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EXHIBIT 10.33
AIRCRAFT LEASE AGREEMENT
Dated as of
April 29, 1996
between
POLARIS HOLDING COMPANY
as
Lessor
and
AIR SOUTH AIRLINES, INC.
as
Lessee
in respect of Boeing 737-242 Advanced Aircraft
Serial Number 21186
Ref. 21186A
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THIS AGREEMENT is made as of the 29th day of April, 1996 between:-
(1) POLARIS HOLDING COMPANY, a company incorporated under the
laws of the State of Delaware whose principal office is at
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇,
U.S.A. ("Lessor"); and
(2) AIR SOUTH AIRLINES, INC., a company incorporated under the laws of the
State of Illinois whose chief executive office is at 1800 St. Julian
Place, ▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇, ▇.▇.▇. ("Lessee").
WHEREAS: Lessor wishes to lease to Lessee and Lessee is willing to
lease from Lessor the Aircraft (MSN 21186) on the terms of this
Agreement.
IT IS AGREED as follows:-
1. INTERPRETATION
1.1 DEFINITIONS
In this Agreement the following expressions have the meanings set out
opposite:-
AGREED MAINTENANCE PERFORMER Lessee (up to and including
B Check) or any FAA approved
maintenance facility (for C
Check and higher) or any
other person agreed to from
time to time in writing by
Lessor.
AGREED MAINTENANCE PROGRAMME the Maintenance Programme
agreed to from time to time
in writing by Lessor.
AGREED VALUE $6,500,000 or such other
amount as Lessor may require
from time to time provided
such other amount does not
exceed 115% of the fair
market value of the Aircraft.
AIR AUTHORITY the FAA.
AIRCRAFT the aircraft described in
Part 1 of Schedule 1, (which
term includes where the
context admits a separate
reference to all Engines,
Parts and Aircraft
Documents).
AIRCRAFT COMMITMENT FEE all amounts paid pursuant to
Clause 5.1 of the November
1994 Lease.
AIRCRAFT DOCUMENTS the documents, data and
records identified in Part 2
of Schedule 1 and all
additions, renewals,
revisions and replacements
from time to time made in
accordance with this
Agreement.
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AIRFRAME the Aircraft, excluding the
Engines and Aircraft
Documents.
APU the auxiliary power unit
installed on the Aircraft on
the Previous Delivery Date
and any replacement auxiliary
power unit installed in
accordance with this
Agreement.
BANKS such financial institution(s)
which from time to time
finance the Aircraft for
Lessor and/or for whose
benefit security over, or
rights relating to, the
Aircraft and/or this
Agreement is granted by
Lessor or at its request.
BASIC RENT means the rent payable for
the Aircraft during the Term
pursuant to Section 5.3 of
this Agreement.
BOEING The Boeing Company, a
Delaware corporation with its
principal office in Seattle,
State of Washington, U.S.A.
BUSINESS DAY a day (other than a Saturday
or Sunday) on which business
of the nature required by
this Agreement is carried out
in the State of Delaware
and the State of
Incorporation or where used
in relation to payments on
which banks are open for
business in London and New
York.
CERTIFICATED AIR CARRIER shall mean any corporation
(except the United States
Government) domiciled in the
United States of America and
holding a Certificate of
Convenience and Necessity
issued under Section 401 of
the Federal Aviation Act by
the Department of
Transportation or any
predecessor or successor
agency thereto, or, in the
event such Certificates shall
no longer be issued, any
corporation (except the
United States Government)
domiciled in the United
States of America and legally
engaged in the business of
transporting for hire
passengers or cargo by air
predominantly to, from or
between points within the
United States of America,
and, in either event,
operating commercial jet
aircraft, which also is
certificated so as to fall
within the purview of Section
1110 of Title
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or any analogous statute.
COLD SECTION REFURBISHMENT the completion of the
following tasks with respect
to an Engine: completely
unstack both high and low
compressors and accomplish
complete visual inspection;
deblade disks as necessary;
accomplish visual inspections
of all disks; measure to
assure all snap diameters on
disks are within limits;
inspect blades for proper
chord dimensions and
cracking; repair or replace
blades below minimums;
inspect and repair stators as
necessary; blade up disks
using new lock plates;
assemble compressor rotors;
balance both rotors; and
install rotors in such
Engine.
CYCLE one take-off and landing of
the Aircraft.
DAMAGE NOTIFICATION THRESHOLD $100,000.
DEFAULT any Event of Default and any
event or condition which with
the giving of notice or lapse
of time would constitute an
Event of Default.
DELIVERY DATE the date hereof.
DELIVERY LOCATION Columbia, South Carolina or
such other location as the
parties may agree.
DOLLARS AND $ the lawful currency of the
United States of America.
ENGINE whether or not installed on
the Aircraft:-
(a) each engine of the
manufacture and model
specified in Part 1 of
Schedule 1 (each of
which has 750 or more
rated takeoff horsepower
or the equivalent of
such horsepower);
or
(b) any engine which has
replaced that engine,
title to which has or
should have, passed to
Lessor in accordance with
this Agreement;
and in each case
includes all modules and
Parts from time to time
belonging to or
installed in
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that engine but excludes
any properly replaced
engine title to which
has, or should have,
passed to Lessee
pursuant to this
Agreement.
EVENT OF DEFAULT an event or condition
specified in Clause 13.1
or Letter Agreement No. 1.
EVENT OF LOSS with respect to the Aircraft
(including for the purposes
of this definition the
Airframe):-
(a) the actual or
constructive total loss
of the Aircraft
(including any damage to
the Aircraft which
results in an insurance
settlement on the basis
of a total loss, or
requisition for use or
hire which results in an
insurance settlement on
the basis of a
total loss); or
(b) it being destroyed,
damaged beyond repair or
permanently rendered
unfit for normal use
for any reason
whatsoever, or
(c) the requisition of
title, or other
compulsory acquisition,
capture, seizure,
deprivation,
confiscation or
detention for any reason
of the Aircraft by the
government of the State
of Registration or other
competent authority
(whether de jure or de
facto), but excluding
requisition for use or
hire not involving
requisition of title;
or
(d) the hi-jacking, theft,
condemnation,
confiscation, seizure or
requisition for use or
hire of the Aircraft
which deprives any
person permitted by this
Agreement to have
possession and/or use of
the Aircraft of its
possession and/or use
for more than 15 days.
EXPIRY DATE subject to Clause 4.5 and
4.6, the day preceding the
numerically corresponding day
24 months after May 13, 1996
or if earlier the date on
which:-
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(a) the Aircraft has been
redelivered in accordance
with this Agreement; or
(b) Lessor receives the
Agreed Value following
an Event of Loss.
FAA the Federal Aviation
Administration of the United
States of America and any
successor thereof.
FEDERAL AVIATION ACT United States Federal
Aviation Act of 1958,
as amended, or any similar
legislation of the United
States of America enacted in
substitution or replacement
thereof.
FINANCIAL INDEBTEDNESS any indebtedness in respect
of:-
(a) moneys borrowed or
raised;
(b) any liability under any
debenture, bond, note,
loan stock, acceptance,
documentary credit or
other security;
(c) the acquisition cost of
any asset to the extent
payable before or after
the time of acquisition
or possession; or
(d) any guarantee, indemnity
or similar assurance
against financial loss
of any person in respect
of the above.
FINANCING STATEMENTS Uniform Commercial Code
Financing Statements in
respect of this Agreement and
the collateral described
therein prepared in a form
acceptable for filing with
the applicable Government
Entities in the Habitual
Base, the State in which the
chief executive office (as
that term is defined in
Article 9 of the Uniform
Commercial Code as in effect
in the State of South
Carolina) and such other
jurisdiction as Lessor shall
reasonably require.
FLIGHT HOUR each hour or part thereof
(rounded up to two decimal
places) elapsing from the
moment the wheels of the
Aircraft leave
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the ground on take off until
the wheels of the Aircraft
next touch the ground.
GOVERNING LAW the laws of the State of New
York.
GOVERNMENT ENTITY (a) any national government,
political subdivision
thereof, or local
jurisdiction therein;
(b) any instrumentality,
board, commission, court
or agency of any
thereof, however
constituted; and
(c) any association,
organization, or
institution of which any
of the above is a member
or to whose jurisdiction
any thereof is subject
or in whose activities
any of the above is a
participant.
HABITUAL BASE the State of South Carolina
or, subject to the prior
written consent of Lessor,
any other state, country or
countries in which the
Aircraft is for the time
being habitually based.
HOT SECTION REFURBISHMENT the complete visual
inspection and repair as
necessary of the combustion
section of an Engine. In
conducting such inspection
and repair, the engine shop
must completely unstack the
high pressure turbine and
accomplish complete visual
inspection; de-blade disks as
necessary; accomplish visual
inspections of all disks;
measure to assure all snap
diameters on disks are within
limits; inspect blades for
proper chord dimensions and
cracking; repair or replace
blades below minimums;
inspect and repair stators as
necessary; blade up disks
using new lock plates;
assemble compressor rotors;
balance both rotors; and
install rotors in such
Engine.
INDEMNITEES each of Lessor and Banks
including any of their
respective successors and
assigns, shareholders,
subsidiaries, affiliates,
partners,
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contractors, directors,
officers, servants, agents and
employees.
LANDING GEAR the landing gear assembly of
the Aircraft excluding any
rotable components.
LESSOR LIEN (a) any security interest
whatsoever from time to
time created by or
through Lessor in
connection with the
financing of the
Aircraft;
(b) any other security
interest in respect of
the Aircraft which
results from acts of or
claims against Lessor,
Sub Lessor or Owner not
related to the
transactions
contemplated by or
permitted under this
Agreement; and
(c) liens in respect of the
Aircraft for Lessor
Taxes.
LESSOR TAXES Taxes:-
(a) imposed as a direct
result of activities of
Lessor in the
jurisdiction imposing
the liability unrelated
to Lessor's dealings
with Lessee or to the
transactions
contemplated by this
Agreement or the
operation of the
Aircraft by Lessee; or
(b) imposed on the income,
profits or gains of
Lessor by any Government
Entity in the United
States of America; or
(c) imposed with respect to
any period commencing or
event occurring after
the Expiry Date and
unrelated to Lessor's
dealings with Lessee or
to the transactions
contemplated by this
Agreement.
LETTER AGREEMENT NO. 1 Letter Agreement No 1. of
even date herewith between
Lessor and Lessee in
respect of the Aircraft, the
terms of which
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constitute an integral part
of this Agreement.
MAINTENANCE PROGRAMME an FAA and Air Authority
approved maintenance
programme for the
Aircraft encompassing
scheduled maintenance
(including block
maintenance), condition
monitored maintenance, and/or
on condition maintenance of
Airframe, Engines and Parts,
including but not limited to,
servicing, testing,
preventive maintenance,
repairs, structural
inspections, system checks,
overhauls, approved
modifications, service
bulletins, engineering
orders, airworthiness
directives, corrosion
control, inspections and
treatments.
MAJOR CHECKS any C-Check, multiple
C-Check, D-Check or
annual heavy maintenance
visit or segment thereof
suggested for commercial
aircraft of the same model as
the Aircraft by its
manufacturer (however
denominated) as set out in
the Agreed Maintenance
Programme.
MANUFACTURER Boeing.
MARCH 29 1996 LETTER AGREEMENT Letter Agreement, dated March
29, 1996, between Lessor,
Lessee, Polaris Aircraft
Leasing K.B. and GE Capital
Aviation Services, Inc.
MINIMUM LIABILITY COVERAGE $400,000,000 on each
occurrence.
NOVEMBER 1994 LEASE the Aircraft Lease
Agreement, dated as of
November 11, 1994, between
Lessor and Lessee relating to
the Aircraft, as supplemented
and amended which agreement
has heretofore been
terminated by agreement of
the parties hereto.
OTHER AGREEMENTS any agreement (other than
this Agreement) made or to be
made between Lessor (or an
affiliate, associate or
subsidiary of Lessor
(including, without
limitation, Polaris Aircraft
Leasing K.B.)) and
Lessee (or an affiliate,
associate or Subsidiary of
Lessee), including without
limitation the November 1994
Lease and the March 29 1996
Letter Agreement.
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PART whether or not installed on
the Aircraft:-
(a) any component,
furnishing or equipment
(other than a complete
Engine) furnished with
the Aircraft on the
Delivery Date; and
(b) any other component,
furnishing or equipment
(other than a complete
Engine) title to which
has, or should have
passed to Lessor pursuant
to this Agreement;
but excludes any such
items title to which
has, or should have,
passed to Lessee
pursuant to this
Agreement.
PERMITTED LIEN (a) any lien for Taxes not
assessed or, if
assessed, not yet due
and payable, or being
contested in good faith
by appropriate
proceedings;
(b) any lien of a repairer,
mechanic, carrier,
hangarkeeper or other
similar lien arising in
the ordinary course of
business or by operation
of law in respect of
obligations which are
not overdue or are being
contested in good faith
by appropriate
proceedings;
but only if (in the case
of both (a) and (b)) (i)
adequate reserves have
been provided by Lessee
for the payment of the
Taxes or obligations;
and (ii) such
proceedings, or the
continued existence of
the lien, do not give
rise to any likelihood
of the sale, forfeiture
or other loss of the
Aircraft or any interest
therein or of criminal
liability on Lessor or
any Bank; and
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(c) any Lessor Lien.
PERSON shall mean and include any
individual person,
corporation, partnership,
firm, joint stock company,
joint venture, trust, estate,
unincorporated organisation,
association, Government
Entity, or organisation or
association of which any of
the above is a member or a
participant.
PREVIOUS DELIVERY DATE the date on which the
Aircraft was delivered by
Lessor to Lessee pursuant to
the November 1994 Lease.
PREVIOUS LEASE the November Lease which
will have expired or
otherwise been terminated
prior to the delivery of the
Aircraft by Lessor to Lessee
pursuant to this Agreement.
REDELIVERY LOCATION ▇▇▇▇ ▇▇▇▇▇▇ World Airport,
Oklahoma City or such other
location in the south western
United States as Lessor shall
advise Lessee or such other
location as the parties may
agree.
RENT means, collectively, Basic
Rent, Supplemental Rent and
all other amounts,
liabilities and obligations
which Lessee assumes or
agrees to pay to Lessor or
other Persons hereunder
(other than Basic Rent and
Supplemental Rent) or under
any Other Agreement,
including without limitation
the payment of deposits,
indemnities and the Agreed
Value.
RENTAL PERIOD each period ascertained in
accordance with Clause 5.2.
RENT DATE the first day of each Rental
Period.
SECURITY INTEREST any mortgage, charge, pledge,
lien, assignment,
hypothecation, right of
set-off or any agreement or
arrangement having the effect
of creating a security
interest other than a
Permitted Lien, or any
agreement to create the
foregoing other than a
Permitted Lien.
STATE OF INCORPORATION the State of Illinois.
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▇▇
▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ of America.
SUBSIDIARY (a) in relation to any
reference to accounts,
any company whose
accounts are
consolidated with the
accounts of Lessee in
accordance with
accounting principles
generally accepted under
accounting standards of
the State of
Incorporation;
(b) for any other purpose
an entity from time to
time:-
(i) of which another has
direct or indirect
control or owns
directly or
indirectly more than
50 per cent of the
voting share
capital; or
(ii) which is a direct
or indirect
subsidiary of
another under the
laws of the
jurisdiction of its
incorporation.
SUPPLEMENTAL RENT all amounts payable under
Clause 5.4(a).
TAXES taxes, duties and the like
of all kinds and any other
amount corresponding to any
taxation together with any
penalties, fines, surcharge
or interest thereon.
TERM the period commencing on the
Delivery Date and ending on
the Expiry Date.
1.2 CONSTRUCTION
(a) In this Agreement, unless the contrary intention is stated, a
reference to:-
(i) each of "Lessor" or "Lessee" or any other person includes with
out prejudice to the provisions of this Agreement any
successor in title to it and any permitted assignee;
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(ii) words importing the plural shall include the singular and vice
versa;
(iii) any document shall include that document as amended, novated
or supplemented;
(iv) a law (1) includes any statute, decree, constitution,
regulation, order, judgment or directive of any Government
Entity; (2) includes any treaty, pact, compact or other
agreement to which any Government Entity is a signatory or
party; (3) includes any judicial or administrative
interpretation or application thereof and (4) is a reference
to that provision as amended, substituted or re-enacted;
(v) a Clause or a Schedule is a reference to a clause of or a
schedule to this Agreement; and
(b) the headings in this Agreement are to be ignored in construing this
Agreement.
2. REPRESENTATIONS AND WARRANTIES
2.1 Lessee's Representations and Warranties: Lessee represents and
warrants to Lessor that:-
(a) STATUS: Lessee is a corporation duly incorporated and validly existing
in good standing under the laws of the State of Incorporation and has
the corporate power to own its assets and carry on its business as it
is being conducted and is the holder of all necessary air
transportation licences required in connection therewith and with the
use and operation of the Aircraft;
(b) POWER AND AUTHORITY: Lessee has the corporate power to enter into and
perform, and has taken all necessary corporate action to authorise the
entry into, performance and delivery of, this Agreement and the
transactions contemplated by this Agreement;
(c) LEGAL VALIDITY: this Agreement constitutes Lessee's legal, valid and
binding obligation;
(d) NON-CONFLICT: the entry into and performance by Lessee of, and the
transactions contemplated by, this Agreement do not and will not:-
(i) conflict with any laws binding on Lessee; or
(ii) conflict with the constitutional documents of Lessee; or
(iii) conflict with or result in default under any indenture,
mortgage, chattel mortgage, deed of trust, conditional sales
contract, lease, bank loan or credit agreement or other
agreement which is binding upon Lessee or any of its assets
nor result in the creation of any Security Interest over any
of its assets;
(e) AUTHORISATION: all authorisations, consents, registrations and
notifications required in connection with the entry into, performance,
validity and enforceability of, this Agreement and the transactions
contemplated by this Agreement, have been (or will on or before the
Delivery Date have been) obtained or effected (as appropriate) and are
(or will on their being obtained or effected be) in full force and
effect;
(f) NO IMMUNITY:
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(i) Lessee is subject to civil commercial law with respect to its
obligations under this Agreement; and
(ii) neither Lessee nor any of its assets is entitled to any right
of immunity and the entry into and performance of this
Agreement by Lessee constitute private and commercial acts;
(g) ACCOUNTS: the audited consolidated accounts of Lessee and its
Subsidiaries most recently delivered to Lessor:-
(i) have been prepared in accordance with accounting principles
and practices generally accepted and consistently applied in
the State of Incorporation; and
(ii) fairly represent the consolidated financial condition of
Lessee and its Subsidiaries as at the date to which they were
drawn up;
(h) CHIEF EXECUTIVE OFFICE: Lessee's chief executive office (as that term
is defined in Article 9 of the Uniform Commercial Code as in effect in
the State of South Carolina) is located at ▇▇▇▇ ▇▇. ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇;
(i) CERTIFICATED AIR CARRIER: Lessee is a Certificated Air Carrier and
Lessor, as lessor of the Aircraft to Lessee, is entitled to the
benefits of Section 1110 of Title 11 of the United States Code with
respect to the Aircraft; and
(j) CITIZEN OF THE UNITED STATES: Lessee is a "citizen of the United
States" as defined in Section 101(16) of the Federal Aviation Act.
2.2 LESSEE'S FURTHER REPRESENTATIONS AND WARRANTIES: Lessee further
represents and warrants to Lessor that:-
(a) NO DEFAULT:
(i) no Default has occurred and is continuing or might result from
the entry into or performance of this Agreement; and
(ii) no other event or condition has occurred and is continuing
which constitutes (or with the giving of notice, lapse of
time, determination of materiality or the fulfilment of any
other applicable condition or any combination of the
foregoing, might constitute) a material default under any
indenture, mortgage, chattel mortgage, deed of trust,
conditional sales contract, lease, bank loan or credit
agreement or other agreement which is binding on Lessee or any
assets of Lessee;
(b) REGISTRATION:
(i) it is not necessary or advisable under the laws of the State
of Incorporation or the Habitual Base in order to ensure the
validity, effectiveness and enforceability of this Agreement
or to, establish, perfect or protect the property rights of
Lessor in the Aircraft or any Engine or Part that this
Agreement or any other instrument relating thereto be filed,
registered or recorded or that any other action be taken or
if any such filings, registrations,
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recordings or other actions are necessary or advisable, the
same have been effected or will have been effected on or
before the Delivery Date; and
(ii) under the laws of the State of Incorporation and the Habitual
Base the property rights of Lessor in the Aircraft, have been
fully established, perfected and protected and this Agreement
will have priority in all respects over the claims of all
creditors of Lessee;
(c) LITIGATION: no litigation, arbitration or administrative proceedings
are pending or to Lessee's knowledge threatened against Lessee which,
if adversely determined, would have a material adverse effect upon its
financial condition or business or its ability to perform its
obligations under this Agreement;
(d) PARI PASSU: the obligations of Lessee under this Agreement rank at
least pari passu with all other present and future unsecured and
unsubordinated obligations (including contingent obligations) of
Lessee, with the exception of such obligations as are mandatorily
preferred by law and not by virtue of any contract;
(e) MATERIAL ADVERSE CHANGE: there has been no material adverse change in
the consolidated financial condition of Lessee and its Subsidiaries or
the financial condition of Lessee since the date to which the accounts
most recently provided to Lessor on or prior to the Delivery Date were
drawn up;
(f) TAXES: Lessee has delivered all necessary returns and payments due to
the tax authorities in the State of Incorporation and the Habitual
Base and all other jurisdictions in which Lessee is required to pay
taxes and/or file tax returns or reports and Lessee is not required by
law to deduct any Taxes from any payments under this Agreement;
(g) INFORMATION: the financial and other information furnished by Lessee
in connection with this Agreement does not contain any untrue
statement or omit to state facts, the omission of which makes the
statements therein, in the light of the circumstances under which they
were made, misleading, nor omits to disclose any material matter to
Lessor and all forecasts and opinions contained therein were honestly
made on reasonable grounds after due and careful enquiry by Lessee;
(h) FOREIGN ASSET CONTROL: as of the date of this Agreement, Lessee does
not hold any contract or other obligation to operate the Aircraft to
any of the countries designated under the United States Foreign Asset
Control Regulations (31 C.F.R. Parts 500-599), including, as of the
date hereof, Cuba, Haiti, Iraq, Libya, North Korea, and the Federal
Republic of Yugoslavia (Serbia and Montenegro) and the Unita Rebels of
Angola;
(i) ERISA: Lessee is not engaged in any transaction in connection with
which it could be subjected to either a civil penalty assessed
pursuant to Section 502(c) of ERISA or any tax imposed by Section 5975
of the Internal Revenue Code; no material liability of the Pension
Benefit Guaranty Corporation has been or is expected by Lessee to be
incurred with respect to any employee pension benefit plan (as defined
in Section 3 of ERISA) maintained by Lessee; there has been no
reportable event (as defined in Section 4043(b) of ERISA) with respect
to any such employee pension benefit plan. There is no event of
termination of any such employee pension benefit plan by the Pension
Benefit Guaranty Corporation; and no accumulated funding deficiency
(as defined in Section 302 of ERISA
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or Section 412 of the Internal Revenue Code), whether or not waived,
exists with respect to any such employee pension benefit plan; and
(j) MAINTENANCE PROGRAMME: the Maintenance Programme for the Aircraft
complies with all FAA requirements.
2.3 REPETITION: The representations and warranties in Clause 2.1 and
Clause 2.2 will survive the execution of this Agreement. The
representations and warranties contained in Clause 2.1 will be deemed
to be repeated by Lessee on each Rent Date as if made with reference
to the facts and circumstances then existing.
2.4 LESSOR'S REPRESENTATIONS AND WARRANTIES: Lessor represents and
warrants to Lessee that:-
(a) STATUS: Lessor is a company existing under the laws of the State of
Delaware and has the power to own its assets and carry on its business
as it is now being conducted;
(b) POWER AND AUTHORITY: Lessor has the corporate power to enter into and
perform, and has taken all necessary corporate action to authorise the
entry into, performance and delivery of, this Agreement and the
transactions contemplated by this Agreement;
(c) LEGAL VALIDITY: this Agreement constitutes Lessor's legal, valid and
binding obligation;
(d) NON-CONFLICT: the entry into and performance by Lessor of, and the
transactions contemplated by, this Agreement do not and will not:-
(i) conflict with any laws binding on Lessor; or
(ii) conflict with the constitutional documents of Lessor; or
(iii) conflict with any document which is binding upon Lessor or any
of its assets;
(e) AUTHORISATION: so far as concerns the obligations of Lessor, all
authorisations, consents, registrations and notifications required
under the laws of the State of Delaware in connection with the entry
into, performance, validity and enforceability of, and the
transactions contemplated by, this Agreement by Lessor have been (or
will on or before the Delivery Date have been) obtained or effected
(as appropriate) and are (or will on their being obtained or effected
be) in full force and effect; and
(f) NO IMMUNITY:
(i) Lessor is subject to civil commercial law with respect to its
obligations under this Agreement; and
(ii) neither Lessor nor any of its assets is entitled to any right
of immunity and the entry into and performance of this
Agreement by Lessor constitute private and commercial acts.
3. CONDITIONS PRECEDENT
3.1 CONDITIONS PRECEDENT: Lessor's obligation to deliver and lease the
Aircraft under this Agreement is subject to satisfaction, or waiver
by Lessor, of each of the following conditions:-
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(a) receipt by Lessor from Lessee not later than 1 Business Day prior to
the date set forth in, or determined in accordance with, Clause 4.1 of
the following satisfactory in form and substance to Lessor:-
(i) CONSTITUTIONAL DOCUMENTS: a copy of the constitutional
documents of Lessee;
(ii) RESOLUTIONS: a copy of a resolution of the board of directors
of Lessee approving the terms of, and the transactions
contemplated by, this Agreement, resolving that it enter into
this Agreement, and authorising a specified person or persons
to execute this Agreement and accept delivery of the Aircraft
on its behalf.-
(iii) OPINION: evidence that an opinion in the form of Schedule 5
will be issued on the Delivery Date by independent legal
counsel acceptable to Lessor in the Habitual Base and the
State of Incorporation;
(iv) FAA OPINION: evidence that there will be issued an opinion of
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ or other counsel acceptable to
Lessor who are recognised specialists with regard to FAA
registration matters in a form acceptable to Lessor as to the
due filing for recordation of this Agreement;
(v) APPROVALS: evidence of the issue of each approval, licence and
consent which may be required in relation to the performance
by Lessee of any of its obligations hereunder (including,
without limitation, any consent to the export of the Aircraft
from the Habitual Base upon the termination of the leasing of
the Aircraft under this Agreement);
(vi) [INTENTIONALLY OMITTED)
(vii) LICENCES: copies of Lessee's air transport licence, air
operator's certificates and all other licences, certificates
and permits required by Lessee in relation to, or in
connection with, the operation of the Aircraft;
(viii) PROCESS AGENT: a letter from the process agent appointed by
Lessee in this Agreement accepting that appointment;
(ix) CERTIFICATE: a certificate of a duly authorised officer of
Lessee:-
(a) setting out a specimen of each signature referred to in Clause
3.1(a)(ii); and
(b) certifying that each document specified in this Clause is
correct, complete and in full force and effect; and
(c) certifying the matters set forth in sub-clause 3.1(a)(x)
below;
(x) AIR TRAFFIC CONTROL: a letter from Lessee addressed to all
relevant air traffic control authorities pursuant to which
Lessee authorises the addressee to issue to Lessor, upon
Lessor's request from time to time, a statement of account of
all sums due by Lessee to the authority in respect of all
aircraft (including, without limitation, the Aircraft)
operated by Lessee and an officer's certificate from the
Lessee certifying that on the Delivery Date, no amounts are
past due and outstanding by Lessee to any air traffic control
authorities, except as otherwise set forth on a schedule
thereto; and
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(xi) GENERAL: such other documents as Lessor may reasonably
request;
(b) the receipt by Lessor on or before the Delivery Date of:-
(i) OPINIONS: a signed original of each of the opinions referred
to in Clauses 3.1(a)(iii) and (iv);
(ii) PAYMENTS: all sums due to Lessor under this Agreement on or
before the Delivery Date including, without limitation, the
payment of Rent;
(iii) INSURANCES: certificates of insurance, an undertaking from
Lessee's insurance broker and other evidence satisfactory to
Lessor that Lessee is taking the required steps to ensure due
compliance with the provisions of this Agreement as to
Insurances with effect on and after the Delivery Date;
(iv) ACCOUNTS: the latest available accounts of Lessee as described
in Clause 8.2(b)(i) and (ii);
(v) DOCUMENTS: a confirmation of receipt of the Aircraft Documents
delivered with the Aircraft on the Previous Delivery Date;
(vi) GENERAL: such other documents as Lessor may reasonably
request;
(c) receipt by Lessor of such information and documents relating to the
proposed Maintenance Programme as Lessor may require and Lessor having
agreed the proposed Maintenance Programme on or prior to the Delivery
Date; and
(d) evidence that on the Delivery Date the Aircraft has been validly
registered under the laws of the State of Registration, that the
Financing Statements have been duly filed and that all filings,
registrations, recordings and other actions have been or will be taken
which are necessary or advisable to ensure the validity, effectiveness
and enforceability of this Agreement and to protect the property
rights of Lessor in the Aircraft or any Part.
3.2 FURTHER CONDITIONS PRECEDENT: The obligations of Lessor to deliver and
lease the Aircraft under this Agreement are subject to the further
conditions precedent that:-
(a) the representations and warranties of Lessee under Clauses 2.1 and 2.2
are correct and would be correct if repeated on delivery of the
Aircraft under this Agreement; and
(b) no Default has occurred and is continuing or might result from the
leasing of the Aircraft to Lessee under this Agreement.
3.3 WAIVER: The conditions specified in Clauses 3.1 and 3.2 are for the
sole benefit of Lessor and may be waived or deferred in whole or in
part and with or without conditions by Lessor. If any of those
conditions are not satisfied on the Delivery Date and Lessor (in its
absolute discretion) nonetheless agrees to deliver the Aircraft to
Lessee, Lessee will ensure that those conditions are fulfilled within
15 days after the Delivery Date and Lessor may treat as an Event of
Default the failure of Lessee to do so.
4. COMMENCEMENT
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4.1 LEASING: Lessor will lease the Aircraft to Lessee and Lessee will take
the Aircraft on lease in accordance with this Agreement for the
duration of the Term. Lessor will deliver and Lessee will accept the
Aircraft on or about April 29, 1996 or such other day as may be
agreed. After delivery the Aircraft and every Part will be in every
respect at the sole risk of Lessee, who will bear all risk of loss,
theft, damage or destruction to the Aircraft from any cause
whatsoever.
4.2 DELIVERY: The Aircraft will be constructively delivered to and
accepted by Lessee as is at the Delivery Location or such other
location as may be agreed. Lessee will effect acceptance of the
Aircraft by execution and delivery to Lessor of the duly completed and
executed Certificate of Acceptance in the form of Schedule 2.
4.3 [INTENTIONALLY OMITTED]
4.4 [INTENTIONALLY OMITTED]
4.5 LESSEE'S LEASE TERM OPTION.
(a) LEASE TERM OPTION: Notwithstanding any other provision of this
Agreement to the contrary, Lessor hereby grants Lessee the option (the
"Lease Term Option") to terminate or extend the Term two (2) months
earlier or later than the numerically corresponding day twenty-four
(24) months after the Delivery Date provided that:
(i) Lessee shall give Lessor six months prior written notice (the
"Option Notice") of Lessee's intention to exercise the Lease Term
Option to either terminate or extend the Term by two (2) months, which
Option Notice, once given, shall be irrevocable; and
(ii) no Default shall have occurred and be continuing on the date that
the Option Notice is given;
(b) OPTION EXERCISED: Upon exercise by Lessee of the Lease Term Option,
but without prejudice to all the other terms and conditions of this
Agreement (including, without limitation, Lessee's obligation to
fulfil the conditions contained in Clause 4.5(a)) which shall remain
in full force and effect, the definition of "Expiry Date" contained in
Clause 1 of this Agreement shall be deemed to be amended such that the
words "Subject to any amendment pursuant to Clause 4.5(b), the day
preceding the numerically corresponding day 24 months after the
Delivery Date" shall be replaced with the words "the day preceding the
numerically corresponding day twenty-two (22) or twenty-six months
after the Delivery Date subject in all cases to the term identified in
the Option Notice".
(c) OPTION NOT EXERCISED: If Lessee has not furnished Lessor with the
Option Notice on or before the date specified in sub-clause (a) above,
the Lease Term Option shall be forfeited, no longer available to
Lessee and of no further effect.
4.6 [Intentionally Omitted]
5. PAYMENTS
5.1 AIRCRAFT COMMITMENT FEE: Lessor hereby acknowledges receipt from
Lessee of the Aircraft Commitment Fee in the amount set forth in
Letter Agreement No. 1.
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5.2 RENTAL PERIODS: The Term will be divided into Rental Periods. The
first Rental Period will commence on the Delivery Date and end May 12,
1996, the second Rental Period will commence on May 13, 1996 and each
subsequent Rental Period will commence on the date succeeding the last
day of the previous Rental Period. Each Rental Period will end on the
date immediately preceding the numerically corresponding day in the
next month except that:-
(a) if there is no such numerically corresponding day in that month, it
will end on the last day of that month; and
(b) if a Rental Period would otherwise overrun the Expiry Date, it will
end on the Expiry Date.
5.3 BASIC RENT: Except as otherwise set forth in Letter Agreement No. 1,
on each Rent Date Lessee will pay to Lessor or its order Basic Rent in
advance in the amount set forth in paragraph A of Letter Agreement No.
1. Payment must be initiated adequately in advance of the Rent Date
to ensure that Lessor receives credit for the payment on the Rent
Date. If a Rental Period begins on a non-Business Day, the Basic Rent
payable in respect of that Rental Period shall be paid on the Business
Day immediately preceding the date on which such Rental Period
commences.
5.4 SUPPLEMENTAL RENT:
(a) AMOUNT: Except as otherwise set forth in Letter Agreement No. 1,
Lessee will further pay to Lessor Supplemental Rent in relation to
each Rental Period (including without limitation the last Rental
Period of the Term) on the 10th day following the end of that Rental
Period as follows:-
(i) in respect of the Airframe, the amount set forth in paragraph
B (i)(a) of Letter Agreement No. 1 in respect of each Flight
Hour operated by the Aircraft during that Rental Period
("Airframe Supplemental Rent"); and
(ii) in respect of each Engine, the amount set forth in paragraph B
(i)(b) of Letter Agreement No. 1 in respect of each Flight
Hour operated by that Engine during that Rental Period
("Engine Refurbishment Supplemental Rent"); and
(iii) in respect of each Engine, the amount set forth in paragraph B
(i)(c) of Letter Agreement No. 1 in respect of each Flight
Hour operated by that Engine during that Rental Period
("Engine Life Limited Parts Supplemental Rent"); and
(v) in respect of the Landing Gear, the amount set forth in
paragraph B (i)(d) of Letter Agreement No. 1 in respect of
each Flight Hour operated by the Landing Gear during that
Rental Period ("Landing Gear Supplemental Rent").
Notwithstanding the foregoing, with respect to any Engine, provided
that (x) no Default shall have occurred and is continuing; and (y)
there shall have been no material adverse change in Lessee's financial
position since the Delivery Date, if at any time commencing from the
Previous Delivery Date and falling during the Term the aggregate
amount of Engine Refurbishment Supplemental Rent and Engine Life
Limited Parts Supplemental Rent previously paid by Lessee in respect
of that Engine less any amount paid by Lessor with respect to that
Engine pursuant to Clause 7.2 equals or exceeds $400,000, then
Lessee's obligation to pay Engine Refurbishment Supplemental Rent and
Engine Life
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Limited Parts Supplemental Rent in respect of that Engine shall ▇▇▇▇▇.
Lessee's obligation to pay Engine Refurbishment Supplemental Rent and
Engine Life Limited Parts Supplemental Rent shall recommence at such
time as the aggregage amount of Engine Refurbishment Supplemental Rent
and Engine Life Limited Parts Supplemental Rent held by Lessor in
respect of that Engine less any amount paid by Lessor with respect to
that Engine pursuant to Clause 7.2 falls below $400,000.
(b) ADJUSTMENT: the rate of Supplemental Rent shall be adjusted upwards
annually by Lessor at the rate of 5% per annum commencing 1 January,
1997. In addition, but not limited to the foregoing, Lessee
acknowledges that the rates of Supplemental Rent currently provided
for in this Agreement are based upon the assumptions that (i) the
Aircraft will be operated on a one Flight Hour to one Cycle ratio; and
(ii) the Agreed Maintenance Programme for the Aircraft during the Term
will be the same as that in effect on the Delivery Date. In the event
that either or both of the foregoing assumptions prove to be incorrect
at any time during the Term, Lessor and Lessee agree that Lessor shall
have the right, upon written notice to Lessee, to adjust the rate of
Supplemental Rent in accordance with the Table set forth in Letter
Agreement No. 1. In the event that the Agreed Maintenance Programme
changes during the Term (any such change to be in accordance with the
relevant terms and conditions of this Agreement), Lessor shall make
the aforementioned adjustment in the manner which Lessor determines,
in its reasonable discretion, is necessary to maintain the rates of
Supplemental Rent at levels which accurately reflect the costs
associated with obtaining maintenance services at prevailing industry
rates. Each such notice shall specify the revised rate of
Supplemental Rent and the effective date of such revision. Lessee
agrees to advise Lessor, in writing, of any circumstances or events
which would result in the foregoing assumptions becoming incorrect at
any time during the Term.
5.5 PAYMENTS: All payments by Lessee to Lessor under this Agreement will
be made for value on the due date in Dollars and in immediately
available funds settled through the New York Clearing House System or
such other funds as may for the time being be customary for the
settlement in New York City of international payments in Dollars by
telegraphic transfer to Bankers Trust Company, New York, NY; Account
Name: Polaris Holding Company/GECC, Account No. ▇▇-▇▇▇-▇▇▇, ABA No.
▇▇▇-▇▇▇-▇▇▇ or to such other account as Lessor may advise Lessee in
writing.
5.6 GROSS-UP:
(a) All payments by Lessee under or in connection with this Agreement will
be made without set-off or counterclaim, free and clear of and without
deduction for or on account of all Taxes (other than Lessor Taxes);
(b) all Taxes (other than Lessor Taxes) in respect of payments under this
Agreement shall be for the account of and will be paid by Lessee for
its own account prior to the date on which penalties apply; and
(c) if Lessee is compelled by law to make payment subject to any Tax
(other than Lessor Taxes) and Lessor does not actually receive for its
own benefit on the due date a net amount equal to the full amount
provided for under this Agreement, Lessee will pay all necessary
additional amounts to ensure receipt by Lessor of the full amount so
provided for.
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5.7 TAXATION: Lessee will on demand pay and indemnify Lessor against all
Taxes (other than Lessor Taxes) levied or imposed against or upon
Lessor or Lessee and relating to or attributable to Lessee, this
Agreement or the Aircraft directly or indirectly in connection with
the importation, exportation, registration, ownership, leasing,
subleasing, delivery, possession, use, operation, repair, maintenance,
overhaul, transportation, landing, storage, presence or redelivery of
the Aircraft or any part thereof or any rent, receipts, insurance
proceeds, income or other amounts arising therefrom.
5.8 VALUE ADDED TAX:
(a) For the purposes of this sub-clause:-
(i) "VAT" means value added tax and any sales or turnover tax,
imposition or levy of a like nature;
(ii) "supply" includes anything on which VAT is chargeable;
(b) Lessee will pay to Lessor the amount of any VAT chargeable in respect
of any supply of goods or services for VAT purposes under this
Agreement; and
(c) each amount stated as payable by Lessee under this Agreement is
exclusive of VAT (if any) and is accordingly to be construed as a
reference to that amount plus any VAT in respect of it.
5.9 INFORMATION: If Lessee is required by any applicable law, or by any
third party, to deliver any report or return in connection with any
Taxes, Lessee will complete the same in a manner satisfactory to
Lessor and in particular will state therein that Lessee is exclusively
responsible for the use and operation of the Aircraft and for any
Taxes arising therefrom, and Lessee will, on request, supply a copy of
the report or return to Lessor.
5.10 TAXATION OF INDEMNITY PAYMENTS:
(a) If and to the extent that any sums payable to Lessor by Lessee under
this Agreement by way of indemnity are insufficient, by reason of any
Taxes payable in respect of those sums, for Lessor to discharge the
corresponding liability to the relevant third party (including any
taxation authority), or to reimburse Lessor for the cost incurred by
it to a third party (including any taxation authority) Lessee will
pay to Lessor such sum as will after the tax liability has been fully
satisfied leave Lessor with the same amount as it would have been
entitled to receive in the absence of that liability together with
interest on the amount of the deficit at the rate of interest stated
in Clause 5.11 in respect of the period commencing on the date on
which the payment of taxation is finally due until payment by Lessee
(both before and after judgment); and
(b) If and to the extent that any sums constituting (directly or
indirectly) an indemnity to Lessor but paid by Lessee to any person
other than Lessor are treated as taxable in the hands of Lessor,
Lessee will pay to Lessor such sum as will after the tax liability has
been fully satisfied indemnify Lessor to the same extent as it would
have been indemnified in the absence of such liability together with
interest on the amount payable by Lessee under this sub-clause at the
rate of interest stated in Clause 5.11 in respect of the period
commencing on the date on which the payment of taxation is finally due
until payment by Lessee (both before and after judgment) provided
however that Lessee will not be liable
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for any Lessor Taxes incurred as a result of the payment of the Agreed
Value pursuant to Clause 11.
5.11 DEFAULT INTEREST: If Lessee fails to pay any amount payable under this
Agreement on the due date, Lessee will pay on demand from time to time
to Lessor interest (both before and after judgment) on that amount,
from the due date to the date of payment in full by Lessee to Lessor,
at the rate calculated by Lessor to be one month Dollar LIBOR plus 500
basis points per annum. All such interest will be compounded monthly
and calculated on the basis of the actual number of days elapsed and a
360 day year.
5.12 CONTEST: If Lessee disputes the payment of any Taxes payable by Lessor
for which Lessee is responsible under this Agreement, Lessor will
consider with Lessee the taking of such action as Lessee may
reasonably request at Lessee's expense to contest that payment but
will not be obliged to take any such action:-
(a) which Lessor considers in its sole discretion may prejudice it; or
(b) which Lessor considers does not have a reasonable prospect of success;
or
(c) for which Lessee has not made adequate provision to the satisfaction
of Lessor in respect of the expense concerned.
5.13 ABSOLUTE: Lessee's obligations under this Agreement are absolute and
unconditional irrespective of any contingency whatsoever including
(but not limited to):-
(a) any right of set-off, counterclaim, recoupment, defence or other right
which either party to this Agreement may have against the other;
(b) any unavailability of the Aircraft for any reason, including, but not
limited to, a requisition of the Aircraft or any prohibition or
interruption of or interference with or other restriction against
Lessee's use, operation or possession of the Aircraft;
(c) any lack or invalidity of title or any other defect in title,
airworthiness, merchantability, fitness for any purpose, condition,
design, or operation of any kind or nature of the Aircraft for any
particular use or trade, or for registration or documentation under
the laws of any relevant jurisdiction, or any Event of Loss in respect
of or any damage to the Aircraft;
(d) any insolvency, bankruptcy, reorganisation, arrangement, readjustment
of debt, dissolution, liquidation or similar proceedings by or against
Lessor or Lessee;
(e) any invalidity or unenforceability or lack of due authorisation of, or
other defect in, this Agreement; and
(f) any other cause which but for this provision would or might otherwise
have the effect of terminating or in any way affecting any obligation
of Lessee under this Agreement.
5.14 SECURITY:
(a) It is intended by Lessor and Lessee that the Aircraft Commitment Fee
paid by Lessee to Lessor and referenced in Clause 5.1, the
Supplemental Rent and, if applicable, the Insurance Security Deposit
contemplated by the first paragraph of Schedule 4 are amounts
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paid by Lessee to Lessor in consideration for Lessor removing the
Aircraft from the market, the use of the Aircraft by Lessee and the
satisfaction of Lessor's obligations under this Agreement and that,
once paid, those monies irrevocably and unconditionally shall be the
property of Lessor. Notwithstanding that stated intent, if and to the
extent that those monies or any thereof, under any applicable law or
otherwise, are determined to be security deposits or otherwise the
property of Lessee or if it is so determined those monies are a debt
owed to Lessee or that Lessee shall have any interest in those monies
(the "Charged Monies"), the parties agree that subclauses (b), (c) and
(d) shall apply;
(b) To the fullest extent permitted by law and by way of continuing
security Lessee charges and grants a security interest in the Charged
Monies and all rights of Lessee to payment thereof, the debt
represented thereby and/or any and all interest of Lessee therein to
Lessor by way of first priority security interest and first fixed
charge as security for Lessee's obligations and liabilities under this
Agreement and the Other Agreements (the "Secured Liabilities").
Except as expressly permitted under this Agreement, Lessee will not be
entitled to payment of the Charged Monies. Lessee will not assign,
transfer or otherwise dispose of all or part of its rights in the
Charged Monies and Lessee agrees that it will enter into any
additional documents and instruments necessary or reasonably requested
by Lessor to evidence, create or perfect Lessor's rights to the
Charged Monies.
(c) If Lessee fails to comply with any provision of this Agreement or any
Event of Default has occurred and is continuing Lessor may immediately
or at any time thereafter, without prior notice to Lessee:-
(i) set-off all or any part of the Secured Liabilities against the
liabilities of Lessor in respect of the Charged Monies; or
(ii) apply or appropriate the Charged Monies in or towards the
payment or discharge of the Secured Liabilities in such order as
Lessor sees fit; and
(d) If Lessor has exercised the set-off described in sub-clause (c) above,
Lessee shall, following a demand in writing from Lessor, promptly
restore the Charged Monies to the level at which they stood
immediately prior to such set-off.
6 MANUFACTURER'S WARRANTIES
6.1 ASSIGNMENT: Notwithstanding this Agreement, Lessor will remain
entitled to the benefit of each warranty, express or implied, with
respect to the Aircraft, any Engine or Part so far as concerns any
manufacturer, vendor, subcontractor or supplier. Except to the extent
Lessor otherwise directs, Lessor hereby authorises Lessee to pursue
any claim thereunder in relation to defects affecting the Aircraft,
any Engine or Part and Lessee agrees diligently to pursue any such
claim which arises at its own cost. Lessee will notify Lessor
promptly upon becoming aware of any such claim.
6.2 PROCEEDS: Except to the extent Lessor otherwise agrees in a particular
case, all proceeds of any such claim will be paid directly to Lessor
but if and to the extent that such claim relates:-
(a) to defects affecting the Aircraft which Lessee has rectified; or
(b) to compensation for loss of use of the Aircraft, an Engine or any Part
during the Term; and
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provided no Default has occurred and is continuing the proceeds will be
paid to Lessee by Lessor but in the case of (a) only on receipt of
evidence satisfactory to Lessor that Lessee has rectified the relevant
defect.
6.3 PARTS: Except to the extent Lessor otherwise agrees in a particular
case, Lessee will procure that all engines, components, furnishings or
equipment provided by the manufacturer, vendor, subcontractor or
supplier in replacement of a defective Engine or Part pursuant to the
terms of any warranty will be installed promptly by Lessee, that title
thereto free of Security Interests vests in Lessor. On installation
those items will be deemed to be an Engine or Part as applicable.
6.4 AGREEMENT: To the extent any warranties relating to the Aircraft are
made available under an agreement between any manufacturer, vendor,
subcontractor or supplier and Lessee, this Clause 6 is subject to that
agreement. However Lessee will:-
(a) pay the proceeds of any claim thereunder to Lessor to be applied
pursuant to Clause 6.2 and pending such payment will hold the claim
and the proceeds on trust for Lessor; and
(b) Lessee will take all such steps as are necessary at the end of the
Term to ensure the benefit of any of those warranties which have not
expired are vested in Lessor.
7. LESSOR'S COVENANTS
7.1 QUIET ENJOYMENT: Lessor will not interfere with the quiet use,
possession and enjoyment of the Aircraft by Lessee but the exercise by
Lessor of its rights under or in connection with this Agreement will
not constitute such an interference.
7.2 MAINTENANCE CONTRIBUTION: Provided no Default has occurred and is
continuing Lessor will pay to Lessee, by way of contribution to the
cost of maintenance of the Aircraft, upon submission by Lessee to
Lessor within 6 months of the commencement of that maintenance and
before the Expiry Date of an invoice and supporting documentation
reasonably satisfactory to Lessor evidencing:-
(a) with respect to the Airframe, the completion, in accordance with this
Agreement, of those items of maintenance characterised by the
Manufacturer's maintenance planning document and best industry
practice as D Check and/or individual structural inspections having an
interval of not less than 15,000 Flight Hours or 6 years for the
Aircraft (but not including repairs arising as the result of
operational or maintenance mishandling and not including airworthiness
directives), the lesser of (i) the amount of that invoice and (ii) an
amount equal to the aggregate amount of Airframe Supplemental Rent
paid under this Agreement at the time of commencement of such
maintenance less the aggregate amount previously paid by Lessor under
this sub-clause;
(b) with respect to any Engine, the performance, in accordance with this
Agreement, of a Hot Section Refurbishment and a Cold Section
Refurbishment (other than (i) repairs arising as a result of foreign
object damage or operational or maintenance mishandling and/or (ii)
removal, installation, maintenance and repair of QEC (Quick Engine
Change) kits; and/or (iii) airworthiness directives), the lesser of
(i) the amount of that invoice and (ii) an amount equal to the
aggregate amount of Engine Refurbishment Supplemental Rent paid in
respect of that Engine under this Agreement at the time of
commencement of such maintenance less the aggregate amount previously
paid in respect of that Engine by Lessor under this sub-clause;
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(c) with respect to any Engine, the replacement, in accordance with this
Agreement, of life limited Parts (other than replacement which is
occasioned by foreign object damage or operational or maintenance
mishandling and other than replacement occasioned by airworthiness
directive or elective replacement), the lesser of (i) the amount of
that invoice and (ii) an amount equal to the aggregate amount of
Engine Life Limited Parts Supplemental Rent paid in respect of that
Engine under this Agreement at the time of commencement of such
maintenance less the aggregate amount previously paid in respect of
that Engine by Lessor under this sub-clause; and
(d) with respect to the Landing Gear, the performance in accordance with
this Agreement, of all work on the Landing Gear in the nature of
overhaul and requiring removal and disassembly (other than repairs
arising as the result of operational or maintenance mishandling or
airworthiness directives), the lesser of (i) the amount of that
invoice and (ii) an amount equal to the aggregate amount of Landing
Gear Supplemental Rent paid under this Agreement at the time of
commencement of such maintenance less the aggregate amount previously
paid by Lessor under this sub-clause.
7.3 LESSOR OBLIGATIONS FOLLOWING EXPIRY DATE: Within 5 Business Days of:-
(a) redelivery of the Aircraft to Lessor in accordance with and in the
condition required by this Agreement; or
(b) payment to Lessor of the Agreed Value following an Event of Loss after
the Delivery Date;
or in each case such later time as Lessor is satisfied Lessee has
irrevocably paid to Lessor all Rent which may then be outstanding or
become payable under this Agreement or the Other Agreements and
provided that no Default shall have occurred and is continuing, Lessor
will pay to Lessee:-
(i) an amount equal to (x) the amount of the Aircraft Commitment
Fee paid by Lessee and referenced in Clause 5.1; plus (y) the
amount of interest at the rate and otherwise calculated in
accordance with Letter Agreement No. 1 which would have
accrued on the amount referred to in (x); and
(ii) the amount of any Basic Rent received in respect of any period
falling after the date of redelivery of the Aircraft or
payment of the Agreed Value, as the case may be; and
(iii) an amount equal to (x) the aggregate amount of Supplemental
Rent previously paid by Lessee under this Agreement; minus (y)
the aggregate amount previously paid by Lessor under Clause
7.2 without payment of interest.
8. LESSEE'S COVENANTS
8.1 DURATION: The undertakings in this Clause and in Clause 12 will:-
(a) except as otherwise stated, be performed at the expense of Lessee; and
(b) remain in force until the Expiry Date in accordance with this
Agreement and thereafter to the extent of any accrued rights of Lessor
in relation to those undertakings.
8.2 INFORMATION: Lessee will:-
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(a) notify Lessor forthwith of the occurrence of any Default or any other
event which might adversely affect Lessee's ability to perform any of
its obligations under this Agreement;
(b) furnish to Lessor:-
(i) on a quarterly and annual basis, the consolidated management
accounts of Lessee (comprising a balance sheet and profit and
loss statement) prepared for the most recent previous
financial quarter certified by Lessee's chief financial
officer as being true and correct;
(ii) as soon as available but not in any event later than 120 days
after the last day of each financial year of Lessee, its
audited consolidated balance sheet as of such day and its
audited consolidated profit and loss statement for the year
ending on such day;
(iii) at the same time as it is issued to the shareholders or
creditors of Lessee, a copy of each notice or circular issued
to Lessee's shareholders or creditors as a group; and
(iv) on request from time to time such other information relevant
to the transaction contemplated by this Agreement regarding
Lessee and its business and affairs as Lessor may reasonably
request;
(c) keep Lessor informed as to current serial numbers of the Engines and
any engine installed on the Aircraft;
(d) promptly furnish to Lessor all information Lessor from time to time
reasonably requests regarding the Aircraft, any Engine or any Part,
its use, location and condition including, without limitation, the
hours available on the Aircraft and any Engine until the next
scheduled check, inspection, overhaul or shop visit, as the case may
be;
(e) on request, within 10 days after the end of any Rental Period, furnish
to Lessor evidence satisfactory to Lessor of payment of all Taxes due
during that or any previous Rental Period;
(f) on request, furnish to Lessor evidence satisfactory to Lessor that all
Taxes and charges incurred by Lessee with respect to the Aircraft,
including without limitation all payments due to the relevant air
traffic control authorities, have been paid and discharged in full;
(g) provide Lessor with a monthly report on the Aircraft and each Engine
in the form required from time to time by Lessor;
(h) give Lessor not less than 60 days' written notice as to the time and
location of all Major Checks; and
(i) promptly notify Lessor of:-
(i) any loss, theft, damage or destruction to the Aircraft, any
Engine or any Part, or any modification to the Aircraft if the
potential cost may exceed the Damage Notification Threshold;
and
(ii) any claim or other occurrence likely to give rise to a claim
under the Insurances
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(but in the case of hull claims only in excess of the Damage
Notification Threshold) and details of any negotiations with
the insurance brokers over any such claim.
8.3 LAWFUL AND SAFE OPERATION: Lessee will:-
(a) comply with the law for the time being in force in any country or
jurisdiction which may for the time being be applicable to the
Aircraft or, so far as concerns the use and operation of the Aircraft
or an owner or operator thereof and take all reasonable steps to
ensure that the Aircraft is not used for any illegal purpose;
(b) not use the Aircraft in any manner contrary to any recommendation of
the manufacturers of the Aircraft, any Engine or any Part or any
recommendation or regulation of the Air Authority or for any purpose
for which the Aircraft is not designed or reasonably suitable;
(c) ensure that the crew and engineers employed by it in connection with
the operation and maintenance of the Aircraft have the qualifications
and hold the licences required by the Air Authority and applicable
law;
(d) use the Aircraft solely in commercial or other operations for which
Lessee is duly authorised by the Air Authority and applicable law;
(e) not use the Aircraft for the carriage of:-
(i) whole animals living or dead except in the cargo compartments
according to I.A.T.A. regulations, and except domestic pet
animals carried in a suitable container to prevent the escape
of any liquid and to ensure the welfare of the animal;
(ii) acids, toxic chemicals, other corrosive materials, explosives,
nuclear fuels, nuclear wastes, or any nuclear assemblies or
components, except as permitted for passenger aircraft under
the "Restriction of Goods" schedule issued by I.A.T.A. from
time to time and provided that all the requirements for
packaging or otherwise contained therein are fulfilled;
(iii) any other goods, materials or items of cargo which could
reasonably be expected to cause damage to the Aircraft and
which would not be adequately covered by the Insurances; or
(iv) any illegal item or substance;
(f) not utilise the Aircraft for purposes of training, qualifying or
re-confirming the status of cockpit personnel except for the benefit
of Lessee's cockpit personnel, and then only if the use of the
Aircraft for such purpose is not disproportionate to the use for such
purpose of other aircraft of the same type operated by Lessee;
(g) not cause or permit the Aircraft to proceed to, or remain at, any
location which is then the subject of a prohibition order (or any
similar order or directive), sanctions or restrictions by:-
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(i) the United Nations Security Council, the U.S. International
Economic Emergency Powers Act or U.N. Security Council
directives (including, as of the date hereof, Haiti, Iraq,
Libya, the Federal Republic of Yugoslavia (Serbia and
Montenegro) and the Unita Rebels of Angola) or the U.S. Export
Administration Act Regulations (15 C.F.R. Parts 730-799)
(including as of the date hereof Cuba, Iran, North Korea,
Sudan, Syria and Vietnam), except as may be permitted by
operating in accordance with the conditions specified by the
U.S. Export Administration Regulations, General License GATS
(15 C.F.R. Part 771.19);
(ii) any Government Entity of the State of Registration or the
Habitual Base;
(iii) any Government Entity of the country in which such location is
situated; or
(iv) any Government Entity having jurisdiction over Lessor, the
Banks or the Aircraft;
(h) obtain and maintain in full force all certificates, licences, permits
and authorisations required for the use and operation of the Aircraft
for the time being, and for the making of payments required by, and
the compliance by Lessee with its other obligations under, this
Agreement;
(i) not operate or locate the Aircraft or suffer or permit the Aircraft to
be operated or located during the Term in any area excluded from
coverage by any insurance policy issued pursuant to the requirements
of this Agreement; and
(j) not operate or locate the Aircraft in, to or over any country which is
(x) the subject of sanctions under the U.S. International Economic
Emergency Powers Act or United Nations Security Council Directives
(currently Haiti, Iraq, Libya, the Federal Republic of Yugoslavia
(Serbia and Montenegro) and the Unita Rebels of Angola) and/or (y)
restricted under the United States Trading with the Enemy Act or the
United States Export Administration Act except as may be permitted by
operating in accordance with the conditions specified by the United
States Export Administration Regulations, General Licence GATS (15 CFR
Part 771.19) (currently Cuba, Iran, North Korea and Syria).
8.4 TAXES AND OTHER OUTGOINGS: Lessee will promptly pay:-
(a) all licence and registration fees, Taxes (other than Lessor Taxes) and
other amounts of any nature imposed by any Government Entity with
respect to the Aircraft, including without limitation the purchase,
ownership, delivery, leasing, possession, use, operation, return, sale
or other disposition of the Aircraft; and
(b) all rent, fees, charges, Taxes (other than Lessor Taxes) and other
amounts in respect of any premises where the Aircraft or any Part
thereof is located from time to time;
except to the extent that in the reasonable opinion of Lessor such
payment is being contested in good faith by appropriate proceedings,
in respect of which adequate reserves have been provided by Lessee and
non-payment of which does not give rise to any material likelihood of
the Aircraft or any interest therein being sold, forfeited or
otherwise lost or of criminal liability on the part of Lessor or
any Bank.
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8.5 SUB-LEASING: LESSEE WILL NOT, WITHOUT THE PRIOR WRITTEN CONSENT OF
LESSOR, SUB-LEASE OR OTHERWISE PART WITH POSSESSION OF THE AIRCRAFT,
THE ENGINES OR ANY PART EXCEPT THAT LESSEE MAY PART WITH POSSESSION
(A) WITH RESPECT TO THE AIRCRAFT, THE ENGINES OR ANY PART TO THE
RELEVANT MANUFACTURERS FOR TESTING OR SIMILAR PURPOSES OR TO THE
AGREED MAINTENANCE PERFORMER FOR SERVICE, REPAIR, MAINTENANCE OR
OVERHAUL WORK, OR ALTERATIONS, MODIFICATIONS OR ADDITIONS TO THE
EXTENT REQUIRED OR PERMITTED BY THIS AGREEMENT, AND (B) WITH RESPECT
TO AN ENGINE OR PART, AS EXPRESSLY PERMITTED BY THIS AGREEMENT.
8.6 INSPECTION:
(a) Lessor and any person designated by Lessor may at any time visit,
inspect and survey the Aircraft, any Engine or any Part and for such
purpose may, subject to any applicable Air Authority regulation,
travel on the flight deck as observer;
(b) Lessee will pay to Lessor on demand all reasonable out-of-pocket
expenses incurred by Lessor in connection with any such visit,
inspection or survey; and
(c) Lessor will:-
(i) have no duty or liability to make, or arising out of any such
visit, inspection or survey; and
(ii) so long as no Default has occurred and is continuing, not
exercise such right other than on reasonable notice and so as
not to disrupt unreasonably the commercial operations of
Lessee.
8.7 OWNERSHIP; PROPERTY INTERESTS; RELATED MATTERS: Lessee will:-
(a) not do or knowingly permit to be done or omit or knowingly permit the
omission of any act or thing which might reasonably be expected to
jeopardise the rights of Lessor as owner and lessor of the Aircraft;
(b) on all occasions when the ownership of the Aircraft, any Engine or any
Part is relevant, make clear to third parties that title is held by
Lessor;
(c) not at any time (i) represent or hold out Lessor or the Banks as
carrying goods or passengers on the Aircraft or as being in any way
connected or associated with any operation or carriage (whether for
hire or reward or gratuitously) which may be undertaken by Lessee or
(ii) pledge the credit of Lessor or the Banks;
(d) ensure that there is always affixed, and not removed or in any way
obscured, a fireproof plate (having dimensions of not less than 10 cm.
x 7 cm.) in a reasonably prominent position in the cockpit of the
Aircraft adjacent to the certificate of airworthiness and on each
Engine stating:-
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"This Aircraft/Engine is owned by Polaris Holding Company and is
leased to Air South Airlines, Inc. and may not be operated by any
other person without the prior written consent of Polaris Holding
Company";
(e) not create or permit to exist any Security Interest upon the Aircraft,
any Engine or any Part;
(f) not do or permit to be done anything which may reasonably be expected
to expose the Aircraft, any Engine or any Part to penalty, forfeiture,
impounding, detention, appropriation, damage or destruction and
without prejudice to the foregoing, if any such penalty, forfeiture,
impounding, detention or appropriation, damage or destruction occurs,
give Lessor notice and use best endeavours to procure the immediate
release of the Aircraft, any Engine or the Part, as the case may be;
(g) not abandon the Aircraft, the Engine or any Part;
(h) pay and discharge or cause to be paid and discharged when due and
payable or make adequate provision by way of security or otherwise for
all debts, damages, claims and liabilities which have given or might
give rise to a Security Interest over or affecting the Aircraft, any
Engine or any Part; and
(i) not attempt, or hold itself out as having any power, to sell, lease or
otherwise dispose of the Aircraft, any Engine or any Part.
8.8 GENERAL: Lessee will:-
(a) not liquidate or dissolve (except in connection with a transaction
otherwise permitted by this Clause 8.8 (a), and Lessee shall not
consolidate with or merge into, any other corporation, and Lessee
shall not convey, transfer, lease or otherwise dispose of all or
substantially all of its property and other assets, whether in one or
series of related transactions unless in the case of any such
consolidation, merger, conveyance, transfer, lease or other
disposition:-
(i) the corporation formed by or surviving such consolidation or
merger or the corporation which acquires by conveyance,
transfer, lease or other disposition all or a material portion
of such property and other assets or stock (the "Successor
Entity")-
(A) shall be a corporation organised and existing under
the laws of the United States of America or any state
thereof;
(B) immediately after giving effect to such transaction,
shall be Lessee or shall have acquired or succeeded
to all or substantially all of the property and other
assets (including, without limitation, all or
substantially all of Lessee's property and other
assets) as an entirety; and
(C) shall execute and deliver to Lessor an agreement, in
form and substance reasonably satisfactory to Lessor,
which is a legal, valid, binding and enforceable
assumption by such Successor Entity of the due and
punctual performance and observance of each covenant
and condition of this Agreement and agreement to be
bound thereby, and
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shall execute, deliver and/or file such recordations
and filings with any Government Entity and such other
documents as Lessor shall reasonably deem to be
necessary or advisable (including, without
limitation, to preserve and protect the interests of
Lessor) to evidence, or in connection with, such
consolidation, merger, sale, lease, transfer or other
disposition or acquisition and an officer's
certificate from a responsible officer of the
Successor Entity confirming the legal, valid, binding
and enforceable nature of such assumption, and to the
effect that the other requirements of this paragraph
have been satisfied, and a legal opinion from counsel
confirming the legal, valid, binding and enforceable
nature of such assumption and otherwise in such form
and substance reasonably satisfactory to Lessor; and
(ii) prior to and immediately after giving effect to such
transaction, no Default or Event of Default shall have
occurred and be continuing.
No such permitted disposition to a Successor Entity shall relieve or
release Lessee of or from any obligations hereunder which arose or
existed prior to such disposition. Promptly following the closing of
such disposition, Lessee shall provide Lessor with a certificate
signed by Lessee's chief financial officer to the effect that such
disposition will not have a material adverse effect on Lessee's
ability to perform its obligations under this Agreement;
(b) ensure that no change will occur in the Habitual Base of the Aircraft
without the prior written consent of Lessor. Lessor agrees that it
shall not withhold its consent to a change in the Habitual Base to
another state of the United States of America if Lessee shall have
provided Lessor with an opinion of counsel practising in the state of
the United States of America proposed by Lessee to be the Habitual
Base in form and in substance reasonably satisfactory to Lessor to the
effect that the rights and interests of Lessor are duly protected; and
(c) not, without giving Lessor 30 days prior notice (in accordance with
this Agreement), change its chief executive office (as such term
is defined in Article 9 of the Uniform Commercial Code as in effect in
the State of South Carolina) from ▇▇▇▇ ▇▇. ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇,
▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇;
(d) remain a Certificated Air Carrier and maintain, without limitation,
its status so as to fall within the purview of Section 1110 of Title
11 of the United States Code or any analogous Statute; and
(e) remain a "citizen of the United States" as defined in Section 101(16)
of the Federal Aviation Act.
8.9 RECORDS: Lessee will:-
(a) cause accurate, complete and current records of all flights made by,
and all maintenance carried out on, the Aircraft (including in
relation to each Engine and Part subsequently installed, before the
installation) to be kept; keep the records in such manner as the Air
Authority may from time to time require, and ensure that they comply
with the recommendations of any manufacturers of the Aircraft, any
Engine or any Part. All records must be maintained in English. The
records will form part of the Aircraft Documents; and
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(b) procure access to a revision service in respect of, and will maintain
with appropriate revisions in English, all Aircraft Documents,
records, logs, and other materials required by applicable laws and
best practice of major international air transport operators in
respect of the Aircraft.
8.10 PROTECTION: Lessee will:-
(a) maintain the registration of the Aircraft with the Air Authority in
the name of Lessor and, to the extent permitted under the laws of the
State of Registration, reflecting the interests of Lessor and not do
or suffer to be done anything which might adversely affect that
registration; and
(b) do all acts and things (including, without limitation, making any
filing or registration with the Air Authority or any other Government
Entity) and execute and deliver, notarise, file, register and record
all documents (including, without limitation, any amendment of this
Agreement) as may be required by Lessor:-
(i) following any change or proposed change in the ownership or
financing of the Aircraft or in the manner of securing
Lessor's obligations to the Banks; or
(ii) following any modification of the Aircraft, any Engine or any
Part or the permanent replacement of any Engine or Part in
accordance with this Agreement, so as to ensure that the
rights of Lessor as owner and lessor of the Aircraft and
under this Agreement apply with the same effect as before; or
(iii) to establish, maintain, preserve, perfect and protect the
rights of Lessor under this Agreement or the interest of
Lessor as owner of the Aircraft.
8.11 MAINTENANCE AND REPAIR: Lessee will:-
(a) keep the Aircraft airworthy in all respects and in good repair and
condition;
(b) not change the Agreed Maintenance Programme or the schedule of the
Agreed Maintenance Programme without the written consent of Lessor;
(c) maintain the Aircraft in accordance with the Agreed Maintenance
Programme through the Agreed Maintenance Performer and perform (at the
respective intervals provided in the Agreed Maintenance Programme) all
Major Checks;
(d) maintain the Aircraft in accordance with FAA Federal Air Regulations
Part 121 and any other rules and regulations of the FAA as may be
applicable to passenger category aircraft and in at least the same
manner and with at least the same care, including, without limitation,
maintenance scheduling, modification status and technical condition,
as is the case with respect to similar aircraft owned or otherwise
operated by Lessee and as if Lessee were to retain the Aircraft in its
fleet and continue to operate the Aircraft after the Expiry Date and
including, without limitation, all maintenance to the Airframe, any
Engine or any Part required to maintain all warranties, performance
guarantees or service life policies in full force and effect;
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(e) comply with all mandatory inspection and modification requirements,
airworthiness directives and similar requirements applicable to the
Aircraft, any Engine or Part having a compliance date during the Term
or within 180 days after the Expiry Date and which are required by the
Air Authority, and/or the FAA and/or the laws of the state of
manufacture of the Aircraft, any Engine or Part and/or recommended by
any manufacturer of the Aircraft, any Engine or Part (each of the
foregoing being hereinafter referred to as a "Relevant AD").
The cost of compliance with any single Relevant AD shall be allocated
among Lessor and Lessee as follows:-
(i) Lessee shall be responsible for the first $100,000 of such
cost;
(ii) Lessor and Lessee shall share, on an equal basis, the portion
of such cost (if any) which exceeds $100,000 up to and
including $200,000; and
(iii) Lessor shall be wholly responsible for the portion of such
cost (if any) which exceeds $200,000 (subject always to the
provisions of the following paragraph).
Notwithstanding the foregoing, in the event that the total cost of any
single Relevant AD (such total cost to be mutually agreed, in good
faith, between Lessor and Lessee) exceeds $200,000 (the "Threshold
Amount"), Lessor may elect not to make its contribution to the cost of
compliance with such Relevant AD as described in (iii) above. If
Lessor shall so elect, Lessee shall be entitled, by giving prior
written notice to Lessor, to terminate this Agreement and redeliver
the Aircraft to Lessor in accordance with Clause 12 and Schedule 3
(except for compliance with the Relevant AD which gave rise to such
termination) on the earlier of (x) the date which is 30 days after the
date of such notice from Lessee to Lessor; or (y) the date on which
the Aircraft is required to be removed from service by reason of
non-compliance with the applicable Relevant AD. Such notice shall
specify the proposed redelivery date of the Aircraft by Lessee and,
upon the receipt of such notice by Lessor, the then current definition
of Expiry Date shall be deemed to have been amended accordingly. Upon
any termination of this Agreement pursuant to this Clause 8.11 (e),
neither party shall be under any further obligation to the other
hereunder except for (x) accrued obligations of Lessee hereunder; and
(y) obligations hereunder which are expressed to continue
notwithstanding the expiration of the Term and provided further that
Lessor shall, if applicable having regard to the provisions of Clause
7.3, make the rebate described in Clause 7.3 (i) and the adjustment
payments described in Schedule 3 shall be payable by Lessee;
(f) comply with all applicable laws and the regulations of the Air
Authority and other aviation authorities with jurisdiction over Lessee
or the Aircraft, any Engine or Part regardless of upon whom such
requirements are imposed and which relate to the maintenance,
condition, use or operation of the Aircraft or require any
modification or alteration to the Aircraft, any Engine or Part;
(g) maintain in good standing a current certificate of airworthiness (in
the appropriate category for the nature of the operations of the
Aircraft) for the Aircraft issued by the Air Authority except where
the Aircraft is undergoing maintenance, modification or repair
required or permitted by this Agreement and will from time to time
provide to Lessor a copy on request;
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(h) if required by the Air Authority, maintain a current certification as
to maintenance issued by or on behalf of the Air Authority in respect
of the Aircraft and will from time to time provide to Lessor a copy on
request; and
(i) procure promptly the replacement of any Engine or Part which has
become time, cycle or calendar expired, lost, stolen, seized,
confiscated, destroyed, damaged beyond repair, unserviceable or
permanently rendered unfit for use, with an engine or part complying
with the conditions set out in Clause 8.13(a).
8.12 REMOVAL OF ENGINES AND PARTS: Lessee will ensure that no Engine or
Part installed on the Aircraft is at any time removed from the
Aircraft other than:-
(a) if replaced as expressly permitted by this Agreement; or
(b) if the removal is of an obsolete item and is in accordance with the
Agreed Maintenance Programme; or
(c) (i) during the course of maintaining, servicing, repairing,
overhauling or testing that Engine or the Aircraft, as the
case may be; or
(ii) as part of a normal engine or part rotation programme; or
(iii) for the purpose of making such modifications to the Engine or
the Aircraft, as the case may be, as are permitted under this
Agreement;
and then in each case only if it is reinstalled or replaced by an
engine or part complying with Clause 8.13(a) as soon as practicable
and in any event no later than the Expiry Date.
8.13 INSTALLATION OF ENGINES AND PARTS: Lessee will:-
(a) ensure that, except as permitted by this Agreement, no engine or part
is installed on the Aircraft unless:-
(i) in the case of an engine, it is an engine of the same model
as, or an improved or advanced version of the Engine it
replaces, which is in the same or better operating condition,
has substantially similar hours available until the next
scheduled checks, inspections, overhauls and shop visits and
has the same or greater value and utility as the replaced
Engine;
(ii) in the case of a part, it is in as good operating condition,
has substantially similar hours available until the next
scheduled checks, inspections, overhauls and shop visits, is
of the same or a more advanced make and model and is of the
same interchangeable modification status as the replaced Part;
(iii) in each case, it has become and remains the property of Lessor
free from Security Interests and on installation on the
Aircraft will without further act be subject to this
Agreement; and
(iv) in each case, Lessee has full details as to its source and
maintenance records;
(b) if no Default has occurred which is continuing, be entitled to install
any engine or part on the Aircraft by way of replacement
notwithstanding Clause 8.13(a) if:-
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(i) there is not available to Lessee at the time and in the place
that such engine or part is required to be installed on the
Aircraft, a replacement engine or part, as the case may be,
complying with the requirements of Clause 8.13(a);
(ii) it would result in an unreasonable disruption of the operation
of the Aircraft and/or the business of Lessee to ground the
Aircraft until an engine or part, as the case may be,
complying with Clause 8.13(a) becomes available for
installation on the Aircraft; and
(iii) as soon as practicable after installation of the same on the
Aircraft but, in any event, no later than the Expiry Date,
Lessee removes any such engine or part and replaces it with
the Engine or Part replaced by it or by an engine or part, as
the case may be, complying with Clause 8.13(a).
8.14 NON-INSTALLED ENGINES AND PARTS: Lessee will:-
(a) ensure that any Engine or Part which is not installed on the Aircraft
(or any other aircraft as permitted by this Agreement) is, except as
expressly permitted by this Agreement, properly and safely stored, and
kept free from Security Interests;
(b) notify Lessor whenever any Engine is removed from the Aircraft and,
from time to time, on request procure that any person to whom
possession of an Engine is given acknowledges in writing to Lessor, in
form and substance satisfactory to Lessor, that it will respect the
interests of Lessor and as owner of the Engine and will not seek to
exercise any rights whatsoever in relation to it;
(c) (notwithstanding the foregoing provisions of this sub-clause), be
permitted, if no Default has occurred and is continuing, to install
any Engine or Part on an aircraft, or in the case of a Part, an
engine:-
(i) owned and operated by Lessee free from Security Interests; or
(ii) leased or hired to Lessee pursuant to a lease or conditional
sale agreement on a long-term basis and on terms whereby
Lessee has full operational control of that aircraft or
engine; or
(iii) acquired by Lessee and/or financed or refinanced, and operated
by Lessee, on terms that ownership of that aircraft or engine,
as the case may be, pursuant to a lease or conditional sale
agreement, or a Security Interest therein, is vested in or
held by any other person;
provided that in the case of (ii) and (iii):-
(1) the terms of any such lease, conditional sale agreement or
Security Interest will not have the effect of prejudicing the
interests of Lessor as owner and lessor of that Engine or
Part; and
(2) the lessor under such lease, the seller under such conditional
sale agreement or the holder of such Security Interest, as the
case may be, has confirmed and acknowledged in writing to
Lessor, in form and substance satisfactory to Lessor, that it
will respect the interest of Lessor as owner
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and lessor of that Engine or Part and that it
will not seek to exercise any rights whatsoever in relation
thereto.
8.15 POOLING OF ENGINES AND PARTS: Lessee will not enter into nor permit
any pooling agreement or arrangement in respect of an Engine or Part
without the prior written consent of Lessor.
8.16 EQUIPMENT CHANGES:
(a) Lessee will not make any modification or addition to the Aircraft
(each an "Equipment Change"), except for an Equipment Change which:-
(i) is expressly permitted by this Agreement, or
(ii) has the prior written approval of Lessor and which does not
diminish the value, utility, condition, or airworthiness of
the Aircraft; and
(b) So long as a Default has not occurred and is continuing, Lessee may
remove any Equipment Change if it can be removed from the Aircraft
without diminishing or impairing the value, utility, condition or
airworthiness of the Aircraft.
8.17 TITLE ON AN EQUIPMENT CHANGE:
(a) Title to all Engines and Parts installed on the Aircraft whether by
way of replacement, as the result of an Equipment Change or otherwise
(except those installed pursuant to Clause 8.13(b)) will on
installation, without further act, vest in Lessor subject to this
Agreement free and clear of all Security Interests. Lessee will at
its own expense take all such steps and execute, and procure the
execution of, all such instruments as Lessor may require and which are
necessary to ensure that title so passes to Lessor according to all
applicable laws. At any time when requested by Lessor, Lessee will
provide evidence to Lessor's satisfaction (including the provision,
if required, to Lessor of one or more legal opinions) that title has
so passed to Lessor;
(b) Lessor may require Lessee to remove any Equipment Change and to
restore the Aircraft to its condition prior to that Equipment Change;
and
(c) Except as referred to in Clause 8.17(b) any Engine or Part at any time
removed from the Aircraft will remain the property of Lessor until a
replacement has been made in accordance with this Agreement and until
title in that replacement has passed, according to applicable laws, to
Lessor subject to this Agreement free of all Security Interests
whereupon title to the replaced Engine or Part will pass to Lessee.
8.18 THIRD PARTY: Lessee will procure that no person (other than Lessor or
any Bank) will act in any manner inconsistent with its obligations
under this Agreement and that all persons will comply with those
obligations as if references to "Lessee" included a separate reference
to those persons.
9. INSURANCE
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9.1 INSURANCES: Lessee will maintain in full force during the Term
insurances in respect of the Aircraft in form and substance
satisfactory to Lessor (the "Insurances" which expression includes,
where the context so admits, any relevant re-insurance(s)) through
such brokers and with such insurers and having such deductibles and
being subject to such exclusions as may be approved by Lessor. The
Insurances will be effected either:-
(a) on a direct basis with insurers of recognised standing who normally
participate in aviation insurances in the leading international
insurance markets and led by reputable underwriter(s) approved by
Lessor; or
(b) with a single insurer or group of insurers approved by Lessor who
does not retain the risk but effects substantial reinsurance with
reinsurers in the leading international insurance markets and through
brokers each of recognised standing and acceptable to Lessor for a
percentage acceptable to Lessor of all risks insured (the
"Reinsurances").
9.2 REQUIREMENTS: Lessor's current requirements as to required Insurances
are as specified in this Clause and in Schedule 4. Lessor may from
time to time stipulate other requirements for the Insurances so that
the scope and level of cover is maintained in line with best industry
practice and the interests of Lessor protected.
9.3 CHANGE: If at any time Lessor wishes to revoke its approval of any
insurer, reinsurer, insurance or reinsurance, Lessor and/or its
brokers will consult with Lessee and Lessee's brokers (as for the
time being approved by Lessor) regarding whether that approval should
be revoked to protect the interests of the parties insured. If,
following the consultation, Lessor considers that any change should
be made, Lessee will then arrange or procure the arrangement of
alternative cover satisfactory to Lessor.
9.4 INSURANCE COVENANTS: Lessee will:-
(a) ensure that all legal requirements as to insurance of the Aircraft,
any Engine or any Part which may from time to time be imposed by the
laws of the State of Registration or any state to, from or over which
the Aircraft may be flown, in so far as they affect or concern the
operation of the Aircraft, are complied with and in particular those
requirements compliance with which is necessary to ensure that (i)
the Aircraft is not in danger of detention or forfeiture, (ii) the
Insurances remain valid and in full force and effect, and (iii) the
interests of the Indemnitees in the Insurances and the Aircraft or
any Part are not thereby prejudiced;
(b) not use, cause or permit the Aircraft, any Engine or any Part to be
used for any purpose or in any manner not covered by the Insurances
or outside any geographical limit imposed by the Insurances;
(c) comply with the terms and conditions of each policy of the Insurances
and not do, consent or agree to any act or omission which:-
(i) invalidates or may invalidate the Insurances; or
(ii) renders or may render void or voidable the whole or any part
of any of the Insurances; or
(iii) brings any particular liability within the scope of an
exclusion or exception to the Insurances;
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(d) not take out without the prior written approval of Lessor any
insurance or reinsurance in respect of the Aircraft other than those
required under this Agreement unless relating solely to hull total
loss, business interruption, profit commission and deductible risk;
(e) commence renewal procedures at least 30 days prior to expiry of any
of the Insurances and provide to Lessor:-
(i) if requested by Lessor, a written status report of renewal
negotiation 14 days prior to each expiry date;
(ii) telexed confirmation of completion of renewal prior to each
expiry date;
(iii) certificates of insurance (and where appropriate certificates
of reinsurance), and broker's (and any reinsurance brokers')
letter of undertaking in a form acceptable to Lessor in
English, detailing the coverage and confirming the insurers'
(and any reinsurers') agreement to the specified insurance
requirements of this Agreement within 7 days after each
renewal date;
(f) on request, provide to Lessor copies of documents evidencing the
Insurances;
(g) on request, provide to Lessor evidence that the Insurance premiums
have been paid;
(h) not make any modification or alteration to the Insurances material
and adverse to the interests of any of the Indemnitees;
(i) be responsible for any deductible under the Insurances; and
(j) provide any other insurance and reinsurance related information, or
assistance, in respect of the Insurances as Lessor may reasonably
require.
9.5 FAILURE TO INSURE: If Lessee fails to maintain the Insurances in
compliance with this Agreement, each of the Indemnitees will be
entitled but not bound, (without prejudice to any other rights of
Lessor under this Agreement):-
(a) to pay the premiums due or to effect and maintain insurances
satisfactory to it or otherwise remedy Lessee's failure in such
manner (including, without limitation to effect and maintain an
"owner's interest" policy) as it considers appropriate. Any sums so
expended by it will become immediately due and payable by Lessee to
Lessor together with interest thereon at the rate specified in Clause
5.11, from the date of expenditure by it up to the date of
reimbursement by Lessee; and
(b) at any time while such failure is continuing to require the Aircraft
to remain at any airport or to proceed to and remain at any airport
designated by it until the failure is remedied to its satisfaction.
9.6 CONTINUING INDEMNITY: Lessor may require Lessee to effect and to
maintain insurance after the Expiry Date with respect to its
liability under the indemnities in Clause 10 for such period as
Lessor may reasonably require (but in any event not more than 3
years) which provides for each Indemnitee to be named as additional
insured. Lessee's obligation in this Clause shall not be affected by
Lessee ceasing to be lessee of the Aircraft and/or any of the
Indemnitees ceasing to have any interest in respect of the Aircraft.
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9.7 APPLICATION OF INSURANCE PROCEEDS:
As between Lessor and Lessee:-
(a) all insurance payments received as the result of an Event of Loss
occurring during the Term will be paid to Lessor and Lessor will pay
the balance of those amounts to Lessee after deduction of all amounts
which may be or become payable by Lessee to Lessor under this
Agreement (including under Clause 11.1(b));
(b) all insurance proceeds of any property, damage or loss to the
Aircraft, any Engine or any Part occurring during the Term not
constituting an Event of Loss and in excess of the Damage
Notification Threshold will be paid to Lessor and applied in payment
(or to reimburse Lessee) for repairs or replacement property upon
Lessor being satisfied that the repairs or replacement have been
effected in accordance with this Agreement. Insurance proceeds in
amounts below the Damage Notification Threshold may be paid by the
insurer directly to Lessee. Any balance remaining may be retained by
Lessor;
(c) all insurance proceeds in respect of third party liability will,
except to the extent paid by the insurers to the relevant third
party, be paid to Lessor to be paid directly in satisfaction of the
relevant liability or to Lessee in reimbursement of any payment so
made;
(d) notwithstanding Clauses 9.7(a), (b) or (c), if at the time of the
payment of any such insurance proceeds a Default has occurred and is
continuing, all such proceeds will be paid to or retained by Lessor
to be applied toward payment of any amounts which may be or become
payable by Lessee in such order as Lessor sees fit or as Lessor may
elect.
10. INDEMNITY
10.1 GENERAL: Lessee agrees to assume liability for, defend, indemnify and
hold harmless the Indemnitees on an after tax basis from and against
any and all claims, proceedings, losses, liabilities, damages
(whether direct, indirect, special, incidental or consequential)
suits, judgments, costs, expenses (including, without limitation,
legal fees and expenses), penalties (whether civil or criminal) or
fines (each a "Claim") (regardless of when the same is made or
incurred, whether during or after the Term (but not before)):-
(a) which may at any time be suffered or incurred directly or
indirectly as a result of or in any manner connected with the
possession, delivery, performance, management, ownership,
registration, control, maintenance, condition, service,
repair, overhaul, leasing, use, operation or return of the
Aircraft, any Engine or Part (either in the air or on the
ground) whether or not the Claim may be attributable to any
defect in the Aircraft, any Engine or any Part or to its
design, testing or use or otherwise, and regardless of when
the same arises or whether it arises out of or is attributable
to any act or omission, negligent or otherwise, of any
Indemnitee;
(b) which arise out of any act or omission which invalidates or
which renders voidable any of the Insurances;
(c) which may at any time be suffered or incurred as a consequence
of any design, article or material in the Aircraft, any Engine
or any Part or its operation or use constituting an
infringement of patent, copyright, trademark, design or other
proprietary right or a breach of any obligation of
confidentiality owed to any person;
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(d) which results from Lessee's breach of any of its
representations or warranties or any other Event of Default
under this Agreement.
but excluding any Claim in relation to a particular Indemnitee to the
extent that such Claim is covered pursuant to another indemnity
provision of this Agreement or to the extent it arises solely as a
result of the willful misconduct of such Indemnitee or Lessor as a
result of Lessor Taxes or a Lessor Lien.
10.2 DURATION: The indemnities contained in this Agreement will continue
in full force after the Expiry Date.
11. EVENTS OF LOSS
11.1 If an Event of Loss occurs after delivery of the Aircraft to Lessee,
Lessee will pay the Agreed Value to Lessor on or prior to the earlier
of (i) 5 Business Days after the Event of Loss and (ii) the date of
receipt of insurance proceeds in respect of that Event of Loss.
Subject to the rights of any insurers and reinsurers or other third
party, upon irrevocable payment in full to Lessor of that amount and
all other amounts which may be or become payable to Lessor under this
Agreement, Lessor will without recourse or warranty (except as to
Lessor's Liens) and without further act, be deemed to have
transferred to Lessee all of Lessor's rights to any Engines and Parts
not installed when the Event of Loss occurred, all on an as-is
where-is basis, and will at Lessee's expense, execute and deliver
such bills of sale and other documents and instruments as Lessee may
reasonably request to evidence (on the public record or otherwise)
the transfer and the vesting of Lessor's rights in such Engines and
Parts in Lessee, free and clear of all rights of Lessor and Lessor
Liens.
11.2 REQUISITION: During any requisition for use or hire of the Aircraft,
any Engine or Part which does not constitute an Event of Loss:-
(a) the Rent and other charges payable under this Agreement will not be
suspended or abated either in whole or in part, and Lessee will not
be released from any of its other obligations under the Agreement
(other than operational obligations with which Lessee is unable to
comply solely by virtue of the requisition);
(b) so long as no Default has occurred and is continuing, Lessee will be
entitled to any hire paid by the requisitioning authority in respect
of the Term. Lessee will, as soon as practicable after the end of
any such requisition, cause the Aircraft to be put into the condition
required by this Agreement. Lessor will be entitled to all
compensation payable by the requisitioning authority in respect of
any change in the structure, state or condition of the Aircraft
arising during the period of requisition, and Lessor will apply such
compensation in reimbursing Lessee for the cost of complying with its
obligations under this Agreement in respect of any such change, but
so that, if any Default has occurred and is continuing, Lessor may
apply the compensation or hire in or towards settlement of any
amounts owing by Lessee under this Agreement.
12. RETURN OF AIRCRAFT
12.1 RETURN: On the Expiry Date or termination of the leasing of the
Aircraft under this Agreement Lessee will unless an Event of Loss has
occurred, at its expense, redeliver the Aircraft and Aircraft
Documents to Lessor at the Redelivery Location or such other airport
as is mutually acceptable to the parties hereto, in a condition
complying with Schedule 3, free and clear of all Security Interests
and Permitted Liens (other than Lessor
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Liens) and in a condition qualifying for immediate certification of
airworthiness by the FAA or as otherwise agreed by Lessor and Lessee,
and thereupon cause the Aircraft to be deregistered by the Air
Authority.
12.2 FINAL INSPECTION: Immediately prior to redelivery of the Aircraft,
Lessee will make the Aircraft available to Lessor for inspection
("Final Inspection") in order to verify that the condition of the
Aircraft complies with this Agreement. The Final Inspection will be
long enough to permit Lessor to:-
(a) inspect the Aircraft Documents;
(b) inspect the Aircraft and uninstalled Parts;
(c) inspect the Engines, including without limitation (i) at Lessor's
expense, a borescope inspection of (A) the low pressure and high
pressure compressors and (B) turbine area and (ii) at Lessee's expense
engine condition runs; and
(d) observe a 2 hour demonstration flight (with Lessor's representatives
as on-board observers).
12.3 NON-COMPLIANCE: To the extent that, at the time of Final Inspection,
the condition of the Aircraft does not comply with this Agreement,
Lessee will at Lessor's option:-
(a) immediately rectify the non-compliance and to the extent the
non-compliance extends beyond the Expiry Date, the Term will be
automatically extended and this Agreement will remain in force until
the non-compliance has been rectified; or
(b) redeliver the Aircraft to Lessor and indemnify Lessor, and provide to
Lessor's satisfaction cash as security for that indemnity, against the
cost of putting the Aircraft into the condition required by this
Agreement.
12.4 REDELIVERY: Upon redelivery Lessee will provide to Lessor all
documents necessary to export the Aircraft from the Habitual Base
(including, without limitation, a valid and subsisting export licence
for the Aircraft) and required in relation to the deregistration of
the Aircraft with the Air Authority.
12.5 ACKNOWLEDGEMENT: Provided Lessee has complied with its obligations
under this Agreement, following redelivery of the Aircraft by Lessee
to Lessor at the Redelivery Location, Lessor will deliver to Lessee an
acknowledgement confirming that Lessee has redelivered the Aircraft to
Lessor in accordance with this Agreement.
12.6 MAINTENANCE PROGRAMME:
(a) Prior to the Expiry Date and upon Lessor's request, Lessee will
provide Lessor or its agent reasonable access to the Agreed
Maintenance Programme and the Aircraft Documents in order to
facilitate the Aircraft's integration into any subsequent operator's
fleet;
(b) Lessee will, if requested by Lessor to do so, upon return of the
Aircraft deliver to Lessor a certified true current and complete copy
of the Agreed Maintenance Programme together with a letter authorising
Lessor to use such copy for "bridging" purposes for the next lessee of
the Aircraft. Lessor agrees that it will not disclose the contents of
the Agreed
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Maintenance Programme to any person or entity except to the extent
necessary to monitor Lessee's compliance with this Agreement and/or to
bridge the maintenance programme for the Aircraft from the Agreed
Maintenance Programme to another programme after the Expiry Date.
12.7 FUEL: Upon redelivery of the Aircraft to Lessor, an adjustment will be
made in respect of fuel on board on the Previous Delivery Date and the
Expiry Date at the price then prevailing at the Redelivery Location.
12.8 AIRCRAFT STORAGE: During the period of 90 days after the Expiry Date,
Lessor shall have the right to require Lessee to maintain, store and
insure the Aircraft at a location having a facility capable of
performing required maintenance of the Aircraft (to be nominated by
Lessor). Any maintenance, storage or insurance cost actually incurred
in connection with the foregoing and which is in excess of the costs
payable by Lessee in meeting its obligations under this Agreement,
shall be payable by Lessor at Lessee's direct cost without "▇▇▇▇-up".
Prior to the Expiry Date, Lessor shall advise Lessee as to whether
Lessor requires Lessee to provide the services contemplated by this
Clause 12.8.
13. DEFAULT
13.1 EVENTS: Each of the following events or conditions will constitute an
Event of Default and a repudiation of this Agreement by Lessee
(whether any such event or condition is voluntary or involuntary or
occurs by operation of law or pursuant to or in compliance with any
judgment, decree or order of any court or any order, rule or
regulation of any Government Entity):-
(a) NON-PAYMENT: Lessee fails to make any payment of Rent under this
Agreement on the due date and such failure continues for 3 Business
Days; or
(b) INSURANCE: Lessee fails to comply with any provision of Clause 9 or
any insurance required to be maintained under this Agreement is
cancelled or terminated or notice of cancellation is given in respect
of any such insurance; or
(c) BREACH: Lessee fails to comply with any other provision of this
Agreement and, if such failure is in the reasonable opinion of Lessor
capable of remedy, the failure continues for 5 days after notice from
Lessor to Lessee; or
(d) REPRESENTATION: any representation or warranty made (or deemed to be
repeated) by Lessee in or pursuant to this Agreement or in any
document or certificate or statement is or proves to have been
incorrect in any material respect when made or deemed to be repeated;
or
(e) CROSS DEFAULT:
(i) any Financial Indebtedness of Lessee or any of its
Subsidiaries is not paid when due; or
(ii) any such Financial Indebtedness becomes due or capable of
being declared due prior to the date when it would otherwise
have become due; or
(iii) the security for any such Financial Indebtedness becomes
enforceable; or
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(iv) any event of default or termination event, howsoever
described, occurs under any Other Agreement or under any
lease, hire purchase, conditional sale or credit sale
agreement of Lessee or any of its Subsidiaries; or
(f) APPROVALS: any consent, authorisation, licence, certificate or
approval of or registration with or declaration to any Government
Entity in connection with this Agreement (including, without
limitation):-
(i) required by Lessee to authorise, or in connection with, the
execution, delivery, validity, enforceability or admissibility
in evidence of this Agreement or the performance by Lessee of
its obligations under this Agreement; or
(ii) the registration of the Aircraft (to the extent that the same is
within the control of Lessee); or
(iii) any airline licence or air transport licence including, without
limitation, authority to operate the Aircraft under Part 121 of
the Federal Aviation Regulations and a Certificate of
Convenience and Necessity issued under Section 401 of the
Federal Aviation Act;
is modified in a manner unacceptable to Lessor or is withheld, or is
revoked, suspended, canceled, withdrawn, terminated or not renewed,
or otherwise ceases to be in full force; or
(g) BANKRUPTCY, ETC:
(i) Lessee or any Subsidiary consents to the appointment of a
custodian, receiver, trustee or liquidator of itself or all or
any material part of Lessee's property or Lessee's consolidated
property, or Lessee or any Subsidiary admits in writing its
inability to, or is unable to, or does not, pay its debts
generally as they come due, or makes a general assignment for
the benefit of creditors, or Lessee or any Subsidiary files a
voluntary petition in bankruptcy or a voluntary petition seeking
reorganisation in a proceeding under any bankruptcy or
insolvency laws (as now or hereafter in effect), or an answer
admitting the material allegations of a petition filed against
Lessee or any Subsidiary in any such proceeding, or Lessee or
any Subsidiary by voluntary petition, answer or consent seeks
relief under the provisions of any other bankruptcy, insolvency
or other similar law providing for the reorganisation or
winding-up of corporations, or provides for an agreement,
composition, extension or adjustment with its creditors, or any
corporate action (including, without limitation, any board of
directors or shareholder action) is taken by Lessee or any
Subsidiary in furtherance of any of the foregoing, whether or
not the same is fully effected or accomplished; or
(ii) an order, judgment or decree is entered by any court appointing,
without the consent of Lessee or any Subsidiary, a custodian,
receiver, trustee or liquidator of Lessee or any Subsidiary, or
of all or any material part of Lessee's property or Lessee's
consolidated property is sequestered, and any such order,
judgment or decree of appointment or sequestration remains in
effect, undismissed, unstayed or unvacated for a period of 30
days after the date of entry thereof or at any time an order for
relief is granted; or
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(iii) an involuntary petition against Lessee or any Subsidiary in a
proceeding under the United States Federal Bankruptcy laws or
other insolvency laws (as now or hereafter in effect) is filed
and is not withdrawn or dismissed within 30 days thereafter or
at any time an order for relief is granted in such proceeding,
or if, under the provisions of any law providing for
reorganisation or winding-up of corporations which may apply to
Lessee or any Subsidiary, any court of competent jurisdiction
assumes jurisdiction over, or custody or control of, Lessee or
any Subsidiary or of all or any material part of Lessee's
property, or Lessee's consolidated property and such
jurisdiction, custody or control remains in effect,
unrelinquished, unstayed or unterminated for a period of 30 days
or at any time an order for relief is granted in such
proceeding; or
(h) UNLAWFUL: it becomes unlawful for Lessee to perform any of its
obligations under this Agreement or this Agreement becomes wholly or
partly invalid or unenforceable; or
(i) SUSPENSION OF BUSINESS: Lessee or any of its Subsidiaries suspends or
ceases or threatens to suspend or cease to carry on all or a
substantial part of its business as a Certificated Air Carrier; or
(j) DISPOSAL: Lessee or any of its Subsidiaries disposes, conveys or
transfers or threatens to dispose, convey or transfer of all or a
material part of its assets, liquidates or dissolves or consolidates
or merges with any other Person whether by one or a series of
transactions, related or not, other than for the purpose of a
reorganisation of the terms of which have received the previous
consent in writing of Lessor; or
(k) RIGHTS: the existence, validity, enforceability or priority of the
rights of Lessor as owner and lessor in respect of the Aircraft are
challenged by Lessee or any other person claiming by or through
Lessee; or
(l) CHANGE OF OWNERSHIP: any single person, or group of persons acquire
control of Lessee without the previous consent in writing of Lessor;
or
(m) DELIVERY: Lessee fails to accept delivery of the Aircraft when validly
tendered pursuant to this Agreement by Lessor; or
(n) ADVERSE CHANGE: any event or series of events occurs which, in the
reasonable opinion of Lessor might have a material adverse effect on
the financial condition or operations of Lessee and its Subsidiaries
or on the ability of Lessee to comply with its obligations under this
Agreement.
13.2 RIGHTS: If an Event of Default occurs, Lessor may at its option (and
without prejudice to any of its other rights under this Agreement), at
any time thereafter (without notice to Lessee except as required under
applicable law):-
(a) accept such repudiation and by notice to Lessee and with immediate
effect terminate the letting of the Aircraft (but without prejudice
to the continuing obligations of Lessee under this Agreement),
whereupon all rights of Lessee under this Agreement shall cease;
and/or
(b) proceed by appropriate court action or actions to enforce performance
of this Agreement or to recover damages for the breach of this
Agreement; and/or
(c) either:-
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(i) take possession of the Aircraft, for which purpose Lessor may
enter any premises belonging to or in the occupation of or
under the control of Lessee where the Aircraft may be located,
or cause the Aircraft to be redelivered to Lessor at ▇▇▇▇▇▇▇
International Airport, Co. Clare, Ireland (or such other
location as Lessor may require), and Lessor is hereby
irrevocably by way of security for Lessee's obligations under
this Agreement appointed attorney for Lessee in causing the
redelivery or in directing the pilots of Lessee or other
pilots to fly the Aircraft to that airport and will have all
the powers and authorisations necessary for taking that
action; or
(ii) by serving notice require Lessee to redeliver the Aircraft to
Lessor at ▇▇▇▇▇▇▇ International Airport, Ireland (or such
other location as Lessor may require).
13.3 DEREGISTRATION: If an Event of Default occurs, Lessor may sell or
otherwise deal with the Aircraft free and clear of any leasehold or
other interest of Lessee as if this Agreement had never been made and
Lessee will at the request of Lessor take all steps necessary to
effect (if applicable) deregistration of the Aircraft and its export
from the country where the Aircraft is for the time being situated and
any other steps necessary to enable the Aircraft to be redelivered to
Lessor in accordance with this Agreement; Lessee hereby irrevocably
and by way of security for its obligations under this Agreement
appoints (which appointment is coupled with an interest) Lessor as its
attorney to execute and deliver any documentation and to do any act or
thing required in connection with the foregoing.
13.4 DEFAULT PAYMENTS: If:-
(a) a Default occurs; or
(b) the Aircraft is not delivered on the proposed Delivery Date
by reason of failure of Lessee to satisfy any conditions to
that delivery;
Lessee will indemnify Lessor on demand against any loss
(including loss of profit), damage, expense, cost or liability
which Lessor may sustain or incur directly or indirectly as a
result including but not limited to:-
(a) any loss of profit suffered by Lessor because of Lessor's
inability to place the Aircraft on lease with another lessee
on terms as favourable to Lessor as this Agreement or because
whatever use, if any, to which Lessor is able to put the
Aircraft upon its return to Lessor, or the funds arising upon
a sale or other disposal of the Aircraft, is not as profitable
to Lessor as this Agreement;
(b) any amount of principal, interest, fees or other sums
whatsoever paid or payable on account of funds borrowed in
order to carry any unpaid amount;
(c) any loss, premium, penalty or expense which may be incurred in
repaying funds raised to finance the Aircraft or in unwinding
any swap, forward interest rate agreement or other financial
instrument relating in whole or in part to Lessor's financing
of the Aircraft; and
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(d) any loss, cost, expense or liability sustained or incurred by
Lessor owing to Lessee's failure to redeliver the Aircraft on
the date, at the place and in the condition required by this
Agreement.
14. ASSIGNMENT
14.1 LESSEE WILL NOT ASSIGN, TRANSFER (VOLUNTARILY OR INVOLUNTARILY BY
OPERATION OF LAW OR OTHERWISE) OR CREATE OR PERMIT TO EXIST ANY
SECURITY INTEREST OVER, ANY OF ITS RIGHTS UNDER THIS AGREEMENT.
14.2 Lessor may assign or transfer all or any of its rights under this
Agreement and in the Aircraft provided that Lessor will in the case of
an assignment other than by way of security have no further obligation
under this Agreement following the assignment of all its rights under
this Agreement but notwithstanding that assignment will remain
entitled to the benefit of each indemnity and the liability insurances
effected under this Agreement. Lessee will comply with all reasonable
requests of Lessor, their successors and assigns in respect of any
such assignment. Lessor will promptly notify Lessee of any assignment.
14.3 If Lessor desires to effect any assignment or transfer of its rights
and obligations under this Agreement, Lessee agrees to cooperate and
take all such steps as Lessor may reasonably request to give the
transferee the benefit of this Agreement. Any reasonable expenses
incurred by Lessee directly as a result of any assignment contemplated
by Clause 14.2.
15. ILLEGALITY
If it is or becomes unlawful in any jurisdiction for Lessor to give
effect to any of its obligations as contemplated by this Agreement or
to continue this Agreement Lessor may by notice in writing to Lessee
terminate the leasing of the Aircraft under this Agreement and Lessee
will forthwith redeliver the Aircraft to Lessor in accordance with
Clause 12. Without prejudice to the foregoing Lessor will consult in
good faith with Lessee as to any steps which may be taken to
restructure the transaction to avoid that unlawfulness but will be
under no obligation to take any such steps.
16. MISCELLANEOUS
16.1 WAIVERS, REMEDIES CUMULATIVE: The rights of Lessor under this
Agreement:-
(i) may be exercised as often as necessary;
(ii) are cumulative and not exclusive of its rights under any law;
and
(iii) may be waived only in writing and specifically.
Delay in exercising or non-exercise of any such right will not
constitute a waiver of that right.
16.2 DELEGATION: Lessor may delegate to any person or persons all or any of
the trusts, powers or discretions vested in it by these presents and
any such delegation may be made upon such terms and conditions and
subject to such regulations (including power to subdelegate) as Lessor
in its absolute discretion thinks fit.
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16.3 CERTIFICATES: Save where expressly provided in this Agreement, any
certificate or determination by Lessor as to any rate of interest or
as to any other amount payable under this Agreement will, in the
absence of manifest error, be conclusive and binding on Lessee.
16.4 APPROPRIATION: If any sum paid or recovered in respect of the
liabilities of Lessee under this Agreement is less than the amount
then due, Lessor may apply that sum to amounts due under this
Agreement in such proportions and order and generally in such manner
as Lessor may determine at its sole discretion.
16.5 CURRENCY INDEMNITY:
(a) If Lessor receives an amount in respect of Lessee's liability under
this Agreement or if such liability is converted into a claim, proof,
judgment or order in a currency other than the currency (the
"contractual currency") in which the amount is expressed to be payable
under this Agreement:-
(i) Lessee will indemnify Lessor as an independent obligation
against any loss arising out of or as a result of such
conversion;
(ii) if the amount received by Lessor, when converted into the
contractual currency (at the market rate at which Lessor is
able on the date of receipt by Lessor (or on the next date
thereafter on which under normal banking practice Lessor is
able to convert the amount received into the contractual
currency) to purchase the contractual currency in London or at
its option New York with that other currency) is less than the
amount owed in the contractual currency, Lessee will,
forthwith on demand, pay to Lessor an amount in the
contractual currency equal to the deficit; and
(iii) Lessee will pay to Lessor on demand any exchange costs and
Taxes payable in connection with the conversion; and
(b) Lessee waives any right it may have in any jurisdiction to pay any
amount under this Agreement in a currency other than that in which it
is expressed to be payable.
16.6 SET-OFF: Lessor may set off any matured obligation owed by Lessee
under this Agreement or the Other Agreements (to the extent
beneficially owned by Lessor) against any obligation (whether or not
matured) owed by Lessor to Lessee, regardless of the place of payment
or currency. If the obligations are in different currencies, Lessor
may convert either obligation at the market rate of exchange available
in London or at its option New York for the purpose of the set-off.
If an obligation is unascertained or unliquidated, Lessor may in good
faith estimate that obligation and set off in respect of the estimate,
subject to the relevant party accounting to the other when the
obligation is ascertained or liquidated. Lessor will not be obliged
to pay any amounts to Lessee under this Agreement so long as any sums
which are then due from Lessee under this Agreement or the Other
Agreements remain unpaid and any such amounts which would otherwise be
due will fall due only if and when Lessee has paid all such sums
except to the extent Lessor otherwise agrees or sets off such amounts
against such payment pursuant to the foregoing.
16.7 SEVERABILITY: If a provision of this Agreement is or becomes illegal,
invalid or unenforceable in any jurisdiction, that will not affect:-
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(a) the legality, validity or enforceability in that jurisdiction of any
other provision of this Agreement; or
(b) the legality, validity or enforceability in any other jurisdiction of
that or any other provision of this Agreement.
16.8 REMEDY: If Lessee fails to comply with any provision of this
Agreement, Lessor may, without being in any way obliged to do so or
responsible for so doing and without prejudice to the ability of
Lessor to treat the non-compliance as a Default or an Event of
Default, effect compliance on behalf of Lessee, whereupon Lessee shall
become liable to pay immediately any sums expended by Lessor together
with all costs and expenses (including legal costs) in connection
therewith.
16.9 EXPENSES: Whether or not the Aircraft is delivered to Lessee pursuant
to this Agreement, Lessee will pay to Lessor on demand:-
(a) all expenses (including legal, professional, and out-of-pocket expense
s) incurred or payable by Lessor in connection with the negotiation,
preparation, and execution of this Agreement and all such expenses
related to any amendment to or extension of or other documentation in
connection with, or the granting of any waiver or consent under this
Agreement or the monitoring of compliance by Lessee with this
Agreement; an
(b) all expenses (including legal, survey and other costs) payable or
incurred by Lessor in contemplation of, or otherwise in connection
with, the enforcement of or preservation of any of Lessor's rights
under this Agreement, or in respect of the repossession of the
Aircraft.
All expenses payable pursuant to this Clause 16.9 will be paid in the
currency in which they are incurred by Lessor.
16.10 TIME OF ESSENCE: The time stipulated in this Agreement for all
payments payable by Lessee to Lessor and for the performance of
Lessee's other obligations under this Agreement will be of the essence
of this Agreement.
16.11 NOTICES: All notices under, or in connection with, this Agreement
will, unless otherwise stated, be given in writing by letter, telex,
facsimile or SITA. Any such notice is deemed effectively to be given
as follows:-
(i) if by letter, when delivered;
(ii) if by telex, when despatched, but only if, at the time of
transmission, the correct answerback appears at the start and
at the end of the sender's copy of the notice; and
(iii) if by facsimile or SITA, when transmitted and full
transmission has been confirmed by a printout of the facsimile
transmittal confirmation of the transmitting party.
The address, telex numbers, SITA, facsimile and telephone numbers of
Lessee and, Lessor are as follows:
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Lessee: Address: ▇▇▇▇
▇▇. ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇
Attn: President
Telex: None
SITA: None
Facsimile: ▇▇▇ ▇▇▇ ▇▇▇▇
Telephone: ▇▇▇ ▇▇▇ ▇▇▇▇
Lessor: Address: ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: Senior Vice President
Facsimile: ▇▇▇ ▇▇▇ ▇▇▇▇
Telephone: ▇▇▇ ▇▇▇ ▇▇▇▇
with a copy to: Address: GE Capital Aviation
Services, Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇-▇▇▇▇
Attn: Senior Vice President,
Portfolio Management
Facsimile: 212-357-4585
Telephone: ▇▇▇-▇▇▇-▇▇▇▇
16.12 LAW AND JURISDICTION:
(a) THIS AGREEMENT IN ALL RESPECTS IS GOVERNED BY THE GOVERNING LAW;
(b) For the benefit of Lessor, Lessee agrees that the courts of the State
of New York are to have nonexclusive jurisdiction to settle any
disputes in connection with this Agreement and submits itself and its
property to the nonexclusive jurisdiction of the courts of the State
of New York in connection with this Agreement;
(c) Without prejudice to any other mode of service, Lessee:-
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(i) appoints CT Corporation System as its agent for service of
process relating to any proceedings before the New York
courts in connection with this Agreement and agrees to
maintain the process agent in New York notified to Lessor;
(ii) agrees that failure by a process agent to notify Lessee of the
process shall not invalidate the proceedings concerned;
(iii) consents to the service of process relating to any such
proceedings by prepaid mailing of a copy of the process to
Lessee's agent at the address identified in paragraph (i);
(d) Lessee:-
(i) waives objection to the courts of the State of New York on
grounds of inconvenient forum or otherwise as regards
proceedings in connection with this Agreement;
(ii) agrees that a judgment or order of a court of the State of New
York in connection with this Agreement is conclusive and
binding on it and may be enforced against it in the courts of
any other jurisdiction;
(e) Nothing in this Clause limits the right of Lessor to bring proceedings
against Lessee in connection with this Agreement:-
(i) in any other court of competent jurisdiction; or
(ii) concurrently in more than one jurisdiction;
(f) Lessee irrevocably and unconditionally:-
(i) agrees that if Lessor brings legal proceedings against it or
its assets in relation to this Agreement no immunity from such
legal proceedings (which will be deemed to include without
limitation, suit, attachment prior to judgment, other
attachment, the obtaining of judgment, execution or other
enforcement) will be claimed by or on behalf of itself or with
respect to its assets;
(ii) waives any such right of immunity which it or its assets now
has or may in the future acquire;
(iii) consents generally in respect of any such proceedings to the
giving of any relief or the issue of any process in connection
with such proceedings including, without limitation, the
making, enforcement or execution against any property
whatsoever (irrespective of its use or intended use) of any
order or judgment which may be made or given in such
proceedings.
16.13 SOLE AND ENTIRE AGREEMENT: This Agreement, Letter Agreement No. 1 and
any related side-letters are the sole and entire agreement between
Lessor and Lessee in relation to the leasing of the Aircraft, and
supersede all previous agreements in relation to that leasing.
16.14 INDEMNITIES: All rights expressed to be granted to each Indemnitee
under this Agreement (other than Lessor) are given to Lessor on behalf
of that Indemnitee.
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16.15 COUNTERPARTS: This Agreement may be executed in counterparts each of
which will constitute one and the same document.
16.16 LANGUAGE: All notices to be given under this Agreement will be in
English. All documents delivered to Lessor pursuant to this Agreement
will be in English, or if not in English, will be accompanied by a
certified English translation. If there is any inconsistency between
the English version of this Agreement and any version in any other
language, the English version will prevail.
16.17 NO BROKERS: Each party agrees to indemnify and hold the other harmless
from and against any and all claims, suits, damages, costs and
expenses (including, but not limited to, reasonable attorneys' fees)
asserted by any agent, broker or other third party for any commission
or compensation of any nature whatsoever based upon the lease of the
Aircraft, if such claim, suit, damage, cost or expense arises out of
any action or alleged action by the indemnifying party, its employees
or agents. Lessee hereby represents and warrants that it has not
paid, agreed to pay or caused to be paid directly or indirectly in any
form, any commission, percentage, contingent fee, brokerage or other
similar payments of any kind, in connection with the establishment or
operation of this Agreement, to any employee of Lessor or to any
person or entity in the State of Incorporation or elsewhere, except to
Excluded Persons, as defined below. For the purposes hereof, the term
"Excluded Persons" shall mean (x) in the case of Lessor, any of its
officers, directors, employees, attorneys or other professional
advisors, wherever located; and (y) in the case of Lessee, any of its
officers, directors, employees, attorneys or other professional
advisors, wherever located.
17. DISCLAIMERS AND WAIVERS
17.1 EXCLUSION: THE AIRCRAFT IS DELIVERED "AS IS, WHERE IS" AND LESSEE
AGREES AND ACKNOWLEDGES THAT, SAVE AS EXPRESSLY STATED IN THIS
AGREEMENT, LESSOR WILL HAVE NO LIABILITY IN RELATION TO, AND LESSOR
HAS NOT AND WILL NOT BE DEEMED TO HAVE MADE OR GIVEN, ANY WARRANTIES
OR REPRESENTATIONS, EXPRESS OR IMPLIED, WITH RESPECT TO, THE AIRCRAFT,
INCLUDING BUT NOT LIMITED TO:-
(a) THE DESCRIPTION, AIRWORTHINESS, MERCHANTABILITY, FITNESS FOR ANY
PARTICULAR USE OR PURPOSE, VALUE, CONDITION, OR DESIGN, OF THE
AIRCRAFT OR ANY PART; OR
(b) ANY OBLIGATION, LIABILITY, RIGHT, CLAIM OR REMEDY IN TORT, WHETHER OR
NOT ARISING FROM LESSOR'S NEGLIGENCE, ACTUAL OR IMPUTED; OR
(c) ANY OBLIGATION, LIABILITY, RIGHT, CLAIM OR REMEDY FOR LOSS OF OR
DAMAGE TO THE AIRCRAFT, FOR ANY LIABILITY OF LESSEE TO ANY THIRD
PARTY, OR FOR ANY OTHER DIRECT, INCIDENTAL OR CONSEQUENTIAL DAMAGES.
17.2 WAIVER: LESSEE HEREBY WAIVES, AS BETWEEN ITSELF AND THE LESSOR, ALL
ITS RIGHTS IN RESPECT OF ANY WARRANTY OR REPRESENTATION, EXPRESS OR
IMPLIED, ON THE PART OF LESSOR AND ALL CLAIMS AGAINST LESSOR HOWSOEVER
AND WHENEVER ARISING AT ANY TIME IN RESPECT OF OR OUT OF THE OPERATION
OR PERFORMANCE OF THE AIRCRAFT OR THIS AGREEMENT EXCEPT TO THE EXTENT
ARISING UNDER CLAUSE 2.4.
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17.3 CONFIRMATION: LESSEE CONFIRMS THAT IT IS FULLY AWARE OF THE PROVISIONS
OF THIS CLAUSE AND ACKNOWLEDGES THAT RENT AND OTHER AMOUNTS HAVE BEEN
CALCULATED BASED ON ITS PROVISIONS.
18. SECTION 1110
Lessee acknowledges that Lessor would not have entered into this
Agreement unless it had available to it the benefits of a lessor under
Section 1110 of Title 11 of the United States Code. Lessee
covenants and agrees with Lessor that to better ensure the
availability of such benefits, Lessee shall support any motion,
petition or application filed by Lessor with any bankruptcy court
having jurisdiction over Lessee, whereby Lessor seeks recovery of
possession of the Aircraft under said Section 1110 and shall not in
any way oppose such action by Lessor unless Lessee shall have complied
with the requirements of said Section 1110 to be fulfilled in order to
entitle Lessee to continued use and possession of the Aircraft
hereunder. In the event said Section 1110 is amended, or if it is
repealed and another statute is enacted in lieu thereof, Lessor and
Lessee agree to amend this Agreement and take such other action not
inconsistent with this Agreement as Lessor reasonably deems necessary
so as to afford to Lessor the rights and benefits as such amended or
substituted statute confers upon owners and lessors of aircraft
similarly situated to Lessor.
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