EXHIBIT 10.1
EXECUTION VERSION
DATED AS OF MAY 4, 2004
BETWEEN
AVIATION FINANCIAL SERVICES INC.
AND
KITTY HAWK AIRCARGO, INC.
AIRCRAFT LEASE
COMMON TERMS AGREEMENT
CONFIDENTIAL TREATMENT HAS BEEN REQUESTED BY KITTY HAWK, INC. FOR CERTAIN
PORTIONS OF THIS DOCUMENT. CONFIDENTIAL PORTIONS HAVE BEEN FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION. OMITTED PORTIONS ARE INDICATED IN THIS
AGREEMENT WITH "*****".
CONTENTS
SECTION PAGE
1. INTERPRETATION............................................................................................. 1
1.1 Definitions.......................................................................................... 1
1.2 Construction......................................................................................... 1
2. REPRESENTATIONS AND WARRANTIES............................................................................. 2
3. CONDITIONS PRECEDENT....................................................................................... 2
4. COMMENCEMENT............................................................................................... 3
5. PAYMENTS................................................................................................... 5
6. MANUFACTURERS' WARRANTIES.................................................................................. 18
7. LESSOR'S COVENANTS......................................................................................... 18
8. LESSEE'S COVENANTS......................................................................................... 19
9. INSURANCE.................................................................................................. 30
10. INDEMNITY............................................................................................... 32
11. EVENTS OF LOSS.......................................................................................... 34
12. RETURN OF AIRCRAFT...................................................................................... 35
13. DEFAULT................................................................................................. 36
14. ASSIGNMENT.............................................................................................. 40
15. MISCELLANEOUS........................................................................................... 42
16. DISCLAIMERS AND WAIVERS................................................................................. 48
17. BROKERS AND OTHER THIRD PARTIES......................................................................... 50
SCHEDULE 1 Definitions..................................................................................... 1
SCHEDULE 2 Representations And Warranties.................................................................. 1
SCHEDULE 3 Conditions Precedent............................................................................ 1
SCHEDULE 4 Pre-Delivery Procedures and Delivery Condition.................................................. 1
SCHEDULE 5 Certificate Of Acceptance....................................................................... 1
SCHEDULE 6 Procedures And Operating Condition At Redelivery................................................ 1
SCHEDULE 7 Insurance Requirements.......................................................................... 1
SCHEDULE 8 Form Of Legal OpinionS.......................................................................... 1
SCHEDULE 9 Events Of Default............................................................................... 1
SCHEDULE 10 Form of GuarantY.............................................................................. 1
SCHEDULE 11 [Omitted]...................................................................................... 1
SCHEDULE 12 Aircraft Passenger Cabin Interior Standard..................................................... 1
SCHEDULE 13 Form Of Assignment, Assumption And Release Agreement........................................... 1
Annex I to Assignment Agreement............................................................................ 1
Annex II To Assignment Agreement........................................................................... 1
Annex A To Notice of Assignment............................................................................ 1
Annex B To Notice of Assignment............................................................................ 1
SCHEDULE 14 Form Of Lease Supplement No. 1................................................................. 1
SCHEDULE 15 Form Of CERTIFICATE Lease Termination.......................................................... 1
SCHEDULE 16 Form Of Letter Of Credit....................................................................... 1
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COMMON TERMS AGREEMENT
THIS COMMON TERMS AGREEMENT (this "CTA") is made as of May 4, 2004, BETWEEN:
Aviation Financial Services Inc. ("AFSI"); and Kitty Hawk Aircargo, Inc.
WHEREAS:
(A) From time to time, Kitty Hawk Aircargo, Inc. or one of its
Affiliates may wish to lease commercial aircraft from AFSI or one of
its Affiliates and AFSI or one of its Affiliates may wish to lease
commercial aircraft to Kitty Hawk Aircargo, Inc. or one of its
Affiliates;
(B) Each party hereto wishes to provide in one document for certain
common terms and conditions, as hereinafter provided in this CTA,
that will be applicable, unless otherwise stated, to each such lease
referred to in Recital (A); and
(C) Each such lease transaction will be concluded only on the terms of
an agreement entitled "Aircraft Lease Agreement," which together
with this CTA (which will be incorporated into and become part of
such Aircraft Lease Agreement) will constitute the lease for the
applicable aircraft as identified therein;
NOW, THEREFORE, for good and valuable consideration the receipt and
sufficiency of which are hereby acknowledged, the parties hereto hereby agree as
follows:
1. INTERPRETATION
1.1 DEFINITIONS
All references herein to "Lease" mean the various documents comprising the
Lease. In the Lease, capitalized words and expressions not otherwise
defined have the meanings set out for them in Schedule 1 or in the
Aircraft Lease Agreement.
1.2 CONSTRUCTION
(a) In the Lease, unless otherwise stated, a reference to:
(i) "Lessor," "Lessee," "GECAS," "Owner" or any other Person
includes any of their successors and assigns;
(ii) plural concepts shall include the singular and vice versa;
CONFIDENTIAL TREATMENT HAS BEEN REQUESTED BY KITTY HAWK, INC. FOR CERTAIN
PORTIONS OF THIS DOCUMENT. CONFIDENTIAL PORTIONS HAVE BEEN FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION. OMITTED PORTIONS ARE INDICATED IN THIS
AGREEMENT WITH "*****".
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(iii) any document, excluding this Common Terms Agreement, shall
include any changes to that document and any replacement for
it;
(iv) a Section or a Schedule is a reference to a section of or a
schedule to this CTA or the Aircraft Lease Agreement as so
indicated;
(v) any Regulation shall include any changes to that Regulation
and any replacement for it;
(vi) an obligation of a Person refers to any obligation that Person
has under or in relation to the Lease;
(vii) "includes," "including", "include" or similar terms shall not
be construed as limiting and shall mean "including without
limitation"; and
(viii) in the event of a conflict between the provisions of the
Aircraft Lease Agreement and the provisions of this CTA, the
provisions of the Aircraft Lease Agreement shall control.
(b) Headings and Subheadings to Sections and Schedules in the Lease are
not intended to affect their meaning.
2. REPRESENTATIONS AND WARRANTIES
2.1 LESSEE'S REPRESENTATIONS AND WARRANTIES
Lessee hereby makes the representations and warranties set out in Section
1.1 of Schedule 2 as of the date of execution of the Aircraft Lease
Agreement and as of the Delivery Date, and Lessee understands that these
statements must be true, both when the Aircraft Lease Agreement is
executed and on the Delivery Date.
2.2 LESSOR'S REPRESENTATIONS AND WARRANTIES
Lessor hereby makes the representations and warranties set out in Section
1.2 of Schedule 2 as of the date of execution of the Aircraft Lease
Agreement and as of the Delivery Date, and Lessor understands that these
statements must be true, both when the Aircraft Lease Agreement is
executed and on the Delivery Date.
3. CONDITIONS PRECEDENT
3.1 CONDITIONS PRECEDENT
Lessee and Lessor will provide each of the Conditions Precedent in a
timely fashion. Lessor need not deliver and start the leasing of the
Aircraft under the Lease unless each of the Lessor Conditions Precedent is
satisfied or waived in writing by Lessor. Lessee need not accept and start
the leasing of the Aircraft under the Lease unless each of the Lessee
Conditions Precedent is satisfied or waived in writing by Lessee.
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3.2 WAIVER
If any Lessor Condition Precedent is not satisfied, or waived in writing
by Lessor, on or before the Delivery Date and Lessor (in its absolute
discretion) nonetheless agrees to deliver the Aircraft to Lessee and to
start the leasing of the Aircraft, Lessee will ensure that such Lessor
Condition Precedent is fulfilled within thirty (30) days after the
Delivery Date, and Lessor may treat as an Event of Default the failure of
Lessee to do so.
4. COMMENCEMENT
4.1 LEASING
(a) The Aircraft Lease Agreement will generally provide a Scheduled
Delivery Month. Unless a specific Scheduled Delivery Week or a
specific Scheduled Delivery Date has been agreed in the Aircraft
Lease Agreement, Lessor shall notify Lessee of the Scheduled
Delivery Week as soon as possible, but no later than thirty (30)
days prior to the anticipated Delivery Date, and unless a specific
Scheduled Delivery Date has been agreed in the Aircraft Lease
Agreement, Lessor shall notify Lessee of the Scheduled Delivery Date
as soon as practicable but no later than one (1) week prior to the
Scheduled Delivery Week, and Lessor shall notify Lessee of any
change in the Scheduled Delivery Date as soon as practicable
thereafter. Subject to Section 4.4, Lessor will lease the Aircraft
to Lessee and Lessee will take the Aircraft on lease for the Term,
which shall be evidenced by Lessee's execution of Lease Supplement
No. 1.
(b) If (i) Lessee is unwilling or unable to accept delivery of the
Aircraft on the date on which Lessor tenders the Aircraft for
Delivery to Lessee under and in accordance with Section 4.3(a), or
Lessee fails to fulfill any Lessor Condition Precedent on or before
such date, and (ii) the Lessee Conditions Precedent are met (or
would reasonably be expected to be met if Delivery had occurred),
then the Rent Commencement Date for the Aircraft shall be deemed to
have occurred on the date on which the Aircraft is tendered by
Lessor for Delivery in accordance with subsection (ii) of this
Section 4.1(b), and Lessee shall be obligated to pay Rent for the
Aircraft on and from such date regardless of whether the Delivery
Date occurs or whether Lessee executes Lease Supplement No. 1, but
Lessor shall have no obligation to deliver, and Lessee shall have no
lease interest in the Aircraft or other right to, possession of the
Aircraft unless and until Lessee fulfills all Lessor Conditions
Precedent as and when provided in the Lease and Lessee accepts
delivery of the Aircraft as evidenced by its execution of Lease
Supplement No. 1, and so long as no Default has occurred and is
continuing.
LESSEE WILL BE RESPONSIBLE FOR ALL RISKS ASSOCIATED WITH (I) THE USE AND
OPERATION OF THE AIRCRAFT AND (II) ANY LOSS OF OR DAMAGE TO THE AIRCRAFT
FROM THE DELIVERY DATE UNTIL POSSESSION OF THE AIRCRAFT IS RETURNED TO
LESSOR ON THE RETURN
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OCCASION AND LESSOR EXECUTES AND DELIVERS THE ACKNOWLEDGEMENT CONTEMPLATED
BY SECTION 12.4.
4.2 PROCEDURE BEFORE DELIVERY
Lessor and Lessee will follow the Pre-Delivery Procedure.
4.3 DELIVERY AND ACCEPTANCE
After the Pre-Delivery Procedure has been carried out:
(a) Subject to Section 3.1, Lessor will tender delivery of the Aircraft
to Lessee at the Delivery Location.
(b) Subject to Section 3.1, Lessee will accept the Aircraft. Lessee
shall also provide evidence of its acceptance by signing Lease
Supplement No. 1 and delivering it to Lessor.
(c) Lessee's acceptance of the Aircraft shall be regarded as absolute,
unconditional and irrevocable.
The Term will commence on the Delivery Date, which Delivery Date is
scheduled to occur on the Scheduled Delivery Date, and will expire on the
Scheduled Expiry Date unless terminated earlier in accordance with the
provisions of the Lease.
4.4 DELAYED DELIVERY
(a) If Delivery takes place after the Scheduled Delivery Date or does
not happen due to an Unforeseen Event or for any other reason (other
than an act or omission of Lessor not relating to, or caused by, an
Unforeseen Event):
(i) Lessor will not be responsible for any Losses that Lessee
suffers resulting from the delay or from the non-delivery of
the Aircraft; and
(ii) Lessee will not, except in the circumstances described in
Section 4.4(b), be entitled to terminate the Lease or to
reject the Aircraft when it is offered for Delivery because of
the delay.
(b) If the Aircraft has not been tendered for Delivery, in accordance
with Section 4.3, by the Final Delivery Date, either party may
terminate the Lease by delivering notice to the other party within
ten (10) days following the Final Delivery Date. Upon delivery of
any such notice, all obligations of each party under the Lease will
end on the date of such notice, except that Lessor will repay to
Lessee an amount equal to the Deposit (if any), return to Lessee or
agree to the cancellation of any Letter of Credit, and release and
return any Guarantee given in respect of the Lease. Lessee will
remain obligated under its indemnity set forth in Section 3 of
Schedule 4.
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(c) Lessee hereby agrees that its only right or remedy for a delay in
delivery of the Aircraft due to an Unforeseen Event or for any other
reason (other than an act or omission of Lessor not relating to, or
caused by, an Unforeseen Event) is the remedy set forth in Section
4.4(b) above and Lessee hereby waives any rights or remedies it may
have under Section 2A-406 of the UCC or otherwise for any delay in
or failure of delivery.
5. PAYMENTS
5.1 DEPOSIT
Lessee shall pay Lessor the Deposit, if any, specified in the Aircraft
Lease Agreement.
5.2 RENTAL PERIODS
The first Rental Period will start on the Rent Commencement Date. Each
subsequent Rental Period will start on the date immediately following the
last day of the previous Rental Period. Each Rental Period will end on the
date immediately before the numerically corresponding day in the next
month, except that:
(a) if there is no numerically corresponding day in that month, it will
end on the last day of that month; and
(b) if a Rental Period would otherwise overrun the Expiry Date, it will
end on the Expiry Date.
5.3 RENT
(a) Time of Payment: Lessee will pay to Lessor or its order Rent in
advance, as specified in the Aircraft Lease Agreement, on each Rent
Date. Lessor must receive value for the payment on each Rent Date.
If a Rental Period begins on a day that is not a Business Day, the
Rent payable in respect of that Rental Period shall be paid on the
Business Day immediately before that day.
(b) Amount: The Rent payable during the Term shall be calculated as
provided in the Aircraft Lease Agreement.
5.4 SUPPLEMENTAL RENT
(a) Amount: If, under the Aircraft Lease Agreement, Lessee is required
to pay Supplemental Rent, Lessee will pay that Supplemental Rent, at
the rates referred to in the Aircraft Lease Agreement, to Lessor in
relation to each calendar month (or part of a month) of the Term, on
the fifteenth (15th) day following the end of that calendar month
(except that the last payment of Supplemental Rent in respect of the
Term shall be paid on the Expiry Date).
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(b) Adjustment: The Supplemental Rent rates shall be adjusted after the
Delivery Date not more frequently than annually (with any such
adjustment having retrospective application as appropriate to
reflect the provisions of paragraphs (ii), (iii) and (iv) below)
based on the following:
(i) Annual Supplemental Rent Adjustment: by the Annual
Supplemental Rent Adjustment, compounded annually commencing
on the first anniversary of the Delivery Date, as an agreed
inflation adjustment.
(ii) Hour to Cycle Ratio Adjustment: Lessor and Lessee acknowledge
that the Aircraft Lease Agreement may provide that the Engine
Supplemental Rent rate and the Engine LLP Supplemental Rent
rate are based upon the assumption that the Aircraft will
operate on an Assumed Ratio. If that assumption proves to be
incorrect at any time during the Term based upon Lessee's
actual operating experience during the most recently preceding
twelve (12) months that data is available at the time of
determination, and the hour to cycle ratio differs from
Assumed Ratio by more than 0.2 during such twelve (12) month
period, Lessor shall have the right, upon written notice to
Lessee, to adjust the Engine Supplemental Rent rate and the
Engine LLP Supplemental Rent rate (in the case of a decrease
in the ratio below the Assumed Ratio) and Lessor, upon written
request from Lessee, will make that adjustment (in the case of
an increase in the ratio above the Assumed Ratio). Any
adjustment shall be based on a table contained in the Aircraft
Lease Agreement. Actual hour to cycle ratios may fall outside
the ratios identified in that table. In that case, the actual
values shall be determined by extrapolating the closest
observed intervals in the table.
(iii) Assumed Utilization Adjustment: Lessor and Lessee acknowledge
that the Aircraft Lease Agreement may provide that any amounts
of Airframe Supplemental Rent, APU Supplemental Rent and
Landing Gear Supplemental Rent payable by Lessee are based
upon the assumption that the Aircraft will operate on an
Assumed Utilization. If that assumption proves to be incorrect
at any time during the Term based upon Lessee's actual
operating experience during the most recently preceding twelve
(12) months that data is available at the time of
determination, such that Lessee's actual utilization of the
Aircraft is (x) ***** or greater or (y) ***** or less than the
Assumed Utilization, Lessor may make, and notify Lessee of,
such adjustment up or down, as applicable, as Lessor
reasonably determines is necessary or appropriate in its
reasonable discretion to maintain the rates of Airframe
Supplemental Rent, APU Supplemental Rent and Landing Gear
Supplemental Rent at levels which accurately reflect the costs
associated with obtaining relevant maintenance services at
prevailing industry rates.
CONFIDENTIAL TREATMENT HAS BEEN REQUESTED BY KITTY HAWK, INC. FOR CERTAIN
PORTIONS OF THIS DOCUMENT. CONFIDENTIAL PORTIONS HAVE BEEN FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION. OMITTED PORTIONS ARE INDICATED IN THIS
AGREEMENT WITH "*****".
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(iv) Material Revision to Maintenance Program: If the Lessee's
Maintenance Program is materially revised and the result of
such revision is to materially increase or decrease the cost
of obtaining relevant maintenance services above and beyond or
below those contemplated by any Supplemental Rent rate then in
effect, Lessor may make, and notify Lessee of, such adjustment
up or down, as applicable, as Lessor reasonably determines is
necessary or appropriate in its reasonable discretion to
maintain the Supplemental Rent at levels which accurately
reflect the costs associated with obtaining relevant
maintenance services at prevailing industry rates.
(v) Each notice by Lessor specified in paragraphs (ii), (iii) and
(iv) above shall specify the relevant revised Supplemental
Rent rates and the effective date of such revision and Lessee
shall be bound by such notice absent manifest error.
(vi) Lessee agrees to advise Lessor, in writing, within thirty (30)
days following any annualized calculation which would result
in the assumptions mentioned in paragraphs (ii) and (iii)
above becoming incorrect at any time during the Term.
(c) Lessor's Property Rights: Lessee acknowledges and agrees that
Supplemental Rent is additional rent for the leasing of the Aircraft
and not cash collateral or other collateral security for Lessee's
maintenance obligations under the Lease. Once paid, all Supplemental
Rent is the property of Lessor, it is not refundable to Lessee under
any circumstances whatsoever and Lessee has no interest therein
whatsoever. For the avoidance of doubt, the provisions of this
Section 5.4(c) do not derogate from the provisions set forth in
Section 7.2 on Maintenance Contributions.
5.5 PAYMENTS
All payments by Lessee to Lessor under the Lease will be made for value on
the due date in Dollars and in immediately available funds by wire
transfer to Deutsche Bank Trust Company Americas, 0 Xxxxxx Xxxxxx, Xxx
Xxxx, XX, ABA Number 021 001 033, Swift Code BKTRUS 33, for the account of
GE Capital Aviation Services, Inc., as Manager, Account number 50 234 585,
or such other account as Lessor designates in writing from time to time.
5.6 WITHHOLDING
(a) WITHHOLDING: Lessee must not deduct any amount from any of its
payments under the Lease, for or on account of any Taxes (other than
Lessor Taxes), unless it is required by Law to do so, in which case
Lessee must:
(i) deduct the minimum amount necessary to comply with the Law;
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(ii) pay Lessor an extra amount so that Lessor receives a net
amount on the relevant payment date that is equal to the
amount that it would have received if the deduction had not
been made. The amount of any such payment to Lessor shall be
made taking into account the principles of Section 5.10 so
that Lessor shall be in no worse position than it would have
been if the deduction had not applied in the first place;
(iii) pay the Tax to the relevant taxing authority according to the
relevant Law; and
(iv) obtain a receipt (if one is available) from the relevant
taxing authority and give it to Lessor.
(b) REPAYMENT OF LESSOR TAXES: If, for any reason, Lessee is required to
make any payment of withholding Taxes to a taxing authority (which
payment was not deducted from the payment made by Lessee to Lessor
on whom such Taxes are imposed) with respect to, or as a result of,
any withholding Taxes imposed with respect to a payment pursuant to
the Lease which withholding Tax is not the responsibility of Lessee
under Section 5.7(a) as a result of Section 5.7(c), then, upon
written request of Lessee, Lessor promptly (and in any event within
twenty days after receipt of notice of payment of the withholding
Taxes and appropriate payment documentation with respect thereto)
shall pay to Lessee an amount that equals such withholding Taxes.
5.7 TAX INDEMNITY
*****
5.8 VALUE ADDED TAX
(a) For the purposes of this Section 5.8:
(i) "VAT" means value added tax and any goods and services, sales
or turnover tax, imposition or levy of a like nature; and
(ii) "supply" includes anything on or in respect of which VAT is
chargeable.
(b) Lessee will pay to Lessor or the relevant taxing authority and
indemnify Lessor against the amount of any VAT chargeable in respect
of any supply for VAT purposes under the Lease. Lessee shall provide
evidence to Lessor, if available, in respect of any payment it makes
of such VAT. The amount of any such payment to Lessor shall be made
taking into account the principles of Section 5.10;
CONFIDENTIAL TREATMENT HAS BEEN REQUESTED BY KITTY HAWK, INC. FOR CERTAIN
PORTIONS OF THIS DOCUMENT. FOUR (4) PAGES OF SECTION 5.7 HAVE BEEN OMITTED
PURSUANT TO THE CONFIDENTIAL TREATMENT REQUEST. CONFIDENTIAL PORTIONS HAVE BEEN
FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION. OMITTED PORTIONS
ARE INDICATED IN THIS AGREEMENT WITH "*****".
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(c) Each amount stated as payable by Lessee under the Lease is exclusive
of VAT (if any);
(d) If, for any reason, Lessee is required to make any payment of VAT to
a taxing authority (which payment was not deducted from the payment
made by Lessee to Lessor on whom such Tax is imposed) with respect
to, or as a result of, any VAT imposed with respect to a payment
pursuant to the Lease which VAT is not the responsibility of Lessee
under Section 5.7(a) as a result of Section 5.7(c), then, upon
written request of Lessee, Lessor promptly (and in any event within
twenty days after receipt of notice of payment of the VAT and
appropriate payment documentation with respect thereto) shall pay to
Lessee an amount that equals such VAT.
5.9 TAX CONTEST
(a) If a Tax Indemnitee receives a written claim for any Tax for which
Lessee would be required to pay an indemnity pursuant to Section
5.7(a)(i), the Tax Indemnitee shall notify Lessee promptly of such
claim, provided that any failure to provide such notice will not
relieve Lessee of any indemnification obligation pursuant to Section
5.7. If requested by Lessee in writing promptly after receipt of the
Tax Indemnitee's notice, the Tax Indemnitee shall, upon receipt of
indemnity reasonably satisfactory to it and at the expense of Lessee
(including all costs, expenses, legal and accountants' fees and
disbursements, and penalties, interest and additions to tax incurred
in contesting such claim) in good faith contest or (if permitted by
applicable Law and the contest does not relate to income Taxes)
permit Lessee to contest such claim by (i) resisting payment thereof
if practicable and appropriate, (ii) not paying the same except
under protest if protest is necessary and proper, or (iii) if
payment is made, using reasonable efforts to obtain a refund of such
Taxes in appropriate administrative and judicial proceedings. The
Tax Indemnitee shall determine the method of any contest conducted
by the Tax Indemnitee and (in good faith consultation with Lessee)
control the conduct thereof. Lessee shall determine the method of
any contest conducted by Lessee and (in good faith consultation with
the Tax Indemnitee) control the conduct thereof. Lessee shall pay in
full all payments of Rent and other amounts payable pursuant to the
Lease, without reduction for or on account of any Tax, while such
contest is continuing. The Tax Indemnitee shall not be required to
contest, or to continue to contest, a claim for Taxes under this
Section 5.9 if (w) in the case of a contest related to income Taxes,
the amount of Taxes at issue is less than *****, or (x) such contest
would result in a risk of criminal penalties or risk of a sale,
forfeiture or loss of, or the imposition of a Security
CONFIDENTIAL TREATMENT HAS BEEN REQUESTED BY KITTY HAWK, INC. FOR CERTAIN
PORTIONS OF THIS DOCUMENT. CONFIDENTIAL PORTIONS HAVE BEEN FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION. OMITTED PORTIONS ARE INDICATED IN THIS
AGREEMENT WITH "*****".
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Interest (other than a Permitted Lien) on, the Aircraft, or (y)
Lessee shall not have furnished, at Lessee's expense, an opinion of
independent tax counsel selected by the Tax Indemnitee and
reasonably satisfactory to Lessee, that a reasonable basis exists
for such contest, or (z) a Default shall be continuing (unless
Lessee shall have provided security reasonably satisfactory to the
Tax Indemnitee securing Lessee's performance of its obligations
under this Section 5.9). If the Tax Indemnitee contests any claim
for Taxes by making a payment and seeking a refund thereof, then
Lessee shall advance to the Tax Indemnitee, on an interest-free
basis, an amount equal to the Taxes to be paid by the Tax Indemnitee
in connection with the contest and shall indemnify the Tax
Indemnitee on an After-Tax Basis for any adverse tax consequences to
the Tax Indemnitee of such interest-free advance. Upon the final
determination of any contest pursuant to this Section 5.9 in respect
of any Taxes for which Lessee shall have made an advance to the Tax
Indemnitee in accordance with the immediately preceding sentence,
the amount of Lessee's obligation shall be determined as if such
advance had not been made; any indemnity obligation of Lessee to the
Tax Indemnitee under this Section 5.9 and the Tax Indemnitee's
obligation to repay the advance will be satisfied first by setoff
against each other, and any difference owing by either party shall
be paid within ***** days after such final determination.
(b) If any Tax Indemnitee obtains a refund or reimbursement of all or
any part of any Taxes for which a full indemnity was paid by Lessee
under Section 5.7 hereof or otherwise, such Tax Indemnitee shall pay
Lessee the amount of such refund or reimbursement, reduced by any
Taxes imposed on such Tax Indemnitee on receipt or accrual of such
refund or reimbursement and increased by any Taxes saved by such Tax
Indemnitee by reason of the deductions, credits, allocations or
allowances in respect of such payment by Lessee. If, in addition to
such refund or reimbursement, a Tax Indemnitee receives an amount
representing interest on such refund or reimbursement, such Tax
Indemnitee shall pay to Lessee the portion of such interest which is
fairly attributable to such refund, reduced by any Taxes imposed on
such Tax Indemnitee on receipt or accrual of such interest and
increased by any Taxes saved by reason of the deductions, credits,
allocations or allowances in respect of such payment. A Tax
Indemnitee shall not be required to make any payment to Lessee
pursuant to this Section 5.9 if, and for so long as, a Payment
Default or an Event of Default shall have occurred and be
continuing.
(c) Any Tax Indemnitee in its sole discretion (by written notice to
Lessee) may waive its rights to indemnification pursuant to Section
5.7 with respect to any claim for any Tax and may refrain from
contesting or continuing the contest of such claim, in which event
Lessee shall have no obligation to indemnify such Tax Indemnitee for
the Taxes that are the subject of such claim. If any Tax Indemnitee
agrees to a settlement of any contest conducted pursuant to this
Section 5.9 without the prior
CONFIDENTIAL TREATMENT HAS BEEN REQUESTED BY KITTY HAWK, INC. FOR CERTAIN
PORTIONS OF THIS DOCUMENT. CONFIDENTIAL PORTIONS HAVE BEEN FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION. OMITTED PORTIONS ARE INDICATED IN THIS
AGREEMENT WITH "*****".
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written consent of Lessee, which consent shall not be unreasonably
withheld, then such Tax Indemnitee shall be deemed to have waived
its rights to the indemnification provided for in Section 5.7 with
respect to the Tax liability accepted in such settlement.
(d) Information:
(i) If Lessee is required by any applicable Law, or by any third
party, to deliver any report or return in connection with any
Taxes for which Lessee would be obligated to indemnify Lessor
or any other Tax Indemnitee under the Lease, Lessee will
complete the same and, on request, supply a copy of the report
or return to Lessor. Should Lessee require any information
exclusively within the Control of Lessor or another Tax
Indemnitee to properly complete and deliver any such report or
return, Lessor or such other Tax Indemnitee shall, at Lessee's
expense, furnish such information to Lessee promptly after
request therefor.
(ii) If any report, return or statement is required to be made by
Lessor or any other Tax Indemnitee with respect to any Tax for
which there is an indemnity obligation of Lessee under the
Lease, and Lessee knows of, or reasonably should have known
of, such return, report or statement, Lessee will promptly
notify Lessor of the requirement and:
(A) if permitted by applicable Law, make and timely file
such report, return or statement (except for any report,
return or statement that Lessor has notified Lessee that
Lessor or any other Tax Indemnitee intends to prepare
and file), prepare such return in such manner as will
show Lessor as lessor of the Aircraft and the ownership
of the Aircraft in Owner if required or appropriate, and
provide Lessor upon request a copy of each such report,
return or statement filed by Lessee, or
(B) if Lessee is not permitted by applicable Law to file any
such report, return or statement, Lessee will prepare
and deliver to Lessor a proposed form of such report,
return or statement within a reasonable time prior to
the time such report, return or statement is to be
filed.
(iii) Lessee will provide such information and documents as Lessor
may reasonably request to enable Lessor or any other Tax
Indemnitee to comply with its tax filing, audit and litigation
obligations. Lessor or any other Tax Indemnitee will provide
such information or documents, at Lessee's expense, that
Lessee does not otherwise have as Lessee may reasonably
request and which are necessary to enable Lessee to comply
with its obligations under the Lease (including Sections 5.6
and 5.7 of this CTA and in the Aircraft Lease Agreement).
-11-
5.10 INDEMNITY PAYMENTS - AFTER-TAX BASIS; TAX CREDIT
*****
5.11 LESSOR OBLIGATIONS FOLLOWING EXPIRY DATE
Within ninety-one (91) days (or such shorter period of not less than
thirty (30) days after the Expiry Date to which Lessor may agree after
Lessee demonstrates to Lessor's reasonable satisfaction that there is no
risk whatsoever of any payment made or to be made under the Lease being
avoided (or otherwise rescinded) under Xxxxxxx 000 xx xxx Xxxxxx Xxxxxx
Bankruptcy Code of 1978, as amended, or any similar occurrence under any
analogous provision of applicable United States federal or state Law)
after:
(a) redelivery of the Aircraft to Lessor in accordance with and in the
condition required by the Lease; or
(b) payment to Lessor of the Agreed Value following an Event of Loss
after the Delivery Date; or
(c) termination of the Lease prior to the commencement of the Term in
accordance with the provisions of the Lease; or
(d) or in each case such later time as Lessor is reasonably satisfied
that Lessee has irrevocably paid to Lessor all amounts that may then
be due and payable under the Lease and the Other Agreements and in
each case so long as no Default has occurred and is continuing:
(i) Lessor will pay to Lessee an amount equal to the balance of
the Deposit (if any);
(ii) Lessor will pay to Lessee the amount of any Rent received in
respect of any period falling after the date of redelivery of
the Aircraft or payment of the Agreed Value, as the case may
be; and
(iii) Lessor will return to Lessee or agree to the cancellation of
any Letter of Credit.
5.12 NET LEASE
The Lease is a net lease. Lessee's obligation to pay Rent and to perform
all of its other obligations under the Lease is absolute and unconditional
no matter what happens and no matter how fundamental or unforeseen the
event, including any of the following:
CONFIDENTIAL TREATMENT HAS BEEN REQUESTED BY KITTY HAWK, INC. FOR CERTAIN
PORTIONS OF THIS DOCUMENT. CONFIDENTIAL PORTIONS HAVE BEEN FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION. OMITTED PORTIONS ARE INDICATED IN THIS
AGREEMENT WITH "*****".
-12-
(a) any right of set-off, counterclaim, recoupment, defense or other
right which either party to the Lease may have against the other
(including any right of reimbursement) or which Lessee may have
against the Manufacturer, any manufacturer or seller of or any
Person providing services with respect to the Aircraft, any Engine
or any Part or any other Person, for any reason whatsoever;
(b) any unavailability of the Aircraft for any reason, including a
requisition of the Aircraft or any prohibition or interruption of or
interference with or other restriction against Lessee's use,
operation or possession of the Aircraft (whether or not the same
would, but for this provision, result in the termination of the
Lease by operation of law);
(c) any lack or invalidity of title or any other defect in title,
airworthiness, merchantability, fitness for any purpose, condition,
design, or operation of any kind or nature of the Aircraft for any
particular use or trade, or for registration or documentation under
the Laws of any relevant jurisdiction, or any Event of Loss in
respect of or any damage to the Aircraft;
(d) any insolvency, bankruptcy, reorganization, arrangement,
readjustment of debt, dissolution, liquidation or similar
proceedings by or against Lessor, Lessee or any other Person;
(e) any invalidity or unenforceability or lack of due authorization of,
or other defect in, the Lease;
(f) any Security Interests or Taxes; and/or
(g) any other cause or circumstance which but for this provision would
or might otherwise have the effect of terminating or in any way
affecting any obligation of Lessee under the Lease. Lessee
acknowledges and agrees that it has used its own judgment in
selecting the Aircraft, and has not relied on Lessor or on any
information supplied by Lessor, that Lessor is not a manufacturer of
or dealer in aircraft and that Lessor has all of the rights and
benefits of a lessor under a lease to which Section 2A-407 of the
UCC applies as provided in such Section 2A-407.
Except as expressly set forth elsewhere in the Lease, Lessee hereby
waives, to the extent permitted by applicable Law, any and all right which
it may now have or which at any time hereafter may be conferred upon it,
by statute or otherwise, to terminate, xxxxx, cancel, quit, reduce, defer,
suspend or surrender the Lease or the Aircraft or any obligation imposed
upon Lessee under the Lease (including payment of Rent or Supplemental
Rent).
Each payment of Rent or Supplemental Rent made by Lessee shall be final.
Lessee will not seek to recover all or any part of any payment of Rent or
Supplemental Rent for any reason whatsoever except manifest error.
If for any reason whatsoever the Lease shall be terminated in whole or in
part by operation of Law, except as specifically provided in the Lease,
Lessee waives all rights
-13-
(if any) to any termination or diminution in its Rent or Supplemental Rent
obligations under the Lease and nonetheless agrees to pay to Lessor, an
amount equal to each Rent and Supplemental Rent payment at the time such
payments would have become due and payable in accordance with the terms of
the Lease had the Lease not been terminated in whole or in part and so
long as such payments are made and all other terms and conditions of the
Lease are complied with by Lessee, Lessor and Lessee will deem the Lease
to remain in full force and effect and Lessee shall continue in possession
of the Aircraft under the terms and conditions of the Lease.
Nothing in this Section 5.12 will be construed to limit Lessee's right to
institute separate legal proceedings against Lessor in the event of Lessor's
breach of the Lease as and to the extent permitted by Sections 7.1 and 16.3 of
this CTA and as otherwise permitted by applicable Law, or to limit Lessee's
rights and remedies against any other Person.
For the avoidance of doubt, nothing in this Section 5.12 shall be construed to
require any payment of Taxes other than those Taxes expressly payable by Lessee
under the Lease.
5.13 FURTHER PROVISIONS REGARDING DEPOSIT
(a) If, under the Aircraft Lease Agreement, Lessee is required to pay a
Deposit, Lessee hereby grants a security interest in the Deposit to
Lessor as security for Lessee's and Lessee Affiliates' obligations
under the Lease and all Other Agreements (including any and all
Losses suffered or incurred by Lessor or any of its Affiliates in
respect of which Lessee or any Lessee Affiliate is obligated under
the Lease or any Other Agreement) and the remaining provisions of
this Section 5.13 shall apply. Lessee agrees that Lessor shall be
entitled to commingle the Deposit with Lessor's general or other
funds, Lessor will have no obligation to pay any interest thereon,
Lessor will not hold any such funds as agent or in trust for Lessee
or in any similar fiduciary capacity and Lessee's right to payment
of any amounts equal to the Deposit is limited as set forth in the
Lease. In this regard, Lessee acknowledges and agrees that it is not
located in the State of New York within the meaning of Section 7-101
1-c. (b) of the New York General Obligations Law and, therefore, the
requirements of Section 7-101 of the New York General Obligations
Law to the effect that Lessor hold the Deposit in a separate,
interest bearing account do not apply.
(b) If Lessee fails to comply with any provision of the Lease or the
Other Agreements, or any Payment Default or Event of Default shall
have occurred and be continuing, in addition to all rights and
remedies accorded to Lessor elsewhere in the Lease or under Law in
respect of the Deposit, Lessor may immediately or at any time
thereafter, without prior notice to Lessee, apply all or part of the
Deposit in or towards the payment or discharge of any matured
obligation owed by Lessee or any Lessee Affiliate under the Lease or
the Other Agreements, in such order as Lessor sees fit, and/or
exercise any of the rights of set-off described in Section 5.20
against all or part of the Deposit.
-14-
(c) If Lessor exercises the rights described in Section 5.13(b), Lessee
shall, following a demand in writing from Lessor, within two (2)
Business Days restore the Deposit to the level at which it stood
immediately prior to such exercise.
5.14 LETTER OF CREDIT
(a) If, under the Aircraft Lease Agreement, Lessee is required or elects
to provide Lessor with a Letter of Credit, the provisions of this
Section 5.14 shall apply. Any Letter of Credit provided by Lessee to
Lessor will be issued and payable by a Pre-Approved Bank or another
bank acceptable to Lessor in its sole and absolute discretion
substantially in the form of Schedule 16 or as otherwise required or
approved by Lessor from time to time, in its sole judgment, and, if
not issued by a Pre-Approved Bank or by the New York branch of a
major international bank acceptable to Lessor in its sole and
absolute discretion from time to time, will be confirmed by and
payable at the New York branch of a major international bank
acceptable to Lessor in its sole and absolute discretion from time
to time. The Letter of Credit will be issued as security for all
obligations of Lessee or any Lessee Affiliate to Lessor or any of
its Affiliates (including any and all Losses suffered or incurred by
Lessor or any of its Affiliates in respect of which Lessee or any of
its Affiliates is obligated under the Lease or any Other Agreement),
and shall remain in full force and effect and may be drawn down by
Lessor upon demand at any time or times following the occurrence of
a Default until the Required LC Expiry Date.
(b) The Letter of Credit may have a validity period or periods ending
prior to the Required LC Expiry Date, provided that (i) the Letter
of Credit shall, in each case, be renewed, extended or reissued and
delivered to Lessor not later than thirty (30) days prior to its
expiry (if not so renewed or extended in such time, Lessor may draw
on the Letter of Credit); and (ii) a Letter of Credit shall remain
in force at all times up to the Required LC Expiry Date. Following
any such drawing, the amount so drawn shall be held by Lessor as a
Deposit, subject to the terms of the Lease, until such time as
Lessee furnishes to Lessor a new Letter of Credit complying with the
terms of the Lease (whereupon Lessor shall return the full amount of
such drawing to Lessee).
(c) If at any time during the Term, Lessor determines in its sole and
absolute discretion that the current issuing or confirming bank for
the Letter of Credit is no longer an acceptable issuing or
confirming bank (whether by virtue of a material adverse change in
its financial condition, a decrease in any credit rating of its
long-term unsecured debt obligations or for any other reason) Lessor
shall notify Lessee of such fact and Lessee shall within ten (10)
Business Days after the date of such notice cause the Letter of
Credit to be replaced by a Letter of Credit issued by another bank
acceptable to Lessor in its sole and absolute discretion and (if
requested by Lessor in its sole and absolute discretion) that such
replacement Letter of Credit is confirmed by another bank acceptable
to Lessor in its sole discretion.
-15-
(d) If Lessor makes a drawing under the Letter of Credit, Lessee shall,
following a demand in writing by Lessor, immediately cause the
maximum amount available for drawing under the Letter of Credit to
be restored to the level at which it stood immediately prior to such
drawing.
5.15 GUARANTEE
If Lessee is required to provide Lessor with a Guarantee under the
Aircraft Lease Agreement, Lessee will contemporaneously with the execution
of the Aircraft Lease Agreement, provide Lessor with the Guarantee.
5.16 LATE PAYMENT INTEREST
If Lessee fails to pay any amount payable under the Lease on the due date,
Lessee will pay on demand from time to time to Lessor interest (both
before and after judgment) on that amount, from the due date to the date
of payment in full by Lessee to Lessor, at the Interest Rate. All such
interest will be compounded monthly and calculated on the basis of the
actual number of days elapsed in the month, assuming a thirty (30) day
month and a three hundred and sixty (360) day year.
5.17 CURRENCY
(a) Except for Losses and expenses suffered or incurred by Lessor, which
shall be payable by Lessee to Lessor in the currency and in the
amount in which such Loss is suffered or incurred, all amounts
payable to Lessor under the Lease shall be payable in Dollars in New
York and payment in Dollars in New York is of the essence. Lessee
must indemnify Lessor against any Loss Lessor suffers if:
(i) Lessor receives an amount relating to Lessee's obligations in
a different currency from that in which payments should be
made under the Lease; or
(ii) Lessee pays a judgment or claim in a different currency from
that in which payments should be made under the Lease.
Lessee relinquishes any right to pay any amount under the Lease in a
currency that is different from the currency provided in the Lease.
Notwithstanding any such receipt, judgment or claim described in Section
5.17(a), Lessee shall have a separate obligation to pay, and Lessor shall
have a separate claim against Lessee for, amounts to be indemnified by
Lessee under this Section 5.17.
5.18 CERTIFICATES
Except where expressly provided in the Lease, any certificate or
determination by Lessor as to any rate of interest or as to any other
amount payable under the Lease will, in the absence of manifest error, be
presumed to be correct.
-16-
5.19 APPROPRIATION
If any sum paid or recovered by Lessor in respect of the liabilities of
Lessee under the Lease is less than the amount then due, Lessor may apply
that sum to amounts due under the Lease in such proportions and order and
generally in such manner as Lessor may determine in its sole discretion.
5.20 SET-OFF
*****
5.21 EXPENSES
Lessee will pay to Lessor on demand all reasonable expenses (including all
legal fees and expenses and the fees and expenses of other professional
advisers) that Lessor suffers or incurs:
(a) to deal with any amendments, extensions, consents or waivers that
are requested by Lessee or required as a result of any act or
omission of Lessee in connection with the Lease (but excluding any
expenses incurred by Lessor or Owner in connection with any change
in the ownership or financing of the Aircraft or a change in the
Lease that is otherwise requested by Lessor or Owner, and in each
case unrelated to any consent, waiver or amendment requested by
Lessee or any other act or omission of Lessee) or to deal with any
replacement of any Engine or Part;
(b) for FAA counsel and otherwise to act upon any advice and obtain
assistance to perfect the Lease in the State of Registry and the
State of Incorporation (and any other appropriate place); and
(c) in contemplation of, or otherwise in connection with, the
enforcement or preservation of any of Lessor's rights under the
Lease (including under Section 10) or in respect of the repossession
of any Aircraft.
All amounts payable pursuant to this Section 5.21 will be paid in the
currency in which they are incurred by Lessor.
5.22 OTHER OUTGOINGS
Without duplication of amounts payable by Lessee under Section 5.7, Lessee
will promptly pay all Taxes, other than any Taxes described in Section 5.7
(c), which it is required to pay and all other amounts of any nature
imposed by any Government Entity with respect to the Aircraft and/or the
Lease except to the extent that such payment is
CONFIDENTIAL TREATMENT HAS BEEN REQUESTED BY KITTY HAWK, INC. FOR CERTAIN
PORTIONS OF THIS DOCUMENT. CONFIDENTIAL PORTIONS HAVE BEEN FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION. OMITTED PORTIONS ARE INDICATED IN THIS
AGREEMENT WITH "*****".
-17-
being contested in good faith by appropriate proceedings in respect of which
adequate reserves have been provided by Lessee and non-payment or contest of
which does not give rise to any material risk of the Aircraft or any interest
therein being sold, forfeited or otherwise lost or any risk of criminal
liability on the part of Lessor or Owner.
6. MANUFACTURERS' WARRANTIES
(a) So long as no Payment Default or Event of Default has occurred which
is continuing, Lessor shall make available to Lessee during the Term
the benefit of all manufacturers' warranties in relation to the
repair or remedy of any defect in the Aircraft, the Engines or any
Part or component thereof (including compensation for loss of use of
the Aircraft) and other product support for the Aircraft to the
extent that it is permitted to do so. In furtherance of the
foregoing, Lessor shall take such actions, at Lessee's cost and
expense, as Lessee may reasonably request to make such warranties
available to Lessee. Lessee will give Lessor prompt written notice
of any warranty claim that is settled with Lessee on the basis of a
cash payment.
(b) If a Default has occurred and is continuing Lessor may immediately
recover from Lessee the proceeds of any warranty claims previously
paid to Lessee to the extent that such claims relate to any defect
in the Aircraft not fully and completely rectified by Lessee before
such Default and Lessor may:
(i) retain for its own account any such proceeds previously paid
to Lessor which would have been remitted to Lessee under this
Section 6 in the absence of such Default; and
(ii) cause any proceeds of any pending claims to be paid to Lessor,
rather than Lessee.
Lessee will take all steps as are necessary at the end of the Term to
ensure that the benefit of any warranties relating to the Aircraft
(including those from manufacturers) that have not expired is vested in
Lessor.
7. LESSOR'S COVENANTS
7.1 QUIET ENJOYMENT
So long as no Event of Default has occurred and is continuing, Lessor will
not interfere or permit any other Person lawfully claiming by, through or
under Lessor to interfere with Lessee's right to quiet use and possession
of the Aircraft during the Term. Lessor will cause Owner (if different
from Lessor) to provide Lessee a letter of quiet enjoyment in respect of
Lessee's use and possession of the Aircraft in a form substantially
similar to Lessor's covenant in this Section 7.1. Exercise by Lessor of
its rights of inspection or other rights provided to it under the Lease in
the absence of an Event of Default shall not be considered to be a breach
of the foregoing covenant. Lessee agrees that its only right
-18-
with respect to a default by Lessor under the Lease is to make a claim
against Lessor for damages resulting directly therefrom, subject to
Section 16.3 hereof. Lessee hereby waives any and all other rights or
remedies it may have under Section 2A-211 of the UCC or Sections 2A-508
through 2A-522 of the UCC or otherwise.
7.2 MAINTENANCE CONTRIBUTIONS
*****
8. LESSEE'S COVENANTS
8.1 DURATION
Lessee shall perform and comply with its undertakings and covenants in the
Lease at all times during the Term. All such undertakings and covenants
shall, except where expressly otherwise stated, be performed at the
expense of Lessee.
8.2 INFORMATION
Lessee will:
(a) provide Lessor with a Technical Report for the Aircraft within seven
(7) days after the end of each calendar month throughout the Term;
(b) promptly provide Lessor with the Financial Information to the extent
not otherwise readily available to Lessor via internet access to the
databases of the Securities Exchange Commission;
(c) promptly after the occurrence thereof, notify Lessor of any Event of
Loss or of any event which is likely to result in an insurance claim
in excess of the Damage Notification Threshold and details of any
negotiations with insurers or insurance brokers relating to such
claim;
(d) promptly after the occurrence thereof, notify Lessor of any Default;
(e) provide Lessor, upon reasonable request, with evidence that all
Taxes and charges that are due and payable and were incurred by
Lessee in connection with the Aircraft, its location and its
operations, including those invoiced by airports and air traffic
control authorities, have been paid in full (or are being contested
in good faith by appropriate proceedings in respect of which
adequate reserves have been provided by Lessee and non-payment of
which does not give rise to any risk of the Aircraft or any interest
therein being sold, forfeited or otherwise lost or of
CONFIDENTIAL TREATMENT HAS BEEN REQUESTED BY KITTY HAWK, INC. FOR CERTAIN
PORTIONS OF THIS DOCUMENT. TWO (2) PAGES OF SECTION 7.2 HAVE BEEN OMITTED
PURSUANT TO THE CONFIDENTIAL TREATMENT REQUEST. CONFIDENTIAL PORTIONS HAVE BEEN
FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION. OMITTED PORTIONS
ARE INDICATED IN THIS AGREEMENT WITH "*****".
-19-
criminal liability on the part of Lessor or Owner);
(f) provide Lessor with such other information concerning the location,
condition, use and operation of the Aircraft or concerning the
business or financial affairs of Lessee, as Lessor may from time to
time reasonably request;
(g) give Lessor not less than sixty (60) days prior written notice as to
the time and location of all Major Checks; and
(h) notify Lessor, promptly, of the removal of any Engine for a period
of more than seventy-two (72) hours or for the purpose of Engine
Refurbishment.
8.3 LAWFUL AND SAFE OPERATION
Lessee will operate the Aircraft for commercial purposes from the Delivery
Date until the Return Occasion from a base within the Habitual Base or
from such other base outside the State of Registry pursuant to sub-lease
or a wet-lease complying with Section 8.4(a), provided always that Lessee
must not use or operate the Aircraft or suffer or permit the Aircraft to
be used or operated:
(a) in violation of any applicable Regulations or in a manner causing
Lessor, Owner, any Financing Party or GECAS to be in violation of
any applicable Regulations;
(b) for any purpose for which the Aircraft was not designed or which is
illegal;
(c) to carry hazardous cargo other than in conformity with industry
procedures and requirements of the Air Authority for the carriage
and handling of such cargo;
(d) in any circumstances or place where the Aircraft is not covered by
Insurance; or
(e) for purposes of training, qualifying or re-confirming the status of
cockpit personnel except for the benefit of Lessee's or a Permitted
Sub-Lessee's cockpit personnel, and then only if the use of the
Aircraft for such purpose is not disproportionate to the use for
such purpose of other aircraft of the same type operated by Lessee
or any Permitted Sub-Lessee, as the case may be. FOR THE AVOIDANCE
OF DOUBT, AS BETWEEN LESSEE AND THE INDEMNITEES, LESSEE ACKNOWLEDGES
AND AGREES THAT:
(i) LESSEE IS SOLELY RESPONSIBLE FOR THE DETERMINATION AND
IMPLEMENTATION OF ALL SECURITY MEASURES AND SYSTEMS NECESSARY
OR APPROPRIATE FOR THE PROPER PROTECTION OF THE AIRCRAFT
(WHETHER ON THE GROUND OR IN FLIGHT) AGAINST (A) THEFT,
VANDALISM, HIJACKING, DESTRUCTION, BOMBING, TERRORISM OR
SIMILAR ACTS, DIRECTLY OR INDIRECTLY AFFECTING IN ANY WAY THE
AIRCRAFT OR ANY PART THEREOF, OR ANY PERSONS WHO (WHETHER OR
NOT ON BOARD THE AIRCRAFT) MAY SUSTAIN
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ANY INJURY OR DAMAGE AS A RESULT OF ANY SUCH ACTS, (B) THE USE
OF THE AIRCRAFT IN ANY ACTS, INCLUDING THOSE OF DESTRUCTION,
BOMBING, TERRORISM OR SIMILAR ACTS, AND (C) THE TAKING, THEFT
OR USE OF ANY PRODUCTS, CHEMICALS, GOODS, OR MATERIALS OF ANY
KIND, FORM, OR NATURE LOCATED ON BOARD THE AIRCRAFT OR BEING
TRANSPORTED VIA THE AIRCRAFT;
(ii) LESSEE'S IMPLEMENTATION OF SUCH SECURITY MEASURES AND SYSTEMS
IS AN OBLIGATION OF LESSEE UNDER THE LEASE, AND THAT LESSOR
SHALL HAVE ABSOLUTELY NO RESPONSIBILITY THEREFOR, AND
(iii) LESSEE, BEING IN SOLE OPERATIONAL CONTROL OF THE AIRCRAFT AND
BEING IN THE BUSINESS OF OPERATING COMMERCIAL AIRCRAFT, IS
UNIQUELY IN A POSITION TO IDENTIFY AND IMPLEMENT THOSE
MAINTENANCE AND SECURITY MEASURES AS ARE NECESSARY TO COMPLY
WITH ALL APPLICABLE REGULATIONS, AND AS ARE OTHERWISE
APPROPRIATE AND THAT IN DOING SO, LESSEE HAS NOT RELIED UPON,
AND SHALL NOT RELY UPON, ANY STATEMENT, ACT, OR OMISSION OF
LESSOR.
8.4 SUBLEASING
*****
8.5 ACCESS
(a) Lessee will permit Lessor's, Owner's and the Financing Parties'
Representative's representatives access to the Aircraft at any
reasonable time. Unless a Default has occurred and is continuing,
any such Person will give Lessee prior notice of not less than five
(5) Business Days and will seek to ensure that it does not result in
an unreasonable disruption to the operation of the Aircraft or to
the conduct of Lessee's business. Lessee shall comply with the
reasonable requests of Lessor's, Owner's and the Financing Parties'
Representative's representative, including any request to travel on
the flight deck of the Aircraft as an observer, subject to any
applicable Regulations and insurance requirements.
(a) The cost of conducting a visit shall be borne by Lessor, Owner or
the Financing Parties' Representative, as the case may be, unless an
Event of Default has occurred and is continuing.
CONFIDENTIAL TREATMENT HAS BEEN REQUESTED BY KITTY HAWK, INC. FOR CERTAIN
PORTIONS OF THIS DOCUMENT. FIVE (5) PAGES OF SECTION 8.4 HAVE BEEN OMITTED
PURSUANT TO THE CONFIDENTIAL TREATMENT REQUEST. CONFIDENTIAL PORTIONS HAVE BEEN
FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION. OMITTED PORTIONS
ARE INDICATED IN THIS AGREEMENT WITH "*****".
-21-
(b) No liability or obligation will be incurred by Lessor, Owner,
Financing Parties' Representative or the Financing Parties, as the
case may be, by reason of non-exercise by any of them of the rights
referred to in this Section 8.5. For the avoidance of doubt, any
viewing of the Aircraft by Lessor, Owner, Financing Parties'
Representative or the Financing Parties, as the case may be, shall
be for such Person's information purposes only, and there shall be
no inference or implication there from that Lessee is in compliance
with its obligations under the Lease.
8.6 OWNERSHIP; PROPERTY INTERESTS; RELATED MATTERS
(a) Lessee will:
(i) fix and maintain Nameplates containing the Nameplate
Inscription as follows:
"This Aircraft/Engine is owned by [Name of Owner] and is
leased to [Name of Lessee] and may not be or remain in the
possession of or be operated by, any other person without the
prior written consent of [Name of Owner];
(ii) in any circumstance where such interests are relevant, take
all reasonable steps to make sure that all relevant Persons
know about the rights or interests of Owner, Lessor and the
Financing Parties' Representative in the Aircraft; and
(iii) pay all navigation charges, air traffic control charges,
landing charges or other amounts of any nature imposed by any
Government Entity with respect to Lessee, the Aircraft and/or
the Lease except to the extent that, in the reasonable opinion
of Lessor, such payment is being contested in good faith by
appropriate proceedings in respect of which adequate reserves
have been provided by Lessee and non-payment of which does not
give rise to any material likelihood of the Aircraft or any
interest therein being sold, forfeited or otherwise lost or of
criminal liability on the part of Lessor or Owner.
(b) Lessee will not:
(i) represent that it is the owner of the Aircraft or that it has
an economic interest (equivalent to ownership) in the Aircraft
for Tax treatment or other purposes;
(ii) take any action or fail to take any action, other than action
required under the Lease (including under Section 7.1) to be
taken by Lessor, Affiliates of Lessor, Owner or a Financing
Party, if such action or omission could result in a forfeiture
or seizure of the Aircraft or otherwise similarly put Owner's
and/or Lessor's and/or Financing Parties' Representative's
rights or interests at risk;
-22-
(iii) represent to others that Owner, Lessor or any Financing Party
is associated with or responsible for the business activities
and/or flight operations of Lessee;
(iv) allow the Aircraft or Owner's, Lessor's or any Financing
Parties' Representatives' interest in it or the Lease to
become or remain subject to any Security Interest (other than
a Permitted Lien); or
(v) allow the name of any Person to be placed on the Aircraft or
any Engine as a designation that could reasonably be
interpreted as a claim of ownership or as a Security Interest;
provided that Lessee may place thereon, or allow a Permitted
Sub-Lessee to place thereon, its customary livery, colors and
insignia.
8.7 GENERAL
Lessee will:
(a) maintain its business as a cargo airline, preserve its corporate
existence (other than as permitted in Section 8.7 (vii) below) and
maintain all rights, privileges, licenses and franchises material
thereto or material to performing its obligations under the Lease;
(b) not operate, maintain, insure or deal with, or keep records with
respect to, the Aircraft in a manner which discriminates against the
Aircraft adversely insofar as Lessor's, Owner's or Financing
Parties' interests are concerned, when compared with the manner in
which Lessee operates, maintains, insures or deals with, or keep
records with respect to, similar aircraft, engines or parts in
Lessee's fleet;
(c) except upon thirty (30) days prior written notice thereof to Lessor,
not change (i) the designated service of process agent set forth in
Section 15.8(c), or (ii) its jurisdiction of organization or
otherwise be located (as defined in Section 9-307 of the UCC) at any
place in the United States other than: Kitty Hawk Aircargo, Inc.,
0000 Xxxx 00xx Xxxxxx, P.O. Box 612787, XXX Xxxxxxxxxxxxx Xxxxxxx,
Xxxxx 00000.
(d) not liquidate or dissolve;
(e) remain a Certificated Air Carrier and maintain its status so as to
fall within the purview of Section 1110 of Title 11 of the U.S.C. or
any analogous statute;
(f) remain a "citizen of the United States" as defined in Section
40102(a)(15)(c) of Title 49 of the U.S.C.;
(g) not consolidate with or merge into or with any other corporation or
other Person, and not convey, transfer, lease or otherwise dispose
of all or substantially all of its property and other assets to, or
acquire all or any substantial part of the property or other assets
or capital stock of (if such acquisition is analogous in either
-23-
purpose or effect to a consolidation or merger), any corporation or
other Person, unless Lessee provides Lessor with not less than
thirty (30) days prior written notice of such transaction describing
such transaction in reasonable detail and providing Lessor with
evidence reasonably satisfactory to Lessor demonstrating that such
transaction will comply with the following requirements of this
Section 8.7 and unless:
(i) such transaction shall not have any material adverse effect on
the rights of Lessor, Owner or the Financing Parties'
Representative under or in respect of the Lease or the
Aircraft;
(ii) the Person formed by or surviving such consolidation or merger
or the Person which acquires by conveyance, transfer, lease or
other disposition all or substantially all of such property
and other assets or stock (the "Successor Entity"): (A) shall
be a corporation organized and existing under the Laws of the
State of Incorporation; (B) immediately after giving effect to
such transaction, shall be Lessee or shall have acquired or
succeeded to all or substantially all of the property and
other assets of Lessee (if such assets are being transferred)
as an entirety, and shall have a tangible net worth of not
less than Lessee's tangible net worth (determined in each case
in accordance with GAAP) immediately prior to such
transaction; (C) shall be a "citizen of the United States" of
America as defined in Section 40102(a)(15)(c) of Title 49 of
the U.S.C. and a Certificated Air Carrier; and (D) shall
execute and deliver to Lessor such recordations and filings
with any Governmental Entity and such other documents as
Lessor determines shall be reasonably necessary or advisable
to evidence, or in connection with, such consolidation,
merger, sale, lease, transfer or other disposition and an
agreement, in form and substance reasonably satisfactory to
Lessor which is a legal, valid, binding and enforceable
assumption by such Successor Entity of the due and punctual
performance and observance of each covenant and condition of
the Lease and the other related documents to which Lessee is a
party, and an officer's certificate to such effect and to the
effect that the other requirements of this Section 8.7 have
been satisfied, and a legal opinion from counsel to such
effect and otherwise in such form and substance reasonably
satisfactory to Lessor; and
(iii) no Event of Default shall have occurred and be continuing or
shall occur as a result thereof.
8.8 RECORDS
Lessee will keep all Aircraft Documents and Records:
(a) in the English language;
-24-
(b) so they meet the requirements of applicable Regulations (including
FAR 91.417) and Lessee's Maintenance Program.
For clarification, Lessee acknowledges and agrees that the Aircraft
Documents and Records, including all additions, supplements and
replacements thereto or thereof constitute part of the Aircraft, are
leased to Lessee hereunder and are the sole and exclusive property of the
Owner.
8.9 PROTECTION
Lessee will:
(a) take all lawful actions requested by Lessor that are within Lessee's
control to keep the Aircraft registered with the Air Authority in
the name of Owner and subject to a first priority Security Interest
in favor of Financing Parties' Representative and, where applicable,
comply with the Geneva Convention;
(b) if permitted under the applicable Regulations, record on each
relevant register that Owner is the owner of the Aircraft and, if
such facilities exist (i) file the Lease (or particulars thereof) on
the public record and (ii) file notices as to the interests of the
Financing Parties (if any); and
(c) make any and all filings required to be made with the Air Authority
registry that are within its control and take all other lawful
actions within its control that are necessary or advisable to
reflect on the Air Authority registry any change in the ownership of
the Aircraft, or in the interests of Lessor, Owner or the Financing
Parties' Representative in the Lease or the Aircraft, any
modification to the Aircraft (such as the permanent replacement of
any Engine or Part in accordance with the Lease) or as a result of
any change in applicable Regulation. Lessor will bear any costs
incurred in connection therewith as a consequence of a transfer by
Lessor, Owner or the Financing Parties' Representative of the
interests of Lessor, Owner or the Financing Parties' Representative
in the Lease or the Aircraft or any other Transfer or a change in
the identity of Lessor, Owner or the Financing Parties'
Representative (in each case, unrelated to the replacement of any
Engine or Part or an Event of Default) and Lessee will bear any
other costs incurred in complying with this Section 8.9, including
in connection with the replacement of any Engine or Part.
8.10 MAINTENANCE AND REPAIR
(a) Lessee will maintain, overhaul and repair the Aircraft (or arrange
for the Aircraft to be maintained, overhauled and repaired through
the Maintenance Performer), so that:
(i) the Aircraft is kept in as good operating condition and repair
as the condition of the Aircraft as at Delivery and after
giving effect to any post-Delivery modifications, repairs or
maintenance paid for or otherwise provided by or on behalf of
Lessor, except for ordinary wear and tear;
-25-
(ii) Lessee has a current certificate of airworthiness (issued by
the Air Authority in the appropriate public transport
category) for the Aircraft;
(iii) the Aircraft complies with all applicable Regulations and the
standards stipulated by FAR Part 121 and in a manner to
maintain all warranty and service life policies and the
requirements of all Airworthiness Directives and all service
bulletins designated by the State of Design or State of
Registry as "mandatory," and to be carried out before the
Return Occasion or within the AD Compliance Period; and
(iv) all maintenance is carried out according to Lessee's
Maintenance Program and shall be performed in at least the
same manner and with at least the same care, including
maintenance scheduling, modification status and technical
condition, as is the case with respect to similar aircraft
owned or otherwise operated by Lessee.
(v) No change shall be made to the Lessee's Maintenance Program or
the Maintenance Performer without first giving reasonable
written notice to Lessor of such change.
(b) *****
8.11 REMOVAL OF ENGINES AND PARTS
(a) General: Lessee must replace, within thirty (30) days thereof, any
Engine that has suffered an Engine Event of Loss in accordance with
Section 8.11(b), and any Part that is permanently removed from the
Aircraft must be replaced in accordance with Section 8.11(b). Any
Part which otherwise is lost, stolen, destroyed, seized, obsolete,
confiscated, damaged beyond repair or permanently rendered unfit for
any reason, must be replaced in accordance with Section 8.11(b). Any
Engine or Part may be installed on another aircraft Lessee owns or
leases in accordance with Section 8.11(c). Lessee may temporarily
install an engine or part in accordance with Section 8.11(d). Lessee
shall obtain from any person to whom possession of an Engine is
given, and from the lessor of any airframe on which an Engine is
installed and from any holder of a Security Interest in any airframe
on which an Engine is installed, an agreement in writing (which
agreement, in the case of a lease or Security Interest, may be
contained in the applicable lease or Security Interest agreement
covering such airframe) that such Person will respect the interests
of Owner and Lessor as owner and lessor, respectively, and of the
Financing Parties' Representative, in such Engine and will not
acquire or claim any rights, title or interest in such Engine as a
result of such Engine being installed on such other airframe at any
time while such Engine
CONFIDENTIAL TREATMENT HAS BEEN REQUESTED BY KITTY HAWK, INC. FOR CERTAIN
PORTIONS OF THIS DOCUMENT. CONFIDENTIAL PORTIONS HAVE BEEN FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION. OMITTED PORTIONS ARE INDICATED IN THIS
AGREEMENT WITH "*****".
-26-
is subject to the Lease. In the event Lessee shall have received
from a lessor of or secured party holding a Security Interest in any
airframe leased to Lessee or owned by Lessee a written agreement
pursuant to the foregoing sentence and the lease or Security
Interest covering such airframe also covers an engine or engines
owned by the lessor under such lease or subject to such Security
Interest in favor of the secured party under such Security Interest,
Lessor hereby agrees for the benefit of such lessor or secured party
that Lessor will respect the interest of such lessor or secured
party and will not acquire or claim as against such lessor or
secured party, any rights, title or interest in any such engine as a
result of such engine being installed on the Airframe at any time
while such engine is subject to such lease or Security Interest and
owned by such lessor or subject to a Security Interest in favor of
such secured party. Lessee will ensure that any Engine or Part not
installed on the Aircraft (or an aircraft permitted by Section
8.11(c)) is properly and safely stored and insured and kept free of
Security Interests.
(b) Permanent Replacement: If Lessee permanently replaces an Engine or
Part:
(i) in the case of an Engine, it must be a Replacement Engine;
(ii) in the case of a Part, the replacement part must be an OEM
approved Part, be in good operating condition, must not have
been involved in any accident or incident, must not have been
installed on an aircraft registered on a military aircraft
register, must have as much useful life available until the
next expected maintenance procedure, must be of the same or a
more advanced make and model and of the same interchangeable
modification status as the Part it is replacing and it must
otherwise of an equivalent value and utility as the Part it is
replacing;
(iii) upon installation on the Aircraft the Replacement Engine or
replacement part must have become and remain, until replaced
in accordance with this Section 8.11, the property of Owner
free from Security Interests (other than Permitted Liens), and
subject to any applicable Financing Documents;
(iv) Lessee must have full details of the source and maintenance
records of the Replacement Engine or replacement part. In the
case of replacement serialized parts, documentation shall be
back to birth and in the case of serialized rotable parts,
shall have a complete service history; and
(v) Lessee shall provide a legal opinion in respect of the
perfection of Financing Parties' Representative interest in
such replaced Engine or Part.
(c) Other Aircraft: An Engine or Part may be installed on an aircraft
which Lessee owns or leases, which is insured to Lessor's reasonable
satisfaction, if:
(i) no Event of Default has occurred and is continuing;
(ii) Lessee or a Permitted Sub-Lessee has operational control over
the aircraft;
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(iii) Owner keeps the ownership of the Engine or Part concerned
until replaced in accordance with Section 8.11(b);
(iv) the Engine or Part does not become subject to a Security
Interest and the applicable airframe is not subject to any
Security Interest except a Permitted Lien or a lease or
Security Interest described in Section 8.11(a) above; and
(v) the Engine or Part is replaced in accordance with Section
8.11(b) and is removed from the aircraft as soon as
practicable under Lessee's engine rotation program (in the
case of an Engine) but not later than the Expiry Date;
(d) Temporary Replacement: Lessee may install any engine or part on the
Aircraft as a temporary replacement if:
(i) no Event of Default has occurred and is continuing;
(ii) there is not available an engine or part complying with the
requirements of the Lease for a Replacement Engine or Part;
(iii) it would result in an unreasonable disruption of the operation
of the Aircraft or the business of Lessee to have the Aircraft
grounded until such time as an engine or part complying with
the requirements of the Lease for a Replacement Engine or Part
becomes available for installation;
(iv) as soon as practicable (under Lessee's engine rotation program
in the case of an engine) after an engine or part is installed
on the Aircraft, but before the Expiry Date, Lessee removes
that engine or part and replaces it with the original Engine
or Part (or by an engine or part which is allowed by Section
8.11(b)); and
(v) the Insurance for the Aircraft is not adversely affected.
(e) Pooling/Interchange: Lessee shall not subject any Engine or Part to
any pooling, interchange, lease or similar arrangement unless Lessee
obtains Lessor's prior written consent thereto, which consent shall
not be unreasonably withheld. Lessee shall be allowed to temporarily
loan an Engine or Part to another operator for a period not to
exceed thirty (30) days.
8.12 EQUIPMENT CHANGES
(a) Lessee will not make any modification or addition to the Aircraft
(each an "Equipment Change"), except for an Equipment Change which:
(i) is expressly permitted or required by the Lease;
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(ii) has (x) is in accordance with Manufacturer approved data and
at a cost (including labor) of less than *****, or (y) the
prior written approval of Lessor and, in either case, does not
diminish the condition, utility, airworthiness or value of the
Aircraft; or
(iii) is required by Law or Regulation of any Government Entity.
(b) So long as no Payment Default or Event of Default has occurred and
is continuing, Lessee may, subject to any applicable Regulations,
remove or reverse any Equipment Change provided that the Equipment
Change is not required pursuant to the terms of the Lease or to
maintain the Insurance and removal or reversal does not diminish the
value, utility, airworthiness or condition of the Aircraft assuming
that such Equipment Change was not made and that the Aircraft is
maintained in accordance with the Lease. Furthermore, Lessor may
require Lessee to remove or reverse any Equipment Change prior to
the Return Occasion so that, on the Expiry Date the Aircraft is
restored to the condition it was in prior to that Equipment Change.
Any Equipment Change. Any Equipment Change not so removed or
reversed becomes the property of Lessor or Owner, as the case may
be, at the Expiry Date.
8.13 TITLE ON AN EQUIPMENT CHANGE
Title to any equipment that is installed on the Airframe shall, except in
the case of an engine or a temporary replacement of a Part in accordance
with Section 8.11(d), vest in Owner solely by virtue of its attachment to
the Airframe or an Engine and it shall then be subject to the Lease and,
if applicable, the Financing Documents, as if it were attached to the
Aircraft at Delivery. In the case of any replacement of an Engine, and
otherwise if so requested by Lessor, Lessee will provide a properly
executed xxxx of sale or similar instrument to evidence the vesting of
good and marketable title, free and clear of any Security Interest (except
Lessor Liens), to any such Replacement Engine or other equipment in Owner
and all documents required under the Financing Documents. After Lessor has
determined that Lessee has permanently replaced an Engine in accordance
with Section 8.11(b) and this Section 8.13, Lessor will, or will procure
that Owner will, without recourse or warranty (except as to the absence of
Lessor Liens), transfer to Lessee or will procure that Owner will transfer
to Lessee all of Lessor's or Owner's, as the case may be, rights to the
engine that has been replaced, on an AS IS, WHERE IS basis, and will at
Lessee's expense provide or will procure that Owner provides a xxxx of
sale or similar instrument as Lessee may reasonably request to evidence
such transfer. Lessee shall indemnify Lessor, Owner and each other Tax
Indemnitee for all fees, expenses and Taxes incurred by Lessor, Owner or
any other Tax Indemnitee in connection with any such transfer; provided
that with respect to Taxes, the obligations of Lessee hereunder shall be
subject to the exclusions set forth in Section 5.7(c) hereof with
CONFIDENTIAL TREATMENT HAS BEEN REQUESTED BY KITTY HAWK, INC. FOR CERTAIN
PORTIONS OF THIS DOCUMENT. CONFIDENTIAL PORTIONS HAVE BEEN FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION. OMITTED PORTIONS ARE INDICATED IN THIS
AGREEMENT WITH "*****".
-29-
the exception of clause (iii) thereof and to the contest rights set forth
in Section 5.9 above.
9. INSURANCE
9.1 INSURANCE
Lessee will maintain the Insurance in full force during the Term, and
thereafter as expressly required in the Lease, which shall be in
accordance with best industry practice for comparable operators operating
similar aircraft in similar circumstances, and shall be through such
brokers and with such insurers and having such deductibles and subject to
such exclusions as may be described in Schedule 7. The Insurance shall in
any event meet the requirements set forth in Schedule 7 which may be
amended from time to time by mutual agreement of Lessor and Lessee so that
the scope and level of cover is maintained and the interests of Lessor and
each Indemnitee are prudently protected in line with best industry
practice and in any event as may be reasonably acceptable to Lessor.
9.2 CHANGE
If at any time Lessor wishes to revoke its approval of any insurer,
reinsurer, insurance or reinsurance for any material reason, Lessor and/or
its brokers will consult with Lessee and Lessee's brokers (as for the time
being approved by Lessor) regarding whether that approval should be
revoked to protect the interests of the parties insured. If, following
such consultation, Lessor acting reasonably considers that any change
should be made, Lessee will then arrange or procure the arrangement of
alternative cover satisfactory to Lessor. Lessor acknowledges that, as of
the date of this Common Terms Agreement, Lessee's current insurer and
brokers are acceptable to Lessor.
9.3 INSURANCE UNDERTAKINGS AND INFORMATION
Lessee will:
(a) comply with the terms and conditions of each policy of any Insurance
and not do, consent or agree to any act or omission which:
(i) invalidates or may invalidate any Insurance; or
(ii) renders or may render void or voidable the whole or any part
of any of any Insurance; or
(iii) brings any particular liability within the scope of an
exclusion or exception to any Insurance;
(b) not take out without the prior written approval of Lessor any
insurance or reinsurance in respect of the Aircraft other than that
which is required under the Lease unless relating solely to hull
total loss, business interruption, profit commission and deductible
risk;
-30-
(c) commence renewal procedures at least thirty (30) days prior to
expiry of any of any Insurance and provide to Lessor:
(i) if requested by Lessor, a written status report of renewal
negotiation fourteen (14) days prior to each expiry date;
(ii) facsimile confirmation of completion of renewal prior to each
policy expiry date; and
(iii) certificates of insurance (and where appropriate certificates
of reinsurance), and broker's (and any reinsurance broker's)
letter of undertaking in a form acceptable to Lessor,
detailing the coverage and confirming compliance with the
specified insurance requirements of the Lease and, in the case
of the broker's letter of undertaking, opining that the
Insurance complies with the requirements of the Lease on or
before each renewal date;
(d) on request, provide to Lessor copies of documents or other
information evidencing the Insurance; and
(e) provide any other insurance and reinsurance related information, or
assistance, in respect of the Insurance as Lessor may reasonably
require.
9.4 FAILURE TO INSURE
If Lessee fails to maintain any Insurance in compliance with the Lease,
each of the Indemnitees will be entitled but not bound (without prejudice
to any other rights of Lessor under the Lease):
(a) to pay the premiums due or to effect and maintain insurance
satisfactory to it or otherwise remedy Lessee's failure in such
manner (including to effect and maintain an "owner's interest"
policy) as it considers appropriate. Any sums so expended by it will
become immediately due and payable by Lessee to Lessor together with
interest thereon at the Interest Rate, from the date of expenditure
by it up to the date of reimbursement by Lessee; and
(b) at any time while such failure is continuing, to require the
Aircraft to remain at any airport or to proceed to and remain at any
airport designated by it until the failure is remedied to its
reasonable satisfaction.
9.5 CONTINUING INSURANCE
Lessee shall effect and maintain insurance after the Expiry Date with
respect to its liability under Section 10 for two (2) years or until
completion of the next "D" check on the Aircraft, whichever is earlier,
and such insurance shall name each Indemnitee as an additional insured.
-31-
10. INDEMNITY
(a) EXCEPT AS PROVIDED IN SECTION 10(b) BELOW, LESSEE AGREES TO ASSUME
LIABILITY AND PAY FOR AND TO INDEMNIFY EACH OF THE INDEMNITEES
AGAINST AND AGREES TO PAY ON DEMAND ANY AND ALL LOSSES WHICH AN
INDEMNITEE MAY SUFFER OR INCUR AT ANY TIME, WHETHER DIRECTLY OR
INDIRECTLY, ARISING OUT OF, RELATED TO OR IN ANY WAY CONNECTED WITH:
(i) THE OWNERSHIP, MAINTENANCE, REPAIR, POSSESSION, SALE OR OTHER
TRANSFER OF OWNERSHIP OR POSSESSION, IMPORT, EXPORT,
REGISTRATION, STORAGE, MODIFICATION, LEASING (INCLUDING
SUB-LEASING), INSURANCE, INSPECTION, TESTING, DESIGN, USE,
OPERATION, CONDITION, SECURITY INTERESTS (OTHER THAN LESSOR
LIENS) OR OTHER MATTERS RELATING TO THE AIRCRAFT, ANY ENGINE
OR PART OR THE LEASE (REGARDLESS OF WHETHER IN THE AIR OR ON
THE GROUND, AND REGARDLESS OF WHETHER SUCH LOSSES ARE BASED ON
STRICT LIABILITY IN TORT, ANY ACT OR OMISSION, INCLUDING THE
NEGLIGENCE, OF ANY INDEMNITEE, OR OTHERWISE); OR
(ii) ANY BREACH BY LESSEE OF ANY OF ITS OBLIGATIONS UNDER THE LEASE
(WITHOUT DUPLICATION OF AMOUNTS OTHERWISE PAYABLE HEREUNDER);
OR
(iii) THE DESIGN, TESTING OR USE OF ANY ARTICLE OR MATERIAL IN THE
AIRCRAFT, ANY ENGINE OR ANY PART OR ITS OPERATION, INCLUDING
ANY DEFECT IN DESIGN AND REGARDLESS OF WHETHER IT IS
DISCOVERABLE, AND ANY INFRINGEMENT OF PATENT, COPYRIGHT,
TRADEMARK, DESIGN OR OTHER PROPRIETARY RIGHT CLAIMED BY ANY
PERSON OR A BREACH OF ANY OBLIGATION OF CONFIDENTIALITY
CLAIMED TO BE OWED TO ANY PERSON.
FOR THE AVOIDANCE OF DOUBT, THE REFERENCE TO "OWNERSHIP" IN SECTION
(i) SHALL NOT REQUIRE LESSEE TO INDEMNIFY LESSOR IN RESPECT OF ANY
DEFECT IN LESSOR'S OR OWNER'S TITLE TO THE AIRCRAFT.
(b) Lessee is not required to indemnify any particular Indemnitee
(provided that Lessor and its Affiliates and its and their officers,
directors and employees shall be treated as a single Indemnitee)
under this Section 10, to the extent a particular Loss is:
-32-
(i) results from or arises out of the gross negligence or willful
misconduct of that Indemnitee, other than gross negligence
imputed to that Indemnitee by reason of its interest in the
Aircraft or the Lease;
(ii) results from or arises out of Lessor's breach of the Lease
which does not result from a Default;
(iii) constitutes or is related to any Taxes (but without prejudice
to any Indemnitee's rights under any other provision of the
Lease relating to Taxes);
(iv) results from or arises out of an event which occurs before the
commencement of the Term (except where (aa) the Loss is
suffered during the Term as a result of a pre-Delivery defect
in or otherwise arises out of or relates to or is any way
connected with the manufacture, design, maintenance, repair,
rebuilding, overhaul or modification of the Aircraft) or (bb)
the Aircraft has been purchased from Lessee (or a Lessee
Affiliate) and is to be leased back to Lessee under the
Lease);
(v) results from or arises out of an event that occurs after the
redelivery of the Aircraft to Lessor in compliance with the
Lease and is not attributable to any act, omission, event or
circumstance occurring prior to such redelivery;
(vi) results from or arises out of any sale, assignment, transfer
or other disposition (whether voluntary or involuntary) by
such Indemnitee of the Aircraft or Engine or any interest
therein that is not a replacement thereof under the Lease or
is otherwise not contemplated under the Lease, and unless such
sale, transfer or other disposition has resulted from or
arises as a result of the exercise of Lessor's remedies
following a Default;
(vii) results from or arises out of the performance by such
Indemnitee of its obligations under any Financing Document or
to any Financing Party, provided that such performance does
not arise out of a Default under the Lease;
(viii) results from or arises out of a default under any Financing
Document which is not a Default under the Lease;
(ix) results from or arises out of any change in or restructuring
of any Financing Document related to the financing of the
Aircraft, any Engine or any Part thereof, unless resulting
from a Default by Lessee under the Lease or unless Lessee has
expressly agreed to undertake such obligations;
(x) consists of normal administrative costs and expenses of such
Indemnitee (but excluding any such costs or expenses resulting
from the exercise of Lessor's remedies following a Default);
or
-33-
(xi) consists of costs or expenses for which Lessor has expressly
agreed to be responsible under any other provision of the
Lease.
11. EVENTS OF LOSS
11.1 EVENTS OF LOSS
(a) If an Event of Loss occurs prior to Delivery of the Aircraft, the
Lease will immediately terminate and except as expressly stated in
the Lease or under any Other Agreement, neither party will have any
further obligation, other than pursuant to Section 5.21 and Section
3 of Schedule 4, except that Lessor will return the Deposit (if any)
to Lessee and return to Lessee or agree to the cancellation of any
Letter of Credit in respect of the Aircraft, in each case in
accordance with the provisions of Section 5.11 hereof.
(b) If an Event of Loss occurs after Delivery, Lessee will pay the
Agreed Value to Lessor on or prior to the earlier of (i) sixty (60)
days after the Event of Loss and (ii) the date of receipt of
insurance proceeds in respect of that Event of Loss.
(c) Subject to the rights of any insurers and reinsurers or other third
party, upon irrevocable payment in full to Lessor of the Agreed
Value and all other amounts which may be or become payable to Lessor
under the Lease, and if Lessee requests such transfer, Lessor will,
or will procure that Owner will, without recourse or warranty
(except as to the absence of Lessor Liens) transfer to Lessee or
will procure that Owner transfers to Lessee legal and beneficial
title, subject to no Lessor Liens (but otherwise without warranty),
to the Aircraft, on an AS IS, WHERE IS basis, and will at Lessee's
expense, execute and deliver or will procure that Owner executes and
delivers, such bills of sale and other documents and instruments as
Lessee may reasonably request to evidence (on the public record or
otherwise) such transfer, free and clear of all rights of Lessor and
Owner and Lessor Liens. Lessee shall indemnify Lessor, Owner and
each other Tax Indemnitee for all fees, expenses and Taxes incurred
by Lessor, Owner or any other Tax Indemnitee in connection with any
such transfer; provided that with respect to Taxes, the obligations
of Lessee hereunder shall be subject to the exclusions set forth in
Section 5.7(c) hereof and to the contest rights set forth in Section
5.9 above.
11.2 REQUISITION
During any requisition for use or hire of the Aircraft, any Engine or Part
which does not constitute an Event of Loss:
(a) the Rent and other charges payable under the Lease will not be
suspended or abated either in whole or in part, and Lessee will not
be released from any of its other obligations (other than
operational obligations with which Lessee is unable to comply solely
by virtue of the requisition); and
-34-
(b) so long as no Payment Default or Event of Default has occurred and
is continuing, Lessee will be entitled to any compensation paid by
the requisitioning authority in respect of such authority's use of
the Aircraft, such Engine or such Part during the Term. Lessee will,
as soon as practicable after the end of any such requisition, cause
the Aircraft to be put into the condition required by the Lease.
Lessor will be entitled to all compensation payable by the
requisitioning authority in respect of any change in the structure,
state or condition of the Aircraft arising during the period of
requisition, and Lessor will apply such compensation in reimbursing
Lessee for the cost of complying with its obligations under the
Lease in respect of any such change, but, if any Default has
occurred and is continuing, Lessor may apply the compensation in or
towards settlement of any amounts owing by Lessee under the Lease
and/or under any Other Agreement.
12. RETURN OF AIRCRAFT
12.1 RETURN
On the Expiry Date or redelivery of the Aircraft pursuant to Section 13.2
or termination of the leasing of the Aircraft under the Lease, Lessee
will, unless an Event of Loss has occurred, redeliver the Aircraft and the
Aircraft Documents and Records at Lessee's expense to Lessor at the
Redelivery Location, in accordance with the procedures and in compliance
with the conditions set forth in Schedule 6, free and clear of all
Security Interests (other than Lessor Liens), in a condition suitable for
immediate operation under FAR Part 121 or as otherwise agreed by Lessor
and Lessee and, in any case, qualifying for and having a valid and fully
effective certificate of airworthiness issued by the Air Authority. If
requested by Lessor, Lessee shall thereupon cause the Aircraft to be
deregistered by the Air Authority.
12.2 NON-COMPLIANCE
If at the time of Final Inspection Lessee has not fully complied with any
of its obligations under the Lease (including Schedule 6), or Lessee fails
to make the Aircraft available to Lessor on a timely basis for inspection
and redelivery pursuant to Section 12.1 and Schedule 6 (whether such
failure is due to any act or omission of Lessee or any other circumstance
whatsoever), the Term shall be extended until the time when the Aircraft
has been redelivered to Lessor in full compliance with the Lease, for the
sole purpose of enabling such non-compliance or failure to be promptly
rectified, and during such extension period:
(a) Lessee shall not use the Aircraft in flight operations except those
related directly to the redelivery of the Aircraft to Lessor;
(b) all Lessee's obligations and covenants under the Lease will remain
in full force until Lessee so redelivers the Aircraft; and
-35-
(c) Lessee shall pay Rent to Lessor at a rate per month equal to the
amount of Rent payable in respect of the last scheduled Rental
Period plus ***** thereof, calculated on a per diem basis.
Any such extension shall not prejudice Lessor's right to treat such
non-compliance or failure as an Event of Default at any time, and to
enforce such rights and remedies as may be available to Lessor in respect
thereof under the terms of the Lease or applicable Law. Without limiting
the generality of the foregoing, Lessee's Rent obligation under paragraph
(c) above shall be without prejudice to Lessor's rights to terminate the
letting of the Aircraft and to indemnification pursuant to Sections
10(a)(ii) or 13.3.
Lessor may elect (either on first tender of the Aircraft by Lessee or at
any time during the said extension period) to accept redelivery of the
Aircraft notwithstanding non-compliance with Section 12.1 or Schedule 6,
in which case Lessee will indemnify Lessor and provide cash to Lessor (in
an amount satisfactory to Lessor) as security for that indemnity in
respect of the cost to Lessor of putting the Aircraft into the condition
required by the Lease.
12.3 REDELIVERY
Upon redelivery Lessee will provide to Lessor all documents necessary to
export the Aircraft from the Habitual Base and the State of Registry
(including a valid and subsisting export certificate of airworthiness for
the Aircraft) or required in relation to the deregistration of the
Aircraft with the Air Authority.
12.4 ACKNOWLEDGEMENT
Provided Lessee has complied with its obligations under Section 12 and
Schedule 6, following redelivery of the Aircraft by Lessee to Lessor at
the Redelivery Location, Lessor will deliver to Lessee an acknowledgement
confirming that Lessee has redelivered the Aircraft to Lessor in
accordance with the Lease which acknowledgement shall be without prejudice
to Lessor's accrued and continuing rights under the Lease or any Other
Agreement.
13. DEFAULT
13.1 EVENTS
The occurrence of any of the Events of Default will constitute a
repudiation (but not a termination) of the Lease by Lessee (whether the
occurrence of any such Event of Default is voluntary or involuntary or
occurs by operation of Law or pursuant to or in compliance with any
judgment, decree or order of any court or any order, rule or regulation of
any Government Entity).
CONFIDENTIAL TREATMENT HAS BEEN REQUESTED BY KITTY HAWK, INC. FOR CERTAIN
PORTIONS OF THIS DOCUMENT. CONFIDENTIAL PORTIONS HAVE BEEN FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION. OMITTED PORTIONS ARE INDICATED IN THIS
AGREEMENT WITH "*****".
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13.2 RIGHTS AND REMEDIES
If an Event of Default occurs, Lessor may at its option (and without prejudice
to any of its other rights and remedies under the Lease, at law, in equity
and/or otherwise), at any time thereafter (without notice to Lessee except as
required under applicable Law) and subject to compliance with non-waivable
mandatory requirements of law:
(a) accept such repudiation and by notice to Lessee and with immediate
effect terminate the leasing of the Aircraft and/or the Lease
whereupon all rights of Lessee under the Lease shall cease (but
without prejudice to the continuing obligations of Lessee that
survive under the Lease, including, obligations to provide
Insurance, maintain and repair the Aircraft and/or redeliver the
Aircraft in the Redelivery Condition); and/or
(b) proceed by appropriate court action or actions to enforce
performance of the Lease or to recover damages sustained by Lessor
by reason of Lessee's breach of the Lease, and all other amounts
payable by Lessee to Lessor or to any Indemnitee pursuant to the
terms of the Lease; and/or
(c) take possession of and/or seize the Aircraft, for which purpose
Lessor may enter any premises belonging to or in the occupation of
or under the control of Lessee where the Aircraft may be located;
and/or
(d) by serving notice, require Lessee to redeliver the Aircraft in
Redelivery Condition at the time and on the date designated by
Lessor in its sole and absolute discretion and at the Redelivery
Location provided that if the Aircraft is not redelivered in
Redelivery Condition, Lessee shall reimburse Lessor for all costs
and expenses incurred to place the Aircraft in Redelivery Condition;
and/or
(e) by serving notice, require that Lessee pay to Lessor, and Lessee
shall be liable for and immediately pay to Lessor, and/or proceed by
appropriate court action or actions to recover any or all of the
following amounts, without duplication:
(i) all Rent and other amounts which are or become due and payable
under the Lease prior to the earlier to occur of the date
Lessor sells or re-leases the Aircraft or receives payment of
the amount calculated pursuant to clause (ii) below;
(ii) an amount equal to the Mitigated Rent Amount;
(iii) an amount equal to Lessor's reasonably anticipated Enforcement
and Remarketing Costs, Unwind Expenses and Aircraft Condition
Damages;
(iv) all amounts indemnified by Lessee pursuant to Section 13.3;
(v) such additional amount, if any, as may be necessary to place
Lessor in the same economic position as Lessor would have been
in if Lessee had timely performed each of its obligations
under the Lease; and
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(vi) all documented attorney's fees, costs and expenses incurred to
enforce the Lease or Lessor's rights and/or remedies or as a
result of Lessee's default under the Lease or failure to
comply with the obligations under the Lease.
It being understood that, to the extent that any of the foregoing
amounts represents an estimate by Lessor of losses, damages, costs
or expenses which Lessor expects to incur, (x) Lessor shall adjust
the amount thereof as needed to reflect the actual amount of such
losses, damages, costs or expenses incurred by Lessor when
substantially all of such amounts become known to Lessor, but Lessee
shall nevertheless be obligated to pay the amount demanded by Lessor
(subject to such subsequent adjustment), and (y) notwithstanding the
amount specified in such demand, Lessor shall be entitled to claim
such other (and greater or additional) amount in any action against
Lessee under the Lease, subsequent demand and/or any other damages
that Lessor may sustain; and/or
(f) require Lessee to pay, and Lessee shall pay to Lessor, interest on
all unpaid amounts at the Interest Rate, from the due date until the
date of payment in full; and/or
(g) draw upon the Deposit or the Letter of Credit and apply such amounts
to any amounts owing or to be owing to Lessor under the Lease;
and/or make demand against any Guarantor for any or all of the
foregoing.
No remedy referred to in this Section 13.2, is intended to be exclusive,
but, to the extent permissible under the Lease or under applicable Law,
each shall be cumulative and in addition to any other remedy referred to
above or otherwise available to Lessor at Law or in equity and in Lessor's
sole and absolute discretion; and the exercise by Lessor of any one or
more of such remedies shall not preclude the simultaneous or later
exercise by Lessor of any or all of such other remedies. No waiver by
Lessor of any Default or Event of Default shall in any way be, or be
construed to be, a waiver of any future or subsequent Default or Event of
Default.
13.3 DEFAULT INDEMNITY
Lessee will indemnify Lessor on demand against any Loss which Lessor may
sustain or incur directly or indirectly as a result of any Event of
Default, including, the non-delivery of the Aircraft by reason of failure
of Lessee to satisfy any conditions to that delivery Lessor will use
reasonable endeavors to mitigate such Losses, but (i) Lessor shall not be
obliged to consult with Lessee concerning any proposed course of action or
to notify Lessee of the taking of any particular action, and (ii) this
provision is without prejudice to Lessor's rights under Section 13.4.
13.4 SALE OR RE-LEASE
If an Event of Default occurs and is continuing, Lessor may sell at a
private or public sale or re-lease or otherwise deal with the Aircraft at
such time and in such manner and on such terms as Lessor considers
appropriate in its sole and absolute discretion, free and clear of any
rights and interest of Lessee, as if the Lease had never been entered
into.
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Lessor shall have no obligation or duty to sell the Aircraft and Lessor
shall be obligated to attempt to re-lease the Aircraft only to the extent,
if any, that it is required to do so under Article 2A of the UCC.
13.5 REMOVAL OF LEASE FROM FAA REGISTRY
If an Event of Default occurs, Lessee will at the request of Lessor
immediately take all steps necessary to enable the Aircraft to be
redelivered to Lessor in accordance with the Lease and Lessee hereby
irrevocably and by way of security for its obligations under the Lease
appoints (which appointment is coupled with an interest) Lessor as its
attorney to execute and deliver any documentation, do any act or thing
required in connection with the foregoing and grant all the powers and
authorizations necessary for taking any of the foregoing actions during
the continuance of an Event of Default. Without limiting the foregoing,
Lessor may file with the FAA the Certificate of Lease Termination provided
to Lessor under the Lease.
13.6 ASSIGNMENT OF WARRANTIES
In the event of the return to or repossession by Lessor of the Aircraft,
the Airframe, an Engine or Part, any rights in any warranty (express or
implied) previously made or assigned to Lessee or otherwise held by Lessee
shall without further act, notice or writing be assigned or reassigned to
Lessor, if assignable.
13.7 WAIVER OF DEFENSES TO REPOSSESSION
Neither Lessee, nor anyone claiming through or under it, shall set up,
claim, invoke or seek to take advantage of any applicable Law now or
hereafter in force in any jurisdiction in which the Aircraft may be
situated in order to prevent, hinder or delay any effort on the part of
Lessor to regain possession of the Aircraft, or re-export the Aircraft
from any jurisdiction in which the Aircraft may be situated upon the
occurrence of an Event of Default under Section 13.1 or the comparable
clause under any Other Agreement and/or the Expiry Date and both prior and
subsequent to entry of a final award or judgment, and Lessee, for itself
and all who may at any time claim through or under it, hereby waives, to
the full extent that it may be lawful so to do, the benefit of all such
applicable Law (including any rights it may have, if any, to avail itself
of the protection provided by the Convention of 1933 on the Unification of
Certain Rules Relating to the Precautionary Arrest of Aircraft, or any
other similar law, treaty or convention applicable to Lessee or the
Aircraft which would limit the ability of Lessor to repossess or otherwise
recover the Aircraft upon the occurrence and continuance of an Event of
Default and/or the expiration or termination of the Lease and prior and
subsequent to entry of a final award or judgment). Lessee and anyone
claiming through or under it, hereby consents to an order or judgment
compelling redelivery or permitting Lessor to take possession of the
Aircraft upon the occurrence of an Event of Default and/or the expiration
or termination of the Lease, and whether prior or subsequent to the entry
of a final judgment, in any action or proceeding.
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13.8 POWER OF ATTORNEY
Lessee hereby appoints Lessor as the attorney-in-fact of Lessee, with full
authority in the place and stead of Lessee and in the name of Lessee or
otherwise, for the purpose of carrying out the provisions of the Lease and
taking any action and executing any instrument that Lessor may deem
necessary or advisable to accomplish the purposes of the Lease; provided,
however, that Lessor may only take action or execute instruments under
this Section 13 after an Event of Default has occurred and is continuing.
Lessee hereby declares that the foregoing powers are granted for valuable
consideration, constitute powers granted as security for the performance
of the obligations of Lessee under the Lease and are coupled with an
interest and shall be irrevocable. Without limiting the generality of the
foregoing or any other rights of Lessor under the Lease, upon the
occurrence and during the continuation of an Event of Default, Lessor
shall have the sole and exclusive right and power to (i) settle,
compromise, compound, adjust or defend any actions, suits or proceedings
relating to or pertaining to the Aircraft, Airframe or any Engine, or the
Lease and (ii) make proof of loss, appear in and prosecute any action
arising from any policy or policies of insurance maintained pursuant to
the Lease, and settle, adjust or compromise any claims for loss, damage or
destruction under, or take any other action in respect of, any such policy
or policies.
14. ASSIGNMENT
14.1 LESSEE
LESSEE WILL NOT ASSIGN, DELEGATE OR OTHERWISE TRANSFER (VOLUNTARILY,
INVOLUNTARILY, BY OPERATION OF LAW OR OTHERWISE) ANY OF ITS RIGHTS OR
OBLIGATIONS UNDER THE LEASE (INCLUDING THE AIRCRAFT LEASE AGREEMENT OR
THIS CTA), OR CREATE OR PERMIT TO EXIST ANY SECURITY INTEREST OVER ANY OF
ITS RIGHTS UNDER THE LEASE (INCLUDING THE AIRCRAFT LEASE AGREEMENT OR THIS
CTA), AND ANY ATTEMPT TO DO SO SHALL BE NULL AND VOID. The foregoing shall
not be construed to prohibit a Permitted Sub-Lease or any other act
permitted to be taken by Lessee under the Lease.
14.2 LESSOR
Lessee acknowledges and agrees that Lessor may, if applicable under the
Financing Documents, assign as security Lessor's interest in the Lease as
described in the Acknowledgement and Agreement referred to in Schedule 3.
Lessor may, without the consent of Lessee, assign, novate, delegate or
otherwise transfer all or any of its rights or obligations under the Lease
or all or any of its right, title or interest in and to the Aircraft (each
a "Transfer"), including pursuant to:
(a) a sale and leaseback; or
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(b) a novation or assignment of the Lease and/or a sale of the Aircraft
(including to a special purpose or securitization or monetization
trust, fund, limited liability company, corporation, partnership or
other vehicle or in connection with any other direct or indirect
raising of capital); or
(c) a secured loan financing.
In connection with any such Transfer, Lessor and its assignee will enter
into an Assignment. Lessor will promptly notify Lessee of any Transfer
using a notice substantially in the form of Annex II to the Assignment
together with such information about the transferee as Lessor has received
from the transferee if not previously provided by Lessor to Lessee, and
Lessee agrees promptly to execute and deliver in connection with any
Transfer such documents and assurances (including an acknowledgement of
the Transfer, the absence of any Default under the Lease, and other
matters identified in the aforementioned notice) and to take such further
action as Lessor may reasonably request to establish or protect the rights
and remedies created or intended to be created in favor of the transferee
in connection with any Transfer. After any Transfer, the transferee shall
be entitled to be an Indemnitee and to such other rights under the Lease
as Lessor shall specify. Upon an assignment or novation described in
subsection (b) above, Lessor shall be released from all obligations and
liabilities under the Lease to the extent such obligations and liabilities
are assumed by such transferee, and the Lease, including this CTA as in
effect at that time and as incorporated in the Aircraft Lease Agreement,
shall be deemed applicable as between Lessee and the transferee of the
Lease and may be amended, supplemented or otherwise modified without the
consent of the transferor (if this CTA is applicable to the Other
Agreements not so transferred, it shall remain in full force and effect
and may be amended, supplemented or otherwise modified without the consent
of the transferee). Notwithstanding any such assignment or novation,
Lessor, Owner, Financing Parties' Representative and each other Indemnitee
shall continue to be entitled to indemnification under Section 10, and
shall continue to be named as an additional insured under all liability
Insurance referred to in Section 9 for a period of not less than two (2)
years after such Transfer. The agreements, covenants, obligations and
liabilities contained in the Lease, including all obligations to pay Rent
and indemnify each Indemnitee, are made for the benefit of Lessor (and, in
the case of Section 10, each other Indemnitee) and its or their respective
successors and assigns, notwithstanding the possibility that any such
Person was not originally a party to the Lease or may, at the time such
enforcement is sought, not be a party to the Lease.
14.3 CONDITIONS
In connection with any such Transfer by Lessor:
(a) Quiet Enjoyment: as a condition precedent to such Transfer becoming
effective, Lessor will procure that the transferee or any new owner
of the Aircraft (except where such new owner is also the "Lessor"
under the Lease) or any new holder of a security interest over the
Aircraft or any holder of an interest in the Aircraft or the Lease
(by way of security or otherwise), as the case may be, shall execute
and deliver to Lessee a letter of quiet enjoyment in respect of
Lessee's use and
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possession of the Aircraft in a form substantially similar to
Lessor's covenant in Section 7.1; and
(b) Costs: Lessor shall reimburse to Lessee its reasonable out-of-pocket
expenses (including reasonable legal fees and expenses) actually
incurred in connection with co-operating with Lessor in relation to
any such Transfer referred to in this Section 14, provided that (i)
such expenses are substantiated to Lessor's reasonable satisfaction
and (ii) no Payment or Event of Default has occurred and is
continuing.
(c) Transferee: Any transferee of Lessor's interest in the Lease
pursuant to a transfer described in clause (b) of Section 14.2, the
effect of which is to result in a release of Lessor from its
obligations under the Lease, shall (i) at the time of the transfer
have a tangible net worth (determined in accordance with GAAP) of at
least *****, or (ii) at the time of the transfer be a Person whose
unsecured debt obligations have an investment grade rating of BBB-
or better by S&P or the equivalent rating or better by Xxxxx'x
Investors Services, Inc. and Lessor's payment obligations owed to
Lessee under the Lease shall rank at least pari passu with any of
such rated debt obligations, or, in the absence of such rated
obligations, all of Lessor's unsecured, unsubordinated debt
obligations or (iii) have its payment obligations under the Lease
absolutely and unconditionally guaranteed by such a Person described
in the foregoing clause (i) or (ii).
(d) No Increase In Lessee's Indemnity or Payment Obligations: As a
condition to such Transfer, the Transfer shall not in any material
respect increase Lessee's indemnity or other payment obligations
under the Lease or diminish Lessee's rights under the Lease (to be
determined in each case at the time of such Transfer by applying all
applicable Laws as are in effect on the effective date of the
Transfer).
15. MISCELLANEOUS
15.1 [INTENTIONALLY OMITTED]
15.2 WAIVERS, REMEDIES CUMULATIVE
The rights of Lessor under the Lease may be exercised as often as
necessary, are cumulative and not exclusive of its rights under any Law;
and may be waived only in writing and specifically. Delay by Lessor in
exercising, or non-exercise of, any such right will not constitute a
waiver of that right.
CONFIDENTIAL TREATMENT HAS BEEN REQUESTED BY KITTY HAWK, INC. FOR CERTAIN
PORTIONS OF THIS DOCUMENT. CONFIDENTIAL PORTIONS HAVE BEEN FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION. OMITTED PORTIONS ARE INDICATED IN THIS
AGREEMENT WITH "*****".
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15.3 DELEGATION
Lessor may delegate to any Person all or any of the rights, powers or
discretions vested in it by the Lease, and any such delegation may be made
upon such terms and conditions and subject to such regulations (including
power to sub-delegate) as Lessor in its absolute discretion thinks fit.
15.4 SEVERABILITY
If a provision of the Lease is or becomes illegal, invalid or
unenforceable in any jurisdiction, that will not affect:
(a) the legality, validity or enforceability in that jurisdiction of any other
provision of the Lease; or
(b) the legality, validity or enforceability in any other jurisdiction of that
or any other provision of the Lease.
15.5 REMEDY
If Lessee fails to comply with any provision of the Lease, Lessor may,
without being in any way obliged to do so or responsible for so doing and
without prejudice to the ability of Lessor to treat such non-compliance as
a Default, effect compliance on behalf of Lessee, whereupon Lessee shall
become liable to pay immediately any sums expended by Lessor together with
all documented costs and expenses (including reasonable and documented
legal fees and expenses) in connection with the non-compliance.
15.6 TIME OF ESSENCE
The time stipulated in the Lease for all payments payable by Lessee and
the prompt, punctual performance of Lessee's other obligations under the
Lease are of the essence of the Lease.
15.7 NOTICES
All notices and other communications under, or in connection with, the
Lease will, unless otherwise stated, be given in writing by hand delivery,
mail, overnight courier service, facsimile or email (where such address is
available). Any such notice or other communication is deemed effectively
given when received by the recipient (or if receipt is refused by the
intended recipient, when so refused).
The address, facsimile and email details for notices to Lessee and Lessor
are as set out below or as otherwise advised by one party to the other in
writing and in compliance with this Section 15.7 from time to time:
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Lessor Lessee
Address: c/o GECAS Inc. 0000 Xxxx 00xx Xxxxxx
000 Xxxx Xxxxx Xxxx X.X. Xxx 000000
Xxxxxxxx, XX 00000 DFW Int'l Xxxxxxx, XX 00000
XXX XXX
Attention: Contracts Leader General Counsel
Facsimile: x0 000-000-0000 000 000-0000
Email: XXxxxxxxx@xxxxx.xxx xxxxxxxxx@xxx.xxx
15.8 GOVERNING LAW; JURISDICTION; WAIVER OF JURY TRIAL
(a) PURSUANT TO AND IN ACCORDANCE WITH SECTION 5-1401 OF THE NEW YORK
GENERAL OBLIGATIONS LAW, THE PARTIES HERETO AGREE THAT THE LEASE IN
ALL RESPECTS SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH,
THE GOVERNING LAW AS APPLIED TO CONTRACTS TO BE PERFORMED WHOLLY
WITHIN THE STATE OF NEW YORK (EXCLUSIVE OF SECTION 7-101 OF THE NEW
YORK GENERAL OBLIGATIONS LAW WHICH IS INAPPLICABLE TO THE LEASE).
THE PARTIES AGREE THAT THE LEASE WAS DELIVERED IN THE STATE OF NEW
YORK.
(b) Pursuant to and in accordance with Section 5-1402 of the New York
General Obligations Law, Lessee and Lessor each agree that the
United States District Court for the Southern District of New York
and any New York state court sitting in the County of New York, New
York, and all related appellate courts, are to have non-exclusive
jurisdiction to settle any disputes arising out of or relating to
the Lease and submits itself and its property to the non-exclusive
jurisdiction of the foregoing courts with respect to such dispute;
(c) Without prejudice to any other mode of service, Lessee:
(i) appoints C.T. Corporation, 0000 Xxxxxx Xxxxxx, 00xx Xxxxx, Xxx
Xxxx, Xxx Xxxx 00000 as its agent for service of process
relating to any proceedings before the New York or federal
courts in connection with the Lease and agrees to maintain the
process agent in New York notified to Lessor;
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(ii) agrees that failure by a process agent to notify Lessee of the
process shall not invalidate the proceedings concerned; and
(iii) consents to the service of process relating to any such
proceedings by prepaid mailing of a copy of the process to
Lessee's agent at the address identified in paragraph (i) or
by facsimile or prepaid mailing by air mail, certified or
registered mail of a copy of the process to Lessee at the
facsimile number or address, as applicable, notified by Lessee
to Lessor pursuant to the Lease.
(d) Without prejudice to any mode of service, Lessor:
(i) appoints C.T. Corporation, 0000 Xxxxxx Xxxxxx, 00xx Xxxxx, Xxx
Xxxx, Xxx Xxxx 00000 as its agent for service of process
relating to any proceedings before the New York or federal
courts in connection with the Lease and agrees to maintain the
process agent in New York notified to Lessor;
(ii) agrees that failure by a process agent to notify Lessor of the
process shall not invalidate the proceedings concerned; and
(iii) consents to the service of process relating to any such
proceedings by prepaid mailing of a copy of the process to
Lessor's agent at the address identified in paragraph (i) or
by facsimile or prepaid mailing by air mail, certified or
registered mail, of a copy of the process to Lessor at the
facsimile number or address, as applicable, set forth in
Section 15.7.
(e) Each of Lessee and Lessor:
(i) waives to the fullest extent permitted by Law any objection
which it may now or hereafter have to the courts referred to
in Section 15.8(b) on grounds of inconvenient forum or
otherwise as regards proceedings in connection with the Lease;
(ii) waives to the fullest extent permitted by Law any objection
which it may now or hereafter have to the laying of venue of
any suit, action or proceeding arising out of or relating to
the Lease brought in the courts referred to in Section
15.8(b); and
(iii) agrees that a judgment or order of any court referred to in
Section 15.8(b) in connection with the Lease is conclusive and
binding on it and may be enforced against it in the courts of
any other jurisdiction as if made by the highest court in that
other jurisdiction and accordingly Lessee will not seek to,
nor be entitled to, contest and/or delay and/or obstruct
registration or enforcement of any such judgment and/or award
and/or order on grounds of public policy or otherwise.
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(f) This Section 15 shall survive, continue to take full effect and not
merge in any order or judgment and nothing in this Section 15.8
limits the right of either party to bring proceedings against the
other in connection with the Lease:
(i) in any other court of competent jurisdiction; or
(ii) concurrently in more than one (1) jurisdiction.
(g) Each of Lessee and Lessor irrevocably and unconditionally:
(i) agrees that if the other brings legal proceedings against it
or its assets in relation to the Lease no sovereign or other
immunity from such legal proceedings (which will be deemed to
include suit, court jurisdiction, attachment prior to
judgment, attachment in aid of execution of a judgment, other
attachment, the obtaining of judgment, execution of a judgment
or other enforcement or legal process or remedy) will be
claimed by or on behalf of itself or with respect to its
assets;
(ii) waives any such right of immunity which it or its assets now
has or may in the future acquire and agrees that the foregoing
waiver shall have the fullest extent permitted under the
Foreign Sovereign Immunities Act of 1976 of the United States
of America and is intended to be irrevocable for the purposes
of such Act; and
(iii) waives any requirement, of any kind whatsoever, for Lessor to
provide any form of security in respect of the payment of any
damages, costs, expenses or any other financial obligation
resulting from the commencement or prosecution of proceedings
or the making of or service of any order and Lessee undertakes
(x) not to challenge the validity of any proceedings or the
making of any orders without any requirement for the provision
of such security (y) to advise any court upon Lessor's request
that Lessee requires no such security and (z) to provide
security itself for any third party claims arising out of or
in connection with such proceedings and/or orders.
EACH OF LESSEE AND LESSOR HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES
ANY AND ALL RIGHTS TO A JURY TRIAL IN RESPECT OF ANY CLAIM OR CAUSE OF
ACTION BASED UPON OR ARISING OUT OF THE LEASE OR ANY DEALINGS BETWEEN THEM
RELATING TO THE SUBJECT MATTER OF THE TRANSACTIONS CONTEMPLATED THEREBY OR
THE LESSOR/LESSEE RELATIONSHIP BEING ESTABLISHED, INCLUDING, CONTRACT
CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS AND OTHER COMMON LAW AND
STATUTORY CLAIMS. EACH OF LESSOR AND LESSEE REPRESENTS AND WARRANTS THAT
EACH HAS REVIEWED AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS FOLLOWING
CONSULTATION WITH ITS LEGAL COUNSEL. THIS WAIVER IS IRREVOCABLE, AND THIS
WAIVER SHALL APPLY TO ANY SUBSEQUENT
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AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THE LEASE. IN THE
EVENT OF LITIGATION, THIS SECTION 15.8 MAY BE FILED AS A WRITTEN CONSENT
TO A TRIAL BY THE COURT.
15.9 SOLE AND ENTIRE AGREEMENT; TRUE LEASE; SECTION 1110
(a) Entire Agreement: The Lease is the sole and entire agreement between
Lessor and Lessee in relation to the leasing of the Aircraft, and
supersedes all previous agreements, representations and
understandings in relation to that leasing. Any amendments to the
Lease must be made in writing and signed on behalf of Lessor and
Lessee.
(b) True Lease: The parties intend and agree that the Lease:
(i) constitutes a "true lease", and not a "security interest" as
defined in Section 1-201(37) of the UCC;
(ii) constitutes a "true lease" for United States federal income
tax purposes; and
(iii) confers only a leasehold interest on Lessee in and to the
Aircraft on and subject to the terms of the Lease, and no
ownership or other interest with respect to the Aircraft is
provided to Lessee under the Lease.
Lessee shall not file a tax return that is inconsistent with the
provisions of this Section 15.9(b).
(c) Lessee acknowledges that Lessor would not have entered into the
Lease unless it had available to it the benefits of a lessor under
Section 1110 of Title 11 of the U.S.C. Lessee covenants and agrees
with Lessor that to better ensure the availability of such benefits,
Lessee shall not oppose any motion, petition or application filed by
Lessor with any bankruptcy court having jurisdiction over Lessee
whereby Lessor seeks recovery of possession of the Aircraft under
said Section 1110 and shall not in any way oppose such action by
Lessor unless Lessee shall have complied with the requirements of
said Section 1110 to be fulfilled in order to entitle Lessee to
continued use and possession of the Aircraft under the Lease. In the
event said Section 1110 is amended, or if it is repealed and another
statute is enacted in lieu thereof, Lessor and Lessee agree to amend
the Lease and take such other action not inconsistent with the Lease
as Lessor reasonably requests so as to afford to Lessor the rights
and benefits as such amended or substituted statute confers upon
owners and lessors of aircraft similarly situated to Lessor.
15.10 BENEFICIARIES
The Lease shall be binding upon and inure to the benefit of Lessor, Lessee
and their permitted successors and assigns. All rights expressed to be
granted to each Indemnitee (other than Lessor) under the Lease are given
to Lessor on behalf of that Indemnitee, and
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each Indemnitee is an express third party beneficiary thereof. Except for
Lessor, GECAS, Financing Parties' Representative, each Indemnitee and each
Tax Indemnitee, no other Person shall be a third party beneficiary of the
Lease.
15.11 COUNTERPARTS
The Lease (including the Aircraft Lease Agreement and this CTA) may be
executed in two (2) or more counterparts, each of which shall be deemed an
original, but all of which together shall constitute one and the same
instrument. To the extent, if any, that the Lease constitutes chattel
paper (as such term is defined in the UCC as in effect in any applicable
jurisdiction), no security interest in the Lease may be created through
the transfer or possession of any counterpart other than the original
counterpart, which shall be identified as the counterpart designated as
the "original" on the signature page of the Aircraft Lease Agreement by
Financing Parties' Representative, Owner or Lessor, as the case may be.
15.12 LANGUAGE
All notices to be given under the Lease will be in English. All documents
delivered to Lessor pursuant to the Lease will be in English, or if not in
English, will be accompanied by a certified English translation. If there
is any inconsistency between the English version of the Lease and any
version in any other language, the English version will prevail.
15.13 SURVIVAL
Lessee's obligations under Section 3 of the applicable Part of Schedule 4,
under Sections 5.6, 5.7, 5.8, 5.10, 5.11, 5.17, 5.21, 9.5, 10, 12, 13.2
and 15 and under any other provision of the Lease providing for an
obligation on the part of Lessee to indemnify Lessor or any other
Indemnitee shall survive the expiration or any termination of the Lease
and continue in full force and effect.
16. DISCLAIMERS AND WAIVERS
LESSOR AND LESSEE AGREE THAT THE DISCLAIMERS, WAIVERS AND CONFIRMATIONS
SET FORTH IN SECTIONS 16.1 THROUGH 16.4 BELOW SHALL APPLY AT ALL TIMES
DURING THE TERM. LESSEE'S ACCEPTANCE OF THE AIRCRAFT IN ACCORDANCE WITH
SECTION 4.3 SHALL BE CONCLUSIVE EVIDENCE THAT LESSEE HAS FULLY INSPECTED
THE AIRCRAFT, THE ENGINES AND EVERY PART THEREOF AND THAT THE AIRCRAFT,
THE ENGINES, THE PARTS AND THE AIRCRAFT DOCUMENTS AND RECORDS ARE
TECHNICALLY ACCEPTABLE TO LESSEE AND SATISFY THE DELIVERY CONDITION
REQUIREMENTS AND ARE IN SUITABLE CONDITION FOR DELIVERY TO AND ACCEPTANCE
BY LESSEE.
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16.1 EXCLUSION
THE AIRCRAFT IS LEASED AND DELIVERED UNDER THE LEASE "AS-IS, WHERE- IS,"
AND LESSEE AGREES AND ACKNOWLEDGES THAT:
(a) LESSOR WILL HAVE NO LIABILITY IN RELATION TO, AND LESSOR HAS NOT AND
WILL NOT BE DEEMED TO HAVE ACCEPTED, MADE OR GIVEN (WHETHER BY
VIRTUE OF HAVING DONE OR FAILED TO DO ANY ACT, OR HAVING ACQUIRED OR
FAILED TO ACQUIRE ANY STATUS UNDER OR IN RELATION TO THE LEASE OR
OTHERWISE), ANY GUARANTEES, COVENANTS, WARRANTIES OR
REPRESENTATIONS, EXPRESS OR IMPLIED, WITH RESPECT TO, THE AIRCRAFT
OR ANY ENGINE OR PART OR ANY SERVICES PROVIDED BY LESSOR UNDER THE
LEASE, INCLUDING THE TITLE, DESCRIPTION, AIRWORTHINESS, COMPLIANCE
WITH SPECIFICATIONS, OPERATION, MERCHANTABILITY, QUALITY, FREEDOM
FROM INFRINGEMENT OF PATENT, COPYRIGHT, TRADEMARK OR OTHER
PROPRIETARY RIGHTS, FITNESS FOR ANY PARTICULAR USE OR PURPOSE,
VALUE, DURABILITY, DATE PROCESSING, CONDITION, OR DESIGN, OR AS TO
THE QUALITY OF THE MATERIAL OR WORKMANSHIP, THE ABSENCE OF LATENT OR
OTHER DEFECTS, WHETHER OR NOT DISCOVERABLE, OR AS TO ANY OTHER
MATTER WHATSOEVER, EXPRESS OR IMPLIED (INCLUDING ANY IMPLIED
WARRANTY ARISING FROM A COURSE OF PERFORMANCE OR DEALING OR USAGE OF
TRADE) WITH RESPECT TO THE AIRCRAFT, ANY ENGINE OR ANY PART OR ANY
SERVICES PROVIDED BY LESSOR UNDER THE LEASE; AND
(b) LESSOR SHALL NOT HAVE ANY OBLIGATION OR LIABILITY WHATSOEVER TO
LESSEE (WHETHER ARISING IN CONTRACT OR IN TORT, AND WHETHER ARISING
BY REFERENCE TO NEGLIGENCE, MISREPRESENTATION OR STRICT LIABILITY OF
LESSOR OR OTHERWISE) FOR:
(i) ANY LIABILITY, LOSS OR DAMAGE CAUSED OR ALLEGED TO BE CAUSED
DIRECTLY OR INDIRECTLY BY THE AIRCRAFT OR ANY ENGINE OR BY ANY
INADEQUACY THEREOF OR DEFICIENCY OR DEFECT THEREIN OR BY ANY
OTHER CIRCUMSTANCE IN CONNECTION THEREWITH (EXCEPT FOR DIRECT
DAMAGES DUE TO LESSOR'S BREACH AS AND TO THE EXTENT EXPRESSLY
PROVIDED IN SECTION 4.4 OR 7.1 HEREOF);
(ii) THE USE, OPERATION OR PERFORMANCE OF THE AIRCRAFT OR ANY RISKS
RELATING THERETO;
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(iii) ANY INTERRUPTION OF SERVICE, LOSS OF BUSINESS OR ANTICIPATED
PROFITS OR ANY OTHER DIRECT (EXCEPT FOR DIRECT DAMAGES DUE TO
LESSOR'S BREACH AS AND TO THE EXTENT EXPRESSLY PROVIDED IN
SECTION 4.4 OR 7.1 HEREOF AND SUBJECT TO SECTION 16.3 BELOW),
INDIRECT, SPECIAL INCIDENTAL OR CONSEQUENTIAL LOSS OR DAMAGE;
OR
(iv) THE DELIVERY, OPERATION, SERVICING, MAINTENANCE, REPAIR,
IMPROVEMENT OR REPLACEMENT OF THE AIRCRAFT, ANY ENGINE OR ANY
PART.
16.2 WAIVER
LESSEE HEREBY WAIVES, AS BETWEEN ITSELF AND 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 ANY OF THE MATTERS REFERRED TO
IN SECTION 16.1.
16.3 DISCLAIMER OF CONSEQUENTIAL DAMAGES
EACH PARTY AGREES THAT, EXCEPT AS OTHERWISE EXPRESSLY SET FORTH HEREIN, IT
SHALL NOT BE ENTITLED TO RECOVER, AND HEREBY DISCLAIMS AND WAIVES ANY
RIGHT THAT IT MAY OTHERWISE HAVE TO RECOVER FROM ANY OTHER PARTY, FOR
INTERRUPTION OF SERVICE, LOSS OF BUSINESS, LOST PROFITS OR REVENUES OR
CONSEQUENTIAL DAMAGES (AS DEFINED IN SECTION 2A-520 OF THE UCC OR
OTHERWISE) OR ANY SPECIAL OR INDIRECT DAMAGES AS A RESULT OF ANY BREACH OR
ALLEGED BREACH BY THE OTHER PARTY OF ANY OF THE AGREEMENTS,
REPRESENTATIONS OR WARRANTIES CONTAINED IN THE LEASE (INCLUDING A BREACH
BY LESSOR UNDER SECTION 4.4 OR SECTION 7.1).
16.4 CONFIRMATION
LESSEE CONFIRMS THAT IT IS FULLY AWARE OF THE PROVISIONS OF THIS SECTION
16 AND ACKNOWLEDGES THAT RENT AND OTHER AMOUNTS PAYABLE UNDER THE LEASE
HAVE BEEN CALCULATED BASED ON ITS PROVISIONS.
17. BROKERS AND OTHER THIRD PARTIES
17.1 NO BROKERS
Each of the parties hereby represents and warrants to the other that it
has not paid, agreed to pay or caused to be paid directly or indirectly in
any form, any commission,
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percentage, contingent fee, brokerage or other similar payments of any
kind, in connection with the establishment or operation of the Lease, to
any Person (other than fees payable to legal advisers or portfolio
services).
17.2 INDEMNITY
Each party agrees to indemnify and hold the other harmless from and
against any and all claims, suits, damages, costs and expenses (including,
reasonable legal fees and expenses) asserted by any agent, broker or other
third party for any commission or compensation of any nature whatsoever
based upon the Lease or the Aircraft, if such claim, suit, damage, cost or
expense arises out of any breach by the indemnifying party, its employees
or agents of Section 17.1.
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IN WITNESS WHEREOF, the parties hereto have executed this Common Terms Agreement
on the date shown at the beginning of the document.
Aviation Financial Services Inc.
By: ___________________________
Name: ___________________________
Title: ___________________________
Kitty Hawk AirCargo, Inc.
By: ___________________________
Name: ___________________________
Title: ___________________________
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SCHEDULE 1
DEFINITIONS
The following words and expressions have the respective meanings set forth
below:
ACT means the Federal Aviation Act of 1958, as amended, and as recodified in
Title 49 of the U.S.C. pursuant to Public Law 103-272, or any similar
legislation of the United States of America as enacted in substitution or
replacement thereof.
AD COMPLIANCE PERIOD means the number of days after the Return Occasion
identified in the Aircraft Lease Agreement under AD Compliance Period.
AD FACTOR has the meaning given in the Aircraft Lease Agreement.
AD THRESHOLD has the meaning given in the Aircraft Lease Agreement.
AFFILIATE means as to any Person, any other Person that, directly or indirectly,
is in control of, is controlled by, or is under common control with, such
Person. For purposes of this definition, "control" of a Person means the power,
directly or indirectly, either to (a) vote greater than 50% of the securities
having ordinary voting power for the election of directors (or persons
performing similar functions) of such Person or (b) direct or cause the
direction of the management and policies of such Person, whether by contract or
otherwise.
AFTER-TAX BASIS means in the case of any amount payable on an "After-Tax Basis"
to or for the benefit of any Person (including any amount payable pursuant to
this definition), that the total amount otherwise payable will be increased so
that, after deduction of the net amount of all Taxes currently required to be
paid by such Person with respect to the receipt or accrual by it of such amount
(and assuming that such Person is subject to (i) United States federal income
tax at the highest marginal statutory rate imposed on corporations in the
highest taxable income bracket for the relevant period (in the case of a person
that is a U.S. Person within the meaning of Section 7701(a)(30) of the Internal
Revenue Code of 1986, as amended), (ii) United States of America state and local
income taxes at the composite of the highest marginal statutory rates imposed on
such Person for the relevant period, as such composite rate shall be certified
by a financial officer of such Person, and (iii) income taxes (if any) imposed
by countries outside the United States at the actual rates imposed on such
Person) the Person entitled to the payment will actually receive the amount
otherwise required to be paid.
AGREED VALUE means the amount identified in the Aircraft Lease Agreement or such
other greater amount as Lessor may from time to time notify to Lessee to reflect
an amount equal to 110% of the current market value of the Aircraft.
AIR AUTHORITY means the FAA.
AIRCRAFT means Aircraft and Engines identified in the Aircraft Lease Agreement
(which term includes, where the context admits, a separate reference to all
Engines, Parts and Aircraft Documents and Records).
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AIRCRAFT CONDITION DAMAGES means, collectively, any loss, cost, expense or
liability, or damage to Lessor's residual interest in the Aircraft, sustained by
Lessor due to Lessee's failure to maintain the Aircraft in accordance with the
terms of the Lease or Lessee's failure to redeliver the Aircraft in the
Redelivery Condition.
AIRCRAFT DOCUMENTS AND RECORDS means the documents, data and records identified
in the list attached to the Certificate of Acceptance, and any other documents
and records required in connection with Lessee's obligations under Section 8.8,
and all additions, renewals, revisions and replacements from time to time made
to any of the foregoing in accordance with the Lease.
AIRCRAFT LEASE AGREEMENT means an aircraft lease agreement entered or to be
entered into between Lessor and Lessee.
AIRFRAME means the Aircraft, excluding the Engines and Aircraft Documents and
Records.
AIRFRAME STRUCTURAL CHECK has the meaning given in the Aircraft Lease Agreement.
AIRFRAME SUPPLEMENTAL RENT means the amount identified in the Aircraft Lease
Agreement for each Flight Hour operated by the Aircraft.
AIRWORTHINESS DIRECTIVE means an airworthiness directive issued by the State of
Design or the State of Registry.
ANNUAL SUPPLEMENTAL RENT ADJUSTMENT has the meaning given in the Aircraft Lease
Agreement.
APPRAISAL PROCEDURE means the following procedure for determining the "fair
market rental value" of the Aircraft pursuant to Section 13 of this CTA: (a)
Lessor shall select an internationally recognized, independent aircraft
appraiser certified by the International Society of Transport Aircraft Trading
in its sole and absolute discretion who shall make a determination of "fair
market rental value" of the Aircraft; and (b) the fees and expenses of the
appraiser shall be paid by Lessee. "Fair market rental value" shall mean the
value determined by an appraisal completed on an "as-is" and "where-is" basis.
APU means the auxiliary power unit installed on the Aircraft on the Delivery
Date and any replacement auxiliary power unit installed on the Aircraft and
title to which is transferred to Owner in accordance with the Lease.
APU SUPPLEMENTAL RENT means the amount identified in the Aircraft Lease
Agreement for each Flight Hour operated by the APU.
ASSUMED RATIO has the meaning given in the Aircraft Lease Agreement.
ASSUMED UTILIZATION has the meaning given in the Aircraft Lease Agreement.
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ASSIGNMENT means the Assignment, Assumption and Release Agreement to be entered
into between Lessor and the assignee named therein in connection with a Transfer
referred to in Section 14.2 of this CTA, in substantially the form of Schedule
13.
BUSINESS DAY means any day other than a Saturday, Sunday or other day on which
banking institutions in New York, New York are authorized or required by Law to
be closed.
"C" CHECK means a "C" check in accordance with the Lessee's Maintenance Program
each in effect on the relevant date.
CERTIFICATE OF ACCEPTANCE means a certificate of acceptance in the form of Part
1 or Part 2, as applicable, of Schedule 5.
CERTIFICATE OF LEASE TERMINATION means a certificate of lease termination in the
form of Schedule 15.
CERTIFICATED AIR CARRIER means any Person (except the United States Government)
that is a "citizen of the United States of America" (as defined in Section 40102
of Title 49 of the U.S.C.) and holding a Certificate of Public Convenience and
Necessity issued under Section 41102 of Title 49 of U.S.C. by the Department of
Transportation or any predecessor or successor agency thereto, and an air
carrier operating certificate issued pursuant to Chapter 447 of Title 49 of
U.S.C. or, in the event such certificates shall no longer be applicable, any
Person (except the United States Government) that is a citizen of the United
States of America (as defined in Section 40102 of Title 49 of the U.S.C.) and
legally engaged in the business of transporting for hire passengers or cargo by
air predominantly to, from or between points within the United States of
America, and, in either event, operating commercial jet aircraft capable of
carrying ten (10) or more individuals or 6,000 pounds or more of cargo, which
also is certificated so as to entitle Lessor, as a lessor, to the benefits of
Section 1110 of Title 11 of U.S.C. with respect to the Aircraft.
COMMON TERMS AGREEMENT OR CTA has the meaning given in the heading hereof.
CONDITIONS PRECEDENT means the conditions specified in Schedule 3 and any others
specified in the Aircraft Lease Agreement.
CSO means Cycles since overhaul.
CYCLE means one take-off and landing of the Aircraft.
DAMAGE NOTIFICATION THRESHOLD means *****.
DEDUCTIBLE AMOUNT means *****.
CONFIDENTIAL TREATMENT HAS BEEN REQUESTED BY KITTY HAWK, INC. FOR CERTAIN
PORTIONS OF THIS DOCUMENT. CONFIDENTIAL PORTIONS HAVE BEEN FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION. OMITTED PORTIONS ARE INDICATED IN THIS
AGREEMENT WITH "*****".
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DEFAULT means any Event of Default or any event or circumstance that, with the
giving of notice and/or lapse of time and/or determination of materiality and/or
fulfillment of any other condition, would constitute an Event of Default.
DEFECT means any defect, discrepancy or non-conformity with the Delivery
Condition Requirements notified by Lessee to Lessor during the Pre-Delivery
Procedure.
DELIVERY means delivery of the Aircraft by Lessor to Lessee under the Lease.
DELIVERY CONDITION REQUIREMENTS means the requirements set forth in Schedule 4
as the same may be varied in the Aircraft Lease Agreement provided that such
requirements are solely a description of the condition in which the Aircraft
must be in order for Lessee to be obligated to accept the Aircraft under the
Lease.
DELIVERY DATE means the date on which Delivery occurs.
DELIVERY LOCATION means the location identified in the Aircraft Lease Agreement
or such other location as Lessor and Lessee may mutually agree.
DEPOSIT has the meaning given in the Aircraft Lease Agreement.
DISCOUNT RATE means *****.
DOLLARS AND $ means the lawful currency of the United States of America.
ENFORCEMENT AND REMARKETING COSTS means, collectively, all documented costs,
expenses and other incidental damages and losses (but not consequential damages)
associated with Lessor's exercise of its remedies under the Lease or otherwise
incurred by Lessor as a result of an Event of Default or the exercise of rights
or remedies with respect thereto, including repossession costs, legal fees,
Aircraft storage, preservation, shipment, repair, refurbishment, modification,
maintenance and insurance costs, Aircraft re-lease or sale costs (including any
costs incurred to prepare the Aircraft for sale or lease, advertising costs,
sale or lease costs (including commissions) and any costs to transition the
Aircraft to the next operator's maintenance program) in any way related to the
Aircraft, any Engine or any Part, including to put the Aircraft in the
Redelivery Condition or in the location provided for in this Section 13.2, or
otherwise.
ENGINE means, whether or not installed on the Aircraft:
(a) each engine of the manufacture and model specified in the Aircraft Lease
Agreement for the Aircraft which Lessor offers to Lessee for delivery with
the Airframe on the Delivery
CONFIDENTIAL TREATMENT HAS BEEN REQUESTED BY KITTY HAWK, INC. FOR CERTAIN
PORTIONS OF THIS DOCUMENT. CONFIDENTIAL PORTIONS HAVE BEEN FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION. OMITTED PORTIONS ARE INDICATED IN THIS
AGREEMENT WITH "*****".
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Date, such engines being described as to serial numbers on the Certificate
of Acceptance; and
(b) any Replacement Engine, with effect from the time when title thereto
has passed to Owner in accordance with the Lease;
and in each case includes all modules and Parts from time to time belonging to
or installed in that engine but excludes any properly replaced engine, title to
which should have passed to Lessee pursuant to the Lease.
ENGINE CYCLE means operation of an engine on an aircraft from and including a
take-off to and including the landing of that aircraft.
ENGINE EVENT OF LOSS means the occurrence, with respect to the Engine only,
whether or not installed on the Airframe, of any of those events described in
the definition of Event of Loss.
ENGINE FLIGHT HOUR means each hour or part thereof an Engine is operated,
elapsing from the moment the wheels of an aircraft on which such Engine is
installed leave the ground until the wheels of such aircraft next touch the
ground.
ENGINE LLP REPLACEMENT has the meaning given in Section 7.2(b).
ENGINE LLP SUPPLEMENTAL RENT means, in respect of the life-limited Parts for
each Engine, the amount identified in the Aircraft Lease Agreement for each
Cycle operated by that Engine.
ENGINE REFURBISHMENT means all scheduled and unscheduled off the wing Engine
maintenance and repair accomplished for each module in accordance with the
performance restoration or full overhaul sections of the Manufacturer's
workscope planning guide.
ENGINE SUPPLEMENTAL RENT means in respect of each Engine, the amount identified
in the Aircraft Lease Agreement for each Engine Flight Hour (or fraction
thereof) operated by that Engine.
ENGINE THRUST SETTING has the meaning given in the Aircraft Lease Agreement.
EQUIPMENT CHANGE has the meaning given in Section 8.12.
ERISA means the Employee Retirement Income Security Act of 1974, as amended.
EVENT OF DEFAULT means any event or condition specified in Schedule 9.
EVENT OF LOSS means with respect to the Aircraft (including for the purposes of
this definition the Airframe):
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(a) the actual or constructive, compromised, arranged or agreed total loss of
the Aircraft; or
(b) the Aircraft being destroyed, damaged beyond economic repair as determined
by Lessor or permanently rendered unfit for normal use for any reason
whatsoever; or
(c) the Aircraft being condemned, confiscated or requisitioned for title, or
title to the Aircraft being otherwise compulsorily acquired by the
government of the State of Registry or any other Government Entity; or
(d) the Aircraft being hijacked, stolen, confiscated, detained, seized,
condemned or requisitioned for use or hire for the lesser of (i) a period
of more than thirty (30) days (or forty-five (45) days in the case of
requisition for use or hire by the government of the State of Registry) or
(ii) a period equal to or exceeding the remaining balance of the Term; or
(e) as a result of any rule, regulation, order or other action by the Air
Authority, the use of the Aircraft by Lessee or any Permitted Sub-Lessee
shall have been prohibited for a period of twelve (12) consecutive months.
EXPIRY DATE means the Scheduled Expiry Date or, if earlier (i) the date when
Lessor acting in accordance with the provisions of the Lease, terminates the
leasing of the Aircraft to Lessee under the Lease, or (ii) subject to the
provisions of Section 11.1 and 11.2, the date when Lessor receives the Agreed
Value together with any other amounts then due and unpaid under the Lease and
the Other Agreements following an Event of Loss; provided that if the Term is
extended pursuant to Section 12.2, the Expiry Date shall be extended to the date
to which the Term is extended pursuant to Section 12.2.
EXTENDED EXPIRY DATE, if applicable, has the meaning given in the Aircraft Lease
Agreement.
FAA means the Federal Aviation Administration of the United States of America
and any successor thereof.
FAR means the Federal Aviation Regulations set forth in Title 14 of the United
States Code of Federal Regulations, as amended and modified from time to time.
FINAL DELIVERY DATE has the meaning given in the Aircraft Lease Agreement.
FINAL INSPECTION has the meaning given in Section 1.1 of Schedule 6.
FINANCIAL INDEBTEDNESS means any indebtedness in respect of:
(a) moneys borrowed or raised;
(b) any liability under any debenture, bond, note, loan stock, acceptance,
documentary credit or other security;
(c) the acquisition cost of any asset to the extent payable before or after
the time of acquisition or possession (exclusive of trade payables); or
1-6
(d) any guarantee, indemnity or similar assurance against financial loss of
any person in respect of the above.
FINANCIAL INFORMATION MEANS:
(a) if requested by Lessor, the consolidated management accounts of Lessee (in
Dollars, and comprising a balance sheet and profit and loss statement and
cash flow forecasts, as well as operational statistics: available ton
miles, revenue ton miles and total tons) in English prepared for the most
recent previous fiscal quarter certified by a qualified financial officer
of Lessee as being true and correct and fairly presenting its financial
condition and results of operation in accordance with GAAP (subject to
year-end adjustments); and
(b) as soon as available but not in any event later than one hundred and
twenty (120) days after the last day of each fiscal year of Lessee, the
audited consolidated financial statements of Lessee (consisting of a
balance sheet and statements of operations and of retained earnings and
cash flows), prepared for the fiscal year then most recently ended
certified by the independent auditors of Lessee without qualification.
FINANCING DOCUMENTS means any mortgage, lease assignment, loan agreement,
conditional sale agreement, head lease or any other documents entered into by
Lessor or Owner with any Financing Party in connection with Lessor's or Owner's
financing of the Aircraft.
FINANCING PARTIES means any Person or Persons from time to time notified by
Lessor to Lessee as providing finance, or participating in a transaction the
purpose of which is to provide finance, to Lessor or Owner in respect of its
acquisition, ownership or leasing of the Aircraft, whether by way of loan,
superior lease or otherwise.
FINANCING PARTIES' REPRESENTATIVE means any one or more Financing Parties from
time to time notified to Lessee as being the Financing Parties' Representative.
FINANCING STATEMENTS means Uniform Commercial Code Financing Statements in
respect of the Lease and the Aircraft and Engines leased thereunder prepared in
a form acceptable for filing with the applicable Government Entities in the
state in which Lessee's location (as determined pursuant to Section 9-307 of the
Uniform Commercial Code as in effect in such state) and such other jurisdictions
as Lessor shall reasonably require.
FLIGHT HOUR means each hour or part thereof elapsing from the moment the wheels
of the Aircraft leave the ground on take off until the wheels of the Aircraft
next touch the ground.
GAAP means generally accepted accounting principles in the United States of
America.
GE CAPITAL means General Electric Capital Corporation.
GECAS means either or both of GE Capital Aviation Services, Limited and GE
Capital Aviation Services, Inc.
GENEVA CONVENTION means the Convention for the International Recognition of
Rights in Aircraft, signed (ad referendum) at Geneva, Switzerland, on June 19,
1948, and amended from
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time to time, but excluding the terms of any adhesion thereto or ratification
thereof containing reservations to which the United States of America does not
accede.
GOVERNING LAW means the Laws of the State of New York, United States of America,
as applied to contracts to be performed wholly within the State of New York
(exclusive of Section 7-101 of the New York General Obligations Law which is
inapplicable to the Lease).
GOVERNMENT ENTITY MEANS:
(a) any national government, political subdivision thereof, or local
jurisdiction therein;
(b) any instrumentality, board, commission, court, or agency of any of the
above, 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.
GUARANTEE means, if applicable, a guarantee in the form of Schedule 10 from
Guarantor if such guarantee is required by the Aircraft Lease Agreement; and
references to the Guarantee include references to any replacement or re-issued
guarantee.
GUARANTOR means, if applicable, the Person(s) identified as such in the Aircraft
Lease Agreement.
HABITUAL BASE means United States of America or, subject to the prior written
consent of Lessor, any other country or countries in which the Aircraft is for
the time being habitually based.
INDEMNITEE means each of Lessor, Owner, GE Capital, GECAS (in its capacity as
lease manager), any Financing Parties' Representative and any Financing Parties,
and their respective successors and permitted assigns, and each of their
respective shareholders, subsidiaries, Affiliates, members, partners,
contractors, directors, officers, representatives, agents and employees.
INSURANCE means insurance in respect of the Aircraft in form and substance
satisfactory to Lessor, and includes any insurance and reinsurance required by
Section 9 and Schedule 7.
INTEREST RATE means ***** prime rate plus ***** per annum, but not to exceed the
maximum amount permitted by Law.
JAA means the body referred to as the "Joint Aviation Authorities" established
by the members of the European Civil Aviation Conference.
JAR means the Joint Aviation Requirements of the JAA.
CONFIDENTIAL TREATMENT HAS BEEN REQUESTED BY KITTY HAWK, INC. FOR CERTAIN
PORTIONS OF THIS DOCUMENT. CONFIDENTIAL PORTIONS HAVE BEEN FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION. OMITTED PORTIONS ARE INDICATED IN THIS
AGREEMENT WITH "*****".
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LANDING GEAR means the landing gear assembly of the Aircraft excluding any
rotable components.
LANDING GEAR SUPPLEMENTAL RENT means in respect of the Landing Gear, the amount
identified in the Aircraft Lease Agreement for each Flight Hour operated by the
Landing Gear.
LAW means and includes (a) any statute, decree, constitution, regulation, order,
judgment or other directive of any Government Entity; (b) any treaty, pact,
compact or other agreement to which any Government Entity is a signatory or
party; (c) any judicial or administrative interpretation or application of any
Law described in (a) or (b) above; and (d) any amendment or revision of any Law
described in (a), (b) or (c) above.
LC AMOUNT has the meaning given in the Aircraft Lease Agreement.
LEASE means an Aircraft Lease Agreement for the Aircraft and any Schedules,
supplements, amendments, modifications or side letter agreements related to the
Lease executed contemporaneously with or subsequently to the Aircraft Lease
Agreement, which incorporates this Common Terms Agreement.
LESSEE CONDITIONS PRECEDENT means the conditions specified in Part B of Schedule
3.
LEASE SUPPLEMENT means any Lease Supplement executed and delivered with respect
to the Lease.
LEASE SUPPLEMENT NO. 1 means a Lease Supplement No. 1 substantially in the form
of Schedule 14.1.
LESSEE means the Person named as Lessee in the applicable Aircraft Lease
Agreement.
LESSEE AFFILIATE means any Subsidiary or other Affiliate for the time being of
Lessee.
LESSEE CONDITIONS PRECEDENT means the conditions specified in Part B of Schedule
3.
LESSEE'S MAINTENANCE PROGRAM means the Maintenance Program, as at the date of
the Aircraft Lease Agreement, specifically approved by the Air Authority for
Lessee's maintenance of the Aircraft.
LESSOR means the Person named as Lessor in the Aircraft Lease Agreement.
LESSOR CONDITIONS PRECEDENT means the conditions specified in Part A of Schedule
3.
LESSOR LIEN means any Security Interest whatsoever from time to time created by
Lessor or Owner in connection with the financing of the Aircraft, including the
Financing Documents, and any other Security Interest in the Aircraft which
results from acts of or claims against Lessor or Owner or any other Person
lawfully claiming by, through or under Lessor or Owner that do not
1-9
relate to the transactions contemplated by or permitted under the Lease and is
not attributable to Lessee.
LESSOR/OWNER TAX JURISDICTION has the meaning given in the Aircraft Lease
Agreement.
LESSOR TAXES means Taxes for which Lessee is not obligated to indemnify Lessor
and/or Owner and/or a Financing Party as provided in Section 5.7(c).
LETTER OF CREDIT means any letter of credit issued in relation to the Lease
pursuant to Section 5.14 and any replacement or renewal of that letter of
credit.
LOSSES means any and all cost, expense (including any and all reasonable legal
fees and expenses and the fees and expenses of other professional advisers),
claims, proceedings, losses, liabilities, obligations, damages (whether direct,
indirect, special or incidental), suits, judgments, fees, penalties or fines
(whether criminal or civil) of any kind or nature whatsoever, including any of
the foregoing arising or imposed with or without any Indemnitee's fault or
negligence, whether passive or active or under the doctrine of strict liability.
MAINTENANCE CONTRIBUTIONS means, as and if applicable, all amounts payable by
Lessor pursuant to Section 7.2.
MAINTENANCE PERFORMER means such Person as is approved and internationally
recognized by the FAA or JAA to perform maintenance and/or modification services
on commercial aircraft and/or commercial aircraft engines, which Person shall be
reasonably agreed by Lessor and Lessee to have recognized standing and
experience, suitable facilities and equipment to perform such services on
aircraft and/or engines of the same or improved model as the Aircraft or, in the
case of engines, the Engines.
MAINTENANCE PROGRAM means an Air Authority approved maintenance program for the
Aircraft in accordance with the Manufacturer's and/or OEM's specifications,
requirements, service bulletins, planning documents, maintenance manuals and
documents and encompassing scheduled maintenance (including block maintenance),
condition-monitored maintenance, and/or on-condition maintenance of Airframe,
Engines and Parts, including servicing, testing, preventive maintenance,
repairs, structural inspections, system checks, overhauls, approved
modifications, service bulletins, engineering orders, airworthiness directives,
corrosion control, inspections and treatments.
MAJOR CHECKS means any C check, multiple C check or heavier check (including
structural inspections and a corrosion prevention and control program)
recommended for commercial aircraft of the same model as the Aircraft by its
manufacturer (however denominated) as set out in the Lessee's Maintenance
Program.
MANUFACTURER means the manufacturer of the Airframe or an Engine, as the case
may be, as identified in the Aircraft Lease Agreement.
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MANUFACTURER'S MAINTENANCE PLANNING DOCUMENT means the recommended maintenance
program for the Aircraft issued by the Manufacturer as in effect at the time of
any applicable determination.
MINIMUM APU LIMIT has the meaning given in the Aircraft Lease Agreement.
MINIMUM COMPONENT CALENDAR LIFE has the meaning given in the Aircraft Lease
Agreement.
MINIMUM COMPONENT CYCLES has the meaning given in the Aircraft Lease Agreement.
MINIMUM COMPONENT FLIGHT HOURS has the meaning given in the Aircraft Lease
Agreement.
MINIMUM ENGINE CYCLES has the meaning given in the Aircraft Lease Agreement.
MINIMUM ENGINE LLP CYCLES has the meaning given in the Aircraft Lease Agreement.
MINIMUM ENGINE FLIGHT HOURS has the meaning given in the Aircraft Lease
Agreement.
MINIMUM LANDING GEAR CALENDAR TIME has the meaning given in the Aircraft Lease
Agreement.
MINIMUM LANDING GEAR CYCLES has the meaning given in the Aircraft Lease
Agreement.
MINIMUM LANDING GEAR FLIGHT HOURS has the meaning given in the Aircraft Lease
Agreement.
MINIMUM LIABILITY COVERAGE has the meaning given in the Aircraft Lease
Agreement.
MITIGATED RENT AMOUNT means an amount equal to the aggregate Rent for the
remainder of the Term (determined without reference to any right of Lessor to
cancel the leasing of the Aircraft, whether or not such right is exercised),
discounted periodically (equal to installment frequency) to present worth at the
Discount Rate to the date of payment by Lessee to Lessor, less the applicable
amount set forth below:
(a) in the event that Lessor has re-let the Aircraft, an amount equal to
the aggregate basic rental payments to become due under such
re-lease for the period coinciding with the remainder of the Term
(determined without reference to any right of Lessor to cancel the
leasing of the Aircraft, whether or not such right is exercised),
discounted periodically (equal to installment frequency) to present
worth at the Discount Rate to the date of payment by Lessee; or
(b) in the event that Lessor has not re-let the Aircraft or has sold the
Aircraft, an amount equal to the fair market rental value
(determined pursuant to the Appraisal Procedure) of the Aircraft for
the period commencing with the date that Lessor reasonably
anticipates that the Aircraft could be re-let at such rental rate
and ending with the date that the Term was scheduled to expire
(determined without reference to any right of Lessor to cancel the
leasing of the Aircraft, whether or not such right is exercised),
discounted periodically (equal to installment
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frequency) to present worth at the Discount Rate to the date of
payment by Lessee.
NAMEPLATE INSCRIPTION means the inscription to be included on the Nameplates as
requested by Lessor from time to time.
NAMEPLATES means the fireproof plates to be installed on the Aircraft in
accordance with Section 8.6(a).
OEM means, in relation to any Part, the original equipment manufacturer of such
Part.
OTHER AGREEMENTS means any aircraft, engine or spare parts related lease or
financing agreement (including an aircraft, engine or spare parts related loan,
hire purchase, conditional sale, credit sale or security agreement) from time to
time entered into between Owner (or any Affiliate of Owner) and/or Lessor (or
any Affiliate of Lessor), on the one hand, and Lessee (or any Lessee Affiliate),
on the other hand.
OWNER means the Person identified in the Aircraft Lease Agreement as Owner or
such other Person of which Lessor may notify Lessee from time to time.
PART means, whether or not installed on the Aircraft:
(a) any module, component, furnishing or equipment (other than a
complete Engine or engine) incorporated or installed in or attached
to or furnished with the Aircraft on the Delivery Date or thereafter
if paid for or otherwise provided by or on behalf of Lessor; and
(b) any other module, component, furnishing or equipment (other than a
complete Engine or engine), with effect from the time when title
thereto has passed to Owner pursuant to the Lease;
but excludes any such items title to which has passed to Lessee pursuant to the
Lease.
PART 36 OR FAR PART 36 means Part 36 of the FAR, as amended or modified from
time to time.
PART 121 OR FAR PART 121 means Part 121 of the FAR, as amended or modified from
time to time.
PAYMENT DEFAULT means any Default by Lessee in respect of a payment obligation
under the Lease regardless of whether such payment obligation is scheduled or
not.
PERMITTED LIEN means:
(a) any lien for Taxes not assessed or, if assessed, not yet due and payable,
or being diligently contested in good faith by appropriate proceedings;
(b) any lien of a repairer, mechanic, hangar-keeper or other similar lien
arising in the ordinary course of business by operation of Law in respect
of obligations which are not overdue or are being diligently contested in
good faith by appropriate proceedings;
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(c) any Lessor Lien; and
(d) the rights of others under any sub-lease or arrangements to the extent
expressly permitted under Section 8.4;
but only if (in the case of both (a) and (b)) (i) adequate reserves have been
provided by Lessee for the payment of such Taxes or obligations; and (ii) such
proceedings, or the continued existence of the lien, do not give rise to any
risk of the sale, forfeiture or other loss of the Aircraft or any interest
therein or of criminal liability on the part of Lessor or Owner.
PERMITTED SUB-LEASE means any sub-lease of the Aircraft to a Permitted
Sub-Lessee to which Lessor has consented as provided for in Section 8.4.
PERMITTED SUB-LESSEE means any sub-lessee of the Aircraft approved by Lessor in
writing under a Permitted Sub-Lease or which is otherwise permitted as provided
for in Section 8.4.
PERSON means any individual person, any form of corporate or business
association, trust, Government Entity, or organization or association of which
any of the above is a member or a participant.
PRE-APPROVED BANK means BankOne, Xxxxx Fargo or any bank organized under the
laws of the United States of America or any State thereof, or the New York
branch of a major international bank, in each case (a) for only so long as its
long-term Dollar denominated unsecured debt (or if it does not have long-term
unsecured Dollar denominated debt, its parent corporation's long-term unsecured
Dollar denominated debt) carries a rating from Standard & Poors of A+ or better,
and (b) so long as each Letter of Credit issued by any such bank to Lessor
permits drawings thereunder by facsimile.
PRE-DELIVERY PROCEDURE means the procedure leading to Delivery as specified in
Schedule 4.
REDELIVERY CHECK has the meaning given in the Aircraft Lease Agreement.
REDELIVERY CONDITION means the condition of the Aircraft at redelivery as
provided in Section 12 and Schedule 6 of the Lease.
REDELIVERY LOCATION means the location identified in the Aircraft Lease
Agreement as the Redelivery Location or such other location as may be agreed in
writing by Lessor and Lessee.
REGULATIONS means any Law or regulation (including any internal corporate
regulation), official directive or recommendation, mandatory requirement or
contractual undertaking, or airworthiness requirements or limitations which
applies to Lessee or the Aircraft and any Law or regulation, official directive
or recommendation or mandatory requirement which applies to Lessor, Owner,
Financing Parties' Representative or GECAS.
RENT means all amounts payable pursuant to Section 5.3.
RENTAL PERIOD means each period ascertained in accordance with Section 5.2.
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RENT COMMENCEMENT DATE means the date on which Lessor tenders the Aircraft for
Delivery to Lessee under and in accordance with Section 4.3(a).
RENT DATE means the first day of each Rental Period.
REPLACEMENT ENGINE means an engine of the same manufacturer and model, or at
Lessee's option an engine of an improved model and having equivalent or better
value, utility, modification status, time elapsed since hot section
refurbishment, cold section refurbishment, reduction gear overhaul, life limited
part utility and remaining equivalent warranty status as the Engine it replaces
under Section 8.11, and is otherwise of an equivalent value and utility and
suitable for installation and use on the Airframe without impairing the value or
utility of the Airframe and compatible with the remaining installed Engine(s).
REQUIRED EGT MARGIN has the meaning given in the Aircraft Lease Agreement.
REQUIRED LC EXPIRY DATE means the date being ninety-one (91) days after the
Expiry Date.
RETURN OCCASION means the date on which the Aircraft is redelivered to Lessor in
accordance with Section 12.
SCHEDULED DELIVERY DATE means the date specified therefor in the Aircraft Lease
Agreement or, if no such date is specified, the date notified by Lessor pursuant
to and in accordance with Section 4.1(a).
SCHEDULED DELIVERY MONTH means the month specified therefor in the Aircraft
Lease Agreement, if such month is so specified.
SCHEDULED DELIVERY WEEK means the week specified therefor in the Aircraft Lease
Agreement or, if no such week is specified, the week notified by Lessor to
Lessee pursuant to Section 4.1(a) in which the Delivery is scheduled to occur.
SCHEDULED EXPIRY DATE means one of the following, as applicable: (i) the date
specified under "Duration of Term" in the Aircraft Lease Agreement; (ii) the day
preceding the numerically corresponding day to the Rent Commencement Date `X'
number of months after the Rent Commencement Date where `X' shall be the actual
number of months specified under "Duration of Term" in the Aircraft Lease
Agreement; or (iii) as to any Lease, if any extension option for that Lease has
been properly exercised, the Extended Expiry Date. If either such date in (i) or
(ii) above does not fall on a day that is a Business Day, then the Scheduled
Expiry Date shall be the immediately preceding Business Day, which date shall be
specifically set forth in Lease Supplement No. 1.
SECURITY INTEREST means any mortgage, chattel mortgage, security interest,
charge, pledge, lien, conditional sale agreement, title retention agreement,
equipment trust agreement, encumbrance, assignment, hypothecation, right of
detention or any other agreement or arrangement having the effect of conferring
security.
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SRM has the meaning given in the introductory paragraph to Schedule 6.
STATE OF DESIGN means the state having jurisdiction over the Person responsible
for the type design of the Aircraft or any Engine or Part.
STATE OF INCORPORATION means Texas.
STATE OF REGISTRY means United States of America.
SUBSIDIARY MEANS:
(a) in relation to any reference to financial statements, any Person whose
financial statements are consolidated with the accounts of Lessee in
accordance with GAAP; or
(b) for any other purpose, an entity from time to time of which another has
direct or indirect control or owns directly or indirectly more than 50
percent (50%) of the voting share capital.
SUPPLEMENTAL RENT means collectively Airframe Supplemental Rent, APU
Supplemental Rent, Engine LLP Supplemental Rent, Engine Supplemental Rent, and
Landing Gear Supplemental Rent, as applicable.
TAXES means any and all present and future taxes, duties, withholdings, levies,
assessments, imposts, fees and other governmental charges of all kinds
(including any value added or similar tax and any stamp, documentary, license,
registration or similar fees or tax), imposed by a Government Entity, together
with any penalties, fines, surcharges and interest thereon and any additions
thereto.
TAX INDEMNITEES means Owner, Lessor, GECAS, each Financing Party, and GE Capital
and each member of the consolidated group of which GE Capital is a member for
U.S. Federal Income Tax purposes.
TECHNICAL REPORT means a monthly report of the Flight Hours, Cycles, Engine
Flight Hours and Engine Cycles operated by the Airframe and Engines in respect
of each calendar month in the form reasonably required by Lessor.
TERM means the period commencing on the Delivery Date and ending on the Expiry
Date.
TRANSFER has the meaning set forth in Section 14.2.
TSO means time (in Flight Hours) since overhaul.
UCC means the Uniform Commercial Code as in effect in the State of New York.
UNFORESEEN EVENT MEANS:
(a) war, civil disturbance or act of any Government Entity;
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(b) natural disaster or any other act of God;
(c) any Law of, or any allocation or other action by, a Government Entity or
any unexpected shortage of labor, materials or facilities affecting the
Aircraft;
(d) any damage or Defect;
(e) labor disputes;
(f) breach of contract by any Person (other than Lessor), or other failure to
deliver or redeliver the Aircraft by any Person (whether or not a breach)
with possession or control of the Aircraft (other than by Lessor, if it
has possession and control of the Aircraft), including any failure to
deliver or delay in delivery by any prior lessee, any seller of the
Aircraft or any Person performing modifications or maintenance to the
Aircraft and any breach by any prior lessee, seller or modification or
maintenance performer or failure to cooperate by any prior lessee, seller
or modification or maintenance performer, or any "excusable" or
"inexcusable" delay under any previous lease, purchase or modification or
maintenance agreement for the Aircraft, or any purchase or modification or
maintenance agreement for the Aircraft terminating prior to Delivery
(including due to Lessor or an Affiliate of Lessor voluntarily terminating
such agreement);
(g) delays in obtaining the Aircraft or any equipment or services for the
Aircraft;
(h) any delay due to Air Authority certifications; or
(i) any other cause beyond the control of Lessor.
UNITED STATES OR US means the United States of America.
UNWIND EXPENSES means, collectively, any loss, premium, penalty or expense which
may be incurred in repaying funds raised to finance the Aircraft or in unwinding
any financial instrument relating in whole or in part to Lessor's financing of
the Aircraft.
U.S.C. means the United States Code.
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SCHEDULE 2
REPRESENTATIONS AND WARRANTIES
1.1 Lessee's Representations and Warranties
Lessee's representations and warranties to Lessor are as follows:
(a) STATUS: It is duly organized, validly existing and in good standing
in its State of Incorporation.
(b) NON-CONFLICT: Execution, delivery and performance of the Lease do
not contravene or breach (i) any Regulation applicable to Lessee,
(ii) the constitutional documents of Lessee, or (iii) any document
which is binding on Lessee or any of its assets.
(c) POWER AND AUTHORITY: It has all corporate and other power and
authority to execute, deliver and perform the Lease, and the Lease
has been duly authorized, executed and delivered by Lessee.
(d) LEGAL VALIDITY: Its obligations under the Lease are legal, valid,
binding and enforceable against Lessee in accordance with their
terms, except as enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or other similar
laws affecting creditors' or lessors' rights or remedies generally
and by general principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at law).
(e) NO DEFAULT: No Default has occurred and is continuing or would occur
because of Delivery.
(f) LITIGATION: It is not involved in any litigation or other dispute
which, if adversely determined, could materially and adversely
affect its financial condition or its ability to perform its
obligations under the Lease.
(g) FINANCIAL INFORMATION: Its audited financial statements most
recently delivered to Lessor:
(i) have been prepared in accordance with GAAP; and
(ii) are true and correct and present fairly the financial
condition and results of operations of Lessee as at the date
thereof and for the period then ending.
(h) FULL DISCLOSURE: Neither the audited financial statements referred
to in paragraph (g) nor any other financial, operational or credit
related information provided to Lessor by Lessee for the purposes of
the Lease contains as of the date thereof any untrue statement of a
material fact or omits to state any material fact necessary in order
to make the statements therein not misleading in the light of the
circumstances under which they were made.
(i) LOCATION: Lessee's location (within the meaning of Article 9 of the
UCC) is as set forth in Section 8.7; and the records of the Lessee
concerning the Aircraft are maintained at such location or at the
Habitual Base of the Aircraft.
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(j) CERTIFICATED AIR CARRIER: Lessee is a Certificated Air Carrier and
Lessor, as lessor of the Aircraft to Lessee, is entitled to the
benefits of Section 1110 of Title 11 of the U.S.C. with respect to
the Aircraft.
(k) CITIZEN OF THE UNITED STATES: Lessee is a "citizen of the United
States" as defined in Section 40102 of Title 49 of the U.S.C.
(l) ERISA: Lessee is not engaged in any transaction in connection with
which it could be subjected to either a civil penalty assessed
pursuant to Section 502 of ERISA or any tax imposed by Section 4975
of the Internal Revenue Code; no material liability to the Pension
Benefit Guaranty Corporation has been or is expected by Lessee to be
incurred with respect to any employee pension benefit plan (as
defined in Section 3 of ERISA) maintained by Lessee or by any trade
or business (whether or not incorporated) which together with Lessee
would be treated as a single employer under Section 4001 of ERISA
and Section 414 of the Internal Revenue Code; there has been no
reportable event (as defined in Section 4043(b) of ERISA) with
respect to any such employee pension benefit plan; no notice of
intent to terminate any such employee pension benefit plan has been
filed or is expected to be filed, nor has any such employee pension
benefit been terminated; no circumstance exists or is anticipated
that constitutes or would constitute grounds under Section 4042 of
ERISA for the Pension Benefit Guaranty Corporation to institute
proceedings to terminate, or to appoint a trustee to manage the
administration of, such an employee pension benefit plan; and no
accumulated funding deficiency (as defined in Section 302 of ERISA
or Section 412 of the Internal Revenue Code), whether or not waived,
exists with respect to any such employee pension benefit plan.
(m) MATERIAL ADVERSE CHANGE: There has been no material adverse change
in the financial condition or operations of Lessee and Lessee
Affiliates or in the ability of Lessee to comply with its
obligations under the Lease since the date of the financial
statements most recently provided to Lessor on or prior to the date
of the Aircraft Lease Agreement.
(n) TAXES: Lessee has delivered all necessary returns and payments due
to the tax authorities in the State of Incorporation, the State of
Registry and the Habitual Base and is not required by Law to deduct
any Taxes from any payments under the Lease.
1.2. LESSOR'S REPRESENTATIONS AND WARRANTIES
Lessor's representations and warranties to Lessee are as follows:
(a) STATUS: It is duly organized, validly existing and in good standing
in its jurisdiction of organization.
(b) NON-CONFLICT: Execution, delivery and performance of the Lease do
not contravene or breach (i) any Regulation applicable to Lessor,
(ii) the constitutional documents of Lessor, or (iii) any document
which is binding on Lessor or any of its assets.
(c) POWER AND AUTHORITY: It has all corporate and other power and
authority to execute, deliver and perform the Lease, and the Lease
has been duly authorized,
2-2
executed and delivered by Lessor and has (or will have on the
Delivery Date) title to, or the lawful right to lease, the Aircraft,
free and clear of all Security Interests (other than Lessor Liens).
(d) LEGAL VALIDITY: Its obligations under the Lease are legal, valid,
binding and enforceable against Lessor in accordance with their
terms.
(e) CITIZEN OF THE UNITED STATES: Lessor is a "citizen of the United
States" as defined in Section 40102 of Title 49 of the U.S.C.
2-3
SCHEDULE 3
CONDITIONS PRECEDENT
PART A - LESSOR CONDITIONS PRECEDENT
On or before the Scheduled Delivery Date, Lessee shall comply with the
Conditions Precedent set out below by ensuring that Lessor receives the
following documents and by taking the actions described below, in each case in a
manner satisfactory to Lessor. All documents delivered to Lessor pursuant to
this Schedule 3 will be in English, or if not in English, will be accompanied by
a certified English translation:
1. CONDITIONS PRECEDENT TO BE SATISFIED BY LESSEE
(a) PAYMENTS: all sums due to Lessor under the Lease on or before the
Delivery Date including the first payment of Rent and, if
applicable, the balance of the Deposit;
(b) OPINION: an original, signed opinion substantially in the form of
Schedule 8 will be issued on the Delivery Date by independent legal
counsel acceptable to Lessor with respect to the Laws of the State
of New York, the state of the Lessee's location (as defined in
Section 9-307 of the UCC) and the State of Incorporation;
(c) APPROVALS/FILINGS: evidence that all approvals, licenses and
consents which may be required in relation to, or in connection with
the performance by Lessee of any of its obligations under the Lease
have been issued. In addition, Lessee shall satisfy Lessor that all
filings, registrations, recordings and other actions have been or
will be taken which are necessary or advisable to ensure the
validity, effectiveness and enforceability of the Lease and to
protect the property rights of Owner in the Aircraft, any Engine or
any Part;
(d) IMPORT: evidence that any required import license, and all customs
formalities, relating to the import of the Aircraft into the
Habitual Base have been obtained or complied with (it being
acknowledged that some filings can only be made upon Lessee's import
of the Aircraft into the State of Registry) and that import of the
Aircraft into the Habitual Base is exempt from Taxes;
(e) PROCESS AGENT: a letter from the process agent appointed by (i)
Lessee in the Lease and (ii) Guarantor (if any) in the Guaranty,
accepting that appointment;
(f) LICENSES: certified copies of Lessee's air transport license, air
operator's certificates and all other licenses, certificates and
permits required by Lessee in relation to, or in connection with,
the operation of the Aircraft, including an air carrier operating
certificate and evidence of authority to operate under FAR Part 121
and a Certificate of Public Convenience and Necessity issued under
Section 40102 of Title 49 of U.S.C.;
(g) LETTER OF CREDIT (if applicable): the Letter of Credit;
3-1
(h) UCC: Financing Statements with respect to the Lease and the Aircraft
in a form acceptable to Lessor duly executed and delivered by Lessee
and duly filed in each jurisdiction requested by Lessor;
(i) ACKNOWLEDGEMENT AND AGREEMENT RE ASSIGNMENT (if applicable): an
acknowledgement of and certain agreements with respect to the
assignment by Lessor of the Lease to Owner and Financing Parties'
Representative in the form previously provided to Lessee or as Owner
or Financing Parties' Representative may otherwise reasonably
request;
(j) INSURANCE: certificates of insurance (and where appropriate,
certificates of reinsurance), an opinion and undertaking from
Lessee's insurance broker (and any reinsurance broker) and other
evidence satisfactory to Lessor that Lessee is taking the required
steps to ensure due compliance with the provisions of the Lease as
to Insurance with effect on and after the Delivery Date;
(k) FAA OPINION: evidence that there will be issued an opinion of Xxxxx
& Xxxxxxx or other counsel reasonably acceptable to Lessor who are
recognized specialists with regard to FAA registration matters in a
form reasonably acceptable to Lessor as to the due filing for
recordation of the Lease and, if applicable, the Financing
Documents, (the costs for which shall be paid by Lessee);
(l) CERTIFICATE OF LEASE TERMINATION: a Certificate of Lease Termination
executed by a duly authorized officer of Lessee acknowledging that
the Lease is no longer in effect with respect to the Aircraft and
Engines, which certificate Lessor will hold in escrow to be filed at
the FAA upon the expiration or other termination of the Lease;
(m) CERTIFICATE OF ACCEPTANCE AND LEASE SUPPLEMENT NO. 1: each of Lease
Supplement No. 1 and the Certificate of Acceptance, dated and fully
completed, and executed by Lessor and Lessee and in the case of
Lease Supplement No. 1, filed for recording at the FAA together with
the Lease; and
(n) GUARANTEE: (if applicable) the Guarantee, duly executed and
delivered by the Guarantor, and a legal opinion or legal opinions of
independent legal counsel acceptable to Lessor in respect of the
Guarantee in form and substance acceptable to Lessor and its legal
counsel; and
(o) GENERAL: such other documents as Lessor may reasonably request.
2. ADDITIONAL CONDITIONS PRECEDENT TO BE SATISFIED BY LESSEE
Lessee shall comply with the following additional conditions precedent:
(a) REPRESENTATIONS/WARRANTIES: the representations and warranties of
Lessee in Schedule 2 shall be correct, and would be correct if
repeated on Delivery;
3-2
(b) NO DEFAULT: no Default shall have occurred and be continuing on
Delivery or might result from the leasing of the Aircraft to Lessee
under the Lease; and
(c) NO ADVERSE CHANGE: . no event or series of events shall have
occurred which, in the reasonable opinion of Lessor, could be
expected to have a material adverse effect on the financial
condition or operations of Lessee or Guarantor or on the ability of
Lessee to comply with its obligations under the Lease or on the
ability of Guarantor to comply with its obligations under the
Guarantee;
PART B - LESSEE CONDITIONS PRECEDENT
On or before the Scheduled Delivery Date, Lessor shall comply with the
Conditions Precedent set out below by ensuring that Lessee receives the
following documents and by taking the actions described below, in each
case in a manner satisfactory to Lessee. All documents delivered to Lessor
pursuant to this Schedule 3 will be in English:
(a) FINAL DOCUMENTS: Lessee shall receive on or before the Delivery Date
for the Aircraft each of the following:
(i) LEASE SUPPLEMENT NO. 1: Lease Supplement No. 1, dated and
executed by Lessor and filed for recording at the FAA
(together with the Lease);
(ii) ACKNOWLEDGEMENT RE QUIET ENJOYMENT: if Lessee is required to
deliver an acknowledgement of or agreement with respect to the
assignment by Lessor of the Lease to Owner or Financing
Parties' Representative, an agreement by each such Person
(Owner, Financing Parties' Representative or both, as the case
may be) as to itself to the effect set forth in Section 7.1;
and
(iii) GUARANTEE: a guarantee from Aviation Financial Services Inc.
in respect of the obligations of Lessor under the Lease.
(b) PROCESS AGENT: a letter from the process agent appointed by Lessor
in the Lease accepting that appointment;
(c) QUIET ENJOYMENT: if Lessor is not the Owner, an agreement by Owner
as to itself to the effect set forth in Section 7.1
(d) REPRESENTATIONS/WARRANTIES: the representations and warranties of
Lessor in Schedule 2 shall be true and correct in all material
respects, and would be true and correct in all material respects if
repeated on Delivery; and
(e) DELIVERY CONDITION REQUIREMENTS: tender by Lessor of delivery of the
Aircraft in compliance with the Delivery Condition Requirements.
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SCHEDULE 4
PRE-DELIVERY PROCEDURES AND DELIVERY CONDITION
REQUIREMENTS - PART 1 (NEW AIRCRAFT)
*****
CONFIDENTIAL TREATMENT HAS BEEN REQUESTED BY KITTY HAWK, INC. FOR CERTAIN
PORTIONS OF THIS DOCUMENT. TWO (2) PAGES OF PART 1 OF SCHEDULE 4 HAVE BEEN
OMITTED PURSUANT TO THE CONFIDENTIAL TREATMENT REQUEST. CONFIDENTIAL PORTIONS
HAVE BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION. OMITTED
PORTIONS ARE INDICATED IN THIS AGREEMENT WITH "*****".
4 -1-1
PRE-DELIVERY PROCEDURES AND DELIVERY CONDITION
REQUIREMENTS - PART 2 (USED AIRCRAFT)
*****
CONFIDENTIAL TREATMENT HAS BEEN REQUESTED BY KITTY HAWK, INC. FOR CERTAIN
PORTIONS OF THIS DOCUMENT. THIRTEEN (13) PAGES OF PART 2 OF SCHEDULE 4 HAVE BEEN
OMITTED PURSUANT TO THE CONFIDENTIAL TREATMENT REQUEST. CONFIDENTIAL PORTIONS
HAVE BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION. OMITTED
PORTIONS ARE INDICATED IN THIS AGREEMENT WITH "*****".
4 -2-1
SCHEDULE 5
CERTIFICATE OF ACCEPTANCE
PART 1 (NEW AIRCRAFT)
This Certificate of Acceptance is delivered on the date set out below by
________ ("Lessee") to ________ ("Lessor") pursuant to the Aircraft Lease
Agreement dated ________ between Lessor and Lessee (the "Lease"). The
capitalized terms used in this Certificate shall have the meaning given to such
terms in the Lease unless otherwise indicated.
DETAILS OF ACCEPTANCE
Lessee hereby confirms to Lessor that Lessee has at [ ] o'clock on this ________
day of ________, at ________ , technically accepted the following, in accordance
with the provisions of the Lease:
________ Aircraft, Manufacturer's Serial Number ________;
________ Engines:
Engine Number Manufacturer's Serial Number
1 ________ ; and
2 ________ ;
Fuel Status: Kilos/lbs ________ ; and
APU: Manufacturer's Serial Number __________.
Loose Equipment Check List: in accordance with the list signed by Lessor and
Lessee and attached hereto.
Aircraft Documents and Records: in accordance with the list signed by Lessor and
Lessee and attached hereto.
LOPA drawing attached.
HOURS AND CYCLES DATA (as of Delivery Date)
Airframe:
Time Since New: Cycles Since New:
Landing Gear (Main and Nose)
Time Since New: Cycles Since New:
5-1-1
Engines:
Position Left Hand s/no. Time Since New:
Cycles Since New:
Position Right Hand s/no. Time Since New:
Cycles Since New:
Auxiliary Power Unit:
Number of Flight Hours/APU Hours
(as applicable) since New:
ACCEPTANCE:
Lessee hereby confirms that the Aircraft, Engines, Parts and Aircraft Documents
and Records are technically acceptable to it, satisfy all of the Delivery
Condition Requirements and are in the condition for delivery and acceptance as
required under the Lease.
IN WITNESS WHEREOF, Lessee and Lessor have, by their duly authorized
representative, executed this Certificate of Acceptance on the date in paragraph
1 above.
LESSEE: _________________________
By: _________________________
Title: _________________________
LESSOR: _________________________
By: _________________________
Title: _________________________
5-1-2
CERTIFICATE OF ACCEPTANCE
PART 2 (USED AIRCRAFT)
This Certificate of Acceptance is delivered, on the date set out below by
________ ("Lessee"), to ________ ("Lessor"), pursuant to the Aircraft Lease
Agreement dated as of ________ between Lessor and Lessee (the "Lease"). The
capitalized terms used in this Certificate shall have the meaning given to such
terms in the Lease unless otherwise indicated.
DETAILS OF ACCEPTANCE
Lessee hereby confirms to Lessor that Lessee has at [ ] o'clock on this ________
day of ________, at ________ , technically accepted the following, in accordance
with the provisions of the Lease:
________ Aircraft, Manufacturer's Serial Number ________;
________ Engines:
Engine Number Manufacturer's Serial Number
1 ________; and
2 ________;
Fuel Status: Kilos/lbs ________ ; and
APU: Manufacturer's Serial Number ___________.
Loose Equipment Check List: in accordance with the list signed by Lessor and
Lessee and attached hereto.
Aircraft Documents and Records: in accordance with the list signed by Lessor and
Lessee and attached hereto.
HOURS AND CYCLES DATA (as of Delivery Date)
Airframe:
Date of accomplishment of last Airframe Structural Check
Number of Hours since last Airframe Structural Check: ________ hours
Number of Cycles since last Airframe Structural Check: ________ cycles
"C" Check (or Equivalent)
Interval: _______________________
Time Since: _____________________
5-2-1
Landing Gear Overhaul:
Number of Cycles/Hours Since Last Overhaul:
Left Gear __________________________ cycles
Date of accomplishment of last Overhaul _______________________________
Right Gear __________________________cycles
Date of accomplishment of last Overhaul _______________________________Nose Gear
__________________________cycles
Date of accomplishment of last Overhaul _______________________________
Center Gear _________________________cycles
Date of accomplishment of last Overhaul _______________________________
Interval: Left Gear ____________________
Date of accomplishment of last Overhaul _______________________________
Right Gear __________________________
Date of accomplishment of last Overhaul _______________________________
Nose Gear __________________________
Date of accomplishment of last Overhaul _______________________________
Center Gear _________________________
Date of accomplishment of last Overhaul _______________________________
Engines:
Number of Hours Since Last Engine Refurbishment:
S/N __________ : __________ hours
S/N __________ : __________ hours
Time Since New:
S/N __________ : __________ hours
S/N __________ : __________ hours
5-2-2
Cycles Since New:
S/N __________ : __________ hours
S/N __________ : __________ hours
Hot Section Inspection:
Interval: ___________________________
Time Since (S/N __________) : ______________
Time Since (S/N __________) : ______________
Time Remaining to First Restriction:
Engine S/N:
Hours: _____________ Restriction: _____________
Cycles: _____________ Restriction: _____________
Engine S/N:
Hours: _____________ Restriction: _____________
Cycles: _____________ Restriction: _____________
Average Cycles in Life Limited Parts (see attached Schedule): _______________
Auxiliary Power Unit:
Number of APU Hours since Last Heavy Shop Visit:
______________ hours Date accomplished ___________
Hot Section Inspection:
Interval: _______________________
Time Since: _______________________
Interior Equipment:
LOPA - attached _______________________
Emergency drawing - attached _______________________
Galley Equipment _______________________
5-2-3
ACCEPTANCE:
Lessee hereby confirms that the Aircraft, Engines, Parts and Aircraft Documents
and Records are technically acceptable to it, satisfy all of the Delivery
Condition Requirements and are in the condition for delivery and acceptance as
required under the Lease.
IN WITNESS WHEREOF, Lessee and Lessor have, by their duly authorized
representative, executed this Certificate of Acceptance on the date in paragraph
1 above.
LESSEE:
By: _________________________
Title: _________________________
LESSOR:
By: _________________________
Title: _________________________
5-2-4
SCHEDULE 6
PROCEDURES AND OPERATING CONDITION AT REDELIVERY
On the Return Occasion the Aircraft, subject to ordinary wear and tear of a kind
and to an extent consistent with similar aircraft engaged in commercial airline
operations, will be redelivered to Lessor by Lessee in accordance with the
procedures and in any event in the condition set out below. For the avoidance of
doubt, any damage assessment and/or rectification criteria used in assessing the
redelivery condition shall be as prescribed in the Manufacturer's maintenance
manual and/or the Manufacturer's structural repair manual ("SRM"), as
appropriate. Any damage outside the scope of the SRM shall require FAA 8110-3
certification or the equivalent certification by the civil aviation authority by
the State of Design.
1.1 FINAL INSPECTION
Immediately prior to the Return Occasion, Lessee will make the Aircraft
available to Lessor and Owner for inspection ("Final Inspection") in order
to verify that the condition of the Aircraft complies with the Lease. The
Final Inspection will include, and be long enough to permit Lessor to:
(a) inspect the Aircraft Documents and Records;
(b) inspect the Aircraft (including an examination of all compartments
and bays, with Lessee to open or remove panels as reasonably
required by Lessor or Owner during the Redelivery Check),
uninstalled Parts and the APU (including a complete video borescope
inspection of the APU);
(c) inspect the Engines, including (i) a complete video borescope
inspection of (A) the low pressure and high pressure compressors and
(B) turbine area (including combusters) and (ii) engine condition
runs (including full take-off power engine run-up performed in
accordance with the performance test in the Manufacturer's
maintenance manual, and the Engines shall not exceed corrected
limits for all parameters using temperature corrected charts, and
power assurance runs); and
(d) observe a two (2) hour demonstration flight at Lessee's cost (with
Lessor's and Owner's representatives as on-board observers (to the
extent permitted by FARs)).
Furthermore, Lessee acknowledges that a purchaser or the next operator of
the Aircraft may need to inspect the Aircraft, the Engines and the
Aircraft Documents and Records prior to redelivery and Lessee hereby
agrees to cooperate reasonably at all times during the Term with Lessor,
Owner and/or such purchaser or such next operator in order to coordinate,
assist and grant access for the above inspections and/or meetings as
necessary; provided that no such inspection shall unreasonably interfere
with or materially interrupt Lessee's normal use, operation or maintenance
of the Aircraft.
Lessor or Owner, as the case may be, is responsible for and will indemnify
Lessee against all Losses arising from the death or injury to any observer
or any employee of Lessor or Owner, as the case may be, in connection with
the inspection of the Aircraft under this Section 1.1.
6-1
1.2 GENERAL CONDITION
The Aircraft will:
(a) be clean by major cargo airline standards immediately prior to
redelivery and will be in the same configuration as at Delivery
subject to any post-Delivery modifications, repairs or maintenance
to the Aircraft which are permitted or required by the Lease;
(b) have installed the full complement of equipment, parts, accessories,
furnishings and loose equipment as when originally delivered to
Lessee (and, in addition, shall include any post-Delivery
modifications, repairs or maintenance which were paid for or
otherwise provided by or on behalf of Lessor or which are required
or permitted by the Lease or mutually agreed). The Aircraft
(including the Aircraft Documents and Records) shall be in a
condition suitable for immediate operations under FAR Part 121,
without waiver, unless, subject to Lessor's consent, the benefit of
such waiver is applicable to the next operator of the Aircraft, or
restriction (other than those applicable generally to aircraft of
similar make and model); and if any of the engines or parts tendered
for redelivery with the Aircraft is not one of the Engines or Parts
referred to in the Certificate of Acceptance or a Replacement Engine
installed pursuant to Section 8.11 (a) following an Engine Event of
Loss in respect of an Engine, Lessor shall have no obligation to
accept such engine or part unless Lessee furnishes to Lessor all the
documents and evidence in respect of such engine or part in
accordance with Section 8.11 (b), as if such engine were a
Replacement Engine or such part were a replacement Part, and
otherwise complies with such Section 8.11(b) with respect thereto;
(c) have in existence a valid and effective certificate of airworthiness
(and if required by Lessor, a valid and effective export certificate
of airworthiness) issued by the Air Authority. In the case of an
export certificate of airworthiness, such certificate shall not be
issued any earlier than ten (10) days prior to the Return Occasion;
(d) comply with the manufacturer's original specifications as at the
Delivery Date, except as modified during the Term in accordance with
the Manufacturer's service bulletins or letters, Airworthiness
Directives, Air Authority approved data (all of which should have
supporting State of Design approval) or otherwise as permitted by
the Lease;
(e) have undergone, immediately prior to redelivery, the Redelivery
Check so that all Airframe and structural inspections, including but
not limited to corrosion prevention and control program inspections
falling due within the "C" Check interval as defined in the Lessee's
Maintenance Program or the Manufacturer's Maintenance Planning
Document (if, and to the extent that, the Lessee's Maintenance
Program does not comply with the requirements of the Manufacturer's
Maintenance Planning Document), have been accomplished in accordance
with the Lessee's Maintenance Program on the Return Occasion;
(f) have had accomplished all outstanding Airworthiness Directives
affecting that model of Aircraft requiring compliance during the
Term or within the AD Compliance Period; for this purpose,
compliance shall be by terminating action if:
6-2
(i) Lessee has complied by terminating action for other aircraft
of the same model and series then operated by Lessee; or
(ii) the latest date permitted by such Airworthiness Directive for
required compliance by terminating action falls within the AD
Compliance Period.
In no event shall there be any time extensions, waivers, deviations
or alternative means of compliance with any Airworthiness Directives
or other regulations that are non-transferable by Lessee.
(g) have installed all applicable vendor's and manufacturer's service
bulletin kits received free of charge by Lessee that relate to the
Aircraft and, to the extent not installed, those kits will be
furnished free of charge to Lessor;
(h) be in such external livery (freshly painted) as may be requested by
Lessor, such painting to include the fuselage, empennage, wings,
engine cowlings and pylons, stripped (or sanded if only two or less
coats of paint) and painted in accordance with standard industry
practice, including any required re-balancing of flight controls and
required re-weighing or recalculation of the Aircraft or the
Aircraft weight;
(i) have all signs and decals clean, secure and legible;
(j) meet the requirements of FAR Part 36, Appendix C, Stage 3 noise
compliance as in effect at the Delivery Date, without waiver or
restriction;
(k) have no open, deferred, continued, carry over, or placarded
maintenance items or watch items and all log book discrepancies
shall be cleared;
(l) have had all repairs and damage requiring repetitive inspections or
future upgrading repaired to a permanent repair standard such that
future repetitive inspections or upgrading shall not be required;
and
(m) have all its systems serviceable and fully operational for their
intended functions in accordance with the Manufacturer's maintenance
manual specifications.
1.3 COMPONENTS
(a) If the Aircraft Lease Agreement specifies Minimum Component Flight
Hours and/or Minimum Component Cycles, each Flight Hour and Cycle
controlled Hard Time Component (other than the APU, but including
the components installed on the APU) shall have not less than the
Minimum Component Flight Hours and the Minimum Component Cycles of
life remaining to the next scheduled removal, in accordance with the
Lessee's Maintenance Program or the Manufacturer's Maintenance
Planning Document (to the extent that Lessee's Maintenance Program
does not comply with the Manufacturer's Maintenance Planning
Document) and shall be supported by documentation indicating date of
installation and by appropriate certification documentation
indicating TSO and CSO in the form of JAA Form 1 or FAA Form 8130-3
as applicable; for this purpose "Hard Time Component" means any
component which has a limited on-wing life in accordance with the
Lessee's Maintenance Program and which can have life fully restored
through appropriate maintenance;
(b) If the Aircraft Lease Agreement specifies a Minimum component
Calendar Life, each Calendar Limited Component including safety
equipment will have not less
than its Minimum Component Calendar Life remaining to the next
scheduled removal in accordance with the Lessee's Maintenance
Program or the Manufacturer's Maintenance Planning Document (to the
extent that Lessee's Maintenance Program does not comply with the
Manufacturer's Maintenance Planning Document) and shall be supported
by documentation indicating date of installation and by appropriate
certification documentation indicating date of manufacture (where
applicable) and date of overhaul in the form of JAA Form 1 or FAA
Form 8130-3 as applicable; for this purpose "Calendar Limited
Component" means any component which has a limited on-wing life in
accordance with the Lessee's Maintenance Program and which has a
life limit specified as calendar time since manufacture or which can
have life fully restored through appropriate maintenance;
(c) Each "on-condition" and "condition-monitored" component will be
serviceable and those components installed on the Aircraft within
the last twenty-four (24) months shall be supported by documentation
indicating date of installation and by appropriate certification
documentation such as JAA Form 1 or FAA Form 8130-3;
(d) [Intentionally omitted.]
(e) If the Aircraft Lease Agreement specifies Minimum Component Flight
Hours and/or Minimum Component Cycles, each Airframe Life-Limited
Component will have not less than the Minimum Component Flight Hours
and the Minimum Component Cycles remaining to next expected removal
and will be supported by certification documentation necessary to
demonstrate total cycles accumulated since new; for this purpose
"Airframe-Life Limited Component" means a component with an ultimate
life which cannot be restored through appropriate maintenance.
1.4 ENGINES
(a) Each Engine (or a Replacement Engine as and to the extent permitted
by Section 1.2(b)) will be installed on the Aircraft and comply with
the following:
If the Aircraft Lease Agreement specifies Minimum Engine Flight
Hours and/or Minimum Engine Cycles and/or Minimum Engine LLP Cycles,
each Engine will have not less than the Minimum Engine Flight Hours
and Minimum Engine Cycles expected life remaining to the next
expected removal and the life limited Parts shall have not less than
the Minimum Engine LLP Cycles release life remaining. The expected
life remaining will be determined by the inspection and checks
accomplished by Lessor in accordance with the Lease which shall
include the following:
(i) full borescope inspection;
(ii) analysis of trend data;
(iii) sea level outside air temperature limit assessment if
recommended by the Manufacturer as an appropriate means to
determine engine condition (e.g., CFM 56 test CESM 15);
(iv) maximum power assurance ground runs;
6-4
(v) technical log analysis for a minimum of the previous three (3)
months' of operation;
(vi) previous shop visit assessment (if applicable); and
(vii) reference to the manufacturer's maintenance manual;
(b) Following the demonstration flight provided for by Section 1.1(d) of
this Schedule 6 each Engine shall have just accomplished at the
Redelivery Location a complete video borescope inspection of all
Engine gas path modules, which inspection shall be performed at
Lessor's expense, and a power assurance run performed at Lessee's
expense in accordance with the Lessee's Maintenance Program or
Manufacturer's maintenance manual and any defects discovered in such
inspections which exceed the Engine manufacturer's in-service limits
shall be corrected at Lessee's expense. Lessee shall cause such
borescope inspections to be performed and to be recorded on
videotape by an agency selected by Lessor and shall provide Lessor
with a copy of such videotape on the Return Occasion. No Engine
shall be on "watch" for any reason requiring any special or out of
sequence inspection. Each such Engine shall comply with the
operations specification of Lessee without waiver or exceptions. All
items beyond the Engine manufacturer's in-service limits shall be
repaired;
(c) If the Aircraft Lease Agreement specifies Minimum Engine LLP Cycles,
each Engine Life-Limited Part will have not less than the Minimum
Engine LLP Cycles remaining in accordance with the manufacturer's
then current limitations for the part number in question, and will
be supported by certification documentation necessary to demonstrate
Back-to-Birth Traceability; for this purpose "Life Limited Part"
means a component with an ultimate life which cannot be restored
through appropriate maintenance approved by the State of Design of
the manufacturer and "Back-to-Birth Traceability" means certified
documentation necessary to identify precisely where, when and with
which aircraft operator the expired life and previous maintenance in
relation to the Life Limited Part occurred since such Engine
Life-Limited Part was new;
(d) Each Engine will have no less than the Minimum Engine Cycles and the
Minimum Engine Flight Hours before any defect, condition or
restriction requires any inspection, testing, repair or replacement
in accordance with the Engine manufacturer's maintenance manual
limits;
(e) Each Engine will be in a condition to operate at a maximum rated
take-off power at sea level under corner point or flat rate
conditions and with the Required EGT Margin; and
(f) Each Engine shall be rated at the Engine Thrust Setting and all
redelivery conditions of this Section 1.4 are based on such Engine
Thrust Setting.
1.5 FUSELAGE, WINDOWS AND DOORS
(a) The fuselage will be free of dents and abrasions which exceed the
limits specified in the Manufacturer's maintenance manual or the
SRM;
(b) Cockpit windows will be free of delamination which exceeds the
limits specified in the Manufacturer's maintenance manual or SRM;
6-5
(c) Cabin windows will be substantially free of blemishes and crazing
and will be properly sealed;
(d) Doors will be free moving, correctly rigged and be fitted with
serviceable seals; and
(e) To the extent that Lessee was provided with a dent, repair and
scratch survey of the Aircraft exterior at Delivery (with specific
locations) then Lessee shall provide an updated survey to Lessor on
the Return Occasion.
1.6 WINGS AND EMPENNAGE
(a) Leading edges will be free from damage in excess of the limits
specified in the Manufacturer's maintenance manual or SRM; and
(b) Unpainted surfaces of the wings and empennage will be polished.
1.7 INTERIOR AND COCKPIT
(a) Lessor may carry out the inspections contemplated by Schedule 12.
Lessee shall ensure that any replacements, repairs or repainting
which are required in accordance with Schedule 12 are effected at
Lessee's cost. For the purposes of this Section 1.7 only, references
in Schedule 12 to "Maintenance Manual" shall be deemed to refer to
Lessee's Maintenance Program manual.
(b) Carpets and seat covers will be in good condition, clean and free of
stains and meet FAR fire resistance regulations.
1.8 LANDING GEAR; WHEELS AND BRAKES
(a) The Landing Gear and wheel xxxxx will be clean, free of leaks and
repaired as necessary;
(b) Each installed Landing Gear shall have no more Cycles accumulated
than the Airframe and, if the Aircraft Lease Agreement specifies
Minimum Landing Gear Flight hours and/or Minimum Landing Gear Cycles
and/or Minimum Landing Gear Calendar Time, in any event shall have
not less than the Minimum Landing Gear Flight Hours and the Minimum
Landing Gear Cycles and the Minimum Landing Gear Calendar Time to
the next scheduled overhaul or removal, as the case may be, in
accordance with Lessee's Maintenance Program which shall not be less
restrictive than the Manufacturer's Maintenance Planning Document;
and
(c) The wheels and brakes will have not less than half of their useful
life remaining.
1.9 RETURN OF AUXILIARY POWER UNIT (APU)
The APU shall have just completed a borescope inspection and shall meet
all air outputs and temperature limitations under load in accordance with
the Lessee's Maintenance Program and the Manufacturer's maintenance
manual, and any defects discovered in such inspection, which exceed the
APU manufacturer's in-service limits, shall be corrected at Lessee's
expense. If the Aircraft Lease Agreement specifies a Minimum APU Limit,
the APU shall have not more than the Minimum APU Limit.
6-6
1.10 CORROSION
(a) The Aircraft shall be in compliance with the Manufacturer's
corrosion prevention and control program (CPCP) requirements as
implemented in Lessee's Maintenance Program. All CPCP inspections
which would normally be accomplished while access is provided during
structural inspection in accordance with the Lessee's Maintenance
Program during the Term shall have been accomplished;
(b) The entire fuselage will be substantially free from corrosion and
will be adequately treated in accordance with Lessee's corrosion
prevention program (which shall include the requirements of the
Manufacturer's Maintenance Planning Document); and
(c) Fuel tanks will be free from contamination and corrosion and a tank
treatment program will be in operation.
1.11 FUEL
At redelivery, Lessor will pay to Lessee or Lessee will pay to Lessor (as
the case may require) a cash adjustment in respect of the difference in
fuel on board at Delivery versus redelivery, at the then prevailing cost
of fuel at the Redelivery Location.
1.12 MAINTENANCE PROGRAM
(a) Prior to the Return Occasion and upon Lessor's or Owner's request,
Lessee will provide Lessor or Owner or its agent reasonable access
to the Lessee's Maintenance Program and the Aircraft Documents and
Records in order to facilitate the Aircraft's integration into any
subsequent operator's fleet; and
(b) Upon redelivery of the Aircraft, Lessee will, if requested by Lessor
or Owner to do so, provide a certified true current and complete
copy of the Lessee's Maintenance Program to Lessor or Owner. Lessor
and any Person to whom Lessor grants access to Lessee's Maintenance
Program shall agree that it will not disclose the contents of the
Lessee's Maintenance Program to any other Person except to the
extent necessary to monitor Lessee's compliance with the Lease
and/or to bridge the maintenance program for the Aircraft from the
Lessee's Maintenance Program to another program after the Return
Occasion.
1.13 AIRCRAFT DOCUMENTS AND RECORDS
At redelivery Lessee will return the following Aircraft Documents and Records to
Lessor; provided, however, that to the extent that an item on this list was not
provided to Lessee at Delivery and is not otherwise a mandatory requirement
under the provisions of the Lease, then Lessee will not be obligated to return
such document at redelivery:
A. Certificates
A001 Certificate of Airworthiness
A002 Current Aircraft Registration
6-7
A003 C of A for Export (if applicable)
A004 Noise Limitation Certificate (AFM page)
A005 Radio Station License
A007 Aircraft deregistration confirmation
A008 Burn Certificates - Cabin Interiors - as follows:
Certification of compliance with the applicable fire blocking requirements as
outlined in FAR/JAR Part 25 including:
- Seat cushions*
- Back rest cushions*
- Dress covers*
- Carpets
- Curtains
- Interior Surfaces (if refurbished)
* Including "in combination" burn certification
B. Aircraft Maintenance Status Summaries
B001 Certified current Time in Service (Hours & Cycles) and maintenance
status
B002 Certified status of Airworthiness Directives including method of
compliance
B003 Certified status of Service Bulletin Status
B004 Certified status of SSI
B005 Certified status of CPCP (if applicable)
B006 Certified inventory of Hard Time Components (Fitted listing)
B007 Certified inventory of OC/CM Components (Fitted listing)
B008 Certified status of all non-SB and Major Modifications/STC's including
acceptable State of Manufacture Certification
B009 Certified status of Check/Inspection History & Current Status of Checks
B010 List of Deferred Maintenance Items
B011 List of Out of Phase Checks, Special Requirements, Time Limited Repairs
(if any).
6-8
B012 Aircraft Accident & Incident Report.
B013 Structural repairs and damage (including Dent & Buckle Chart).
C. Aircraft Maintenance Records
C001 Technical Logs (Minimum of 2 years)
C002 A Checks
Last complete cycle of A Checks (or equivalent)
C003 C Checks
Last Complete cycle of C Checks (or equivalent)
C004 All Major Checks
C005 CPCP Tasks (if applicable)
C006 Periodic Tasks
C007 Dirty Finger Print Certification - AD's
C008 Dirty Finger Print Certification - SB's
C009 Dirty Finger Print Certification - All other modification
C010 Last Weight Report including Schedule
C011 Compass Swing Report
C012 Last Test Flight Report
C013 Certified ETOPS compliance report (if applicable)
C014 Dirty Finger Print certification - All Structural repairs/structural
damage
C015 Details of State of Manufacture certification basis - A non-SRM
Structural repairs
C016 Aircraft Log Book(s) if applicable
D. Configuration Status
D001 Approved and certified LOPA
X000 Xxxxxx Xxxxxxxx/Xxxxxxxxx XXX
X000 Emergency Equipment Drawing/Listing
D004 Loose Equipment Inventory
6-9
D005 Inventory Listing of Avionic installed Units.
E. Aircraft Historical Records
E001 C of A (Export) from State of Manufacture
E002 Manufacturer's AD Report
E003 Manufacturer's Inspection Report, Initial Equipment list
E004 Manufacturer's repair/alteration report
E005 Manufacturer's SB Report
E006 Service Difficulty Reports (if any)
E007 Aircraft Historical Log
E008 Last Flight Data Recorder Read-Out & Corrections
E009 Weighing report
F. Engine Records
F001 Certified Statement of Status of Each Engine
F002 AD Compliance Report and Compliance Documents
F003 Manufacturer's Modifications & SB Status
F004 In-house Modifications (if applicable)
F005 Certified LLP Listing
F006 Certified listing of installed units
F007 Manufacturer Delivery Document
F008 Complete copies of all historical engine/module Shop Visit Reports
F009 State of Manufacture LLP Traceability
F010 Conditioning Monitoring Report
F011 Engine Log Book/Master Records of Installation/Removals
F012 Last Borescope Report, including video if available
F013 Test Cell Run Report
F014 Last On-Wing Ground Run
6-10
F015 Certified Statement that Engines are not involved in an Accident
F016 Approved Release to Service Certification for installed rotables
F017 Approved ETOPS compliance report (if applicable)
G. APU
G001 Certified Statement on Status of APU (if applicable)
G002 Certified SB Compliance Report/AD Status Report
G003 Approved Release to Service Certification for installed units
G004 APU Log Book/Master Record of Installation/Removals
G005 Complete copies of all APU Shop Visit Reports & Reason for Removal
G006 Statement of APU Hours to Aircraft Flying Hours
G007 LLP Status and Full Traceability to birth
G008 APU Borescope Report
G009 Last On-Wing/Health Check Data sheets (if applicable)
G010 Last Test Cell Run
G011 Approved ETOPS compliance report
H. Component Records
H001 Approved Release to Service Certification for Hard Time Components
H002 Approved Release to Service Certification for OC/CM Components (to the
extent that this is required by the Air Authority including retention period)
I. Landing Gears
I001 Approved Release to Service Certification for major assemblies on each
Gear
I002 Approved LLP Listings for each Gear (evidencing total accumulated
cycles)
I003 Last Shop Visit Report (OH)
J. Manuals
All Manufacturer's Manuals delivered with the Aircraft under the Lease updated
to the latest revision standard (applicable as at the Return Occasion) or
provided with comprehensive approved supplements as may be reasonably requested
by Lessor
6-11
Microfilm or CD:
J006 WDM
J007 IPC
J008 Maintenance Manual
J009 Schematics
J010 Hook Up Listing
K. Miscellaneous
K006 Maintenance Program Specifications (Operator's)
K007 Reference Material for Interpretation of Status Summaries, or
cross-reference for Part Numbers
6-12
SCHEDULE 7
INSURANCE REQUIREMENTS
1.1 TYPES OF INSURANCE
The Insurance required to be maintained is as follows:
(a) HULL ALL RISKS of loss or damage while flying and on the ground with
respect to the Aircraft on an agreed value basis for the Agreed
Value and with a deductible not exceeding the Deductible Amount or
such other amount agreed by Lessor and Lessee from time to time;
(b) HULL WAR AND ALLIED PERILS, being such risks excluded from the Hull
All Risks Policy to the fullest extent available from the leading
commercial insurance markets that is of the type and covering the
same risks as usually carried by similarly situated air carriers
operating similar aircraft, engaged in the same or similar business,
and similarly situated with Lessee;
(c) SPARES ALL RISKS (INCLUDING WAR AND ALLIED RISK except when on the
ground or in transit other than by air) property insurance on all
Engines and Parts when not installed on the Aircraft on an "agreed
value" basis for their full replacement value and including engine
test and running risks; and
(d) AIRCRAFT THIRD PARTY, PROPERTY DAMAGE, PASSENGER, BAGGAGE, CARGO AND
MAIL AND AIRLINE GENERAL THIRD PARTY (INCLUDING PRODUCTS, BUT
EXCLUSIVE OF MANUFACTURERS PRODUCT LIABILITY INSURANCE) LEGAL
LIABILITY (bodily injury/property damage) of an amount not less than
the Minimum Liability Coverage for the time being for any one
occurrence (but in respect of products and personal injury
liability, this limit may be an aggregate limit for any and all
losses occurring during the currency of the policy). War and Allied
Perils Risks cover is to be maintained from (i) leading commercial
insurance markets for similarly situated air carriers operating
similar aircraft, engaged in the same or similar business, and
similarly situated with Lessee; (ii) the FAA; or (iii) a combination
of clauses (i) and (ii), in the scope provided by AVN 52D as in
effect on April 1, 2004 or its equivalent and shall be for an amount
not less than the greater of (i) the Minimum Liability Coverage and
(ii) the amount carried by Lessee in respect of similar aircraft
owned or otherwise operated by Lessee.
1.2 TERMS OF HULL AND SPARES INSURANCE
All required hull and spares insurance, so far as it relates to the
Aircraft, will:
(a) ADDITIONAL INSUREDS: name Lessor, any intermediate lessor, Owner,
Financing Parties' Representative and the Person serving as the
Financing Parties' Representative in its individual capacity as
additional insureds for their respective rights and interests
(without imposing on any such Person any obligation imposed on the
insured, including the liability to pay any calls, commissions or
premiums);
(b) SETTLEMENT OF LOSSES: provide that any loss will be settled jointly
with Lessor and Lessee, and will be payable in Dollars to Lessor,
for the account of all interests, except where the insurance payment
does not exceed the Damage Notification
7-1
Threshold and no Payment Default or Event of Default is in
existence, in which case the loss or such portion of the loss will
be settled with and paid to Lessee;
(c) 50/50 PROVISION: if separate Hull "all risks" and "war risks"
insurances are arranged, include a 50/50 provision in accordance
with market practice (AVS. 103 is the current London market
language); and
(d) NO OPTION TO REPLACE: confirm that the insurers are not entitled to
replace the Aircraft in the event of an insured Event of Loss.
1.3 TERMS OF LIABILITY INSURANCE
All required liability insurance will:
(a) ADDITIONAL INSUREDS: include each Indemnitee, as additional insureds
for its respective rights and interests, warranted, each as to
itself only, no operational interest (without imposing on any such
Person any obligation imposed on the insured, including the
liability to pay any calls, commissions or premiums);
(b) SEVERABILITY: include a severability of interests clause which
provides that the insurance, except for the limit of liability, will
operate to give each insured the same protection as if there was a
separate policy issued to each insured; and
(c) PRIMARY POLICY: contain a provision confirming that the policy is
primary without right of contribution and the liability of the
insurers will not be affected by any other insurance of which
Lessor, each Indemnitee or Lessee have the benefit so as to reduce
the amount payable to the additional insureds under such policies.
1.4 TERMS OF ALL INSURANCE
All Insurance will:
(a) BEST INDUSTRY PRACTICE: be in accordance with best industry practice
of persons operating similar aircraft in similar circumstances;
(b) DOLLARS: provide cover denominated in Dollars and any other
currencies that Lessor may reasonably require in relation to
liability insurance;
(c) WORLDWIDE: operate on a worldwide basis subject to such limitations
and exclusions as are generally included in the policies obtained by
similarly situated United States-based international air carriers
operating similar aircraft on similar routes;
(d) BREACH OF WARRANTY: provide that, in relation to the interests of
each of the additional assureds, the Insurance will not be
invalidated by any act or omission by Lessee, or any other person
other than the respective additional assureds seeking protection and
shall insure the interests of each of the additional assureds
regardless of any breach or violation by Lessee, or any other person
other than the respective additional assured seeking protection of
any warranty, declaration or condition, contained in such Insurance;
(e) SUBROGATION: provide that the insurers will hold harmless and waive
any rights of recourse or subrogation against the additional
insureds to the extent Lessee has
7-2
waived its rights by its agreements to indemnify the additional
insureds pursuant to the Lease. Upon indemnification of an
additional insured under Insurance, the insurers may, with the
consent of such additional insured (such consent not to be
unreasonably withheld) exercise subrogation rights;
(f) PREMIUMS: provide that the additional insureds will have no
obligation or responsibility for the payment of any premiums due
(but reserve the right to pay the same should any of them elect so
to do) and that the insurers will not exercise any right of set-off,
counter-claim or other deduction, by attachment or otherwise in
respect of any premium due against the respective interests of the
additional insureds other than outstanding premiums relating to the
Aircraft, any Engine or Part the subject of the relevant claim;
(g) CANCELLATION/CHANGE: provide that the Insurance will continue
unaltered for the benefit of the additional insureds for at least
thirty (30) days (ten (10) days in the event of cancellation due to
non-payment of premium) after written notice by registered mail or
facsimile of any cancellation, material adverse change, event of
non-payment of premium or installment thereof has been sent by
insurer(s) to Lessor, or where an insurance broker is appointed to
the insurance broker who shall promptly send on such notice to
Lessor, except in the case of war risks for which seven (7) days (or
such lesser period as is or may be customarily available in respect
of war risks or allied perils) will be given, or in the case of war
between the five (5) great powers or nuclear peril for which
termination is automatic;
(h) REINSURANCE: if reinsurance is required for the Insurance to be
acceptable under the Lease, including the requirements of Section 9
and Schedule 7, such reinsurance shall:
(i) be on the same terms as the original insurance and will
include the provisions of this Schedule;
(ii) provide that notwithstanding any bankruptcy, insolvency,
liquidation, dissolution or similar proceedings of or
affecting the reinsured that the reinsurers' liability will be
to make such payments as would have fallen due under the
relevant policy of reinsurance if the reinsured had
(immediately before such bankruptcy, insolvency, liquidation,
dissolution or similar proceedings) discharged its obligations
in full under the original insurance policies in respect of
which the then relevant policy of reinsurance has been
effected; and
(iii) contain a "cut-through" clause in the following form (or
otherwise satisfactory to Lessor):
"The Reinsurers and the Reinsured hereby mutually agree that
in the event of any claim arising under the reinsurances in
respect of a total loss or other claim where as provided by
the Aircraft Lease Agreement dated as of _________ 20__ and
made between Lessor and Lessee such claim is to be paid to the
person named as sole loss payee under the primary insurances,
the Reinsurers will in lieu of payment to the Reinsured, its
successors in interest and assigns pay to the person named as
sole loss
7-3
payee under the primary insurances effected by the Reinsured
that portion of any loss due for which the Reinsurers would
otherwise be liable to pay the Reinsured (subject to proof of
loss), it being understood and agreed that any such payment by
the Reinsurers will (to the extent of such payment) fully
discharge and release the Reinsurers from any and all further
liability in connection therewith"; subject to such provisions
not contravening any Law of the State of Incorporation;
(j) INITIATING CLAIMS: contain a provision entitling any
Indemnitee to initiate a claim under any policy in the event
of the refusal or failure of Lessee to do so;
(k) INDEMNITIES: accept and insure the indemnity provisions of the
Lease to the extent of the risks covered by the policies; and
(l) SCOPE OF COVERAGE PROVIDED: The policies and insurance
provisions set forth above for the benefit of the additional
insureds are at all times subject to the policy terms,
conditions, limitations, exclusions and deductibles and shall
only apply to the extent that Lessee has agreed to protect the
additional insureds by its agreements to indemnify the
additional insureds pursuant to the Lease and then only in
their capacity as owner, lessor or lienholder.
1.5 DEDUCTIBLES
Lessee shall be responsible for any and all deductibles under the
Insurance.
1.6 APPLICATION OF INSURANCE PROCEEDS
The Insurance will be endorsed to provide for payment of proceeds as
follows:
(a) EVENT OF LOSS: all insurance payments received as the result of an
Event of Loss occurring during the Term will be paid to Lessor, and
Lessor will pay the remaining balance of those amounts to Lessee
after deduction of all amounts which may be or become payable by
Lessee to Lessor under the Lease and the Other Agreements (including
under Section 11.1(b));
(b) EXCEEDING DAMAGE NOTIFICATION THRESHOLD: all insurance proceeds
related to any property, damage or loss to the Aircraft, any Engine
or any Part occurring during the Term not constituting an Event of
Loss and in excess of the Damage Notification Threshold will be paid
to Lessor and applied in payment (or to reimburse Lessee) for
repairs or replacement property upon Lessor being satisfied that the
repairs or replacement have been effected in accordance with the
Lease;
(c) BELOW DAMAGE NOTIFICATION THRESHOLD: insurance proceeds in amounts
below the Damage Notification Threshold may be paid by the insurer
directly to Lessee;
(d) LIABILITY PROCEEDS: all insurance proceeds in respect of third party
liability will, except to the extent paid by the insurers to the
relevant third party, be paid to Lessor to be paid directly in
satisfaction of the relevant liability or to Lessee in reimbursement
of any payment so made; and
7-4
(e) DEFAULT: notwithstanding any of the foregoing paragraphs, if at the
time of the payment of any such insurance proceeds a Default has
occurred and is continuing, all such proceeds will be paid to or
retained by Lessor to be applied toward payment of any amounts which
may be or become payable by Lessee in such order as Lessor may
elect.
To the extent that insurance proceeds are paid to Lessee, Lessee agrees to
hold such proceeds in trust and comply with the foregoing provisions and
apply or pay over such proceeds as so required.
1.7 UNITED STATES GOVERNMENTAL INDEMNITY
Notwithstanding any of the foregoing paragraphs, in the event of a
Permitted Sub-Lease to, or a requisition of use by, the United States or
any Governmental Entity whose obligations have the full faith and credit
of the federal Government of the United States, Lessor agrees to accept in
lieu of insurance required hereunder indemnification or insurance from the
United States or such a Governmental Entity in a form reasonably
acceptable to Lessor and Owner and against such risks and in such amounts
and on such terms such that when added to the Insurance maintained by
Lessee, Lessee is in full compliance with the requirements of Section 9
and this Schedule.
1.8 REPORT FROM FAA
In respect of any Insurances under of this Schedule 7 obtained by Lessee
from the FAA, Lessee shall (i) furnish to Lessor copies of any
certificates of insurance issued by the FAA in respect of such insurance
and (ii) notify Lessor and the Additional Insureds of any cancellation,
lapse or material change in such policy (including by reason of any
failure to renew or pay premiums) immediately following Lessee's receipt
of notice thereof or its publication in the Federal Register.
7-5
SCHEDULE 8
FORM OF LEGAL OPINIONS
PART A - FORM OF ORRICK LEGAL OPINION
________, 200___
[LESSOR]
c/o GE Capital Aviation Services, Inc.
000 Xxxx Xxxxx Xxxx
Xxxxxxxx, Xxxxxxxxxxx 00000
Re: LEASE OF ONE (1) [DESCRIBE AIRCRAFT]; AIRCRAFT MANUFACTURER'S SERIAL
NO._______
Ladies and Gentlemen:
We have acted as special counsel to Kitty Hawk AirCargo, Inc., a Texas
corporation ("Lessee"), Kitty Hawk Inc., a Delaware corporation ("KHI"), and
Kitty Hawk Cargo, Inc., a Texas corporation ("KHC"), in connection with the
transactions contemplated by the Aircraft Lease Agreement dated as of
______________, 200___ between [LESSOR] (the "Lessor") and the Lessee in respect
of the Aircraft bearing manufacturer's serial number ____________ ("Lease"). As
used herein, the term "Lease" means and includes the aforementioned Aircraft
Lease Agreement which incorporates the Common Terms Agreement (as defined
therein). Capitalized terms used in this opinion letter and not otherwise
defined herein shall have the meanings assigned thereto (or incorporated by
reference) in the Lease.
In connection with rendering the opinions contained herein, we have
examined executed originals or copies of the following:
(i) the Lease;
(ii) the Common Terms Agreement;
(iii) the Lessee Guaranty dated as of _______________ executed by KHI;
(iv) the Lessee Guaranty dated as of _______________ executed by KHC; and
(v) the Certificate of ________________, in [his/her] capacity as
General Counsel of the Lessee, KHI and KHC, respectively, attached
hereto as Attachment 1. [THIS CERTIFICATE TO COME FROM IN-HOUSE
COUNSEL]
The documents listed above in paragraphs (i) through (iv) are collectively
referred to herein as the "Principal Documents." The transactions contemplated
by the Principal Documents are referred to herein as the "Transaction."
8-1
In addition, we have reviewed such other documents, agreements,
instruments, corporate records and certificates of the Lessee, KHI and KHC, and
have made such inquiries of such officers and representatives and have made such
investigations of law, as we have deemed relevant and necessary as a basis for
the opinions hereinafter set forth.
As to various questions of fact relevant to this letter, we have relied,
without independent investigation, upon certificates of public officials and/or
officers of the Lessee, KHI, KHC or their respective designees, and
representations and warranties in the Principal Documents of the parties
thereto, all of which we assume to be true, correct and complete. We have made
no investigation or review of any matters relating to the Lessee, KHI, KHC or
any other Person other than as expressly listed herein. Further, we have made no
special investigation of the business operations of the Lessee, KHI or KHC for
the purpose of identifying laws or regulations to which any of the Lessee, KHI
or KHC is subject. We wish to inform you that our knowledge is necessarily
limited due to scope of our review.
With your permission we have assumed the following: (a) the authenticity
of original documents and the genuineness of all signatures; (b) the conformity
to the originals of all documents submitted to us as copies; (c) the truth,
accuracy and completeness of the information, factual matters, representations
and warranties as to matters of fact contained in the records, documents,
instruments and certificates we have reviewed; (d) the legal capacity of natural
Persons; (e) the Lessee is a corporation validly existing under the laws of
Texas; (f) KHI is a corporation validly existing under the laws of Delaware; (g)
KHC is a corporation validly existing under the laws of Texas; (h) the valid and
due authorization, execution and delivery by each Person of the Principal
Documents to which they are a party; (i) the good standing of the parties to the
Principal Documents under the laws of all applicable jurisdictions; (j) the full
corporate, trust, partnership, limited liability or other power of each of the
parties to the Principal Documents, to execute, deliver and perform its
respective obligations under the Principal Documents; (k) each of the Principal
Documents constitutes the legal, valid and binding obligation of each party
thereto (other than the Lessee, KHI and KHC), enforceable against each such
party in accordance with its respective terms; (l) the Lessee is and at all
relevant times will be a "citizen of the United States" as defined in 49 United
States Code Section 40102(a)(15), (m) the Lessee is and at all relevant times
will be a Certificated Air Carrier, (n) the Lessee did not have, at any time
prior to the Aircraft becoming subject to the Lease, any right, title or
interest in the Aircraft and the only, right, title or interest of Lessee in the
Aircraft at all relevant times is and will be that arising from the Lease and
(o) no Person has any right, title or interest in or to the Aircraft, other than
the Lessor and the Lessee.
Based on such examination and having regard for legal considerations that
we deem relevant and subject to the assumptions and qualifications set forth
above and below, we are of the opinion that:
1. The Principal Documents to which the Lessee, KHI or KHC is a party
constitute the legal, valid and binding obligations of such entity
enforceable against such entity in accordance with their respective terms.
8-2
2. No consent, approval or authorization of, or filing, registration or
qualification with, giving of notice to or the taking of other action by
or in respect of any New York State or United States Government Entity
(other than the Federal Aviation Administration and the United States
Department of Transportation, as to which we express no opinion) is
required for the execution, delivery and performance by each of the
Lessee, KHI and KHC of the Principal Documents to which it is a party,
except such consents, approvals, authorizations, filings, registrations,
qualifications, notices and other actions as have been given, achieved or
accomplished and are in full force and effect.
3. Except for (i) the registration of the Aircraft in the name of Lessor with
the FAA pursuant to the Transportation Code (as defined below) and (ii)
the filing and recordation pursuant to the Transportation Code of the
documents referenced in the opinion of
_________________________________________, special FAA counsel ("FAA
Counsel"), with respect to the transactions contemplated by the Lease, no
further action is necessary under the laws of the State of New York or the
federal laws of the United States in order to establish and perfect
Lessor's interest in the Aircraft under the Lease as against the Lessee
and any third party in any applicable jurisdiction within the United
States. We note that we do not opine with respect to the necessity of any
filing which may be required under the Uniform Commercial Code as in
effect in the State of Delaware and Texas, as to which you are receiving
an opinion of _____________, counsel to the Lessee, KHI and KHC in such
jurisdiction.
4. The Lessor is entitled to the benefits of Section 1110 of Title 11 of the
United States Code as currently in effect with respect to the Airframe and
Engines; provided, however, that no opinion is expressed as to any
replacement Airframe or replacement Engine.
In giving the opinion set forth in paragraph 2 above, we have relied on
certificates of officers of the Lessee, KHI and KHC as to the absence of any
judgment, decree, injunction, writ or order of any court, arbitration board or
other New York State or United States Government Entity which would require any
consent, approval, authorization, filing, registration, qualification, notice or
other action described in said paragraph 2.
We have assumed that no fraud, dishonesty, forgery, coercion, duress or
breach of fiduciary duty exists or will exist with respect to any of the matters
relevant to the opinion expressed in this opinion letter.
The validity, enforceability and binding nature of the Principal Documents
may be limited by and subject to (a) applicable liquidation, conservatorship,
receivership, bankruptcy, insolvency, reorganization, fraudulent transfer or
conveyance, arrangement, moratorium or other similar laws relating to or
affecting creditors' rights and remedies generally from time to time in effect;
(b) general principles of equity (regardless of whether applied in a proceeding
in equity or at law), including principles of commercial reasonableness, good
faith and fair dealing; (c) the power of the courts to award damages in lieu of
equitable remedies; and (d) the limitation that the right to indemnification and
contribution contained in the Principal Documents may be limited by federal or
state laws or the policies underlying such laws.
8-3
We express no opinion as to the enforceability of any provisions contained
in the Principal Documents purporting to: (a) allow the acceleration of the
maturity of any indebtedness or obligation, the institution of foreclosure
proceedings or the exercise of any other rights without notice to the Lessee,
KHI or KHC; (b) provide for specific performance, injunctive relief or
liquidated damages; (c) restrict or waive access to, or covenant not to assert,
legal or equitable remedies, set-off, claims or other rights (including, without
limitation, proper jurisdiction, forum non conveniens and venue), waive rights
of the Lessee, KHI or KHC or impose duties on any secured party in violation of
New York law, or waive any right or duty under any marshalling and exemption law
or the right to recover direct, special, exemplary, punitive or consequential
damages; (d) relate to delay or failure by the Lessor or any of its
representatives to exercise any right, remedy, or option under the Principal
Documents not operating as a waiver; (e) establish evidentiary standards; (f)
permit the Lessor or any of its representatives to set-off Transaction or
non-Transaction obligations against any assets belonging to a third party or
otherwise held in a fiduciary capacity or against any certificates of deposit or
permit any Affiliate of the Lessor to offset Transaction or non-Transaction
obligations against any assets of the Lessee, KHI or KHC or their Affiliates or
purporting to permit any set-off or application of monies without prior notice
to the Lessee, KHI or KHC (as applicable) or purporting to permit any set-off or
application of monies as to unliquidated amounts; (g) expressly or implicitly
constitute any Person as the attorney-in-fact of Lessee or any other Person or
otherwise grant the Lessor or any of its representatives an irrevocable power of
attorney to take actions on behalf of the Lessee, KHI or KHC for the benefit or
protection of the Lessor or any of its representatives to the extent that the
Lessor or any of its representatives could not otherwise take such actions; (h)
vest jurisdiction over any property in any court to the extent such property is
not located in such jurisdiction; (i) covenant to take actions, the taking of
which is discretionary with or subject to the approval of a third party or which
are otherwise subject to contingency, the fulfillment of which is not within the
control of the party so covenanting; (j) indemnify a party against liability for
its own wrongful or negligent acts or where such indemnification is contrary to
public policy; (k) impose penalties, forfeitures, late payment charges, or
increasing an interest rate upon delinquency in payment or upon the occurrence
of a default; (l) permit various self-help or summary remedies without notice or
opportunity for hearing or correction; (m) provide for a waiver of broadly or
vaguely stated rights or unknown future rights and/or providing that rights or
remedies are not exclusive, that every right or remedy is cumulative and may be
exercised in addition to, or with, any right or remedy or that the election of
some particular remedy or remedies does not preclude recourse to one or another
remedy; (n) permit any Person to determine, in its sole and absolute discretion,
the application of the proceeds from any disposition of collateral, where such
application may be contrary to statutory provisions governing such application;
(o) construe, interpret, and/or resolve any inconsistencies or ambiguities in
the Principal Documents in favor of a party; (p) provide for the submission by
the Lessee, KHI or KHC to the jurisdiction of any court other than a New York
State court or provide that venue is proper in any particular court; (q) provide
for enforcement of any judgment against Lessee, KHI or KHC in any court other
than a New York State court or a U.S. federal court sitting in New York, New
York; (r) provide for a waiver of rights to termination of the Lease or
diminution of Rent, Supplemental Rent or other amounts payable under the Lease
in the event the Lease is terminated in whole or in part by operation of Law; or
(s) provide for a waiver of jury trial. In addition, we express no opinion as to
the enforceability of (i) Section 15.8(g)(iii) of the Common Terms Agreement,
(ii) any provision
8-4
contained in the Principal Documents that a specific number of days constitutes
reasonable notice under applicable law or (iii) any provision contained in the
Principal Documents prohibiting oral amendments to or waivers of provisions of
such documents or limiting the effect of a course of dealing between parties
thereto.
The foregoing opinions are subject to the qualification that the
enforceability of certain waivers, rights and remedies provided in any of the
Principal Documents may be unavailable or limited by certain laws and judicial
decisions. In respect of such qualification, however, we are of the opinion that
such laws and judicial decisions do not, subject to the other exceptions and
limitations contained in this opinion, make the remedies (including, without
limitation, the remedy of sale following default) generally afforded by any of
the Principal Documents inadequate for the practical realization of the
principal benefits to be provided by the Principal Documents.
We note that the provisions of the Principal Documents that permit the
Lessor or any of its representatives to take actions or make determinations, or
to benefit from indemnities and similar undertakings by any other party thereto
may be subject to a requirement that such action be taken or such determination
be made, and that any action or inaction by such persons that may give rise to a
request for payment under such an undertaking be taken, or not taken, or a
reasonable basis and in good faith.
Without limiting the foregoing, we express no opinion as to the
enforceability or the effect of any demand sent in connection with any Guaranty
prior to the occurrence of any Default or Event of Default. We express no
opinion with respect to the effect on the enforceability of any Guaranty of any
modification or alteration affecting the obligations of Lessee or an election of
remedies by Lessor, which occurs without notice to or the consent of the
Guarantors.
We express no opinion as to matters governed by laws other than the
Included Laws (as defined below). We have made no special investigation or
review of any published constitutions, treaties, laws, rules or regulations, or
judicial or administrative decisions ("Laws"), other than a review of (i) the
laws of the State of New York and (ii) the federal laws of the United States of
America (except as excluded in the next sentence). For purposes of this opinion,
the term "Included Laws" means the items described in clauses (i) and (ii) of
the preceding sentence that are, in our experience, normally applicable to
transactions of the type contemplated in the Principal Documents. The term
Included Laws specifically excludes (a) Laws of any counties, cities towns,
municipalities, and special political subdivisions and any agencies thereof, (b)
Laws relating to land use, zoning, and building code issues, taxes,
environmental issues, intellectual property Laws, antitrust issues, Federal
Reserve Board margin regulation issues, federal or state antitrust laws, federal
or state laws relating to taxation, and federal or state securities or blue sky
laws, (c) matters arising under the Federal Aviation Act of 1958, as amended
("FAA Act"), and Subtitle VII of Xxxxx 00, Xxxxxx Xxxxxx Code (the
"Transportation Code") and the rules and regulations promulgated thereunder,
including, without limitation, FARs, and (d) laws, rules, and regulations
relating to the regulation of the conduct of the business of Lessee.
8-5
In rendering these opinions, as to all matters relating to the FAA Act and
the rules and regulations promulgated thereunder, including, without limitation,
FARs, we have assumed the correctness of the opinions contained in an opinion
letter of FAA Counsel dated the date hereof, which is being delivered to you in
connection with the transactions contemplated by the Principal Documents, and we
express no opinion regarding matters addressed by FAA Counsel.
This opinion letter addresses the legal consequences of only the facts
existing or assumed as of the date hereof. The opinions expressed herein are
based on an analysis of existing laws and court decisions and cover certain
matters not directly addressed by such authorities. Such opinions may be
affected by actions taken or omitted, events occurring, or changes in the
relevant facts, after the date hereof. We have not undertaken to determine, or
to inform any Person of, the occurrence or non-occurrence of any such actions,
events, or changes. This opinion is solely for you in connection with the
Transaction and may not be relied upon or used by, circulated, quoted, or
referred to, nor may copies hereof be delivered to, any other Person without our
prior written approval. We disclaim any obligation to update this opinion letter
for events occurring or coming to our attention after the date hereof.
Very truly yours,
XXXXXX XXXXXXXXXX & XXXXXXXXX LLP
8-6
Attachment 1
CERTIFICATE OF KITTY HAWK AIRCARGO, INC., A TEXAS CORPORATION
("LESSEE"), KITTY HAWK INC., A DELAWARE CORPORATION ("KHI"), AND KITTY
HAWK CARGO, INC., A TEXAS CORPORATION ("KHC")
I, ______________, the duly authorized General Counsel of Kitty Hawk
AirCargo, Inc., a Texas corporation ("Lessee"), Kitty Hawk Inc., a Delaware
corporation ("KHI"), and Kitty Hawk Cargo, Inc., a Texas corporation ("KHC"),
hereby certify for purposes of the opinion of Xxxxxx Xxxxxxxxxx & Xxxxxxxxx LLP
(the "Opinion") in connection with that certain Aircraft Lease Agreement dated
as of _______________ (the "Lease"), by and among the Lessee and [LESSOR] (the
"Lessor"), that:
1. No proceedings for the dissolution, liquidation, consolidation or merger
of the Lessee, KHI or KHC have been commenced or are threatened as of the
date hereof.
2. No consent, approval or authorization of, or filing, registration or
qualification with, giving of notice to or the taking of other action by
or in respect of any New York State or United States Government Entity
(other than the Federal Aviation Administration and the United States
Department of Transportation) is required for the execution, delivery and
performance by each of the Lessee, KHI and KHC of the Principal Documents
to which it is a party, except such consents, approvals, authorizations,
filings, registrations, qualifications, notices and other actions as have
been given, achieved or accomplished and are in full force and effect.
Capitalized terms not otherwise defined herein are used as defined in the
Opinion, a copy of which has been furnished to the undersigned.
IN WITNESS WHEREOF, the undersigned duly authorized officer of the Lessee,
KHI and KHC has executed this Certificate this ___ day of _______________.
_________________________________
Name: ______________
Title: ______________
8-7
PART B - FORM OF IN-HOUSE LEGAL OPINION
________, 200___
[LESSOR]
c/o GE Capital Aviation Services, Inc.
000 Xxxx Xxxxx Xxxx
Xxxxxxxx, Xxxxxxxxxxx 00000
Re: LEASE OF ONE (1) [DESCRIBE AIRCRAFT]; AIRCRAFT MANUFACTURER'S SERIAL
NO._______
Ladies and Gentlemen:
I am the General Counsel of Kitty Hawk, Inc., a Delaware corporation
("KHI"). Reference is made to the transactions contemplated by the Aircraft
Lease Agreement dated as of ______________, 200___ between [LESSOR] (the
"Lessor") and Kitty Hawk Aircargo, Inc., a wholly-owned subsidiary of KHI (the
"Lessee") in respect of the Aircraft bearing manufacturer's serial number
____________ ("Lease"). As used herein, the term "Lease" means and includes the
aforementioned Aircraft Lease Agreement which incorporates the Common Terms
Agreement (as defined therein). Capitalized terms used in this opinion letter
and not otherwise defined herein shall have the meanings assigned thereto (or
incorporated by reference) in the Lease.
In connection with rendering the opinions contained herein, I have
examined executed originals or copies of the following:
(i) the Lease;
(ii) the Common Terms Agreement;
(iii) the Lessee Guaranty dated as of _______________ executed by KHI;
(iv) the Lessee Guaranty dated as of _______________ executed by Kitty
Hawk Cargo, Inc. ("KHC"); and
The documents listed above in paragraphs (i) through (iv) are collectively
referred to herein as the "Principal Documents." The transactions contemplated
by the Principal Documents are referred to herein as the "Transaction."
In addition, I have reviewed such other documents, agreements,
instruments, corporate records and certificates of the Lessee, KHI and KHC, and
have made such inquiries of such officers and representatives and have made such
investigations of law, as I have deemed relevant and necessary as a basis for
the opinions hereinafter set forth.
8-8
As to various questions of fact relevant to this letter, I have relied,
without independent investigation, upon certificates of public officials and/or
officers of the Lessee, KHI, KHC or their respective designees, and
representations and warranties in the Principal Documents of the parties
thereto, all of which I assume to be true, correct and complete.
With your permission I have assumed the following: (a) the authenticity of
original documents and the genuineness of all signatures; (b) the conformity to
the originals of all documents submitted to me as copies; (c) the truth,
accuracy and completeness of the information, factual matters, representations
and warranties as to matters of fact contained in the records, documents,
instruments and certificates I have reviewed; (d) the legal capacity of natural
Persons; (e) that the Lessee is a corporation validly existing under the laws of
Texas; (f) that KHI is a corporation validly existing under the laws of
Delaware; (g) that KHC is a corporation validly existing under the laws of
Texas; (h) the valid and due authorization, execution and delivery by each
Person, of the Principal Documents to which they are a party; (i) the good
standing of the parties to the Principal Documents under the laws of all
applicable jurisdictions; (j) the full corporate, trust, partnership, limited
liability or other power of each of the parties to the Principal Documents, to
execute, deliver and perform its respective obligations under the Principal
Documents; (k) the due authorization, execution and delivery on behalf of each
of the respective parties thereto, of documents referred to herein and (l) that
each of the Principal Documents constitutes the legal, valid and binding
obligation of each party thereto, enforceable against each such party in
accordance with its respective terms; except, in the case of clauses (a), (h),
(i) and (k), with respect to Lessee, KHC and KHI.
Based on such examination and having regard for legal considerations that
I deem relevant and subject to the assumptions and qualifications set forth
above and below, I am of the opinion that:
1. Lessee is a "citizen of the United States" as defined in 00 Xxxxxx Xxxxxx
Code Section 40102(a)(15).
2. Lessee is a Certificated Air Carrier.
I express no opinion as to matters governed by laws other than the
Included Laws (as defined below). I have made no special investigation or review
of any published constitutions, treaties, laws, rules or regulations, or
judicial or administrative decisions ("Laws"), other than a review of the
federal laws of the United States of America, including, without limitation,
matters arising under the Federal Aviation Act of 1958, as amended ("FAA Act"),
and Subtitle VII of Xxxxx 00, Xxxxxx Xxxxxx Code (the "Transportation Code") and
the rules and regulations promulgated thereunder, including, without limitation,
FARs. For purposes of this opinion, the term "Included Laws" means the items
described in the preceding sentence that are, in my experience, normally
applicable to transactions of the type contemplated in the Principal Documents.
The term Included Laws specifically excludes (a) Laws of any counties, cities
towns, municipalities, and special political subdivisions and any agencies
thereof, (b) Laws relating to land use, zoning, and building code issues, taxes,
environmental issues, intellectual property Laws, antitrust issues, Federal
Reserve Board margin regulation issues, federal or state antitrust laws, federal
or state laws relating to taxation, and federal or state securities or blue sky
8-9
laws, and (c) laws, rules, and regulations relating to the regulation of the
conduct of the business of Lessee.
This opinion letter addresses the legal consequences of only the facts
existing or assumed as of the date hereof. The opinions expressed herein are
based on an analysis of existing laws and court decisions and cover certain
matters not directly addressed by such authorities. Such opinions may be
affected by actions taken or omitted, events occurring, or changes in the
relevant facts, after the date hereof. I have not undertaken to determine, or to
inform any Person of, the occurrence or non-occurrence of any such actions,
events, or changes. This opinion is solely for you in connection with the
Transaction and may not be relied upon or used by, circulated, quoted, or
referred to, nor may copies hereof be delivered to, any other Person without our
prior written approval. I disclaim any obligation to update this opinion letter
for events occurring or coming to our attention after the date hereof.
Very truly yours,
8-10
FORM OF LOCAL COUNSEL LEGAL OPINION
________, 200___
[LESSOR]
c/o GE Capital Aviation Services, Inc.
000 Xxxx Xxxxx Xxxx
Xxxxxxxx, Xxxxxxxxxxx 00000
Re: LEASE OF ONE (1) BOEING 737-300F; AIRCRAFT MANUFACTURER'S
SERIAL NO. ________
Ladies and Gentlemen:
We have acted as special counsel to Kitty Hawk Aircargo, Inc., a Texas
corporation ("Lessee"), Kitty Hawk, Inc., a Delaware corporation ("KHI"), and
Kitty Hawk Cargo, Inc., a Delaware corporation ("KHC"), in connection with the
transactions contemplated by the Aircraft Lease Agreement dated as of
______________, 200___ between [LESSOR] (the "Lessor") and the Lessee in respect
of the Aircraft bearing manufacturer's serial number ____________ ("Lease"). As
used herein, the term "Lease" means and includes the aforementioned Aircraft
Lease Agreement which incorporates the Common Terms Agreement (as defined
therein). Capitalized terms used in this opinion letter and not otherwise
defined herein shall have the meanings assigned thereto (or incorporated by
reference) in the Lease.
SCOPE OF EXAMINATION AND GENERAL
ASSUMPTIONS AND QUALIFICATIONS
In connection with rendering the opinions contained herein, we have
examined executed originals or copies of the following:
(i) the Lease;
(ii) the Common Terms Agreement;
(iii) the Lessee Guaranty dated as of _______________ executed by
KHI;
(iv) the Lessee Guaranty dated as of _______________ executed by
KHC;
(v) a certified copy of the Certificate of Incorporation, as
amended, of the Lessee, as certified by the Secretary of State
of the State of Texas on ______________ (the "Lessee
Certificate of Incorporation");
(vi) a copy of the Bylaws, as amended, of the Lessee certified as
current as of the date hereof (the "Lessee Bylaws");
(vii) a certified copy of the Second Amended and Restated
Certificate of Incorporation, as amended, of KHI, as certified
by the Secretary of State of the State of Delaware on
_______________ (the "KHI Certificate of Incorporation");
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(viii) a copy of the Second Amended and Restated Bylaws, as amended,
of KHI certified as current as of the date hereof (the "KHI
Bylaws");
(ix) a certified copy of the Certificate of Incorporation of KHC,
as certified by the Secretary of State of the State of
Delaware on _______________ (the "KHC Certificate of
Incorporation");
(x) a copy of the Bylaws of KHC certified as current as of the
date hereof (the "KHC Bylaws");
(xi) a certificate from the Secretary of State of the State of
Texas indicating that the Lessee has an active status in the
State of Texas as of ____________;
(xii) a certificate from the Comptroller of Public Accounts of the
State of Texas certifying that Lessee is in good standing in
the State of Texas as of _____________;
(xiii) a certificate from the Secretary of State of the State of
Delaware indicating that KHI is in existence and in good
standing in the State of Delaware as of _____________;
(xiv) a certificate from the Secretary of State of the State of
Delaware indicating that KHC is in existence and in good
standing in the State of Delaware as of _____________;
(xv) a written consent of the Board of Directors of the Lessee with
respect to the Transaction (as defined below);
(xvi) resolutions of the Board of Directors of KHI and the Aircraft
Acquisition Committee of the Board of Directors of KHI with
respect to the Transaction;
(xvii) a written consent of the Board of Directors of KHC with
respect to the Transaction; and
(xviii) the Certificate of ________________, in his capacity as
General Counsel of the Lessee, KHI and KHC, attached hereto as
Attachment 1, to the effect that (a) the Lessee, KHI and KHC
have identified and delivered or made available to us copies
of all material agreements, indentures, or instruments to
which the Lessee, KHI or KHC is a party or by which it is
bound, a list of which is set forth in Exhibit A thereto (the
"Material Agreements"); (b) the Lessee, KHI and KHC have
delivered to us copies of all judgments, injunctions, writs,
decrees, and orders of any court or governmental agency to
which the Lessee, KHI or KHC is a party or by which it is
bound, a list of which is set forth in Exhibit B thereto (the
"Applicable Orders") and (c) the other matters addressed
therein.
The documents listed above in paragraphs (i) through (iv) are
collectively referred to herein as the "Principal Documents." The transactions
contemplated by the Principal Documents are referred to herein as the
"Transaction." The documents listed above in paragraphs (v) through (xviii) are
collectively referred to herein as the "Constituent Documents."
In addition, we have reviewed such other documents, agreements,
instruments, corporate records and certificates of the Lessee, KHI and KHC, and
have made such inquiries of such officers and representatives and have made such
investigations of law, as we have deemed relevant and necessary as a basis for
the opinions hereinafter set forth.
8-12
As to various questions of fact relevant to this letter, we have relied,
without independent investigation of their accuracy, upon certificates of public
officials and/or officers of the Lessee, KHI, KHC or their respective designees,
and representations and warranties in the Principal Documents of the parties
thereto, all of which we assume to be true, correct and complete. We have made
no investigation or review of any matters relating to the Lessee, KHI, KHC or
any other Person other than as expressly listed herein. Further, we have made no
special investigation of the business operations of the Lessee, KHI or KHC for
the purpose of identifying laws or regulations to which any of the Lessee, KHI
or KHC is subject. We wish to inform you that our knowledge is necessarily
limited due to scope of our review.
With your permission we have assumed the following: (a) the authenticity
of original documents and the genuineness of all signatures (other than Lessee,
KHI and KHC); (b) the conformity to the originals of all documents submitted to
us as copies; (c) the truth, accuracy and completeness of the information,
factual matters, representations and warranties as to matters of fact contained
in the records, documents, instruments and certificates we have reviewed; (d)
the legal capacity of natural Persons; (e) the valid and due authorization,
execution and delivery by each Person (other than the Lessee, KHI, and KHC), of
the Principal Documents to which they are a party; (f) the good standing of the
parties (other than the Lessee, KHI, and KHC) to the Principal Documents under
the laws of all applicable jurisdictions; (g) the full corporate, trust,
partnership, limited liability or other power of each of the parties to the
Principal Documents (other than the Lessee, KHI, and KHC), to execute, deliver
and perform its respective obligations under the Principal Documents; (h) each
of the Principal Documents constitutes the legal, valid and binding obligation
of each party thereto, enforceable against each such party in accordance with
its respective terms; (i) the Lessee is and at all relevant times will be a
"citizen of the United States" as defined in 49 United States Code Section
40102(a)(15), (j) the Lessee is and at all relevant times will be a Certificated
Air Carrier, (k) the Lessee did not have, at any time prior to the Aircraft
becoming subject to the Lease, any right, title or interest in the Aircraft and
the only, right, title or interest of Lessee in the Aircraft at all relevant
times is and will be that arising from the Lease and (l) no Person has any
right, title or interest in or to the Aircraft, other than the Lessor and the
Lessee.
We have assumed, with your consent and without independent verification,
for the purpose of the opinions expressed herein that no mutual mistake,
misunderstanding or fraud exists with respect to any of the matters relevant to
such opinions. We have also assumed, with your consent, that Lessee, KHI and KHC
and their agents have acted in good faith and that consummation of the
transactions contemplated by the Principal Documents has complied or will comply
with any requirement of good faith, fair dealing and conscionability.
We express no opinion as to matters governed by laws other than the
Included Laws (as defined below). We have made no special investigation or
review of any published constitutions, treaties, laws, rules or regulations, or
judicial or administrative decisions ("Laws"), other than a review of (i) the
laws of the State of Texas, (ii) the federal laws of the United States of
America (except as excluded in the next sentence) and (iii) the General
Corporation Law of the State of Delaware. For purposes of this opinion, the term
"Included Laws" means the items described in clauses (i), (ii) and (iii) of the
preceding sentence that are, in our experience, normally applicable to
transactions of the type contemplated in the Principal Documents. The term
Included Laws
8-13
specifically excludes (a) Laws of any counties, cities towns, municipalities,
and special political subdivisions and any agencies thereof, (b) Laws relating
to land use, zoning, and building code issues, taxes, environmental issues,
intellectual property Laws, antitrust issues, Federal Reserve Board margin
regulation issues, federal or state antitrust Laws, federal or state Laws
relating to taxation, and federal or state securities or blue sky Laws, (c)
matters arising under the Federal Aviation Act of 1958, as amended ("FAA Act"),
and Subtitle VII of Xxxxx 00, Xxxxxx Xxxxxx Code (the "Transportation Code") and
the rules and regulations promulgated thereunder, including, without limitation,
FARs, and (d) Laws, rules, and regulations relating to the regulation of the
conduct of the business of Lessee.
In rendering these opinions, as to all matters relating to the FAA Act and
the rules and regulations promulgated thereunder, including, without limitation,
FARs, we have assumed the correctness of the opinions contained in an opinion
letter of FAA Counsel dated the date hereof, which is being delivered to you in
connection with the transactions contemplated by the Principal Documents, and we
express no opinion regarding matters addressed by FAA Counsel.
SPECIFIC LIMITATIONS AND QUALIFICATIONS ON
OPINION REGARDING GOOD STANDING, POWER, AUTHORITY AND AUTHORIZATION
Our opinion in paragraphs 1 and 2 below are based solely and exclusively
upon our review of the Constituent Documents.
SPECIFIC LIMITATIONS AND QUALIFICATIONS ON
OPINION REGARDING NO BREACHES, VIOLATIONS OR LIENS
In giving the opinion set forth in paragraph 3 below, we have relied on
certificates of officers of the Lessee, KHI and KHC as to the absence of any
judgment, decree, injunction, writ or order of any court, arbitration board or
other State of Texas or United States Government Entity which would be
contravened by the execution, delivery or performance by the Lessee, KHI or KHC
of any of the Principal Documents.
SPECIFIC LIMITATIONS AND QUALIFICATIONS ON
OPINION REGARDING CHOICE OF NEW YORK LAW
The Lease provides that the laws of the State of New York shall govern all
matters, including the construction, validity, and performance thereof. Section
35.51 of the Texas UCC provides that if parties agree in writing that the law of
a particular jurisdiction governs an issue relating to a "qualified transaction"
(including the validity or enforceability of an agreement relating to the
transaction or a provision of the agreement) and the transaction bears a
"reasonable relation" to that jurisdiction, then the law, other than conflict of
laws rules, of that jurisdiction governs the issue regardless of whether the
application of that law is contrary to a fundamental or public policy of the
State of Texas or of any other jurisdiction. A "qualified transaction" includes
a transaction under which a party pays, or is obligated to pay, at least
$1,000,000. Section 35.51 of the Texas UCC provides that a transaction bears a
"reasonable relation" to a particular jurisdiction if the transaction, the
subject matter of the transaction, or a
8-14
party to the transaction is reasonably related to that jurisdiction. In
addition, Section 35.51 of the Texas UCC contains specific factual criteria, and
provides that the presence of any one of the criteria will satisfy the
"reasonable relation" test. Accordingly, for purposes of the opinion set forth
in paragraph 5 below, and in light of the factual criteria specified in Section
35.51 of the Texas UCC, we have, with your consent, assumed the following facts:
(a) all payments by Lessee will be paid to Lessor in the State of New
York;
(b) a substantial part of the negotiations relating to the Transactions
occurred in the State of New York; and
(c) the choice of governing law contained in the Principal Documents was
willingly and knowingly agreed to by all parties thereto.
The Texas Legislature enacted SECTION 35.51 of the Texas UCC to allow
"PARTIES ENTERING INTO CERTAIN BUSINESS TRANSACTIONS INVOLVING SUBSTANTIAL
DOLLAR AMOUNTS TO CHOOSE, THROUGH WRITTEN AGREEMENT, THE LAW THAT WILL GOVERN
THEIR CONTRACTUAL RELATIONS." Xxxx Analysis, H.B. 1113, Committee on Business
and Industry. There is no evidence in the statute or any available legislative
history to suggest that the legislature intended to allow a court to consider
whether a choice of law was a sham or subterfuge if the transaction meets the
literal terms of the statute. As a result, it is reasonable to conclude that a
Texas court would give effect to the language of the statute and objectively
apply the facts, as outlined above, to uphold the choice of New York law.
We note that the determination of applicable law as to specific issues may
vary from the choice of law expressed in the Principal Documents, where another
statute of the State of Texas or a statute of the United States provides that
such issue is governed by the law of a particular jurisdiction. For example,
notwithstanding the choice of law contained in the Principal Documents, certain
matters pertaining to the power and authority of corporations, partnerships,
limited liability companies, and other entities will be governed by the law of
the jurisdiction of incorporation, formation, or organization of each such
entity.
SPECIFIC LIMITATIONS AND QUALIFICATIONS ON
OPINION REGARDING USURY
In giving the opinion set forth in paragraph 7 below, we have assumed that
the Lease is a true lease and not a financing lease.
OPINIONS
Based on such examination and having regard for legal considerations that
we deem relevant and subject to the assumptions and qualifications set forth
above and below, we are of the opinion that:
8-15
1. The Lessee is a corporation validly existing and in good standing under
the laws of the State of Texas. KHI is a corporation validly existing and
in good standing under the laws of the State of Delaware. KHC is a
corporation validly existing and in good standing under the laws of the
State of Delaware.
2. Each of the Lessee, KHI and KHC has all requisite corporate power and
authority to execute and deliver the Principal Documents to which it is a
party and to perform its respective obligations thereunder. The execution,
delivery and performance of the Principal Documents to which it is a party
by each of the Lessee, KHI and KHC, and the consummation by each of the
Lessee, KHI and KHC of the transactions contemplated thereby have been
authorized by all necessary corporate action on the part of the Lessee,
KHI and KHC.
3. The execution and delivery by the Lessee, KHI and KHC of each of the
Principal Documents to which it is a party and the performance by each of
the Lessee, KHI and KHC of its respective obligations thereunder will not
(a) contravene the Lessee Certificate of Incorporation, the Lessee Bylaws,
the KHI Certificate of Incorporation, the KHI Bylaws, the KHC Certificate
of Incorporation or the KHC Bylaws, (b) violate or result in the creation
or imposition of any material Lien on any of the properties or revenues of
the Lessee, KHI or KHC (except any Liens created pursuant to the Principal
Documents) pursuant to (i) any Included Laws applicable to the Lessee, KHI
or KHC or (ii) any Applicable Orders, or (c) constitute a breach of,
constitute a default under or result in the creation or imposition of any
material Lien on any of the properties or revenues of the Lessee, KHI or
KHC (except any Liens created pursuant to the Principal Documents)
pursuant to any of the Material Agreements.
4. Assuming (i) the registration of the Aircraft in the name of Lessor with
the FAA pursuant to the Transportation Code (as defined below), (ii) the
filing and recordation pursuant to the Transportation Code of the
documents referenced in the opinion of
_________________________________________, special FAA counsel ("FAA
Counsel"), and (iii) the filing of a financing statement under Article 9
of the Uniform Commercial Code of the State of Texas (as to Lessee) naming
Lessee as debtor and Lessor as secured party, with respect to such
portion, if any, of the Aircraft as may not be covered by recording
pursuant to the Transportation Code to the extent the Aircraft constitutes
personal property for which perfection can be achieved through the filing
of a financing statement, no further filing or recording of any document
is necessary under applicable state Law in order to establish and perfect
Lessor's interest in the Aircraft under the Lease as against Lessee and
any third parties.
5. A Texas court, or a federal court sitting in the State of Texas as the
forum state and applying State of Texas conflict of laws rules, would give
effect to the choice of New York law set forth in the Lease with respect
to general issues of contract validity, enforcement, and interpretation.
6. The Principal Documents to which Lessee is a party have been duly executed
and delivered on behalf of Lessee. The Principal Documents to which KHI is
a party have
8-16
been duly executed and delivered on behalf of KHI. The Principal Documents
to which KHC is a party have been duly executed and delivered on behalf of
KHC.
7. The Lease does not violate applicable usury statutes of the State of
Texas.
In addition, we hereby advise you that we are not aware of any statute of
the State of Texas that would invalidate the Lessee's submission pursuant to
Section 15.8(b) of the Lease to the non-exclusive jurisdiction of the United
States District Court for the Southern District of New York and any New York
state court sitting in the County of New York, New York, and all related
appellate courts.
This opinion letter addresses the legal consequences of only the facts
existing or assumed as of the date hereof. The opinions expressed herein are
based on an analysis of existing Laws and court decisions and cover certain
matters not directly addressed by such authorities. Such opinions may be
affected by actions taken or omitted, events occurring, or changes in the
relevant facts, after the date hereof. We have not undertaken to determine, or
to inform any Person of, the occurrence or non-occurrence of any such actions,
events, or changes. This opinion is solely for you in connection with the
Transaction and may not be relied upon or used by, circulated, quoted, or
referred to, nor may copies hereof be delivered to, any other Person without our
prior written approval. We disclaim any obligation to update this opinion letter
for events occurring or coming to our attention after the date hereof.
Very truly yours,
Xxxxxx and Xxxxx, LLP
8-17
Attachment 1
CERTIFICATE OF KITTY HAWK AIRCARGO, INC., A TEXAS CORPORATION
("LESSEE"), KITTY HAWK INC., A DELAWARE CORPORATION ("KHI"), AND KITTY
HAWK CARGO, INC., A DELAWARE CORPORATION ("KHC")
I, ______________, the duly authorized General Counsel of Kitty Hawk
Aircargo, Inc., a Texas corporation ("Lessee"), Kitty Hawk, Inc., a Delaware
corporation ("KHI"), and Kitty Hawk Cargo, Inc., a Delaware corporation ("KHC"),
hereby certify for purposes of the opinion of Xxxxxx and Xxxxx, LLP (the
"Opinion") in connection with that certain Aircraft Lease Agreement dated as of
_______________ (the "Lease"), by and among the Lessee and [LESSOR] (the
"Lessor"), that:
1. Attached hereto as Exhibit A is a list of all the material agreements,
indentures, or instruments to which the Lessee, KHI or KHC is a party or
by which either of them is bound (the "Material Agreements"). For purposes
of this clause (a), an agreement, indenture or instrument must call for
the payment of more than $9,000,000 in the aggregate to be considered
material.
2. Attached hereto as Exhibit B is a list of all judgments, writs, decrees,
and orders of any court or governmental agency to which the Lessee, KHI or
KHC is a party or by which any of them is bound (the "Applicable Orders").
The execution and delivery by the Lessee, KHI and KHC of each of the
Principal Documents to which it is a party and the performance by each of
the Lessee, KHI and KHC of its respective obligations thereunder will not
violate any Applicable Orders.
3. Attached hereto as Appendix 1 is a true, correct and complete copy of the
Certificate of Incorporation of the Lessee and all amendments thereto, as
of the date hereof, duly certified by the Secretary of State of the State
of Texas. Such Certificate has not been modified, amended, rescinded,
revoked or changed and remains in full force and effect as of the date
hereof.
4. Attached hereto as Appendix 2 is a true, correct and complete copy of the
Second Amended and Restated Certificate of Incorporation of KHI and all
amendments thereto, as of the date hereof, duly certified by the Secretary
of State of the State of Delaware. Such Certificate has not been modified,
amended, rescinded, revoked or changed and remains in full force and
effect as of the date hereof.
5. Attached hereto as Appendix 3 is a true, correct and complete copy of the
Certificate of Incorporation of KHC and all amendments thereto, as of the
date hereof, duly certified by the Secretary of State of the State of
Delaware. Such Certificate has not been modified, amended, rescinded,
revoked or changed and remains in full force and effect as of the date
hereof.
8-18
6. Attached hereto as Appendix 4 is a true, correct and complete copy of a
written consent[s] of the Board of Directors of the Lessee dated May 3,
2004 and [__________, 20__], at which the Principal Documents to which
Lessee is a party and the Transaction were approved. The resolutions
therein have not been modified, amended, rescinded, revoked or changed and
remain in full force and effect as of the date hereof.
7. Attached hereto as Appendix 5 is a true, correct and complete copy of (A)
the minutes of the meeting of the Board of Directors of KHI at meeting a
held on April 25, 2004, at which the Aircraft Acquisition Committee was
formed and delegated the authority to approve the Principal Documents and
the Transaction, (B) the resolutions of the Aircraft Acquisition Committee
of the Board of Directors of KHI dated as of May 3, 2004 at which the
Principal Documents to which KHI is a party and the Transaction were
approved and (C) the resolutions of _______________ dated as of
[__________, 20__] at which _______________ was approved. The resolutions
therein have not been modified, amended, rescinded, revoked or changed and
remain in full force and effect as of the date hereof.
8. Attached hereto as Appendix 6 is a true, correct and complete copy of
written consent[s] of the Board of Directors of KHC dated May 3, 2004 and
[____________, 20__], at which the Principal Documents to which KHC is a
party and the Transaction were approved. The resolutions therein have not
been modified, amended, rescinded, revoked or changed and remain in full
force and effect as of the date hereof.
9. Attached hereto as Appendix 7 is a true, correct and complete copy of the
current bylaws of the Lessee, as amended. Such bylaws have not been
modified, amended, rescinded, revoked or changed and remain in full force
and effect as of the date hereof.
10. Attached hereto as Appendix 8 is a true, correct and complete copy of the
current bylaws of KHI, as amended. Such bylaws have not been modified,
amended, rescinded, revoked or changed and remain in full force and effect
as of the date hereof.
11. Attached hereto as Appendix 9 is a true, correct and complete copy of the
current bylaws of KHC, as amended. Such bylaws have not been modified,
amended, rescinded, revoked or changed and remain in full force and effect
as of the date hereof.
12. Each of the officers and directors of the Lessee, KHI and KHC are duly
elected and qualified officers and directors of their respective
companies.
13. No proceedings for the dissolution, liquidation, consolidation or merger
of the Lessee, KHI or KHC have been commenced or are threatened as of the
date hereof.
14. Principal Documents were duly executed and delivered by the officers
indicated thereon as executing same, and there are no extrinsic agreements
or understandings concerning the Principal Documents or the transactions
contemplated thereby that would modify or interpret the terms of the
Principal Documents, or the respective rights or obligations of the
parties thereunder.
8-19
Xxxxxx and Xxxxx, LLP is hereby authorized to rely on the Officer's
Certificates and the Secretary's Certificates of Lessee, KHC and KHI, dated as
of the date hereof, being delivered to the Lessor in connection with the
Transaction, in connection with the rendering of the Opinion.
Capitalized terms not otherwise defined herein are used as defined in the
Opinion, a copy of which has been furnished to the undersigned.
[This Space Intentionally Left Blank]
8-20
IN WITNESS WHEREOF, the undersigned duly authorized officer of the Lessee,
KHI and KHC has executed this Certificate this ___ day of _______________.
_________________________________
Name: ______________
Title: ______________
8-21
EXHIBIT A
Material Agreements
8-22
EXHIBIT B
List of Applicable Orders
[TBD]
8-23
APPENDIX 1
Lessee Certificate of Incorporation and Amendments
(see attached)
8-24
APPENDIX 2
KHI Certificate of Incorporation and Amendments
(see attached)
8-25
APPENDIX 3
KHC Certificate of Incorporation and Amendments
(see attached)
8-26
APPENDIX 4
Lessee Resolutions
(see attached)
8-27
APPENDIX 5
KHI Resolutions
(see attached)
8-28
APPENDIX 6
KHC Resolutions
(see attached)
0-00
XXXXXXXX 0
Xxxxxx Xxxxxx
(see attached)
8-30
APPENDIX 8
KHI Bylaws
(see attached)
8-31
APPENDIX 9
KHC Bylaws
(see attached)
8-32
SCHEDULE 9
EVENTS OF DEFAULT
Each of the following events or conditions constitutes an Event of Default:
(a) NON-PAYMENT: Lessee fails to make any payment of (i) Rent on the due date
and such failure continues for three (3) Business Days or more; (ii)
Supplemental Rent on the due date and such failure continues for five (5)
Business Days or more; or (iii) any other amount payable under the Lease
on the due date therefor and such failure continues for ten (10) Business
Days or more; or
(b) INSURANCE: Lessee fails to comply with any provision of Section 9 or
Schedule 7, or any insurance required to be maintained under the Lease is
cancelled or terminated, or a notice of cancellation is given in respect
of any such insurance and replacement policies meeting the requirements of
Section 9, Schedule 7 and the applicable Lease are not obtained on or
prior to the effective date of such cancellation or termination; or
(c) BREACH: Lessee fails to comply with any other provision of the Lease not
referenced in this Schedule 9 and, if such failure is in the reasonable
opinion of Lessor capable of remedy, such failure continues for more and
thirty (30) days after notice from Lessor to Lessee; or
(d) REPRESENTATION: any representation or warranty made (or deemed to be
repeated) by Lessee in or pursuant to the Lease or in any document or
certificate or statement is or proves to have been incorrect in any
material respect when made or deemed to be repeated;
(e) CROSS-DEFAULT:
(i) any amount in respect of Financial Indebtedness of Lessee or any
Lessee Affiliate having a principal amount in excess of ***** is not
paid when due (after giving effect to any applicable grace period)
and as a result of such failure, any such Financial Indebtedness
becomes due or capable of being declared due prior to the date when
it would otherwise have become due; or becomes due as a result of an
event of default or termination event, howsoever described, on the
part of Lessee or any other Person prior to the date when it would
otherwise have become due; or
(ii) the security for any such Financial Indebtedness becomes
enforceable; or
(iii) any event of default or termination event, howsoever described,
occurs under any Other Agreement; or
CONFIDENTIAL TREATMENT HAS BEEN REQUESTED BY KITTY HAWK, INC. FOR CERTAIN
PORTIONS OF THIS DOCUMENT. CONFIDENTIAL PORTIONS HAVE BEEN FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION. OMITTED PORTIONS ARE INDICATED IN THIS
AGREEMENT WITH "*****".
9-1
(f) APPROVALS: any consent, authorization, license, certificate or approval of
or registration with or declaration to any Government Entity required to
be obtained or maintained by Lessee in connection with the Lease and/or
the operation of the Aircraft (including any airline license or air
transport license including authority to operate the Aircraft under Part
121 of the FARs, a Certificate of Convenience and Necessity issued under
the Act and an air carrier operating certificate issued under the Act) is
modified in a materially prejudicial manner or is withheld, or is revoked,
suspended, cancelled, withdrawn, terminated or not renewed, or otherwise
ceases to be in full force; or
(g) INSOLVENCY:
(i) Lessee or any Lessee Affiliate consents to the appointment of a
custodian, receiver, trustee or liquidator of itself or all or a
material part of its property or its consolidated property, or
Lessee or any Lessee Affiliate admits in writing its inability to,
or is unable to, or does not, pay its debts generally as they come
due, or makes a general assignment for the benefit of creditors, or
Lessee or any Lessee Affiliate files a voluntary petition in
bankruptcy or voluntary petition seeking reorganization in a
proceeding under any bankruptcy or insolvency Laws (as now or
hereafter in effect), or an answer admitting the material
allegations of a petition filed against Lessee in any such
proceeding, or Lessee or any Lessee Affiliate by voluntary petition,
answer or consent seeks relief under the provisions of any other
bankruptcy, insolvency or other similar Law providing for the
reorganization or winding-up of debtors, or provides for an
agreement, composition, extension or adjustment with its creditors,
or any board of directors or shareholder action is taken by Lessee
or any Lessee Affiliate in furtherance of any of the foregoing,
whether or not the same is fully effected or accomplished; or
(ii) An order, judgment or decree is entered by any court appointing,
without the consent of Lessee or any Lessee Affiliate, a custodian,
receiver, trustee or liquidator of or sequestering any of Lessee's
or any Lessee Affiliate's property, and any such order, judgment or
decree of appointment or sequestration remains in effect,
undismissed, unstayed or unvacated for a period of sixty (60) days
after the date of entry thereof or at any time an order for relief
is granted; or
(iii) An involuntary petition against Lessee or any Lessee Affiliate or
other proceeding under the United States Federal Bankruptcy Laws or
other insolvency Laws (as now or hereafter in effect) is filed and
is not withdrawn or dismissed within thirty (30) days thereafter or
at any time an order for relief is granted in such proceeding, or
if, under the provisions of any Law providing for reorganization or
winding-up of debtors which may apply to Lessee or any Lessee
Affiliate, any court of competent jurisdiction assumes jurisdiction
over, or custody or control of, Lessee or any Lessee Affiliate or of
all or any material part of Lessee's or Lessee Affiliates' property,
and such jurisdiction, custody or control remains in effect,
unrelinquished, unstayed or unterminated for a period of sixty (60)
days or at any time an order for relief is granted in such
proceeding; or
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(h) SUSPENSION OF BUSINESS: Lessee suspends or ceases or takes substantive
steps to suspend or cease to carry on all or a material part of its
business as a Certificated Air Carrier (other than as a result of a labor
dispute with Lessee's employees); or
(i) RIGHTS AND REMEDIES: Lessee or any other Person claiming by or through
Lessee challenges the existence, validity, enforceability or priority of
the Lease or the rights of Lessor as lessor or of Owner as owner in
respect of the Aircraft or Financing Parties' Representative as holder of
a first priority Security Interest in the Aircraft and the Lease; or
(j) CHANGE OF CONTROL: any single person or group of persons acting in concert
acquire control of Lessee or Guarantor without the previous consent in
writing of Lessor, such consent not to be unreasonably withheld; or
(k) DELIVERY: Lessee fails to (i) comply with its obligation under Section 4
to accept delivery of the Aircraft after Lessor has fulfilled all of the
Lessee Conditions Precedent or (ii) fulfill the Conditions Precedent to
delivery of the Aircraft within the time periods provided for by the
Lease; or
(l) [INTENTIONALLY OMITTED], or
(m) LETTER OF CREDIT:
(i) the issuer of the Letter of Credit (if any) fails to make any
payment under that Letter of Credit when due; or
(ii) any such Letter of Credit is not in full force or, for any reason
ceases to constitute the legal, valid and binding obligation of the
issuer; or
(iii) any of the events listed in paragraph (e)(i) or (ii) or paragraph
(g) above applies to such issuer (references in those sub-paragraphs
to Lessee being deemed to be to the issuer); or
(iv) where applicable, any Letter of Credit is not renewed, extended or
reissued within the time, or replaced when, required by Section
5.14;
(v) and each reference in this paragraph (m) to "the issuer" shall
include a reference to any confirming bank for the Letter of Credit.
(n) REDELIVERY: Lessee fails to return the Aircraft to Lessor on the Expiry
Date in accordance with Section 12; or
(o) LITIGATION: a judgment for the payment of money not covered by insurance
in excess of ***** (or the equivalent thereof in other currencies) shall
be rendered against Lessee or
CONFIDENTIAL TREATMENT HAS BEEN REQUESTED BY KITTY HAWK, INC. FOR CERTAIN
PORTIONS OF THIS DOCUMENT. CONFIDENTIAL PORTIONS HAVE BEEN FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION. OMITTED PORTIONS ARE INDICATED IN THIS
AGREEMENT WITH "*****".
9-3
any Guarantor and the same remains undischarged for a period of forty-five
(45) days, unless execution of such judgment shall have been effectively
stayed by agreement of the parties involved or by court order or such
judgment shall have been adequately bonded; or
(p) GUARANTEE:
(i) any representation or warranty made by Guarantor is or proves to
have been incorrect in any material respect when made or deemed to
be repeated or Guarantor fails to make any payment or comply with
any other obligation under the Guarantee when due; or
(ii) the Guarantor repudiates, revokes or claims that it has no further
obligations under the Guarantee or the Guarantee ceases to be in
full force or, for any reason, ceases to be the legal, valid and
binding obligation of Guarantor; or
(iii) any of the events listed in paragraph (e) or (g) above occurs in
respect of Guarantor (and for purposes of this paragraph(s),
references in those paragraphs to Lessee shall be deemed to be
references to Guarantor); or
(q) UNLAWFUL: it becomes unlawful for Lessee to perform any of its obligations
under the Lease or the Lease becomes wholly or partly invalid or
unenforceable; or
(r) TRANSFER/LESSEE REQUIREMENTS: Lessee makes or permits any assignment or
transfer of the Lease, or any interest herein, or of the right to
possession of the Aircraft, the Airframe, or any Engine, or any
obligations under the Lease, or Lessee subleases the Aircraft, in any case
except as expressly permitted in the Lease; or Lessee breaches any
provision of Section 8.7; or
(s) ENGINE LOSS: Lessee fails to timely comply with its obligations under
Sections 8.11(a) and 8.11 (b) with respect to an Engine Event of Loss; or
(u) SUSPENSION OF PAYMENTS: Lessee announces generally or advises Lessor that
Lessee (i) is declaring a moratorium on or suspension of any payments in
respect of its Financial Indebtedness or aircraft or aircraft engine lease
obligations or (ii) does not intend to pay all or any portion of a payment
of Rent that is not yet due or which has become due but in respect of
which the cure period has not expired under the Lease or of any rent or
other amount payable under any Other Agreement that is not yet due or
which has become due but in respect of which any applicable cure period
has not expired under such Other Agreement. The foregoing Event of Default
shall not in any way limit any and all rights or remedies otherwise
available to Lessor under applicable Law in respect of any repudiation by
Lessee of the Lease, or advisement or declaration by Lessee that it does
not intend to perform any or all of its obligations under the Lease.
9-4
SCHEDULE 10
FORM OF GUARANTY
LESSEE GUARANTY
THIS GUARANTY (the "Guaranty"), dated as of _____________, is given
by _________________________________________, a _______________("Guarantor"), to
_______________________________________ ("Lessor"), for its benefit and the
benefit of each of Owner and Financing Parties' Representative as defined in the
Lease referred to below (individually, "Beneficiary" and, collectively,
"Beneficiaries").
WITNESSETH:
WHEREAS, in connection with the leasing of that certain
______________ Aircraft bearing the Manufacturer's Serial Number _____________
(together with the engines installed thereon, the "Aircraft"), Lessor and Kitty
Hawk Aircargo, Inc., a Texas corporation ("Lessee"), are entering or have
entered into that certain Aircraft Lease Agreement, dated as of , (incorporating
by reference the Common Terms Agreement referred to therein, and as amended,
supplemented or modified from time to time, the "Lease"), providing for the
lease by Lessor, as lessor, to Lessee, as lessee, of the Aircraft; and
WHEREAS, Beneficiaries desire support for the due and punctual
payment, observance and performance of all of the obligations and liabilities of
Lessee under or in respect of the Lease and any related documents (together with
the Lease, as amended, supplemented or modified from time to time, the
"Operative Documents") to which Lessee is a party (the "Obligations"); and
WHEREAS, inasmuch as Lessee and Guarantor are members of a unified
group of companies conducting interrelated and mutually dependent businesses,
Guarantor, in furtherance of its business objectives, is willing to provide such
support on the terms and conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the foregoing premises, and to
induce Beneficiaries to enter into the Operative Documents, and for other good
and valuable consideration, the receipt and adequacy of which are hereby
acknowledged, Guarantor hereby agrees for the benefit of Beneficiaries as
follows:
1. Definitions. All capitalized terms used but not defined herein shall have
the meanings assigned thereto in the Lease.
2. Guaranty. For value received and to induce Beneficiaries to enter into the
Operative Documents, Guarantor, as a primary obligor and not as a surety,
does hereby absolutely, unconditionally and irrevocably guarantee to
Beneficiaries the due and punctual payment, observance and performance by
Lessee of all of the Obligations.
10-1
Accordingly, upon and during the occurrence and continuance of an Event of
Default under the Lease, Guarantor shall forthwith without demand of any
kind pay, perform and observe all of such Obligations to and for the
benefit of Beneficiaries, strictly in accordance with the terms of the
Lease and the other Operative Documents; provided, however, that demand on
Guarantor may be made prior to the occurrence and continuance of the
applicable Event of Default under the Lease but Guarantor's payment,
performance, and observance shall not be due and owing until the
occurrence and during the continuance of such Event of Default. Guarantor
further agrees to pay any and all reasonable and documented out-of-pocket
costs and expenses (including reasonable and documented fees and
disbursements of legal counsel and other professional advisors) that may
be paid or incurred by any Beneficiary in collecting any Obligations,
exercising its rights and remedies hereunder or in preserving or enforcing
any rights under this Guaranty or under the Obligations.
3. Absolute and Continuing Guaranty. The obligations of Guarantor under this
Guaranty shall be absolute, continuing, unconditional and irrevocable and
this Guaranty shall remain in full force and effect until such time as all
of the Obligations are finally paid, performed and observed in full. The
obligations of Guarantor set forth herein constitute the full recourse
obligations of Guarantor enforceable against it to the full extent of all
its assets and properties, notwithstanding any provision in the Lease or
any other Operative Documents limiting the liability of any Beneficiary or
any other Person.
4. Strict Observance. To the maximum extent permitted by applicable Law, the
obligations of Guarantor under this Guaranty shall not in any manner be
affected by: (a) any termination, amendment or modification of, or
deletion from, or addition or supplement to, or other change in the Lease
or any other any of the Operative Documents (including an increase in the
Rent or an extension of the Term), or any other instrument or agreement
applicable to any of the parties to such agreements, or to the Aircraft or
any part thereof, or any assignment, mortgage or transfer of any thereof,
or of any interest therein, or any leasing of the Aircraft, or any
furnishing or acceptance of any security, or any release of any security,
for the obligations of Lessee under the Operative Documents, or the
failure of any security or the failure of any Person to perfect any
interest in any collateral security; (b) any failure, omission or delay on
the part of Lessee or any other Person to conform or comply with any term
of any Operative Document; (c) any exercise or nonexercise of any right,
remedy, power or privilege under or in respect of any Operative Document;
(d) any extension of time for payment of or settlement, compromise or
subordination of, Rent or any other Obligation; (e) the exchange,
surrender, substitution or modification of any collateral security or
guarantee for any-of the Obligations; (f) any failure, omission or delay
on the part of any of Beneficiaries to enforce, assert or exercise any
right, power or remedy conferred on it in this Guaranty, or any such
failure, omission or delay on the part of any of Beneficiaries in
connection with any Operative Document, or any other action on the part of
Beneficiaries; (g) any voluntary or involuntary bankruptcy, insolvency,
reorganization, arrangement, readjustment, assignment for the benefit of
creditors, composition, receivership, conservatorship, custodianship,
liquidation, marshalling of assets and liabilities or similar proceedings
with respect to Lessee, Guarantor, any other Person, or any of their
respective properties or creditors, or any action taken by any trustee or
receiver or by any
10-2
court in any such proceeding; (h) any invalidity, illegality or
unenforceability, in whole or in part, of any of the Operative Documents;
(i) any defect in the title, compliance with specifications, condition,
design, operation or fitness for use of, or any damage to or loss or
destruction of, the Aircraft, or any interruption or cessation in the use
of the Aircraft or any portion thereof by Lessee or any other Person for
any reason whatsoever (including any governmental prohibition or
restriction, condemnation, requisition, seizure or any other act on the
part of any governmental or military authority, or any act of God or of
the public enemy) regardless of the duration thereof (even though such
duration would otherwise constitute a frustration of contract or an Event
of Loss), whether or not resulting from accident and whether or not
without fault on the part of Lessee or any other Person; (j) any permitted
or non-permitted assignment of the Lease by Lessee or any merger or
consolidation of Lessee or Guarantor or any Affiliate into or with any
other corporation, or any sale, lease or transfer of any of the assets of
Lessee or Guarantor or any Affiliate to any other Person; (k) any change
in the ownership of any shares of capital stock of Lessee or any Lessee
Affiliate, or any change in the corporate relationship between Lessee or
any Lessee Affiliate and Guarantor, or any termination of such
relationship; (l) any release or discharge, by operation of law, of
Guarantor from the performance or observance of any obligation, covenant
or agreement contained in this Guaranty, or any release, discharge or
cancellation of the Obligations, other than payment or performance in full
of the Obligations; (m) the imposition or operation of any currency
exchange controls in any country; (n) any failure of any Person to
mitigate its damages; (o) the effect of any foreign or domestic laws,
rules, regulations or actions of a court or governmental body or entity;
or (p) any other condition, event or circumstance which might otherwise
constitute a legal or equitable discharge, release or defense of a surety
or guarantor or otherwise, or which might otherwise limit recourse against
Guarantor, it being agreed that the obligations of Guarantor hereunder
shall not be discharged except by payment and performance in full as
herein provided. No failure to make demand or delay in making demand on
Guarantor for satisfaction of the obligations of Guarantor hereunder shall
prejudice the right of Beneficiaries to enforce the obligations of
Guarantor hereunder.
5. Waivers of Notice, Etc. To the maximum extent permitted by applicable Law,
Guarantor hereby waives diligence, presentment, demand, protest or notice
of any kind whatsoever (including (a) notice of acceptance of this
Guaranty, notice of nonpayment or nonperformance of any of the
Obligations, and (b) all notices required by statute, rule of law or
otherwise now or hereafter in effect to preserve any rights against
Guarantor), with respect to this Guaranty or the Obligations, including:
(w) any right to the enforcement, assertion or exercise against Lessee or
any other Person or the Aircraft or any other collateral security for the
Obligations of any right, power, privilege or remedy conferred in any
Agreement or otherwise, (x) any requirement to exhaust any remedies, (y)
any requirement of promptness in commencing suit against any Person who
may be or become liable thereon, and (z) any other circumstance whatsoever
which might otherwise constitute a legal or equitable discharge, release
or defense of Guarantor or any surety or which might otherwise limit
recourse against Guarantor. Each of the Obligations shall be deemed
conclusively to have been created, contracted or incurred in reliance upon
this Guaranty.
10-3
6. Extensions, Etc. Guarantor consents and agrees that Beneficiaries, or any
of them, may in their sole discretion, to the extent otherwise permitted
by the Operative Documents and to the maximum extent permitted by
applicable Law, at any time or from time to time, (i) extend or shorten
the Term of the Lease and/or renew, extend, or increase or decrease or
otherwise change or modify the amount, time, manner, place or terms of
payment, performance or observance of any or all of the Obligations, (ii)
apply payments by Lessee or Guarantor to any Obligations, (iii) exchange,
release or surrender any security or property which may at any time be
held by it, (iv) release any surety or guarantor for or of any of the
Obligations, (v) settle or compromise any or all of the Obligations with
Lessee or any other Person liable thereon or (vi) subordinate the payment,
performance or observance of all or any part thereof to the payment,
performance or observance of any other debts or obligations which may be
due or owing to them or any other Person, all in such manner and upon such
terms as Beneficiaries, or any of them, may deem proper, without further
assent from Guarantor, who agrees to remain bound under this Guaranty
notwithstanding any such extension, change, modification, amendment,
release, surrender, settlement, compromise or subordination.
7. No Waiver. No failure on the part of any of Beneficiaries to exercise, and
no delay in exercising, any right or power under this Guaranty shall
operate as a waiver thereof, nor shall any single or partial exercise of
any such right or power preclude any other or further exercise thereof or
the exercise of any other right or power, or of any remedy, of any
Beneficiary under this Guaranty, the Operative Documents or applicable
law.
8. Guaranty of Performance. This Guaranty is a guaranty of payment and
performance and not of collection and Guarantor waives any right to
require that any action against Lessee or any Lessee Affiliate be taken or
exhausted prior to action being taken against Guarantor.
9. Representations and Warranties. Guarantor represents and warrants to and
for the benefit of each Beneficiary that:
(a) Due Organization. Guarantor is a company duly organized under the
Laws of _______ and has the full power and authority to carry on its
business as presently conducted and to enter into and perform its
obligations under this Guaranty and each of the other Operative
Documents to which it is or will be a party.
(b) Due Authorization. This Guaranty and each of the other Operative
Documents to which Guarantor is or will be a party have been duly
authorized by all necessary corporate action on the part of
Guarantor, and do not require any stockholder approval or approval
or consent of any trustee or holders of any indebtedness or other
obligations of Guarantor, except such, if any, as have been duly
obtained, and neither the execution and delivery hereof or thereof
nor the consummation of the transactions contemplated hereby or
thereby will contravene any United States federal or state Law
applicable to Guarantor or result in any breach of, or constitute
any default under, or result in the creation or imposition of any
Security Interest upon any property of Guarantor under, any
indenture, mortgage, deed of trust, conditional sales contract, bank
loan or credit agreement, corporate charter,
10-4
by-law, or other agreement or instrument to which Guarantor is a
party or by which Guarantor or its properties' or assets may be
bound or affected.
(c) Enforceability. This Guaranty and each of the other Operative
Documents to which Guarantor is or will be a party have been or on
the Delivery Date will have been duly entered into and delivered by
Guarantor and constitute or on the Delivery Date will constitute the
valid, legal, and binding obligations of Guarantor, except as
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting
creditors' or lessors' rights or remedies generally and by general
principles of equity (regardless of whether such enforceability is
considered in a proceeding in equity or at law).
(d) Consents. The execution and delivery by Guarantor of this Guaranty
and each of the Operative Documents to which it is or will be a
party, and each of the transactions by Guarantor contemplated hereby
and thereby, have received, and Guarantor has complied with every
necessary consent, approval, order, or authorization of, or
registration with, or the giving of prior notice to, any United
States federal or state Government Entity or other Government Entity
having jurisdiction with respect to the execution and delivery of
this Guaranty or any other Operative Document to which it is a party
or the validity and enforceability hereof or thereof or the
satisfaction of all monetary or other obligations hereunder or
thereunder.
(e) No Litigation. There are no suits, arbitrations or legal proceedings
(including any administrative proceeding) pending or threatened
before any Government Entity against Guarantor or with respect to
any property of Guarantor which, if adversely determined, would have
a material adverse effect upon its ability to perform its
obligations hereunder and each of the other Operative Documents to
which it is or will be a party.
(f) Investment Company. Guarantor is not an "investment company" as
defined in the Investment Company Act of 1940, as amended.
(g) Submission to Jurisdiction. Guarantor has validly submitted to the
jurisdiction of the courts of the County of New York, State of New
York and the federal courts for the Southern District of New York.
(h) No Broker. Except for one or more financial advisors to Guarantor,
the fees for which the Beneficiaries shall have no liability,
Guarantor has not retained or employed any broker, finder or
financial advisor to act on its behalf in connection with the
transactions contemplated hereby and it has not authorized any
broker, finder or financial advisor retained or employed by any
other Person to so act.
10. Certain Covenants. Guarantor covenants and agrees with each Beneficiary as
follows:
(a) Mergers, Consolidations and Sales. Guarantor shall not liquidate or
dissolve; and Guarantor shall not consolidate with or merge with or
into any other Person or
10-5
convey, transfer, lease or otherwise dispose of all or substantially
all of its property or other assets (in one or a series of
transactions) to any Person, unless Guarantor provides Lessor with
not less than thirty (30) days prior written notice of such
transaction describing such transaction in reasonable detail and
providing Lessor with evidence reasonably satisfactory to Lessor
that such transaction will comply with the following requirements of
this Section 10 and unless:
(i) the Person formed by such consolidation or with or into which
Guarantor is merged or the Person that acquired all or
substantially all of the property or other assets of Guarantor
shall (A) be a corporation incorporated under the Laws of the
United States or a state thereof, (B) immediately after giving
effect to such transaction, shall be Guarantor or shall have
acquired or succeeded to all or substantially all of the
property and other assets of Guarantor (if such assets are
being transferred) as an entirety, and shall have a tangible
net worth (as determined in accordance with GAAP) of not less
than Guarantor's tangible net worth (as determined in
accordance with GAAP) immediately prior to such transaction,
(C) execute and deliver to Lessor (y) an agreement in form and
substance reasonably satisfactory to Lessor containing an
effective confirmation of this Guaranty by Guarantor or
assumption by such successor corporation or transferee of the
due and punctual performance and observance of each covenant
and condition to be performed or observed by Guarantor under
this Guaranty, and (z) such other documents as Lessor may
reasonably request in connection with such consolidation,
merger or transfer, and (D) shall have the requisite power and
authority and legal right to enter into and carry out the
transactions contemplated hereby;
(ii) immediately after giving effect to such transaction, no
Default shall have occurred and be continuing or shall occur
as a result thereof; and
(iii) Guarantor shall have delivered to each of Lessor (A) a
certificate signed by an officer of Guarantor stating that (1)
such consolidation, merger or transfer and the assumption
agreement mentioned in subparagraph (i) of this Section 10(a)
comply with this Section 10(a) and (2) all conditions
precedent herein provided for relating to such transaction
have been complied with and (B) an opinion of Guarantor's or
the transferee's, as the case may be, counsel (which may be
internal counsel) to the effect that the agreement referred to
in such subparagraph (i) is the legal, valid and binding
confirmation of this Guaranty by Guarantor or obligation of
the successor corporation or transferee enforceable against
such successor corporation or transferee, as the case may be,
in accordance with its terms and otherwise in form and
substance reasonably acceptable to Lessor.
(b) Guarantor's Financial Statements. Guarantor agrees that it will
furnish to Lessor, to the extent not otherwise readily available to
Lessor via internet access to the databases of the Securities
Exchange Commission:
10-6
(i) within forty-five (45) days after the last day of each of its
fiscal periods (other than the end of its fiscal year), a copy
of the unaudited consolidated management accounts for
Guarantor and its consolidated subsidiaries for such period,
certified by an authorized officer of Guarantor to the effect
that such accounts present fairly the consolidated financial
condition of Guarantor and its consolidated subsidiaries as of
such date in accordance with GAAP consistently applied except
as noted and subject to year-end adjustments; and
(ii) within ninety (90) days after the last day of each of its
fiscal years, a copy of the audited financial statements for
Guarantor and its consolidated subsidiaries, together with a
copy of the auditor's unqualified certification in respect
thereof.
11. Bankruptcy, Etc. Guarantor agrees that if at any time all or any part of
any payment or performance theretofore applied by any Beneficiary to any
of the Obligations is or must be rescinded or returned by any Beneficiary
for any reason whatsoever (including the insolvency, bankruptcy or
reorganization of Lessee), such Obligations shall, for the purposes of
this Guaranty, to the extent that such payment or performance is or must
be rescinded or returned, be deemed to have continued in existence,
notwithstanding such application by Beneficiaries, and this Guaranty shall
continue to be effective or be reinstated, as the case may be, as to such
Obligations, all as though such application by a Beneficiary had not been
made. If an Event of Default shall at any time have occurred and be
continuing, or the exercise of any remedy pursuant to the Lease, shall at
such time be prevented by reason of the pendency against Lessee or any
other Person of a case or proceeding under a bankruptcy, insolvency or
similar law, or if the Lease or any other Operative Document shall be
terminated as a result of a rejection or disaffirmance in a bankruptcy,
insolvency or similar proceeding involving Lessee, Guarantor or any
Affiliate of either Lessee or Guarantor, Guarantor agrees that, for
purposes of this Guaranty and its obligations hereunder, the Lease or such
other Operative Documents shall be deemed to be in default with the same
effect as if the Lease or such other Operative Documents had been
enforceable in accordance with the terms thereof, and Guarantor shall
forthwith pay all amounts, or any of them, to be paid thereunder, any
interest thereon and any other amounts guaranteed hereunder or provided
herein. In the circumstance described in the preceding sentence, any
election of remedies and any determination of any such amount may be made
solely for purposes of this Guaranty and any required notice or demand
upon Lessee is hereby waived by the Guarantor and may, at the option of a
Beneficiary, be given or made upon the Guarantor. Guarantor agrees that it
shall be liable for the full amount of the Obligations guaranteed hereby,
irrespective of and without regard to, any modification, limitation or
discharge of liability, rejection or disaffirmance that may result from or
in connection with any bankruptcy, insolvency or similar proceeding
involving Lessee, Guarantor, any Affiliate, or any other Person.
12. Jurisdiction. Guarantor hereby irrevocably and unconditionally submits to
the jurisdiction of the United States District Court for the Southern
District of New York and the courts of the State of New York located in
New York County with respect to any
10-7
disputes arising out of or in connection with this Guaranty or any other
Operative Document to which it is a party. Guarantor hereby designates,
appoints and empowers C.T. Corporation at 0000 Xxxxxx Xxxxxx, 00xx Xxxxx,
Xxx Xxxx, Xxx Xxxx 00000, or such other Person as may from time to time be
designated by Guarantor, in writing to Lessor to receive for it and on its
behalf service of process issued out of the courts referred to above in
any legal action or proceedings arising out of or in connection with this
Guaranty or other Operative Document to which it is a party. Guarantor
further agrees that failure by its process agent to notify it of the
process shall not invalidate the proceedings concerned and consents to the
service of process relating to any such proceedings provided that such
service of process complies with applicable Law. The submission to such
jurisdiction shall not (and shall not be construed so as to) limit the
rights of any Beneficiary to take proceedings against Guarantor in any
other court of competent jurisdiction, nor shall the taking of proceedings
in any one or more jurisdictions, preclude the taking of proceedings in
any other jurisdiction, whether concurrently or not. Guarantor agrees that
in any legal action or proceedings against it or its assets in connection
with this Guaranty, no immunity from legal action or proceedings (which
shall include, suit, attachment prior to judgment, other attachment, the
obtaining of judgment, execution or other enforcement) shall be claimed by
or on behalf of it or with respect to its assets, irrevocably waives any
such right of immunity which it or its assets now have or may hereafter
acquire or which may be attributed to it or its assets and consents
generally in respect of any such legal action or proceedings to the giving
of any relief or the issue of any process in connection with such action
or proceedings including the making, enforcement or execution against any
property whatsoever (irrespective of its use or intended use) of any order
or judgment which may be made or given in such action or proceedings.
13. Judgments. A judgment against Guarantor, obtained in any suit in the
courts of the State of New York in New York County or in the United States
District Court for the Southern District of New York shall be conclusive,
and, to the extent permitted by applicable law, may be enforced in other
jurisdictions by suit on the judgment, a certified or true copy of which
shall be conclusive evidence of the fact and of the amount of any
indebtedness or liability of Guarantor therein described; provided that
the plaintiff at its option may bring suit, or institute other judicial
proceedings against, the defendant or any of its assets in the courts of
any country or place where the defendant or such assets may be found.
Nothing herein shall be construed as a waiver of Guarantor's right to
appeal any such judgment.
14. Assignment. Beneficiaries may at any time grant a Security Interest in or
sell, assign, transfer, delegate or otherwise dispose of all or any part
of their respective rights, titles and interests in and under this
Guaranty and, in such event, this Guaranty shall inure to the benefit of,
and be enforceable by, the applicable successors and assigns of
Beneficiaries. Guarantor shall not permit to exist any Security Interest
in respect of, or assign, delegate or otherwise transfer (voluntarily,
involuntarily, by operation of law or otherwise) any of its rights or
obligations hereunder, and any such action shall be null and void.
10-8
15. Guarantor's Obligations; Setoff.
(a) Guarantor. Guarantor's obligation to make all payments due hereunder
and to perform its other obligations hereunder shall be absolute and
unconditional and shall in no event be subject to any right of
setoff, recoupment, deduction or counterclaim or any other defense
which Guarantor or any other Person may now or hereafter have
against any Beneficiary or any other Person, which Guarantor hereby
waives.
(b) Lessor. Lessor may set off any Obligation of Guarantor hereunder
against any obligation owed by Lessor or any of its Affiliates to
Lessee or Guarantor or any of their Affiliates.
16. Limitations on Subrogation. (a) Guarantor shall become entitled to
subrogation rights by reason of performance of any of its obligations
hereunder, provided, that such rights are and shall be subject and
subordinate to the rights of the Beneficiaries against Lessee under the
Lease in the event of any insolvency, bankruptcy, liquidation,
reorganization or other similar proceedings related to Lessee, or in the
event of any proceedings for voluntary liquidation, dissolution or other
winding up of Lessee, whether or not involving insolvency or bankruptcy
proceedings, such that the Obligations shall be finally paid and performed
in full before any payment in respect of a subrogation claim by Guarantor
shall be made by or on behalf of Lessee and (b) notwithstanding the
foregoing provisions, or any other provision of this Guaranty or the
Lease, if an Event of Default is in existence, Guarantor hereby
irrevocably waives and relinquishes any and all rights of subrogation,
contribution, reimbursement or other payment from Lessee or Lessee's
estate, whether arising by contract or operation of law (including any
such right arising under the United States Bankruptcy Code) or otherwise
arising out of, or on account of, any sums which have been claimed or are
thereafter claimable against Guarantor under this Guaranty, which waiver
shall be in effect unless and until all of the Obligations shall have been
finally paid and performed in full. The waiver and relinquishment of
rights provided for in the immediately preceding sentence shall be
irrevocable and unconditional regardless of whether any such right is
reduced to judgment liquidated, unliquidated, fixed, contingent, matured,
unmatured, disputed, undisputed, secured, or unsecured. The provisions of
this paragraph are made for the express benefit of Lessee as well as each
Beneficiary and may be enforced independently by Lessee or any such
Beneficiary, in each case, after the date of such Event of Default.
17. GOVERNING LAW. THIS GUARANTY HAS BEEN EXECUTED AND DELIVERED IN THE STATE
OF NEW YORK AND SHALL IN ALL RESPECTS BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE INTERNAL SUBSTANTIVE LAWS OF THE STATE OF NEW YORK,
INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE.
18. Severability of Provisions. Any provision of this Guaranty that is
prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining portions
10-9
hereof, and any such prohibition or unenforceability in any jurisdiction
shall not invalidate or render unenforceable such provision in any other
jurisdiction.
19. Amendments. This Guaranty and any provision hereof may be terminated,
waived, amended, modified or supplemented only by an agreement or
instrument in writing, specifying the provision (or, if applicable, the
whole of this Guaranty) intended to be terminated, waived, amended,
modified or supplemented, and executed by Guarantor and Lessor.
20. Government Authorizations. Guarantor will obtain from time to time all
permits, licenses, approvals and authorizations of, and will file all
registrations and declarations with, all governmental authorities, bureaus
and agencies and will pay all stamp duties required in connection with the
execution, delivery, performance, validity or enforceability of this
Guaranty (including, payments hereunder, in the lawful currency of the
United States of America, of the Obligations) and will take all actions
necessary to maintain each such permit, license approval authorization,
registration or declaration in full force and effect.
21. Withholding Taxes.
(a) Any and all amounts required to be paid by Guarantor hereunder shall
be paid in the lawful currency of the United States of America
strictly in accordance with the terms and provisions of the
Operative Documents, without set-off or counterclaim and without
deduction or adjustment for and free and clear of any and all Taxes,
provided, however, that Guarantor will not be required to pay and
discharge (and, if required by law, shall withhold) any Taxes that
it is not required to indemnify the recipient against pursuant to
subsection (b) (as limited by subsection (c)) and (d). If any Taxes
shall be required to be deducted or withheld from any amounts
payable to any Beneficiary, Guarantor must deduct the minimum amount
necessary to comply with the Law and if required pursuant to
Subsection (b) (as limited by subsection (c)) below, pay Beneficiary
an extra amount so that Beneficiary receives a net amount on the
relevant payment date that is equal to the amount it would have
received if the reduction had not been made. The amount of any such
payment to Beneficiary must take into account the tax treatment of
that payment to Beneficiary applying the principles of Section 5.10
of the Common Terms Agreement such that Beneficiary shall be in no
worse position than it would have been if the deduction had not
applied in the first place.
(b) Guarantor further agrees that it will indemnify each Beneficiary
against, and reimburse each of them upon demand for, Taxes levied or
imposed against or upon or payable by such Beneficiary, Lessee or
Guarantor and arising from the transactions pursuant to the Lease,
including all Taxes relating or attributable to Lessee, the Lease or
the Aircraft in connection with the importation, exportation,
registration, ownership (but only to the extent relating to or
attributable to or arising as a result of the possession, operation,
use or maintenance of the Aircraft by Lessee), leasing, sub-leasing,
purchase, delivery, possession, use, operation, repair, maintenance,
overhaul, transportation, landing, storage, presence or
10-10
redelivery of the Aircraft or any part thereof or any rent,
receipts, insurance proceeds, income, indemnification payment or
other amounts arising therefrom, or the making of any Equipment
Change or the permanent replacement of any Engine. Guarantor further
agrees that it will indemnify each Beneficiary against, and
reimburse any of them upon demand for, any Taxes and any loss,
liability, claim or expense (including interest, penalties and legal
fees) that any of them may incur at any time arising from or in
connection with any failure of Guarantor to make any payments of
Taxes when due. All Taxes indemnified pursuant to this subsection
(b) shall be paid by Guarantor directly to the appropriate taxing
authority (to the extent permitted by applicable Law) at or before
the time prescribed by applicable Law. After any payment by
Guarantor of any Tax directly to a taxing authority, Guarantor shall
furnish to the relevant Beneficiary, on request, a certified copy of
a receipt for Guarantor's payment of such Tax or such other evidence
of payment of such Tax as is reasonably obtainable by Guarantor and
reasonably acceptable to Beneficiary. Any amount payable by
Guarantor to a Beneficiary pursuant to this subsection shall be paid
within ten Business Days after receipt of a written demand therefore
from the relevant Beneficiary accompanied by a written statement
describing in reasonable detail the basis for such indemnity and the
computation of the amount so payable, provided that if an amount of
any indemnified Tax is being contested in accordance with Section
5.9 of the Common Terms Agreement included in the Lease and
Guarantor shall have duly performed (and shall continue to perform)
all its obligations under such Section 5.9 with respect to such
contest, then payment of the indemnity with respect to such Tax
under this subsection shall, at Guarantor's election, be deferred
until the date the contest has been completed.
(c) Guarantor is not required to indemnify any Beneficiary, for any
Lessor Taxes.
(d) Notwithstanding Subsection (c) above, the Guarantor will be required
to indemnify any Beneficiary for any Tax imposed by any government
or taxing authority of or in any jurisdiction if and to the extent
that such tax would not have been imposed but for the sites of
organization, any place of business or any activity of Guarantor in
the jurisdiction imposing the tax.
(e) The provisions of Section 5.9 of the Common Terms Agreement included
in the Lease shall apply to Guarantor's indemnities in this Section
21, mutatis mutandis.
(f) If a Beneficiary, in good faith, determines that it has realized a
tax benefit (by way of deduction, credit or otherwise) as a result
of any payment or Tax for which Guarantor is liable under Section
21(a), 21(b) or 21(c), such Beneficiary shall pay to Guarantor as
soon as practicable after the tax benefit has been realized (but not
before Guarantor has made all payments and indemnities to such
Beneficiary required under Section 21(a), 21(b) or 21(c), as
applicable), an amount which will ensure that (after taking account
of the payment itself) Beneficiary is in no better and no worse
position than it would have been if the deduction had not applied.
Nothing in this subsection (f) shall (i) interfere with the right of
Beneficiary to arrange its tax affairs in whatever manner it thinks
fit; or (ii) oblige Beneficiary to
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disclose any information relating to its Tax affairs or any Tax
computations (other than computations made with respect to any
amounts claimed by Beneficiary from Guarantor pursuant to Section
21(a), 21(b) or 21(c)); provided, however, that if any of the
information related to the computations is contained in tax returns
or other documents involving matters unrelated to the Lease or is
otherwise confidential information, then such information shall be
confirmed by Beneficiary's independent auditors.
22. Currency of Payment. Guarantor acknowledges and agrees that the lawful
currency of the United States of America shall be the currency of account
in any and all events and guarantees that the obligations will be paid in
the lawful currency of the United States of America in accordance with the
terms and provisions of the Operative Documents, regardless of any law,
regulation or decree now or hereafter in effect that might in any manner
affect the Obligations or the rights of any Beneficiary with respect
thereto as against Lessee, or cause or permit to be invoked any alteration
in the time, amount or manner of payment by Lessee of any of or all the
Obligations. The obligation of Guarantor hereunder to make payment in the
lawful currency of the United States of America shall not be discharged or
satisfied by any tender or recovery pursuant to any judgment or otherwise
expressed in or converted into any other currency except to the extent
that such tender or recovery results in the effective receipt by any
Beneficiary of the full amount in the lawful currency of the United States
of America payable to it under this Guaranty, and Guarantor shall
indemnify each Beneficiary for any difference between such full amount and
the amount effectively received by it pursuant to any such tender or
recovery, and each Beneficiary shall have an additional claim against
Guarantor for the additional amount necessary to yield the amount of the
lawful currency of the United States of America due and owing to such
Beneficiary, which difference Guarantor shall promptly pay to such
Beneficiary. In the event that any conversion as aforesaid results in a
Beneficiary receiving an amount in Dollars in excess of the amount unpaid
under this Guaranty, such Beneficiary shall return to Guarantor the amount
of such excess taking into account any tax on the currency exchange not
identified as provided herein.
23. Headings. Paragraph headings used herein are for convenience only and
shall not be used or construed to define, interpret, expand or limit any
provision hereof.
24. Entire Agreement. This Guaranty constitutes, on and as of the date hereof,
the entire agreement of Guarantor and Beneficiaries with respect to the
subject matter hereof, and supersedes all prior or contemporaneous
understandings or agreements, whether written or oral, between Guarantor
and Beneficiaries with respect to the subject matter hereof.
25. Further Assurances. Guarantor shall execute and deliver all such
instruments and take all such actions as a Beneficiary may from time to
time reasonably request in order to effectuate and perfect fully the
purposes of this Guaranty , and any or all of any Beneficiary's rights,
titles, interest, benefits or remedies hereunder, including to effect or
facilitate any action by a Beneficiary referred to in the first sentence
of Section 13 hereof.
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26. Successors and Assigns. This Guaranty shall be binding upon the successors
and assigns of the Guarantor, as and to the extent provided in this
Guaranty.
27. Notices. Every notice, request, demand or other communication under this
Guaranty shall be given and effective as set forth in the Lease.
Guarantor's address for notices is:
[Name of Guarantor]
0000 Xxxx 00xx Xxxxxx
P.O. Box 612787
DFW Int'l Xxxxxxx, Xxxxx 00000
Attn: General Counsel
Fax: [______________]
or to such other address or facsimile number as is notified by Guarantor to
Lessor under this Guaranty.
IN WITNESS WHEREOF, Guarantor has caused this Guaranty to be duly executed
as of the day and year first above written.
[NAME OF GUARANTOR]
By:______________________________
Title:
Accepted as of the
date below written:
_________________________
By:______________________
Title:
Date:
10-13
SCHEDULE 11
[OMITTED]
11-1
SCHEDULE 12
AIRCRAFT PASSENGER CABIN INTERIOR STANDARD
THIS SCHEDULE IS INTENDED LARGELY FOR PASSENGER AIRCRAFT. TO THE EXTENT
THAT ITEMS LISTED HEREIN ARE NOT INSTALLED ON CARGO
AIRCRAFT, THEN THESE ITEMS WILL BE IGNORED BY LESSEE AND LESSOR,
AS APPLICABLE, IN THE DELIVERY AND REDELIVERY OF DEDICATED CARGO
AIRCRAFT
*****
CONFIDENTIAL TREATMENT HAS BEEN REQUESTED BY KITTY HAWK, INC. FOR CERTAIN
PORTIONS OF THIS DOCUMENT. CONFIDENTIAL PORTIONS HAVE BEEN FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION. OMITTED PORTIONS ARE INDICATED IN THIS
AGREEMENT WITH "*****".
12-1
SCHEDULE 13
FORM OF ASSIGNMENT, ASSUMPTION AND RELEASE AGREEMENT
THIS ASSIGNMENT, ASSUMPTION AND RELEASE AGREEMENT (MSN ___) (this
"Agreement"), dated as of ________ is entered into by and between
______________, a company incorporated under the laws of _______ ("Assignor"),
and __________, a ________ _________ ("Assignee").
W I T N E S S E T H:
WHEREAS, Kitty Hawk Aircargo, Inc., a company incorporated under the
Laws of Texas ("Lessee") and Assignor have heretofore entered into that certain
Aircraft Lease Agreement, dated as of ___________, 2004 ("ALA"), which
incorporates by reference therein a Common Terms Agreement dated as of
__________, 2004 between Aviation Financial Services Inc. and Lessee ("CTA"), as
amended and supplemented from time to time (collectively, the "Lease"), as more
particularly described in Annex 1 hereto (terms not otherwise defined herein
shall have the meanings assigned to them in the Lease), which Lease relates to
the Aircraft (as defined in Annex I hereto);
WHEREAS, Assignor and Assignee have entered into an aircraft sale
and purchase agreement dated on or prior to the date hereof ("Purchase
Agreement");
WHEREAS, pursuant to the Purchase Agreement, Assignor's interest in
the Lease is being transferred to Assignee, as contemplated by Section 14.2 of
the CTA;
WHEREAS, in connection with the foregoing, Assignor desires to
assign all of its right, title and interest in, to and under the Lease to
Assignee, Assignee desires to assume certain of Assignor's obligations under the
Lease, and, pursuant to the Lease, Lessee has agreed to release Assignor from
Assignor's obligations under the Lease to the extent agreed to be assumed by
Assignee hereunder, all on the terms and subject to the conditions hereinafter
set forth;
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, Assignor and Assignee hereby agree
as follows:
Article 1. Definitions.
For purposes of this Agreement, the following terms shall have the
respective meanings set forth below.
"Effective Time" has the meaning given to such term in Section 6.4
below.
"Lien" shall mean a Security Interest as defined in the Lease
(without giving effect to the exclusion of Lessor Liens set forth therein).
13-1
"Permitted Lien" shall mean (i) any Lien which is created by or
results from debts or liabilities or actions of Lessor or its Affiliates and
(ii) any Lien (other than a Lessor Lien) which Lessee is permitted under the
Lease to allow to subsist (including rights conferred on Lessee or any third
parties by the Lease) or which is otherwise attributable to or for which Lessee
is responsible under the Lease.
"Prior Party" shall mean a prior lessor (other than Assignor) under
the Lease, if applicable.
Article 2. Assignment and Assumption.
2.1 Assignor for $10 and for other good and valuable consideration,
receipt of which is hereby acknowledged, does hereby assign, transfer, sell and
convey unto Assignee, without recourse or, except as provided below in this
Section 2.1, representation or warranty, all of Assignor's right, title and
interest accruing on or after the Effective Time hereof in, to and under the
Lease, free and clear of Liens other than Permitted Liens, to have and hold the
said Lease unto Assignee, its successors and assigns, to and for its and their
use forever; provided, however, that Assignor retains and does not assign to
Assignee any rights or benefits accrued or arising pursuant to the Lease in
respect of the period prior to the Effective Time hereof, including, Rent paid
in advance prior to the date hereof and which is allocable to the period prior
to the Effective Time, and Assignor retains and does not assign to Assignee
hereby Assignor's (or if applicable, a Prior Party's) rights under Sections 5.6,
5.7, 5.8, 5.9, 5.10, 5.12, 9 (as an additional insured in their capacity as an
Indemnitee for liability purposes only), 10 or 14.3 of the CTA as if Assignor
and such Prior Parties continued to be named as a Tax Indemnitee or Indemnitee,
as the case may be, thereunder in the capacity as "Lessor" (and/or Owner,
Financing Parties' Representative and Financing Party, as the case may be) for
the period prior to the Effective Time and in the capacity as a Prior Party for
the period after the Effective Time (collectively, the "Retained Rights"). In
furtherance of the foregoing, (i) Assignor shall pay to Assignee on the date of
the Effective Time an amount equal to all Rent paid in advance and allocable to
the period on or after the date of the Effective Time in accordance with the
terms and conditions of the Purchase Agreement and (ii) from the Effective Time,
Assignee shall be entitled to all rights, remedies and benefits of Lessor
provided for under the Lease, including, the right to make all inspections and
determinations and give all requests thereunder, the right to receive all
payments and other performance by Lessee thereunder and the right to exercise
all rights and remedies of Lessor with respect to Lessee or the Aircraft
thereunder other than in respect of Retained Rights.
2.2 Assignee hereby assumes all of the duties, liabilities, and
obligations of Lessor under the Lease arising or accruing on or after the
Effective Time, and agrees that it shall be bound by all the terms of, and shall
undertake all of the obligations of Lessor contained in, the Lease, arising on
or after the Effective Time hereof; provided, however, that Assignee does not
assume, and Assignor shall be and shall remain obligated to Lessee for, all
duties, liabilities and obligations of Lessor under the Lease arising or
accruing prior to the Effective Time (the "Retained Obligations"). For avoidance
of doubt, Assignee hereby confirms that, from the Effective Time, it is assuming
all the obligations of Lessor under the Lease (other than the
13-2
Retained Obligations) including, without limitation, the obligations, if any, of
Lessor under Sections 5.11, 7.1 and 7.2 of the CTA.
2.3 Assignee and Assignor hereby covenant and agree to execute and to
deliver to each other and to Lessee from time to time such other documents,
instruments and agreements as any of them reasonably may request in order to
further evidence the assignment, assumption and substitution effected hereby or
otherwise to carry out the purposes and intent of this Agreement. Assignee
agrees that, in all matters relating to any Retained Rights, Assignee shall not
amend the Lease or otherwise act in derogation of any Retained Rights.
2.4 In furtherance of the foregoing, Assignor hereby agrees to [pay to
Assignee an amount equal to the Deposit] [transfer to Assignee the Letter of
Credit] [and pay an amount equal to Lessor's maximum potential Maintenance
Contribution liability under Section 7.2 of the CTA as of the Effective Time].
[Assignor and Assignee shall execute and deliver a receipt for such payments,
which receipt shall be acknowledged by Lessee pursuant to which acknowledgment
Lessee shall agree that, upon Assignee's receipt of such payments, Assignor
shall not have any further obligations under the Lease relating to the Deposit,
Supplemental Rent or Maintenance Contributions or amounts payable in respect
thereof and Assignee's obligations in respect thereof as of the date hereof
shall be limited to the amounts set forth in such receipt.]
Article 3. Release.
3.1 For the avoidance of doubt, pursuant to Section 14.2 of the Lease,
Lessee shall be bound by the foregoing assignment and assumption, including,
Assignor's reservation of rights and benefits provided for above, and Assignor
(and all other Prior Parties) continuing as a "Tax Indemnitee" and an
"Indemnitee", as the case may be, under and for purposes of Sections 5.6, 5.7,
5.8, 5.9, 5.10, 5.12, 9 (as an additional insured in their capacity as an
Indemnitee for liability purposes only), 10 and 14.2 of the CTA as provided
above. Except as provided above with respect to Retained Rights and Retained
Obligations, on and as of the Effective Time, pursuant to Section 14.2 of the
Lease, Lessee shall be deemed to have agreed that Assignor is hereby released
and discharged from each and every obligation, liability (express or implied) or
duty under or pursuant to the Lease (included under Sections 5.11, 7.1 and 7.2
of the CTA) arising or accruing on or after the Effective Time hereof and, for
such purposes, Assignee shall be substituted in lieu of Assignor as the "Lessor"
under the Lease.
Article 4. Assignee's Representations and Warranties. Assignee represents and
warrants to Assignor and Lessee that:
4.1 [Assignee is a "citizen of the United States" within the meaning of
the Federal Aviation Act of 1958, as amended, and as recodifed in Subtitle VII
of Title 49 of the United States Code, and the regulations thereunder (including
with respect to voting trust or other voting rights arrangements).]
4.2 Assignee is a [corporation][limited liability company][national
banking association] organized and validly existing in good standing under the
laws of [_______] and has
13-3
the _______ power to own its assets and to carry on its business as presently
conducted and to enter into and perform this Agreement.
4.3 This Agreement has been duly authorized all necessary corporate action
on the part of Assignee and neither the execution and delivery hereof nor the
consummation of the transactions contemplated hereby nor compliance by Assignee
with any of the terms and provisions hereof does or will contravene any law
applicable to Assignee, conflict with the constitutional documents of Assignee,
or result in any breach of, or constitute any default under, or result in the
creation of any lien, charge or encumbrance upon any property of Assignee under,
any material credit agreement or instruments or other agreement or instruments
to which Assignee is a party or by which Assignee or its properties or assets
are bound.
4.4 Assignee has received every consent, approval or authorization of, and
has given every notice to, each Government Entity having jurisdiction with
respect to the execution, delivery or performance of this Agreement by Assignee.
4.5 This Agreement has been duly executed and delivered by Assignee and
constitutes a legal, valid and binding obligation of Assignee, enforceable
against Assignee in accordance with its terms, except as such enforceability may
be limited by bankruptcy, reorganization, insolvency, moratorium or other
similar laws affecting the enforcement of the rights of creditors generally and
by general principles of equity (regardless of whether such enforceability is
considered in a proceeding in equity or at law).
Article 5. Assignor's Representations and Warranties. Assignor represents and
warrants to Assignee and Lessee that:
5.1 Assignor is a [corporation][limited liability company][national
banking association] organized and validly existing in good standing under the
laws of [_______] and has the ______ power to own its assets and to carry on its
business as presently conducted and to enter into and perform this Agreement.
5.2 This Agreement has been duly authorized pursuant to all necessary
corporate action on the part of Assignor and neither the execution and delivery
hereof nor the consummation of the transactions contemplated hereby nor
compliance by Assignor with any of the terms and provisions hereof does or will
contravene any law applicable to Assignor, conflict with the constitutional
documents of Assignor, or result in any breach of, or constitute any default
under, or result in the creation of any lien, charge or encumbrance upon any
property of Assignor under, any material credit agreement or instruments or
other agreement or instruments to which Assignor is a party or by which Assignor
or its properties or assets are bound.
5.3 Assignor has received every consent, approval or authorization of, and
has given every notice to, each Government Entity having jurisdiction with
respect to the execution, delivery or performance of this Agreement by Assignor.
5.4 This Agreement has been duly executed and delivered by Assignor and
constitutes a legal, valid and binding obligation of Assignor, enforceable
against Assignor in
13-4
accordance with its terms, except as such enforceability may be limited by
bankruptcy, reorganization, insolvency, moratorium or other similar laws
affecting the enforcement of the rights of creditors generally and by general
principles of equity (regardless of whether such enforceability is considered in
a proceeding in equity or at law).
Article 6. Miscellaneous.
6.1 This Agreement shall be binding upon and inure to the benefit of the
parties hereto and their successors and assigns. Assignor and Assignee agree
that Lessee shall be a third party beneficiary of this Agreement.
6.2 This Agreement has been executed and delivered in the State of New
York, and this Agreement, including all matters of construction, validity and
performance, shall in all respects be governed by, and construed in accordance
with, the laws of the State of New York applicable to contracts made in such
State and to be performed entirely within such State.
6.3 This Agreement may be executed by the parties hereto in separate
counterparts, each of which when so executed and delivered shall be an original,
but all such counterparts shall together constitute but one and the same
instrument.
6.4 This Agreement shall become effective at the time of filing of this
Agreement for recordation with the FAA (the "Effective Time"). Assignor and
Assignee agree to notify Lessee of the Effective Time promptly after the
occurrence thereof pursuant to a Notice of Assignment substantially in the form
of Annex 2 hereto[, and to notify the applicable broker and/or insurers of the
substance of Section 2.1 of the Assignment Notice promptly after the Effective
Time].
13-5
IN WITNESS WHEREOF, the parties hereto have each caused this Assignment,
Assumption and Release Agreement to be duly executed and delivered by their
respective officers thereunto duly authorized as of the day and year first above
written.
ASSIGNOR: ________________________________
By: _________________________
Name:
Title:
ASSIGNEE: ________________________________
By: _________________________
Name:
Title:
13-6
ANNEX I
TO ASSIGNMENT AGREEMENT
(MSN ___)
Description of Aircraft and Lease
Aircraft:
Lease:
Instrument Date of Instrument Recording Date and Number
------------------ -------------------------
Aircraft Lease Agreement
Common Terms Agreement
Annex I-1
ANNEX II
TO ASSIGNMENT AGREEMENT
(MSN ___)
Kitty Hawk Aircargo, Inc.
0000 Xxxx 00xx Xxxxxx
XXX Xxxxxxxxxxxxx Xxxxxxx
Xxxxxx, Xxxxx 00000, Xxxxxx Xxxxxx of America
NOTICE OF ASSIGNMENT RE: MSN ____________
Ladies and Gentlemen:
Please find attached hereto a fully executed Assignment, Assumption and Release
Agreement (MSN ___) between the Assignor and Assignee named therein (the
"Assignment Agreement") with respect to the lease of Aircraft bearing
manufacturer's serial number ___________. Terms used herein and not otherwise
defined have the meanings given to them in the Assignment Agreement.
1. Notice. Assignor and Assignee hereby notify Lessee of the assignment,
assumption and release with respect to the Lease provided for in the
attached Assignment Agreement, which assignment, assumption and release
are in full force and effect. The "Effective Time" as defined therein
occurred at ______.
2. Lease Amendments/Supplements. The following amendments and/or supplements
to the Lease are hereby made effective automatically on and for the period
from and after the Effective Time.
2.1 The definitions of the following terms in the CTA or the ALA, as
applicable, are hereby amended and/or supplemented as set forth below:
(a) The term "Indemnitees" in Schedule I to the CTA includes Assignee as
Lessor, _______ as Owner, _______. All Indemnitees prior to the
Effective Time remain as Indemnitees.
(b) The term "Lessor" in the ALA is hereby amended to refer to Assignee.
(c) [The term "Owner" in the ALA is hereby amended to refer to
____________].
(d) The term "Tax Indemnitee" in Schedule I to the CTA includes Assignee
as Lessor, _______ as Owner. All Tax Indemnitees in effect prior to
the Effective Time shall remain Tax Indemnitees.
2.2. Section 5.5 of the CTA is hereby deleted in its entirety and replaced with
the following: "All payments by Lessee to Lessor under the Lease will be
made for value on the due date in Dollars and in immediately available
funds by wire transfer to
______________________, ABA Number ____________, Swift Code ___________,
for the account of ________________________, Account number
________________, or such other account as Lessor designates in writing
from time to time"
Annex II-1
2.3 Section 15.7 of the CTA is hereby amended by deleting Lessor's contact
information appearing therein and replacing it in its entirety with the
following:
Lessor:
Address:
Attn:
Facsimile:
Telephone
3. Lessee's Representation of Warranties. Upon receipt hereof, and in
consideration of Assignor's and Assignee's representations, warranties and
covenants contained in the Assignment Agreement, Lessee shall be deemed to
represent and warrant to Assignor of Assignee that:
3.1 Lessee is a corporation organized and validly existing in good standing
under the laws of Texas and has the corporate power to own its assets and
to carry on its business as presently conducted and to enter into and
perform the Lease.
3.2 As of the Effective Time the representations and warranties set forth in
Section 1.1 of Schedule 2 of the CTA were true and correct.
3.3 Except as notified in writing by Lessee to Assignee within ten (10) days
from the date hereof, the Lease is in full force and effect, and a true,
complete and current description of the Lease is attached hereto as Annex
B (and is accurately described in the Assignment Agreement), which
contains all written amendments, waivers or other modifications thereto as
of the date hereof, and there have been no oral amendments, waivers or
other modifications of any provisions of the Lease, in each case which
continue in effect on or after the Effective Time.
3.4 Except as notified in writing by Lessee to Assignee within ten (10) days
from the date hereof, Lessee has no disputes with Assignor, and, to the
knowledge of Lessee, Lessee has no claims against Assignor, under or in
respect of the Lease.
3.5 Except as notified in writing by Lessee to Assignee within ten (10) days
from the date hereof, no prior notice of assignment of the Lease by
Assignor has been received by Lessee [other than ______].
3.6 Except as notified in writing by Lessee to Assignee within ten (10) days
from the date hereof, neither the Aircraft nor any Engine is subject to a
requisition by any Government Entity, nor to any sublease, interchange or
charter.
3.7 Except as notified in writing by Lessee to Assignee within ten (10) days
from the date hereof, no unrepaired damage with the cost of repair or
replacement in excess of the Damage Notification Threshold, and no Event
of Loss or incipient Event of Loss, has occurred with respect to the
Aircraft or any Engine.
3.8 Except as notified in writing by Lessee to Assignee within ten (10) days
from the date hereof, no Default (including with respect to the payment of
Rent) has occurred and is continuing.
3.9 Lessee has made no prepayments of Rent.
Annex II-2
3.10 Except as notified in writing by Lessee to Assignee within ten (10) days
from the date hereof, as of the date hereof, the Agreed Value, [and] the
monthly Rent[, the Supplemental Rent amounts,][the Deposit][the Letter of
Credit][, and the amount of Lessor's maximum Maintenance Contribution
liability] are as set forth on Annex A attached hereto.
4. Plates. Upon Lessee's acknowledgement hereof, Lessee shall be deemed to
have agreed that Lessee will, at Assignee's expense, procure that
replacement fireproof plates are affixed to the Aircraft in compliance
with Section 8.7(d) of the CTA at the next scheduled maintenance check of
the Aircraft and Assignee agrees that no Default shall occur under the
Lease due to Lessee's failure to install such replacement fireproof plates
prior to such time.
5. Further Assurances. Each of the parties hereto agrees from time to time to
do and perform such other and further acts and to execute and deliver any
and all such instruments as may be required by law or reasonably requested
by any other party hereto to establish, maintain and protect the rights
and remedies of the parties hereto and to carry out and effect the
intended purpose of the Assignment Agreement. In particular, Lessee agrees
that it will use reasonable commercial efforts to obtain within ten (10)
days from the date hereof an acknowledgment from the applicable insurance
broker or insurer that it received the notice referred to in Section 6.4
of the Assignment Agreement.
Annex II-3
Please acknowledge your receipt of this Notice of Assignment and confirmation of
the foregoing terms hereof by executing a counterpart hereof and returning it to
the Assignee.
[Assignor] [Assignee]
By: By:
Name: Name:
Title: Title:
Acknowledged and Confirmed:
Kitty Hawk Aircargo, Inc.
By:
Name:
Title:
Dated: _____________________
Annex II-4
ANNEX A
TO NOTICE OF ASSIGNMENT
(MSN ___)
Agreed Value: $__________
Rent: $__________
[Supplemental Rent: [amount payable by category]]
Deposit: $__________
Letter of Credit: __________
Annex A -1
ANNEX B
TO NOTICE OF ASSIGNMENT
(MSN ___)
Copy of complete Lease
Annex B-1
SCHEDULE 14
FORM OF LEASE SUPPLEMENT XX. 0
XXXXX XXXXXXXXXX XX. 0, dated as of ___________, 200_, between
____________________________________________, [a corporation organized under the
laws of ______________] [, not in its individual capacity, but solely as owner
trustee] ("Lessor"), and Kitty Hawk Aircargo, Inc., a corporation organized
under the laws of Texas ("Lessee").
Lessor and Lessee have previously entered into that certain Aircraft Lease
Agreement dated as of _____________________, including the Common Terms
Agreement as defined therein (collectively, herein referred to as the
"Agreement" and the defined terms therein being hereinafter used with the same
meaning). The Agreement provides for the execution and delivery from time to
time of a Lease Supplement substantially in the form hereof for the purpose of
leasing the aircraft described below under the Agreement as and when delivered
by Lessor to Lessee in accordance with the terms thereof.
The Agreement and this Lease Supplement relate to the Aircraft, Engines and
Parts as more precisely described below and in the Certificate of Technical
Acceptance. A counterpart of the Agreement is attached hereto and shall be filed
together with this Lease Supplement with the FAA.
In consideration of the premises and other good and sufficient consideration,
Lessor and Lessee hereby agree as follows:
1. Lessor hereby delivers and leases to Lessee under and pursuant to the
Agreement and Lessee hereby accepts, acknowledges receipt of possession and
leases from Lessor under and pursuant to the Agreement, that certain
[manufacturer, model, msn, registry number] aircraft, and the [manufacturer,
model, esn] Engines (each of which Engines has 750 or more rated takeoff
horsepower or the equivalent of such horsepower) described in Schedule 1 hereto,
together with the Aircraft Documents and Records described in the Agreement (the
"Delivered Aircraft").
2. The Delivery Date of the Delivered Aircraft is the date of this Lease
Supplement set forth in the opening paragraph hereof.
3. The Term for the Delivered Aircraft shall commence on the Delivery Date and
shall end on the Expiry Date, with respect to which the Scheduled Expiry Date
shall be [insert date].
4. The amount of Rent for the Delivered Aircraft is set forth in Schedule B to
the Agreement.
5. Lessee hereby confirms to Lessor that (i) the Delivered Aircraft and each
delivered Engine have been duly marked in accordance with the terms of Section
8.6(a) of the Agreement, (ii) the Aircraft is insured as required by the
Agreement, (iii) the representations and warranties of Lessee referred to in
Section 2.1 of the Agreement are hereby repeated with effect as of the date
first above written, (iv) having inspected the Delivered Aircraft, Lessee
acknowledges that the Delivered Aircraft satisfies all conditions required for
Lessee's acceptance of delivery as set
14-1
forth in the Agreement, and (v) the execution and delivery of this Lease
Supplement signifies absolute and irrevocable acceptance by Lessee of the
Delivered Aircraft for all purposes hereof and of the Agreement.
6. This Lease Supplement shall be governed by and construed in accordance with
the Laws of the State of New York. This Lease Supplement is hereby deemed
executed and delivered pursuant to the Agreement in the State of New York.
7. This Lease Supplement may be executed in any number of counterparts; each of
such counterparts, shall for all purposes be deemed to be an original; and all
such counterparts shall together constitute but one and the same Lease
Supplement; provided, that to the extent, if any, that this Lease Supplement
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 Supplement may be created through the transfer or possession of any
counterpart other than the "Original", which shall be identified by Lessor's
receipt therefore indicated on the signature page thereof.
8. This Lease Supplement supplements and forms a part of the Agreement. The
Agreement, as supplemented hereby, is hereby ratified, approved and confirmed in
all respects.
IN WITNESS WHEREOF, Lessor and Lessee have caused this Lease Supplement No. 1 to
be duly executed as of the day and year first above written.
LESSOR, LESSEE,
[Lessor] . KITTY HAWK AIRCARGO, INC.
By:_____________________________ By:_____________________________
Name:___________________________ Name:___________________________
Title:__________________________ Title:__________________________
14-2
SCHEDULE 15
FORM OF CERTIFICATE LEASE TERMINATION
The undersigned hereby certify that the Aircraft Lease Agreement dated as of
_________, ____ between the undersigned Lessor and undersigned Lessee, and as
further described in the Appendix attached hereto, has terminated (except as
described in Section 15.13 thereof) and the aircraft and aircraft engines
covered thereby are no longer subject to the terms thereof. This certificate may
be executed in one or more counterparts each of which when taken together shall
constitute one and the same instrument.
DATED this __________ day of ____________________, __________
LESSOR LESSEE
[LESSOR] KITTY HAWK AIRCARGO, INC.
By:________________________________ By:_______________________________
Title:_____________________________ Title:____________________________
15 - 1
SCHEDULE 16
FORM OF LETTER OF CREDIT
*****
CONFIDENTIAL TREATMENT HAS BEEN REQUESTED BY KITTY HAWK, INC. FOR CERTAIN
PORTIONS OF THIS DOCUMENT. TWO (2) PAGES OF SCHEDULE 16 HAVE BEEN OMITTED
PURSUANT TO THE CONFIDENTIAL TREATMENT REQUEST. CONFIDENTIAL PORTIONS HAVE BEEN
FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION. OMITTED PORTIONS
ARE INDICATED IN THIS AGREEMENT WITH "*****".
18-1
