Exhibit 99 (k)
Final Version
Date 6/28/02
LEASE AGREEMENT HAS BEEN EXECUTED IN SEVERAL COUNTERPARTS. TO THE EXTENT, IF
ANY, THAT THIS LEASE AGREEMENT CONSTITUTES CHATTEL PAPER (AS SUCH TERM IS
DEFINED IN THE UNIFORM COMMERCIAL CODE AS IN EFFECT IN ANY APPLICABLE
JURISDICTION), NO SECURITY INTEREST IN THIS LEASE AGREEMENT MAY BE CREATED
THROUGH THE TRANSFER OR POSSESSION OF ANY COUNTERPART OTHER THAN THE FIRST
ORIGINAL EXECUTED COUNTERPART CONTAINING THE RECEIPT EXECUTED BY LESSOR.
LEASE AGREEMENT
dated June 28, 2002
between
U.S. BANK NATIONAL ASSOCIATION, a national banking association, not in its
individual capacity except as expressly set forth in this Agreement but as
"Owner Trustee" pursuant to the Trust Agreement ("Owner Trustee" and "Trust
Agreement" defined herein)
(Lessor)
- and -
CYGNUS AIR, S.A.
(Lessee)
___________________________________
- relating to -
DC8-73F
Manufacturer's Serial No: 46133
Registration Number N961R
Equipped with four (4) CFM International, Inc. 56-2C1 Engines bearing
manufacturer's serial numbers 692514, 692542, 692543, and 692506.
_____________________________________
Original 1 of 6
TABLE OF CONTENTS
Section Page
1. DEFINITIONS AND INTERPRETATION 1
1.1 Definitions 1
1.2 Interpretation 10
2. REPRESENTATIONS AND WARRANTIES 10
2.1 Lessee's Representations and Warranties 10
2.2 Lessee's Further Representations and Warranties 12
2.3 Lessee Continuing Representation 14
2.4 Lessor's Representations and Warranties 14
2.5 Lessor Continuing Representation 16
3. CONDITIONS PRECEDENT AND SUBSEQUENT 15
3.1 Lessor's Documentary Conditions Precedent 15
3.2 Lessor's Additional Condition Precedent and Lessor's Waiver 19
3.3 Lessee's Conditions Precedent 19
3.4 Lessor's Conditions Subsequent 21
4. COMMENCEMENT 21
4.1 Leasing 21
4.2 Delivery 21
4.3 Delivery Inspection and Correction 21
4.4 Acceptance and Risk 22
4.5 Lessor Failure to Deliver 24
5. PAYMENTS 23
5.1 Basic Rent 23
5.2 Maintenance Reserves 23
5.3 Payment Method 24
5.4 No Set-Off, Gross Up 25
5.5 Taxation 27
5.6 Information 30
5.7 Taxation of Indemnity Payments 30
5.8 Default Interest 31
5.9 Net-Lease 31
5.10 Deposit 32
5.11 Lease Reimbursement of Maintenance Reserves 33
5.12 Lessee Setoff 36
6. MANUFACTURER'S WARRANTIES 34
6.1 Assignment 34
6.2 Proceeds 34
6.3 Parts 35
6.4 Agreement 35
7. LESSOR'S COVENANTS AND DISCLAIMERS 35
7.1 Quiet Enjoyment 35
7.2 Registration and Filings 35
7.3 Exclusion 35
7.4 Lessee's Waiver 36
7.5 Lessee's Confirmation 36
7.6 Lessor Contribution 36
7.7 Lessor Use of Irrevocable Power of Attorney 39
8. LESSEE'S COVENANTS 37
8.1 Duration 37
8.2 Information 37
8.3 Lawful and Safe Operation 39
8.4 Taxes and Other Charges 40
8.5 Sub-Leasing 41
8.6 Inspection 41
8.7 Protection of Title 42
8.8 General 43
8.9 Records 44
8.10 Registration and Filings 44
8.11 Maintenance and Repair 45
8.12 Removal of Engines and Parts 47
8.13 Installation of Engines and Parts 47
8.14 Non-Installed Engines and Parts 48
8.15 Pooling of Engines and Parts 49
8.16 Equipment Changes 49
8.17 Title to Parts 49
8.18 Third Parties 50
8.19 Redelivery Preparation 53
9. INSURANCE 50
9.1 Public Liability and Property Damage Insurance 53
9.2 Insurance Against Loss or Damage 53
9.3 Required Policy Designations and Provisions 54
9.4 Excess Insurance 55
9.5 Application of Insurance Proceeds for an Event of Loss 55
9.6 Application of Insurance Proceeds for Other than an Event of Loss 55
9.7 Application in Default 55
9.8 Certificates of Insurance 55
9.9 Reinsurance 56
10. INDEMNITY 53
11. EVENTS OF LOSS 54
11.1 Total Loss 54
11.2 Requisition 55
12. RETURN OF AIRCRAFT 56
12.1 Redelivery 56
12.2 Final Inspection 56
12.3 Non-Compliance 57
12.4 Export Documentation 58
12.5 Acknowledgment 58
13. DEFAULT 58
13.1 Events 58
13.2 Rights 61
13.3 Repossession and Removal 62
13.4 Default Payments 62
13.5 Xxxxxxxxxxxx 00
00. ASSIGNMENT AND TRANSFER 63
14.1 No Assignment by Lessee 63
14.2 Lessor Assignment 63
14.3 Grants of Security Interests 65
14.4 Further Acknowledgments 66
15. MISCELLANEOUS 67
15.1 Waivers; Remedies Cumulative 67
15.2 Delegation 67
15.3 Certificates 67
15.4 Appropriation 67
15.5 Currency Indemnity 67
15.6 Severability 68
15.7 Remedy 68
15.8 Expenses 68
15.9 Time of Essence 68
15.10 Notices 68
15.11 Sole and Entire Agreement 70
15.12 Indemnities 71
15.13 Counterparts 71
15.14 Confidentiality 71
15.15 Concerning Lessor 76
15.16 Concerning Specific Lender 76
15.17 Translation Conflicts 76
16. DISPUTE RESOLUTION 76
16.1 Governing Law and Jurisdiction 76
16.2 Exclusive Jurisdiction in New York 77
16.3 Waiver 77
16.4 Agent for Service of Process 77
16.5 Survival of Obligations 77
SCHEDULE 1 -- DESCRIPTION OF AIRCRAFT
SCHEDULE 2 -- CERTIFICATE OF ACCEPTANCE
SCHEDULE 3 -- CONDITION AT DELIVERY
SCHEDULE 4 -- OPERATING CONDITION AT REDELIVERY
SCHEDULE 5 -- FORM OF LEGAL OPINION
SCHEDULE 6 -- FORM OF MONTHLY STATUS REPORT
SCHEDULE 7 -- BASIC RENT, DEPOSIT, AGREED VALUE
AND MAINTENANCE RESERVES
SCHEDULE 8-- LESSOR CONTRIBUTION
SCHEDULE 9-- IRREVOCABLE POWER OF ATTORNEY AND IRREVOCABLE INSTRUCTION
LEASE AGREEMENT
This LEASE AGREEMENT, dated June 28, 2002 (this "Agreement"), is between U.S.
Bank National Association, a national banking association, not in its individual
capacity except as expressly set forth as Trust Company in this Agreement but as
Owner Trustee pursuant to the Trust Agreement (as further defined herein, the
"Lessor"), and Cygnus Air, S.A., a corporation formed under the laws of Spain
(the "Lessee").
RECITALS:
(A) The Aircraft is owned by that certain trust created pursuant to the
Trust Agreement (defined herein).
(B) The Aircraft is subject to that certain UBK Mortgage (defined herein)
granted in favor of The United Bank of Kuwait PLC.
(C) Lessor and Lessee wish to provide for the leasing of the Aircraft to the
Lessee upon and subject to the covenants, terms and conditions set out in this
Agreement.
In consideration of the foregoing and for other good and valuable consideration
whose receipt and sufficiency Lessor and Lessee hereby acknowledge, Lessor and
Lessee agree as follows:
1. DEFINITIONS AND INTERPRETATION
1.1 Definitions
In this Agreement the following terms shall, unless the context otherwise
requires, have the following respective meanings:
Affiliate means, in relation to any Person, any other Person controlled
directly or indirectly by that Person, any other Person that controls directly
or indirectly that Person or any other Person under common control with that
Person. For this purpose "control" of any Person means ownership of a majority
of the voting power of the Person.
Agreed Maintenance Performer means a maintenance facility approved by the
Aviation Authorities and the JAA or FAA and approved by Lessor, such approval
not to be unreasonably withheld.
Agreed Maintenance Program means the Lessee's current Maintenance Program as the
same may be amended from time to time with the approval of the Aviation
Authorities.
Agreed Value means on any date the amount set forth for such date in Schedule 7.
Agreement has the meaning specified in the preamble.
Aircraft means the aircraft described in Part l of Schedule 1, including,
without limitation, the Airframe and all Engines, Parts, Loose Equipment and
Aircraft Documents and any airframe substituted pursuant to this Agreement for
such Airframe and any engine substituted pursuant to this Agreement for any of
said Engines hereunder.
Aircraft Documents means the documents, data and records identified in Part 2 of
Schedule 1 and all additions, renewals, revisions and replacements from time to
time made in accordance with this Agreement.
Airframe means the Airframe identified on Part 1 of Schedule 1 to this
Agreement.
Airframe "C" Check means a "D" Check pursuant to the Maintenance Program.
Airframe "C" Check Reserves has the meaning ascribed to such term in Schedule 7
hereto.
Airframe "E" Check Reserves has the meaning ascribed to such term in Schedule 7
hereto.
Applicable Law means (i) any law, statute, decree, constitution, regulation,
order, judgment, rule, license, permit, injunction or other directive of any
Governmental Entity; (ii) any treaty, pact, compact or other agreement to which
any Governmental Entity is a signatory or party; (iii) any judicial
interpretation with binding characteristics or application of those described in
(i) or (ii) above; (iv) any administrative interpretation with binding
characteristics or application of those described in (i) or (ii) above; and (v)
any amendment or revision of any of those described in (i), (ii), (iii) or (iv)
above, and in each case, which is applicable to the Aircraft and its use and
operation, the Lessee, or the transactions contemplated by this Agreement.
Approved Insurance Broker means an insurance broker of internationally
recognized responsibility and standing specializing in aircraft insurance in the
London, United States of America, or French insurance markets and that is
reasonably acceptable to and approved by Lessor.
Approved Insurer means an insurer approved by Lessor that is an internationally
recognized insurer in the London, United States of America, or French
international markets.
Assignment, Consent and Agreement means the Assignment, Consent and Agreement of
equal date hereof executed by Lessee, Lessor and The United Bank of Kuwait, PLC.
Aviation Authorities means the DGAC or, if the State of Registration ceases with
Lessor's prior written consent to be Spain, the Person and/or Government Entity
which, under the laws of the State of Registration, from time to time (a) has
control or supervision of civil aviation; or (b) has jurisdiction over
registration, airworthiness or operation of the Aircraft.
Bankruptcy Laws has the meaning specified in Section 13.1.
Basic Rent has the meaning ascribed to such term in Schedule 7.
Xxxx of Sale means that certain Xxxx of Sale and related documents that Lessor
shall provide to Lessee which for purposes of filing with the DGAC only,
evidences ownership of the aircraft.
Business Day means a day (other than a Saturday or Sunday) on which banks are
open for business in Madrid, Spain, New York, New York, and St. Xxxx, Minnesota.
Certificate of Acceptance means a certificate in the form of Schedule 2 to be
completed and executed by the Lessee on Delivery.
Claim has the meaning specified in Section 10.1.
Control has the meaning ascribed to such term in Section 8.8.4, herein.
Cycle means one take-off and landing of an airframe.
DGAC means the Spanish Directorate General of Civil Aviation ("Direccion General
de Aviacion Civil") of the Ministry of Fomento, or any other Person or
Government Entity succeeding to the functions thereof.
Damage Notification Threshold means $150,000.
Default means any Event of Default and any event that with the giving of notice,
lapse of time, determination of materiality or fulfillment of any other
condition or any combination of the foregoing would constitute an Event of
Default.
Default Rate has the meaning specified in Section 5.8.
Delivery means the delivery of the Aircraft to the Lessee in accordance with the
terms of this Agreement.
Delivery Date means the date of the Certificate of Acceptance.
Delivery Location means Smyrna Airport, Tennessee, United States of America.
Deposit means the amount, or other security, set forth or specified in Schedule
7.
Dollars and $ mean the lawful currency of the United States of America.
Engine means whether or not installed on the Aircraft:
(a) each engine of the manufacture, model and serial number specified in
Part 1 of Schedule 1, title to which shall belong to the Lessor; or
(b) any engine which replaces that engine, title to which passes to the
Lessor in accordance with Section 8.17.2;
and in each case includes all modules and Parts from time to time belonging to,
installed in or appurtenant to that engine but excludes any engine replaced in
accordance with Section 8.13.1 title to which has, or should have, passed to the
Lessee in accordance with Section 8.17.2 pursuant to this Agreement.
Engine Loss means the occurrence of any of the events referred to in the
definition of "Total Loss" but with the references therein to "Airframe" being
construed as references to an Engine.
Engine Loss Date means the relevant date determined in accordance with the
definition of "Total Loss Date" as if that definition applied to an Engine Loss.
Engine Manufacturer means CFM International, Inc.
Engine LLP Reserves has the meaning ascribed to such term in Schedule 7 hereto.
Engine Refurbishment Reserves has the meaning ascribed to such term in Schedule
7 hereto.
Event of Default means an event specified in Section 13.1.
Event of Loss means an event specified in Section 11 herein.
Expiry Date means the thirtieth (30th) monthly anniversary of the Delivery Date,
or such earlier date as:
(a) the Lessor receives the Agreed Value following a Total Loss and any
other amounts then due and owing in accordance with this Agreement; or
(b) an Event of Default occurs.
FAA means the United States Federal Aviation Administration of the Department of
Transportation or any Person or Government Entity succeeding to the functions
thereof.
FAR means the Federal Aviation Regulations for the time being in force, issued
by the FAA pursuant to the Federal Aviation Law and published in Title 14 of the
Code of Federal Regulations.
Federal Aviation Law means Title 49 of the United States Code, as amended, or
any successor statutory provisions and the regulations promulgated under such
provisions.
Financial Indebtedness means any indebtedness in respect of (a) moneys borrowed,
(b) any liability under any debenture, bond, note, loan stock, acceptance
credit, documentary credit or other security, (c) the acquisition cost of any
asset to the extent payable before or after the time of acquisition or
possession, (d) the capitalized value (determined in accordance with accounting
practices generally accepted in the State of Incorporation) of obligations under
finance leases, or (e) any guarantee, indemnity or similar assurance against
financial loss of any Person in respect of the above.
Flight Hour means each hour or part thereof (rounded up to two decimal places)
elapsing from the moment the wheels of an airframe leave the ground on take off
until the moment the wheels of such airframe next touch the ground.
GAAP means generally accepted accounting principles as in effect from time to
time in the State of Incorporation and, subject to changes in such principles
from time to time, consistently applied in accordance with the past practices of
a Person.
Government Entity means (a) any national government, political subdivision
thereof or local jurisdiction therein, (b) any instrumentality, board,
commission, court, or agency of any thereof, however constituted, and (c) any
association, organization, or institution of which any of the above is a member
or to whose jurisdiction any thereof is subject or in whose activities any of
the above is a participant.
Habitual Base means Spain or, subject to the prior written consent of the Lessor
(which will not be unreasonably withheld), any other country or countries in
which the Aircraft is for the time being habitually based.
IATA means the International Air Transport Association.
Indemnitees means Lessor, any Lender, Owner Trustee, Trust Company, Trust
Estate, any beneficiary(ies) under the Trust Agreement, and all of the foregoing
entities' successors and permitted assigns, shareholders, beneficiaries,
members, Affiliates, partners, contractors, directors, managers, officers,
servants, agents and employees.
JAA means the European Joint Aviation Authority or any Person or Government
Entity succeeding to the functions thereof.
JAR means the Joint Aviation Regulations promulgated by the JAA.
Landing Gear means the landing gear assembly of the Aircraft excluding the
wheels and brake units.
Lender means The United Bank of Kuwait PLC and any Person to whom Lessor grants
a Mortgage, or any Affiliate thereof, and the successors and permitted assigns
of such Persons.
Lessee has the meaning specified in the preamble.
Lessor means U.S. Bank National Association, a national banking association, not
in its individual capacity but as Owner Trustee pursuant to the Trust Agreement.
Lessor Contribution has the meaning specified in Section 7.6.
Lessor Lien means any Security Interest from time to time created by or arising
through the Lessor, that results from acts or omissions of, or claims against,
the Lessor not related to the operation of the Aircraft during the Term or the
transactions contemplated by or permitted under this Agreement, and any Security
Interest in respect of the Aircraft for Taxes applicable to Lessor.
Loose Equipment means the equipment identified on Part 3 of Schedule 1 to this
Agreement.
Maintenance Program means Manufacturer's DC8 OAMP maintenance program for the
Aircraft approved by the applicable Aviation Authorities, substantially similar
to the Manufacturer's planning documents and acceptable to Lessor encompassing
scheduled maintenance, condition monitored maintenance and/or on-condition
maintenance of Airframe, Engines and Parts, including servicing, testing,
preventative maintenance, repairs, structural inspections, system checks,
overhauls, approved modifications, service bulletins, engineering orders,
airworthiness directives, corrosion control, inspections and treatments.
Maintenance Reserves means the Maintenance Reserves Payments specified in
Schedule 7 herein payable throughout the Term pursuant to Section 5.2 herein.
Major Checks means any heavy maintenance visit or segment thereof suggested for
commercial aircraft of the same model as the Aircraft by its Manufacturer.
Manufacturer means the Mc Xxxxxx Xxxxxxx Company or its successors in interest.
Mortgage has the meaning specified in Section 14.3.
Owner Trustee means U.S. Bank National Association, a national banking
association, not acting in its individual capacity but as Owner Trustee pursuant
to the Trust Agreement.
Part means, whether or not installed on the Aircraft:
(a) any component, furnishing or equipment (other than a complete Engine)
furnished with, installed on or appurtenant to the Airframe and Engines on
Delivery; and
(b) any other component, furnishing or equipment (other than a complete
Engine) title to which has, or should have, passed to the Lessor pursuant to
Section 8.17.1.
Permitted Lien means:
(a) any Security Interest for Taxes not assessed or, if assessed, not yet
due and payable, or being contested in good faith by appropriate proceedings;
(b) any Security Interest of a repairer, mechanic, carrier, hangar keeper,
unpaid seller or other similar lien arising in the ordinary course of business
or by operation of law in respect of obligations which are not overdue in
accordance with Applicable Law (or, if applicable, generally accepted accounting
principles and practices in the relevant jurisdiction) or are being contested in
good faith by appropriate proceedings;
(c) any Lessor Lien;
(d) the respective rights of the Lessor and the Lessee as herein provided
(including such rights with respect to Subleases permitted hereunder);
(e) any other Security Interest with respect to which Lessee shall have
provided a bond or other security in an amount and under terms reasonably
satisfactory to Lessor (as evidenced by Lessor's prior written consent thereto);
and
(f) Security Interests arising out of any judgment or award against the
Lessee that is, within 60 days after entry, discharged, vacated or appealed,
with execution stayed pending appeal;
but only if, in the case of (a) and (b): (i) adequate reserves have been
provided by the Lessee for the payment of the Taxes or obligations in accordance
with generally accounting principles and practices in the relevant jurisdiction;
and (ii) such proceedings, or the continued existence of the Security Interest,
do not give rise to any reasonable likelihood of the sale, forfeiture or other
loss of the Aircraft or any interest therein or of criminal liability on the
Lessor.
Person means any individual person, corporation, partnership, limited liability
company, firm, joint stock company, joint venture, trust, estate, unincorporated
organization, association, Government Entity or organization or association of
which any of the above is a member or a participant.
Redelivery Location means Madrid or a European location as agreed upon between
Lessor and Lessee.
Rent means collectively, all Basic Rent and all Supplemental Rent.
Rent Date means the date of each month corresponding to the monthly anniversary
of the Delivery Date or, if the Delivery Date falls on the 29th, 30th or the
31st day of the month of Delivery and for any given month there is no such
corresponding date, the Rent Date for such given month will be the last day of
such given month.
Security Interest means any mortgage, charge, pledge, lien, assignment,
hypothecation, right of set-off, or any agreement or arrangement having the
effect of creating a security interest, other than a Permitted Lien.
Settlement Date has the meaning specified in Section 11.1.2.
SRM means the manufacturer's structural repair manual.
State of Incorporation means Spain.
State of Registration means Spain.
Subsidiary means:
(a) in relation to any reference to financial statements, any company whose
financial statements are consolidated with the financial statements of the
Lessee in accordance with GAAP; and
(b) for any other purpose, an entity from time to time (i) of which another
has direct or indirect control or owns directly or indirectly more than 50% of
the voting share capital, or (ii) which is a direct or indirect subsidiary of
another under the laws of the jurisdiction of its incorporation.
Successor has the meaning specified in Section 8.8.2.
Supplemental Rent means all amounts, liabilities and obligations (other than
Basic Rent) which Lessee assumes or agrees to pay under this Agreement to Lessor
or any other Person, including payment of indemnities, Maintenance Reserves, and
Agreed Value.
Taxes has the meaning ascribed to such term in Section 5.5.1.
Term means the period commencing on the Delivery Date and ending on the Expiry
Date.
Total Loss means with respect to the Airframe:
(a) the actual, arranged or constructive total loss of the Airframe
(including any damage to the Airframe which results in an insurance settlement
on the basis of a total loss, or requisition for use or hire which results in an
insurance settlement on the basis of a total loss);
(b) the Airframe being destroyed, damaged beyond repair or permanently
rendered unfit for normal use for any reason whatsoever;
(c) the requisition of title, or other compulsory acquisition, capture,
seizure, deprivation, confiscation or detention (for a period in excess of 120
days) for any reason of the Airframe by any Government Entity (whether de jure
or de facto), but excluding requisition for use or hire not involving
requisition of title; or
(d) the hi-jacking, theft, condemnation, confiscation, seizure or
requisition for use or hire of the Airframe which deprives any Person permitted
by this Agreement to have possession and/or use of the Airframe of its
possession and/or use for more than 120 consecutive days.
Total Loss Date means:
(a) in the case of an actual total loss, the actual date on which the loss
occurs or, if such date is unknown, the day on which the Aircraft was last heard
of;
(b) in the case of any of the events described in sub-paragraph (a) of the
definition of "Total Loss" (other than an actual total loss), the earlier of (i)
30 days after the date on which notice claiming such total loss is given to the
relevant insurers, and (ii) the date on which such loss is admitted or
compromised by the insurers;
(c) in the case of any of the events described in sub-paragraph (b) of the
definition of "Total Loss", the date on which such destruction, damage or
rendering unfit occurs;
(d) in the case of any of the events described in sub-paragraph (c) of the
definition of "Total Loss", the date on which the relevant requisition of title
or other compulsory acquisition, capture, seizure, deprivation, confiscation or
detention occurs;
(e) in the case of any of the events described in sub-paragraph (d) of the
definition of "Total Loss", the expiry of the period of 120 days referred to in
such sub-paragraph (d);
and, in each case (other than an actual Total Loss), the Total Loss shall be
deemed to have occurred at noon New York City time on such date.
Transfer has the meaning specified in Section 14.2.
Transferee has the meaning specified in Section 14.2.
Trust Agreement means that certain Trust Agreement dated as of October 15, 1984
(as amended, supplemented, and assigned) between U.S. Bank National Association,
formerly known as First Bank, National Association, formerly known as First
National Bank of Minneapolis, as Owner Trustee and AFG Investment Trust D,
successor in interest to Union Bank, formerly known as California First Bank, as
Owner Participant.
Trust Company means U.S. Bank National Association, a national banking
association, in its individual corporate capacity (and not as owner trustee
under the Trust Agreement).
Trust Estate has the meaning ascribed to such term in the Trust Agreement.
UBK Mortgage means that certain Aircraft Security Agreement dated February 3,
2000 between Lessor and The United Bank of Kuwait, PLC as amended and restated
by that certain Amended and Restated Aircraft Security Agreement dated June 10,
2002 between Lessor and The United Bank of Kuwait, PLC.
Withholding Taxes has the meaning ascribed to such term in Section 5.4
herein.
1.2 Interpretation
1.2.1 In this Agreement, unless the contrary intention is stated, a
reference to:
a. each of "the Lessor", "the Lessee" or any other Person includes without
prejudice to the provisions of this Agreement any successor in title to it and
any assignee permitted pursuant to this Agreement;
b. terms used herein include, as appropriate, all genders and the plural as
well as the singular;
c. the term "including", when used in this Agreement, means "including
without limitation" and "including but not limited to" and the term "or" shall
include "and/or".
d. any document shall include that document as amended, notated or
supplemented and all schedules thereto;
e. a law (1) includes any statute, decree, constitution, regulation, order,
judgment or directive of any Government Entity; (2) includes any treaty, pact,
compact or other agreement to which any Government Entity is a signatory or
party; (3) includes any judicial or administrative interpretation or application
thereof; and (4) is a reference to that provision as amended, substituted or
re-enacted; and
f. a Section or a Schedule is a reference to a section of or a schedule to
this Agreement, including any sub-section or sub-part of such section or
schedule.
1.2.2 The headings in this Agreement are to be ignored in construing this
Agreement.
2. REPRESENTATIONS AND WARRANTIES
2.1 Lessee's Representations and Warranties
The Lessee represents and warrants to the Lessor as follows:
2.1.1 Status: The Lessee is a corporation duly organized and validly
existing under the laws of the State of Incorporation, has the corporate power
to own its assets and carry on its business as it is being conducted and is (or
will at the relevant time be) the holder of all necessary air transportation
licenses required in connection therewith and with the use and operation of the
Aircraft.
2.1.2 Power and authority: The Lessee has the corporate power to enter into
and perform, and has taken all necessary corporate action to authorize the entry
into, performance and delivery of, this Agreement and the transactions
contemplated by this Agreement, and neither the execution and delivery hereof
nor the consummation of the transactions contemplated hereby nor compliance by
Lessee with any of the terms and provisions hereof will, contravene any
Applicable Law or result in any breach of, or constitute any default under, or
result in the creation of any lien upon any property of Lessee under Lessee's
articles of incorporation or any credit agreement or instrument or other
agreement or instrument to which Lessee is a party or by which Lessee or its
properties or assets are bound or affected.
2.1.3 Legal validity: This Agreement has been duly executed and delivered
by Lessee, and the Agreement and the Certificate of Acceptance, when executed
and delivered by Lessee, constitute legal, valid and binding obligations of
Lessee, enforceable in accordance with their respective terms.
2.1.4 Non-conflict: The entry into and performance by the Lessee of, and
the transactions contemplated by, this Agreement do not and will not:
a. conflict with any laws binding on the Lessee;
b. conflict with the constitutional documents of the Lessee; or
c. conflict with or result in default under any document which is binding
upon the Lessee or any of its assets, or result in the creation of any Security
Interest over any of its assets.
2.1.5 Authorization: All authorizations, consents, certifications,
registrations, filings, and similar actions required or advisable in connection
with the entry into, performance, validity, and enforceability of this Agreement
and the transactions contemplated by this Agreement have been taken with or
received from all applicable Governmental Entities of the countries in which the
Aircraft will be operated, including, without limitation, the Aviation
Authorities, and are in full force and effect, including, without limitation,
the authorization from the Aviation Authorities to lease the Aircraft from a
foreign lessor, to make payments in Dollars under the Agreement to Lessor
without any offset or deduction on account of Taxes or otherwise, to incorporate
the Aircraft into Lessee's fleet and to otherwise operate, possess, use and
maintain the Aircraft. Except for those items listed in Section 3.4 herein no
additional consent, approval or authorization of, or notice to, any Governmental
Entity having jurisdiction with respect to the execution, delivery or
performance by Lessee of this Agreement is required for Lessee to execute and
deliver this Agreement, and to perform the transactions contemplated hereby.
2.1.6 No Immunity: The Lessee is subject to civil commercial law with
respect to its obligations under this Agreement. Neither the Lessee nor any of
its assets is entitled to any right of immunity, sovereign or otherwise, and the
entry into and performance of this Agreement by the Lessee constitute private
and commercial acts, enforceable by their terms and conditions against Lessee.
2.1.7 Financial Statements: the audited consolidated financial statements
of the Lessee and its Subsidiaries most recently delivered to the Lessor have
been prepared in accordance with GAAP and consistently applied and fairly
present the consolidated financial condition of the Lessee and its Subsidiaries
as of the date to which they were drawn up and the consolidated results of
operations of the Lessee and its Subsidiaries for the periods covered by such
statements.
2.1.8 No Further Interest: except for the rights of Lessee conferred by
this Agreement, Lessee shall not have, or claim to have, any other interest in
the Aircraft or make any demands against Lessor in respect thereof.
2.1.9 Maintenance Program: the Agreed Maintenance Program complies with all
requirements of the Aviation Authorities and the JAA for a DC8-73F maintenance
program and is substantially similar to the Manufacturer's planning documents.
2.2 Lessee's Further Representations and Warranties
The Lessee further represents and warrants to the Lessor that:
2.2.1 No Default: No Default or Event of Default has occurred or might
reasonably be expected to result from the entry into or performance of this
Agreement.
2.2.2 Registration:
a. To the full extent legally possible pursuant to Applicable Law under the
laws of the State of Incorporation, the State of Registration or the Habitual
Base, all filings, registrations, recordings and other actions necessary or
advisable and in order to ensure the validity, effectiveness and enforceability
of this Agreement or to establish, perfect, protect, note, or record to the full
extent legally possible the property and/or other rights of the Lessor and any
Lender in the Aircraft, any Engine or Part have been effected on execution of
this Agreement or will be effected on the earliest date legally possible but in
no event later than 95 days after the date of issuance of the initial
temporary/provisional certificate of registration of the Aviation Authorities
indicating that the Aircraft is validly registered with the Aviation
Authorities. Lessee has used its best efforts to earliest obtain and has
diligently pursued such registrations, recording and filings and will continue
to use its best efforts to earliest obtain and diligently pursue such
registrations, recordings and filings. However, if despite such best efforts and
due diligence, any of such filings, registrations, recordings and other actions
will be completed later than 90 days after the date of issuance of the initial
temporary/provisional certificate referenced above, Lessee shall also provide to
Lessor and Lender, within 90 days of the date of issuance of such initial
temporary/provisional certificate, a copy of the extension of the initial
temporary/provisional certificate(s) of registration of the Aircraft and this
Agreement with the Aviation Authorities and other applicable Governmental
Entities and non-governmental authorities.
b. Under the Applicable Laws of the State of Incorporation, the State of
Registration and the Habitual Base, the property rights of the Lessor and any
security interest of Lender in the Aircraft and this Agreement will be fully
filed prior to Delivery and, on the earliest date legally possible, noted and,
with respect to such rights, this Agreement and the Assignment, Consent and
Agreement will have priority in all respects over the claims of all creditors of
the Lessee, with the exception of such claims as are mandatorily preferred by
law and not by virtue of any contract.
2.2.3 Litigation: No suits, litigation, arbitration, administrative
proceedings or other proceedings are pending or threatened against the Lessee
which, if adversely determined, would be reasonably likely to have a material
adverse effect upon its financial condition or business or its ability to
perform its obligations under this Agreement.
2.2.4 Pari Passu: The obligations of the Lessee under this Agreement rank
at least pari passu with all other present and future unsecured and
unsubordinated obligations (including contingent obligations) of the Lessee,
with the exception of such obligations as are mandatorily preferred by law and
not by virtue of any contract.
2.2.5 Material Adverse Change: There has been no material adverse change in
the consolidated financial condition of the Lessee and/or its Subsidiaries since
the release of its audited financials for 2001 and through and including the
date corresponding to Lessee's payment of Basic Rent for the first month of the
Term.
2.2.6 Taxes: The Lessee has delivered all necessary returns and payments
due to the tax authorities in the State of Incorporation, the State of
Registration and the Habitual Base other than any Taxes (i) which are being
contested by the Lessee in good faith and by appropriate proceedings, (ii) which
do not involve any material risk of the creation of a Lessor Lien on, or the
sale, forfeiture, loss or other disposition of, the Aircraft, the Airframe or
any Engine or interest therein, and (iii) where the failure to do so could not
reasonably be expected to have a material adverse effect on the business or
operations of Lessee or its ability to comply with its obligations hereunder.
2.2.7 Insurance: Lessee has procured, or caused to be procured, the
insurance required to be provided by the Lessee under Section 9 of this
Agreement.
2.2.8 Disclosure of Material Facts: Lessee has fully disclosed to Lessor
all facts which the Lessee knows or should reasonably know are material for
disclosure to Lessor in the context of this Agreement and the transactions
contemplated hereby, and Lessee knows of no facts which would render any prior
information furnished by or on behalf of Lessee to Lessor inaccurate or
misleading.
2.2.9 Insurance Deductible: With respect to Lessee's insurance
policies utilized to comply with the terms of Section 9 herein, no portion of
any deductible has been paid or utilized by Lessee.
2.3 Lessee Continuing Representations
The representations and warranties contained in Section 2.1 and Section 2.2 will
be deemed to survive the execution and delivery of this Agreement. The
representations and warranties contained in Section 2.1 and 2.2 will be deemed
to be repeated by the Lessee on Delivery and on each Rent Date as if made with
reference to the facts and circumstances then existing.
2.4 Lessor's Representations and Warranties
The Lessor represents and warrants to the Lessee that:
2.4.1 Status: The Lessor is a national banking association, not in
its individual capacity but as "Owner Trustee" pursuant to the Trust Agreement
2.4.2 Power and authority: The Lessor has the power and authority to enter
into and perform and has taken all necessary trust action to authorize the entry
into, performance and delivery of, this Agreement and the transactions
contemplated by this Agreement and neither the transactions contemplated hereby
nor compliance by Lessor with any of the terms and provisions hereof will, to
the extent that there could be a material effect on Lessee's rights under the
Lease, contravene any Applicable Law or, before Delivery, result in any breach
of, constitute any default under, or result in the creation of any lien (other
than Lender liens) upon any property of Lessor or any credit agreement or
instrument or other agreement or instrument to which Lessor is a party or by
which Lessor or its properties or assets are bound or affected.
2.4.3 Legal validity: This Agreement has been executed and delivered by
Lessor and constitutes legal, valid and binding obligations of Lessor
enforceable in accordance with this Agreement.
2.4.4 Non-conflict: The entry into and performance by the Lessor of, and
the transactions contemplated by, this Agreement do not and will not:
a. conflict with any laws binding on the Lessor;
b. conflict with the constitutional documents of the Lessor; or
c. conflict with or cause a default under any document that is binding upon
the Lessor or any of its assets.
2.4.5 Authorization: So far as concerns the obligations of the Lessor, all
authorizations, consents, registrations and notifications required under the
laws of the United States of America in connection with the entry into,
performance, validity and enforceability of, and the transactions contemplated
by, this Agreement by the Lessor have been (or will on or before Delivery have
been) obtained or effected (as appropriate) and are (or will on their being
obtained or effected be) in full force and effect.
2.4.6 Lessor Tax Status: The Lessor is a taxpayer in the United States of
America and, upon the reasonable request of the Lessee, the Lessor will provide
the Lessee with a copy of any relevant forms, duly completed by the Lessor, and
to the extent the same are reasonably obtainable, certifying that the Lessor has
filed a tax return with the Internal Revenue Service of the United States of
America and/or certifying that the Lessor is a resident and taxpayer of the
United States of America.
2.4.7 Right to Lease: On the Delivery Date, the Lessor shall have the right
to lease the Aircraft to the Lessee in accordance with the terms of this
Agreement.
2.4.8 No Immunity: The Lessor is subject to civil commercial law with
respect to its obligations under this Agreement. Neither the Lessor nor any of
its assets is entitled to any right of immunity, sovereign or otherwise, and the
entry into and performance of this Agreement by the Lessor constitute private
and commercial acts, enforceable by their terms and conditions against Lessor.
2.5 Lessor Continuing Representations
The representations and warranties in Section 2.4 will survive the execution and
delivery of this Agreement. The representations and warranties contained in
Section 2.4 will be deemed to be repeated by the Lessor, on Delivery and on each
Rent Date as if made with reference to the facts and circumstances then
existing.
3. CONDITIONS PRECEDENT AND SUBSEQUENT
3.1 Lessor's Documentary Conditions Precedent
The Lessor's obligation to lease the Aircraft to the Lessee under this Agreement
is subject to the receipt of the following by the Lessor and Lender from the
Lessee on or before Delivery (if before Delivery, within the time period
indicated) in English and in Spanish (where a Spanish version is applicable or
necessary) and in form and substance reasonably satisfactory to the Lessor and
Lender:
3.1.1 Corporate Status: evidence that Lessee is a corporation duly
incorporated, validity existing, and in good standing under the laws of the
State of Incorporation and with all applicable Governmental Entities thereunder
(to be provided on or before June 28, 2002).
3.1.2 Constitutional Documents: a copy of the constitutional and
organizational documents of Lessee, certified as correct and complete by a duly
authorized officer of Lessee, including but not limited to the Deed of
Incorporation, Bylaws, Board of Directors' and shareholders' authorization for
the execution, delivery and performance of this Agreement, the Certificate of
Acceptance, and all related documents of the Lessee (all items in this Section
3.1.2 to be provided on or before June 28, 2002).
3.1.3 Opinion: an opinion by Lessee's chief internal legal counsel to
Lessor and Lender, in the form set out in Schedule 5, in respect of the Lessee's
obligations under this Agreement, and an opinion issued by outside counsel to
Lessee, in a form reasonably acceptable to Lessor and Lender, which shall
include, without limitation, an acknowledgment that Lessor and Lender shall be
entitled to rely on such opinion with respect to this Agreement that all
obligations under this Agreement are in accord with the regulatory and legal
requirements of the Aviation Authority, and that Lessor may rely upon the
documentation referenced in Section 3.1.15 herein.
3.1.4 Licenses: copies of the Lessee's air transport license, air
operator's certificate and all other licenses, certificates and permits required
by the Lessee (including any authorization required under any statute, law,
ordinance, regulation or the like required by the aviation authority of the
country(ies) in which the Aircraft will be operated) in relation to, or in
connection with, the operation of the Aircraft. To the extent that it is not
legally possible for Lessee to obtain permanent versions of the documents
referenced in this Section 3.1.4 on or before Delivery, Lessee may instead
provide copies of temporary versions of such documents (all items in this
Section 3.1.4 to be provided on or before June 28, 2002).
3.1.5 Certificate: a certificate of a duly authorized officer of the Lessee
dated the Delivery Date:
a. setting out specimen signatures of the officers of the Lessee referred to
in Section 3.1.12;
b. certifying that each copy of a document delivered pursuant to this
Section 3.1 is correct, complete and in full force and effect;
c. certifying that the representations and warranties of the Lessee under
Sections 2.1 and 2.2 are correct; and
d. certifying that no event has occurred, or would result from the
execution, delivery and performance by Lessee of this Agreement that constitutes
a Default or an Event of Default.
3.1.6 Delivery of Agreement: this Agreement and all of its attachments and
exhibits, duly executed, notarized and apostilled, including six (6) original
duly executed and notartized, and delivered counterparts of the Agreement (all
items in this Section 3.1.6 to be provided on or before June 28, 2002).
3.1.7 Certificate of Acceptance: the Certificate of Acceptance executed,
notarized and apostilled and delivered by Lessee, and all attachments and
exhibits to the same.
3.1.8 Payments: all payments due to the Lessor under this Agreement on or
before Delivery, including, but not limited to, the first payment of Basic Rent
(such Basic Rent payment due at Lease execution) and the required Deposit.
3.1.9 Insurances: a certificate of insurance and brokers' undertakings,
certifying that Lessee is in due compliance with the insurance provisions of
Section 9 and that the policy rights have been assigned in favor of Lessor.
3.1.10 Operating Documents: a copy of Lessee's Operating Certificate and
Operations Specifications and any other documentation or authority pursuant to
which the Aircraft will initially be authorized to be operated by Lessee, or in
the alternative, evidence that the same is valid and in compliance with the
requirements of the JAA and Aviation Authorities (all items in this Section
3.1.10 to be provided on or before June 28, 2002).
3.1.11 Registration: evidence, including, without limitation, a copy of the
initial temporary/provisional certificate(s) of registration of the Aviation
Authorities, indicating that the Aircraft and this Agreement have been validly
registered under the laws of the State of Registration, including, without
limitation, with the Aviation Authorities and any other applicable Governmental
Entities and non-governmental authorities, and all filings, registrations,
recordings, notations and other actions have been taken which are necessary to
ensure the validity and effectiveness of this Agreement and to protect the
rights of the Lessor and Lender to the full extent legally possible in the
Aircraft and to note with the Aviation Authorities Lessor's and Lender's rights
in the Aircraft.
3.1.12 Execution Power of Attorney: a copy of the general power of attorney
in favor of one or more authorized officers of the Lessee or other evidence of
due authorization and authority for such officers granted in a manner
enforceable in the State of Registration, demonstrating that such officers are
authorized and empowered, on behalf of the Lessee, to execute, deliver and bind
the Lessee to perform this Agreement and all related documents, including,
without limitation, the Certificate of Acceptance (all items in this Section
3.1.12 to be provided on or before June 28, 2002).
3.1.13 Governmental Entity Approvals: evidence, in form and substance
reasonably satisfactory to the Lessor, that the Lessee has obtained all
necessary approvals, consents or authorizations from the Aviation Authority or
any other applicable Government Entity in respect of the leasing of the Aircraft
by the Lessee under this Agreement and the operation of the Aircraft by the
Lessee whilst the Aircraft is registered with the Aviation Authorities (to the
extent that it is legally possible, Lessee shall provide items in this Section
3.1.13 by June 28, 2002 and the remaining Section 3.1.13 items shall be provided
on or before Delivery).
3.1.14 Irrevocable Instruction: proof of any irrevocable instruction by the
Lessee's insurer to the reinsurer with clear and mandatory instructions to pay
directly to Lessor or at Lessor's direction Lender, any insurance proceeds, duly
accepted by such reinsurers.
3.1.15 Irrevocable Power of Attorney and Irrevocable Instruction: any and
all necessary and duly executed, notarized and legalized irrevocable powers of
attorney, irrevocable instructions and other documentation deemed desirable by
Lessor and/or Lender, in form and substance acceptable to Lessor and Lender, and
granted in a manner enforceable in the State of Registration, in favor of Lessor
and Lender or their appointed agents and as are customarily available to
facilitate immediate deregistration in the State of Registration of the
Agreement and/or the Aircraft, and for the immediate removal of the Aircraft and
Aircraft Documents from the State of Registration in the event of a breach or
hold-over by Lessee. In addition to and without limiting the other requirements
hereunder or in this Agreement, such Irrevocable Power of Attorneys and
Irrevocable Instructions shall be granted in Spanish as a public deed before a
Spanish Notary Public and the Irrevocable Powers of Attorney and Irrevocable
Instructions shall be substantially in the form set forth in Schedule 9 herein
(all items in this Section 3.1.15 to be provided on or before June 28, 2002).
3.1.16 Banking Documents: evidence of the issue of any necessary approval,
license and consent which may be required in relation to, or in connection with,
the remittance to Lessor in Dollars of all amounts payable under this Agreement,
including filing for registry of this Agreement and forms as required by any
bank, or any other foreign exchange authority (all items in this Section 3.1.16
to be provided on or before June 28, 2002).
3.1.17 Filing Fees, duties, taxes: evidence of payment of any applicable
customs duties, fees, taxes, and filing fees applicable prior to Delivery.
3.1.18 Financial Information: financial information regarding Lessee
including Lessee's audited financials for the 2001 fiscal year and their
translation into English, unaudited financials for the first quarter of the 2002
fiscal year and their translation into English, and any other information
materially effecting Lessee's financial position (all items in this Section
3.1.18 to be provided on or before June 28, 2002).
3.1.19 Assignment, Consent and Agreement: the Assignment, Consent and
Agreement, executed, notarized, apostilled and translated into Spanish (to be
delivered concurrently with execution of this Agreement except that translation
to be provided on or before July 8, 2002). Lessor shall reimburse Lessee up to
a cumulative amount of $400 for amounts actually expended by Lessee, and
documented in form and substance acceptable to Lessor and Lender, for such
notarization and Spanish translation of the Assignment, Consent and Agreement.
3.1.20 Authorization Documents: copies of all documents evidencing action
taken by Lessee to authorize the execution and delivery of this Agreement, the
Assignment, Consent and Agreement and any and all additional documents related
to this Agreement (all items in this Section 3.1.20 to be provided on or before
June 28, 2002).
3.1.21 Other Documents: copies of all other documents that Lessor or
Lender may reasonably request relating to the authority for the execution,
delivery and performance of, and the validity of, this Agreement, the
Assignment, Consent and Agreement and documents related to the same (to be
provided within reasonable timeframes requested by Lessor or Lender if required
on a date prior to Delivery).
3.2 Lessor's Additional Condition Precedent and Lessor's Waiver
3.2.1 Lender Approval and Perfection: Lessor's obligation to lease the
Aircraft to the Lessee under this Agreement is subject to Lender's approval of
the terms herein and the ability of Lender to note, to the extent legally
possible, on terms satisfactory to Lender with the DGAC an Aircraft Mortgage
against the Aircraft in Spain.
3.2.2 Sole Waiver: The conditions specified in Section 3.1 are for the sole
benefit of the Lessor and its successors and assigns and may only be waived or
deferred, in whole or in part and with or without conditions, in writing by the
Lessor.
3.3 Lessee's Conditions Precedent
The Lessee's obligation to accept the Aircraft on lease from the Lessor under
this Agreement is subject to the satisfaction by the Lessor of the following
conditions precedent:
3.3.1 Aircraft Records: the records enumerated in Schedule 1 shall have
been provided to Lessee;
3.3.2 Certificate: the receipt by the Lessee of a certificate of a duly
authorized officer of the Lessor setting out a specimen of each signature of an
officer signing this Agreement or any document or instrument in connection
herewith;
3.3.3 Representations and Warranties: that the representations and
warranties of the Lessor under Section 2.4 are correct; and,
3.3.4 Documents: Receipt by Lessee of this Agreement, completed, duly
executed and delivered by Lessor.
3.3.5 Lessor Approval: a copy of Lessor's authorization for the execution,
delivery and performance of this Agreement.
3.3.6 FAA Perfection: evidence of perfection of the Aircraft Mortgage
against the Aircraft with the FAA referenced in Section 3.2.1.
3.4 Lessor's Conditions Subsequent
3.4.1 Supplemental Legal Opinions: Lessee shall provide to Lessor and Lender
any further supplemental legal opinions requested or required by Lessor or from
Lessee's legal counsel in form and substance reasonably acceptable to Lessor
which shall include without limitation an opinion that all licenses, permits,
registrations and the like have been obtained to allow Lessee to operate the
Aircraft pursuant to Applicable Law (to be provided within a reasonable time
after Lessor's request).
3.4.2 Registration and Filing: on the earliest date legally possible
but in no event later than 95 days after the date of issuance of the initial
temporary/provisional certificate of registration of the Aviation Authorities
indicating that the Aircraft is validly registered with the Aviation
Authorities, Lessee shall provide to Lessor and Lender a copy of the certificate
of airworthiness issued by the DGAC and a copy of the permanent certificate(s)
of registration from the Aviation Authorities, indicating that the Aircraft and
this Agreement have been validly registered and the Certificate of Acceptance
validly filed under the laws of the State of Registration, including, without
limitation, with the Aviation Authorities and any other applicable Governmental
Entities and non-governmental authorities. Within the time period set forth
above in this Section 3.4.2, Lessee shall also provide to Lessor and Lender
evidence, in form and substance satisfactory to Lessor and Lender, that all
filings, registrations, recordings and other actions have been taken which are
necessary to ensure the validity and effectiveness of this Agreement and to
protect the rights of the Lessor and Lender, to the full extent legally
possible, in the Aircraft and to record with the Aviation Authorities Lessor and
Lender's rights in the Aircraft. If the permanent certificate of registration
referenced above in this Section 3.4.2 will be provided later than 90 days after
the date of issuance of the initial temporary/provisional certificate referenced
above, Lessee shall also provide to Lessor and Lender, within 90 days of the
date of issuance of such initial temporary/provisional certificate, a copy of
the extension of the initial temporary/provisional certificate(s) of
registration of the Aircraft and this Agreement with the Aviation Authorities
and other applicable Governmental Entities and non-governmental authorities.
3.4.3 Evidence of Importation: within 15 days after the Delivery Date,
Lessee shall provide to Lessor and Lender evidence that the Aircraft has been
properly imported into Spain.
3.4.4 Filing Fees, duties, taxes: within 15 days after the Delivery Date
Lessee will provide to the Lessor and Lender evidence of payment of any
applicable customs duties, fees, taxes, and filing fees payable after Delivery.
3.4.5. Licenses: to the extent that Lessee provides temporary versions
of documents referenced in Section 3.1.4, Lessee shall provide permanent
versions of such documents to Lessor and Lender within 95 days of Delivery.
However, if such documents will be provided later than 90 days after the date of
Delivery, Lessee shall also provide within 90 days of the date of Delivery a
copy of the extension of the initial temporary/provisional certificate(s) of
registration of the Aircraft and this Agreement with the Aviation Authorities
and other applicable Governmental Entities and non-governmental authorities.
3.4.6 Lease Translation: on or before July 8, 2002 Lessee shall
deliver to Lessor and Lender (1) an official Spanish translation of this
Agreement and all of its attachments and exhibits, duly executed, notarized and
apostilled and (2) an official Spanish translation of the Assignment, Consent
and Agreement, duly executed, notarized and apostilled.
4. COMMENCEMENT
4.1 Leasing
The Lessor will lease the Aircraft to the Lessee and the Lessee will take the
Aircraft on lease in accordance with this Agreement for the duration of the
Term.
4.2 Delivery
The Aircraft will be delivered to, and will be accepted by, the Lessee at the
Delivery Location on or before June 28, 2002 (or, if Section 4.5 herein applies,
on an alternative date of delivery of the Aircraft by Lessor pursuant to such
Section) following satisfaction of the conditions precedent specified in
Sections 3.1, 3.2 and 3.3 (or their waiver or deferral by the party entitled to
grant such waiver or deferral). The Aircraft is delivered "AS-IS, WHERE-IS,"
subject only to the conditions set forth in the Certificate of Acceptance, and
is subject to the limitations in Section 7 of this Agreement.
4.3 Delivery Inspection and Corrections
4.3.1 Pre-Lease Inspection. Lessee has satisfactorily completed or
otherwise waived a physical "walk around" inspection of the Aircraft, an
inspection of the Aircraft Documents, and video borescopes and power assurance
runs.
4.3.2 Pre-Delivery Inspection. Prior to Lessee's execution and delivery of
the Certificate of Acceptance but after full execution of this Agreement, Lessor
shall have permitted and Lessee shall have completed or otherwise be deemed to
have waived an inspection of the Aircraft. Such inspection may include, without
limitation, physical inspection of the Aircraft and Aircraft Documents and a
demonstration test flight. For purposes of clarification, Lessor shall not
be required to provide any video borescope or power assurance runs.
Notwithstanding the immediately preceding sentence, with respect to any or all
of the Engines, Lessee may, at its sole cost and expense, perform a power
assurance run prior to the demonstration test flight on such Engine(s). The test
flight shall comply with the Manufacturer's test flight procedures and shall not
exceed three (3) hours in duration. Lessee shall be permitted to have up to two
(2) observers on board for the test flight, at Lessee's expense.
4.3.3 Discrepancies. Any discrepancies from the conditions required by
Schedule 3 and identified as a result of the inspections referenced in Section
4.3.2 shall be remedied by Lessor prior to Delivery provided that (1) on
reasonable request of Lessee and at Lessee's sole cost and expense, Lessor will,
after correction of such discrepancies, make the Aircraft available for
reasonable inspection by Lessee of such discrepancy corrections made pursuant to
this Section 4.3.3, and (2) if the cost and expense of correcting such
discrepancies will exceed $250,000, Lessor shall have the right to terminate the
Agreement, in which event return of the Deposit shall be Lessee's sole remedy.
Notwithstanding the immediately preceding sentence, any discrepancies that (a)
will not affect the airworthiness of the aircraft (b) do not exceed $1,000 to
correct (including parts and labor) and (c) are not included within Sections
A.2. through I.1. of Schedule 3 shall be noted on the Certificate of Acceptance
and corrected at the cost and expense of Lessee, provided, however, that Lessee
may redeliver the Aircraft at the Expiry Date subject to such discrepancies if
not corrected.
4.3.4 Replacement or Overhaul of Engines: At any time prior to Delivery,
Lessor shall have the right, in Lessors sole discretion, to overhaul any Engine
or to replace any Engine with an engine of the same model and similar or higher
modification level as the Engine that it replaced provided that, notwithstanding
Section 4.3.2 regarding video borescopes, Lessor shall provide, at Lessor's
expense, a video borescope of such engine. For avoidance of doubt, such
replacement Engine must meet the conditions of Schedule 3 herein at the time of
Delivery.
4.4 Acceptance and Risk
4.4.1 Immediately following satisfaction of the conditions precedent
specified in Sections 3.1, 3.2 and 3.3 (or their waiver or deferral by the party
entitled to grant such waiver or deferral) and completion of the pre-delivery
inspection and discrepancies correction procedure in Sections 4.3.2 and 4.3.3,
the Lessor and the Lessee shall forthwith complete the Certificate of Acceptance
and the Lessee shall sign and deliver to the Lessor the notarized and apostilled
Certificate of Acceptance.
4.4.2 On and from Delivery, the Aircraft and every component thereof will be
in every respect at the sole risk of the Lessee, which will bear all risk of
loss, theft, damage or destruction to the Aircraft from any cause whatsoever and
Lessee will comply with all obligations of this Agreement.
4.4.3 Upon or immediately following receipt of the notarized and apostilled
Agreement and prior to Delivery, the Lessee shall register and file, at Lessee's
expense, this Agreement and the Xxxx of Sale (if requested by the Aviation
Authorities), shall provide to the Lessor a copy of the initial
temporary/provisional certificate of registration and, to the full extent
legally possible, shall note the ownership of and Lender's interest in the
Aircraft at the Aviation Authorities,
4.5 Lessor Failure to Deliver
If due solely and directly to the action or inaction of Lessor or its
representatives, Lessor fails to deliver the Aircraft on or before June 28,
2002, no default or breach of this Agreement by Lessor shall be deemed to have
occurred but Lessee shall be entitled to seek a setoff pursuant to the terms of
Section 5.12 herein. If due solely and directly to the action or inaction of
Lessor or its representatives, Lessor fails to deliver the Aircraft by July 31,
2002, this Agreement shall automatically terminate and neither Lessor nor Lessee
will have any further obligations to each other hereunder except that Lessee
shall be entitled to a refund of any pre-paid Basic Rent for the first month of
the Term and to a refund of the Deposit.
5. PAYMENTS
5.1 Basic Rent
5.1.1 Basic Rent: Lessee will pay to the Lessor or its order the Basic Rent
on the date of execution of this Agreement and in advance on each subsequent
Rent Date. Payment must be initiated adequately in advance of the Rent Date to
ensure that the Lessor receives credit for the payment on the Rent Date.
5.2 Maintenance Reserves
5.2.1 Time of Payment: the Lessee will pay to the Lessor or its order
Maintenance Reserves monthly in arrears within 10 days from the end of each
preceding calendar month during the Term. If the Term ends prior to the end of
a calendar month, Lessor will pay the Maintenance Reserves for the last month on
or before the Expiry Date.
5.2.2 Amount: The Maintenance Reserves payable pursuant to this Section 5.2
shall be the amounts set forth in Schedule 7. Such Maintenance Reserves are
Supplemental Rent and notwithstanding anything to the contrary herein, are the
exclusive property of Lessor, and Lessee shall have no rights there to except as
expressly provided in this Agreement. Subject to the terms of Schedule 7 herein
with respect to Engine Refurbishment Reserves, any remaining balances of
Maintenance Reserves at the end of the Term shall remain the property of Lessor.
5.2.3 Security: The Maintenance Reserves shall act as additional security
for Lessee's obligations under this Agreement. If Lessee fails to pay Rent or
any other amount payable hereunder when due or to perform any other terms or
provisions of this Agreement or an Event of Default has otherwise occurred,
Lessor may use, apply, draw upon, or retain all or any portion of the
Maintenance Reserves in partial payment for sums due to Lessor by Lessee, to
compensate Lessor for any sums it may in its discretion advance as a result of
an Event of Default, or to apply towards losses or expenses Lessor may suffer or
incur as a result of the occurrence of an Event of Default hereunder. If Lessor
uses, draws upon, or applies all or any portion of Maintenance Reserves, such
application shall not be deemed a cure of any Default or any Event of Default,
and Lessee shall within five (5) Business Days after written demand therefore
deposit with Lessor cash or other collateral acceptable to Lessor in an amount
sufficient to restore the Maintenance Reserves to their original level. The
failure of Lessee to do so shall be a material breach of this Agreement by
Lessee.
5.3 Payment Method
5.3.1 All payments of Rent and Maintenance Reserves by the Lessee to the
Lessor under this Agreement will be made by wire transfer for value on the due
date, for the full amount due, in Dollars and in same day funds, to:
XX Xxxxxx Chase, New York
Swift Code: XXXXXX00
Fedwire Routing Number: 000000000
For the account of:
The United Bank of Kuwait PLC
Account Number: 0011951266
CHIPS UID: 037393
Reference: Cygnus
or to such other account as Lessor may direct in writing upon five Business Days
prior written notice to Lessee.
5.3.1 If any Rent, Maintenance Reserves or other payment would otherwise
become due on a day that is not a Business Day, it shall be due on the
immediately preceding Business Day.
5.4 No Set-Off; Gross-up
Subject to the terms of Section 5.11.2(b) herein with respect to shortfall
credits, all payments by the Lessee under or in connection with this Agreement
will be made without offset or counterclaim, free and clear of and without
deduction or withholding for or on account of any present or future Taxes of any
nature whatsoever now or hereinafter imposed, levied, collected, withheld or
assessed by any government body or taxing authority, required to be withheld or
deducted from any amounts payable by, or on behalf of, Lessee hereunder to
Lessor and Lessee shall indemnify, defend and hold harmless Lessor, on an
after-tax basis, with respect to any withholding taxes whenever imposed (all
such Taxes being herein referred to as "Withholding Taxes"). If any Withholding
Taxes are so required to be withheld or deducted from any payment made by Lessee
hereunder, Lessee shall (i) pay to the appropriate government body the amount of
such Withholding Taxes and make such reports and filings in connection therewith
in the time and manner required by applicable laws and forward to Lessor
receipts evidencing payments of such Withholding Taxes including, but not
limited to, all forms Agencia Tributaria Impuesto sobre la Renta de no
Residentes Modelos 216 and 296 filed by Lessee, Lessee's annual summary of such
amounts withheld during each year as provided to the Spanish tax authorities,
appropriate certificates required by the Spanish tax authorities to be submitted
to Lessor evidencing amounts withheld and a quarterly certificate from the
Spanish tax authorities summarizing such amounts withheld, (ii) at the time that
the payment upon which the deduction or withholding applies is required to be
made, pay to Lessor (as Supplemental Rent) any additional amount which is
necessary in order for the net amounts received by Lessor, after deduction or
withholding of such Withholding Taxes (including Withholding Taxes or any
payments made under this Section 5.4), to equal the amounts payable to Lessor
had no such deduction or withholding been required and (iii) promptly forward
Taxes to such government body. Lessor agrees to deliver to Lessee, at Lessee's
sole cost and expense, such official certificates or documents that are: (a)
reasonably requested in writing by Lessee (b) reasonably obtainable by Lessor
and (c) are necessary to establish the payments by Lessee to Lessor hereunder,
or under this Agreement are exempt from or are subject to a reduced rate of
Withholding Tax imposed by any government body or taxing authority, so long as
the Lessor has determined that, it is entitled to claim such reduction or
exemption without any cost or adverse consequence to Lessor. If requested by
Lessor in connection with any request for certificates or documents hereunder,
Lessee shall provide Lessor with blank forms and instructions for completion
thereof. For clarification, Lessor's obligation to provide such tax certificate
or documentation will not compromise in any manner Lessee's obligations to make
full and timely payments pursuant to this Agreement, including but not limited
to, Lessee's obligations under this Section 5.4.
5.5 Taxation
5.5.1 General Obligation of Lessee. Except as set forth in Section 5.5.2,
Lessee agrees to pay promptly when due, and to indemnify and hold harmless
Indemnitees on a full indemnity basis from, all license, translation,
Eurocontrol and registration fees and all taxes, fees, levies, imposts, duties,
charges, deductions or withholdings of any nature (including without limitation
any value added, franchise, transfer, sales, gross receipts, use, import
business, excise, turnover, personal property, stamp or other tax) together with
any assessments, penalties, fines, additions to tax or interest thereon, however
or wherever imposed (whether imposed upon Lessee, any of the Indemnitees, on all
or part of the Aircraft, the Engines or otherwise), by any Government Entity or
taxing authority in the State of Incorporation, the State of Registration, the
United States of America or any other country or any international taxing
authority, upon or with respect to, based upon or measured by any of the
following (collectively, "Taxes"):
a. the Aircraft, Engines or any Parts;
b. the delivery, importation, leasing, possession, control, use, operation
maintenance, return or other disposition of the Aircraft or carriage of
passengers or freight during the Term; and
c. this Agreement, the payments due hereunder and the terms and conditions
hereof; and
5.5.2 Exceptions to Indemnity. The indemnity provided for in Section 5.5.1
above, does not extend to any of the following Taxes:
a. Taxes imposed by any Government Entity or taxing authority in the State
of Incorporation, the State of Registration, the United States of America, or
any other country or international taxing authority on the net income, gross
receipts, capital or net worth of Lessor (including, without limitation, any
franchise tax, any capital gains tax, any minimum or alternative minimum taxes
and Taxes measured on or by any items of tax preference) or Taxes in lieu
thereof. For avoidance of doubt, the parties agree that Lessee will indemnify
Lessor as provided in Section 5.5.1 above for any sales or use tax or value
added tax assessed by the State of Incorporation based on payments made by
Lessee to Lessor under this Agreement and the parties clarify that Section 5.4
herein is fully applicable to payments made by Lessee to Lessor under this
Agreement;
b. Taxes attributable to the period prior to Delivery or after return of the
Aircraft to Lessor in accordance with this Agreement;
c. Taxes attributable to Lessor's gross negligence, willful misconduct or
breach of this Agreement;
d. Taxes imposed as a result of Lessor's voluntary or involuntary transfer
or other disposition of the Aircraft, Engines or any Parts or this Agreement
(except a transfer or sale resulting directly from Lessee's Default) provided
that Lessee remains responsible for payment of any Taxes that it would have been
required to indemnify for if such voluntary or involuntary transfer had not
occurred; or
e. Taxes imposed by any Government Entity or taxing authority in the United
States of America or any foreign country or by any international taxing
authority solely as a result of (and unrelated to Lessee's use, operation or
maintenance of the Aircraft during the Term) (i) Lessor's ownership of the
Aircraft, the Engines or any Parts and (ii) the location of Lessor's business.
5.5.3 AfterTax Basis. The amount which Lessee is required to pay with
respect to any Taxes indemnified against under Section 5.5.1 is an amount
sufficient to restore the relevant indemnitees on an aftertax basis to the same
position that such relevant Indemnitees would have been in had such Taxes not
been incurred.
5.5.4 Tax Savings. If Lessor (or if applicable its affiliate) realizes a
reduction in Taxes not subject to future challenge by any governmental tax
authority (resulting from a deduction, credit, allocation, apportionment or
otherwise) as a result of Taxes paid or indemnified against by Lessee, to the
extent that the parties, at the request of the Lessor, did not take such
reduction into account in calculating the amount to be indemnified for under
this Section 5.5, Lessor will promptly pay to Lessee an amount equal to the sum
of (a) the actual reduction in Taxes realized by Lessor and (b) the actual
reduction in Taxes realized by Lessor as a result of any payment made pursuant
to this sentence. Nothing herein will be deemed to restrict the right of Lessor
or its affiliate to make available tax elections and otherwise arrange their
respective tax affairs as they deem appropriate and shall not require Lessor or
its affiliate to file any claim for refund. Notwithstanding the immediately
preceding sentence, on reasonable written request by Lessee, Lessor will use
best efforts to provide to Lessee, within a reasonable time period and at
Lessee's sole cost and expense, reasonable documentation necessary to assist
Lessee in applying for any possible tax refunds or tax deductions related to any
taxes or tax obligations imposed or to be imposed upon Lessee that are related
to Lessee's obligations under this Agreement. For clarification, Lessor's
obligation to provide such tax refund or tax deduction documentation will not
compromise in any manner Lessee's obligations to make full and timely payments
pursuant to this Agreement, including but not limited to, Lessee's obligations
under Section 5.4 herein.
5.5.5 Timing of Payment. Any amount payable to any Indemnitees pursuant to
this Section 5.5 will be paid within ten (10) days after receipt of a written
demand therefore from Lessor accompanied by a written statement describing in
reasonable detail the basis for such indemnity and the computation of the amount
so payable provided, however, that such amount need not be paid by Lessee prior
to the earlier of (a) the date any Tax is payable to the appropriate Government
Entity or taxing authority or (b) in the case of amounts which are being
contested by Lessee in good faith or by Lessor pursuant to Section 5.5, the date
such contest is finally resolved.
5.5.6 Contests. If claim is made against Lessor for Taxes with respect to
which Lessee is liable for a payment or indemnity under this Agreement, Lessor
will promptly give Lessee notice in writing of such claim provided, however,
that Lessor's failure to give notice will not relieve Lessee of its obligations
hereunder unless such failure materially impairs or precludes Lessee's ability
to contest the claim. So long as (i) a contest of such Taxes does not involve
any substantial danger of the sale, forfeiture or loss of the Aircraft or any
interest therein, (ii) if Lessor so requests, Lessee has provided Lessor with an
opinion of independent tax counsel that a reasonable basis exists for contesting
such claim and (iii) adequate reserves have been made for such Taxes or, if
required by the taxing authority, an adequate bond has been posted, then Lessor
at Lessee's written request will in good faith, with due diligence and at
Lessee's expense, contest (or permit Lessee to contest in the name of Lessee or
Lessor) the validity, applicability or amount of such Taxes. Lessor will
provide Lessee with such information as Lessee may reasonably request to enable
independent counsel to issue an opinion and to enable Lessee to contest such
Taxes in Lessee's or Lessor's name.
5.5.7 Refunds. Upon receipt by Lessor of a refund of all or any part of any
Taxes which Lessee has paid, Lessor will pay to Lessee the net amount of such
Taxes refunded (including any interest received with the refunded Taxes).
5.5.8 Cooperation in Filing Tax Returns. Lessee and Lessor will cooperate
with one another in providing information which may be reasonably required to
fulfill each party's tax filing requirements and any audit information request
arising from such filing.
5.5.9 Survival of Obligations. The indemnities and agreements of Lessee
provided for in this Section 5.5 will survive the Expiry Date.
5.6 Information
If the Lessee is required by any Applicable Law, or by any third party, to
deliver any report or return in connection with any Taxes, the Lessee will duly
complete the same and Lessee will either make such report or return in such
manner as will show the ownership of the Aircraft in Lessor and send a copy of
such report or return to Lessor or will notify Lessor of such requirement and
make such report or return in such manner as shall be reasonably satisfactory to
Lessor.
5.7 Taxation of Indemnity Payments
5.7.1 If and to the extent that any sums payable to any Indemnitee by the
Lessee under this Agreement by way of indemnity are insufficient, by reason of
any Taxes payable in respect of those sums, for such Indemnitee to discharge the
corresponding liability to the relevant third party (including any taxation
authority), or to reimburse such Indemnitee for the cost incurred by it to a
third party (including any taxation authority) the Lessee will, upon the written
request for payment of such amount, pay to such Indemnitee such sum as will,
after the tax liability has been fully satisfied, leave such Indemnitee with the
same amount as it would have been entitled to receive in the absence of that
liability, together with interest on the amount of the deficit at the Default
Rate in respect of the period commencing on the date on which the payment of
taxation is finally due or, if later, five (5) Business Days after the date on
which such Indemnitee notified the Lessee in writing of the deficit and made
payment therefore, until payment by the Lessee (both before and after judgment).
5.7.2 If and to the extent that any sums constituting (directly or
indirectly) an indemnity to an Indemnitee but paid by the Lessee to any Person
other than the Indemnitee are treated as taxable in the hands of the Indemnitee,
the Lessee will pay to such Indemnitee, such sum as will, after the tax
liability has been fully satisfied, indemnify such Indemnitee, to the same
extent as it would have been indemnified in the absence of such liability,
together with interest on the amount payable by Lessee under this sub-clause at
the Default Rate in respect of the period commencing on the date on which the
payment of taxation is finally due or until payment by the Lessee (both before
and after judgment).
5.8 Default Interest
If the Lessee fails to pay any amount payable under this Agreement on the due
date, the Lessee will pay on demand from time to time to the Lessor or any
Indemnitee interest (both before and after judgment) on the amount, from the due
date to the day of payment in full by the Lessee to the Lessor or Indemnitee, at
a per annum rate equal to the lower of (i) the base rate or prime rate for
commercial loans as announced from time to time by Citibank at its principal
lending office in New York, New York, plus 5.0% per annum (the "Default Rate"),
or (ii) the maximum lawful per annum rate for commercial loans; both net of
Withholding Taxes. All such interest will be calculated on the basis of the
actual number of days elapsed and on a 360 day year.
5.9 Net-Lease
This Agreement is a net lease and Lessee's obligations under this Agreement
including but not limited to Lessee's obligations to pay Rent and make other
payments in accordance with this Agreement are absolute and unconditional under
any and all circumstances and regardless of other events, including the
following:
5.9.1 any right of off-set, counterclaim, recoupment, defense or other right
(including any right of reimbursement) which Lessee may have against Lessor,
Manufacturer, the Engine manufacturer or any other person for any reason,
including any claim Lessee may have for the foregoing;
5.9.2 unavailability or interruption in use of the Aircraft for any reason,
including a requisition thereof or any prohibition or interference with or other
restriction against Lessee's use, operation or possession of the Aircraft
(whether by law or otherwise), airworthiness, merchantability, fitness for any
purpose, condition, design, specification or operation of any kind or nature of
the Aircraft, the ineligibility of the Aircraft for any particular use or trade
or for registration under the laws of any jurisdiction or Total Loss of the
Aircraft until Lessor receives the Agreed Value (on receipt of Agreed Value,
Lessor shall return to Lessee that portion of Basic Rent paid for the period
between the Total Loss Date and Lessor's receipt of the Agreed Value);
5.9.3 insolvency, bankruptcy, reorganization, arrangement, readjustment of
debt, dissolution, liquidation, receivership, administration or similar
proceedings by or against Lessor, Lessee, Manufacturer, the Engine manufacturer
or any other Person;
5.9.4 invalidity or unenforceability or lack of due authorization of or
other defect in this Agreement;
5.9.5 failure or delay on the part of any party to perform its obligations
under this Agreement; or
5.9.6 any other circumstance which but for this provision would or might
have the effect of terminating or in any other way affecting any obligation of
Lessee hereunder.
Nothing in Section 5.9 will be construed to limit Lessee's rights and remedies
in the event of Lessor's breach of its warranty of quiet enjoyment set forth in
Section 7.1 or to limit Lessee's rights and remedies to pursue any claim it may
have against Lessor or any other Person pursuant to this Agreement.
5.10 Deposit
5.10.1 The Deposit was paid directly to Lessor or Lender. Lessor shall be
entitled to hold and apply the Deposit as specified in Section 5.10.2.
5.10.2 The Lessor shall retain the Deposit during the Term as additional
security for Lessee's obligations under this Agreement. On the Delivery Date,
the Deposit, together with any interest earned thereon shall constitute a
security deposit under this Agreement, shall be non-refundable during the Term
of this Agreement, and shall be held by Lessor as security for the timely and
faithful performance by Lessee of all of Lessee's obligations under this
Agreement. If Lessee fails to pay Rent or Maintenance Reserves hereunder or to
pay any other sums due or to or to perform any of the other terms and provisions
of this Agreement or an Event of Default has otherwise occurred, Lessor may use,
apply, draw upon or retain all or any portion of the Deposit in partial payment
for sums due to Lessor by Lessee, to compensate Lessor for any sums it may in
its discretion advance as a result of an Event of Default, or to apply toward
losses or expenses Lessor may suffer or incur as a result of the occurrence of
an Event of Default hereunder. If Lessor uses, draws upon or applies all or any
portion of the Deposit, such application shall not be deemed a cure of any
Default or Event of Default, and Lessee shall within five (5) Business Days
after written demand therefore deposit with Lessor cash or other collateral
acceptable to Lessor in an amount sufficient to restore the Deposit to its
original level as set forth in Schedule 7 hereto, and the failure of Lessee to
do so shall be a material breach of this Agreement by Lessee. Provided no
Default has occurred, the Deposit shall be returned to Lessee within thirty (30)
Business Days following the later of the Expiry Date, or the date Lessee's
obligations relating to the return of the Aircraft have been fully performed.
5.11 Lessee Reimbursement of Maintenance Reserves
5.11.1 Use of Maintenance Reserves. Maintenance Reserves may be used as
follows:
a. Airframe "C" Check Reserves. Lessor shall reimburse Lessee from the
Airframe "C" Check Reserves paid by Lessee (less any previous disbursements from
Airframe "C" Check Reserves) for the actual cost of a scheduled Airframe "C"
Check pursuant to the Agreed Maintenance Program which occurs after completion
of the first such scheduled Airframe "C" Check pursuant to the Agreed
Maintenance Program during the Term. With respect to each such Airframe "C"
Check, Lessee shall be entitled to reimbursement under this Section 5.11 of an
amount only up to 100% of accumulated Airframe "C" Check Reserves as of the
first date of such Airframe "C" Check and shall be solely responsible for any
such Airframe "C" Check costs exceeding such Airframe "C" Check Reserves amount
and shall pay for such costs immediately at the time of completion of such
Airframe "C" Check.
b. Airframe "E" Check Reserves. Lessor shall reimburse Lessee from the
Airframe "E" Check Reserves paid by Lessee (less any previous disbursements from
Airframe "E" Check Reserves) for the actual cost of a scheduled "E" Check or "E"
Check equivalents pursuant to the Agreed Maintenance Program. With respect to
each such D-check, Lessee shall be entitled to reimbursement under this Section
5.11 of an amount only up to 100% of accumulated Airframe "E" Check Reserves as
of the first date of such "E" Check and shall be solely responsible for any such
"E" Check costs exceeding such Airframe "E" Check Reserves amount and shall pay
for such costs immediately at the time of completion of such "E" Check.
c. Engine Refurbishment Reserves. Lessor shall reimburse Lessee from the
respective Engine Refurbishment Reserves for each scheduled Engine overhaul paid
by Lessee (less any previous disbursements from such Engine Refurbishment
Reserves) for the actual cost of work performed during the respective Engine's
shop visit requiring teardown or disassembly, including but not limited to the
replacement of life-limited Parts, including third party labor in respect
thereof, and where the replacement of life-limited Parts is accomplished with
advance notice to and the approval of Lessor (such approval not to be
unreasonably withheld), in each case in accordance with the Maintenance Program.
Such reimbursement may be in any amount of only up to 100% of such Engine's
Engine Refurbishment Reserves. However, the actual cost of the life-limited
Parts shall not be reimbursed from Engine Refurbishment Reserves.
d. Engine LLP Reserves. Life-limited Parts replaced on an Engine
pursuant to Section 5.11.1(c) shall be reimbursable to Lessee from such Engine's
respective Engine LLP Reserves and only up to an amount of 100% of such Engine's
Engine LLP Reserves.
e. Landing Gear Reserves. Lessor shall reimburse Lessee from the Landing
Gear Reserves (less any previous disbursements from Landing Gear Reserves) for
the actual cost of scheduled overhauls, refurbishments, or exchanges with the
advance consent of Lessor and only up to an amount of 100% of such Landing Gear
Reserves.
If Lessee intends to undertake maintenance on the Aircraft, the cost for which
it will seek reimbursement from the Maintenance Reserves, Lessee shall notify
Lessor at least thirty (30) days in advance in respect of any tasks under (a),
(b) and/or (c) above, at least ten (10) Business Days in advance in respect of
any tasks under (d) and/or (e) above, or shall provide such other notice as is
possible or feasible in respect of any other tasks, and shall request Lessor's
consent in writing, of the workscope Lessee desires to accomplish, the estimated
cost thereof and the maintenance facility Lessee proposes to have accomplish the
work. Lessor shall advise in writing of its consent or rejection in respect of
any task under (a), (b) or (c) above within ten (10) days after receipt of
Lessee's notice. Lessor shall advise in writing of its consent or rejection in
respect of any task under (d) or (e) above within three (3) Business Days after
receipt of Lessee's notice, and any failure by Lessor to respond to such notice
within such time periods shall be deemed consent by Lessor thereto. Lessor's
consent regarding all work under this paragraph shall not be unreasonably
withheld. Lessor is entitled to have one or more representatives present, at
Lessor's cost, during any maintenance on the Aircraft that may result in a
claim by Lessee for payment from Maintenance Reserves.
5.11.2 Payment by Lessor. Any claims by Lessee for reimbursement from
Maintenance Reserves shall be for completed work only. Provided there is no
Default or Event of Default, any reimbursable claims pursuant to this Section
5.11 shall be paid or disputed not later than ninety (90) days after Lessor's
receipt of a detailed invoice, reasonably satisfactory to Lessor in form and
substance, together with supporting evidence reasonably acceptable to Lessor,
such as third party bills and work package certified completed. Lessor shall
pay to Lessee such amounts as are equal to the actual cost incurred by Lessee,
during the Term of the Agreement and claimed by Lessee, in respect of and to the
extent of reimbursable claims pursuant to this Section 5.11 provided, however,
that:
a. No payment shall be made in respect of replacements or repairs caused by
foreign object damage, faulty maintenance or installation, or covered by
manufacturer's alert service bulletins outside of the Agreed Maintenance
Program, or misuse, neglect, negligence, or any cost which is reimbursable by a
claim under the manufacturer's warranties or by insurance (deductibles being
treated as reimbursable by insurance for this purpose) after due diligence in
effecting recovery, or any other replacements or repairs paid for or
reimbursable by any other Person.
b. Lessee will be responsible for payment of all costs in excess of the
amounts reimbursed hereunder. If, at the time of the structural check (in the
case of the Airframe) or at the time of removal (in the case of an Engine, or
the Landing Gear) and so long as there is no Default or Event of Default under
this Agreement, the balance in the account for the Airframe "C" Check Reserves,
Airframe "E" Check Reserves, Engine LLP Reserves or Engine Refurbishment
Reserves for a particular Engine, or Landing Gear Reserves, as applicable, less
all previous payments by Lessor to Lessee for reimbursement in such account and
less any set off by Lessor for any repair or overhaul expenditure that Lessor
may incur in accordance with Section 15.7 of this Agreement, is insufficient to
satisfy a claim for reimbursement in respect of the applicable Airframe check,
Engine, or Landing Gear, Lessee shall receive a credit against future
Maintenance Reserves to the applicable account in an amount equal to the
shortfall in that account. Notwithstanding the foregoing, with respect to the
credit available to Lessee in the case of an Engine overhaul, if such deficiency
in the appropriate Maintenance Reserves account for the overhaul is due to a
scheduled overhaul event or due to normal operation of such Engine (pursuant to
the Manufacturer's maintenance manual) Lessor may, at Lessor's sole discretion
and in lieu of such credit to Lessee; (1) draw and retain all Maintenance
Reserves related to the Engine so replaced and replace such Engine with an
engine of the same model and similar or higher modification level as the Engine
it replaced provided: (i) such engine has a positive EGT Margin; (ii) such
engine has at least one year of life remaining to the next scheduled overhaul or
the same duration of life remaining to the Expiration Date if such duration of
time is less than one year, and (iii) Lessor, at Lessor's cost and expense has
provided a videoborescope of such engine or (2) pay directly to the Agreed
Maintenance Performer, an amount representing the deficiency in the applicable
Maintenance Reserves for such overhaul.
5.11.3 Lessee's Right to Payment. For the avoidance of doubt, Lessee has no
right to the payment or return of any Maintenance Reserves at any time and at no
time shall Lessor be required to reimburse Lessee for any shortfall in any
Maintenance Reserves except for Lessor's reimbursement pursuant to Schedule 7
herein for Maintenance Reserves credits resulting from such shortfalls.
Furthermore, no interest will accrue or be paid at any time to Lessee on such
Maintenance Reserves. If Lessor fails to timely pay any properly reimbursable
claim pursuant to Section 5.11.2 of Schedule 7 herein, Lessor shall, provided no
Default or Event of Default has occurred, pay interest on the amount of such
claim at the Default Rate from the date that such reimbursement is due through
the date that such reimbursement is made. Lessor may commingle the Maintenance
Reserves with Lessor's general funds.
5.12 Lessee Setoff.
Provided no Default or Event of Default has occurred, if Lessor fails to deliver
the Aircraft on or before June 28, 2002, due solely and directly to the fault of
Lessor or its representatives, Lessor shall share equally in the cost of the
penalty, if any, actually incurred and paid by Lessee to Iberia Lineas Aereas de
Espana, S.A. ("Iberia") pursuant to that certain agreement between Lessee and
Iberia entitled Contrato de Reserva de Capacidad para Transporte de Carga Aerea
entre Iberia Lineas Aereas de Espana, S.A. y Cygnus Air, S.A. and dated June 12,
2002. Such penalty must be solely and directly related to Lessor's delayed
delivery of the Aircraft to Lessee and Lessee shall provide documentation to
Lessor, in form and substance satisfactory to Lessor, of Lessee's incurrence and
payment of such penalty. Lessor's contribution to payment of such penalty shall
be limited to one half of such penalty and up to a maximum of US$3,600.00
penalty incurred by Lessee per day with a maximum gross total of US$115,200.
Such penalty shall only be paid for days occurring on or after June 29, 2002
through July 31, 2002 during which Lessor continues, due solely and directly to
the fault of Lessor or its representatives, to fail to deliver the Aircraft to
Lessee. Payment by Lessor of such penalty shall only be in the form of an
allowed set-off by Lessee, in amounts equal to properly documented penalty
payments by Lessee, against "Basic Rent" payments owed by Lessee to Lessor
pursuant to this Agreement. Such allowed set-off may not be applied to Basic
Rent owed by Lessee to Lessor for the first month of the Term. In no event will
Lessor be required to make monetary payments to Lessor for such penalty.
6. MANUFACTURER'S WARRANTIES
6.1 Assignment
Notwithstanding this Agreement, the Lessor will remain entitled to the benefit
of each warranty, express or implied, and any unexpired customer and/or product
support given or provided in respect of the Aircraft, any Engine or Part by any
manufacturer, vendor, maintenance performer, subcontractor or supplier. Unless
an Event of Default shall have occurred, the Lessor hereby authorizes the Lessee
to pursue any claim thereunder in relation to defects affecting the Aircraft,
any Engine or Part and the Lessee agrees diligently to pursue any such claim
which arises at its own cost. The Lessee will notify the Lessor promptly upon
becoming aware of any such claim. The Lessor will provide such assistance to
the Lessee in making a claim under any such warranties or customer and/or
product support as the Lessee may reasonably request, and, if requested by the
Lessee and at the Lessee's expense, will pursue a claim in its own name where
the relevant manufacturer, vendor, maintenance performer, subcontractor or
supplier has refused to acknowledge the Lessee's right to pursue that claim.
6.2 Proceeds
All proceeds of any such claim as is referred to in Section 6.1 that exceed the
Damage Notification Threshold will be paid directly to the Lessor. To the
extent that such claim relates, however, to (i) defects affecting the Aircraft
which have been rectified by Lessee; or (ii) reasonable and necessary costs
incurred by the Lessee in pursuing such claim (whether or not proceeds of such
claim are payable to the Lessee); or (iii) any proceeds in an amount less than
the Damage Notification Threshold; and provided no Default shall have occurred,
such proceeds shall be paid directly to the Lessee.
6.3 Parts
Except to the extent the Lessor otherwise agrees in a particular case, the
Lessee will assure that all engines, components, furnishings or equipment
provided by the manufacturer, vendor, maintenance performer, subcontractor or
supplier as a replacement for a defective Engine or Part pursuant to the terms
of any warranty or customer and/or product support arrangement comply with
Section 8.13.1, are installed on the Aircraft promptly and that title to any
such engine or part vests in the Lessor in accordance with this Agreement. On
installation, such items will be deemed to be an Engine or Part, as applicable.
6.4 Agreement
To the extent any warranties or customer and/or product support relating to the
Aircraft are made available under an agreement between any manufacturer, vendor,
maintenance performer, subcontractor or supplier and the Lessee, this Section 6
is subject to that agreement. Lessee shall take all such steps as are necessary
and requested by the Lessor at the end of the Term to ensure that the benefit of
any of those warranties or customer and/or product support which have not
expired are vested in the Lessor.
7. LESSOR'S COVENANTS AND DISCLAIMERS
7.1 Quiet Enjoyment
Provided no Default or Event of Default shall have occurred, neither the Lessor
nor any Person claiming by, through or on account of the Lessor will interfere
with the quiet use, possession and enjoyment of the Aircraft by the Lessee.
7.2 Registration and Filings
The Lessor shall not do or cause to be done anything that might reasonably be
expected to adversely affect the registration of the Aircraft with the Aviation
Authorities. Lessor shall do all acts and things (including making any filing
or registration with the Aviation Authorities or any other Government Entity) as
may be required following and be directly related to any change in the ownership
of the Aircraft.
7.3 Exclusion
THE AIRCRAFT IS ACCEPTED BY THE LESSEE "AS IS, WHERE IS" AND LESSEE AGREES AND
ACKNOWLEDGES THAT LESSOR WILL HAVE NO LIABILITY IN RELATION TO, AND LESSOR HAS
NOT AND WILL NOT BE DEEMED TO HAVE MADE OR GIVEN, ANY CONDITIONS, WARRANTIES OR
REPRESENTATIONS, EXPRESS OR IMPLIED, WITH RESPECT TO THE AIRCRAFT, INCLUDING BUT
NOT LIMITED TO:
7.3.1 THE DESCRIPTION, AIRWORTHINESS, MERCHANTABILITY, FITNESS FOR ANY USE
OR PURPOSE, VALUE, CONDITION, OR DESIGN, OF THE AIRCRAFT OR ANY PART; OR
7.3.2 ANY OBLIGATION, LIABILITY, RIGHT, CLAIM OR REMEDY IN TORT, WHETHER OR
NOT ARISING FROM LESSOR'S NEGLIGENCE, ACTUAL OR IMPUTED; OR
7.3.3 ANY OBLIGATION, LIABILITY, RIGHT, CLAIM OR REMEDY FOR LOSS OF OR
DAMAGE TO THE AIRCRAFT, FOR ANY LIABILITY OF LESSEE TO ANY THIRD PARTY, OR FOR
ANY OTHER DIRECT, INDIRECT, INCIDENTAL OR CONSEQUENTIAL DAMAGES.
7.4 Lessee's Waiver
EXCEPT FOR THE LESSOR'S PERFORMANCE OF EACH COVENANT AND AGREEMENT OF LESSOR
EXPRESSLY SET FORTH IN THIS AGREEMENT (INCLUDING ITS COVENANT OF QUIET
ENJOYMENT), LESSEE HEREBY WAIVES, AS BETWEEN ITSELF AND THE LESSOR, ALL ITS
RIGHTS IN RESPECT OF ANY CONDITION, WARRANTY OR REPRESENTATION, EXPRESS OR
IMPLIED, ON THE PART OF LESSOR AND ALL CLAIMS AGAINST LESSOR HOWSOEVER AND
WHENEVER ARISING AT ANY TIME IN RESPECT OF OR OUT OF THE OPERATION OR
PERFORMANCE OF THE AIRCRAFT OR THIS AGREEMENT, INCLUDING BUT NOT LIMITED TO ANY
RIGHTS ARISING OUT OF THE GROSS NEGLIGENCE OR WILLFUL MISCONDUCT OF THE LESSOR.
7.5 Lessee's Confirmation
LESSEE CONFIRMS THAT IT IS FULLY AWARE OF THE PROVISIONS OF SECTIONS 7.3 AND 7.4
AND ACKNOWLEDGES THAT BASIC RENT, MAINTENANCE RESERVES AND OTHER AMOUNTS HAVE
BEEN VALUED AND CALCULATED BASED UPON SUCH PROVISIONS.
7.6 Lessor Contribution
Provided no Default or Event of Default has occurred, the Lessor shall make the
Lessor Contributions as required in accordance with Schedule 8.
7.7 Lessor Use of Irrevocable Power of Attorney
Lessor shall only utilize the Irrevocable Power of Attorney referenced in
Section 3.1.15 herein in the event of a Default or an Event of Default.
8. LESSEE'S COVENANTS
8.1 Duration
The undertakings in this Section 8 and in Section 12 will, except as otherwise
stated, be performed at the expense of the Lessee and remain in force until
redelivery of the Aircraft to the Lessor in accordance with this Agreement and
thereafter to the extent of any accrued rights of the Lessor in relation to
those undertakings.
8.2 Information
The Lessee shall promptly take the following actions and supply the following
reports to Lessor. All reports delivered to Lessor pursuant to this Section 8.2
shall be in English.
8.2.1 Notify the Lessor immediately of the occurrence of any Default or
Event of Default.
8.2.2 Furnish to the Lessor:
a. within 90 days after the last day of each of the first three fiscal
quarters of each fiscal year of the Lessee, unaudited quarterly financial
statements of the Lessee prepared for such quarter, including a balance sheet as
of the last day of such quarter and statements of income and retained earnings
and statements of cash flow for such fiscal quarter, all in reasonable detail
(subject to year-end audit adjustments) and prepared in accordance with GAAP;
b. as soon as available but not in any event later than 180 days after the
last day of each fiscal year of the Lessee, audited consolidated financial
statements of the Lessee prepared for such year, including a consolidated
balance sheet of the Lessee and its Subsidiaries as of the last day of such year
and consolidated statements of income and retained earnings and consolidated
statements of cash flow for such fiscal year and on a comparative basis figures
for the immediately preceding fiscal year, all in reasonable detail, each
prepared in accordance with GAAP and certified by an accounting firm of
internationally recognized independent certified public accountants as fairly
presenting the financial position and the results of operations of Lessee and
its Subsidiaries at the end of and for such fiscal year and as having been
prepared in accordance with GAAP;
c. at the same time as it is issued to the creditors of the Lessee, a copy
of each notice or circular issued to the Lessee's creditors as a group; and
d. on request from time to time such other information regarding the Lessee
and its business and affairs as the Lessor may reasonably request.
8.2.3 Inform the Lessor as to the current serial numbers of the Engines and
any engine installed on the Airframe.
8.2.4 Promptly furnish to the Lessor all information which the Lessor from
time to time reasonably requests regarding the Aircraft, any Engine or any Part
and its use, location and condition, including the hours available on the
Aircraft and any Engine until the next scheduled check, inspection, overhaul or
shop visit, as the case may be.
8.2.5 Furnish to the Lessor evidence reasonably satisfactory to the Lessor
that all Taxes and charges incurred by the Lessee with respect to the Aircraft
have been timely paid and discharged in full, including but not limited to forms
Agencia Tributaria Impuesto sobre la Renta de no Residentes Modelos 216 and 296
filed by Lessee, Lessee's annual summary of such amounts withheld during each
year as provided to the Spanish tax authorities, appropriate certificates
required by the Spanish tax authorities to be submitted to Lessor evidencing
amounts withheld and a quarterly certificate from the Spanish tax authorities
summarizing such amounts withheld.
8.2.6 Provide the Lessor, within five (5) days following the end of each
calendar month during the Term, with a monthly report on the Aircraft in the
form set out in Schedule 6. If there is a partial month at the end of the Term,
such report will be due upon the Expiry Date.
8.2.7 Give the Lessor annual written notice of the time and location of all
Major Checks during the succeeding 12-month period.
8.2.8 Promptly notify the Lessor of:
a. any loss, theft, damage or destruction to the Airframe, any Engine or any
Part, or any modification to the Aircraft if the potential cost may reasonably
be expected to exceed the Damage Notification Threshold;
b. any claim or other occurrence likely to give rise to a claim under the
Insurances (but, in the case of hull claims only, in excess of the Damage
Notification Threshold) and details of any negotiations with the insurance
brokers over any such claim; and
c. any litigation, arbitration or administrative proceedings that are
pending or, to the Lessee's knowledge, threatened against the Lessee which, if
adversely determined, would have a material adverse effect upon its financial
condition or business or its ability to perform its obligations under this
Agreement.
8.2.9 Provide the Lessor, within five (5) days following the end of each
calendar month during the Term, with a monthly report regarding Lessee's fees
due to Eurocontrol related to the Aircraft and all other aircraft in Lessee's
fleet.
8.2.10 Provide the Lessor, within five (5) days following end of each
calendar month during the Term evidence in form and substance satisfactory to
Lessor, of Lessee's payment of each of such fees referenced in Section 8.2.9
herein,.
8.2.11 Provide to Lessor within (5) days preceding the end of each calendar
month during the Term, with the scheduled flight plan/routes for the Aircraft
for the following month.
8.2.12 Provide to Lessor written notice of payment or use of any
deductible provided for pursuant to the insurance policy(ies) utilized by Lessor
to comply with the terms of Section 9 herein. Such notice shall be provided
within 48 hours of such payment or use and shall be accompanied by documentation
from the relevant insurer(s), reasonably satisfactory in form and substance to
Lessor and Lender, indicating the amount of any aggregate deductible remaining
pursuant to the relevant insurance policy(ies) after such payment or use of
deductible.
8.3 Lawful and Safe Operation
The Lessee shall:
8.3.1 Comply with the law for the time being in force in any country or
jurisdiction in which the Aircraft is being operated which is applicable to the
Aircraft or the use and operation of the Aircraft.
8.3.2 Not use the Aircraft in any manner contrary to any requirement of the
Aviation Authorities, any other applicable Governmental Entity, or the
manufacturers of the Aircraft, any Engine or any Part or for any purpose for
which the Aircraft is not designed or reasonably suitable.
8.3.3 Ensure that the crew and engineers employed by it in connection with
the operation and maintenance of the Aircraft have the qualifications and hold
the licenses required by the Aviation Authorities and Applicable Law.
8.3.4 Use the Aircraft solely in commercial or other operations for which
the Lessee is duly authorized by the Aviation Authorities and Applicable Law.
8.3.5 Not knowingly use the Aircraft (or use it when the Lessee ought
reasonably to have known that it was being so used) for the carriage of:
a. whole animals, living or dead, except in the cargo compartments according
to IATA regulations, and except domestic pet animals carried in a suitable
container to prevent the escape of any liquid and to ensure the welfare of the
animal;
b. acids, toxic chemicals, other corrosive materials, explosives, nuclear
fuels, nuclear wastes or any nuclear assemblies or components, except as
permitted for cargo aircraft under the "Restriction of Goods" schedule issued by
IATA from time to time and provided that all the requirements for packaging or
otherwise contained therein are fulfilled;
c. any other goods, materials or items of cargo which could reasonably be
expected to cause damage to the Aircraft and which would not be adequately
covered by the Insurances; or
d. any illegal item or substance;
8.3.6 Not utilize the Aircraft for purposes of training, qualifying or
re-confirming the status of cockpit personnel except for the benefit of the
Lessee's cockpit personnel, and then only if the use of the Aircraft for such
purpose is not disproportionate to the use for such purpose of other aircraft of
the same type operated by the Lessee.
8.3.7 Not cause or permit the Aircraft to proceed to, or remain at, any
location which is for the time being the subject of a prohibition order (or any
similar order or directive) by:
a. any Government Entity of the State of Registration or the Habitual Base;
or
b. any Government Entity of the country in which such location is situated;
or
c. any Government Entity having jurisdiction over the Lessor or the
Aircraft;
provided, however, that the failure of the Lessee to comply with the provisions
of this sentence shall not give rise to a Default or an Event of Default
hereunder where such failure is attributable to a hijacking, medical emergency,
equipment malfunction, weather condition, navigational error or other isolated
extraordinary event (not within the Lessee's control) and the Lessee is
diligently proceeding to rectify such failure as soon as is reasonably
practicable.
8.3.8 Obtain and maintain in full force all certificates, licenses, permits
and authorizations required for the use and operation of the Aircraft for the
time being, and for the making of payments required by, and the compliance by
the Lessee with its other obligations under, this Agreement.
8.4 Taxes and Other Charges
Subject to Section 5.5, the Lessee will promptly pay, when due, all license,
filing and registration fees, Eurocontrol fees, costs, charges, fees, levies,
expenses, notarization fees, legalization fees and apostille fees, translation
fees, Taxes and other amounts of any nature imposed by any Government Entity
with respect to the Aircraft and its delivery, importation, leasing, possession,
use, operation, control, maintenance, return, or other disposition, and all
rent, fees, charges, Taxes imposed on the Aircraft, Lessee, or any Indemnitees,
or any Lender and other amounts with respect to any premises where the Aircraft
or any Part thereof is located from time to time during the Term. Lessee will
also arrange and pay for the timely translation into Spanish or English (and
utilizing an official translator when required), as applicable, of any and all
documents including, but not limited to, this Agreement, the Assignment, Consent
and Agreement, the Certificate of Acceptance, and all documents referenced in
Sections 3 and 4 herein, as is necessary to accomplish the transactions and
obligations contemplated by this Agreement and/or as is necessary for any
litigation, arbitration, mediation, or other court, administrative, or like
proceeding related to this Agreement. For avoidance of doubt, such translations
of the Assignment, Consent and Agreement, the Certificate of Acceptance, and all
documents referenced in Sections 3 and 4 herein, except for this Agreement,
shall be provided to Lessor and Lender prior to Delivery. The translation of
this Agreement and of the Assignment Consent and Agreement shall be provided on
or before July 8, 2002. The provisions of this Section 8.4 shall survive and
shall remain in full force after the Expiry Date.
8.5 Sub-Leasing
Lessee will not, without the prior written consent of Lessor or Lender,
sub-lease or part with possession of the Aircraft, the Engines or any Part
except that Lessee may part with possession (i) with respect to the Aircraft,
the Engines or any Part to the relevant manufacturers for testing or similar
purposes or to an Agreed Maintenance Performer for service, repair, maintenance
or overhaul work, or alterations, modifications or additions to the extent
required or permitted by this Agreement, and (ii) with respect to an Engine or
Part, as expressly permitted by this Agreement. For the avoidance of doubt,
Lessee shall be entitled to operate the Aircraft on a "wet lease" basis for a
third party so long as (1) possession and operational control of the Aircraft
remains with the Lessee at all times, and (2) Lessee is otherwise in compliance
with the terms and conditions of this Agreement.
8.6 Inspection
8.6.1 The Lessor and any Person designated by the Lessor may, at any
reasonable time and upon prior reasonable notice (except if there exists a
Default or Event of Default wherein no notice shall be required), visit, inspect
and survey the Aircraft, Aircraft Documents, Aircraft records, any Engine or any
Part for the purpose of verifying compliance by the Lessee with its obligations
under this Agreement as to the maintenance, use or operation of the Aircraft;
provided, that such inspection shall not unreasonably interfere with the
operation of the Aircraft or the conduct of the Lessee's commercial business.
8.6.2 The Lessor shall bear its own costs and expenses in connection with
any such visit(s), inspection(s) or survey(s) unless a Default or Event of
Default has occurred or unless the visit(s), inspection(s) or survey(s)
discloses that a Default or Event of Default has occurred, in which case such
costs and expenses of such inspection(s), visit(s) or survey(s) shall be paid by
the Lessee immediately on demand. This Section 8.6 shall in no way limit the
Lessor's rights and the Lessee's obligations pursuant to Section 12.2.2 herein.
8.6.3 The Lessor shall have no duty to make, or liability arising out of,
any such visit, inspection or survey.
8.7 Protection of Title
The Lessee shall, at Lessee's sole expense:
8.7.1 Not do or knowingly permit to be done or omit or knowingly permit to
be omitted to be done any act or thing which might reasonably be expected to
jeopardize the respective rights, title and interest of the Lessor as owner of
the Aircraft and Lessor under this Agreement, the right, title and interest of
any Lender of the Aircraft or assignee of this Agreement or the validity,
enforceability or priority of any Mortgage.
8.7.2 Make clear to third parties, on all occasions when the ownership of
the Aircraft, any Engine or any Part is relevant, that title is held by the
Lessor and is subject to any Mortgage.
8.7.3 Not at any time represent or hold out the Lessor as carrying goods or
passengers on the Aircraft or as being in any way connected or associated with
any operation or carriage (whether for hire or reward or gratuitously) which may
be undertaken by the Lessee, or pledge the credit of the Lessor.
8.7.4 Ensure that there is always affixed, and not removed or in any way
obscured, a fireproof (having dimensions of not less than 6 in. x 4 in.) in
a location reasonably adjacent to, and not less prominent than, the
airworthiness certificate for the Aircraft and in a reasonably prominent
position on each Engine stating:
"This Aircraft/Engine is leased to Cygnus Air, S.A.
U.S. BANK NATIONAL ASSOCIATION,
AS TRUSTEE AND OWNER
THE UNITED BANK OF KUWAIT PLC,
AS AGENT AND LENDER
Airframe: DC8-73F, Manufacturer's Serial Number 46133, Spanish Registration
Number_____"
and Lessee agrees to make such changes to such lease identification plates as
Lessor may reasonably request from time to time.
8.7.5 Not create or permit to exist any Security Interest other than those
of Lessor or authorized by Lessor upon the Aircraft, any Engine or any Part.
8.7.6 Not do or permit to be done anything which may reasonably be expected
to expose the Aircraft, any Engine or any Part to penalty, forfeiture,
impounding, detention, appropriation, damage or destruction and, without
prejudice to the foregoing, if any such penalty, forfeiture, impounding,
detention, appropriation, damage or destruction occurs, give the Lessor notice
and use its best efforts to procure the immediate release of the Aircraft, such
Engine or such Part, as the case may be.
8.7.7 Not abandon the Aircraft, the Engine or any Part.
8.7.8 Pay and discharge or cause to be paid and discharged when due and
payable or make adequate provision by way of security or otherwise for all
debts, damages, claims and liabilities which have given or might reasonably be
expected to give rise to a Security Interest over or affecting the Aircraft, any
Engine or any Part.
8.7.9 Not attempt, or hold itself out as having any power, to sell, lease or
otherwise dispose of the Aircraft, any Engine or any Part other than as
expressly permitted by this Agreement.
8.7.10 Do or cause to be done, at its sole cost and expense, any and all
acts and things which may be required under the terms of any Applicable Law
(other than Federal Aviation Law) involving any jurisdiction in which Lessee may
operate, or any and all acts and things which the Lessor or any Lender may
reasonably request, to perfect and preserve, to the extent legally possible,
Lessor's ownership rights and any Lender's Security Interest in and to the
Aircraft within any such jurisdiction.
8.8 General
The Lessee will:
8.8.1 Not make any substantial change in the nature of the business in which
it is engaged if such change, in the reasonable opinion of the Lessor, might
reasonably be expected to have a material adverse effect on the Lessee's
performance of its obligations under this Agreement.
8.8.2 Preserve its corporate existence, and will not merge or consolidate
with any Person without Lessor's prior written approval and unless the successor
Person resulting from such merger or consolidation (the "Successor"):
a. is the Lessee or an Affiliate incorporated in the State of Incorporation
or the State of Registration;
b. shall have a net worth immediately after such merger or consolidation of
not less than the Lessee's net worth immediately prior thereto;
c. shall be authorized under Applicable Law to perform the Lessee's
obligations under this Agreement and any assignment or assumption relating
thereto to the same extent as the Lessee;
d. shall deliver to the Lessor an agreement, in form and substance
reasonably satisfactory to the Lessor, containing an assumption by the Successor
of the Lessee's representations and warranties under this Agreement (with such
changes and qualifications as are appropriate), together with the due and
punctual performance of all the Lessee's obligations under this Agreement; and
e. shall deliver to the Lessor an opinion of counsel reasonably satisfactory
in form and substance to the Lessor to the effect that the Successor complies
with sub-sections (a) and (b), above, and that the agreements referred to in
sub-section (d) above constitutes the Successor's legal, valid and binding
obligations and evidence reasonably satisfactory to Lessor that the Successor
complies with sub-section (b), above.
8.8.3 Ensure that no change will occur in the Habitual Base of the Aircraft
without the prior written consent of the Lessor.
8.8.4 Notify Lessor prior to any single Person or group of Persons acquiring
Control of Lessee either directly or indirectly, whether in one transaction or a
series of transactions, and will not allow a change in Control without Lessor's
prior written consent, such consent not to be unreasonably withheld. "Control"
for purposes of this Agreement, shall mean 25% or more ownership in Lessee or
any other transaction that vests actual control of Lessee in any Person or
entity.
8.9 Records
The Lessee shall procure that accurate, complete and current records of all
flights made by, and all maintenance carried out on, the Aircraft (including, in
relation to each Engine and Part subsequently installed, before the
installation) are kept in English (to the extent required by Applicable Law),
and shall keep the records in such manner as the Aviation Authorities and JAA
may from time to time require and ensure that they comply with the requirements
of the manufacturers of the Aircraft, any Engine or any Part. The records will
form part of the Aircraft Documents. Lessee shall ensure that all life-limited
Parts installed on the Aircraft during the Term are traceable "back to birth."
Maintenance records shall include, but not be limited to, an overhaul record
including usage since the last overhaul. Notwithstanding the foregoing in this
Section 8.9, the Aircraft log book entries and daily reports may be kept in
Spanish. However, Lessee shall ensure that Aircraft log book entries and daily
reports for at least the last 60 days prior to the end of the Term are kept in
English. At the end of the Term, Lessee shall, on Lessor's reasonable request,
at Lessee's expense, translate any non-English records entries into English.
8.10 Registration and Filings
The Lessee shall:
8.10.1 Maintain the registrations, notations and recordings with the
Aviation Authorities of the Aircraft and this Agreement with such registration
reflecting interests of Lessor and the Security Interest of any Lender in the
Aircraft and this Agreement, and not do or suffer to be done anything that might
adversely affect such registration, notation, recording or interest.
8.10.2 Do all acts and things (including making any filing, notation or
registration with the Aviation Authorities, or any other Government Entity or
non-governmental authority) and executing and delivering all documents
(including any amendment of this Agreement) as may be reasonably required by the
Lessor or Lender:
a. following any change or proposed change in the ownership or financing of
the Aircraft (but, in each such case, at the Lessor's cost); or
b. following any modification of the Aircraft, any Engine or any Part or the
permanent replacement of any Engine or Part in accordance with this Agreement,
so as to ensure that the rights of the Lessor under this Agreement apply with
the same effect as before; or
c. following enforcement by Lender of the Assignment, Consent and Agreement,
so as to fully ensure the effective recognition of Lender as Lessor hereunder as
provided for in the Assignment, Consent and Agreement, if so requested by Lender
only; or
d. to establish, maintain, preserve, perfect and protect the rights of the
Lessor under this Agreement to the full extent legally possible
8.10.3 Maintain the filings with the Aviation Authorities of the Certificate
of Acceptance and the Xxxx of Sale (if Xxxx of Sale is requested by the Aviation
Authorities) with such filing reflecting interests of Lessor and the Security
Interest of any Lender in the Aircraft and this Agreement, and not do or suffer
to be done anything that might adversely affect such registration, notation,
recording or interest.
8.10.4 On Lessor or Lender's request, provide additional
irrevocable powers of attorney in a form substantially similar to Schedule 9
hereto.
8.11 Maintenance and Repair
The Lessee shall at Lessee's sole cost, as if Lessee were the legal owner of the
Aircraft, subject to Sections 5.11 herein and Schedule 7:
8.11.1 Keep the Aircraft airworthy in all respects and in good repair and
condition, normal wear and tear excepted.
8.11.2 Not make any material change to the Agreed Maintenance Program,
including but not limited to changes in intervals between checks or
replacements, without the approval of the Lessor, and the Aviation Authority,
and not change the intervals between Major Checks of the Airframe without the
consent of Lessor, not to be unreasonably withheld.
8.11.3 Maintain the Aircraft and perform all Major Checks in accordance with
the Agreed Maintenance Program through JAA or FAA maintenance facilities
reasonably acceptable to Lessor, provided that all heavy airframe checks (C- and
higher), Engine overhauls, landing gear overhauls, and time or life limited
component overhauls for components with a value exceeding $30,000 shall be
performed through Agreed Maintenance Performers.
8.11.4 Maintain the Aircraft in accordance with rules and regulations of the
Aviation Authorities and JAA JAR 145 and/or OPS 1, as applicable to cargo
category aircraft operating under JAA rules and regulations.
8.11.5 With respect to the Aircraft, any Engine or Part, comply with all
applicable mandatory inspection and modification requirements, mandatory
regulations, airworthiness directives and similar requirements that are required
by the JAA and the Aviation Authorities and that have a compliance or
termination date during the Term or are required by Schedule 4 hereto.
8.11.6 Comply with all mandatory service bulletins issued by any
manufacturer of the Aircraft, Engines or Parts and, to the extent Lessee
complies with them for aircraft of similar make and model as the Aircraft in its
fleet, comply with all other service bulletins issued by any such manufacturer.
8.11.7 Comply with all Applicable Laws and the regulations of the Aviation
Authorities and any other aviation authorities with jurisdiction over the Lessee
or the Aircraft, any Engine or Part, and comply with all requirements of the
Manufacturer, the Engine Manufacturer and the manufacturers of Parts, that
relate to the maintenance, condition, use or operation of the Aircraft or
require any modification or alteration to the Aircraft, any Engine or Part.
8.11.8 Maintain in good standing a current Certificate of Airworthiness for
the Aircraft issued by the Aviation Authorities except when the Aircraft is
undergoing maintenance, modification or repair required or permitted by this
Agreement, and from time to time provide to the Lessor a copy on request.
8.11.9 Maintain the Engines with respect to overhaul build standards and
disc replacements at a level that is not materially inferior to the level
applied by the Lessee in relation to other engines of the same type as the
Engines in its fleet or other engines in its fleet.
8.11.10 Maintain the Engine in an "on condition" program in accordance with
the Approved Maintenance Program.
8.11.11 Subject to Section 11.1.3, procure promptly the replacement of any
Engine or Part which has become time, cycle or calendar expired, lost,
stolen, seized, confiscated, destroyed, damaged beyond repair, unserviceable
or permanently rendered unfit for use, with an engine or part complying with
the conditions set out in Section 8.13.1.
8.11.12 Maintain, protect and preserve the Aircraft in a manner consistent
with Lessee's practices applied to similar equipment owned by Lessee or
leased from other Lessors, without in any way materially favoring
or disfavoring the Aircraft relative to such other equipment.
8.11.13 Ensure that all modifications and/or repairs are performed in
accordance with manufacturer data and shall be FAA or JAA approved.
8.12 Removal of Engines and Parts
The Lessee will ensure that no Engine or Part installed on the Aircraft is at
any time removed from the Aircraft other than:
8.12.1 if replaced as expressly permitted by this Agreement; or
8.12.2 if the removal is of an obsolete item and is in accordance with the
Agreed Maintenance Program; or
8.12.3 pursuant to, and in accordance with, Section 8.15; or
8.12.4 a. during the course of maintaining, servicing, repairing,
overhauling or testing that Engine or the Aircraft, as the case may be; or
b. as part of a normal engine or part rotation program; or
c. for the purpose of making such modifications to the Engine or the
Aircraft, as the case may be, as are permitted under this Agreement,
and then in each case only if it is reinstalled or replaced by an engine or part
complying with Section 8.13.1 as soon as practicable and in any event no later
than the Expiry Date.
8.13 Installation of Engines and Parts
The Lessee will ensure that, except as permitted by this Agreement, no engine or
part is installed on the Aircraft unless Lessee complies with each of the
following:
8.13.1 In the case of an engine, it is an engine of the same model and
similar or higher modification level as, or an improved or advanced version of,
the Engine it replaces (provided, in the case of an improved or advanced
version, it can be installed and operated on the Airframe without modification
of the Airframe or the engine, whether or not the other installed Engine is also
such an improved or advanced version) and it has attached to it a current
"serviceable tag" issued by the manufacturer or supplier indicating that the
engine is new, serviceable or overhauled, and the Lessee shall retain all such
tags to the extent required under Applicable Law.
8.13.2 In the case of a part, it is in as good operating condition, is of
the same or a more advanced make and model and is of the same interchangeable
modification status as the replaced Part and has attached to it a current
"serviceable tag" issued by the manufacturer or supplier indicating that the
part is new, serviceable or overhauled, and the Lessee shall retain all such
tags to the extent required under Applicable Law and JAA or FAA (and shall
retain all corresponding FAA form 8130-3's (if applicable) and JAA Form One's);
provided, that the replacement of parts will not, in the aggregate, result in
the material diminution in the value or utility of the Aircraft.
8.13.3 In the case of a part, it has become and remains the property of the
Lessor free from Security Interests and on installation on the Aircraft will,
without further act, be subject to this Agreement.
8.13.4 In each case, the Lessee has full details as to its source and
maintenance records as required by the Aviation Authorities and JAA.
8.14 Non-Installed Engines and Parts
The Lessee shall ensure that any Engine or Part which is not installed on the
Airframe (or any other airframe as permitted by this Agreement) is, except as
expressly permitted by this Agreement, insured pursuant to Section 9 herein and
properly and safely stored and kept free from Security Interests.
Notwithstanding the foregoing sentence, the Lessee shall be permitted, if no
Event of Default has occurred, to install any Engine on an airframe and any Part
on an airframe or engine:
8.14.1 owned and operated by the Lessee and free from Security Interests; or
8.14.2 operated by the Lessee and either (1) leased or hired to the Lessee
pursuant to a lease or conditional sale agreement on terms whereby the Lessee
has full operational control of that aircraft or engine, or (2) owned by the
Lessee and subject to a mortgage, a lease, conditional sale agreement or other
agreement that constitutes a Security Interest vested in or held by any other
Person, provided that:
a. the terms of any such lease, conditional sale agreement or Security
Interest will not have the effect of prejudicing the title and interest of the
Lessor or any Lender in and to that Engine or Part; and
b. the lessor under such lease, the seller under such conditional sale
agreement or the secured party of any Security Interest, as the case may be, has
confirmed and acknowledged in writing (which confirmation and acknowledgment may
be contained in the lease, conditional sale agreement or document creating the
Security Interest) to the Lessor, in form and substance reasonably satisfactory
to the Lessor, that it will recognize the rights, title and interest of the
Lessor and any Lender to and in that Engine or Part and that it will not acquire
any rights of ownership whatever in relation thereto.
8.15 Pooling of Engines and Parts
Lessee will not enter into nor permit any pooling agreement or arrangement in
respect of an Engine or Part without the prior written consent of the Lessor.
Such consent shall not be unreasonably withheld in any case where an Engine or
Part is leased, let on hire, or otherwise made available by the Lessee (on terms
conferring no more than a contractual right in personam against the Lessee and
not a right in rem against such Engine or Part) pursuant to a pooling agreement
to which the Lessee is a party and:
8.15.1 the other parties to which are reputable, solvent commercial air
carriers or the manufacturers or suppliers of the Engine or Part (or other
reputable, solvent organizations whose business includes the administration of
and participation in such pooling agreements or arrangements); and
8.15.2 which does not contemplate the transfer of title to the pooled Engine
or Part;
8.15.3 either provides that the Lessor (or any Lender designated by Lessor)
will be sole loss payee in respect of any loss or damage to the Engine or Part,
or provides for Lessor to acquire title to a substitute engine or part
satisfying the conditions set out in Section 11.1.3 if the Engine or Part is
destroyed; and
8.15.4 any Engine obtained from the pool and remaining upon the Aircraft at
Redelivery complies with the Redelivery conditions in Schedule 4.
8.16 Equipment Changes
The Lessee will not make any modification or addition to the Aircraft without
the prior written consent of Lessor.
8.17 Title to Parts
8.17.1 Subject to Section 8.13.3, title to all parts installed on the
Aircraft (except those installed pursuant to Section 8.13.2 or Section 8.15)
will on installation, without further act, vest in the Lessor subject to this
Agreement free and clear of all Security Interests. The Lessee will, at its own
expense, take all such steps and execute, and procure the execution of, all such
instruments that are necessary to ensure that title so passes to the Lessor
according to all Applicable Laws. At any time when requested by the Lessor, the
Lessee will provide evidence to the Lessor's reasonable satisfaction (including
the provision, if required, to the Lessor of a legal opinion of Lessee's chief
internal counsel) that title has so passed to the Lessor.
8.17.2 Any Engine or Part at any time removed from the Aircraft will remain
the property of the Lessor until a replacement has been made in accordance with
this Agreement and until title to that replacement has passed, according to
Applicable Laws, to the Lessor subject to this Agreement free of all Security
Interests, whereupon title to the Engine or Part will, provided no Event of
Default has occurred, pass to the Lessee.
8.18 Third Parties
The Lessee shall ensure that no Person having possession of the Aircraft during
the Term (other than the Lessor) will act in any manner inconsistent with the
Lessee's obligations under this Agreement and that all such Persons shall comply
with those obligations as if references to "Lessee" included a separate
reference to those Persons.
8.19 Redelivery Preparation
Lessee shall take all actions reasonably necessary to ensure that Lessee will
meet all redelivery conditions in this Agreement prior to the Expiry Date in
order to avoid expiration of the DGAC registration of the Aircraft prior to
completion of such redelivery conditions by Lessee.
9. INSURANCE
9.1 Public Liability and Property Damage Insurance
Lessee will carry and maintain in effect, at its own cost and expense, with
Approved Insurers, comprehensive public liability insurance (including, without
limitation, contractual liability to cover Lessee's obligations under Section 10
of this Lease, and passenger legal liability), and property damage insurance
with respect to the Aircraft. Such insurance shall be in an amount not less
than the amount applicable to similar cargo aircraft and engines which comprise
Lessee's fleet, and which shall at all times be in amounts not less than the
higher of (i) the amount carried by Lessee on other similar aircraft in its
fleet, and (ii) $500,000,000 per occurrence. Lessee shall not discriminate
against the Aircraft in providing such insurance. Notwithstanding the foregoing
in this Section 9.1, pursuant to AVN52D, third party war liability and property
damage coverage shall be in the amount not less than the higher of (a) the
amount of such insurance made available by the Spanish government, and (b)
$50,000,000 for any one occurrence. However, Lessor and Lessee agree to
increase the required coverage amount for third party war liability and property
damage from time to time, subject to reasonable cost and availability of such
coverage.
9.2 Insurance Against Loss or Damage
Lessee, at its own cost and expense, will maintain in effect with Approved
Insurers "all-risk" ground and flight aircraft hull insurance (which shall
include, but not be limited to, full war risk and allied perils, hijacking, a
disappearance clause and coverage against strikes, riots, commotions or labor
disturbances, malicious acts or acts of sabotage and unlawful seizure or
wrongful exercise of control of the Aircraft in flight by a person on board such
Aircraft acting without the consent of Lessee, and foreign object damage to
Engines) covering such Aircraft, and fire, transit and extended and "all-risk"
coverage insurance with respect to Engines and Parts while not installed on such
Aircraft or an aircraft, which in each case is at least as broad as coverage of
the type carried by Lessee on the other aircraft in Lessee's fleet. Such
insurance shall be for an amount not less than the Agreed Value.
Such insurance shall include provisions for deductibles in an amount of not more
than Five Hundred Thousand Dollars ($500,000.00) or such lesser amount as is
provided for any other aircraft in Lessee's fleet.
9.3 Required Policy Designations and Provisions
Each policy of insurance obtained and maintained pursuant to this Section, and
each policy obtained in substitution or replacement for any such policies,
shall: (i) designate Lessor as owner of the Aircraft covered thereby, (ii)
designate the Indemnitees as additional named insureds, (iii) with respect to
all hull insurance policies, designate the Lessor, or the Lender (at Lessor's
election) as sole loss payee for the account of all interests in the event of a
Total Loss or Engine Loss or in the event of loss or damage not constituting a
Total Loss or Engine Loss but where such loss or damage equals or exceeds
$150,000.00; (iv) with respect to hull insurance policies, designate an Agreed
Maintenance Performer as payee in the event of repairable damage in an amount
less than $150,000.00 unless the insurance broker has received notice of a
Default or Event of Default wherein such proceeds shall be payable to Lessor or
Lender (at Lender's election); (v) expressly provide that, in respect of the
interests of the Indemnitees in such policies, the insurance shall not be
invalidated by any action or inaction of Lessee, and shall insure the
Indemnitees regardless of any breach or violation of any warranty, declaration
or condition contained in such policies by Lessee, (vi) provide that if such
insurance is canceled by the Approved Insurers for any reason whatsoever, or is
adversely changed in any way with respect to the interests of the Indemnitees or
if such insurance is allowed to lapse for nonpayment of premium, such
cancellation, adverse change or lapse shall not be effective as to the
Indemnitees for thirty (30) days (seven (7) days in the case of any war risks or
allied perils coverage or such lesser period of time as may be customarily
applicable, and ten (10) days for non-payment of premium after receipt by Lessor
and any Lender of written notice of such prospective cancellation, change or
lapse) after issuance to the Indemnitees of written notice by such insurer or
insurers to Lessor and Lessor's Lender of such prospective cancellation, change
or lapse; (vii) include coverage for the territorial limits of any country in
which the Aircraft may at any time be located; (viii) provide that, as against
the Indemnitees, the insurer waives any rights of set-off, counterclaim or any
other deduction, whether by attachment or otherwise, and waives the rights it
may have to be subrogated to any right of any insured against the Indemnitees
with respect to the Aircraft. Each such policy shall be primary without right of
contribution from any other insurance that may be carried by the Indemnitees and
shall be in accordance with AVN67B; (ix) if a "Total Loss Only" ("TLO") or like
provision is utilized, provide that a total loss and constructive loss will have
occurred with respect to the Airframe or any Engine if the Airframe or any such
Engine is damaged, at maximum, in an amount equal or greater than 75% of the
value for which the Airframe or any such Engine, as the case may be, is insured
pursuant to such TLO provision; and, (x) if a TLO or like provision is utilized,
provide that the terms of the TLO policy reflect the same terms as the other
policies utilized by Lessor to comply with Section 9 herein.
9.4 Excess Insurance
Lessee shall have the right to carry insurance in excess of the amounts required
hereunder and the proceeds of such excess insurance shall be payable to Lessee.
Similarly, the Indemnitees shall have the right to carry additional and separate
insurance for their own benefit at their own expense, without, however, thereby
limiting Lessee's obligations under this Section 9.
9.5 Application of Insurance Proceeds for an Event of Loss
It is agreed that insurance payments which arise from insurance obtained
hereunder and received as the result of the occurrence of an Event of Loss shall
be applied in accordance with Section 11 hereof.
9.6 Application of Insurance Proceeds for Other than an Event of Loss
The insurance payments for any property damage loss to the Airframe or any
Engine not constituting an Event of Loss, or to any Part, shall be paid to
Lessor, and thereafter be applied by Lessor in payment for repairs Lessee is
required to perform or for replacement property Lessee is required to obtain in
accordance with the terms of Section 8 of this Agreement, or, if such repair or
replacement has already been paid for by the Lessee, to reimburse Lessee for
such repairs or replacements, and any balance remaining after compliance with
such sections with respect to such loss shall be applied, in the sole discretion
of Lessor, towards any amounts due and owing to Lessor hereunder by Lessee.
9.7 Application in Default
Any amount referred to in Section 11 or Section 9.5 hereof which is otherwise
payable to Lessee shall not be paid to Lessee, or, if it has been previously
paid to Lessee, and not yet applied by Lessee as permitted or required
hereunder, shall be immediately delivered by Lessee to Lessor, if at the time of
such payment, a Default or an Event of Default shall have occurred. In either
case, all such amounts shall be held by Lessor as security for the obligations
of Lessee, or, at the option of Lessor, applied by Lessor toward payment of any
of Lessee's obligations at the time due hereunder. At such time as there shall
not be any such Default or Event of Default, all such amounts at the time held
by Lessor in excess of the amount, if any, which Lessor has elected for
application as provided above, shall be paid to Lessee.
9.8 Certificates of Insurance
On or before the Delivery Date, and thereafter on each renewal by the Lessee of
the insurance required hereby, Lessee will furnish to Lessor a certificate and a
letter of undertaking executed and delivered by an Approved Insurance Broker who
is authorized by an Approved Insurer, appointed by Lessee, describing in
reasonable detail insurance carried on the Aircraft and certifying that the
insurance then maintained on the Aircraft complies with the terms of this
Agreement. Lessee will cause such Approved Insurance Broker who is authorized by
an Approved Insurer to agree to advise Lessor in writing or by telex: (i) at
least thirty (30) days (seven (7) days in the case of any war risk and allied
perils coverage or such lesser period of time as may be customarily applicable)
prior to the termination or cancellation by the underwriters for any reason
(including, without limitation, failure to pay the premium therefore) or
expiration of any such insurance; and (ii) at least three (3) Business Days or,
in the case of any war risk and allied perils coverage, such lesser period of
time as may be customarily applicable, prior to any non-renewal by the
underwriters for any reason (including, without limitation, failure to pay the
premium therefore) or expiration of any such insurance.
9.9 Reinsurance
In the event that the insurances required hereunder are reinsured, as a result
of a sublease to a foreign air carrier or otherwise, such reinsurance shall
contain a "cut-through" clause reasonably satisfactory to Lessor, and Lessee
will furnish to Lessor a certificate and a letter of undertaking executed and
delivered by an Approved Insurance Broker who is authorized by an Approved
Insurer appointed by Lessee, describing in reasonable detail the reinsurance
carried on the Aircraft and certifying that the reinsurance then maintained on
the Aircraft complies with the terms of this Agreement.
10. INDEMNITY
The Lessee shall defend, indemnify and hold harmless the Indemnitees from and
against any and all claims, proceedings, losses, liabilities, suits, judgments,
costs, expenses, penalties or fines (each a "Claim") regardless of when the same
is made or incurred, whether during or after the Term (but not before):
10.1 that may at any time be suffered or incurred directly or indirectly as
a result of or connected with possession, delivery, performance, management,
registration, control, maintenance, condition, service, repair, overhaul,
leasing, sub-leasing, use, operation or return of the Aircraft, any Engine or
Part (either in the air or on the ground) whether or not the Claim may be
attributable to any defect in the Aircraft, any Engine or any Part or to its
design, testing, use or otherwise, and regardless of when the same arises or
whether it arises out of or is attributable to any act or omission, negligent or
otherwise, of any Indemnitee;
10.2 that arise out of any act or omission that invalidates or that renders
voidable any of the Insurances;
10.3 that may at any time be suffered or incurred as a consequence of any
design, article or material in the Aircraft, any Engine or any Part or its
operation or use constituting an infringement of patent, copyright, trademark,
design or other proprietary right or a breach of any obligation of
confidentiality owed to any Person,
Such indemnification shall exclude any Claim to the extent that:
a. it arises as a result of the willful misconduct or gross negligence of
such Indemnitee;
b. it arises as a result of a breach by the Lessor of its express
obligations under this Agreement or as a result of a representation or warranty
given by the Lessor in this Agreement not being true and correct at the date
when, or when deemed to have been, given or made;
c. it constitutes a Lessor Tax or Lessor Lien;
d. it represents a Tax or loss of tax benefits (the Lessee's liabilities for
which, to the extent thereof, are set out in Sections 5.5, 5.6 and 5.8);
e. it constitutes a cost or expense that is required to be borne by the
Lessor in accordance with any other provision of this Agreement;
f. it results from any voluntary disposition by the Lessor of all or any
part of its rights, title or interest in or to the Aircraft or under this
Agreement, unless such disposition occurs as a consequence of a Default or an
Event of Default; or
g. it is attributable to an event occurring after the Term unless the Claim
results from or arises out of an act or omission by the Lessee, or any
circumstance existing, during the Term.
The indemnities contained in this Agreement will survive and continue in full
force after the Expiry Date.
11. EVENTS OF LOSS
11.1 Total Loss
11.1.1 Pre-delivery: If a Total Loss occurs prior to Delivery, this
Agreement will immediately terminate and, except as expressly stated in this
Agreement, neither party will have any further obligation or liability under
this Agreement except that the Lessor will return to the Lessee the Deposit.
11.1.2 Post-delivery: Notwithstanding Section 5.2.2 herein, if a Total Loss
occurs after Delivery, the Lessee will pay to the Lessor, no later than 90 days
after the Total Loss Date (the "Settlement Date"), the Agreed Value on the
Settlement Date less the remaining amount of Maintenance Reserves on the Total
Loss Date, if any, paid by Lessee during the Term. The receipt by the Lessor (or
any Lender designated by Lessor) of the insurance proceeds in respect of the
Total Loss on or prior to the Settlement Date shall discharge the Lessee from
its obligation to pay the Agreed Value to the Lessor pursuant to this Section
11.1.2, provided such proceeds are not less than an amount equal to the Agreed
Value. In the event that the insurance proceeds are paid initially to the
Lessee and not to the Lessor, they may be retained by the Lessee if the Lessee
shall have paid the Agreed Value to the Lessor; otherwise, the Lessee shall pay
the Agreed Value, to the Lessor within two (2) Business Days following receipt
by the Lessee of such proceeds. In the event that the Lessee pays the Agreed
Value to the Lessor in accordance with this Section 11.1.2, the Lessor shall
promptly assign to the Lessee its rights under the Insurances to receive the
insurance proceeds in respect of the Total Loss to the extent that such proceeds
shall not have been paid to the Lessee. Subject to the rights of any insurers
and reinsurers or other third parties, upon irrevocable payment in full to the
Lessor of that amount and all other amounts then due and payable to the Lessor
under this Agreement, the Lessor shall, without recourse or warranty (except as
to the absence of Lessor Liens and as to good and marketable title), and without
further act, be deemed to have transferred to the Lessee all of the Lessor's
rights to any Engines or Parts not installed when the Total Loss occurred, all
on an "as-is, where is" basis, and shall, at the Lessee's expense, execute and
deliver such bills of sale and other documents and instruments as the Lessee may
reasonably request to evidence (on the public record or otherwise) the transfer
and the vesting of the Lessor's rights in such Engines and Parts in the Lessee,
free and clear of all rights of the Lessor and any Lessor Liens.
11.1.3 Engine Loss: Upon the occurrence of an Engine Loss (including, for
the avoidance of doubt, at a time when the Engine is not installed on the
Airframe) in circumstances in which there has not also occurred a Total Loss,
the Lessee shall give the Lessor written notice promptly upon becoming aware of
the same and shall (unless the Lessor has received the insurance proceeds
relating to such Engine Loss), within 90 days after the Engine Loss Date, convey
or cause to be conveyed to the Lessor, as replacement for such Engine, title to
a replacement engine that is in the same or better operating condition, is the
same make and model or an improved or advanced version of, has as many or more
Flight Hours and Cycles available until the next scheduled checks, inspections,
overhauls and shop visits, has the same or greater remaining life on life
limited parts, and has the same or greater value and utility as the lost Engine
and that complies with the conditions set out in Section 8.13.1. The Lessee
will at its own expense take all such steps and execute, and procure the
execution of, all such instruments that are necessary to ensure that title to
the replacement engine passes to the Lessor according to all Applicable Laws,
and if requested by the Lessor, will provide evidence to the Lessor's reasonable
satisfaction (including the provision, if required, to the Lessor of a legal
opinion of counsel to Lessee reasonably satisfactory to Lessor) that title has
so passed to the Lessor, whereupon the leasing of the replaced Engine the
subject of the Engine Loss shall cease and title to such replaced Engine shall
(subject to any salvage rights of insurers) vest in the Lessee pursuant to
Section 8.17.2. If the Lessor subsequently receives any insurance proceeds
relating to such Engine Loss, the Lessor shall promptly remit such proceeds to
the Lessee. No Engine Loss with respect to any Engine that is replaced in
accordance with the provisions of this Section 11.1.3 shall result in any
increase or decrease in Basic Rent, or the Agreed Value.
11.2 Requisition
During any requisition for use or hire of the Aircraft, any Engine or Part that
does not constitute a Total Loss:
11.2.1 the Basic Rent and Supplemental Rent payable under this Agreement
will not be suspended or abated either in whole or in part, and the Lessee will
not be released from any of its other obligations under this Agreement (other
than operational obligations with which the Lessee is unable to comply solely by
virtue of the requisition); and
11.2.2 so long as no Event of Default has occurred, the Lessee will be
entitled to any compensation payable by the requisitioning authority in respect
of the Term. The Lessee will, as soon as practicable after the end of any such
requisition, cause the Aircraft to be put into the condition required by this
Agreement. The Lessor will be entitled to all compensation payable by the
requisitioning authority in respect of any change in the structure, state or
condition of the Aircraft arising during the period of requisition, and the
Lessor will apply such compensation in reimbursing the Lessee for the cost of
complying with its obligations under this Agreement in respect of any such
change, but so that, if any Event of Default has occurred, the Lessor may apply
the compensation in or towards settlement of any amounts owing by the Lessee
under this Agreement. All such sums shall be held by the Lessor.
12. RETURN OF AIRCRAFT
12.1 Redelivery
On the Expiry Date or termination of the leasing of the Aircraft under this
Agreement, the Lessee shall, unless a Total Loss has occurred, at its expense,
redeliver the Aircraft and Aircraft Documents to the Lessor at the Redelivery
Location. If requested by Lessor, Lessee shall ferry the Aircraft to another
location designated by Lessor at Lessor's expense (except for crew and
insurance, which shall be provided by Lessee free of charge) at the end of the
Term. The Aircraft shall be redelivered by Lessee to Lessor in a condition
complying with this Section 12 and Schedule 4, free and clear of all Security
Interests (other than Lessor Liens).
12.2 Final Inspection
12.2.1 Documents: At least 45 days prior to the Airframe "C" Check required
pursuant to Schedule 4 herein, or, if Lessee properly exercises the Airframe "C"
Check buyout provision in Schedule 4, Section 2(a), at least 45 days prior to
the redelivery of the Aircraft, the Lessee will make available to the Lessor at
its maintenance base (i) the Aircraft Documents, (ii) a current and complete
copy of the Agreed Maintenance Program, (iii) a copy of all Engine trend
monitoring data, (iv) a written summary of all structure sampling programs
(SSIDs or the equivalent) involving or affecting the Aircraft, and (v) a copy of
all other documentation and data reasonably requested by Lessor and required to
be maintained by the Aviation Authorities and the JAA for review and inspection
in order to prepare for the Final Inspection of the Aircraft and in order to
facilitate the Aircraft's integration into any subsequent operator's fleet. The
Lessor agrees that it will not disclose the contents of the Agreed Maintenance
Program to any Person except to the extent necessary to monitor the Lessee's
compliance with this Agreement and/or to bridge the maintenance program for the
Aircraft from the Agreed Maintenance Program to another program after the Expiry
Date.
12.2.2 Inspection: During the Airframe "C" Check required pursuant to
Schedule 4, herein, or, if the Airframe "C" Check buyout provision in Schedule
4, Section 2(a) is properly exercised by Lessee, immediately prior to redelivery
of the Aircraft, the Lessor shall be permitted to inspect the Aircraft. Such
inspection shall include but not be limited to physical inspection of the
Aircraft, Aircraft records, Aircraft documents and Aircraft manuals in order to
verify that the condition of the Aircraft complies with this Agreement ("Final
Inspection"). Immediately prior to the acceptance of the Aircraft, Lessee shall
also cause a demonstration flight to be performed in accordance with the
manufacturer's test flight procedures at Lessee's cost for not more than three
(3) hours in duration. Lessor shall be permitted to have up to two (2)
observers on board. Following the demonstration flight, Lessee shall provide
for a complete video borescope and power assurance run of each Engine (to be
performed by Lessee, at Lessee's cost, in accordance with the manufacturer's
maintenance manual) and Lessor shall be entitled to have a qualified independent
observer present.
12.2.3 Discrepancies. Any discrepancies from the conditions required by
Schedule 4 shall be noted on a redelivery certificate, substantially similar to
the form of Certificate of Acceptance, including, without limitation, specifics
of the discrepancies and actions necessary for the correction of each. With
respect to discrepancies that (1) will not affect the airworthiness of the
Aircraft (2) do not exceed $1,000 to correct (including parts and labor) and (3)
are not included within Sections 1 (b) through 11 (b) of Schedule 4, Lessee may
redeliver the Aircraft at the Expiry Date without remedying such discrepancies
provided that the cost and expense of correcting such discrepancies, when added
to the cost and expense of correcting delivery discrepancies allowed pursuant to
Section 4.3.3 that remain uncorrected ("Delivery Discrepancy Expense"), will not
cumulatively exceed $250,000 ("Return Discrepancy Expense Limit"), unless the
Delivery Discrepancy Expense exceeds $250,000 wherein the Return Discrepancy
Expense Limit may equal such Delivery Discrepancy Expense. Any other
discrepancies noted during the final inspection or demonstration flight shall be
corrected at the cost and expense of Lessee as further provided in Section 12.3.
12.3 Non-Compliance
To the extent that, on the Expiry Date, discrepancies remain under Section
12.2.3, to be corrected at the cost and expense of Lessee, the Lessee shall, at
the option of the Lessor (without prejudice to any of Lessor's rights under this
Agreement):
12.3.1 immediately rectify the non-compliance and, to the extent the
non-compliance extends beyond the Expiry Date due to acts or omissions of the
Lessee, the Term will be automatically extended until the non-compliance has
been rectified; or
12.3.2 redeliver the Aircraft to the Lessor and indemnify the Lessor, and
provide security reasonably acceptable to the Lessor for that indemnity, against
the cost of putting the Aircraft into the condition required by this Agreement.
During any extension of the Term pursuant to Section 12.3.1, this Agreement will
remain in full force and effect, including the obligation to pay Rent which
Lessee shall pay at the rate of $ 4,000.00 per day plus the Default Rate weekly
in arrears; provided, however, that Lessee shall not operate, or permit others
to operate the Aircraft after the Expiry Date except for acceptance flights
pursuant to Section 12.2 and a ferry flight to the Redelivery Location.
12.4 Export Documentation
Upon redelivery, the Lessee shall provide to the Lessor all documents necessary
to export the Aircraft from the State of Incorporation (including a valid and
subsisting export license for the Aircraft).
12.5 Acknowledgment
Provided the Lessee has complied with its obligations under this Agreement, upon
redelivery of the Aircraft by the Lessee to the Lessor at the Redelivery
Location, the Lessor will deliver to the Lessee a written acknowledgment
confirming that the Lessor is satisfied that the Aircraft is in the condition
required by this Agreement and has been redelivered to the Lessor in accordance
with this Agreement. Within twenty (20) Business Days of the delivery of such
acknowledgment the Lessor shall return the balance, if any, of the Deposit to
Lessee.
13. DEFAULT
13.1 Events
Each of the following events will constitute an Event of Default and a
repudiation of this Agreement by the Lessee and Lessee agrees that any such
Events of Default are severe and material with respect to this Agreement
regardless of Lessee's compliance with other provisions of this Agreement:
13.1.1 Non-payment: the Lessee fails to pay any amount of Basic Rent or
Deposit when due or Lessee fails to pay any amount of Agreed Value when due, or,
fails to make any payment of Supplemental Rent when due and in accordance with
the terms of this Agreement.
13.1.2 Insurance: the Lessee fails to comply with any provision of Section
9 or any insurance required to be maintained under this Agreement is canceled or
terminated.
13.1.3 Representation: any representation or warranty made by the Lessee in
this Agreement or in any document or certificate furnished to the Lessor
pursuant to or in connection with this Agreement is or proves to have been
incorrect in any material respect when made.
13.1.4 Cross Default:
a. any Financial Indebtedness in respect of a single event exceeding one
million dollars ($1,000,000) or in respect of more than one event, exceeding two
million dollars ($2,000,000) in the aggregate of the Lessee is not paid when due
and any applicable grace period shall have expired AND (A) such Financial
Indebtedness could result in any lien or encumbrance of any kind on the Aircraft
or detention of the Aircraft or, (B) such Financial Indebtedness is not remedied
within 30 days unless Lessee is in good faith contesting in the appropriate
court or administrative proceeding the validity of such Financial Indebtedness
and Lessee has posted a bond with such court or administrative body in an amount
equal to or exceeding the amount of such Financial Indebtedness;
b. the security for any such Financial Indebtedness is enforced; or
c. any material lease, conditional sale, installment sale or forward
purchase agreement of the Lessee in respect of an aircraft is terminated as a
consequence of an event of default or termination event (however described).
13.1.5 Approvals: any consent, authorization, license, certificate or
approval of or registration with or declaration to any Government Entity in
connection with this Agreement, including but not limited to:
a. any authorization required by the Lessee of, or in connection with, the
execution, delivery, validity, enforceability or admissibility in evidence of
this Agreement or the performance by the Lessee of its obligations under this
Agreement; or
b. any airline license, air transport license, franchise, concession,
permit, certificate, right or privilege required by the Lessee for the conduct
of its business, is modified, withheld, revoked, suspended, canceled, withdrawn,
terminated or not renewed, or otherwise ceases to be in full force.
13.1.6 Insolvency:
a. the Lessee is, or is deemed for the purposes of any relevant law to be,
unable to pay its debts as they fall due or to be insolvent, or admits in
writing its inability to pay its debts as they fall due (disregarding for that
purpose any assumed, and not actual acceleration of such debts made solely for
the purpose of complying with applicable accounting rules); or
b. the Lessee suspends making payments in full on all or any class of its
debts, including but not limited to, leases, or a moratorium is declared in
respect of any of its indebtedness or a receiver, custodian, judicial
administrator, or any other similar official is appointed to intervene in, or to
take charge of, the management of the Lessee or of a substantial part of its
property and/or business.
13.1.7 Bankruptcy and Similar Proceedings:
a. Lessee shall consent to the appointment of a receiver, trustee or
liquidator for itself or for a substantial part of its property.
b. Lessee shall file a voluntary petition in bankruptcy or composition or a
voluntary petition or answer seeking reorganization in a proceeding under any
laws dealing with bankruptcy, composition, insolvency, moratorium or creditors'
rights generally (any or all of which are hereinafter referred to as "Bankruptcy
Laws") or an answer admitting the material allegations of a petition filed
against Lessee in any such proceeding, or Lessee shall by voluntary petition
answer or consent to or seek relief under the provisions of any Bankruptcy Laws.
c. any order, judgment or decree is entered by a court of competent
jurisdiction: (1) appointing a receiver, trustee or liquidator of Lessee or a
substantial part of its property and such appointment will have a material
adverse effect on the Lessee's ability to perform its obligations under this
Agreement, or (2) ordering a substantial part of Lessee's property to be
sequestered.
d. a petition against Lessee in a proceeding under any Bankruptcy Laws shall
be filed and shall not be withdrawn or dismissed within 30 days thereafter, or
if, under the provisions of any Bankruptcy Laws that may apply to Lessee, any
court of competent jurisdiction shall assume jurisdiction, custody or control of
Lessee or of any substantial part of its property and such jurisdiction, custody
or control remains in force unrelinquished, unstayed or unterminated for a
period of 30 days.
e. the Lessee enters into a composition, assignment or arrangement with any
creditors of, or the reorganization, rehabilitation, administration,
liquidation, or dissolution of, the Lessee.
13.1.8 Unlawful: it becomes unlawful for the Lessee to perform any of its
material obligations under this Agreement or this Agreement becomes wholly or
partly invalid or unenforceable.
13.1.9 Suspension of Business: the Lessee suspends or ceases to carry on a
substantial part of its business.
13.1.10 Disposal: the Lessee disposes of a substantial part of its assets,
whether by one or a series of transactions, related or not, other than
pursuant to a merger or consolidation as referred to in, and subject to,
Section 8.8.2 or for the purpose of any other reorganization or
amalgamation the terms of which have received the previous consent in
writing of the Lessor.
13.1.11 Rights: the existence, validity, enforceability or priority of the
rights of the Lessor as owner and Lessor in respect of the Aircraft is
challenged by the Lessee or any other Person lawfully claiming by or through
the Lessee.
13.1.12 Change of Control: Lessee suffers a change of Control through one
or a series of transactions without the prior written consent of Lessor
which will not be unreasonably withheld.
13.1.13 Breach: the Lessee fails to comply with any other provision of
this Agreement and Lessee fails to cure the same within seven days after such
failure. However, such cure period will not apply to a subsequent breach of the
same provision of this Agreement and there will be no cure period for such
subsequent breach.
13.2 Rights
If an Event of Default occurs, the Lessor may at its option (and without
prejudice to any of its other rights under this Agreement) do any or all of the
following and Lessee shall fully cooperate with Lessor's actions with respect to
any or all of the following:
13.2.1 treat such event as a repudiation by the Lessee of its obligations
under this Agreement and by notice to the Lessee with immediate effect terminate
the leasing of the Aircraft (but without prejudice to the continuing obligations
of the Lessee under this Agreement), whereupon all rights of the Lessee under
this Agreement shall cease;
13.2.2 proceed by appropriate action or actions (subject to the requirements
of Section 16 herein) to enforce performance of this Agreement or to recover
damages for the breach of this Agreement;
13.2.3 take possession of the Aircraft, for which purpose the Lessor may
enter any premises belonging to, occupied by or under the control of the Lessee
(for which purpose the Lessee hereby grants to the Lessor an irrevocable license
to the extent permitted by Applicable Law) where the Aircraft may be located, or
cause the Aircraft to be redelivered to the Lessor at Lessee's expense at the
Redelivery Location or another location specified by Lessor;
13.2.4 by serving notice, require the Lessee to redeliver the Aircraft to
the Lessor at the Redelivery Location or another location specified by Lessor
and the Lessee shall in such case immediately proceeed as notified by Lessor and
to carry out any actions necessary to cause the Aircraft to be de-registered
from the DGAC and exported from Spain to the location specified by Lessor;
13.2.5 de-register the Aircraft from the Aviation Authorities or State of
Registration, in Lessee's name and in accordance with the Irrevocable Power of
Attorney and irrevocable instruction referenced in Section 3.1.15; or
13.2.6 without limiting any other rights of Lessor hereunder, retain the
Deposit.
13.3 Repossession and Removal
If an Event of Default occurs, the Lessor may sell or otherwise deal with the
Aircraft as if this Agreement had never been made and the Lessee will, at
Lessee's expense, at the request of the Lessor, take all steps necessary to
return the Aircraft to Lessor, including if requested by Lessor to export the
Aircraft from the country where the Aircraft is for the time being situated, and
any other steps necessary to enable the Aircraft to be redelivered to the Lessor
in accordance with this Agreement. If Lessee fails to take all steps necessary
to return the Aircraft to Lessor pursuant to this Section 13.3, the Basic Rent
will automatically become, and Lessee shall pay, as hold-over daily Basic Rent
to Lessor for each day of such failure, the amount of daily Basic Rent described
in Schedule 7 to this Agreement, to be received by Lessor by noon Eastern Time
in the United States of America, of each such day. The preceding sentence shall
in no way limit any of Lessor's other rights or remedies pursuant to this
Agreement.
13.4 Default Payments
If a Default or an Event of Default occurs, the Lessee will indemnify the Lessor
on demand against any loss, damage, expense, cost or liability which the Lessor
may sustain or incur directly or indirectly as a result, including without
limitation:
13.4.1 in the event that the Aircraft has not been sold, upon written notice
from Lessor to Lessee specifying a payment date not earlier than 10 days from
the date of such notice, as liquidated damages for loss of a bargain and not as
a penalty (in lieu of the Basic Rent for the Aircraft due for periods commencing
after the date specified for payment in such notice), any unpaid Basic Rent due
for periods prior to and including the period ending with the payment date
specified in such notice plus an amount (together with interest, if any, at the
Default Rate on the amount of any such unpaid Basic Rent and on such specified
amount from the respective due dates to and including the actual date of
payment) equal to the excess, if any, of (i) the Agreed Value computed as of the
Rent Date immediately preceding the date specified for payment in such notice,
over (ii) the fair market sales value of the Aircraft; for purposes hereof, the
"fair market sales value" of the Aircraft shall be as specified in an appraisal
by a recognized independent aircraft appraiser chosen by the Lessor;
13.4.2 in the event that the Aircraft is sold, the amount (if any) by which
the aggregate of (i) the net sale proceeds (calculated on an after-tax basis by
deducting the costs of sale, including the loss or recapture of the Lessor's tax
benefits, if any, together with the cost of preparing the Aircraft for sale, and
the repayment of any outstanding indebtedness in relation to the financing of
the Aircraft) plus (ii) the present value of the anticipated after-tax net
income to be derived from such net sale proceeds up to the scheduled Expiry
Date, discounted on a monthly basis using 4 % per annum as the discount rate,
are less than the Agreed Value computed as of the Rent Date immediately
preceding the date of sale;
13.4.3 any amount of principal, interest, fees or other sums whatsoever paid
or payable on account of funds borrowed in order to carry any amount unpaid by
the Lessee; and
13.4.4 any loss, premium, penalty or expense that may be incurred in
repaying funds raised to finance the Aircraft or in unwinding any swap, forward
interest rate agreement or other financial instrument relating in whole or in
part to the Lessor's financing of the Aircraft.
For the avoidance of doubt, the provisions of Section 5.9 will apply to any sums
payable by the Lessee pursuant to this Section 13.4. Without prejudice to any
of Lessee's obligations pursuant to this Section 13.4, on reasonable request of
Lessee, Lessor will provide reasonable evidence to Lessee of any loss, damage,
expense or liability for which Lessor seeks indemnification from Lessee pursuant
to this Section 13.4.
13.5 Acceleration
If an Event of Default pursuant to Sections 13.1.1 or 13.1.2 occurs, all
payments of Rent for the entire Term and all other amounts payable by Lessee
during the entire term shall immediately and without further action by Lessor
become due and payable and Lessee shall be obligated to immediately make such
payments.
14. ASSIGNMENT AND TRANSFER
14.1 No Assignment by Lessee
The Lessee will not, without Lessor's prior written consent, assign or create or
permit to exist any Security Interest over any of its rights or obligations
under this Agreement, except as expressly permitted in Section 8.5 hereof.
14.2 Lessor Assignment
The Lessor may sell, assign or transfer all or any of its rights under this
Agreement and in the Aircraft (a "Transfer") and the Lessor will, other than in
the case of an assignment for security purposes, have no further obligation
under this Agreement following a Transfer but, notwithstanding any Transfer,
will remain entitled to the benefit of each indemnity under this Agreement and
any rights not specifically included in such Transfer.
14.2.1 In connection with any Transfer, the following conditions shall
apply:
a. Lessor shall give Lessee written notice of such Transfer at least ten
Business Days before the date of such Transfer, specifying the name and address
of the proposed purchaser, assignee or transferee (the "Transferee");
b. the Transfer will not materially adversely affect the Lessee's rights and
interests in the Aircraft and/or this Agreement, nor subject the Lessee to any
Tax or Claim or any other obligation or liability to which it would not have
been subject had such assignment or transfer not taken place;
c. the Transferee will have full corporate power and authority to enter into
and perform the transactions contemplated by this Agreement and by the Transfer
on the part of "Lessor";
d. on the Transfer date, the Lessor and the Transferee shall enter into an
agreement or agreements in which the Transferee confirms that it shall be deemed
a party to this Agreement with respect to the subject matter of the Transfer and
agrees to be bound by all the terms of, and to undertake all of the obligations
of, the Lessor contained in this Agreement with respect to the subject matter of
the Transfer;
e. in connection with such assignment, the Aircraft may be registered in the
jurisdiction where it is registered prior to such assignment under the relevant
laws and rules and regulations of such jurisdiction;
f. the Lessor shall pay all reasonable, out-of-pocket costs and expenses
(including, without limitation, reasonable legal fees and registration costs)
imposed on or incurred by the Lessee as a result of the entering into of such
assignment.
14.2.2 Upon any Transfer, the Transferee shall be deemed Lessor for all
purposes of this Agreement with respect to the subject matter of such Transfer,
each reference in this Agreement to the "Lessor" with respect to the subject
matter of such Transfer shall thereafter be deemed for all purposes to refer to
the Transferee, and the Lessor prior to such Transfer shall be relieved of all
obligations of the "Lessor" with respect to the subject matter of such Transfer
under this Agreement arising after the time of such Transfer except to the
extent attributable to acts or events occurring prior to the time of such
Transfer.
14.2.3 Upon compliance by Lessor and a Transferee with the terms and
conditions of Section 14.2.1, Lessee shall at the time of Transfer, at the
specific written request and at the sole reasonable cost and expense of Lessor:
a. execute and deliver to Lessor and to such Transferee an agreement, in
form and substance satisfactory to Lessor, and such Transferee, dated the date
of such transfer, consenting to such transfer, agreeing to pay, to the extent
the subject matter of the Transfer includes rights to Basic Rent and other
payments under this Agreement, all or such portion of the Basic Rent and other
payments under this Agreement to such Transferee or its designee as such
Transferee shall direct, and agreeing that such Transferee shall be entitled to
rely on all representations and warranties made by Lessee in this Agreement or
in any certificate or document furnished by Lessee in connection with this
Agreement as though such Transferee was the original "Lessor";
b. deliver to Lessor and to such Transferee a certificate, signed by a duly
authorized officer or Lessee, dated the date of such Transfer, to the effect
that no Default or Event of Default has occurred;
c. cause to be delivered to Lessor and such Transferee certificates of
insurance (and where appropriate certificates of reinsurance) and broker's (and
any reinsurance brokers') letter of undertaking detailing the coverage and
confirming the insurers' (and any reinsurers') agreement to the specified
insurance requirements of this Agreement and listing the Lessor and Transferee
as additional insureds and the Transferee as sole loss payee to the extent of
the subject matter of the Transfer (subject to other direction by the Lessor);
d. deliver to Lessor and to such Transferee an opinion of Lessee's chief
internal and outside counsel to the effect that such Transferee may rely on the
opinion delivered by such counsel or its predecessor counsel in connection with
this Agreement on the Delivery Date with the same force and effect as if such
Transferee was an original addressee of such opinion when given;
e. deliver to Lessor and such Transferee information on the location of the
Airframe and Engines at all times requested by Lessor in order to permit the
Transfer to take place at a time and on a date so as to eliminate or minimize
any Taxes applicable to the Transfer; and
f. deliver such other documents as Lessor or such Transferee may reasonably
request, so long as such documents do not adversely affect the rights or
obligations of Lessee under this Agreement.
14.3 Grants of Security Interests
The Lessor shall be entitled at any time before, at, or after Delivery to grant
a security interest in the Aircraft and this Agreement or its right, title and
interest in this Agreement including but not limited to that certain UBK
Mortgage (the UBK Mortgage and all other security interests granted pursuant to
this Section 14.3, each, a "Mortgage") in favor of any Lender. In the case of
any such grant by Lessor of a Mortgage to a Lender in all or any portion of
Lessor's rights, title and interest in and to the Aircraft and this Agreement,
Lessee shall promptly, at the specific written request and at the sole
reasonable cost and expense of Lessor:
14.3.1 execute and deliver to Lessor and to such Lender an agreement, in
form and substance satisfactory to Lessor, and such Lender, dated the date of
the grant of such Mortgage, (i) consenting to such Mortgage and to any
assignment of Lessor's rights, title and interest in and to this Agreement to
such Lender for security purposes, (ii) if requested in writing by Lessor,
agreeing that Lessee will pay the Basic Rent and other payments under this
Agreement to such Lender, (iii) agreeing that such Lender shall be entitled to
rely on all representations and warranties made by Lessee in this Agreement or
in any certificate or document furnished by Lessee in connection with this
Agreement as though such Lender was originally the "Lessor" and (iv) consenting
and agreeing to the terms in the Assignment, Consent and Agreement;
14.3.2 execute and deliver to Lessor and such Lender such agreements as the
Lessor may reasonably require for the purposes of effecting all necessary
amendments to this Agreement (including Sections 8, 9 and 10);
14.3.3 deliver to Lessor and such Lender a certificate, signed by a duly
authorized officer of Lessee, dated the date of the grant of the Mortgage, to
the effect that no Default or Event of Default has occurred;
14.3.4 cause to be delivered to Lessor and such Lender certificates of
insurance (and where appropriate certificates of reinsurance) and broker's (and
any reinsurance brokers') letter of undertaking detailing the coverage and
confirming the insurers' (and any reinsurers') agreement to the specified
insurance requirements of this Agreement, adding such Lender as an additional
insured and, if requested by Lessor, listing such Lender as sole loss payee;
14.3.5 deliver to Lessor and such Lender an opinion of Lessee's chief
internal counsel to the effect that such Lender may rely on the opinion
delivered by such counsel or its predecessor counsel in connection with this
Agreement on the Delivery Date with the same force and effect as if such Lender
was an original addressee of such opinion when given; and
14.3.6 deliver such other documents as Lessor or such Lender may reasonably
request so long as such documents do not adversely affect the rights or
obligations of Lessee under this Agreement.
So long as no Default or Event of Default has occurred, no Lender will disturb
Lessee's quiet use, possession and enjoyment of the Aircraft referenced in
Section 7.1 herein.
14.4 Further Acknowledgments
Lessee further acknowledges that any Transferee or Lender shall in turn have the
rights of, and be subject to the conditions to, transfer and grants of Security
Interests set forth above in this Section 14.
15. MISCELLANEOUS
15.1 Waivers; Remedies Cumulative
The rights of either party under this Agreement:
15.1.1 may be exercised as often as necessary;
15.1.2 are cumulative and not exclusive of that party's rights under any
law; and
15.1.3 may be waived only in writing and specifically.
Delay in exercising or non-exercise of any such right is not a waiver of that
right.
15.2 Delegation
The Lessor may delegate to any Person or Persons all or any of the trusts,
powers or discretions vested in it by this Agreement and any such delegation may
be made upon such terms and conditions and subject to such regulations
(including power to sub-delegate) as the Lessor in its absolute discretion
thinks fit; provided, that any such delegation shall be subject to the
conditions set forth in Section 14.2.1.
15.3 Certificates
Except where expressly provided in this Agreement, any certificate or
determination by the Lessor as to any rate of interest or as to any other amount
payable under this Agreement will, in the absence of manifest error, be
conclusive and binding on the Lessee.
15.4 Appropriation
If any sum paid or recovered in respect of the liabilities of the Lessee under
this Agreement is less than the amount then due, the Lessor may apply that sum
to amounts due under this Agreement in such proportions and order and generally
in such manner as the Lessor may determine.
15.5 Currency Indemnity
15.5.1 If the Lessor receives an amount in respect of the Lessee's liability
under this Agreement or if such liability is converted into a claim, proof,
judgment or order in a currency other than the currency in which the amount is
expressed to be payable under this Agreement (the "Contract Currency"):
a. the Lessee will indemnify the Lessor, as an independent obligation,
against any loss arising out of or as a result of such conversion;
b. if the amount received by the Lessor, when converted into the Contract
Currency (at the market rate at which the Lessor is able on the relevant date to
purchase the Contract Currency in New York City with that other currency) is
less than the amount owed in the Contract Currency, the Lessee will, immediately
on demand, pay to the Lessor an amount in the Contract Currency equal to the
deficit; and
c. the Lessee will pay to the Lessor on demand any exchange costs and Taxes
(other than Lessor Taxes) payable in connection with the conversion.
15.5.2 The Lessee waives, to the extent permitted by Applicable Law, any
right it may have in any jurisdiction to pay any amount under this Agreement in
a currency other than that in which it is expressed to be payable.
15.6 Severability
If a provision of this Agreement is or becomes illegal, invalid or unenforceable
in any jurisdiction, that will not affect:
15.6.1 the legality, validity or enforceability in that jurisdiction of any
other provision of this Agreement; or
15.6.2 the legality, validity or enforceability in any other jurisdiction of
that or any other provision of this Agreement.
15.7 Remedy
If the Lessee fails to comply with any provision of this Agreement, the Lessor
may, without being in any way obliged to do so or responsible for so doing and
without prejudice to the ability of the Lessor to treat the non-compliance as a
Default, effect compliance on behalf of the Lessee, whereupon the Lessee shall
become liable to pay immediately any sums reasonably expended by the Lessor
together with all reasonable costs and expenses (including reasonable legal
costs) necessarily incurred in connection therewith.
15.8 Expenses
Except as set forth in this Agreement, each party shall bear its own expenses
incurred or payable in connection with the negotiation, preparation and
execution of this Agreement.
15.9 Time of Essence
The time stipulated in this Agreement for all payments payable by the Lessee to
the Lessor and for the performance of the Lessee's other obligations under this
Agreement will be of the essence of this Agreement (subject always to any
applicable grace period).
15.10 Notices
15.10.1 All notices and other communications given under or in connection
with this Agreement shall be in writing (including telefax) and in English, and
shall be deemed to have been received as follows:
a. If sent by telefax, at the time of receipt by the sender of a
transmission report indicating that all pages of the telefax transmission were
properly transmitted (unless the recipient notifies the sender promptly, or
unless sender receives after 5:30 p.m. local time, by no later than 10:00 a.m.
local time the following Business Day, notification that the transmission was
incomplete or illegible, in which case the telefax shall be deemed to have been
received at the time of receipt by the sender of a further clear transmission
report on re-transmitting the telefax), provided the relevant telefax
transmission (or retransmission, as the case may be) was transmitted to the
receiver between 9:00 a.m. and 5:30 p.m. local time. If it was transmitted
later, then it shall be deemed to have been received at 9:00 a.m. local time on
the succeeding Business Day.
b. In any other case, when received at the address specified in Section
15.10.2.
15.10.2 All such notices, requests, demands and other communications shall
be sent:
a. if to the Lessor, to it at: U.S. Bank National Association,
a national banking association,
as Owner Trustee
US Bank Trust Center, 000
Xxxx Xxxxx Xxxxxx
Xx. Xxxx, XX 00000
Xxxxxx Xxxxxx of America
Attn: Corporate Trust Department
Fax: 000 000 0000
Telephone No.: 000 000 0000
with copies to:
Equis Financial Group L.P.
00 Xxxxx Xxxxxx
Xxxxxx, XX 00000
Xxxxxx Xxxxxx of America
Attn: Xxxx Xxxxxx
Phone: 000-000-0000
Fax: 000-000-0000
and:
The United Bank of Kuwait PLC
0 Xxxxx Xxxxxx
Xxxxxx X0X 0XX
Xxxxxxx
Attention: Aviation Finance
Telephone: x000000000000
Telefax: x000000000000
and;
Xx. Xxx Xxxxxxxx
Sigma Aircraft Management LLC
Vice President - Marketing
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, XX 00000
Xxxxxx Xxxxxx of America
Telefax.: 000-000-0000
Telephone.: 000-000-0000
and;
Xxxxxx X. Xxxxxxxx, Xx., Esq.
Xxxxxxxx, Xxxx & Xxxxxxx, P.A.
0000 Xxxx Xxxx Xxxxxxx, Xxxxx 000
Xxxxxxxxxxx, Xxxxxxxxx 00000
Xxxxxx Xxxxxx of America
Telephone: 000-000-0000
Telefax: 952-995-9577
b. if to the Lessee, to it at: Cygnus Air, S.A.
Xx. Xxxxxx Xxxxxxxx xx Xxxxxxx
X/ Xxxxxxx, 0
00000- Xxxxxx
Xxxxx
Telefax No.: + 34 91 746 13 83
Telephone No.: + 00 00 000 00 00
or to such other address or telefax number as shall have been notified in
writing by one party to the other in the manner set out in this Section 15.10.
15.11 Sole and Entire Agreement
This Agreement, is the sole and entire agreement between the Lessor and the
Lessee in relation to the leasing of the Aircraft, and supersedes all previous
agreements in relation to that leasing. The terms and conditions of this
Agreement can only be varied by an instrument in writing executed by both
parties or by their duly authorized representatives.
15.12 Indemnities
All rights expressed to be granted to each Indemnitee under this Agreement are
given to the Lessor as agent for and on behalf of that Indemnitee.
15.13 Counterparts
This Agreement may be executed, manually or by telefacsimile signatures, in
counterparts each of which will constitute one and the same document.
15.14 Confidentiality
Neither the Lessor nor the Lessee shall, without the other's prior written
consent, communicate or disclose the terms of this Agreement or any information
or documents furnished pursuant to this Agreement (except to the extent that the
same are within the public domain) to any third party (other than any
prospective Transferee, or Lender, the respective external legal advisers,
auditors, insurance brokers or underwriters of Lessor, Lessee and such parties,
the Manufacturer and the Engine Manufacturer); provided however that disclosure
will be permitted, to the extent required:
a. pursuant to an order of any court of competent jurisdiction; or
b. pursuant to any procedure for discovery of documents in any proceedings
before any such court; or
c. pursuant to any law or regulation having the force of law; or
d. pursuant to a lawful requirement of any authority with whose requirements
the disclosing party is legally obliged to comply; or
e. in order to perfect any assignment of any assignable warranties.
15.15 Concerning Lessor
The Parties hereto agree that all of the statements, representations, covenants
and agreements made by the Lessor contained in this Agreement are made and
intended only for the purpose of binding the Trust Estate and establishing the
existence of rights and remedies which can be exercised and enforced against the
Trust Estate. Therefore, anything contained in this Agreement to the contrary
notwithstanding, no recourse shall be had with respect to this Agreement against
the Trust Company in its individual capacity or against any institution or
person which becomes a successor trustee or co-trustee or any officer, director,
trustee, servant or direct or indirect parent or controlling person or persons
of any of them; provided, however, that this Section 15.15 shall not be
construed to prohibit any action or proceeding against Lessor, Lessee or the
Trust Company for its own willful misconduct or grossly negligent conduct; and
provided, further, that nothing contained in this Section 15.15 shall be
construed to limit the exercise and enforcement in accordance with the terms of
this Agreement of rights and remedies against the Trust Estate. The foregoing
provisions of this Section 15.15 shall survive the termination of this
Agreement.
15.16 Concerning Specific Lender
Lessee hereby acknowledges that its interest in the Aircraft and this Agreement
are subject to and subordinate to The United Bank of Kuwait PLC's interest in
that certain UBK Mortgage. Lessee further acknowledges that The United Bank of
Kuwait PLC can exercise its rights under the Assignment, Consent and Agreement
once the "Relevant Notice" (as such term is defined in the Assignment, Consent
and Agreement) is issued by The United Bank of Kuwait PLC and thereafter The
United Bank of Kuwait PLC shall be deemed the "Lessor" and shall have all rights
of the Lessor under the Agreement but none of the obligations except such
obligations expressly set forth in the Assignment, Consent and Agreement.
15.17 Translation Conflicts
Lessor and Lessee acknowledge that the purpose of the Spanish translation of
this Agreement is for filing, registration and other recording purposes in
Spain. In the event that there exists a conflict between such Spanish
translation and the fully executed, notarized and apostilled English version of
this Agreement, Lessor and Lessee hereby agree that the English version shall
govern any and all disputes and other issues related to this Agreement.
16. DISPUTE RESOLUTION
16.1 New York Law: This Agreement will in all respects be governed by and
construed in accordance with the Laws of the State of New York, United States of
America (notwithstanding the conflict laws of the State of New York).
16.2 Exclusive Jurisdiction in New York: the parties hereto hereby
irrevocably submit to the exclusive jurisdiction and venue of the New York State
Supreme Court for the Borough of Manhattan, New York County, New York and of the
United States District Court for the Southern District of New York in any action
arising out of or connected in any way with this Lease, and Lessor and Lessee
further agree that the service of process or of any other papers upon them or
any of them by certified or registered mail, return receipt requested , at their
respective addresses set forth in Section 15.10 or 16.5 shall be deemed good,
proper and effective service upon them.
16.3 Waiver: LESSEE AND LESSOR HEREBY IRREVOCABLY WAIVE ANY OBJECTION WHICH
IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF THE VENUE OF ANY SUIT, ACTION OR
PROCEEDING ARISING OUT OF OR RELATED TO THIS AGREEMENT BROUGHT IN ANY OF THE
COURTS REFERRED TO IN SECTION 16.2 AND HEREBY FURTHER IRREVOCABLY WAIVE ANY
CLAIM THAT ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT HAS
BEEN BROUGHT IN AN INCONVENIENT FORUM.
16.4 Agent for Service of Process:
Without prejudice to any other mode of service, Lessee (i) appoints CT
Corporation System, 000 Xxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000 as its agent for
service of process relating to any proceedings before any court as provided in
Section 16.2 hereof in connection with this Agreement and agrees to maintain the
process agent in New York, New York notified to Lessor and Agent and (ii) agrees
that failure by a process agent to notify Lessor or Agent of the process shall
not invalidate the proceedings concerned.
16.5 Survival of Obligations. The provisions of this Section 16 will survive
the Expiry Date.
[signature page follows]
IN WITNESS WHEREOF Lessor and Lessee have executed this Lease Agreement which is
effective on the first date shown at the beginning of this Lease Agreement.
U.S. Bank National Association,
a national banking association, not in its
individual capacity except as set forth as Trust Company in this Agreement, but
as Owner Trustee pursuant to the Trust Agreement
By:__________________________________
Name:
Title:
Subscribed and sworn to before me
this _____ day of __________, 2002.
_______________________________
Notary Public
Cygnus Air, S.A.
By:__________________________________
Mac Holfam International, S.L.
(acting as Managing Director of Cygnus Air, S.A. through its individual
representative, Xx. Xxxx Xxxxxxxx)
Subscribed and sworn to before me
this _____ day of __________, 2002.
_______________________________
Notary Public
SCHEDULE 1 -- DESCRIPTION OF AIRCRAFT
Part 1
Aircraft Specifications
Airframe Manufacturer:
Airframe Model: DC8-73F
Airframe Manufacturer's Serial No: 46133
FAA Registration No.: N961R
Configuration: Cargo
Engine Type: CFM International, Inc. 56-2C1
Engine Serial Numbers: 692514, 692542, 692543, and 692506.
Part 2
Aircraft Documents
Part 3
Loose Equipment
SCHEDULE 2 -- CERTIFICATE OF ACCEPTANCE
This Certificate of Acceptance is delivered on the date set forth in
paragraph 1 below by Cygnus Air, S.A. (the "Lessee") to U.S. Bank National
Association, a national banking association, not in its individual capacity
except as set forth in this Agreement but as Owner Trustee pursuant to the Trust
Agreement (the "Lessor") pursuant to the Lease Agreement, dated June 28, 2002,
between the Lessor and the Lessee (the "Agreement"). Capitalized terms used but
not defined in this Certificate of Acceptance shall have the meaning given to
such terms in the Agreement.
1. Details of Acceptance
The Lessee hereby confirms to the Lessor that the Lessee has at _____ a.m./p.m.
local time on this _____ day of __________, 2002, in the State of _____,
accepted the following, in accordance with the provisions of the Agreement and
the Annex attached hereto:
(a) Airframe: DC8-73F airframe, Manufacturer's Serial 46133, currently
under Registration No. N961R (TAT:_____ TAC:____);
(b) Engines: four (4) CFM International, Inc. 56-2C1 Engines, bearing
Manufacturer's Serial Nos. 692514 (TET:____ TEC:___), 692542 (TET:____
TEC:___), 692543 (TET:____ TEC:___), and 692506 (TET:____ TEC:___);
(c) All Parts installed on, attached to or appurtenant to the Airframe and
Engines, including, without limitation, two loose equipment specified in
Schedule 1 - Part 3 of the Agreement; and
(d) Aircraft Documents specified in Schedule 1 - Part 2 of the Agreement.
2. Lessee's Confirmation
The Lessee confirms to the Lessor that the Aircraft and Aircraft Documents were
made available to Lessee for inspection and an acceptance flight pursuant to the
Agreement. Lessee performed such inspections and an acceptance flight as it
deemed necessary and, pursuant to such inspections, the Aircraft is deemed by
Lessee to be in acceptable condition in compliance with the Delivery terms of
the Agreement.
Without limiting the generality of the foregoing paragraph, the Lessee confirms
to the Lessor that as at the time indicated above, being the time of Delivery:
(a) The Lessee's representations and warranties contained in Sections 2.1
and 2.2 of the Agreement are true and accurate.
(b) The Aircraft is insured as required by the Agreement.
(c) Lessee has received the Aircraft Documents.
(d) Lessee has received all of the Aircraft Documents referenced in Section
1(d) of this Schedule, above and such Aircraft Documents are satisfactory to
Lessee.
(e) Lessee has received all items of loose equipment referenced in Section 1
(c) of this Schedule, above and such loose equipment is satisfactory to Lessee.
(f) The Aircraft complies in all respects with the Delivery conditions set
forth in Schedule 3 of the Agreement except for those items allowed pursuant to
Section 4.3.3 of the Agreement which are specified in Exhibit A to this
Certificate of Acceptance.
(g) Lessee has received a photo assessment document reflecting external
repairs accomplished on the Aircraft, including photos and documents with
authorized procedure to accomplish said repairs as required by FAR guidelines.
(h) Lessee has received both Basic Rent and Maintenance Reserves invoices
from Lessor for each of the 30 months during the Term. Lessee acknowledges: 1)
that such invoices are a formality requested by Lessee with respect to its
obligations to pay withholding tax to Spanish authorities; 2) that Lessor has
absolutely no obligations with respect to such invoices; 3) that such invoices
have no effect on any of Lessee's obligations pursuant to the Agreement
including, but not limited to, Lessee's duties to make payments (Basic Rent,
Supplemental Rent, Maintenance Reserves and other amounts) pursuant to the
Agreement; 4) that such invoices have no diminishing effect on Lessor's rights
pursuant to the Agreement and 5) that Lessee will insert the appropriate
Maintenance Reserves amounts on the Maintenance Reserves invoices and will
forward copies of such completed invoices to Lessor with the corresponding
monthly status report required pursuant to Section 8.2.6 of the Agreement.
(i) Lessee hereby takes Delivery of the Aircraft.
3. Lessor's Confirmation
The Lessor confirms to the Lessee that, as at the time indicated above, being
the time of Delivery, the Lessor's representations and warranties contained in
Section 2.4 of the Agreement are true and correct.
4. Specific Schedule 3, Section A.2. Discrepancy
Notwithstanding anything to the contrary herein, Lessor and Lessee acknowledge
that at the location on the Aircraft identified as "right hand wing lower front
spar cap forward tang approxment station XFS 520" there exists an approved
engineered temporary repair on the crack of the spar cap requiring a DTA (Damage
Tolerance Assement), which deviates from the
requirements of Schedule 3, Section A. 2. Lessee and Lessor hereby agree that
Lessee accepts the Aircraft despite such discrepancy and that Lessor will,
subject to Lessor's advance written approval of the workscope proposed by Lessee
to specifically remedy such discrepancy (such approval not to be unreasonably
withheld) and subject to Lessor's receipt from Lessee of an invoice in form and
substance reasonably satisfactory to Lessor and Lender, and provided no Default
or Event of Default has occurred, pay to such Approved Maintenance Performer the
reasonable and necessary actual cost to remedy such discrepancy during the Term.
Lessee shall use its best efforts to schedule remedy of such discrepancy for a
date later than the Expiry Date. If it is not possible to schedule remedy of
such discrepancy for a date after the Expiry Date, Lessee shall use its best
effort to accomplish remedy of such discrepancy during a scheduled Airframe "C"
Check during the Term, or if not possible during a scheduled Airframe "C" Check,
during a scheduled maintenance event provided for in the Agreed Maintenance
Program. Provided no Default or Event of Default has occurred, if due solely and
directly to the remedy of this discrepancy during the Term, the Aircraft is
unavailable to Lessee for revenue service, Lessee shall be entitled to credit
against the earliest future Basic Rent payable the pro-rata amount of Basic Rent
paid for each day that the Aircraft is unavailable to Lessee for such revenue
service. However, if a Rent Date occurs within the time period that the Aircraft
is unavailable for revenue service pursuant to the terms of this paragraph, (1)
Lessee shall not be required to pay the pro-rata share of Basic Rent payable for
the days that the Aircraft remains so unavailable following such Rent Date and
(2) the Basic Rent payable for the remaining time period corresponding to such
Rent Date will become immediately due and payable at the time that the Aircraft
becomes available for such revenue service. Provided no Default or Event of
Default has occurred, if due solely and directly to the remedy of such
discrepancy during the Term, Lessee is required to wet lease an alternative
aircraft to cover only the specific revenue service for which the Aircraft is
unavailable, the Expiry Date shall be extended by two days for each full day
that the Aircraft remains so unavailable. All terms of this Agreement shall
apply to such extension with the sole exception that Lessee shall not be
required to pay Basic Rent for the time period of such extension. At all
times, Lessee shall use its best efforts to minimize the time period during
which the Aircraft is unavailable for revenue service and to minimize any time
period during which Lessee wet leases an alternative aircraft for the purposes
referenced herein.
[Signature Page Follows]
IN WITNESS WHEREOF Lessor and Lessee have executed this Certificate of
Acceptance on the date shown at the beginning of this Certificate of Acceptance.
U.S. Bank National Association,
a national banking association, not in its
individual capacity except as set forth in
this Agreement but as Owner Trustee
pursuant to the Trust Agreement
By:___________________________________
Name:
Title:
Subscribed and sworn to before me
this _____ day of __________, 2002.
_______________________________
Notary Public
Cygnus Air, S.A.
By:________________________
Mac Holfam International, S.L.
(acting as Managing Director of Cygnus Air, S.A. through its individual
representative, Xx. Xxxx Xxxxxxxx)
Subscribed and sworn to before me
this _____ day of __________, 2002.
_______________________________
Notary Public
Original 1 of 6
SCHEDULE 2 -- EXHIBIT A
Discrepancies
The following chart indicates Agreement Section 4.4.3 discrepancies, the level
of each discrepancy and the procedure for correction of each discrepancy.
Discrepancy Description Discrepancy Level Agreed Correction Procedure
Correctable via Normal Line Maintenance Not Correctable via Normal Line
Maintenance
SCHEDULE 3 -- CONDITION AT DELIVERY
At the Delivery Date, the Aircraft shall be delivered to Lessee in an "AS-IS,
WHERE-IS" condition subject to the following specific conditions.
A. The Aircraft shall:
1. Be airworthy and in normal operating condition, conform to type design
and be in a condition for safe operation with all equipment, components and
systems operating in accordance with their intended use.
2. All equipment, components and systems operating within limits established
by the manufacturer and approved by the FAA, and all pilot discrepancies and
deferred, temporary, interim and carry-over maintenance items cleared on a
terminating action basis.
3. Have a valid and current export certificate of airworthiness issued by
the FAA and upon Lessee's request, a certificate of deregistration issued by the
FAA.
4. Without exemption or waiver, have accomplished all outstanding
airworthiness directives and mandatory service bulletins issued by the FAA, the
Aircraft Manufacturer, and the Engine Manufacturer affecting the Aircraft and
the Engines requiring compliance to the Maintenance Program and be cleared for
60 days after the Delivery Date.
5. Be in compliance with all CPCP tasks requiring compliance pursuant to the
Maintenance Program on or before the Delivery Date and cleared for 60 days
thereafter.
6. Be eligible for JAR operation by having a Single Mode TCAS II with 7.0 or
above software installed, VHF Comm 8.33 Mhz Spacing & VHF NAV FM Immunity and
RSVM.
7. Each Engine shall be airworthy, in good condition, and fully serviceable
and shall have not less than 1,500 cycles of expected life remaining until the
next scheduled removal. In addition, each Engine shall have a positive EGT
Margin and have no defects that reduce the Flight Hours of remaining life
pursuant to the manufacturer's requirements or airworthiness requirements until
overhaul.
8. Have not less than 3,000 Flight Hours or 1,500 cycles or 12 months
whichever is more limiting remaining on all airframe life limited and calendar
controlled components if maximum time/utilization limits permits.
9. Have time limited emergency equipment with 700 hours or 120 days
remaining to the life limit.
10. Be fresh from the delivery "C" Check and bridged for compliance onto the
manufacturer's DC8 OAMP program, including all lower level checks, structural
inspections and CPCP inspections required to be accomplished on or before the
Delivery Date as per manufacturer's intervals/implementation schedule except for
the passage of time and any test and ferry flights. Lessee has been permitted
to keep technical representatives and to inspect the aircraft during execution
of the delivery "C" Check;
11. Have all logs, manuals, data and inspection, modification, maintenance
and overhaul records (including historical records) current and updated as
applicable in the English language;
12. Be clean by international airline standards.
13. Be free from any oil and fuel leaks.
14. Have no deferred maintenance outstanding on the Aircraft outside of the
maintenance manual limits.
15. Have all protective panels in the cargo compartments in good, airworthy
and serviceable condition.
16. Have a photo assessment document reflecting external repairs
accomplished on the Aircraft, including photos and documents with authorized
procedure to accomplish said repairs as required by FAR guidelines.
B. The Airframe shall:
1. Have all fluid reservoirs (including fuel, oil, oxygen, hydraulic and
water), and the waste tank serviced in accordance with the manufacturer's
instructions.
2. If required under the Maintenance Program, all fuel tanks shall have
recently undergone an anti-fungus/biological growth contamination laboratory
evaluation , and any excessive levels of contamination corrected.
C. Parts or each Part shall:
1. Have each "on-condition" and "condition" monitored Part serviceable in
accordance with the FAA and its prescribed parameters and the maintenance manual
prescribed parameters.
2. Have a corresponding current "serviceable tag" issued by the manufacturer
or supplier indicating that the part is new, serviceable, or over hauled and
shall be accompanied by all corresponding FAA form 8130-3's.
D. Fuselage, Windows, and Doors shall:
1. Be sanded and painted white.
2. Be free of major dents and abrasions that exceed the prescribed
parameters under the SRM or other approved data and shall be free of scrab
patches which are temporary or out of maintenance manual limits and loose,
pulled or missing rivets (normal wear and tear excepted).
3. Have windows that do not contain any de-lamination, blemishes, scratches,
or crazing that exceed the prescribed parameters under the Manufacturer's
maintenance manual and that are properly sealed (normal wear and tear excepted).
4. Have doors that are free moving, correctly rigged and fitted with
serviceable seals.
E. Wings and Empennage shall:
1. Have leading edges that do not contain any damage that exceeds the
prescribed parameters under the SRM and any other approved data.
2. Have wings and pylons free of fuel leaks.
F. Interior and Cargo Compartments shall:
1. Be fully serviceable and airworthy.
2. All decals shall be in the English language, clean, secure and legible
and all ferring panels shall be in airworthy condition, secure and painted as
necessary. Floor coverings shall be clean and effectively sealed and painted as
necessary. Seats and seat covers shall be in good condition, serviceable, clean
and shall conform to all international fire resistance regulations.
3. Have panels in good condition, serviceable and airworthy.
4. Have nets in good condition, serviceable and airworthy.
5. Have Cargo Compartments complying with FAR fire resistance and
containment regulations as applicable to a FAR 121 operator.
6. Have Cargo Compartments being Class C compliant.
G. Cockpit shall:
1. Have fairing panels substantially free of stains cracks, clean, secure,
airworthy and repainted as necessary.
2. Have floor coverings that are clean and effectively sealed.
3. Have seats that are serviceable, airworthy and in good condition.
4. All decals shall be in the English language, clean, secure and legible.
H. Landing Gear shall:
1. Have landing gear, brakes and wheel xxxxx clean, free of leaks,
airworthy, in good condition and fully serviceable.
I. Corrosion:
1. Fuel tanks will be free from contamination and corrosion which exceed the
allowable limits contained in the Maintenance Program and a tank treatment
program will be in operation and up-to-date if required under the Maintenance
Program.
SCHEDULE 4 -- OPERATING CONDITION AT REDELIVERY
Unless specifically stated otherwise in this Agreement, on the Expiry Date the
Aircraft shall be returned to Lessor in the same condition as the condition of
the Aircraft on the Delivery Date, normal wear and tear excepted. The Aircraft
shall also be in the following condition:
1. Aircraft General Condition
The Aircraft shall be returned to Lessor at Lessee's expense in the same
condition as existed on the Delivery Date, normal wear and tear excepted. The
Aircraft shall:
(a) Be airworthy and in normal operating condition, conform to type design
and be in a condition for safe operation with all equipment, components and
systems operating in accordance with their intended use.
(b) All equipment, components and systems operating within limits
established by the manufacturer and approved by the Aviation Authorities and the
JAA, and all pilot discrepancies and deferred, temporary, interim and carry-over
maintenance items cleared on a terminating action basis.
(c) Have a current certificate of airworthiness issued by the Aviation
Authorities, or at Lessor's option, a certificate of airworthiness for export to
a country of Lessor's choice.
(d) Without exemption or waiver, be in compliance with and be cleared for 60
days after redelivery of the Aircraft with respect to all airworthiness
directives, mandatory service bulletins and CPCP tasks requiring compliance
pursuant to Lessee's Maintenance Program.
(e) Be in a condition that will qualify the Aircraft for a Certificate of
Airworthiness for cargo operation in the State of Registration and have a valid
export certificate of airworthiness with respect to the Aircraft issued by the
Aviation Authority), unconditionally meet all JAA requirements for immediate
operations, will be in full compliance with applicable Type Certificate Data
Sheets and shall be eligible for JAA operations.
(f) Have installed the full complement of engines ((4) serviceable CFM
International, Inc. 56-2C1 engines) and other equipment, parts and accessories
and loose equipment required under the Agreed Maintenance Program and installed
in the other DC8 freighter aircraft operated by Lessee under maintenance
programs similar to the Agreed Maintenance Program (together with any additions
and improvements thereto, or replacements thereof, effected pursuant to and in
accordance with this Agreement) and be in a condition suitable for immediate
operation in commercial service.
(g) Be eligible for JAR operation by having Single Mode TCASII with 7.0 or
above software installed, VHF Comm 8.33 Mhz Spacing, VHF Nav FM Immunity, and
RVSM.
(h) Be clean by international airline standards.
(i) Be free from any oil and fuel leaks.
(j) Have no deferred maintenance outstanding on the Aircraft outside of
maintenance manual limits.
(k) Have all protective panels in the cargo compartments in good, airworthy
and serviceable condition.
(l) Have, at Lessor's option, all or part of the modifications made solely
in compliance with the laws of the State of Registration removed.
(m) Have all of Lessee's logos and markings removed and the Aircraft shall
be in an all white paint scheme with paint quality equal to or exceeding such
paint quality on the Aircraft on the Delivery Date.
(n) Have a photo assessment document reflecting external repairs
accomplished on the aircraft during the Term, including photos and documents
with authorized procedure to accomplish said repairs as required by the Aviation
Authorities and JAR guidelines.
2. The Airframe will:
(a) Be fresh from a Airframe "C" Check, including all lower level checks,
structural inspections and CPCP inspections (CPCP inspections cleared for 60
days after redelivery) required to be accomplished on or before the Expiry Date
as pursuant to the Manufacturer's intervals/implementation schedule without
regard to Lessee's fleet wide implementation program. Lessee may redeliver the
Aircraft without completing such Airframe "C" Check provided that Lessee pays to
Lessor, prior to the Expiry Date, fifty percent (50%) of the average of the cost
of the delivery "C" Check required pursuant to Section 9 of Schedule 3 and the
cost of the first Airframe "C" Check overhaul required pursuant to this
Agreement during the Term less the balance of the Airframe "C" Check Reserves.
Such amounts paid by Lessee to Lessor will cover routine "D" Check
work cards and the non-routine work cards generated from the routine "D" Check
work cards. All open maintenance items will be over and above and handled
pursuant to Section 12.3.
(b) Have installed all applicable vendor's and manufacturer's service
bulletin kits received free of charge by the Lessee that are appropriate for the
Aircraft and, to the extent not installed, those kits which have been received
with respect to this Aircraft will be furnished free of charge to the Lessor.
(c) All fluid reservoirs (including fuel, oil, oxygen, hydraulic and water)
will be full, and the waste tank serviced in accordance with the manufacturer's
instructions.
(d) If required under the Agreed Maintenance Program, all fuel tanks will
have recently undergone an anti-fungus/biological growth contamination
laboratory evaluation, and any excessive levels of contamination corrected.
(e) Have a DGAC approved aging aircraft program equivalent to that required
by the FAA in operation and up to date and in compliance with Manufacturer's
data without waivers or extensions.
3. Parts
(a) Each life limited or hard time controlled Part, excluding Engine Parts
and Landing Gear, shall have not less than 12 months, 3,000 flight hours or 1500
cycles (whichever is the more limiting factor) remaining to the next scheduled
removal or overhaul in accordance with the Maintenance Program if maximum
time/utilization limits permits.
(b) Each "on-condition" and "condition monitored" Part will be serviceable
in accordance with the Aviation Authority and JAA prescribed parameters and the
maintenance manual prescribed parameters.
(c) Each Part shall have a corresponding current "serviceable tag"
issued by the manufacturer or supplier indicating that the part is new,
serviceable or overhauled, and shall be accompanied by all corresponding FAA
form 8130-3's (as applicable) and JAA Form One's.
4. Engines
Each engine installed on the Aircraft shall be an Engine and (if not the engine
installed at Delivery) shall, to the extent not previously provided to the
Lessor, be accompanied by all documentation the Lessor may require to evidence
that title thereto is properly vested in the Lessor in accordance with this
Agreement and will:
(a) Each Engine shall be capable of achieving Max Take Off Power without any
restrictions, in accordance with the Manufacturer's Max Power Assurance Test
corrected to the maximum permissible outside air temperature at sea level and
each engine shall be airworthy, in good condition and fully serviceable.
Subsequent to the power assurance runs, Lessee shall provide for a complete and
full video borescope of each Engine.
(b) Have no defect that reduces the Flight Hours of remaining life pursuant
to manufacturer's or airworthiness requirements until overhaul.
(c) Shall have a positive EGT margin.
5. Fuselage, Windows and Doors
(a) Have the fuselage sanded down and painted white.
(b) The fuselage will be free of major dents and abrasions that exceed the
prescribed parameters under the SRM and any other approved data and shall be
free of scab patches which are temporary or out of maintenance manual limits and
loose, pulled or missing rivets (normal wear and tear excepted).
(c) The windows will not contain any de-lamination, blemishes, scratches, or
crazing that exceed the prescribed parameters under the Manufacturer's
maintenance manual and will be properly sealed (normal wear and tear excepted).
(d) The doors will be free moving, correctly rigged and fitted with
serviceable seals.
6. Wings and Empennage
(a) Leading edges will not contain any damage that exceeds the prescribed
parameters under the SRM.
(b) Wings and pylons will be free of fuel leaks.
7. Interior and Cargo Compartments
(a) The interior and cargo compartments will be fully serviceable and
airworthy.
(b) Emergency equipment having a calendar life will have a minimum of 700
hours or 120 days, whichever is more, remaining to the life limit.
(c) All decals shall be in the English language, clean, secure and legible
and all ferring panels shall be in airworthy condition, secure and repainted as
necessary. Floor coverings shall be clean and effectively sealed and painted as
necessary. Seats and seat covers shall be in good condition, serviceable, clean
and shall continue to conform to all international fire resistance regulations.
(d) Panels will be in good condition, serviceable and airworthy.
(e) Nets will be in good condition, serviceable and airworthy.
(f) Cargo Compartments will comply with JAR fire resistance and containment
regulations as applicable to a JAR-OPS-1 operator.
(g) Cargo Compartments will be Class C Compliant.
8. Cockpit
(a) Fairing panels shall be substantially free of stains and cracks, clean,
secure, airworthy and repainted as necessary.
(b) Floor coverings will be clean and effectively sealed.
(c) Seat covers will be in good condition, clean and substantially free of
stains and will conform to JAR fire resistance regulations as applicable to a
JAR-Ops 1 operator.
(d) Seats will be serviceable, airworthy and in good condition.
(e) All decals shall be in the English language, clean, secure and legible.
9. Landing Gear
The landing gear, brakes and wheel xxxxx will be clean, free of leaks, repaired
as necessary, airworthy, in good condition and fully serviceable
10. Corrosion
(a) Have been inspected and treated with respect to corrosion. Such
inspection and treatment shall be cleared for 60 days after the Expiry Date and
have been performed as defined in the Maintenance Program corrosion prevention
control plan (CPCP) on or before the Delivery Date.
(b) Fuel tanks will be free from contamination and corrosion which exceed
the allowable limits contained in the Approved Maintenance Program and a tank
treatment program will be in operation and up-to-date if required under the
Approved Maintenance Program.
11. Records
(a) The Aircraft will be delivered to Lessor with all logs, manuals, data
and inspection, modification, maintenance and overhaul records (including
historical records necessary to prove parts traceability, to the extent
delivered by Lessor) provided by Lessor at Delivery current and updated as
applicable and in the English language.
(b) Have complete and historical records as required by the Aviation
Authorities and JAA, including but not limited to vendor tags, showing last
overhaul for all hard time components and full back to birth traceability for
all life limited parts.
SCHEDULE 5 -- FORM OF LEGAL OPINION
[Date]
U.S. Bank National Association,
US Bank Trust Center
000 Xxxx Xxxxx Xxxxxx
Xx. Xxxx, XX 00000
Xxxxxx Xxxxxx of America
Attn: Corporate Trust Department
AFG Investment Trust D
C/O EQUIS FINANCIAL GROUP
00 Xxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Attention: Xx. Xxxx Xxxxxx
THE UNITED BANK OF KUWAIT PLC
0 Xxxxx Xxxxxx
Xxxxxx X0X 0XX
Xxxxxxx
Attention: Aviation Finance
Re: Lease Agreement ("Agreement") dated June 28, 2002
between U.S. Bank National Association, a national banking association, not in
its individual capacity except as specifically set forth in the Agreement but as
Owner Trustee pursuant to the Trust Agreement, a national banking association
("U.S. Bank") and Cygnus Air, S.A., a Spanish corporation ("Cygnus").
Ladies and Gentlemen:
I am counsel to Cygnus, a corporation organized under the laws of
Spain (the "Lessee") and have acted on behalf of the Lessee in connection with
the transactions contemplated by the above referenced Lease Agreement between
U.S. Bank ("Lessor") and Lessee. This opinion is being rendered to you
pursuant to Section 3.1.3 of the Agreement. Capitalized terms used herein,
unless otherwise defined herein, shall have the meanings ascribed to such terms
in the Agreement.
We have examined the following documents:
(i) Agreement;
(ii) the Certificate of Acceptance dated __________, 2002 among the Lessor
and the Lessee; and,
(iii) all documents executed and/or delivered to Lessor pursuant to Sections
3.1 and 3.2 of the Agreement.
(iv) and the Lessee's corporate and constitutional documents as reflected in
its notarial Deed of Incorporation ("escritura de constitucion") and By-laws
("estatutos") and other Lessee's corporate documents as we have considered
necessary for purposes of this opinion; and
(v) the Assignment, Consent and Agreement.
(Items (i) - (iii) collectively the "Transaction Documents")
We have also examined originals, or facsimile, certified or photostatic copies,
of such agreements and records of the Lessee, and such other documents as we
deemed necessary or advisable for the purpose of rendering the opinions set
forth below. We have assumed the genuineness of all signatures, the
authenticity of all documents submitted to us as originals, the conformity to
original documents of all documents submitted to us as facsimile, certified or
photostatic copies and the authenticity of the originals of such copies.
For the purposes of this opinion, we have also assumed the valid and
binding execution of all documents set forth above.
Words and expressions used and not otherwise defined herein will bear
the same meanings as defined in the Agreement.
We do not purport to be experts on and do not purport to be generally
familiar with or qualified to express legal opinions based on any law other than
the laws of Spain and accordingly have made no investigation of an express no
opinions in respect of the laws of any jurisdictions outside of Spain.
Therefore, the issues mentioned in this opinion have been examined only with
regard to their compliance with Spanish law, and we express no opinion on any
laws other than the laws of Spain as they now stand. This opinion is subject to
Spanish law and exclusively bound to the Transaction Documents.
Based and relying upon the foregoing, and subject to the
qualifications set forth below, we are of the opinion that:
1. The Lessee is a corporation duly formed, validly existing and in good
standing under the laws of Spain and has full corporate power and authority to
carry on its business as currently conducted and as currently contemplated by
the Transaction Documents.
2. The Lessee has full corporate power and authority to execute, and deliver
the Transaction Documents and perform its obligations thereunder. The
execution, delivery and performance by the Lessee of the Transaction Documents
have been duly authorized by all necessary corporate action on the part of the
Lessee, do not require any approval of the shareholders of the Lessee and do not
contravene the Constitutional Documents referenced in Section 3.1a. of the
Agreement, or any other organizational documents of Lessee.
3. _____________ in his capacity as __________________ of Lessee has full
power and authority to execute and deliver the Transaction Documents on behalf
of Lessee and to authorize any third party representatives, either through a
delegation of his own powers to other employees or agents of Lessee or through a
power of attorney, to negotiate, execute, deliver and perform the Transaction
Documents on behalf of Lessee .
4. (a) The execution, delivery and performance by the Lessee of the
Transaction Documents do not contravene any law applicable to the Lessee or any
regulation, decree or order and do not result in the breach of, constitute any
default under or result in the creation of any lien, charge or encumbrance upon
any property of the Lessee under any credit agreement (other than the Agreement
and the other Transaction Documents) or other agreement to which the Lessee is a
party or by which any of its properties or assets are bound or affected.
(b) The Lessee has all governmental consents, permits and licenses to
conduct its business as an airline in Spain and to operate the Aircraft as part
of its business and as contemplated by the Transaction Documents.
5. The Transaction Documents have been executed and delivered by a duly
authorized and/or third party representative officer of the Lessee and are
enforceable against Lessee pursuant to the terms thereof and pursuant to Spanish
law.
6. There are no outstanding judgments against the Lessee, nor are there any
actions, claims, suits, investigations, governmental proceedings, or other
proceedings pending or, to the best of my knowledge, threatened against or
affecting the Lessee or its property before any court, board of arbitration or
administrative agency which would, as a consequence, have a material adverse
effect on the business of the Lessee or the ability of the Lessee to perform its
obligations pursuant to the Transaction Documents.
7. The Lessee is not in default under or in violation of any agreement or
order, lien, injunction or decree of any court or any order, statute, rule,
regulation or demand of any federal, state municipal or other governmental
agency, default under which would, as a consequence, have a material adverse
effect on the business of the Lessee or the ability of the Lessee to perform its
obligations pursuant to the Transaction Documents.
8. Upon presentation by Lessor of the documents referenced in Section 3.1.15
of the Agreement to the DGAC, the Lessor will have the right to immediately
de-register and export the Aircraft from Spain without any other further action.
9. All documents, filing and actions (including but not limited to the
payment of any fees) necessary to register the Aircraft with the DGAC and obtain
the Spanish registry have been completed and filed with the DGAC, and therefore
the Aircraft is [temporarily/permanently] a Spanish aircraft [and will remain so
temporarily registered for a period of at least 90 days from the date of
issuance of such temporary registration.]
10. All documents, filing and actions (including but not limited to the
payment of any fees) necessary to reflect Lessor's ownership of and Lender's
interest in the Aircraft and to note and disclose all of Lessor's rights of
ownership in and Lender's interest in the Aircraft have been completed and filed
with the Spanish Aviation Authorities.
11. The Agreement, the Assignment, Consent and Agreement and the Xxxx of
Sale (if the Xxxx of Sale is requested by the DGAC) has been properly filed with
the Aircraft Matriculation Registry ("Registro de Matricula de Aeronaves")
within the Spanish DGAC.
12. Lessee has legally and validly authorized its Spanish insurer to provide
an irrevocable instruction to the reinsurer pursuant to Section 3.1.l4 of the
Agreement and has no right to revoke or contravene such instruction after the
date of it without the prior written consent of Lessor.
13. Lessee's Spanish insurer has provided the reinsurer the irrevocable
instruction required pursuant to Section 3.1.l4 of the Agreement and the same is
legally valid and binding, and such insurer has no right to revoke or contravene
such instruction after the date of it without the prior written consent of
Lessor.
14. The application, and filing necessary, if any, to make payments under
the Agreement by the Lessee in Dollars outside Spain has been made and no
further requisites or documents or payments are necessary to allow and require
Lessee to remit the United States Dollars abroad to Lessor.
15. The Spanish banking system will release all Rent payments to Lessor
pursuant to the Agreement without any withholding of any such monies.
16. Any and all permits, documents, registrations, licenses, authorizations
and the like that are required by Applicable Law to allow Lessee to operate the
Aircraft as contemplated by the Transaction Documents ("collectively Licenses")
and capable of being obtained prior to delivery of the Aircraft to Lessee have
been issued, obtained, received and are valid and are listed in Section A of
Annex I attached hereto. The remaining such Licenses, which are, pursuant to
Applicable Law, capable of delivery by Lessee to Lessor only on delivery of the
Aircraft by Lessor to Lessee, are listed in Section B of Annex I and [shall
be/were] delivered on the date that the aircraft is delivered by Lessor to
Lessee and are valid.
17. Lessor and Lender are hereby entitled to rely upon this opinion with
respect to the Agreement.
18. Any and all obligations contained in the Agreement are in compliance
with the regulatory and legal requirements of Aviation Authority.
19. The Lessee is subject to civil commercial law with respect to its
obligations under the Agreement. Neither the Lessee nor any of its assets is
entitled to any right of immunity, sovereign or otherwise, and the entry into
and performance of this Agreement by the Lessee constitute private and
commercial acts, enforceable by their terms and conditions against Lessee.
The above opinions are subject to the following qualifications:
a. Under Spanish law, the Agreement has to be registered in the Aircraft
Registry ("Registro de Matricula de Aeronaves") of the DGAC after signature and
delivery. For the purposes of such registration, the Agreement must be
previously filed with the Spanish tax authorities to obtain the exemption from
Stamp Duty Tax ("Impuesto de Transmisiones Patrimoniales y Actos Juridicos
Documentados"). The Lessor's ownership of the Aircraft is capable of being
identified in the said Registry.
Spanish aircraft must also be registered at the Commercial Registry. For such
purposes, however, only aircraft owned by or leased to individuals or legal
entities of Spanish citizenship have access to the Commercial Registry.
b. Spanish exchange control provisions mandate that certain formal
requirements are complied with by Lessee when making payments abroad. In
essence, Lessee would have to communicate to the bank effecting the transfer of
funds the reason of the payment. If payment is made in cash or by bearer
cheques, then the Spanish exchange control authorities need to be informed
before exporting the monies or payment instruments. Infringement of these
provisions is subject to economic fines.
c. The Power of Attorney referenced in 3.1.15 of the Agreement will have to
be executed and legalized before a Notary Public. If executed in Spain, then
the form of such Power of Attorney will have to be slightly amended to adapt it
to the formal requirements of Spanish law. Such requirements relate to
providing the Notary details of the signatory and the company granting the power
as well as sufficient evidence on the signatory's authority to bind the company.
d. Any amounts payable by Lessee to Lessor are subject to the Treaty to
Avoid Double Taxation executed between the United States of America and Spain
and Spanish implementation legislation as regards potential withholding taxes.
We understand that Lessee intends to operate the Aircraft mainly in Spain
(rather than in international flights), so that the withholding applicable to
royalty payments foreseen under Article 12.2 of the said Treaty would be
applicable on rental payments (including all items included as Supplemental
Rent, such as Maintenance Reserves). Furthermore, there is some case law to
suggest that the Spanish tax authorities might try to levy a withholding tax on
interest payments for overdue amounts.
e. The validity, enforceability and binding nature of the Transaction
Documents may be limited, at a certain moment in time, by application of
bankruptcy, insolvency, suspension of payments, moratorium, arrangement,
winding-up, expropriation and other similar laws of Spain affecting the rights
and remedies of creditors.
f. Under Spanish law, the ability to make claims may be prescribed after a
period of time or may be or become subject to the defences of set-off or
counterclaim. As a general rule, under Spanish law personal actions (such as
those arising under the Lease) must be brought within 15 years from the date
they could first be exercised (for instance, in the event of breach of contract,
from the date on which the breach occurs). However, article 1,966 of the Civil
Code establishes a five-year period for actions arising out of real estate lease
agreements ("fincas"). Since certain other provisions of Spanish law might
provide arguments to support an analogous application of the said article to the
Lease, it would be advisable to respect this period of 5 years if the Lessor
decides to file a claim under the Lease.
g. In Spain, to make documents executed in a foreign language admissible
evidence before Spanish courts, translations (under certain circumstances
certified by a sworn translator) of these documents are required.
h. Before a Spanish Court, the scope of a choice of New York law clause is
subject to the limitations provided for in the 1980 Rome Convention on Law
Applicable to Contractual Obligations, and particularly in its articles 7 and
16.
i. Any judgment for a definite sum given by the State or Federal courts of
New York against Lessee could be recognized and enforced in Spain subject to the
requirements and restrictions of the 1881 Spanish Law of Civil Procedure. The
aforementioned Spanish Law and its interpretation by the Spanish Supreme Court:
a. Includes a reciprocity requirement which would be normally satisfied by a
State or Federal New York Court's judgment.
b. Allows the rejection of the recognition and
enforcement of a foreign judgment if the contacts with Court of origin to the
case submitted to such Court were not sufficient. The test is normally
satisfied when the foreign court of origin is the court to which the parties to
a contract have voluntarily submitted.
c. Allows the rejection of the recognition and
enforcement of a foreign judgment contrary to forum public policy ("ordre
public"). Damages granted by the court of origin when considered excessive from
the point of view of Spanish law may be grounds for non-recognition or
non-enforcement.
d. Allows the rejection of the recognition and enforcement of a
foreign judgment contrary to the due process clause of the Spanish law. Service
of process in a manner not provided for in an international Treaty when such a
Treaty is of application may be grounds for non-recognition or non-enforcement.
This opinion is rendered solely for the benefit of the adressees in
connection with the transactions referred to herein and may not be used,
circulated, quoted or referred, or otherwise relied upon by any other person or
for any other purpose without our prior written consent. Notwithstanding the
foregoing, the adressees may furnish this opinion to the addressees's
professional advisers, and/or to Lenders without obtaining our prior written
consent, for the purposes of seeking the advice of such professional advisers in
respect of matters referred to in this opinion and/or in connection with any
legal proceedings which may be initiated on behalf of the addressees or any of
them.
Very truly yours,
[Cygnus' Chief Legal Counsel and Cygnus' Outside Legal Counsel]
SCHEDULE 5 -- ANNEX I
LIST OF DOCUMENTS PURSUANT TO SECTIONS 3.1.4. & 3.1.10
A: "Licenses" Delivered to Lessor:
1. AIRCRAFT OPERATIONS CERTIFICATE JAR-OPS1
2. MAINTENANCE APPROVAL STATUS
3. EN-ROUTE BASIC RNAV OPERATIONAL APPROVAL (EC-EMD)
4. EN-ROUTE BASIC RNAV OPERATIONAL APPROVAL (EC-EMX)
5. APPROVAL CERTIFICATE JAR-145 MAINTENANCE ORGANIZATION
6. OPERATING LICENSE RENEWAL
7. AUTHORIZATION FOR TRANSPORT OF HAZARDOUS GOODS
8. AUTHORIZATION FOR MNPS OPERATION OF AIRCRAFT EC-EMD BELONGING TO THE
COMPANY CYGNUS AIR, S.A.
9. AUTHORIZATION FOR MNPS OPERATION OF AIRCRAFT EC-EMX BELONGING TO THE
COMPANY CYGNUS AIR, S.A.
10. PRESENTATION OF DC8-73F S/N 46133 MAINTENANCE PROGRAM
11. APPLICATION FOR ACCEPTANCE OF IMPORTED AIRCRAFT
12. REQUEST OF INSPECTORS' DESIGNATION
B. "Licenses" [to be] delivered to Lessor by Lessee on delivery of Aircraft to
Lessee by Lessor:
1. TEMPORARY VALIDATION OF AIRWORTHINESS CERTIFICATE
2. TEMPORARY APPROVAL OF RADIO STATION LICENSE
3. TEMPORARY APPROVAL OF MAINTENANCE PROGRAM
4. TEMPORARY APPROVAL OF "AIRCRAFT CHARACTERISTICS SHEETS"
5. TEMPORARY APPROVAL OF NOISE LEVEL CERTIFICATE
6. ACCEPTANCE OF IMPORTED AIRCRAFT
SCHEDULE 6 -- FORM OF MONTHLY STATUS REPORT
AIRCRAFT TYPE REG. XXXX SERIAL NO. MONTH ENDING
DC8-73F 46133
1. AIRCRAFT UTILIZATION:
(a) Airframe Total Flight Hours
(b) Airframe Total Cycles
(c) Airframe Flight Hours for Month
(d) Airframe Flight Cycles for Month
(e) Period of time since last Airframe overhaul
2. POWERPLANT STATUS: Xx.0 Xx.0 Xx.0 Xx.
0
(x) Xxxxxx Xxx. of Delivered Engines [#] [#] [#]
[#]
(b) Serial Nos. of Replacement Engines .
(if applicable)
(c) Serial Nos. of Installed Engines .
(if different from (a) or (b) above)
(d) Current Location of Delivered or .
Replacement Engines (as applicable)
(if not installed on Airframe)
(e) Total Time Since New of Delivered
or Replacement Engines (as applicable)
(f) Total Cycles Since New of Delivered
or Replacement Engines (as applicable)
(g) Total Flight Hours for the Month for
each Delivered or Replacement Engine
(as applicable)
(h) Total Cycles for the Month for each
Delivered or Replacement Engine
(as applicable)
(i) Period of time since last overhaul for
each Engine or Replacement Engine.
(j) Cycles remaining to next Life Limited
Part Replacement
3. LANDING GEAR STATUS:
(a) Serial No. of Delivered Landing Gear
(b) Serial No. of Replacement Landing Gear
(if applicable)
(c) Serial No. of Installed Landing Gear
(if different from (a) or (b) above)
(d) Current Location of Delivered or
Replacement Landing Gear (as applicable)
(if not installed on Airframe)
(e) Total Time Since New of Delivered
or Replacement Landing Gear (as applicable)
(f) Total Cycles Since New of Delivered
or Replacement Landing Gear (as applicable)
(g) Total Hours for the Month for
Delivered or Replacement Landing Gear
(as applicable)
(h) Total Cycles for the Month for
Delivered or Replacement Landing Gear
(as applicable)
4. COMPONENTS: [Component] [Component] [Component]
[Component]
Period of time since last overhaul of . .
each listed component
5. ROUTINE CHECKS / A.D. AND S.B. COMPLIANCE:
(a) Routine Checks (A and above) performed during Month:
(b) Airworthiness Directives complied with during Month:
(c) Service Bulletins complied with during Month:
6. AIRCRAFT DAMAGE OR ENGINE CHANGES:
Details of any repairs carried out to the Aircraft beyond SRM limits and Engine
changes, giving reasons for repair or change:
7. UPCOMING MAINTENANCE CHECKS
(a) Maintenance Checks (C segment and above) scheduled or expected to be
performed on the Airframe during the next 12 months:
(b) Scheduled shop visits or heavy maintenance visits scheduled or expected
to be performed on the Engines during the next 12 months:
(c) Overhauls, or replacements scheduled or expected to be performed on the
Landing Gear during the next 12 months:
Date: ___________, 20__ CERTIFIED FOR AND ON BEHALF OF Cygnus Air,
S.A.
By:_______________________________
Name:
Title:
SCHEDULE 7 -- BASIC RENT, DEPOSIT, AGREED VALUE,
MAINTENANCE RESERVES
A. Basic Rent: The Basic Rent shall be $120,000.
B. Deposit: (i) The total amount of $330,000 previously paid by Lessee to
Lessor pursuant to the terms of a Letter of Intent, dated March 14, 2002,
between the Lessor and Lessee.
C. Agreed Value: $12,500,000.00. This figure shall be increased to reflect the
amounts of all Lessor investments on or after the Delivery Date. Such Lessor
investments shall include, but not be limited to, Lessor Contributions in the
Aircraft that (1) result in installation of equipment or systems on the Aircraft
of a type that was not previously installed on the Aircraft and (2) consist of
individual airworthiness directives that result in Lessor contributing an amount
equal to or exceeding $100,000.00 for each such airworthiness directive. Such
adjusted Agreed Value shall also be decreased on each annual anniversary of the
Delivery Date by $500,000.
D. Maintenance Reserves: Lessee shall pay to Lessor Maintenance Reserves,
based on Lessee's use of the Aircraft during the Term, in the following amounts
per Flight Hour or Cycle, as the case may be, (individually, "Airframe C-check
Reserves," "Airframe "E" Check Reserves," "Engine Refurbishment Reserves,"
"Engine LLP Reserves," and "Landing Gear Reserves," collectively "Maintenance
Reserves"):
Total Maintenance Reserves for the Aircraft are as follows
Airframe "C" Check Airframe "E" Check Engine Refurbishment
Engine LLP Reserves (per
Reserves (or C-check) Reserves (or D-Check Reserves (per flight
cycle per Engine when the
Equivalent) (per Airframe equivalent) (per Hour per Engine when
Engine is used on the
Flight Hour) Airframe Flight Hour) the Engine is used on the
Aircraft or another aircraft) Aircraft or another
aircraft
$ as below in this
Schedule 7, Section D $53.00 $175.00 $75.00
Landing Gear Reserves
(per Airframe Flight Hour)
$6.00
The Airframe "C" Check Reserves rate will be the average of the cost of the
delivery "C" Check required pursuant to Schedule 3 and the cost of the first
Airframe "C" Check overhaul required pursuant to this Agreement during the Term
divided by the Manufacturer's recommended program DC8 OAMP "E" Check interval of
2,500 FHs. Lessee's obligation to pay Airframe "C" Check Reserves will begin
after completion of the first Airframe "C" Check after the Delivery Date
performed by the Agreed Maintenance Performer.
If, on the anniversary date of the Delivery Date during the Term and the
following anniversaries or on the Expiry Date, the hour to cycle ratio for an
Engine, for the year preceding such anniversary date, deviates from the ratio of
2.16-2.34:1 for such year (or portion of such year in the year of the Expiry
Date), Lessee shall be entitled to a credit against future payments to such
Engine's Engine Refurbishment Reserves or shall make additional payment, as
additional Rent, to the Engine Refurbishment Reserves for such Engine according
to the following:
(1) if the hour to cycle ratio is equal to or exceeds 2.45:1, Lessee's
obligations for Engine Refurbishment Reserves for such Engine for the year
preceding such anniversary date at issue (or portion of such year in the year of
the Expiry Date), shall be adjusted to $161 for each Flight Hour and Lessee
shall, so long as no Default or Event of Default has occurred, be entitled to a
credit against future reserves in the amount of the adjusted reserves for the
prior year;
(2) if the hour to cycle ratio is equal to or exceeds 2.35:1, but is less
than 2.45:1, Lessee's obligations for Engine Refurbishment Reserves for such
Engine for the year preceding such anniversary date at issue (or portion of such
year in the year of the Expiry Date), shall be adjusted to $168 for each Flight
Hour and Lessee shall, so long as no Default or Event of Default has occurred,
be entitled to a credit against future reserves in the amount of the adjusted
reserves for the prior year;
(3) if the hour to cycle ratio is equal to or lower than 2.15:1, but is
greater than 2.05:1, Lessee's obligations for Engine Refurbishment Reserves for
such Engine for the year preceding such anniversary date at issue (or portion of
such year in the year of the Expiry Date), shall be adjusted to $183 for each
Flight Hour and Lessee shall pay the shortfall of such Reserves for the prior
year based on such adjusted Reserves amount; and,
(4) if the hour to cycle ratio is equal to or lower than 2.05:1, Lessee's
obligations for Engine Refurbishment Reserves for such Engine for the year
preceding such anniversary date at issue (or portion of such year in the year of
the Expiry Date), shall be adjusted to $192 for each Flight Hour and Lessee
shall pay the shortfall of such Reserves for the prior year based on such
adjusted Reserves amount.
The above calculations will be made within ten (10) days of the end of each
anniversary year of the Term and on the Expiry Date and any required additional
Rent will be due and payable by Lessee on the date on which the next Maintenance
Reserves payment is due following such calculation period. However, any
reasonable failure by Lessee to demand an offset or to make the above
calculations (although payment by Lessee must be timely made) shall not
constitute a waiver of Lessee's rights to such Engine Refurbishment Reserves
offset(s) and any failure by Lessor to demand any payment for additional Engine
Refurbishment Reserves (although Lessor is not required to make any demand for
payment) or make any calculation shall not constitute a waiver of Lessor's
rights to such payment(s).
Provided no Default or Event of Default has occurred, all conditions required in
Schedule 4 are met, and Lessee will have no further monetary obligations to
Lessor pursuant to this Agreement, any outstanding credits pursuant to this
Schedule 7 or Section 5.11.2 of this Agreement due to Lessee for future payments
at the time of redelivery of the Aircraft shall be paid by Lessor to Lessee in
monetary amounts equal to such credits less any costs, expenses and/or other
amounts due to Lessor from Lessee pursuant to this Agreement. Such payment(s)
by Lessor, if any, shall be paid on the later of 30 Business Days after
redelivery of the Aircraft or the first date on which any and all pending
indemnification and/or other claims against Lessee by Lessor and/or Lender have
been satisfied.
For purposes of clarification, a separate accounting shall be made for each type
of maintenance Reserves, and the Maintenance Reserves may not be pooled in any
manner.
For further purposes of clarification, a separate accounting shall be made for
the Engine Refurbishment Reserves for each Engine and for the Engine LLP
Reserves for each Engine and no Engine Refurbishment Reserves and/or Engine LLP
Reserves may be pooled in any manner.
SCHEDULE 8 - LESSOR CONTRIBUTIONS
In accordance with Section 7.6, and provided no Default or Event of Default has
occurred, the Lessor shall make each applicable Lessor Contributions, as
follows:
if (i) the Aircraft shall be subject to any FAA airworthiness directive which
requires compliance by a terminating action during the Term, (ii) the Lessee
shall have caused compliance with such FAA airworthiness directive to have been
duly effected, and (iii) the Lessee's parts and labor expense for performance of
such FAA airworthiness directive shall have exceeded seventy five thousand
dollars ($75,000.00), Lessor shall reimburse the Lessee, after Lessor's receipt
of appropriate invoices together with any supporting documentation reasonably
requested by and satisfactory to Lessor, for a portion of the costs of
compliance with such FAA airworthiness directive determined as follows. The
first seventy five thousand dollars ($75,000.00) of such expense for each
airworthiness directive shall be the sole responsibility of the Lessee ("Floor
Amount"). Any excess shall be prorated, with the Lessor's liability being
determined by the following formula:
R = 24 x C
24 + M
"R" means the portion of the actual cost of parts and labor for compliance with
such FAA airworthiness directive to be reimbursed to Lessee;
"M" equals the number of calendar months between the date of actual compliance
with the FAA airworthiness directive and the date representing the second
anniversary of the Delivery Date.
"C" means the actual cost of parts and labor (at normal commercial labor and
material rates) over and above the Floor Amount, at the normal commercial labor
charge rates, plus reasonable cost of materials.
For purposes of this Schedule 8, the cost of a FAA airworthiness directive shall
not include maintenance expense required by or otherwise incorporated in the
Maintenance Program notwithstanding any AD.
SCHEDULE 9-- FORM OF IRREVOCABLE POWER OF ATTORNEYS AND IRREVOCABLE INSTRUCTIONS
Form of Power of Attorney
CYGNUS AIR, S.A., a company duly established in accordance with the law of Spain
with its registered office at x/ Xxxxxxx, 0, 00000 - Xxxxxx, Xxxxx, CIF:
X-00000000,hereby irrevocably appoints [U.S. Bank National Association ("U.S.
Bank")] [United Bank of Kuwait PLC ("UBK")] [Mr(including personal data)and
Ms], as its attorneys, so that the aforementioned attorneys or any of them may
take, with respect to the DC8-73F aircraft, Manufacturer's Serial No: 46133,
Equipped with four (4) related CFM International, Inc. 56-2C1 Engines (such
aircraft and all such engines collectively the "Aircraft"), which has been
leased to CYGNUS AIR, S.A. by virtue of a Lease Agreement dated June__, 2002
("Lease Agreement") and with respect to the Lease Agreement and the "Aircraft
Documents" (as such term is defined in the Lease Agreement), may take, in the
name and on behalf of CYGNUS AIR, S.A., the following actions:
1. To perform any act or grant any consent or document to permit [U.S. Bank,
Ms. ____, Mr._____ and/or Mr. _____][UBK, Mr. _______, and/or Mr._____], to
recover possession of and to use the Aircraft; as well as to initiate and follow
any necessary procedures before the Spanish authorities and courts in order to
export the Aircraft and Aircraft documents from Spain and to cause the Aircraft
to be de-registered from the Spanish Aircraft Registry ("Registro de Matricula
de Aeronaves") and, if applicable, from the Mercantiles Registry upon
termination of the Lease Agreement.
2. In the exercise of the rights mentioned in the preceding paragraph, which
are granted without any limitation or restriction, to make any declarations or
statements to apply for any authorization, permits and/or consents, to pay any
taxes and to sign any public or private documents or applications which may be
consider necessary or appropriate for the most complete and efficient
performance of such faculties.
3. To delegate, in full or in part, the powers conferred hereby in favor of
one or more individuals acting as agent(s) or representative(s) for the above
appointed attorneys or any of them.
CYGNUS AIR, S.A., hereby agrees to confirm and ratify if so requested by the
attorneys each and every action taken by any person in reliance upon this power
of attorney and to indemnify each such person against any and all claims,
proceedings, losses, liabilities, suits, judgments, costs, expenses, penalties
or fines (each a "Claim"), that arise out of the use of this power of attorney
but excluding Claims arising as a result of willful misconduct or gross
negligence by such persons. In any event, any action taken under this power of
attorney shall comply with any requirements set forth by the Spanish civil air
authorities and by any applicable regulation.
This Power of Attorney is expressed to be irrevocable and is granted by virtue
of the above-mentioned Lease Agreement existing between U.S. Bank and CYGNUS
AIR, S.A. and will be governed by the laws of Spain.
Cygnus Air, S.A.
By:__________________________________
Name:
Title:
STATE OF ________ )
)ss:
COUNTY OF ______ )
The foregoing Lease Agreement was acknowledged before me as of the ____ day of
__________, 2002 by __________ as __________ of __________. She/He has produced
as identification: _____________.
In Witness Whereof, I have hereunto set my hand and seal in the State and County
aforesaid.
Notary Public
State of _____
Commission or Serial No.:
My Commission Expires:
[Seal]
Modelo de poder
CYGNUS AIR, S.A., sociedad v lidamente constituida y existente de acuerdo con
las leyes de Espa a, con domicilio social en Xxxxxxx, 0, Xxxxxx, Xxxx a,
confiere poder especial irrevocable, tan amplio y suficiente como en Derecho sea
necesario, en favor de [U.S. Bank National Association, con domicilio en 000
Xxxx Xxxxx Xxxxxx, Xx. Xxxx, Xxxxxxxxx 00000] [The United Bank of Kuwait, PLC.,
con domicilio en 0 Xxxxx Xxxxxx, Xxxxxxx X0X 0XX, Inglaterra], as como de
[D.__, de nacionalidad estadounidense, con n mero de pasaporte__], [D.__, de
nacionalidad estadounidense, con n mero de pasaporte__], y de [D.__, de
nacionalidad espa ola, con n mero de DNI __] y de [D.__, de nacionalidad espa
ola, con n mero de DNI __] a fin de que, indistintamente, la citada sociedad,
actuando a trav s de sus representantes legales o personas debidamente
apoderadas al efecto, o cualquiera de las personas f sicas se aladas, pueda, en
relaci n con la aeronave DC8-73F Aircraft, N mero de Serie de Fabricante: 46133,
equipada con cuatro (4) motores CFM International, Inc. 56-2C1 (la citada
aeronave y sus motores, conjuntamente denominada como la "Aeronave"), la cual ha
sido arrendada a CYGNUS AIR, S.A. en virtud de un Contrato de Arrendamiento de
fecha 21 de junio de 2002 ("Contrato de Arrendamiento") y en relaci n con el
Contrato de Arrendamiento y con los "Documentos de la Aeronave" (seg n se
definen en el Contrato de Arrendamiento), actuando solidariamente en nombre y
representaci n de CYGNUS AIR, S.A., realizar las siguientes actuaciones:
1. Llevar a cabo cualquier actuaci n u otorgar cualquier consentimiento o
documento para permitir a [U.S. National Bank Association][ The United Bank of
Kuwait, PLC] recuperar la posesi n y utilizar la Aeronave; as como iniciar y
seguir cualesquiera procedimientos necesarios ante las autoridades y tribunales
espa xxxx para exportar la Aeronave y los Documentos de la Aeronave de Espa a, y
cancelar la inscripci n de la misma en el Registro de Matr cula de Aeronaves y,
en su caso, en el Registro Mercantil a la terminaci n de dicho Contrato de
Arrendamiento.
2. En el ejercicio de las facultades conferidas en el apartado anterior, que
se otorgan sin limitaci n o restricci n de ninguna clase, realizar las
gestiones, declaraciones y manifestaciones para solicitar las autorizaciones,
permisos y/o verificaciones, realizar cualesquiera pagos de tributos, y otorgar
los documentos p blicos o privados que xxxx necesarios o convenientes para la m
s completa y eficaz ejecuci n de las citadas facultades; y
3. Delegar, en todo o en parte, los poderes aqu conferidos a favor de uno o
m s apoderados actuando como agentes o representantes de todas las personas aqu
apoderadas o de alguna de ellas.
CYGNUS AIR, S.A. se compromete a confirmar y ratificar, a requerimiento de
cualquiera de los apoderados, toda actuaci n llevada a cabo por cualquier
persona en el uso de este poder e indemnizar a las mismas frente a cualesquiera
reclamaciones, procedimientos, p rdidas, responsabilidades, demandas,
sentencias, costes, gastos, penas o multas (cada uno de ellos, una "Reclamaci
n"), que se pudieran derivar del uso de este poder, pero excluyendo
Reclamaciones derivadas de la conducta dolosa o gravemente negligente de tales
apoderados. En todo caso deber n seguirse en el cumplimiento de las facultades
otorgadas todos los requisitos y exigencias que las autoridades aeron uticas
espa olas y la legislaci n aplicable establezcan en su caso.
Este poder tiene el car cter de irrevocable y se otorga en base al contrato de
arrendamiento de aeronave antes se alado existente entre U.S. Bank National
Association y CYGNUS AIR, S.A. Este poder se regir por la legislaci n espa ola.
Cygnus Air, X.X.
X.x.
___________________________
Nombre:
Cargo:
