Exhibit 10.33
EXECUTION VERSION
AIRCRAFT LEASE AGREEMENT [N288SK]
between
▇▇▇▇▇ FARGO BANK NORTHWEST, NATIONAL ASSOCIATION
not in its individual capacity, except as expressly set
forth herein, but solely as Owner Trustee
as Lessor
and
CHAUTAUQUA AIRLINES, INC.
as Lessee
Dated as of June 5, 2001
One Embraer EMB-145LR aircraft bearing manufacturer's serial no. 145461 and
United States registration ▇▇▇▇ N288SK
and the two Rolls-▇▇▇▇▇ ▇▇▇▇▇▇▇ AE 3007-A1P engines bearing serial numbers
CAE311866 and CAE311867
THIS AIRCRAFT LEASE AGREEMENT (THIS "LEASE") HAS BEEN EXECUTED IN SEVERAL
COUNTERPARTS. TO THE EXTENT, IF ANY, THAT THIS LEASE CONSTITUTES CHATTEL PAPER
(AS SUCH TERM IS DEFINED IN THE UNIFORM COMMERCIAL CODE AS IN EFFECT IN ANY
APPLICABLE JURISDICTION), NO SECURITY INTEREST HEREIN MAY BE CREATED THROUGH THE
TRANSFER OR POSSESSION OF ANY COUNTERPART HEREOF OTHER THAN THE ORIGINAL
COUNTERPART. THE COUNTERPART TO BE DEEMED THE ORIGINAL COUNTERPART SHALL BE THE
COUNTERPART THAT CONTAINS THE RECEIPT THEREFOR EXECUTED BY THE LESSOR ON THE
SIGNATURE PAGE THEREOF. SEE SECTION 20.04 FOR INFORMATION CONCERNING THE RIGHTS
OF THE HOLDERS OF THE VARIOUS COUNTERPARTS HEREOF.
DUPLICATE
THIS IS NOT THE "ORIGINAL" COUNTERPART.
------------
Certain portions of this exhibit have been omitted pursuant to a request for
confidential treatment under Rule 406 of the Securities Act of 1933. The
omitted materials have been filed separately with the Securities and Exchange
Commission.
AIRCRAFT LEASE AGREEMENT [ N288SK]
This AIRCRAFT LEASE AGREEMENT [N288SK] is made as of June 5, 2001, between
▇▇▇▇▇ FARGO BANK NORTHWEST, NATIONAL ASSOCIATION, a national banking association
organized and existing under the laws of the United States of America, not in
its individual capacity, except as expressly set forth herein, but solely as
Owner Trustee (in such capacity, the "LESSOR"), and CHAUTAUQUA AIRLINES, INC., a
New York corporation (the "LESSEE").
RECITALS:
WHEREAS, Lessee desires to lease from Lessor and Lessor is willing to lease
to Lessee the Aircraft upon and subject to the terms and conditions of this
Lease; and
WHEREAS, the parties intend this Lease to constitute a true lease and not a
security agreement;
NOW IT IS HEREBY AGREED as follows:
ARTICLE I
DEFINITIONS AND CONSTRUCTION
Section 1.01 DEFINITIONS. In this Lease, except as otherwise provided or
unless the context otherwise requires, the following terms shall have the
meanings set forth below:
"ADDITIONAL INSURED" means the Owner Trustee (in its individual and trust
capacities), the Beneficiary and any Financing Party.
"AERO" means Aero Ltd, a Cayman Islands corporation.
"AERONAUTICAL AUTHORITY" means as of any time of determination, the FAA,
the JAA or other governmental airworthiness authority having jurisdiction over
the Aircraft or the Airframe and Engines or engines attached thereto under the
laws of the country in which the Airframe is then registered as provided in
Section 8.05.
"AFFILIATE" means, with respect to any Person, any other Person directly or
indirectly controlling 50% or more of any class of voting securities of such
Person or otherwise controlling, controlled by or under common control with such
Person. For the purposes of this definition, "control" (including "controlled
by" and "under common control with") shall mean the power, directly or
indirectly, to direct or cause the direction of the management and policies of
such Person whether through the ownership of voting securities or by contract or
otherwise.
"AIRCRAFT" means the Airframe described in EXHIBIT A-1 together with (a)
the Engines relating to such Airframe, whether or not installed on such
Airframe, (b) any and all Parts furnished with such Airframe and such Engines,
(c) all Aircraft Documents relating to such Airframe, Engines and Parts, and (d)
all substitutions, replacements and renewals of any and all thereof made
pursuant to the terms of this Lease title to which is, or is required pursuant
to this Lease to be, vested in Lessor.
"AIRCRAFT DOCUMENTS" means all technical data, manuals, log books and
weight and balance sheets, and all inspection, modification and overhaul records
and other service, repair, maintenance, and
technical records that are maintained with respect to the Aircraft, Airframe,
Engines, APU, landing gears or parts (including, without limitation, all
additions, renewals, revisions, and replacements of any such materials from time
to time made, or required to be made, in accordance with the Maintenance Program
and/or FAA regulations, and in each case in whatever form and by whatever means
or medium such materials may be maintained or retained by or on behalf of
Lessee, and including in any event the items identified in EXHIBIT B and
back-to-birth life limited Parts traceability records); PROVIDED, HOWEVER, that
all such material shall be maintained in the English language.
"AIRCRAFT PRICE" has the meaning assigned to such term in the Purchase
Agreement.
"AIRFRAME" means (i) the Embraer model EMB-145LR aircraft (excluding the
Engines and any other engines which may from time to time be installed thereon,
but including any and all Parts which may from time to time be incorporated in,
installed on or attached to such aircraft, and including any and all such Parts
removed therefrom so long as title to such removed Parts remains vested in the
Lessor under the terms of Article IX) originally delivered and leased hereunder,
identified by national registration number and manufacturer's serial number in
the Lease Supplement executed and delivered on the Delivery Date, so long as a
Replacement Airframe shall not have been substituted therefor pursuant to
Section 12.01, and (ii) a Replacement Airframe, so long as another Replacement
Airframe shall not have been substituted therefor pursuant to Section 12.01.
"AIRWORTHINESS DIRECTIVE" or "AD" means any airworthiness directive issued
by the FAA and applicable to aircraft and engines of the same type as the
Aircraft and the Engines.
"AMM" has the meaning assigned to such term in the definition "Maintenance
Program."
"APPROVED INSURANCE BROKER" means an insurance broker meeting the
requirements set forth in Section 11.07(a)(iii).
"APPROVED INSURER" means a reputable insurer of nationally or
internationally recognized responsibility and standing in aircraft insurances.
"ASSIGNMENT NO. 1" means the Purchase Agreement Assignment No. 1 (N288SK),
dated as of June 29, 2001, between Seller and Aero, together with the Consent
and Agreement thereto dated as of June 29, 2001 executed and delivered by the
Manufacturer.
"ASSIGNMENT NO. 2" means the Purchase Agreement Assignment No. 2 (N288SK)
dated as of June 29, 2001, between Aero and Lessor, together with the Consent
and Agreement thereto dated as of June 29, 2001 executed and delivered by the
Manufacturer and the guarantee executed and delivered by the Manufacturer of
Aero's obligations thereunder in favor of Lessor, Lessee and Seller.
"BANKRUPTCY CODE" means the United States Bankruptcy Code (11 U.S.C.
Section.101 ET SEQ.) as amended from time to time, or any similar legislation of
the United States enacted to supersede, amend, or supplement such Bankruptcy
Code (and any reference to a provision of the Bankruptcy Code shall refer to any
successor provision(s), however designated).
"BASIC TERM" means the period commencing on the Delivery Date and ending on
but excluding the Expiration Date, or such earlier date on which this Lease
shall be terminated as provided therein.
"BENEFICIAL INTEREST" means all right, title and interest of the
Beneficiary in, to and under the Trust Agreement.
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"BENEFICIARY" means Mitsui & Co. (U.S.A.), Inc., a New York corporation.
"BENEFICIARY GUARANTOR" means the provider of a Beneficiary Guaranty.
"BENEFICIARY GUARANTY" means any guaranty delivered or to be delivered to
support the obligations of the Beneficiary under the Operative Documents in
connection with the transfer by the Beneficiary of the Beneficial Interest.
"▇▇▇▇ OF SALE" means the warranty ▇▇▇▇ of sale relating to the Aircraft
delivered to Lessor pursuant to the Purchase Agreement.
"BUSINESS DAY" means a day other than a Saturday or a Sunday and other than
a day on which banking institutions in Indianapolis, Indiana or New York, New
York are required or authorized by law or order to be closed.
"C CHECK" shall mean any inspection and related maintenance procedures
designated as such by Lessee.
"CITIZEN OF THE UNITED STATES" means a citizen of the United States as
defined in Section. 40102(a)(15) of the Federal Aviation Act, or any analogous
part of any successor or substituted legislation or regulation at the time in
effect.
"CLAIMS" has the meaning set forth in Section 1.01 of EXHIBIT H.
"CLOSING DOCUMENTS" means each of the documents listed in EXHIBIT E.
"CODE" means the United States Federal Internal Revenue Code of 1986, as
amended from time to time, or any similar legislation of the United States
enacted to supersede, amend, or supplement such Code (and any reference to a
provision of the Code shall refer to any successor provision(s), however
designated).
"CPCP" has the meaning assigned to such term in the definition "Maintenance
Program."
"CYCLE" means one take-off and landing of the Aircraft or any aircraft on
which the part or engine in question may at any time be installed.
"DEFAULT" means an event or condition that is, or with the lapse of time,
the giving of notice, the making of any determination or the fulfillment of any
condition would constitute, an Event of Default.
"DELIVERY" means the delivery of the Aircraft to and the acceptance of the
Aircraft by Lessee for the purposes of this Lease, as evidenced by the execution
and delivery by the Lessee of the Delivery Acceptance Certificate.
"DELIVERY ACCEPTANCE CERTIFICATE" means a Delivery Acceptance Certificate,
dated the Delivery Date, in substantially the form of EXHIBIT C.
"DELIVERY DATE" means the date on which Delivery of the Aircraft occurs, as
evidenced by the delivery by Lessee to Lessor of the Delivery Acceptance
Certificate.
"DELIVERY LOCATION" means Sao ▇▇▇▇ dos ▇▇▇▇▇▇, Sao Paulo, Brazil or such
other location in the United States as Lessor and Lessee may mutually agree.
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"DOLLARS" and "$" means the lawful currency of the United States of
America.
"ENGINE" means (i) each of the two ▇▇▇▇▇▇▇ model AE3007A1P engines
originally delivered and leased under this Lease, identified by manufacturer's
serial number in the Lease Supplement executed and delivered on the Delivery
Date, so long as a Replacement Engine shall not have been substituted therefor
pursuant to Section 12.02, and (ii) a Replacement Engine, so long as another
Replacement Engine shall not have been substituted therefor pursuant to Section
12.02, whether or not such engine or Replacement Engine, as the case may be, is
from time to time installed on the Airframe or installed on any other aircraft,
and including in each case all Parts incorporated or installed in or attached
thereto and any and all Parts removed therefrom so long as title to such Parts
remains vested in the Lessor under the terms of Article IX. The term "ENGINES"
means, as of any date of determination, the two engines each of which is an
Engine on that date.
"ENGINE MANUFACTURER" means Rolls-Royce Corporation, a Delaware
corporation.
"ENGINE WARRANTY AGREEMENT" means the Rolls-Royce AE3007A Series Engine
Warranty Agreement made effective as of April 30, 1999, among the Engine
Manufacturer, Seller and the Lessee, as amended and supplemented from time to
time.
"ENGINE WARRANTY ASSIGNMENT AND CONSENT" means the Warranty Assignment
Agreement and Consent [N288SK] dated as of June 5, 2001, between Seller and
Lessor and consented to by the Engine Manufacturer.
"EQUIVALENCY PAYMENT" has the meaning specified in EXHIBIT D-1 or EXHIBIT
D-2, as applicable.
"ERISA" means the Employee Retirement Income Security Act of 1974 and any
regulations and rulings issued thereunder all as amended and in effect from time
to time.
"ERISA PLAN" means, individually or collectively, an employee benefit plan,
as defined in Section 3(3) of ERISA, which is subject to Title I of ERISA or any
applicable regulation thereunder or a plan or individual retirement account
which is subject to Section 4975(c) of the Code;
"EVENT OF DEFAULT" means any event specified in Section 17.01.
"EVENT OF LOSS" means any of the following events with respect to the
Aircraft, the Airframe or any Engine whether or not installed on the Airframe
(except for an Engine that has been replaced by a Replacement Engine):
(a) loss of such property or its use due to theft, hijacking or
disappearance for a period in excess of sixty (60) consecutive days, or in
any event extending beyond the Term;
(b) destruction, damage beyond economic repair or rendition of such
property permanently unfit for normal use for any reason whatsoever;
(c) any damage to such property which results in an insurance
settlement with respect to such property on the basis of a total loss or on
the basis of a compromised or constructive total loss;
(d) the condemnation, confiscation, appropriation or seizure of, or
requisition of title to such property by any Governmental Entity or
purported Governmental Entity;
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(e) the condemnation, confiscation, appropriation or seizure of the
use of such property by or on the authority of any Governmental Entity or
purported Governmental Entity, that in any such case shall have resulted in
the loss of possession thereof by Lessee for a period in excess of sixty
(60) consecutive days for any Governmental Entity other than a United
States Entity and one hundred eighty (180) days for any United States
Entity (or in either case for such shorter period ending on the date that
is seven (7) days from the date of receipt of an insurance settlement with
respect to such property on the basis of a total loss) or in any event
extending beyond the end of the Term;
(f) in the case of any Engine, a deemed Event of Loss pursuant to
clause (vi) or clause (vii) of Section 8.01(a).
The date of such Event of Loss shall be (aa) the 61st day following an Event of
Loss described in clause (a); (bb) the date of an Event of Loss described in
clause (b); (cc) the date of any insurance settlement in the case of an Event of
Loss described in clause (c); (dd) the date of an Event of Loss described in
clause (d); (ee) the 61st day following an Event of Loss described in clause (e)
with respect to a Governmental Entity other than a United States Entity and the
181st day following an Event of Loss described in clause (e) with respect to a
United States Entity; and (ff) the date of the deemed Event of Loss described in
clause (f). An Event of Loss with respect to the Aircraft shall be deemed to
have occurred if any Event of Loss occurs with respect to the Airframe.
"EXPIRATION DATE" means the date specified as such in the Lease Supplement
executed and delivered on the Delivery Date.
"FAIR MARKET RENTAL VALUE" means in respect of the Aircraft at any time,
the aggregate base rentals (which shall in no event be less than zero) which
would be payable in an arm's-length transaction for cash under a lease of the
Aircraft on an "as is", "where is" basis and otherwise on terms substantially
identical (except for Basic Rent and Term) to the terms of this Lease for such
period of time as such Fair Market Rental Value is to be determined between a
willing lessor and a willing lessee both with full knowledge of the relevant
facts, including the actual condition and maintenance status of the Aircraft at
such time, and neither under any compulsion to enter into the transaction.
"FAA" means the United States Federal Aviation Administration and any
successor agency or agencies thereto.
"FAA-FILED DOCUMENTS" means this Lease, the ▇▇▇▇ of sale on FAA Form 8050-2
executed by Aero, the Trust Agreement, the application for registration of the
Aircraft with the FAA in the name of the Owner Trustee (together with any
attachments thereto), and the Delivery Acceptance Certificate and Lease
Supplement to be filed with the FAA in connection with the Delivery of the
Aircraft.
"FEDERAL AVIATION ACT" means subtitle VII of title 49 of the United States
Code, as amended and in effect on the date of this Lease or as subsequently
amended, or any successor or substituted legislation at the time in effect and
applicable.
"FINANCING" means any financing arrangement to which Lessor is a party
secured by an interest in the Aircraft or this Lease in accordance with Section
19.02.
"FINANCING PARTY" means any party to a Financing, including any such party
acting as lender in a Financing; PROVIDED that such lender (i) shall be a Person
(other than a natural person) who is reasonably experienced in equipment leasing
and financing transactions, (ii) shall not be an airline or other Person engaged
in air transportation or a competitor of Lessee in the business of air
transportation or any
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Affiliate thereof, and (iii) shall not be a party adverse to the Lessee or any
Affiliate of the Lessee in any pending litigation or arbitration (whether as
plaintiff or defendant) and shall not have overtly threatened to initiate any
such litigation or arbitration against Lessee or any Affiliate of Lessee.
"FLIGHT HOUR" means each hour or part thereof, measured to one decimal
place, elapsing from the moment the wheels of the Airframe (or any airframe on
which the Engine or Part in question may be installed) first leave the ground on
take-off to the moment when the wheels of the Airframe or airframe first touch
the ground on landing.
"GOVERNMENTAL ENTITY" means and includes (a) the FAA or other United States
Entity; (b) any national government, or political subdivision thereof or local
jurisdiction therein; (c) any board, commission, department, division, organ,
instrumentality, court, or agency of any entity described in (b) above, however
constituted; and (d) any joint authority, association, organization, or
institution of which any entity described in (b) or (c) above is a member or to
whose jurisdiction any such entity is subject or in whose activities any such
entity is a participant but only (except for purposes of defining Law below) to
the extent that any of the preceding have jurisdiction over the Aircraft or its
operations.
"INDEMNITEE" means WFB, in its individual capacity and as Lessor, the
Beneficiary, the Financing Parties, if any, and each Affiliate, officer,
director, shareholder, agent, employee, successor and permitted assign of any of
the foregoing Persons.
"INTEREST RATE" means, at any time, LIBOR (as adjusted for applicable
reserve requirements) [*], where LIBOR means [*] appearing on Telerate Page
3750 (or any successor page) as the London interbank offered rate for deposits
in Dollars at approximately 11:00 A.M. (London time) two Business Days prior to
the first day of the period to which the obligation to pay such interest arises,
for a term of one month. If for any reason such rate is not available, the term
"LIBOR" shall mean, for all amounts owing under this Lease to which an
obligation to pay such interest arises, the rate per annum (rounded upwards, if
necessary, to the nearest 1/100 of 1%) appearing on Reuters Screen LIBO Page as
the London interbank offered rate for deposits in Dollars at approximately 11:00
A.M. (London time) two Business Days prior to the first day of the period to
which the obligation to pay such interest arises, for a term of one month;
PROVIDED, HOWEVER, if more than one rate is specified on Reuters Screen LIBO
Page, the applicable rate shall be the arithmetic mean of all such rates
(rounded upwards, if necessary, to the nearest 1/100 of 1%). All computations of
interest under this Lease at the Interest Rate or otherwise are to be made on
the basis of a 360 day year for the actual number of days elapsed and shall be
compounded monthly.
"JAA" means the European Joint Aviation Authority or any successor agency
thereto.
"LAW" means and includes (a) any statute, decree, constitution, regulation,
order, judgment or other directive of any Governmental Entity; (b) any treaty,
pact, compact or other agreement to which any Governmental Entity is a party;
(c) any judicial or administrative interpretation or application of any Law
described in (a) or (b) above; and (d) any amendment or revision of any Law
described in (a), (b) or (c) above.
"LEASE" means this Aircraft Lease Agreement [N288SK ], together with all
Lease Supplements.
"LEASE SUPPLEMENT" means a supplement to this Lease in form and substance
satisfactory to Lessor and Lessee.
"LESSOR'S LIENS" means Liens against, on, or with respect to, the Aircraft,
any Engine or Part or title thereto or interest thereon arising as a result of
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* Confidential
(a) claims against Lessor, WFB or the Beneficiary or claims arising by
or through Lessor, WFB or the Beneficiary as a result of acts or omissions
of Lessor, WFB or the Beneficiary not related to this Lease or any other
Operative Document or the transactions contemplated hereby or thereby;
(b) Taxes or Claims imposed against Lessor, WFB or the Beneficiary
that are not required to be indemnified against by Lessee pursuant to
Article XIV or XV;
(c) a Financing pursuant to Section 19.02(b); and;
(d) claims against Lessor, WFB or the Beneficiary or claims arising
by, through or under Lessor, WFB or the Beneficiary arising out of the
voluntary or involuntary transfer by Lessor, WFB or the Beneficiary (other
than to any Financing Party) or any transferee, successor or assign of
Lessor, WFB or the Beneficiary of all or any part of its respective
interests in the Aircraft, any Engine, any Part or the Operative Documents,
other than a transfer pursuant to Article XII or Article XVII.
"LIEN" means any mortgage, pledge, lien, charge, encumbrance,
hypothecation, lease, statutory or other rights in rem, assignment or exercise
of rights, security interest or claim, trust or title retention or any other
encumbrance of any kind securing any obligation of any Person including any
equivalent thereof created or arising under the Laws of the State of
Registration or any subdivision thereof.
"MAINTENANCE CONTRACTOR" means (i) Lessee, (ii) Manufacturer, (iii) Engine
Manufacturer or (iv) any other maintenance contractor that is duly certified by
the Aeronautical Authority to perform such work on aircraft and engines of the
same type as the Aircraft and the Engines and chosen by Lessee.
"MAINTENANCE PROGRAM" has the meaning specified in Exhibit A-2.
"MANUFACTURER" means EMBRAER - Empresa Brasileira de Aeronautica S.A., a
company organized under the laws of Brazil.
"MANUFACTURER PURCHASE AGREEMENT" the EMB-145 Purchase Agreement Number
GCT-025/98, dated June 17, 1998, between the Manufacturer and Seller.
"OFFICER'S CERTIFICATE" means as to any Person other than a natural person
a certificate signed by a Responsible Officer of such Person.
"OEMS" has the meaning assigned to such term in the definition "Maintenance
Program".
"OPERATING RESULTS" means revenue passenger miles, available seat miles,
load factor and passengers enplaned.
"OPERATIVE DOCUMENTS" means, collectively, this Lease, the Purchase
Agreement, the Trust Agreement, the Tax Indemnity Agreement, Assignment ▇▇. ▇,
▇▇▇▇▇▇▇▇▇▇ ▇▇. ▇, the Engine Warranty Assignment and Consent, the ▇▇▇▇ of Sale
and the FAA-filed documents.
"ORIGINAL TERM" has the meaning set forth in Section 17.02(e).
"OTHER LEASE" means any lease of jet aircraft between Beneficiary or any of
its Affiliates (including any Other Lessor) and Lessee or any of its Affiliates
entered into by such Persons or acquired
7
by Beneficiary or its Affiliates on or after the date hereof, but excluding any
such lease in which the Beneficiary and its Affiliates own less than fifty
percent of the beneficial ownership or interests.
"OTHER LESSOR" means any trust or similar arrangement of which the
Beneficiary or any of its Affiliates is the beneficiary or beneficial owner in
whole or in part.
"OWNER TRUSTEE" means WFB, in its capacity as owner trustee under the Trust
Agreement.
"PARTS" means any and all appliances, avionics, components, parts,
instruments, appurtenances, accessories, furnishings, seats, galleys,
lavatories, and other equipment of whatever nature (other than complete Engines
or engines and excluding galley equipment and serving equipment (including, but
not limited to, galley carts, coffee heater, coffee pots, utensils, dishes and
cups) and emergency medical equipment), that may now or from time to time be
incorporated or installed or positioned in or on or attached to the Airframe or
any Engine, or that remain the property of Lessor pursuant to the terms of
Article IX despite removal therefrom, PROVIDED that at such time as a
Replacement Part shall be substituted for a Part in accordance with Article IX,
the Part so replaced shall cease to be a Part hereunder.
"PERMITTED INVESTMENTS" means (a) direct obligations of the United States
of America or any agency or instrumentality thereof, (b) obligations fully
guaranteed by the United States of America or any agency or instrumentality
thereof, (c) any mutual fund the portfolio of which is limited to obligations of
the type described in clauses (a) and (b), (d) certificates of deposit issued
by, or bankers' acceptances of, or time deposits or a deposit account with, any
bank, trust company, or national banking association incorporated or doing
business under the laws of the United States of America or one of the states
thereof, having a combined capital and surplus of at least $100,000,000 and
having a rating of "A-" or better from the Standard & Poor's Ratings Group or
"A3" or better by ▇▇▇▇▇'▇ Investors Services, Inc., (e) commercial paper issued
by companies in the United States which directly issue their own commercial
paper and which are doing business under the laws of the United States of
America or one of the states thereof and in each case having a rating assigned
to such commercial paper of A1+ by Standard & Poor's Ratings Group or P-1 by
▇▇▇▇▇'▇ Investors Services, Inc., or (f) obligations of the type described in
clauses (a), (b), (d), or (e) above, purchased from any bank, trust company, or
banking association referred to in clause (d) above pursuant to repurchase
agreements obligating such bank, trust company, or banking association to
repurchase any such obligation not later than 30 days after the purchase of any
such obligation. Unless otherwise specified in writing by the Lessor, all such
Permitted Investments shall mature not later than 30 days from the date of
purchase. Interest on such Permitted Investments shall accumulate and be held by
Lessor until the principal amount of such Permitted Investments due and owing to
Lessee shall be paid to Lessee, in which case any such interest shall be paid to
Lessee together with such principal amount.
"PAYMENT LOCATION" means the account of the Beneficiary at Citibank, N.A.,
ABA No. ▇▇▇▇▇▇▇▇▇, Account Name: Mitsui & Co. (U.S.A.), Inc., Account No.
▇▇▇▇▇▇▇▇, Ref: Chautauqua [N288SK], or such other account as may be designated
by Beneficiary in accordance with Section 4.02.
"PERMITTED AIR CARRIER" means (a) any Section 1110 Person and (b) any
foreign air carrier that is principally based in any foreign country listed on
EXHIBIT F.
"PERMITTED LIEN" means:
(i) any Lessor's Lien;
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(ii) any Lien created in favor of Lessee, Lessor or Beneficiary under
the Operative Documents or of other Persons, to the extent permitted by
Section 8.01 or 9.03 hereof;
(iii)any Lien created by Lessor in favor of any Financing Party in a
Financing purusant to Section 19.02;
(iv) any Lien for Taxes either not yet due or being contested in good
faith;
(v) any air navigation authority, airport, materialmen's, workmen's,
repairmen's, mechanics', suppliers', employees' or other similar Liens
arising in the ordinary course of Lessee's business by statute or by
operation of Law in respect of obligations that are not yet due or that are
being contested in good faith;
(vi) Liens arising out of any judgment or award against Lessee,
PROVIDED that such judgment or award is reversed, discharged, vacated or
stayed within no more than 45 days after entry thereof;
(vii) salvage and similar rights of insurers under policies of
insurance maintained in accordance with Article XI; and
(viii) Liens with respect to which the Lessee has provided a bond or
other security adequate in the good faith opinion of the Lessor;
PROVIDED, HOWEVER, that in the case of Liens described in paragraphs (iv) and
(v) that are being contested by Lessee in good faith, adequate resources or
reserves for the payment of the sums giving rise to the Lien have been provided
for by Lessee and such Lien does not arise by reason of the failure of Lessee to
make any payment which is not being reasonably disputed by Lessee as being due
and so long as the same does not involve any material risk (in the reasonable
opinion of Lessor) of the detention, seizure, forfeiture, sale or loss
(including loss of use) of, or of any interest of the Lessor, Beneficiary or
Financing Party in, the Aircraft, any Engine or Part or any discernible risk of
criminal liability or any material risk of any civil penalty against Lessor,
Beneficiary, or any Financing Party or any Affiliate of any thereof.
"PERMITTED SUBLESSEE" means (i) any Permitted Air Carrier, (ii) the Engine
Manufacturer, (iii) any Affiliate of the Manufacturer domiciled in the United
States; (iv) any United States Entity backed by the full faith and credit of the
United States of America, and (v) any other Person that may be approved in
writing by the Lessor prior to the effectiveness of the relevant Sublease.
"PERSON" means and includes any individual person, corporation, limited
liability company, partnership, business trust, firm, joint stock company, joint
venture, trust, estate, unincorporated organization, association, sovereign
state or Governmental Entity or other entity recognized as a separate person
under applicable Law.
"PURCHASE AGREEMENT" means the Aircraft Purchase Agreement [N288SK] dated
as of June 5, 2001, among Seller, Lessee, Lessor and the Beneficiary relating to
the Aircraft.
"RECOVERY PERIOD" means "TAX ATTRIBUTE PERIOD" as defined in the Tax
Indemnity Agreement.
"RE-LEASING" has the meaning set forth in Section 17.02(e).
"RENEWAL TERM" has the meaning set forth in Section 6 of EXHIBIT A-2.
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"RENT" means Basic Rent and Supplemental Rent.
"RENT PAYMENT DATE" means the Delivery Date, the same calendar day as the
Delivery Date occurring in the calendar month next following the calendar month
in which the Delivery Date occurred, and, thereafter, the same calendar day as
the Delivery Date occurring in each subsequent calendar month during the Term.
"RENTAL PERIOD" means each period from and including (i) the Delivery Date
to, but excluding, the next succeeding Rent Payment Date, and thereafter, (ii)
each Rent Payment Date to, but excluding, the next succeeding Rent Payment Date
or, in the case of the last Rental Period, the period from and including the
last Rent Payment Date to, but excluding the last day of the Term.
"REPLACEMENT AIRCRAFT" means any Aircraft of which a Replacement Airframe
is part.
"REPLACEMENT AIRFRAME" means an Embraer model EMB-145LR aircraft or a
comparable or improved model of such aircraft of the Manufacturer (except
Engines or engines from time to time installed thereon) which shall satisfy the
requirements for a Replacement Airframe set forth in Section 12.01(a)(ii) and
which shall have become subject to this Lease pursuant to Section 12.01.
"REPLACEMENT ENGINE" means an engine (a) (i) of the Engine Manufacturer and
is the same model or an improved model, (ii) of equal or greater value, utility
and modification, having all Airworthiness Directives completed for which a
terminating action is required as of the transfer of such Replacement Engine to
Lessor in accordance with Section 12.02, and (iii) in as good an operating
condition (as determined in the case of a used engine acquired from any
unrelated Person by a full (hot and cold section) borescope inspection), in each
case, as that of the Engine for which it is substituted, assuming such Engine
was in the condition and repair required by the terms hereof immediately prior
to the Event of Loss, (b) suitable for installation and use on the Airframe and
compatible with the other engine then installed on the Airframe , and (c ) in
the case of a Replacement Engine delivered in connection with the return of the
Aircraft pursuant to Section 18.03, having no greater number of accumulated
Flight Hours or Cycles since the last overhaul or shop visit on such engine, as
applicable under Lessee's engine maintenance program at the time of return of
the Aircraft, as the Engine that should have been returned, assuming such Engine
which should have been returned was in the condition and repair as required by
the terms hereof immediately prior to such return.
"REPLACEMENT PART" has the meaning set forth in Section 9.01(b).
"RESPONSIBLE OFFICER" means, with respect to the Owner Trustee, any officer
in its Corporate Trust Administration designated by the Owner Trustee to perform
obligations under the Operative Documents, and with respect to any other party,
any corporate officer of a party who, in the normal performance of his or her
operational responsibilities, with respect to the subject matter of any
covenant, agreement or obligation of such party pursuant to any Operative
Document, would have responsibility for and knowledge of such matter and the
requirements of any Operative Document with respect thereto.
"RETURN ACCEPTANCE CERTIFICATE" means a certificate in the form of EXHIBIT
D-3 to be completed by Lessor pursuant to Section 18.06.
"RETURN CONDITIONS" means such status and condition as shall permit the
Aircraft to comply with Sections 18.01 through 18.04 and EXHIBIT D-1 or EXHIBIT
D-2, as applicable.
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"RETURN LOCATION" means such location within the continental United States
on Lessee's regional jet route system at one of its principal maintenance bases
as may be designated by Lessor and, so long as no Default or Event of Default
shall have occurred and be continuing, acceptable to Lessee.
"RETURN OCCASION" means the event that occurs when possession of the
Aircraft is returned from Lessee to Lessor at the end of the Term or upon
Lessor's taking possession of the Aircraft pursuant to Article XVIII.
"SECTION 1110" means 11 U.S.C.ss.1110 of the Bankruptcy Code.
"SECTION 1110 PERSON" is a Citizen of the United States and is an "air
carrier" within the meaning of the Federal Aviation Act holding an "air carrier
operating certificate" issued under Chapter 447 (or any successor provision) of
the Federal Aviation Act for aircraft capable of carrying 10 or more individuals
or 6,000 or more pounds of cargo, with such certificate in full force and
effect.
"SELLER" means Solitair Corp., a Delaware corporation.
"SERVICE BULLETIN" means a service bulletin or service information letter
issued by the Manufacturer, Engine Manufacturer or other original equipment
manufacturer in respect of the Aircraft or any part thereof.
"SPECIFIED DEFAULT" means (a) an event or condition described in Section
17.01(a), (g), (h), (i) or (j) (but only in the case of a voluntary suspension
of all Lessee's operations) that, after the giving of notice or lapse of time,
or both, would become an Event of Default, or (b) any Event of Default.
"SMRD" has the meaning assigned to such term in the definition "Maintenance
Program."
"SRM" has the meaning assigned to such term in the definition "Maintenance
Program."
"STATE OF REGISTRATION" means the United States, or such other country in
which the Aircraft may be registered in accordance with Section 8.05 of this
Lease or Section 5 of Exhibit A-2.
"SUBLEASE" means any sublease of the Aircraft with a Permitted Sublessee
entered into in accordance with Section 8.01(a) and any further subleasing of
the Aircraft whether or not authorized by this Lease; PROVIDED, HOWEVER, that a
wet lease or charter shall not be considered a Sublease for purposes of this
Lease.
"SUPPLEMENTAL RENT" means any and all amounts, liabilities and obligations
(other than Basic Rent) that Lessee agrees to pay hereunder, or under any other
Operative Document , including, without limitation:
(a) any payment of Stipulated Loss Value; and/or
(b) any payment of Equivalency Payment; and/or
(c) any payment by way of indemnity hereunder; and/or
(d) as provided herein and to the extent permitted by applicable Law,
interest at the Interest Rate calculated on any part of any installment of
Basic Rent not paid on the due date thereof for the period the same remains
unpaid, and on any Supplemental Rent not paid when due hereunder until the
same is paid.
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"TAX" and "TAXES" means any and all forms of taxation, levy, impost, duty,
with holding or charge of whatever nature and by whatever name called whenever
created or imposed and whether of the United States or elsewhere and whether
imposed by a local, municipal, governmental, state, federal or other body or
authority together with any additions to tax, penalties, fines, charges or
interest thereon and "taxation" shall be construed accordingly.
"TAX INDEMNITEE" means WFB, in its individual capacity and as Lessor, the
Beneficiary, any Affiliate of a Tax Indemnitee with respect to any interest in
the Aircraft, or any part thereof and their respective successors and permitted
assigns.
"TAX INDEMNITY AGREEMENT" means the Tax Indemnity Agreement [N288SK], dated
as of June 5, 2001 between the Lessee and the Beneficiary.
"TERM" means the period of the leasing of the Aircraft to Lessee pursuant
to this Lease, and shall include the Basic Term and one or more Renewal Terms
(if any).
"TRANSACTION COSTS" means those costs and expenses set forth in Section
12(e) of the Purchase Agreement that are to be paid or reimbursed by
Beneficiary.
"TREASURY RATE" means in respect of any period the per annum rate equal to
the yield-to-maturity on the most liquid U.S. Treasury note maturing on the date
which falls on the last day of such period at the time it is to be determined
for the purposes of this Lease, in each case as reasonably determined by Lessor
(or any other person acceptable to Lessor and Lessee) as set forth on page 5 of
the Telerate screen (or, if such page no longer exists, a substitute page
providing the equivalent information).
"TRUST AGREEMENT" means the Trust Agreement [N288SK], dated as of June 5,
2001, between WFB and the Beneficiary.
"TRUST ESTATE" means all estate, right, title and interest of Lessor in and
to the Aircraft, this Lease, any Lease Supplement and any other Operative
Document to which Lessor is a party, including all amounts of Rent and
Supplemental Rent, insurance proceeds or other amounts payable to or for the
benefit of Lessor (other than any amounts payable to Lessor in its individual
capacity) pursuant thereto.
"UCC" means the Uniform Commercial Code of New York as in effect from time
to time.
"UNITED STATES ENTITY" means the government of the United States or America
or any agency or instrumentality thereof.
"WFB" means ▇▇▇▇▇ Fargo Bank Northwest, National Association, a United
States national banking association.
Section 1.02 OTHER TERMS. In this Lease, the terms "APPLICABLE RATE,"
"APPRAISAL PROCEDURE," "EARLY PURCHASE DATE," "BASIC RENT," "EQUIVALENCY
CHARGE," "EXPIRY DATE," "FAIR MARKET SALE VALUE," "EARLY PURCHASE OPTION,"
"MINIMUM LIABILITY AMOUNT,""NET ECONOMIC RETURN," FMV OPTION," "PURCHASE PRICE,"
"SCHEDULED DELIVERY DATE," "STIPULATED LOSS VALUE," and "TERMINATION DATE" and
certain other terms defined in EXHIBIT A-2 shall have the meanings set forth in
EXHIBIT A-2.
Section 1.03 CONSTRUCTION. In this Lease, except as otherwise expressly
provided or unless the context otherwise requires:
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(a) the Schedules and Exhibits to this Lease shall form an integral
part hereof;
(b) reference herein to this Lease shall be deemed to include
references to this Lease and its Schedules and Exhibits and all Lease
Supplements as the same may be amended or supplemented or replaced from time to
time;
(c) references within any documents to appendices, schedules,
paragraphs, sections, exhibits or annexes are references to appendices,
schedules, paragraphs, sections, exhibits or annexes in or to such document;
(d) headings, subheadings, and paragraph number descriptions and the
table of contents are solely for the convenience of reference and shall not
affect the meaning, construction or effect of any provision of this Lease or any
other document;
(e) references to any Person or party shall include such Person or
party, its successors and permitted assigns and transferees;
(f) references to the neuter gender include the masculine or feminine,
the masculine gender includes the feminine and the singular number includes the
plural, and vice versa;
(g) reference to any agreement means such agreement as amended,
modified or supplemented from time to time in accordance with the provisions
thereof;
(h) references to "including" shall mean including without limiting
the generality of any description preceding such term and the rule of EJUSDEM
GENERIS shall not be applicable to limit a general statement, followed by or
referable to an enumeration of specific matters, to matters similar to those
specifically mentioned;
(i) the "winding up" or "dissolution" of a company or the appointment
of an "administrative receiver," a "liquidator," a "receiver" or an
"administrator" shall be construed so as to include any equivalent or analogous
proceedings and any proceedings giving protection for any period against the
claims of creditors under the Law of the jurisdiction in which such company is
incorporated or any jurisdiction in which such company carries on business or
owns assets;
(j) references to any statutory provision shall include reference to
that provision as it may be amended from time to time and to any like or similar
provisions replacing the same or which replacement provision addresses the same,
the similar or analogous matter;
(k) references to "indebtedness" shall be construed so as to include
any obligation (whether incurred as principal or as surety) for the payment or
repayment of money, whether present or future, actual or contingent;
(l) where any matter requires the approval or consent of either party,
such approval or consent shall be deemed not to have been given unless given in
writing and where any matter is required to be acceptable to either party, the
same shall be deemed not to have been accepted unless such acceptance is
communicated in writing; and
(m) each of the parties hereto and its counsel have reviewed and
revised, or requested revisions to, this Lease, and the usual rule of
construction that any ambiguities are to be resolved against the drafting party
shall be inapplicable in the construction and interpretation of this Lease.
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ARTICLE II
LEASE AND CONDITIONS
Section 2.01 TERM. (a) On the Delivery Date Lessor hereby agrees to tlease
the Aircraft to Lessee, and Lessee hereby agrees to lease the Aircraft from
Lessor, on the terms of this Lease for the Basic Term.
(b) Lessee and Lessor agree that this Lease is, and shall be treated
for U.S. federal income tax purposes as, a lease of the Aircraft, Airframe,
Engines and Parts. It is the intention of each of Lessee and Lessor that Lessor
(and any Financing Party holding a mortgage as assignee of Lessor) shall be
entitled to the benefits of Section 1110 with respect to the right to take
possession of the Aircraft, Airframe, Engines and Parts as provided in this
Lease, and in any instance where more than one construction of the terms and
conditions of this Lease or any other pertinent Operative Document is possible,
or of the facts and circumstances underlying the transactions contemplated
herein or therein, Lessor and Lessee agree that a construction that would create
and preserve such benefits shall control over any construction that would not
create and preserve such benefits. Lessor and Lessee agree that, for all
purposes of applicable Law, this Lease constitutes an agreement of lease and
nothing contained herein shall be construed as conveying to Lessee any right,
title or interest in the Aircraft, Airframe, Engines, Parts or Aircraft
Documents, except as expressly provided herein to Lessee as a lessee only.
Section 2.02 CONDITIONS PRECEDENT. (a) Lessor's obligation to lease the
Aircraft to Lessee shall be subject to satisfaction of the following conditions:
(i) no Default, Event of Default or Event of Loss shall have
occurred and be continuing, and no Default or Event of Default would result
from the leasing of the Aircraft hereunder on the Delivery Date;
(ii) the representations and warranties of Lessee set forth in
Section 5.01 and of Seller set forth in Section 9(a) of the Purchase
Agreement shall be true and correct on the Delivery Date (unless any such
representation and warranty shall have been made with reference to a
specified date, in which case such representation and warranty shall be
true and accurate as of such specified date), and each other party to this
Lease and the other Operative Documents to which it is a party shall have
performed and observed, in all material respects, all of its covenants,
obligations and agreements in this Lease and the other Operative Documents
to which it is a party to be observed or performed by it as of the Delivery
Date;
(iii) Lessee shall have delivered to Lessor an original of this
Lease and Lease Supplement No. 1 thereto, and Lessor shall have received
each of the other Closing Documents, each duly executed by the parties
thereto other than Lessor, dated as of the Delivery Date (or such other
date as may be reasonably satisfactory to Lessor) and in form and substance
reasonably satisfactory to Lessor;
(iv) no Default or Event of Default shall have occurred and be
continuing under any Other Lease;
(v) no change shall have occurred subsequent to the execution of
this Lease and prior to the Delivery Date in any applicable Law or in the
interpretation thereof that, in Lessor's reasonable opinion, would make it
illegal for Lessor, Beneficiary, Seller or Lessee, or any or all of them,
to perform any of their respective obligations under any of the Operative
Documents; and
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(vi) no action or proceeding shall have been instituted, nor
shall any action be threatened in writing, before any governmental
authority, nor shall any order, judgement or decree have been issued or
proposed to be issued by any governmental authority, to set aside,
restrain, enjoin or prevent the completion and consummation of this Lease
or any other Operative Document or the transactions contemplated hereby or
thereby.
(vii) the conditions set forth in Section 4 of EXHIBIT A-2 shall
have been met.
(b) Lessee's obligation to lease the Aircraft hereunder shall be
subject to its satisfaction of the following conditions:
(i) no Event of Loss shall have occurred.
(ii) the representations and warranties of each other party to
the Operative Documents made, in each case, in this Lease and in any other
Operative Document to which Lessee is party, shall be true and correct on
the Delivery Date (unless any such representation and warranty shall have
been made with reference to a specified date, in which case such
representation and warranty shall be true and accurate as of such specified
date); and each other party to this Lease and the other Operative Documents
to which it is a party shall have performed and observed, in all material
respects, all of its covenants, obligations and agreements in this Lease
and the other Operative Documents to which it is a party to be observed or
performed by it as of the Delivery Date.
(iii) Lessee shall have received originals of this Lease and
Lease Supplement No. 1 thereto, and Lessee shall have received each of the
other Closing Documents, each duly executed by the parties thereto other
than Lessee, dated as of the Delivery Date (or such other date as may be
reasonably satisfactory to Lessee) and in form and substance reasonably
satisfactory to Lessee;
(iv) no change shall have occurred subsequent to the execution of
this Lease and prior to the Delivery Date in any applicable Law or in the
interpretation thereof that, in Lessee's reasonable opinion, would make it
illegal for Lessor, Beneficiary, Seller or Lessee, or any or all of them,
to perform any of their respective obligations under any of the Operative
Documents; and
(v) no action or proceeding shall have been instituted, nor shall
any action be threatened in writing, before any governmental authority, nor
shall any order, judgement or decree have been issued or proposed to be
issued by any governmental authority, to set aside, restrain, enjoin or
prevent the completion and consummation of this Lease or any other
Operative Document or the transactions contemplated hereby or thereby.
PROVIDED that Lessee hereby acknowledges that each of the foregoing conditions
shall be deemed to have been satisfied upon delivery of the Aircraft by Aero to
Lessor and payment of the Aircraft Price and acceptance of the Aircraft by
Lessor under the Purchase Agreement, in which event Lessee shall not have any
right to reject the Aircraft or any Part thereof hereunder.
(c) The conditions specified in paragraph (a) are inserted for the
sole benefit of Lessor and may be waived or deferred in whole or in part by
Lessor. Lessor may attach to such waiver or deferral such requirements and
further or other conditions as Lessor reasonably thinks fit.
(d) The conditions specified in paragraph (b) are inserted for the
sole benefit of Lessee and may be waived or deferred in whole or in part by
Lessee, subject to the proviso at the end of
15
paragraph (b). Lessee may attach to such waiver or deferral such requirements
and further or other conditions as Lessee reasonably thinks fit.
ARTICLE III
DELIVERY AND ACCEPTANCE
Section 3.01 DELIVERY. Lessor and Lessee anticipate that the Aircraft and
the Aircraft Documents will be tendered for delivery on June 29, 2001 at the
Delivery Location. On the Delivery Date the FAA-filed Documents shall be filed
with the FAA.
Section 3.02 ACCEPTANCE OF AIRCRAFT. Following delivery of the Aircraft to
Lessor under the Purchase Agreement and execution by the Lessee of the Delivery
Acceptance Certificate, Lessee shall accept the Aircraft to be leased hereunder
"AS IS, WHERE IS" AND SUBJECT TO ALL FAULTS AND TO EACH AND EVERY DISCLAIMER OF
WARRANTY AND REPRESENTATION SET FORTH IN SECTION 7.03; it being understood that,
upon acceptance by Lessor of the Aircraft under the Purchase Agreement, Lessee
shall be obligated to execute and deliver the Delivery Acceptance Certificate
and accept the Aircraft under this Section 3.02.
Section 3.03 RISK OF LOSS. From and after the Delivery Date and throughout
the Term until the Aircraft is redelivered to Lessor in accordance herewith,
Lessee shall bear all risk of loss, damage, theft or destruction of, or any
other Event of Loss with respect to, the Aircraft or to the Airframe, any Engine
or any Part.
ARTICLE IV
RENT
Section 4.01 RENT; ADJUSTMENTS. (a) BASIC RENT. Lessee covenants and agrees
to pay to Lessor (or as Lessor shall direct) in respect of the Aircraft, as
Rent, on each Rent Payment Date, the Basic Rent for the Aircraft due on such
Rent Payment Date as provided in SCHEDULE BR-1 attached hereto and any and all
Supplemental Rent as the same becomes due. The Basic Rent payable on any Rent
Payment Date shall be allocated among the Rental Periods as provided in SCHEDULE
BR-2 attached hereto for all purposes, including federal and state income tax
purposes.
(b) ADJUSTMENTS TO BASIC RENT AND STIPULATED LOSS VALUES.
(i) If there is any change in the Aircraft Price from the Assumed
Aircraft Price (as defined in EXHIBIT A-2), all installments of Basic Rent
remaining to be paid during the Basic Term shall be recalculated and
adjusted upwards or downwards as the case may be (and corresponding
adjustments shall be made to the Basic Rent allocations set forth in
SCHEDULE BR-2 and Stipulated Loss Values applicable during the remaining
Basic Term), as provided in EXHIBIT A-2.
(ii) If the Transaction Costs payable by the Beneficiary pursuant
to Section 12(e) of the Purchase Agreement shall be less than the Assumed
Transaction Costs (as defined in EXHIBIT A-2), all installments of Basic
Rent remaining to be paid during the Basic Term shall be recalculated and
adjusted downwards (and corresponding adjustments shall be made to the
Basic Rent allocations set forth in SCHEDULE BR-2 and Stipulated Loss
Values applicable during the remaining Basic Term), as provided in EXHIBIT
A-2.
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(iii) If required by the terms of Section 17 of the Tax Indemnity
Agreement, Stipulated Loss Values applicable during the remaining Basic
Term shall be recalculated and adjusted upwards or downwards as the case
may be (and, if appropriate, corresponding adjustments shall be made to
Basic Rent applicable during the remaining Basic Term and the Basic Rent
allocations set forth in SCHEDULE BR-2) to maintain the Net Economic Return
through the Early Purchase Date as well as the end of the Basic Term and,
to the greatest extent consistent with such maintenance of such Net
Economic Return, to minimize the net present value (calculated at a
discount rate specified by the Lessee to the Beneficiary) of the remaining
Basic Rent payments (or, if the Lessee shall have so specified to the
Beneficiary, the remaining Basic Rent Payments to the Early Purchase Date).
Section 4.02 MANNER OF PAYMENT. Each installment of Rent and all other
amounts payable by Lessee hereunder shall be paid, in Dollars, by wire transfer
of freely available same day funds on the due date therefor by 12:00 noon (New
York time) to the Payment Location therefor or to such other account as Lessor
may designate from time to time by not less than five (5) Business Days' written
notice to Lessee.
Section 4.03 ABSENCE OF NEED FOR DEMAND. Except where payable on demand (in
which case payment shall be made promptly on demand), all payments to be made by
Lessee pursuant to this Lease on a date certain shall be made by Lessee on such
date whether or not demanded by the person to whom such payments are to be made.
Section 4.04 NON-BUSINESS DAY; DATE OF RECEIPT. (a) If any payment falls
due hereunder on a day that is not a Business Day, such payment shall be made on
the next succeeding Business Day with the same force and effect as if paid on
the scheduled date of payment, and (if paid on such next succeeding Business
Day) no interest shall accrue on the amount of such payment from and after such
scheduled date to the time of payment on such next succeeding Business Day.
(b) All payments shall be considered to have been made on the date on
which they are received at the Payment Location in the manner provided in
Section 4.02.
Section 4.05 NET LEASE; PROHIBITION AGAINST SET OFF, COUNTERCLAIM, ETC.
THIS LEASE IS A NET LEASE AND, EXCEPT AS OTHERWISE EXPRESSLY PROVIDED HEREIN,
LESSOR SHALL HAVE NO RESPONSIBILITY (OPERATIONALLY OR FINANCIALLY) IN RESPECT OF
THE USE, POSSESSION, CONTROL OR OPERATION OF THE AIRCRAFT. LESSEE'S OBLIGATION
TO PAY ALL RENT AND ALL OTHER AMOUNTS DUE HEREUNDER AND TO PERFORM ALL THE TERMS
HEREOF SHALL BE ABSOLUTE AND UNCONDITIONAL AND SHALL NOT BE AFFECTED OR REDUCED
BY ANY CIRCUMSTANCES, INCLUDING (I) ANY SET-OFF, COUNTERCLAIM, RECOUPMENT,
DEFENSE OR OTHER RIGHT THAT LESSEE MAY HAVE AGAINST LESSOR OR ANY OTHER PERSON;
(II) ANY DEFECT IN THE TITLE, AIRWORTHINESS OR ELIGIBILITY FOR REGISTRATION
UNDER APPLICABLE LAW, OR ANY CONDITION, DESIGN, OPERATION OR FITNESS FOR USE OF
THE AIRCRAFT, OR ANY INTERRUPTION OR CESSATION IN THE USE OR POSSESSION THEREOF
BY LESSEE; (III) SUBJECT TO SECTION 12.01, ANY EVENT OF LOSS; (IV) ANY LIENS
WITH RESPECT TO THE AIRCRAFT; (V) THE INVALIDITY OR UNENFORCEABILITY OF THIS
LEASE OR ANY ABSENCE OF RIGHT, POWER OR AUTHORITY OF LESSOR OR LESSEE TO ENTER
INTO THIS LEASE; (VI) ANY INSOLVENCY, BANKRUPTCY, REORGANIZATION OR SIMILAR
PROCEEDINGS BY OR AGAINST LESSOR OR LESSEE; IT BEING THE EXPRESS INTENTION OF
LESSOR AND LESSEE THAT ALL RENT AND OTHER AMOUNTS PAYABLE HEREUNDER SHALL BE
PAYABLE AND ALL OTHER TERMS HEREOF SHALL BE PERFORMED IN ALL EVENTS, UNLESS THE
OBLIGATION TO PAY OR TO PERFORM THE SAME SHALL BE TERMINATED OR SUSPENDED
PURSUANT TO THE EXPRESS PROVISIONS OF THIS LEASE. EXCEPT AS EXPRESSLY PROVIDED
IN THIS LEASE, EACH PAYMENT OF RENT OR ANY OTHER PAYMENT HEREUNDER MADE BY
LESSEE TO LESSOR SHALL BE FINAL AND LESSEE WILL NOT SEEK TO RECOVER ANY PART OF
SUCH PAYMENT FROM LESSOR FOR ANY REASON
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WHATSOEVER. LESSEE HEREBY WAIVES, TO THE EXTENT PERMITTED BY APPLICABLE LAW, ANY
AND ALL RIGHTS THAT IT MAY NOW HAVE OR THAT AT ANY TIME HEREAFTER MAY BE
CONFERRED UPON IT, BY LAW OR OTHERWISE, TO TERMINATE THIS LEASE OR ANY
OBLIGATION IMPOSED UPON LESSEE HEREUNDER.
NOTHING IN THIS SECTION 4.05 SHALL BE CONSTRUED TO PROHIBIT LESSEE FROM
SEPARATELY PURSUING ANY CLAIM IT MAY HAVE FROM TIME TO TIME AGAINST LESSOR OR
ANY OTHER PERSON WITH RESPECT TO ANY MATTER (OTHER THAN THE ABSOLUTE AND
UNCONDITIONAL NATURE OF LESSEE'S OBLIGATIONS HEREUNDER TO PAY RENT DUE HEREUNDER
AND TO PERFORM ALL THE TERMS HEREOF).
Section 4.06 INTEREST ON OVERDUE AMOUNTS. If Lessee fails to pay any sum
when due hereunder, Lessee shall pay interest thereon at the Interest Rate after
as well as before any judgment from the date such sum fell due until the date of
payment thereof. Such interest shall be payable by Lessee to Lessor on demand.
The provisions of this Section shall be in addition and without prejudice to any
other rights of Lessor at law or hereunder in relation to the failure of Lessee
to make prompt payment of sums due hereunder.
Section 4.07 PAYMENTS BY LESSOR. Notwithstanding any provision of this
Lease to the contrary, Lessor shall not be obligated to make any payment or to
release any money to Lessee if a Specified Default shall have occurred and be
continuing but shall be entitled to hold such money as provided in Section 4.09
until any such Specified Default shall no longer be continuing, PROVIDED,
HOWEVER, that if an Event of Default occurs, Lessor shall be entitled to apply
such money to any Rent or other obligation owed by Lessee to Lessor hereunder.
Section 4.08 PAYMENTS SET ASIDE OR REPAID. If at any time following the
application or payment of any sums hereunder to or for the benefit of Lessee by
Lessor it is discovered that no such application or payment should have been
made or that any payment by Lessee to Lessor is set aside, avoided under any
Laws relating to insolvency or liquidation or otherwise must be repaid, Lessee
shall, on Lessor's demand, reimburse Lessor in an amount equal to the sum so
applied or paid or, as the case may be, such amount so set aside, avoided or
repaid and such amount so set aside, avoided or repaid shall not be considered
as having been discharged or diminish the liability of Lessee to Lessor and the
liability of Lessee to Lessor shall continue to apply as if such payment had at
all times remained owing to Lessor and Lessee shall accordingly indemnify Lessor
in respect thereof.
Section 4.09 INVESTMENT OF FUNDS. Any monies paid to or retained by the
Lessor which are required to be paid to the Lessee or applied for the benefit of
the Lessee (including, without limitation, amounts payable to the Lessee under
Articles XI and XII), but which the Lessor is entitled to hold under the terms
hereof pending the occurrence of some event or the performance of some act
(including, without limitation, the remedying of an Event of Default), shall,
until paid to the Lessee or applied as provided herein, be invested by the
Lessor from time to time at the direction, risk and expense of the Lessee in
Permitted Investments. The Lessor shall remit any gain (including interest
received) realized as the result of any such investment (net of any fees,
commissions and other expenses, if any, incurred in connection with such
investment) at the time such monies are to be paid to the Lessee or applied to
or for the benefit of the Lessee, unless an Event of Default shall have occurred
and be continuing, in which case such gains shall be held or applied in
accordance with the provisions of Section 4.07. The Lessee will promptly pay to
the Lessor, on demand, the amount of any loss realized as the result of any such
investment (together with any fees, commissions and other expenses, if any,
incurred in connection with such investment).
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ARTICLE V
REPRESENTATIONS AND WARRANTIES
-------------------------------
Section 5.01 REPRESENTATIONS AND WARRANTIES OF LESSEE. Lessee acknowledges
that Lessor has entered into this Lease in full reliance upon the
representations of Lessee in the following terms and Lessee now warrants to
Lessor that the following statements are as of the date hereof, and on the
Delivery Date (unless any such representation and warranty shall have been made
with reference to a specified date, in which case such representation and
warranty shall be true and accurate as of such specified date) will be, true and
accurate:
(a) Lessee is a corporation duly incorporated and validly existing in
good standing under the Laws of the State of New York, holds all authorizations
necessary to authorize Lessee to engage in air transport and to carry on its
passenger airline service as presently conducted and has the corporate power and
authority to carry on its business as presently conducted and to perform its
obligations under this Lease and the other Operative Documents to which it is a
party;
(b) this Lease has, and the other Operative Documents to which Lessee
is a party have, been duly authorized by all necessary corporate action on the
part of Lessee and none of such agreements requires any approval of the
shareholders of Lessee (or if such approval is required, such approval has been
obtained) and neither the execution and delivery hereof and thereof nor the
consummation of the transactions contemplated hereby and thereby nor compliance
by Lessee with any of the terms and provisions hereof and thereof will
contravene any Law 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 creditor agreement or instrument, corporate charter
or by-law or other agreement or instrument to which Lessee is a party or by
which Lessee or its properties or assets are bound or affected, except for any
such conflicts, breaches or defaults which would not, individually or in the
aggregate, have a material adverse effect on the business or financial condition
of Lessee or on its ability to perform its obligations under this Lease and the
other Operative Documents to which Lessee is a party;
(c) Lessee has or will, prior to the Delivery Date have, received
every consent, approval or authorization of, and has given every notice to, each
Governmental Entity having jurisdiction with respect to the execution, delivery
or performance of this Lease and the other Operative Documents to which it is a
party (including all monetary and other obligations hereunder) that is required
for Lessee to execute and deliver this Lease and the other Operative Documents
to which it is a party and each such consent, approval or authorization and
notice is valid and effective and has not been revoked, except for the
registrations, applications and recordings referred to in the opinion of Special
FAA Counsel delivered pursuant to Section 2.02 and the filings with the FAA of
the FAA-filed Documents pursuant to Section 2.02;
(d) this Lease has been, and the other Operative Documents to which
Lessee is a party have been or will be, duly executed and delivered by Lessee,
and this Lease does, and the other Operative Documents to which Lessee is a
party do or will, constitute legal, valid and binding obligations of Lessee,
enforceable in accordance with their respective terms, except as enforcement
thereof may be limited by applicable bankruptcy, insolvency, reorganization,
moratorium or other similar laws affecting the enforcement of creditors' rights
generally and by such principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at law) as a court
having jurisdiction may impose and by laws that may affect some of such remedies
but which do not make the available remedies inadequate for the substantial
realization of the benefits provided herein;
19
(e) except as disclosed in any of the financial statements referred to
in Section 5.01(f), or as otherwise disclosed in writing to the Beneficiary
prior to the date hereof, 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 Governmental Entity against or affecting Lessee that
may, either individually or in the aggregate, reasonably be expected to have a
materially adverse effect on the ability of Lessee to perform its obligations
hereunder;
(f) the audited financial statements of Lessee for the financial
period ended December 31, 2000, have been prepared in accordance with United
States generally accepted accounting principles consistently applied and present
fairly in all material respects the financial condition of Lessee and its
consolidated subsidiaries, if any, as of such date and the results of its
operations and cash flows for such period;
(g) except as disclosed in writing to the Beneficiary prior to the
date hereof, there has been no change in the financial condition, results of
operations or business prospects of Lessee since the date of the financial
statements described in paragraph(f) above that could reasonably be expected to
have a material adverse effect on the ability of Lessee to perform its
obligations hereunder or under any other Operative Document to which it is a
party; and
(h) Lessee is a Section 1110 Person, and under the law as in effect on
the date hereof and on the Delivery Date, Lessor would be entitled to the
benefit of Section 1110 with respect to the Aircraft, for all Lessee's
obligations under this Lease, if Lessee were to become a debtor under 11 U.S.C.
Chapter 11.
Section 5.02 REPRESENTATIONS AND WARRANTIES OF LESSOR. WFB and Owner
Trustee each acknowledges that Lessee has entered into this Lease in full
reliance upon the representations and warranties of WFB and the Owner Trustee in
the following terms and each of WFB and the Owner Trustee, as applicable, now
represents and warrants to Lessee that the following statements are as of the
date hereof, and as of the Delivery Date (unless any such representation and
warranty shall have been made with reference to a specified date, in which case
such representation and warranty shall be true and accurate as of such specified
date), will be, true and accurate:
(a) WFB is a national banking association duly organized and existing
under the laws of the United States of America and has the power and authority
to carry on its business as presently conducted and to perform its obligations
as lessor under this Lease and the other Operative Documents to which it is a
party, whether in its individual capacity or as Owner Trustee;
(b) this Lease has and the other Operative Documents to which it is a
party, whether in its individual capacity or as Owner Trustee, have been duly
authorized by all necessary trust action on the part of WFB and none of such
agreements requires any approval of the shareholders of WFB (or if such approval
is required, such approval has been obtained) and neither the execution and
delivery hereof and thereof nor the consummation of the transactions
contemplated hereby and thereby nor compliance by WFB, whether in its individual
capacity or as Owner Trustee, with any of the terms and provisions hereof and
thereof will contravene any Utah law or federal law governing the banking and
trust powers of WFB, whether in its individual capacity or as Owner Trustee, or
result in any breach of, or constitute any default under, or result in the
creation of any Lien, charge or encumbrance upon any property of WFB under any
creditor agreement or instrument, charter or by-law or other agreement or
instrument to which WFB, whether in its individual capacity or as Owner Trustee,
is a party or by which WFB, whether in its individual capacity or as Owner
Trustee, or its properties or assets are bound or affected;
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(c) WFB, whether in its individual capacity or as Owner Trustee, has
or will, prior to the Delivery Date have, received every consent, approval or
authorization of, and has given every notice to, each Governmental Entity having
jurisdiction with respect to the execution, delivery or performance of this
Lease and the other Operative Documents (including all monetary and other
obligations hereunder) that is required for WFB, whether in its individual
capacity or as Owner Trustee, to execute and deliver this Lease and the other
Operative Documents to which it is a party and each such consent, approval or
authorization and notice is valid and effective and has not been revoked;
(d) this Lease has been, and the other Operative Documents have been,
duly executed and delivered by WFB, whether in its individual capacity or as
Owner Trustee, and this Lease does, and the other Operative Documents to which
it is a party do, constitute legal, valid and binding obligations of WFB,
whether in its individual capacity or as Owner Trustee, enforceable in
accordance with their respective terms, except as enforcement thereof may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium or
other similar laws affecting the enforcement of creditors' rights generally and
by such principles of equity (regardless of whether such enforceability is
considered in a proceeding in equity or at law) as a court having jurisdiction
may impose and by laws that may affect some of such remedies but which do not
make the available remedies inadequate for the substantial realization of the
benefits provided herein;
(e) there are no suits or proceedings pending or, to the knowledge of
WFB, threatened in any court or before any regulatory commission, board or other
Governmental Entity against or affecting WFB, whether in its individual capacity
or as Owner Trustee, that may, either individually or in the aggregate,
reasonably be expected to have a materially adverse effect on the ability of
WFB, whether in its individual capacity or as Owner Trustee, to perform its
obligations under this Lease and the other Operative Documents to which it is a
party;
(f) on the Delivery Date, WFB is a "Citizen of the United States";
(g) on the Delivery Date, Owner Trustee holds whatever title to the
Aircraft as was conveyed to it by Aero and there are no Lessor's Liens
attributable to WFB, either in its individual capacity or as Owner Trustee, in
respect of all or any part of the Aircraft or the Trust Estate;
(h) there are no Claims or Taxes that may be imposed on or asserted
against Lessee, Beneficiary, Owner Trustee (except on fees of Owner Trustee) or
the Trust Estate or any part thereof or any interest therein under the laws of
the State of Utah in connection with the execution, delivery, or performance of
any Operative Document by the Owner Trustee, which would not have been imposed
if Owner Trustee had not (x) had its principal place of business in, (y)
performed (in its individual capacity or as Owner Trustee) any or all of its
duties under the Operative Documents in or (z) engaged in any activities
unrelated to the transactions contemplated by the Operative Documents in, the
State of Utah; and
(i) WFB has made a filing with the New York State Banking Department
under Section 131.3 of the New York State Banking Law with respect to the trust
formed by the Trust Agreement.
Section 5.03 SURVIVAL, NO PREJUDICE. (a) The representations and warranties
contained in Sections 5.01 and 5.02 shall survive the execution of this Lease
and Delivery of the Aircraft.
(b) The rights of Lessor in relation to any misrepresentation or
breach of representation or warranty by Lessee shall not be prejudiced by any
investigation by or on behalf of
21
Lessor into the affairs of Lessee, by the performance of this Lease or by any
other act or thing done or omitted to be done by Lessor that would, but for this
Section 5.03(b), prejudice such rights.
(c) The rights of Lessee in relation to any misrepresentation or
breach of representation or warranty by Lessor shall not be prejudiced by any
investigation by or on behalf of Lessee into the affairs of Lessor, by the
performance of this Lease or by any other act or thing done or omitted to be
done by Lessee that would, but for this Section 5.03(c), prejudice such rights.
ARTICLE VI
COVENANTS OF LESSEE
Section 6.01 MAINTENANCE OF CORPORATE EXISTENCE. Lessee will (a) preserve
and maintain such of its rights, privileges, licenses and franchises in any
jurisdiction where failure to obtain such licenses or qualifications would have
a material adverse effect upon Lessee (but without limiting Lessee's discretion
to determine in which jurisdictions it chooses to do business) or its ability to
perform its obligations hereunder and (b) not merge into or consolidate with or
convey, transfer or lease substantially all of its assets as an entirety to any
Person unless:
(i) the surviving or acquiring entity has executed an assumption
agreement in form and substance reasonably satisfactory to Lessor pursuant
to which the surviving entity has agreed to assume all of Lessee's
obligations under the Operative Documents, and
(ii) immediately after the merger, consolidation, transfer or
lease, no Event of Default shall have occurred or be continuing, and
(iii) immediately after the merger, consolidation, transfer or
lease, the net worth of the surviving or acquiring entity shall be at least
equal to Lessee's net worth immediately prior to such merger, consolidation
or transfer or lease.
Section 6.02 MAINTENANCE OF STATUS. Lessee is, and shall remain so long as
it shall be Lessee under this Lease, duly qualified to carry on its business as
an air carrier under applicable Law in accordance with the terms of this Lease
and shall, at all times during the Term, be a Section 1110 Person so long as
such status is a condition to the availability of Section 1110.
Section 6.03 TAXES AND CHARGES. During the Term, Lessee shall be
responsible for and shall pay or cause to be paid all Taxes, governmental
charges, imposts, fees or levies, imposed upon it, or upon its income or
profits, or upon any property belonging to it, or which are incurred by Lessee
and/or any other operator of the Aircraft in the course of the operation of the
Aircraft or any other aircraft, prior to the date on which any such Tax, charge,
impost, fee or levy, if not paid, would become a Lien upon the Aircraft,
PROVIDED that Lessee shall pay or cause to paid as the same become due for
payment any such charges, imposts, fees or levies which attach to the Aircraft
in the course of the operation of the Aircraft or of any other aircraft and
which are imposed by any Governmental Entity other than a United States Entity
or any Governmental Entity within the United States, unless Lessee shall be
contesting in good faith the imposition or amount of any such Taxes,
governmental charges or levies, and in such case, subject to application of the
proviso, MUTATIS MUTANDIS, set forth in the definition of Permitted Lien.
Section 6.04 GOVERNMENTAL CONSENTS. Lessee shall maintain in full force and
effect all governmental consents, licenses, authorizations, approvals,
declarations, filings and registrations required to be obtained by it in
connection with its obligations under this Lease and the other Operative
Documents and to take all such actions in connection therewith as may be proper
or advisable. Lessee
22
further undertakes to obtain or effect any new or additional governmental
consents, licenses, authorizations, approvals, declarations, filings or
registrations that may become necessary for the performance by it of any of the
terms and conditions of this Lease or any other Operative Document.
Section 6.05 LIENS. During the Term, Lessee shall not directly or
indirectly create, incur, assume or suffer to exist any Lien on or with respect
to the Aircraft, any Engine or any Part, title thereto or any interest therein,
other than Permitted Liens and shall promptly, at its own expense, duly
discharge any Lien, other than Permitted Liens, if the same shall arise during
the Term with respect to the Aircraft, any Engine or any Part or at any time
thereafter as a result of any act or omission of the Lessee during the Term. The
obligations of Lessee under this Section 6.05 shall survive the assignment,
expiration or other termination of this Lease.
ARTICLE VII
COVENANTS OF LESSOR AND WFB; DISCLAIMER
Section 7.01 QUIET ENJOYMENT. Lessor covenants that so long as no Event of
Default shall have occurred that has not been waived, it will not, and it will
not permit any mortgagee or any other Person acting by or through Lessor
(including Beneficiary and any Financing Party) to take or cause or permit to be
taken any action contrary to Lessee's right to the quiet use and enjoyment of
the Aircraft during the Term, in accordance with the terms hereof.
Section 7.02 LESSOR'S LIENS. Each of WFB and Owner Trustee covenants that,
for the duration of the Term, it will not create, assume, permit or suffer to
exist any Lessor's Lien (other than Liens arising as a result of a Financing)
and will promptly take such actions as may be necessary to duly discharge any
Lessor's Lien (other than Liens arising as a result of a Financing) at any time
arising at Lessor's sole cost and expense. WFB agrees to indemnify and hold
harmless the Lessee and the Owner Trustee from and against any loss, cost,
expense or damage which may be suffered by the Lessee or the Owner Trustee as a
result of the failure of WFB to discharge and satisfy in full and promptly after
the same shall first become known to it any Lessor's Lien attributable to it in
its individual capacity.
Section 7.03 DISCLAIMER OF WARRANTIES. THE AIRCRAFT IS TO BE LEASED
HEREUNDER "AS IS, WHERE IS" AND LESSEE HEREBY ACKNOWLEDGES THAT IT HAS HAD THE
OPPORTUNITY TO INSPECT THE AIRCRAFT AS PROVIDED HEREIN PRIOR TO THE DELIVERY
THEREOF. EXCEPT AS EXPRESSLY PROVIDED IN SECTIONS 5.02 AND 7.01, LESSOR HAS NOT
AND SHALL NOT BE DEEMED TO HAVE MADE, AND LESSOR HEREBY SPECIFICALLY DISCLAIMS,
ANY REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, AS TO THE AIRWORTHINESS,
VALUE, DURABILITY, COMPLIANCE WITH SPECIFICATIONS, CONDITION, DESIGN, OPERATION,
MERCHANTABILITY, FREEDOM FROM CLAIMS OF INFRINGEMENT OR THE LIKE, OR FITNESS FOR
USE FOR ANY PARTICULAR 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, OR AS TO ANY MATTER WHATSOEVER,
EXPRESS OR IMPLIED (INCLUDING ANY IMPLIED WARRANTY ARISING FROM A COURSE OF
PERFORMANCE OR DEALING OR USAGE OF TRADE), WITH RESPECT TO THE AIRCRAFT; AND
LESSEE HEREBY WAIVES, RELEASES, RENOUNCES AND DISCLAIMS RELIANCE UPON ANY SUCH
WARRANTY OR WARRANTIES.
LESSOR SHALL NOT HAVE ANY RESPONSIBILITY OR LIABILITY TO LESSEE OR ANY
OTHER AFFILIATE OF LESSEE, WHETHER ARISING IN CONTRACT OR TORT OUT OF ANY
NEGLIGENCE OR STRICT LIABILITY OF LESSOR OR OTHERWISE, FOR (I) ANY LIABILITY,
LOSS OR DAMAGE CAUSED OR ALLEGED TO BE CAUSED DIRECTLY OR INDIRECTLY BY THE
AIRCRAFT OR ANY ENGINE OR BY ANY DEFECT THEREIN, (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
CONSEQUENTIAL
23
DAMAGES OR (IV) THE DELIVERY, OPERATION, SERVICING, MAINTENANCE, REPAIR,
IMPROVEMENT OR REPLACEMENT OF THE AIRCRAFT. THE WARRANTIES AND REPRESENTATIONS
OF LESSOR SET FORTH IN THIS AGREEMENT ARE EXCLUSIVE AND IN LIEU OF ALL OTHER
REPRESENTATIONS OR WARRANTIES WHATSOEVER, EXPRESS OR IMPLIED, AND LESSOR SHALL
NOT BE DEEMED TO HAVE MADE ANY OTHER REPRESENTATIONS OR WARRANTIES.
Section 7.04 CITIZENSHIP. WFB represents and warrants that it is and on the
Delivery Date will be a Citizen of the United States. If WFB does not comply
with the requirements of this Section 7.04, the Lessor and the Lessee hereby
agree that no Default shall be deemed to exist due to non-compliance by the
Lessee with the registration requirements set forth in Section 8.05 of this
Lease and Section 5 of Exhibit A-2 occasioned solely by such noncompliance of
WFB. WFB covenants that if at any time on or after the Delivery Date any of its
officers shall have actual knowledge that it has ceased to be a Citizen of the
United States, it will resign immediately as the Owner Trustee. WFB further
covenants that if at any time it appears reasonably probable that it will cease
to be a Citizen of the United States based on information that is (i) known to a
Responsible Officer of WFB or (ii) generally known to the public, it will
promptly so notify, to the extent permitted by law, the Lessee.
Section 7.05 OTHER BUSINESS. Owner Trustee will not enter into any business
or other activity except as contemplated by the Operative Documents.
Section 7.06 COMPLIANCE WITH TRUST AGREEMENT. Each of WFB and the Owner
Trustee agrees with the Lessee that so long as this Lease shall be in effect it
will (i) comply with all of the terms of the Trust Agreement applicable to it in
its respective capacity, the noncompliance with which would materially adversely
affect Lessee and (ii) not take any action, or cause any action to be taken, to
amend, modify or supplement any other provision of the Trust Agreement in a
manner that would materially adversely affect Lessee without the prior written
consent of Lessee.
Section 7.07 SECURITIES ACT. None of WFB, the Lessor or any Person
authorized by either of them to act on its behalf has directly or indirectly
offered any interest in the Trust Estate, or in any similar security relating to
the Trust Estate, for sale to, or solicited any offer to acquire any such
interest or security from, or has sold any such interest or security to, any
Person in violation of the Securities Act of 1933, as amended, or any applicable
state securities laws.
Section 7.08 PERFORMANCE OF AGREEMENTS. Owner Trustee shall perform its
obligations under the Operative Documents to which it is a party in accordance
with the terms thereof.
Section 7.09 ACTIONS WITH RESPECT TO TRUST ESTATE, ETC. Neither WFB, in its
individual capacity, nor the Owner Trustee will take any action to subject the
Trust Estate or the trust established by the Trust Agreement, as debtor, to the
reorganization or liquidation provisions of the Bankruptcy Code or any other
applicable bankruptcy or insolvency statute.
ARTICLE VIII
POSSESSION; SUBLEASING; MAINTENANCE AND USE
Section 8.01 POSSESSION. (a) PERMITTED TRANSFERS. Lessee will not without
the prior written consent of Lessor (which consent will not be unreasonably
withheld or delayed), assign, pledge or otherwise encumber this Lease or sublet
or transfer possession or operational control of the Aircraft or any Engine
leased hereunder or install any Engine or permit any Engine to be installed on
any airframe other than the Airframe; PROVIDED, HOWEVER, that if (x ) except as
expressly permitted in Section 8.05 and in Section 5 of EXHIBIT A-2, the action
to be taken shall not affect the registration of the Aircraft and (y )
24
all necessary approvals of each Governmental Entity having jurisdiction over the
Aircraft, Lessee or other relevant Person have been obtained, then subject to
the limitations set forth in Sections 8.01(b ) and (c ), Lessee may, without the
consent of Lessor:
(i) deliver possession of the Aircraft, Airframe or any Engine or
any Part thereof to a Maintenance Contractor for testing or other similar
purposes or for service, repair, maintenance, testing or overhaul work on
the Aircraft or for alterations or modifications in or additions to the
Aircraft to the extent required or permitted by the terms hereof;
(ii) install any Engine on an airframe owned by Lessee free and
clear of all Liens, except (A) Permitted Liens or those that apply only to
the engines (other than Engines), appliances, parts, instruments,
appurtenances, accessories, furnishings and other equipment (other than
Parts) installed on such airframe and (B) the Lien of any mortgage that
expressly and effectively provides that such Engine shall not become
subject to the Lien thereof, notwithstanding the installation of such
Engine on any airframe subject to such Lien, unless and until Lessee shall
become the owner of such Engine;
(iii) install any Engine on an airframe leased to Lessee or
purchased by Lessee subject to a conditional sale or other security
agreement; PROVIDED that (A) such airframe is free and clear of all Liens
except the rights of the parties to the lease or conditional sale or other
security agreement covering such airframe and except Liens of the type
permitted by Section 8.01(a)(ii)(A) and (B); and (B) there shall be in
effect between Lessee and such lessor or conditional vendor or other
secured party of such airframe a written agreement (which may be the lease
or hire purchase or conditional sale agreement covering such airframe)
whereby such lessor or conditional vendor or other secured party expressly
and effectively agrees that neither it nor its successors and assigns will
acquire or claim any right, title or interest in such Engine by reason of
such Engine's being installed on such airframe at any time while such
Engine is subject to this Lease; and PROVIDED FURTHER, that the rights of
any transfer permitted by this Section 8.01 shall be subject and
subordinate to all of the terms of this Lease, including, without
limitation, Lessee's obligation to return the Engines at the end of the
Term and Lessor's right to repossession pursuant hereto, and Lessee shall
remain primarily liable hereunder for the performance of all of the terms
of this Lease to the same extent as if such transfer had not occurred;
(iv) so long as no Specified Default shall have occurred and be
continuing, sublease the Aircraft to any Permitted Sublessee;
(v) enter into a charter or wet lease or other similar
arrangement, which shall not constitute a transfer of possession hereunder
so long as (A) no Person other than the Lessee is granted any legally
enforceable possessory interest in the Aircraft and the Lessee retains
operational control of the Aircraft at all times, (B) Lessee will remain
primarily responsible for the performance of all terms of this Lease and
the other Operative Documents, and (C) any such wet lease or other
arrangement does not preclude Lessee from performing any of its obligations
under this Lease;
(vi) so long as no Specified Default shall have occurred and be
continuing, subject any Engine to an interchange or pooling agreement
approved by the Lessor (such approval not to be unreasonably withheld in
the case of any such Engine interchange agreement solely among Section 1110
Persons) and that is applicable to other similar property owned by or
leased to the Lessee and is entered into by the Lessee in the ordinary
course of its airline business, PROVIDED, that (A) no such agreement or
arrangement shall under any circumstances result in, contemplate or require
the transfer of title to any Engine and (B) if the Lessor's title to any
Engine shall
25
nevertheless be divested under any such agreement or arrangement, such
divestiture shall be deemed to be an Event of Loss with respect to such
Engine and the Lessee shall comply with Section 12.02 hereof in respect
thereof; and
(vii) so long as no Specified Default shall have occurred and be
continuing, transfer possession of the Airframe or any Engine to the United
States of America, or to a foreign government, when required by applicable
Law (it being understood that nothing in this clause (viii) shall relieve
the Lessee from its obligations under Section 12.01(a) if such transfer
becomes an Event of Loss), in which event Lessee shall promptly notify
Lessor in writing of any such transfer of possession.
In the event that Lessee shall have entered into a mortgage, lease or
conditional sale agreement complying with the provisions of Section 8.01(a)(ii)
or (iii), Lessor hereby agrees, for the benefit of the mortgagee, lessor or
conditional vendor under such agreement, that Lessor and its successors and
assigns shall not acquire or claim, as against such mortgagee, lessor or
conditional vendor, any right, title or interest in any engine owned by such
person or in which it has a security or ownership interest by reason of such
engine's being installed on the Airframe.
(b) LIMITATIONS ON TRANSFERS. With respect to any transfer pursuant to
Section 8.01(a):
(i) the rights of any transferee pursuant to a transfer or other
arrangement permitted by Section 8.01(a) shall be subject and subordinate
to all the terms of this Lease and to the rights of Lessor in the Aircraft
and this Lease, PROVIDED that, in the case of a transfer pursuant to
Section 8.01(a)(ii) and (iii), Lessee shall ensure that the lease,
mortgage, hire purchase or conditional sale agreement pursuant to which the
airframe on which an Engine is installed is leased or purchased by the
Lessee contains a clause similar to the last proviso of Section
8.01(a)(iii);
(ii) Lessee shall remain primarily liable hereunder for the
performance of all of the terms hereof to the same extent as if such
transfer or other arrangement had not occurred, and no such transfer or
other arrangement pursuant to the terms of Section 8.01(a) shall in any way
discharge or diminish any of Lessee's obligations to Lessor hereunder; and
(iii) Lessee shall be responsible for filing or recording all
such instruments, including, if applicable, this Lease and an aircraft
mortgage, as may be necessary to perfect and preserve the respective
interests of Lessor and any Financing Party in the Aircraft and this Lease
in the State of Registration at its sole expense, notwithstanding any
provision of this Lease to the contrary.
(c) LIMITATIONS ON SUBLEASES. With respect to any Sublease pursuant to
Section 8.01(a)(iv):
(i) Prior to the end of the Recovery Period, Lessee may not enter
into a Sublease (A) with any Permitted Sublessee domiciled in a country
other than the United States, (B) or with any "tax-exempt entity," within
the meaning of Section 168(h)(2) of the Code, or (C) that would result in a
determination by any United States taxing authority that the Aircraft will
be treated as "used predominantly outside the United States" within the
meaning of Section 168(g) of the Code that would result in the cost
recovery deductions to Lessor being less than the maximum allowable to a
United States owner of the Aircraft, unless Lessee has prepaid on a lump
sum basis, prior to the commencement of such Sublease, an amount equal to
any indemnity obligation
26
of the Lessee due under the Tax Indemnity Agreement. The Country List in
Exhibit F shall be subject to review from time to time, and Lessee may
propose additions thereto, subject to the consent of Lessor not to be
unreasonably withheld, and Lessor may propose deletions therefrom in its
reasonable discretion.
(ii) With respect to any Sublease, Lessee shall notify Lessor as
soon as a copy of the proposed Sublease is available and in any event not
less than 30 days prior to the execution of any such Sublease or, if later,
the commencement of such Sublease, and together with such notice, Lessee
will deliver promptly to Lessor a copy of such proposed Sublease and, if
requested by Lessor, other documents reasonably related to such proposed
Sublease and Permitted Sublessee.
(iii) Lessee shall not enter into any Sublease unless:
(A) the term (including any option of the Permitted
Sublessee to renew or extend) of any such Sublease does not continue
beyond the end of the Term, unless (x) no Specified Default shall have
occurred and be continuing at the commencement of such Sublease and
(y) Lessee shall have irrevocably committed to purchase the Aircraft
pursuant to the terms hereof;
(B) such Permitted Sublessee is prohibited from
sub-subleasing the Aircraft or, except to the extent provided in
subclause (F), otherwise assigning, granting or transferring any of
its rights, obligations or interests with respect thereto or under the
Sublease;
(C) the Sublease by its terms is expressly and effectively
subject and subordinate to all of the terms of this Lease, and to
Lessor's rights, powers or remedies hereunder, including Lessor's
right pursuant to the exercise of its rights and remedies hereunder to
avoid such Sublease and to recover the Aircraft from Lessee;
(D) such Permitted Sublessee is not on the effective date of
such Sublease in default thereof in any material respect, with or
without giving of notice or passage of time;
(E) if such Permitted Sublessee is domiciled in the United
States, the Aircraft is and remains registered, and eligible for
registration, in Lessor's name in accordance with the provisions
hereof;
(F) the terms and conditions of such Sublease (1) shall not
permit any Sublessee to perform any act not permitted to Lessee, (2)
shall either (x) impose on the Sublessee obligations that are
substantially the same as those contained in Sections 8.01(a)
(PROVIDED that Sublessee may only be authorized to make the transfers
permitted in clauses (i), (ii), ( iii ) and (v) of Section 8.01(a)),
Section 8.01(b), Sections 8.02 through 8.08, Section 9.01, Section
9.02(a) and (b), and Section 9.03 (PROVIDED that only pooling
arrangements approved in advance by Lessor shall be permitted) or (y)
permit Lessee to continue to perform its obligations thereunder, (3)
shall provide for the inspections contemplated by Section 13.02, and
(4) shall not delegate to Sublessee any of the obligations of Lessee
under Article XVIII; and
27
(G) such Permitted Sublessee has provided evidence
satisfactory to Lessor of insurance coverage required by Article XI
with respect to the operation of the Aircraft by such Permitted
Sublessee.
(iv) Lessee may not enter into any Sublease the provisions of
which would prevent Lessee from complying with the terms of EXHIBIT D-1 and
EXHIBIT D-2 hereto.
(v) In the case of any Sublease that has a term greater than one
year (assuming that any renewal options in such Sublease are exercised), as
security for the due and punctual payment of all Rent payable by Lessee,
and the timely performance and observance by Lessee of all covenants made
by it under this Lease, Lessee hereby grants to Lessor a security interest
in all of Lessee's right, title and interest in and to any such Sublease of
the Aircraft together with all renewals of such Sublease executed or in
effect from time to time, and all payments, including rent, insurance
proceeds (other than public liability insurance proceeds) and all other
amounts due and to become due thereunder (other than indemnity payments for
the account of Lessee) and all proceeds of the foregoing; PROVIDED, that
Lessor shall be exclusively entitled to exercise all of Lessee's rights and
remedies under each Sublease of the Aircraft, including the right to
demand, collect, ▇▇▇, make claims for, and otherwise be paid all rent and
other amounts due and to become due under each such Sublease, only from and
after the occurrence of an Event of Default hereunder.
(vi) With respect to any Sublease that has a term longer than one
year, such Sublease shall (A) be accompanied by a security assignment in
form and substance reasonably satisfactory to Lessor, and (B) be filed,
together with such security assignment and such other documents as are
necessary to perfect, protect and preserve the security interest granted
hereby with respect to such Sublease, with the FAA or other government of
registry of the Aircraft, as applicable, and with the necessary state
recording offices pursuant to the UCC, or with such other recording offices
as are required under applicable Law, and Lessee shall take such actions as
Lessor shall reasonably request to perfect the security interest in the
Sublease.
(vii) Concurrently with entering into any Sublease, Lessee shall
give written notice to the Permitted Sublessee of Lessor's right to be paid
such rents and Lessor's other rights with respect to the Sublease from and
after the occurrence of an Event of Default, and Lessee and such Permitted
Sublessee shall each acknowledge in writing that all such payments shall be
made directly to Lessor, and as to Lessor's other rights and remedies wish
respect thereto.
(viii) Lessee's right to enter into any Sublease is further
conditioned upon Lessee delivering to Lessor (A) an opinion of counsel
(which counsel and opinion shall be reasonably satisfactory to Lessor) to
the effect, among other things, that (1) if the country in which the
Permitted Sublessee has its principal office and domicile is not the United
States, such country would give effect to the title of Lessor in and to the
Aircraft, and permit the registration of the Aircraft in the name of Lessor
(or Lessee or Permitted Sublessee, as appropriate), and (2) if the
Permitted Sublessee is a Section 1110 Person, an opinion of counsel that
the Lessee as lessor is entitled to the benefits of Section 1110 (assuming
no change in United States law which would make such benefits unavailable
to aircraft leases generally under United States law), and (B) a notice
stating the identity of the applicable Permitted Sublessee and stating that
no Specified Default shall have occurred and be continuing and that such
Sublease complies with the requirements of this Section 8.01 and to the
knowledge of Lessee after due inquiry the applicable Permitted Sublessee is
not then subject to a proceeding or final order under applicable
bankruptcy, insolvency or reorganization laws.
28
(ix) Any consolidation or merger of Lessee or conveyance,
transfer or lease of all or substantially all of Lessee's assets permitted
by Section 6.01 shall not be prohibited by this Section 8.01(c).
(d) [Intentionally Omitted]
(e) EXPENSES. Lessee hereby agrees to reimburse all reasonable out of
pocket costs and expenses of Lessor (including the reasonable fees and expenses
of counsel) incurred in connection with any re-registration of, or any Sublease
or other permitted transfer relating to the Aircraft.
(f) NO ASSIGNMENT. Lessee shall not assign, except in accordance with
this Section 8.01 or as otherwise expressly provided in this Lease, any interest
in this Lease or any of its rights hereunder or in any property leased
hereunder. Lessor shall have no responsibility for any increased costs resulting
from any assignment that is provided for under Section 8.01.
Section 8.02 LAWFUL INSURED OPERATIONS. (a) Lessee will operate and use the
Aircraft only in or in connection with lawful
commercial passenger airline operations.
(b) Lessee will not maintain the Aircraft, or permit the Aircraft to
be maintained in a manner contrary to the Maintenance Program or in violation of
any applicable Law or any certificate of airworthiness, permit, license or
registration issued by the Aeronautical Authority, except to the extent being
contested diligently and in good faith, and Lessee will not use or operate the
Aircraft, or permit the Aircraft to be used or operated in a manner contrary to
the Lessee's operating manuals approved by the Aeronautical Authority or
instructions or the Maintenance Program or in violation of any applicable Law or
in violation of any certificate of airworthiness, permit, license or
registration issued by the Aeronautical Authority, except to the extent being
contested diligently and in good faith, PROVIDED that in either case such
contest does not create any material risk of the loss or forfeiture of the
Aircraft or to cancellation, suspension or loss of insurance coverage.
(c) [Intentionally Omitted]
(d) Lessee will not operate the Aircraft, or permit the Aircraft to be
operated during the Term unless the Aircraft is covered by insurance as required
by the provisions hereof and such operation is in compliance with the terms of
such insurance.
(e) Lessee solely shall bear any costs and expenses that may arise
from any loss or damage (with respect to both the Aircraft and any affected
third parties) that may occur during or in connection with operations of the
Aircraft including those that are excluded from coverage by the insurance
maintained in accordance with Article XI.
(f) Lessee shall not at any time represent Lessor as carrying goods or
passengers in the Aircraft or as being in any way connected or associated with
the operation or carriage being undertaken by Lessee or as having any
operational interest in or responsibility for the Aircraft.
Section 8.03 RESTRICTIONS ON OPERATION. Lessee shall not operate or locate
the Aircraft or permit the Aircraft to be operated or located on any routes or
in any country in any manner that (i) would be in breach of or violate any
relevant Law of the United States or in or over any area that may expose Lessor
or any Financing Party to any penalty, fine, sanction or other liability,
whether civil or criminal, under any applicable Law, or (ii), subject to Section
8.05, would result in the Aircraft being ineligible for registration in the name
of Lessor under 49 U.S.C. 44102(a)(1)(C). Lessee shall not operate the Aircraft
in any geographical area for which it is not duly authorized. Lessee shall not
use the Aircraft for training of
29
any Person other than its own employees and shall not use the Aircraft for
training its personnel more than it uses any other EMB-145 aircraft in its
fleet, whether owned or leased.
Section 8.04 AOC. Lessee shall continue to hold an air carrier operator's
certificate with an operating specification allowing it to operate aircraft of
the same type as the Aircraft and for the purpose for which the Aircraft is
permitted to be used hereunder issued by the FAA.
Section 8.05 REGISTRATION AND OPERATION. Except as otherwise permitted by
Section 5 of Exhibit A-2, or as otherwise required by the Federal Aviation Act
or rules, regulations, or orders promulgated thereunder, or to the extent that
such registration cannot be effected or continued due solely to the Lessor's
failure to comply with the citizenship or other eligibility requirements for
registration of commercial aircraft under the Federal Aviation Act or any rule,
regulation or order promulgated thereunder, Lessee shall at its expense keep the
Aircraft at all times registered under the applicable Laws of the United States
in the name of Lessor and, at all times that the Aircraft is being used and
operated for the public transport of passengers, shall insure that the Aircraft
possesses a valid, current certificate of airworthiness and such other
certificates, licenses, permits and authorizations as may be from time to time
required for the use and operation of the Aircraft for the public transport of
passengers; PROVIDED that the Lessor shall execute and deliver all such
documents as the Lessee may reasonably request for the purpose of effecting,
continuing or (as provided in this Section 8.05 of this Lease and Section 5 of
Exhibit A-2) changing such registration.
Section 8.06 INSIGNIA. On the Delivery Date or promptly thereafter, but in
any event prior to the Aircraft being placed in service, Lessor shall place, and
at all times during the Term, Lessee shall maintain, in the cockpit of the
Airframe in a prominent location and on the gearbox of each Engine, a fireproof
plate of a reasonable size bearing the legend:
"THIS AIRCRAFT/ENGINE IS OWNED BY ▇▇▇▇▇ FARGO BANK NORTHWEST, NATIONAL
ASSOCIATION, NOT IN ITS INDIVIDUAL CAPACITY, BUT SOLELY AS OWNER TRUSTEE
(THE "OWNER"), AND IS LEASED BY THE OWNER TO CHAUTAUQUA AIRLINES, INC."
Lessee agrees to make such changes to such identification plates as Lessor may
reasonably request from time to time.
Section 8.07 REMOVED ENGINES. At any time when an Engine is installed on an
airframe or aircraft other than the Airframe or the Aircraft, Lessee shall
ensure that insurance cover is maintained incompliance with Article XI .
Notwithstanding anything herein to the contrary, Lessee shall not install, and
shall not permit the installation of, any Engine on any airframe that is not an
EMB-145 airframe or, if fully compatible in accordance with Manufacturer's and
Engine Manufacturer's specifications, an EMB-140 airframe.
Section 8.08 MAINTENANCE. Lessee, at its own cost and expense, shall:
(a) perform or cause a Maintenance Contractor to perform all service,
inspections, repairs, maintenance, modifications, alterations, overhaul, checks
(including heavy checks) and testing, (i) as may be required under the rules and
regulations of the Aeronautical Authority applicable to the Aircraft and in
compliance with the Maintenance Program and good commercial practice, (ii) as
may be included in any ADs, (iii) so as to keep the Aircraft airworthy (except
as otherwise provided in Section 8.08(b)) and in good operating order, repair,
condition and appearance and in at least as good operating condition and
appearance as when delivered to Lessee subject to normal wear and tear
associated with the operation and maintenance thereof in accordance herewith and
(iv) as required pursuant to Section 1(l) of EXHIBIT D-1 OR EXHIBIT D-2, AS
APPLICABLE. Lessee shall do each of the foregoing and shall incorporate Service
30
Bulletins, in the same manner and with the same care as is the case with similar
aircraft and engines of the same make and model as the Aircraft and Engines
owned by or operated by or on behalf of Lessee, without discrimination (as
compared to other similar aircraft owned or operated by Lessee) in contemplation
of the expiration or termination of this Lease with respect to the use,
operation or mandatory maintenance, other than the withdrawal of the Aircraft
from service as necessary to prepare the Aircraft for return to Lessor upon such
expiration or termination. Nothing in this Section 8.08(a) shall be construed in
such a manner as to require Lessee to modify the Aircraft in such a manner as to
reflect a configuration that is unique to Lessee solely because Lessee may be so
modifying other aircraft operated by it;
(b) keep the Aircraft (i) in such condition as may be necessary to
enable the airworthiness certification of the Aircraft to be maintained in good
standing at all times (except during periods of maintenance, repair or
modification when the Aircraft is not operated, during any period when the
Aeronautical Authority shall have revoked or suspended the airworthiness
certification of all aircraft of the same type, model and series as the
Aircraft, and during any period which the Aircraft is in long-term storage) and
(ii) in compliance with Part 121 of the Federal Aviation Regulations (as set
forth in Title 14 of the U.S. Code of Federal Regulations), or, if the Aircraft
has been re-registered in accordance with the provisions of this Lease in a
country other than the United States, the requirements of the civil aviation
authority having jurisdiction over the Lessee's or any Permitted Sublessee's
operations, and all other applicable Law; and
(c) maintain throughout the Term in a form that is accurate, complete,
and current all Aircraft Documents listed on EXHIBIT B and all log books, all
manuals and revisions and updates thereto, all certification and inspection
records (including without limitation all certifications and forms required by
the Aeronautical Authority and otherwise and all reports, x-rays, video tapes,
print-outs and other non destructive testing documents), and all other material
required by the Aeronautical Authority or required by the Maintenance Program
relating to operation, maintenance or other activity of the Aircraft during the
Term, with all such Aircraft Documents being in English.
Section 8.09 COSTS. Lessee shall be responsible for and shall hold Lessor
harmless from all costs incurred in the operation of the Aircraft for profit or
otherwise, including, without limitation, the costs and expenses of flight
crews, cabin personnel, fuel, oil, lubricants, maintenance, insurance, landing
fees, navigation fees, airport charges and any and all other expenses or claims
of any kind or nature, directly or indirectly incurred or imposed in connection
with or related to the use, movement, operation, maintenance, repair, storage or
location of the Aircraft during the Term.
ARTICLE IX
REPLACEMENT OF PARTS; MODIFICATIONS
Section 9.01 REPLACEMENT AND REMOVAL OF PARTS. (a) Except as otherwise
provided in Section 9.01(f) or if the Airframe or an Engine to which a Part
relates has suffered an Event of Loss, Lessee, at its own cost and expense,
shall promptly replace or ensure the replacement of all Parts that, from time to
time, may become worn out, lost, stolen, destroyed, seized, confiscated, damaged
beyond repair or rendered unfit for use for any reason whatsoever.
(b) In the ordinary course of maintenance, service, repair, overhaul
or testing during the Term, Lessee may at its own cost and expense cause to be
removed or allow the removal of any Parts, whether or not worn out, destroyed,
damaged beyond repair or rendered unfit for use, PROVIDED that Lessee shall
replace at its own cost and expense such Parts as promptly as practicable (any
Part replaced
31
pursuant to Section 9.01(a) or (b), a "REPLACEMENT PART"), PROVIDED FURTHER,
HOWEVER, that Lessee may elect not to replace Parts only to the extent provided
in Section 9.01(f).
(c) All Replacement Parts shall be free and clear of all Liens, shall
be Aeronautical Authority-approved and fully interchangeable, shall have been
overhauled, repaired and inspected by a Maintenance Contractor, except for
Permitted Liens and for pooling arrangements to the extent permitted by Section
9.03, and shall be in as good operating condition as, and have a utility at
least equal to and a value reasonably approximating, the Parts replaced
(assuming such Parts were in the condition and repair in which they were
required to be maintained by the terms hereof) and all serviceable tags or other
required documentation relating to the last overhaul of such Parts performed by
an Aeronautical Authority approved facility shall be provided and maintained by
Lessee.
(d) All Parts owned by Lessor that are at any time removed from the
Aircraft shall remain the property of Lessor and subject to this Lease, no
matter where located, until such time as such Parts shall be replaced by parts
which have been incorporated or installed in or attached to the Aircraft and
that meet the requirements of Replacement Parts specified in Section 9.01(c) or
as otherwise provided in Section 9.01(f). Immediately upon any Replacement Part
becoming incorporated or installed in or attached to the Aircraft as above
provided, without further act, (i) title to the removed Part shall thereupon
vest in Lessee, free and clear of all rights of Lessor and any Financing Party
and Lessor's Liens, and such removed Part shall no longer be deemed a Part
hereunder, (ii) title to such Replacement Part shall thereupon vest solely in
Lessor, and (iii) such Replacement Part shall become subject to this Lease and
be deemed a Part for all purposes hereof to the same extent as the Part which it
has replaced.
(e) Lessee shall be entitled, so long as no Event of Default shall be
continuing, to substitute, replace or renew any Part with a part that does not
satisfy the requirements of Section 9.01(c) PROVIDED that:
(i) there shall not have been available to Lessee at the time and
in the place that such substitute or replacement part was required to be
installed on the Airframe or an Engine a substitute or replacement part
complying with such requirements;
(ii) it would have resulted in an unreasonable disruption of the
operation of the Aircraft to have grounded the Aircraft until such time as
a substitute or replacement part complying with such requirements became
available for installation in or on the Aircraft; and
(iii) as soon as practicable after installation of the same in or
on the Airframe or Engine (which, in the case of an Engine, shall be no
later than the next off-wing shop visit of the Engine) Lessee shall remove
any such part not complying with such requirements and replace or
substitute the same with a part complying with the same.
(f) Lessee may, at its own cost and expense at any time during the
Term, remove or cause to be removed any Part from the Airframe or an Engine if
(i) such Part is in addition to, and not in replacement of or in substitution
for, any Part originally incorporated or installed in or attached to the
Airframe or such Engine at the time of delivery thereof hereunder or any Part in
replacement of, or in substitution for, any such original Part and (ii) such
Part can be removed from the Airframe or such Engine without materially (as
measured on an aggregate basis) diminishing or impairing the value, condition,
utility, airworthiness that the Airframe or such Engine would have had at the
time of removal had such removal not been effected by Lessee, assuming the
Aircraft was otherwise maintained in the condition required by this Lease,
PROVIDED that Lessee also may remove Parts that the Lessee deems obsolete or no
longer suitable or appropriate for use in the Aircraft, Airframe or such Engine
so long as the aggregate value of such removed Parts (based on their value as of
the Delivery Date) does not exceed
32
$200,000. Lessee shall only make such removals referred to in the proviso to the
first sentence of this Section 9.01(f) if such removals are made in the same
manner and with the same care as removals made in the case of similar aircraft
and engines of the same make and model as the Aircraft and Engines owned by or
operated by or on behalf of Lessee, without discrimination (as compared to other
similar aircraft owned or operated by Lessee). Upon the removal of any such
Part, title thereto shall vest, without further act, in Lessee free and clear of
all rights of Lessor and such Part shall no longer be deemed a Part hereunder.
Any Part not removed as above provided prior to the return of the Aircraft to
Lessor hereunder shall remain the property of Lessor.
(g) Notwithstanding anything to the contrary contained in this Section
9.01, Lessee may not replace or remove any Parts in a manner that would prevent
it from complying with Section 1(b) of EXHIBIT D-1 or EXHIBIT D-2, as
applicable.
Section 9.02 ALTERATIONS, MODIFICATIONS AND ADDITIONS. (a) Lessee, at its
own expense, shall promptly make or ensure or allow the making of such
alterations, modifications and additions to the Aircraft as may be required from
time to time to meet the applicable standards of the FAA or to comply with any
mandatory Law, rule, directive, bulletin, notice, regulation or order of any
Governmental Entity having jurisdiction over the Aircraft; PROVIDED that Lessee
may in good faith and by appropriate procedure, contest the validity or
application of any such standard in any reasonable manner which does not
materially and adversely affect the interests of the Lessor or Beneficiary and
does not involve any material risk of sale, forfeiture or loss of the Aircraft
or the interest of the Lessor or Beneficiary therein, any material risk of civil
penalty or any discernable risk of criminal liability being imposed on Lessor or
Beneficiary.
(b) So long as no Specified Default has occurred and is continuing,
Lessee, at its own expense, may from time to time make other alterations,
modifications and additions to the Aircraft, subject to the following conditions
and limitations:
(i) Lessee may not make any such alteration, modification or
addition in a manner that would prevent it from complying
with Section 1(b) of EXHIBIT D-1 or EXHIBIT D-2, as
applicable;
(ii) no such alteration, modification or addition diminishes the
remaining warranty status, value or utility, or impairs the
condition or airworthiness, of the Aircraft;
(iii) title to all Parts incorporated or installed in or attached
or added to the Aircraft as a result of such alteration,
modification or shall vest immediately in Lessor and become
subject to this Lease, without the necessity for any further
act of transfer, document or notice
(iv) Lessee shall only make such alterations, modifications and
additions in the same manner and with the same care as are
made in the case of similar aircraft of the same make and
model as the Aircraft owned by or operated by or on behalf
of Lessee, without discrimination (as compared to other
similar aircraft owned or operated by Lessee; PROVIDED that
Lessee shall be deemed to be in compliance with this Section
9.02(b)(iv) with respect to any alteration or modification
made to the Aircraft to meet the operational requirements of
any code share party under a code share or other similar
arrangement that is also made to other aircraft leased or
33
owned by Lessee that are subject to code sharing or similar
arrangements with such code share party; and
(v) No such alteration, modification or addition shall cause the
Aircraft to be limited use property, but without limiting
Lessee's right to remove Parts pursuant to Section 9.01(f).
(c) In no event shall Lessor bear any liability or cost for any
alteration, modification or addition to, or for any grounding or suspension of
operations or of the certification of, the Aircraft, or for any loss of revenue
arising therefrom.
Section 9.03 POOLING OR PARTS LEASING. Any Part removed from the Airframe
or from any Engine as provided in Section 9.01 may be subjected by the Lessee to
a pooling or parts leasing agreement or arrangement that (i) is sponsored or
supervised by the Manufacturer or Engine Manufacturer or a manufacturer of such
Parts, (ii) is entered into in connection with a power by the hour agreement,
(iii) is based on immediate operational necessity or (iv) has been approved in
advance by the Lessor (such approval not to be unreasonably withheld), PROVIDED
that the part replacing such removed Part shall be incorporated or installed in
or attached to such Airframe or Engine in accordance with Section 9.01 as
promptly as practicable after the removal of such removed Part. In addition, any
Replacement Part when incorporated or installed in or attached to the Airframe
or any Engine in accordance with Section 9.01 may be owned by another airline or
vendor as customary in the airline industry, subject to any such pooling or
parts leasing arrangement, PROVIDED that the Lessee, at its expense as promptly
thereafter as reasonably practicable, either (x) causes title to such temporary
Replacement Part to vest in the Lessor in accordance with Section 9.01(d) by the
Lessee acquiring title thereto for the benefit of the Lessor free and clear of
all Liens except Permitted Liens, at which time such temporary replacement part
shall become a Part and become subject to this Lease or (y) replaces such
temporary Replacement Part by incorporating or installing in or attaching to
such Airframe or Engine a further Replacement Part owned by the Lessee free and
clear of all Liens except Permitted Liens and by causing title to such further
Replacement Part to vest in the Lessor in accordance with Section 9.01(d).
ARTICLE X
MANUFACTURERS' WARRANTIES
Section 10.01 ASSIGNMENT. Lessor hereby assigns to Lessee all rights Lessor
has under any warranty, express or implied, with respect to the Aircraft and the
Engines or any Parts thereof made by the Manufacturer, the Engine Manufacturer,
or any other Person, and all proceeds thereof and recoveries thereunder under
the Manufacturer Purchase Agreement, Assignment No. 2, the Engine Warranty
Agreement and Engine Warranty Assignment and Consent and otherwise, to the
extent that such warranties exist or may be assigned or otherwise made available
to Lessee; PROVIDED, HOWEVER, that upon the occurrence of an Event of Default
and any termination of this Lease under Section 17.02 hereof, all such rights
shall, without further action or notice, immediately revert to Lessor including
all claims thereunder whether or not perfected. In the event any such warranties
are not assignable to Lessee, Lessor shall use commercially reasonable efforts
at Lessee's expense to enforce such warranties on Lessee's behalf so long as no
Event of Default shall have occurred and not been remedied or waived.
Section 10.02 LIMITATIONS. Lessee shall not do or omit to do anything (or
permit or fail to prevent the doing or omission of anything) that, or the
omission of which, prejudices any right that Lessor or Lessee may have against
the Manufacturer, the Engine Manufacturer or against the manufacturer or
supplier of any part of the Aircraft or against any maintenance, conversion or
repair facility in respect of the Aircraft or any part thereof.
34
ARTICLE XI
INSURANCE
Section 11.01 PUBLIC LIABILITY AND PROPERTY DAMAGE INSURANCE. Lessee shall,
without expense to the Lessor, maintain or cause to be maintained in effect at
all times during the Term, with an Approved Insurer, public liability insurance
(including, without limitation, aircraft third party, passenger legal liability,
property damage, general third party legal liability and product liability
coverage (in each case, without any exclusion for date recognition coverage) but
excluding manufacturer's product liability coverage) with respect to the
Aircraft in an amount not less than the greater of (x) the amount which Lessee
may carry from time to time on other similar aircraft in its fleet (whether
owned or leased) and (y) the Minimum Liability Amount; PROVIDED that an
agreement of a United States Entity backed by the full faith and credit of the
United States government for the benefit of the Additional Insureds to insure
against or indemnify for substantially the same risks to at least the same
amount shall satisfy the requirements of this Section 11.01, PROVIDED FURTHER,
that on or prior to the date of such agreement, the Lessee shall provide an
Officer's Certificate of the Lessee certifying that any such insurance or
indemnity provides protection no less favorable than insurance coverage that
would comply with this Section 11.01. Such insurance shall be of the type
usually carried by the Lessee with respect to similar aircraft and engines, and
covering risks of the kind customarily insured against by the Lessee and shall
be consistent with generally accepted industry-wide practice for airlines
similarly situated to Lessee with regard to the insurance of aircraft similar to
those operated by Lessee and based or operated in any jurisdiction in which the
Aircraft may then be based or operated.
During any period of more than thirty (30) days that the Aircraft is placed
in short-term or long-term storage status, the Lessee may modify the insurance
required by this Section 11.01 to modify the amounts of public liability and
property damage insurance, the scope of the risks covered and the type of
insurance, in all circumstances to conform to such insurance customary in the
United States airlines industry for regional air carriers similarly situated
with the Lessee in respect of similar aircraft which are placed in short-term or
long-term storage status, except that in all instances the amounts of coverage
and scope of risk covered and the type of insurance shall be at a minimum no
less favorable than the insurance as from time to time applicable to aircraft
owned or leased by Lessee and in short-term or long-term storage status.
Section 11.02 INSURANCE AGAINST LOSS OR DAMAGE TO THE AIRCRAFT AND ENGINES.
Subject to the rights of Lessee under Section 11.10, Lessee shall, without
expense to the Lessor, maintain or cause to be maintained in effect at all times
during the Term, with an Approved Insurer, all risk (which may, except as
provided in Section 11.04, exclude war and allied perils (but which shall not
contain any exclusion for date recognition coverage)), agreed value, ground and
flight hull insurance, covering the Aircraft for an amount at all times (even
when the Aircraft is grounded or in storage) not less than the Stipulated Loss
Value from time to time; PROVIDED that, the Lessee shall not be required to
maintain all-risk flight aircraft hull insurance with respect to any period in
which the Aircraft is placed in short term or long term storage status, and
PROVIDED FURTHER that all-risk flight aircraft hull insurance shall be in effect
during any check flights, ferry flights or other flight time during such
storage. Such insurance shall not provide insurers with a right to replace the
Airframe or any Engine with another airframe or Engine. Such hull insurance or
other personal property insurance of the Lessee shall cover Engines or engines
and Parts temporarily removed from the Airframe pending replacement by
installation of the same or similar Engines, engines or Parts on the Airframe in
an amount not less than the fair market value of such Engine or Part. Such
insurance shall be of the type usually carried by the Lessee with respect to
similar aircraft and engines, and covering risks of the kind customarily insured
against by the Lessee and shall be consistent with generally accepted
industry-wide practice for airlines similarly situated to Lessee with regard to
the insurance of aircraft similar to those operated by Lessee and based or
operated in any jurisdiction in
35
which the Aircraft may then be based or operated. An agreement of a United
States Entity backed by the full faith and credit of the United States
government to insure against or indemnify for substantially the same risks to at
least the same amount will satisfy any of the requirements of this Section
11.02.
Section 11.03 ADDITIONAL INSUREDS; LOSS PAYMENT. The Lessee shall cause all
policies of insurance carried in accordance with this Article XI to name the
Additional Insureds as their respective interests may appear as additional
insureds and shall cause all policies required by Section 11.02 to name Lessor
as the sole loss payee. Such policies shall provide with respect to such
Additional Insureds that (a) none of their respective interests in such policies
shall be invalidated by any act or omission or breach of warranty or condition
contained in such policies by the Lessee or, in the case of any particular
Additional Insured, any other Additional Insured; (b) no cancellation or lapse
of coverage for nonpayment of premium or otherwise, and no substantial change of
coverage which adversely affects the interests of any such Additional Insured,
shall be effective as to such Additional Insured until 30 days (or 10 days in
respect of non-payment of premium and, in the case of war risk coverage, such
lesser period as may be applicable) after receipt by such Additional Insured of
written notice from the insurers of such cancellation, lapse or change; (c) they
shall have no liability for premiums, commissions, calls, assessments or
advances with respect to such policies; (d) such policies will be primary
without any right of contribution from any other insurance carried by such
Additional Insureds; (e) the insurers waive any rights of set-off, counterclaim,
deduction or subrogation against such Additional Insureds; (f) shall apply
worldwide and have no territorial restrictions or limitations (except, in the
case of war, hijacking or related perils insurance, as otherwise permitted
hereunder); and (g) shall contain a 50/50% Clause per Lloyd's Aviation
Underwriter's Association Standard Policy Form AVS 103 to the extent a separate
war risk policy is maintained. Each liability policy shall provide that all the
provisions thereof, except the limits of liability, shall operate in the same
manner as if there were a separate policy covering each insured and provide that
the exercise by the insurer of rights of subrogation derived from rights
retained by the Lessee will not delay payment of any claim that would otherwise
be payable but for such rights of subrogation. Each hull policy shall name the
Lessor as loss payee with respect to proceeds payable for an Event of Loss and
where the aggregate insurance proceeds exceed $750,000; PROVIDED that, so long
as the insurers shall not have received written notice that a Specified Default
has occurred and is continuing, if insurance proceeds in the aggregate equal to
$750,000 or less become payable, then such proceeds shall be payable to the
Lessee and, notwithstanding the foregoing, any amounts up to Stipulated Loss
Value (x) of any proceeds which in the aggregate exceed $750,000, (y) of any
proceeds in respect of an Event of Loss or (z) if the insurers shall have
received written notice that a Specified Default has occurred and is continuing,
any proceeds with respect to any single loss, shall be payable to Lessor as loss
payee.
Section 11.04 WAR RISK. Subject to the rights of Lessee under Section
11.10, if and to the extent that the Lessee or a Permitted Sublessee operates
the Aircraft (a) on routes for which it maintains war risk, hijacking or allied
perils insurance in effect with respect to other similar owned or leased
aircraft in its fleet, (b) on routes (other than routes within the United States
and Canada) where the custom in the industry is to carry war risk insurance, or
(c) in any area of recognized hostilities, the Lessee or such Permitted
Sublessee shall maintain or cause to be maintained a war risks insurance policy
(hull and liability) on the Aircraft covering all of those risks that are
currently enumerated in Lloyds Form AVN 48B (War, Hijacking and Other Perils
Exclusion Paragraph (Aviation)) to the fullest extent possible and any
additional risks that may hereafter be included therein or in any form
succeeding to any of its functions in an amount with respect to hull, not less
than the Stipulated Loss Value and, with respect to liability, in an amount not
less than the Minimum Liability Amount. An agreement of a United States Entity
backed by the full faith and credit of the United States government to insure
against or indemnify for substantially the same risks to at least the same
amount will satisfy any of the requirements of this Section 11.04.
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Section 11.05 APPLICATION OF HULL INSURANCE PROCEEDS. As between the Lessor
and the Lessee, any payments received under policies of hull or other property
insurance required to be maintained by the Lessee pursuant to Section 11.02 or
11.04, shall be applied as follows:
(a) if such payments are received with respect to loss or damage
(including an Event of Loss with respect to an Engine) not constituting an Event
of Loss with respect to the Airframe, payments in the aggregate of $750,000 or
less shall be paid over to or retained by the Lessee and, subject to Section
11.03, any payments which in the aggregate are greater than $750,000 shall be
paid over to or retained by the Lessor for payment to the Lessee only upon
performance of its repair or replacement obligation as set forth in Section
12.02;
(b) if such payments are received with respect to an Event of Loss
with respect to the Airframe, or the Airframe and Engines or engines installed
thereon, and the Airframe is not being replaced by the Lessee pursuant to
Section 12.01(a)(ii) or has not been replaced by Lessee pursuant to Section
12(a)(ii) within one hundred twenty (120) days after the Event of Loss, so much
of such payments as shall not exceed the amounts required to be paid by the
Lessee pursuant to Section 12.01(a)(i) shall be applied in reduction of the
Lessee's obligation to pay such amounts if not already paid by the Lessee and to
reimburse the Lessee if such amounts shall have been paid, and the balance, if
any, of such payments shall be promptly paid over to or retained by the Lessee;
(c) if such payments are received with respect to the Airframe or the
Airframe and Engines or engines installed thereon as a result of an Event of
Loss with respect thereto and the Airframe is being replaced by the Lessee
pursuant to Section 12.01(a)(ii), such payments shall be paid over to, or
retained by the Lessee, PROVIDED that if the Lessee has not completed such
replacement and the performance of all other obligations under Section 12.01(c),
such payments shall be paid over to, or retained by, the Lessor as security, and
upon completion of, or in connection with a closing for, such replacement, be
paid over to or retained by the Lessee or, if such completion of a replacement
has not occurred within the applicable time period, applied as provided in
Section 11.05(b).
Section 11.06 INSURANCE BY LESSOR. Nothing in this Article XI shall
prohibit the Lessee, the Lessor, or any other Additional Insured from obtaining
insurance with respect to the Aircraft, any Engines or engines installed on the
Airframe, or any Part for its own account (including, without limitation, in the
case of the Lessee, hull insurance under the same policies maintained pursuant
to this Article XI in amounts in excess of those required to be maintained
pursuant to this Article XI) and any proceeds payable thereunder shall be
payable as provided in the insurance policy relating thereto, PROVIDED that no
such insurance may be obtained which would limit or otherwise adversely affect
the availability of coverage or payment of any insurance required to be obtained
or maintained pursuant to this Article XI, it being understood that all salvage
rights to the Airframe or the Engines shall remain with the Lessee's insurers at
all times.
Section 11.07 REPORTS, ETC. (a) Lessee will furnish to the Lessor (i) on or
prior to the Delivery Date, insurance certificates describing in reasonable
detail the insurance maintained by Lessee as required pursuant to this Article
XI, (ii) prior to the cancellation, lapse or expiration of the insurance
policies required pursuant to this Article XI, evidence of renewal of such
insurance policies, and (iii) on or prior to the Delivery Date and on or before
the renewal dates of the insurance policies carried by the Lessee pursuant to
this Article XI, a report signed by a firm of aircraft insurance brokers, not
affiliated with the Lessee, appointed by the Lessee and reasonably satisfactory
to the Lessor, stating the opinion of such firm that all premiums in connection
with the insurance then due have been paid and the insurance then carried and
maintained on the Aircraft complies with the terms hereof and, in the case of
renewal insurance, that such renewal insurance will on and after the effective
date thereof so comply with the terms hereof, PROVIDED that all information
contained in such report shall be held confidential by the Lessor and
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Beneficiary and shall not be furnished or disclosed by them to anyone except
their legal counsel, insurance brokers or advisors, bona fide prospective
transferees of the Lessor and Beneficiary and their respective agents (PROVIDED
that they shall agree for the benefit of the Lessee to hold all such information
similarly confidential) or as may be required by applicable Law. The Lessee will
instruct such firm to give prompt written advice to the Lessor of any default in
the payment of any premium and of any other act or omission on the part of the
Lessee of which it has knowledge and which would in such firm's opinion
invalidate or render unenforceable, in whole or in any material part, any
insurance on the Aircraft. The Lessee will also instruct such firm to advise the
Lessor in writing at least 30 days prior to the termination or cancellation of,
or material adverse change in, such insurance carried and maintained on the
Aircraft pursuant to this Article XI (or such lesser period as may be applicable
in the case of war risk coverage).
(b) Lessee shall use reasonable efforts to notify Lessor promptly of
any event (other than an event constituting an Event of Loss, notice of which
shall be governed by Section 12.01(a) or (b), as applicable) with respect to the
Aircraft, the Airframe, any Engine or any Part thereof that will or may give
rise to a claim under any hull risk insurance policy in excess of $750,000,
PROVIDED that receipt by Lessor of any payments pursuant to Section 11.05(a)
shall be deemed to constitute notice of such event, subject to Lessee providing
such additional information regarding such event as Lessor shall request after
receipt of such payment.
(c) If at any time and from time to time, Lessor shall identify a
Financing Party to Lessee, Lessee shall cause to be delivered new insurance
certificates and broker's undertakings to ensure that each such Financing Party
is afforded the insurance coverage required under this Lease.
Section 11.08 NEGATIVE UNDERTAKINGS. (a) Lessee shall not knowingly do or
omit to do or permit to be done or left undone anything whereby any policy
required to be maintained under this Article XI would or may reasonably be
expected to be rendered in whole or in part invalid or unenforceable.
(b) Without prejudice to the obligations of Lessee under Section
11.08(a), Lessee shall not operate or locate the Airframe or any Engine or
suffer the Airframe or any Engine to be operated or located, (i) in any area or
for carriage of any goods excluded from coverage by any insurance required by
the terms of this Article XI, except in the case of requisition by or any
contract with any Governmental Entity where Lessee obtains an indemnity in lieu
of such insurance from such Governmental Entity against the risks and in the
amounts required by this Article XI in respect of such area or such carriage of
any goods, or (ii) in any recognized or threatened area of hostilities unless
fully covered by war risk insurance or unless the Airframe or Engine is operated
or used under contract with any Governmental Entity under which contract such
Governmental Entity assumes full liability for any damage, loss, destruction or
failure to return possession of such Airframe or Engines at the end of the term
of such contract and for injury to persons and damage to property of others, or
(iii) in any place or in any manner or for any purpose inconsistent with the
terms or outside the cover provided by any such policy, and the result of such
operation or location is that any policy required to be maintained under this
Article XI would or may be reasonably expected to be rendered in whole or in
part invalid or unenforceable, PROVIDED that if Lessee unintentionally and
temporarily operates or locates the Airframe or any Engine or suffers the
Airframe or any Engine to be operated or located in violation of this Section
11.08(b ), Lessee shall be deemed not to have breached its obligations under
this Section 11.08(b ) if, upon a Responsible Officer becoming aware thereof,
Lessee promptly terminates any such operation or changes such location that
resulted in such violation and takes reasonable affirmative actions to prevent
the operation or location of the Aircraft in violation of Section 11.08(b)
occurring again.
Section 11.09 FAILURE TO INSURE. If Lessee shall fail to maintain or cause
there to be maintained insurance as herein provided, Lessor may, at its
option,provide such insurance and in such event Lessee
38
shall, upon demand, reimburse Lessor for the cost thereof. Such provision by
Lessor shall not affect the right of Lessor to treat such failure by Lessee as
an Event of Default.
Section 11.10 DEDUCTIBLE. For insurance provided pursuant to Section 11.02
or 11.04, a deductible per occurrence that is not in excess of the prevailing
standard market deductible for similar aircraft shall be permitted for each
aircraft in the Lessee's fleet. In no case shall the amount of the deductible
during any policy year with respect to the Aircraft exceed $750,000 unless
Lessee provides a report from the Lessee's independent insurance broker
confirming that any higher deductible amount maintained by Lessee does not
exceed the amount maintained by airlines similarly situated to Lessee with
regard to the insurance of aircraft similar to those operated by Lessee and
based or operated in any jurisdiction in which the Aircraft may then be based or
operated.
ARTICLE XII
EVENT OF LOSS
Section 12.01 EVENT OF LOSS WITH RESPECT TO THE AIRFRAME. (a) Upon the
occurrence of an Event of Loss to the Airframe or the Airframe and the Engines
or engines then installed on the Airframe, Lessee (x) shall as soon as possible
(and, in any event, within five (5) days after the occurrence of such Event of
Loss) provide written notice to Lessor and Beneficiary of such Event of Loss and
(y) shall forthwith (and, in any event, within sixty (60) days after the
occurrence of such Event of Loss), give written notice to Lessor of its election
to perform one of the following options (it being understood that, if Lessee
fails to give such notice, or if Lessee has elected the option set forth in
clause (ii) below but has failed to comply with the provisions thereof or with
the provisions of Section 12.01(c), Lessee shall be deemed to have elected the
option set forth in clause (i) below):
(i) On or before the date that is ninety (90) days after the date
of any Event of Loss with respect to the Airframe or the Airframe and any
Engines or engines, but in no event later than two (2) Business Days after
receipt of insurance or other proceeds in respect of such Event of Loss
(or, if Lessee has elected to replace the Airframe or the Airframe and any
Engines or engines pursuant to Section 12.01(a)(ii), on the first Business
Day after the 120th day following the Event of Loss), Lessee shall pay to
Lessor the sum of (A) the Stipulated Loss Value PLUS (B) the amount of
Basic Rent, if any, due and unpaid on such date, PLUS (C) the amount of
deferred Basic Rent, if any, as of such date as set forth in the column
headed "Deferred Basic Rent" in Schedule SLV, MINUS (D) the amount of
prepaid Basic Rent, if any, as of such date as set forth in the column
headed "Prepaid Basic Rent" in Schedule SLV, PLUS (E) all Supplemental Rent
(other than Stipulated Loss Value) unpaid as of such date; or
(ii) So long as (A) no Specified Default has occurred and is
continuing, and (B) the conditions set forth in Section 12.01(c) are met,
Lessee may substitute another Embraer aircraft model EMB-145LR or Embraer
airframe model EMB-145LR of the same or later vintage as the Airframe that
suffered the Event of Loss together with one or more Rolls-▇▇▇▇▇ ▇▇▇▇▇▇▇ AE
300 7A1P engines, as the case may be, or an improved model of the Airframe
and Engines, if any, that suffered the Event of Loss, that, in each case,
has a value, utility, condition, maximum take-off weight, maximum landing
weight (and in the case of an engine, with an equal or greater engine
thrust rating), estimated residual value and remaining useful life equal to
or greater than, and in as good an operating condition as, the Airframe and
Engines, if any, that suffered such Event of Loss (assuming that such
Airframe and Engines were then in the condition required by the terms of
this Lease) within 120 days following the occurrence of such Event of Loss
in accordance with the terms and provisions of Section 12.01(c) below.
39
(b) If an Event of Loss occurs with respect to the Airframe and Lessee
elects the option set forth in clause (i) of Section 12.01(a), then upon payment
in full by Lessee of all amounts referred to therein:
(i) the obligations of the Lessee to pay Rent (except for
Supplemental Rent obligations surviving pursuant to Section 6.05 and
Articles XIV and XV of this Lease or the Tax Indemnity Agreement or which
have otherwise accrued but not been paid as of the Termination Date) shall
cease;
(ii) the Term shall end; and
(iii) Lessor will transfer to Lessee, without recourse or
warranty (except as set forth below) on an as-is, where-is basis, all of
Lessor's right, title and interest, if any, in and to the Airframe and
Engines (if any) suffering the Event of Loss, as well as all of Lessor's
right, title and interest in and to any Engine constituting part of the
Aircraft but not installed thereon at the time of the Event of Loss, by way
of a ▇▇▇▇ of sale conveying to Lessee such title as was received by Lessor
on the Delivery Date, free of Lessor's Liens, but subject to Liens arising
by or through Lessee.
Nothing in this Section 12.01(b) shall be deemed to relieve Lessee of its
obligation to pay Rent prior to the date on which the Stipulated Loss Value and
all other amounts due hereunder have been paid in full.
(c) If an Event of Loss occurs with respect to the Airframe and Lessee
elects the option set forth in clause (ii) of Section 12.01(a), then Lessee
shall duly convey to Lessor, at its sole cost and expense, and shall reimburse
Lessor for any out-of-pocket costs and expenses incurred in connection
therewith, as replacement for the Aircraft that suffered the Event of Loss,
title to a Replacement Aircraft (or a Replacement Airframe or a Replacement
Airframe and a Replacement Engine which, together with the Engine or Engines
constituting a part of the Aircraft but not installed thereon at the time of the
Event of Loss, constitute the Aircraft) free and clear of all Liens except
Permitted Liens described in clauses (i), (ii) and (iii) of the definition
thereof. Prior to or at the time of such conveyance, Lessee shall at its
expense:
(i) furnish to Lessor a full warranty ▇▇▇▇ of sale, in form and
substance reasonably satisfactory to Lessor, with respect to such
Replacement Aircraft or Replacement Airframe and Replacement Engines, if
any,
(ii) cause a supplement hereto, in form and substance reasonably
satisfactory to Lessor, subjecting such Replacement Aircraft or Replacement
Airframe and Replacement Engines to the terms of this Lease, to be duly
executed by Lessee and recorded as may be necessary or as Lessor may
request pursuant to the Federal Aviation Act,
(iii) cause Uniform Commercial Code financing statement(s) to be
filed in such place or places as may be necessary or advisable in order to
evidence and perfect the interests of Lessor in and to such Replacement
Aircraft or Replacement Airframe and Replacement Engines under applicable
law,
(iv) furnish Lessor with such evidence as to Lessee's title to
such Replacement Aircraft or Replacement Airframe and Replacement Engine
and as to the integration of substituted property into the Maintenance
Program as Lessor may reasonably request,
40
(v) furnish Lessor with a certificate of an authorized officer of
Lessee together with an appraisal by a qualified independent appraiser of
nationally recognized standing reasonably acceptable to Lessor that such
Replacement Aircraft or Replacement Airframe and Replacement Engines have a
value, utility, condition, maximum take-off weight, maximum landing weight
(and in the case of an engine, with an equal or greater engine thrust
rating) and remaining useful life, at least equal to, and are in as good an
operating condition as, the Aircraft, or the Airframe and Engines, if any,
subject to the Event of Loss (assuming that such Aircraft, or Airframe and
Engines were in the condition required by the terms of this Lease),
together with an insurance certificate related thereto evidencing
compliance with Article XI,
(vi) furnish Lessor with an opinion of counsel, reasonably
acceptable to Lessor, to the effect that title to such Replacement Aircraft
or Replacement Airframe and Replacement Engines have been duly conveyed to
Lessor free and clear of all Liens except Permitted Liens and that such
Replacement Aircraft is duly leased hereunder, and that the supplement to
this Lease covering the same has been duly recorded under applicable Law
together with a favorable opinion of counsel, acceptable to Lessor in its
reasonable discretion, as to the availability of Section 1110 of the
Bankruptcy Code or any successor statute thereto having similar subject
matter to Section 1110 with respect to such Replacement Aircraft or
Replacement Airframe and Replacement Engines and as to such other matters
as may be reasonably requested by Lessor or Beneficiary,
(vii) furnish Lessor with an opinion (in form and substance
reasonably acceptable to Lessor) of independent tax counsel selected by
Lessee and reasonably acceptable to Lessor, to the effect that the
replacement of the Aircraft or the Airframe and Engine, as applicable, will
not cause any adverse tax consequences to Lessor or, in lieu of such
opinion, furnish Lessor with an indemnity satisfactory to Lessor against
any such adverse tax consequences,
(viii) provide all other documentation and take such other action
as may be necessary or as Lessor may reasonably request in order that such
Replacement Aircraft or Replacement Airframe and Replacement Engines be
duly and properly titled in Lessor and covered by the insurance policies
required under Article XI,
(ix) cause such Replacement Aircraft to be duly registered in
Lessor's name at the FAA, and
(x) subject to Section 10.01, assign to Lessor the benefit of all
assignable manufacturers' warranties with respect to such Aircraft or
Replacement Airframe and Replacement Engines.
Upon full compliance by Lessee with the terms of this Section 12.01(c),
Lessor will transfer to Lessee without recourse or warranty (except as set forth
below) on an as-is, where-is basis, all of Lessor's right, title and interest,
if any, in and to the Airframe and Engines (if any) suffering the Event of Loss,
by way of a ▇▇▇▇ of sale conveying to Lessee such title as was received by
Lessor on the Delivery Date, free of Lessor's Liens, but subject to Liens
arising by or through Lessee, and shall remit to Lessee any insurance proceeds
relating to property damage from policies maintained by Lessee or any Permitted
Sublessee pursuant to Article XI or net condemnation award, in either case,
actually received by Lessor. For the avoidance of doubt, Lessee agrees that it
shall be solely responsible for the location of any Replacement Aircraft,
Replacement Airframe or Replacement Engine at the time that it is to be so
transferred in relation to any liability of Lessee under Article XIV. For all
purposes hereof, the property so substituted shall be deemed an "AIRCRAFT,"
"AIRFRAME" and "ENGINE," as the case may be, as defined herein. No Event of Loss
with respect to the Aircraft or the Airframe and the Engines or engines then
41
installed thereon for which substitution has been elected pursuant to this
Section 12.01(c) shall result in any reduction in any sum due from Lessee under
any Operative Document.
Section 12.02 SUBSTITUTION OF ENGINES. (a) Upon an Event of Loss with
respect to an Engine under circumstances in which there has not occurred an
Event of Loss with respect to the Airframe, Lessee (x) shall as soon as possible
(and, in any event, within ten (10) Business Days after the occurrence of such
Event of Loss) provide written notice to Lessor and Beneficiary of such Event of
Loss and (y) shall as soon as possible (and, in any event, within ninety (90)
days after the occurrence of such Event of Loss) convey to Lessor, as
replacement for the Engine suffering such Event of Loss, title to a Replacement
Engine in accordance with this Section 12.02(a), free of all Liens (except Liens
permitted by clauses (i ), (ii ), (iii ) and (v ) of the definition of Permitted
Liens). Prior to or at the time of any such transfer, Lessee, at its own
expense, will promptly
(i) furnish Lessor with a full warranty ▇▇▇▇ of sale (excluding
Liens permitted by clauses (i), (ii), (iii) and (v) of the definition of
Permitted Liens) of that is, by its terms, governed by the laws of the
State of New York and otherwise in form and substance reasonably
satisfactory to Lessor with respect to such Replacement Engine;
(ii) execute and deliver a supplement hereto, in form and
substance reasonably satisfactory to Lessor, subjecting such Replacement
Engine to this Lease;
(iii) furnish Lessor with such evidence of title to such
Replacement Engine and of compliance with the insurance provisions of
Article XI with respect to such Replacement Engine as Lessor may reasonably
request; and
(iv) furnish Lessor with such documents as Lessor may reasonably
request in connection with the completion of the transactions contemplated
by this Section 12.02, in each case in form and substance reasonably
satisfactory to Lessor.
Upon full compliance by Lessee with the terms of this Section 12.02, Lessor
will transfer to Lessee "AS IS, WHERE IS" and without recourse or warranty,
except a warranty as to the absence of Liens arising by or through Lessor, such
right, title and interest in the Engine that suffered the Event of Loss as
Lessor received on the Delivery Date. For all purposes hereof, each such
Replacement Engine shall be deemed part of the property leased hereunder, shall
be deemed an "Engine" as defined herein. No Event of Loss covered by this
Section 12.02 shall result in any reduction in Rent.
(b) In connection with the return of the Aircraft pursuant to Section
18.03 or at any time during the Term, so long as no Specified Default shall have
occurred and be continuing, on at least thirty (30) days prior written notice to
Lessor, the Lessee may elect to replace an Engine on the Airframe with a
Replacement Engine in accordance with this Section 12.02. In such event, Lessee
shall convey to Lessor, as replacement for the Engine suffering such deemed
Event of Loss, title to a Replacement Engine in accordance with the provisions
of Section 12.02(a).
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Section 12.03 APPLICATION OF PROCEEDS AND PAYMENTS. Any payments received
at any time by Lessor or by Lessee from any insurer under any policy of
insurance required to be maintained pursuant to Article XI (other than liability
insurance) shall be applied in the manner specified in Section 11.05. Subject to
Section 4.07, any payments received at any time by Lessor or Lessee from any
Governmental Entity or other Person (except as provided in the preceding
sentence) with respect to an Event of Loss will be applied as follows:
(a) if such payments are received as a result of an Event of Loss with
respect to the Airframe (or the Airframe and the Engine or Engines installed
thereon):
(i) so much of such payments as shall not exceed the amounts
payable by Lessee pursuant to Section 12.01(a)(i) shall be paid to Lessor
in reduction of Lessee's obligation to pay such amounts if not already paid
by Lessee, or, if already paid by Lessee, shall be applied by Lessor to
reimburse Lessee for its payment of such amounts and the balance of such
payment, if any, remaining thereafter shall be paid over to, or retained
by, Lessee; or
(ii) if the Airframe (or the Airframe and the Engines or Engines
installed thereon) is being replaced in accordance with Section
12.01(a)(ii), all such payments shall be held by Lessor as security until
such time as Lessee shall have fully complied with its obligations under
Section 12.01(a)(ii) and (c), whereupon such payments shall be paid over to
Lessee or to such other Person or Persons as Lessee may direct or shall be
applied as provided in Section 12.01(a)(i) if such replacement is not
completed within the applicable time period; and
(b) if such payments are received with respect to an Event of Loss to
an Engine that has been or is being replaced by the Lessee pursuant to the terms
hereof, such payments shall be paid over to, or retained by, the Lessee,
PROVIDED that if the Lessee has not completed such replacement, such payments
shall be paid over to, or retained by, the Lessor as security, and upon
completion of, or in connection with a closing for, such replacement in
accordance with Section 12.02, shall be paid over to or retained by the Lessee.
Section 12.04 REQUISITION FOR USE BY GOVERNMENT. In the event of the
requisition for use by a Governmental Entity of the Airframe or any Engine
(other than a requisition constituting an Event of Loss), all Lessee's
obligations under this Lease shall continue to the same extent as if such
requisition had not occurred, except to the extent that performance or
observance of any obligation by the Lessee shall have been prevented or delayed
as a result of such requisition (other than Lessee's obligations to pay Rent and
its obligation under Article XI hereof). If the Airframe or any Engine or engine
installed thereon is not returned by such Governmental Entity prior to the last
day of the Term, the Term shall nonetheless terminate on such last day. Subject
to Section 4.07, all payments received by Lessor or Lessee from the Governmental
Entity for the use of the Airframe or Engine during the Term prior to the time
such requisition becomes an Event of Loss shall be paid over to, or retained by,
Lessee; PROVIDED that any such payments received by Lessor may be offset against
Lessee's obligation to pay Rent; and all payments received by Lessor or Lessee
from the Governmental Entity for the use of such item after such requisition
constitutes an Event of Loss or after the expiration of the Term and the receipt
by Lessor of payment of Stipulated Loss Value, shall be paid over to, or
retained by, Lessee. Lessee shall, as soon as practicable after the termination
of any requisition for use or hire, cause the Aircraft to be put into the
condition required by this Lease.
43
ARTICLE XIII
INFORMATION AND INSPECTION
Section 13.01 FINANCIAL AND GENERAL INFORMATION. Throughout the Term,
Lessee agrees to furnish to Beneficiary the following:
(a) (i) within forty-five (45) days or such other number of days as
Lessee furnishes the same to its lessors or lenders (as the case may be), after
the close of each fiscal quarter occurring in each fiscal year of Lessee, an
unaudited consolidated balance sheet, profit and loss statement, as of the close
of such fiscal quarters and for the periods then ended, (ii) within ninety (90)
days or such other number of days as Lessee furnishes the same to its lessors or
lenders (as the case may be), after the close of each fiscal year of Lessee, an
audited consolidated balance sheet, profit and loss statement, as of the close
of such fiscal year and for the period then ended, prepared in accordance with
generally accepted accounting principles in the United States, and (iii) within
forty-five (45) days or such other number of days as Lessee furnishes the same
to its lessors or lenders (as the case may be), after the close of each fiscal
quarter occurring in each fiscal year of Lessee, Operating Results as of the
close of such fiscal quarters and for the periods then ended;
(b) within seventy-two (72) hours after the occurrence thereof, notice
of any notices published by the FAA or the Department of Transportation
proposing any disciplinary action on Lessee, which would have a material adverse
effect upon Lessee or upon its ability to perform its obligations hereunder;
(c) upon request of Lessor, (i) notice of scheduled maintenance on the
Aircraft equivalent to a C check or greater and the locations thereof, together
with reasonable prior written notice of any changes in the schedule so provided,
and (ii) a true and accurate summary of the Maintenance Program, as in effect at
the time of such request;
(d) promptly after request for the same, such information regarding
the condition of the Aircraft as Lessor may reasonably require; and
(e) with the financial statements provided pursuant to Section
13.02(a)(ii), an Officer's Certificate of the Lessee, to the effect that the
signer is familiar with or has reviewed the relevant terms of this Lease and has
made, or caused to be made under his supervision, a review of the transactions
and conditions of the Lessee during the preceding fiscal year and that such
review has not disclosed the existence during such period, nor does the signer
have knowledge of the existence as of the date of such certificate, of any
condition or event which constituted or constitutes a Default or Event of
Default, or, if any such condition or event existed or exists, specifying the
nature and period of existence thereof and what action the Lessee has taken or
is taking or proposes to take with respect thereof.
Section 13.02 INSPECTION RIGHTS. (a) Once in each twelve month period
during the Term on reasonable notice, and at any time so long as an Event of
Default is continuing and with one (1) Business Day's notice or such shorter
notice as may be reasonable under the circumstances, Lessee shall allow Lessor,
any Financing Party and/or their respective authorized representatives (it being
understood that Lessor, during the twelve (12) month period immediately
preceding the last day of the Term, may designate the Manufacturer as its
authorized representative), at the risk of such Persons, to conduct an on-board
or visual walk around inspection of the Aircraft and any Engine (including a
visual walk-around inspection of the Aircraft during any C check or other heavy
maintenance) and to inspect the Aircraft Documents, in each case during normal
business hours in the location where the Aircraft is physically located or in
the location where the Aircraft Documents are kept, as applicable, PROVIDED that
(i) any such
44
inspection shall be subject to the safety, security (in respect of which Lessee
shall assist Lessor, but shall not be responsible to obtain airport security
clearance) and workplace rules applicable at the location where such inspection
is conducted and any applicable governmental rules or regulations, and (ii) so
long as Lessor is not exercising its remedies under Section 17.02, in the case
of an inspection during a maintenance visit, such inspection shall not in any
respect interfere with the normal conduct of such maintenance visit or extend
the time required for such maintenance visit or interfere with the use or
operation of the Airframe or any Engine or with the normal conduct of Lessee's
business.
(b) Lessor shall have no duty to make any such inspection and shall
not incur any liability or obligation by reason of not making any such
inspection. Lessor's failure to object to any condition or procedure observed or
observable in the course of an inspection hereunder shall not be deemed to waive
or modify any of the terms of this Lease with respect to such condition or
procedure.
(c) The cost of such inspections shall be borne (i) except as set
forth in clause (ii), by the Person making the inspection; and (ii) during the
continuance of an Event of Default, by Lessee.
ARTICLE XIV
GENERAL TAX INDEMNITY
Section 14.01 GENERAL TAX INDEMNITY. The terms and conditions of the
General Tax Indemnity are set forth in full in EXHIBIT G.
ARTICLE XV
GENERAL INDEMNITY
Section 15.01 GENERAL INDEMNITY. The terms and conditions of the General
Indemnity are set forth in full in EXHIBIT H.
ARTICLE XVI
PERFECTION OF TITLE AND FURTHER ASSURANCES
Section 16.01 TITLE TO AIRCRAFT. Title to the Aircraft shall at all times
remain vested in Lessor and it is the intent of Lessor and Lessee that this
Agreement shall constitute a lease for all purposes and shall not be
characterized by either of them under any circumstances as a borrowing or
indebtedness of Lessee that is not a "true lease". If at any time any filing,
notarization or recording is necessary or reasonably advisable to protect the
interest of Lessor in the Aircraft or this Lease, Lessee shall, at its sole cost
and expense at the reasonable request of Lessor, cause this Lease and any
financing statements with respect thereto, and any and all additional
instruments that shall be executed pursuant to the terms hereof or thereof to be
kept, filed, notarized and recorded and to be re-executed, re-notarized, refiled
and re-recorded in the appropriate office or offices pursuant to applicable
Laws, to perfect, protect and preserve the rights and interests of Lessor
hereunder and in the Aircraft, including the right of Lessor to repossess, and
export from any country, the Aircraft, the Engines and the Parts following an
Event of Default.
Section 16.02 FURTHER ASSURANCES. The Lessee and the Lessor will each
promptly and duly execute and deliver to the other such further documents and
assurances and take such further action as the other may from time to time
reasonably request in order to more effectively carry out the intent and
45
purpose of this Lease and to establish and protect the rights and remedies
created or intended to be created in favor of the Lessor and the Lessee
hereunder.
ARTICLE XVII
EVENTS OF DEFAULT; REMEDIES
Section 17.01 EVENTS OF DEFAULT. Any one or more of the following
occurrences or events shall constitute an Event of Default (whether such
occurrences or events shall be voluntary or involuntary or be effected by
operation of law or pursuant to or in compliance with any judgment, decree or
order of any court or of any other Governmental Entity):
(a) Lessee shall fail to make any payment of Rent to Lessor when due
and in the manner and at the place required under this Lease and such failure
shall continue for a period of (i) in the case of Basic Rent or a payment of
Stipulated Loss Value, within three (3) Business Days after the date on which it
is due, and (ii) in the case of any other payment of Supplemental Rent, within
ten (10) Business Days after receipt by Lessee of a written demand therefor from
Lessor or, if later, ten (10) Business Days after such other payment of
Supplemental Rent is due and payable;
(b) Lessee shall fail to obtain and maintain any insurance required
under the provisions of Article XI or shall fail to perform or observe its
covenants in Section 11.08(b);
(c) Any representation or warranty made by Lessee herein or in any
other Operative Document, or in any document or certificate furnished to Lessor
in connection with this Lease or pursuant hereto (other than the Tax Indemnity
Agreement) proves to have been incorrect in any material respect at the time
made and shall not be remedied within thirty (30) days after notice thereof has
been given to the Lessee by the Lessor;
(d) [reserved];
(e) Lessee shall make or permit any assignment or transfer of this
Lease, or any interest therein, or of the right to possession of or operational
control over the Aircraft, the Airframe, and any Engine or any Part other than
as permitted by the Operative Documents, and such assignment or transfer of
operational control shall continue unremedied for a period of thirty (30) days
after delivery of notice thereof from the Lessor to the Lessee;
(f) Lessee shall fail to perform or observe any other material
covenant, condition or agreement to be performed or observed by it pursuant to
this Lease or any other Operative Document to which it is a party (other than
the Tax Indemnity Agreement) and such failure shall continue unremedied for a
period of thirty (30) days after delivery of notice of such failure from the
Lessor to the Lessee, unless such failure is curable and the Lessee shall, after
the delivery of such notice (or such date), be diligently proceeding to correct
such failure and shall in fact correct such failure within 120 days after
delivery of such notice (or such date), PROVIDED that the covenant to provide
notice to Lessor in Section 13.01(b) shall be deemed to be cured if Lessee
provides such notice within the foregoing time periods after notice from Lessor,
unless Lessor shall have been materially adversely affected by the delay in the
delivery of such notice;
(g) Lessee consents to the appointment of a receiver, examiner,
administrator, trustee, official manager, custodian, or liquidator or
provisional liquidator of itself or of a substantial part of its property or
Lessee admits in writing its inability to pay its debts generally as they come
due, or makes a general assignment for the benefit of creditors, or Lessee files
a voluntary petition in bankruptcy
46
or a voluntary petition seeking reorganization in a proceeding under any
bankruptcy laws (as now or hereafter in effect), or an answer admitting the
material allegations of a petition filed against Lessee, in any such proceeding,
or Lessee by voluntary petition, answer or consent seeks relief under the
provisions of any bankruptcy or other similar law providing for the insolvency,
reorganization or winding-up of corporations, or provides for an agreement,
composition, extension or adjustment with its creditors;
(h) An order, judgment or decree is entered by any court, with or
without the consent of Lessee appointing a receiver, examiner, administrator,
trustee, official manager, custodian or liquidator or provisional liquidator for
Lessee or if all or any substantial part of the property of Lessee is
sequestered, and any such order, judgment or decree of appointment or
sequestration remains in effect, undismissed, unstayed or unvacated for a period
of sixty (60) days after the date of entry thereof;
(i) A petition against Lessee in a proceeding under the bankruptcy,
insolvency or other similar Laws (as now or hereafter in effect) is filed and is
not withdrawn or dismissed within sixty (60) days thereafter and is not being
disputed in good faith with reasonable chance of success, or if, under the
provisions of any Law providing for reorganization or winding-up of corporations
that may apply to Lessee, any court of competent jurisdiction assumes
jurisdiction over, or custody or control of, Lessee or of all or any substantial
part of Lessor's property and such jurisdiction, custody or control remains in
effect, unrelinquished, unstayed or unterminated for a period of sixty (60) days
and is not being disputed in good faith with reasonable chance of success;
(j) Lessee voluntarily or involuntarily suspends all or substantially
all of its operations or if all or substantially all of the franchises,
concessions, permits, licenses, rights or privileges required for the conduct of
the business and operations of Lessee are revoked, canceled or otherwise
terminated and, in the case of any involuntary suspension only, such involuntary
suspension (including, but not limited to, a suspension by Lessee due to an
imminent labor disruption or regulatory suspension) continues for a period of
ninety (90) days, PROVIDED that, if an involuntary suspension directly results
from a general grounding by the Aeronautical Authority of all aircraft of the
same type and series as the Aircraft, such involuntary suspension continues for
a period of one hundred eighty (180) days;
(k) This Lease ceases to be in full force and effect or to be a legal,
valid and binding obligation of Lessee, in whole or in material part,
enforceable against Lessee in accordance with its terms as a result of any act
or omission of Lessee;
(l) Lessee repudiates its obligations under this Lease in whole or in
material part;
(m) An "Event of Default" shall have occurred under any Other Lease
(as defined therein);
(n) Lessee shall cease at any time during the Term to be a Section
1110 Person and such circumstance results in the Owner Trustee no longer being
entitled to the benefits of Section 1110; or
(o) Lessee shall receive notice of default or exercise of remedies
with respect to the payment or performance of any indebtedness or other
obligation to any third party and any such default or exercise of remedies
results in an acceleration of such indebtedness or obligation; provided,
however, that the aggregate amount of any such indebtedness or obligation is in
excess of $3,500,000 (determined in the case of borrowed money by the amount
outstanding under the agreement pursuant to which such borrowed money was
borrowed, in the case of a deferred purchase price by the remaining balance and
in the case of a lease by the present value of the remaining rent payable
thereunder);
47
PROVIDED that, notwithstanding anything to the contrary contained in this Lease,
any failure of the Lessee to perform or observe any covenant, condition, or
agreement herein shall not constitute an Event of Default under clause (f) above
if such failure is caused solely by reason of an event referred to in the
definition of "EVENT OF LOSS" so long as the Lessee is continuing to comply with
the applicable terms of Section 12.
Section 17.02 REMEDIES. (a) Upon the occurrence of any Event of Default,
Lessor may at its option declare this Lease to be in default; PROVIDED that,
upon the occurrence of any Event of Default specified in paragraphs (g), (h) or
(i) of Section 17.01, this Lease shall automatically be deemed to have been
declared in default. Once this Lease has been declared to be in default or is
deemed to have been so declared then, and at any time thereafter, Lessor shall
be entitled to exercise any of the following remedies as Lessor in its sole
discretion shall elect, to the extent permitted by applicable Law then in effect
without making demand or giving notice or the taking of any other action,
require that Lessee, and Lessee shall upon the written request of Lessor and at
Lessee's expense, immediately return the Aircraft to Lessor in the manner
specified in such written request, in which event such return shall not be
delayed for purposes of complying with the return conditions specified in
Article XVIII (none of which conditions shall be deemed to affect Lessor's
possession of the Aircraft) or be delayed for any other reason, PROVIDED
HOWEVER, that Lessor, at Lessor's option, may require Lessee to and Lessee shall
thereafter take such actions as would be required by the provisions of this
Lease if the Aircraft were being returned at the end of the Term, subject to
making the Aircraft available to Lessee if Lessor has then repossessed the
Aircraft. In addition, Lessor, at its option and to the extent permitted by
applicable Law, may enter upon the premises where all or any part of the
Aircraft is located and take immediate possession of and, at Lessor's sole
option, remove the same (including any engine that is not an Engine but that is
installed on the Airframe, subject to the rights of the owner, lessor or secured
party thereof) by summary proceedings or otherwise;
(b) Sell at private or public sale, as Lessor may determine, or hold,
use, operate or lease to others the Aircraft as Lessor in its sole discretion
may determine, all free and clear of any rights of Lessee except as set forth in
this Section 17.02;
(c) Whether or not Lessor shall have exercised, or shall thereafter at
any time exercise, any of its rights under paragraph (a) or (b) above, Lessor,
by fifteen (15) days' written notice to Lessee specifying a payment date, may
demand that Lessee pay to Lessor, and Lessee shall pay to Lessor, on the payment
date specified in such notice any unpaid Basic Rent for the Aircraft to and
including the payment date specified in such notice, PLUS, as liquidated damages
for loss of bargain and not as a penalty (in lieu of Basic Rent payable for the
period commencing after the date specified for payment in such notice),
whichever of the following amounts Lessor, in its sole discretion, shall specify
in such notice (together with accrued interest thereon, if any, to the extent
permitted by applicable Law at the Interest Rate from the date specified for
payment in such notice to the date of actual payment: (i) the amount if any, by
which (x) the Stipulated Loss Value computed as of the payment date specified in
such notice (plus the amount of the deferred Basic Rent, if any, as of such date
as set forth in the column headed "Deferred Basic Rent" in Schedule SLV, and
minus the amount of prepaid Basic Rent, if any, as of such date as set forth in
the column headed "Prepaid Basic Rent" in Schedule SLV), exceeds (y) the
aggregate Fair Market Rental Value (determined in accordance with the Appraisal
Procedure) of the Aircraft for the remainder of the Basic Term (or if in a
Renewal Term, then until the scheduled end of the Renewal Term), after
discounting such Fair Market Rental Value periodically (equal to installment
frequency) to present worth as of the payment date specified in such notice
using the Treasury Rate as of such date, (ii) the amount if any, by which (x)
the Stipulated Loss Value computed as of the payment date specified in such
notice (plus the amount of the deferred Basic Rent, if any, as of such date as
set forth in the column headed "Deferred Basic Rent" in Schedule SLV, and minus
the amount of prepaid Basic Rent, if any, as of such date as set forth in the
column headed "Prepaid Basic Rent" in Schedule SLV), exceeds (y) the
48
Fair Market Sales Value (determined on the basis of an arms-length transaction
between a willing seller and a willing buyer both with full knowledge of the
relevant facts, including the actual condition and maintenance status of the
Aircraft at such time) of the Aircraft as of such date, or (iii) the amount, if
any, by which (x) the aggregate Basic Rent for the remainder of the Basic Term
(or if in a Renewal Term, then until the scheduled end of the Renewal Term),
discounted periodically (equal to installment frequency) to present worth as of
the payment date using the Treasury Rate as of such date, exceeds (y) the Fair
Market Rental Value (determined in accordance with the Appraisal Procedure) of
the Aircraft for the remainder of the Basic Term (or if in a Renewal Term, then
until the scheduled end of the Renewal Term), after discounting such Fair Market
Rental Value periodically (equal to installment frequency) to present worth as
of the payment date specified in such notice using the Treasury Rate as of such
date;
(d) In the event that Lessor, pursuant to Section 17.02(b), shall have
sold the Aircraft, Lessor, in lieu of exercising its rights under Section
17.02(c), may demand that Lessee pay Lessor, and Lessee shall pay Lessor on the
date of such sale, any unpaid Basic Rent and Supplemental Rent for the Aircraft
payable up to and including the Rent Payment Date next succeeding the date of
such sale, plus, as liquidated damages for loss of bargain and not as a penalty
(in lieu of Basic Rent for the Aircraft payable after the time of such sale),
the amount of any deficiency between the net proceeds of such sale and the
Stipulated Loss Value, computed as of the Rent Payment Date next succeeding the
date of such sale, together with interest thereon, to the extent permitted by
applicable Law, at the Interest Rate from the date as of which such Stipulated
Loss Value is computed until the date of actual payment;
(e) In the event that Lessor, pursuant to Section 17.02(b), shall have
re-leased the Aircraft, Lessor, in lieu of exercising its rights under Section
17.02(c), may demand that Lessee pay Lessor, and Lessee shall pay Lessor, any
unpaid Basic Rent for the Aircraft payable up to the date of the Re-leasing,
plus, as liquidated damages for loss of bargain and not as a penalty (in lieu of
Basic Rent for the Aircraft payable after the time of such re-leasing (the
"RE-LEASING")), together with accrued interest thereon, if any, at the Interest
Rate to the date specified for payment, the amount, if any, by which (i) the
aggregate Basic Rent that would otherwise have become due over the Basic Term
(or if in a Renewal Term, then until the scheduled end of the Renewal Term) for
the Aircraft determined without regard to the exercise of remedies under this
Article XVII (the "ORIGINAL TERM"), discounted periodically (equal to
installment frequency) to present worth as of the date of Re-leasing using the
Treasury Rate as of such date, exceeds (ii) the sum of (A) the aggregate basic
rental payments to become due under the Re-leasing from the date of the
Re-leasing to the earlier of (x) the end of the term of the Re-leasing and (y)
the date upon which the Original Term would have expired, discounted
periodically (equal to installment frequency) to present worth as of the date of
the Re-leasing using the Treasury Rate as of such date and (B) an estimate of
Fair Market Rental Value (determined in accordance with the Appraisal Procedure)
for the period, if any, commencing on the end of the Re-leasing through the end
of the Original Term, discounted periodically (equal to installment frequency)
to present worth as of the date of the Re-leasing using the Treasury Rate as of
such date;
(f) Proceed by appropriate court action or actions, either at law or
in equity, to enforce the performance by Lessee of the applicable covenants of
this Lease and to recover damages for the breach thereof and/or for any loss
suffered by Lessor by reason of the return of the Aircraft to Lessor otherwise
than on the last day of the Term and/or to rescind this Lease; and/or
(g) Terminate this Lease by written notice and repossess the Aircraft.
In addition to the foregoing, Lessee shall be liable for any and all unpaid
Basic and Supplemental Rent during or after the exercise of any of the
aforementioned remedies, together with interest on such unpaid amounts at the
Interest Rate, until Lessor shall have recovered in full the amounts payable to
Lessor under this Section 17.02 and for all reasonable legal fees and other
costs and expenses incurred by
49
Lessor (on a full indemnity basis) by reason of the occurrence of any Event of
Default or the exercise of Lessor's remedies with respect thereto including all
costs and expenses incurred in connection with the return of the Aircraft in
accordance with the terms of Article XVIII or in placing the Aircraft in the
condition and with the airworthiness certification as required by such Article
XVIII.
In effecting any repossession of the Aircraft, Lessor and its
representatives and agents, to the extent permitted by Law, shall:
(i) have the right to enter upon any premises which it reasonably
believes the Aircraft, the Airframe, an Engine or a Part to be located;
(ii) not be liable, in conversion or otherwise, for the taking of
any personal property of Lessee that is in or attached to the Aircraft, the
Airframe, any Engine or Part that is repossessed; PROVIDED, HOWEVER, that
Lessor shall return to Lessee all personal property of Lessee or its
customers that was on the Aircraft at the time Lessor re-takes possession
of the Aircraft;
(iii) if Lessee is either obstructing or not reasonably
cooperating with the return to Lessor of the Aircraft or any part thereof,
not be liable or responsible, in any manner, for any inadvertent damage or
injury to any of Lessee's property in repossessing and holding the
Aircraft, the Airframe, any Engine or Part, except for that directly caused
by Lessor's gross negligence or willful misconduct;
(iv) have the right to maintain possession of and dispose of the
Aircraft, the Airframe, any Engine or Part on any premises owned by Lessee
or under Lessee's control; and
(v) have the right to obtain a key to any premises on or at which
the Aircraft, the Airframe, any Engine or Part, may be located from the
landlord or owner thereof.
If required by Lessor, Lessee, at its sole expense, shall make the
Aircraft, the Airframe, any Engine or Part available at a place designated by
Lessor in accordance with Article XVIII. Lessee hereby agrees that, in the event
of the return to or repossession by Lessor of the Aircraft, the Airframe, any
Engine or Part, any rights in any warranty (express or implied) heretofore
assigned to Lessee or otherwise held by Lessee shall without further act, notice
or writing be assigned or reassigned to Lessor, if assignable. Lessee shall be
liable to Lessor for all expenses, disbursements, costs and fees incurred (i) in
repossessing, storing, preserving, shipping, maintaining, repairing and
refurbishing the Aircraft, the Airframe, any Engine or Part to the condition
required by Article XVIII and (ii) in the event of a repossession of the
Aircraft by Lessor following an Event of Default, in preparing the Aircraft, the
Airframe, any Engine or Part for sale or lease, advertising the sale or lease of
the Aircraft, the Airframe, any Engine or Part and selling or releasing the
Aircraft, the Airframe, any Engine or Part and for any reasonable expenditures
which Lessor considers advisable to repair and restore the Aircraft, the
Airframe, any Engine or Part to the condition required by Article XVIII, all at
Lessee's sole expense.
No remedy referred to in this Section 17.02 is intended to be exclusive,
but, to the extent permissible hereunder or under applicable Law, each shall be
cumulative and in addition to any other remedy referred to or otherwise
available to Lessor at Law or in equity; and the exercise or beginning of
exercise by Lessor of any one or more of such remedies shall not preclude the
simultaneous or later exercise by Lessor of any or all of such other remedies.
No express or implied waiver by Lessor of any Default or Event of Default shall
in any way be, or be construed to be, a waiver of any subsequent Default or
Event of Default.
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ARTICLE XVIII
RETURN OF THE AIRCRAFT
Section 18.01 RETURN. On the expiration of the Term or at such other time
as Lessee shall be required to return the Aircraft to Lessor pursuant to the
terms hereof, Lessee, at its own expense, shall deliver the Aircraft to Lessor
at the Return Location equipped with all required Parts and all Engines (or
Replacement Engines delivered in accordance with Section 18.03), duly installed
thereon and with all Aircraft Documents complete and up to date and in all cases
in the Return Conditions and reasonably acceptable to Lessor. The Aircraft, at
the time of return to Lessor, shall be in the same configuration as on delivery,
except as modified in accordance with the terms and conditions of this Lease and
the Return Conditions, and be fully equipped with the Engines or equivalent
engines owned by Lessee (and complying with Section 18.03) APU, landing gears
and other equipment and modifications properly installed thereon. The Aircraft
shall be in a condition suitable for immediate operation in accordance with
commercial passenger airline standards.
Section 18.02 NO LIENS. Immediately prior to the Return Occasion, Lessee
shall, at its cost, ensure that the Aircraft, Engines and Parts are free and
clear of all Liens, except Lessor's Liens.
Section 18.03 RETURN OF ENGINES. In the event any engine not owned by
Lessor shall be returned with the Airframe in lieu of an Engine and the reason
therefor is other than that an Event of Loss has occurred to such Engine, Lessor
shall not be obligated to accept such engine unless it meets the requirements
for a Replacement Engine, is free and clear of Liens, is suitable for use on the
Airframe with the other Engine or engine being returned with the Airframe, in
the condition required by EXHIBIT D-1 or EXHIBIT D-2, as applicable, and has an
expected useful life at least equal to, the Engine that should have been
returned, assuming such Engine which should have been returned was in the
condition and repair as required by the terms hereof immediately prior to such
required. Lessee shall, at its own expense and concurrently with such delivery,
convey such Replacement Engine to Lessor in accordance with the requirements in
Section 12.02(a). Upon full compliance with this Section 18.03 and passage of
title to such engine to Lessor, such engine shall be an Engine for all purposes
of this Lease and Lessor shall transfer to Lessee all Lessor's right, title and
interest in an Engine constituting part of the Aircraft so returned but not
installed on the Aircraft at the time of such return, without any
representation, warranty or recourse of any kind whatsoever, express or implied,
except a warranty that such Engine is free and clear of Liens created by Lessor.
Section 18.04 CONDITION OF THE AIRCRAFT. Upon the Return Occasion, Lessee
shall, at its cost, cause the Aircraft to comply with all of the Return
Conditions.
Section 18.05 RETURN CERTIFICATES. (a) Upon completion of the ground
inspections and the functional check flight of the Aircraft referred to in
EXHIBIT D-1 or EXHIBIT D-2, as applicable, Lessor shall either:
(i) accept the return of the Aircraft and sign the Return
Acceptance Certificate with any deficiencies noted thereon and deliver the
same to Lessee; or
(ii) if the Aircraft fails to conform to the Return Conditions,
notify Lessee of the non-conforming items in writing.
(b) The provisions of this Section 18.06 shall be without prejudice to
the rights or remedies of Lessor or to the obligations of Lessee under any other
provision of this Lease.
51
Section 18.06 [Intentionally Omitted].
Section 18.07 REGISTRATION AND DEREGISTRATION COSTS. Lessee shall be solely
responsible for any and all costs relating to the exportation and
de-registration of the Aircraft from the State of Registration (if other than
the United States), if any, in connection with the redelivery of the Aircraft to
Lessor as required hereby, including the cost of obtaining any necessary
certificates of airworthiness for export in respect of the Aircraft.
Section 18.08 AIRPORT AND NAVIGATION CHARGES. Lessee will ensure that on
the Return Occasion, any and all airport, navigation and other charges imposed
or levied by the airport at which the Aircraft is habitually based as at the
date of the Return Occasion (if located outside the United States) that give
rise or might if unpaid give rise to any Lien, right of detention or right of
sale in relation to the Aircraft, any Engine or any Part, whether incurred in
respect of the Aircraft or any other aircraft operated by Lessee, have been paid
and discharged in full and will at Lessor's request produce evidence thereof
satisfactory to Lessor, which may include a certificate of an officer of Lessee
stating that all such outstanding airport, navigation or other charges have been
paid in full and that no such charge is being contested by Lessee.
Section 18.09 AID IN DISPOSITION. Lessee agrees that during the last 180
days of the Term (and during the storage period set forth in Section 18.11) it
will cooperate in all reasonable respects with the efforts of Lessor to lease or
sell the Aircraft, including, without limitation, permitting potential lessees
or purchasers to inspect the Aircraft and the records relating thereto, PROVIDED
that Lessee shall not be required to incur out-of-pocket expenses for which it
is not to be reimbursed or interrupt the use and operation of the Aircraft.
Section 18.10 STORAGE FOLLOWING RETURN OCCASION. Upon any expiration or
termination of this Lease for the Aircraft, at the written request of Lessor,
Lessee will arrange, or will cause to be arranged, secured ramp storage
facilities and storage maintenance for the Aircraft (properly insured) at an
appropriate storage area (which shall include any of Lessee's hangar facilities
suitable for such aircraft) for the Aircraft for a period not exceeding sixty
(60) days at Lessee's expense (other than for the costs of insurance and storage
maintenance, which Lessor shall reimburse to Lessee) and at Lessor's risk.
Notwithstanding other provisions of this Article 18, in the event of an Event of
Default all storage, maintenance, insurance costs and risk of loss for the
Aircraft shall be for the account of Lessee.
Section 18.11 LESSEE'S CONTINUING OBLIGATIONS. In the event that Lessee
does not return the Aircraft to Lessor on the last day of the Term in the
condition required by Sections 18.01 through 18.04, whether as a result of any
termination under Section 17.02 or otherwise, and whether or not the reason for
such failure to return is within the control of Lessee:
(a) the obligations of Lessee under this Lease (other than the
payment of Basic Rent, which shall be governed by Section 18.11(b )) shall
continue in full force and effect on a day-to-day basis until such return, and
the Lessee shall be obligated to continue to perform its obligations under this
Lease, including, without limitation, the obligation to maintain insurance
coverages, and the Term shall be deemed to be extended on a day-to-day basis,
PROVIDED that nothing in this paragraph (a ) shall be deemed to constitute a
waiver of any right that Lessor may have consequent upon any Event of Default by
Lessee; and
(b) until such time as the Aircraft is redelivered in accordance
with the Return Conditions or the Lessor accepts return of the Aircraft and
delivers a Return Certificate pursuant to Section 18.05, instead of paying the
Basic Rent specified in the definition thereof, the Lessee shall pay one hundred
percent (100%) of such Basic Rent (calculated on a daily basis) for the period
from the date that the Aircraft was required to be returned to the date on which
it is actually returned and put into the
52
condition required by this Article XVIII and EXHIBIT D-1 or EXHIBIT D-2, as
applicable, or the Lessor accepts return of the Aircraft and delivers a Return
Certificate pursuant to Section 18.05, PROVIDED that, if Lessee's failure to
return the Aircraft is solely and directly the result of Lessor's failure to
complete any inspection and acceptance in a commercially reasonable manner, then
Lessee shall pay no Basic Rent during such delay, and during any such period,
Lessee shall not use or operate the Aircraft except as required by this Lease.
When the Lessor accepts return of the Aircraft and delivers a Return Certificate
pursuant to Section 18.05, the Term shall end and Lessee's obligations under
this Lease shall cease, except as provided in Section 20.13 hereof.
ARTICLE XIX
ALIENATION
Section 19.01 SUCCESSOR OWNER TRUSTEE. (a) The Owner Trustee or any
successor Owner Trustee may resign or may be removed (with the consent of the
Lessee not to be unreasonably withheld) by the Beneficiary, and a successor
Owner Trustee may be appointed (with the prior written consent of the Lessee,
not to be unreasonably withheld) and a Person may become Owner Trustee under the
Trust Agreement only in accordance with the provisions of Section 9.01 of the
Trust Agreement and the provisions of this Section 19.01. The appointment in any
manner of a successor Owner Trustee pursuant to the Trust Agreement shall be
subject to the following conditions:
(i) such successor Owner Trustee shall be a Citizen of the
United States;
(ii) such successor Owner Trustee shall be a bank or a trust
company having combined capital, surplus and undivided profits of at least
$100,000,000;
(iii) such appointment shall not violate any provisions of the
Federal Aviation Act or any applicable rule or regulation of the applicable
regulatory agency or body of any other jurisdiction in which the Aircraft may
then be registered or create a relationship which would be in violation of the
Federal Aviation Act or any applicable rule or regulation of the applicable
regulatory agency or body of any other jurisdiction in which the Aircraft may
then be registered;
(iv) such successor Owner Trustee shall enter into an
agreement or agreements, in form and substance reasonably satisfactory to the
Lessee and the Beneficiary whereby such successor Owner Trustee confirms that it
shall be deemed a party to this Lease and each other Operative Document to which
the Owner Trustee is a party and agrees to be bound by all the terms of such
documents applicable to the Owner Trustee and makes the representations and
warranties contained in Section 5.02 hereof (except that it may be duly
incorporated, validly existing and in good standing under the laws of the United
States of America or any State thereof); and
(v) all filings of UCC financing and continuation statements,
filings in accordance with the Federal Aviation Act and amendments thereto shall
be made and all further actions taken in connection with such appointment as may
be necessary in connection with maintaining the valid and continued registration
of the Aircraft in accordance with the Federal Aviation Act.
Section 19.02 ALIENATION BY LESSOR. (a) Lessor may not, without the prior
consent of the Lessee, assign any of its rights under or interest in this Lease
except to a successor Owner Trustee as provided in Section 19.01 or as otherwise
expressly provided herein or in any other Operative Document. Lessee shall
provide Lessor with such information regarding the location of the Aircraft in
connection with any such assignment as the Lessor may reasonably request.
53
(b) Lessor may enter into a Financing with a Financing Party upon
twenty (20) days' prior written notice to Lessee, and Lessee agrees to execute
and deliver in connection with any Financing such documents and assurances
(including an acknowledgment of the Financing and a certificate as to the
absence of any Default under this Lease) and to take such further action as the
Owner Trustee may reasonably request in connection with the Financing. A
Financing Party shall be entitled to be an Indemnitee and an Additional Insured.
(c) In connection with a Financing by the Lessor, (i) as a condition
precedent to such Financing becoming effective, Lessor will procure that the
Financing Party shall execute and deliver to Lessee a letter of quiet enjoyment
reasonably acceptable to Lessee in respect of Lessee's use and possession of the
Aircraft, (ii) the Lessor shall reimburse Lessee for any reasonable costs and
expenses (including reasonable attorneys' fees) actually incurred by Lessee in
connection with such Financing, and (iii) no such Financing shall increase the
expenses or indemnity obligations of Lessee hereunder or under any other
Operative Document., including without limitation obligations under Article XIV
or XV hereof or the Tax Indemnity Agreement.
Section 19.03 BENEFIT AND BINDING EFFECT. The terms and provisions of this
Lease shall be binding upon and, subject to the limitations on assignment of
rights hereunder, inure to the benefit of the Lessor and the Lessee and their
respective successors and permitted assigns. Nothing herein shall be construed
as creating rights in any other Person except, to the extent provided herein,
the Beneficiary. The obligations to indemnify each Indemnitee are made for the
benefit of such Indemnitee and its respective successors and permitted assigns.
Section 19.04 PERMITTED SUBLESSEE'S PERFORMANCE AND RIGHTS. Any obligation
imposed on the Lessee in this Lease shall require only that the Lessee perform
or cause to be performed such obligation, even if stated herein as a direct
obligation, and the performance of any such obligation by any sublessee or
transferee of the Airframe or any Engine or Part permitted by the terms hereof
under a Sublease or transfer agreement then in effect shall constitute
performance by the Lessee and to the extent of such performance discharges such
obligation by the Lessee. Except as otherwise provided in Section
8.01(c)(iii)(F) or a Sublease, a Permitted Sublessee shall have the rights
granted to the Lessee hereunder with respect to the Aircraft, Airframe and
Engines, and the provisions of this Lease shall be interpreted to permit a
Permitted Sublessee to exercise such rights to the extent permitted in the
relevant Sublease.
Section 19.05 ALIENATION BY LESSEE. Except as provided in Article VIII,
Lessee shall not assign, transfer or otherwise dispose of or create any Lien in
or over its rights or obligations, or both, or, except as expressly permitted by
the terms hereof, delegate any of its obligations under this Lease or any other
Operative Document, except with the prior written consent of Lessor.
ARTICLE XX
MISCELLANEOUS
Section 20.01 SEVERABILITY. Any provision of this Lease that 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, any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provisions in any other jurisdiction. To the extent permitted
by Law, Lessee and/or Lessor hereby waives any provisions of Law which renders
any provisions hereof prohibited or unenforceable in any respect.
Section 20.02 NOTICES. Any report, notice, request, demand or other
communication to or upon the parties hereto under this Lease shall (i) be in the
English language and in writing; (ii) be deemed to
54
have been delivered to a party if it is (1) left at the address of that party
specified below or at such other address as that party may notify to the other
party from time to time,(2) sent by courier to that party at that address, or
(3) sent by facsimile to the facsimile number of that party specified below or
to such other number as that party may notify the other party from time to time;
(iii) signed on behalf of the party giving, serving or making the same by any
attorney, director, officer, secretary, partner, agent or other duly authorized
representative of such party; and (iv) be effective (A) in the case of a letter
or delivery by courier, when left at the address referred to above ; or (B) in
the case of a facsimile transmission, when receipt is confirmed by return
facsimile or by telephone or on actual receipt if not so confirmed.
For the purposes of this Lease, all reports, notices, requests, demands or other
communications shall be given or made by being addressed as follows:
(a) if to Lessor to:
▇▇▇▇▇ Fargo Bank Northwest, National Association
▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
Tel: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Attn: Corporate Trust Department
with a copy to:
Mitsui & Co. (U.S.A.), Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Tel: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Attn: General Manager, Aerospace, Marine and Motor Vehicle
Department
(b) if to Lessee to:
Chautauqua Airlines, Inc.
▇▇▇▇ ▇. ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Tel: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Attn: President
with a copy to:
Wexford Capital LLC
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Tel: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Attn: President
55
PROVIDED, that any report, notice, request, demand or other communication
delivered to Lessee in accordance with this Section 20.02 shall be effective as
to Lessee without regard to whether such report, notice, request, demand or
other communication has been delivered to Wexford Capital LLC.
Section 20.03 LESSOR'S 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 the covenants, agreements or obligations contained herein, Lessor
shall have the right, but not the obligation, to make such payment or conform or
comply with such agreement, covenant or obligation, and the amount of such
payment and the amount of the reasonable expenses of Lessor incurred in
connection with such payment or the performance thereof or compliance therewith,
together with interest thereon at the Interest Rate, shall be payable by Lessee
to Lessor, as Supplemental Rent, upon demand. Lessor agrees to notify Lessee in
writing prior to making any payment or exercising any right under this Section
20.03, unless the Aircraft will be in danger of loss, sale, confiscation,
forfeiture or seizure should such payment not be made or right exercised. The
taking of any such action by Lessor shall not constitute a waiver or release of
any obligation of Lessee under this Lease, nor a waiver of any Default or Event
of Default which may arise out of Lessee's nonperformance of such obligation,
nor an election or waiver by Lessor of any remedy or right available to Lessor
under or in relation to this Lease.
Section 20.04 COUNTERPARTS, CHATTEL PAPER. This Lease may be executed in
two or more counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument. To the extent, if
any, that this Lease constitutes chattel paper (as such term is defined in the
UCC as in effect in any applicable jurisdiction) no security interest in this
Lease may be created through the transfer of possession of any counterpart other
than the original counterpart containing the receipt therefor executed by the
Lessor on the signature page thereof.
Section 20.05 CONCERNING OWNER TRUSTEE. It is understood and agreed that,
except as otherwise expressly provided herein or in the Trust Agreement or any
other Operative Document, WFB is entering into this Lease solely in its capacity
as trustee as provided in the Trust Agreement and not in its individual capacity
and in no case whatsoever will WFB be liable or accountable in its individual
capacity for any of the statements, representations, warranties, agreements or
obligations of Lessor hereunder, or for any loss in respect thereof, as to all
of which all interested parties agree to look solely to the Trust Estate;
PROVIDED that nothing in this Section 20.05 shall be deemed to limit in scope or
substance the personal liability of WFB (a) to Beneficiary as expressly set
forth in the Trust Agreement, (b) in respect of the representations, warranties
and agreements of WFB expressly made in its individual capacity herein or in any
other Operative Document to which it is a party, (c) for the consequences of its
own gross negligence, willful misconduct and, in receiving, handling or
remitting of funds only, its willful misconduct or simple negligence as a
trustee, (d) in respect of Lessor's Liens attributable to it in its individual
capacity, and (e) taxes, fees or other charges on, or based on, or measured by,
any fees, commissions or compensation received by it in connection with the
transactions contemplated by the Operative Documents.
Section 20.06 NO BROKERS. (a) Lessee hereby represents and warrants that it
has not paid, agreed to pay or caused to be paid directly or indirectly in any
form, to any Person, other than Seabury Securities LLC, any commission,
percentage, contingent fee, brokerage or other similar payments of any kind, in
connection with the establishment or operation of this Lease.
(b) Lessor hereby represents and warrants that it has not
paid, agreed to pay or caused to be paid directly or indirectly in any form, to
any Person, other than Tombo Aviation Inc., any commission, percentage,
contingent fee, brokerage or other similar payments of any kind, in connection
with the establishment or operation of this Lease.
56
Section 20.07 ENTIRE AGREEMENT; MODIFICATION OR REVISION. This Lease and
the other Operative Documents is intended to be a complete and exclusive
statement of the terms of the agreement of the parties hereto and this Lease and
the other Operative Documents supersede any prior or contemporaneous agreements,
whether oral or in writing in relation to the leasing of the Aircraft to Lessee.
Neither this Lease nor any term of this Lease may be modified or waived except
by an agreement in writing signed by the parties.
Section 20.08 GOVERNING LAW; JURISDICTION. (a) THIS LEASE IS BEING
DELIVERED IN THE STATE OF NEW YORK AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES
HEREUNDER SHALL, PURSUANT TO NEW YORK GENERAL OBLIGATIONS LAW SECTION 5-1401, BE
GOVERNED BY THE LAWS OF THE STATE OF NEW YORK.
(b) The parties hereto each hereby irrevocably consents that any legal
action or proceeding against it or any of its assets arising out of or relating
to this Lease or any other Operative Document may be brought in any jurisdiction
where it or any of its assets may be found, in the courts of the State of New
York located in the County of New York, New York, and in the Federal courts
sitting in the Southern District of New York, as the party bringing such action
or proceeding may elect, and by execution and delivery of this Lease each of the
parties hereto hereby irrevocably submits to and accepts with regard to any such
action or proceeding, for itself and in respect of its assets, generally and
unconditionally, the jurisdiction of the aforesaid courts and irrevocably agrees
to be bound by any judgment rendered thereby. Nothing herein shall prevent any
party from bringing any legal action or proceeding or obtaining execution of
judgment in any other appropriate jurisdiction. The parties hereto further agree
that a final judgment in any action or proceeding arising out of or relating to
this Lease or any other Operative Document shall be conclusive and may be
enforced in any other jurisdiction within or outside the United States by suit
on the judgment, a certified or exemplified copy of which shall be conclusive
evidence of the fact and the amount of the indebtedness or liability therein
described, or in any other manner provided by Law. Each of the parties hereto
hereby irrevocably waives, to the fullest extent permitted by Law, any objection
which it may now or hereafter have to the laying of venue of any suit, action or
proceeding arising out of or relating to this Lease or any other Operative
Document brought in any court in or of New York, New York, and hereby further
irrevocably waives any claim that any such suit, action or proceeding in New
York, New York has been brought in an inconvenient forum.
(c) Each party hereto hereby irrevocably consents to the service by
certified mail at its address set forth in Section 20.02 of any summons and
complaint and any other process which may be served in any action or proceeding
arising out of or relating to this Lease or any other Operative Document.
Notwithstanding the foregoing, nothing herein shall affect the rights of either
party to serve process in any other manner permitted by Law.
Section 20.09 WAIVER OF IMMUNITY. To the extent that any party may in any
jurisdiction claim for itself or its assets immunity from suit, execution,
attachment (whether in aid of execution before judgment or otherwise) or other
legal process and to the extent that in any such jurisdiction there may be
attributed to itself or its assets such immunity (whether or not claimed), that
party hereby irrevocably agrees not to claim and hereby irrevocably waives such
immunity to the full extent permitted by the Laws of such jurisdiction.
Section 20.10 WAIVER OF JURY TRIAL. 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 Lease or any other Operative Document. 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 enforce the foregoing waiver and (b)
acknowledges that it and the other parties hereto have been induced to enter
into
57
this Agreement and the other transaction documents, as applicable, by, among
other things, the mutual waivers and certifications in this section.
Section 20.11 [RESERVED]. Section 20.12 CONFIDENTIALITY. The Lessor and
Beneficiary agree to keep the following information confidential: all
information that is included in any Exhibit hereto that is not filed with the
FAA and such other information as any Party shall identify in writing to the
other Parties as confidential information, including any such information that
is so identified in connection with an inspection of the Aircraft pursuant to
Section 13.02. This confidentiality obligation shall survive the termination of
this Lease for a period of one year following such termination, except that if
this Lease shall have been terminated following an Event of Default, Lessor
shall have the right to disclose such information as may be necessary in order
to remarket the Aircraft and/or to enforce any remedy that may be available to
it. Notwithstanding the foregoing, this Lease, the other Operative Documents and
all information supplied by either of the parties hereunder or thereunder may be
disclosed by any other party (1) as may be required by Law or by any court or
administrative order, (2) to the extent that the substance hereof or thereof
becomes public knowledge through no fault or negligence of such other party, (3)
to such party's professional advisers and to the Manufacturer and Engine
Manufacturer, and (4) to any subsequent potential transferees of the Aircraft,
the Trust Estate or an interest therein or the Beneficial Interest or to a
Financing Party, PROVIDED that any such Person agrees to be bound by this
Section 20.12.
Section 20.13 TERMINATION. Upon the return of the Aircraft in accordance
with Article XVIII or as otherwise provided in Section 18.11, the Term shall
end, and the obligations of the Lessee to pay Rent (except for Supplemental Rent
obligations surviving pursuant to Section 6.05 and Articles XIV and XV of this
Lease or the Tax Indemnity Agreement or which have otherwise accrued but not
been paid as of the Termination Date) shall cease.
[This space intentionally left blank.]
58
IN WITNESS WHEREOF, Lessor and Lessee, each pursuant to due authority, have
each caused this Aircraft Lease Agreement [N288SK] to be executed by their duly
authorized officers on the day and year first above written.
Lessor:
▇▇▇▇▇ FARGO BANK NORTHWEST, NATIONAL
ASSOCIATION, not in its individual
capacity, except as expressly set forth
herein, but solely as Owner Trustee
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇
-------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇
Title: Vice President
Lessee:
CHAUTAUQUA AIRLINES, INC.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Vice President
IN WITNESS WHEREOF, Lessor and Lessee, each pursuant to due authority, have
each caused this Aircraft Lease Agreement [N288SK] to be executed by their duly
authorized officers on the day and year first above written.
Lessor:
▇▇▇▇▇ FARGO BANK NORTHWEST, NATIONAL
ASSOCIATION, not in its individual
capacity, except as expressly set forth
herein, but solely as Owner Trustee
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇
-------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇
Title: Vice President
Lessee:
CHAUTAUQUA AIRLINES, INC.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Vice President
The undersigned acknowledges receipt of this original counterpart of this
Aircraft Lease Agreement [N288SK] on this __ day of ____________, 2001.
▇▇▇▇▇ FARGO BANK NORTHWEST, NATIONAL
ASSOCIATION, not in its individual
capacity, except as expressly set forth
herein, but solely as Owner Trustee
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇
-------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇
Title: Vice President
AIRCRAFT LEASE AGREEMENT []
EXHIBIT A-1
DESCRIPTION OF AIRCRAFT
AIRFRAME:
MFG/MODEL SERIAL NO. REGISTRATION ▇▇▇▇
Embraer EMB-145LR 145461 N288SK
ENGINES (each of which has over 750 rated takeoff horsepower or the equivalent
thereof):
MFG/MODEL SERIAL NO.
Rolls-▇▇▇▇▇ ▇▇▇▇▇▇▇ AE3007-A1P CAE 311866
Rolls-▇▇▇▇▇ ▇▇▇▇▇▇▇ AE3007-A1P CAE 311867
EXHIBIT C
FORM OF DELIVERY ACCEPTANCE CERTIFICATE
EMBRAER EMB-145LR
MSN [ ]
To: ▇▇▇▇▇ Fargo Bank Northwest, National Association
▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
This Delivery Acceptance Certificate is delivered on the date set forth
below by Chautauqua Airlines, Inc. (the "LESSEE") to ▇▇▇▇▇ Fargo Bank Northwest,
National Association, not in its individual capacity, except as expressly set
forth therein, but solely as Owner Trustee (the "LESSOR") pursuant to
Aircraft
Lease Agreement [ ] dated as of June [ ], 2001 (the "LEASE") between Lessor and
Lessee. Terms used in this Certificate shall have the same meanings as in the
Lease.
1. ACCEPTANCE. Lessee hereby indicates and confirms to Lessor that Lessee
has at ________ hours, local time, on ______________ __, 2001 at the Delivery
Location accepted from Lessor possession of:
one (1) Embraer EMB-145LR airframe bearing manufacturer's serial no. ,
together with
two (2) AE3007-A1P engines bearing manufacturer's serial nos. [ ] and
[ ]; and
one (1) ________ auxiliary power unit bearing manufacturer's serial
no. ; and -------
all equipment, accessories, furnishings and parts belonging to,
installed in or appurtenant to that Airframe, those Engines and APU
and all Aircraft Documents relating to such Airframe, Engines, APU,
ancillary equipment or devices (excluding galley equipment, serving
equipment and emergency medical equipment), and in full compliance
with the terms of the Lease.
2. CONFIRMATIONS. Lessee confirms that at the above mentioned time and on
the above mentioned date (being the Delivery Date for the above Aircraft
pursuant to the Lease):
(i) Lessee became obligated to pay to Lessor the amounts
provided for in the Lease in respect of the above mentioned
Aircraft;
(ii) the Aircraft is insured in accordance with the terms of the
Lease;
(iii) Lessor has fully, duly and timely performed all of its
obligations under the Lease; and
(iv) the representations and warranties contained in Section 5.01
of the Lease are true and correct as at the date hereof
(unless any such representation and warranty shall have been
made with reference to a specified date,
in which case such representation and warranty shall be
true and correct as of such specified date).
3. RELIANCE. Lessee acknowledges and agrees that any Financing Party may
rely upon all or any of the foregoing in granting any Financing and that funds
may be advanced in reliance upon the foregoing.
2
IN WITNESS WHEREOF, Lessee has caused this Delivery Acceptance Certificate
to be executed on its behalf by its duly authorized officers or representatives
pursuant to due corporate authority on this the Delivery Date.
CHAUTAUQUA AIRLINES, INC.
By:
-------------------------------------
Name:
Title:
EXHIBIT D-3
FORM OF RETURN ACCEPTANCE CERTIFICATE
EMBRAER EMB-145LR
MSN
To: Chautauqua Airlines, Inc.
▇▇▇▇ ▇. ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
This Return Acceptance Certificate is delivered on the date set forth
below by ▇▇▇▇▇ Fargo Bank Northwest, National Association, not in its individual
capacity, except as expressly set forth therein, but solely as Owner Trustee
(the "LESSOR") pursuant to an Aircraft Lease Agreement [N288SK] dated as of
June4, 2001 (the "LEASE") between Lessor and Lessee. Terms used in this
Certificate shall have the same meaning as in the Lease.
Lessor hereby indicates and confirms to Lessee that Lessor has at
___________hours, local time, on ______________, 20____ at
_______________________(1), being the agreed Return Location, accepted from
Lessee possession of:
one (1) Embraer EMB-145LR airframe bearing manufacturer's serial no. ,
together with its
two (2) Rolls ▇▇▇▇▇ ▇▇▇▇▇▇▇ AE 3007-A1P engines bearing manufacturer's
serial nos. [ ] and [ ] and
one (1) __________ auxiliary power unit bearing manufacturer's serial
no. _________ and
all equipment, accessories, furnishings and parts belonging to,
installed in or appurtenant to that Airframe, those Engines and APU
and all Aircraft Documents relating to such Airframe, Engines, APU,
ancillary equipment (excluding all of the galley equipment , serving
equipment and emergency medical equipment).
(i) in the required Return Conditions except as may be noted in
Annex 3 hereto
(ii) with a status as detailed in Annex 1.
Lessee hereby certifies that no airport, navigation, or other charges
are due with respect to the Aircraft.
[Remainder of page intentionally left blank]
----------
(1) Insert name of airport and city.
IN WITNESS WHEREOF, Lessor has caused this Return Acceptance Certificate to
be executed on its behalf by its duly authorized officers or representatives
pursuant to due corporate authority on this the Return Occasion.
▇▇▇▇▇ FARGO BANK NORTHWEST, NATIONAL
ASSOCIATION, not in its individual
capacity, but solely as Owner Trustee
By
--------------------------------------
Name:
Title:
CHAUTAUQUA AIRLINES, INC.
By:
-------------------------------------
Name:
Title:
ANNEX 1 to
Return Acceptance Certificate
Aircraft Type: Embraer EMB-145LR
MSN: [ ]
Registration: [ ]
Airframe:
Total Time: ________ Hrs
Engines: Position #1 Position #2
Engine Serial Number: [ ] [ ]
Percent of life remaining
to next OH: ________ ________
Percent of life remaining
to first limiting part: ________ ________
Landing Gear: Nose Left Main Right Main
Serial No. ________ ________ ________
Percent of life remaining
to next OH: ________ ________ ________
Brakes:
Percent of life remaining to replacement ________ ________ ________
Tires:
Percent of life remaining to replacement ________ ________ ________
EXHIBIT E
LIST OF CLOSING DOCUMENTS
1. Documents to be Provided by Lessee:
a. Copies of the Certificate of Incorporation and By-laws of Lessee,
certified by a duly authorized officer of the Lessee;
b. Good standing certificate of Lessee;
c. Copies of the resolutions of the Board of Directors of the Lessee
approving and authorizing the execution, delivery and performance
of the Lease and the other Operative Documents in which Lessee is
a party, and any and all other documents required to be executed
and delivered on its behalf, certified by a duly authorized
officer of the Lessee, together with such other documents and
evidence with respect to it as Beneficiary may reasonably request
in order to establish the consummation of the transactions
contemplated by the Operative Documents and the taking of all
corporate proceedings in connection therewith;
d. a Certificate of duly authorized officers of Lessee setting forth
the names and signatures of the persons authorized and appointed
to execute and deliver on behalf of Lessee the Lease and each
other document to be delivered by Lessee thereunder and to take
any action contemplated therein;
e. A certificate dated the Delivery Date and signed by the chief
executive officer and the chief financial officer or treasurer or
their equivalent of Lessee, dated the Delivery Date, stating
that: (i) the representations and warranties contained in Section
5.01 of the Lease, Section 9(a) of the Purchase Agreement and
Section 6 of the Engine Warranty Assignment are true and accurate
on and as of the Delivery Date as though made on and as of such
time (except to the extent such representations and warranties
expressly relate solely to an earlier date, in which case such
representations and warranties were true and correct on and as of
such earlier date); (ii) no event has occurred and is continuing,
or would result from the leasing of the Aircraft under the Lease,
that constitutes a Default, an Event of Default or an Event of
Loss (as such terms are defined in the Lease) and (iii) Lessee is
not in default of any of its obligations under any Other Lease
(as such term is defined in the Lease).
2. Documents to be provided by the Trust Company:
a. A copy of the Certificate of Incorporation or Articles of
Incorporation or Articles of Association and By-Laws and general
authorizing resolutions of the boards of directors (or executive
committees) or other satisfactory evidence of authorization of
the Trust Company, certified as of the Delivery Date by the
Secretary or an Assistant Secretary of Trust Company, which
authorize the execution, delivery and performance by Trust
Company of each of the Operative Documents to which it is a
party, together with such other documents and evidence with
respect to it as Lessee and Beneficiary may reasonably request in
order to establish the consummation of the transactions
contemplated by the Operative Documents and the taking of all
corporate proceedings in connection therewith;
b. A good standing certificate of Trust Company and an incumbency
certificate of Trust Company as to the person or persons
authorized to execute and deliver the relevant Operative
Documents on behalf of Trust Company and/or Owner Trustee, as the
case may be; and
c. An Officer's Certificate of Trust Company, dated the Delivery
Date, stating that its representations and warranties, in its
individual capacity and as Owner Trustee, set forth in the Lease
and the other Operative Documents are true and correct as of the
Delivery Date (or, to the extent that any such representation and
warranty expressly relates to an earlier date, true and correct
as of such earlier date).
3. Documents to be provided by Seller:
a. A copy of the Certificate of Incorporation and By-Laws and
resolutions of the Board of Directors of Seller, certified as of
the Delivery Date by the Secretary or an Assistant Secretary of
Seller, which authorize the execution, delivery and performance
by Seller of each of the Operative Documents to which it is a
party, together with such other documents and evidence with
respect to it as Beneficiary may reasonably request in order to
establish the consummation of the transactions contemplated by
the Operative Documents and the taking of all corporate
proceedings in connection therewith;
b. A good standing certificate of Seller and an incumbency
certificate of Seller as to the person or persons authorized to
execute and deliver the relevant Operative Documents on behalf of
Seller, and;
c. An Officer's Certificate of Seller, dated the Delivery Date,
stating that its representations and warranties set forth in the
Operative Documents to which it is a party are true and correct
as of the Delivery Date (or, to the extent that any such
representation and warranty expressly relates to an earlier date,
true and correct as of such earlier date);
4. Documents to be provided by Aero:
d. A copy of the Certificate of Incorporation and By-Laws and
resolutions of the Board of Directors of Aero, certified as of
the Delivery Date by the Secretary or an Assistant Secretary of
Aero, which authorize the execution, delivery and performance by
Aero of Assignment ▇▇. ▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇. ▇ and the Bills of Sale
(the "AERO DOCUMENTS"), together with such other documents and
evidence with respect to it as Beneficiary may reasonably request
in order to establish the consummation of the transactions
contemplated by such documents and the taking of all corporate
proceedings in connection therewith;
e. A good standing certificate of Aero and an incumbency certificate
of Aero as to the person or persons authorized to execute and
deliver the Aero Documents on behalf of Aero, and;
f. An Officer's Certificate of Aero, dated the Delivery Date,
stating that its representations and warranties set forth in the
Aero Documents are true and correct as of the Delivery Date (or,
to the extent that any such representation and warranty expressly
relates to an earlier date, true and correct as of such earlier
date);
5. Documents to be provided by Beneficiary:
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a. A copy of the Certificate of Incorporation and By-Laws and
general authorizing resolutions of the board of directors (or
executive committees) or other satisfactory evidence of
authorization of Beneficiary, certified as of the Delivery Date
by the Secretary or an Assistant Secretary of Beneficiary, which
authorize the execution, delivery and performance by Beneficiary
of each of the Operative Documents to which it is a party,
together with such other documents and evidence with respect to
it as Lessee may reasonably request in order to establish the
consummation of the transactions contemplated by the Operative
Documents and the taking of all corporate proceedings in
connection therewith;
b. A good standing certificate of Beneficiary and an incumbency
certificate of Beneficiary as to the person or persons authorized
to execute and deliver the relevant Operative Documents on behalf
of Beneficiary, and;
c. An Officer's Certificate of Beneficiary, dated the Delivery Date,
stating that its representations and warranties set forth in the
Operative Documents to which it is a party are true and correct
as of the Delivery Date (or, to the extent that any such
representation and warranty expressly relates to an earlier date,
true and correct as of such earlier date);
6. A certificate of insurance signed by an Approved Insurance Broker or
Approved Insurer evidencing compliance by Lessee with the provisions of Article
XI.
7. A letter of undertaking signed by an Approved Insurer or by an Approved
Insurance Broker complying with the provisions of Article XI.
8. Legal opinions of:
▇. ▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ L.L.P., special counsel to Lessee,
substantially in the form attached to the Purchase Agreement as
Exhibit F-1;
b. ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, in-house counsel to Lessee, substantially in the
form attached to the Purchase Agreement as Exhibit F-2;
▇. ▇▇▇, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇, a Professional Corporation, special
counsel to WFB and Owner Trustee, substantially in the form
attached to the Purchase Agreement as Exhibit F-3;
▇. ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇, a Professional Corporation,
special FAA counsel, substantially in the form attached to the
Purchase Agreement as Exhibit F-4;
▇. ▇▇▇▇▇▇▇▇▇ Winthrop LLP, special counsel to Beneficiary,
substantially in the form attached to the Purchase Agreement as
Exhibit F-5;
f. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, Esq., manager of the Legal Department of
Beneficiary, substantially in the form attached to the Purchase
Agreement as Exhibit F-6;
g. ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, in-house counsel to Seller, substantially in the
form attached to the Purchase Agreement as Exhibit F-7;
3
▇. ▇▇▇▇▇▇▇▇ ▇▇▇▇, special Brazilian counsel to Beneficiary, in a
form reasonably satisfactory to Seller, the Beneficiary, the
Lessor and the Lessee and addressed to Seller, the Beneficiary,
the Lessor and the Lessee;
i. (delivered only to Beneficiary) Pillsbury Winthrop LLP, special
tax counsel to Beneficiary; and
j. special counsel for the Manufacturer, in a form reasonably
satisfactory to the Beneficiary and the Lessee and addressed to
the Beneficiary, the Lessor and the Lessee[; and
k. special Cayman Islands counsel for Aero, in a form reasonably
satisfactory to Seller, the Beneficiary and the Lessee and
addressed to Seller, the Beneficiary, the Lessor and the Lessee].
9. An executed counterpart of each of the Operative Documents and the Trust
Agreement, duly executed by each of the parties thereto or a certified copy
thereof, including, without limitation, an originally executed copy of the Lease
and Lease Supplement No. 1 thereto;
10. The Delivery Acceptance Certificate for the Aircraft duly signed for and on
behalf of Lessee;
11. A copy of the certificate of airworthiness for the Aircraft, which
certificate shall be in full force and effect with no exceptions noted thereon;
12. Evidence that the aircraft has not been registered in any jurisdiction
prior to the Delivery Date;
13. Evidence that any required export license, import license and all customs
formalities relating to the export of the Aircraft from Brazil and the import of
the Aircraft into the United States have been obtained or complied with
(including, without limitation, copies of the following documents: (i) a
print-out of the registration of the transaction with the Registry of Credit
Transactions (the "Registro de Operacao de Credito RC") to be obtained by the
Manufacturer through the SISCOMEX System in Brazil, (ii) a print-out of the
Export Registration (the "Registro de Exportacao - RE") of the transaction to be
obtained by the Manufacturer through the SISCOMEX System in Brazil, and (iii)
the Export Certificate of Airworthiness to be issued by the Aerospace Technical
Center ("Centro Tecnico Aerospacial - CTA") of the Ministry of Defense in Brazil
with respect to the Aircraft and (iv) evidence reasonably satisfactory to Lessor
of the amount due to the Manufacturer under the Manufacturer Purchase Agreement;
14. One or more Uniform Commercial Code financing statements signed by Lessee
as debtor/lessee and naming Lessor as secured party/lessor;
15. A certified accurate summary of the Lessee's Maintenance Program and an
excerpted copy of the Manufacturer Purchase Agreement to the extent relating to
the Manufacturer's warranties and related obligations or any right in the
Manufacturer Purchase Agreement assigned to Lessor pursuant to the Assignment
No.2;
16. An excerpted copy of the Engine Warranty Agreement to the extent relating
to the Engine Manufacturer's warranties and related obligations or any right in
the Engine Warranty Agreement assigned to Lessor pursuant to the Engine Warranty
Assignment & Consent;
17. An appraisal with respect to the Aircraft, in form and substance
satisfactory to the Lessor.
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18. Such other documents or conditions as Lessor may reasonably request, in
form and substance satisfactory to Lessor.
POST-CLOSING MATTERS
As soon as reasonably practicable following the Delivery Date, Lessee shall
cause Special FAA Counsel to issue a post-recordation opinion indicating that
the FAA-filed Documents (other than the Trust Agreement, the application for
registration of the Aircraft with the FAA in the name of the Owner Trustee
(together with any attachments thereto) and the notice of no prior registration
of the Aircraft) have been recorded by the FAA.
Written confirmation that the identification plate required to be affixed
to the Airframe and Engines pursuant to Section 8.05 has been duly affixed.
If necessary, evidence that the Consent and Agreement to each of Assignment
No. 1 and Assignment No. 2 and the Guaranty by the Manufacturer, together with a
certified translation of each such document, has been filed with the Brazilian
Register of Deeds and Documents.
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NOTE TO EXHIBIT 10.33
The two additional Aircraft Lease Agreements are substantially identical in
all material respects to the filed Aircraft Lease Agreement except as follows:
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TAIL NUMBER CLOSING DATE OWNER-PARTICIPANT
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N286SK June, 2001 Mitsui & Co.
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N287SK June, 2001 Mitsui & Co.
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