insurance then carried and maintained on the Aircraft
complies with the terms hereof. Lessee agrees that it will cause such firm to
advise Lessor in writing promptly of any default in the payment of any premium
or any other act or omission on the part of Lessee of which they have knowledge
and which might invalidate or render unenforceable, in whole or in part, the
insurance on the Aircraft. Lessee further agrees to cause such firm to advise
Lessor in writing as soon as such firm has knowledge that any insurance carried
and maintained on the Aircraft pursuant to this Section 11 will not be renewed
by the applicable underwriters.
11.5. LESSOR'S RIGHT TO MAINTAIN INSURANCE. In the event
that Lessee shall fail to cause to be maintained insurance as herein provided,
Lessor may at its option (but shall not be obligated to) provide such insurance
and in such event, Lessee shall, upon demand, reimburse such Person, as
Supplemental Rent, for the cost thereof. No such payment, performance or
compliance shall be deemed to cure any Lease Event of Default hereunder or
otherwise relieve Lessee of its obligations with respect thereto.
11.6. INSURANCE FOR OWN ACCOUNT. Nothing in Section 11
shall limit or prohibit Lessor, Owner Participant or any Lender from obtaining
insurance for its own account, and any proceeds payable thereunder shall be
payable as provided in the insurance policy relating thereto.
11.7. GOVERNMENT INDEMNITY. In the case of a contract with
the Government in respect of the Aircraft or Engines, a valid agreement by the
Government to indemnify Lessee and each Indemnitee against the same risks which
are required hereunder to be insured against in an amount at least equal to the
amounts required hereunder from time to time, shall be considered adequate
insurance with respect to any Aircraft, Airframe and Engine subject to such
contract to the extent of the risks and in the amounts that are the subject of
any such agreement to indemnify.
Section 12. INSPECTION. At all reasonable times during
the Term, on three days' prior written notice, or earlier if events occur
adversely affecting Lessor's rights, Lessor and each Owner Participant, or their
respective authorized representatives, may inspect the Aircraft and the books
and records of Lessee or any operator relative thereto. No such Person shall
have any duty to make any such inspection or incur any liability or obligation
by reason of not making any such inspection. Any costs or expenses relating to
such inspection shall be borne by the Person making such inspection, unless an
Event of Default shall have occurred and be continuing, in which case such costs
and expenses shall be borne by Lessee.
Section 13. ASSIGNMENT. LESSEE WILL NOT, WITHOUT THE
PRIOR WRITTEN CONSENT OF LESSOR, ASSIGN ANY OF ITS RIGHTS UNDER THIS LEASE.
LESSOR MAY ASSIGN OR CONVEY ANY OF ITS RIGHT, TITLE AND INTEREST IN AND TO THIS
LEASE OR THE AIRCRAFT. THE TERMS AND PROVISIONS OF THE LEASE SHALL BE BINDING
UPON AND INURE TO THE BENEFIT OF LESSOR AND LESSEE AND THEIR RESPECTIVE
PERMITTED SUCCESSORS AND ASSIGNS.
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Section 14. EVENTS OF DEFAULT. The following events
shall constitute Lease Events of Default (whether any such event shall be
voluntary or involuntary or come about or be effected by operation of law or
pursuant to or in compliance with any judgement, decree or order of any court or
any order, rule or regulation of any administrative or governmental body):
14.1. FAILURE TO PAY RENT. Lessee shall fail to make any
payment of Rent within two days after the same shall have become due; or
14.2. INSURANCE. Lessee shall fail to cause to be carried
and maintained insurance on or with respect to any Aircraft obtained or required
to be obtained in accordance with the provisions of Section 11; or
14.3. GENERAL DEFAULT. Lessee shall fail to perform or
observe any covenant, condition, obligation or agreement to be performed or
observed by it hereunder (other than the obligations referred to in 14.1, 14.2
and 14.8) or under any other Lessee Document and such failure shall continue
unremedied for a period of 30 days after written notice thereof by Lessor; or
14.4. MISREPRESENTATION AND BREACH OF WARRANTY. Any
representation or warranty made by Lessee herein or in any other Lessee Document
shall prove to have been incorrect in any material respect at the time made, and
such incorrectness shall continue to be material and unremedied for a period of
30 days after written notice thereof by Lessor; or
14.5. LESSEE BANKRUPTCY, ETC. Lessee shall commence a
voluntary case or other proceeding seeking liquidation, reorganization or other
relief with respect to itself or its debts under any bankruptcy, insolvency or
other similar law now or hereafter in effect or seeking the appointment of a
trustee, receiver, liquidator, custodian or other similar official of it or any
substantial part of its property, or shall consent to any such relief or to the
appointment of or taking possession by any such official or agency in a
involuntary case or other proceeding commenced against it, or shall make a
general assignment for the benefit of creditors, or shall take any corporate
action to authorize any of the foregoing; or an involuntary case or other
proceeding shall be commenced against Lessee seeking liquidation, reorganization
or other relief with respect to it or its debts under any bankruptcy, insolvency
or other similar law now or hereafter in effect or seeking the appointment of a
trustee, receiver, liquidator, custodian or other similar official or agency of
it or any substantial part of its property, and such involuntary case or other
proceeding shall remain undismissed and unstayed for a period of 60 days; or
14.6. OTHER LEASE. A Lease Event of Default, as defined in
the Other Lease, shall have occurred; or
14.7. MAINTENANCE AGREEMENT. Lessee or any Person acting
by or on behalf of Lessee shall deny or disaffirm Lessee's obligations under the
Maintenance Agreement, or Lessee shall default in the due performance or
observance of any term, covenant or agreement on its part to be performed or
observed thereunder; or
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14.8. USMS AGREEMENT. The USMS Agreement shall terminate
or be terminated as a result of Lessee defaulting in the due performance or
observance of any term, covenant or agreement on its part to be performed or
observed hereunder or thereunder; or
14.9. MAINTENANCE PROVIDER BANKRUPTCY, ETC. The Maintenance
Provider shall commence a voluntary case or other proceeding seeking
liquidation, reorganization or other relief with respect to itself or its debts
under any bankruptcy, insolvency or other similar law now or hereafter in effect
or seeking the appointment of a trustee, receiver, liquidator, custodian or
other similar official of it or any substantial part of its property, or shall
consent to any such relief or to the appointment of or taking possession by any
such official or agency in a involuntary case or other proceeding commenced
against it, or shall make a general assignment for the benefit of creditors, or
shall take any corporate action to authorize any of the foregoing; or an
involuntary case or other proceeding shall be commenced against the Maintenance
Provider seeking liquidation, reorganization or other relief with respect to it
or its debts under any bankruptcy, insolvency or other similar law now or
hereafter in effect or seeking the appointment of a trustee, receiver,
liquidator, custodian or other similar official or agency of it or any
substantial part of its property, and such involuntary case or other proceeding
shall remain undismissed and unstayed for a period of 60 days, PROVIDED THAT if
Lessee shall have entered into a Maintenance Agreement with a replacement
Maintenance Provider, and Lessor shall have received a properly perfected
security interest in such agreement within 30 days of the occurrence of any of
the events listed in this Section 14.9, such event shall not be considered an
Event of Default under this Section 14.9; or
14.10. OPINION OF LESSEE'S COUNSEL. Lessor and Owner
Participant shall not have received an opinion of special counsel to the Lessee
in the form attached hereto as Exhibit F within 10 Business Days after the
Delivery Date; or
14.11. SECURITY. Lessor shall not have received the
Security within 10 Business Days after the Delivery Date.
Section 15. REMEDIES.
15.1. DEFAULT; REMEDIES.
Upon the occurrence of a Lease Event of Default and at any
time thereafter so long as the same shall be continuing, Lessor may, at its
option, declare this Lease to be in default; provided that this Lease shall be
deemed to be in default automatically without the necessity of such a written
declaration upon the occurrence of a Lease Event of Default described in Section
14.5; and thereafter may exercise one or more of the following remedies as
Lessor in its sole discretion shall elect, to the extent permitted by, and
subject to compliance with any mandatory requirements of, applicable law then in
effect:
(a) RETURN; REPOSSESSION. Lessor may cause Lessee, upon
written demand by Lessor and at Lessee's expense, to return promptly, and Lessee
shall return promptly, all or any part of the Aircraft, Airframe or Engines as
Lessor may so demand to Lessor or its order in the manner and condition required
by, and otherwise in accordance with all the provisions of, Section 5 as if the
Aircraft, Airframe or Engines were being returned at the end of the Term; or
Lessor, at its option, may enter upon the premises where the Aircraft, Airframe
or Engines, or part thereof, is located and take immediate possession of and
remove the same by summary proceedings or otherwise, all without liability
accruing to Lessor for or by reason of such entry
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or taking of possession, whether for the restoration of damage to property
caused by such taking or otherwise; or
(b) SALE; USE; ETC. Lessor may sell the Aircraft,
Airframe or any Engine, or part thereof, at public or private sale, at such
times and places, to such Persons as Lessor may determine, or otherwise dispose
of, hold, use, operate, lease to others or keep idle the Aircraft, Airframe or
any Engine, or part thereof, as Lessor, in its sole discretion, may determine,
all free and clear of any rights of Lessee and without any duty to account to
Lessee with respect to such action or inaction or for any proceeds with respect
thereto; or
(c) LIQUIDATED DAMAGES--FAIR MARKET RENTAL VALUE.
Whether or not Lessor shall have exercised, or shall
thereafter at any time exercise, any of its rights under Section 15.1(a) or
15.1(b) with respect to the Aircraft, Airframe or Engine, or part thereof,
Lessor, by written notice to Lessee specifying a payment date not earlier than
ten days from the date of such notice, may cause Lessee to pay to Lessor, and
Lessee shall pay to Lessor, on the payment date specified in such notice, as
liquidated damages for loss of a bargain and not as a penalty, any accrued but
unpaid Rent for the Aircraft due to and including the payment date specified in
such notice, plus an amount equal to the excess, if any, of the discounted value
of the unpaid Rent for the Aircraft that would otherwise have accrued over the
remainder of the Term but for the Event of Default, over the discounted value of
the fair market monthly rental for the Aircraft (computed as provided in Section
15.2) for a period commencing six months after the payment date and extending to
the end of the Expiry Date, in each case discounted monthly to present value as
of the payment date specified in such notice at 4%. The amounts specified in
such notice shall continue to earn interest from the payment date until payment
is made; or
(d) TERMINATION AND OTHER REMEDIES. Lessor may terminate
the leasing of the Aircraft, Airframe and Engines, or Part thereof under this
Lease, or may exercise any other right or remedy which may be available to it
under the Uniform Commercial Code in any applicable jurisdiction or other
applicable statute or law whether or not in effect in the jurisdiction in which
enforcement is sought or proceed by appropriate court action to enforce the
terms hereof or to recover damages for the breach hereof, including without
limitation Lessee's agreement to lease the Aircraft for the Term and to pay
Rent.
In addition to the foregoing remedies, Lessee shall be liable
for any and all unpaid Rent due hereunder before, during or after the exercise
of any of the foregoing remedies and for all legal fees and other costs and
expenses of Lessor, including without limitation interest on overdue Rent at the
rate as herein provided, and the fees and expenses of all appraisers required by
this Section 15, incurred by reason of the occurrence of any Lease Event of
Default or the exercise of Lessor's remedies with respect thereto, including all
insurance and storage costs and all costs and expenses incurred in connection
with the return of the Aircraft, Airframe or any Engine, or part thereof, in
accordance with the terms of Section 5 or in placing the Aircraft, Airframe or
any Engine, or part thereof, in the condition and airworthiness required by
Section 5.
15.2. DETERMINATION OF FAIR MARKET RENTAL VALUE.
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For the purpose of this Section 15, the "fair market rental
value" of the Aircraft shall be determined on the assumption that the Aircraft
was maintained or returned, as the case may be, in the condition required by
this Lease, by a recognized independent appraiser chosen by Lessor.
15.3. NO WAIVER, ETC. No remedy referred to in this Section
15 is intended to be exclusive, but each shall be cumulative and in addition to
any other remedy referred to above or otherwise available to Lessor at law or in
equity; and the exercise or beginning of exercise by Lessor of any one or more
of such remedies shall not preclude the simultaneous or later exercise by Lessor
of any or all of such other remedies. No express or implied waiver by Lessor of
any Lease Event of Default shall in any way be, or be construed to be, a waiver
of any earlier or subsequent Lease Event of Default. To the extent permitted by
applicable law, Lessee hereby waives any rights now or hereafter conferred by
statute or otherwise which may require Lessor to sell, lease or otherwise use
any Aircraft, Airframe or Engine, or Part thereof, in mitigation of Lessor's
damages as set forth in this Section 15 or which may otherwise limit or modify
any of Lessor's rights or remedies under this Section 15.
Section 16. NOTICES.
All notices required under the terms and provisions hereof
shall be in writing and shall be given by registered mail, facsimile, telex,
teletype or any other customary means of written communication, addressed:
If to Lessee, at ▇.▇. ▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇, Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, or at such other address as Lessee shall from
time to time designate in writing;
If to Lessor, at One ▇▇▇▇▇▇ Square, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇, fax: ▇▇▇-▇▇▇-▇▇▇▇, Attention: Corporate Trust
Administration, with copies to Airlease Ltd., ▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇,
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇, Fax: ▇▇▇-▇▇▇-▇▇▇▇, Attention: ▇▇▇ ▇▇▇▇▇▇▇, or at such
other address as Lessor or such other Person shall from time to time designate
in writing.
If to Airlease, at the address set forth in the foregoing
paragraph, or to such other Person as Airlease shall from time to time designate
in writing.
The effective date of any such notice shall be, if sent by
mail, five days after mailing or, if sent by telex, facsimile or teletype, the
date when such notice is sent or dispatched, and otherwise the date on which it
is received by the addressee.
Section 17. NET LEASE; LESSEE'S OBLIGATIONS; NO SET-OFF,
COUNTERCLAIM, ETC.
This is a net lease. Lessee's obligation to pay all Rent
payable hereunder shall be absolute and unconditional and shall not be affected
by any circumstance, including without limitation: (a) any setoff, counterclaim,
recoupment, defense or other right which Lessee may have against Lessor; (b)
airworthiness, condition, design, operation or fitness for use of, or any damage
to or loss or destruction of, the Aircraft, Airframe or any Engine, or any
interruption or cessation in the use or possession thereof by Lessee for any
reason whatsoever; (c) any insolvency, bankruptcy, reorganization or similar
proceedings by or against Lessee or any other
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Person; (d) any change, waiver, extension, indulgence or other action or
omission in respect of any obligation or liability of Lessee or Lessor; (e) any
claim that Lessee has or might have against any Person; or (f) any invalidity or
unenforceability or disaffirmance of this Lease or any provision hereof.
All Rent payable by Lessee shall be paid without notice or
demand (except as otherwise expressly provided) and without abatement,
suspension, deferment, deduction, diminution or proration by reason of any
circumstance or occurrence whatsoever. Lessee hereby waives, to the extent
permitted by applicable law, any and all rights which it may now have or which
at any time hereafter may be conferred upon it, by statute or otherwise, to
terminate, cancel, quit or surrender this Lease or any part hereof, or to any
abatement, suppression, deferment, diminution, reduction or proration of Rent
except in accordance with the express terms hereof. Each payment of Rent made by
Lessee shall be final as to Lessor and Lessee. Lessee will not seek to recover
all or any part of any such payment of Rent for any reason whatsoever. Nothing
in this Section 17 will be construed to extinguish or otherwise limit Lessee's
right to institute legal proceedings against Lessor in the event of Lessor's
breach of this Agreement.
Section 18. COVENANTS OF LESSEE.
(a) CERTAIN ASSURANCES. Lessee shall do, execute,
acknowledge and deliver or cause to be done, executed, acknowledged and
delivered all such further acts, conveyances and assurances as Lessor shall
reasonably request for accomplishing the purposes of this Lease. Lessee shall
also do or cause to be done, at its own expense, any and all acts and things
which may be required under the terms of any law, rule, regulation, agreement,
treaty, convention, pact or by any practice, custom, or understanding recognized
as having wide application or control involving any jurisdiction in which the
Aircraft is being operated, or any and all other acts and things which Lessor
may reasonably request and which are necessary or advisable to perfect and
preserve the rights of Lessor in and to the Aircraft within any such
jurisdiction.
(b) FILING AND RECORDATION. Lessee will cause this Lease
in respect of the Aircraft to be duly and timely filed and recorded, or filed
for recordation, to the extent permitted under the Act or required under any
applicable law.
(c) FINANCIAL AND OTHER INFORMATION. Lessee shall deliver
or cause to be delivered to Lessor promptly after the same are available (and in
any event within 90 days) after the end of each of its financial years ending
after the date hereof, a copy of its audited financial statements for such
financial year, which (i) shall be prepared by independent, certified public
accountants in accordance with generally accepted accounting principles and
practices in the consistently applied, (ii) shall fairly and accurately present
the financial position of Lessee as at the date as of which they were prepared
and the results of the operations of Lessee for the period to which they relate
and (iii) shall disclose all significant liabilities, actual or contingent, of
Lessee.
Lessee shall promptly provide Lessor with such financial,
operational and other information concerning Lessee and its affairs and the
Aircraft as Lessor may from time to time
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reasonably request in the context of Lessee Documents and the transactions
contemplated thereby.
(d) EXISTENCE. Lessee will preserve and maintain its
corporate existence and much of its rights, privileges, licenses and franchises
where failure to maintain such rights and privileges or obtain such licensing or
qualification would have a material adverse effect upon Lessee.
(e) LEASE TERMINATION AGREEMENT. Upon the expiration or
earlier termination of this Lease, Lessee and Lessor will duly execute and
deliver a Lease Termination Agreement in the form attached hereto as Exhibit
"C".
(f) EXPENSES. Each party shall be responsible for its own
fees and expenses in connection with the execution, delivery and preparation of
this Lease including, without limitation, the fees and expenses of its legal
counsel.
Section 19. RIGHT TO PERFORM FOR LESSEE.
If Lessee fails to make any payment required to be made by it
hereunder or fails to perform or comply with any of its agreements contained
herein, Lessor may (but shall not be obligated to) make such payment or perform
or comply with such agreement, and the amount of such payment and the amount of
the expenses of Lessor incurred in connection with such payment or the
performance of or compliance with such agreement, as the case may be, together
with interest thereon at the Overdue Interest Rate, shall be deemed Supplemental
Rent, payable by Lessee upon demand. No such payment, performance or compliance
shall be deemed to cure any default of Lessee hereunder or otherwise relieve
Lessee of its obligations with respect thereto.
Section 20. MISCELLANEOUS.
Any provision of this Lease which is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction. The prevailing party in any action to enforce its rights
hereunder shall be entitled to recover from the nonprevailing party reasonable
attorneys fees and costs. No term or provision of this Lease may be changed,
waived, discharged or terminated orally, but only by an instrument in writing
signed by the party against which the enforcement of the change, waiver,
discharge or termination is sought.
The Lessee irrevocably agrees, by execution and delivery of
this Lease, that any legal action or proceeding brought against the Lessee with
respect to this Lease or any Lessee Document may be brought and determined in
the Supreme Court of the State of New York, New York County, or in the United
States District Court for the Southern District of New York, and the Lessee
hereby irrevocably accepts with regard to any such action or proceeding, for
itself and in respect of its properties, generally and unconditionally, the
nonexclusive jurisdiction of the aforesaid courts. The Lessee further
irrevocably consents to the service of process out of any of the aforementioned
courts in any such action or proceeding by the mailing of copies thereof by
-40-
registered airmail, postage prepaid, to the Lessee at its address set forth in
Section 16 hereof. Nothing herein shall affect the right of Lessor to serve
process in any other manner permitted by law or to commence legal proceedings or
otherwise proceed against the Lessee in any other jurisdiction in which the
Lessee may be subject to suit.
EACH PARTY HERETO HEREBY WAIVES, TO THE FULLEST EXTENT
PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT
OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER OR IN CONNECTION
WITH THIS AGREEMENT. EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE,
AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE,
THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORECE
THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO
HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE
MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.
THIS LEASE SHALL CONSTITUTE AN AGREEMENT OF LEASE, AND NOTHING HEREIN SHALL BE
CONSTRUED AS CONVEYING TO LESSEE ANY RIGHT, TITLE OR INTEREST IN OR TO THE
AIRCRAFT, AIRFRAME OR ANY ENGINE EXCEPT AS A LESSEE ONLY. THE SECTION AND
PARAGRAPH HEADINGS IN THIS LEASE AND THE TABLE OF CONTENTS ARE FOR CONVENIENCE
OF REFERENCE ONLY AND SHALL NOT MODIFY, DEFINE, EXPAND OR LIMIT ANY OF THE TERMS
OR PROVISIONS HEREOF AND ALL REFERENCES HEREIN TO NUMBERED SECTIONS, UNLESS
OTHERWISE INDICATED, ARE TO SECTIONS OF THIS LEASE. THIS LEASE HAS BEEN, AND
EACH LEASE SUPPLEMENT AND AMENDMENT HERETO IS INTENDED TO BE, DELIVERED IN THE
STATE OF NEW YORK AND SHALL IN ALL RESPECTS BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO CONTRACTS MADE
IN SUCH STATE BY RESIDENTS THEREOF AND AS IF PERFORMED ENTIRELY WITHIN SUCH
STATE, INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE. THIS
LEASE AND EACH LEASE SUPPLEMENT AND AMENDMENT HERETO MAY BE EXECUTED IN SEVERAL
COUNTERPARTS, EACH OF WHICH SHALL BE DEEMED AN ORIGINAL, AND ALL SUCH
COUNTERPARTS SHALL CONSTITUTE ONE AND THE SAME INSTRUMENT.
Section 21. LESSOR DEFAULT ETC.
Without prejudice to Lessee's rights under applicable law
other than Uniform Commercial Code Article 2-A to bring suit or claim for
monetary damages or to enforce the terms of this Agreement, Lessee acknowledges
and agrees that any statutory default of Lessor or remedy (excluding any right
to bring suit or claim for monetary damages) granted to Lessee by reason of
Uniform Commercial Code Article 2-A (including any right to revoke acceptance
under Section 2-A-517) is not a part of this Lease.
Section 22. TRUTH IN LEASING.
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DURING THE TWELVE MONTHS PRECEDING THE EXECUTION OF THIS
LEASE, THE AIRCRAFT WAS MAINTAINED, INSPECTED AND OPERATED PURSUANT TO THE
REQUIREMENTS OF THE FEDERAL AVIATION REGULATION PART 121 UPON THE REGISTRATION
OF THE AIRCRAFT WITH THE FEDERAL AVIATION ADMINISTRATION. THE AIRCRAFT WILL BE
MAINTAINED AND INSPECTED UNDER FEDERAL AVIATION REGULATION PART 121 FOR
OPERATIONS TO BE CONDUCTED BY THE LESSEE UNDER THIS LEASE EXCEPT AT SUCH TIMES
AS THE AIRCRAFT IS SUBLEASED TO A SUBLESSEE HOLDING AN AIR CARRIER OPERATOR
CERTIFICATE. NOTWITHSTANDING THE FOREGOING FOR SO LONG AS THE USMS AGREEMENT
REMAINS IN EFFECT, THE AIRCRAFT WILL BE MAINTAINED AND INSPECTED BY THE LESSEE
UNDER THIS LEASE AND WILL BE UNDER THE OPERATIONAL CONTROL OF THE USMS. AN
EXPLANATION OF THE FACTORS BEARING ON OPERATIONAL CONTROL AND PERTINENT FEDERAL
AVIATION REGULATIONS CAN BE OBTAINED FROM THE NEAREST FAA FLIGHT STANDARDS
DISTRICT OFFICE.
(This remainder of this page left blank intentionally).
-42-
IN WITNESS WHEREOF, Lessor and Lessee have each caused this
Lease to be duly executed and delivered as of the day and year first above
written.
FIRST UNION NATIONAL BANK,
not in its individual capacity, but
solely as Trustee, Lessor
By:
----------------------------------------------
Name:
Title:
CSI AVIATION SERVICES, INC., Lessee
By:
----------------------------------------------
Name:
Title:
AIRLEASE LTD.
By:
----------------------------------------------
Name:
Title:
-Signature Page-
[Aircraft Lease Agreement]
SCHEDULE 1
AIRCRAFT DESCRIPTION
PART A
Aircraft Manufacturer, Model and Series: ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ DC-9-Series 82
Manufacturer's Serial Number: 48038
FAA Registration Number: N806US
Engine Manufacturer and Model: ▇▇▇▇▇ & ▇▇▇▇▇▇▇ JT8D-217
Engine Serial Numbers: P708517 and P708136
Auxiliary Power Unit: Model 85-98DHF
s/n 179BCA
Date of Manufacture: 1981
Seating Configuration: 140 passengers
WEIGHTS & CAPACITY POUNDS
Maximum Ramp Weight 148,000
Maximum Take Off Weight 147,000
Maximum Landing Weight 128,000
Maximum Zero Fuel Weight 118,000
Operating Empty Weight [_____]
Fuel Capacity 39, 128
LANDING GEAR
NOSE RIGHT MAIN LEFT MAIN
Manufacturer 5910447-5041 5930593-5504 5930593-5503
Serial Number C92766 C90126 C90339
Wheels 9550267-6 (12 ply) 5006040-1 (26 ply) 5006040-1 (26 ply)
GALLEY EQUIPMENT:
MANUFACTURER QTY.
Ovens TIA 1 each
Trolleys 2
Coffee Makers Nords K09 4
AVIONICS:
DESCRIPTION QTY. MANUFACTURER MODEL
Cabin Press 2 Airesearch 211718-1
Stall Warning Computor 2 Sunstroud ▇▇▇-▇▇▇▇-▇▇▇
ADC 2 Honeywell HG-280D80
P.A. Amp. 1 ▇▇▇▇▇▇▇ 346D-2
NAV. Comparator 1 Dynamic Controls 11170-2
DFGC 2 Honeywell 4034241-971
NAV. SW. Unit 1 ▇▇▇▇▇▇ Natl. 001122-101
Compass Rack 2 Sperry 614937-10
Marker Beacon 1 Bendix 2087821-2811
ADF 1 ▇▇▇▇▇▇▇ 5147
Central Aural Warning 1 MDC H05A0035-4
VOR/ILS NAV. 2 ▇▇▇▇▇▇▇ 51RV-4
VHF Tranceivers 3 ▇▇▇▇▇▇▇ 618 M-3
TCAS Processor 1 Bendix ▇▇▇-▇▇▇▇▇-▇▇▇▇
Transponder ▇ ▇▇▇▇▇▇ ▇▇▇-▇▇▇
Controller 1 Teledyne R6357-501A
Prox SW. Electronics Unit 1 ELDEC 8-336-04
Management Control Unit 1 ▇▇▇▇▇▇▇▇ 773167-1
Flite Data Acq. ▇▇▇▇ ▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇-▇
▇▇▇▇-▇▇▇▇ Control 1 Hytrol ▇▇-▇▇▇-▇▇
-2-
DME 2 ▇▇▇▇▇▇▇ 860E5
Windshield 1 Honeywell 4059845-911
Instr. SW. ▇▇▇▇ ▇ ▇▇▇▇▇▇ ▇▇▇▇. ▇▇▇▇▇▇-▇▇▇
Grd. Prox 1 ▇▇▇▇▇▇▇ FPC-75
PART B
The following Maintenance Publications, Maintenance Records, Documents and
Certificates shall be delivered to Lessee on or to prior to the Delivery Date.
ITEM
- Flight operations manual
- Airframe maintenance manual
- Engine maintenance manual
- IPC
- Wiring diagrams
- Aircraft flight manual
- various component overhaul manuals
- Weight and Balance manual
- ▇▇▇
- FMS operation manual
- Pilots Handbook
-3-
SCHEDULE 2
"Airframe Payment Amount" means $150.00 per Flight Hour.
"APU Payment Amount" means $7.00 per Flight Hour.
"Basic Rent Amount" means $125,000.00 per month for the first
year of the Agreement, and $120,000.00 per month in the event
the Agreement is extended beyond 30 September 2002.
"Engine Payment Amount" means $75.00 per Flight Hour.
"Gear Payment Amount" means $10.00 per Flight Hour.
EXHIBIT A
LEASE SUPPLEMENT
THIS LEASE SUPPLEMENT, dated November __, 2001, between FIRST
UNION NATIONAL BANK, not in its individual capacity but solely as Trustee
("Lessor"), and CSI AVIATION SERVICES, INC. ("Lessee").
Lessor and Lessee have heretofore entered into that certain
Aircraft Lease Agreement, dated as of November 21, 2001 (as at any time amended,
modified or supplemented, herein called the "Lease" and the terms defined
therein being herein used with the same meanings), which Lease provides in
Section 2 for the execution of a Lease Supplement substantially in the form
hereof for the purpose of leasing the Aircraft under the Lease after the
Delivery Flight in accordance with the terms thereof. The Lease relates, among
other matters, to the Airframe and Engines described below, and this Lease
Supplement is attached to a counterpart of the Lease for purposes of filing and
recordation.
NOW, THEREFORE, in consideration of the premises and other
good and sufficient consideration, and pursuant to Section 2 of the Lease,
Lessor and Lessee hereby agree as follows:
1. Lessor hereby delivers and leases to Lessee, and Lessee
hereby accepts and leases from Lessor, under the Lease, as herein supplemented,
the following described ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ DC-9-Series 82 aircraft (the
"Delivered Aircraft") which Delivered Aircraft as of the date hereof consists of
the following:
Airframe: FAA Registration Number N806US, Manufacturer's
Serial No. 48038 and manufactured in 1981; and
Engines: Two ▇▇▇▇▇ & ▇▇▇▇▇▇▇ JT8D-217 engines installed
thereon bearing Engine Manufacturer's Serial Numbers 708517 and 708136.
Each of the Engines described above has 750 or more rated takeoff horsepower or
the equivalent of such horsepower.
2. The Delivery Date of the Delivered Aircraft and Engines is
the date of this Lease Supplement set forth in the opening paragraph hereof.
3. Lessee hereby confirms to Lessor that Lessee has accepted
the Delivered Aircraft and Engines for all purposes hereof and of the Lease,
including its being airworthy, in accordance with specifications, in good
working order and repair and without defect in condition, design, operation or
fitness for use, whether or not discoverable by Lessee as of the date hereof.
4. All the provisions of the Lease are hereby incorporated by
reference in this Lease Supplement, on and as of the date of this Lease
Supplement, to the same extent as if fully set forth herein.
5. THIS LEASE SUPPLEMENT IS BEING DELIVERED IN AND SHALL IN
ALL RESPECTS BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE
STATE OF NEW YORK, INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND
PERFORMANCE.
6. This Lease Supplement may be executed by the parties hereto
in separate counterparts, each of which when so executed and delivered shall be
an original, but all such counterparts shall together constitute but one and the
same instrument.
-2-
IN WITNESS WHEREOF, Lessor and Lessee have caused this Lease
Supplement to be duly executed and delivered as of the date and year first above
written.
FIRST UNION NATIONAL BANK,
not in its individual capacity, but solely
as Trustee, Lessor
By: _________________________
Name:
Title:
CSI AVIATION SERVICES, INC.
Lessee
By: _________________________
Name:
Title:
-Signature Page-
[Lease Supplement]
EXHIBIT B
RECEIPT FOR LEASE AIRCRAFT
Date: November __, 2001
Time: ________________________
Place: _______________________
Received from _____________________________________________, pursuant to the
Lease Agreement, dated as of November 21, 2001 (the "Lease Agreement") among CSI
AVIATION SERVICES, INC. ("Lessee"), FIRST UNION NATIONAL BANK, not in its
individual capacity but solely as Trustee, and AIRLEASE LTD. the following:
One (1) ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ DC-9-Series 82 Aircraft (140) seats
Federal Aviation Administration Registry No. N806US
Manufacturer's Serial No. 48038
Remaining to Next
Overhaul ("Q Check") Hours MSG 3 mx program schedule
Cycles: 4467
Engine Serial (#1) P708517
Total Hours: 41,603
Total Cycles: 36,172
Cycles remaining to next LLP: 3245
Hours since Last Shop Visit: 861
(#2) P708136
Total Hours: 45,945
Total Cycles: 39,376
Cycles remaining to next LLP: 7053
Hours since Last Shop Visit: 1188
Total Aircraft Hours at Delivery: 54,413
Total Aircraft Cycles at Delivery: 47,659
Pounds of Fuel on Board: [_____]
[The list of mutually agreed discrepancies referred to in Section 2.5 of the
Lease Agreement is attached hereto.] The undersigned is authorized by Lessee to
accept delivery of the above designated aircraft pursuant to the aforesaid
Agreement.
CSI AVIATION SERVICES, INC.
By: _________________________
Title:
-2-
EXHIBIT C
LEASE TERMINATION AGREEMENT
CSI AVIATION SERVICES, INC. ("Lessee") does hereby terminate
the Lease of one (1) ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ DC-9-Series 82 Aircraft, manufacturer's
serial number 48038, such termination having been made at ________ at _______
(AM/PM) on the ____ day of __________, 20__, in accordance with the Aircraft
Lease Agreement among First Union National Bank, not in its individual capacity
but solely as Trustee, Airlease Ltd. and Lessee, dated as of November 21, 2001.
Concurrently with the return of the Aircraft in the condition
specified in Section 5 of the Lease Agreement, Lessor shall execute and deliver
to Lessee a Receipt for Lease Aircraft substantially in the form of Exhibit B to
the Lease Agreement. Lessor's execution and delivery of this Agreement and the
aforesaid Receipt for Lease Aircraft shall constitute Lessor's agreement that
the Aircraft and related records and manuals are in compliance with the Lease
Agreement, including without limitation, the provisions of Section 5 thereof,
except as specified in such Exhibit B.
Nothing herein is intended to affect any indemnification
rights or obligations arising under the Lease Agreement.
CSI AVIATION SERVICES, INC.
By: _________________________
Title:
Date:
FIRST UNION NATIONAL BANK,
not in its individual capacity but solely
as Trustee
By: _________________________
Title:
Date:
AIRLEASE LTD.
By: _________________________
Title:
Date:
EXHIBIT D
MONTHLY OPERATING REPORT
CSI AVIATION SERVICES, INC.
======================================================================= ========================= ==================
ITEM Comments
----------------------------------------------------------------------- ------------------------- ------------------
GENERAL
/ Reserve Period Begin and End Date [AIRCRAFT TYPE]
-------------
/ Effective Date for Below Information
/ Model [MSN]
/ Delivery Year
/ Manufacturer's Serial Number
/ Manufacturer's Line Number
----------------------------------------------------------------------- ------------------------- ------------------
AIRFRAME
/ Airframe Total Time
/ Airframe Flight Hours during prior Reserve Period
/ Airframe Flight Cycles during prior Reserve Period
/ Airframe Total Cycles
/ Approx. Date of Next C-Check or equivalent
/ Approx. Date of Next Q-Check or equivalent
----------------------------------------------------------------------- ------------------------- ------------------
LANDING GEAR
/ Overhaul Interval (All Gears)
/ Nose Date of Next Overhaul
/ Port Main Gear Date of Next Overhaul
/ Starboard Main Gear Date of Next Overhaul
----------------------------------------------------------------------- ------------------------- ------------------
AUXILIARY POWER UNIT
/ Total Time
/ Hours to next expected shop visit
----------------------------------------------------------------------- ------------------------- ------------------
WEIGHT
/ Max Take-Off Weight
/ Max Landing Weight
/ Max Zero Fuel Weight
/ Empty Weight (OWE)
/ Fuel Capacity (Max Usable)
----------------------------------------------------------------------- ------------------------- ------------------
ENGINES
/ Type [ENGINE TYPE]
/ Serial Numbers [_______] Pos. 1
[_____] Pos. 2
/ Total Time Pos. 1
Pos. 2
/ Total Cycles Pos. 1
Pos. 2
/ Remaining Time (Dkc) in Cycles Pos. 1
Pos. 2
/ Current Location Pos. 1
/ Time Since Last Overhaul Pos. 1
/ EGT Margin Pos. 1
Pos. 2
/ Flight Hours during prior
Determination Period Pos. 1
Pos. 2
/ Cycles during prior
Determination Period Pos. 1
Pos. 2
----------------------------------------------------------------------- ------------------------- ------------------
INCIDENTS OF DAMAGE OR LOSS
----------------------------------------------------------------------- ------------------------- ------------------
Comment Date
======================================================================= ========================= ==================
-2-
EXHIBIT E
FORM OF
IRREVOCABLE LETTER OF CREDIT
--------------------------------------------------------------------------------
IRREVOCABLE STANDBY LETTER OF CREDIT NO. PLACE AND DATE OF ISSUE:
___________
--------------------------------------------------------------------------------
BENEFICIARY: APPLICANT:
[LESSOR] CSI Aviation Services
[address]
--------------------------------------------------------------------------------
EXPIRY DATE/PLACE: AVAILABLE AT/BY:
Expires on the second anniversary of the date Our office only by presentation
of issue ofthis credit. For presentation at of document(s) required and your
our office. draft(s) drawn at sight.
--------------------------------------------------------------------------------
AMOUNT OF CREDIT:
Not to exceed, in the aggregate US dollars 250,000 (two hundred fifty thousand
US dollars)
--------------------------------------------------------------------------------
RE: ONE ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ DC-9-SERIES 82 AIRCRAFT MANUFACTURER'S SERIAL NUMBER
48038
--------------------------------------------------------------------------------
Gentlemen,
At the request and for the account of the above named applicant we hereby
establish our irrevocable letter of credit in your favour which is available as
indicated above against presentation of your draft(s) drawn on [INSERT NAME OF
BANK] when accompanied by the following documents:
DOCUMENTS REQUIRED
A dated statement bearing an original signature purporting to be an authorised
▇▇▇▇▇▇ for [Lessor] (indicating the name and title/capacity of the ▇▇▇▇▇▇),
reading as follows:
"[We hereby certify that the amount of US$_________ drawn under [INSERT
NAME OF BANK] Letter of Credit No. _________, as evidenced by our draft
accompanying this statement, is payable to us because an event of
default under and as defined in a certain aircraft lease agreement
dated as of November 21, 2001 among CSI Aviation Services, Airlease
Ltd. and ourselves relating to one ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ DC-9-Series 82
Aircraft manufacturers serial number 48038 has occurred and is
continuing.]
OR
[We hereby certify that the amount of US$________ drawn under [INSERT
NAME OF BANK] Letter of Credit No. _________, as evidenced by our draft
accompanying this statement, is payable to us because said Letter of
Credit has not been replaced or extended in accordance with the terms
of a certain aircraft lease agreement dated as of November 21, 2001
between CSI Aviation Services, Airlease Ltd. and ourselves relating to
one ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ DC-9-Series 82 Aircraft manufacturers serial
number 48038.]"
OTHER CONDITIONS
Partial drawings are permitted.
Any dispute(s) whatsoever that may arise between the above named applicant and
yourselves shall be settled as a matter completely separate from and outside of
this irrevocable standby Letter of Credit. We shall honour your claim if
presented to [INSERT NAME AND ADDRESS OF BANK] (the "Drawing Office") by latest
on the second anniversary of the date of issue of this credit which is the
expiry date of this instrument.
The original of this Letter of Credit must be returned to us with any drawing(s)
hereunder for our endorsement of any payment effected. We undertake to return
said original Letter of Credit to you (unless fully utilised or expired)
together with our advice of settlement.
This Letter of Credit sets forth in full our undertaking, and such undertaking
shall not in any way be modified, amended, amplified or limited by reference to
any document, instrument or agreement referred to herein except only the
certificate and sight drafts referred to herein and any such reference shall not
be deemed to incorporate herein by reference any document, instrument or
agreement except such certificates and sight drafts.
Each draft drawn hereunder must be marked: "Drawn under [INSERT NAME OF BANK]
Letter of Credit No. (specify L/C No.)".
Unless otherwise expressly stated herein, this Letter of Credit is subject to
the uniform customs and practice for documentary credits, 1998 revision, ICC
publication No. 500 and the laws of the State of New York.
ENGAGEMENT
We hereby agree with you that drafts drawn under and in compliance with the
terms of this credit will be duly honoured upon presentation and delivery of the
documents as specified herein within three (3) business days of such
presentation and delivery if presented to the Drawing Office on or before the
expiry date indicated above.
This credit is transferable to your successors and assigns by (i) giving us
written notice stating this credit has been transferred and (ii) delivering the
original credit to such successor or assign.
Very truly yours,
----------------------- -----------------------
Authorised Signature Authorised Signature
-2-
EXHIBIT F
FORM OF OPINION
November [ ], 2001
Airlease Ltd.
First Union National Bank
Re: ONE ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ DC-9-SERIES 82, MSN 48038
-----------------------------------------------
Gentlemen:
We have acted as counsel for CSI Aviation Services, Inc., a
corporation organized and existing under the laws of New Mexico (the "Lessee"),
in connection with the execution and delivery of the following documents
(collectively, the "Documents") together with all exhibits and schedules
thereto:
(a) the Aircraft Lease Agreement, dated as of November
21, 2001 (the "Agreement") among First Union National Bank (the
"Lessor"), the Lessee and Airlease Ltd. ("Airlease"); and
(b) the Lease Supplement dated November [ ], 2001,
between Lessor and Lessee; and
(c) the USMS Agreement, dated as of October 2, 2001,
between the Lessee and The United States ▇▇▇▇▇▇▇▇ Service ("USMS"); and
(d) the Maintenance Agreement dated November 21, 2001,
between Lessee and Spirit Airlines.
This Opinion is delivered to you pursuant to Section 2.3 of
the Agreement. Terms used herein which are defined in the Agreement shall have
the respective meanings set forth in the Agreement, unless otherwise defined
herein.
In connection with this opinion, we have examined the
originals, or certified, conformed or reproduction copies, of all records,
agreements, instruments and documents as we have deemed relevant or necessary as
the basis for the opinions hereinafter expressed. In stating our opinion, we
have assumed the genuineness of all signatures on original or certified copies,
the authenticity of documents submitted to us as originals and the conformity to
original or certified copies of all copies submitted to us as certified or
reproduction copies.
We have also assumed, for purposes of the opinions expressed
herein, that the parties to the Documents other than the Lessee have the
corporate power and authority to enter
into and perform each of the Documents and that each of the Documents has been
duly authorized, executed and delivered by each such other party.
Based upon the foregoing, and subject to the limitations set
forth herein, we are of the opinion that:
1. The Lessee (i) is a duly organized and validly existing
corporation in good standing under the laws of the jurisdiction of its
incorporation, (ii) has the power and authority to own its property and
assets and to transact the business in which it is engaged and (iii) is
duly qualified as a foreign corporation and in good standing in each
jurisdiction where the ownership, leasing or operation of property or
the conduct of its business requires such qualification.
2. The Lessee has the corporate power to execute, deliver and
perform the terms and provisions of each of the Documents to which it
is a party and has taken all necessary corporate action to authorize
the execution, delivery and performance by it of each of such
Documents. The Lessee has duly executed and delivered each of the
Documents to which it is a party, and each of such Documents
constitutes its legal, valid and binding obligation enforceable in
accordance with its terms except as the enforceability thereof may be
limited by applicable bankruptcy, insolvency, reorganization or other
similar laws affecting creditors' rights generally and by general
equitable principles (regardless of whether the issue of enforceability
is considered in proceeding in equity or at law).
3. Neither the execution, delivery or performance by
the Lessee of the Documents to which it is a party, nor compliance by
it with the terms and provisions thereof, (i) will contravene any
provision of any law, statute, rule or regulation or, to the best of
our knowledge after due inquiry, any order, writ, injunction or decree
of any court or governmental instrumentality, (ii) will conflict or be
inconsistent with or result in any breach of any of the terms,
covenants, conditions or provisions of, or constitute a default under,
or result in the creation or imposition of (or the obligation to create
or impose) any Lien upon any of the property or assets of the Lessee
pursuant to the terms of any indenture, mortgage, deed of trust, credit
agreement, loan agreement or any other agreement, contract or
instrument or which we are aware to which the Lessee is a party or by
which it or any of its property of assets is bound or to which it may
be subject or (iii) will violate any provision of the Certificate of
Incorporation or By-Laws of Lessee.
4. To the best of our knowledge after due inquiry,
there are no actions, suits, or proceedings pending or threatened (i)
with respect to any Document or (ii) that are reasonably likely to
materially and adversely affect the operations, business, property,
assets, condition (financial or otherwise) or prospects of the Lessee.
5. No order, consent, approval, license,
authorization or validation of, or filing, recording or registration
with (except as have been obtained or made prior to the Delivery Date),
or exemption by, any governmental or public body or authority, or any
subdivision thereof, is required to authorize, or is required in
connection with, (i) the
-2-
execution, delivery and performance of any Document to which the Lessee
is a party or (ii) the legality, validity, binding effect or
enforceability of any such Document.
6. The choice of New York law as the governing law of
the Agreement is a valid choice of law.
7. The consent by the Lessee in Section 20 of the
Agreement to the jurisdiction of courts sitting in the State of New
York is a valid consent to the jurisdiction of such courts.
8. It is not necessary under the laws of the
jurisdiction of incorporation of the Lessee, (i) in order to enable the
Lessor and Airlease or either of them to enforce their respective
rights under the Documents or (ii) by reason of the execution, delivery
or performance of the Documents, that either of them should be
licensed, qualified or entitled to carry on business in any such
jurisdiction.
9. Neither the Lessor nor Airlease is or will be
resident, domiciled, carrying on business or subject to taxation in the
jurisdiction of incorporation of the Lessee by reason only of the
execution, delivery, performance or enforcement of the Documents.
The opinions concerning the enforceability of the Documents means that
the Documents constitute an effective contract under applicable law, that the
Documents are not invalid in their entirety because of a specific statutory
prohibition or public policy and are not subject in their entirety to a
contractual defense and, subject to the last sentence of this paragraph, some
remedy is available if the Lessee is in material default under the Documents.
This opinion does not mean that any particular remedy is available upon a
material default, or every provision of the Documents will be upheld or enforced
in any or each circumstance by a court. Furthermore, the validity, binding
effect and enforceability of the Documents may be limited or otherwise affected
by a bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance
or other similar statutes, rules, regulations or other laws affecting the
enforcement of creditors' rights and remedies generally and the unavailability
of, or limitation on the availability of, a particular right or remedy (whether
in a proceeding in equity or at law) because of an equitable principle or
requirement as to commercial reasonableness, conscionability or good faith.
We do not purport to be experts on, and do not purport to be generally
familiar with or qualified to express legal opinions based on, any law other
than the laws of the State of New Mexico and accordingly express no opinion
herein based upon any law other than the laws of the State of New Mexico or the
federal laws of the United States of America. We note that the Agreement
provides that is shall be governed by the laws of the State of New York. We have
assumed with your permission for purposes of this opinion letter that the laws
of the State of New York are the same as the laws of the State of New Mexico.
The opinions expressed herein are solely for your benefit and may not be relied
upon in any manner or for any purpose by any other person.
Very truly yours,
-3-
TABLE OF CONTENTS
PAGE
ERROR! NO TABLE OF CONTENTS ENTRIES FOUND.
SCHEDULE 1 AIRCRAFT DESCRIPTION
SCHEDULE 2
EXHIBIT A Lease Supplement
EXHIBIT B Form of Receipt for Lease Aircraft
EXHIBIT C Lease Termination Agreement
EXHIBIT D Form of Operating Report
EXHIBIT E Form of Letter of Credit
EXHIBIT F Form of Opinion