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| CONFIDENTIAL: ANNEXES B, C AND D AND SCHEDULES 1, 2, 3 AND 4 |
| OF THIS LEASE AGREEMENT ARE SUBJECT TO RESTRICTIONS ON |
| DISSEMINATION SET FORTH IN SECTION 8 OF THE |
| PARTICIPATION AGREEMENT (AS DEFINED HEREIN) |
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LEASE AGREEMENT ____
Dated as of April 21, 1998
Between
FIRST SECURITY BANK,
NATIONAL ASSOCIATION,
Not in its Individual Capacity,
except as expressly provided herein,
but solely as Owner Trustee,
Lessor
and
CONTINENTAL AIRLINES, INC.,
Lessee
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One [XxXxxxxxx Xxxxxxx Model DC-9-82][Boeing Model 737-3T0]
Aircraft Bearing
United States Registration No. N _____
and Bearing Manufacturer's Serial No. _____
with two ____ Model ________ Engines
Bearing Engine Manufacturer's Serial Nos. ______ and ______
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The right, title and interest of Lessor in and to, among other things, this
Lease Agreement has been assigned to and is subject to a security interest in
favor of Wilmington Trust Company, a Delaware banking corporation, as Mortgagee,
under the Trust Indenture and Mortgage ____, dated as of April 21, 1998 for the
benefit of the holders of the Equipment Notes referred to in such Trust
Indenture, all to the extent provided in such Trust Indenture. This Lease
Agreement has been executed in multiple counterparts; to the extent, if any,
that this Lease Agreement constitutes chattel paper (as defined in the Uniform
Commercial Code as in effect in any applicable jurisdiction), no security
interest in Lessor's right, title and interest in and to this Lease Agreement
may be perfected through the delivery or possession of any counterpart of this
Lease Agreement other than the counterpart of this Lease Agreement that contains
the original receipt executed by Wilmington Trust Company, as Mortgagee.
CONTENTS
SECTION 1. DEFINITIONS AND CONSTRUCTION................................. 1
SECTION 2. DELIVERY AND ACCEPTANCE...................................... 1
2.1 Delivery and Lease of Aircraft............................... 1
2.2 Acceptance by Lessee......................................... 2
SECTION 3. TERM AND RENT................................................ 2
3.1 Term......................................................... 2
3.2 Rent......................................................... 2
3.3 Payments..................................................... 5
SECTION 4. DISCLAIMER; CERTAIN AGREEMENTS OF LESSOR;
SECTION 1110 MATTERS. ....................................... 6
4.1 Disclaimer................................................... 6
4.2 Certain Agreements of Lessor................................. 6
4.3 Quiet Enjoyment.............................................. 7
4.4 Investment of Funds Held as Security......................... 7
4.5 Title Transfers by Lessor.................................... 8
4.6 Lessor's Interest in Certain Engines......................... 8
4.7 Lease For U.S. Federal Income Tax Law
Purposes; Section 1110 of Bankruptcy Code.................... 9
SECTION 5. RETURN OF AIRCRAFT........................................... 9
5.1 Compliance with Annex B...................................... 9
5.2 Storage and Related Matters.................................. 9
5.3 Return of Other Engines...................................... 10
5.4 Failure to Return............................................ 10
SECTION 6. LIENS........................................................ 10
SECTION 7. REGISTRATION, OPERATION, POSSESSION,
SUBLEASING AND RECORDS.. .................................... 11
7.1 Registration and Operation................................... 11
7.2 Possession................................................... 13
7.3 Certain Limitations on Subleasing or Other
Relinquishment of Possession................................. 18
SECTION 8. MAINTENANCE; REPLACEMENT AND POOLING OF
PARTS; ALTERATIONS, MODIFICATIONS AND
ADDITIONS; OTHER LESSEE COVENANTS............................ 19
8.1 Maintenance; Replacement and Pooling of
Parts; Alterations, Modifications and
Additions.................................................... 19
8.2 Information, Certificates, Notices and
Reports...................................................... 19
8.3 Aircraft Documents........................................... 21
SECTION 9. VOLUNTARY TERMINATION UPON OBSOLESCENCE...................... 21
9.1 Right of Termination......................................... 21
9.2 Election by Lessor to Sell................................... 22
9.3 Retention of Aircraft by Lessor.............................. 24
SECTION 10. LOSS, DESTRUCTION, REQUISITION, ETC.......................... 26
10.1 Event of Loss With Respect to Aircraft....................... 26
10.2 Event of Loss With Respect to an Engine...................... 29
10.3 Conditions to any Replacement................................ 29
10.4 Conveyance to Lessee......................................... 31
10.5 Application of Payments...................................... 32
10.6 Requisition of Aircraft for Use.............................. 32
10.7 Requisition of an Engine for Use............................. 33
10.8 Application of Payments...................................... 33
10.9 Application of Payments During Existence of
a Lease Event of Default..................................... 34
SECTION 11. INSURANCE.................................................... 34
11.1 Lessee's Obligation to Insure................................ 34
11.2 Insurance for Own Account.................................... 34
11.3 Indemnification by Government in Lieu of
Insurance.................................................... 35
11.4 Application of Insurance Proceeds............................ 35
11.5 Application of Payments During Existence of
Default...................................................... 35
SECTION 12. INSPECTION................................................... 36
SECTION 13. ASSIGNMENT; MERGER; SUCCESSOR OWNER TRUSTEE.................. 37
13.1 In General................................................... 37
13.2 Merger of Lessee............................................. 37
13.3 Assignment Security for Lessor's Obligations................. 38
13.4 Successor Owner Trustee...................................... 38
SECTION 14. LEASE EVENTS OF DEFAULT...................................... 39
14.1 Payments..................................................... 39
14.2 Insurance.................................................... 39
14.3 Other Covenants.............................................. 39
14.4 Representations and Warranties............................... 40
14.5 Bankruptcy and Insolvency.................................... 40
SECTION 15. REMEDIES AND WAIVERS......................................... 41
15.1 Remedies..................................................... 41
15.2 Limitations Under CRAF....................................... 44
15.3 Right to Perform for Lessee.................................. 45
15.4 Determination of Fair Market Rental Value
and Fair Market Sales Value.................................. 45
15.5 Remedies Cumulative.......................................... 46
SECTION 16. LESSEE'S OBLIGATIONS; NO SETOFF, COUNTERCLAIM, ETC........... 46
SECTION 17. RENEWAL OPTIONS.............................................. 47
17.1 Notices Generally............................................ 47
17.2 Renewal Options.............................................. 47
17.3 [Intentionally omitted.]..................................... 49
17.4 Appraisals................................................... 49
SECTION 18. MISCELLANEOUS................................................ 50
18.1 Amendments................................................... 50
18.2 Severability................................................. 50
18.3 Third-Party Beneficiary...................................... 50
18.4 Reproduction of Documents.................................... 51
18.5 Counterparts................................................. 51
18.6 Notices...................................................... 51
18.7 GOVERNING LAW; SUBMISSION TO JURISDICTION; VENUE............. 52
18.8 Application of Article 2A of the UCC......................... 53
18.9 Entire Agreement............................................. 53
18.10 No Waiver.................................................... 53
ANNEXES, EXHIBITS AND SCHEDULES
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ANNEX A Definitions
ANNEX B Return Conditions
ANNEX C Maintenance
ANNEX D Insurance
EXHIBIT A Form of Lease Supplement
EXHIBIT B Form of Return Acceptance Supplement
SCHEDULE 1 Certain Terms
SCHEDULE 2 Basic Rent
SCHEDULE 3 Stipulated Loss Value Schedule
SCHEDULE 4 Termination Value Schedule
SCHEDULE 5 Permitted Countries and Domiciles for Permitted Sublessees
SCHEDULE 6 Placards
LEASE AGREEMENT ____
LEASE AGREEMENT ____, dated as of April 21, 1998 (this "Agreement" or
"Lease"), between (a) FIRST SECURITY BANK, NATIONAL ASSOCIATION, a national
banking association, not in its individual capacity, except as expressly
provided herein, but solely as Owner Trustee (this and all other capitalized
terms used but not defined herein shall have the respective meanings ascribed
thereto in Section 1 below) ("Lessor" or "Owner Trustee"), and (b) CONTINENTAL
AIRLINES, INC., a Delaware corporation ("Lessee").
RECITALS
A. Lessor and Lessee are parties to the Participation Agreement, pursuant
to which, among other things, Lessor and Lessee have agreed to enter into this
Agreement.
B. Pursuant to the Trust Agreement, Owner Participant has authorized Lessor
to enter into this Agreement.
NOW, THEREFORE, for and in consideration of the premises and the mutual
agreements contained herein and for other good and valuable consideration, the
sufficiency and receipt of which are hereby acknowledged, the parties hereto
agree as follows:
SECTION 1. DEFINITIONS AND CONSTRUCTION
Capitalized terms used but not defined herein shall have the respective
meanings set forth or incorporated by reference, and shall be construed and
interpreted in the manner described, in Annex A.
SECTION 2. DELIVERY AND ACCEPTANCE
2.1 DELIVERY AND LEASE OF AIRCRAFT
Lessor hereby agrees (subject to the satisfaction or waiver of the
conditions set forth in Section 5 of the Participation Agreement) to lease to
Lessee for the Term and Lessee hereby agrees (subject to the satisfaction or
waiver of the conditions set forth in Section 5 of the Participation Agreement)
to lease from Lessor for the Term, the Aircraft and the Aircraft Documents,
commencing immediately upon acquisition of the Aircraft and the Aircraft
Documents by Lessor pursuant to the Participation Agreement.
2.2 ACCEPTANCE BY LESSEE
By executing and delivering Lease Supplement No. 1, Lessee confirms to
Lessor that Lessee has duly and irrevocably accepted delivery of the Aircraft
and Aircraft Documents for all purposes of this Agreement.
SECTION 3. TERM AND RENT
3.1 TERM
The Aircraft shall be leased hereunder for the Term, unless this Agreement
or the leasing of the Aircraft is earlier terminated in accordance with any
provision of this Agreement. Lessee shall have the option to renew the leasing
of the Aircraft hereunder pursuant to, and subject to the terms and conditions
of, Section 17, for the Renewal Lease Term.
3.2 RENT
3.2.1 BASIC RENT; ADJUSTMENTS TO BASIC RENT AND
CERTAIN OTHER AMOUNTS
(a) During the Base Lease Term, Lessee shall pay to Lessor, on each Payment
Date occurring therein, Basic Rent in the amount equal to the percentage of
Lessor's Cost specified in Schedule 2 for such Payment Date, which shall be
allocated to the Payment Period ending on such Payment Date, if designated as a
payment in arrears, or allocated to the Payment Period commencing on such
Payment Date, if designated as a payment in advance, in each case as specified
in Schedule 2, as such amount may be adjusted pursuant to Section 3.2.1(b).
(b) Basic Rent, Stipulated Loss Values and Termination Values, shall be
subject to adjustment as follows:
(i) In the event of a refinancing as contemplated by Section 11 of the
Participation Agreement, then the Basic Rent percentages set forth in
Schedule 2, Stipulated Loss Value percentages set forth in Schedule 3 and
the Termination Value percentages set forth in Schedule 4 shall be
recalculated (upwards and downwards) by the Owner Participant as
contemplated by such Section to (1) maintain the Owner Participant's Net
Economic Return and (2) to the extent possible consistent with clause (1)
hereof, minimize the Net Present Value of Rents to Lessee.
(ii) In the event that Lessee is required to indemnify the Owner
Participant under the Tax Indemnity Agreement, then the Stipulated Loss
Value percentages set forth in Schedule 3 and the Termination Value
percentages set forth in Schedule 4 shall be recalculated (upwards or
downwards) by Owner Participant, using the same methods and assumptions
(except to the extent such assumptions shall be varied to take into account
the Tax Loss or Foreign Tax Credit Loss (as each such term is defined in
the Tax Indemnity Agreement) that is the subject of such indemnification
and any prior or contemporaneous Tax Loss or Foreign Tax Credit Loss) used
to calculate the Basic Rent percentages, the Stipulated Loss Value
percentages and the Termination Value percentages on the Closing Date, in
order to (1) maintain the Owner Participant's Net Economic Return and (2)
to the extent possible consistent with clause (1) hereof, minimize the Net
Present Value of Rents to Lessee.
(c) All adjustments pursuant to Section 3.2.1(b) shall be made as promptly
as practicable after either Owner Participant or Lessee gives notice to the
other that an event has occurred that requires an adjustment. Owner Participant
and Lessee shall give prompt notice to the other of any event requiring an
adjustment. Any recalculation of the percentages of Basic Rent, Stipulated Loss
Value and Termination Value shall be prepared by Owner Participant, subject to
consultation with the Lessee at the request of Lessee in accordance with this
Section 3.2.1(c) and Section 3.2.1(d), on the basis of the same methodology and
assumptions used by Owner Participant in determining the percentages of Basic
Rent, Stipulated Loss Value and Termination Value as of the Closing Date, except
as such assumptions have been modified to reflect the events giving rise to
adjustments hereunder. Promptly after an adjustment is made hereunder, Owner
Participant shall deliver to Lessee a description of such adjustment, setting
forth in reasonable detail the calculation thereof. All adjustments shall (i) be
made so as to avoid characterization of the Lease as a "disqualified leaseback
or long-term agreement" within the meaning of Section 467 of the Code unless
such adjustments are made in a manner that holds the Owner Participant harmless
from the effect of such characterization and (ii) be in compliance with the
requirements of Sections 4.02(5), 4.07(1) and, on a prospective basis, 4.08(1)
of Revenue Procedure 75-28, except to the extent that on the Closing Date the
Lease constituted a "disqualified leaseback or long-term agreement" or was not
in compliance with the regulations referred to in clause (ii). All adjustments
required pursuant to Section 3.2.1(b) shall be set forth in a Lease Supplement
or in an amendment to this Lease, and, promptly after execution thereof by
Lessor and Lessee, Lessee shall give a copy thereof to Mortgagee. Lessee shall
pay all out-of-pocket costs and expenses (including reasonable legal fees and
expenses) of the Owner Participant in connection with any adjustment pursuant to
this Section.
(d) If Lessee believes that any calculations by Owner Participant pursuant
to Section 3.2.1(c) are in error, and if, after consultation, Lessee and Owner
Participant are unable to agree on an adjustment, then a nationally recognized
firm of accountants selected by Lessee and reasonably satisfactory to Owner
Participant shall verify such calculations. Owner Participant will make
available to such firm, but not, in any circumstances, to Lessee or any
representative of Lessee, the methodology and assumptions referred to in Section
3.2.1(c) and any modifications thereto made to reflect the events giving rise to
adjustments hereunder (subject to the execution by such firm of a
confidentiality agreement, reasonably acceptable to Owner Participant,
prohibiting disclosure of such methodology and assumptions to any third party).
The determination by such firm of accountants shall be final. Lessee will pay
the reasonable costs and expenses of such further verification by such
accountants, provided that if it results in a decrease in Basic Rent which
decreases the remaining Net Present Value of Rents by ten or more basis points
from the remaining Net Present Value of Rents as recalculated by the Owner
Participant, then the Owner Participant will pay such costs and expenses.
(e) Notwithstanding anything to the contrary in any Operative Agreement,
the amount of the payment of Basic Rent due and payable on each Payment Date
shall be at least sufficient to pay in full, as of such Payment Date (assuming
timely payment of the Equipment Notes prior to such Date), the aggregate
principal amount of scheduled installments due on the Equipment Notes
outstanding on such Payment Date, together with the accrued and unpaid interest
thereon, due on such Payment Date in respect of the Equipment Notes; provided,
however, that no installment of Basic Rent shall be increased to the extent such
increase would be based upon (i) any attachment or diversion of Basic Rent on
account of Lessor Liens, (ii) any modification of the payment terms of the
Equipment Notes, other than as required or permitted by any Operative Agreement
(including, without limitation, as permitted upon the occurrence of a Lease
Event of Default) or (iii) the acceleration of any Equipment Note or Equipment
Notes due solely to the occurrence of an Indenture Event of Default that does
not constitute a Lease Event of Default.
3.2.2 SUPPLEMENTAL RENT
Lessee shall, in the manner and in the funds specified in Section 3.3, pay
to Lessor, or to whosoever shall be entitled thereto, any and all Supplemental
Rent when and as the same shall become due and owing. Lessee will also pay to
Lessor, or to whosoever shall be entitled thereto as Supplemental Rent, to the
extent permitted by applicable Law, interest at the Payment Due Rate on any part
of any amount of Rent (including, without limitation, Supplemental Rent) not
paid by 12:30 p.m., New York time, on the date when due (so long as, in the case
of any person not a party to the Participation Agreement, Lessee had received
timely notice of the account to which such payment was required to be made), for
the period from and including the date on which the same was due to, but
excluding, the date of payment in full.
3.3 PAYMENTS
(a) Payments of Rent by Lessee shall be paid by wire transfer of
immediately available Dollars, not later than 12:30 p.m., New York time, on the
date when due, to the account of Lessor specified in Schedule 1 to the
Participation Agreement or to such other account in the United States as
directed by Lessor to Lessee in writing at least 10 Business Days prior to the
date such payment of Rent is due or, in the case of any payment of Supplemental
Rent expressly payable to a person other than Lessor, to the person that shall
be entitled thereto to such account in the United States as such person may
specify from time to time to Lessee at least 10 Business Days prior to the date
such payment of Rent is due.
(b) Except as otherwise expressly provided herein, whenever any payment of
Rent shall be due on a day that is not a Business Day, such payment shall be
made on the next day that is a Business Day, and, if such payment is made on
such next Business Day, no interest shall accrue on the amount of such payment
during such extension.
(c) So long as Lessee has not received written notice from the Mortgagee
that the Lien of the Trust Indenture has been discharged, and notwithstanding
Section 3.3(a), Lessor hereby directs, and Lessee agrees, that all payments of
Rent and all other amounts payable by Lessee hereunder, other than Excluded
Payments, shall be paid directly to Mortgagee on behalf of Lessor by wire
transfer of immediately available Dollars to the account of Mortgagee specified
in Schedule 1 to the Participation Agreement, or to such other account in the
United States as Mortgagee may specify by written notice to Lessor and Lessee at
least 10 Business Days prior to the date such payment of Rent is due.
(d) Excluded Payments to any person shall be paid by wire transfer of
immediately available Dollars to the account of such person specified in the
Participation Agreement or, if not so specified, to such account in the United
States as may be specified by such person by written notice to Lessor and Lessee
from time to time at least 10 Business Days prior to the date such payment is
required to be made.
(e) All computations of interest under this Agreement shall be made
on the basis of a year of 360 days comprised of twelve 30-day months.
SECTION 4. DISCLAIMER; CERTAIN AGREEMENTS OF LESSOR; SECTION 1110 MATTERS
4.1 DISCLAIMER
LESSOR LEASES AND LESSEE TAKES THE AIRCRAFT "AS-IS, WHERE-IS." LESSEE
ACKNOWLEDGES AND AGREES THAT AS BETWEEN LESSEE AND EACH OF LESSOR, MORTGAGEE AND
ANY PARTICIPANT (i) LESSEE HAS SELECTED THE AIRCRAFT AND MANUFACTURER THEREOF
AND (ii) NONE OF LESSOR, MORTGAGEE AND ANY PARTICIPANT MAKES, HAS MADE OR SHALL
BE DEEMED TO HAVE MADE, AND EACH WILL BE DEEMED TO HAVE EXPRESSLY DISCLAIMED,
ANY REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, AS TO:
(v) THE AIRWORTHINESS, VALUE, CONDITION, DESIGN, OPERATION, ANY IMPLIED
WARRANTY OF MERCHANTABILITY OR FITNESS FOR USE OR FOR ANY PARTICULAR
PURPOSE OF THE AIRFRAME, ANY ENGINE OR ANY PART THEREOF;
(w) THE QUALITY OF THE MATERIAL OR WORKMANSHIP WITH RESPECT TO THE
AIRFRAME, ANY ENGINE OR ANY PART THEREOF;
(x) THE ABSENCE OF LATENT OR ANY OTHER DEFECT IN THE AIRFRAME, ANY ENGINE
OR ANY PART THEREOF, WHETHER OR NOT DISCOVERABLE;
(y) THE ABSENCE OF ANY INFRINGEMENT OF ANY PATENT, TRADEMARK OR COPYRIGHT
OR THE LIKE; OR
(z) THE ABSENCE OF OBLIGATIONS BASED ON STRICT LIABILITY IN TORT, OR ANY
OTHER REPRESENTATION OR WARRANTY WHATSOEVER, EXPRESS OR IMPLIED, WITH
RESPECT TO THE AIRFRAME, ANY ENGINE OR ANY PART THEREOF.
LESSEE FURTHER WAIVES, DISCLAIMS, RELEASES AND RENOUNCES ANY LIABILITY, RIGHT,
CLAIM, REMEDY OR OBLIGATION WHETHER OR NOT ARISING FROM THE NEGLIGENCE (WHETHER
ACTIVE, PASSIVE OR IMPUTED) OF LESSOR, MORTGAGEE OR ANY PARTICIPANT, ARISING OUT
OF OR ATTRIBUTABLE TO THE USE, OPERATION OR PERFORMANCE OF THE AIRFRAME, ANY
ENGINE OR ANY PART.
4.2 CERTAIN AGREEMENTS OF LESSOR
Unless a Lease Event of Default shall have occurred and be continuing,
Lessor agrees to make available to Lessee such rights as Lessor may have under
any warranty with respect to the Aircraft made, or made available, by Airframe
Manufacturer or Engine Manufacturer or any of their respective subcontractors or
suppliers, as the case may be, to the extent that the same may be assigned or
otherwise made available to Lessee, and Lessor agrees to exert its diligent
efforts to enforce such rights as Lessor may have with respect thereto for the
benefit of Lessee. Lessee shall pay Lessor's reasonable out-of-pocket costs and
expenses in connection with making available to Lessee the rights of Lessor
under the warranties referred to in the preceding sentence.
4.3 QUIET ENJOYMENT
So long as no Lease Event of Default shall have occurred and be continuing,
Lessor shall not interfere with Lessee's rights hereunder to continued
possession, use and operation of, and quiet enjoyment of, the Aircraft during
the Term.
4.4 INVESTMENT OF FUNDS HELD AS SECURITY
4.4.1 INVESTMENT
Any moneys required to be paid to or retained by Lessor that are required
to be paid to Lessee or applied as provided herein shall, until paid to Lessee
as provided herein or applied as provided herein, be invested by Lessor from
time to time as directed in writing by Lessee (or, if Lessee fails to so direct,
by or as directed by Lessor in its sole discretion) and at the expense and risk
of Lessee in Cash Equivalents so long as such Cash Equivalents specified by
Lessee or Lessor, as the case may be, can be acquired by Lessor; provided, that
so long as the Lien of the Trust Indenture shall not have been discharged, such
moneys shall be invested and held by Mortgagee, as assignee of Lessor, in
accordance with this Lease and upon discharge of such Lien, Mortgagee shall pay
any such money held by it to Lessor to be held and invested in accordance with
this Section.
4.4.2 PAYMENT OF GAIN OR LOSS
Any net gain (including interest received) realized as the result of
investments pursuant to Section 4.4.1 (net of any fees, commissions and other
reasonable expenses, if any, incurred in connection with such investment) shall
be held and applied in the same manner as the principal amount is to be held and
applied hereunder. Lessee will promptly pay to Lessor, on demand, the amount of
any loss realized as the result of any such investment (together with any fees,
commissions and other reasonable expenses, if any, incurred in connection with
such investment), such amount so paid to be held and applied by Lessor as
contemplated in Section 4.4.1 above.
4.4.3 LIMITATION OF LIABILITY
All investments under this Section 4.4 shall be at the expense and risk of
Lessee, and Lessor and Mortgagee shall not be liable for any loss resulting from
any investment made under this Section 4.4 other than by reason of its willful
misconduct or gross negligence. Any such investment may be sold (without regard
to its maturity) by Lessor without instructions whenever such sale is necessary
to make a distribution required by this Lease.
4.5 TITLE TRANSFERS BY LESSOR
If Lessor shall be required to transfer title to the Aircraft, Airframe or
any Engine to Lessee or any other person pursuant to this Lease, then (a) Lessor
shall (1) transfer to Lessee or such other person, as the case may be, all of
Lessor's right, title and interest in and to the Aircraft, Airframe or such
Engine, as the case may be, free and clear of all Lessor Liens attributable to
the Lessor or Owner Participant, (2) so long as the Lien of the Trust Indenture
has not been discharged, comply with the Trust Indenture relating to the release
of the Aircraft, Airframe or such Engine, (3) assign to Lessee or such other
person, as the case may be, if and to the extent possible, all warranties of
Airframe Manufacturer and Engine Manufacturer with respect to the Aircraft,
Airframe or such Engine, and (4) assign to Lessee or such other person, as the
case may be, if and to the extent permitted, all claims, if any, for damage to
the Aircraft, Airframe or such Engine, in each case free of Lessor Liens
attributable to the Lessor or Owner Participant, and without recourse or
warranty of any kind whatsoever (except as to the transfer described in clause
(1) above and as to the absence of such Lessor Liens, as aforesaid), and (b)
Lessor shall promptly deliver to Lessee or such other person, as the case may
be, a xxxx of sale and agreements of assignment, evidencing such transfer and
assignment, and such other instruments of transfer, all in form and substance
reasonably satisfactory to Lessee (or such other person, as the case may be), as
Lessee (or such other person, as the case may be) may reasonably request.
4.6 LESSOR'S INTEREST IN CERTAIN ENGINES
Lessor hereby agrees for the benefit of each lessor, conditional seller,
indenture trustee or secured party of any engine leased to, or purchased by,
Lessee or any Permitted Sublessee subject to a lease, conditional sale, trust
indenture or other security agreement that Lessor, its successors and assigns
will not acquire or claim, as against such lessor, conditional seller, indenture
trustee or secured party, any right, title or interest in any engine as the
result of such engine being installed on the Airframe at any time while such
engine is subject to such lease, conditional sale, trust indenture or other
security agreement and owned by such lessor or conditional seller or subject to
a trust indenture or security interest in favor of such indenture trustee or
secured party.
4.7 LEASE FOR U.S. FEDERAL INCOME TAX LAW PURPOSES;
SECTION 1110 OF BANKRUPTCY CODE
(a) Lessee and Lessor agree that this Lease is, and shall be treated as, a
lease for U.S. federal income tax purposes of the Aircraft, Airframe, Engines
and Parts.
(b) It is the intention of each of Lessee and Lessor that Lessor (and
Mortgagee as assignee of Lessor under the Trust Indenture) shall be entitled to
the benefits of Section 1110 with respect to the right to take possession of the
Aircraft, Airframe, Engines and Parts as provided in this Lease.
SECTION 5. RETURN OF AIRCRAFT
5.1 COMPLIANCE WITH ANNEX B
Lessee shall comply with each of the provisions of Annex B hereto, which
provisions are hereby incorporated by this reference as if set forth in full
herein.
5.2 STORAGE AND RELATED MATTERS
If Lessor gives written notice to Lessee not less than 60 days nor more
than 180 days prior to the end of the Term requesting storage of the Aircraft
upon its return hereunder, Lessee will provide Lessor, or cause Lessor to be
provided, with outdoor parking facilities for the Aircraft for a period up to 30
days, commencing on the date of such return, at such storage facility in the 48
contiguous states of the United States as Lessee may select. Lessee shall, at
Lessor's written request, maintain insurance (if available) for the Aircraft
during such storage period, PROVIDED that Lessor shall reimburse Lessee for
Lessee's out-of-pocket cost of providing such insurance. Such storage shall be
at Lessor's risk, and Lessor shall pay all applicable storage fees, except that
Lessee shall pay the parking fees for the initial 30 day storage period;
PROVIDED that Lessee's obligation to provide parking shall be subject to Lessee
and Lessor entering into an agreement prior to the commencement of the storage
period with the storage facility providing, among other things, that Lessee
shall pay only the parking fees for the initial storage period of up to 30 days
and that Lessor shall bear all maintenance charges and other costs incurred
relating to such storage.
5.3 RETURN OF OTHER ENGINES
In the event that any Engine owned by Lessor shall not be installed on the
Airframe at the time of return hereunder, Lessee shall be required to return the
Airframe hereunder with a Replacement Engine meeting the requirements of, and in
accordance with, Section 10 hereof and Annex B hereto. Thereupon, Lessor will
transfer to Lessee the Engine constituting part of such Aircraft but not
installed on such Airframe at the time of the return of the Airframe.
5.4 FAILURE TO RETURN
If Lessee shall, for any reason whatsoever, fail to return the Aircraft and
the Aircraft Documents at the time specified herein (including without
limitation as a result of an Event of Loss, or any event which with the passage
of time may result in an Event of Loss), all obligations of Lessee under this
Lease shall continue in effect with respect to the Aircraft until the Aircraft
is returned to Lessor and Lessee shall pay to Lessor an amount equal to the
average daily Basic Rent payable by Lessee during the Term for each day after
the end of the Term to but excluding the day of such return; PROVIDED, HOWEVER,
that this Section 5.4 shall not be construed as permitting Lessee to fail to
meet its obligation to return the Aircraft or the Aircraft Documents in
accordance with the requirements hereof or constitute, or be deemed to
constitute, a waiver of any Lease Event of Default resulting from Lessee's
failure to return the Aircraft or the Aircraft Documents or otherwise; and
PROVIDED, FURTHER, that Lessee shall not be responsible for Lessor's failure to
accept return of the Aircraft and Aircraft Documents in accordance with this
Section 5 in a timely manner or for any rent with respect to periods after
Lessee has tendered the Aircraft and Aircraft Documents for return in accordance
with this Lease. Any rent owed to Lessor pursuant to this Section 5.4 shall be
payable upon acceptance of the Aircraft by Lessor or on the last day of each
calendar week following the last day of the Term if the Aircraft has not been
accepted earlier.
SECTION 6. LIENS
Lessee shall not, directly or indirectly, create, incur, assume or suffer
to exist any Lien on or with respect to the Aircraft, the Airframe, any Engine
or any Part, title to any of the foregoing or any interest of Lessee therein, or
the Lessee's rights in and to this Lease or any Permitted Sublease, except (a)
the respective rights of Lessor, Mortgagee, the Participants or Lessee under the
Operative Agreements, or of any Permitted Sublessee under any Permitted
Sublease; (b) Lessor Liens; (c) the rights of others under agreements or
arrangements to the extent expressly permitted by the terms of Sections 7.2 and
7.3 or Section C of Annex C; (d) Liens for Taxes of Lessee (and its U.S. federal
tax law consolidated group), or Liens for Taxes of any Tax Indemnitee (and its
U.S. federal tax law consolidated group) for which Lessee is obligated to
indemnify such Tax Indemnitee under any of the Lessee Operative Agreements, in
any such case either not yet due or being contested in good faith by appropriate
proceedings so long as such Liens and such proceedings do not involve any
material risk of the sale, forfeiture or loss of the Aircraft, the Airframe, any
Engine or the interest of any Participant therein or impair the lien of the
Trust Indenture; (e) materialmen's, mechanics', workers', repairers', employees'
or other like Liens arising in the ordinary course of business for amounts the
payment of which is either not yet delinquent for more than 60 days or is being
contested in good faith by appropriate proceedings, so long as such Liens and
any such proceedings do not involve any material risk of the sale, forfeiture or
loss of the Aircraft, the Airframe, any Engine or the interest of any
Participant therein or impair the lien of the Trust Indenture; (f) Liens arising
out of any judgment or award against Lessee (or against any Permitted
Sublessee), so long as such judgment shall, within 60 days after the entry
thereof, have been discharged or vacated, or execution thereof stayed pending
appeal or shall have been discharged, vacated or reversed within 60 days after
the expiration of such stay, and so long as during any such 60-day period there
is not, or any such judgment or award does not involve, any material risk of the
sale, forfeiture or loss of the Aircraft, the Airframe, any Engine or the
interest of any Participant therein or impair the lien of the Trust Indenture,
or involve a discernible risk of criminal liability or a material risk of
material civil liability against Lessor or Owner Participant and (g) any other
Lien with respect to which Lessee (or any Permitted Sublessee) shall have
provided a bond, cash collateral or other security adequate in the reasonable
opinion of Lessor. Lessee shall promptly take (or cause to be taken) such action
as may be necessary duly to discharge (by bonding or otherwise) any Lien not
excepted above if the same shall at any time arise in respect of the Aircraft,
the Airframe, any Engine or any Part during the Term.
SECTION 7. REGISTRATION, OPERATION, POSSESSION, SUBLEASING AND RECORDS
7.1 REGISTRATION AND OPERATION
7.1.1 REGISTRATION AND RECORDATION
Subject to the compliance by Lessor and Owner Participant with their
respective obligations under Section 13 of the Participation Agreement, Lessee
shall cause the Aircraft to be, and at all times during the Term to remain, duly
registered with the FAA under the Act or with such other country of registry as
shall be permitted under Section 7.1.2 below, in the name of Lessor as owner and
lessor (except to the extent that such registration under the Act cannot be
effected with the FAA because of Lessor's or Owner Participant's failure to
comply with the citizenship requirements for registration of the Aircraft under
the Act). Lessor shall execute and deliver all such documents as Lessee (or any
Permitted Sublessee) may reasonably request for the purpose of effecting and
continuing such registration. Unless Mortgagee has given Lessee notice that the
Trust Indenture has been discharged, Lessee shall also cause the Trust Indenture
to be duly recorded and at all times maintained of record as a first-priority
perfected mortgage (subject to Permitted Liens) on the Aircraft, the Airframe
and each of the Engines (except to the extent such perfection or priority cannot
be maintained solely as a result of the failure by Lessor or Mortgagee to
execute and deliver any necessary documents).
7.1.2 REREGISTRATION
So long as no Lease Event of Default or Special Default shall have occurred
and be continuing, Lessee may, by written notice to Lessor, request to change
the country of registration of the Aircraft. Any such change in registration
shall be effected only in compliance with, and subject to all of the conditions
set forth in, Section 7.6.11 of the Participation Agreement.
7.1.3 MARKINGS
If not prohibited by applicable Law, on or reasonably promptly after the
Closing Date (but, in any event, within 90 days thereafter), Lessee will remove
any placards or markings (other than the placards referred to below) stating any
other person's ownership or security interest in the Aircraft and will cause to
be affixed to, and maintained in, the cockpit of the Airframe and on each
Engine, in each case, in a clearly visible location (it being understood that
the location of such placards, as identified to the Owner Participant prior to
the Closing Date, shall be deemed to be in compliance with this requirement), a
placard of a reasonable size and shape bearing the legend, in English, set forth
in Schedule 6. Such placards may be removed temporarily, if necessary, in the
course of maintenance of the Airframe or Engines. If any such placard is damaged
or becomes illegible, Lessee shall promptly replace it with a placard complying
with the requirements of this Section 7.1.3.
7.1.4 COMPLIANCE WITH LAWS
Lessee shall not, and shall not allow any other person to, operate, use,
maintain, service, repair or overhaul the Aircraft (a) in violation of any Law
binding on or applicable to the Aircraft, the Airframe or any Engine, or (b) in
violation of any airworthiness certificate, license or registration of any
Government Entity relating to the Aircraft, Lessee (or any Permitted Sublessee),
the Airframe or any Engine, except (1) immaterial or non-recurring violations
with respect to which corrective measures are taken promptly by Lessee or a
Permitted Sublessee, as the case may be, upon discovery thereof, and (2) to the
extent Lessee or any Permitted Sublessee is contesting the validity or
application of any such Law or requirement relating to any such certificate,
license or registration in good faith in any reasonable manner which does not
involve any material risk of the sale, forfeiture or loss of the Aircraft, the
Airframe, any Engine or the interest of any Participant therein, any discernible
risk of criminal liability or material risk of material civil penalty against
Lessor, Mortgagee or any Participant or impair the Lien of the Trust Indenture.
7.1.5 OPERATION
Lessee agrees not to operate, use or locate the Aircraft, the Airframe or
any Engine, or allow the Aircraft, the Airframe or any Engine to be operated,
used or located (a) in any area excluded from coverage by any insurance required
by the terms of Section 11, except in the case of a requisition by the U.S.
Government where Lessee obtains an indemnity in lieu of such insurance from the
U.S. Government, or insurance from the U.S. Government, covering such area, in
accordance with Section 11.3 or (b) in any recognized area of hostilities unless
fully covered in accordance with Annex D by war-risk insurance as required by
the terms of Section 11 (including, without limitation, Section 11.3), unless in
any case referred to in this Section 7.1.5 the Aircraft is only temporarily
operated, used or located in such area as a result of an emergency, equipment
malfunction, navigational error, hijacking, weather condition or other similar
unforeseen circumstances, so long as Lessee diligently and in good faith
proceeds to remove the Aircraft from such area.
7.2 POSSESSION
Lessee will not, without the prior written consent of Lessor, sublease or
otherwise in any manner deliver, transfer or relinquish possession of the
Aircraft, the Airframe or any Engine or install any Engine, or permit any Engine
to be installed, on any airframe other than the Airframe; PROVIDED, HOWEVER,
subject to the provisions of Section 7.3, that if and for so long as no Lease
Event of Default shall have occurred and be continuing, then Lessee may, without
such prior written consent:
7.2.1 INTERCHANGE AND POOLING
Subject or permit any Permitted Sublessee to subject the Airframe to normal
interchange agreements or any Engine to normal interchange agreements or pooling
agreements or arrangements, in each case customary in the commercial airline
industry and entered into by Lessee or such Permitted Sublessee, as the case may
be, in the ordinary course of business; PROVIDED, HOWEVER, that if Lessor's
title to any such Engine is divested under any such agreement or arrangement,
then such Engine shall be deemed to have suffered an Event of Loss as of the
date of such divestiture, with the effect that Lessee shall be required to
replace such Engine with a Replacement Engine meeting the requirements of, and
in accordance with, Section 10.
7.2.2 TESTING AND SERVICE
Deliver or permit any Permitted Sublessee to deliver possession of the
Aircraft, Airframe, any Engine or any Part (i) to the manufacturer thereof or to
any third-party maintenance provider, for testing, service, repair, maintenance
or overhaul work on the Aircraft, Airframe, any Engine or any Part, or, to the
extent required or permitted by the terms of Annex C, for alterations or
modifications in or additions to the Aircraft, Airframe or any Engine or (ii) to
any Person for the purpose of transport to a Person referred to in the preceding
clause (i).
7.2.3 TRANSFER TO U.S. GOVERNMENT
Transfer or permit any Permitted Sublessee to transfer possession of the
Aircraft, Airframe or any Engine to the U.S. Government pursuant to CRAF or
other similar program or otherwise as required by Law for a period that does not
extend beyond the end of the Term, in which event Lessee shall promptly notify
Lessor and Mortgagee in writing of any such transfer of possession and, in the
case of any transfer pursuant to CRAF, in such notification shall identify by
name, address and telephone numbers the Contracting Office Representative or
Representatives for the Military Airlift Command of the United States Air Force
to whom notices must be given and to whom requests or claims must be made to the
extent applicable under CRAF.
7.2.4 INSTALLATION OF ENGINES ON OWNED AIRCRAFT
Install or permit any Permitted Sublessee to install an Engine on an
airframe owned by Lessee or such Permitted Sublessee, as the case may be, free
and clear of all Liens, except (a) Permitted Liens and those that do not apply
to the Engines and (b) the rights of third parties under normal interchange or
pooling agreements and arrangements of the type that would be permitted under
Section 7.2.1.
7.2.5 INSTALLATION OF ENGINES ON OTHER AIRFRAMES
Install or permit any Permitted Sublessee to install an Engine on an
airframe leased to Lessee or such Permitted Sublessee, or purchased by Lessee or
such Permitted Sublessee subject to a mortgage, security agreement, conditional
sale or other secured financing arrangement, but only if (a) such airframe is
free and clear of all Liens, except (i) the rights of the parties to such lease,
or any such secured financing arrangement, covering such airframe and (ii) Liens
of the type permitted by clauses (a) and (b) of Section 7.2.4 and (b) Lessee or
Permitted Sublessee, as the case may be, shall have received from the lessor,
mortgagee, secured party or conditional seller, in respect of such airframe, a
written agreement (which may be a copy of the lease, mortgage, security
agreement, conditional sale or other agreement covering such airframe), whereby
such Person agrees that it will not acquire or claim any right, title or
interest in, or Lien on, such Engine by reason of such Engine being installed on
such airframe at any time while such Engine is subject to this Lease or is owned
by Lessor.
7.2.6 INSTALLATIONS OF ENGINES ON FINANCED AIRCRAFT
Install or permit any Permitted Sublessee to install an Engine on an
airframe owned by Lessee or such Permitted Sublessee, leased to Lessee or such
Permitted Sublessee, or purchased by Lessee or such Permitted Sublessee subject
to a conditional sale or other security agreement under circumstances where
neither Section 7.2.4 or 7.2.5 is applicable; PROVIDED, HOWEVER, that any such
installation shall be deemed an Event of Loss with respect to such Engine, and
Lessee shall comply with Section 10.2 hereof in respect thereof.
7.2.7 SUBLEASING
With respect to the Aircraft, Airframe or any Engine, so long as no Lease
Event of Default or Special Default shall have occurred and be continuing, enter
into a sublease with any Permitted Air Carrier, but only if:
(a) Lessee shall provide written notice to Lessor and Mortgagee (such
notice in the event of a sublease to a U.S. Air Carrier to be given promptly
after entering into any such sublease or, in the case of a sublease to any other
Permitted Air Carrier, 15 days in advance of entering into such sublease);
(b) At the time that Lessee enters into such sublease, such Permitted Air
Carrier shall not be subject to any bankruptcy, insolvency, liquidation,
reorganization, dissolution or similar proceeding, and shall not have
substantially all of its property in the possession of any liquidator, trustee,
receiver or similar person;
(c) Any such sublease (i) shall not extend beyond the expiration of the
Base Lease Term or any Renewal Lease Term then in effect unless Lessee shall
have irrevocably committed to purchase the Aircraft, (ii) shall include
provisions for the maintenance, operation, possession, inspection and insurance
of the Aircraft that are the same in all material respects as the applicable
provisions of this Lease, (iii) shall be expressly subject and subordinate to
all the terms of this Agreement and to the rights, powers and remedies of Lessor
hereunder, including, without limitation, Lessor's rights under Section 15 to
repossess the Aircraft, Airframe and Engines and to terminate such sublease upon
the occurrence of a Lease Event of Default, (iv) shall, except in the case of a
Permitted Sublease to a Manufacturer Sublessee or an Affiliate thereof, prohibit
any further sub-sublease, PROVIDED that any permitted sub-sublease by any
Manufacturer Sublessee or such Affiliate shall prohibit any further sub-sublease
and any such sub-sublease by any Manufacturer Sublessee or such Affiliate shall
only be permitted to the extent the conditions of this Section 7.2.7 are
satisfied with respect thereto and (v) shall include provisions requiring the
sublessee to maintain all records relating to the Aircraft that are required to
be maintained under this Lease in English and in accordance with FAA rules;
(d) In connection with a sublease or sub-sublease to a Permitted Foreign
Air Carrier, (1) the United States maintains diplomatic relations with the
country of domicile of such Permitted Foreign Air Carrier (or, in the case of
Taiwan, diplomatic relations at least as good as those in effect on the Closing
Date) and (2) Lessee shall have furnished Lessor, Owner Participant and
Mortgagee a favorable opinion of counsel, which counsel and opinion shall be
reasonably satisfactory to Lessor and Owner Participant, in the country of
domicile of such Permitted Foreign Air Carrier, that (i) the terms of such
sublease (or sub-sublease) and this Lease are the legal, valid and binding
obligations of the parties thereto enforceable under the laws of such
jurisdiction, (ii) it is not necessary for Owner Participant, Lessor or
Mortgagee to register or qualify to do business in such jurisdiction, if not
already so registered or qualified, as a result, in whole or in part, of the
proposed sublease, (iii) Lessor's title to, and Mortgagee's Lien in respect of,
the Aircraft, Airframe and Engines will be recognized in such jurisdiction, (iv)
the Laws of such jurisdiction of domicile require fair compensation by the
government of such jurisdiction, payable in a currency freely convertible into
Dollars, for the loss of title to the Aircraft, Airframe or Engines in the event
of the requisition by such government of such title (unless Lessee shall provide
insurance in the amounts required with respect to hull insurance under Section
11 covering the requisition of title to the Aircraft, Airframe or Engines by the
government of such jurisdiction so long as the Aircraft, Airframe or Engines are
subject to such sublease), (v) the agreement of such Permitted Air Carrier that
its rights under the sublease (or sub-sublease) are subject and subordinate to
all the terms of this Lease is enforceable against such Permitted Air Carrier
under applicable law, (vi) there exist no possessory rights in favor of the
sublessee (or sub-sublessee) under such sublease under the laws of such
sublessee's (or such sub-sublessee's) country of domicile that would, upon
bankruptcy or insolvency of or other default by Lessee, and assuming at such
time such sublessee (or such sub-sublessee) is not insolvent or bankrupt,
prevent the return or repossession of the Aircraft in accordance with the terms
of this Lease and (vii) all filings and approvals if any, required to be made or
obtained in such jurisdiction in connection with the execution of such sublease
(or sub-sublease) (and the payment of rent thereunder) in order to protect the
interest of Lessor and Mortgagee in the Aircraft have been made (or, if such
opinion cannot be given at the time of such proposed sublease (or sub-sublease)
because a change in registration (permitted by Section 7.1.2) is not yet
effective, (1) the opinion shall detail what filing, recording or other action
is necessary and (2) the Lessor and the Mortgagee shall have received a
certificate from Lessee that all possible preparations to accomplish such
filing, recording and other action shall have been done, and such filing,
recording and other action shall be accomplished and a supplemental opinion to
that effect shall be delivered to the Lessor and the Mortgagee on or prior to
the effective date of such change in registration;
(e) Lessee shall furnish to Lessor, Mortgagee and Owner Participant
evidence reasonably satisfactory to Lessor that the insurance required by
Section 11 remains in effect;
(f) All necessary documents shall have been duly filed, registered or
recorded in such public offices as may be required fully to preserve the title
of Lessor, and the first priority security interest (subject to Permitted Liens)
of Mortgagee, in the Aircraft, Airframe and Engines;
(g) Lessee shall reimburse Lessor, Mortgagee and Owner Participant for all
of their reasonable out-of-pocket fees and expenses, including, without
limitation, reasonable fees and disbursements of counsel, incurred by Lessor,
Mortgagee and Owner Participant in connection with any such sublease (or
sub-sublease); and
(h) No such sublease (or sub-sublease) shall be made to a Permitted Foreign
Air Carrier prior to the close of the Tax Attribute Period, unless Lessee
prepays at such time on a lump-sum basis any liability due under the Tax
Indemnity Agreement as a result of such sublease based upon the assumption that
such sublease (or sub-sublease) were to continue for the remainder of the term
of such sublease (or sub-sublease).
7.3 CERTAIN LIMITATIONS ON SUBLEASING OR OTHER
RELINQUISHMENT OF POSSESSION
Notwithstanding anything to the contrary in Section 7.2:
(a) The rights of any person that receives possession of the Aircraft in
accordance with Section 7.2 shall be subject and subordinate to all the terms of
this Lease, and to Lessor's rights, powers and remedies hereunder, including,
without limitation (i) Lessor's right to repossess the Aircraft pursuant to
Section 15, (ii) Lessor's right to terminate and avoid such sublease, delivery,
transfer or relinquishment of possession upon the occurrence of a Lease Event of
Default and (iii) the right to require such person to forthwith deliver the
Aircraft, the Airframe and Engines subject to such transfer upon the occurrence
of a Lease Event of Default, and any Permitted Sublease shall expressly contain
an agreement by the Permitted Sublessee that Lessor is an intended third party
beneficiary with respect to the foregoing with a right to remedies against the
Permitted Sublease for a breach of any of the foregoing (and, in the case of any
sublease to an Affiliate of a Manufacturer Sublessee, such agreement shall be
guaranteed by such Manufacturer Sublessee in a manner reasonably acceptable to
Owner Participant);
(b) Lessee shall remain primarily liable hereunder for the performance of
all the terms of this Lease to the same extent as if such transfer had not
occurred, and no transfer of possession of the Aircraft, the Airframe, any
Engine or any Part shall in any way discharge or diminish any of Lessee's
obligations to Lessor hereunder or under any Operative Agreement;
(c) Lessee shall ensure that no sublease, delivery, transfer or
relinquishment permitted under Section 7.2 shall affect the United States
registration of the Aircraft, unless also made in accordance with the provisions
of Section 7.1.2.
(d) Any event that constitutes or would, with the passage of time,
constitute an Event of Loss under paragraph (c), (d), or (e) of the definition
of such term (as set forth in Annex A) shall not be deemed to violate the
provisions of Section 7.2; and
(e) Any Wet Lease shall not constitute a delivery, transfer or
relinquishment of possession for purposes of Section 7.2 and shall not be
prohibited by the terms hereof, PROVIDED, HOWEVER that no Wet Lease may extend
beyond the end of the Term.
SECTION 8. MAINTENANCE; REPLACEMENT AND POOLING OF PARTS;
ALTERATIONS, MODIFICATIONS AND ADDITIONS;
OTHER LESSEE COVENANTS
8.1 MAINTENANCE; REPLACEMENT AND POOLING OF PARTS;
ALTERATIONS, MODIFICATIONS AND ADDITIONS
At all times during the Term, Lessee shall comply with, or cause to be
complied with, each of the provisions of Annex C, which provisions are hereby
incorporated by this reference as if set forth in full herein.
8.2 INFORMATION, CERTIFICATES, NOTICES AND REPORTS
8.2.1 FINANCIAL INFORMATION
Lessee will furnish to Lessor:
(a) Within 90 days after the end of each of the first three fiscal
quarters in each fiscal year of Lessee, a consolidated balance sheet
of Lessee as of the end of such quarter and related statements of
income and cash flows for the period commencing at the end of the
previous fiscal year and ending with the end of such quarter, setting
forth in each case in comparative form the corresponding figures for
the corresponding period in the preceding fiscal year, prepared in
accordance with GAAP; PROVIDED THAT so long as Lessee is subject to
the reporting requirements of the Securities Exchange Act of 1934, as
amended, a copy of Lessee's report on Form 10-Q for such fiscal
quarter (excluding exhibits) will satisfy this paragraph (a).
(b) Within 120 days after the end of each fiscal year of Lessee, a
consolidated balance sheet of Lessee as of the end of such fiscal year
and related statements of income and cash flows of Lessee for such
fiscal year, in comparative form with the preceding fiscal year,
prepared in accordance with GAAP, together with a report of Lessee's
independent certified public accountants with respect to their audit
of such financial statements; PROVIDED THAT so long as Lessee is
subject to the reporting requirements of the Securities Exchange Act
of 1934, as amended, a copy of Lessee's report on Form 10-K for such
fiscal year (excluding exhibits) will satisfy this paragraph (b).
8.2.2 ANNUAL CERTIFICATE
Within 120 days after the close of each fiscal year of Lessee, Lessee shall
deliver to Lessor and Mortgagee an Officer's Certificate of Lessee to the effect
that such officer is familiar with or has reviewed or caused to be reviewed the
relevant terms of this Lease and the other Lessee Operative Agreements and that
such officer does not have knowledge of the existence as at the date of such
certificate of any Lease Default or Lease Event of Default or, if any such Lease
Default or Lease Event of Default existed or exists, specifying the nature and
period of existence thereof and the action Lessee has taken or its taking or
proposes to take with respect thereto.
8.2.3 INFORMATION FOR FILINGS
Lessee shall promptly furnish to Owner Participant or Lessor such
information (other than with respect to the citizenship of Owner Participant and
Lessor) within Lessee's or any Permitted Sublessee's possession, or reasonably
available to or obtainable by Lessee or such Permitted Sublessee, as may be
required to enable Lessor timely to file any reports required to be filed by it
as lessor under the Lease or to enable Owner Participant to timely file any
reports required to be filed by it, as the beneficiary of the Trust Estate, in
either case, with any Government Entity because of, or in connection with, the
interest of Owner Participant or Lessor in the Aircraft, Airframe or Engines,
this Lease or any other part of the Trust Estate; provided, however, that with
respect to any such information which Lessee reasonably deems commercially
sensitive or confidential, Owner Participant or Lessor, as the case may be,
shall afford Lessee a reasonable opportunity to seek from any such Government
Entity a waiver of the obligation of Owner Participant or Lessor to file any
such information, or shall consent to the filing of such information directly by
Lessee in lieu of filing by Owner Participant or Lessor, and if any such waiver
or consent is evidenced to the reasonable satisfaction of Owner Participant or
Lessor, as the case may be, then Lessee shall not be required to furnish such
information to Owner Participant or Lessor.
8.2.4 OTHER INFORMATION
Lessee shall provide to Lessor or Owner Participant from time to time such
other information or data as Lessor or Owner Participant may reasonably request
concerning the Aircraft, Airframe or Engines, or Lessee's financial condition,
or otherwise relating to the transactions or matters contemplated herein and in
the other Operative Agreements, in each case if and to the extent within
Lessee's or any Permitted Sublessee's possession, or reasonably available to or
obtainable by Lessee or such Permitted Sublessee (unless Lessee reasonably deems
the same to be commercially sensitive or confidential).
8.3 AIRCRAFT DOCUMENTS
Lessee will maintain, or cause to be maintained, all Aircraft Documents at
an office at Houston, Texas (or such other location as Lessee shall determine,
and Lessee shall give Lessor prompt notice of any such new location), or Lessee
will procure that an approved maintenance performer will maintain the Aircraft
Documents. Upon request from time to time, Lessee will advise Lessor as to the
address at which the Aircraft Documents are then maintained.
SECTION 9. VOLUNTARY TERMINATION UPON OBSOLESCENCE
9.1 RIGHT OF TERMINATION
(a) So long as no Lease Event of Default has occurred and is continuing,
Lessee shall have the right at its option to terminate this Lease during the
Base Lease Term, effective only on a Termination Date occurring after the
Authorized Termination Date, if:
(i) Lessee makes a good faith determination that the Aircraft either
has become economically obsolete or is surplus to Lessee's requirements and
the Chief Financial Officer or Treasurer of Lessee so certifies in writing
to Lessor; and
(ii) written notice of Lessee's exercise of its option to terminate
this Agreement shall be given to Lessor not less than 90 days prior to the
proposed Termination Date specified in such notice.
(b) Lessor shall notify Lessee and Mortgagee of Lessor's intention to sell
or retain the Aircraft, as provided in this Section 9, no less than 30 days
after Lessee gives Lessor written notice pursuant to Section 9.1(a)(ii). Any
failure by Lessor to give such notice of its election shall be deemed to be an
election to sell the Aircraft, as provided in this Section 9.
(c) Any termination pursuant to this Section 9 shall become effective on
the date of the sale, if any, pursuant to Section 9.2 or upon the date of
termination and payment by Lessee and Lessor in accordance with Section 9.3 if
Lessor elects to retain the Aircraft.
9.2 ELECTION BY LESSOR TO SELL
9.2.1 BIDS; CLOSING OF SALE
Unless Lessor has given Lessee notice of Lessor's election to retain the
Aircraft, Lessee, as non-exclusive agent for Lessor, shall, until the date ten
Business Days prior to the proposed Termination Date, use commercially
reasonable efforts to obtain bids for a cash purchase of the Aircraft and Lessor
may, if it desires to do so, also seek to obtain such bids. In the event Lessee
receives any bid, Lessee shall promptly, and in any event at least ten Business
Days prior to the proposed date of sale, certify to Lessor in writing the amount
and terms of such bid, the proposed date of such sale and the name and address
of the person (who shall not be Lessee or any Affiliate of Lessee or any person
with whom Lessee or any such Affiliate has an arrangement for the future use of
the Aircraft by Lessee or any such Affiliate) submitting such bid. In the event
Lessor receives any bid on or prior to the date ten Business Days prior to the
proposed Termination Date, Lessor shall, at least ten Business Days prior to the
proposed date of sale, certify to Lessee in writing the amount and terms of such
bid, the proposed date of such sale and the name and address of the person
submitting such bid.
9.2.2 CLOSING OF SALE
(a) On the proposed Termination Date (i) Lessee shall deliver the Airframe
and Engines or engines constituting part of the Aircraft to the bidder, if any,
which shall have submitted the highest cash bid (net of applicable brokerage
commissions) on or before the date ten Business Days prior to such Termination
Date, in the same manner as if delivery were made to Lessor pursuant to Section
5 and Annex B and in full compliance with the terms thereof, and shall duly
transfer to Lessor title to any such engines not owned by Lessor, all in
accordance with the terms of Section 5 and Annex B, and (ii) Lessor shall
simultaneously therewith transfer the Airframe and Engines or engines to such
bidder, in the manner described in Section 4.5, against cash paid to Lessor in
the amount of such highest bid (net of applicable brokerage commissions and all
reasonable out-of-pocket fees and expenses incurred by Lessor, Mortgagee and
Owner Participant in connection with such sale and the related termination of
this Lease (collectively, the "Expenses of Sale")) and in the manner and in
funds of the type specified in Section 3.3.
(b) All proceeds of any sale described in Section 9.2.2(a) (net of the
Expenses of Sale) shall be paid to and retained by Lessor and, on such
Termination Date, and as a condition precedent to such sale and the delivery of
the Aircraft and Engines or engines to such bidder, Lessee shall pay to Lessor,
in the manner and in funds of the type specified in Section 3.3:
(i) all unpaid Basic Rent due at any time prior to such Termination
Date and all Basic Rent due on such Termination Date if payable in arrears
with respect to the Payment Period then ended; plus
(ii) an amount equal to the excess, if any, of the Termination Value
for the Aircraft, computed as of such Termination Date, over the proceeds
of such sale (net of the Expenses of Sale); plus
(iii) as provided in Section 3.2.2, interest on the amounts specified
in the foregoing clause (i) at the Payment Due Rate from and including the
date on which any such amount was due to the date of payment of such amount
in full.
As a further condition precedent to such sale and delivery, Lessee shall
pay all Supplemental Rent due by Lessee to Lessor, Mortgagee or the Participants
under this Lease (including, without limitation, (A) Supplemental Rent in
respect of Make-Whole Amount, if any, payable pursuant to Section 2.10(b) of the
Trust Indenture in connection with a prepayment of the Equipment Notes upon such
sale, (B) all interest charges provided for hereunder or under any other Lessee
Operative Agreement with respect to the late payment of any amounts so payable,
and (C) the Expenses of Sale.
(c) Upon and subject to any such sale and receipt of proceeds by Lessor,
and full and final payment of all amounts described in Section 9.2.2(b), and
compliance by Lessee with all the other provisions of this Section 9.2,
(i) Lessor will transfer to Lessee, in accordance with Section 4.5,
any Engines constituting part of the Aircraft but which were not then
installed on the Airframe and sold therewith; and
(ii) the obligation of Lessee to pay Basic Rent, on (if payable in
advance) or after the Payment Date with reference to which Termination
Value is computed, shall cease, and the Term for the Aircraft shall end
effective as of the date of such sale.
(d) A sale of the Aircraft pursuant to this Section 9.2.2 shall take place
only on a Termination Date. Subject to Section 9.3, if no sale shall have
occurred on or as of the proposed Termination Date, this Agreement shall
continue in full force and effect, and all of Lessee's obligations shall
continue, including, without limitation, its obligation to pay Rent, in each
case, as if the notice under Section 9.1 shall not have been given and, subject
to Section 9.2.3(b), Lessee may give another notice pursuant to Section 9.1.
9.2.3 WITHDRAWAL OF NOTICE OF TERMINATION
(a) Lessee may withdraw any notice given pursuant to Section 9.1 at any
time on or before the date ten Business Days prior to the proposed Termination
Date, whereupon this Agreement shall continue in full force and effect and all
of Lessee's obligations shall continue, including, without limitation, its
obligation to pay Rent, in each case, as if the notice under Section 9.1 shall
not have been given and Lessee may give another notice pursuant to Section 9.1;
PROVIDED that Lessee shall not be entitled to give more than three notices
pursuant to Section 9.1.
(b) Lessee shall pay all reasonable out-of-pocket fees and expenses of
Lessor, Mortgagee and Owner Participant in connection with any notice of
termination withdrawn by Lessee or in connection with any notice of termination
pursuant to which a sale of the Aircraft fails to occur.
9.3 RETENTION OF AIRCRAFT BY LESSOR
(a) If Lessor shall elect to retain the Aircraft in accordance with Section
9.1, on the proposed Termination Date:
(i) Lessor shall pay, or cause to be paid, in the manner and in funds
of the type specified in Section 3.3, to the Mortgagee an amount sufficient
to prepay all outstanding Equipment Notes pursuant to Section 2.10(b) of
the Trust Indenture;
(ii) subject to receipt by Mortgagee of the funds described in
paragraph (i) above, Lessee shall deliver the Airframe and Engines or
engines constituting part of the Aircraft to Lessor pursuant to Section 5
and Annex B and in full compliance with the terms thereof, and shall duly
transfer to Lessor title to any such engines not owned by Lessor, all in
accordance with the terms of Section 5 and Annex B;
(iii) Lessee shall pay to Lessor, in the manner and in funds of the
type specified in Section 3.3:
(1) all unpaid Basic Rent due at any time prior to such Termination
Date and all Basic Rent due on such Termination Date if payable
in arrears with respect to the Payment Period then ended; plus
(2) as provided in Section 3.2.2, interest on the amounts specified
in the foregoing clause (1) at the Payment Due Rate from and
including the date on which any such amount was due to the date
of payment of such amount in full; and
(iv) Lessee shall also pay all Supplemental Rent due and payable by
Lessee to Lessor, Mortgagee or the other Participants under this Lease
(including without limitation (A) any Supplemental Rent in respect of
Make-Whole Amount, if any, payable pursuant to Section 2.10(b) of the Trust
Indenture in connection with a prepayment of the Equipment Notes upon such
termination, (B) all interest charges provided for hereunder or under any
other Lessee Operative Agreement with respect to the late payment of any
amounts, so payable, and (C) the reasonable out-of-pocket fees and expenses
incurred by Lessor, Mortgagee and Owner Participant in connection with such
termination and retention).
(b) Upon full and final payment to Lessor, Mortgagee and the Participants
of the amounts described in Section 9.3(a), and compliance by Lessee with all
the other applicable provisions of this Section 9.3,
(i) Lessor will transfer to Lessee, in accordance with Section 4.5,
any Engines constituting part of the Aircraft but which were not then
installed on the Airframe and sold therewith; and
(ii) The obligation of Lessee to pay Basic Rent otherwise due on (if
payable in advance) or after the Termination Date shall cease, and the Term
for the Aircraft shall end effective as of such Termination Date.
SECTION 10. LOSS, DESTRUCTION, REQUISITION, ETC.
10.1 EVENT OF LOSS WITH RESPECT TO AIRCRAFT
10.1.1 NOTICE AND ELECTION
(a) Upon the occurrence of an Event of Loss with respect to the Airframe,
and any Engine or Engines installed thereon at the time of such Event of Loss,
Lessee shall promptly (and in any event within 15 days after such occurrence)
give Lessor and Mortgagee written notice of such Event of Loss. Within 45 days
after such occurrence, Lessee shall give Lessor and Mortgagee written notice of
Lessee's election to make payment in respect of such Event of Loss, as provided
in Section 10.1.2, or to replace the Airframe, and any such Engines, as provided
in Section 10.1.3; PROVIDED, HOWEVER, that Lessee shall not be able to elect to
replace the Airframe without prior written consent of the Owner Participant if
such Event of Loss has occurred after the 485th day prior to the end of the Base
Lease Term.
(b) Any failure by Lessee to give such notice of its election shall be
deemed to be an election of the option set forth in Section 10.1.2. In addition,
Lessee shall not be entitled to elect the option set forth in Section 10.1.3 if,
at the time Lessor receives such notice from Lessee, there shall have occurred
and be continuing a Special Default or Lease Event of Default.
(c) For purposes of Section 10.1.2, an Event of Loss with respect to the
Airframe shall be deemed to constitute an Event of Loss with respect to the
Aircraft. For purposes of Section 10.1.3, any Engine not actually suffering an
Event of Loss shall not be required to be replaced.
10.1.2 PAYMENT OF LOSS AND TERMINATION OF LEASE
(a) If Lessee elects, in accordance with Section 10.1.1, to make payment in
respect of any such Event of Loss, then Lessee shall pay, in the manner and in
funds of the type specified in Section 3.3, the following amounts:
(i) on or before the Business Day next following the earlier of (x)
the 120th day following the date of the occurrence of such Event of Loss,
and (y) the fourth Business Day following the receipt of insurance proceeds
with respect to such occurrence (but in any event not earlier than the date
of Lessee's election under Section 10.1.1 to make payment under this
Section 10.1.2) (the applicable date referred to in clause (x) or (y) being
referred to as the "Loss Payment Date"), Lessee shall pay to Lessor:
(1) all unpaid Basic Rent or Renewal Rent, as the case may be, due at
any time prior to the Stipulated Loss Value Date that is on or
immediately preceding the Loss Payment Date; plus
(2) the Stipulated Loss Value of the Aircraft computed as of the
Stipulated Loss Value Date used in the foregoing clause (1) for
the computation of unpaid Rent; plus
(3) if the Stipulated Loss Value Date used in the foregoing clause
(1) is a Payment Date on which Basic Rent payable in arrears is
due, the amount of such Basic Rent; plus
(4) as provided in Section 3.2.2, interest on the amount specified in
the foregoing clause (1) at the Payment Due Rate from and
including the date on which any such amount was due to the date
of payment of such amount in full; plus
(5) interest on the amounts specified in the foregoing clauses (2)
and (3) at the SLV Rate from and including the Stipulated Loss
Value Date used in the foregoing clause (1) for the computation
of unpaid Rent to the date such amount is due, and thereafter at
the Payment Due Rate to the date of payment of such amounts in
full;
provided that, in the event that the Commencement Date or a Payment Date shall
occur (x) on the Stipulated Loss Value Date used in the foregoing clause (1) for
the computation of unpaid Rent, and (y) on or before the date of payment of the
amounts specified above in this subparagraph (i), then Lessee shall pay the
Basic Rent or the Renewal Rent, as the case may be, due on such Commencement
Date or Payment Date, and thereupon such amounts payable under this subparagraph
(i) shall be reduced by the amount of such payment to the extent it constitutes
a payment in advance of Basic Rent or Renewal Rent, as the case may be; and
(ii) on or before the date required for payment of the amounts
specified in paragraph (i) above, Lessee shall also pay to Lessor,
Mortgagee and the other Participants all other amounts due and payable by
Lessee to Lessor, Mortgagee and the other Participants under this Lease,
the Participation Agreement or any other Lessee Operative Agreement.
(b) Upon payment in full of all amounts described in the foregoing
paragraph (a),(i) the obligation of Lessee to pay Basic Rent or Renewal Rent
hereunder with respect to the Aircraft shall terminate, (ii) the Term for the
Aircraft shall end and (iii) Lessor will transfer the Aircraft to Lessee, as-is
and where-is, and subject to any insurer's salvage rights, but otherwise in the
manner described in Section 4.5.
(c) No Event of Loss with respect to an Engine, or with respect to an
Airframe, shall result in, or otherwise allow or permit (other than as provided
in Section 10.1.2(b)), any reduction, deferral, discharge or other change in the
timing or amount of any Rent payable by Lessee hereunder, and (subject to such
Section 10.1.2(b)) Lessee shall pay all such Rent and other amounts as though
such Event of Loss had not occurred.
10.1.3 REPLACEMENT OF AIRFRAME AND ENGINES
(a) If Lessee elects, in accordance with Section 10.1.1, to replace the
Airframe, and any Engines actually suffering the Event of Loss, then Lessee
shall, as promptly as possible and in any event within 120 days after the
occurrence of such Event of Loss, convey or cause to be conveyed to Lessor, in
compliance with Section 10.3 and as replacement for the Airframe, and any such
Engine, title to a Replacement Airframe (which shall comply with paragraph (b)
below), and for each such Engine a Replacement Engine, in each case free and
clear of all Liens other than Permitted Liens. If Lessee makes such election,
but for any reason fails or is unable to effect such replacement within such
time period and in compliance with the requirements set forth in Section 10.3,
then Lessee shall be deemed to have initially made the election set forth in
Section 10.1.2 with the effect that Lessee shall immediately pay, in the manner
and in funds of the type specified in Section 3.3, the amounts required under,
and in accordance with, Section 10.1.2.
(b) Any such Replacement Airframe shall be an airframe that is the same
model as the Airframe to be replaced thereby, or an improved model that was
placed in service in the same or later year as the Airframe being replaced, and
that has a value, utility, modification status and remaining useful life
(without regard to hours or cycles remaining until the next regular maintenance
check), at least equal to the Airframe to be replaced thereby (assuming that
such Airframe had been maintained in accordance with the Lease). Any such
Replacement Engine shall meet the requirements of, and be conveyed by Lessee to
Lessor in accordance with, Section 10.2 (other than the notice requirement set
forth in Section 10.2.1).
10.2 EVENT OF LOSS WITH RESPECT TO AN ENGINE
10.2.1 NOTICE
Upon the occurrence of an Event of Loss with respect to an Engine under
circumstances in which an Event of Loss with respect to the Airframe has not
occurred, Lessee shall promptly (and in any event within 15 days after such
occurrence) give Lessor written notice of such Event of Loss.
10.2.2 REPLACEMENT OF ENGINE
Lessee shall, promptly and in any event within 60 days after the occurrence
of such Event of Loss, convey or cause to be conveyed to Lessor, in compliance
with Section 10.3 and as replacement for the Engine with respect to which any
Event of Loss occurred, title to a Replacement Engine free and clear of all
Liens other than Permitted Liens. Such Replacement Engine shall be an engine
manufactured by Engine Manufacturer that is the same model as the Engine to be
replaced thereby, or an improved model, and that is suitable for installation
and use on the Airframe and compatible for use with the other Engine, and that
has a value, utility, modification status and remaining useful life (without
regard to hours and cycles remaining until overhaul) at least equal to the
Engine to be replaced thereby (assuming that such Engine had been maintained in
accordance with the Lease).
10.2.3 ENGINE EXCHANGE
So long as no Lease Event of Default or Special Default has occurred and is
continuing, upon not less than five (5) Business Days' prior written notice to
Lessor, Lessee may replace any Engine leased hereunder with another engine (the
"Exchanged Engine") meeting the requirements of Section 10.2.2. Such Exchanged
Engine shall be deemed to be a "Replacement Engine" and Lessor and Lessee shall
comply with the provisions of Section 10.3 with regard to the Exchanged Engine
and the Engine so replaced.
10.3 CONDITIONS TO ANY REPLACEMENT
10.3.1 DOCUMENTS
Prior to or at the time of conveyance of title to any Replacement Airframe
or Replacement Engine to Lessor, Lessee shall take each of the following
actions:
(a) furnish Lessor with a full warranty xxxx of sale duly conveying to
Lessor such Replacement Airframe or Replacement Engine, in form and substance
reasonably satisfactory to Lessor and cause such Replacement Airframe to be duly
registered in the name of Lessor pursuant to the Act;
(b) cause (i) a Lease Supplement subjecting such Replacement Airframe or
Replacement Engine to this Lease, duly executed by Lessee, to be delivered to
Lessor for execution and, upon such execution, to be filed for recordation with
the FAA pursuant to the Act, (ii) a Trust Indenture Supplement, subjecting such
Replacement Airframe or Replacement Engine to the Trust Indenture, to be
delivered to Lessor for execution and, upon execution, to be filed for
recordation with the FAA pursuant to the Act and (iii) such Financing Statements
and other filings, as Lessor or Mortgagee may reasonably request, duly executed
by Lessee and, to the extent applicable, Lessor and Mortgagee (and Lessor and
Mortgagee shall execute and deliver the same), to be filed in such locations as
any such party may reasonably request;
(c) furnish evidence of compliance with the insurance provisions of Section
11 with respect to such Replacement Airframe or Replacement Engine;
(d) furnish an opinion or opinions of Lessee's counsel (which may be
Lessee's legal department) reasonably satisfactory to Lessor and addressed to
Lessor and Mortgagee to the effect that (i) such full warranty xxxx of sale
referred to in Section 10.3.1(a) constitutes an effective instrument for the
conveyance of title to the Replacement Airframe or Replacement Engine and (ii)
in the case of a Replacement Airframe, Lessor and Mortgagee, as assignee of
Lessor, will be entitled to the benefits of Section 1110 with respect to the
Replacement Airframe, provided that such opinion referred to in this clause (ii)
need not be delivered to the extent that immediately prior to such replacement
the benefits of Section 1110 were not, solely by reason of a change in law or
court interpretation thereof, available to Lessor or Mortgagee, as assignee of
Lessor;
(e) furnish an opinion of Lessee's aviation law counsel reasonably
satisfactory to Lessor and addressed to Lessor and Mortgagee as to the absence
of Liens of record (other than Permitted Liens) due registration of any such
Replacement Airframe and the due filing for recordation of each Lease Supplement
and Trust Indenture Supplement with respect to such Replacement Airframe or
Replacement Engine under the Act;
(f) with respect to any Replacement Airframe, furnish an opinion of tax
counsel, selected by Owner Participant and reasonably satisfactory to Lessee, as
to the federal income tax consequences (without any requirement as to the nature
of such Federal income tax consequences) to Lessor and Owner Participant of any
such replacement;
(g) with respect to the replacement of the Airframe, and any Engine
installed thereon at the time of the subject Event of Loss, furnish a certified
report of a qualified independent aircraft appraiser, reasonably satisfactory to
Lessor, certifying that such Replacement Airframe and any such Replacement
Engine complies with the value, utility and remaining useful life requirements
set forth in Sections 10.1.3(b) and 10.2.2, as the case may be; and
(h) with respect to a Replacement Engine not related to a Replacement
Airframe, furnish a certificate of a qualified aircraft engineer (who may be an
employee or agent of Lessee) or, if requested by Lessor and at Lessor's request
and expense, an independent aircraft engineer certifying that such Replacement
Engine complies with the value, utility and remaining useful life requirements
set forth in Section 10.2.2;
Lessor and Lessee understand and agree that if at the time of any
replacement of the Airframe or any Engine, as contemplated in this Section 10,
the Airframe was registered in a jurisdiction other than the United States, then
the requirements set forth above in this Section 10.3.1 relating to compliance
with the requirements of the Act or the FAA, shall be deemed to refer to the
comparable applicable Law of, and the Aviation Authority of, such other
jurisdiction.
10.3.2 OTHER OBLIGATIONS
Lessor and Lessee agree that, upon any Replacement Airframe becoming the
Airframe hereunder, and upon any Replacement Engine becoming an Engine
hereunder, this Lease shall continue to be, and shall be treated as, a lease for
U.S. federal income tax purposes of, among other things, such Replacement
Airframe and such Replacement Engine. Without limiting the foregoing, Lessee and
Lessor intend that Lessor shall, in all events, be entitled to the benefits of
Section 1110 with respect to any Replacement Airframe or Replacement Engine and
Lessee and Lessor shall cooperate and take such action as the other may
reasonably request so as to ensure that Lessor shall be entitled to such
benefits.
10.4 CONVEYANCE TO LESSEE
Upon compliance by Lessee with the applicable terms of Sections 10.1.3,
10.2 and 10.3.1, Lessor will transfer to Lessee the Airframe or Engine, as the
case may be, with respect to which such Event of Loss occurred, in accordance
with Section 4.5.
10.5 APPLICATION OF PAYMENTS
Any amounts, other than insurance proceeds in respect of damage or loss not
constituting an Event of Loss (the application of which is provided for in
Section 11), received at any time by Lessor, Lessee or any Permitted Sublessee
from any Government Entity or any other Person in respect of any Event of Loss
will be applied as follows:
10.5.1 REPLACEMENT OF AIRFRAME AND ENGINES
If such amounts are received with respect to the Airframe, and any Engine
installed thereon at the time of such Event of Loss, upon compliance by Lessee
with the applicable terms of Section 10.1.3 with respect to the Event of Loss
for which such amounts are received, such amounts shall be paid over to, or
retained by, Lessee.
10.5.2 LOSS OF ENGINE
If such amounts are received with respect to an Engine (other than an
Engine installed on the Airframe at the time such Airframe suffers an Event of
Loss), upon compliance by Lessee with the applicable terms of Section 10.2.2
with respect to the Event of Loss for which such amounts are received, such
amounts shall be paid over to, or retained by, Lessee.
10.5.3 PAYMENT OF LOSS
If such amounts are received, in whole or in part, with respect to the
Airframe, and Lessee makes, has made or is deemed to have made the election set
forth in Section 10.1.2, such amounts shall be applied as follows:
(a) FIRST, if the sum described in Section 10.1.2 has not then been paid in
full by Lessee, such amounts shall be paid to Lessor (or to Mortgagee so long as
Mortgagee has not given notice to Lessee that the Lien of the Trust Indenture
has been duly discharged, except with respect to Excluded Payments) to the
extent necessary to pay in full such sum;
(b) SECOND, the remainder, if any, shall be paid to Lessee.
10.6 REQUISITION OF AIRCRAFT FOR USE
If any Government Entity shall requisition for use the Airframe and the
Engines or engines installed thereon, and if the same does not constitute an
Event of Loss, Lessee shall promptly notify Lessor and Mortgagee of such
requisition and all of Lessee's obligations under this Agreement shall continue
to the same extent as if such requisition had not occurred; PROVIDED, HOWEVER,
that if the Airframe and Engines or engines installed thereon are not returned
to Lessor by Lessee at the end of the Term or within 30 days thereafter, and
Lessor, upon notice given not less than 30 days nor more than 120 days before
the end of the Term, shall have elected to treat such event as constituting an
Event of Loss with respect to the Aircraft, Lessee shall then be deemed to have
made the election set forth in Section 10.1.2 with the effect that Lessee shall
be obligated to pay the Stipulated Loss Value and all other amounts payable
pursuant to Section 10.1.2 with respect to the Aircraft as if an Event of Loss
had occurred as of the end of the Term. If Lessor shall not have elected to
treat such event as an Event of Loss, Lessee shall be obligated to return the
Airframe and Engines or engines to Lessor pursuant to, and in all other respects
to comply with the provisions of, Section 5 promptly upon their return by such
Government Entity, and Lessee shall pay to Lessor upon such return an amount
equal to the average daily Basic Rent payable by Lessee during the Term for each
day after the end of the Term to but excluding the day of such return, up to a
maximum of 30 days.
10.7 REQUISITION OF AN ENGINE FOR USE
If any Government Entity shall requisition for use any Engine but not the
Airframe, Lessee will replace such Engine by complying with the applicable terms
of Sections 10.2 and 10.3 to the same extent as if an Event of Loss had occurred
with respect to such Engine, and any payments received by Lessor or Lessee from
such Government Entity with respect to such requisition shall be paid or
retained in accordance with Section 10.5.2.
10.8 APPLICATION OF PAYMENTS
All payments received by Lessor or Lessee, or any Permitted Sublessee, from
any Government Entity for the use of the Airframe and Engines or engines
installed thereon during the Term (or any subsequent period as to which Lessee
is obligated to pay Rent pursuant to the last sentence of Section 10.6) shall be
paid over to, or retained by, Lessee and all payments received by Lessor or
Lessee from any Government Entity for the use of the Airframe and Engines or
engines installed thereon after the Term (or any subsequent period as to which
Lessee is obligated to pay Rent pursuant to the last sentence of Section 10.6)
shall be paid over to, or retained by, Lessor; provided that, if such
requisition constitutes an Event of Loss, or Lessor has elected under Section
10.6 to treat such requisition as an Event of Loss, then all such payments shall
be paid over to Lessor (or to Mortgagee so long as Mortgagee has not given
notice to Lessee that the Lien of the Trust Indenture has been duly discharged),
and held as provided in Section 10.5.
10.9 APPLICATION OF PAYMENTS DURING EXISTENCE OF A LEASE
EVENT OF DEFAULT
Any amount described in this Section 10 that is payable or creditable to,
or retainable by, Lessee shall not be paid or credited to, or retained by,
Lessee if at the time such payment, credit or retention would otherwise occur a
Lease Event of Default or Special Default shall have occurred and be continuing,
but shall instead be held by or paid over to Lessor (or to Mortgagee so long as
Mortgagee has not given notice to Lessee that the Trust Indenture has been duly
discharged) as security for the obligations of Lessee under this Lease and the
other Lessee Operative Agreements and shall be invested pursuant to Section 4.4
hereof unless and until Lessor shall have demanded liquidated damages pursuant
to Section 15.1.3 or 15.1.4 and such amount is applied, at the option of Lessor,
or upon the written request of Lessee to Lessor, from time to time during the
continuance of a Lease Event of Default, to Lessee's obligations under this
Lease as and when due, it being understood that any such application shall be
made to such obligations of Lessee as Lessor may determine in its sole
discretion. At such time as there shall not be continuing any Lease Event of
Default or Special Default, such amount shall be paid to Lessee to the extent
not previously applied in accordance with this Section 10.9.
SECTION 11. INSURANCE
11.1 LESSEE'S OBLIGATION TO INSURE
Lessee shall comply with, or cause to be complied with, each of the
provisions of Annex D, which provisions are hereby incorporated by this
reference as if set forth in full herein.
11.2 INSURANCE FOR OWN ACCOUNT
Nothing in Section 11 shall limit or prohibit (a) Lessee from maintaining
the policies of insurance required under Annex D with higher limits than those
specified in Annex D, or (b) Lessor, Mortgagee or Owner Participant from
obtaining insurance for its own account (and any proceeds payable under such
separate insurance shall be payable as provided in the policy relating thereto);
PROVIDED, HOWEVER, that no insurance may be obtained or maintained to the extent
it would limit or otherwise adversely affect the coverage of any insurance
required to be obtained or maintained by Lessee pursuant to this Section 11 and
Annex D.
11.3 INDEMNIFICATION BY GOVERNMENT IN LIEU OF INSURANCE
Lessor agrees to accept, in lieu of insurance against any risk with respect
to the Aircraft described in Annex D, indemnification from, or insurance
provided by, the U.S. Government, or upon the written consent of Owner
Participant and Lessor, other Government Entity, against such risk in an amount
that, when added to the amount of insurance (including permitted
self-insurance), if any, against such risk that Lessee (or any Permitted
Sublessee) may continue to maintain, in accordance with this Section 11, during
the period of such requisition or transfer, shall be at least equal to the
amount of insurance against such risk otherwise required by this Section 11.
11.4 APPLICATION OF INSURANCE PROCEEDS
As between Lessor and Lessee, all insurance proceeds received as a result
of the occurrence of an Event of Loss with respect to the Aircraft or any Engine
under policies required to be maintained by Lessee pursuant to this Section 11
will be applied in accordance with Section 10.5. All proceeds of insurance
required to be maintained by Lessee, in accordance with Section 11 and Section B
of Annex D, in respect of any property damage or loss not constituting an Event
of Loss with respect to the Aircraft, Airframe or any Engine will be applied in
payment (or to reimburse Lessee) for repairs or for replacement property, and
any balance remaining after such repairs or replacement with respect to such
damage or loss shall be paid over to, or retained by, Lessee.
11.5 APPLICATION OF PAYMENTS DURING EXISTENCE OF DEFAULT
Any amount described in this Section 11 that is payable or creditable to,
or retainable by, Lessee shall not be paid or credited to, or retained by,
Lessee if at the time such payment, credit or retention would otherwise occur a
Lease Event of Default or Special Default shall have occurred and be continuing,
but shall instead be held by or paid over to Lessor (or to Mortgagee so long as
Mortgagee has not given notice to Lessee that the Lien of the Trust Indenture
has been duly discharged) as security for the obligations of Lessee under this
Lease and shall be invested pursuant to Section 4.4 hereof unless and until
Lessor shall have demanded liquidated damages pursuant to Section 15.1.3 or
15.1.4 and such amount is applied, at the option of Lessor, or upon the written
request of Lessee to Lessor, from time to time during the continuance of a Lease
Event of Default, to Lessee's obligations under this Lease and the other Lessee
Operative Agreements as and when due, it being understood that any such
application shall be made to such obligations of Lessee as Lessor may determine
in its sole discretion. At such time as there shall not be continuing any Lease
Event of Default or Special Default, such amount shall be paid to Lessee to the
extent not previously applied in accordance with this Section 11.5.
SECTION 12. INSPECTION
(a) At all reasonable times Lessor, Mortgagee or the Owner Participant, and
their respective authorized representatives (the "Inspecting Parties") may (not
more than once every 12 months unless a Lease Event of Default has occurred and
is continuing then such inspection right shall not be so limited) visit and
inspect the Aircraft, Airframe and Engines (including, without limitation, the
Aircraft Documents) and any such Inspecting Party may make copies of such
Aircraft Documents unless, in the case of any Inspecting Party other than Owner
Participant or its authorized representatives, reasonably deemed confidential by
Lessee or such Permitted Sublessee.
(b) Unless otherwise agreed in Lessee's reasonable discretion, any
inspection of the Aircraft hereunder shall be limited to a visual, walk-around
inspection and shall not include the opening of any panels, bays or other
components of the Aircraft, and no such inspection shall interfere with Lessee's
or any Permitted Sublessee's maintenance and operation of the Aircraft, Airframe
and Engines.
(c) With respect to such rights of inspection, Lessor, Owner Participant
and Mortgagee shall not have any duty or liability to make, or any duty or
liability by reason of not making, any such visit, inspection or survey.
(d) Each Inspecting Party shall bear its own expenses in connection with
any such inspection (including the cost of any copies made in accordance with
Section 12(a)).
(e) Upon the reasonable request of Lessor, Lessee shall provide to Lessor
reasonable prior notice of the date upon which the Aircraft, Airframe or any
Engine will undergo its next scheduled maintenance visit involving any "S" check
(or equivalent check or higher level check), and shall advise Lessor of the name
and location of the relevant maintenance performer. Lessor shall have the right
to observe such maintenance visit so long as such observation does not interfere
with the maintenance and operation of the Aircraft, Airframe or Engine.
SECTION 13. ASSIGNMENT; MERGER; SUCCESSOR OWNER TRUSTEE
13.1 IN GENERAL
This Lease and the other Lessee Operative Agreements shall be binding upon
and inure to the benefit of Lessor and Lessee and their respective successors
and permitted assigns. Except as otherwise expressly permitted by the terms of
the Lease or any other Lessee Operative Agreement, Lessee will not, without the
prior written consent of Lessor and Mortgagee, assign any of its rights under
this Lease. Except as otherwise provided herein (including, without limitation,
under the provisions of Section 15 hereof), Lessor and Mortgagee may not assign
or convey any of its right, title and interest in and to this Lease or the
Aircraft without the prior written consent of Lessee, such consent not to be
unreasonably withheld.
13.2 MERGER OF LESSEE
13.2.1 IN GENERAL
Lessee shall not consolidate with or merge into any other person under
circumstances in which Lessee is not the surviving corporation, or convey,
transfer or lease in one or more transactions all or substantially all of its
assets to any other person, unless:
(a) such person is organized, existing and in good standing under the Laws
of the United States, any State of the United States or the District Columbia
and, upon consummation of such transaction, such person will be a U.S. Air
Carrier;
(b) such person executes and delivers to Lessor, Mortgagee and Owner
Participant a duly authorized, legal, valid, binding and enforceable agreement,
reasonably satisfactory in form and substance to Lessor and Owner Participant,
containing an effective assumption by such person of the due and punctual
performance and observance of each covenant, agreement and condition in the
Lessee Operative Agreements to be performed or observed by Lessee;
(c) such person makes such filings and recordings with the FAA pursuant to
the Act as shall be necessary to evidence such consolidation or merger; and
(d) immediately after giving effect to such consolidation or merger no
Lease Event of Default shall have occurred and be continuing.
(e) Lessee shall have delivered to the Lessor, Mortgagee and the Owner
Participant an opinion of counsel (which may be Lessee's Legal Department)
reasonably satisfactory to the Owner Participant with respect to the
satisfaction of requirements set forth in Sections 13.2.1(a), (b) and (c).
13.2.2 EFFECT OF MERGER
Upon any such consolidation or merger of Lessee with or into, or the
conveyance, transfer or lease by Lessee of all or substantially all of its
assets to, any Person in accordance with this Section 13.2, such Person will
succeed to, and be substituted for, and may exercise every right and power of,
Lessee under the Lessee Operative Agreements with the same effect as if such
person had been named as "Lessee" therein. No such consolidation or merger, or
conveyance, transfer or lease, shall have the effect of releasing Lessee or such
Person from any of the obligations, liabilities, covenants or undertakings of
Lessee under the Lease.
13.3 ASSIGNMENT SECURITY FOR LESSOR'S OBLIGATIONS
In order to secure the indebtedness evidenced by the Equipment Notes,
Lessor has agreed in the Trust Indenture, among other things, to assign to
Mortgagee this Lease and to mortgage the Aircraft, Airframe and Engines in favor
of Mortgagee, subject to the reservations and conditions therein set forth.
Lessee hereby accepts and consents to the assignment of all Lessor's right,
title and interest in and to this Lease pursuant to the terms of the Trust
Indenture. In accordance with Section 3.3(c), Lessee agrees to pay directly to
Mortgagee (or, after receipt by Lessee of notice from Mortgagee of the discharge
of the Lien of the Trust Indenture, to Lessor), all amounts of Rent (other than
Excluded Payments) due or to become due hereunder and assigned to Mortgagee and
Lessee agrees that Mortgagee's right to such payments hereunder shall be
absolute and unconditional and shall not be affected by any circumstance,
including, without limitation, the circumstances set forth in Section 16 hereof.
Notwithstanding the foregoing assignment of this Lease, the obligations of
Lessee to Lessor to perform the terms and conditions of this Lease shall remain
in full force and effect.
13.4 SUCCESSOR OWNER TRUSTEE
Lessee agrees that in the case of the appointment of any successor Owner
Trustee pursuant to the terms of the Participation Agreement and the Trust
Agreement, such successor Owner Trustee shall, upon written notice by such
successor Owner Trustee to Lessee, succeed to all the rights, powers and title
of Lessor hereunder and shall be deemed to be Lessor and the owner of the
Aircraft and the other assets of the Trust Estate for all purposes hereof
without the necessity of any consent or approval by Lessee and without in any
way altering the terms of this Lease or Lessee's obligations hereunder. An
appointment and designation of a successor Owner Trustee shall not exhaust the
right to appoint and designate further successor or additional Owner Trustees
pursuant to the Participation Agreement and the Trust Agreement, and such right
may be exercised repeatedly as long as this Lease shall be in effect.
SECTION 14. LEASE EVENTS OF DEFAULT
The occurrence of any one or more of the following circumstances,
conditions, acts or events, for any reason whatsoever and whether any such
circumstance, condition, act or event shall be voluntary or involuntary or come
about or be effected by operation of Law or pursuant to or in compliance with
any judgment, decree, order, rule or regulation of any Government Entity, shall
constitute a Lease Event of Default so long as it shall not have been remedied:
14.1 PAYMENTS
Lessee shall fail to pay any amount of Basic Rent, Renewal Rent, Stipulated
Loss Value or Termination Value within ten (10) Business Days after the same
shall have become due; or Lessee shall fail to pay any Supplemental Rent (other
than Stipulated Loss Value or Termination Value) when due and such failure shall
continue for a period in excess of ten (10) Business Days from and after the
date of any written notice to Lessee from Lessor of the failure to make such
payment when due; provided that any such failure to pay any Excluded Payment
shall not constitute a Lease Event of Default until written notice is given by
the Owner Participant to Lessee and Mortgagee that such failure constitutes a
Lease Event of Default and such failure shall have continued for a period in
excess of ten (10) Business Days after such notice.
14.2 INSURANCE
Lessee shall fail to carry and maintain, or cause to be carried and
maintained, insurance on and in respect of the Aircraft, Airframe and Engines in
accordance with the provisions of Section 11.
14.3 OTHER COVENANTS
Lessee shall fail to observe or perform (or caused to be observed and
performed) in any material respect any other covenant, agreement or obligation
set forth herein or in any other Lessee Operative Agreement (other than the
covenants, agreements and obligations set forth in the Tax Indemnity Agreement),
and such failure shall continue unremedied for a period of 30 days from and
after the date of written notice thereof to Lessee from Lessor or Mortgagee,
unless such failure is capable of being corrected and Lessee shall be diligently
proceeding to correct such failure, in which case there shall be no Lease Event
of Default unless and until such failure shall continue unremedied for a period
of 180 days after receipt of such notice.
14.4 REPRESENTATIONS AND WARRANTIES
Any representation or warranty made by Lessee herein, in the Participation
Agreement or in any other Lessee Operative Agreement (other than the
representations and warranties of Lessee in the Tax Indemnity Agreement) (a)
shall prove to have been untrue or inaccurate in any material respect as of the
date made, (b) such untrue or inaccurate representation or warranty is material
at the time in question, (c) and the same shall remain uncured (to the extent of
the adverse impact of such incorrectness on the interest of the Participants or
Lessor) for a period in excess of 30 days from and after the date of written
notice thereof from Lessor or Mortgagee to Lessee.
14.5 BANKRUPTCY AND INSOLVENCY
(a) Lessee shall consent to the appointment of or the taking of possession
by a receiver, trustee or liquidator of itself or of all, or substantially all,
of its property, or Lessee shall admit in writing its inability to pay its debts
generally as they come due, or does not pay its debts generally as they become
due or shall make a general assignment for the benefit of creditors, or Lessee
shall file a voluntary petition in bankruptcy or a voluntary petition or an
answer seeking reorganization, liquidation or other relief in a case under any
bankruptcy Laws or other insolvency Laws (as in effect at such time), or Lessee
shall seek relief by voluntary petition, answer or consent, under the provisions
of any other bankruptcy or other similar Law providing for the reorganization or
winding-up of corporations (as in effect at such time) or Lessee's board of
directors shall adopt a resolution authorizing any of the foregoing; or
(b) an order, judgment or decree shall be entered by any court of competent
jurisdiction appointing, without the consent of Lessee, a receiver, trustee or
liquidator of Lessee or of substantially all of its property, or substantially
all of the property of Lessee shall be sequestered, and any such order, judgment
or decree of appointment or sequestration shall remain in force undismissed,
unstayed and unvacated for a period of 90 days after the date of entry thereof;
or
(c) a petition against Lessee in a case under any bankruptcy Laws or other
insolvency Laws (as in effect at such time) is filed and not withdrawn or
dismissed within 90 days thereafter, or if, under the provisions of any Law
providing for reorganization or winding-up of corporations which may apply to
Lessee, any court of competent jurisdiction assumes jurisdiction, custody or
control of Lessee or of substantially all of its property and such jurisdiction,
custody or control remains in force unrelinquished, unstayed and unterminated
for a period of 90 days.
SECTION 15. REMEDIES AND WAIVERS
15.1 REMEDIES
If any Lease Event of Default shall occur and be continuing, Lessor may, at
its option and at any time and from time to time, exercise any one or more of
the following remedies as Lessor in its sole discretion shall elect:
15.1.1 RETURN AND REPOSSESSION
Lessor may cause Lessee, upon giving written notice to Lessee, to return
promptly, and Lessee shall return promptly, the Airframe and Engines as Lessor
may so demand, to Lessor or its order in the manner and condition required by,
and otherwise in accordance with, all the provisions of Section 5 as if the
Airframe or Engine were being returned at the end of the Base Lease Term or any
Renewal Lease Term or Lessor, at its option, may enter upon the premises where
the Airframe or any Engine, or any Part thereof, are located and take immediate
possession of and remove the same by summary proceedings or otherwise, all
without liability accruing to Lessor for or by reason of such entry or taking of
possession, whether for the restoration of damage to property caused by such
taking or otherwise.
15.1.2 SALE AND USE
Lessor may sell the Airframe and/or any Engine at public or private sale,
at such times and places, and to such Persons (including Lessor, Mortgagee or
any Participant), as Lessor may determine; or Lessor may otherwise dispose of,
hold, use, operate, lease to others or keep idle the Airframe and/or any Engine,
as Lessor, in its sole discretion, may determine, all free and clear of any
rights of Lessee and without any duty to account to Lessee with respect to such
action or inaction or for any proceeds with respect thereto, except as
hereinafter set forth in this Section 15, and except to the extent that such
proceeds would constitute, under applicable Law, a mitigation of Lessor's
damages suffered or incurred as a result of the subject Lease Event of Default.
Lessor shall give Lessee at least 15 days prior written notice of the date fixed
for any public sale of the Airframe and/or any Engine or of the date on or after
which will occur the execution of any contract providing for any private sale.
15.1.3 CERTAIN LIQUIDATED DAMAGES
Whether or not Lessor shall have exercised, or shall thereafter at any time
exercise, any of its rights under Section 15.1.1 or 15.1.2 with respect to the
Airframe and/or any Engine, or any Part thereof, Lessor, by written notice to
Lessee specifying a payment date (which shall be the Stipulated Loss Value Date
next occurring not less than 10 days after the date of such notice), may demand
Lessee to pay to Lessor, and Lessee shall pay to Lessor, on the payment date so
specified and in the manner and in funds of the type specified in Section 3.3,
as liquidated damages for loss of a bargain and not as a penalty (in lieu of the
Basic Rent or Renewal Rent, as the case may be, for the Aircraft in respect of
all periods commencing on or after the date specified for payment in such
notice), the following amounts:
(a) all unpaid Basic Rent or Renewal Rent, as the case may be, due at any
time prior to the Stipulated Loss Value Date specified in such notice and if
such Stipulated Loss Value Date is a Payment Date on which Basic Rent is payable
in arrears, the amount thereof payable in arrears; plus
(b) whichever of the following amounts Lessor, in its sole discretion shall
specify in such notice:
(i) an amount equal to the excess, if any, of the present value,
computed as of the Stipulated Loss Value Date specified in such notice,
discounted to such date at a rate per annum equal to the Debt Rate,
compounded semiannually, of all unpaid Basic Rent during the then remaining
portion of the Base Lease Term or, if a Renewal Lease Term has commenced,
of all unpaid Renewal Rent during the remaining portion of such Renewal
Lease Term, over the Fair Market Rental Value of the Aircraft for the
remainder of the Term, after discounting such Fair Market Rental Value to
its then present value (at a rate per annum equal to the Debt Rate,
compounded semiannually) as of the Stipulated Loss Value Date specified in
such notice, or
(ii) an amount equal to the excess, if any, of the Stipulated Loss
Value for the Aircraft, computed as of the Stipulated Loss Value Date
specified in such notice, over the Fair Market Sales Value of the Aircraft,
as of the Stipulated Loss Value Date specified in such notice; plus
(c) interest on the amounts specified in the foregoing clause (a) at the
Payment Due Rate from and including the date on which any such amount was due to
the date of payment of such amount; plus
(d) interest on the amount specified in the foregoing clause (b)(i) or
(b)(ii), according to Lessor's election, at the Payment Due Rate from and
including the Stipulated Loss Value Date specified in such notice to the date of
payment of such amount.
15.1.4 LIQUIDATED DAMAGES UPON SALE
If Lessor, pursuant to Section 15.1.2 or applicable Law, shall have sold
the Airframe and/or any Engine, Lessor, in lieu of exercising its rights under
Section 15.1.3 with respect to the Aircraft, Airframe or any Engine, as the case
may be, may, if Lessor shall so elect, upon giving written notice to Lessee,
demand Lessee to pay Lessor, and Lessee shall pay to Lessor, on the date of such
sale and in the manner and in funds of the type specified in Section 3.3, as
liquidated damages for loss of a bargain and not as a penalty (in lieu of the
Basic Rent or Renewal Rent, as the case may be, for the Aircraft in respect of
all periods commencing on or after the date of such sale), the following
amounts:
(a) all unpaid Basic Rent or Renewal Rent, as the case may be, due at any
time prior to the Stipulated Loss Value Date on or immediately
preceding the date of such sale; plus
(b) an amount equal to the excess, if any, of (i) the Stipulated Loss
Value of the Aircraft, computed as of the Stipulated Loss Value Date
used in the foregoing clause (a) for the computation of unpaid Rent,
over (ii) the proceeds of such sale minus all reasonable costs of
Lessor and Mortgagee in connection with the sale; plus
(c) if the date of such sale is not a Stipulated Loss Value Date, an
amount equal to interest on the outstanding principal amount of the
Equipment Notes at the rate per annum borne thereby from and including
the Stipulated Loss Value Date used in the foregoing clause (a) for
the computation of unpaid Rent to the date of such sale; plus
(d) if the date of such sale is not a Stipulated Loss Value Date, an
amount equal to the interest that would be accrued on the portion of
the Stipulated Loss Value attributable to Owner Participant's interest
computed at a rate per annum equal to the SLV Rate from and including
the Stipulated Loss Value Date used in the foregoing clause (a); plus
(e) interest on the amounts specified in the foregoing clause (a) at the
Payment Due Rate from and including the date on which any such amount
was due to the date of payment of such amount; plus
(f) interest on the sum of the amounts specified in the foregoing clause
(b) at the Payment Due Rate from and including the date of such sale
to the date of payment of such amounts.
15.1.5 RESCISSION
Lessor may (i) at its option, rescind or terminate the leasing of the
Aircraft, Airframe or any Engine, or any Part thereof hereunder, or (ii)
exercise any other right or remedy that may be available to it under applicable
Law or proceed by appropriate court action to enforce the terms hereof.
15.1.6 OTHER REMEDIES
In addition to the foregoing remedies (but without duplication of amounts
otherwise paid under this Section 15), Lessee shall be liable for any and all
unpaid Rent due hereunder before, during or after (except as otherwise provided
herein) the exercise of any of the foregoing remedies and for all reasonable
attorneys' fees and other costs and expenses of Lessor, Mortgagee the Owner
Participant and the Note Holders, including, without limitation, interest on
overdue Rent at the rate as herein provided, incurred by reason of the
occurrence of any Lease Event of Default or the exercise of Lessor's remedies
with respect thereto, including all reasonable costs and expenses incurred in
connection with the return of the Airframe or any Engine, in accordance with the
terms of Section 5 or in placing the Airframe or any Engine, in the condition
and airworthiness required by Section 5 and, in the case of Owner Participant,
expenses of inspection notwithstanding the limitations in Section 12(d).
15.2 LIMITATIONS UNDER CRAF
Notwithstanding the provisions of Section 15.1, during any period that the
Aircraft, Airframe or any Engine is subject to CRAF in accordance with the
provisions of Section 7.2.3 and in the possession of the U.S. Government, Lessor
shall not, as a result of any Lease Event of Default, exercise its remedies
hereunder in such manner as to limit Lessee's control under this Lease (or any
Permitted Sublessee's control under any Permitted Sublease) of the Aircraft,
Airframe or such Engine, unless at least 30 days' (or such other period as may
then be applicable under CRAF) written notice of default hereunder shall have
been given by Lessor or Mortgagee by registered or certified mail to Lessee (and
any Permitted Sublessee) with a copy to the Contracting Officer Representative
or Representatives for the Military Airlift Command of the United States Air
Force to whom notices must be given under the contract governing Lessee's (or
any Permitted Sublessee's) participation in CRAF with respect to the Aircraft,
Airframe or any Engine.
15.3 RIGHT TO PERFORM FOR LESSEE
If Lessee (i) fails to make any payment of Rent required to be made by it
hereunder or (ii) fails to perform or comply with any of its agreements
contained herein and such failure (except with respect to Lessee's agreement to
insure pursuant to Section 11) continues for a period of thirty days after
written notice thereof is given by Lessor, Owner Participant or Mortgagee to
Lessee, Owner Participant, Lessor or Mortgagee may (but shall not be obligated
to) make such payment or perform or comply with such agreement, and the amount
of such payment and the amount of the expenses of Lessor, Owner Participant or
Mortgagee incurred in connection with such payment or the performance of or
compliance with such agreement, as the case may be, together with interest
thereon at the Payment Due Rate, shall be deemed Supplemental Rent, payable by
Lessee upon demand by Lessor or Mortgagee, whichever is entitled thereto. No
such payment, performance or compliance shall be deemed to cure any Lease
Default or Lease Event of Default or otherwise relieve Lessee of its obligations
with respect thereto.
15.4 DETERMINATION OF FAIR MARKET RENTAL VALUE AND FAIR
MARKET SALES VALUE
For the purpose of this Section 15, the "Fair Market Rental Value" or the
"Fair Market Sales Value" of the Aircraft, Airframe or any Engine, shall be
determined on an "as is, where is" basis and shall take into account customary
brokerage and other out-of-pocket fees and expenses which typically would be
incurred in connection with a re-lease or sale of the Aircraft, Airframe or any
Engine. Any such determination shall be made by an Appraiser selected by Lessor
and the costs and expenses associated therewith shall be borne by Lessee, unless
Lessor does not obtain possession of the Aircraft, Airframe and Engines pursuant
to this Section 15, in which case an Appraiser shall not be appointed and Fair
Market Rental Value and Fair Market Sales Value for purposes of this Section 15
shall be zero.
15.5 REMEDIES CUMULATIVE
Nothing contained in this Lease shall be construed to limit in any way any
right, power, remedy or privilege of Lessor hereunder or under any other
Operative Agreement or now or hereafter existing at law or in equity. Each and
every right, power, remedy and privilege hereby given to, or retained by, Lessor
in this Lease shall be in addition to and not in limitation of every other
right, power, remedy and privilege given under the Operative Agreements or now
or hereafter existing at law or in equity. Each and every right, power, remedy
and privilege of Lessor under this Lease and any other Operative Agreement may
be exercised from time to time or simultaneously and as often and in such order
as may be deemed expedient by Lessor. All such rights, powers, remedies and
privileges shall be cumulative and not mutually exclusive, and the exercise of
one shall not be deemed a waiver of the right to exercise any other. Lessee
hereby waives to the extent permitted by applicable Law any right which it may
have to require Lessor to choose or elect remedies.
SECTION 16. LESSEE'S OBLIGATIONS; NO SETOFF, COUNTERCLAIM, ETC.
(a) Lessee's obligation to pay Rent hereunder shall be absolute and
unconditional, and shall not be affected by any event or circumstance,
including, without limitation: (i) any setoff, counterclaim, recoupment, defense
or other right that Lessee may have against Lessor, Mortgagee, any Participant,
any Note Holder, or any other Person for any reason whatsoever; (ii) any defect
in the title, airworthiness, condition, design, operation or fitness for use of,
or any damage to or loss or destruction of, the Aircraft, Airframe or any
Engine, or any interruption or cessation in the use or possession thereof by
Lessee for any reason whatsoever; (iii) any insolvency, bankruptcy,
reorganization or similar proceedings by or against Lessee or any other Person;
or (iv) any other circumstance, happening or event whatsoever, whether or not
similar to any of the foregoing.
(b) If for any reason whatsoever this Lease shall be terminated in whole or
in part by operation of law or otherwise except as specifically provided herein,
Lessee nonetheless agrees to pay an amount equal to each Rent payment at the
time such payment would have become due and payable in accordance with the terms
hereof had this Agreement not been terminated in whole or in part. Lessee hereby
waives, to the extent permitted by applicable law, any and all rights that it
may now have or that at any time hereafter may be conferred upon it, by statute
or otherwise, to terminate, cancel, quit or surrender this Agreement, except in
accordance with the express terms hereof.
(c) Nothing set forth in this Section 16 shall be construed to prohibit
Lessee from separately pursuing any claim that it may have from time to time
against Lessor or any other Person with respect to any matter (other than the
absolute and unconditional nature of Lessee's obligations hereunder to pay Rent,
and other than in respect of the matters specified in paragraphs (a) and (b)
above).
SECTION 17. RENEWAL OPTIONS
17.1 NOTICES GENERALLY
(a) At least 210 days but no more than 365 days prior to the Scheduled
Expiration Date or, if a Renewal Lease Term is then in effect, prior to the
Scheduled Renewal Term Expiration Date of such Renewal Lease Term, Lessee may
provide notice to Lessor that Lessee may exercise the option to extend the
leasing of the Aircraft for a Renewal Lease Term pursuant to Section 17.2 (a
"Preliminary Notice").
(b) If any such Preliminary Notice is given by Lessee, then Lessee may
provide a further notice specifying it intends to elect its option, with respect
to the relevant period, pursuant to Section 17.2.1. If a Preliminary Notice is
given and no such further notice is given, the Lessee shall return the Aircraft
at the time and in the manner specified in Section 5.
17.2 RENEWAL OPTIONS
17.2.1 RENEWAL NOTICE
(a) If Lessee has given a Preliminary Notice, as specified in Section 17.1,
and subject to the terms and conditions of this Section 17.2, Lessee may
exercise its option to extend the leasing of the Aircraft hereunder until the
next Scheduled Renewal Term Expiration Date, on the same terms, provisions and
conditions (except as contemplated by this Section 17) set forth herein and in
the other Lessee Operative Agreements with respect to the Base Lease Term, by
delivery of a notice (a "Renewal Notice") to Lessor not less than 180 days prior
to (i) if the Base Lease Term is then in effect, the Scheduled Expiration Date,
or (ii) if a Renewal Lease Term is then in effect, the Scheduled Renewal Term
Expiration Date for such Renewal Lease Term. The Scheduled Renewal Term
Expiration Date for such Renewal Lease Term shall be the first anniversary of
the first Scheduled Expiration Date, if the Base Lease Term is then in effect,
or the first anniversary of the first Scheduled Renewal Term Expiration Date for
any Renewal Lease Term then in effect, as the case may be. Lessee shall be
entitled to renew this Lease for up to two Renewal Lease Terms.
(b) Notwithstanding anything to the contrary in this Agreement or any other
Operative Agreement:
(i) No Preliminary Notice or Renewal Notice shall be binding on Lessor
or oblige Lessor to extend the leasing of the Aircraft hereunder for a
Renewal Lease Term if any Lease Event of Default or Special Default shall
have occurred and be continuing on and as of the date that such Renewal
Lease Term would otherwise commence.
(ii) Any Renewal Notice shall be revocable by Lessee until the date
which is 150 days prior to the Scheduled Expiration Date or Scheduled
Renewal Term Expiration Date, as the case may be, (so long as Owner
Participant and Lessor have acted in good faith in determining the Renewal
Rent in accordance with Section 17.2.2) or, if Lessor or Owner Participant
have failed to so act in good faith, until 10 Business Days after the
Renewal Rent is determined in accordance with Sections 17.2.2 and unless so
revoked by written notice by Lessee to Lessor shall thereafter become
irrevocable and shall constitute an unconditional obligation of Lessee to
extend the leasing of the Aircraft hereunder for the Renewal Lease Term to
which such Renewal Notice relates.
(iii) Lessee shall not be entitled to give any Renewal Notice if it
has (x) not delivered a Preliminary Notice or (y) delivered a Purchase
Notice to Lessor.
17.2.2 RENEWAL RENT
(a) During the Renewal Lease Term, Lessee shall pay to Lessor on each
Payment Date, in the manner and in the funds of the type specified in Section
3.3, Renewal Rent in arrears.
(b) The Renewal Rent payable by Lessee on each Payment Date during any
Renewal Lease Term shall be the Fair Market Rental Value of the Aircraft for
such Renewal Lease Term. Any such Fair Market Rental Value shall be determined
not more than 20 Business Days after Lessee gives a Preliminary Notice by mutual
agreement of Lessor and Lessee or, if they shall be unable to agree, by an
appraisal in accordance with Section 17.4. Notwithstanding the foregoing, (i) on
the first Payment Date and last Payment Date of a Renewal Lease Term, Lessee
shall pay to Lessor a pro-rated amount of Renewal Rent equal to (x) the Renewal
Rent applicable to such Renewal Lease Term divided by 180 multiplied by (y) the
actual number of days elapsed in the Payment Period ending on such Payment Date.
17.2.3 STIPULATED LOSS AND TERMINATION VALUES
(a) For any Renewal Lease Term, Stipulated Loss Value Dates and Termination
Value Dates shall be extended throughout such Renewal Lease Term on the same
days and for the same months as during the Base Lease Term.
(b) Stipulated Loss Value and Termination Value amounts that are payable
during any such Renewal Lease Term shall be equal to Stipulated Loss Value and
Termination Value amounts as of the end of the Base Lease Term.
17.3 [INTENTIONALLY OMITTED.]
17.4 APPRAISALS
Whenever Fair Market Rental Value of the Aircraft is required to be
determined by an appraisal under this Section 17, Lessee and Lessor shall
appoint a mutually satisfactory Appraiser to conduct such appraisal. If Lessee
and Lessor fail to agree upon a satisfactory Appraiser then each shall promptly
appoint a separate Appraiser and such Appraisers shall jointly determine such
amount. If either Lessee or Lessor fails to so appoint an Appraiser, the
determination of the single Appraiser appointed shall be final. If two
Appraisers are appointed and within 7 days after the appointment of the latter
of such two Appraisers, they cannot agree upon such amount, such two Appraisers
shall, within 8 days after such latter appointment, appoint a third Appraiser
and such amount shall be determined by such three Appraisers, who shall make
their separate appraisals within 7 days following the appointment of the third
Appraiser, and any determination so made shall be conclusive and binding upon
Lessor and Lessee. If no such third Appraiser is appointed within such 8-day
period, either Lessor or Lessee may apply to the American Arbitration
Association to make such appointment, and both parties shall be bound by such
appointment. The foregoing appraisal procedure shall in any event be completed
no less than 190 days before the end of the Base Lease Term or the current
Renewal Lease Term, as the case may be. If three Appraisers are appointed and
the difference between the determination which is farther from the middle
determination and the middle determination is more than 125% of the difference
between the middle determination and the third determination, then such farther
determination shall be excluded, the remaining two determinations shall be
averaged and such average shall be final and binding upon Lessor and Lessee.
Otherwise, the average of all three determinations shall be final and binding
upon Lessor and Lessee. The fees and expenses of all such Appraisers and such
appraisal procedure shall be borne equally by Lessee and Lessor, PROVIDED that
if Lessee elects not to renew this Lease or purchase the Aircraft following the
conclusion of such appraisal, Lessee shall pay all expenses of such appraisal.
SECTION 18. MISCELLANEOUS
18.1 AMENDMENTS
No provision of this Agreement may be amended, supplemented, waived,
modified, discharged, terminated or otherwise varied orally, but only by an
instrument in writing that specifically identifies the provision of this
Agreement that it purports to amend, supplement, waive, modify, discharge,
terminate or otherwise vary and is signed by Lessor and Lessee. Each such
amendment, supplement, waiver, modification, discharge, termination or variance
shall be effective only in the specific instance and for the specific purpose
for which it is given. No provision of this Agreement shall be varied or
contradicted by oral communication, course of dealing or performance or other
manner not set forth in an agreement, document or instrument in writing and
signed by Lessor and Lessee.
18.2 SEVERABILITY
If any provision hereof shall be held invalid, illegal or unenforceable in
any respect in any jurisdiction, then, to the extent permitted by Law (a) all
other provisions hereof shall remain in full force and effect in such
jurisdiction and (b) such invalidity, illegality or unenforceability shall not
affect the validity, legality or enforceability of such provision in any other
jurisdiction. If, however, any Law pursuant to which such provisions are held
invalid, illegal or unenforceable may be waived, such Law is hereby waived by
the parties hereto to the full extent permitted, to the end that this Agreement
shall be deemed to be a valid and binding agreement in all respects, enforceable
in accordance with its terms.
18.3 THIRD-PARTY BENEFICIARY
This Agreement is not intended to, and shall not, provide any person not a
party hereto (other than Mortgagee, the Participants, the Indenture Indemnitees
and the Persons referred to in Section 4.6, with respect to matters expressly
for their benefit in this Lease) with any rights of any nature whatsoever
against either of the parties hereto, and no person not a party hereto (other
than Mortgagee, the Participants, the Indenture Indemnitees and the Persons
referred to in Section 4.6, with respect to matters expressly for their benefit
in this Lease) shall have any right, power or privilege in respect of, or have
any benefit or interest arising out of, this Agreement, it being understood that
this Section 18.3 shall in no way limit Mortgagee's rights as assignee of the
Lessor pursuant to the Trust Indenture.
18.4 REPRODUCTION OF DOCUMENTS
This Agreement, all annexes, schedules and exhibits hereto and all
agreements, instruments and documents relating hereto, including, without
limitation (a) consents, waivers and modifications that may hereafter be
executed and (b) financial statements, certificates and other information
previously or hereafter furnished to any party hereto, may be reproduced by such
party by any photographic, photostatic, microfilm, micro-card, miniature
photographic or other similar process, and such party may destroy any original
documents so reproduced. Any such reproduction shall be admissible in evidence
as the original itself in any judicial or administrative proceeding (whether or
not the original is in existence and whether or not such reproduction was made
by such party in the regular course of business) and any enlargement, facsimile
or further reproduction of such reproduction likewise is admissible in evidence.
18.5 COUNTERPARTS
This Agreement and any amendments, waivers, consents or supplements hereto
may be executed in any number of counterparts (or upon separate signature pages
bound together into one or more counterparts), each of which when so executed
shall be deemed to be an original, and all of which counterparts, taken
together, shall constitute one and the same instrument.
18.6 NOTICES
Unless otherwise expressly permitted by the terms hereof, all notices,
requests, demands, authorizations, directions, consents, waivers and other
communications required or permitted to be made, given, furnished or filed
hereunder shall be in writing (it being understood that the specification of a
writing in certain instances and not in others does not imply an intention that
a writing is not required as to the latter), shall refer specifically to this
Agreement and shall be personally delivered, sent by facsimile or
telecommunication transmission (which in either case provides written
confirmation to the sender of its delivery), sent by registered mail or
certified mail, return receipt requested, postage prepaid, or sent by overnight
courier service, in each case to the respective address or facsimile number set
forth for such party in Schedule 1 to the Participation Agreement, or to such
other address or number as either party hereto may hereafter specify by notice
to the other party hereto. Each such notice, request, demand, authorization,
direction, consent, waiver or other communication shall be effective when
received or, if made, given, furnished or filed (a) by facsimile or
telecommunication transmission, when confirmed, or (b) by registered or
certified mail, three Business Days after being deposited, properly addressed,
with the U.S. Postal Service.
18.7 GOVERNING LAW; SUBMISSION TO JURISDICTION; VENUE
(A) THIS AGREEMENT SHALL IN ALL RESPECTS BE GOVERNED BY THE LAWS OF THE
STATE OF NEW YORK, INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND
PERFORMANCE. THIS AGREEMENT IS BEING DELIVERED IN THE STATE OF NEW YORK.
(B) EACH PARTY HERETO HEREBY IRREVOCABLY, TO THE EXTENT PERMITTED BY
APPLICABLE LAW, AGREES, ACCEPTS AND SUBMITS ITSELF TO THE NON-EXCLUSIVE
JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK IN THE CITY AND COUNTY OF
NEW YORK AND OF THE UNITED STATES FOR THE SOUTHERN DISTRICT OF NEW YORK, IN
CONNECTION WITH ANY LEGAL ACTION, SUIT OR PROCEEDING WITH RESPECT TO ANY MATTER
RELATING TO OR ARISING OUT OF OR IN CONNECTION WITH THIS AGREEMENT.
(C) EACH PARTY HERETO HEREBY IRREVOCABLY CONSENTS AND AGREES, TO THE EXTENT
PERMITTED BY APPLICABLE LAW, TO THE SERVICE OF ANY AND ALL LEGAL PROCESS,
SUMMONS, NOTICES AND DOCUMENTS OF ANY OF THE AFOREMENTIONED COURTS IN ANY SUCH
SUIT, ACTION OR PROCEEDING MAY BE MADE BY MAILING COPIES THEREOF BY REGISTERED
OR CERTIFIED MAIL, POSTAGE PREPAID, AT THE ADDRESS SET FORTH PURSUANT TO SECTION
18.6. EACH PARTY HERETO HEREBY AGREES THAT SERVICE UPON IT, OR ANY OF ITS
AGENTS, IN EACH CASE IN ACCORDANCE WITH THIS SECTION 18.7(C), SHALL CONSTITUTE
VALID AND EFFECTIVE PERSONAL SERVICE UPON SUCH PARTY, AND EACH PARTY HERETO
HEREBY AGREES THAT THE FAILURE OF ANY OF ITS AGENTS TO GIVE ANY NOTICE OF SUCH
SERVICE TO ANY SUCH PARTY SHALL NOT IMPAIR OR AFFECT IN ANY WAY THE VALIDITY OF
SUCH SERVICE ON SUCH PARTY OR ANY JUDGMENT RENDERED IN ANY ACTION OR PROCEEDING
BASED THEREON.
(D) EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES, TO THE EXTENT PERMITTED BY
APPLICABLE LAW, AND AGREES NOT TO ASSERT, BY WAY OF MOTION, AS A DEFENSE, OR
OTHERWISE, IN ANY LEGAL ACTION OR PROCEEDING BROUGHT HEREUNDER IN ANY OF THE
ABOVE-NAMED COURTS, THAT SUCH ACTION OR PROCEEDING IS BROUGHT IN AN INCONVENIENT
FORUM, THAT VENUE FOR THE ACTION OR PROCEEDING IS IMPROPER OR THAT THIS
AGREEMENT OR ANY OTHER OPERATIVE AGREEMENT MAY NOT BE ENFORCED IN OR BY SUCH
COURTS.
(E) EACH PARTY HERETO HEREBY WAIVES, TO THE EXTENT PERMITTED BY APPLICABLE
LAW, ITS RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION IN
ANY COURT IN ANY JURISDICTION BASED UPON OR ARISING OUT OF OR RELATING TO THIS
AGREEMENT.
18.8 APPLICATION OF ARTICLE 2A OF THE UCC
Notwithstanding anything stated herein, the parties hereby agree to the
extent permitted by Law, that no right or remedy granted solely by reason of
Article 2A of the UCC shall be available to Lessor or Lessee as against each
other unless expressly set forth herein.
18.9 ENTIRE AGREEMENT
This Agreement, together with the other Operative Agreements, on and as of
the date hereof constitutes the entire agreement of the parties hereto with
respect to the subject matter hereof, and all prior or contemporaneous
understandings or agreements, whether written or oral, between the parties
hereto with respect to such subject matter are hereby superseded in their
entireties.
18.10 NO WAIVER
No failure on the part of Lessor to exercise, and no delay by Lessor in
exercising, any of its rights, powers, remedies or privileges under this
Agreement or provided at Law, in equity or otherwise shall impair, prejudice or
constitute a waiver of any such right, power, remedy or privilege or be
construed as a waiver of any breach hereof or default hereunder or as an
acquiescence therein, nor shall any single or partial exercise of any such
right, power, remedy or privilege preclude any other or further exercise thereof
by Lessor or the exercise of any other right, power, remedy or privilege by
Lessor. No notice to or demand on Lessee in any case shall, unless otherwise
required under this Agreement, entitle Lessee to any other or further notice or
demand in similar or other circumstances or constitute a waiver of the rights of
Lessor to any other or further action in any circumstances without notice or
demand.
[This space intentionally left blank.]
IN WITNESS WHEREOF, Lessor and Lessee have each caused this Lease Agreement
to be duly executed as of the day and year first above written.
FIRST SECURITY BANK,
NATIONAL ASSOCIATION,
not in its individual capacity,
except as expressly provided
herein, but solely as Owner
Trustee under the Trust
Agreement, as Lessor
By________________________________
Name:
Title:
CONTINENTAL AIRLINES, INC.,
as Lessee
By________________________________
Name:
Title:
Receipt of this original counterpart of the foregoing Lease Agreement is
hereby acknowledged on this ____ day of April, 1998.
WILMINGTON TRUST COMPANY,
as Mortgagee
By________________________________
Name:
Title:
IN WITNESS WHEREOF, Lessor and Lessee have each caused this Lease Agreement
to be duly executed as of the day and year first above written.
FIRST SECURITY BANK,
NATIONAL ASSOCIATION,
not in its individual capacity,
except as expressly provided
herein, but solely as Owner
Trustee under the Trust
Agreement, as Lessor
By________________________________
Name:
Title:
CONTINENTAL AIRLINES, INC.,
as Lessee
By________________________________
Name:
Title:
------------------------------------
| EXHIBIT A - LEASE SUPPLEMENT |
| LEASE AGREEMENT ___ |
------------------------------------
LEASE SUPPLEMENT NO.__
LEASE SUPPLEMENT No. __, dated ________, 199_, between FIRST SECURITY BANK,
NATIONAL ASSOCIATION, a national banking association, not in its individual
capacity, but solely as Owner Trustee under the Trust Agreement ____, dated as
of April 21, 1998 with the Owner Participant named therein (such Owner Trustee,
in its capacity as such Owner Trustee being herein called "Lessor"), and
CONTINENTAL AIRLINES, INC., a Delaware corporation, as Lessee ("Lessee").
Lessor and Lessee have heretofore entered into that certain Lease Agreement
____, dated as of April 21, 1998 relating to one [XxXxxxxxx Xxxxxxx Model
DC-9-82][Boeing 737-3T0] aircraft (herein called the "Lease" and the defined
terms therein being hereinafter used with the same meanings). The Lease provides
for the execution and delivery of this Lease Supplement for the purpose of
leasing the Airframe and Engines under the Lease as and when delivered by Lessor
to Lessee in accordance with the terms thereof.
The Lease relates to the Airframe and Engines described below, and a
counterpart of the Lease to which this Lease Supplement is attached and of which
this Lease Supplement is a part, is being filed for recordation on the date
hereof with the Federal Aviation Administration as one document.
NOW, THEREFORE, 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 the Lease and Lessee
hereby accepts and leases from Lessor under the Lease the following described
[XxXxxxxxx Xxxxxxx Model DC-9-82][Boeing Model 737-3T0] aircraft (the
"Aircraft"), which Aircraft as of the date hereof consists of the following
components:
(i) Airframe: U.S. Registration No. ___________; manufacturer's serial
no. ___________; and
(ii) Engines: two (2) _________________________ engines bearing,
respectively, manufacturer's serial nos. ___________ and ____________(each
of which engines has 750 or more rated takeoff horsepower or the equivalent
of such horsepower).
2. The Closing Date for the Aircraft is the date of this Lease Supplement
set forth in the opening paragraph hereof.
3. Lessee hereby confirms to Lessor that Lessee has duly and irrevocably
accepted the Aircraft under and for all purposes hereof, of the Lease and of the
other Lessee Operative Agreements.
4. All of the terms and provisions of this Lease Supplement are hereby
incorporated by reference in the Lease to the same extent as if fully set forth
therein.
5. This Lease Supplement 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. 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 executed counterpart, which shall be identified as the counterpart
containing the receipt therefor executed by the Mortgagee on the signature page
thereof.
[This space intentionally left blank.]
IN WITNESS WHEREOF, Lessor and Lessee have each caused this Lease
Supplement to be duly executed as of the day and year first above written.
FIRST SECURITY BANK,
NATIONAL ASSOCIATION,
not in its individual capacity,
except as expressly provided
herein, but solely as Owner
Trustee under the Trust
Agreement, as Lessor
By________________________________
Name:
Title:
CONTINENTAL AIRLINES, INC.,
as Lessee
By________________________________
Name:
Title:
IN WITNESS WHEREOF, Lessor and Lessee have each caused this Lease
Supplement to be duly executed as of the day and year first above written.
FIRST SECURITY BANK,
NATIONAL ASSOCIATION,
not in its individual capacity,
except as expressly provided
herein, but solely as Owner
Trustee under the Trust
Agreement, as Lessor
By________________________________
Name:
Title:
CONTINENTAL AIRLINES, INC.,
as Lessee
By________________________________
Name:
Title:
Receipt of this original counterpart of the foregoing Lease Supplement is
hereby acknowledged on this ____ day of ___________, ___________.
WILMINGTON TRUST COMPANY,
as Mortgagee
By________________________________
Name:
Title:
------------------------------------
| EXHIBIT B - LEASE SUPPLEMENT |
| LEASE AGREEMENT ___ |
------------------------------------
RETURN ACCEPTANCE SUPPLEMENT
RETURN ACCEPTANCE SUPPLEMENT dated ________, between FIRST SECURITY BANK,
NATIONAL ASSOCIATION, a national banking association, not in its individual
capacity, but solely as Owner Trustee under the Trust Agreement ____, dated as
of April 21, 1998, with the Owner Participant named therein (such Owner Trustee,
in its capacity as such Owner Trustee being herein called "Lessor"), and
CONTINENTAL AIRLINES, INC., a Delaware corporation, as Lessee ("Lessee").
Lessor and Lessee have heretofore entered into that certain Lease Agreement
____, dated as of April 21, 1998, relating to one [XxXxxxxxx Xxxxxxx Model
DC-9-82][Boeing Model 737-3T0] aircraft (herein called the "Lease" and the
defined terms therein being hereinafter used with the same meanings). The Lease
relates to the Airframe and Engines described below.
NOW, THEREFORE, in consideration of the premises and other good and
sufficient consideration, Lessor and Lessee hereby agree as follows:
1. This Return Acceptance Supplement is executed by Lessor and Lessee to
confirm that on the date hereof the following described Airframe and Engines
were returned by Lessee to Lessor:
(i) Airframe: U.S. Registration No. ________________; manufacturer's
serial no. __________________; and
(ii) Engines: two (2) _____________________ engines bearing,
respectively, manufacturer's serial nos. ____________________________ and
_________________________.
2. This Return Acceptance Supplement is intended to be delivered in
_____________________.
3. Lessor and Lessee agree that the return of the Aircraft is in compliance
with Section 5 and Annex B of the Lease, except as set forth below:
4. Lessor and Lessee agree that the Lease is terminated, except for the
provisions thereof that expressly survive termination.
IN WITNESS WHEREOF, Lessor and Lessee have each caused this Return
Acceptance Supplement to be duly executed as of the day and year first above
written.
FIRST SECURITY BANK,
NATIONAL ASSOCIATION,
not in its individual capacity,
except as expressly provided
herein, but solely as Owner
Trustee under the Trust
Agreement, as Lessor
By________________________________
Name:
Title:
CONTINENTAL AIRLINES, INC.,
as Lessee
By________________________________
Name:
Title:
[SCHEDULES 1-4 ARE OMITTED FROM THIS VERSION OF THE DOCUMENT
AS CONTAINING CONFIDENTIAL FINANCIAL INFORMATION]
--------------------------
| SCHEDULE 5 - PERMITTED |
| COUNTRIES |
| LEASE AGREEMENT ___ |
--------------------------
PART A
PERMITTED COUNTRIES
Argentina Luxembourg
Australia Malaysia
Austria Mexico
Bahamas Netherlands
Belgium New Zealand
Brazil Norway
Canada Philippines
Chile Portugal
Denmark Republic of China (Taiwan)
Finland Singapore
France South Africa
Germany South Korea
Hungary Sweden
Iceland Switzerland
Indonesia Thailand
Ireland United Kingdom
Italy Venezuela
Japan
--------------------------
| SCHEDULE 5 - PERMITTED |
| COUNTRIES |
| LEASE AGREEMENT ___ |
--------------------------
PART B
DOMICILES OF PERMITTED SUBLESSEES
Argentina Malta
Australia Mexico
Austria Morocco
Bahamas Netherlands
Belgium New Zealand
Brazil Norway
Canada Paraguay
Chile Peoples Republic of China
Denmark Philippines
Ecuador Portugal
Finland Republic of China (Taiwan)
France Singapore
Germany South Africa
Hungary South Korea
Iceland Sweden
India Switzerland
Indonesia Thailand
Ireland United Kingdom
Italy Uruguay
Japan Venezuela
Luxembourg
Malaysia
------------------------------------
| SCHEDULE 6 - PLACARDS |
| LEASE AGREEMENT ___ |
------------------------------------
PLACARDS
Owned by and Leased from
First Security Bank, National Association,
not in its individual capacity but solely as
Owner Trustee, Owner and Lessor
and
Mortgaged to
Wilmington Trust Company,
not in its individual capacity but solely as Mortgagee
ANNEX A
DEFINITIONS
GENERAL PROVISIONS
(a) In each Operative Agreement, unless otherwise expressly provided, a
reference to:
(i) each of "Lessee," "Lessor," "Loan Participant," "Owner Trustee,"
"Owner Participant," "Mortgagee," "Note Holder" or any other person
includes, without prejudice to the provisions of any Operative Agreement,
any successor in interest to it and any permitted transferee, permitted
purchaser or permitted assignee of it;
(ii) words importing the plural include the singular and words
importing the singular include the plural;
(iii) any agreement, instrument or document, or any annex, schedule or
exhibit thereto, or any other part thereof, includes, without prejudice to
the provisions of any Operative Agreement, that agreement, instrument or
document, or annex, schedule or exhibit, or part, respectively, as amended,
modified or supplemented from time to time in accordance with its terms and
in accordance with the Operative Agreements, and any agreement, instrument
or document entered into in substitution or replacement therefor;
(iv) any provision of any Law includes any such provision as amended,
modified, supplemented, substituted, reissued or reenacted prior to the
Closing Date, and thereafter from time to time;
(v) the words "Agreement," "this Agreement," "hereby," "herein,"
"hereto," "hereof" and "hereunder" and words of similar import when used in
any Operative Agreement refer to such Operative Agreement as a whole and
not to any particular provision of such Operative Agreement;
(vi) the words "including," "including, without limitation,"
"including, but not limited to," and terms or phrases of similar import
when used in any Operative Agreement, with respect to any matter or thing,
mean including, without limitation, such matter or thing; and
(vii) a "Section," an "Exhibit," an "Annex" or a "Schedule" in any
Operative Agreement, or in any annex thereto, is a reference to a section
of, or an exhibit, an annex or a schedule to, such Operative Agreement or
such annex, respectively.
(b) Each exhibit, annex and schedule to each Operative Agreement is
incorporated in, and shall be deemed to be a part of, such Operative Agreement.
(c) Unless otherwise defined or specified in any Operative Agreement, all
accounting terms therein shall be construed and all accounting determinations
thereunder shall be made in accordance with GAAP.
(d) Headings used in any Operative Agreement are for convenience only and
shall not in any way affect the construction of, or be taken into consideration
in interpreting, such Operative Agreement.
(e) For purposes of each Operative Agreement, the occurrence and
continuance of a Lease Default or Lease Event of Default referred to in Section
14.5 shall not be deemed to prohibit the Lessee from taking any action or
exercising any right that is conditioned on no Lease Event of Default, Lease
Default or Special Default having occurred and be continuing if such Lease
Default, Special Default or Lease Event of Default consists of the institution
of reorganization proceedings with respect to Lessee under Chapter 11 of the
Bankruptcy Code and the trustee or debtor-in-possession in such proceedings
shall have (i) agreed to perform its obligations under the Lease with the
approval of the applicable court and thereafter shall have continued to perform
such obligations in accordance with Section 1110 or (ii) shall have assumed the
Lease with the approval of the relevant court and thereafter shall have
continued to perform its obligations under the Lease.
DEFINED TERMS
"ACT" means part A of subtitle VII of title 49, United States Code.
"ACTUAL KNOWLEDGE" means (a) as it applies to Owner Trustee or Mortgagee,
as the case may be, actual knowledge of a responsible officer in the Corporate
Trust Department or the Corporate Trust Office, respectively, and (b) as it
applies to Owner Participant or Lessee, actual knowledge of a Vice President or
more senior officer of any Member of Owner Participant or Lessee, respectively,
or any other officer of any Member of Owner Participant or Lessee, respectively,
having responsibility for the transactions contemplated by the Operative
Agreements; PROVIDED that each of Lessee, Owner Participant, Owner Trustee and
Mortgagee shall be deemed to have "Actual Knowledge" of any matter as to which
it has received notice from Lessee, Owner Participant, any Note Holder, Owner
Trustee or Mortgagee, such notice having been given pursuant to Section 15.7 of
the Participation Agreement.
"ADDITIONAL INSURED" is defined in Section D of Annex D to the Lease.
"ADVERSE CHANGE IN TAX LAW" means (a) for Lessee, a Change in Tax Law that
Lessee regards as one that could adversely affect the economic consequences of
the transactions contemplated by the Participation Agreement and the other
Operative Agreements that are anticipated by Lessee or (b) for Owner
Participant, any Change in Tax Law that would adversely affect any of the
following tax assumptions:
(i) For federal income tax purposes, the Lease will be a "true" lease
for purposes of the Code and Owner Participant will be treated as the owner
of the Aircraft and Lessee will be treated as the lessee thereof;
(ii) For federal income tax purposes, Owner Participant will be
entitled to depreciation or cost recovery deductions with respect to
Lessor' s Cost of the Aircraft; and
(iii) For federal income tax purposes, Owner Participant will be
entitled to deductions for interest payments on the Equipment Notes.
"AFFILIATE" means, with respect to any person, any other person directly or
indirectly controlling, controlled by or under common control with such person.
For purposes of this definition, "control" means the power, directly or
indirectly, to direct or cause the direction of the management and policies of
such person, whether through the ownership of voting securities or by contract
or otherwise and "controlling," "controlled by" and "under common control with"
have correlative meanings.
"AFTER-TAX BASIS" means, with respect to any payment required to be made on
an After-Tax Basis, that such payment shall be adjusted such that, after
deduction of all Taxes resulting from receipt or accrual of such payment and any
tax benefits realized as a result of the indemnified cost or liability, the net
amount received is equal to such payment required to be made.
"AIRCRAFT" means, collectively, the Airframe and Engines.
"AIRCRAFT XXXX OF SALE" means the full warranty xxxx of sale covering the
Aircraft delivered by Lessee to Owner Trustee on the Delivery Date.
"AIRCRAFT DOCUMENTS" means all technical data, manuals and log books, and
all inspection, modification and overhaul records and other service, repair,
maintenance and technical records that are required by the FAA (and any other
applicable Aviation Authority), to be maintained with respect to the Aircraft,
Airframe, Engines or Parts; and such term shall include all additions, renewals,
revisions and replacements of any such materials from time to time made, or
required to be made, by the FAA (and any other applicable Aviation Authority)
regulations, and in each case in whatever form and by whatever means or medium
(including, without limitation, microfiche, microfilm, paper or computer disk)
such materials may be maintained or retained by or on behalf of Lessee
(PROVIDED, that all such materials shall be maintained in the English language).
"AIRFRAME" means (a) the aircraft (excluding Engines or engines from time
to time installed thereon) manufactured by Airframe Manufacturer and identified
by Airframe Manufacturer's model number, United States registration number and
Airframe Manufacturer's serial number set forth in Lease Supplement No. 1 and
any Replacement Airframe and (b) any and all Parts incorporated or installed in
or attached or appurtenant to such airframe, and any and all Parts removed from
such airframe, unless title to such Parts shall not be vested in Lessor in
accordance with Section 8.1 and Annex C of the Lease. Upon substitution of a
Replacement Airframe under and in accordance with the Lease, such Replacement
Airframe shall become subject to the Lease and shall be the "Airframe" for all
purposes of the Lease and the other Operative Agreements and thereupon the
Airframe for which the substitution is made shall no longer be subject to the
Lease, and such replaced Airframe shall cease to be the "Airframe."
"AIRFRAME MANUFACTURER" means [XxXxxxxxx Xxxxxxx Corporation, a Maryland
corporation][The Boeing Company, a Delaware corporation].
"AMORTIZATION AMOUNT" means, with respect to any Equipment Note, as of any
Payment Date, the amount determined by multiplying the percentage set forth
opposite such Payment Date on the Amortization Schedule by the Original Amount
of such Equipment Note.
"AMORTIZATION SCHEDULE" means, with respect to each Equipment Note, the
amortization schedule for such Equipment Note delivered pursuant to Section 2.02
of the Trust Indenture.
"APPRAISER" means a firm of internationally recognized, independent
aircraft appraisers.
"AUTHORIZED TERMINATION DATE" is defined in Schedule 1 to the Lease.
"AVERAGE LIFE DATE" for any Equipment Note shall be the date which follows
the time of determination by a period equal to the Remaining Weighted Average
Life of such Equipment Note. "Remaining Weighted Average Life" on a given date
with respect to any Equipment Note shall be the number of days equal to the
quotient obtained by dividing (a) the sum of each of the products obtained by
multiplying (i) the amount of each then remaining scheduled payment of principal
of such Equipment Note by (ii) the number of days from and including such
determination date to but excluding the date on which such payment of principal
is scheduled to be made, by (b) the then outstanding principal amount of such
Equipment Note.
"AVIATION AUTHORITY" means the FAA or, if the Aircraft is permitted to be,
and is, registered with any other Government Entity under and in accordance with
Section 7.1.2 of the Lease, such other Government Entity.
"BANKRUPTCY CODE" means the United States Bankruptcy Code, 11 U.S.C. ss.
101 ET SEQ.
"BASE LEASE TERM" means the period beginning on and including the Closing
Date and ending on the Scheduled Expiration Date, or such earlier date on which
the Term terminates in accordance with the provisions of the Lease.
"BASIC PASS THROUGH TRUST AGREEMENT" means the Pass Through Trust
Agreement, dated September 25, 1997, between Lessee and Pass Through Trustee,
but does not include any Trust Supplement.
"BASIC RENT" means the rent payable for the Aircraft pursuant to Section
3.2.1(a) of the Lease.
"BENEFICIAL OWNER" when used in relation to an Equipment Note means a
Person that, by reason of direct ownership, contract, share ownership or
otherwise, has the right to receive or participate in receiving, directly or
indirectly, payments of principal, interest or Make-Whole Amount in respect of
such Equipment Note; provided that a Person shall not be deemed to be a
Beneficial Owner of an Equipment Note solely because another Person in which
such a Person owns common stock or other equity securities is a registered
holder or Beneficial Owner of such Equipment Note unless such Person is an
Affiliate of such other Person.
"BILLS OF SALE" means the Aircraft Xxxx of Sale and the FAA Xxxx of Sale.
"BUSINESS DAY" means any day other than a Saturday, Sunday or other day on
which commercial banks are authorized or required by law to close in New York,
New York, Houston, Texas, Wilmington, Delaware, or Salt Lake City, Utah.
"CASH EQUIVALENTS" means the following securities (which shall mature
within 90 days of the date of purchase thereof): (a) direct obligations of the
U.S. Government; (b) obligations fully guaranteed by the U.S. Government; (c)
certificates of deposit issued by, or bankers' acceptances of, or time deposits
or a deposit account with, Owner Trustee, Mortgagee or any bank, trust company
or national banking association incorporated or doing business under the laws of
the United States or any state thereof having a combined capital and surplus and
retained earnings of at least $500,000,000 and having a rate of "C" or better
from the Thomson BankWatch Service; or (d) commercial paper of any issuer doing
business under the laws of the United States or one of the states thereof and in
each case having a rating assigned to such commercial paper by Standard & Poor's
or Moody's equal to A1 or higher.
"CHANGE IN TAX LAW" means any amendment, modification, addition or change
in or to the provisions of the Code, any other federal tax statutes, the
Treasury Regulations promulgated thereunder, the Internal Revenue Service
Revenue Rulings, Revenue Procedures or other administrative or judicial
interpretations of the Code or the federal tax statutes that affects the tax
assumptions set forth in the Tax Indemnity Agreement or otherwise affects Owner
Participant's anticipated Net Economic Return (other than a change in the
alternative minimum tax or other change that results in Owner Participant being
subject to alternative minimum tax or unable to fully utilize tax benefits
because of its particular tax situation).
"CITIZEN OF THE UNITED STATES" is defined in Section 40102(a)(15) of the
Act and in the FAA Regulations.
"CLOSING" means the occurrence of the following concurrent events: (i) sale
of the Aircraft to the Owner Trustee and the filing of the FAA Xxxx of Sale with
the FAA in connection therewith; (ii) payment of Lessor's Cost by Owner Trustee
to Lessee; (iii) lease of the Aircraft by Owner Trustee to Lessee pursuant to
the Lease; and (iv) completion of the other events contemplated by the
Participation Agreement to occur at the Closing.
"CLOSING DATE" means the Business Day specified in Lease Supplement No. 1
as the Closing Date, which shall be the date on which the Closing occurs.
"CODE" means the Internal Revenue Code of 1986, as amended; PROVIDED, that
when used in relation to a Plan, "Code" shall mean the Internal Revenue Code of
1986 and any regulations and rulings issued thereunder, all as amended and in
effect from time to time.
"COMMITMENT" means, for any Participant, the amount of its participation in
the payment of Lessor's Cost.
"COMMITMENT TERMINATION DATE" is defined in Schedule 3 to the Participation
Agreement.
"CONTINUOUS STAY PERIOD" is defined in Section 4.04(a) of the Trust
Indenture.
"CORPORATE TRUST DEPARTMENT" or "TRUST OFFICE" means the principal
corporate trust office of Owner Trustee located from time to time at Owner
Trustee's address for notices under the Participation Agreement or such other
office at which Owner Trustee's corporate trust business shall be administered
which Owner Trustee shall have specified by notice in writing to Lessee,
Mortgagee and each Note Holder.
"CORPORATE TRUST OFFICE" means the principal office of Mortgagee located at
Mortgagee's address for notices under the Participation Agreement or such other
office at which Mortgagee's corporate trust business shall be administered which
Mortgagee shall have specified by notice in writing to Lessee, Owner Trustee and
each Note Holder.
"CRAF" means the Civil Reserve Air Fleet Program established pursuant to 10
X.X.X.xx. 9511-13 or any similar substitute program.
"DEBT" means any liability for borrowed money, or any liability for the
payment of money in connection with any letter of credit transaction or any
other liabilities evidenced or to be evidenced by bonds, debentures, notes or
other similar instruments.
"DEBT RATE" means, with respect to (i) any Series, the rate per annum
specified for such Series under the heading "Interest Rate" in Schedule I to the
Trust Indenture and (ii) any other purpose, with respect to any period, the
weighted average interest rate per annum during such period borne by the
outstanding Equipment Notes, excluding any interest payable at the Payment Due
Rate.
"DEFAULT" means any event or condition that with the giving of notice or
the lapse of time or both would become an Event of Default.
"DELAYED CLOSING DATE" means a delayed Closing Date established pursuant to
Section 4.3 of the Participation Agreement, which delayed Closing Date shall be
a Business Day not later than the Commitment Termination Date.
"DOLLARS," "UNITED STATES DOLLARS" or "$" means the lawful currency of the
United States.
"DOT" means the Department of Transportation of the United States or any
Government Entity succeeding to the functions of such Department of
Transportation.
"ELIGIBLE ACCOUNT" means an account established by and with an Eligible
Institution at the request of the Mortgagee, which institution agrees, for all
purposes of the UCC including Article 8 thereof, that (a) such account shall be
a "securities account" (as defined in Section 8-501 of the UCC), (b) all
property (other than cash) credited to such account shall be treated as a
"financial asset" (as defined in Section 8-102(9) of the UCC), (c) the Mortgagee
shall be the "entitlement holder" (as defined in Section 8-102(7) of the UCC) in
respect of such account, (d) it will comply with all entitlement orders issued
by the Mortgagee to the exclusion of the Lessee and the Owner Trustee, and (e)
the "securities intermediary jurisdiction" (under Section 8-110(e) of the UCC)
shall be the State of New York.
"ELIGIBLE INSTITUTION" means the corporate trust department of (a)
Wilmington Trust Company, acting solely in its capacity as a "securities
intermediary" (as defined in Section 8-102(14) of the UCC), or (b) a depository
institution organized under the laws of the United States of America or any one
of the states thereof or the District of Columbia (or any U.S. branch of a
foreign bank), which has a long-term unsecured debt rating from Moody's and
Standard & Poor's of at least A-3 or its equivalent.
"ENFORCEMENT DATE" is defined in Section 4.03 of the Trust Indenture.
"ENGINE" means (a) each of the engines manufactured by Engine Manufacturer
and identified by Engine Manufacturer's model number and Engine Manufacturer's
serial number set forth in Lease Supplement No. 1 and originally installed on
the Airframe on delivery thereof pursuant to the Lease, and any Replacement
Engine, in any case whether or not from time to time installed on such Airframe
or installed on any other airframe or aircraft, and (b) any and all Parts
incorporated or installed in or attached or appurtenant to such engine, and any
and all Parts removed from such engine, unless title to such Parts shall not be
vested in Lessor in accordance with Section 8.1 and Annex C of the Lease. Upon
substitution of a Replacement Engine under and in accordance with the Lease,
such Replacement Engine shall become subject to the Lease and shall be an
"Engine" for all purposes of the Lease and the other Operative Agreements and
thereupon the Engine for which the substitution is made shall no longer be
subject to the Lease, and such replaced Engine shall cease to be an "Engine."
"ENGINE MANUFACTURER" means the Xxxxx & Whitney division of the United
Technologies Corporation, a Delaware corporation.
"EQUIPMENT NOTE REGISTER" is defined in Section 2.07 of the Trust
Indenture.
"EQUIPMENT NOTES" means and includes any equipment notes issued under the
Trust Indenture in the form specified in Section 2.01 thereof (as such form may
be varied pursuant to the terms of the Trust Indenture) and any Equipment Note
issued under the Trust Indenture in exchange for or replacement of any Equipment
Note.
"ERISA" means the Employee Retirement Income Security Act of 1974 and any
regulations and rulings issued thereunder all as amended and in effect from time
to time.
"EVENT OF DEFAULT" is defined in Section 4.02 of the Trust Indenture.
"EVENT OF LOSS" means, with respect to the Aircraft, Airframe or any
Engine, any of the following circumstances, conditions or events with respect to
such property, for any reason whatsoever:
(a) the destruction of such property, damage to such property beyond
economic repair or rendition of such property permanently unfit for
normal use by Lessee;
(b) the actual or constructive total loss of such property or any damage
to such property, or requisition of title or use of such property,
which results in an insurance settlement with respect to such property
on the basis of a total loss or constructive or compromised total
loss;
(c) any theft, hijacking or disappearance of such property for a period of
180 consecutive days or more;
(d) any seizure, condemnation, confiscation, taking or requisition
(including loss of title) of such property by any Government Entity or
purported Government Entity (other than a requisition of use by a U.S.
Government Entity) for a period exceeding 180 consecutive days or, if
earlier, at the end of the Term or, in the case of a requisition of
title, the requisition of title shall not have been reversed within 90
days from the date of such requisition of title or, if earlier, at the
end of the Term;
(e) any seizure, condemnation, confiscation, taking or requisition of use
of such property by any U.S. Government Entity that continues until
the 30th day after the last day of the Term, PROVIDED that no such
Event of Loss shall exist if Lessor shall have elected not to treat
such event as an Event of Loss pursuant to Section 10.6 of the Lease;
and
(f) as a result of any law, rule, regulation, order or other action by the
Aviation Authority or by any Government Entity of the government of
registry of the Aircraft or by any Government Entity otherwise having
jurisdiction over the operation or use of the Aircraft, the use of
such property in the normal course of Lessee's business of passenger
air transportation is prohibited for a period of 180 consecutive days,
unless Lessee, prior to the expiration of such 180 day period, shall
have undertaken and shall be diligently carrying forward such steps as
may be necessary or desirable to permit the normal use of such
property by Lessee, but in any event if such use shall have been
prohibited for a period of one year (or if earlier the expiration of
the Term), provided that no Event of Loss shall be deemed to have
occurred if such prohibition has been applicable to Lessee's entire
U.S. fleet of such property and Lessee, prior to the expiration of
such one-year period, shall have conformed at least one unit of such
property in its fleet to the requirements of any such law, rule,
regulation, order or other action and commenced regular commercial use
of the same in such jurisdiction and shall be diligently carrying
forward, in a manner which does not discriminate against such property
in so conforming such property, steps which are necessary or desirable
to permit the normal use of the Aircraft by Lessee, but in any event
if such use shall have been prohibited for a period of two years or
such use shall be prohibited at the expiration of the Term.
An Event of Loss with respect to the Aircraft shall be deemed to have
occurred if an Event of Loss occurs with respect to its Airframe. The date of
such Event of Loss shall be the date of such loss, damage, insurance settlement,
seizure, condemnation, taking or requisition of title or use or prohibition,
except that for purpose of clause (c), (d), (e) and (f) above, no Event of Loss
shall be deemed to have occurred until the date of expiration of the applicable
period referred to therein (unless an insurance settlement shall have occurred
prior to such date).
"EXCLUDED PAYMENTS" means (i) indemnity payments paid or payable by Lessee
to or in respect of Owner Participant, or Owner Trustee in its individual
capacity, their respective Affiliates, successors and permitted assigns and
their directors, officers, employees, servants and agents pursuant to Section 9
of the Participation Agreement or any corresponding payments under the Lease,
(ii) proceeds of public liability insurance paid or payable as a result of
insurance claims made, or losses suffered, by Owner Trustee in its individual
capacity or by Owner Participant, that are payable directly to Owner Trustee in
its individual capacity, or Owner Participant, respectively, for their own
account, (iii) proceeds of insurance maintained with respect to the Aircraft by
Owner Participant or any Affiliate thereof for its or their own account or
benefit (whether directly or through Owner Trustee) and permitted under Section
11.2 of the Lease, (iv) all payments required to be made under the Tax Indemnity
Agreement by Lessee whether or not denominated as Supplemental Rent, (v) any
Transaction Expenses paid or payable by the Lessee to the Owner Trustee (to the
extent for its sole benefit) or the Owner Participant pursuant to the Lease or
the Participation Agreement, (vi) any amount payable to the Owner Participant by
any transferee as the purchase price of the Owner Participant's interest in the
Trust Estate, (vii) any interest that pursuant to the Operative Agreements may
from time to time accrue in respect of any of the amounts described in clauses
(i) through (vi) above, (viii) any right to enforce the payment of any amount
described in clauses (i) through (vii) above (PROVIDED, that the rights referred
to in this clause (viii) shall not be deemed to include the exercise of any
remedies provided for in the Lease other than the right to xxx for specific
performance of any covenant to make such payment or to xxx for damages in
respect of the breach of any such covenant) and (ix) any right to exercise any
election or option or make any decision or determination, or to give or receive
any notice, consent, waiver or approval, or to take any other action in respect
of, but in each case, only to the extent relating to, any Excluded Payments.
"EXISTING SECURITY AGREEMENT" is defined in Schedule 3 to the Participation
Agreement.
"EXISTING SECURITY AGREEMENT RELEASE" means the release of the Aircraft,
the Aircraft Documents and certain other collateral from the Lien of the
Existing Security Agreement.
"EXPENSES" means any and all liabilities, obligations, losses, damages,
settlements, penalties, claims, actions, suits, costs, expenses and
disbursements (including, without limitation, reasonable fees and disbursements
of legal counsel, accountants, appraisers, inspectors or other professionals,
and costs of investigation).
"EXPENSES OF SALE" is defined in Section 9.2.2(a) of the Lease.
"FAA" means the Federal Aviation Administration of the United States or any
Government Entity succeeding to the functions of such Federal Aviation
Administration.
"FAA XXXX OF SALE" means a xxxx of sale for the Aircraft on AC Form 8050-2
(or such other form as may be approved by the FAA) delivered to Owner Trustee on
the Closing Date by Lessee.
"FAA FILED DOCUMENTS" means the Lease, Lease Supplement No. 1, the Trust
Indenture, the Trust Agreement, the initial Trust Indenture Supplement, the FAA
Xxxx of Sale, an application for registration of the Aircraft with the FAA in
the name of Owner Trustee and the Existing Security Agreement Release.
"FAA REGULATIONS" means the Federal Aviation Regulations issued or
promulgated pursuant to the Act from time to time.
"FAIR MARKET RENTAL VALUE" means the fair market rental value in Dollars
for the Aircraft that would apply in an arm's-length transaction between an
informed and willing lessee under no compulsion to lease, and an informed and
willing lessor under no compulsion to lease, the Aircraft, for the applicable
Renewal Lease Term, assuming that (a) the Aircraft has been maintained in
accordance with, and is in the condition required by, the Lease, (b) payments of
rent would be made semiannually (or for any such applicable shorter period ended
on the first or last Payment Dates of any Renewal Lease Term), and (c) the
Aircraft would be leased during any such Renewal Lease Term on the same terms
and conditions as are set forth in the Lease with respect to the Base Lease
Term.
"FAIR MARKET SALES VALUE" means, except otherwise provided in Section 15.4
of the Lease, the fair market sales value in Dollars for the Aircraft that would
apply in an arm's-length transaction between an informed and willing buyer under
no compulsion to buy, and an informed and willing seller under no compulsion to
sell, the Aircraft, in a transaction that would close on or about the relevant
time of determination, assuming that (a) the Aircraft has been maintained in
accordance with, and is in the condition required by, the Lease and (b) the
Aircraft would be delivered to such informed and willing buyer in the return
condition required by the Lease.
"FINANCING STATEMENTS" means, collectively, (i) UCC-1 financing statements
(a) covering the Trust Indenture Estate, by Owner Trustee, as debtor, showing
Mortgagee as secured party, for filing in Utah and each other jurisdiction that,
in the opinion of Mortgagee, is necessary to perfect its Lien on the Trust
Indenture Estate and (b) covering the Lease and the Aircraft, as a precautionary
matter, by Lessee, as lessee, showing Owner Trustee as lessor and Mortgagee as
assignee of Owner Trustee, for filing in Texas and each other jurisdiction that,
in the opinion of Owner Trustee and Mortgagee, is reasonably desirable and (ii)
UCC-3 financing statements evidencing the release of the Aircraft, Aircraft
Documents and other collateral from the Lien of the Existing Security Agreement
for filing in Texas and each other jurisdiction that, in the opinion of Owner
Trustee and Mortgagee, is reasonably desirable.
"FIRST SECURITY" means First Security Bank, National Association, a
national banking association, not in its capacity as Owner Trustee under the
Trust Agreement, but in its individual capacity.
"GAAP" means generally accepted accounting principles as set forth in the
statements of financial accounting standards issued by the Financial Accounting
Standards Board of the American Institute of Certified Public Accountants, as
such principles may at any time or from time to time be varied by any applicable
financial accounting rules or regulations issued by the SEC and, with respect to
any person, shall mean such principles applied on a basis consistent with prior
periods except as may be disclosed in such person's financial statements.
"GOVERNMENT ENTITY" means (a) any federal, state, provincial or similar
government, and any body, board, department, commission, court, tribunal,
authority, agency or other instrumentality of any such government or otherwise
exercising any executive, legislative, judicial, administrative or regulatory
functions of such government or (b) any other government entity having
jurisdiction over any matter contemplated by the Operative Agreements or
relating to the observance or performance of the obligations of any of the
parties to the Operative Agreements.
"GTA" means the General Terms Agreement as defined in the Purchase
Agreement Assignment.
"INDEMNITEE" means (i) First Security and Owner Trustee, (ii) WTC and
Mortgagee, (iii) each separate or additional trustee appointed pursuant to the
Trust Agreement or the Trust Indenture, (iv) each Participant, (v) the Trust
Estate and the Trust Indenture Estate, (vi) each Affiliate of the persons
described in clauses (i) through (iv), inclusive, (vii) the respective
directors, officers, employees, agents and servants of each of the persons
described in clauses (i) through (iv) inclusive and in clause (vi), (viii) the
successors and permitted assigns of the persons described in clauses (i) through
(iv), inclusive, and in clauses (vi) and (vii), and (ix) the Pass Through
Indemnitees; PROVIDED that the Pass Through Indemnitees are Indemnitees only for
purposes of Section 9.1 of the Participation Agreement. If any Indemnitee is
Airframe Manufacturer or Engine Manufacturer or any subcontractor or supplier of
either thereof, such Person shall be an Indemnitee only in its capacity as Owner
Participant, Loan Participant or Note Holder.
"INDENTURE AGREEMENTS" means the Participation Agreement, the Lease, the
Bills of Sale and any other contract, agreement or instrument from time to time
assigned or pledged under the Trust Indenture.
"INDENTURE DEFAULT" means any condition, circumstance, act or event that,
with the giving of notice, the lapse of time or both, would constitute an
Indenture Event of Default.
"INDENTURE EVENT OF DEFAULT" means any one or more of the conditions,
circumstances, acts or events set forth in Section 4.02 of the Trust Indenture.
"INDENTURE INDEMNITEE" means (i) WTC and the Mortgagee, (ii) each separate
or additional trustee appointed pursuant to the Trust Indenture, (iii) the
Subordination Agent, (iv) the Liquidity Provider, (v) each Pass Through Trustee,
and (vi) each of the respective directors, officers, employees, agents and
servants of each of the persons described in clauses (i) through (v) inclusive
above.
"INTERCREDITOR AGREEMENT" means that certain Intercreditor Agreement among
the Pass Through Trustees, the Liquidity Provider and the Subordination Agent,
dated as of the Issuance Date, PROVIDED that, for purposes of any obligation of
Lessee, no amendment, modification or supplement to, or substitution or
replacement of, such Intercreditor Agreement shall be effective unless consented
to by Lessee.
"IRS" means the Internal Revenue Service of the United States or any
Government Entity succeeding to the functions of such Internal Revenue Service.
"ISSUANCE DATE" means April 21, 1998.
"LAW" means (a) any constitution, treaty, statute, law, decree, regulation,
order, rule or directive of any Government Entity, and (b) any judicial or
administrative interpretation or application of, or decision under, any of the
foregoing.
"LEASE" or "LEASE AGREEMENT" means the Lease Agreement ____, dated as of
even date with the Participation Agreement, between Owner Trustee and Lessee.
"LEASE DEFAULT" means any condition, circumstance, act or event that, with
the giving of notice, the lapse of time or both, would constitute a Lease Event
of Default.
"LEASE EVENT OF DEFAULT" means any one or more of the conditions,
circumstances, acts or events set forth in Section 14 of the Lease.
"LEASE SUPPLEMENT" means a supplement to the Lease, in the form of Exhibit
A to the Lease.
"LEASE SUPPLEMENT NO. 1" means the initial Lease Supplement, dated the
Closing Date.
"LESSEE" means Continental Airlines, Inc., a Delaware corporation.
"LESSEE OPERATIVE AGREEMENTS" means the Participation Agreement, the Lease,
Lease Supplement No. 1, the Tax Indemnity Agreement, the Bills of Sale, and each
other agreement between Lessee and any other party to the Participation
Agreement, relating to the Transactions, delivered on the Closing Date.
"LESSEE PERSON" means Lessee, any sublessee, assignee, successor or other
user or person in possession of the Aircraft, Airframe or an Engine with or
without color of right, or any Affiliate of any of the foregoing (excluding any
Tax Indemnitee or any related Tax Indemnitee with respect thereto, or any person
using or claiming any rights with respect to the Aircraft, Airframe or an Engine
directly by or through any of the persons in this parenthetical, but not
excluding any Person claiming directly or indirectly through or under the
Lease).
"LESSEE'S ADVISOR" is defined in Schedule 3 to the Participation Agreement.
"LESSOR" means Owner Trustee in its capacity as lessor under the Lease.
"LESSOR LIEN" means, with respect to any person and in respect of any
property (including, without limitation, the Trust Estate, the Trust Indenture
Estate, the Aircraft, Airframe, Engines, Parts or Aircraft Documents) or any
payments, any Lien on such property or payments which (a) arises from claims
against such person (if such person is a trustee, whether in its individual
capacity or in its capacity as a trustee) not related to any of the transactions
contemplated by the Operative Agreements, (b) results from acts or omissions of
such person (if such person is a trustee, whether in its individual capacity or
in its capacity as a trustee) in violation of such person's obligations under
any of the terms of the Operative Agreements, or not related to the transactions
contemplated by the Operative Agreements, (c) is imposed as a result of Taxes
against such person (if such person is a trustee, whether in its individual
capacity or in its capacity as a trustee) or any of its Affiliates not required
to be indemnified by Lessee under the Participation Agreement, or (d) claims
against such person arising out of any transfer by such person of its interest
in the Aircraft, the Trust Estate or the Operative Agreements, other than a
Transfer permitted by the terms of the Operative Agreements or pursuant to the
exercise of remedies set forth in Section 15 of the Lease.
"LESSOR'S COST" means the aggregate of the amounts paid by Owner Trustee to
Lessee to purchase the Aircraft pursuant to the Participation Agreement, and is
designated by Dollar amount in Schedule 3 to the Participation Agreement.
"LIEN" means any mortgage, pledge, lien, charge, claim, encumbrance, lease
or security interest affecting the title to or any interest in property.
"LIFE LIMITED PARTS" means any Part requiring replacement, overhaul, bench
check or other action that necessitates removal of such Part from the Aircraft
on a time (flight hours, cycle or calendar) specified basis as defined by the
type certificate, the MPD, the Maintenance Program or the Maintenance Manual of
the Airframe Manufacturer or Engine Manufacturer.
"LIMITED LIABILITY COMPANY AGREEMENT" means the Limited Liability Company
Agreement, dated as of the Issuance Date, relating to the organization and
operation of Owner Participant.
"LIQUIDITY FACILITIES" means the three Revolving Credit Agreements
(consisting of a separate Revolving Credit Agreement with the Liquidity Provider
with respect to each Pass Through Trust) between the Subordination Agent, as
borrower, and the Liquidity Provider, each dated as of the Issuance Date,
PROVIDED that, for purposes of any obligation of Lessee, no amendment,
modification or supplement to, or substitution or replacement of, any such
Liquidity Facility shall be effective, unless consented to by Lessee.
"LIQUIDITY PROVIDER" means Westdeutsche Landesbank Girozentrale, acting
through its New York branch, as a Class A Liquidity Provider, Class B Liquidity
Provider, and Class C Liquidity Provider (as such terms are defined in the
Intercreditor Agreement) under the respective Liquidity Facilities, or any
successor thereto.
"LOAN PARTICIPANTS" mean, until the Closing shall have been consummated,
the Pass Through Trustees, and after the Closing shall have been consummated,
each Note Holder.
"LOSS PAYMENT DATE" means the date on which payment is due pursuant to
Section 10.1.2(a)(i) of the Lease.
"MAINTENANCE PROGRAM" is defined in Annex C to the Lease.
"MAJORITY IN INTEREST OF NOTE HOLDERS" means as of a particular date of
determination, the holders of a majority in aggregate unpaid Original Amount of
all Equipment Notes outstanding as of such date (excluding any Equipment Notes
held by Owner Trustee, Lessee, or Owner Participant or any Affiliate of any such
party or any interests of Owner Trustee or Owner Participant therein by reason
of subrogation pursuant to Section 4.03 of the Trust Indenture (unless all
Equipment Notes then outstanding shall be held by Owner Trustee, Lessee, Owner
Participant or any Affiliate of any thereof)); PROVIDED that for the purposes of
directing any action or casting any vote or giving any consent, waiver or
instruction hereunder any Note Holder of an Equipment Note or Equipment Notes
may allocate, in such Note Holder's sole discretion, any fractional portion of
the principal amount of such Equipment Note or Equipment Notes in favor of or in
opposition to any such action, vote, consent, waiver or instruction.
"MAKE-WHOLE AMOUNT" means, with respect to any Equipment Note, an amount
(as determined by an independent investment bank of national standing) equal to
the excess, if any, of (a) the present value of the remaining scheduled payments
of principal and interest to maturity of such Equipment Note computed by
discounting such payments on a semiannual basis on each Payment Date (assuming a
360-day year of twelve 30-day months) using a discount rate equal to the
Treasury Yield over (b) the outstanding principal amount of such Equipment Note
plus accrued interest to the date of determination. For purposes of determining
the Make-Whole Amount, "Treasury Yield" means, at the date of determination with
respect to any Equipment Note, the interest rate (expressed as a decimal and, in
the case of United States Treasury bills, converted to a bond equivalent yield)
determined to be the per annum rate equal to the semi-annual yield to maturity
for United States Treasury securities maturing on the Average Life Date of such
Equipment Note and trading in the public securities markets either as determined
by interpolation between the most recent weekly average yield to maturity for
two series of United States Treasury securities, trading in the public
securities markets, (A) one maturing as close as possible to, but earlier than,
the Average Life Date of such Equipment Note and (B) the other maturing as close
as possible to, but later than, the Average Life Date of such Equipment Note, in
each case as published in the most recent H.15(519) or, if a weekly average
yield to maturity for United States Treasury securities maturing on the Average
Life Date of such Equipment Note is reported on the most recent H.15(519), such
weekly average yield to maturity as published in such H.15(519) "H.15(519)"
means the weekly statistical release designated as such, or any successor
publication, published by the Board of Governors of the Federal Reserve System.
The date of determination of a Make-Whole Amount shall be the third Business Day
prior to the applicable payment or redemption date and the "most recent
H.15(519)" means the H.15(519) published prior to the close of business on the
third Business Day prior to the applicable payment or redemption date.
"MANAGER" means the manager of the Owner Participant, determined in
accordance with the Limited Liability Company Agreement.
"MANUFACTURER SUBLESSEE" means the Airframe Manufacturer, Airbus Industrie,
United Technologies Corporation, Xxxxx & Xxxxxxx Group, Commercial Products
Division, The General Electric Company and Rolls-Royce plc.
"MATERIAL ADVERSE CHANGE" means, with respect to any person, any event,
condition or circumstance that materially and adversely affects such person's
business or consolidated financial condition, or its ability to observe or
perform its obligations, liabilities and agreements under the Operative
Agreements.
"MEMBER" means each member of Owner Participant, determined in accordance
with the Limited Liability Company Agreement.
"MINIMUM LIABILITY INSURANCE AMOUNT" is defined in Schedule 1 to the Lease.
"MOODY'S" means Xxxxx'x Investors Service, Inc.
"MORTGAGED PROPERTY" is defined in Section 3.03 of the Trust Indenture.
"MORTGAGEE" means Wilmington Trust Company, a Delaware banking corporation,
not in its individual capacity but solely as loan trustee under the Trust
Indenture.
"MORTGAGEE AGREEMENTS" means, collectively, the Participation Agreement,
the Trust Indenture and each other agreement between Mortgagee and any other
party to the Participation Agreement, relating to the Transactions, delivered on
the Closing Date.
"MORTGAGEE EVENT" means (i) in the event of a reorganization proceeding
involving the Lessee under Chapter 11 of the Bankruptcy Code, (A) the trustee in
such proceeding or the Lessee not assuming or agreeing to perform its
obligations under the Lease, as contemplated under Section 1110, during the
60-day period under Section 1110(a)(1)(A) of the Bankruptcy Code (or such longer
period as may apply under Section 1110(b) of the Bankruptcy Code) or (B) at any
time after agreeing to perform or assuming such obligations, such trustee or the
Lessee ceasing to perform such obligations with the result that the Continuous
Stay Period comes to an end or (ii) either the Equipment Notes shall have become
due and payable pursuant to Section 4.04(b) of the Trust Indenture or Mortgagee
has taken action or notified Owner Trustee that it intends to take action to
foreclose the Lien of the Trust Indenture or otherwise commence the exercise of
any significant remedy in accordance with Section 4.04(a) of the Trust
Indenture.
"NET ECONOMIC RETURN" means the Owner Participant's net after-tax yield
utilizing the multiple investment sinking fund method of analysis and aggregate
net after-tax cash flow, computed on the basis of the same methodology and
assumptions as were utilized by the initial Owner Participant in determining
Basic Rent, Stipulated Loss Value percentages and Termination Value percentages,
as of the Closing Date, as such assumptions may be adjusted for events that have
been the basis for adjustments to Basic Rent pursuant to Section 3.2.1(b) of the
Lease or events giving rise to indemnity payments pursuant to Section 5.1 of the
Tax Indemnity Agreement; PROVIDED, that, if the initial Owner Participant shall
have transferred its interest, Net Economic Return shall be calculated as if the
initial Owner Participant had retained its interest; PROVIDED FURTHER, that,
notwithstanding the preceding proviso, solely for purposes of Section 11 of the
Participation Agreement and calculating any adjustments to Basic Rent,
Stipulated Loss Values and Termination Values in connection with a refunding
pursuant to such Section 11 at a time when Owner Participant is a transferee
(other than an Affiliate of the initial Owner Participant), the after-tax yield
(but not the after-tax cash flow) component of Net Economic Return shall be
calculated on the basis of the methodology and assumptions utilized by the
transferee Owner Participant as of the date on which it acquired its interest.
"NET PRESENT VALUE OF RENTS" means the present value, as of the date of
determination, discounted at 10% per annum, compounded semiannually to the date
of determination, of all unpaid Basic Rent payments during the then-remaining
portion of the Base Lease Term, expressed as a percentage of Lessor's Cost.
"NET WORTH" means, for any person, the excess of its total assets over its
total liabilities.
"NEW DEBT" means debt securities in an aggregate principal amount specified
in the Refunding Information.
"NON-U.S. PERSON" means any Person other than a United States person, as
defined in Section 7701(a)(30) of the Code.
"NOTE HOLDER" means at any time each registered holder of one or more
Equipment Notes.
"OFFICER'S CERTIFICATE" means, in respect of any party to the Participation
Agreement, a certificate signed by the Chairman, the President, any Vice
President (including those with varying ranks such as Executive, Senior,
Assistant or Staff Vice President), the Treasurer or the Secretary of such party
or, in the case of Owner Participant, of the Manager of Owner Participant.
"OPERATIVE AGREEMENTS" means, collectively, the Participation Agreement,
the Trust Agreement, the Lease, Lease Supplement No. 1, the Trust Indenture, the
initial Trust Indenture Supplement, the Bills of Sale, the Tax Indemnity
Agreement, and the Equipment Notes.
"OPERATIVE INDENTURES" means each of the indentures under which notes have
been issued and purchased by the Pass Through Trustees.
"ORIGINAL AMOUNT," with respect to an Equipment Note, means the stated
original principal amount of such Equipment Note and, with respect to all
Equipment Notes, means the aggregate stated original principal amounts of all
Equipment Notes.
"OWNER PARTICIPANT" means the person executing the Participation Agreement
as "Owner Participant" or, if a second person becomes an "Owner Participant"
pursuant to Section 10.1.1 of the Participation Agreement, both of such persons;
PROVIDED that if an Owner Participant Transfers 100% of its interest to a
successor Owner Participant, such transferring Owner Participant shall
thereafter no longer be considered an "Owner Participant".
"OWNER PARTICIPANT AGREEMENTS" means, collectively, the Participation
Agreement, the Tax Indemnity Agreement, the Trust Agreement and each other
agreement between Owner Participant and any other party to the Participation
Agreement relating to the Transactions, delivered on the Closing Date.
"OWNER PARTICIPANT'S PERCENTAGE" means the percentage of Lessor's Cost
allocated to the Owner Participant in Schedule 2 to the Participation Agreement.
"OWNER TRUSTEE" means First Security Bank, National Association, a national
banking association, not in its individual capacity, except as expressly
provided in any Operative Agreement, but solely as Owner Trustee under the Trust
Agreement.
"OWNER TRUSTEE AGREEMENTS" means, collectively, the Participation
Agreement, the Lease, Lease Supplement No. 1, the Trust Agreement, the Trust
Indenture, the initial Trust Indenture Supplement, the Equipment Notes, and each
other agreement between Owner Trustee and any other party to the Participation
Agreement, relating to the Transactions, delivered on the Closing Date.
"PARTICIPANTS" means, collectively, Owner Participant and each Loan
Participant and "Participant" means Owner Participant or a Loan Participant,
individually.
"PARTICIPATION AGREEMENT" means the Participation Agreement ____ dated as
of April 21, 1998, among Lessee, Owner Participant, Owner Trustee, the Pass
Through Trustees, Subordination Agent and Mortgagee.
"PARTS" means all appliances, parts, components, instruments,
appurtenances, accessories, furnishings, seats and other equipment of whatever
nature (other than (a) Engines or engines, and (b) any items leased by Lessee
from a third party other than Lessor)), that may from time to time be installed
or incorporated in or attached or appurtenant to the Airframe or any Engine.
"PASS THROUGH AGREEMENTS" means the Pass Through Trust Agreements, the
Intercreditor Agreement, the Liquidity Facilities and the Fee Letters referred
to in Section 2.03 of each of the Liquidity Facilities, PROVIDED, that no
amendment, modification or supplement to, or substitution or replacement of, any
such Fee Letter shall be effective for purposes of any obligation of Lessee,
unless consented to by Lessee.
"PASS THROUGH CERTIFICATES" means the pass through certificates issued by
the Pass Through Trusts (and any other pass through certificates for which such
pass through certificates may be exchanged).
"PASS THROUGH INDEMNITEES" means (i) the Subordination Agent, the Liquidity
Provider, and the Pass Through Trustees, (ii) each Affiliate of a person
described in the preceding clause (i), (iii) the respective directors, officers,
employees, agents and servants of each of the persons described in the preceding
clauses (i) and (ii) and (iv) the successors and permitted assigns of the
persons described in the preceding clauses (i), (ii) and (iii).
"PASS THROUGH TRUST" means each of the three separate pass through trusts
created under the Pass Through Trust Agreements.
"PASS THROUGH TRUST AGREEMENT" means each of the three separate Trust
Supplements, together in each case with the Basic Pass Through Trust Agreement,
each dated as of the Issuance Date by and between the Lessee and a Pass Through
Trustee PROVIDED, that for purposes of any obligation of Lessee, no amendment,
modification or supplement to, or substitution or replacement of, any such
Agreement shall be effective unless consented to by Lessee.
"PASS THROUGH TRUSTEE" means Wilmington Trust Company, a Delaware banking
corporation, in its capacity as trustee under each Pass Through Trust Agreement.
"PASS THROUGH TRUSTEE AGREEMENTS" means the Participation Agreement, the
Pass Through Trust Agreements and the Intercreditor Agreement.
"PAYMENT DATE" means (i) each April 15 and October 15 during the Term,
commencing with the first such date to occur after the Closing Date, (ii) the
Scheduled Expiration Date and (iii) each Scheduled Renewal Term Expiration Date.
"PAYMENT DUE RATE" is defined in Schedule 1 to the Lease.
"PAYMENT PERIOD" means each of the consecutive semiannual periods (or such
applicable shorter period ended on the Scheduled Expiration Date and the first
and last Payment Dates of any Renewal Lease Term) during the Term ending on a
Payment Date, the first such period commencing on and including the Closing
Date.
"PERMITTED AIR CARRIER" means (i) any Manufacturer Sublessee, or any
Affiliate of a Manufacturer Sublessee, in each case, based in the United States,
(ii) any Permitted Foreign Air Carrier, (iii) any person approved in writing by
Lessor and Owner Participant, (iv) the U.S. Government or (v) any U.S. Air
Carrier.
"PERMITTED COUNTRY" means any country listed on Part A of Schedule 5 to the
Lease.
"PERMITTED FOREIGN AIR CARRIER" means (i) any air carrier with its
principal executive offices in any country listed in Part B of Schedule 5 to the
Lease and which is authorized to conduct commercial airline operations and to
operate jet aircraft similar to the Aircraft under the applicable Laws of such
country or (ii) any Manufacturer Sublessee or any Affiliate of Manufacturer
Sublessee, in each case with its principal executive offices in any country
listed in Part B of Schedule 5 to the Lease.
"PERMITTED GOVERNMENT ENTITY" means (i) the U.S. Government or (ii) any
Government Entity if the Aircraft is then registered under the laws of the
country of such Government Entity.
"PERMITTED INSTITUTION" means (a) any bank, trust company, insurance
company, financial institution or corporation (other than, without Lessee's
consent, an air carrier (as defined in Section 1.1 of the FAA Regulations), a
commercial operator (as defined in Section 1.1 of the FAA Regulations) or
Affiliate of any of the foregoing), in each case with a combined capital and
surplus or net worth of at least $50,000,000.
"PERMITTED LIEN" means any Lien described in clauses (a) through (g),
inclusive, of Section 6 of the Lease.
"PERMITTED SUBLEASE" means a sublease permitted under Section 7.2.7 of the
Lease.
"PERMITTED SUBLESSEE" means the sublessee under a Permitted Sublease.
"PERSONS" or "PERSONS" means individuals, firms, partnerships, joint
ventures, trusts, trustees, Government Entities, organizations, associations,
corporations, government agencies, committees, departments, authorities and
other bodies, corporate or incorporate, whether having distinct legal status or
not, or any member of any of the same.
"PLAN" means any employee benefit plan within the meaning of Section 3(3)
of ERISA, or any plan within the meaning of Section 4975(e)(1) of the Code.
"PRELIMINARY NOTICE" is defined in Section 17.1 of the Lease.
"PREMIUM TERMINATION DATE" means April 15, 2007, in the case of the Series
A Equipment Notes, October 15, 2004 in the case of the Series B Equipment Notes
and October 15, 2002 in the case of the Series C Equipment Notes.
"PTT PERCENTAGE" means, with respect to each Pass Through Trustee, the
percentage of Lessor's Cost allocated to such Pass Through Trustee in Schedule 2
to the Participation Agreement.
"QIB" is defined in Section 2.08 of the Trust Indenture.
"REFUNDING CERTIFICATE" means a certificate of an authorized representative
of Owner Participant delivered pursuant to Section 11.1.1 of the Participation
Agreement, setting forth (a) the Refunding Date and (b) the following
information, subject to the limitations set forth in Section 11 of the
Participation Agreement: (i) the principal amount of debt to be issued by Owner
Trustee on the Refunding Date, (ii) the proposed adjusted debt/equity ratio and
(iii) the proposed revised schedules of Basic Rent, Stipulated Loss Value
percentages and Termination Value percentages, and the proposed Amortization
Schedules, calculated in accordance with Section 3.2.1 of the Lease.
"REFUNDING DATE" means the proposed date on which the outstanding Equipment
Notes will be redeemed and refinanced pursuant to Section 11 of the
Participation Agreement.
"REFUNDING INFORMATION" means the information set forth in the Refunding
Certificate (other than the Refunding Date) as such information may have been
revised by any verification procedures demanded by Lessee pursuant to Section
3.2.1(d) of the Lease.
"RENEWAL LEASE TERM" means each term for which the Lease is extended by
Lessee, if any, pursuant to the first and second such extensions in accordance
with Section 17 of the Lease.
"RENEWAL NOTICE" is defined in Section 17.2.1 of the Lease.
"RENEWAL RENT" for the Aircraft means the rent payable therefor in respect
of a Renewal Lease Term determined pursuant to Section 17.2.2 of the Lease.
"RENT" means, collectively, Basic Rent, Renewal Rent and Supplemental Rent.
"REPLACEMENT AIRFRAME" means any airframe substituted for the Airframe
pursuant to Section 10 of the Lease.
"REPLACEMENT ENGINE" means an engine substituted for an Engine pursuant to
the Lease.
"RETURN ACCEPTANCE SUPPLEMENT" means a Return Acceptance Supplement, dated
as of the date the Aircraft is returned to Lessor pursuant to Section 5 of the
Lease, by Lessor and Lessee substantially in the form of Exhibit B to the Lease.
"SCHEDULED CLOSING DATE" means the expected Closing Date notified to each
Participant, Owner Trustee and Mortgagee by Lessee pursuant to Section 4.1 of
the Participation Agreement, which expected Closing Date shall be a Business Day
not later than the Commitment Termination Date.
"SCHEDULED EXPIRATION DATE" is defined in Schedule 1 to the Lease.
"SCHEDULED RENEWAL TERM EXPIRATION DATE" means, in the case of a Renewal
Lease Term, the Scheduled Renewal Term Expiration Date as elected by Lessee
pursuant to Section 17.2 of the Lease.
"SEC" means the Securities and Exchange Commission of the United States, or
any Government Entity succeeding to the functions of such Securities and
Exchange Commission.
"SECTION 1110" means 11 U.S.C. ss. 1110 of the Bankruptcy Code or any
successor or analogous section of the federal bankruptcy Law in effect from time
to time.
"SECURED OBLIGATIONS" is defined in Section 2.06 of the Trust Indenture.
"SECURITIES ACT" means the Securities Act of 1933, as amended.
"SECURITY" means a "security" as defined in Section 2(1) of the Securities
Act.
"SENIOR HOLDER" is defined in Section 2.14(c) of the Trust Indenture.
"SERIES" means any of Series A, Series B or Series C.
"SERIES A" or "SERIES A EQUIPMENT NOTES" means Equipment Notes issued under
the Trust Indenture and designated as "Series A" thereunder, in the Original
Amount and maturities and bearing interest as specified in Schedule I to the
Trust Indenture under the heading "Series A."
"SERIES B" or "SERIES B EQUIPMENT NOTES" means Equipment Notes issued under
the Trust Indenture and designated as "Series B" thereunder, in the Original
Amount and maturities and bearing interest as specified in Schedule I to the
Trust Indenture under the heading "Series B."
"SERIES C" or "SERIES C EQUIPMENT NOTES" means Equipment Notes issued under
the Trust Indenture and designated as "Series C" thereunder, in the Original
Amount and maturities and bearing interest as specified in Schedule I to the
Trust Indenture under the heading "Series C."
"SIMILAR AIRCRAFT" is defined in Schedule 1 to the Lease.
"SLV RATE" is defined in Schedule 1 to the Lease.
"SPECIAL DEFAULT" means (i) the failure by Lessee to pay any amount of
Basic Rent, Renewal Rent, Stipulated Loss Value or Termination Value when due or
(ii) the occurrence of any Lease Default or Lease Event of Default referred to
in Section 14.5 of the Lease.
"STANDARD & POOR'S" means Standard & Poor's Ratings Services, a division of
The XxXxxx-Xxxx Companies, Inc.
"STIPULATED LOSS VALUE" means, with respect to the Aircraft, (a) during the
Base Lease Term, the amount determined by multiplying (i) the percentage set
forth in Schedule 3 to the Lease (as adjusted from time to time in accordance
with Section 3.2.1 of the Lease) opposite the Stipulated Loss Value Date by (ii)
Lessor's Cost and (b) during any Renewal Lease Term, the amount determined
pursuant to Section 17.2.3 of the Lease. Notwithstanding anything to the
contrary in any Operative Agreement, Stipulated Loss Value shall always be
sufficient to pay in full, as of the date of payment thereof (assuming timely
payment of the Equipment Notes prior to such date), the aggregate unpaid
principal amount of all Equipment Notes outstanding as of such date, together
with accrued and unpaid interest on all such Equipment Notes as of such date.
"STIPULATED LOSS VALUE DATE" means, for any month, the day in such month
specified in Schedule 3 to the Lease or, if such day is not a Business Day, the
immediately succeeding Business Day.
"SUBORDINATION AGENT" means Wilmington Trust Company, as subordination
agent under the Intercreditor Agreement.
"SUBORDINATION AGENT AGREEMENTS" means the Participation Agreement, the
Liquidity Facilities and the Intercreditor Agreement.
"SUPPLEMENTAL RENT" means, without duplication (a) all amounts,
liabilities, indemnities and obligations (other than Basic Rent or Renewal Rent
but including Make-Whole Amount, if any) that Lessee assumes or becomes
obligated to or agrees to pay under any Lessee Operative Agreement to or on
behalf of Lessor or any other person, including, without limitation, payments of
Stipulated Loss Value, Termination Value, any amounts in respect of a purchase
price payable pursuant to Section 17.3 of the Lease and payments of indemnities
under Section 9 of the Participation Agreement, but excluding any amount as to
which Lessee is obligated to pay a pro rata share pursuant to clause (e) of this
definition, (b) (i) an amount or amounts equal to the fees payable to the
relevant Liquidity Provider under Section 2.03 of each Liquidity Facility and
the related Fee Letter (as defined in the Intercreditor Agreement) multiplied by
a fraction the numerator of which shall be the then outstanding aggregate
principal amount of the Series A Equipment Notes, Series B Equipment Notes and
Series C Equipment Notes and the denominator of which shall be the then
outstanding aggregate principal amount of all "Series A Equipment Notes",
"Series B Equipment Notes" and "Series C Equipment Notes" (each as defined in
each of the Operative Indentures); (ii) (x) the amount equal to interest on any
Downgrade Advance (other than any Applied Downgrade Advance) payable under
Section 3.07 of each Liquidity Facility minus Investment Earnings from such
Downgrade Advance multiplied by (y) the fraction specified in the foregoing
clause (i); (iii) (x) the amount equal to interest on any Non-Extension Advance
(other than any Applied Non-Extension Advance) payable under Section 3.07 of
each Liquidity Facility minus Investment Earnings from such Non-Extension
Advance multiplied by (y) the fraction specified in the forgoing clause (i);
(iv) if any payment default shall have occurred and be continuing with respect
to interest on any Series A Equipment Notes, Series B Equipment Notes or Series
C Equipment Notes, (x) the excess, if any, of (1) an amount equal to interest on
any Unpaid Advance, Applied Downgrade Advance or Applied Non-Extension Advance
payable under Section 3.07 of each Liquidity Facility OVER (2) the sum of
Investment Earnings from any Final Advance PLUS any amount of interest at the
Payment Due Rate actually payable (whether or not in fact paid) by Lessee in
respect of the overdue scheduled interest on the Equipment Notes in respect of
which such Unpaid Advance, Applied Downgrade Advance or Applied Non-Extension
Advance was made multiplied by (y) a fraction the numerator of which shall be
the then aggregate overdue amounts of interest on the Series A Equipment Notes,
Series B Equipment Notes and Series C Equipment Notes (other than interest
becoming due and payable solely as a result of acceleration of any such
Equipment Notes) and the denominator of which shall be the then aggregate
overdue amounts of interest on all "Series A Equipment Notes", "Series B
Equipment Notes" and "Series C Equipment Notes" (each as defined in each of the
Operative Indentures) (other than interest becoming due and payable solely as a
result of acceleration of any such "Equipment Notes"); and (v) Lessee's pro rata
share of any other amounts owed to the Liquidity Provider by the Subordination
Agent as borrower under each Liquidity Facility (other than amounts due as
repayment of advances thereunder or as interest on such advances), except to the
extent payable pursuant to clause (i), (ii), (iii) or (iv) above, (c) Lessee's
pro rata share of all compensation and reimbursement of expenses, disbursements
and advances payable by Lessee under the Pass Through Trust Agreements, (d)
Lessee's pro rata share of all compensation and reimbursement of expenses and
disbursements payable to the Subordination Agent under the Intercreditor
Agreement except with respect to any income or franchise taxes incurred by the
Subordination Agent in connection with the transactions contemplated by the
Intercreditor Agreement and (e) Lessee's pro rata share of any amount payable
under Section 9.1 (and, if attributable thereto, Section 9.5) of the
Participation Agreement to any Pass Through Indemnitee to the extent such amount
relates to, results from or arises out of or in connection with (i) the Pass
Through Agreements or the enforcement of any of the terms of any of the Pass
Through Agreements, (ii) the offer, sale, or delivery or the Pass Through
Certificates or any interest therein or represented thereby or (iii) any breach
of or failure to perform or observe, or any other noncompliance with, any
covenant or agreement or other obligation to be performed by Lessee under any
Pass Through Agreement or the falsity of any representation or warranty of
Lessee in any Pass Through Agreement. As used herein, "Lessee's pro rata share"
means as of any time a fraction, the numerator of which is the principal balance
then outstanding of Equipment Notes and the denominator of which is the
aggregate principal balance then outstanding of all "Equipment Notes" (as such
term is defined in each of the Operative Indentures). For purposes of this
definition, the terms "Applied Downgrade Advance", "Applied Non-Extension
Advance", "Cash Collateral Account", "Downgrade Advance", "Final Advance",
"Investment Earnings", "Non-Extension Advance" and "Unpaid Advance" shall have
the meanings specified in each Liquidity Facility. For the avoidance of doubt,
it is understood and agreed that Supplemental Rent includes, without limitation,
any amounts payable under the third paragraph of Section 2.02 of the Trust
Indenture.
"TAX ATTRIBUTE PERIOD" is defined in Section 1(e) of the Tax Indemnity
Agreement.
"TAX INDEMNITEE" means (a) First Security and Owner Trustee, (b) WTC and
Mortgagee, (c) each separate or additional trustee appointed pursuant to the
Trust Agreement or the Trust Indenture, (d) each Participant, (e) the Trust
Estate and the Trust Indenture Estate and (f) the respective successors,
assigns, agents and servants of the foregoing.
"TAX INDEMNITY AGREEMENT" means the Tax Indemnity Agreement, dated as of
even date with the Participation Agreement, between Lessee and Owner
Participant.
"TAXES" means all license, recording, documentary, registration and other
similar fees and all taxes, levies, imposts, duties, charges, assessments or
withholdings of any nature whatsoever imposed by any Taxing Authority, together
with any penalties, additions to tax, fines or interest thereon or additions
thereto.
"TAXING AUTHORITY" means any federal, state or local government or other
taxing authority in the United States, any foreign government or any political
subdivision or taxing authority thereof, any international taxing authority or
any territory or possession of the United States or any taxing authority
thereof.
"TERM" means the term, commencing on the Closing Date, for which the
Aircraft is leased pursuant to Section 3 of the Lease, and shall include, the
Base Lease Term and, if applicable, any Renewal Lease Term; PROVIDED that if at
the scheduled end of the Term the Aircraft or Airframe is being used, or was
within six (6) months prior thereto being used, by the U.S. Government pursuant
to CRAF, the Term shall be deemed extended for the period necessary to
accommodate usage of the Aircraft or Airframe pursuant to CRAF plus six months
thereafter, and Lessee shall be obligated to pay Basic Rent with respect to any
such period of extension at a semiannual rate equal to the higher of (x) average
of the Basic Rent paid during the Base Lease Term or the applicable Renewal
Lease Term, whichever shall have ended immediately prior to such extension or
(y) Fair Market Rental Value.
"TERMINATION DATE" means any Payment Date occurring after the Authorized
Termination Date on which the Lease shall terminate in accordance with Section 9
of the Lease.
"TERMINATION VALUE" means, with respect to the Aircraft, the amount
determined by multiplying (a) the percentage set forth in Schedule 4 to the
Lease (as adjusted from time to time in accordance with Section 3.2.1 of the
Lease) opposite the Termination Value Date by (b) Lessor's Cost. Notwithstanding
anything to the contrary in any Operative Agreement, Termination Value shall
always be sufficient to pay in full, as of the date of payment thereof (assuming
timely payment of the Equipment Notes prior to such date), the aggregate unpaid
principal amount of all Equipment Notes outstanding as of such date, together
with accrued and unpaid interest on all such Equipment Notes as of such date.
"TERMINATION VALUE DATE" means, for any month, the day in such month
specified in Schedule 4 to the Lease or, if such day is not a Business Day, the
immediately succeeding Business Day.
"THRESHOLD AMOUNT" is defined in Schedule 1 to the Lease.
"TRANSACTIONS" means the transactions contemplated by the Participation
Agreement and the other Operative Agreements to occur on the Closing Date.
"TRANSACTION EXPENSES" means: (i) the reasonable and actual fees, expenses
and disbursements incurred in connection with the preparation, execution and
delivery of the Operative Agreements and the Transactions of (1) Xxxxxxxx,
Xxxxxx & Finger, special counsel for Mortgagee and the Loan Participants, such
information to be furnished by Mortgagee and the Subordination Agent, (2) Ray,
Xxxxxxx & Xxxxxxx, special counsel for the Owner Trustee under the Trust
Agreement, such information to be furnished by Owner Trustee, and (3) Xxxxx,
Xxxxx & Xxxxxx, special counsel in Oklahoma City, Oklahoma, such information to
be furnished by Lessee, (ii) all fees, taxes and other charges payable in
connection with the recording or filing of instruments and financing statements,
such information to be furnished by Lessee, (iii) the initial fee and reasonable
and actual disbursements of Owner Trustee under the Trust Agreement, such
information to be furnished by the Owner Trustee, (iv) the initial fee and
reasonable and actual disbursements of Mortgagee under the Trust Indenture, such
information to be furnished by Mortgagee, and (v) Lessee's pro rata share (as
defined in the definition of Supplemental Rent) of the underwriting fees and
expenses attributable to the offering and sale of the Pass Through Certificates.
"TRANSFER" means the transfer, sale, assignment or other conveyance of all
or any interest in any property, right or interest.
"TRANSFEREE" means a person to which any Owner Participant, Owner Trustee
or any Loan Participant or Note Holder purports or intends to Transfer any or
all of its right, title or interest in the Trust Estate or in its Equipment Note
and the Trust Indenture Estate, respectively, as described in Section 10.1.1(a),
10.1.2 or 10.1.3 (but excluding participants in any participation referred to in
Section 10.1.3), respectively, of the Participation Agreement.
"TRUST" means the trust created by the Trust Agreement.
"TRUST AGREEMENT" means the Trust Agreement ____, dated as of even date
with the Participation Agreement, between Owner Participant and Owner Trustee.
"TRUST ESTATE" means all estate, right, title and interest of Owner Trustee
in and to the Aircraft, the Lease, any Lease Supplement and the Purchase
Agreement including, without limitation, all amounts of Basic Rent and
Supplemental Rent including, without limitation, insurance proceeds and
requisition, indemnity or other payments of any kind for of with respect to the
Aircraft. Notwithstanding the foregoing, "Trust Estate" shall not include any
Excluded Payment.
"TRUST INDENTURE" means the Trust Indenture and Mortgage ____, dated as of
even date with the Participation Agreement, between Owner Trustee and Mortgagee.
"TRUST INDENTURE ESTATE" is defined in the "Granting Clause" of the Trust
Indenture.
"TRUST INDENTURE SUPPLEMENT" means a Trust Indenture and Mortgage ____
Supplement, substantially in the form of Exhibit A to the Trust Indenture, with
appropriate modifications to reflect the purpose for which it is being used.
"TRUST SUPPLEMENT" means an agreement supplemental to the Basic Pass
Through Trust Agreement pursuant to which (i) a separate trust is created for
the benefit of the holders of the Pass Through Certificates of a class, (ii) the
issuance of the Pass Through Certificates of such class representing fractional
undivided interests in such trust is authorized and (iii) the terms of the Pass
Through Certificates of such class are established.
"UCC" means the Uniform Commercial Code as in effect in any applicable
jurisdiction.
"UNITED STATES" or "U.S." means the United States of America; PROVIDED,
that for geographic purposes, "United States" means, in aggregate, the 50 states
and the District of Columbia of the United States of America.
"U.S. AIR CARRIER" means any United States air carrier that is a Citizen of
the United States holding an air carrier operating certificate issued by the
Secretary of Transportation pursuant to chapter 447 of title 49 of the United
States Code for aircraft capable of carrying 10 or more individuals or 6000
pounds or more of cargo, and as to which there is in force an air carrier
operating certificate issued pursuant to Part 121 of the FAA Regulations, or
which may operate as an air carrier by certification or otherwise under any
successor or substitute provisions therefor or in the absence thereof.
"U.S. PERSON" means any Person described in Section 7701(a)(30) of the
Code.
"U.S. GOVERNMENT" means the federal government of the United States, or any
instrumentality or agency thereof the obligations of which are guaranteed by the
full faith and credit of the federal government of the United States.
"WEIGHTED AVERAGE LIFE TO MATURITY" means, with respect to any specified
Debt, at the time of the determination thereof the number of years obtained by
dividing the then Remaining Dollar-years of such Debt by the then outstanding
principal amount of such Debt. The term "Remaining Dollar-years" shall mean the
amount obtained by (1) multiplying the amount of each then-remaining principal
payment on such Debt by the number of years (calculated at the nearest
one-twelfth) that will elapse between the date of determination of the Weighted
Average Life to Maturity of such Debt and the date of that required payment and
(2) totaling all the products obtained in clause (1) above.
"WET LEASE" means any arrangement whereby Lessee or a Permitted Sublessee
agrees to furnish the Aircraft, Airframe or any Engine to a third party pursuant
to which the Aircraft, Airframe or Engine shall at all times be in the
operational control of Lessee or a Permitted Sublessee, provided that Lessee's
obligations under this Lease shall continue in full force and effect
notwithstanding any such arrangement.
"WTC" means Wilmington Trust Company, a Delaware banking corporation, not
in its capacity as Mortgagee under the Trust Indenture, but in its individual
capacity.
[ANNEXES B, C AND D ARE OMITTED FROM THIS VERSION OF THE
DOCUMENT AS CONTAINING CONFIDENTIAL FINANCIAL INFORMATION]
