Exhibit 10.38
EXECUTION COPY
================================================================================
AIRCRAFT PURCHASE AGREEMENT [N288SK]
among
SOLITAIR CORP.
as Seller
CHAUTAUQUA AIRLINES, INC.
as Lessee
MITSUI & CO. (U.S.A.), INC.
as Beneficiary
and
▇▇▇▇▇ FARGO BANK NORTHWEST, NATIONAL ASSOCIATION,
not in its individual capacity but solely as Owner Trustee
as Owner Trustee
dated as of June 5, 2001
One (1) EMB-145LR aircraft
manufacturer's serial number ▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇ registration ▇▇▇▇ N288SK
================================================================================
TABLE OF CONTENTS
PAGE
Section 1 SUBJECT MATTER...............................................2
Section 2 PRICE; TAXES; DELIVERY LOCATION..............................2
Section 3 TERMS OF PAYMENT................................. .... ......2
Section 4 RISK OF LOSS.................................................2
Section 5 DELIVERY OF AIRCRAFT.........................................3
Section 6 TERMS OF SALE................................................3
Section 7 DELIVERY DATE................................................3
Section 8 CONDITIONS PRECEDENT.........................................4
Section 9 Representations and Warranties...............................6
Section 10 FURTHER COVENANTS............................................9
Section 11 CONCERNING OWNER TRUSTEE....................................12
Section 12 MISCELLANEOUS...............................................12
This
AIRCRAFT PURCHASE AGREEMENT [N288SK] ("AGREEMENT"), made as of June 5,
2001, by and among SOLITAIR CORP., a
New York corporation ("SELLER"), MITSUI &
CO. (U.S.A.), INC., a
New York corporation ("BENEFICIARY"), CHAUTAUQUA AIRLINES,
INC., a
New York corporation ("LESSEE"), and ▇▇▇▇▇ FARGO BANK NORTHWEST,
NATIONAL ASSOCIATION, not in its individual capacity, but solely as Owner
Trustee under a Trust Agreement dated as of June 5, 2001, between itself and
Beneficiary (such entity, in its individual capacity being herein referred to as
"WFB" and, in its capacity as Owner Trustee under such Trust Agreement, as
"OWNER TRUSTEE");
W I T N E S S E T H:
WHEREAS, Seller is party to the EMB-145 Purchase Agreement Number
GCT-025/98, dated June 17, 1998 (the "MANUFACTURER PURCHASE AGREEMENT"), between
the Seller and EMBRAER - Empresa Brasileira de Aeronautica S.A., a Brazilian
company (the "MANUFACTURER");
WHEREAS, Seller desires to assign its right, title and interest in and to
the Manufacturer Purchase Agreement, to the extent that the same relates to the
Aircraft (as hereinafter defined) and the purchase thereof, to Aero Ltd., a
Cayman Islands corporation ("AERO"), pursuant to and in accordance with the
terms and conditions of Purchase Agreement Assignment No. 1 [N288SK], dated the
date hereof ("ASSIGNMENT NO. 1"), between Seller and Aero and consented to by
the Manufacturer, in the form attached as Exhibit C-1;
WHEREAS, Beneficiary desires that Owner Trustee purchase and acquire title
to, and Seller is willing to cause Aero to sell and transfer title to Owner
Trustee, in accordance with the terms and conditions hereinafter set forth, the
Aircraft;
WHEREAS, as a condition to Seller's assignment of its rights in the
Manufacturer Purchase Agreement pursuant to Assignment No. 1, Aero will assign
its right, title and interest in and to [certain rights of Aero under] the
Manufacturer Purchase Agreement, as assigned by Assignment No. 1, to Owner
Trustee, pursuant to and in accordance with the terms of Purchase Agreement
Assignment No. 2 [N288SK], dated the date hereof ("ASSIGNMENT NO. 2"), among
Aero, Owner Trustee and Lessee and consented to by the Manufacturer, in the form
attached as Exhibit C-2;
WHEREAS, Beneficiary desires that Owner Trustee be provided the benefit of,
and Seller is willing to cause Aero to transfer to Owner Trustee, the warranties
relating to the Airframe specified in the Assignment No. 2 and the warranties
relating to the Engines specified in the Engine Warranty Assignment and Consent,
the form of which is attached hereto as Exhibit D; and
WHEREAS, simultaneously with the sale of the Aircraft to Owner Trustee,
Beneficiary shall cause Owner Trustee to, and Owner Trustee shall, lease the
Aircraft to Chautauqua Airlines, Inc., a
New York corporation (the "LESSEE"),
pursuant to Aircraft Lease Agreement [N288SK] dated as of the date hereof
between Owner Trustee and Lessee (the "LEASE"); and
WHEREAS, capitalized terms used herein and not otherwise defined herein
shall have the meanings ascribed thereto in the Lease and shall be interpreted
in accordance with the rules of construction set forth in Section 1.03 of the
Lease;
NOW, THEREFORE, in consideration of the premises and the mutual covenants
hereinafter set forth, the parties hereto (individually a "PARTY" and
collectively the "PARTIES") agree as follows:
Section 1 SUBJECT MATTER.
In accordance with and subject to the terms and conditions hereinafter set
forth, on the Delivery Date (as defined in Section 4), Seller hereby agrees to
cause Aero to sell and transfer title to Owner Trustee, as designee of
Beneficiary, and Beneficiary hereby agrees to cause Owner Trustee to purchase
and acquire title from Aero to, one (1) Embraer EMB-145LR aircraft bearing
manufacturer's serial number 145461, together with the Engines and appurtenances
installed thereon and therein and delivered new from the Manufacturer, as more
particularly described and defined in the form of ▇▇▇▇ of Sale attached hereto
as EXHIBIT A (the "AIRCRAFT"), in accordance with the terms and conditions of
this Agreement, and
(b) Owner Trustee hereby agrees, at the direction of Beneficiary, to
purchase and acquire title to the Aircraft from Aero in accordance with the
terms and conditions hereof and to lease the Aircraft to Lessee in accordance
with the terms and conditions of the Lease.
Section 2 PRICE; TAXES; DELIVERY LOCATION.
(a) PRICE. The purchase price of the Aircraft shall be equal to the
amount payable by Seller for the Aircraft under Article 03 of the Manufacturer
Purchase Agreement, as evidenced by an invoice for the Aircraft issued by Aero,
DECREASED by any rebate payable by the Manufacturer and Aero in respect of
the Aircraft that is credited to the Beneficiary on or before the Delivery
Date and INCREASED by the amount of [*] payable directly to Solitair, and the
Seller and the Beneficiary agree that such amount as so decreased and
increased is equal to [*], which shall be the purchase price of the Aircraft
(the "AIRCRAFT PRICE") payable by the Beneficiary to Seller as consideration
for the sale and transfer of the Aircraft to the Owner Trustee, as designee
of the Beneficiary.
(b) TAXES. Seller, Beneficiary and Owner Trustee shall cooperate and
take such reasonable measures as may be requested by Lessee to ensure that the
sale of the Aircraft is arranged in such a manner as to minimize or avoid Taxes
thereon, which shall be indemnified by Lessee pursuant to the Lease.
(c) DELIVERY LOCATION. Seller shall cause Aero to deliver the Aircraft
to Owner Trustee on the Delivery Date, in accordance with the terms hereof, in
Sao ▇▇▇▇ dos ▇▇▇▇▇▇, Sao Paulo, Brazil or in such other location and
jurisdiction designated by Seller and Lessee which they determine to be
acceptable for taxation purposes and that is reasonably acceptable to
Beneficiary and Owner Trustee.
Section 3 TERMS OF PAYMENT.
(a) TIME OF PAYMENT. Subject to the satisfaction or waiver of the
conditions set forth in Section 8(a), Beneficiary shall pay, or cause to be
paid, the Aircraft Price to Seller on the Delivery Date.
(b) U.S. DOLLARS; TRANSFER. All payments due to Seller hereunder shall
be effected in United States dollars in immediately available funds without any
set-off, counterclaim or deduction of whatsoever nature by wire transfer to an
account designated by the Seller. Payments will be deemed to have been made when
such amounts have been credited and confirmed as immediately available funds to
such designated account.
Section 4 RISK OF LOSS.
2
-------
* Confidential
Delivery of the Bills of Sale to Owner Trustee and of the Acceptance
Certificate to Seller and Aero pursuant to Section 5 shall conclusively evidence
the sale of the Aircraft to Owner Trustee by Aero and of Owner Trustee's
acceptance of the Aircraft, and risk of loss of or damage to the Aircraft shall
pass from Seller and Aero to Owner Trustee at the time stated in the Acceptance
Certificate as being the time at which the transfer took place (the "DELIVERY
TIME"). The date on which the Delivery Time occurs is herein referred to as the
"DELIVERY DATE."
Section 5 DELIVERY OF AIRCRAFT.
Immediately upon receipt by Seller of the Aircraft Price, and subject to
the satisfaction or waiver of the conditions set forth in Section 8(b), Seller
shall cause Aero to deliver to Owner Trustee a duly executed original ▇▇▇▇ of
sale covering the Aircraft dated as of the Delivery Date, substantially in the
form of EXHIBIT A (the "WARRANTY ▇▇▇▇ OF SALE") and a duly executed ▇▇▇▇ of sale
covering the Aircraft dated as of the Delivery Date on FAA AC Form 8050-2 (the
"FAA ▇▇▇▇ OF SALE," and together with the Warranty ▇▇▇▇ of Sale,, the "BILLS OF
SALE"), and immediately upon receipt by it of the Bills of Sale, Beneficiary
shall cause Owner Trustee to, and Owner Trustee shall, execute and deliver to
Aero and Seller an acceptance certificate substantially in the form of EXHIBIT B
(the "ACCEPTANCE CERTIFICATE"), covering the Aircraft and dated the Delivery
Date. Seller shall ensure that the FAA ▇▇▇▇ of Sale is physically at the offices
of ▇▇▇▇▇ ▇▇▇▇▇ & ▇▇▇▇▇▇ ("LSC") in Oklahoma City and by providing one or more
attorneys at LSC with such authorization as may be necessary in order to permit
such firm to present the FAA ▇▇▇▇ of Sale at the Delivery Time to the FAA for
immediate recordation together with the other documents and instruments referred
to in Section 8(a)(v).
Section 6 TERMS OF SALE.
Seller hereby warrants and undertakes to Beneficiary that Seller shall
cause Aero to transfer to Owner Trustee all of its right, title and interest in
and to the Aircraft, free and clear of any and all Liens. EXCEPT FOR THE
WARRANTY OF TITLE PROVIDED BY AERO IN THE WARRANTY ▇▇▇▇ OF SALE, THE AIRCRAFT IS
BEING SOLD AND DELIVERED TO OWNER TRUSTEE AND PURCHASED AND ACCEPTED BY OWNER
TRUSTEE "AS IS" AND "WHERE IS." SELLER MAKES NO, AND EXPRESSLY AND SPECIFICALLY
DISCLAIMS (AND OWNER TRUSTEE AND BENEFICIARY EACH EXPRESSLY AND SPECIFICALLY
WAIVES AND DISCLAIMS) ANY, REPRESENTATION, GUARANTEE, COVENANT, CONDITION OR
WARRANTY OF ANY KIND RELATING TO THE AIRCRAFT, INCLUDING BUT NOT LIMITED TO THE
AIRWORTHINESS AND/OR CONDITION OF THE AIRCRAFT, WHETHER EXPRESS OR IMPLIED, ORAL
OR WRITTEN, ARISING BY LAW OR OTHERWISE, IN CONTRACT OR IN TORT, INCLUDING
WITHOUT LIMITATION, WARRANTIES WITH RESPECT TO THE AIRCRAFT'S AIRWORTHINESS,
MERCHANTABILITY, QUALITY, FITNESS FOR ANY PARTICULAR USE, PURPOSE, DESIGN,
CONDITION, VALUE, QUALITY, DURABILITY, OR AS TO THE ABSENCE OF LATENT, INHERENT
OR OTHER DEFECTS (WHETHER OR NOT DISCOVERABLE) OR AS TO THE ABSENCE OF ANY
INFRINGEMENT OF ANY PATENT, DESIGN, COPYRIGHT OR OTHER PROPRIETARY RIGHT OR
THOSE ARISING BY STATUTE OR OTHERWISE IN LAW FROM THE COURSE OF DEALING OR USAGE
OF TRADE.
Section 7 DELIVERY DATE.
The Delivery Date for the Aircraft is, as of the date hereof, scheduled to
occur on or about June 29, 2001 (the "SCHEDULED DELIVERY DATE"). The exact
Delivery Date will be designated by Seller, and Seller will give notice thereof
to Beneficiary, at least three (3) Business Days in advance thereof, PROVIDED
that if Seller fails to give to Beneficiary notice required by this sentence at
least three (3) Business Days prior to August 31, 2001, Beneficiary may, at its
option, by written notice to Seller,
3
terminate its commitment hereunder to purchase and lease the Aircraft with no
liability whatsoever to Seller or Lessee or any other Person.
Section 8 CONDITIONS PRECEDENT.
(a) BENEFICIARY CONDITIONS. The obligation of Beneficiary and Owner
Trustee to purchase the Aircraft from Aero at the Delivery Time is subject to
the fulfillment to the reasonable satisfaction of Beneficiary and Owner Trustee,
or waiver by Beneficiary and Owner Trustee, of the following conditions
precedent on or prior to the Delivery Time:
(i) all of the conditions precedent to obligations of Owner Trustee as
lessor under the Lease shall have been fulfilled or waived in accordance with
the terms thereof;
(ii) the Owner Trustee shall have received (1) Assignment No. 1 duly
executed and delivered by Seller and Aero and the Consent and Agreement thereto
duly executed and delivered by Manufacturer; (2) Assignment No. 2 duly executed
and delivered by Aero and the Consent and Agreement thereto duly executed and
delivered by Manufacturer; and (3) the Engine Warranty Assignment and Consent
duly executed and delivered by Seller, Lessee and the Engine Manufacturer;
(iii) all representations and warranties of Seller set forth herein or
in any of the documents delivered hereunder are true and accurate on and as of
the Delivery Date as though made on and as of the Delivery Date (unless any such
representation and warranty shall have been made with reference to a specified
date, in which case such representation and warranty shall be true and accurate
as of such specified date);
(iv) the Aircraft shall be free and clear of Liens and Beneficiary and
Owner Trustee shall have received a memorandum of Daugherty, Fowler, Peregrin &
▇▇▇▇▇▇ ("SPECIAL FAA COUNSEL"), stating that there are no Liens of record noted
in the records of the United States Federal Aviation Administration;
(v) Manufacturer shall have executed and delivered the Residual Value
Guarantee and the Deficiency Guarantee and there shall exist no condition
precedent to any such agreement becoming effective pursuant to the terms thereof
other than Delivery of the Aircraft;
(vi) Seller shall have caused Aero to have delivered an original
executed FAA ▇▇▇▇ of Sale to LSC to be held in escrow pending receipt by the
Seller of the Aircraft Price;
(vii) Lessee shall have delivered the Lease and Lease Supplement No. 1
thereto, each duly executed and delivered by Lessee, to Special FAA Counsel to
be held in escrow pending release thereof by Lessee and Owner Trustee at the
Delivery Time in accordance with the terms of the Lease;
(viii) no change shall have occurred subsequent to the execution of
this Agreement and prior to the Delivery Date in any applicable Law or in the
interpretation thereof that, in Beneficiary's reasonable opinion, would make it
illegal for Beneficiary or Owner Trustee, or both, to perform any of their
respective obligations under any of the Operative Documents;
(ix) the Beneficiary shall have received a purchase agreement and
lease in substantially the same form as this Agreement and the Lease for each of
two other Embraer EMB
4
145LR aircraft (the "OTHER PURCHASE AGREEMENTS AND OTHER LEASES") duly
executed and delivered by Seller and Lessee;
(x) the Lessee shall have paid to the Owner Trustee the initial
payment of Base Rent due under the Lease on the Delivery Date; and
(xi) no Default or Event of Default shall have occurred and be
continuing under (and as defined in) any Other Lease.
(b) SELLER CONDITIONS. The obligation of Seller to sell the Aircraft to
Owner Trustee at the Delivery Time is subject to the fulfillment to the
reasonable satisfaction of Seller, or waiver by Seller, of the following
conditions precedent:
(i) the Seller shall have received the Aircraft Price;
(ii) the Seller shall have received Assignment No. 1 duly executed and
delivered by Aero and the Consent and Agreement thereto duly executed and
delivered by Manufacturer;
(iii) all of the conditions precedent to obligations of Lessee under
the Lease shall have been fulfilled or waived in accordance with the terms
thereof;
(iv) all representations and warranties of Beneficiary, WFB and Owner
Trustee set forth herein or in any of the documents delivered hereunder or
under the Lease are true and accurate on and as of the Delivery Date as
though made on and as of the Delivery Date (unless any such representation
and warranty shall have been made with reference to a specified date, in
which case such representation and warranty shall be true and accurate as
of such specified date);
(v) the Seller and Aero shall have received the Acceptance Certificate
duly executed and delivered by Owner Trustee;
(vi) Owner Trustee shall have executed and delivered an original
application for registration of the Aircraft on FAA AC Form 8050-1 to
Special FAA Counsel, with pink copy thereof delivered to the Lessee to be
placed on board the Aircraft at the Delivery Time, each to be held in
escrow pending a direction by Seller to LSC to release the Bills of Sale
from escrow;
(vii) Owner Trustee shall have delivered the Lease and the Trust
Agreement, duly executed and delivered by Owner Trustee, to Special FAA
Counsel to be held in escrow pending release thereof by Lessee and Owner
Trustee at the Delivery Time in accordance with the terms of the Lease or
the Trust Agreement, as the case may be;
(viii) no change shall have occurred subsequent to the execution of
this Agreement and prior to the Delivery Date in any applicable Law or in
the interpretation thereof that, in Seller's reasonable opinion, would make
it illegal for Seller to perform any of its obligations under any of the
Operative Documents to which it is a party;
(ix) Beneficiary shall have caused (1) an application for registration
of the Aircraft on FAA Form 8050-1 with the original signature of Owner
Trustee attached thereto and (2) a copy of the Lease and the Lease
Supplement No. 1 thereto and the Trust Agreement with the original
signature of Owner Trustee attached thereto to be delivered to Special FAA
Counsel to be held in escrow pending a direction by Seller to Special FAA
Counsel to release the Bills of Sale from escrow; and
5
(x) the Lessee shall have received the Other Purchase Agreements and
Other Leases, duly executed and delivered by Beneficiary and Owner Trustee.
Section 9 Representations and Warranties.
(a) SELLER'S REPRESENTATIONS AND WARRANTIES. Seller hereby represents
and warrants to the other Parties hereto, as of its execution of this Agreement
and as of the Delivery Date, that:
(i) Seller is a corporation duly organized and validly existing under
the laws of the State of Delaware and has corporate power and authority to
carry on its business as presently conducted, to own its properties and to
execute and deliver, and to perform all of its obligations under this
Agreement, Assignment No. 1 and the Engine Warranty Assignment and Consent
(collectively, the "SELLER DOCUMENTS");
(ii) The execution, delivery and performance by Seller of the Seller
Documents have been duly authorized by all necessary corporate action, do
not require any stockholder approval or approval of any trustee or holder
of any indebtedness or obligations of Seller, and do not and will not
contravene the certificate of incorporation, by-laws or other charter
documents of Seller or any law, governmental rule, regulation, judgment or
order binding on Seller or contravene or result in a breach of, or
constitute a default under any indenture, mortgage, contract or other
agreement to which Seller is a party or by which Seller or its properties
may be bound or affected, except for any such conflicts, breaches or
defaults which would not, individually or in the aggregate, have a material
adverse effect on the ability of Seller to perform its obligations under
the Seller Documents;
(iii) Neither the execution and delivery by Seller of, nor the
performance by Seller of its obligations under, any of the Seller Documents
requires the consent or approval of, or the giving of notice to, or the
registration with, or the taking of any other action in respect of any
governmental entity having jurisdiction over Seller or any of its
affiliates or properties, except for the filing with the FAA of the FAA
▇▇▇▇ of Sale and such other registrations, applications and recordings
referred to in the opinion of Special FAA Counsel to be rendered by Special
FAA Counsel on the Delivery Date;
(iv) Each of the Seller Documents has been duly executed and delivered
by Seller and each of the Seller Documents constitutes the legal, valid and
binding obligations of Seller, enforceable in accordance with their
respective terms, except as enforcement thereof may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or other
similar laws affecting the enforcement of creditors' rights generally and
by such principles of equity (regardless of whether such enforceability is
considered in a proceeding in equity or at law) as a court having
jurisdiction may impose;
(v) There are no pending or, to the best of Seller's knowledge,
threatened actions or proceedings before any court, arbitrator or
administrative agency that, if adversely determined, would have a material
adverse effect on Seller's ability to perform its obligations under the
Seller Documents;
(vi) Seller is not in default in any material respect under the
Manufacturer Purchase Agreement with respect to the Aircraft or the
aircraft subject to the Other Purchase Agreements and Other Leases; and
6
(vii) as of the Delivery Date, the Aircraft shall not have been
delivered by the Manufacturer to Aero more than fourteen (14) days prior to
the Delivery Date.
(b) BENEFICIARY'S REPRESENTATIONS AND WARRANTIES. Beneficiary hereby
represents and warrants to the other Parties hereto, as of its execution of this
Agreement and as of the Delivery Date, that:
(i) Beneficiary is a corporation duly organized and validly existing
under the laws of the State of
New York and has corporate power and
authority to carry on its business as presently conducted, to own its
properties and to execute and deliver, and to perform all of its
obligations under this Agreement and the other Operative Documents to which
it is a party (collectively, the "BENEFICIARY DOCUMENTS");
(ii) The execution, delivery and performance by Beneficiary of the
Beneficiary Documents have been duly authorized by all necessary corporate
action, do not require any stockholder approval or approval of any trustee
or holder of any indebtedness or obligations of Beneficiary, and do not and
will not contravene the articles of incorporation or by-laws of Beneficiary
or any current law, governmental rule, regulation, judgment or order
binding on Beneficiary or contravene or result in a breach of, or
constitute a default under any indenture, mortgage, contract or other
agreement to which Beneficiary is a party or by which Beneficiary or its
properties may be bound or affected, except for any such conflicts,
breaches or defaults which would not, individually or in the aggregate,
have a material adverse effect on the ability of Beneficiary to perform its
obligations under the Beneficiary Documents;
(iii) Neither the execution and delivery by Beneficiary of, nor the
performance by Beneficiary of its obligations under, the Beneficiary
Documents requires the consent or approval of, or the giving of notice to,
or the registration with, or the taking of any other action in respect of,
any governmental entity having jurisdiction over Beneficiary or any of its
affiliates or properties, except for the filing with the FAA of the Trust
Agreement and such other registrations, applications and recordings
referred to in the opinion of Special FAA Counsel to be rendered by Special
FAA Counsel on the Delivery Date;
(iv) Each of the Beneficiary Documents has been duly executed and
delivered by Beneficiary and each of the Beneficiary Documents constitutes
the legal, valid and binding obligations of Beneficiary, enforceable in
accordance with their respective terms, except as enforcement thereof may
be limited by applicable bankruptcy, insolvency, reorganization, moratorium
or other similar laws affecting the enforcement of creditors' rights
generally and by such principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at law) as a
court having jurisdiction may impose;
(v) There are no pending, to the best of Beneficiary's knowledge, or
threatened actions or proceedings before any court, arbitrator or
administrative agency that, if adversely determined, would have a material
adverse effect on Beneficiary's ability to perform its obligations under
the Beneficiary Documents;
(vi) The funds to be used by the Beneficiary to acquire its interest
under this Agreement and the other Operative Documents do not constitute
assets (within the meaning of ERISA and any applicable rules and
regulations) of an ERISA Plan;
(vii) The Beneficiary acknowledges that the Residual Value Guarantee
and the Deficiency Guarantee (collectively, the "GUARANTEES") contain
confidentiality provisions that
7
prohibit the Beneficiary and Manufacturer from disclosing the Guarantees
and the terms thereof to the Lessee, Seller and Owner Trustee without the
consent of the other party, that the Beneficiary has made no such
disclosure other than in clauses (vii), (viii) and (ix) of this Section
9(b) (which disclosure the Manufacturer has consented to), that the
Manufacturer has not sought the consent of the Beneficiary to disclose any
terms of the Guarantees to the Lessee, Seller and Owner Trustee and, to the
knowledge of the Beneficiary, the Manufacturer has not made any such
disclosure;
(viii) The Beneficiary has not granted any right to the Manufacturer
under the Guarantees which is inconsistent with the rights of the Lessee
under the Operative Documents; and
(ix) The amount guaranteed by the Manufacturer under the Residual
Value Guarantee is the Guaranteed Amount.
(x) The Beneficiary has not entered into any agreements with the
Manufacturer or any Person with respect to the transactions contemplated by
this Agreement and the Operative Documents other than the Beneficiary
Documents and the Guarantees.
(c) OWNER TRUSTEE'S REPRESENTATIONS AND WARRANTIES. WFB, in its
individual capacity, and Owner Trustee, each as to itself only, hereby
represents and warrants to each of the other Parties hereto that:
(i) WFB is a national banking association duly organized and existing
under the laws of the United States of America and has the power and
authority to carry on its business as presently conducted and to perform
its respective obligations as lessor under this Agreement, the Trust
Agreement, the Lease, Assignment No. 2, the Engine Warranty Assignment and
Consent, the Acceptance Certificate and the application for registration of
the Aircraft on FAA AC Form 8050-1 and the other Operative Documents to
which it is a party (collectively, the "OWNER TRUSTEE DOCUMENTS"), whether
in its individual capacity or as Owner Trustee;
(ii) The execution, delivery and performance by Owner Trustee of the
Owner Trustee Documents have been duly authorized by all necessary trust
action on the part of WFB, do not require any approval of the shareholders
of WFB (or if such approval is required, such approval has been obtained)
or approval of any trustee or holder of any indebtedness or obligations of
WFB or Owner Trustee, and do not and will not contravene the charter or
by-laws of WFB or any current law, governmental rule, regulation, judgment
or order binding on WFB or Owner Trustee or contravene or result in a
breach of, or constitute a default under any indenture, mortgage, contract
or other agreement to which WFB or Owner Trustee is a party or by which WFB
or Owner Trustee or the property of either of them may be bound or
affected;
(iii) Neither the execution and delivery by Owner Trustee of, nor the
performance by WFB or Owner Trustee of their respective obligations under,
the Owner Trustee Documents requires the consent or approval of, or the
giving of notice to, or the registration with, or the taking of any other
action in respect of, any governmental entity having jurisdiction over WFB,
Owner Trustee or any of their respective affiliates or properties, except
for the filing with the FAA of the Trust Agreement, the application for
registration of the Aircraft on FAA AC Form 8050-1 and such other
registrations, applications and recordings referred to in the opinion of
Special FAA Counsel to be rendered by Special FAA Counsel on the Delivery
Date;
(iv) Each of the Owner Trustee Documents has been duly executed and
delivered by Owner Trustee and each of the Owner Trustee Documents
constitutes the legal, valid and binding
8
obligations of Owner Trustee, enforceable in accordance with their
respective terms, except as enforcement thereof may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or other
similar laws affecting the enforcement of creditors' rights generally and
by such principles of equity (regardless of whether such enforceability is
considered in a proceeding in equity or at law) as a court having
jurisdiction may impose;
(v) There are no pending, to the best knowledge of WFB or Owner
Trustee, or threatened actions or proceedings before any court, arbitrator
or administrative agency that, if adversely determined, would have a
material adverse effect on Owner Trustee's ability to perform its
obligations under the Owner Trustee Documents.
(d) LESSEE'S REPRESENTATIONS AND WARRANTIES. Lessee hereby represents
and warrants to each of the other Parties hereto that that each of its
warranties and representations contained in Section 5.01 of the Lease are true
and accurate as of its execution of this Agreement and as of the Delivery Date
(unless any such representation and warranty shall have been made with reference
to a specified date, in which case such representation and warranty shall be
true and accurate as of such specified date).
(e) SURVIVAL. The representations and warranties of the Parties
provided for in this Section 9 and in any other Operative Documents shall
survive the Delivery of the Aircraft and the expiration or other termination of
this Agreement and the other Operative Documents.
Section 10 FURTHER COVENANTS.
(a) FURTHER ASSURANCES. Each Party will promptly and duly execute and
deliver, or cause to be executed or delivered, to any other Party hereto (at
Seller's sole cost and expense except as may be otherwise expressly provided
herein) all and every document, agreements, certificates, instruments and any
other documents as the requesting Party or its counsel may reasonably request in
order to effect, perfect or confirm the consummation of the transactions
contemplated by this Agreement, the other Operative Documents, the agreements,
instruments and documents delivered or to be delivered hereunder or thereunder,
the taking of all necessary proceedings in connection herewith or therewith and
compliance with the conditions here or therein set forth.
(b) BENEFICIARY COVENANTS.
(i) QUIET ENJOYMENT. Beneficiary covenants that so long as no Event of
Default shall have occurred and be continuing, it will not, and it will not
permit any mortgagee or any other Person acting by or through Beneficiary or
Lessor (including any Financing Party) to take or cause or permit to be taken
any action contrary to Lessee's right to the quiet use and enjoyment of the
Aircraft during the Term, in accordance with the terms of the Lease.
(ii) LESSOR'S LIENS. The Beneficiary agrees with and for the benefit
of the Lessee and the Owner Trustee that the Beneficiary will, at its own cost
and expense, take such action as may be necessary to duly discharge and satisfy
in full, promptly after the same first becomes known to the Beneficiary, any
Lessor's Lien (other than any Lien arising pursuant to a Financing) attributable
to the Beneficiary (or an Affiliate thereof), PROVIDED, HOWEVER, that the
Beneficiary shall not be required to discharge or satisfy such Lessor's Lien
which is being contested by the Beneficiary in good faith and by appropriate
proceedings so long as such proceedings do not involve any material risk of the
sale, forfeiture or loss of the Aircraft or the Trust Estate or any interest in
any thereof.
9
(iii) AIRCRAFT REGISTRATION. Beneficiary agrees that if at any time on
or after the Delivery Date the Aircraft shall or would become ineligible for
registration in the name of the Owner Trustee at the FAA (such eligibility to be
determined without regard to any provision of law that permits the U.S.
registration of the Aircraft by restricting where it is based or used), then the
Beneficiary shall give notice thereof to the Lessee and the Owner Trustee and
shall (at its own expense and without any reimbursement or indemnification from
the Lessee) within a reasonable period after its obtaining actual knowledge that
the Aircraft is ineligible for its then-current U.S. registration (and in any
event within a period of 10 days thereafter) (x) effect a voting trust or
similar arrangement reasonably acceptable to Lessee that permits the continued
registration of the Aircraft in the name of the Owner Trustee at the FAA or (y)
transfer in accordance with the terms of the Agreement, the Lease and the Trust
Agreement all its rights, title and interest in and to the Trust Agreement and
the other Operative Documents. Each Party hereto agrees, upon the request and at
the sole expense of the Beneficiary, to cooperate with the Beneficiary in
complying with its obligations under the provisions of this Section 10(b)(i),
but without any obligation on the part of such other Party to take any action
believed by it in good faith to be unreasonably burdensome to such Party or
materially adverse to its business interests.
(iv) COMPLIANCE WITH TRUST AGREEMENT. Beneficiary further agrees with
the Lessee that so long as the Lease and the Trust Agreement are in effect it
will (I) comply with all of the terms of the Trust Agreement applicable to it
noncompliance with which would materially adversely affect the Lessee and (II)
not take any action, or cause any action to be taken, to amend, modify or
supplement any other provision of the Trust Agreement in a manner that would
materially adversely affect the Seller without the prior written consent of the
Lessee. Notwithstanding anything else to the contrary in the Trust Agreement, so
long as the Lease remains in effect, the Beneficiary agrees not to terminate or
revoke the trust created by the Trust Agreement without the consent of the
Lessee.
(v) ASSIGNMENT OF INTERESTS IN TRUST ESTATE. Beneficiary may assign
all of, or an undivided interest in, its rights and obligations hereunder, under
the other Operative Documents, and in the Trust Estate, to any Permitted
Transferee (PROVIDED that there shall be no more than two holders of the
interests in the Trust Estate at any time), upon
(A) the execution and delivery by such Permitted Transferee of an
agreement substantially in the form of Exhibit E-1 hereto or in
such other form that is reasonably satisfactory in form and
substance to Lessee and that includes the covenants,
representations and warranties of the Permitted Transferee that
are in the form of agreement attached as Exhibit E-1 and in which
the Permitted Transferee unconditionally and irrevocably assumes
the duties and obligations of the transferring Beneficiary under
the Operative Documents with respect to the interest being
transferred;
(B) if and to the extent required by the definition of Permitted
Transferee, the execution and delivery to Lessee and Owner Trustee
of a Beneficiary Guaranty; and
(C) delivery to the Lessee of an opinion of counsel (reasonably
satisfactory to Lessee, which may be in-house counsel), in form
and substance reasonably satisfactory to Lessee with respect to
the due authorization, execution, delivery and enforceability of
such agreement (and the Beneficiary Guaranty, if any) and the
absence of any conflicts with or violations of any applicable Law
(including any securities laws in respect of such transfer).
Upon (but only upon) any such transfer in accordance with the foregoing, the
duties and obligations of the Beneficiary arising from and after the date of
such transfer hereunder and under the other Operative
10
Documents shall terminate to the extent of the interest being transferred to and
assumed by the Permitted Transferee, who shall become a Beneficiary hereunder to
such extent. No such assignment shall increase the expenses or indemnity
obligations of Lessee hereunder or under any Operative Document (including,
without limitation, under Article XIV or Article XV of the Lease or under the
Tax Indemnity Agreement) or shall impair the registration of the Aircraft with
the FAA or the eligibility of the Owner Trustee to qualify as registered owner
of the Aircraft with the FAA, and the transferring Beneficiary shall provide
such information as Lessee may reasonably request to determine whether the
requirements of this sentence are satisfied. No transfer by a Beneficiary under
this Section 10(b)(v) shall release such Beneficiary from any obligations to
other Parties hereto theretofore accrued or in respect of acts or omissions
theretofore occurring or with respect to any interest not being transferred. The
transferring Beneficiary shall be responsible for all costs and expenses of any
transfer pursuant to this Section 10(b)(v) (including, but not limited to,
reasonable fees and expenses of counsel for Lessee and Owner Trustee). A
"Permitted Transferee" (1) shall be (x) a bank, savings institution, finance
company, leasing company or trust company, national banking association acting
for its own account or in a fiduciary capacity as trustee or agent under any
pension, retirement, profit sharing or similar trust or fund, insurance company,
financial institution, fraternal benefit society or a corporation acting for its
own account having a combined capital and surplus (or, if applicable,
consolidated net worth or its equivalent) of not less than $25,000,000, (y) a
subsidiary of any Person described in clause (x) where such Person provides a
guaranty of the obligations of such subsidiary substantially in the form
attached as Exhibit E-2 or in such other form that is reasonably satisfactory in
form and substance to Lessee and Owner Trustee (a "BENEFICIARY GUARANTY"), or
(z) an Affiliate of the transferring Beneficiary, so long as such Affiliate has
a combined capital and surplus (or, if applicable, consolidated net worth or its
equivalent) of not less than $25,000,000 (unless the Beneficiary remains liable
for the obligations of such Affiliate under the Operative Documents, in which
case there shall be no such net worth requirement), (2) shall be reasonably
experienced in equipment leasing and financing transactions; and (3) shall not
be (x) an airline or other Person engaged in air transportation or a competitor
of Lessee in the business of air transportation or any Affiliate thereof, (y) a
party adverse to the Lessee or any Affiliate of the Lessee in any pending
litigation or arbitration (whether as plaintiff or defendant) or (z) a Person
that has overtly threatened to initiate any such litigation or arbitration
against Lessee or any Affiliate of Lessee.
(vi) ASSIGNMENT OF RIGHTS BY BENEFICIARY AND OWNER TRUSTEE.
Notwithstanding anything to the contrary contained herein or in any other
Operative Document, on or prior to the Delivery Date, upon notice to the Seller,
each of the Owner Trustee's and Beneficiary's rights (but not any of their
respective obligations other than the obligation to pay Aircraft Price) under
this Agreement to acquire the Aircraft shall be freely assignable in connection
with a like-kind exchange under Section 1031 of the Code, PROVIDED that on or
prior to the Delivery Date the Owner Trustee and the Beneficiary shall have
reacquired all such rights which have been so assigned.
(vii) ACTIONS WITH RESPECT TO TRUST ESTATE, ETC. The Beneficiary
agrees that it will not take any action to subject the Trust Estate or the trust
established by the Trust Agreement, as debtor, to the reorganization or
liquidation provisions of the Bankruptcy Code or any other applicable bankruptcy
or insolvency statute.
(viii) CONSENT TO OTHER OPERATIVE DOCUMENTS. The Beneficiary hereby
consents in all respects to the execution and delivery of the Lease and the
other Operative Documents and hereby agrees to follow the provisions thereof
which by their terms are applicable to it.
(ix) GUARANTEES. The Beneficiary agrees for the benefit of the Lessee
that it will not make or consent to any change to the Guarantees that would make
the representation in Section 9(b)(viii) incorrect at the time of such change or
that would increase the Guaranteed Amount and the Beneficiary agrees to provide
notice to the Lessee of any decrease in the Guaranteed Amount and the amount of
such decrease.
11
(e) SURVIVAL. The obligations of the Parties under this Section 10 shall
survive the Delivery of the Aircraft.
Section 11 CONCERNING OWNER TRUSTEE.
It is understood and agreed that, except as otherwise expressly provided
herein or in the Trust Agreement or any other Operative Document, WFB is
entering into this Agreement solely in its capacity as trustee as provided in
the Trust Agreement and not in its individual capacity and in no case whatsoever
will WFB be liable or accountable in its individual capacity for any of the
statements, representations, warranties, agreements or obligations of Lessor
hereunder, or for any loss in respect thereof, as to all of which all interested
parties agree to look solely to the Trust Estate; provided that nothing in this
Section 11 shall be deemed to limit in scope or substance the personal liability
of WFB (a) to Beneficiary as expressly set forth in the Trust Agreement, (b) in
respect of the representations, warranties and agreements of WFB expressly made
in its individual capacity herein or in any other Operative Document to which it
is a party, (c) for the consequences of its own gross negligence, willful
misconduct and, in receiving, handling or remitting of funds only, its willful
misconduct or simple negligence as a trustee, (d) in respect of Lessor's Liens
attributable to it in its individual capacity, and (e) taxes, fees or other
charges on, or based on, or measured by, any fees, commissions or compensation
received by it in connection with the transactions contemplated by the Operative
Documents.
Section 12 MISCELLANEOUS.
(a) NOTICES AND REQUESTS. Any report, notice, request, demand or other
communication to or upon the Parties hereto under this Agreement shall (i) be in
the English language and in writing; (ii) be deemed to have been duly delivered
to a party if it is (1) left at the address of that party specified below or at
such other address as that party may notify to the other party from time to
time, (2) sent by courier to that party at that address, or (3) sent by
facsimile to the facsimile number of that party specified below or to such other
number as that party may notify the other party from time to time; (iii) signed
on behalf of the party giving, serving or making the same by any attorney,
director, officer, secretary, partner, agent or other duly authorized
representative of such party; and (iv) be effective (a) in the case of a letter
or delivery by courier, when left at the address referred to above; or (b) in
the case of a facsimile transmission, when receipt is confirmed by return
facsimile or by telephone or on actual receipt if not so confirmed.
For the purposes of this Agreement, all reports, notices, requests, demands
or other communications shall be given or made by being addressed as follows:
If to the Seller:
Solitair Corp.
c/o Wexford Capital LLC
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: President
Telephone: ▇▇▇-▇▇▇-▇▇▇▇
Facsimile: ▇▇▇-▇▇▇-▇▇▇▇
If to Beneficiary:
12
Mitsui & Co. (U.S.A.), Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Tel: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Attn: General Manager, Aerospace, Marine and Motor Vehicles
If to WFB or Owner Trustee:
▇▇▇▇▇ Fargo Bank Northwest, National Association
▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
Attention: Corporate Trust Department
Telephone: ▇▇▇-▇▇▇-▇▇▇▇
Facsimile: ▇▇▇-▇▇▇-▇▇▇▇
If to Lessee:
Chautauqua Airlines, Inc.
▇▇▇▇ ▇. ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Tel: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Attn: President
with a copy to:
Wexford Capital LLC
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Tel: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Attn: President
PROVIDED, that any report, notice, request, demand or other communication
delivered to Lessee in accordance with this Section 12(a) shall be effective as
to Lessee without regard to whether such report, notice, request, demand or
other communication has been delivered to Wexford Capital LLC
(b) GOVERNING LAW; JURISDICTION.
(i) THIS AGREEMENT IS BEING DELIVERED IN THE STATE OF
NEW YORK, AND
THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER SHALL, PURSUANT TO
NEW
YORK GENERAL OBLIGATIONS LAW SECTION 5-1401, BE GOVERNED BY THE LAWS OF THE
STATE OF
NEW YORK.
(ii) The Parties hereto each hereby irrevocably consents that any
legal action or proceeding against it or any of its assets arising out of
or relating to this Agreement or any other Operative Document may be
brought in any jurisdiction where it or any of its assets may be found, in
the courts of the State of
New York located in the County of
New York, New
York, and in the Federal courts sitting in the Southern District of New
York, as the Party bringing such
13
action or proceeding may elect, and by execution and delivery of this
Agreement each of the Parties hereto hereby irrevocably submits to and
accepts with regard to any such action or proceeding, for itself and in
respect of its assets, generally and unconditionally, the jurisdiction of
the aforesaid courts and irrevocably agrees to be bound by any judgment
rendered thereby. Nothing herein shall prevent any Party from bringing any
legal action or proceeding or obtaining execution of judgment in any other
appropriate jurisdiction. The Parties hereto further agree that a final
judgment in any action or proceeding arising out of or relating to this
Agreement or any other Operative Document shall be conclusive and may be
enforced in any other jurisdiction within or outside the United States by
suit on the judgment, a certified or exemplified copy of which shall be
conclusive evidence of the fact and the amount of the indebtedness or
liability therein described, or in any other manner provided by law. Each
of the Parties hereto hereby irrevocably waives, to the fullest extent
permitted by law, any objection which it may now or hereafter have to the
laying of venue of any suit, action or proceeding arising out of or
relating to this Agreement or any other Operative Document brought in any
court in or of New York, New York, and hereby further irrevocably waives
any claim that any such suit, action or proceeding in New York, New York
has been brought in an inconvenient forum.
(iii) Each Party hereto hereby irrevocably consents to the service by
certified mail at its address set forth in Section 12(a) of any summons and
complaint and any other process which may be served in any action or
proceeding arising out of or relating to this Agreement or any other
Operative Document. Notwithstanding the foregoing, nothing herein shall
affect the rights of either Party to serve process in any other manner
permitted by law.
(iv) WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY WAIVES, TO THE
FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A
TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING
OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT OR ANY OTHER OPERATIVE
DOCUMENT. Each Party hereto (a) certifies that no representative, agent or
attorney of any other Party has represented, expressly or otherwise, that
such other Party would not, in the event of litigation, seek to enforce the
foregoing waiver and (b) acknowledges that it and the other Parties hereto
have been induced to enter into this Agreement and the other transaction
documents, as applicable, by, among other things, the mutual waivers and
certifications in this section.
(c) [RESERVED.]
(d) ASSIGNMENTS. Except as otherwise expressly provided herein or in
any other Operative Document, this Agreement shall not be assignable by any
Party without the consent of the other Parties; PROVIDED, HOWEVER, that the
Beneficiary may assign its rights and obligations in and under this Agreement
without the consent of the Seller or Lessee in connection with the sale of all
or a portion of the Beneficiary's interests in the Trust Estate, the Aircraft
and Lease as provided in Section 10(b)(v) hereof and may assign its rights, but
not its obligations as provided in Section 10(b)(vi) hereof. This Agreement, and
the rights and obligations of the Parties hereunder, shall be binding upon and
inure to the benefit of each of the Parties, their respective successors and
permitted assigns.
(e) TRANSACTION COSTS. Beneficiary shall be responsible for and shall
pay and reimburse the Parties for all reasonable out of pocket costs and
expenses of the Parties (other than costs and expenses relating to the Owner
Trustee specified in the next succeeding sentence), including the costs and
expenses of counsel, LSC, Special FAA counsel (other than costs and expenses of
Special FAA Counsel referred in the next succeeding sentence) and ▇▇▇▇▇▇▇▇ Neto,
special Brazilian counsel, and the fee of Lessee's advisor (not to exceed 0.5%
of the Aircraft Price), in each case incurred in connection with the
preparation, negotiation and delivery of this Agreement and any other documents,
agreements or
14
instruments delivered in connection herewith up to a maximum amount in the
aggregate of [*], and Lessee shall be responsible for and shall pay or
reimburse Beneficiary for all such costs and expenses in excess of the
aggregate amount of [*]. Lessee also shall be responsible for and shall pay
or reimburse all costs and expenses relating to the Owner Trustee, including
the annual fees and expenses of the Owner Trustee and the costs and expenses
of Special FAA Counsel in qualifying the Trust Agreement with the FAA. All
such costs and expenses of the parties to the transaction other than the
Parties shall be evidenced by appropriate original bills or invoices, which
shall be reasonably satisfactory in form and amount to the Beneficiary and,
with respect to any amounts payable by Lessee, the Lessee.
(f) NO WAIVER. The failure of any Party to enforce at any time any of
the provisions of this Agreement or any document, agreement or instrument
delivered hereunder, or to require at any time the performance by the other
Party of any of the provisions hereof or thereof, shall in no way be construed
to be a waiver of such provisions, nor in any way affect the validity of this
Agreement or such document, agreement or instrument or any part thereof, or the
right of such Party thereafter to enforce each and every such provision. The
express waiver by any Party of any provision, condition or requirement of this
Agreement or any document, agreement or instrument delivered hereunder shall not
constitute a waiver of any future obligation to comply with such provision,
condition or requirement.
(g) SEVERABILITY. Any provision of this Agreement that is prohibited
or unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provisions in any other jurisdiction. To the extent permitted
by law, each of the Parties hereto hereby waives any provisions of law which
renders any provisions hereof prohibited or unenforceable in any respect.
(h) COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
(i) ENTIRE AGREEMENT; MODIFICATION OR REVISION. This Agreement and the
other Operative Documents are, collectively, intended to be a complete and
exclusive statement of the terms of the agreement of the Parties and this
Agreement and the other Operative Documents supersede any prior or
contemporaneous agreements, whether oral or in writing in relation to the
transactions contemplated herein. None of this Agreement, any other Operative
Document or any term hereof or thereof may be modified or waived except by an
agreement in writing signed by the Parties.
(j) HEADINGS. The headings of the Sections in this Agreement are
inserted for convenience of reference only, and are not deemed to be part of
this Agreement shall not in any way affect the interpretation thereof.
(k) NO BROKER.
(i) Seller hereby represents and warrants that it has not paid,
agreed to pay or caused to be paid directly or indirectly in any form,
to any Person, other than Seabury Securities LLC, any commission,
percentage, contingent fee, brokerage or other similar payments of any
kind, in connection with the establishment or operation of this
Agreement.
(ii) Beneficiary and Owner Trustee each hereby represents and
warrants that it has not paid, agreed to pay or caused to be paid
directly or indirectly in any form, to any Person, other than Tombo
Aviation Inc., any commission, percentage, contingent fee,
----------
* Confidential
15
brokerage or other similar payments of any kind, in connection with
the establishment or operation of this Agreement.
(l) CONFIDENTIALITY. The Parties agree to keep the following
information confidential: the Aircraft Price, Assignment No.1, Assignment No. 2
and the terms of the warranties relating to the Airframe, the Engine Warranty
Assignment and Consent and the terms of the warranties relating to the Engines
and such other information as any Party shall identify in writing to the other
Parties as confidential information. This confidentiality obligation shall
survive the termination of the Lease for a period of one year following such
termination, except that if the Lease shall have been terminated following an
Event of Default, Lessor and Beneficiary shall have the right to disclose such
information as may be necessary in order to remarket the Aircraft and/or to
enforce any remedy that may be available to it. Notwithstanding the foregoing,
this Agreement, the other Operative Documents and all information supplied by
either of the Parties hereunder or thereunder may be disclosed by any of the
other Parties (1) as may be required by Law or by any court or administrative
order, (2) to the extent that the substance hereof or thereof becomes public
knowledge through no fault or negligence of such other party, (3) to such
Party's professional advisers and to the Manufacturer and Engine Manufacturer,
and (4) to any subsequent potential transferees of the Aircraft, the Trust
Estate or an interest therein or the Beneficial Interest or to a Financing
Party; PROVIDED that any such Person agrees to be bound by this Section 12(l).
[signature page immediately follows]
16
IN WITNESS WHEREOF, the Parties hereto have duly executed this
Aircraft
Purchase Agreement [N288SK] as of the day and year first above written.
SOLITAIR CORP.
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇
-------------------------------------
Name: ▇▇▇▇ ▇▇▇▇▇▇▇
Title: Vice President
CHAUTAUQUA AIRLINES, INC.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Vice President
MITSUI & CO. (U.S.A.), INC.
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
-------------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Title: General Manager
▇▇▇▇▇ FARGO BANK NORTHWEST, NATIONAL
ASSOCIATION, not in its individual
capacity, but solely as Owner Trustee
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇
-------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇
Title: Vice President
EXHIBIT A
TO PURCHASE AGREEMENT
FORM OF ▇▇▇▇ OF SALE
KNOW ALL MEN BY THESE PRESENT THAT AERO LTD., a Cayman Islands corporation
("AERO"), whose address is [____________________], is the owner of good and
marketable title to that certain EMB-145 LR Aircraft bearing Manufacturer's
Serial No. [____], with two Rolls ▇▇▇▇▇ ▇▇▇▇▇▇▇ AE3007A1P engines bearing
manufacturer's serial numbers CAE [_____] and CAE [____], with all appliances,
parts, instruments, appurtenances, accessories, furnishings and/or other
equipment or property incorporated in or installed on or attached to said
aircraft, not including the galley equipment, serving equipment or emergency
medical equipment (hereinafter collectively referred to as the "AIRCRAFT")
purchased by ▇▇▇▇▇ FARGO BANK NORTHWEST, NATIONAL ASSOCIATION, a national
banking association, not in its individual capacity, but solely as trustee under
a Trust Agreement dated as of June 5, 2001 between itself and MITSUI & CO.
(U.S.A.), INC., a corporation organized and existing under the laws of the State
of New York, with its principal place of business at ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇,
▇▇▇ ▇▇▇▇ ▇▇▇▇▇ (the "PURCHASER"), under the
Aircraft Purchase Agreement
[N288SK], dated as of June 5, 2001, including Attachments, Exhibits, Letters,
Amendments and Agreements by and between AERO and PURCHASER.
THAT for and in consideration of the sum of US$10.00) and other valuable
consideration, receipt of which is hereby acknowledged, AERO does this ___ day
of _____, 2001, grant, convey, transfer bargain and sell, deliver and set over
to PURCHASER and unto its successors and assigns forever, all of AERO's right,
title and interest in and to the Aircraft.
THAT AERO hereby represents and warrants to PURCHASER, its successors and
assigns:
(i) that AERO has good and marketable title to the Aircraft and the good and
lawful right to the Aircraft and the good and lawful right to sell the
same; and
(ii) that good and marketable title to the Aircraft is hereby duly vested in
PURCHASER free and clear of all claims, liens, encumbrances and rights of
others of any nature. AERO hereby covenants and agrees to defend such title
forever against all claims and demands whatsoever.
This Full Warranty ▇▇▇▇ of Sale is governed by the laws of the state of New
York, United States of America.
IN WITNESS WHEREOF, AERO has caused this instrument to be executed and delivered
by its duly authorized officer and attorney in fact.
Date as of __________, __, 2001.
AERO LTD.
By:
-----------------------------
Name:
Title:
By:
-----------------------------
Name:
Title:
EXHIBIT B
TO PURCHASE AGREEMENT
FORM OF ACCEPTANCE CERTIFICATE
This undersigned ▇▇▇▇▇ FARGO BANK NORTHWEST, NATIONAL ASSOCIATION, not in
its individual capacity, but solely as trustee under a Trust Agreement, dated as
of June 5, 2001 (the "TRUST AGREEMENT"), between MITSUI & CO. (U.S.A.), INC. and
itself (the "PURCHASER"), hereby indicates and confirms to SOLITAIR CORP. (the
"SELLER") and AERO LTD. ("AERO") and their respective successors and assigns
that PURCHASER has at _____________a.m./p.m. (New York time) on this ______ day
of June, 2001 (the "DELIVERY TIME"), and at the city of Sao ▇▇▇▇ dos ▇▇▇▇▇▇, Sao
Paulo, Brazil, accepted the following Aircraft, "as is, where is" in accordance
with the provisions of the
Aircraft Purchase Agreement, dated as of June 5,
2001, among PURCHASER, SELLER and Mitsui & Co. (U.S.A.), Inc., and does hereby
consider it duly transferred to the ownership of PURCHASER, which from the
Delivery Time on assumes the full responsibility for any and all damages and
risks that may arise out of its ownership and operation:
One EMB-145 LR Aircraft bearing Manufacturer's Serial No. 145461, with two
Rolls ▇▇▇▇▇ ▇▇▇▇▇▇▇ AE3007A1P engines bearing manufacturer's serial numbers CAE
311866 and CAE 311867, with all appliances, parts, instruments, appurtenances,
accessories, furnishings and/or other equipment or property incorporated in or
installed on or attached to said aircraft (not including the galley equipment,
serving equipment or emergency medical equipment),
IN WITNESS WHEREOF, PURCHASER has caused this Acceptance Certificate to be
executed in its name, by its duly authorized officers) or representative(s),
pursuant to due corporate authority, this ___________ day of June. 2001.
▇▇▇▇▇ FARGO BANK NORTHWEST, NATIONAL
ASSOCIATION, not in its individual
capacity, but solely as trustee under the
Trust Agreement
By:
-------------------------------------
Name:
Title:
EXHIBIT A-2
Section 1. GENERAL CONDITIONS.
"APPRAISAL PROCEDURE" means, if (x) the Beneficiary does not provide a
Residual Notice to the Lessee as provided in Section 3(e) by the one hundred
eightieth (180th) day prior to the Expiration Date (it being agreed that, if
such Residual Notice is so given, the RVG Appraisal Procedure in Exhibit D-2
shall be used to determine Fair Market Sales Value, except as set forth in the
last proviso to this sentence), and (y) the Lessor and the Lessee shall not have
agreed on the Fair Market Sale Value of the Aircraft within thirty (30) days
after Lessee gives notice pursuant to Section 3(c) that it is exercising its FMV
Option, then Fair Market Sale Value shall be as specified in an appraisal
prepared and delivered in New York City and mutually agreed to by two recognized
independent aircraft appraisers, one of which shall be appointed by the Lessor
and the other of which shall be appointed by the Lessee, in each case promptly
after such one hundred eightieth (180th) day, or, if such appraisers cannot
agree on such appraisal, an appraisal arrived at by a third independent
recognized appraiser chosen by the mutual consent of the two aircraft
appraisers, PROVIDED that if either party should fail to appoint an appraiser
within fifteen (15) days of receiving notice of the appointment of an appraiser
by the other party, then such appraisal shall be made by the appraiser appointed
by the first party, and PROVIDED FURTHER, that if the two appraisers cannot
agree on such appraisal and fail to appoint a third independent recognized
aircraft appraiser within fifteen (15) days after the appointment of the second
appraiser, then either party may apply to the American Arbitration Association
to make such appointment, and PROVIDED FURTHER that the appraisal shall be
completed within thirty (30) days of the appointment of the last appraiser so
appointed, and PROVIDED FURTHER that, for purposes of Section 17.02 of the
Lease, any determination of Fair Market Sales Value or Fair Market Rental Value
pursuant to Section 17.02 of the Lease shall be made by a single recognized
independent aircraft appraiser selected by Lessor and the costs and expenses
associated therewith shall be borne by Lessee..
Each appraiser appointed pursuant to any of the foregoing procedures must
be associated with a professional organization of aircraft appraisers and the
appraised fair market sales values shall be determined by the appraisers
pursuant to ISTAT 1994 appraisal methods, definitions and assumptions (or any
successor thereto). Each of the Lessor and Lessee agrees to promptly provide the
other Party with copies of any reports received by it from any appraiser hired
by it in connection with the appraisal procedures described above. Except as
otherwise expressly provided in the Lease and in the last proviso of the first
paragraph of this definition of Appraisal Procedure, all appraisal costs will be
shared equally by the Lessor and the Lessee; provided that if the Lessee elects
not to renew the Lease or purchase the Aircraft following the conclusion of such
appraisal, the Lessee shall pay all such appraisal costs.
"ASSUMED TRANSACTION COSTS" means [*]
"BASIC RENT" means the amount payable on each Rent Payment Date as set
forth in Schedule BR1, as adjusted pursuant to Section 4.01) of the Lease,
PROVIDED that each such amount shall be allocated among the Rental Periods as
set forth in Schedule BR2, as adjusted pursuant to Section 4.01 of the Lease.
"EARLY PURCHASE OPTION" means the purchase option exercisable by Lessee on
the Early Purchase Date.
-------
* Confidential
"DEFICIENCY GUARANTEE" means the Deficiency Guarantee Agreement, dated June
5, 2001, between the Manufacturer and Beneficiary.
"FAIR MARKET RENTAL VALUE" means in respect of the Aircraft at any time,
the aggregate base rentals (which shall in no event be less than zero) which
would be payable in an arm's-length transaction for cash under a lease of the
Aircraft on an "as is", "where is" basis and otherwise on terms substantially
identical (except for Basic Rent and Term) to the terms of this Lease for such
period of time as such Fair Market Rental Value is to be determined between a
willing lessor and a willing lessee both with full knowledge of the relevant
facts, including the actual condition and maintenance status of the Aircraft at
such time, and neither under any compulsion to enter into the transaction.
"FAIR MARKET SALE VALUE" means in respect of the Aircraft, if the
Beneficiary does not provide a Residual Notice to the Lessee as provided in
Section 3(e), an amount equal to the fair market sales value (which shall in no
event be less than zero) which would be obtained in an arms' length retail
transaction for a sale of the Aircraft, between an informed and willing buyer
(other than a lessee currently in possession or a used equipment dealer) and an
informed and willing seller, neither under any compulsion to buy or sell. In
determining Fair Market Sale Value by appraisal or otherwise, it will be assumed
that the Aircraft is in the condition, location and overhaul status in which it
is required to be returned to the Lessor pursuant to Article XVIII of the Lease
(without any allowance which may otherwise be permitted by Section 6 of EXHIBIT
D-1), that the Lessee has removed all Parts which it is entitled to remove
pursuant to Article IX of the Lease and that the Aircraft is not encumbered by
the Lease, PROVIDED that if an Event of Default has occurred, then for purposes
of Section 17.02 of the Lease, the Fair Market Sales Value of the Aircraft, the
Airframe or any Engine shall be determined on an "as is, where is" basis and
shall take into account customary brokerage and other out-of-pocket fees and
expenses which typically would be incurred in connection with a sale of the
Aircraft, the Airframe or any Engine. If the Beneficiary provides a Residual
Notice as provided in Section 3(e), the definition of Fair Market Sale Value
will be determined as provided in the definition of RVG Appraisal Procedure.
"FMV OPTION" means the purchase option exercisable by the Lessee on the
Expiry Date.
"GUARANTEED AMOUNT" means [*].
"MAINTENANCE PROGRAM" means the Lessee's maintenance program, as such
program may be from time to time amended and supplemented by Lessee and which
(i) shall have been approved by the FAA ) and be in compliance with Part 121 of
the Federal Aviation Regulations (as set forth in Title 14 of the U.S. Code of
Federal Regulations), (ii) shall fully comply with the requirements of the FAA
for the EMB-145 and Rolls-▇▇▇▇▇ ▇▇▇▇▇▇▇ AE3007-A1P aero engines (or an improved
model, as the case may be) installed thereon, and (iii) shall incorporate the
requirements of the EMB-145 Scheduled Maintenance Requirements Document Part 1
("SMRD"), the Aircraft Maintenance Manual ("AMM"), the Structural Repair Manual
("SRM"), the Corrosion Prevention and Correction Program ("CPCP") and the
Original Equipment Manufacturers' ("OEMS") maintenance manuals, (all of the
foregoing as from time to time amended or supplemented), the Service Newsletters
and the service bulletins issued by the Manufacturer and all OEMs, provided,
however, that when the Aircraft is subject to a Sublease, "Maintenance Program"
shall mean any maintenance program approved by the relevant Aeronautical
Authority for the Aircraft, Airframe and engines, as applicable, but only to the
extent provided in the Sublease. .
"MINIMUM LIABILITY AMOUNT" means [*].
"NET ECONOMIC RETURN" means the Beneficiary's nominal after-tax book yield
(utilizing the multiple investment sinking fund method of analysis), computed
through the Early Purchase Date and the Expiry Date on the basis of the same
methodology, constraints and assumptions as were utilized by the
--------
* Confidential
initial Beneficiary in determining Basic Rent and Stipulated Loss Values as
of the Delivery Date; provided that, if the initial Beneficiary shall have
transferred all or any portion of its interest, Net Economic Return shall be
calculated as if the initial Beneficiary had retained its interest .
"LEASE [N287SK]" means Aircraft Lease Agreement [N287SK], dated as of June
5, 2001 between an Other Lessor and Lessee.
"LEASE [N288SK]"means Aircraft Lease Agreement [N288SK], dated as of June
5, 2001 between an Other Lessor and Lessee.
"PBH AGREEMENT" has the meaning assigned in Exhibit D-1 or Exhibit D-2, as
applicable.
"PURCHASE PRICE" means, in the case of the Early Purchase Option, the
higher of [*] and Stipulated Loss Value as listed in the column headed
"Stipulated Loss Value" in Schedule SLV on the Early Purchase Date, and in the
case of the FMV Purchase Option, the Fair Market Sale Value of the Aircraft as
of the Expiry Date.
"RESIDUAL VALUE GUARANTEE" means the Residual Value Guarantee Agreement,
dated as of June 5, 2001, between the Beneficiary and the Manufacturer.
"RVG APPRAISAL PROCEDURE" has the meaning specified in Section 9 of Exhibit
D-2.
"SCHEDULED DELIVERY DATE" means June 5, 2001, or such other date as may be
notified to Lessee by the Manufacturer and agreed to by Lessor, but not later
than August 31, 2001.
"STIPULATED LOSS VALUE" means, with respect to any given date, the amount
set forth in the column headed "Stipulated Loss Value" in Schedule SLV opposite
such date or the next succeeding date in such column, in each case as adjusted
pursuant to Section 4.01 of the Lease.
Section 2. [RESERVED]
Section 3. PURCHASE OPTION. (a) The Lessee may, at its option and upon
written notice to Lessor as hereinafter provided, (i) so long as no Specified
Default (other than an Event of Default described in Section 17.01(m) of the
Lease) shall have occurred and be continuing, purchase the Aircraft at the
Purchase Price on the date that is the fourteenth anniversary of the Delivery
Date (the "EARLY PURCHASE DATE") (such purchase option, the "EARLY PURCHASE
Option"), or (ii) so long as no Event of Default described in Section 17.02 (g),
(h) and (i) shall have occurred and be continuing, on the Expiration Date (the
"EXPIRY DATE") (such purchase option, the "FMV OPTION," and the Early Purchase
Option and FMV Option each being herein referred to as a "LESSEE PURCHASE
OPTION").
(b) In the event Lessee intends to exercise the Early Purchase Option on
the Early Purchase Date, Lessee shall give irrevocable written notice to Lessor
stating that it intends to so exercise the Early Purchase Option, which notice
shall be delivered to Lessor not less than one hundred twenty (120) days nor
more than three hundred sixty-five (365) days prior to the Early Purchase Date
and shall set forth a reasonably detailed calculation of the amounts that will
be due on the Early Purchase Date, PROVIDED that if Lessee fails to to deliver
such notice not less than one hundred twenty (120) days prior to the Early
Purchase Date, Lessee shall be deemed to have waived its right to exercise the
Early Purchase Option.
(c) In the event Lessee intends to exercise the FMV Option , Lessee shall
give written notice to Lessor of its intent to exercise its FMV Option on the
Expiry Date, which notice shall be delivered to Lessor not less than two hundred
ten (210) days prior to the Expiry Date, PROVIDED that if Lessee fails to
-------
* Confidential
deliver such notice not less than two hundred ten (210) days prior to the Expiry
Date, Lessee shall be deemed to have waived its right to exercise the FMV
Option.
(d) After providing notice of its exercise of a Lessee Purchase Option,
whether or not any purchase is consummated pursuant to a Purchase Option, Lessee
shall pay all the out-of-pocket expenses of Lessor (including, but not limited
to, reasonable legal fees) relating thereto or incurred in connection therewith,
PROVIDED that, if Lessee revokes the exercise of its FMV Option as provided in
Section 3(f) or such exercise is revoked as provided in Section 3(e), such costs
shall be limited to appraisal costs and shall be paid as provided in the
definition of the Appraisal Procedure or the RVG Appraisal Procedure, as
applicable.
(e) If (i) the Lessee has timely given the notice described in Section
3(c) that it is exercising the FMV Purchase Option, and (ii), the Beneficiary
delivers notice to Lessee (such notice, a "RESIDUAL NOTICE") not less than one
hundred eighty (180) days prior to the Expiry Date that Beneficiary has notified
or is notifying the Manufacturer that it is demanding payment under the Residual
Value Guarantee, the Fair Market Sales Value of the Aircraft shall be determined
pursuant to the RVG Appraisal Procedure in Exhibit D-2. If (i) the Lessee has
timely given the notice described in Section 3(c) that it is exercising the FMV
Purchase Option and (ii) the Beneficiary does not so deliver a Residual Notice,
the Fair Market Sales Value of the Aircraft shall be determined in accordance
with the Appraisal Procedure in this Exhibit A-2. The Manufacturer shall have
the right to notify Lessee and Beneficiary within 30 days after the
determination of Fair Market Sales Value in accordance with the RVG Appraisal
Procedure whether it will exercise its purchase option under the Residual Value
Guarantee, in which case Lessee's exercise of the FMV Purchase Option shall be
revoked and cancelled.
(f) Unless the Lessee's purchase option is revoked under the preceding
clause (e) by the Manufacturer's exercise of its purchase option under the
Residual Value Guarantee, Lessee shall have the option of revoking its exercise
of the FMV Purchase Option within forty-five (45) days after the determination
of Fair Market Sales Value pursuant to the Appraisal Procedure or within fifteen
(15) days following the determination of Fair Market Sales Value pursuant to the
RVG Appraisal Procedure, but in either case not later than 105 days prior to the
end of the Basic Term.
(g) Upon the date specified by Lessee in the notice referred to in
paragraph (b) or (c) of this Section 3, as applicable (and subject to revocation
of the FMV Purchase Option as provided in Section 3(e) or Section 3(f)), Lessee
shall pay the applicable Purchase Price for the Aircraft at the Payment Location
and in the manner set forth in Section 4.02 of the Lease, together with (i) the
amount of Basic Rent, if any, then due and unpaid on such date PLUS (ii) the
amount of deferred Basic Rent, if any, as of such date as set forth in the
column headed "Deferred Basic Rent" in Schedule SLV, MINUS (iii) the amount of
prepaid Basic Rent, if any, as of such date as set forth in the column headed
"Prepaid Basic Rent" in Schedule SLV, PLUS (iv) any Supplemental Rent unpaid as
of such date. Upon receipt by Lessor of the amounts described in the preceding
sentence, Lessor will transfer the Aircraft to Lessee on an "as is, where is"
basis and without any representation or warranty except that it is transferring
to Lessee title, free of Lessor's Liens, but subject to Liens arising by or
through Lessee, and will, at Lessee's sole cost and expense, execute and deliver
a ▇▇▇▇ of sale evidencing the same and such other instruments as Lessee may
reasonably request to evidence such transfer and the release of the Aircraft
from the terms of this Lease.
(h) Upon delivery by the Lessor of the Aircraft and payment by the Lessee
of all amounts payable by the Lessee under paragraph (g) above, the obligations
of the Lessee to pay Rent (except for Supplemental Rent obligations surviving
pursuant to Articles XIV and XV of the Lease or the Tax Indemnity Agreement or
which have otherwise accrued but not been paid as of the Early Purchase Date or
the Expiry Date) shall cease and the Term shall end.
Section 4. ADDITIONAL CONDITIONS PRECEDENT. Lessor shall have received a
copy of the Residual Value Guaranty and the Deficiency Guarantee, each duly
executed and delivered by the Manufacturer.
Section 5. RE-REGISTRATION. Lessor agrees that in connection with a
Sublease to a Permitted Sublessee that is not a Section 1110 Person and that is
not domiciled in the United States, Lessee may register the Aircraft in any
country listed on EXHIBIT F hereto; subject to satisfaction of the requirements
for such a Sublease in Section 8.01(c) of the Lease (including, without
limitation, the requirements that no Specified Default shall have occurred and
be continuing, such Permitted Sublessee has provided evidence satisfactory to
Lessor of insurance coverage required by the XI with respect to the operation of
the Aircraft by such Permitted Sublessee, and the Lessee has made the lump sum
payment required by Section 8.01(c)(i) of the Lease, if any) and to the
following conditions:
(i) the Lessee shall pay all reasonable fees and expenses (including
the reasonable fees and expenses of local counsel in such country) relating
to such re-registration;
(ii) the Lessee shall, at its cost, cause the interest of the Owner
Trustee as owner of the Aircraft to be duly registered or recorded under
the laws of such country and at all times thereafter to remain so duly
registered or recorded unless and until the registration of the Aircraft is
changed as provided herein, and shall, at its cost, cause to be done at all
times all other acts including the filing, recording and delivery of any
document or instrument and the payment of any sum necessary or, by
reference to prudent industry practice in such country, advisable in order
to create, preserve and protect such interest in the Aircraft as against
the Lessee or any third parties in such jurisdiction, and the laws of such
country would give effect to the Owner Trustee's title to and ownership
interest in the Aircraft;
(iii) the obligations of the Lessee (and of the Permitted Sublessee
under a Sublease) and the rights and remedies of the Lessor shall remain or
be, as the case may be, legal, valid, binding and enforceable in such
country, and the courts of such country will respect the choice of New York
law to govern the Lease;
(iv) the Aeronautical Authority in the country of such re-registration
imposes aircraft maintenance standards approved by, or at least as
stringent as those approved by, the FAA the JAA or the central civil
aviation authority of the United Kingdom, France, Germany, Japan, the
Netherlands or Canada;
(v) it shall not be necessary by reason of such re-registration or for
purposes of enforcing remedies contained in the Lease or the related
Sublease for the Owner Trustee or the Beneficiary to register or qualify to
do business in such country;
(vi) no Liens (except Permitted Liens) shall arise by reason of such
re-registration;
(vii) none of the Owner Trustee and the Beneficiary shall be subjected
to any risk of adverse tax consequences in the jurisdiction in which the
Aircraft is to be re-registered as a result of such re-registration for
which the Lessee does not then indemnify or cause to be indemnified such
Person in a manner satisfactory in form and substance to such Person;
(viii) any export licenses and certificate of deregistration required
in connection with any repossession or return of the Aircraft will be
readily obtainable in the normal course without material delay or material
burden on the Owner Trustee, it being agreed that the Lessee shall be
responsible for the cost thereof;
(ix) there is no tort liability of the owner or lessor of an aircraft
not in possession thereof under the laws of such jurisdiction more onerous
than under the laws of the United States or any state thereof (it being
agreed that, in the event such opinion cannot be given in a form
satisfactory to the Beneficiary, such opinion shall be waived if insurance
reasonably satisfactory to the Beneficiary is provided to cover such risk);
(x) unless Lessee shall have agreed to provide insurance reasonably
satisfactory to the Beneficiary covering the risk of requisition of use of
or title to the Aircraft by the government of such country (so long as the
Aircraft is registered under the laws of such country), the laws of such
country require fair compensation by the government of such country payable
in currency freely convertible into Dollars and freely removable from such
country (without license or permit, unless Lessee prior to such proposed
re-registration has obtained such license or permit or such license or
permit will be readily obtainable in the normal course without material
delay or material burden on the Beneficiary) for the taking or requisition
by such government of such use or title;
(xi) the Beneficiary and the Owner Trustee shall have received
opinions in scope, form and substance reasonably satisfactory to them, of
counsel, expert in the laws of such country, to the effect set forth in
clauses (ii), (iii) (with respect to the obligations of the Lessee under
the Lease), (v), (vii), (viii), (ix) and (x) of this Section 5;
(xii) such proposed change in registration is made in connection with
a Sublease to a Permitted Sublessee domiciled in such country; and
(xiii) Lessee shall deliver such request to Lessor and Beneficiary in
writing at least 20 days in advance of the date of any such proposed change
in registration.
Section 6. RENEWAL TERM. Lessor agrees to enter into good faith discussions
with Lessee regarding the potential renewal of this Lease at the end of the
Basic Term for such period or periods (any such period, a "RENEWAL Term"), and
at such amount or amounts of basic rent, as may be agreed upon by Lessor and
Lessee at the time of such discussions; PROVIDED that nothing in this Section 7
of Exhibit A-2 shall be construed as an obligation on the part of Lessor to
agree to any such Renewal Term. Lessee agrees that, notwithstanding anything to
the contrary contained herein, Lessor shall be entitled to refuse to enter into
any Renewal Term in the event that (i) the Residual Value Guarantee, or (ii) a
substitute residual value guaranty that is substantially identical to the
Residual Value Guarantee (as determined in the reasonable discretion of the
Beneficiary) and is otherwise in form and substance satisfactory to the
Beneficiary (with the obligor thereunder having a tangible net worth at least
equal to the net worth of the Manufacturer immediately prior to the first day of
such Renewal Term), shall not be available to Beneficiary during such Renewal
Term. Lessee acknowledges that, as of the date hereof, Manufacturer has
indicated that it does not intend to make the Residual Value Guarantee available
to Beneficiary during any such Renewal Term.
Section 7. ADJUSTMENTS TO BASIC RENT AND STIPULATED LOSS VALUES. The
installments of Basic Rent in SCHEDULE BR1 attached hereto are based on the
Assumed Aircraft Price being equal to [*] and on the Assumed Transaction
Costs being equal to [*]. The amount of Basic Rent payable on each Rent
Payment Date other than the first four (4) Rent Payment Date shall be
increased or decreased by [*] for every increase or decrease of [*] of the
Aircraft Price above or below the Assumed Aircraft Price. The amount of Basic
Rent payable on each Rent Payment Date other than the first four (4) Rent
Payment Date shall be decreased by [*] (or a proportionate part thereof) for
every
--------
* Confidential
decrease of [*] (or proportionate part thereof) of the Transaction Costs
below the Assumed Transaction Costs.
Section 8. [Reserved]
Section 9. SELF-INSURANCE. Lessor and Lessee agree to engage in good faith
discussions on the right of Lessee to self-insure in such amounts as may be
agreed to by Lessor and Lessee at the time of such discussions. Nothing in this
Section 5 shall be construed as an obligation on the part of Lessor or
Beneficiary to agree to any such self-insurance provisions.
Section 10. VOLUNTARY TERMINATION.
(A) TERMINATION BY SALE OF AIRCRAFT. So long as no Specified Default shall
have occurred and be continuing, the Lessee shall have the right at its option
at any time after March 31, 2009 on at least 180 days', but not more than 365
days, prior written notice (which notice shall be irrevocable, except as
provided below) to the Lessor, specifying a proposed date of termination which
shall be a Termination Date, to terminate this Lease if the chief financial
officer of the Lessee shall have certified in writing to the Lessor that the
Aircraft shall have become obsolete or shall be surplus to the Lessee's
equipment requirements. Subject to the Lessor's preemptive election under
Section 10(c), during the period following the giving of such notice of
termination until the Termination Date, the Lessee, as agent for the Lessor,
shall endeavor to sell the Aircraft "as is", without any warranty by the Lessor
or the Lessee except as to the Lessor's title, on behalf of the Lessor. If
Lessee receives any bid, it shall at least 10 Business Days prior to the
proposed day of sale, certify to Lessor in writing the amount and terms of such
bid, such proposed date of sale and the name and address of the potential buyer
(which shall not be Lessee or any Affiliate or any Person with whom Lessee or
any Affiliate has any arrangement or understanding for the future purchase,
lease, operation or use of the Aircraft). Lessor may also solicit bids directly
or through agents other than Lessee. So long as the Lessor has not exercised its
preemptive election under Section 10(c), the Lessee may, by notice to the
Lessor, withdraw its notice of termination at any time on or before the date 10
days prior to the proposed Termination Date (unless such withdrawal is due to
the cancellation of the proposed purchase of the Aircraft by the potential buyer
in which event such notice may be given at any time on or prior to the proposed
Termination Date), and thereupon this Lease shall continue in full force and
effect. Withdrawal of notice of termination shall not exhaust the Lessee's right
to give a further notice of termination as provided herein; provided that Lessee
shall not be entitled to give more than two such notices (excluding one notice
of termination which has been withdrawn due to the cancellation of the proposed
purchase of the Aircraft by the potential buyer). Unless the Lessee shall
withdraw its notice of termination as stated above or the Lessor shall have made
a preemptive election to take possession of the Aircraft in accordance with
Section 10(c), on the Termination Date, or such other date of sale as shall be
consented to in writing by the Lessor and the Lessee, which date shall
thereafter be deemed the Termination Date, the Lessee shall, upon payment in
full of the amounts described in Section 10(b), deliver the Airframe and Engines
or engines installed thereon to the party which shall have prior to such date
submitted the highest bona fide cash bid to close such sale and purchase of the
same, in the same manner as if delivery were being made to the Lessor pursuant
to Article XVIII of the Lease, and shall duly transfer to such party title to
any engines which are not Engines delivered with the Airframe in accordance with
the terms of Article XVIII of the Lease. The Lessor shall, in "as-is, where-is"
condition, without recourse or warranty (except a warranty as to the absence of
Lessor's Liens), simultaneously therewith sell and convey title to the Airframe
and the Engines or engines conveyed to the Lessor as provided in Article XVIII
of the Lease for cash to such party. Upon the sale of the Airframe and the
Engines or engines conveyed to the Lessor as provided in Article XVIII of the
Lease pursuant to this Section 10 and receipt by the Lessor of all amounts
referred to in Section 10(b), the Lessor will transfer to the Lessee, in "as-is,
where-is" condition, without recourse or warranty (except a warranty as to the
absence of Lessor's Liens), all right, title and interest of the Lessor in and
to any Engines constituting part
--------
* Confidential
of the Aircraft but which were not delivered to the purchaser with the Airframe.
The Lessee shall pay all out of pocket expenses of the Lessor and Beneficiary in
connection with any termination or proposed termination of this Lease except
that Lessee shall not be responsible for such expenses of the Lessor or the
Beneficiary in the event the Lessor exercises its preemptive election under
Section 10(c) and thereafter fails to perform its obligations under such
Section.
(b) PAYMENTS DUE UPON SALE OF AIRCRAFT. The total selling price realized at
any sale of the Airframe and Engines or engines installed thereon in accordance
with this Section 10 shall be retained by the Lessor and, in addition, on the
Termination Date, the Lessee shall pay to the Lessor or, in the case of
Supplemental Rent, to the Persons entitled thereto, in immediately available
funds, an amount equal to the sum of (A) the excess, if any, of (x) the
Stipulated Loss Value as of the Termination Date, over (y) the net proceeds of
the sale of the Aircraft, plus (B) the amount of unpaid Basic Rent, if any,
payable as of such Termination Date, PLUS (C) the amount of deferred Basic Rent,
if any, as of such Termination Date as set forth in the column headed "Deferred
Basic Rent" in Schedule SLV, MINUS (D) the amount of prepaid Basic Rent, if any,
as of such Termination Date as set forth in the column headed "Prepaid Basic
Rent" in Schedule SLV, PLUS (E) all unpaid Supplemental Rent due on or before
the Termination Date, PLUS (F) the reasonable fees and expenses of the
Beneficiary and Lessor in connection therewith, PLUS (G) any sales, transfer or
similar Taxes incurred on such sale.
(c) PREEMPTIVE ELECTION BY LESSOR. Notwithstanding the foregoing provisions
of this Section 10, the Lessor may, not later than 90 days prior to the proposed
Termination Date, notify the Lessee of its preemptive election to take
possession of the Aircraft and following delivery of such notice, the Lessee
shall have no obligation to pay Stipulated Loss Value or any amount with respect
to Stipulated Loss Value under this Section 10. On the Termination Date, if the
Lessor shall have exercised its preemptive election to retain the Aircraft in
accordance with the terms of this Section 10(c), the Lessee shall deliver the
Airframe and Engines or engines installed thereon to the Lessor in accordance
with Article XVIII of the Lease and shall pay all unpaid Basic Rent, if any,
payable before the Termination Date, together with all Basic Rent (if payable in
arrears) due on such Termination Date, all unpaid Supplemental Rent due on or
before or after the Termination Date, and the Lessor shall transfer to the
Lessee title to any Engines constituting part of the Airframes but which were
not then installed on the Aircraft as provided in Section 18.03.
(d) TERMINATION OF LEASE. Upon delivery by the Lessee of the Airframe and
Engines or engines installed thereon and payment by the Lessee of all amounts
payable by the Lessee under either Section 10(b) or 10(c), as the case may be,
the obligations of the Lessee to pay Rent (except for Supplemental Rent
obligations surviving pursuant to Articles XIV and XV of the Lease or the Tax
Indemnity Agreement or which have otherwise accrued but not paid as of the
Termination Date) shall cease and the Term shall end.
(e) EFFECT OF NO SALE OR PREEMPTIVE DELIVERY TO LESSOR. If on the
Termination Date no sale of the Aircraft shall have occurred and the Lessee has
not delivered the Aircraft to the Lessor pursuant to Section 10(c), the Lessee's
notice given pursuant to Section 10(a) shall be deemed to be withdrawn as of
such date and this Lease shall continue in full force and effect.
(f) NO DUTY ON PART OF LESSOR. Lessor shall be under no duty to solicit
bids, to inquire into the efforts of Lessee to obtain bids or otherwise to take
any action in connection with any such sale other than to cooperate with such
efforts as Lessee may reasonably request and to make the transfers described in
Section 10(a).
EXHIBIT B
PRINCIPAL AIRCRAFT DOCUMENTS
A. MANUALS.
OPERATIONAL
1. Airplane Flight Manual (AFM)
2. Weight & Balance Manual (WB)
3. Operations Manual (OM)
4. Quick Reference Handbook (QRH)
5. Dispatch Deviation Procedures Manual (DDPM)
6. Supplementary Performance Manual (SPM)
7. Operational Bulletins Set (OB)
8. Master Minimum Equipment List (MMEL)
MAINTENANCE - BASIC SET
9. Aircraft Maintenance Manual (AMM)
10. Illustrated Parts Catalog (IPC)
11. Fault Isolation Manual (FIM)
12. Non Destructive Manual (NDI)
13. Scheduled Maintenance Requirements Document (SMRD)
14. Wiring Manual (WM)
15. Structural Repair Manual (SRM)
16. Service & Information Bulletins Set (SB/IB)
17. Service Newsletters (SNL)
MAINTENANCE SUPPLEMENTARY SET
18. System Schematic Manual (SSM)
19. Instructions for Ground Fire Extinguishing and Rescue (IGFER)
20. Airport Planning (AP)
21. Illustrated tool & Equipment Manual (ITEM)
22. Task Card Manual (TCM)
23. Powerplant Build-up Manual (PPBM)
24. Auxiliary Power Unit Build up Manual (APUBM)
25. Corrosion Control Manual (CCM)
26. Vendor Service Publications Set
The documents set forth in Clauses (B), (C), (D) and (E) of this
Exhibit B shall only be required to be maintained by the Lessee (or any
Permitted Sublessee) to the extent required by the FAA or the Maintenance
Program.
B. AIRWORTHINESS DIRECTIVES DOCUMENTATION
1. A single, complete and current AD status list of each
airframe, appliances, Engine and APU AD and mandatory FAA regulation applicable
to each Aircraft, appliances, Engine and APU including:
a. AD number and revision number.
b. AD title.
c. Aircraft serial number, Engine serial number, APU
serial number, appliance serial number.
d. Engineering documentation reference.
e. Manufacturer's Service Bulletin references and
cross-references where appropriate.
f. Specify terminated or repetitive status.
g. Date of initial accomplishment,
h. Date of last maintenance accomplishment, if
repetitive.
i. Name and serial number of the internal maintenance
form used to document accomplishment, if applicable.
j. State means by which compliance was accomplished
(e.g. modified, repaired, inspected).
The list shall be typed, certified and signed by authorized
quality assurance representative of previous operator.
2. Legible copies of the completion documents that accomplish
each A.D. If the A.D. is a repetitive inspection, documentation of the last
accomplishment, signature of a certified mechanic and / or inspector, and the
mechanic's / inspector's certificate number or repair station number of the
mechanic accomplishing the work. The document must reference the A.D. number and
company authorization, which covered the AD.
3. Exemptions or deviations granted by the FAA (or equivalent) to
Lessor on AD compliance, including copy of exemption request.
4. Items 2 and 3 will be provided in individual document packages
for each AD Each package will contain all documents relative to that AD /
Aircraft combination.
C. ENGINEERING DOCUMENTATION
1. A single, current list of Airframe, appliance, Engine and APU
Service Bulletins, Engineering Orders, major repairs and Supplemental Type
Certificates ("STC") accomplished on Aircraft, Engine and APU, including method
and date of accomplishment, reference to engineering documentation, including
related drawing and original signed documents where applicable shall be provided
with information similar to that described in item B. 1.
2. A current copy of all Engineering documentation related to
Aircraft alterations, repairs and configuration changes. This shall include
documentation for work done by the manufacturer or any vendor. A current copy of
all repairs that require follow-up action.
3. Data package covering all non-manufacturer / non-FAA-approved
repairs or alterations, including the submittal to the FAA for an STC or Form
337, If applicable.
4. All open engineering deviations or Material Review Board
("MRB") records applicable to the Airframe, Engines and APU, components and
piece parts.
5. Mapping of all exterior repairs and damage to the exterior of
the Aircraft and Engines. Supporting data for each repair and damage shall be
provided with information similar to items C-1 and C-2.
D. ADDITIONAL DOCUMENTATION
2. Master Minimum Equipment List.
4. Monthly Reliability reports for one (1) year.
5. Accurate summary of the Maintenance Program.
6. Location map of emergency equipment with description.
7. Weight and balance current status.
8. Shop repair maintenance program specification for Engines and
APU's.
9. JAA Form 1 or FAA Form 8130 certification for all components,
as reasonably requested by Lessee.
10. Aircraft major equipment listing.
11. Passenger/cargo equipment list (seats, galleys. lavs,
entertainment, etc.).
12. Avionics equipment list (includes P/N, model number and
manufacturer and quantity).
13. Electronic logbook data, CD ROM or computer printouts, to the
extent accepted by the FAA, but otherwise, historical flight
log showing cumulative times for major inspection
accomplishments, engine changes, APU, etc.
14. Complete paperwork for last "C" check.
15. Compass card and F.D.R. calibration documentation.
16. Copies of Aircraft registration and certificate of
airworthiness.
17. List of previous owner / operators including dates, locations
and aircraft times.
E. INDIVIDUAL AIRCRAFT AND ENGINE RECORDS.
1. Incident report, if any.
2. Major structural damage reports, if any.
3. FAA Form 337 or equivalent JAA form or manufacturer's approval
for major repair and alteration, if any,
4. Engines last shop visit report.
5. Documentation and records concerning the last Aircraft
overhaul.
6. Copies of logbook entries for the last twelve (12) months of
operation.
7. Declaration of Aircraft accident and major repairs, if any,
8. Provide historical data for all life limited parts and hard
time components for the Airframe, Engines, and APU, if
reasonably requested by Lessee.
9. Listing of Aircraft and Engine components status by P/N - S/N
description position TBO-TSI-TSO-TSN (with respect to TSO or
TSN, if available), total time, next Due Time, including,
interpretation keys, if reasonably requested by Lessee.
10. APU- Same documentation as Items E. 8 and E. 9 above.
11. Certified letter with serial no.- total time/ total cycles-
times to the next inspection and the time to the next
inspection or removal of Engines and hard time component
status list.
12. All Engine and APU records, up to and including the last major
overhaul or heavy maintenance and shop visits (all modules)
including life limited part history to birth.
13. Electrical load analysis documents and data.
14. The last power plant test cell run documents for Engines and
APU
15. Borescope inspection documents for current installation for
Engines.
17. Corrosion prevention control program.
18. Aircraft readiness log (manufacturer's)
19. Approvals (DAR/DER 8110-3s) for all modifications alterations
not covered by Manufacturer's Service Bulletins or JAA
equivalent (including appliances),
20. Fire blocking status for all seats, interior
fabrics/materials, including burn test documentation and
certification where applicable.
21. Aircraft detail specification.
22. Daily time and cycle log for Aircraft and Engines.
Exhibit D-1
RETURN CONDITIONS
This Exhibit D-1 shall be applicable unless Exhibit D-2 applies in
accordance with its terms, in which case Exhibit D-2 shall supercede this
Exhibit D-1 and shall be applicable.
Section 1. General Conditions.
At the time of return, the Aircraft shall (i) have been continuously
and currently maintained in accordance with the Maintenance Program,
(ii) comply with the Maintenance Program as authorized by the FAA, in
each case as if the Aircraft were to be kept in further commercial
passenger service by Lessee, and (iii) meet the following requirements:
(a) Operating Condition - The Aircraft shall be in good
operating condition, ordinary wear and tear excepted,
with all of the Aircraft equipment, components, and
systems functioning in accordance with their intended
use irrespective of variations or deviations
authorized by the Minimum Equipment List or
Configuration Deviation List. All replacement
equipment, parts, components or items installed on
the Aircraft shall be manufactured by the original
manufacturer approved by the Manufacturer or a
manufacturer holding requisite authority of the FAA,
and in case of used, rotable parts, have an
FAA-approved serviceable tag.
(b) Configuration - The Aircraft shall be in the same
passenger configuration with all equipment installed
therein as the Aircraft was when delivered under the
Manufacturer Purchase Agreement, ordinary wear and
tear excepted, including replacements and substitute
parts and equipment. The Aircraft shall not suffer
any modification or alteration (hereinafter
"Modifications") after the Delivery Date provided
however that Lessee may make Modifications to the
Aircraft as long as they are included as
factory-installed features in EMB-145 aircraft
delivered to the Lessee subsequent to the delivery of
the Aircraft. The term Modifications shall be deemed
to include, but not be limited to (i) changes to the
Aircraft structure, performance, weight and balance,
(ii) changes which materially adversely affect the
Aircraft's flight qualities, operational
characteristics, operational safety, ease or cost of
maintenance, spare parts interchangeability or
replaceability, and (iii) substitution of different
types of equipment or accessories which are not
equivalent in cost value and/or operation capability
to the equipment or accessories being replaced, and
shall exclude (x) changes pursuant to service
bulletins issued by the Manufacturer or the OEMs, and
(y) mandatory changes required to be accomplished by
Lessee hereunder. All permitted Modifications made to
the Aircraft shall be in accordance with FAA-approved
data, and Lessee shall provide complete data and
documentation to substantiate their certification,
approval, and methods of compliance (including,
without limitation, a copy of the Aircraft
Illustrated Parts Catalog and a copy of the Aircraft
Interior Configuration document). A complete listing
of all modifications and repairs performed shall be
supplied together with the Aircraft. Modifications,
other than permitted ones, shall be removed and the
appropriate repairs to the Aircraft made prior to the
day of return of the Aircraft.
Page 1
(c) Certification - The Aircraft shall have, a valid and
effective Certificate of Airworthiness of the type
"Transport, Category (Passengers)" issued by the FAA,
and shall be in full compliance with, and capable of
registration under, the provisions of Part 121 of the
U.S. Federal Aviation Regulations (or any successor
legislation) and other US regulations applicable to
the Aircraft's operation and continued airworthiness,
without any restrictions, corrections, repairs,
limitations, modifications or alterations or
overhauls having to be performed to meet such
standards.
(d) General Appearance - The Aircraft shall be clean by
commercial passenger airline standards, cosmetically
acceptable, interior complete, and prepared to be
placed into scheduled revenue airline operations.
Interior items which may be broken shall be repaired
or replaced. All decals, signs and placards shall be
clean, secure and legible in the English language.
The Aircraft shall meet the following minimum
requirements:
(i) Fuselage, Wings and Empennage - The fuselage
shall be within Maintenance Program approved
limits regarding dents and abrasions and
loose or pulled rivets; all leading edges
shall be within Maintenance Program approved
limits regarding damage occurring since
delivery; the airframe, Engines and wings
shall be free of fuel, oil and hydraulic
leaks so as to allow unrestricted operation;
all leading edges and fuselage areas which
are aerodynamically critical shall be free
of any scab patches other than those
required by the Manufacturer and shall be
repaired with repairs which are permanent in
nature in accordance with the SRM, or are
made in accordance with the Manufacturer's
approval or FAA approved data.
(ii) Interior - Ceilings, sidewalls, bulkhead
panels shall be clean, free of cracks and
within Maintenance Program approved limits
regarding dents; all carpets and seat covers
shall be in good condition and clean and
meet FAR fire resistance regulations; all
seats shall be serviceable and in good
condition. All safety equipment shall be
installed at the correct stations, a loose
equipment check list and location drawings
shall accompany the Aircraft and a loose
equipment inventory shall be drawn up on the
Delivery Date and checked on the day of
return of the Aircraft.
(iii) Cockpit - All fairing panels shall be free
of cracks and shall be clean; all floor
coverings shall be clean and effectively
sealed and secured, all seat covers and
cushions shall be in good condition and
clean and shall, as applicable, conform to
FAA fire resistance regulations. All seats
shall be fully serviceable and in good
condition. All instruments and light panels
shall be clean, secure and legible, function
in accordance with their intended purpose
and have all lighting operating properly.
(iv) Landing, Gear and Wheel ▇▇▇▇▇ - The landing
gear and all wheel ▇▇▇▇▇ shall be clean,
free of leaks, and repaired as necessary.
The main and nose landing gear components
and their associated actuators and parts
shall be in a good operating condition.
Page 2
(v) Cargo Compartment, Galleys and Toilets - All
cargo compartment panels shall be installed
and be in good condition so as to comply
with extended range operations requirements.
The cargo compartments, galleys and toilet
of the Aircraft shall be in a clean and
presentable condition and all cargo securing
system components shall be serviceable; all
galley inserts (to the extent delivered with
the Aircraft) shall be redelivered with the
Aircraft.
(vi) Windows - Any delamination, and crazing of
the windshields and cabin windows of the
Aircraft shall be within approved limits of
the Maintenance Program and shall be
properly sealed.
(vii) Doors - All the doors of the Aircraft shall
be free moving, correctly rigged and
properly sealed and all door assist
mechanisms shall be charged in accordance
with the AMM.
(e) Airworthiness Directives and Service Bulletins - All
FAA Airworthiness Directives and amendments or
changes to Aviation Regulations issued by the FAA and
applicable to the Aircraft which require compliance
within a period of six (6) months following the day
of return of the Aircraft (or the equivalent hours or
cycles, based on the Lessee's EMB-145 last four (4)
years of operation average monthly utilization) shall
have been accomplished on a Terminating Action basis
and in compliance with the issuing agency's and the
manufacturer's associated service bulletins,
regardless of any operator-specific waiver, deferral,
or deviation from such directive or regulation. The
Aircraft shall have installed on it all Manufacturer
and OEM service bulletin kits requested by Lessee and
actually received by Lessee in respect of the
Aircraft, and if not installed, Lessee shall deliver
them together with the Aircraft at no charge.
(f) Deferred Maintenance - The Aircraft shall be free of
all deferred or carried over maintenance items,
including without limitation, any pilot log book
reports, maintenance reports, and the Aircraft's
Central Maintenance Computer reports. Any such
deferred or carried over maintenance shall be
promptly accomplished in a terminating manner prior
to the return of the Aircraft at the end of the term
of the Lease.
(g) Corrosion - The Maintenance Program shall include a
corrosion control program based on the corrosion
prevention, treatment and correction criteria
recommended by the Manufacturer in the CPCP. The
Aircraft shall be free from corrosion or shall have
been adequately treated in compliance with the
Maintenance Program. Complete details of the
corrosion control program, as well as a summary of
specific corrosion correction, of the Aircraft in
accordance with the Maintenance Program shall be
available for delivery together with the Aircraft.
This summary shall include Lessee's identifying the
Manufacturer's task identifier and cross referencing,
Lessee's identifier indicating status of
accomplishment and findings and incorporation status
relative to all recommended corrective and
preventative actions. The hydraulic system and fuel
tanks shall be free from contamination as
demonstrated by a laboratory
Page 3
report to be performed after the Aircraft is removed
from service and delivered together with the
Aircraft.
(h) Leased Components - The Aircraft shall be free and
clear of all Liens other than any Lessor's Liens and
at return shall not have installed thereon any
equipment, components and/or parts which are leased
or loaned or otherwise owned by a third party.
(i) Records - The Aircraft shall be accompanied by all
Aircraft Documents. The Aircraft Documents shall be
provided in English, and be in good condition,
readable and capable of being reproduced.
(i) All Parts, components and assemblies
identified with safe-life, hard time or
condition monitored limits (to the extent
that such condition monitored items are to
be tracked in accordance with the approved
Maintenance Program) shall be provided with
part number, serial number, their service
histories, accumulated cycles and flight
hours, safe-life, hard time or condition
monitored limits and remaining service lives
on a separate listing and where practicable,
be physically verified as installed and have
hard copy documentation (i.e., appropriate
overhaul or serviceable vendor tags and work
orders) to verify their service histories.
(ii) All components and assemblies, which are,
identified on the maintenance records by
part numbers and/or serial numbers other
than the Manufacturer's or other
manufacturer's shall be provided with
two-way cross-reference listing necessary to
establish complete traceability.
(iii) All documentation, flight records, and
maintenance records as specified herein and
as specified by Federal Aviation Regulations
Sections 121.380, and, as applicable,
Section 91.417 and 91.419 (or FAR's as
amended), and which normally accompany the
transfer of an aircraft or engine shall be
delivered together with the Aircraft. In the
event of missing or incomplete records, the
tasks necessary to produce such complete
records shall be accomplished in accordance
with the Maintenance Program prior to return
of the Aircraft.
(iv) All documentation and records shall be in
English and shall be made available for
inspection in the location they are normally
kept which location shall permit direct
access to the Aircraft, at least 14 Business
Days before the day of return of the
Aircraft.
(v) Any and all documentation, data, drawings,
records and manuals as required to be
maintained by the FAA and SMRD, shall be
provided, regardless of whether such
information is considered proprietary.
(vi) Hard Landing inspection reports, Lightning
Strike inspection reports or High Intensity
Radiated Field (HIRF) check reports as may
be required should Aircraft records show
evidence of any occurrence indicating such
inspections or checks to be necessary.
Page 4
(vii) Corrosion Prevention & Control Program
(CPCP) inspection findings and correction
reports, as required by the Maintenance
Program.
The head of Lessee's quality control department shall sign a
statement certifying that the data and information contained
in the documentation and records are true and correct.
(j) Exterior Markings - At time of return of the
Aircraft, Lessee shall, at its cost remove from the
exterior and interior of the Aircraft Lessee's
operator specific exterior and interior markings. The
area where such markings were removed or painted over
shall be refurbished by Lessee as necessary to blend
in with the surrounding surface in a good and
workmanlike manner.
(k) Overhaul and Repair - All components, rotables, and
assemblies (including the Engines, APU, and landing
gears) shall be documented with work orders, vendor
serviceable tags, 8130 tags, form 337, etc. to have
been repaired or overhauled by FAA-certified repair
stations in such manner so that such components,
rotables, assemblies, Engines, APU, and landing gears
are approved by the FAA for use on United
States-registered and certified aircraft. All
overhaul and repair procedures shall have met all FAA
requirements necessary to transfer to a new operator
under Part 121 of the U.S. Federal Aviation
Regulations.
(l) Structural Repairs - All repairs that were performed
since the Delivery Date and that then exist on the
Aircraft shall conform to the SRM and the AMM and
shall have FAA approval if required, including
without limitation repairs related to impact damage
to the Aircraft caused by ground handling equipment
or foreign objects. All repairs not covered by the
SRM or the AMM shall have been made in accordance
with the Manufacturer's approval if required, which
approval shall not be unreasonably be withheld and
shall be provided with complete data and
documentation to verify and substantiate their
certification and methods of compliance. A complete
listing of all repairs performed shall be supplied
together with the Aircraft.
Section 2. Condition of Airframe.
On the day of return, the Aircraft shall be as follows:
(a) C Check Inspection - The Airframe shall have
completed, within 100 flight hours of return, the
next sequential C check or any multiple thereof. If
the Aircraft has logged more than 100 flight hours
since the last C check or any multiple thereof, then
Lessee shall perform the next scheduled C check or
any multiple thereof, as applicable. All observed
defects observed during such C check shall be
rectified at Lessee's expense, in accordance with the
Maintenance Program;
(b) Structural and other scheduled Inspections - The
Airframe shall have at least twelve (12) months, or
two thousand (2,000) flight hours or cycles,
whichever is applicable or most limiting, remaining
before any scheduled structural tasks or maintenance
inspections which are not included in (a) above. In
the event that a structural task or maintenance
inspection interval is less than the above, Lessee
shall, at its expense, perform all such tasks
immediately prior to return of the Aircraft;
Page 5
(c) Landing Gear Life - The main Landing Gear and the
nose Landing Gear shall have at least fifty percent
(50%) of the cycles remaining prior to removal for
overhaul in accordance with the Maintenance Program,
and the landing gear total cycles since new ("TCSN")
shall be no more than ten percent (10%) greater than
the airframe TCSN;
(d) Brakes - The brakes shall have no less than the C
check brake wear limits with the brakes set at normal
parking break pressure. The tires shall have a
remaining useful life of at least fifty percent
(50%).
Section 3. Condition of Controlled Components.
Aircraft and Engine hour or cycle controlled components or parts, at
time of return to Lessor, shall have remaining, as a minimum, one half
life and/or fifty percent (50%) of the Lessee's approved hour or cycle
limit, whichever is applicable or most limiting, before any scheduled
removals for overhaul, test, disassembly or replacement. All components
or parts controlled on a calendar basis shall have at least twelve (12)
months or fifty percent (50%) of its total approved life in hours or
cycles, if greater, remaining before scheduled removal for testing,
overhaul or replacement.
However, if a component or part has a life, overhaul or check interval
limit that is less than the above, Lessee shall, at its expense,
perform all such tasks immediately prior to return. All such hour/cycle
or calendar controlled components or parts are defined as those
components or parts controlled under the Maintenance Program.
Section 4. Condition of Installed Engines and APU.
At time of return, each Engine shall be capable of certificated, full
rated performance and its life limited parts ("LLP") will have at least
fifty percent (50%) of cycles between installation and replacement
under the Maintenance Program.
(a) Time remaining - Each Engine shall have completed no
more than 2,500 flight hours since new or since its
last full performance restoration shop visit at which
it was subject to a full engine management program
rework, based on the reliability goals set out in the
Rolls-▇▇▇▇▇ ▇▇▇▇▇▇ workscope guide, which currently
state that the workscope is designed to give 30
degrees centigrade of exhaust gas temperature margin
and 5,000 flight hours of on-wing life. To the extent
that the shop workscope guide is amended in the
future to include different reliability goals then
the engine shall have at least fifty percent (50%) of
the on-wing hours remaining in accordance with such
amended shop workscope guide.
(b) Borescope Inspection - On each installed Engine an
external visual inspection, accessory inventory check
and video-taped borescope inspection in accordance
with the requirements of the Maintenance Program
shall be performed by Lessee or a designated
representative as mutually agreed between Lessor and
Lessee during the ground inspection per Section 7(a)
of this Exhibit accompanied by a written report on
the findings of such inspection herein and
satisfactory evidence shall be provided to Lessor
reflecting the correction of any discrepancies found
during such inspection, which are in excess of the
Engine Manufacturer's Maintenance Manual
Airworthiness Limitations.
Page 6
(c) Adverse Trend Data - Complete engine records,
including but not limited to (i) Group A (Lifed)
components (as listed in Engine Manufacturer's Time
Limits Manual) as approved by the FAA and (ii) in
flight performance data and (iii) shop visit reports
from all shop visits, shall be made available to
Lessor for review and evaluation. If the Aircraft
and/or engine historical and maintenance records
and/or trend monitoring indicate a rate of
acceleration in performance deterioration or oil
consumption on any installed engine beyond the limits
of the Maintenance Program, the causes of such
conditions shall have been corrected prior to the
return date.
(d) Oil spectrum analysis - an oil spectrum analysis
shall be made on the installed Engines after the
Aircraft is removed from service and a written report
shall be made available together with the Aircraft.
Any discrepancies found in the engine's lubrication
system -which are in excess of the Engine
Manufacturer's Maintenance Manual Airworthiness
limitations shall have been corrected prior to the
return date.
(e) APU Life - The installed APU shall have remaining at
least fifty percent (50%) of the expected mean time
before removal as evidenced by the Lessee's
demonstrated on-wing last two years average for APU
hours, before scheduled removal for overhaul, heavy
maintenance, or replacement of hour limited or LCF
parts at the time of return. The APU shall have a
video taped borescope inspection and magnetic plug
inspection during the ground inspection per Section
7(a) of this Exhibit D-1.
Section 5. Provision for "Power-By-The Hour Agreements".
If the Engines, APU, or any other hour or cycle controlled components
on the day of return are maintained under valid PBH Agreements (as
defined below) (and either have been maintained throughout the Term
under PBH Agreements, or Lessee has made payments to the maintenance
provider to cover the period in which such components where not under
such PBH Agreements), under which the Lessee is current on all payments
and otherwise in good standing, then, in lieu of the relevant
requirements in Sections 2(c), 2(d), 3, 4(a) or 4(e) of this Exhibit
D-1, the Lessee shall return each such component in such condition as
shall make it eligible for continued maintenance under PBH Agreements,
without additional costs, start-up charges, or overhaul requirements.
For the purposes hereof, a "PBH Agreement" shall mean a
"power-by-the-hour" maintenance program, provided by the Engines, APU
or component manufacturer or its successor or designee, providing full
maintenance (other than routine day-to-day maintenance; provided, that
foreign-object damage and abuse may be excluded or separately charged)
for the Engines, APU or such components at no cost other than standard
per-cycle rates (i.e., excluding charges based on the current
maintenance status of such component), all benefits of which program,
including but not limited to the payments made by Lessee under such PBH
Agreements while operating the Aircraft, shall be assignable or
otherwise transferable to any other carrier. Notwithstanding the
foregoing, each such Engine, APU and other hour or cycle controlled
component shall have not less twelve months of expected time before
overhaul or major refurbishment, whichever is applicable, based upon
Lessee's average experience during the immediately preceding 2 year
period.
Page 7
Section 6. Return Condition Adjustment.
(a) Each item referred to in Sections 2(c), 2(d), 3, the
first two lines of Section 4 and in Section 4(a) and
4(e) (each such item, an "Adjustable Item" and each
such section, an "Adjustable Return Condition") may
be returned with less than the required limits,
subject, however, to the minimum requirements set
forth in item (e) below.
(b) If the Lessee does not meet the conditions set forth
for an Adjustable Item in the relevant Adjustable
Return Condition then Lessee shall pay to the Lessor
(for deficient condition) an Equivalency Payment in
accordance with the following formula:
[*]
The components of the formula above shall be as agreed between
Lessor and Lessee. If Lessor and the Lessee fail to reach
agreement on any components of the above formula, such amount
will be determined as the average price that would be charged
by a third party to restore the Aircraft to the conditions
required under the Lease and this Exhibit D-1, based on one
quotation obtained by Lessor and one quotation obtained by
Lessee, both from a reputable, FAA and Manufacturer-approved
EMB-145 repair station in the United States. If the prices of
such quotations differ by more than [*], Lessor and Lessee
shall obtain a third quotation from another reputable, FAA and
Manufacturer-approved EMB-145 repair station in the United
States, the quotation which is farthest from the average of
all three quotations shall be disregarded and the average of
the two remaining quotations shall be binding upon Lessor and
Lessee as the components of the formula.
(c) The Equivalency Payment for each return condition of
each Adjustable Item in the relevant Section referred
to in the first paragraph of this Section 6, whether
positive or negative, shall be aggregated in order to
determine the total Equivalency Payment due from
Lessee. (For clarification, items in more than the
----------
* Confidential
Page 8
required condition shall be netted against items in
less than the required condition when determining the
amount of the total payment due, provided however
that such netting is only applicable to the following
major components: Engines, APU and landing gear). If
the cumulative Equivalency Payment after such netting
is negative, it shall be deemed to be zero.
(d) [intentionally omitted]
(e) Notwithstanding the Equivalency Payment that may be
otherwise payable or available under this Section 6,
if:
(i) Any installed Engine has less than the
number of on-wing hours remaining before
overhaul or major refurbishment, in
accordance with the Maintenance Program, for
such overhaul or major refurbishment to be
scheduled not earlier than one year after
the date of redelivery,
(ii) Any Engine life limited part has a remaining
useful life until the next scheduled
replacement of not less than one year after
the date of redelivery,
(iii) The APU has remaining less than one year of
the expected life before removal,
(iv) The main landing gear or the nose landing
gear has less than the number of cycles
remaining prior to removal for overhaul, for
such removal for overhaul to be scheduled
not earlier than one year after the date of
redelivery or, the cycles exceed one hundred
and ten percent (110%) of the airframe
cycles, or
(v) The brakes have less than the C check brake
wear limits with the brakes set at normal
parking break pressure, or the tires have a
remaining useful life of less than one year
after the date of redelivery,
then, in any such case, Lessee shall, at its own cost and
expense, overhaul, refurbish and/or replace each non-complying
item so that it meets the applicable level specified in items
(i) through (v) above. For avoidance of doubt, this Section 6
shall be applicable whether or not the Engines, APU or any
other hour or cycle controlled component is maintained under a
PBH Agreement, as contemplated by Section 5.
Section 7. Inspection Upon Return
Lessor shall have the right to inspect the Aircraft upon return, and
the following conditions shall apply:
(a) Ground Inspection - The Aircraft, including the
Aircraft Documents, shall be made available to Lessor
for ground inspection by Lessor or its designee at
Lessee's facilities. Such inspection shall commence
no later than fourteen (14) Business Days prior to
the date of return of the Aircraft. Lessee shall
remove the Aircraft from scheduled service and open
the areas of the Aircraft as required to perform the
necessary checks as specified in Section 2 of this
Exhibit D-1. In
Page 9
addition, Lessee shall allow Lessor to accomplish its
inspection to determine that the Aircraft, including
the Aircraft Documents are in the condition set forth
in Sections 1, 2, 3 and 4 of this Exhibit D-1. During
such checks, Lessor's personnel shall have the right
to reasonably request that adjacent additional panels
or areas be opened in order to allow further
inspection by Lessor's personnel.
(b) Operational Ground Check - Lessee shall conduct an
operations ground check on the Aircraft in accordance
with the Maintenance Program manual criteria for the
purpose of demonstrating to Lessor the satisfactory
operation of the systems, including a full fuel tank
leak check, pilot and static systems check and
hydraulic system internal leak check.
(c) Operational Test Flight - The Aircraft shall be test
flown by Lessee, using qualified flight test
personnel, for the amount of time necessary to
satisfactorily demonstrate the airworthiness of the
Aircraft and the proper functioning of all systems
and components in accordance with the agreed check
flight procedures. During such test flight command,
care, custody and control of the Aircraft shall
remain at all times with Lessee. Up to five (5) of
Lessor's designated representatives (or more if
mutually agreed) may participate in such flight as
observers. Upon completion of such operational
flight-testing, the representatives of Lessee and
Lessor participating in such testing shall agree in
writing upon any discrepancies required to be
corrected by Lessee in order to comply with the
conditions required hereunder.
(d) Discrepancies - If requested by Lessor in writing,
all discrepancies, which are noted during the
inspection and acceptance flight(s), shall be
corrected at Lessee's expense. If such discrepancies
are substantiated by the Maintenance Program and
Lessor determines that repairs, modifications or
other work items are required to cause the Aircraft
to comply with the requirements provided herein,
including, without limitation, any maintenance
required so that the Engines will meet all Engine
parameters and trends specified by the Maintenance
Program, Lessee shall cause such repairs and other
work items to be commenced and completed prior to
return.
Section 8. Delegation.
Lessee agrees that whenever a determination under this Exhibit D-1 is
to be made by, or a right is granted to, the Lessor, the Lessor may, at its
option, allow the Manufacturer to make such determination or exercise such
right.
Section 9. Definitions.
For the purpose of this Exhibit D-1, the following terms have the
following meanings:
"APU" shall mean the auxiliary power unit bearing serial number
__________, and any substitute APU which may from time to time be
substituted therefor pursuant to the terms of the Lease.
Page 10
"CALENDAR CONTROLLED COMPONENTS OR PARTS" means those components or
parts, which are identified in the MRB Report which have maintenance
tasks at specific calendar-time intervals.
"CYCLE-CONTROLLED COMPONENTS OR PARTS" means those components or parts,
which are identified in the MRB Report which have maintenance tasks at
specific flight-cycle intervals.
"HOUR-CONTROLLED COMPONENTS OR PARTS" means those components or parts,
which are identified in the MRB Report which have maintenance tasks at
specific flight-hour intervals.
"LIFE CYCLE FATIGUE ("LCF") PARTS" means those rotating parts which
have specific cycle limits as specified by the manufacturer to preclude
cycle fatigue failures.
"MAINTENANCE REVIEW BOARD REPORT ("MRB REPORT")" means the report
published by the maintenance review board detailing the intervals and
description of the maintenance tasks and, where applicable, the life
limits required for continued airworthiness of the Aircraft. Where the
intervals specified in the MRB Report differ from the limit specified
by the component manufacturer, the MRB Report shall take precedence.
"TERMINATING ACTION" means the alteration or modification of the
Aircraft in accordance with mandatory service bulletins, orders,
airworthiness directives, and instructions required to eliminate
repetitive inspections or maintenance action.
Page 11
Exhibit D-2
RETURN CONDITIONS
This Exhibit D-2 shall be applicable only if Beneficiary notifies Lessee
not later than one hundred eighty (180) days prior to the end of the Basic Term
that Beneficiary is demanding payment of a deficiency amount under the Residual
Value Guarantee except that this Exhibit D-2 shall be assumed to apply for the
purposes stated in the definition of "RVG Appraisal Procedure".
Section 1. General Conditions.
At the time of return, the Aircraft shall (i) have been continuously and
currently maintained in accordance with the Maintenance Program, (ii)
comply with the Maintenance Program as authorized by the FAA, in each case
as if the Aircraft were to be kept in further commercial passenger service
by Lessee, and (iii) meet the following requirements:
(a) Operating Condition - The Aircraft shall be in good operating
condition, ordinary wear and tear excepted, with all of the
Aircraft equipment, components, and systems functioning in
accordance with their intended use irrespective of variations or
deviations authorized by the Minimum Equipment List or
Configuration Deviation List. All replacement equipment, parts,
components or items installed on the Aircraft shall be
manufactured by the original manufacturer approved by the
Manufacturer or a manufacturer holding requisite authority of the
FAA, and in case of used, rotable parts, have an FAA-approved
serviceable tag.
(b) Configuration - The Aircraft shall be in the same passenger
configuration with all equipment installed therein as the
Aircraft was when delivered under the Manufacturer Purchase
Agreement, ordinary wear and tear excepted, including
replacements and substitute parts and equipment. The Aircraft
shall not suffer any modification or alteration (hereinafter
"Modifications") after the Delivery Date provided however that
Lessee may make Modifications to the Aircraft as long as they are
included as factory-installed features in EMB-145 aircraft
delivered to the Lessee subsequent to the delivery of the
Aircraft. The term Modifications shall be deemed to include, but
not be limited to (i) changes to the Aircraft structure,
performance, weight and balance, (ii) changes which materially
adversely affect the Aircraft's flight qualities, operational
characteristics, operational safety, ease or cost of maintenance,
spare parts interchangeability or replaceability, and (iii)
substitution of different types of equipment or accessories which
are not equivalent in cost value and/or operation capability to
the equipment or accessories being replaced, and shall exclude
(x) changes pursuant to service bulletins issued by the
Manufacturer or the OEMs, and (y) mandatory changes required to
be accomplished by Lessee hereunder. All permitted Modifications
made to the Aircraft shall be in accordance with FAA-approved
data, and Lessee shall provide complete data and documentation to
substantiate their certification, approval, and methods of
compliance (including, without limitation, a copy of the Aircraft
Illustrated Parts Catalog and a copy of the Aircraft Interior
Configuration document). A complete listing of all modifications
and repairs performed shall be supplied together with the
Aircraft.
Exhibit D-2 Page 1
Modifications, other than permitted ones, shall be removed and
the appropriate repairs to the Aircraft made prior to the day of
return of the Aircraft.
(c) Certification - The Aircraft shall have, a valid and effective
Certificate of Airworthiness of the type "Transport, Category
(Passengers)" issued by the FAA, and shall be in full compliance
with, and capable of registration under, the provisions of Part
121 of the U.S. Federal Aviation Regulations (or any successor
legislation) and other US regulations applicable to the
Aircraft's operation and continued airworthiness, without any
restrictions, corrections, repairs, limitations, modifications or
alterations or overhauls having to be performed to meet such
standards.
(d) General Appearance - The Aircraft shall be clean by commercial
passenger airline standards, cosmetically acceptable, interior
complete, and prepared to be placed into scheduled revenue
airline operations. Interior items which may be broken shall be
repaired or replaced. All decals, signs and placards shall be
clean, secure and legible in the English language. The Aircraft
shall meet the following minimum requirements:
(i) Fuselage, Wings and Empennage - The fuselage shall be
within Maintenance Program approved limits regarding dents
and abrasions and loose or pulled rivets; all leading edges
shall be within Maintenance Program approved limits
regarding damage occurring since delivery; the airframe,
Engines and wings shall be free of fuel, oil and hydraulic
leaks so as to allow unrestricted operation; all leading
edges and fuselage areas which are aerodynamically critical
shall be free of any scab patches other than those required
by the Manufacturer and shall be repaired with repairs
which are permanent in nature in accordance with the SRM,
or are made in accordance with the Manufacturer's approval.
(ii) Interior - Ceilings, sidewalls, bulkhead panels shall be
clean, free of cracks and within Maintenance Program
approved limits regarding dents; all carpets and seat
covers shall be in good condition and clean and meet FAR
fire resistance regulations; all seats shall be serviceable
and in good condition. All safety equipment shall be
installed at the correct stations, a loose equipment check
list and location drawings shall accompany the Aircraft and
a loose equipment inventory shall be drawn up on the
Delivery Date and checked on the day of return of the
Aircraft.
(iii) Cockpit - All fairing panels shall be free of cracks and
shall be clean; all floor coverings shall be clean and
effectively sealed and secured, all seat covers and
cushions shall be in good condition and clean and shall, as
applicable, conform to FAA fire resistance regulations. All
seats shall be fully serviceable and in good condition. All
instruments and light panels shall be clean, secure and
legible, function in accordance with their intended purpose
and have all lighting operating properly.
(iv) Landing, Gear and Wheel ▇▇▇▇▇ - The landing gear and all
wheel ▇▇▇▇▇ shall be clean, free of leaks, and repaired as
necessary. The main and
Exhibit D-2 Page 2
nose landing gear components and their associated actuators
and parts shall be in a good operating condition.
(v) Cargo Compartment, Galleys and Toilets - All cargo
compartment panels shall be installed and be in good
condition so as to comply with extended range operations
requirements. The cargo compartments, galleys and toilet of
the Aircraft shall be in a clean and presentable condition
and all cargo securing system components shall be
serviceable; all galley inserts (to the extent delivered
with the Aircraft) shall be redelivered with the Aircraft.
(vi) Windows - Any delamination, and crazing of the windshields
and cabin windows of the Aircraft shall be within approved
limits of the Maintenance Program and shall be properly
sealed.
(vii) Doors - All the doors of the Aircraft shall be free moving,
correctly rigged and properly sealed and all door assist
mechanisms shall be charged in accordance with the AMM.
(e) Airworthiness Directives and Service Bulletins - All FAA
Airworthiness Directives and amendments or changes to Aviation
Regulations issued by the FAA and applicable to the Aircraft
which require compliance within a period of six (6) months
following the day of return of the Aircraft (or the equivalent
hours or cycles, based on the Lessee's EMB-145 last four 4) years
of operation average monthly utilization) shall have been
accomplished on a Terminating Action basis and in compliance with
the issuing agency's and the manufacturer's associated service
bulletins, regardless of any operator-specific waiver, deferral,
or deviation from such directive or regulation. The Aircraft
shall have installed on it all Manufacturer and OEM service
bulletin kits requested by Lessee and actually received by Lessee
in respect of the Aircraft, and if not installed, Lessee shall
deliver them together with the Aircraft at no charge.
(f) Deferred Maintenance - The Aircraft shall be free of all deferred
or carried over maintenance items, including without limitation,
any pilot log book reports, maintenance reports, and the
Aircraft's Central Maintenance Computer reports. Any such
deferred or carried over maintenance shall be promptly
accomplished in a terminating manner prior to the return of the
Aircraft at the end of the term of the Lease.
(g) Corrosion - The Maintenance Program shall include a corrosion
control program based on the corrosion prevention, treatment and
correction criteria recommended by the Manufacturer in the CPCP.
The Aircraft shall be free from corrosion or shall have been
adequately treated in compliance with the Maintenance Program.
Complete details of the corrosion control program, as well as a
summary of specific corrosion correction, of the Aircraft in
accordance with the Maintenance Program shall be available for
delivery together with the Aircraft. This summary shall include
Lessee's identifying the Manufacturer's task identifier and cross
referencing, Lessee's identifier indicating status of
accomplishment and findings and incorporation status relative to
all
Exhibit D-2 Page 3
recommended corrective and preventative actions. The hydraulic
system and fuel tanks shall be free from contamination as
demonstrated by a laboratory report to be performed after the
Aircraft is removed from service and delivered together with the
Aircraft.
(h) Leased Components - The Aircraft shall be free and clear of all
Liens other than any Lessor's Liens and at return shall not have
installed thereon any equipment, components and/or parts which
are leased or loaned or otherwise owned by a third party.
(i) Records - The Aircraft shall be accompanied by all Aircraft
Documents. The Aircraft Documents shall be provided in English,
and be in good condition, readable and capable of being
reproduced.
(i) All Parts, components and assemblies identified with
safe-life, hard time or condition monitored limits (to the
extent that such condition monitored items are to be
tracked in accordance with the approved Maintenance
Program) shall be provided with part number, serial number,
their service histories, accumulated cycles and flight
hours, safe-life, hard time or condition monitored limits
and remaining service lives on a separate listing and where
practicable, be physically verified as installed and have
hard copy documentation (i.e., appropriate overhaul or
serviceable vendor tags and work orders) to verify their
service histories.
(ii) All components and assemblies, which are, identified on the
maintenance records by part numbers and/or serial numbers
other than the Manufacturer's or other manufacturer's shall
be provided with two-way cross-reference listing necessary
to establish complete traceability.
(iii) All documentation, flight records, and maintenance records
as specified herein and as specified by Federal Aviation
Regulations Sections 121.380, and, as applicable, Section
91.417 and 91.419 (or FAR's as amended), and which normally
accompany the transfer of an aircraft or engine shall be
delivered together with the Aircraft. In the event of
missing or incomplete records, the tasks necessary to
produce such complete records shall be accomplished in
accordance with the Maintenance Program prior to return of
the Aircraft.
(iv) All documentation and records shall be in English and shall
be made available for inspection in the location they are
normally kept which location shall permit direct access to
the Aircraft, at least 14 Business Days before the day of
return of the Aircraft.
(v) Any and all documentation, data, drawings, records and
manuals as required to be maintained by the FAA and SMRD,
shall be provided, regardless of whether such information
is considered proprietary.
(vi) Hard Landing inspection reports, Lightning Strike
inspection reports or High Intensity Radiated Field (HIRF)
check reports as may be required
Exhibit D-2 Page 4
should Aircraft records show evidence of any occurrence
indicating such inspections or checks to be necessary.
(vii) Corrosion Prevention & Control Program (CPCP) inspection
findings and correction reports, as required by the
Maintenance Program.
The head of Lessee's quality control department shall sign a statement
certifying that the data and information contained in the
documentation and records are true and correct.
(j) Exterior Markings - At time of return of the Aircraft, Lessee
shall, at its cost remove from the exterior and interior of the
Aircraft Lessee's operator specific exterior and interior
markings. The area where such markings were removed or painted
over shall be refurbished by Lessee as necessary to blend in with
the surrounding surface in a good and workmanlike manner.
(k) Overhaul and Repair - All components, rotables, and assemblies
(including the Engines, APU, and landing gears) shall be
documented with work orders, vendor serviceable tags, 8130 tags,
form 337, etc. to have been repaired or overhauled by
FAA-certified repair stations in such manner so that such
components, rotables, assemblies, Engines, APU, and landing gears
are approved by the FAA for use on United States-registered and
certified aircraft. All overhaul and repair procedures shall have
met all FAA requirements necessary to transfer to a new operator
under Part 121 of the U.S. Federal Aviation Regulations.
(l) Structural Repairs - All repairs that were performed since the
Delivery Date and that then exist on the Aircraft shall conform
to the SRM and the AMM and shall have FAA approval if required,
including without limitation repairs related to impact damage to
the Aircraft caused by ground handling equipment or foreign
objects. All repairs not covered by the SRM or the AMM shall have
been made in accordance with the Manufacturer's approval if
required, which approval shall not be unreasonably be withheld
and shall be provided with complete data and documentation to
verify and substantiate their certification and methods of
compliance. A complete listing of all repairs performed shall be
supplied together with the Aircraft.
Section 2. Condition of Airframe.
On the day of return, the Aircraft shall be as follows:
(a) C Check Inspection - The Airframe shall have completed, within
100 flight hours of return, the next sequential C check or any
multiple thereof. If the Aircraft has logged more than 100 flight
hours since the last C check or any multiple thereof, then Lessee
shall perform the next scheduled C check or any multiple thereof,
as applicable. All observed defects observed during such C check
shall be rectified at Lessee's expense, in accordance with the
Maintenance Program;
(b) Structural and other scheduled Inspections - The Airframe shall
have at least twelve (12) months, or two thousand (2,000) flight
hours or cycles, whichever is applicable or most limiting,
remaining before any scheduled structural tasks or
Exhibit D-2 Page 5
maintenance inspections which are not included in (a) above. In
the event that a structural task or maintenance inspection
interval is less than the above, Lessee shall, at its expense,
perform all such tasks immediately prior to return of the
Aircraft;
(c) Landing Gear Life - The main Landing Gear and the nose Landing
Gear shall have at least fifty percent (50%) of the cycles
remaining prior to removal for overhaul in accordance with the
Maintenance Program, and the landing gear total cycles since new
("TCSN") shall be no more than ten percent (10%) greater than the
airframe TCSN;
(d) Brakes - The brakes shall have no less than the C check brake
wear limits with the brakes set at normal parking break pressure.
The tires shall have a remaining useful life of at least fifty
percent (50%).
Section 3. Condition of Controlled Components.
Aircraft and Engine hour or cycle controlled components or parts, at time
of return to Lessor, shall have remaining, as a minimum, one half life
and/or fifty percent (50%) of the Lessee's approved hour or cycle limit,
whichever is applicable or most limiting, before any scheduled removals for
overhaul, test, disassembly or replacement. All components or parts
controlled on a calendar basis shall have at least twelve (12) months or
fifty percent (50%) of its total approved life in hours or cycles, if
greater remaining before scheduled removal for testing, overhaul or
replacement.
However, if a component or part has a life, overhaul or check interval
limit that is less than the above, Lessee shall, at its expense, perform
all such tasks immediately prior to return. All such hour/cycle or calendar
controlled components or parts are defined as those components or parts
controlled under the Maintenance Program.
Section 4. Condition of Installed Engines and APU.
At time of return, each Engine shall be capable of certificated, full rated
performance and its life limited parts ("LLP") will have at least fifty
percent (50%) of cycles between installation and replacement under the
Maintenance Program.
(a) Time remaining - Each Engine shall have completed no more than
2,500 flight hours since new or since its last full performance
restoration shop visit at which it was subject to a full engine
management program rework, based on the reliability goals set out
in Rolls-▇▇▇▇▇ ▇▇▇▇▇▇ workscope guide, which currently state that
the workscope is designed to give 30 degrees centigrade of
exhaust gas temperature margin and 5,000 flight hours of on-wing
life. To the extent that the shop workscope guide is amended in
the future to include different reliability goals then the engine
shall have at least fifty percent (50%) of the on-wing hours
remaining in accordance with such amended shop workscope guide.
(b) Borescope Inspection - On each installed Engine an external
visual inspection, accessory inventory check and video-taped
borescope inspection in accordance with the requirements of the
Maintenance Program shall be performed by Lessee or a designated
representative as mutually agreed between Lessee and Lessor
Exhibit D-2 Page 6
during the ground inspection per Section 7(a) of this Exhibit D-2
accompanied by a written report on the findings of such
inspection herein and satisfactory evidence shall be provided to
Lessor reflecting the correction of any discrepancies found
during such inspection.
(c) Adverse Trend Data - Complete engine records, including but not
limited to (i) Group A (Lifed) components (as listed in Engine
Manufacturer's Time Limits Manual) as approved by the FAA and
(ii) in flight performance data and (iii) shop visit reports from
all shop visits, shall be made available to Lessor for review and
evaluation. If the Aircraft and/or engine historical and
maintenance records and/or trend monitoring indicate a rate of
acceleration in performance deterioration or oil consumption on
any installed engine beyond the limits of the Maintenance
Program, the causes of such conditions shall have been corrected
prior to the return date.
(d) Oil spectrum analysis - an oil spectrum analysis shall be made on
the installed Engines after the Aircraft is removed from service
and a written report shall be made available together with the
Aircraft. Any discrepancy found in the engine's lubrication
system shall have been corrected prior to the return date.
(e) APU Life - The installed APU shall have remaining at least fifty
percent (50%) of the expected mean time before removal as
evidenced by the Lessee's demonstrated on-wing last two years
average for APU hours, before scheduled removal for overhaul,
heavy maintenance, or replacement of hour limited or LCF parts at
the time of return. The APU shall have a video taped borescope
inspection and magnetic plug inspection during the ground
inspection per Section 7(a) of this Exhibit D-2.
Section 5. Provision for "Power-By-The Hour Agreements".
If the Engines, APU, or any other hour or cycle controlled components on
the day of return are maintained under valid PBH Agreements (as defined
below) (and either have been maintained throughout the Term under PBH
Agreements, or Lessee has made payments to the maintenance provider to
cover the period in which such components where not under such PBH
Agreements), under which the Lessee is current on all payments and
otherwise in good standing, then, in lieu of the relevant requirements in
Sections 2(c), 2(d), 3, 4(a) or 4(e) of this Exhibit D-2, the Lessee shall
return each such component in such condition as shall make it eligible for
continued maintenance under PBH Agreements, without additional costs,
start-up charges, or overhaul requirements. For the purposes hereof, a "PBH
Agreement" shall mean a "power-by-the-hour" maintenance program, provided
by the Engines, APU or component manufacturer or its successor or designee,
providing full maintenance (other than routine day-to-day maintenance;
provided, that foreign-object damage and abuse may be excluded or
separately charged) for the Engines, APU or such components at no cost
other than standard per-cycle rates (i.e., excluding charges based on the
current maintenance status of such component), all benefits of which
program, including but not limited to the payments made by Lessee under
such PBH Agreements while operating the Aircraft, shall be assignable or
otherwise transferable to any other carrier without restrictions of any
kind.
Exhibit D-2 Page 7
Section 6. Return Condition Adjustment.
(a) Each item referred to in Sections 2(c), 2(d), 3, the first two
lines of Section 4 and in Section 4(a) and 4(e) (each such item,
an "Adjustable Item" and each such section, an "Adjustable Return
Condition") may be returned with less than the required limits,
subject, however, to the minimum requirements set forth in item
(e) below.
(b) If the Lessee does not meet the conditions set forth for an
Adjustable Item in the relevant Adjustable Return Condition then
Lessee shall pay to the Lessor (for deficient condition) an
Equivalency Payment in accordance with the following formula:
[*]
The components of the formula above shall be as agreed between Lessor
and the Lessee. If Lessor and the Lessee fail to reach agreement on
any components of the above formula, such amount will be determined as
the average price that would be charged by a third party to restore
the Aircraft to the conditions required under the Lease and this
Exhibit D-2, based on one quotation obtained by Lessor and one
quotation obtained by Lessee, both from a reputable, FAA and
Manufacturer-approved EMB-145 repair station in the United States. If
the prices of such quotations differ by more than ten percent (10%),
Lessor and Lessee shall obtain a third quotation from another
reputable, FAA and Manufacturer-approved EMB-145 repair station in the
United States, the quotation which is farthest from the average of all
three quotations shall be disregarded and the average of the two
remaining quotations shall be binding upon Lessor and Lessee as the
components of the formula.
(c) The Equivalency Payment for each return condition of each
Adjustable Item in the relevant Section referred to in the first
paragraph of this Section 6, whether positive or negative, shall
be aggregated in order to determine the total Equivalency Payment
due from Lessee. (For clarification, items in more than the
Exhibit D-2 Page 8
----------
* Confidential
required condition shall be netted against items in less than the
required condition when determining the amount of the total
payment due, provided however that such netting is only
applicable to the following major components: Engines, APU and
landing gear). If the cumulative Equivalency Payment after such
netting is negative, it shall be deemed to be zero.
(d) In no event shall the Equivalency Payment due from the Lessee to
the Manufacturer exceed the aggregate amount of any payment and
expenses that the Manufacturer may make under the Residual Value
Guarantee.
(e) Notwithstanding the equivalency charges that may be otherwise
payable or available under this Section 6, if:
(i) Any installed Engine has completed more than 3,750 flight
hours since new or since its last full performance
restoration shop visit at which it was subject to a full
engine management program rework (or less than twenty-five
percent (25%) of the on-wing hours remaining in accordance
with an amended ▇▇ ▇▇▇▇▇▇▇ shop workscope guide),
(ii) Any Engine life limited part has a remaining useful life
until the next scheduled replacement of less than twenty
five percent (25%),
(iii) The APU has remaining less than twenty five (25%) of the
expected mean time before removal,
(iv) The main landing gear or the nose landing gear has less
than twenty five percent (25%) of the cycles remaining
prior to removal for overhaul, or the cycles exceed one
hundred and ten percent (110%) of the airframe, or
(v) The brakes have less than the C check brake wear limits
with the brakes set at normal parking break pressure, or
the tires have a remaining useful life of less than twenty
five percent (25%),
then, in any such case, Lessee shall, at its own cost and expense,
overhaul, refurbish and/or replace each non-complying item so that it meets
the applicable level specified in items (i) through (v) above.
Section 7. Inspection Upon Return
Lessor shall have the right to inspect the Aircraft upon return, and the
following conditions shall apply:
(a) Ground Inspection - The Aircraft including the Aircraft Documents
shall be made available to Lessor for ground inspection by Lessor
or its designee at Lessee's facilities. Such inspection shall
commence no later than fourteen (14) Business Days prior to the
date of return of the Aircraft. Lessee shall remove the Aircraft
from scheduled service and open the areas of the Aircraft as
required to
Exhibit D-2 Page 9
perform the necessary checks as specified in Section 2 of this
Exhibit D-2. In addition, Lessee shall allow Lessor to accomplish
its inspection to determine that the Aircraft, including the
Aircraft Documents are in the condition set forth in Sections 1,
2, 3 and 4 of this Exhibit D-2. During such checks, Lessor's
personnel shall have the right to reasonably request that
adjacent additional panels or areas be opened in order to allow
further inspection by Lessor's personnel.
(b) Operational Ground Check - Lessee shall conduct an operations
ground check on the Aircraft in accordance with the Maintenance
Program manual criteria for the purpose of demonstrating to
Lessor the satisfactory operation of the systems, including a
full fuel tank leak check, pilot and static systems check and
hydraulic system internal leak check.
(c) Operational Test Flight - The Aircraft shall be test flown by
Lessee, using qualified flight test personnel, for the amount of
time necessary to satisfactorily demonstrate the airworthiness of
the Aircraft and the proper functioning of all systems and
components in accordance with the agreed check flight procedures.
During such test flight command, care, custody and control of the
Aircraft shall remain at all times with Lessee. Up to five (5) of
Lessor's designated representatives (or more if mutually agreed)
may participate in such flight as observers. Upon completion of
such operational flight-testing, the representatives of Lessee
and Lessor participating in such testing shall agree in writing
upon any discrepancies required to be corrected by Lessee in
order to comply with the conditions required hereunder.
(d) Discrepancies - If requested by Lessor in writing, all
discrepancies, which are noted during the inspection and
acceptance flight(s), shall be corrected at Lessee's expense. If
such discrepancies are substantiated by the Maintenance Program
and Lessor determines that repairs, modifications or other work
items are required to cause the Aircraft to comply with the
requirements provided herein, including, without limitation, any
maintenance required so that the Engines will meet all Engine
parameters and trends specified by the Maintenance Program,
Lessee shall cause such repairs and other work items to be
commenced and completed prior to return.
Section 8. Delegation.
Lessee agrees that whenever a determination under this Exhibit D-2 is to be
made by, or a right is granted under this Exhibit D-2 to, the Lessor, the Lessor
may, at its option, allow the Manufacturer to act as the authorized
representative of the Lessor and make such determination or exercise such right.
Section 9. Definitions.
For the purpose of this Exhibit D-2, the following terms have the following
meanings:
"RVG APPRAISAL PROCEDURE" means this procedure shall apply only if
Lessee exercises the FMV Purchase Option and Beneficiary provides a
Residual Notice pursuant to Section 3 of Exhibit A-2 of the Lease and
shall be used in such case to determine the Fair Market Sales Value of
the Aircraft as herein provided. Manufacturer, Beneficiary and Lessee
shall, within thirty (30)
Exhibit D-2 Page 10
calendar days after Beneficiary has delivered a Residual Notice, each
obtain appraisal values from a recognized independent appraiser (one to be
selected by Manufacturer, one by Beneficiary, and one by Lessee), and the
average value as determined by the appraisers shall be binding on
Manufacturer, Beneficiary and Lessee; provided that if the value or values
determined by one or more of the appraisers differs from the average of the
values determined by all three appraisers by more than five percent (5%) of
such average, the value which differs the most from such average shall be
excluded, and the average of the values determined by the other two
appraisers shall be binding on Manufacturer, Beneficiary and Lessee.
Manufacturer, Beneficiary and Lessee shall each pay its own appraiser. Each
appraiser must be associated with a professional organization of aircraft
appraisers and each appraisal shall be conducted pursuant to ISTAT 1994 (or
any successor) appraisal methods, definitions and assumptions. Fair Market
Sales Value as determined hereunder shall mean the value that would be
obtained in an arms'-length transaction between an informed and willing
buyer-user (other than a lessee currently in possession or a used equipment
dealer) under no compulsion to buy and an informed and willing seller under
no compulsion to sell. In determining Fair Market Sales Value, it will be
assumed that the Aircraft is in the condition, location and overhaul status
in which it is required to be returned to the Lessor pursuant to Article
XVIII of the Lease, without allowance for any return condition adjustments
otherwise permitted by Section 6 of this Section D-2, that Exhibit D-2 of
the Lease will apply, that the Lessee has removed all Parts which it is
entitled to remove pursuant to Article IX of the Lease and that the
Aircraft is not encumbered by the Lease or any Lien.
"APU" shall mean the auxiliary power unit bearing serial number __________,
and any substitute APU which may from time to time be substituted therefor
pursuant to the terms of the Lease.
"CALENDAR CONTROLLED COMPONENTS OR PARTS" means those components or parts,
which are identified in the MRB Report which have maintenance tasks at
specific calendar-time intervals.
"CYCLE-CONTROLLED COMPONENTS OR PARTS" means those components or parts,
which are identified in the MRB Report which have maintenance tasks at
specific flight-cycle intervals.
"HOUR-CONTROLLED COMPONENTS OR PARTS" means those components or parts,
which are identified in the MRB Report which have maintenance tasks at
specific flight-hour intervals.
"LIFE CYCLE FATIGUE ("LCF") PARTS" means those rotating parts which have
specific cycle limits as specified by the manufacturer to preclude cycle
fatigue failures.
"MAINTENANCE REVIEW BOARD REPORT ("MRB REPORT")" means the report published
by the maintenance review board detailing the intervals and description of
the maintenance tasks and, where applicable, the life limits required for
continued airworthiness of the Aircraft. Where the intervals specified in
the MRB Report differ from the limit specified by the component
manufacturer, the MRB Report shall take precedence.
"TERMINATING ACTION" means the alteration or modification of the Aircraft
in accordance with mandatory service bulletins, orders, airworthiness
directives, and instructions required to eliminate repetitive inspections
or maintenance action.
Exhibit D-2 Page 11
EXHIBIT E-1 TO
THE PURCHASE AGREEMENT
FORM OF ASSIGNMENT AND ASSUMPTION AGREEMENT
THIS ASSIGNMENT AND ASSUMPTION AGREEMENT, dated as of ___________,
________ between [_____________________] (the "TRANSFEREE") and
________________________________________ (the "TRANSFEROR").
W I T N E S S E T H:
WHEREAS, the Transferor is a party to an
Aircraft Purchase Agreement
[N288SK], dated as of June 5, 2001 among Solitair Corp., Chautauqua Airlines,
Inc. (the "Lessee"), the Transferor and ▇▇▇▇▇ Fargo Bank Northwest, National
Association, not in its individual capacity (except as otherwise expressly
provided therein) but solely as Owner Trustee (as the same may be from time to
time amended, the "PURCHASE AGREEMENT") and certain other Transaction Documents
(as defined herein);
WHEREAS, the Transferor desires to sell and assign to the Transferee
[all of]/[an undivided interest in] its right, title and interest in, to and
under the Trust Agreement (as defined in the Purchase Agreement) (except as
reserved below), and the Transferee desires to (i) purchase and accept from the
Transferor the assignment of [all of]/[such undivided interest in] the
Transferor's right, title and interest in, to and under the Trust Agreement
(except as reserved below) and (ii) assume the Assumed Obligations (as defined
herein); and
WHEREAS, capitalized terms used herein without definition and which
are defined in the Purchase Agreement are used herein with the respective
meanings given such terms in the Purchase Agreement;
NOW, THEREFORE, in consideration of the premises and the mutual
agreements contained herein, the parties agree as follows:
1. ASSIGNMENT. Effective as of the date hereof (the "TRANSFER DATE"),
the Transferor hereby irrevocably sells, assigns, transfers, conveys and sets
over to the Transferee [all of]/[an undivided interest in ___ portion of] its
right, title and interest in, to and under the Trust Estate, the Purchase
Agreement, the Trust Agreement, the Tax Indemnity Agreement and all other
Operative Documents (as defined in the Purchase Agreement), agreements,
contracts, documents and instruments executed and delivered at any time prior to
the execution and delivery of this Agreement in connection with any of the
foregoing (the "TRANSACTION DOCUMENTS"), and any proceeds therefrom, except such
rights of the Transferor as have arisen or accrued prior to the Transfer Date
(such excepted rights to include, without limitation, the right to receive any
amounts due or accrued to the Transferor under any Transaction Document as of a
date prior to the Transfer Date and the right to enforce any terms under the
Purchase Agreement
Exhibit E-1 -- Page 1
or the Tax Indemnity Agreement with respect to acts or events occurring prior to
the Transfer Date).
2. ASSUMPTION. The Transferee hereby assumes all of the obligations,
liabilities and duties of the Transferor arising from and after the Transfer
Date under each Transaction Document [with respect to the undivided interest
therein transferred hereunder] (the "ASSUMED OBLIGATIONS") and confirms that
from and after the Transfer Date it shall be deemed a party to each Transaction
Document to which the Transferor is a party and shall be bound by all the terms
thereof (including the agreements and obligations of the Transferor set forth
therein) as if it were named as the Transferor therein.
3. FURTHER ASSURANCES. Each party hereto shall, at any time and from
time to time, upon the request of the other party hereto, promptly and duly
execute and deliver any and all such further instruments and documents and take
such further action as the other party may reasonably request to obtain the full
benefits of this Agreement and of the rights and powers herein granted.
4. REPRESENTATIONS AND WARRANTIES. The Transferee hereby represents
and warrants to the other parties hereto that:
(a) ORGANIZATION; AUTHORITY. The Transferee (i) is a __________ duly
organized, validly existing and in good standing under the laws of
___________________ and (ii) has the full [corporate] power and authority to
conduct its business as presently conducted, to own or hold under lease its
properties and to execute, deliver and perform this Agreement and to perform the
Assumed Obligations.
(b) DUE AUTHORIZATION. The execution, delivery and performance of this
Agreement and the performance of the Assumed Obligations have been duly
authorized by all necessary corporate action on the part of the Transferee.
(c) CONFLICT. The execution, delivery and performance by the
Transferee of this Agreement and the performance of the Assumed Obligations and
the consummation or performance by the Transferee of the transactions
contemplated thereby will not conflict with or result in any violation of,
constitute a default under, or result in the creation of any Lien upon any
property of the Transferee under, any term of the Certificate of Incorporation
or By-laws of the Transferee or any agreement, mortgage, contract, indenture,
lease or other instrument, or any Applicable Law, by which the Transferee or its
properties or assets are bound, except for any such violation, conflict or
default which would not have a material adverse effect on the Transferee or its
ability to perform the Assumed Obligations.
(d) GOVERNMENT CONSENTS. Neither the execution or delivery of this
Agreement and the performance of the Assumed Obligations nor the consummation of
any of the transactions contemplated hereby or thereby by the Transferee
requires the consent or approval of, the giving of notice to, the registration
with, or the taking of any other action in respect of any United States federal,
state or other governmental authority or agency, including any judicial body,
that would be required to be taken or obtained by the Transferee.
Exhibit E-1 -- Page 2
(e) LEGAL, VALID AND BINDING OBLIGATIONS. The Assumed Obligations and
this Agreement constitute the legal, valid and binding obligations of the
Transferee enforceable against the Transferee in accordance with their
respective terms except as such enforcement may be limited by bankruptcy,
insolvency, reorganization, moratorium, and other similar laws affecting the
rights of creditors generally and by general principles of equity, regardless of
whether enforcement is pursuant to a proceeding in equity or at law.
(f) LITIGATION. There are no pending or, to the knowledge of the
Transferee, threatened actions or proceedings against the Transferee by or
before any court or administrative agency or arbitrator that, either
individually or in the aggregate, are reasonably likely to materially adversely
affect the ability of the Transferee to perform its obligations under this
Assumption Agreement or the Assumed Obligations.
(g) SECURITIES REPRESENTATION. The Transferee is acquiring its
interest in the Trust Estate for investment and not with a view to any resale or
distribution thereof, but subject, nevertheless, to any requirement of law that
the disposition of its property remain within its control at all times, and that
neither it nor anyone authorized by it to act on its behalf has directly or
indirectly offered any interest in the Trust Estate, or any similar security for
sale to, or solicited any offer to acquire any of the same from, anyone.
(h) LESSOR'S LIENS. Upon the execution of this Assumption Agreement,
there will be no Lessor's Lien attributable to the Transferee on the Trust
Estate.
(i) ERISA. No part of the funds to be used by the Transferee to
acquire the interests to be acquired by it hereunder constitutes assets (within
the meaning of ERISA and any rules and regulations thereunder) of any ERISA
plan.
(j) PERMITTED TRANSFEREE. The Transferee is a bank, savings
institution, finance company, leasing company or trust company, national banking
association acting for its own account or in a fiduciary capacity as trustee or
agent under any pension, retirement, profit sharing or similar trust or fund,
insurance company, financial institution, fraternal benefit society or a
corporation acting for its own account having a combined capital and surplus
(or, if applicable, consolidated net worth or its equivalent) of not less than
$25,000,000.(1) [The Transferee is an Affiliate(2) of the transferring
Beneficiary having a combined capital and surplus (or, if applicable,
consolidated net worth or its equivalent) of not less than $25,000,000.](3) The
Transferee is reasonably experienced in equipment leasing and financing
transactions. The Transferee is not (x) an airline or other Person engaged in
air transportation or a competitor of Lessee in the business of air
transportation or any Affiliate thereof, (y) a party adverse to the Lessee or
any Affiliate of the Lessee in any pending litigation or arbitration (whether as
plaintiff
----------
(1) If a guaranty is being provided pursuant to Section 10(b)(v) of the Purchase
Agreement, replace "The Transferee" at the beginning of this sentence with
the name of the guarantor.
(2) Include if the Transferee is an Affiliate of the transferring Beneficiary.
(3) There shall be no such net worth requirement if the transferring Beneficiary
remains liable for the obligations of such Affiliate under the Operative
Documents.
Exhibit E-1 -- Page 3
or defendant) or (z) a Person that has overtly threatened to initiate
any such litigation or arbitration against Lessee or any Affiliate of Lessee.
Notwithstanding the foregoing or anything else contained in this
Agreement, the Transferee makes no representation or warranty in this Agreement
with respect to laws, rules or regulations relating to aviation or to the nature
or use of the equipment owned by the Owner Trustee, including, without
limitation, the airworthiness, value, condition, workmanship, design, patent or
trademark infringement, operation, merchantability or fitness for use of the
Aircraft.
5. RELIANCE. The representations, warranties, covenants and agreements
of the Transferee are made for the benefit of, and may be relied upon by, the
Owner Trustee, Lessee and Transferor (collectively, the "BENEFICIARIES"), and
each of the Beneficiaries shall be deemed to be an express third party
beneficiary with respect thereto, entitled to enforce directly and in its own
name any rights or claims it may have against such Transferee as such
beneficiary.
6. PAYMENTS. Transferor hereby covenants and agrees to pay over to
Transferee, if and when received on or following the Transfer Date, any amounts
(including any sums payable as interest in respect thereof) paid to or for the
benefit of Transferor that, under Section 2 hereof, belong to Transferee, and
Transferee hereby covenants and agrees to pay over to Transferor, if and when
received on or following the Transfer Date, any amounts (including any sums
payable as interest in respect thereof) paid to or for the benefit of Transferee
that, under Section 2 hereof, belong to Transferor.
7. COUNTERPARTS. This Agreement may be executed in any number of
counterparts and by the parties hereto on separate counterparts (or upon
separate signature pages), all of which together shall constitute but one and
the same instrument.
8. GOVERNING Law. THIS AGREEMENT IS BEING DELIVERED IN THE STATE OF
NEW YORK, AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER SHALL,
PURSUANT TO NEW YORK GENERAL OBLIGATIONS LAW SECTION 5-1401, BE GOVERNED BY THE
LAWS OF THE STATE OF NEW YORK.
Exhibit E-1 -- Page 4
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed and delivered on the date first above written
[ ]
------------------------------------------
Transferor
By:
-----------------------------------------
Name:
Title:
[ ]
------------------------------------------
Transferee
By:
-----------------------------------------
Name:
Title:
Exhibit E-1 -- Page 5
EXHIBIT E-2 TO
THE PURCHASE AGREEMENT
FORM OF GUARANTY AGREEMENT
[DATE]
Re: Chautauqua Airlines, Inc. - One Embraer model EMB-145LR Aircraft
Bearing United States Registration No. N288SK
Ladies and Gentlemen:
Reference is made to that certain Assignment and Assumption Agreement dated
as of _______________ (the "ASSIGNMENT AGREEMENT") by and between
_______________ ("BENEFICIARY") and _______________ ("ASSIGNEE"). Assignee is a
direct or indirect subsidiary of the undersigned, _____________________, a
____________ ("GUARANTOR"). Except as otherwise noted herein, all capitalized
terms used herein shall have the respective defined meanings set forth in (1)
that certain Purchase Agreement [N288SK] (the "PURCHASE AGREEMENT"), dated as of
June 5, 2001 among Solitair Corp., Chautauqua Airlines, Inc. (the "Lessee"), the
Beneficiary and ▇▇▇▇▇ Fargo Bank Northwest, National Association, a national
banking association, not in its individual capacity, except as expressly
provided therein, but solely as Owner Trustee ("OWNER TRUSTEE"); and (2) that
certain Aircraft Lease Agreement [N288SK] (the "LEASE"), dated as of June 5,
2001 between the Owner Trustee, as Lessor and the Lessee, as Lessee (each of the
Lessee and the Owner Trustee, together with its successors and permitted
assigns, a "GUARANTEED PARTY").
In connection with the transactions contemplated by the Assignment
Agreement, Guarantor represents and warrants to, and covenants with, each
Guaranteed Party, as follows:
1. OWNERSHIP OF ASSIGNEE. Assignee is a direct or indirect subsidiary of
Guarantor.
2. REPRESENTATIONS AND WARRANTIES. Guarantor represents and warrants that
Guarantor is duly organized and validly existing in good standing under the laws
of _____________. The execution, delivery and performance of this Guaranty
Agreement are within Guarantor's power and authority, have been duly authorized
by all necessary corporate action on the part of the Guarantor and do not
contravene the charter or the by-laws of Guarantor or any indenture, mortgage,
credit agreement, note, long-term lease or other material agreement to which
Guarantor is a party or by which Guarantor is bound, and this Guaranty Agreement
constitutes a legal, valid and binding obligation of Guarantor, enforceable
against Guarantor in accordance with its terms.
3. SUBMISSION TO JURISDICTION, ETC. Guarantor hereby agrees to be bound, to
the same extent Beneficiary is bound, by the provisions of Section 12(b) of the
Purchase Agreement, which are incorporated herein by reference as if fully set
forth herein.
Exhibit E-2 -- Page 1
4. UNDERTAKINGS.
(a) Guarantor hereby unconditionally and irrevocably guaranties not merely
as surety but as primary obligor, the due and punctual: (i) performance by
Assignee of all of the obligations of the "Beneficiary" under the Operative
Documents assumed by Assignee under the Assignment Agreement; (ii) payment of
any and all sums which are payable by the Beneficiary pursuant to any of the
Operative Documents which payment obligations were assumed by Assignee under the
Assignment Agreement; and (iii) performance of, observance of and compliance
with all other obligations, covenants and undertakings and representations and
warranties of, or made by, Assignee in the Assignment Agreement or the
Beneficiary contained in or arising under the Operative Documents and assumed by
Assignee under the Assignment Agreement (such payments and other obligations
referred to in this Section 4(a) hereinafter referred to as the "OBLIGATIONS").
Guarantor agrees that it will not use the assets of any ERISA Plan to fund its
payment obligations hereunder.
(b) Guarantor agrees that this Guaranty Agreement is an unconditional and
absolute guaranty of payment and performance (not merely collectability), that
its undertakings hereunder are not contingent upon any Guaranteed Party bringing
any action against Assignee or resorting to any security and hereby expressly
waives any claim that its undertakings hereunder are so contingent.
(c) Guarantor irrevocably waives promptness, diligence, demand, and all
notices whatsoever as to the Obligations guaranteed hereby, and any other
circumstances which might otherwise constitute a defense available to it, or a
discharge of it (other than the defense of payment or performance), and agrees
that it shall not be required to consent to or receive any notice of any
amendment or modification of, or waiver, consent or extension with respect to,
the Purchase Agreement or the other Operative Documents to which Assignee is a
party that may be made or given as provided herein or otherwise.
(d) Guarantor further agrees to pay all expenses (including, without
limitation, all fees and disbursements of counsel) that may be paid or incurred
by any Guaranteed Party in enforcing any rights with respect to, or collecting,
any or all of the Obligations and/or enforcing any rights with respect to, or
collecting against, the Guarantor under this Guaranty Agreement.
(e) Guarantor understands and agrees that its obligations hereunder shall
be construed as continuing, absolute and unconditional without regard to (i) the
validity, regularity or enforceability of any Operative Document, any of the
Obligations or any collateral security therefor or guarantee or right of offset
with respect thereto at any time or from time to time held by any Guaranteed
Party, (ii) any defense, set-off or counterclaim (other than a defense of
payment or performance) that may at any time be available to or be asserted by
the Assignee against any Guaranteed Party, or (iii) any other instances
whatsoever (with or without notice to or knowledge of the Assignee or the
Guarantor) that constitutes, or might be construed to constitute, an equitable
or legal discharge of Assignee for the Obligations, or of Guarantor under this
Guaranty Agreement, in bankruptcy or in any other instance.
5. NO DISCHARGE. The obligation of Guarantor hereunder will not be
discharged by: (a) any extension or renewal with respect to any obligation of
Assignee, as Beneficiary, under
Exhibit E-2 -- Page 2
the Operative Documents; (b) any modification of, or amendment or supplement to,
any such agreement; (c) any furnishing or acceptance of additional security or
any release of any security; (d) any waiver, consent or other action or inaction
or any exercise or non-exercise of any right, remedy or power with respect to
Assignee, or any change in the structure of Assignee; (e) any insolvency,
bankruptcy, reorganization, arrangement, composition, liquidation, dissolution
or similar proceedings with respect to Assignee; (f) except as provided in
Section 6 any change in ownership of the shares of capital stock of Guarantor or
Assignee; or (g) any other occurrence whatsoever, except payment in full of all
amounts payable by Assignee, as Beneficiary, under the Operative Documents and
performance in full of all Obligations of Assignee, as Beneficiary, in
accordance with the terms and conditions of the Operative Documents.
6. TRANSFERS. The Guarantor may assign, convey or otherwise transfer its
obligations hereunder to any other Person (hereinafter referred to as the
"TRANSFEREE GUARANTOR"), provided that (a) the Transferee Guarantor enters into
an agreement substantially in the form of this Guaranty Agreement and (b) the
Transferee Guarantor meets the requirements of Section 10(b)(iv) of the Purchase
Agreement relating to a "guarantor". If pursuant to Section 10(b)(iv) of the
Purchase Agreement or the preceding sentence, a new guaranty shall be delivered
or the obligations of the Guarantor shall be transferred, the Transferee
Guarantor shall deliver an opinion or opinions of counsel substantively similar
to the form of opinion attached to the Purchase Agreement as Exhibit G to the
effect that the obligations incurred by the Transferee Guarantor pursuant hereto
constitute the legal, valid, binding and enforceable obligations of such
Transferee Guarantor. Upon the satisfaction by the Guarantor of the conditions
set forth in this Section 6, the Guarantor shall be released and discharged of
any and all further obligations under this Guaranty Agreement.
7. REINSTATEMENT. Guarantor agrees that this Guaranty Agreement shall be
automatically reinstated with respect to any payment made prior to the
termination of this Guaranty Agreement by or on behalf of Assignee pursuant to
the Purchase Agreement or the other Operative Documents to which Assignee is a
party if and to the extent that such payment is rescinded or must be otherwise
restored, whether as a result of any proceedings in bankruptcy or reorganization
or otherwise.
8. NO SUBROGATION. Notwithstanding any payment or payments made by
Guarantor hereunder or any set-off or application of funds of Guarantor by any
Guaranteed Party, Guarantor shall not be entitled to be subrogated to any of the
rights of Guaranteed Party against Assignee or any collateral, security or
guarantee or right of set-off held by any Guaranteed Party for the payment of
the Obligations, nor shall Guarantor seek or be entitled to seek any
reimbursement from the Assignee in respect of payments made by Guarantor
hereunder, until all amounts and performance owing to the Guaranteed Parties by
Assignee on account of the Obligations are paid and performed in full.
9. SEVERABILITY. Any provision of this Guaranty Agreement that is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
Exhibit E-2 -- Page 3
10. MISCELLANEOUS. This Guaranty Agreement shall: (a) be binding upon
Guarantor, its successors and assigns; (b) inure to the benefit of, and be
enforceable by, the Guaranteed Parties but shall not, and is not intended to,
create rights in any other third parties; (c) not be waived, amended or
modifiedthe written consent of each of the Guaranteed Parties; (d) be governed
by and construed in accordance with, the internal laws of the State of New York,
and (e) remain in full force and effect until the earlier of (i) payment in full
of all sums payable by Assignee, as Beneficiary, under the Assignment Agreement
and the Operative Documents and by Guarantor hereunder, and performance in full
of all other Obligations of Assignee, as Beneficiary, under the Assignment
Agreement and the Operative Documents and (ii) the compliance by Guarantor with
Section 6. All notices to, requests of, demands on and other communications with
Guarantor shall be made in writing and shall be personally delivered, sent by
facsimile or telecommunication transmission (which in either case provides
written confirmation to the sender of its delivery) or sent by registered or
certified mail, postage prepaid, or by prepaid courier service to Guarantor at:
______________________________________, Attention: ______________________,
telephone (___) __________] facsimile [(___) __________].
IN WITNESS WHEREOF, the undersigned has caused this instrument to be duly
executed this ______ day of ________________________.
[GUARANTOR]
By:
------------------------------------
Name:
Title:
Exhibit E-2 -- Page 4
EXHIBIT F
COUNTRY LIST
Australia Italy
Austria Japan
Belgium Luxembourg
Canada The Netherlands
Denmark New Zealand
Finland Norway
France Portugal
Germany Singapore
Iceland Switzerland
Ireland United Kingdom
EXHIBIT G
GENERAL TAX INDEMNITY
Section 1.01 INDEMNITY. Lessee agrees for the benefit of each Tax
Indemnitee to pay and, on written demand, to indemnify and hold each Tax
Indemnitee harmless from all Taxes, howsoever levied or imposed, whether levied
or imposed upon or asserted against any Tax Indemnitee, this Lease, the
Aircraft, or any part thereof or interest therein, or otherwise by any Federal,
state or local government, political subdivision, or taxing authority in the
United States, by any government or taxing authority of or in a foreign country
or of or in a territory or possession of the United States or by any
international taxing authority upon or with respect to, or arising out of or
connected with, or based upon or measured:
(a) by the Aircraft, or any part thereof, or interest therein;
(b) by the exportation, importation, ownership, delivery,
non-delivery, warehousing, removal, leasing, exchange, acceptance, assigning,
possession, repossession, condition, recording, use, location, presence,
operation, settlement of any insurance or warranty claim, sale, subleasing,
rental, retirement, chartering, imposition of any Lien, abandonment,
registration or change in registration, preparation, installation, modification,
repair, maintenance, replacement, transportation, storage, transfer of title,
return or other disposition of the Aircraft or any part thereof or interest
therein;
(c) by the rentals, receipts or earnings arising from any one or more
of the items or acts described in Section 1.01 (a) or (b) above (including,
without limitation, the Rent), or any other payment contemplated by this Lease;
(d) upon or with respect to this Lease, or any other Operative
Document pertaining to or in connection with the transactions contemplated by
this Lease; or
(e) otherwise with respect to or in connection with the transactions
contemplated by this Lease.
Section 1.02 EXCEPTIONS TO INDEMNITY. Notwithstanding anything to the
contrary in this Agreement or any other Operative Document, the indemnity
provided for in this Exhibit G does not extend to any of the following Taxes:
(a) Taxes that are based on or measured by gross or net income or
receipts, capital or net worth or capital stock, capital adequacy, or reserves
or that are capital gains Taxes, excess profits Taxes, minimum or alternative
minimum Taxes, accumulated earnings Taxes, personal holding company Taxes,
succession Taxes, estate Taxes, franchise Taxes, doing business Taxes, or
similar Taxes; PROVIDED, HOWEVER, that this exception (a) shall not apply to (i)
Taxes that are in the nature of sales, use, or property Taxes or (ii) Taxes if
Taxes of such type would not have been incurred by a Tax Indemnitee but for the
use, operation, location, or registration of the Aircraft by Lessee or any
Affiliate thereof or any sublessee, or the activities or place of incorporation
or business organization of Lessee or any Affiliate of Lessee, in a jurisdiction
in which such Taxes have been incurred (PROVIDED, HOWEVER, that Lessee shall
only incur responsibility for Taxes of such type only if and to the extent that
such Taxes are imposed as a result of such use, operation, location,
registration, or activities and not as a result of the activity of a Tax
Indemnitee and PROVIDED, FURTHER, that this clause (ii) shall not apply to any
Taxes of such type imposed by any Federal, state or local government, political
subdivision, or taxing authority in the United States);
(b) withholding taxes imposed on any indebtedness of any Tax
Indemnitee;
(c) Taxes incurred by a Tax Indemnitee or any of its Affiliates by (A)
engaging in activities in the jurisdiction imposing such Tax which activities or
property are unrelated to the transactions contemplated by this Lease or other
Operative Documents, (B) being incorporated therein or maintaining an office or
having a place of business therein and (C) such Tax Indemnitee's failure to file
any form, document or certificate within thirty (30) days following notice by
Lessee to such Tax Indemnitee that such form, document or certificate is
required to be filed in order to avoid or mitigate applicability of such Tax;
(d) Taxes (including excess taxes) incurred as the result of any
voluntary or involuntary transfer or Financing by Lessor or any other Tax
Indemnitee of any interest in the Aircraft, any part thereof, this Lease or any
Operative Document, the Trust Estate or in the Lessor or any Tax Indemnitee
except following (w) an Event of Default in the exercise of remedies, (x) the
exercise of the Purchase Option pursuant to the Lease, (y) the substitution,
replacement, modification, pooling or improvement of the Aircraft or any part
thereof pursuant to Article IX of the Lease, or (z) an Event of Loss;
(e) Taxes incurred by any Tax Indemnitee because of a Lessor's Lien or
the gross negligence or willful misconduct of such Tax Indemnitee or the breach
or inaccuracy of any representation, warranty or covenant of such Tax Indemnitee
in this Lease or any other Operative Document;
(f) Taxes attributable to acts or events occurring after the
redelivery of the Aircraft to the Lessor, except to the extent fairly
attributable to acts or events occurring prior thereto;
(g) Taxes imposed against a transferee of a Tax Indemnitee to the
extent of the excess of such Taxes over the amount of such Taxes which would
have been imposed had there not been a transfer by an original Tax Indemnitee of
any interest of such Tax Indemnitee in the Aircraft, the Trust Estate, or the
Operative Documents;
(h) Taxes for which the Lessee is obligated to indemnify the
Beneficiary under the Tax Indemnity Agreement;
(i) United States withholding taxes imposed on payments to a foreign
person (other than any such withholding taxes imposed on payments to Aero);
(j) Taxes imposed with respect to any fees received by or the Owner
Trustee;
(k) interest, penalties, fines or additions to tax to the extent they
relate to Taxes for which no indemnity would be payable by the Lessee pursuant
to this Section 1.02;
(l) Taxes imposed by section 4975 of the Code; or
(m) Taxes arising from or attributable to the like-kind exchange
transaction described in Section 10(b)(vi) of the Purchase Agreement to the
extent such Taxes exceed the amount of Taxes that would have been imposed in the
absence of such like-kind exchange transaction.
Section 1.03 CONTESTS. If a claim is made against a Tax Indemnitee for
Taxes with respect to which Lessee is liable for a payment or indemnity under
this Lease, such Tax Indemnitee will promptly give Lessee notice in writing of
such claim; PROVIDED, HOWEVER, that such Tax Indemnitee's failure to give notice
will not relieve Lessee of its obligations hereunder except to the extent that
such failure actually or
2
effectively (i) results in the imposition of penalties or interest by the
applicable taxation authority or (ii) has a material adverse impact upon
Lessee's right to contest such Taxes in accordance with this Section 1.03. So
long as (i) a contest of such Taxes does not involve any material danger of the
sale, forfeiture, seizure or loss of the Aircraft or any interest therein
(except if the Lessee shall have adequately bonded any Lien that results in such
risk or otherwise made adequate provision to protect the interests of the Tax
Indemnitees), (ii) adequate reserves have been provided for such Taxes by Lessee
or, if required by applicable law, an adequate bond has been posted, (iii) in
the event the Tax Indemnitee decides after consultation with the Lessee to pay
the Tax prior to the contest, the Lessee shall have provided to the Tax
Indemnitee an interest-free advance in an amount equal to the Tax which the Tax
Indemnitee is required to pay, and (iv) no Event of Default described in clauses
(a), (b), (g), (h), (i), or (j) of Section 17.01 of the Lease shall have
occurred and be continuing, then such Tax Indemnitee at Lessee's written request
will in good faith, with due diligence and at Lessee's expense (including paying
the reasonable legal and accounting fees of such Tax Indemnitee), contest (or
permit Lessee to contest its own name if permitted by applicable Law or in the
name and on behalf of such Tax Indemnitee) the validity, applicability or amount
of such Taxes.
Section 1.04 TAX OBLIGATIONS AND AFTER-TAX BASIS OF PAYMENTS. Notwithstanding
any other provision anywhere contained in the Operative Documents, it is
understood that all of the Lessee's obligations with respect to taxes are set
forth in this Exhibit G (and Section 1.04 of Exhibit H to the Lease to the
extent that payments by the Lessee thereunder are required to be made on an
"after-tax basis") and in the Tax Indemnity Agreement, and if the Lessee shall
be required under any provision of the Operative Documents to pay any tax
imposed upon any Tax Indemnitee or with respect to a payment made by the Lessee
under the Operative Documents for which the Lessee is not responsible under this
Exhibit G, Section 1.04 of Exhibit H to the Lease or the Tax Indemnity
Agreement, it shall be entitled to prompt reimbursement of such amount from the
party whose tax liability was paid. Notwithstanding anything in this Exhibit G
to the contrary, Lessee further agrees that, with respect to any indemnity
payment hereunder, such indemnity payment shall include any amount necessary to
hold the recipient of the indemnity payment harmless on a net after-tax basis
(after taking into account all relevant Tax benefits and savings whether by way
of deduction, credit, allocation, apportionment or otherwise, realized or,
except in the case of foreign tax credits, the present value of such Tax
benefits and savings expected to be realized) from all Taxes required to be paid
by such recipient with respect to such indemnity payment, so that such recipient
shall receive an amount which, net of any Taxes required to be paid or withheld
by (or for the account of) such recipient in respect of such amount, and taking
into account the aforementioned tax benefits and savings, shall be equal to the
amount of indemnity payment otherwise required hereunder.
All computations for the purposes hereof shall be based on tax rates in
effect on the date payment pursuant to this Section is made. Computations
involving the loss of use of money or calculations of present value shall be
based on the Treasury Rate, as adjusted for applicable income tax effects and
compounded semiannually.
If any Tax Indemnitee or Indemnitee shall realize a tax benefit not taken
into account in the preceding paragraph in the form of a deduction or foreign
tax credit against United States income tax liability, as a result of any claims
or Taxes paid or indemnified against by the Lessee under Section 1.04 of Exhibit
H to the Lease or this Exhibit G (whether by way of deduction, credit,
allocation or apportionment of income or otherwise), such Tax Indemnitee or
Indemnitee shall pay to the Lessee an amount which, after subtraction of any
further tax savings such Tax Indemnitee or Indemnitee realizes as a result of
the payment thereof, is equal to the amount of such tax benefit; PROVIDED, in
calculating the amount of any credits against United States Federal income taxes
realized by the Tax Indemnitee with respect to foreign Taxes, it shall be
assumed that (i) to the extent Tax Indemnitee's ability to utilize foreign tax
credits to reduce its liability for United States Federal taxes is actually
increased by reason of
3
net foreign source taxable income attributable to the transaction contemplated
by the Operative Documents, the foreign tax credit generated with respect to the
foreign income tax for which the Lessee is obligated to make an indemnity
payment hereunder shall be deemed to be utilized prior to any other foreign tax
credit of the Tax Indemnitee; (ii) except as provided in the preceding clause
(i), any foreign tax credit not described in the succeeding clauses (iii) and
(iv) shall be deemed to be utilized prior to any foreign tax credit attributable
to the Lessee; (iii) any foreign tax credit generated by Lessee shall be
utilized ahead of any credit generated by another lessee of the Beneficiary with
respect to whom the Beneficiary has a contractual obligation to pay over the
benefits arising therefrom on a basis that assumes that such credits shall be
utilized after all other credits available to the Beneficiary have been
utilized, and (iv) except as provided in clause (i), any foreign tax credit
generated by the Lessee shall be utilized on a PARI PASSU basis with all other
credits generated in connection with any other leases of the Beneficiary not
described in clause (iii) and with respect to whom the Beneficiary does not have
a contractual obligation to pay over the benefits arising therefrom on a basis
that assumes that such credits shall be utilized ahead of all other credits of
the Beneficiary. Each payment made by any Tax Indemnitee or Indemnitee to the
Lessee pursuant to this paragraph shall be made within 30 days after the
respective Tax Indemnitee or Indemnitee files a tax return (including estimated
returns) which reflects the tax benefits described in the prior sentence.
Section 1.05 REPORTS. In case any report or return is required to be made
with respect to any Taxes (other than income Taxes) that are an obligation of
Lessee hereunder or for which an indemnification obligation may arise under this
Exhibit G, Lessee will, to the extent it has knowledge thereof make such report
or return in such manner that is not inconsistent with the ownership of the
Aircraft and the Engines in Lessor, and, upon request, send a copy of the
applicable portions of such report or return to Lessor. In addition, the Tax
Indemnitees shall furnish Lessee, at Lessee's written request and expense, with
any information in Tax Indemnitee's possession or control (and not within the
control of Lessee) that is reasonably necessary to make any tax filing, report
or return (but no Tax Indemnitee shall be required to furnish its tax return,
although it may be required to furnish information contained therein).
Section 1.06 REFUNDS. Upon receipt by a Tax Indemnitee of a refund or
credit of all or any part of any Taxes that Lessee has paid or for which the
Lessee has reimbursed or indemnified the Tax Indemnitee, such Tax Indemnitee
will promptly pay to Lessee the net amount of such Taxes refunded or credited,
after taking into account any net Tax benefit, and interest received or credited
thereto.
Section 1.07 SURVIVAL. All the obligations under this Exhibit G shall
survive the assignment (subject to the limitations in Section 1.02), expiration
or other termination of this Lease and the Operative Documents.
Section 1.08 PAYMENT PROCEDURES. Any amount payable to a Tax Indemnitee
pursuant to this Exhibit G shall be paid within 30 days after receipt of a
written demand therefor from such Tax Indemnitee accompanied by a written
statement describing in reasonable detail the basis for such indemnity and the
computation of the amount so payable, provided that such amount need not be paid
prior to the later of (i) 1 business day prior to the date that the
indemnifiable Taxes are due or (ii) in the case of amounts which are being
contested by the Lessee in good faith or by the Tax Indemnitee pursuant to
Section 1.03, the time such contest is finally resolved. Within 15 days
following the Lessee's receipt of the computation of the amount of the
indemnity, the Lessee may request that an accounting firm to be jointly selected
by the Lessee and such Tax Indemnitee (but not including the accounting firm
that regularly prepares the certified financial statements of the Lessee or such
Tax Indemnitee unless such firm consists of one of the "Big 5" accounting firms
in which case such firm shall be deemed acceptable to the parties) determine
whether such computations of the Tax Indemnitee are correct. The computations
4
of such accounting firm shall be final, binding and conclusive upon the parties
and the Lessee shall have no right to inspect the books, records or tax returns
of the Tax Indemnitee to verify such computation. All fees and expenses payable
in connection with such verification shall be borne by the Lessee unless such
verification discloses an error adverse to the Lessee of more than 5% of the
amount computed by the Tax Indemnitee, in which case such fees and expenses
shall be paid by the Tax Indemnitee.
Section 1.09 NON-SIGNATORIES. As a condition precedent to any performance
by the Lessee in connection with any indemnity, payment or other obligation
pursuant to this Exhibit G with respect to any Person claiming as a Tax
Indemnitee which is not a signatory to this Lease, such Person shall expressly
agree in writing with the Lessee to be bound by all the terms of this Exhibit G
and this Lease applicable to such Person in its capacity as a Tax Indemnitee.
5
EXHIBIT H
GENERAL INDEMNITY
Section 1.01 GENERAL INDEMNITY. Except as otherwise expressly set forth in
Section 1.03, Lessee agrees to indemnify, reimburse, hold harmless and defend
each Indemnitee from and against any and all claims, damages, losses,
liabilities, demands, suits, judgments, causes of action, legal proceedings,
whether civil or criminal, penalties, fines and other sanctions, and any
reasonable attorneys' fees and other reasonable costs and expenses in connection
herewith, (including any of the foregoing arising or imposed with or without
fault of any Indemnitee, or under the doctrine of absolute or strict liability)
and including any third party claims arising from or in any way connected with
injury to or death of any Person or loss or damage to property (any and all of
which are hereafter referred to as "CLAIMS") which in any way result from,
pertain to or arise out of, or are in any manner related to (a) the Lease, any
other Operative Document or the Manufacturer Purchase Agreement or the breach of
any representation, warranty or covenant made by Lessee hereunder, thereunder or
in any document delivered by Lessee in connection herewith or therewith, or (b)
the condition, ownership, manufacture, purchase, delivery, lease, sublease,
acceptance, possession, return, disposition, use, operation, maintenance,
repair, alteration or control of the Aircraft, the Airframe, any Engine or any
Part, either in the air or on the ground during the Term, or (c) any defect in
the Aircraft, any Engine or any Part (whether or not discovered or discoverable
by Lessee or Lessor) arising from the material or any articles used therein or
from the design, testing, or use thereof or from any maintenance, service,
repair, overhaul, or testing of the Aircraft, any Engine or any Part, whether or
not the Aircraft, such Engine or such Part is in the possession of Lessee, and
regardless of where the Aircraft, such Engine or such Part may then be located,
or (d) any transaction, approval, or document contemplated by the Lease, any
Operative Document or the Manufacturer Purchase Agreement or given or entered
into in connection herewith or therewith. Lessee shall be subrogated to all
rights and remedies that any Indemnitee may have against the Manufacturer and
its subcontractors or any other person as to any such Claims, but only to the
extent that Lessee has paid in full to such Indemnitee the amount claimed by it
hereunder with respect to such Claims.
Section 1.02 LESSEE WAIVER AND LIMITATION OF LIABILITY. Except as expressly
set forth in Section 1.03, Lessee hereby waives and releases each Indemnitee
from any Claims (other than Claims attributable to or arising out of the willful
misconduct or gross negligence of such Indemnitee), whether existing now or
hereafter arising, for or on account of or arising out of or in any way
connected with injury to or death of personnel of Lessee or loss or damage to
property of Lessee or the loss of use of any property that may result from or
arise in any manner out of or in relation to the ownership, leasing, condition,
use or operation of the Aircraft, in the air or on the ground, or that may be
caused by any defect in the Aircraft, from the material or any article used
therein or from the design or testing thereof, or use thereof, or from any
maintenance, service, repair, overhaul or testing of the Aircraft regardless of
when such defect may be discovered, whether or not the Aircraft is at the time
in the possession of Lessee, and regardless of the location of the Aircraft at
any such time.
Section 1.03 EXCEPTIONS. Notwithstanding anything to the contrary herein,
the indemnity provided for in Section 1.01 will not extend to any Claim of any
Indemnitee to the extent it:
(a) is attributable to acts or events occurring after the redelivery
of the Aircraft to Lessor, except to the extent fairly attributable to acts or
events occurring prior thereto;
(b) is directly attributable to the gross negligence or willful
misconduct of such Indemnitee or the breach or inaccuracy of any representation,
warranty or covenant of such Indemnitee in the Lease or in any other Operative
Document;
(c) other than as expressly provided in Section 1.04 of this Exhibit
H, is a Tax or loss of a Tax benefit, whether or not the Lessee is required to
indemnify therefor pursuant to Article XIV hereof or pursuant to the Tax
Indemnity Agreement;
(d) is a cost or expense expressly required to be paid by such
Indemnitee or its permitted transferees (and not by the Lessee) pursuant to the
Lease or any other Operative Document and for which the Lessee is not otherwise
obligated to reimburse such Indemnitee, directly or indirectly pursuant to the
terms of the Lease or such other Operative Document;
(e) is, in the case of the Beneficiary, Lessor's Liens attributable to
the Beneficiary; in the case of the Owner Trustee, Lessor's Liens to the extent
attributable to the Owner Trustee; in the case of WFB, Lessor's Liens to the
extent attributable to WFB; in the case of a Financing Party, Lessor's Liens to
the extent attributable to such Financing Party;
(f) is, in the case of the Beneficiary or the Owner Trustee,
attributable to the sale by such Indemnitee of any interest in the Aircraft, the
Beneficial Interest or any similar interest (including a sale resulting from
bankruptcy or other proceedings for the relief of debtors in which such
Indemnitee is the debtor and which is not caused by the Default of the Lessee),
unless in each case such sale shall occur pursuant to the exercise of remedies
under Section 17.02 hereof or following the occurrence of an Event of Default;
(g) in the case of the Beneficiary, is a Claim relating to, resulting
from, arising out of or in connection with a "prohibited transaction" within the
meaning of Section 406 of ERISA or Section 4975(c)(1) of the Code resulting from
the direct or indirect use of assets of any ERISA Plan to acquire or hold
Beneficiary's interest in the Trust Estate or in the case of any transferee of
the Beneficiary referred to in Section 10(b)(v) of the Purchase Agreement, to
purchase the Beneficial Interest pursuant to Section 10(b)(v) of the Purchase
Agreement;
(h) except during the continuation of an Event of Default, is
attributable to any amendment to any of the Operative Documents which is not
requested, or consented to, by the Lessee or is not required or made pursuant to
the terms of any of the Operative Documents;
(i) constitutes the loss of future profits of such Indemnitee or
losses attributable to such Indemnitee's overhead; or
(j) arises from or is attributable to the like-kind exchange
transaction described in Section 10(b)(vi) of the Purchase Agreement to the
extent such Claim exceeds the amount of Claim that would have been imposed in
the absence of such like-kind exchange transaction.
Section 1.04 AFTER-TAX BASIS OF PAYMENTS. Lessee further agrees that, with
respect to any payment or indemnity hereunder, such payment or indemnity shall
include any amount necessary to hold the recipient of the payment or indemnity
harmless on a net after-tax basis from all Taxes required to be paid by such
recipient or otherwise withheld with respect to such payment or indemnity (after
taking into account all related Tax benefits and savings), subject to, and
calculated in accordance with, Sections 1.05 and 1.09 of EXHIBIT H to the Lease,
MUTATIS MUTANDIS.
2
Section 1.05 PAYMENTS. Any amount payable as an indemnity to any Indemnitee
by Lessee pursuant to this Exhibit H is to be paid to such party directly, in
immediately available funds, by bank wire transfer at such bank or to such
account as specified by the payee in written directions to Lessee, within thirty
(30) days after receipt of a written demand therefor from such Indemnitee (or,
if such indemnity is payable from insurance proceeds, promptly after timely
receipt of such insurance proceeds).
Section 1.06 REFUNDS. If any Indemnitee obtains a recovery of all or any
part of any indemnity amount that Lessee has paid in full to such Indemnitee,
such Indemnitee will promptly pay to Lessee the net amount recovered by such
Indemnitee, together with any tax benefit actually realized in connection
therewith, PROVIDED no Specified Default is then continuing. If any Indemnitee
is subsequently obligated to repay all or any portion of any such recovery, then
Lessee shall, upon demand by Lessor, repay to Lessor any amounts paid in respect
thereof by Lessor pursuant to this Section 1.06.
Section 1.07 DEFENSE OF CLAIMS. Unless an Event of Default has occurred and
has not been waived by Lessor, Lessee and its insurers will have the right (in
each such case at Lessee's sole expense) to investigate, defend or compromise
any claim for which indemnification is sought as provided in this Section 1.07
(so long as Lessee has agreed in writing reasonably acceptable to the relevant
Indemnitee that Lessee is liable to such Indemnitee for any Claims relating to
or arising out of the Claim for which indemnification is sought, PROVIDED that
Lessee will not be so liable to the extent that it is determined that one or
more of the exclusions contained in Section 1.03 would be applicable to such
Claim), and each Indemnitee will cooperate with Lessee and its insurers with
respect thereto. If a claim is made against an Indemnitee involving one or more
Claims and such Indemnitee has notice thereof, such Indemnitee shall promptly
after receiving such notice give notice of such Claim to Lessee; PROVIDED that
the failure to give such notice shall not affect the obligations of Lessee
hereunder except to the extent Lessee is prejudiced by such failure or the
Lessee's indemnification obligations are increased as a result of such failure.
If no Specified Default shall have occurred and be continuing, Lessee shall be
entitled, at its sole cost and expense, acting through counsel reasonably
acceptable to the respective Indemnitee, (A) in any judicial or administrative
proceeding that involves solely a claim for one or more Claims, to assume
responsibility for and control thereof, (B) in any judicial or administrative
proceeding involving a claim for one or more Claims and other claims related or
unrelated to the transactions contemplated by the Operative Documents, to assume
responsibility for and control of such claim for Claims to the extent that the
same may be and is severed from such other claims (and such Indemnitee shall use
its best efforts to obtain such severance), and (C) in any other case, to be
consulted by such Indemnitee and to be allowed, at Lessee's sole expense, to
participate therein. Notwithstanding any of the foregoing to the contrary,
Lessee shall not be entitled to assume responsibility for and control of any
such judicial or administrative proceedings or compromise any claim if such
proceedings or compromise will involve a material risk of the sale, forfeiture
or loss of, or the creation of any Lien (other than a Permitted Lien) on, the
Aircraft, the Beneficial Interest or any part thereof unless in such an event
Lessee shall have posted a bond or other security satisfactory to the relevant
Indemnitees in respect to such risk. The Indemnitee may participate at its own
expense and with its own counsel in any judicial proceeding controlled by Lessee
pursuant to the preceding provisions.
Section 1.08 SURVIVAL. All the obligations of Lessee under this Exhibit H
shall survive the assignment, expiration or other termination of the Lease. Such
obligations are expressly undertaken by Lessee for the benefit of, and shall be
enforceable directly by, Lessor and each other Indemnitee, provided that if an
Indemnitee is not a party to the Lease, Lessee may require such Indemnitee to
agree in writing, in a form reasonably acceptable to Lessee, to the terms of
this Exhibit H prior to making any payment to such Indemnitee hereunder.
PURCHASE AGREEMENT ASSIGNMENT NO. 2 - (N288SK)
PURCHASE AGREEMENT ASSIGNMENT NO. 2 - (N288SK), dated as of June 29,
2001 (this "Assignment"), among (1) AERO LTD., a Cayman Islands corporation
("Assignor"), (2) ▇▇▇▇▇ Fargo Bank Northwest, National Association ("WFB"), not
in its individual capacity but solely as Owner Trustee under Trust Agreement
(N288SK) dated as of the date hereof ("Trust Agreement") between Mitsui & Co.
(U.S.A.), Inc. ("Beneficiary") and WFB ("Assignee"), and (3) Chautauqua
Airlines, Inc., a New York corporation ("Lessee").
WHEREAS, Solitair Corp. as buyer, and EMBRAER-Empresa Brasileira de
Aeronautica S.A., a corporation organized under the laws of Brazil
("Manufacturer"), have entered into the Purchase Agreement, pursuant to which,
among other things, Manufacturer has agreed to manufacture and sell to Solitair
Corp. and it has agreed to purchase from Manufacturer, certain aircraft,
including the Aircraft (each such capitalized term is as defined in the Purchase
Agreement Assignment No. 1 described below).
WHEREAS, immediately prior to the execution and delivery of this
Assignment, Solitair Corp. as assignor and Assignor as assignee are entering
into the Purchase Agreement Assignment No. 1 - (N288SK) dated as of even date
herewith (the "Purchase Agreement Assignment No. 1"), pursuant to which, among
other things, Solitair Corp. is assigning to Assignor certain of its right,
title and interest in, to and under the Purchase Agreement including, without
limitation, the right to purchase the Aircraft from Manufacturer upon and
subject to the terms and conditions set forth in the Purchase Agreement and the
Purchase Agreement Assignment No. 1; and
WHEREAS, Assignor desires to sell and transfer to Assignee all of its
present and future rights, title, obligations and interest in, to and under the
warranties and indemnities under the Purchase Agreement that are described in
clause (y) of the definition of the Purchase Agreement in the Purchase Agreement
Assignment No. 1 (the "Assigned Warranties");
NOW, THEREFORE, in consideration of the foregoing premises and the
mutual covenants and agreements of the parties contained herein, and for other
good and valuable consideration, the receipt and adequacy of which is hereby
acknowledged, Assignor and Assignee agree as follows:
Section 1. DEFINITIONS. Capitalized terms used but not defined herein
shall have the respective meanings set forth or incorporated by reference, and
shall be construed and interpreted in the manner described, in Purchase
Agreement Assignment No. 1.
Section 2. TRANSFER AND ASSUMPTION. Assignor does hereby sell, assign
and transfer to Assignee all of Assigned Warranties and Assignee hereby accepts
the Assigned Warranties from Assignor. Assignor and Assignee agree that such
sale, assignment, transfer and acceptance is effective as of the date hereof.
Assignor hereby acknowledges and consents to the assignment of
warranties with respect to the Aircraft by Assignee to Lessee pursuant to
Section 10.01 of the Lease. Notwithstanding anything in this Assignment to the
contrary, so long as no Event of Default
1
shall have occurred and the Lease shall not have been terminated under Section
17.02 thereof, Lessee may, to the exclusion of Assignee, exercise in Lessee's
name the right to obtain any recovery or benefit resulting from the enforcement
of any of the Assigned Warranties under the Purchase Agreement in respect of the
Aircraft subject to the terms of the Lease and may exercise all other rights and
powers of the "Buyer" with respect to the Assigned Warranties and may, without
the consent of the Assignee, enter into amendments or modifications thereof.
Manufacturer shall not be deemed to have knowledge of, and need not
recognize the occurrence or discontinuance of, any Event of Default under, or
termination of, the Lease, unless and until Manufacturer has received written
notice thereof from Assignee addressed to Manufacturer, to its Director of
Contracts by mail to EMBRAER-Empresa Brasileira de Aeronautica S.A., ▇▇.
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇, 12.227-901 Sao ▇▇▇▇ dos ▇▇▇▇▇▇-SP, Brazil, or by
telecopy to telecopy no.: (55-123) 45-1257, and, in acting in accordance with
the terms and conditions of the Purchase Agreement and this Assignment,
Manufacturer may act with acquittance and conclusively rely upon any such
notice. If Manufacturer so receives notice from Assignee that an Event of
Default shall have occurred and the Lease shall have been terminated under
Section 17.02 thereof, Manufacturer will perform all the duties and obligations
under the Purchase Agreement with respect to the Assigned Warranties for the
benefit of Assignee and will make any and all payments that it thereafter is
required to make in respect of the Assigned Warranties directly to Assignee at
the account or location as Assignee from time to time notifies Manufacturer in
writing.
Section 3. In accordance with the Purchase Agreement, the assignment
herein is subject to the following conditions:
(a) Assignee is not and will not be owned, effectively
controlled or managed by any airframe manufacturer which competes with
Manufacturer in the thirty-seven (37) to seventy (70) seat turbo jet
market; and
(b) In the event Assignee subsequently transfers the Aircraft
and/or any of Assignee's remaining rights to the Assigned Warranties
with respect to the Aircraft, to any other entity, Assignee agrees to
notify Manufacturer of the identity of such entity at least thirty (30)
calendar days prior to such transaction (provided that if Assignee
fails to notify Manufacturer within this time, Assignee may not assign
its remaining rights without Manufacturer's consent, which shall not be
unreasonably withheld) and provide Manufacturer with prior written
notice of any events under such agreement that would cause any rights
thereby assigned to revert to Assignee under such agreement; provided,
however, that, pursuant to the Purchase Agreement, Assignee shall not
transfer the Aircraft to an entity which is owned, effectively
controlled or managed by any airframe manufacturer which competes with
Manufacturer in the thirty-seven (37) to seventy (70) seat turbo jet
market.
Section 4. Anything herein contained to the contrary notwithstanding:
(a) Neither Assignee nor Beneficiary shall have any obligation
or liability under the Purchase Agreement by reason of, or arising out
of, this Assignment, or be obligated to perform any of Assignor's
duties or obligations under the Purchase Agreement, to make any
payment, to present or file any claim, or to take any other action to
collect or enforce any claim for any payment assigned hereunder;
2
(b) Assignee confirms, for Manufacturer's benefit, that in
exercising any rights under the Purchase Agreement or in making any
claim with respect to the Aircraft or other goods and services
delivered or to be delivered pursuant to the Purchase Agreement, the
terms and conditions of the Purchase Agreement shall apply to and bind
Assignee (and any assignee of Assignee) to the same extent as Assignor;
and
(c) Except as stated herein, nothing contained herein shall
subject Manufacturer or Assignor to any liability to which it, as the
case may be, would not otherwise be subject under the Purchase
Agreement or modify in any respect the rights of Manufacturer or
Assignor thereunder.
Section 5. NOTICES. Any notices provided for in the Purchase Agreement
Assignment No. 1 shall be delivered to Assignee and Lessee at the following
address or such other place as Assignee or Lessee, as the case may be, may
designate in accordance with the Purchase Agreement Assignment No. 1:
(a) if to Assignee to:
▇▇▇▇▇ Fargo Bank Northwest, National Association
MAC: U1254-031
▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
Tel: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Attn: Corporate Trust Department
with a copy to:
Mitsui & Co. (U.S.A.), Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Tel: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Attn: General Manager, Aerospace, Marine and Motor Vehicle
Department
(b) if to Lessee to:
Chautauqua Airlines, Inc.
▇▇▇▇ ▇. ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Tel: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Attn: President
with a copy to:
Wexford Capital LLC
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Tel: (▇▇▇) ▇▇▇-▇▇▇▇
3
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Attn: President
Section 6. HEADINGS. The headings of the Sections herein are for
convenience of reference only and shall not define or limit any of the terms or
provisions hereof.
Section 7. GOVERNING LAW. THIS ASSIGNMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK, UNITED STATES OF
AMERICA, WITHOUT REGARD TO CONFLICT OF LAWS RULES OTHER THAN SECTION 5-1401 OF
THE NEW YORK GENERAL OBLIGATIONS LAW.
Section 8. WAIVER OF WARRANTIES. THE ASSIGNEE HEREBY WAIVES, RELEASES
AND RENOUNCES, ALL WARRANTIES, OBLIGATIONS AND LIABILITIES OF THE ASSIGNOR OTHER
THAN THE WARRANTY OF TITLE CONTAINED IN THE WARRANTY ▇▇▇▇ OF SALE ISSUED OF EVEN
DATE HEREWITH BY THE ASSIGNOR TO THE ASSISGNEE, AND ASSIGNEE FURTHER WAIVES AND
RELEASES ALL OTHER RIGHTS, CLAIMS AND REMEDIES OF ASSIGNEE AGAINST ASSIGNOR
EXPRESS OR IMPLIED, ARISING BY LAW OR OTHERWISE, WITH RESPECT TO ANY
NON-CONFORMANCE OR DEFECT OR FAILURE OR ANY OTHER REASON IN ANY AIRCRAFT OR
OTHER THING DELIVERED UNDER THE PURCHASE AGREEMENT, INCLUDING DATA, DOCUMENT,
INFORMATION OR SERVICE, INCLUDING BUT NOT LIMITED TO:
a. ANY IMPLIED WARRANTY OF MERCHANTABILITY OR FITNESS;
b. ANY IMPLIED WARRANTY ARISING FROM COURSE OF PERFORMANCE, COURSE OF
DEALING OR USAGE OF TRADE;
c. ANY OBLIGATION, LIABILITY, RIGHT, CLAIM OR REMEDY IN TORT, WHETHER
OR NOT ARISING FROM THE NEGLIGENCE OR OTHER RELATED CAUSES OF ASSIGNOR, WHETHER
ACTIVE, PASSIVE OR IMPUTED; AND
d. ANY OBLIGATION, LIABILITY, RIGHT, CLAIM OR REMEDY FOR LOSS OF OR
DAMAGE TO ANY AIRCRAFT, FOR LOSS OF USE, REVENUE OR PROFIT WITH RESPECT TO ANY
AIRCRAFT OR FOR ANY OTHER DIRECT, INCIDENTAL OR CONSEQUENTIAL DAMAGES.
Section 9. COUNTERPARTS. This Assignment and the acknowledgment and
consent to be signed by the Manufacturer and any amendments, waivers, consents
or supplements hereto may be executed in any number of counterparts (or upon
separate signature pages bound together into one or more counterparts), each of
which when so executed shall be deemed to be an original, and all of which
counterparts, taken together, shall constitute one and the same instrument.
Section 10. WFB is entering into this Assignment solely as Owner
Trustee under the Trust Agreement and not in its individual capacity and neither
WFB nor any entity acting as successor Owner Trustee or additional Owner Trustee
under the Trust Agreement shall be personally liable for, or for any loss in
respect of, any of the statements, representations, warranties, agreements or
obligations stated to be those of the Assignee hereunder, as to
4
which all interested parties shall look solely to the Trust Estate (as defined
in the Trust Agreement), except to the extent expressly provided otherwise in
the other Operative Documents (as defined in the Trust Agreement), PROVIDED
HOWEVER, that nothing in this Section 10 shall be construed to limit in scope or
substance the liability of WFB or any entity acting as successor Owner Trustee
or additional Owner Trustee under the Trust Agreement in its individual capacity
for the consequences of its own willful misconduct or gross negligence or (in
receiving, handling or remitting funds) its simple negligence, or the inaccuracy
or breach of its representations, warranties or covenants made in such capacity
in any other Operative Documents.
[Remainder of the Page is Intentionally Left Blank.]
5
IN WITNESS WHEREOF, Assignor and Assignee have caused this Purchase
Agreement Assignment No. 2 to be duly executed and sealed as of the day and year
first written above.
AERO LTD., as Assignor
By:
----------------------------------------
Name:
Title:
▇▇▇▇▇ FARGO BANK NORTHWEST, NATIONAL
ASSOCIATION, not in its individual capacity but solely
as Owner Trustee on behalf of Mitsui & Co. (U.S.A.), Inc., as Assignee
By:
----------------------------------------
Name:
Title:
CHAUTAUQUA AIRLINES, INC., as Lessee
By:
----------------------------------------
Name:
Title:
6
Annex 1 to Purchase Agreement Assignment No. 2 - (N288SK)
CONSENT AND AGREEMENT No. 2 - (N288SK)
The undersigned, EMBRAER-EMPRESA BRASILEIRA DE AERONAUTICA S.A., a
corporation organized and existing under the laws of Brazil, hereby acknowledges
notice of and consents to all of the terms (including without limitation the
assignment of the Assigned Warranties by Assignee to Lessee pursuant to Section
10.01 of the Lease) of the foregoing Purchase Agreement Assignment No. 2 -
(N288SK), dated as of June 29, 2001, among Aero Ltd., ▇▇▇▇▇ Fargo Bank
Northwest, National Association, not in its individual capacity but solely as
Owner Trustee on behalf of Mitsui & Co. (U.S.A.), Inc. (the "Beneficiary") and
Chautauqua Airlines, Inc. (the "Lessee"), to the extent they relate to the
Manufacturer (herein called the "Assignment No. 2", the defined terms therein
being hereinafter used with the same meaning) and hereby confirms to the
Assignee and the Lessee that: (i) all representations, warranties, indemnities
and agreements of the Manufacturer under the Assigned Warranties with respect to
the Aircraft shall inure to the benefit of the Assignee to the same extent as if
originally named the "Buyer" therein, subject to the terms and conditions of the
Assignment No. 2, the Purchase Agreement and the Purchase Agreement Assignment
No. 1 -(N288SK) dated as of June 29, 2001 between Solitair Corp. and Assignor
("Assignment No. 1"); (ii) neither Assignee nor Beneficiary shall be liable for
any of the obligations or duties of Solitair Corp. or the Assignor under the
Purchase Agreement or Assignment No. 1, nor shall the Assignment No. 2 give rise
to any duties or obligations whatsoever on the part of the Assignee owing to the
Manufacturer except for Assignee's agreement to effect that in exercising any
rights under the Purchase Agreement as assigned by Assignment No. 1, or in
making any claims with respect to the Aircraft or other things (including
without limitation data, sale documents and services) delivered or to be
delivered pursuant to the Purchase Agreement as assigned by Assignment No. 1,
the terms and conditions of the Purchase Agreement as assigned by Assignment No.
1, shall apply to and be binding upon Assignee to the same extent as if Assignee
had been the original "Buyer" thereunder, and with respect to such agreement the
Manufacturer agrees that, anything contained in the Purchase Agreement or the
Assignment No. 2 to the contrary notwithstanding, so long as the Manufacturer
shall not have received notice that an Event of Default shall have occurred and
the Lease shall have been terminated under Section 17.02 thereof, the Assignee
shall not have any responsibility to the Manufacturer for failure to comply with
any of the terms of the Purchase Agreement as assigned by Assignment No. 1 with
respect to the Aircraft while subject to the terms of the Lease to Lessee so
long as the Assignee acts upon the written instructions of Lessee (to which
instructions the Manufacturer understands it shall have access on request);
provided that no person other than the Manufacturer shall have any rights
against the Assignee with respect to the undertaking and agreement set forth in
this clause (ii); (iii) the Manufacturer will continue to pay to the Lessee all
payments which the Manufacturer may be required to make in respect of the
Aircraft under the Purchase Agreement as assigned by Assignment No. 1 unless and
until the Manufacturer shall have received written notice addressed to its
Contracts Administrator, by mail to EMBRAER-Empresa Brasileira de Aeronautica
S.A., ▇▇. ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇, 12.227-901 Sao ▇▇▇▇ dos ▇▇▇▇▇▇, ▇▇,
Brazil, or by telecopy to telecopy no.: (55-123) 45-1257, that an Event of
Default shall have occurred and the Lease shall have been terminated under
Section 17.02 thereof (which such notice from the Assignee shall be conclusive
proof thereof to the Manufacturer and as to which the Manufacturer shall have no
obligation to inquire), whereupon the Manufacturer will make any and all
payments and take any and all actions which it may be required thereafter to
make or take in respect of the Aircraft under the Purchase Agreement as assigned
by Assignment No. 1 and the Assigned Warranties which have been assigned under
the Assignment No. 2 directly to the
1
Assignee at its address at ▇▇▇▇▇ Fargo Bank Northwest, National Association,
MAC: ▇▇▇▇▇-▇▇▇,▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, Tel:
(▇▇▇) ▇▇▇-▇▇▇▇, Fax: (▇▇▇) ▇▇▇-▇▇▇▇, Attn: Corporate Trust Department, with copy
to Mitsui & Co. (U.S.A.), Inc., ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Tel:
(▇▇▇) ▇▇▇-▇▇▇▇, Fax: (▇▇▇) ▇▇▇-▇▇▇▇, Attn: General Manager, Aerospace, Marine
and Motor Vehicle Department; and (iv) from and after the delivery of the
Aircraft and payment in full therefor as invoiced by the Assignor to the
Assignee on the Delivery Date, the Manufacturer will not assert any lien or
claim against the Aircraft or any part thereof arising with respect to or in
connection with any work or other services performed before the delivery and
acceptance of the Aircraft.
The Manufacturer hereby represents and warrants that (A) the
Manufacturer is a corporation duly organized and existing in good standing under
the laws of Brazil, (B) the making and performance of the Purchase Agreement
have been duly authorized by all necessary corporate action on the part of the
Manufacturer, do not require any stockholder approval, do not contravene the
Manufacturer's By-Laws or any indenture, credit agreement or other contractual
agreement to which the Manufacturer is a party or by which it is bound, and the
making of the Purchase Agreement does not contravene any law binding on the
Manufacturer, (C) the making and performance of this Consent and Agreement have
been duly authorized by all necessary corporate action on the part of the
Manufacturer, do not require any stockholder approval and do not contravene any
law binding on the Manufacturer or contravene the Manufacturer's By-laws or any
indenture, credit agreement or other contractual agreement to which the
Manufacturer is a party or by which it is bound and (D) the Purchase Agreement
constituted as of the date thereof and at all times thereafter to and including
the date of this Consent and Agreement constitutes a binding obligation of the
Manufacturer enforceable against the Manufacturer in accordance with its terms
subject to: (i) the limitations of applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the rights of creditors
generally; and (ii) general principles of equity (regardless of whether such
enforceability is considered in -a proceeding in equity or at law), which
principles do not make the remedies available at law or in equity with respect
to the Purchase Agreement inadequate for the practical realization of the
benefits intended to be provided thereby and this Consent and Agreement is a
binding obligation of the Manufacturer enforceable against the Manufacturer in
accordance with its terms subject to: (a) the limitations of applicable
bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the
rights of creditors generally; and (b) general principles of equity (regardless
of whether such enforceability is considered in a proceeding in equity or at
law), which principles do not make the remedies available at law or in equity
which respect to this Consent and Agreement inadequate for the practical
realization of the benefits intended to be provided thereby.
[The remainder of this page has been left blank intentionally.]
2
THIS CONSENT AND AGREEMENT SHALL BE GOVERNED BY THE LAWS OF THE STATE
OF NEW YORK, INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE, AS
APPLICABLE TO CONTRACTS BETWEEN CITIZENS OF THE STATE TO BE PERFORMED WHOLLY
WITHIN THAT STATE, AND WITHOUT REGARD TO CONFLICTS OF LAW RULES OTHER THAN
SECTION 5-1401 OF THE NEW YORK GENERAL OBLIGATIONS LAW.
Dated as of June 29, 2001
EMBRAER-EMPRESA BRASILEIRA
DE AERONAUTICA S.A.
By
------------------------------------------
Name:
Title:
By
------------------------------------------
Name:
Title:
NOTE TO EXHIBIT 10.38
The two additional
Aircraft Purchase Agreements are substantially identical
in all material respects to the filed
Aircraft Purchase Agreement except as
follows:
------------------------------------- ----------------------------------- -----------------------------------
TAIL NUMBER CLOSING DATE OWNER-PARTICIPANT
------------------------------------- ----------------------------------- -----------------------------------
N286SK June, 2001 Mitsui & Co.
------------------------------------- ----------------------------------- -----------------------------------
N287SK June, 2001 Mitsui & Co.
------------------------------------- ----------------------------------- -----------------------------------
------------------------------------- ----------------------------------- -----------------------------------
------------------------------------- ----------------------------------- -----------------------------------
------------------------------------- ----------------------------------- -----------------------------------
------------------------------------- ----------------------------------- -----------------------------------
------------------------------------- ----------------------------------- -----------------------------------
------------------------------------- ----------------------------------- -----------------------------------
------------------------------------- ----------------------------------- -----------------------------------
------------------------------------- ----------------------------------- -----------------------------------
------------------------------------- ----------------------------------- -----------------------------------
------------------------------------- ----------------------------------- -----------------------------------
------------------------------------- ----------------------------------- -----------------------------------
------------------------------------- ----------------------------------- -----------------------------------
------------------------------------- ----------------------------------- -----------------------------------
------------------------------------- ----------------------------------- -----------------------------------
------------------------------------- ----------------------------------- -----------------------------------