AIRCRAFT LEASE AGREEMENT
Dated as of
January 7, 2000
between
AVIATION FINANCIAL SERVICES INC.
a wholly owned subsidiary of General Electric Capital Corporation
as
Lessor
and
FRONTIER AIRLINES, INC.
as
Lessee
in respect of
Aircraft : Boeing 737-36E
Serial No: 25159
U.S. Reg. No.: N315FL
Note: This Aircraft Lease Agreement has been executed in several counterparts
of which this is Counterpart No. ___. See Clause 16.15 hereof for
information concerning the distinction between various counterparts.
INDEX
CLAUSE PAGE
------ ----
1. Interpretation..............................................................1
1.1 Definitions.......................................................1
1.2 Construction.....................................................15
2. Representations and Warranties.............................................16
2.1 Lessee's Representations and Warranties..........................16
2.2 Lessee's Further Representations and Warranties..................17
2.3 Repetition.......................................................19
2.4 Lessor's Representations and Warranties..........................19
3. Conditions Precedent.......................................................20
3.1 Conditions Precedent.............................................20
3.2 Further conditions precedent.....................................23
3.3 Waiver...........................................................23
4. Commencement...............................................................24
4.1 Leasing..........................................................24
4.2 Delivery.........................................................24
4.3 Delayed Delivery.................................................24
4.4 Licenses.........................................................25
4.5 Inspection.......................................................25
4.6 Indemnity........................................................25
5. Payments...................................................................25
5.1 Deposit..........................................................25
5.2 Rental Periods...................................................25
5.3 Rent.............................................................26
5.4 Maintenance Reserves.............................................26
5.5 Payments.........................................................26
5.6 Withholding......................................................27
5.7 General Tax indemnity............................................27
5.8 Sales and Use Taxes..............................................29
5.9 Information......................................................30
5.10 Indemnity Payments to be Made on an After-Tax Basis.............30
5.11 Default Interest................................................30
5.12 Contest.........................................................31
5.13 Net Lease.......................................................32
5.14 Security........................................................32
5.14 Security........................................................33
6. Manufacturer's Warranties..................................................34
6.1 Assignment.......................................................34
6.2 Proceeds.........................................................34
6.3 Parts............................................................34
6.4 Agreement........................................................34
7. Lessor's Covenants.........................................................35
7.1 Quiet Enjoyment..................................................35
7.2 Release of Maintenance Reserves..................................35
7.3 Lessor Obligations Following Expiry Date.........................36
8. Lessee's Covenants.........................................................36
8.1 Duration.........................................................36
8.2 Information......................................................36
8.3 Lawful and Safe Operation........................................37
8.4 Taxes and other Outgoings........................................39
8.5 Sub-Leasing and Wet-Leasing......................................39
8.6 Inspection.......................................................40
8.7 Title............................................................40
8.8 General..........................................................41
8.9 Records..........................................................41
8.10 Protection......................................................42
8.11 Maintenance and Repair..........................................42
8.12 Removal of Engines and Parts....................................43
8.13 Installation of Engines and Parts...............................44
8.14 Non-Installed Engines and Parts.................................44
8.15 Pooling of Engines and Parts....................................45
8.16 Equipment Changes...............................................45
8.17 Title on an Equipment Change....................................46
8.18 Third Party.....................................................46
9. Insurance..................................................................46
9.1 Insurances.......................................................46
9.2 Requirements.....................................................47
9.3 Change...........................................................47
9.4 Insurance Covenants..............................................47
9.5 Failure to Insure................................................48
9.6 Continuing Indemnity.............................................48
9.7 Application of Insurance Proceeds................................48
9.7 Application of Insurance Proceeds................................49
10. Indemnity.................................................................49
10.1 General.........................................................49
10.2 Duration........................................................50
11. Events of Loss............................................................50
11.1 Events of Loss..................................................50
11.2 Substitute Aircraft.............................................51
11.3 Requisition.....................................................52
12. Return of Aircraft........................................................52
12.1 Return..........................................................52
12.2 Final Inspection................................................52
12.3 Non-Compliance..................................................53
12.4 Redelivery......................................................53
12.5 Acknowledgment.................................................53
12.6 Maintenance Program.............................................53
12.7 Fuel............................................................53
12.8 Automatic Extension of Term....................................54
13. Default...................................................................54
13.1 Events..........................................................54
13.2 Rights..........................................................57
13.3 Deregistration..................................................61
14. Assignment................................................................61
14.1 Lessee's Assignment.............................................61
14.2 Lessor's Assignment.............................................61
14.3 Transfer........................................................61
15. Illegality................................................................61
16. Miscellaneous.............................................................62
16.1 Waivers, Remedies Cumulative....................................62
16.2 Delegation......................................................62
16.3 Certificates....................................................62
16.4 Appropriation...................................................62
16.5 Currency........................................................62
16.6 Set-off.........................................................62
16.7 Severability....................................................63
16.8 Remedy..........................................................63
16.9 Expenses........................................................63
16.10 Time of Essence................................................63
16.11 Notices........................................................64
16.12 Governing Law and Jurisdiction.................................64
16.13 Sole and Entire Agreement......................................66
16.14 Indemnities....................................................66
16.15 Counterparts...................................................66
16.16 Language.......................................................66
16.17 No Brokers.....................................................66
17. Disclaimers and Waivers...................................................68
17.1 Exclusion.......................................................68
17.2 Waiver..........................................................68
17.3 Disclaimer of Consequential Damages.............................69
17.4 Confirmation....................................................69
18. Section 1110..............................................................69
19. Usury Laws................................................................69
20. Modification or Revision..................................................70
21. Witness...................................................................71
SCHEDULES.....................................................................72
SCHEDULE 1. Description of Aircraft.........................................72
SCHEDULE 2. Certificate of Technical Acceptance.............................78
SCHEDULE 3. Operating Condition at Redelivery...............................84
SCHEDULE 4. Insurances Requirements.........................................88
SCHEDULE 5. Intentionally Omitted...........................................91
SCHEDULE 6. Lease Supplement No.____........................................92
SCHEDULE 7. Form of Lease Termination Certificate...........................95
SCHEDULE 8. Form of Aircraft Usage Report...................................97
AIRCRAFT LEASE AGREEMENT
THIS AGREEMENT is made as of the 7th day of January, 2000 between:-
(1) AVIATION FINANCIAL SERVICES INC., a company incorporated under the
laws of Delaware and a wholly owned subsidiary of General Electric
Capital Corporation whose principal place of business is at c/o GE
Capital Aviation Services, Inc., 000 Xxxx Xxxxx Xxxx, Xxxxxxxx,
Xxxxxxxxxxx, 00000 ("Lessor"); and
(2) FRONTIER AIRLINES, INC., a company incorporated under the laws of the
State of Colorado whose principal place of business is at 00000 Xxxx
00xx Xxxxxx, Xxxxxx, Xxxxxxxx, 00000, Xxxxxx Xxxxxx of America
("Lessee").
WHEREAS: Lessor wishes to lease to Lessee and Lessee is willing to lease
from Lessor the Aircraft on the terms of this Agreement. IT IS AGREED as
follows:-
1. INTERPRETATION
1.1 DEFINITIONS
In this Agreement the following expressions have the meanings set out
opposite:-
After-Tax Basis
in the case of any amount payable on an "After-Tax
Basis" to or for the benefit of any Person (including any
amount payable pursuant to this definition) (a "Required
Payment"), the total amount that must be paid is the amount
such that, after deduction of the net amount of all Taxes
required to be paid by such Person with respect to the
receipt or accrual by it of such amount (and assuming that
such Person is subject to (i) United States Federal income
tax at the highest marginal statutory rate imposed on
corporations for the relevant period, (ii) United States
state and local income taxes at the composite of the highest
marginal statutory rates imposed on such Person for the
relevant period, as such composite rate shall be certified
by a financial officer of such Person, and (iii) income
taxes (if any) imposed by countries outside the United
States at the actual rates imposed on such Person) the net
amount received is the amount of the Required Payment.
Agreed Value
the amount specified for Agreed Value in Letter
Agreement No. 1.
Air Authority
Federal Aviation Administration ("FAA").
Aircraft
the aircraft described in Part 1 of Schedule 1, (which
term includes where the context admits a separate reference
to all Engines, Parts and Aircraft Documents) or any
aircraft substituted in place thereof pursuant to Clause
11.1 or 11.2.
Aircraft
Documents the documents, data and records identified in
Part 2 of Schedule 1 and all additions, renewals, revisions
and replacements from time to time made in accordance with
this Agreement.
Airframe
the Aircraft, excluding the Engines and Aircraft
Documents.
Appraisal Procedure
the following procedure for determining the "fair
market rental value" of the Aircraft: (a) Lessor shall
select an independent aircraft appraiser who shall make a
determination of "fair market rental value" of the Aircraft;
and (b) the fees and expenses of the appraiser shall be paid
by Lessee. "Fair market rental value" shall mean the value
determined by an appraisal completed on an "as-is" and
"where-is" basis.
APU
the auxiliary power unit installed on the Aircraft on
the Delivery Date and any replacement auxiliary power unit
installed in accordance with this Agreement.
Boeing
The Boeing Company, a Delaware corporation with its
principal office in Seattle, State of Washington, U.S.A.
Business
Day a day (other than a Saturday or Sunday) on which
business of the nature required by this Agreement is carried
out in the State of Incorporation or where used in relation
to payments on which banks are open for business in New
York.
Certificated Air Carrier
any Person (except the United States Government) that
is a citizen of the United States of America (as defined in
Section 40102 of Title 49 of the United States Code) and
holding a Certificate of Public Convenience and Necessity
issued under Section 41102 of Title 49 of the United States
Code by the Department of Transportation or any predecessor
or successor agency thereto, or, in the event such
certificates shall no longer be issued, any Person (except
the United States Government) that is a citizen of the
United States of America (as defined in Section 40102 of
Title 49 of the United States Code) and legally engaged in
the business of transporting for hire passengers or cargo by
air predominantly to, from or between points within the
United States of America, and, in either event, operating
commercial jet aircraft capable of carrying ten or more
individuals or 6,000 pounds or more of cargo, which also is
certificated so as to entitle Lessor, as a lessor, to the
benefits of Section 1110 of Title 11 of the United States
Code with respect to the Aircraft.
Cold Section Refurbishment
with respect to any Engine the completion of the
following: completely unstacking either high or low or both
compressor sections, if needed, and completing the following
for the appropriate section(s): visual inspection;
de-blading discs as necessary; visual and NDT
(Non-Destructive Testing) inspections as necessary of all
discs; verification that all snap diameters on discs are
within limits; inspection of all blades for proper chord
dimensions and cracking; repair or replacement of blades
below minimums; inspection and repair of stators as
necessary; blade-up of discs using new lock plates; assembly
of rotors in the compressor; balance of all rotors; and
installation of rotors in the engine.
Cycle
one take-off and landing of the Aircraft.
DGAC
means the Civil Aviation Authority of Spain.
Damage Notification Threshold
the amount specified therefor in Letter Agreement No.
1.
Default
any Event of Default and any event which with the
giving of notice, lapse of time, determination of
materiality or fulfillment of other condition would
constitute an Event of Default.
Delivery Condition Requirements
the requirements specified on Part 1 of Schedule 1.
Delivery Date
the date on which the Aircraft is tendered for delivery
by Lessor in accordance with this Agreement.
Delivery Location
Marana, Arizona.
Deposit
all amounts payable pursuant to Clause 5.1 whether in
cash or by Letter of Credit.
Dollars and $
the lawful currency of the United States of America.
Engine
whether or not installed on the Aircraft:-
(a) each engine of the manufacture and model specified
in Part 1 of Schedule 1 (each of which has 750 or more rated
takeoff horsepower or the equivalent of such horsepower)
which Lessor elects to tender to Lessee with the Aircraft on
the Delivery Date, such engines being described as to serial
numbers on the certificate of acceptance to be executed by
Lessee upon delivery of the Aircraft; or
(b) any engine which has replaced that engine, title to
which has or should have, passed to Lessor in accordance
with this Agreement; and in each case includes all modules
and Parts from time to time belonging to or installed in
that engine but excludes any properly replaced engine title
to which has, or should have, passed to Lessee pursuant to
this Agreement.
Engine Event of Loss
the occurrence with respect to an Engine only, whether
or not installed on the Airframe, of any of those events
described in provisions (a) through (d) of the definition of
Event of Loss. Engine Flight Hour means each hour or part
thereof an Engine is operated, elapsing from the moment that
wheels of an aircraft on which such Engine is installed
leave the ground until the wheels of such aircraft next
touch the ground.
Engine Refurbishment
a complete disassembly, inspection and repair of the
modules of an Engine per the engine manufacturer's
maintenance manual, so that such Engine shall have a minimum
expected on-wing life of * hours and * cycles.
ERISA
the Employee Retirement Income Security Act of 1974, as
amended.
Event of Default
an event or condition specified in Clause 13.1.
Event of Loss
with respect to the Aircraft (including for the
purposes of this definition the Airframe):-
(a) the actual or constructive total loss of the
Aircraft (including any damage to the Aircraft which results
in an insurance settlement on the basis of a total loss, or
requisition for use or hire which results in an insurance
settlement on the basis of a total loss); or
(b) it being destroyed, damaged beyond repair or
permanently rendered unfit for normal use for any reason
whatsoever; or
(c) the requisition of title, or other compulsory
acquisition, capture, seizure, deprivation, confiscation or
detention for any reason of the Aircraft by the government
of the State of Registration or other competent authority
(whether de jure or de facto), but excluding requisition for
use or hire not involving requisition of title; or
(d) the hi-jacking, theft, condemnation, confiscation,
seizure or requisition for use or hire of the Aircraft which
deprives any person permitted by this Agreement to have
possession and/or use of the Aircraft of its possession
and/or use for more than * days (or, if earlier, beyond the
Expiry Date).
Excusable Delay
with respect to delivery of the Aircraft, delay or
non-performance due to or arising out of acts of God or
public enemy, civil war, insurrection or riot, fire, flood,
explosion, earthquake, accident, epidemic, quarantine
restriction, any act of government, governmental priority,
allocation, regulation or order affecting directly or
indirectly, the Aircraft, any manufacturer, Lessor or any
materials or facilities, strike or labor dispute causing
cessation, slowdown or interruption of work, inability after
due and timely diligence to procure equipment, data or
materials from manufacturers, suppliers, any existing owner,
seller or lessee in a timely manner, damage, destruction or
loss, or any other cause to the extent that such cause is
beyond the control of Lessor whether above mentioned or not
and whether or not similar to the foregoing.
Expiry Date
the day preceding the numerically corresponding day *
months after the Delivery Date or if earlier the date on
which:-
(a) the date Lessor, acting in accordance with the
terms of this Agreement terminates the leasing of the
Aircraft to Lessee under this Agreement; or
(b) Lessor receives the Agreed Value together with any
other amounts then due and unpaid by Lessee following an
Event of Loss.
FAA
the Federal Aviation Administration of the United
States of America and any successor thereof.
FAR
the Federal Aviation Regulations set forth in Title 14
of the United States Code of Federal Regulations, as amended
and modified from time to time.
Federal Aviation Act
The Transportation Laws of the United States as set
forth at 49 United States Code et seq. or any similar
legislation of the United States of America enacted in
substitution or replacement thereof.
Financing Statements
Uniform Commercial Code Financing Statements in respect
of the Aircraft and Engines leased hereunder prepared in a
form acceptable for filing with the applicable Government
Entities in the Habitual Base, the state in which the chief
executive office (as that term is defined in Article 9 of
the Uniform Commercial Code as in effect in the Habitual
Base) and such other jurisdiction as Lessor shall reasonably
require.
Flight Hour
each hour or part thereof (rounded up to two decimal
places) elapsing from the moment the wheels of the Aircraft
leave the ground on take off until the wheels of the
Aircraft next touch the ground.
GAAP
generally accepted accounting principles in the United
States.
Governing Law
the laws of the State of New York.
Government Entity
(a) any national government, political subdivision
thereof, or local jurisdiction therein;
(b) any instrumentality, board, commission, court, or
agency of any thereof, however constituted; and
(c) any association, organization, or institution of
which any of the above is a member or to whose jurisdiction
any thereof is subject or in whose activities any of the
above is a participant.
Gross Negligence
means any intentional, conscious or voluntary action or
decision which is taken with wanton, reckless, flagrant and
culpable disregard for the consequences of such action or
decision.
Guaranty
means a Guaranty of General Electric Capital
Corporation to Lessee with respect to Lessor substantially
in the form attached hereto as Exhibit A to Letter Agreement
No. 1.
Habitual Base
the State of Colorado or, subject to the prior written
consent of Lessor, any other state, country or countries in
which the Aircraft is for the time being habitually based.
Hot Section Refurbishment
with respect to any Engine, the complete visual
inspection and repair as necessary of the combustion section
of an Engine in an engine repair/overhaul station including
without limitation complete unstacking of the high pressure
or low pressure turbine or both if needed; complete visual
inspection of such turbine(s); de-blading of discs as
required; visual and NDT inspections of all discs as
required; verification that all snap diameters on discs are
within limits; inspection of all blades for proper chord
dimensions and cracking; repair or replacement of all blades
below minimums; inspection and repair of stators as
necessary; blade-up of discs using new lock plates; assembly
of rotors in the turbine; balance of all rotors; and
installation of rotors in the engine.
Indemnitee
each of GE Capital Aviation Services, Inc. ("GECASI"),
GE Capital Aviation Services Limited ("GECASL"), Lessor, and
any of their respective successors and assigns,
shareholders, subsidiaries, affiliates, partners,
contractors, directors, officers, servants, agents and
employees and indemnitees; provided, however, that no such
Indemnitee shall be entitled to an indemnification to the
extent such Indemnitee is manufacturer of the Aircraft, any
Engines, or Parts in its capacity as such.
Insurances
as defined in Clause 9.1 hereof.
Landing Gear
the landing gear assembly of the Aircraft excluding any
rotable components.
Law
shall mean and include (a) any statute, decree,
constitution, regulation, order judgment or other directive
of any Governmental Entity; (b) any treaty, pact, compact or
other agreement to which any Governmental Entity is a
signatory or party; (c) any judicial or administrative
interpretation or application of any Law described in (a) or
(b) above; and (d) any amendment or revision of any Law
described in (a), (b) or (c) above.
Lease Supplement
a Lease Supplement, substantially in the form of
Schedule 6 hereto, entered into between Lessor and Lessee.
Lessee's Maintenance Program
the Maintenance Program specifically approved by the
Air Authority for Lessee's maintenance of the Aircraft.
Lessor Lien
(a) any Security Interest whatsoever from time to time
created by or through Lessor in connection with the
financing of the Aircraft;
(b) any other Security Interest in respect of the
Aircraft which results from acts of or claims against Lessor
not related to the transactions contemplated by or permitted
under this Agreement; and
(c) Security Interests in respect of the Aircraft for
Lessor Taxes.
Lessor Taxes
Taxes:-
(a) imposed as a direct result of activities of Lessor
in the jurisdiction imposing the Tax unrelated to Lessor's
dealings with Lessee or to the transactions contemplated by
this Agreement or the operation of the Aircraft by Lessee;
or
(b) imposed on the net income, profits or gains of
Lessor by any Government Entity in the United State of
America; provided, however, that Lessor Taxes shall not
include any Tax imposed by any government or taxing
authority of any jurisdiction if and to the extent that such
Tax results from (i) the use, operation, presence or
registration of the Aircraft, the Airframe, any Engine or
any Part in the jurisdiction imposing the Tax, or (ii) the
situs of organization, any place of business or any activity
of Lessee or any other Person having use, possession or
custody of the Aircraft, the Airframe, any Engine or any
Part in the jurisdiction imposing the Tax; or
(c) imposed with respect to any period commencing or
event occurring after the Expiry Date and unrelated to
Lessor's dealings with Lessee or to the transactions
contemplated by this Agreement;
provided always, that Lessor Taxes shall not include
any income taxes or other amounts payable and subject to
indemnification in favor of Lessor pursuant to the Lease.
Letter Agreement No. 1
that certain Letter Agreement No. 1 between Lessor and
Lessee dated as of the date hereof.
MACRS Deductions
means cost recovery deductions for *% of the Lessor's
cost of the Aircraft pursuant to Section 168(b) of the
Internal Revenue Code of 1986, as amended, commencing in the
year 2000, computed (i) on the basis that the Aircraft is
"7-year property" (within the meaning of Section 168(e) of
the Code), (ii) by using the *% declining balance method
over a 7 year recovery period, switching to the
straight-line method for the first taxable year of the
Lessor during the term for which such method yields a larger
allowance, (iii) assuming salvage value is zero, (iv) using
a half-year convention and (v) assuming that the Aircraft is
sold at the end of the Term of * months.
Letter of Credit
means any letter of credit issued in relation to the
Lease pursuant to Section 5.15 and any replacement or
renewal of that letter of credit.
Maintenance Performer
the Lessee, Tramco, USAir Inc., or such other Person as
is approved by the FAA to perform maintenance and/or
modification services on commercial aircraft and/or
commercial aircraft engines, which Person shall be agreed by
Lessor and Lessee to have recognized standing and
experience, suitable facilities for the level of maintenance
being carried out and suitable equipment to perform such
services on aircraft and/or engines of the same or improved
model as the Aircraft or, in the case of engines, the
Engines.
Maintenance Program
an Air Authority approved maintenance program for the
Aircraft based upon the Manufacturer's specifications,
service bulletins, planning documents, maintenance manuals
and documents and encompassing scheduled maintenance
(including block maintenance), condition-monitored
maintenance, and/or on-condition maintenance of Airframe,
Engines and Parts, including but not limited to, servicing,
testing, preventive maintenance, repairs, structural
inspections, system checks, overhauls, approved
modifications, service bulletins, engineering orders,
airworthiness directives, corrosion control, inspections and
treatments.
Major Checks
any C-Check, multiple C-Check, D-Check or annual heavy
maintenance visit or segment thereof suggested for
commercial aircraft of the same model as the Aircraft by its
manufacturer (however denominated) as set out in Lessee's
Maintenance Program.
Manufacturer
Boeing.
Minimum Liability Coverage
the amount set forth therefore in Letter Agreement No.
1.
Mortgage Convention
shall mean the Convention for the International
Recognition of Rights in Aircraft, signed (ad referendum) at
Geneva, Switzerland, on June 19, 1948, and amended from time
to time, but excluding the terms of any adhesion thereto or
ratification thereof containing reservations to which the
United States of America does not accede.
Operative Documents
shall mean this Agreement, all Lease Supplements
hereto, Letter Agreement No. 1, the Guaranty, any schedules
or documents prepared in conformance to the Schedules
hereto, any side-letters related hereto and any amendments,
revisions, supplements or modifications hereto or thereto.
Other Agreements
any agreement (other than this Agreement) made or to be
made between Lessor (or an associate or affiliate thereof or
a trustee-lessor acting for Lessor as beneficiary, including
without limitation Polaris Holding Company) or AerFi Group
plc (or an associate or affiliate thereof) and Lessee (or an
associate or affiliate thereof).
Part
whether or not installed on the Aircraft:-
(a) any component, furnishing or equipment (other than
a complete Engine) furnished with the Aircraft on the
Delivery Date; and
(b) any other component, furnishing or equipment (other
than a complete Engine) title to which has, or should have
passed to Lessor pursuant to this Agreement;
but excludes any such items title to which has, or
should have, passed to Lessee pursuant to this Agreement.
Permitted Lien
(a) any lien for Taxes not assessed or, if assessed,
not yet due and payable, or being contested in good faith by
appropriate proceedings;
(b) any lien of a repairer, mechanic, carrier,
hangarkeeper or other similar lien arising in the ordinary
course of business or by operation of Law in respect of
obligations which are not overdue or are being contested in
good faith by appropriate proceedings; and
(c) any Lessor Lien.
but only if (in the case of both (a) and (b)) (i)
adequate resources have been provided by Lessee for the
payment of the Taxes or obligations; and (ii) such
proceedings, or the continued existence of the lien, do not
give rise to any likelihood of the sale, forfeiture or other
loss of the Aircraft or any interest therein or of criminal
liability on Lessor.
Person
any individual person, corporation, partnership, firm,
joint stock company, joint venture, trust, estate,
unincorporated organization, association, Government Entity,
or organization or association of which any of the above is
a member or a participant.
Redelivery Location
a location on Lessee's route system in the United
States designated by Lessor, or such other location as
Lessor and Lessee shall agree.
Related Agreements
any agreement (other than this Agreement) made or to be
made between or with Lessor (or an associate or affiliate
thereof or a trustee-lessor acting for Lessor as
beneficiary, including without limitation Polaris Holding
Company) and Lessee (or an associate or affiliate of
Lessee).
Replacement Engine
an engine of the same manufacturer and model, and
having equivalent value, utility, modification status, time
elapsed since Hot Section Refurbishment and Cold Section
Refurbishment and remaining warranty status as the Engine it
is intended to replace under Clause 11.1(c), or at Lessee's
option, an engine of the same manufacturer as such Engine
but of an improved model, and otherwise of an equivalent
value and utility and suitable for installation and use on
the Airframe without impairing the value or utility of the
Airframe and compatible with the remaining installed Engine.
Rent
all amounts payable pursuant to Clause 5.3.
Rental Period
each period ascertained in accordance with Clause 5.2.
Rent Date
the first day of each Rental Period.
Required LC Expiry Date
means the date being * days after the Expiry Date.
Return Occasion
the date on which the Aircraft is redelivered to Lessor
in accordance with Clause 12 hereof.
Scheduled Delivery Month
*.
Security Interest
any mortgage, charge, pledge, lien, assignment,
hypothecation, right of set-off or any agreement or
arrangement having the effect of creating a Security
Interest other than a Permitted Lien.
State of Incorporation
State of Colorado.
State of Registration
United States of America.
Subsidiary
(a) in relation to any reference to accounts, any
company whose accounts are consolidated with the accounts of
Lessee in accordance with GAAP;
(b) for any other purpose an entity from time to time:-
(i) of which another has direct or indirect control or
owns directly or indirectly more than 50 per cent of the
voting share capital; or
(ii) which is a direct or indirect subsidiary of
another under the laws of the jurisdiction of its
incorporation.
Supplemental Rent
all amounts payable under Clause 5.4(a).
Tax Indemnitee
means an Indemnitee and for any taxable year in which
the Lessor joins in the filing of a consolidated federal
income tax return, shall include each member of the
affiliated group (within the meaning of Section 1504 of the
Internal Revenue Code of 1986, as amended, or any successor
provision thereto) of which the Lessor is a member.
Taxes
any and all present and future taxes, duties,
withholdings, levies, assessments, imposts, fees and other
governmental charges of all kinds together with any
penalties, fines, surcharges and interest thereon and any
additions thereto.
Term
the period commencing on the Delivery Date and ending
on the Expiry Date, except that the Term may be extended
beyond the Expiry Date if the Return Occasion is delayed in
the circumstances specified, and subject to the limitation
described, in Clause 12.3.
United States
the United States of America
Viva
collectively means (i) Viva Vuelos Internacionales de
Vacaciones, S.A. (ii) Hispamer Servicos Financieros EFC -
S.A. and (iii) Leasebanesto S.A
Wet Lease
any arrangement whereby Lessee agrees to furnish the
Aircraft to a third party pursuant to which the Aircraft (i)
shall be solely within the operational control of Lessee and
shall be operated solely by regular employees of Lessee
possessing all current certificates and licenses that would
be required under the Federal Aviation Act for the
performance by such employees of similar functions within
the United States of America, (ii) shall be maintained by
Lessee in accordance with Lessee's Maintenance Program and
(iii) shall be and remain subject and subordinate to all
other terms and conditions of this Agreement; provided,
however, that Lessee shall remain primarily liable for the
performance of all of the terms of this Agreement
(including, without limitation, its obligations set forth in
Clause 9 of this Agreement) to the same extent as if such
arrangement had not been entered into.
1.2 CONSTRUCTION
(a) In this Agreement, unless the contrary intention is stated, a reference
to:-
(i) each of "Lessor" or "Lessee" or any other person includes without
prejudice to the provisions of this Agreement any successor in title to it
and any permitted assignee;
(ii) words importing the plural shall include the singular and vice versa;
(iii) any document shall include that document as amended, novated or
supplemented;
(iv) a Clause or a Schedule is a reference to a clause of or a schedule to
this Agreement;
(v) a reference to "Agreement", "the Agreement" or "this Agreement" shall,
unless expressly provided otherwise, mean and include this Aircraft Lease
Agreement and each of the other Operative Documents; and
(b) the headings in this Agreement are to be ignored in construing this
Agreement.
2. REPRESENTATIONS AND WARRANTIES
2.1 Lessee's Representations and Warranties: Lessee represents and
warrants to Lessor that:-
(a) Status: Lessee is a corporation duly incorporated and validly existing
under the laws of the State of Incorporation and has the corporate power to
own its assets and carry on its business as it is being conducted and is
the holder of all necessary air transportation licenses required in
connection therewith and with the use and operation of the Aircraft;
(b) Power and authority: Lessee has the corporate power to enter into and
perform, and has taken all necessary corporate action to authorize the
entry into, performance and delivery of, this Agreement and the
transactions contemplated by this Agreement;
(c) Legal validity: this Agreement has been duly entered into and delivered by
Lessee, and this Agreement does, and the Operative Documents to which it is
a party when executed and delivered by Lessee will, constitute legal, valid
and binding obligations of Lessee, enforceable in accordance with their
respective terms, except as may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or other similar Laws affecting the
enforcement of creditors' rights generally, and, to the extent that certain
remedies require or may require enforcement by a court of equity, by such
principles of equity (regardless of whether such enforceability is
considered in a proceeding in equity or at law) as a court having
jurisdiction may impose and by Laws which may affect some of such remedies
but which do not make the available remedies inadequate for the substantial
realization of the benefits provided herein;
(d) Non-conflict: the entry into and performance by Lessee of, and the
transactions contemplated by, this Agreement do not and will not:-
(i) conflict with any laws binding on Lessee; or
(ii) conflict with the constitutional documents of Lessee; or
(iii) conflict with or result in default under any indenture, mortgage,
chattel mortgage, deed of trust, conditional sales contract, lease, bank
loan or credit agreement or other agreement which is binding upon Lessee or
any of its assets nor result in the creation of any Security Interest over
any of its assets;
(e) Authorization: all authorizations, consents, registrations and
notifications required in connection with the entry into, performance,
validity and enforceability of, this Agreement and the transactions
contemplated by this Agreement, have been (or will on or before the
Delivery Date have been) obtained or effected (as appropriate) and are (or
will on their being obtained or effected be) in full force and effect;
(f) No Immunity:
(i) Lessee is subject to civil commercial law with respect to its
obligations under this Agreement; and
(ii) neither Lessee nor any of its assets is entitled to any right of
immunity and the entry into and performance of this Agreement by Lessee
constitute private and commercial acts;
(g) Accounts: the audited consolidated accounts of Lessee and its Subsidiaries
most recently delivered to Lessor, including balance sheets and statements
of income and retained earnings:-
(i) have been prepared in accordance with GAAP; and
(ii) fairly represent the consolidated financial condition of Lessee and
its Subsidiaries as at the date to which they were drawn up;
(h) Restricted Countries: Lessee does not hold a contract or other obligation
to operate the Aircraft to or for any of the countries designated under
U.S. Code of Federal Regulations 31 CFR Parts 500-599 including, without
limitation, Cuba, Iraq, Iran, Libya, North Korea, the Bosnia-Serb
controlled areas of the Republic of Bosnia and Herzegovina and the Unita
Rebels of Angola.
(i) Chief Executive's Office: Lessee's Chief Executive Office (as that term is
defined in Article 9 of the Uniform Commercial Code as in effect in the
State of Colorado) is located at 00000 Xxxx 00xx Xxxxxx, Xxxxx 000, Xxxxxx,
Xxxxxxxx, Xxxxxx Xxxxxx of America;
(j) Certificated Air Carrier: Lessee is a Certificated Air Carrier and Lessor,
as lessor of the Aircraft to Lessee, is entitled to the benefits of Section
1110 of Title 11 of the United States Code with respect to the Aircraft;
and
(j) Citizen of the United States: Lessee is a "citizen of the United States" as
defined in Section 40102 of Title 49 of the United States Code.
2.2 Lessee's Further Representations and Warranties: Lessee further
represents and warrants to Lessor that:-
(a) No Default:
(i) no Default has occurred and is continuing or might result from the
entry into or performance of the Operative Documents to which Lessee is a
party; and
(ii) no other event or condition has occurred and is continuing which
constitutes (or with the giving of notice, lapse of time, determination of
materiality or the fulfillment of any other applicable condition or any
combination of the foregoing, might constitute) a material default under
any indenture, mortgage, chattel mortgage, deed of trust, conditional sales
contract, lease, bank loan or credit agreement or other agreement which is
binding on Lessee or any assets of Lessee;
(b) Registration:
(i) except for the filing for recordation of this Agreement and a Lease
Supplement with the FAA, and the filing of any Financing Statements
required (and continuation statements at periodic intervals), no further
filing or recording of this Agreement or of any other document (including
any financing statement under Article 9 of the Uniform Commercial Code) and
no further action, is or will be necessary under the Laws of the United
States, the State of Incorporation, and the State of Registration, the
Habitual Base or any other states in order to (A) fully establish, perfect
and protect Lessor's title to, and interest in, the Aircraft or any Engine
or Part as against Lessee or any third party, or (B) ensure the validity,
effectiveness and enforceability of this Agreement or any other Operative
Document to which the Lessee is a party; and
(ii) under the laws of the State of Incorporation, the State of
Registration and the Habitual Base the property rights of Lessor in the
Aircraft have been fully established, perfected and protected and this
Agreement will have priority in all respects over the claims of all
creditors of Lessee;
(c) Litigation: no litigation, arbitration or administrative proceedings are
pending or to its knowledge threatened against Lessee which, if adversely
determined, would have a material adverse effect upon its financial
condition or business or its ability to perform its obligations under this
Agreement;
(d) Pari Passu: the obligations of Lessee under the Operative Documents to
which it is a party rank at least pari passu with all other present and
future unsecured and unsubordinated obligations (including contingent
obligations) of Lessee, with the exception of such obligations as are
mandatorily preferred by law and not by virtue of any contract;
(e) Material Adverse Change: there has been no material adverse change in the
consolidated financial condition of Lessee and its Subsidiaries or the
financial condition of Lessee since the date to which the accounts most
recently provided to Lessor on or prior to the Delivery Date were drawn up;
(f) Taxes: Lessee has delivered all necessary returns and payments due to the
tax authorities in the State of Incorporation, the State of Registration
and the Habitual Base and is not required by Law to deduct any Taxes from
any payments under this Agreement;
(g) Information: the financial and other information furnished by Lessee in
connection with this Agreement does not contain any untrue statement or
omit to state facts, the omission of which makes the statements therein, in
the light of the circumstances under which they were made, misleading, nor
omits to disclose any material matter to Lessor and all forecasts and
opinions contained therein were honestly made on reasonable grounds after
due and careful inquiry by Lessee; and
(h) ERISA: Lessee is not engaged in any transaction in connection with which it
could be subjected to either a civil penalty assessed pursuant to Section
502 of ERISA or any tax imposed by Section 4975 of the Internal Revenue
Code; no material liability to the Pension Benefit Guaranty Corporation has
been or is expected by Lessee to be incurred with respect to any employee
pension benefit plan (as defined in Section 3 of ERISA) maintained by
Lessee or by any trade or business (whether or not incorporated) which
together with Lessee would be treated as a single employer under Section
4001 of ERISA and Section 414 of the Internal Revenue Code; there has been
no reportable event (as defined in Section 4043(b) of ERISA) with respect
to any such employee pension benefit plan; no notice of intent to terminate
any such employee pension benefit plan has been filed or is expected to be
filed, nor has any such employee pension benefit been terminated; no
circumstance exists or is anticipated that constitutes or would constitute
grounds under Section 4042 of ERISA for the Pension Benefit Guaranty
Corporation to institute proceedings to terminate, or to appoint a trustee
to manage the administration of, such an employee pension benefit plan; and
no accumulated funding deficiency (as defined in Section 302 of ERISA or
Section 412 of the Internal Revenue Code), whether or not waived, exists
with respect to any such employee pension benefit plan.
2.3 Repetition: The representations and warranties in Clause 2.1 and
Clause 2.2 will survive the execution of this Agreement. The
representations and warranties contained in Clause 2.1 and Clause 2.2
will be deemed to be repeated by Lessee on the Delivery Date with
reference to the facts and circumstances then existing. The
representations and warranties contained in Clause 2.1 will be deemed
to be repeated by Lessee on each Rent Date as if made with reference
to the facts and circumstances then existing.
2.4 Lessor's Representations and Warranties: Lessor represents and
warrants to Lessee that:-
(a) Status: Lessor is a company duly incorporated and validly existing under
the laws of the State of New York and has the corporate power to own its
assets and carry on its business as it is now being conducted;
(b) Power and authority: Lessor has the corporate power to enter into and
perform, and has taken all necessary corporate action to authorize the
entry into, performance and delivery of, the Operative Documents to which
it is a party and the transactions contemplated by the Operative Documents
to which it is a party;
(c) Legal validity: the Operative Documents to which it is a party constitute
Lessor's legal, valid and binding obligation;
(d) Non-conflict: the entry into and performance by Lessor of, and the
transactions contemplated by, the Operative Documents to which it is a
party do not and will not:-
(i) conflict with any laws binding on Lessor; or
(ii) conflict with the constitutional documents of Lessor; or
(iii) conflict with any document which is binding upon Lessor or any of its
assets;
(e) Authorization: so far as concerns the obligations of Lessor, all
authorizations, consents, registrations and notifications required under
the laws of the State of New York in connection with the entry into,
performance, validity and enforceability of, and the transactions
contemplated by, the Operative Documents to which it is a party by Lessor
have been (or will on or before the Delivery Date have been) obtained or
effected (as appropriate) and are (or will on their being obtained or
effected be) in full force and effect; and
(f) No Immunity:
(i) Lessor is subject to civil commercial law with respect to its
obligations under the Operative Documents to which it is a party; and
(ii) neither Lessor nor any of its assets is entitled to any right of
immunity and the entry into and performance of the Operative Documents to
which it is a party by Lessor constitute private and commercial acts.
3. CONDITIONS PRECEDENT
3.1 Conditions Precedent: Lessor's obligation to deliver and lease the
Aircraft under this Agreement is subject to satisfaction of each of
the following conditions:-
(a) receipt by Lessor from Lessee not later than * Business Days prior to the
Delivery Date of the following satisfactory in form and substance to
Lessor:-
(i) Constitutional Documents: a copy of the constitutional documents of
Lessee including without limitation articles of incorporation, bylaws and a
current certificate of good standing issued by the secretary of the state
for the State of Incorporation;
(ii) Resolutions: a copy of a resolution of the board of directors of
Lessee approving the terms of, and the transactions contemplated by, this
Agreement, resolving that it enter into this Agreement, and authorizing a
specified person or persons to execute this Agreement and the other
Operative Documents to which it is a party and accept delivery of the
Aircraft on its behalf;
(iii) Opinion: evidence that opinions as reasonably agreed by Lessor will
be issued on the Delivery Date by legal counsel acceptable to Lessor;
(iv) FAA Opinion: a draft of an opinion of Xxxxx & Xxxxxxx P.C. or other
counsel acceptable to Lessor who are recognized specialists with regard to
FAA registration matters in form acceptable to Lessor as to the due filing
for recordation of this Agreement, to be delivered in executed final form
to Lessor and Lessee upon such filing and recordation;
(v) Approvals: evidence of the issue of each approval, license and consent
which may be required in relation to, or in connection with, the
performance by Lessee of any of its obligations hereunder (including,
without limitation, any consent to the export of the Aircraft from the
Habitual Base and consent to the deregistration of the Aircraft upon the
termination of the leasing of the Aircraft under this Agreement);
(vi) Licenses: copies of Lessee's Certificate of Convenience and Necessity,
Radio License, FAR Part 121 operator's certificates and all other licenses,
certificates and permits required by Lessee in relation to, or in
connection with, the operation of the Aircraft;
(vii) Process Agent: a letter from the process agent appointed by Lessee in
this Agreement accepting that appointment;
(viii) Certificate: a certificate of a duly authorized officer of Lessee:-
(a) setting out a specimen of each signature referred to in Clause
3.1(a)(ii);
(b) certifying that each copy document specified in this Clause is
correct, complete and in full force and effect;
(c) certifying that Lessee's representations and warranties contained
in Clause 2.1 and 2.2 are true and correct on the Delivery Date as if
given on such date; and
(d) certifying that there has been no material change in Lessee's
Constitutional Documents since originally delivered by Lessee to
Lessor;
(ix) Air Traffic Control: a letter from Lessee addressed to Transport
Canada or other relevant air traffic control authority pursuant to which
Lessee authorizes the addressee to issue to Lessor, upon Lessor's request
from time to time, a statement of account of all sums due by Lessee to the
authority in respect of all aircraft (including, without limitation, the
Aircraft) operated by Lessee;
(x) Deregistration Power: an irrevocable power of attorney authorizing
Lessor or such other person as Lessor may from time to time specify to do
any thing or act or to give any consent or approval which may be required
to obtain deregistration of the Aircraft and to export the Aircraft from
the Habitual Base upon termination of the leasing of the Aircraft under
this Agreement, duly notarized and legalized;
(xi) Certificate of Lease Termination: a certificate of lease termination
executed by a duly authorized officer of Lessee, substantially in the form
of Schedule 7 hereto, acknowledging that this Agreement is no longer in
effect with respect to the Aircraft and Engines, which certificate Lessor
will hold in escrow to be filed at the FAA upon the expiration of the Term
or other termination of the leasing of the Aircraft to the Lessee
hereunder; and
(xii) General: such other documents as Lessor may reasonably request;
(b) the receipt by Lessor on or before the Delivery Date of:-
(i) Opinions: a signed original of each of the opinions referred to in
Clause 3.1(a)(iii) and 3.1(a)(iv);
(ii) Payments: all sums due to Lessor under this Agreement on or before the
Delivery Date including, without limitation, the first payment of Rent;
(iii) Insurances: certificates of insurance, an undertaking from Lessee's
insurance broker and other evidence satisfactory to Lessor that Lessee is
taking the required steps to ensure due compliance with the provisions of
this Agreement as to Insurances with effect on and after the Delivery Date;
(iv) Lease Supplement No. 1: in the form of Schedule 6 hereto, to be dated
the Delivery Date, fully completed and executed by Lessor and Lessee, and
filed for recording at the FAA;
(v) Certificate of Technical Acceptance: in the form of Schedule 2 hereto,
to be dated and fully completed, and executed by Lessor and Lessee
certifying that Lessee has completed its inspection of the Aircraft in
accordance with Clause 4.5 hereof and that Aircraft conforms to the
provisions set forth therein and is in all respects acceptable to Lessee,
or if not so acceptable, then setting forth discrepancies and corrective
action to be taken;
(vi) Accounts: the latest available accounts of Lessee as described in
Clause 8.2(b)(i) and (ii);
(vii) Documents: a confirmation of receipt of the Aircraft Documents
delivered with the Aircraft on the Delivery Date;
(viii) UCC-1 Financing Statements: in form acceptable to Lessor, and
suitable for filing in the States of Colorado and New York and signed by
Lessee; and
(ix) General: such other documents as Lessor may reasonably request.
(c) receipt by Lessor of such information and documents relating to the
proposed Maintenance Program as Lessor may require and Lessor having agreed
the proposed Maintenance Program on or prior to the Delivery Date; and
(d) evidence that on the Delivery Date that all filings, registrations,
recordings and other actions have been or will be taken which are necessary
or advisable to ensure the validity, effectiveness and enforceability of
this Agreement and the Assignments and to protect the property rights of
Lessor in the Aircraft or any Part.
3.2 Further conditions precedent: The obligations of Lessor to deliver
and lease the Aircraft under this Agreement are subject to the
further conditions precedent that:-
(a) the representations and warranties of Lessee under Clauses 2.1 and 2.2 are
correct and would be correct if repeated on delivery of the Aircraft under
this Agreement; and
(b) no Default has occurred and is continuing or might result from the leasing
of the Aircraft to Lessee under this Agreement.
3.3 Waiver: The conditions specified in Clauses 3.1 and 3.2 are for the
sole benefit of Lessor and may be waived or deferred in whole or in
part and with or without conditions by Lessor. If any of those
conditions are not satisfied on the Delivery Date and Lessor (in its
absolute discretion) nonetheless agrees to deliver the Aircraft to
Lessee, Lessee will ensure that those conditions are fulfilled within
* days after the Delivery Date and Lessor may treat as an Event of
Default the failure of Lessee to do so.
4. COMMENCEMENT
4.1 Leasing: Lessor will lease the Aircraft to Lessee and Lessee will
take the Aircraft on lease in accordance with this Agreement for the
duration of the Term. Lessor will deliver and Lessee will accept the
Aircraft on the day in the Scheduled Delivery Month notified by
Lessor to Lessee at least * Business Days in advance of such date or
such other day as may be agreed. In the event (a) Lessee is unwilling
or unable to accept delivery of the Aircraft on the date notified by
Lessor as the Delivery Date, and (b) the Aircraft meets Delivery
Condition Requirements then Lessee's obligation to pay Rent hereunder
shall commence on such Delivery Date notwithstanding that Lessee has
not accepted possession of the Aircraft. After delivery the Aircraft
and every Part will be in every respect at the sole risk of Lessee,
who will bear all risk of loss, theft, damage or destruction to the
Aircraft from any cause whatsoever.
4.2 Delivery: The Aircraft will be delivered to and accepted by Lessee at
the Delivery Location or such other location as may be agreed. Lessee
will effect acceptance of the Aircraft by execution and delivery to
Lessor of the duly completed and executed Certificate of Acceptance
in the form of Schedule 2 and a duly completed and executed Lease
Supplement No. 1 in the form of Schedule 6 hereto and by authorizing
the filing at the FAA of an executed copy of such Lease Supplement
with an executed copy of this Agreement attached thereto.
4.3 Delayed Delivery: If owing to:-
(a) any seller, manufacturer or existing lessee of the Aircraft delaying in the
delivery of, or failing to deliver, the Aircraft to Lessor for any reason
(other than because of any default of Lessor in the performance of its
obligations under an agreement with that seller, manufacturer or lessee
unless the default arises from any act or omission of Lessee) whether or
not in circumstances entitling that seller, manufacturer or lessee to
terminate that agreement;
(b) any purchase agreement for the Aircraft terminating prior to delivery of
the Aircraft (other than because of any default of Lessor in the
performance of its obligations under that agreement unless the default
arises from any act or omission of Lessee);
(c) any Excusable Delay; or
(d) notification of any defect or non-conformity pursuant to Clause 4.5;
Lessor delays in the delivery of, or fails to deliver, the Aircraft under this
Agreement:-
(i) Lessor will not be responsible for any losses, including
loss of profit, costs or expenses arising from or in
connection with the delay or failure suffered or incurred by
Lessee;
(ii) subject to Clause 4.5, Lessee will not be entitled to
terminate this Agreement or to reject the Aircraft when
tendered for delivery by Lessor, on the grounds of any such
delay;
(iii) in the case of termination of a purchase agreement, Lessor
may at any time after the termination terminate this
Agreement; and
(iv) upon any such termination or termination pursuant to Clause
4.5 neither Lessor nor Lessee will have any further
obligation to the other under this Agreement other than as
expressly set out in this Agreement, except that Lessor will
repay to Lessee the Deposit if paid in cash or cancel and
return the Letter of Credit, as applicable.
4.4 Licenses: Lessee will at its expense obtain all licenses, permits and
approvals which may be necessary to export the Aircraft from the
Delivery Location. Lessor will furnish such data and information as
may be reasonably requested by Lessee in connection with obtaining
any such license, permit or approval.
4.5 Inspection: Prior to the Delivery Date, subject to any applicable
purchase or lease agreement, Lessor will give Lessee an opportunity:-
(a) to inspect the Aircraft at the Delivery Location; and
(b) to assign up to 2 representatives to participate as observers in a
demonstration flight to demonstrate the condition of the Aircraft.
If Lessee notifies Lessor promptly prior to the Delivery Date of any
defect or non-conformity with Schedule 1 observed during the
inspection or demonstration flight, Lessor will correct or procure
the correction of the defect or non-conformity as promptly as
practicable (except to the extent otherwise agreed or to the extent
in the opinion of Lessor it is impracticable or prohibitively
expensive to do so). Subject to Clause 4.3, Lessor may postpone the
Delivery Date in such a case to the date which Lessor notifies Lessee
that the defect or non-conformity has been rectified. Lessee will be
entitled to terminate this Agreement if Lessor notifies it that
Lessor does not intend to correct the defect or non-conformity.
4.6 Indemnity: Lessee will indemnify and hold harmless the Indemnitees
from and against all Claims (as defined in Clause 10) arising from
death or injury to any observer or any employee of Lessee in
connection with any demonstration flight or inspection of the
Aircraft by Lessee.
5. PAYMENTS
5.1 Deposit: Lessee shall pay to Lessor a Deposit in cash or pursuant to
a Letter of Credit in form and substance reasonably acceptable to
Lessor in the amounts set forth in the definition of Deposit in
Letter Agreement No. 1 and in accordance with the schedule set forth
therein. So long as no Default or Event of Default then exists,
Lessor shall refund to Lessee all Deposits then held by Lessor upon
return and final acceptance of the Aircraft by Lessor on the Expiry
Date or promptly after receipt of the Agreed Value after an Event of
Loss.
5.2 Rental Periods: The Term will consist of consecutive whole or partial
Rental Periods set forth in Letter Agreement No. 1. The first Rental
Period will commence on the Delivery Date and each subsequent Rental
Period will commence on the date succeeding the last day of the
previous Rental Period. Each Rental Period will end on the date
immediately preceding the calendar day in the next month numerically
corresponding to the Delivery Date, except that:
(a) if there is no such numerically corresponding day in that month, it will
end on the last day of that month; and
(b) if a Rental Period would otherwise overrun the Expiry Date, it will end on
the Expiry Date.
5.3 Rent: Lessee will pay to Lessor or its order on each Rent Date, Rent
in advance in the amount specified as "Rent" in Letter Agreement No.
1. Payment must be initiated adequately in advance of the Rent Date
to ensure that Lessor receives credit for the payment on the Rent
Date. If a Rental Period begins on a non-Business Day, the Rent
payable in respect of that Rental Period shall be paid on the
Business Day immediately preceding the date on which such Rental
Period commences.
5.4 Supplemental Rent:
(a) Amount: Lessee will further pay to Lessor Supplemental Rent in relation to
each calendar month or portion thereof during the Term and for the last
Rental Period of the Term no later than the 10th day following the end of
such calendar month as follows:-
(i) in respect of the Airframe, the product of the Airframe
Maintenance Reserve Rate specified in Letter Agreement No. 1
and the number of Flight Hours operated by the Aircraft
during that calendar month ("Airframe Supplemental Rent");
and
(ii) in respect of the life-limited Parts ("LLP") for each
Engine, the product of the Life-Limited Parts Reserve Rate
specified in Letter Agreement No. 1 and the number of Engine
Flight Hours (or fraction thereof) operated by the Engine
during that calendar month ("Engine LLP Refurbishment
Reserves"); and
(iii) in respect of Engine Refurbishment for each Engine,
the product of the Engine Refurbishment Reserve Rate
specified in Letter Agreement No. 1 and the number of Engine
Flight Hours (or fraction thereof) operated by the Engine
during that calendar month ("Engine Refurbishment
Reserves"); and
(iv) in respect of the Landing Gear, the product of the
Landing Gear Reserve Rate specified in Letter Agreement No.
1 and the number of Flight Hours operated by the Landing
Gear during that calendar month ("Landing Gear Supplemental
Rent").
(b) Adjustment: Lessor may adjust the amount of Supplemental Rent after the
Delivery Date upon notice to Lessee not more frequently than annually
utilizing the Escalation Adjustment set forth in Letter Agreement No. 1.
The Engine Reserve Rate may be further adjusted not more frequently than
annually as provided in Section III of Letter Agreement No. 1.
5.5 Payments: All payments by Lessee to Lessor under this Agreement will
be made for value on the due date in Dollars and in same day funds
settled through the New York Clearing House System or such other
funds as may for the time being be customary for the settlement in
New York City of international payments in Dollars by telegraphic
transfer to Bankers Trust Company, ABA number * for the account of
GECC T&I Air Depository Account, Account No. * or to such other
account as Lessor may advise Lessee in writing.
5.6 Withholding: All payments by Lessee pursuant to the Operative
Documents to which it is a party shall be free of all withholdings of
any nature whatsoever except to the extent otherwise required by Law,
and if any such withholding is so required, Lessee shall pay on an
After-Tax Basis an additional amount such that after the deduction of
all amounts required to be withheld, the net amount actually received
by Lessor on an After-Tax Basis will equal the amount that Lessor
would have received on an After-Tax Basis if such withholding had not
been required; provided, however, that if Lessee pays any such
additional amount to compensate for the withholding of any Lessor
Tax, Lessor shall repay to Lessee within * days after receipt of
Lessee's written request therefor (which request shall include a
description in reasonable detail of the Lessor Tax involved and the
calculation of the additional amount to be repaid) the amount of such
additional amount to the extent attributable to any Lessor Tax.
5.7 General Tax Indemnity:
(a) General:
(i) Lessee will on demand pay and indemnify each Indemnitee
against all Taxes (other than Lessor Taxes) levied or
imposed against or upon or payable by such Indemnitee or
Lessee and arising from, with respect to or in connection
with the transactions pursuant to the Operative Documents to
which it is a party including (but not limited to) all Taxes
relating or attributable to Lessee, any Operative Document
or the Aircraft directly or indirectly in connection with
the importation, exportation, registration, ownership,
leasing, sub-leasing, purchase, delivery, possession, use,
operation, repair, maintenance, overhaul, transportation,
landing, storage, presence or redelivery of the Aircraft or
any part thereof or any rent, receipts, insurance proceeds,
income or other amounts arising therefrom.
(ii) All Taxes indemnified pursuant to this Clause 5.7 shall
be paid by Lessee directly to the appropriate taxing
authority (to the extent permitted by applicable Law) at or
before the time prescribed by applicable Law. After any
payment by Lessee of any Tax directly to a taxing authority,
Lessee shall furnish to Lessor, on request, a certified copy
of a receipt for Lessee's payment of such Tax or such other
evidence of payment of such Tax as is reasonably obtainable
by Lessee and reasonably acceptable to Lessor.
(iii) Any amount payable by Lessee to an Indemnitee pursuant
to Clause 5.7 shall be paid within * days after receipt of a
written demand therefor from the relevant Indemnitee
accompanied by a written statement describing in reasonable
detail the basis for such indemnity and the computation of
the amount so payable, provided that if an amount of any
indemnified Tax is being contested in accordance with Clause
5.12 and Lessee shall have duly performed (and shall
continue to perform) all its obligations under Clause 5.12
with respect to such contest, then payment of the indemnity
with respect to such Tax under Clause 5.12 shall , at
Lessee's election, be deferred until the date the contest
has been completed.
(b) MACRS Tax Indemnity
Lessee will on demand pay and indemnify each Tax Indemnitee for any
loss, disallowance, or deferral of, or delay in claiming, the MACRS
Deductions resulting from (A) Lessee's using the Aircraft in such a
manner as to cause the Aircraft to be treated as "used predominantly
outside the United States" within the meaning of Section 168(g) of The
Internal Revenue Code of 1986, as amended (the "Code") or (B) the
Aircraft being treated as "tax-exempt use property" within the meaning
of Section 168(h) of the Code other than as a result of the Lessor
being a "tax-exempt entity" under Section 168(h)(2) of the Code (either
(A) or (B) hereinafter referred to as a "MACRS Loss"). In determining
the indemnity required in connection with a MACRS Loss to the Tax
Indemnitee under this Clause, the Tax Indemnitees shall be assumed to
be subject to a combined U. S. and state income tax rate of (after
giving effect to the deductibility of such state income taxes for U. S.
income tax purposes) *% in 2000 and in each year thereafter (the
"Assumed Tax Rate"), and the Tax Indemnitee will have sufficient
taxable income to be taxed at the Assumed Tax Rate after full
utilization of the MACRS Deductions. The amount of the MACRS Loss for
any taxable year or years shall be computed as the difference between
(X) the present value of the MACRS Deductions for such year or years
and all subsequent years using a discount rate of * per cent (*%) per
annum, and (Y) the present value of the actual cost recovery deductions
attributable to the Aircraft realized by the Tax Indemnitee as a result
of the MACRS Loss (but assuming that the Aircraft is sold by the Lessor
at the end of the Term of * months using a discount rate of * per cent
(*%) per annum. The amount payable under this indemnity shall be the
amount that, after deduction by the Tax Indemnitee of the amount of all
additional U.S., state, local and foreign taxes required to be paid by
the Tax Indemnitee in respect of the receipt or accrual of such amount,
will equal the amount of the MACRS Loss as computed in the preceding
sentence, plus the amount of any actual interest, penalties and
additions to tax payable by the Tax Indemnitee with respect to the
MACRS Loss.
(c) Foreign Tax Credit Indemnity
If, as a result of the use or operation or location of the Aircraft
outside the United States by Lessee, more than the *% (the "Permitted
Percentage") of any item of income, deduction, or loss with respect to
the transactions contemplated by the Lease will be treated for Federal
income tax purposes as derived from, or allocable to, sources outside
the United States (an "Excess Foreign Allocation"), and if as a result
thereof the amount of the foreign tax credits available for utilization
by the Lessor for any taxable year shall be less than the amount of the
foreign tax credits that would have been available for utilization by
the Lessor if the Lessee had not used the Aircraft outside the United
States more than the Permitted Percentage (such event being referred to
herein as a "Foreign Tax Credit Loss"), then the Lessee shall pay to
the Lessor as an indemnity an amount which, after deduction of the
amount of all additional federal, state, local and foreign taxes
actually required to be paid by the Lessor in respect of the receipt or
accrual of such amount, is equal to the actual increase in the Federal
income taxes payable by (or not refundable to) the Lessor for such
taxable year as a result of such Foreign Tax Credit Loss, plus the
amount of any interest, penalties and additions to tax payable by the
Lessor as a result of such Foreign Tax Credit Loss.
(d) Payment
Each payment by the Lessee pursuant to Clauses 5.7(b) and (c) shall be
made within * days after receipt of a written demand therefor
accompanied by a written statement describing in reasonable detail the
MACRS Loss or Foreign Tax Credit Loss in question, the amount of
additional Federal income tax, interest, penalties and additions to tax
and the calculation of the payment due in request thereof (but in no
event shall be required to be paid earlier than * (*) Business Days
prior to the date such additional Federal income taxes are due);
provided that, if a contest of the MACRS Loss or Foreign Tax Credit
Loss is being conducted pursuant to Clause 5.12 hereof, payment (other
than payments required under Clause 5.12) shall not be required from
the Lessee until * days after the final determination of such contest.
5.8. Sales and Use Taxes:
(a) Lessee shall pay to Lessor (or, if permitted by applicable Law and if
requested by Lessor, Lessee shall pay to the relevant tax authority for the
account of Lessor), in addition to the amounts specified as "Rent" in
Letter Agreement No. 1:
(i) all sales, use, rental, value added, goods and services
and similar taxes ("Sales Taxes") required to be paid to the
tax authority of the jurisdiction in which the Delivery
Location is situated or to the jurisdiction in which the
Aircraft is habitually based with respect to the lease of
the Aircraft to Lessee pursuant to the Operative Documents
to which it is a party unless Lessee delivers to Lessor on
or prior to the Delivery Date such exemption certificate or
other document as may be acceptable to Lessor to evidence
Lessee's entitlement to exemption from all Sales Taxes
imposed by such jurisdiction with respect to the lease of
the Aircraft pursuant to the Operative Documents to which
Lessee is a party; and
(ii) all Sales Taxes required to be paid to the tax
authority of any jurisdiction in which the Aircraft may be
used, operated or otherwise located from time to time unless
Lessee delivers to Lessor such exemption certificates or
other documents as may be required by applicable Law to
evidence Lessee's entitlement to exemption from all Sales
Taxes imposed by each such jurisdiction with respect to the
lease of the Aircraft pursuant to the Operative Documents to
which Lessee is a party.
(b) Lessee will cooperate with Lessor in connection with the preparation and
filing of any exemption application or similar document that is reasonably
necessary or desirable under applicable Law to avoid the imposition of any
Sales Taxes with respect to the transactions contemplated by the Operative
Documents to which Lessee is a party.
(c) The specific obligations with respect to sales and use taxes set forth in
this Clause 5.8 are in addition to, and are not in substitution for, the
Lessee's obligation to indemnify for sales and use taxes pursuant to Clause
5.7.
5.9 Information:
(a) If Lessee is required by any applicable Law, or by any third party, to
deliver any report or return in connection with any Taxes for which Lessee
would be obligated to indemnify Lessor under the Operative Documents to
which Lessee is a party, Lessee will complete the same and, on request,
supply a copy of the report or return to Lessor.
(b) If any report, return or statement is required to be made by Lessor with
respect to any Tax for which there is an indemnity obligation of Lessee
under this Clause 5, Lessee will promptly notify Lessor of the requirement
and:
(i) if permitted by applicable Law, make and timely file
such report, return or statement (except for any report,
return or statement that Lessor has notified Lessee that
Lessor intends to prepare and file), prepare such return in
such manner as will show the ownership of the Aircraft in
Lessor if required or appropriate, and provide Lessor upon
request a copy of each such report, return or statement
filed by Lessee, or
(ii) if Lessee is not permitted by applicable Law to file
any such report, return or statement, Lessee will prepare
and deliver to Lessor a proposed form of such report, return
or statement within a reasonable time prior to the time such
report, return or statement is to be filed.
Lessee will provide such information and documents as Lessor may
reasonably request to enable Lessor to comply with its tax filing,
audit and litigation obligations.
5.10 Indemnity Payments to be Made on an After-Tax Basis: Lessee agrees
that, with respect to any payment or indemnity pursuant to Clause 5.7
(Tax Indemnity), Clause 5.8 (Sales and Use Taxes) or Clause 10
(Indemnity) to or for the benefit of any Indemnitee, Lessee's
indemnity obligations shall include such amount as may be necessary
to hold such Indemnitee harmless on an After-Tax Basis from all Taxes
required to be paid by such Indemnitee with respect to such payment
or indemnity (including any payments pursuant to this Clause 5.10),
determined based on the assumption that at the time each such payment
or indemnity accrues to the relevant Indemnitee, such payment or
indemnity will be subject to (i) United States Federal income tax at
the highest marginal statutory tax rate applicable to corporations,
(ii) United States state and local income taxes at the composite of
the highest marginal statutory tax rates applicable to the Indemnitee
and (iii) income taxes (if any) imposed by countries outside the
United States at the actual rates imposed on the relevant Indemnitee.
5.11 Default Interest: If Lessee fails to pay any amount payable under
this Agreement on the due date, Lessee will pay on demand from time
to time to Lessor interest (both before and after judgment) on that
amount, from the due date to the date of payment in full by Lessee to
Lessor, at the Interest Rate specified in Letter Agreement No. 1;
provided, however, that in no event shall such rate exceed the
maximum permitted by Law. All such interest will be compounded
monthly and calculated on the basis of the actual number of days
elapsed in the month assuming a * day month and a * day year.
5.12 Contest:
(a) If an Indemnitee receives a written claim for any Tax for which Lessee
would be required to pay an indemnity pursuant to Clause 5.7 or Clause 5.8,
such Indemnitee shall notify Lessee promptly of such claim, provided that
any failure to provide such notice will not relieve Lessee of any
indemnification obligation pursuant to Clause 5.7 or Clause 5.8. If
requested by Lessee in writing promptly after receipt of such Indemnitee's
notice, such Indemnitee shall, upon receipt of indemnity satisfactory to it
and at the expense of Lessee (including, without limitation, all costs,
expenses, legal and accountants' fees and disbursements, and penalties,
interest and additions to tax incurred in contesting such claim) in good
faith contest or (if permitted by applicable Law in the case of Taxes other
than those payable pursuant to Clauses 5.7(b) and (c)) permit Lessee to
contest such claim by (i) resisting payment thereof if practicable and
appropriate, (ii) not paying the same except under protest if protest is
necessary and proper, or (iii) if payment is made, using reasonable efforts
to obtain a refund of such Taxes in appropriate administrative and judicial
proceedings. Such Indemnitee shall determine the method of any contest
conducted by such Indemnitee and (in good faith consultation with Lessee)
control the conduct thereof. Lessee shall determine the method of any
contest conducted by Lessee and (in good faith consultation with such
Indemnitee) control the conduct thereof. Lessee shall pay in full all
payments of Rent and other amounts payable pursuant to the Operative
Documents to which Lessee is a party, without reduction for or on account
of any Tax, while such contest is continuing. Such Indemnitee shall not be
required to contest, or to continue to contest, a claim for Taxes under
this Clause 5.12 if (w) in the case of Taxes payable pursuant to Clauses
5.7(b) or (c), the amount in dispute is less than $*, or (x) such contest
would result in a risk of criminal penalties or of a sale, forfeiture or
loss of, or the imposition of a Lien (other than a Permitted Lien) on, the
Aircraft, or (y) Lessee shall not have furnished an opinion of independent
tax counsel selected by such Indemnitee and reasonably satisfactory to
Lessee, that a reasonable basis exists for such contest, or (z) a Default
or an Event of Default shall be continuing (unless Lessee shall have
provided security reasonably satisfactory to such Indemnitee securing
Lessee's performance of its obligations under this Clause 5). If such
Indemnitee contests any claim for Taxes by making a payment and seeking a
refund thereof, then Lessee shall advance to such Indemnitee, on an
interest-free basis, an amount equal to the Taxes to be paid by such
Indemnitee in connection with the contest and shall indemnify such
Indemnitee on an After-Tax Basis for any adverse tax consequences to such
Indemnitee of such interest-free advance. Upon the final determination of
any contest pursuant to this Clause 5.12 in respect of any Taxes for which
Lessee shall have made an advance to such Indemnitee in accordance with the
immediately preceding sentence, the amount of Lessee's obligation shall be
determined as if such advance had not been made; any indemnity obligation
of Lessee to such Indemnitee under this Clause 5 and such Indemnitee's
obligation to repay the advance will be satisfied first by setoff against
each other, and any difference owing by either party shall be paid within
ten days after such final determination.
(b) If an Indemnitee obtains a refund of all or any part of any Taxes for which
a full indemnity was paid by Lessee, such Indemnitee shall pay Lessee the
amount of such refund, reduced by any Taxes imposed on such Indemnitee on
receipt or accrual of such refund and increased by any Taxes saved by such
Indemnitee by reason of the deductibility of such payment by such
Indemnitee. If, in addition to such refund, such Indemnitee receives an
amount of interest on such refund, such Indemnitee shall pay to Lessee the
portion of such interest which is fairly attributable to such refund,
reduced by any Taxes imposed on such Indemnitee on receipt or accrual of
such interest and increased by any Taxes saved by reason of the
deductibility of such payment by such Indemnitee. Such Indemnitee shall not
be required to make any payment to Lessee pursuant to this Clause 5.12 if,
and for so long as, an Event of Default shall have occurred and be
continuing.
(c) Any Indemnitee in its sole discretion (by written notice to Lessee) may
waive its rights to indemnification pursuant to Clause 5.7 with respect to
any claim for any Tax and may refrain from contesting or continuing the
contest of such claim, in which event Lessee shall have no obligation to
indemnify such Indemnitee for the Taxes that are the subject of such claim.
If an Indemnitee agrees to a settlement of any contest conducted pursuant
to this Clause 5.11 without the prior written consent of Lessee, which
consent shall not be unreasonably withheld, then Lessor shall be deemed to
have waived its rights to the indemnification provided for in Clause 5.7
with respect to the Tax liability accepted in such settlement.
5.13 Net Lease: This Agreement is a net lease. Lessee's obligations under
this Agreement are absolute and unconditional irrespective of any
contingency whatsoever including (but not limited to):-
(a) any right of set-off, counterclaim, recoupment, defense or other right
which either party to this Agreement may have against the other;
(b) any unavailability of the Aircraft for any reason, including, but not
limited to, a requisition of the Aircraft or any prohibition or
interruption of or interference with or other restriction against Lessee's
use, operation or possession of the Aircraft;
(c) any lack or invalidity of title or any other defect in title,
airworthiness, merchantability, fitness for any purpose, condition, design,
or operation of any kind or nature of the Aircraft for any particular use
or trade, or for registration or documentation under the laws of any
relevant jurisdiction, or any Event of Loss in respect of or any damage to
the Aircraft;
(d) any insolvency, bankruptcy, reorganization, arrangement, readjustment of
debt, dissolution, liquidation or similar proceedings by or against Lessor
or Lessee;
(e) any invalidity or unenforceability or lack of due authorization of, or
other defect in, this Agreement;
(f) and Security Interests with respect to the Aircraft or Taxes; and/or
(g) any other cause which but for this provision would or might otherwise have
the effect of terminating or in any way affecting any obligation of Lessee
under this Agreement.
5.14 Security
(a) To the fullest extent permitted by Law and by way of continuing security
Lessee as sole beneficial owner charges the Deposit and the Supplemental
Rent and all rights of Lessee to payment thereof and the debt represented
thereby (the "Charged Monies") to Lessor by way of first fixed charge as
security for Lessee's obligations and liabilities under this Agreement and
the Related Agreements (the "Secured Liabilities"). Except as expressly
permitted under this Agreement, Lessee will not be entitled to payment of
the Charged Monies. Lessee will not assign, transfer or otherwise dispose
of all or part of its rights in the Charged Monies and it will enter into
any additional documents and instruments necessary or advisable to
evidence, create or perfect Lessor's rights to the Charged Monies;
(b) If Lessee fails to comply with any provision of this Agreement or any Event
of Default has occurred and is continuing, in addition to all rights and
remedies accorded to Lessor elsewhere in this Agreement and under Law as a
secured party in respect of the Charged Monies, Lessor may immediately or
at any time thereafter, without prior notice to Lessee:-
(i) set-off all or any part of the Secured Liabilities
against the liabilities of Lessor in respect of the Charged
Monies; or
(ii) apply or appropriate the Charged Monies in or towards
the payment or discharge of the Secured Liabilities in such
order as Lessor sees fit; and
(c) If Lessor has exercised the set-off described in sub-clause (b) above,
Lessee shall, following a demand in writing from Lessor, restore the
Charged Monies to the level at which they stood immediately prior to such
set-off.
5.15 Letter of Credit
(a) If Lessee elects to provide Lessor with a Letter of Credit, the provisions
of this Section shall apply. Any Letter of Credit provided by Lessee to
Lessor will be issued and payable by USBank or another bank reasonably
acceptable to Lessor in its reasonable discretion and in form and substance
reasonably acceptable to Lessor, and, if not issued by USBank or by the New
York branch of a major bank reasonably acceptable to Lessor in its
reasonable discretion from time to time, will be confirmed by and payable
at the New York branch of a major bank reasonably acceptable to Lessor in
its reasonable discretion from time to time, and will be issued in lieu of
a cash Deposit as security for all payment obligations of Lessee under the
Lease and each Other Agreement (including any and all obligations to
indemnify Lessor for Losses suffered or incurred by it), which shall remain
in full force and effect and may be drawn down by Lessor upon demand at any
time or times following the occurrence of an Event of Default until the
Required LC Expiry Date.
(b) With the prior written consent of Lessor, the Letter of Credit may have a
validity period or periods ending prior to the Required LC Expiry Date,
provided that (i) the Letter of Credit shall, in each case, be renewed and
delivered to Lessor not later than * days prior to its expiry; and (ii) a
Letter of Credit shall remain in force at all times up to the Required LC
Expiry Date.
(c) If at any time during the Term, Lessor reasonably determines in its
reasonable discretion that the current issuing or confirming bank for the
Letter of Credit is no longer an acceptable issuing or confirming bank
(whether by virtue of a material adverse change in its financial condition,
a decrease in any credit rating of its long-term unsecured debt
obligations, or for any other reason) Lessee shall promptly procure that
the Letter of Credit is replaced by a Letter of Credit issued by another
bank reasonably acceptable to Lessor in its reasonable discretion and (if
reasonably requested by Lessor in its reasonable discretion) that such
replacement Letter of Credit is confirmed by another bank reasonably
acceptable to Lessor in its reasonable discretion.
(d) If Lessor makes a drawing under the Letter of Credit, Lessee shall,
following a demand in writing by Lessor, immediately procure that the
maximum amount available for drawing under the Letter of Credit is promptly
restored to the level at which it stood immediately prior to such drawing.
6. MANUFACTURER'S WARRANTIES
6.1 Assignment: Notwithstanding this Agreement, Lessor will remain
entitled to the benefit of each warranty, express or implied, with
respect to the Aircraft, any Engine or Part so far as concerns any
manufacturer, vendor, subcontractor or supplier. Except to the extent
Lessor otherwise directs, Lessor hereby authorizes Lessee to pursue
any claim thereunder in relation to defects affecting the Aircraft,
any Engine or Part and Lessee agrees diligently to pursue any such
claim which arises at its own cost. Lessee will notify Lessor
promptly upon becoming aware of any such claim.
6.2 Proceeds: Except to the extent Lessor otherwise agrees in a
particular case, all proceeds of any such claim will be paid directly
to Lessor but if and to the extent that such claim relates:-
(a) to defects affecting the Aircraft which Lessee has rectified; or
(b) to compensation for loss of use of the Aircraft, an Engine or any Part
during the Term; and provided no Default has occurred and is continuing the
proceeds will be paid to Lessee by Lessor but in the case of (a) above only
on receipt of evidence satisfactory to Lessor that Lessee has rectified the
relevant defect.
6.3 Parts: Except to the extent Lessor otherwise agrees in a particular
case, Lessee will procure that all engines, components, furnishings
or equipment provided by the manufacturer, vendor, subcontractor or
supplier in replacement of a defective Engine or Part pursuant to the
terms of any warranty will be installed promptly by Lessee and that
title thereto free of Security Interests vests in Lessor. On
installation each part will be deemed to be a Part. In the case of a
Replacement Engine, Lessee will satisfy and perform each of the
conditions and covenants set forth in Clause 11.1(c), and upon
satisfaction of such conditions, such Replacement Engine will be
deemed an "Engine" for all purposes of this Agreement.
6.4 Agreement: To the extent any warranties relating to the Aircraft are
made available under an agreement between any manufacturer, vendor,
subcontractor or supplier and Lessee, this Clause 6 is subject to
that agreement. However Lessee will:-
(a) pay the proceeds of any claim thereunder to Lessor to be applied pursuant
to Clause 6.2 and pending such payment will hold the claim and the proceeds
on trust for Lessor; and
(b) Lessee will take all such steps as are necessary at the end of the Term to
ensure the benefit of any of those warranties which have not expired are
vested in Lessor.
7. LESSOR'S COVENANTS
7.1 Quiet Enjoyment: Lessor will not interfere with the quiet use,
possession and enjoyment of the Aircraft by Lessee but the exercise
by Lessor of its rights under or in connection with this Agreement
will not constitute such an interference. Lessor will procure at
Lessee's request an undertaking of quiet enjoyment for the benefit of
Lessee with respect to any prospective Lessor Lien.
7.2 Release of Supplemental Rent: Provided no Default has occurred and is
continuing Lessor will release funds to Lessee from the Supplemental
Rent respecting maintenance work performed upon submission by Lessee
to Lessor within * months of the commencement of that maintenance and
before * (*) months following the Expiry Date of an invoice and
supporting documentation reasonably satisfactory to Lessor
evidencing:-
(a) with respect to the Airframe, the completion, in accordance with this
Agreement, of those items of maintenance (excluding any repairs arising as
the result of operational or maintenance mishandling) characterized by the
Manufacturer's maintenance planning document and best industry practice as
"D" Check and/or individual structural inspections having an interval of
not less than * Flight Hours or * years for the Aircraft or any lesser
interval for an equivalent major structural inspection if required by the
Manufacturer's maintenance planning document subject to retroactive and
prospective adjustment of the Reserve Rates as deemed appropriate by
Lessor, the lesser of (i) the amount of that invoice and (ii) the amount
equal to the aggregate amount of Airframe Supplemental Rent paid under this
Agreement at the time of commencement of that maintenance less the
aggregate amount previously released by Lessor under this sub-clause;
(b) with respect to any Engine, the performance, in accordance with this
Agreement, of all shop visits requiring engine disassembly (other than (i)
repairs arising as a result of foreign object damage or operational or
maintenance mishandling and/or (ii) removal, installation, maintenance and
repair of Quick Engine Change ("QEC") kits), the lesser of (i) the amount
of that invoice and (ii) the amount equal to the aggregate amount of Engine
Refurbishment Reserves paid in respect of that Engine under this Agreement
at the time of commencement of that maintenance less the aggregate amount
previously paid in respect of that Engine by Lessor under this sub-clause;
(c) with respect to life limited parts within any Engine, the performance, in
accordance with this Agreement, of any such parts replacement (other than
(i) replacement arising as a result of accidents or incidents (whether or
not eligible for recovery under Lessee's insurance), foreign object damage
or operational or maintenance mishandling and/or (ii) removal,
installation, maintenance and repair of QEC kits) and/or (iii) any elective
parts replacement), the lesser of (i) the amount of that invoice and (ii)
the amount equal to the aggregate of Engine LLP Refurbishment Reserves paid
in respect of that Engine under this Agreement at the time of commencement
of that maintenance less the aggregate amount previously paid in respect of
that Engine by Lessor under this sub-clause; and
(d) with respect to the Landing Gear, the performance in accordance with this
Agreement, of all work on the landing gear in the nature of overhaul and
requiring removal and disassembly (other than repairs arising as the result
of operational or maintenance mishandling), the lesser of (i) the amount of
that invoice and (ii) the amount equal to the aggregate amount of Landing
Gear Supplemental Rent paid under this Agreement at the time of
commencement of that maintenance less the aggregate amount previously paid
by Lessor under this sub-clause.
7.3 Lessor Obligations Following Expiry Date: Within * Business Days of:-
(a) redelivery of the Aircraft to Lessor in accordance with and in the
condition required by this Agreement; or
(b) payment to Lessor of the Agreed Value following an Event of Loss after the
Delivery Date; or in each case such later time as Lessor is reasonably
satisfied Lessee has irrevocably paid to Lessor all amounts which may then
be outstanding or become payable under this Agreement, the other Operative
Documents to which Lessee is a party or the Related Agreements and Lessee,
Lessor will pay to Lessee:-
(i) the balance of the Deposit if paid in cash or cancel and
return the Letter of Credit, as applicable; and
(ii) the amount of any Rent received in respect of any
period falling after the date of redelivery of the Aircraft
or payment of the Agreed Value, as the case may be; and
shall return to Lessee the warrant certificate, if not
previously exercised, representing the Warrant.
8. LESSEE'S COVENANTS
8.1 Duration: The undertakings in this Clause and in Clause 12 will:-
(a) except as otherwise stated, be performed at the expense of Lessee; and
(b) remain in force until the Expiry Date in accordance with this Agreement and
thereafter to the extent of any accrued rights of Lessor in relation to
those undertakings.
8.2 Information: Lessee will:-
(a) notify Lessor forthwith of the occurrence of any Default or any other event
which might adversely affect Lessee's ability to perform any of its
obligations under this Agreement;
(b) furnish to Lessor:-
(i) upon request, the consolidated management accounts of
Lessee (comprising a balance sheet and profit and loss
statement) prepared for the most recent previous financial
quarter;
(ii) as soon as available but not in any event later than *
days after the last day of each financial year of Lessee,
its audited consolidated balance sheet as of such day and
its audited consolidated profit and loss statement for the
year ending on such day;
(iii) at the same time as it is issued to the shareholders
or creditors of Lessee, a copy of each notice or circular
issued to Lessee's shareholders or creditors as a group; and
(iv) on request from time to time such other information
regarding Lessee and its business and affairs as Lessor may
reasonably request;
(c) keep Lessor informed as to current serial numbers of the Engines and any
engine installed on the Aircraft;
(d) promptly furnish to Lessor all information Lessor from time to time
reasonably requests regarding the Aircraft, any Engine or any Part, its
use, location and condition including, without limitation, the hours
available on the Aircraft and any Engine until the next scheduled check,
inspection, overhaul, refurbishment or shop visit, as the case may be;
(e) on request, within * days after the end of any Rental Period, furnish to
Lessor evidence satisfactory to Lessor of payment of all Taxes due during
that or any previous Rental Period;
(f) on request, furnish to Lessor evidence satisfactory to Lessor that all
Taxes and charges incurred by Lessee with respect to the Aircraft,
including without limitation all payments due to the relevant air traffic
control authorities, have been paid and discharged in full;
(g) within * days after the end of each calendar month during the Term, provide
Lessor with a monthly report on the Aircraft and each Engine in the form
set out in Schedule 8 hereto;
(h) give Lessor not less than * days' written notice as to the time and
location of all Major Checks; and
(i) promptly notify Lessor of:-
(i) any loss, theft, damage or destruction to the Aircraft,
any Engine or any Part, or any modification to the Aircraft
if the potential cost may exceed the Damage Notification
Threshold; and
(ii) any claim or other occurrence likely to give rise to a
claim under the Insurances (but in the case of hull claims
only in excess of the Damage Notification Threshold) and
details of any negotiations with the insurance brokers over
any such claim.
8.3 Lawful and Safe Operation: Lessee will:-
(a) comply with the law for the time being in force in any country or
jurisdiction which may for the time being be applicable to the Aircraft
(including without limitation Laws mandating insurance coverage) or, so far
as concerns the use and operation of the Aircraft or an owner or operator
thereof and take all reasonable steps to ensure that the Aircraft is not
used for any illegal purpose;
(b) not use the Aircraft in any manner contrary to any recommendation of the
manufacturers of the Aircraft, any Engine or any Part or any recommendation
or regulation of the Air Authority or for any purpose for which the
Aircraft is not designed or reasonably suitable;
(c) ensure that the crew and engineers employed by it in connection with the
operation and maintenance of the Aircraft have the qualifications and hold
the licenses required by the Air Authority and applicable Law;
(d) use the Aircraft solely in commercial or other operations for which Lessee
is duly authorized by the Air Authority and applicable Law;
(e) not use the Aircraft for the carriage of:-
(i) whole animals living or dead except in the cargo
compartments according to I.A.T.A. regulations, and except
domestic pet animals carried in a suitable container to
prevent the escape of any liquid and to ensure the welfare
of the animal;
(ii) acids, toxic chemicals, other corrosive materials,
explosives, nuclear fuels, nuclear wastes, or any nuclear
assemblies or components, except as permitted for passenger
aircraft under the "Restriction of Goods" schedule issued by
I.A.T.A. from time to time and provided that all the
requirements for packaging or otherwise contained therein
are fulfilled;
(iii) any other goods, materials or items of cargo which
could reasonably be expected to cause damage to the Aircraft
and which would not be adequately covered by the Insurances;
or
(iv) any illegal item or substance;
(f) not utilize the Aircraft for purposes of training, qualifying or
re-confirming the status of cockpit personnel except for the benefit of
Lessee's cockpit personnel, and then only if the use of the Aircraft for
such purpose is not disproportionate to the use for such purpose of other
aircraft of the same type operated by Lessee;
(g) not cause or permit the Aircraft to proceed to, or remain at, any location
which is for the time being the subject of a prohibition order (or any
similar order or directive) by:-
(i) any Government Entity of the State of Registration or
the Habitual Base; or
(ii) any Government Entity of the country in which such
location is situated; or
(iii) any Government Entity having jurisdiction over Lessor
or the Aircraft;
(h) obtain and maintain in full force all certificates, licenses, permits and
authorizations required for the use and operation of the Aircraft for the
time being, and for the making of payments required by, and the compliance
by Lessee with its other obligations under, this Agreement;
(i) not operate the Aircraft, or suffer or permit the Aircraft to operate, to
or for any country or entity that is the subject of sanctions under the
U.S. International Economic Emergency Powers Act or U.N. Security Council
directives (presently Iraq, Iran, Libya, the Bosnia-Serb controlled areas
of the Republic of Bosnia and Herzegovina and the Unita Rebels of Angola).
Lessee also covenants and agrees (i) not to operate or locate, or suffer or
permit to be operated or located, the Aircraft in any country restricted
under the U.S. Trading with the Enemy Act and the U.S. Export
Administration Act except as may be permitted by operating in accordance
with the conditions specified by the U.S. Export Administration Regulations
(15 CFR Parts 730-799), General License GATS (15 CFR Part 771.19)
(presently Cuba, Iran, North Korea, Sudan, and Syria), and (ii) not to
operate the Aircraft between Cuba and the United States; and
(j) not use, operate, or locate the Aircraft, or cause suffer or permit the
Aircraft to be used, operated or located during the Term in any manner not
covered by the Insurances or in any area excluded from coverage by the
Insurances or in any manner which would prejudice the interests of the
Indemnitees in the Insurances, the Aircraft, any Engine or any Part.
8.4 Taxes and other Outgoings: Lessee will promptly pay:-
(a) all license and registration fees, Taxes (other than Lessor Taxes) and
other amounts of any nature imposed by any Government Entity with respect
to the Aircraft, including without limitation the purchase, ownership,
delivery, leasing, possession, use, operation, return, sale or other
disposition of the Aircraft; and
(b) all rent, fees, charges, Taxes (other than Lessor Taxes) and other amounts
in respect of any premises where the Aircraft or any Part thereof is
located from time to time;
except to the extent that in the reasonable opinion of Lessor such
payment is being contested in good faith by appropriate proceedings,
in respect of which adequate resources have been provided by Lessee
and non-payment of which does not give rise to any material
likelihood of the Aircraft or any interest therein being sold,
forfeited or otherwise lost or of criminal liability on the part of
Lessor.
8.5 Sub-Leasing and Wet-Leasing: LESSEE WILL NOT, WITHOUT THE PRIOR
WRITTEN CONSENT OF LESSOR, SUB-LEASE, WET LEASE OR PART WITH
POSSESSION OF THE AIRCRAFT, THE ENGINES OR ANY PART EXCEPT THAT
LESSEE MAY PART WITH POSSESSION (A) WITH RESPECT TO THE AIRCRAFT, THE
ENGINES OR ANY PART TO THE RELEVANT MANUFACTURERS FOR TESTING OR
SIMILAR PURPOSES OR TO THE MAINTENANCE PERFORMER FOR SERVICE, REPAIR,
MAINTENANCE OR OVERHAUL WORK, OR ALTERATION, MODIFICATIONS OR
ADDITIONS TO THE EXTENT REQUIRED OR PERMITTED BY THIS AGREEMENT, AND
(B) WITH RESPECT TO AN ENGINE OR PART, AS EXPRESSLY PERMITTED BY THIS
AGREEMENT. LESSEE MAY ENTER INTO A WET LEASE FOR THE AIRCRAFT, THE
ENGINES OR ANY PART FOR A TERM NOT TO CONTINUE BEYOND THE TERM, ON
TERMS CUSTOMARY IN THE INDUSTRY FOR WET LEASES OF SUCH DURATION;
PROVIDED, HOWEVER, THAT LESSEE SHALL REMAIN PRIMARILY LIABLE FOR THE
PERFORMANCE OF ALL OF THE TERMS OF THIS AGREEMENT (INCLUDING WITHOUT
LIMITATION, ITS OBLIGATIONS UNDER CLAUSES 8 AND 9) TO THE SAME EXTENT
AS IF SUCH WET LEASE HAD NOT BEEN ENTERED INTO AND PROVIDED, FURTHER,
THAT NO SUCH WET LEASE INVOLVES OR RELATES TO A CONTRACT OR AN
OPERATION PROHIBITED UNDER CLAUSE 2.1(H) HEREOF.
8.6 Inspection:
(a) Lessor and any person designated by Lessor may at any time visit, inspect
and survey the Aircraft, any Engine or any Part and for such purpose may,
subject to any applicable Air Authority regulation, travel on the flight
deck as observer;
(b) Lessee will pay to Lessor on an After-Tax Basis on demand all reasonable
out-of-pocket expenses incurred by Lessor in connection with any such
visit, inspection or survey; and
(c) Lessor will:-
(i) have no duty or liability to make, or arising out of
making or failing to make, any such visit, inspection or
survey; and
(ii) so long as no Default has occurred and is continuing,
not exercise such right other than on reasonable notice and
so as not to disrupt unreasonably the commercial operations
of Lessee, provided, however, Lessee will take such action
as may be reasonably required to facilitate Lessor's
inspection.
8.7 Title: Lessee will:-
(a) not do or knowingly permit to be done or omit or knowingly permit to be
omitted to be done any act or thing which might reasonably be expected to
jeopardize the rights of Lessor as owner of the Aircraft;
(b) on all occasions when the ownership of the Aircraft, any Engine or any Part
is relevant, make clear to third parties that title is held by Lessor;
(c) not at any time (i) represent or hold out Lessor, GECASI or GACASL as
carrying goods or passengers on the Aircraft or as being in any way
connected or associated with any operation or carriage (whether for hire or
reward or gratuitously) which may be undertaken by Lessee or (ii) pledge
the credit of Lessor;
(d) ensure that there is always affixed, and not removed or in any way
obscured, a fireproof plate (having dimensions of not less than 10 cm. x 7
cm.) in a reasonably prominent position in the cockpit of the Aircraft and
on each Engine stating:-
"This Aircraft/Engine is owned by Aviation Financial Services Inc. and is leased
to Frontier Airlines, Inc. and may not be operated by any other person without
the prior written consent of Aviation Financial Services Inc.";
(e) not create or permit to exist any Security Interest upon the Aircraft, any
Engine or any Part;
(f) not do or permit to be done anything which may reasonably be expected to
expose the Aircraft, any Engine or any Part to penalty, forfeiture,
impounding, detention, appropriation, damage or destruction and without
prejudice to the foregoing, if any such penalty, forfeiture, impounding,
detention or appropriation, damage or destruction occurs, give Lessor
notice and use best endeavors to procure the immediate release of the
Aircraft, any Engine or the Part, as the case may be;
(g) not abandon the Aircraft, the Engine or any Part;
(h) pay and discharge or cause to be paid and discharged when due and payable
or make adequate provision by way of security or otherwise for all debts,
damages, claims and liabilities which have given or might give rise to a
Security Interest over or affecting the Aircraft, any Engine or any Part;
and
(i) not attempt, or hold itself out as having any power, to sell, lease or
otherwise dispose of the Aircraft, any Engine or any Part; and
(j) obtain a waiver of any mechanic's lien or right thereto from any vendor
providing maintenance services for Lessee prior to delivering the Aircraft
or any Engine or Part to such vendor.
8.8 General: Lessee will:-
(a) not make any substantial change in the nature of the business in which it
is engaged, will preserve its corporate existence (other than in connection
with a solvent reconstruction the terms of which have been approved by
Lessor, such approval not to be unreasonably withheld), and will conduct
its business in an orderly and efficient and will maintain all rights,
privileges, licenses and franchises material thereto or material to
performing its obligations under this Agreement;
(b) ensure that no change will occur in the Habitual Base of the Aircraft
without the prior written consent of Lessor;
(c) not without giving Lessor * days prior notice (in accordance with this
Agreement), change its chief executive office (as such term is defined in
Article 9 of the Uniform Commercial Code as in effect in the State of
Colorado) from 00000 Xxxx 00xx Xxxxxx, Xxxxxx, Xxxxxxxx, 00000, Xxxxxx
Xxxxxx of America;
(d) remain a Certified Air Carrier and maintain, without limitation, its status
so as to fall within the preview of Section 1110 of Title 11 of the United
States Code or any analogous Statute; and
(e) remain a "citizen of the United States" as defined in Section 40102 of
Title 49 of the United States Code.
8.9 Records: Lessee will:-
(a) procure that accurate, complete and current records of all flights made by,
and all maintenance carried out on, the Aircraft (including in relation to
each Engine and Part subsequently installed, before the installation) are
kept; keep the_records in such manner as the Air Authority may from time to
time require. All records must be maintained in English. The records will
form part of the Aircraft Documents; and
(b) maintain, with appropriate revisions in English, all Aircraft Documents,
records, logs, and other materials required by applicable Laws and best
practice of major international air transport operators in respect of the
Aircraft.
8.10 Protection: Lessee will:-
(a) maintain the registration of the Aircraft with the Air Authority reflecting
(so far as permitted by applicable Law) the interest of Lessor and not do
or suffer to be done anything which might adversely affect that
registration; and
(b) do all acts and things (including, without limitation, making any filing or
registration with the Air Authority or any other Government Entity or as
required to comply with the Mortgage Convention where applicable) and
execute and deliver all documents (including, without limitation, any
amendment of this Agreement) as may be required by Lessor:-
(i) following any change or proposed change in the ownership
or financing of the Aircraft; or
(ii) following any modification of the Aircraft, any Engine
or any Part or the permanent replacement of any Engine or
Part in accordance with this Agreement, so as to ensure that
the rights of Lessor under this Agreement apply with the
same effect as before; or
(iii) to establish, maintain, preserve, perfect and protect
the rights of Lessor under this Agreement and the interest
of Lessor in the Aircraft.
8.11 Maintenance and Repair: Lessee will:-
(a) keep the Aircraft airworthy in all respects and in good repair and
condition;
(b) not change the Maintenance Performer without providing the Lessor with
prior written notice;
(c) not materially change the Lessee's Maintenance Program or the schedule of
the Lessee's Maintenance Program without the prior written consent of
Lessor;
(d) maintain the Aircraft in accordance with Lessee's Maintenance Program
through the Maintenance Performer and perform (at the respective intervals
provided in Lessee's Maintenance Program) all Major Checks;
(e) maintain the Aircraft in accordance with the standard of maintenance
required by FAR Part 121, Subpart L and any other rules and regulations of
the FAA and in at least the same manner and with at least the same care,
including, without limitation, maintenance scheduling, modification status
and technical condition, as is the case with respect to similar aircraft
owned or otherwise operated by Lessee and as if Lessee were to retain and
continue operating the Aircraft in its fleet after the Expiry Date,
including, without limitation, all maintenance to the Airframe, any Engine
or any Part required to maintain all warranties, performance guarantees or
service life policies in full force and effect except to the extent of
conflict with the rules and regulations of the Air Authority;
(f) subject to Letter Agreement No. 1, comply with all outstanding (i.e. at or
prior to the Expiry Date) mandatory inspection and modification
requirements, airworthiness directives and similar requirements applicable
to the Aircraft, any Engine or Part having a compliance date during the
Term or within * days after the Expiry Date and which are required by the
Air Authority and/or mandated by any manufacturer of the Aircraft, any
Engine or Part (an "Airworthiness Directive);
(g) comply with all applicable Laws and the regulations of the Air Authority
and other aviation authorities with jurisdiction over Lessee or the
Aircraft, any Engine or Part regardless of upon whom such requirements are
imposed and which relate to the maintenance, condition, use or operation of
the Aircraft or require any modification or alteration to the Aircraft, any
Engine or Part;
(h) maintain in good standing a current certificate of airworthiness (in the
appropriate category for the nature of the operations of the Aircraft) for
the Aircraft issued by the Air Authority except where the Aircraft is
undergoing maintenance, modification or repair required or permitted by
this Agreement and will from time to time provide to Lessor a copy on
request;
(i) if required by the Air Authority, maintain a current certification as to
maintenance issued by or on behalf of the Air Authority in respect of the
Aircraft and will from time to time provide to Lessor a copy on request;
and
(j) procure promptly the replacement of any Engine or Part which has become
time, cycle or calendar expired, lost, stolen, seized, confiscated,
destroyed, damaged beyond repair, unserviceable or permanently rendered
unfit for use, with an engine or part complying with the conditions set out
in Clause 8.13(a) and in the case of any Engine which suffers an Engine
Event of Loss, shall procure that such engine complies with the provisions
of Clause 11.1(c).
8.12 Removal of Engines and Parts: Lessee will ensure that no Engine or
Part installed on the Aircraft is at any time removed from the
Aircraft other than:-
(a) if replaced as expressly permitted by this Agreement; or
(b) if the removal is of an obsolete item and is in accordance with Lessee's
Maintenance Program; or
(c) (i) during the course of maintaining, servicing, repairing,
overhauling or testing that Engine or the Aircraft, as the
case may be; or
(ii) as part of a normal engine or part rotation program; or
(iii) for the purpose of making such modifications to the
Engine or the Aircraft, as the case may be, as are permitted
under this Agreement;
and then in each case (A) with respect to a Part, only if it
is reinstalled or replaced by a part complying with Clause
8.13(a) as soon as practicable and in any event no later
than the Expiry Date, and (B) with respect to an Engine,
title to such Engine shall remain vested in Lessor.
8.13 Installation of Engines and Parts: Lessee will:-
(a) ensure that, except as permitted by this Agreement, no engine or part is
installed on the Aircraft unless:-
(i) in the case of an engine, it is an engine of the same
model as, or an improved or advanced version of the Engine
it replaces, which is in the same or better operating
condition, has substantially similar hours available until
the next scheduled checks, inspections, overhauls and shop
visits and has the same or greater value and utility as the
replaced Engine;
(ii) in the case of a part, it is in as good operating
condition, has substantially similar hours available until
the next scheduled checks, inspections, overhauls and shop
visits, is of the same or a more advanced make and model and
is of the same interchangeable modification status as the
replaced Part;
(iii) in the case of a part, it has become and remains the
property of Owner free from Security Interests and on
installation on the Aircraft will without further act be
subject to this Agreement; and
(iv) in each case, Lessee has full details as to its source
and maintenance records;
(b) if no Default has occurred which is continuing, be entitled to install any
engine or part on the Aircraft by way of replacement notwithstanding Clause
8.13(a) if:-
(i) there is not available to Lessee at the time and in the
place that that engine or part is required to be installed
on the Aircraft, a replacement engine or, as the case may
be, part complying with the requirements of Clause 8.13(a);
(ii) it would result in an unreasonable disruption of the
operation of the Aircraft and/or the business of Lessee to
ground the Aircraft until an engine or part, as the case may
be, complying with Clause 8.13(a) becomes available for
installation on the Aircraft; and
(iii) as soon as practicable after installation of the same
on the Aircraft but, in any event, no later than the Expiry
Date, Lessee removes any such engine or part and replaces it
with the Engine or Part replaced by it or by an engine or
part, as the case may be, complying with Clause 8.13(a).
8.14 Non-Installed Engines and Parts: Lessee will:-
(a) ensure that any Engine or Part which is not installed on the Aircraft (or
any other aircraft as permitted by this Agreement) is, except as expressly
permitted by this Agreement, properly and safely stored, and kept free from
Security Interests;
(b) notify Lessor whenever any Engine is removed from the Aircraft and, from
time to time, on request procure that any person to whom possession of an
Engine is given acknowledges in writing to Lessor, in form and substance
satisfactory to Lessor, that it will respect the interest of Lessor in the
Engine and will not seek to exercise any rights whatsoever in relation to
it;
(c) (notwithstanding the foregoing provisions of this sub-clause), be
permitted, if no Default has occurred and is continuing, to install any
Engine or Part on an aircraft, or in the case of a Part on an engine:-
(i) owned and operated by Lessee free from Security
Interests; or
(ii) leased or hired to Lessee pursuant to a lease or
conditional sale agreement on a long-term basis and on terms
whereby Lessee has full operational control of that aircraft
or engine; or
(iii) acquired by Lessee and/or financed or refinanced, and
operated by Lessee, on terms that ownership of that aircraft
or engine, as the case may be, pursuant to a lease or
conditional sale agreement, or a Security Interest therein,
is vested in or held by any other Person;
provided that in the case of (ii) and (iii):-
(1) the terms of any such lease, conditional sale agreement or
Security Interest will not have the effect of prejudicing
the interest of Lessor in that Engine or Part; and
(2) the lessor under such lease, the seller under such
conditional sale agreement or the holder of such Security
Interest, as the case may be, has confirmed and
acknowledged in writing to Lessor, in form and substance
satisfactory to Lessor, that it will respect the interest
of Lessor in respect of that Engine or Part and that it
will not seek to exercise any rights whatsoever in
relation thereto.
8.15 Pooling of Engines and Parts: Lessee will not enter into nor permit
any pooling agreement or arrangement in respect of an Engine or Part
without the prior written consent of Lessor.
8.16 Equipment Changes:
(a) Lessee will not make any modification or addition to the Aircraft (each an
"Equipment Change"), except for an Equipment Change which:-
(i) is expressly permitted by this Agreement, or
(ii) has the prior written approval of Lessor and which does
not diminish the value, utility, condition, or airworthiness
of the Aircraft;
(b) So long as a Default has not occurred and is continuing, Lessee may remove
any Equipment Change if it can be removed from the Aircraft without
diminishing or impairing the value, utility, condition or airworthiness of
the Aircraft; and
(c) Lessee shall indemnify Lessor on an After-Tax Basis for any and all Taxes
payable by Lessor as the case may be, as a result of an Equipment Change.
8.17 Title on an Equipment Change:
(a) Title to all Parts installed on the Aircraft whether by way of replacement,
as the result of an Equipment Change or otherwise (except those installed
pursuant to Clause 8.13(b)) will on installation, without further act, vest
in Lessor subject to this Agreement free and clear of all Security
Interests. Lessee will at its own expense take all such steps and execute,
and procure the execution of, all such instruments as Lessor may require
and which are necessary to ensure that title so passes to Lessor according
to all applicable Laws. At any time when requested by Lessor, Lessee will
provide evidence to Lessor's satisfaction (including the provision, if
required, to Lessor of one or more legal opinions) that title has so passed
to Lessor;
(b) Lessor may require Lessee to remove any Equipment Change and to restore the
Aircraft to its condition prior to that Equipment Change; and
(c) Except as referred to in Clause 8.17(b) any Engine or Part at any time
removed from the Aircraft will remain the property of Owner until a
replacement has been made in accordance with this Agreement and until title
in that replacement has passed, according to applicable Laws, to Lessor
subject to this Agreement and free of all Security Interests. Upon title to
such replacement so passing to Lessor, title to the replaced Engine or
Part, will, provided no Default has occurred and is continuing, pass to
Lessee.
8.18 Third Party: Lessee will procure that no person (other than Lessor)
will act in any manner inconsistent with its obligations under this
Agreement and that all persons will comply with those obligations as
if references to "Lessee" included a separate reference to those
persons.
9. INSURANCE
9.1 Insurances: Lessee will maintain in full force during the Term, and
thereafter as expressly required in this Agreement, insurances in
respect of the Aircraft in form and substance satisfactory to Lessor
(the "Insurances" which expression includes, where the context so
admits, any relevant re-insurance(s)) through such brokers and with
such insurers and having such deductibles and being subject to such
exclusions as may be approved by Lessor from time to time. The
Insurances will be effected either:-
(a) on a direct basis with insurers of recognized standing who normally
participate in aviation insurances in the leading international insurance
markets and led by reputable underwriter(s) approved by Lessor; or
(b) with a single insurer or group of insurers approved by Lessor who does not
retain the risk but effects substantial reinsurance with reinsurers in the
leading international insurance markets and through brokers each of
recognized standing and acceptable to Lessor for a percentage acceptable to
Lessor of all risks insured (the "Reinsurances").
9.2 Requirements: Lessor's current requirements as to required Insurances
are as specified in this Clause and in Schedule 4. Lessor may from
time to time stipulate other requirements for the Insurances so that
the scope and level of cover is maintained in line with best industry
practice and the interests of Lessor protected.
9.3 Change: If at any time Lessor wishes to revoke its approval of any
insurer, reinsurer, insurance or reinsurance, Lessor and/or its
brokers will consult with Lessee and Lessee's brokers (as for the
time being approved by Lessor) regarding whether that approval should
be revoked to protect the interests of the parties insured. If,
following the consultation, Lessor considers that any change should
be made, Lessee will then arrange or procure the arrangement of
alternative cover satisfactory to Lessor.
9.4 Insurance Covenants: Lessee will:-
(a) ensure that all legal requirements as to insurance of the Aircraft, any
Engine or any Part which may from time to time be imposed by the laws of
the State of Registration or any state to, from or over which the Aircraft
may be flown, in so far as they affect or concern the operation of the
Aircraft, are complied with and in particular those requirements compliance
with which is necessary to ensure that (i) the Aircraft is not in danger of
detention or forfeiture, (ii) the Insurances remain valid and in full force
and effect, and (iii) the interests of the Indemnitees in the Insurances
and the Aircraft or any Part are not thereby prejudiced;
(b) not use, cause or permit the Aircraft, any Engine or any Part to be used
for any purpose or in any manner not covered by the Insurances or outside
any geographical limit imposed by the Insurances;
(c) comply with the terms and conditions of each policy of the Insurances and
not do, consent or agree to any act or omission which:-
(i) invalidates or may invalidate the Insurances; or
(ii) renders or may render void or voidable the whole or any
part of any of the Insurances; or
(iii) brings any particular liability within the scope of an
exclusion or exception to the Insurances;
(d) not take out without the prior written approval of Lessor any insurance or
reinsurance in respect of the Aircraft other than those required under this
Agreement unless relating solely to hull total loss, business interruption,
profit commission and deductible risk;
(e) commence renewal procedures at least * days prior to expiry of any of the
Insurances and provide to Lessor:-
(i) if requested by Lessor, a written status report of
renewal negotiation * days prior to each expiry date;
(ii) telexed telecopy confirmation of completion of renewal
prior to each expiry date; and
(iii) certificates of insurance (and where appropriate
certificates of reinsurance), and broker's (and any
reinsurance brokers') letter of undertaking in a form
acceptable to Lessor in English, detailing the coverage and
confirming the insurers' (and any reinsurers') agreement to
the specified insurance requirements of this Agreement
within * days after each renewal date;
(f) on request, provide to Lessor copies of documents or other information
evidencing the Insurances;
(g) on request, provide to Lessor evidence that the Insurance premiums have
been paid;
(h) not make any modification or alteration to the Insurances material and
adverse to the interests of any of the Indemnitees;
(i) be responsible for any deductible under the Insurances; and
(j) provide any other insurance and reinsurance related information, or
assistance, in respect of the Insurances as Lessor may reasonably require.
9.5 Failure to Insure: If Lessee fails to maintain the Insurances in
compliance with this Agreement, each of the Indemnitees will be
entitled but not bound, (without prejudice to any other rights of
Lessor under this Agreement):-
(a) to pay the premiums due or to effect and maintain insurances satisfactory
to it or otherwise remedy Lessee's failure in such manner (including,
without limitation to effect and maintain an "owner's interest" policy) as
it considers appropriate. Any sums so expended by it will become
immediately due and payable by Lessee to Lessor on an After-Tax Basis
together with interest thereon at the rate specified in Clause 5.11, from
the date of expenditure by it up to the date of reimbursement by Lessee;
and
(b) at any time while such failure is continuing to require the Aircraft to
remain at any airport or to proceed to and remain at any airport designated
by it until the failure is remedied to its satisfaction.
9.6 Continuing Indemnity: Lessee shall effect and maintain insurance
after the Expiry Date with respect to its liability under the
Indemnity in Clause 10 for * years which provides for each Indemnitee
to be named as additional insured. Lessee's obligation in this Clause
shall not be affected by Lessee ceasing to be lessee of the Aircraft
and/or any of the Indemnitees ceasing to have any interest in respect
of the Aircraft.
9.7 Application of Insurance Proceeds:-
As between Lessor and Lessee:-
(a) all insurance payments received as the result of an Event of Loss or
Engine Event of Loss occurring during the Term will be paid to Lessor
and Lessor will pay the balance of those amounts to Lessee after
deduction of all amounts which may be or become payable by Lessee to
Lessor under this Agreement (including under Clause 11.1(b));
(b) all insurance proceeds of any property, damage or loss to the
Aircraft, any Engine or any Part occurring during the Term not
constituting an Event of Loss or Engine Event of Loss and in excess
of the Damage Notification Threshold will be applied in payment (or
to reimburse Lessee) for repairs or replacement property upon Lessor
being satisfied that the repairs or replacement have been effected in
accordance with this Agreement. Insurance proceeds in amounts below
the Damage Notification Threshold may be paid by the insurer directly
to Lessee. Any balance remaining may be retained by Lessor;
(c) all insurance proceeds in respect of third party liability will,
except to the extent paid by the insurers to the relevant third
party, be paid to Lessor to be paid directly in satisfaction of the
relevant liability or to Lessee in reimbursement of any payment so
made; and
(d) notwithstanding Clauses 9.7(a), (b) or (c), if at the time of the
payment of any such insurance proceeds a Default has occurred and is
continuing, all such proceeds will be paid to or retained by Lessor
to be applied toward payment of any amounts which may be or become
payable by Lessee in such order as Lessor sees fit or as Lessor may
elect.
To the extent insurance proceeds are paid to Lessee, Lessee agrees to
comply with the foregoing provisions and apply or pay over such
proceeds as so required.
9.8 Previous Owner as Additional Insured:- Lessee shall effect and
maintain insurance naming Viva as an additional insured under
Lessee's public liability policy, to the extent of Viva's interest,
for the period commencing on the Delivery Date and ending on the
earlier to occur of (i) the second anniversary of the Delivery Date
or (ii) the date of completion of the next scheduled annual heavy
maintenance visit.
10. INDEMNITY
10.1 GENERAL: LESSEE AGREES TO DEFEND, INDEMNIFY AND HOLD HARMLESS THE
INDEMNITEES ON AN AFTER-TAX BASIS FROM AND AGAINST ANY AND ALL
CLAIMS, PROCEEDINGS, LOSSES, LIABILITIES, SUITS, JUDGMENTS, COSTS,
EXPENSES, PENALTIES OR FINES (EACH A "CLAIM") (REGARDLESS OF WHEN THE
SAME IS MADE OR INCURRED, WHETHER DURING OR AFTER THE TERM (BUT NOT
BEFORE)):-
(A) WHICH MAY AT ANY TIME BE SUFFERED OR INCURRED DIRECTLY OR INDIRECTLY AS A
RESULT OF OR CONNECTED WITH THE POSSESSION, DELIVERY, PERFORMANCE,
MANAGEMENT, OWNERSHIP, REGISTRATION, CONTROL, MAINTENANCE, CONDITION,
SERVICE, REPAIR, OVERHAUL, LEASING, USE, OPERATION, DATE PROCESSING OR
RETURN OF THE AIRCRAFT, ANY ENGINE OR PART (EITHER IN THE AIR OR ON THE
GROUND) WHETHER OR NOT THE CLAIM MAY BE ATTRIBUTABLE TO ANY DEFECT IN THE
AIRCRAFT, ANY ENGINE OR ANY PART OR TO ITS DESIGN, TESTING OR USE OR
OTHERWISE, AND REGARDLESS OF WHEN THE SAME ARISES OR WHETHER IT ARISES OUT
OF OR IS ATTRIBUTABLE TO ANY ACT OR OMISSION, NEGLIGENT OR OTHERWISE, OF
ANY INDEMNITEE;
(B) WHICH ARISE OUT OF ANY ACT OR OMISSION WHICH INVALIDATES OR WHICH RENDERS
VOIDABLE ANY OF THE INSURANCES; AND
(C) WHICH MAY AT ANY TIME BE SUFFERED OR INCURRED AS A CONSEQUENCE OF ANY
DESIGN, ARTICLE OR MATERIAL IN THE AIRCRAFT, ANY ENGINE OR ANY PART OR ITS
OPERATION OR USE CONSTITUTING AN INFRINGEMENT OF PATENT, COPYRIGHT,
TRADEMARK, DESIGN OR OTHER PROPRIETARY RIGHT OR A BREACH OF ANY OBLIGATION
OF CONFIDENTIALITY OWED TO ANY PERSON;
BUT EXCLUDING ANY CLAIM IN RELATION TO A PARTICULAR INDEMNITEE TO THE
EXTENT THAT THAT CLAIM IS COVERED PURSUANT TO ANOTHER INDEMNITY
PROVISION OF THIS AGREEMENT OR TO THE EXTENT IT ARISES SOLELY AS A
RESULT OF THE GROSS NEGLIGENCE OR WILLFUL MISCONDUCT OF THAT
INDEMNITEE, LESSOR TAXES OR A LESSOR LIEN.
10.2 Duration: The indemnities contained in this agreement will continue
in full force following the end of the Term notwithstanding any
breach or repudiation by Lessor or Lessee of this Agreement or any
termination of the lease of the Aircraft hereunder.
11. EVENTS OF LOSS
11.1
(a) Pre-delivery: If an Event of Loss occurs prior to delivery of the Aircraft
to Lessee, Lessor will have the option, exercisable by giving Lessee notice
in writing, to substitute an alternative aircraft of the same manufacture,
model, value and utility as the Aircraft. If Lessor exercises such option,
Lessee shall be obliged to lease such substitute aircraft pursuant to the
terms and conditions of this Agreement and such substitute aircraft shall
constitute the Aircraft for all purposes of this Agreement. Lessor shall
provide Lessee with details of the substitute aircraft as soon as may be
practicable after the occurrence of the Event of Loss. If Lessor advises
Lessee that Lessor does not wish to exercise such option, this Agreement
will immediately terminate and except as expressly stated in this Agreement
neither party will have any further obligation or liability under this
Agreement other than pursuant to Clause 16.9 except that Lessor will return
the Deposit if paid in cash or cancel and return the Letter of Credit, as
applicable, to Lessee; and
(b) Post-delivery: If an Event of Loss occurs after delivery of the Aircraft to
Lessee, Lessee will pay the Agreed Value to Lessor on or prior to the
earlier of (i) * Business Days after the Event of Loss and (ii) the date of
receipt of insurance proceeds in respect of that Event of Loss. Subject to
the rights of any insurers and reinsurers or other third party, upon
irrevocable payment in full to Lessor of that amount and all other amounts
which may be or become payable to Lessor under this Agreement, Lessor will
without recourse or warranty (except as to Lessor's Liens) and without
further act, be deemed to have transferred to Lessee all of Lessor's rights
to any Engines and Parts not installed when the Event of Loss occurred, all
on an as-is where-is basis, and will at Lessee's expense, execute and
deliver such bills of sale and other documents and instruments as Lessee
may reasonably request to evidence (on the public record or otherwise) the
transfer and the vesting of Lessor's rights in such Engines and Parts in
Lessee, free and clear of all rights of Lessor and Lessor Liens.
(c) Engine Event of Loss: From the Delivery Date upon an Engine Event of Loss,
Lessee shall give Lessor prompt written notice thereof and shall, within *
days after such occurrence, convey to Lessor, as replacement for the Engine
suffering such event, title to a Replacement Engine. Each Replacement
Engine shall be free of all Security Interests and shall be in as good an
operating condition as the Engine being replaced, assuming the Engine being
replaced was in the condition and repair required by the terms hereof
immediately prior to the Engine Event of Loss. Upon full compliance by
Lessee with the terms of this Clause 11.1(c), Lessor will transfer to
Lessee title to the Engine which suffered the Engine Event of Loss. Prior
to or at the time of any such conveyance, Lessee, at its own expense, will
promptly (i) furnish Lessor with a full warranty xxxx of sale, in form and
substance reasonably satisfactory to Lessor, with respect to such
Replacement Engine; (ii) cause a lease supplement (in form and substance
satisfactory to Lessor) subjecting such Replacement Engine to this
Agreement, to be duly executed by Lessee, and recorded pursuant to
applicable Law; (iii) furnish Lessor with such evidence of title to such
Replacement Engine as Lessor may reasonably request; (iv) furnish Lessor
with an opinion of Lessee's counsel to the effect that title to such
Replacement Engine has been duly conveyed to Lessor subject to this
Agreement, free and clear of all Security Interests, and that such
Replacement Engine is duly leased hereunder; (v) furnish a certificate
signed by a duly authorized financial officer or executive of Lessee
certifying that, upon consummation of such replacement, no Event of Default
will have occurred or be continuing; (vi) furnish Lessor with such
documents as Lessor may reasonably request in connection with the
consummation of the transactions contemplated by this Clause 11.1(c), in
each case in form and substance satisfactory to Lessor; and (vii) furnish
such Financing Statements incorporating the Replacement Engine as may be
requested by Lessor. For all purposes hereof, each such Replacement Engine
shall be deemed part of the property leased hereunder, shall be deemed an
"Engine" as defined herein and shall be deemed part of the same Aircraft as
was the Engine replaced thereof. No Engine Event of Loss covered by this
Clause 11.1(c) shall result in any reduction in Rent or affect Lessee's
obligation to pay Engine Supplemental Rent or the amount thereof to be paid
by Lessee.
Lessee shall indemnify each Indemnitee on an After-Tax Basis for any adverse tax
consequence to such Indemnitee of the replacement of one or more Engines
pursuant to this Clause 11.1.
11.2 Substitute Aircraft:
(a) Without prejudice to the provisions of Clause 11.1 (b), if an Event of Loss
occurs after delivery of the Aircraft to Lessee, Lessor will have the
option, exercisable by giving Lessee notice in writing, to substitute an
alternative aircraft (the "Substitute Aircraft") of the same manufacture
and model as the Aircraft and having a value, utility and condition equal
to or greater than the Aircraft as at the date of occurrence of the Event
of Loss which Substitute Aircraft will be leased by Lessor to Lessee for
the remainder of the Term pursuant to the terms and conditions of this
Agreement. If Lessor exercises such option, the Substitute Aircraft will
constitute the Aircraft for all purposes of this Agreement in respect of
facts and circumstances arising after the date of delivery thereof to
Lessee. Lessor shall provide Lessee with details of the Substitute Aircraft
as soon as may be practicable after the occurrence of the Event of Loss;
(b) Lessor will use all reasonable endeavors to deliver the Substitute Aircraft
to Lessee as soon as may be practicable following the date of occurrence of
the Event of Loss but not later than * months after such date; and
(c) Lessee agrees to enter into such documentation as Lessor may require in
order to reflect the leasing of the Substitute Aircraft as aforesaid
including, without limitation, documentation in respect of the Insurances.
Lessee shall indemnify each Indemnitee on an After-Tax Basis for any adverse tax
consequence to such Indemnitee of the replacement of the Aircraft or Airframe
pursuant to this Clause 11.2.
11.3 Requisition: During any requisition for use or hire of the Aircraft,
any Engine or Part which does not constitute an Event of Loss:-
(a) the Rent and other charges payable under this Agreement will not be
suspended or abated either in whole or in part, and Lessee will not be
released from any of its other obligations under the Agreement (other than
operational obligations with which Lessee is unable to comply solely by
virtue of the requisition); and
(b) so long as no Default has occurred and is continuing, Lessee will be
entitled to any hire paid by the requisitioning authority in respect of the
Term. Lessee will, as soon as practicable after the end of any such
requisition, cause the Aircraft to be put into the condition required by
this Agreement. Lessor will be entitled to all compensation payable by the
requisitioning authority in respect of any change in the structure, state
or condition of the Aircraft arising during the period of requisition, and
Lessor will apply such compensation in reimbursing Lessee for the cost of
complying with its obligations under this Agreement in respect of any such
change, but so that, if any Default has occurred and is continuing, Lessor
may apply the compensation or hire in or towards settlement of any amounts
owing by Lessee under this Agreement.
12. RETURN OF AIRCRAFT
12.1 Return: On the Expiry Date or redelivery of the Aircraft pursuant to
Clause 13.2 or termination of the leasing of the Aircraft under this
Agreement Lessee will, unless an Event of Loss has occurred, at its
expense, redeliver the Aircraft and Aircraft Documents to Lessor at
the Redelivery Location or such other airport as is mutually
acceptable to the parties hereto, in accordance with the procedures
and in compliance with the conditions set forth in Schedule 3, free
and clear of all Security Interests and Permitted Liens (other than
Lessor Liens) and in a condition qualifying for immediate
certification of airworthiness by the FAA or as otherwise agreed by
Lessor and Lessee.
12.2 Final Inspection: Immediately prior to redelivery of the Aircraft,
Lessee will make the Aircraft available to Lessor for inspection
("Final Inspection") in order to verify that the condition of the
Aircraft complies with this Agreement. The Final Inspection will
permit, and be of sufficient duration for, Lessor to:-
(a) inspect the Aircraft Documents;
(b) inspect the Aircraft and uninstalled Parts;
(c) inspect the Engines, including without limitation (i) a borescope
inspection of (A) the low pressure and high pressure compressors and
(B) turbine and combustion areas, (ii) engine condition runs and
(iii) review of Engine trend monitoring data and technical log
reports covering the last * (*) days of operation; and
(d) perform a complete borescope inspection of the APU; and
(e) observe a * hour demonstration flight (with Lessor's representatives
as on-board observers).
12.3 Non-Compliance: To the extent that, at the time of Final Inspection,
the condition of the Aircraft does not comply with this Agreement,
Lessee will at Lessor's option:-
(a) immediately rectify the non-compliance and to the extent the
non-compliance extends beyond the Expiry Date, the Term will be
automatically extended and this Agreement will remain in force until
the non-compliance has been rectified as provided in Clause 12.8; or
(b) redeliver the Aircraft to Lessor and indemnify Lessor on an After-Tax
Basis, and provide to Lessor's satisfaction cash as security for that
indemnity, against the cost of putting the Aircraft into the
condition required by this Agreement.
12.4 Redelivery: Upon redelivery Lessee will provide to Lessor, upon
Lessor's request, all documents necessary to export the Aircraft from
the Habitual Base (including, without limitation, a valid and
subsisting export license for the Aircraft) and required in relation
to the deregistration of the Aircraft with the Air Authority.
12.5 Acknowledgment: Provided Lessee has complied with its obligations
under this Agreement, following redelivery of the Aircraft by Lessee
to Lessor at the Redelivery Location, Lessor will deliver to Lessee
an acknowledgment confirming that Lessee has redelivered the Aircraft
to Lessor in accordance with this Agreement.
12.6 Maintenance Program:
(a) Prior to the Expiry Date and upon Lessor's request, Lessee will
provide Lessor or its agent reasonable access to Lessee's Maintenance
Program and the Aircraft Documents in order to facilitate the
Aircraft's integration into any subsequent operator's fleet; and
(b) Lessee will, if requested by Lessor to do so, upon return of the
Aircraft deliver to Lessor a certified true current and complete copy
of Lessee's Maintenance Program. Lessor agrees that it will not
disclose the contents of Lessee's Maintenance Program to any person
or entity except to the extent necessary to monitor Lessee's
compliance with this Agreement and/or to bridge the maintenance
program for the Aircraft from Lessee's Maintenance Program to another
program after the Expiry Date.
12.7 Fuel: Upon redelivery of the Aircraft to Lessor, an adjustment will
be made in respect of fuel on board on the Delivery Date and the
Expiry Date at the price then prevailing at the Redelivery Location.
12.8 Automatic Extension of Term: In the event of Lessee's failure to make
the Aircraft available to Lessor for timely inspection pursuant to
Clauses 12.1 hereof, non-compliance of the condition of the Aircraft
under Clause 12.3 hereof or any other failure of Lessee which
prevents timely Redelivery of the Aircraft to Lessor, the Term of
this Agreement will be automatically extended and this Agreement will
remain in force until such non-compliance has been rectified, with
Lessee being obligated to pay Rent at a rate specified in Clause 5.3
plus * percent on a per diem basis with respect to the period of such
extension.
13. DEFAULT
13.1 Events: Each of the following events will constitute an Event of
Default and a repudiation (but not a termination) of this Agreement
by Lessee (whether any such event or condition is voluntary or
involuntary or occurs by operation of law or pursuant to or in
compliance with any judgment, decree or order of any court or any
order, rule or regulation of any Government Entity). Lessee
acknowledges that the occurrence of any Event of Default would
represent a material default in the performance of its obligations
under this Agreement:-
(a) Non-payment: Lessee fails to make any payment under this Agreement on
the due date; or
(b) Insurance: Lessee fails to comply with any provision of Clause 9 or
any insurance required to be maintained under this Agreement is
canceled or terminated or notice of cancellation is given in respect
of any such insurance; or
(c) Breach: Lessee fails to comply with any other provision of this
Agreement and, if such failure is in the reasonable opinion of Lessor
capable of remedy, the failure continues for * days after notice from
Lessor to Lessee; or
(d) Representation: any representation or warranty made (or deemed to be
repeated) by Lessee in or pursuant to this Agreement or in any
document or certificate or statement is or proves to have been
incorrect in any material respect when made or deemed to be repeated;
or
(e) Cross Default:
(i) a final judgment for the payment of money not covered by
insurance in excess of * Dollars ($*), or final judgments
for the payment of money not covered by insurance in
excess of * Dollars ($*) in the aggregate, shall be
rendered against Lessee and the same shall remain
undischarged for a period of * (*) days during which
execution thereof shall not be effectively stayed by
agreement of the parties involved, stayed by court order
or adequately bonded; or
(ii) attachments or other Security Interests shall be issued or
entered against substantially all of the property of
Lessee and shall remain undischarged or unbonded for * (*)
days except for Security Interests created in connection
with monies borrowed or obligations agreed to by Lessee in
the ordinary course of its business; or
(iii) Lessee shall default in the payment of any sum which by
itself is in excess of $* or any sums which in aggregate
exceed $* notwithstanding that any particular individual
sum thereof does not exceed $* of any one or more
obligations for the payment of borrowed money, for the
deferred purchase price of property or for the payment of
rent or hire under any lease of aircraft when the same
becomes due if such nonpayment results in or would permit
an acceleration of such indebtedness, or Lessee shall
default in the performance of any other term, agreement,
or condition contained in any agreement or instrument
under or by which any such obligation is created,
evidenced or secured, if the effect of such default is to
cause or permit such obligation to become due prior to its
stated maturity; or
(iv) any event of default or termination event, howsoever
described, occurs under the Other Agreements; or
(f) Approvals: any consent, authorization, license, certificate or approval of
or registration with or declaration to any Government Entity in connection
with this Agreement (including, without limitation): -
(i) any authorization required by Lessee to obtain and
transfer freely Dollars (or any other relevant currency)
out of any relevant country; or
(ii) required by Lessee to authorize, or in connection with,
the execution, delivery, validity, enforceability or
admissibility in evidence of this Agreement or the
performance by Lessee of its obligations under this
Agreement; or
(iii) the registration of the Aircraft; or
(iv) any airline license or air transport license including,
without limitation, authority to operate the Aircraft
under FAR Part 121 and a Certificate of Public Convenience
and Necessity issued under Section 41102 of Title 49 of
the United States Code;
is modified in a manner unacceptable to Lessor or is withheld, or is
revoked, suspended, canceled, withdrawn, terminated or not renewed,
or otherwise ceases to be in full force; or
(g) Bankruptcy, etc.:
(i) Lessee or any Subsidiary consents to the appointment of a
custodian, receiver, trustee or liquidator of itself or
all or any material part of Lessee's property or Lessee's
consolidated property, or Lessee or any Subsidiary admits
in writing its inability to, or is unable to, or does not,
pay its debts generally as they come due, or makes a
general assignment for the benefit of creditors, or Lessee
or any Subsidiary files a voluntary petition in bankruptcy
or a voluntary petition seeking reorganization in a
proceeding under any bankruptcy or insolvency Laws (as now
or hereafter in effect) or an answer admitting the
material allegations of a petition filed against Lessee or
any Subsidiary in any such proceeding, or Lessee or any
Subsidiary by voluntary petition, answer or consent seeks
relief under the provisions of any other bankruptcy,
insolvency or other similar Law providing for the
reorganization or winding-up of corporations, or provides
for an agreement, composition, extension or adjustment
with its creditors, or any corporate action (including,
without limitation, any board of directors or shareholder
action) is taken by Lessee or any Subsidiary in
furtherance of any of the foregoing, whether or not the
same is fully effected or accomplished; or
(ii) an order, judgment or decree is entered by any court
appointing, without the consent of Lessee or any of its
Subsidiaries, a custodian, receiver, trustee or liquidator
of Lessee or any Subsidiary, or of all or any material
part of Lessee's property or Lessee's consolidated
property is sequestered, and any such order, judgment or
decree of appointment or sequestration remains in effect,
undismissed, unstayed or unvacated for a period of * days
after the date of entry thereof or at any time an order
for relief is granted; or
(iii) an involuntary petition against Lessee or any Subsidiary
in a proceeding under the United States Federal Bankruptcy
Laws or other insolvency Laws (as now or hereafter in
effect) is filed and is not withdrawn or dismissed within
* days thereafter or at any time an order for relief is
granted in such proceeding, or if, under the provisions of
any Law providing for reorganization or winding-up of
corporations which may apply to Lessee or any Subsidiary,
any court of competent jurisdiction assumes jurisdiction
over, or custody or control of, Lessee or any Subsidiary
or of all or any material part of Lessee's property, or
Lessee's consolidated property and such jurisdiction,
custody or control remains in effect, unrelinquished,
unstayed or unterminated for a period of 30 days or at any
time an order for relief is granted in such proceeding; or
(h) Unlawful: it becomes unlawful for Lessee to perform any of its
obligations under this Agreement or this Agreement becomes wholly or
partly invalid or unenforceable; or
(i) Suspension of Business: Lessee or any of its Subsidiaries suspends or
ceases or threatens to suspend or cease to carry on all or a
substantial part of its business; or
(j) Disposal: Lessee or any of its Subsidiaries disposes, conveys or
transfers or threatens to dispose, convey or transfer of all or a
material part of its assets, liquidates or dissolves or consolidates
or merges with any other Person whether by one or a series of
transactions, related or not, other than for the purpose of a
reorganization of the terms of which have received the previous
consent in writing of Lessor; or
(k) Rights and Remedies: the existence, validity, enforceability or
priority of the rights of Lessor as owner and the rights of Lessor as
lessor in respect of the Aircraft are challenged by Lessee or any
other person claiming by or through Lessee; or
(l) Delivery: Lessee fails to timely comply with its obligations under
Clause 4 to accept delivery of the Aircraft; or
(m) Ownership, Security Interests and Related Matters: Lessee fails to
timely comply with its obligations under Clause 8.7; or
(n) Transfer: Lessee makes or permits any assignment or transfer of this
Agreement, or any interest herein, or of the right to possession of
the Aircraft, the Airframe, or any Engine; or
(o) Redelivery: Lessee fails to return the Aircraft to Lessor on the
Expiry Date in accordance with Clause 12.
(p) Adverse Change: any event or series of events occurs which, in the
reasonable opinion of Lessor might have a material adverse effect on
the financial condition or operations of Lessee and its Subsidiaries
or on the ability of Lessee to comply with its obligations under this
Agreement; or
(q) Letter of Credit:
(i) the issuer of the Letter of Credit (if any) fails to
make any payment under that Letter of Credit when
due; or
(ii) any such Letter of Credit is not in full force or,
for any reason ceases to constitute the legal, valid
and binding obligation of the issuer; or
(iii) any of the events listed in paragraph (f)(i) above,
with respect to the performance by the issuer of its
obligations under any Letter of Credit, or paragraph
(g) above applies to such issuer (references in those
sub-paragraphs to Lessee being deemed to be to the
issuer); or
(iv) where applicable, any Letter of Credit is not renewed
within the time required by Section 5.15;
and each reference in this paragraph (q) to "the issuer" shall include a
reference to any confirming bank for the Letter of Credit.
13.2 Rights: If an Event of Default occurs, Lessor may at its option (and
without prejudice to any of its other rights under this Agreement),
at any time thereafter (without notice to Lessee except as required
under applicable Law):-
(a) by notice to Lessee and with immediate effect on dispatch of such
notice terminate the letting of the Aircraft (but without prejudice
to the continuing obligations of Lessee under this Agreement),
whereupon all rights of Lessee under this Agreement shall cease;
and/or
(b) proceed by appropriate court action or actions to enforce performance
of this Agreement, including, without limitation, the payment of all
Rent and all other amounts payable to Lessor or any Indemnitee
pursuant to the terms hereof; and/or
(c) proceed by appropriate court action or actions to recover damages for
the breach of this Agreement which shall include, without limitation:
-
(i) all Rent and other amounts which are or become due and
payable hereunder prior to the date Lessor recovers
possession of the Aircraft;
(ii) at Lessor's election, either one of the amounts determined
pursuant to Clause 13.2(e) or Clause 13.2(f) below or any
lost profits suffered by Lessor as a consequence of
Lessor's inability to place the Aircraft with another
lessee on financial terms that are as favorable to Lessor
as the terms of this Agreement;
(iii) all costs associated with Lessor's exercise of its
remedies hereunder, including, but not limited to,
repossession costs, legal fees, Aircraft storage costs,
Aircraft re-lease or sale costs and Lessor's internal
costs and expenses (including the cost of personnel time
calculated based upon the compensation paid to the
individuals involved on an annual basis and a general
Lessor overhead allocation);
(iv) any loss, premium, penalty or expense which may be
incurred in repaying funds raised to finance the Aircraft
or in unwinding any financial instrument relating in whole
or in part to Lessor's financing of the Aircraft;
(v) any loss, cost, expense or liability sustained by Lessor
due to Lessee's failure to redeliver the Aircraft in the
condition required by this Agreement; and
(vi) any other losses (including lost profits), damage,
expense, cost or liability which Lessor suffers or incurs
as a result of the Event of Default and/or termination of
this Agreement, including an amount sufficient to fully
compensate Lessor for any loss of or damage to Lessors
residual interest in the Aircraft caused by Lessee's
default; and/or
(d) either: -
(i) enter upon the premises where all or any part of the
Aircraft is located and take immediate possession of and,
at Lessor's sole option, remove the same (and/or any
engine which is not an Engine but which is installed on
the Airframe, subject to the rights of the owner, lessor
or secured party thereof) or cause it to be redelivered to
Lessor at a location in the United States identified by
Lessor (or such other location as Lessor may require) (the
"Return Location"), 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, or otherwise, caused by
such entry or taking, except damages caused by gross
negligence or willful misconduct; and Lessor is hereby
irrevocably, by way of security for Lessee's obligations
under this Agreement, appointed attorney for Lessee in
causing the redelivery or in directing the pilots of
Lessee or other pilots to fly the Aircraft to that airport
and will have all the powers and authorizations necessary
for taking that action; or
(ii) by serving notice require Lessee to redeliver the Aircraft
to Lessor at a point within the continental United States
designated by Lessor; and/or
(e) sell at private or public sale, as Lessor may determine, or hold,
use, operate or lease to others the Aircraft as Lessor in its sole
discretion may determine, all free and clear of any rights of Lessee;
and/or
(f) whether or not Lessor shall have exercised, or shall thereafter at
any time exercise, any of its rights under paragraph (a), paragraph
(b), paragraph (c), paragraph (d), or paragraph (e) of this Clause
13.2, Lessor, by * days written notice to Lessee specifying a payment
date, may demand that Lessee pay to Lessor, and Lessee shall pay to
Lessor, on the payment date specified in such notice, as liquidated
damages for loss of bargain and not as a penalty (in lieu of the Rent
due for the period commencing after the date specified for payment in
such notice), any unpaid Rent for the Aircraft and other amounts
owing under this Agreement (prorated in the case of Rent on a daily
basis) to and including the payment date specified in such notice,
plus the amount, if any, by which the aggregate Rent for the
remainder of the Term (determined without reference to any right of
Lessor to terminate the leasing of the Aircraft, whether or not such
right is exercised), discounted periodically (equal to installment
frequency) to present worth at the interest rate of * percent (*%)
per annum, exceeds the fair market rental value (determined pursuant
to the Appraisal Procedure) of the Aircraft for the remainder of the
Term, after discounting such fair market rental value periodically
(equal to installment frequency) to present worth as of the payment
date specified in such notice at the interest rate of * percent (*%)
per annum; and/or
(g) In the event that Lessor, pursuant to Clause 13.2(e) above, shall
have relet the Aircraft under a lease which extends at least to the
date upon which the Term for the Aircraft would have expired but for
Lessee's default, Lessor, in lieu of exercising its rights under
Clause 13.2(f) above with respect to the Aircraft, may, if it shall
so elect, demand that Lessee pay Lessor, and Lessee shall pay Lessor,
as liquidated damages for loss of bargain and not as a penalty (in
lieu of the Rent for the Aircraft due after the time of reletting)
any unpaid Rent for the Aircraft due up to the date of reletting and
any other amounts owing under this Agreement, plus the amount, if
any, by which the aggregate Rent for the Aircraft, which would
otherwise have become due over the remainder of the Term (determined
without reference to any right of Lessor to terminate the leasing of
the Aircraft, whether or not such right is exercised), discounted
periodically (equal to installment frequency) to present worth as of
the date of reletting at the interest rate of * percent (*%) per
annum, exceeds the aggregate basic rental payments to become due
under the reletting from the date of such reletting to the date upon
which the Term for the Aircraft would have expired but for Lessee's
default, discounted periodically (equal to installment frequency) to
present worth as of the date of the reletting at the interest rate of
* percent (*%) per annum; and/or
(h) in lieu of the remedies set forth in paragraphs (a), (c), (d), (e),
(f), and (g) of this Clause 13.2, by * days written notice to Lessee
specifying a payment date, Lessor may demand that Lessee pay to
Lessor, and Lessee shall pay to Lessor on the payment date specified
in such notice as liquidated damages for loss of bargain and not as a
penalty (in lieu of the Rent due for the period commencing after the
date specified for payment in such notice), any unpaid Rent for the
Aircraft and other amounts payable under this Agreement (prorated in
the case of Rent on a daily basis) to and including the payment date
specified in such notice, plus an amount equaling the aggregate Rent
for the remainder of the Term, discounted periodically (equal to
installment frequency) to present worth at the interest rate of * per
cent (*%) per annum;
(i) draw upon the Deposit (including the Letter of Credit) or the
Supplemental Rent furnished under this Agreement or the Related
Agreements (as those times are defined in such agreements) and apply
such amounts to amounts owing to Lessor hereunder.
Lessee, for itself and for its successors and assigns, hereby agrees
that, to the extent now or hereafter permitted by applicable Law,
notwithstanding any provision of the Federal Bankruptcy Code as
amended from time to time, the title of Lessor to the Aircraft and
any right of Lessor to take possession of the Aircraft in compliance
with the provisions of this Agreement, in each case, upon the
occurrence and continuance of an Event of Default, shall not be
affected by the provisions of the Federal Bankruptcy Code, as amended
from time to time.
In addition to the foregoing, Lessee shall be liable for any and all
unpaid Rent and other amounts payable under this Agreement during or
after the exercise of any of the aforementioned remedies, together
with interest on such unpaid amounts at the Interest Rate set forth
in Letter Agreement No. 1, and until satisfaction of all of Lessee's
obligations to Lessor hereunder and (on an After-Tax Basis) for all
reasonable legal fees and other reasonable costs and expenses
incurred by Lessor by reason of the occurrence of any Event of
Default or the exercise of Lessor's remedies with respect thereto,
including all costs and expenses incurred in connection with the
return of the Aircraft in accordance with the terms of Clause 12
hereof or in placing the Aircraft in the condition and with
airworthiness certification as required by such Clause.
In effecting any repossession, Lessor and its representatives and
agents, to the extent permitted by Law, shall: (i) have the right to
enter upon any premises where it reasonably believes the Aircraft,
the Airframe, an Engine or Part to be located; (ii) not be liable, in
conversion or otherwise, for the taking of any personal property of
Lessee which is in or attached to the Aircraft, the Airframe, an
Engine or Part which is repossessed; provided, however, that Lessor
shall return to Lessee all personal property of Lessee or its
passengers which was on the Aircraft at the time Lessor re-takes
possession of the Aircraft; (iii) not be liable or responsible, in
any manner, for any inadvertent damage or injury to any of Lessee's
property in repossessing and holding the Aircraft, the Airframe, an
Engine or Part, except for that caused by or in connection with
Lessor's gross negligence or willful acts; (iv) have the right to
maintain possession of and dispose of the Aircraft, the Airframe, an
Engine or Part on any premises owned by Lessee or under Lessee's
control; and (v) have the right to obtain a key to any premises at
which the Aircraft, the Airframe, an Engine or Part may be located
from the landlord or owner thereof.
If reasonably required by Lessor, Lessee, at its sole expense, shall
assemble and make the Aircraft, the Airframe, an Engine or Part
available at a place designated by Lessor in accordance with Clause
12 hereof. Lessee hereby agrees that, in the event of the return to
or repossession by Lessor of the Aircraft, the Airframe, an Engine or
Part, any rights in any warranty (express or implied) previously
assigned to Lessee or otherwise held by Lessee shall without further
act, notice or writing be assigned or reassigned to Lessor, if
assignable. Lessee shall be liable to Lessor on an After-Tax Basis
for all reasonable expenses, disbursements, costs and fees incurred
in (i) repossessing, storing, preserving, shipping, maintaining,
repairing and refurbishing the Aircraft, the Airframe, an Engine or
Part to the condition required by Clause 12 hereof and (ii) preparing
the Aircraft, the Airframe, an Engine or Part for sale or lease,
advertising the sale or lease of the Aircraft, the Airframe, an
Engine or Part and selling or releasing the Aircraft, the Airframe,
an Engine or Part. Lessor is hereby authorized and instructed, at its
option, to make reasonable expenditures which Lessor considers
advisable to repair and restore the Aircraft, the Airframe, an Engine
or Part to the condition required by Clause 12 hereof, all at
Lessee's sole expense.
At any public sale of the Aircraft, the Airframe, an Engine or Part
pursuant to this Clause, Lessor may bid for and purchase such
property and Lessee agrees that the amounts paid therefor shall be
used in the computation contemplated herein.
With the exception that the remedy in Clause 13.2(g) can be elected
only if the remedy in Clause 13.2(f) is not elected and the remedy in
Clause 13.2(h) can be elected only in lieu of all other remedies save
the remedies in Clauses 13.2(b) and 13.2(i), no remedy referred to in
this Clause 13 is intended to be exclusive, but, to the extent
permissible hereunder or under applicable Law, each shall be
cumulative and in addition to any other remedy referred to above or
otherwise available to Lessor at Law or in equity; and the exercise
or beginning of exercise by Lessor of any one or more of such
remedies shall not preclude the simultaneous or later exercise by
Lessor of any or all of such other remedies; provided, however, that
nothing in this Clause 13 shall be construed to permit Lessor to
obtain a duplicate recovery of any element of damages to which Lessor
is entitled. No express or implied waiver by Lessor of any Default or
Event of Default shall in any way be, or be construed to be, a waiver
of any future or subsequent Default.
13.3 Deregistration: If an Event of Default occurs, Lessor may sell or
otherwise deal with the Aircraft free and clear of any leasehold or
other interest of Lessee as if this Agreement had never been made and
Lessee will at the request of Lessor take all steps necessary to
effect (if applicable) deregistration of the Aircraft and its export
from the country where the Aircraft is for the time being situated
and any other steps necessary to enable the Aircraft to be
redelivered to Lessor in accordance with this Agreement including
without limitation execution and filing of a certificate or other
instrument of lease termination with the Air Authority and; Lessee
hereby irrevocably and by way of security for its obligations under
this Agreement appoints (which appointment is coupled with an
interest) Lessor as its attorney to execute and deliver any
documentation and to do any act or thing required in connection with
the foregoing.
14. ASSIGNMENT
14.1 Lessee's Assignment: LESSEE WILL NOT ASSIGN, TRANSFER (VOLUNTARILY OR
INVOLUNTARILY BY OPERATION OF LAW OR OTHERWISE) OR CREATE OR PERMIT
TO EXIST ANY SECURITY INTEREST OVER, ANY OF ITS RIGHTS UNDER THIS
AGREEMENT.
14.2 Lessor's Assignment: Lessor may assign or transfer all or any of its
rights under this Agreement and in the Aircraft. In the case of an
assignment other than by way of security, Lessor will be released
from and will have no further obligation under this Agreement
following the assignment of all its rights under this Agreement and
the assumption by the assignee or transferee of all of Lessor's
obligations under this Agreement. Notwithstanding any such
assignment, Lessor will remain entitled to the benefit of each
indemnity and the liability insurances effected under this Agreement.
Lessee will comply with all reasonable requests of Lessor, its
successors and assigns in respect of any such assignment. Lessor will
promptly notify Lessee of any assignment.
14.3 Transfer: If Lessor desires to effect any assignment or transfer of
its rights and obligations under this Agreement, Lessee agrees to
cooperate and take all such steps as Lessor may reasonably request to
give the transferee the benefit of this Agreement and to acknowledge
the release of Lessor from its obligations hereunder as of the time
of such assignment or transfer.
15. ILLEGALITY
If it is or becomes unlawful in any jurisdiction for Lessor to give
effect to any of its obligations as contemplated by this Agreement or
to continue this Agreement, Lessor may by notice in writing to Lessee
terminate the leasing of the Aircraft under this Agreement and Lessee
will forthwith redeliver the Aircraft to Lessor in accordance with
Clause 12. Without prejudice to the foregoing Lessor will consult in
good faith with Lessee as to any steps which may be taken to
restructure the transaction to avoid that unlawfulness but will be
under no obligation to take any such steps.
16. MISCELLANEOUS
16.1 Waivers, Remedies Cumulative: The rights of Lessor under this
Agreement:-
(i) may be exercised as often as necessary;
(ii) are cumulative and not exclusive of its rights under any
Law; and
(iii) may be waived only in writing and specifically.
Delay in exercising or non-exercise of any such right will not
constitute a waiver of that right.
16.2 Delegation: Lessor may delegate to any person or persons all or any
of the trusts, powers or discretions vested in it by these presents
and any such delegation may be made upon such terms and conditions
and subject to such regulations (including power to sub-delegate) as
Lessor in its absolute discretion thinks fit.
16.3 Certificates: Save where expressly provided in this Agreement, any
certificate or determination by Lessor as to any rate of interest or
as to any other amount payable under this Agreement will, in the
absence of manifest error, be conclusive and binding on Lessee.
16.4 Appropriation: If any sum paid or recovered in respect of the
liabilities of Lessee under this Agreement is less than the amount
then due, Lessor may apply that sum to amounts due under this
Agreement in such proportions and order and generally in such manner
as Lessor may determine at its sole discretion.
16.5 Currency: Lessee acknowledges that the specification of Dollars in
this Agreement is of the essence and that Dollars shall be the
currency of account in any and all events. Lessee waives any right it
may have in any jurisdiction to pay any amount under this Agreement
in a currency other than Dollars.
16.6 Set-off: Lessor may set off any matured obligation owed by Lessee
under this Agreement, the Related Agreements or under any other
agreement between Lessor (or any affiliate or associate of Lessor or
a trustee-lessor acting for Lessor as beneficiary) and Lessee against
any obligation (whether or not matured) owed by Lessor to Lessee,
regardless of the place of payment or currency. If the obligations
are in different currencies, Lessor may convert either obligation at
the market rate of exchange available in New York or at its option
London for the purpose of the set-off. If an obligation is
unascertained or unliquidated, Lessor may in good faith estimate that
obligation and set off in respect of the estimate, subject to the
relevant party accounting to the other when the obligation is
ascertained or liquidated. Lessor will not be obliged to pay any
amounts to Lessee under this Agreement so long as any sums which are
then due from Lessee under this Agreement, the Related Agreements or
under any other agreement between Lessor (or any affiliate or
associate of Lessor or a trustee-lessor acting for Lessor as
beneficiary) and Lessee remain unpaid and any such amounts which
would otherwise be due will fall due only if and when Lessee has paid
all such sums except to the extent Lessor otherwise agrees or sets
off such amounts against such payment pursuant to the foregoing.
16.7 Severability: If a provision of this Agreement is or becomes illegal,
invalid or unenforceable in any jurisdiction, that will not affect:-
(a) the legality, validity or enforceability in that jurisdiction of any
other provision of this Agreement; or
(b) the legality, validity or enforceability in any other jurisdiction of
that or any other provision of this Agreement.
16.8 Remedy: If Lessee fails to comply with any provision of this
Agreement, Lessor may, without being in any way obliged to do so or
responsible for so doing and without prejudice to the ability of
Lessor to treat the non-compliance as a Default or an Event of
Default, effect compliance on behalf of Lessee, whereupon Lessee
shall become liable to pay immediately any sums expended by Lessor
together with all costs and expenses (including legal costs) in
connection therewith.
16.9 Expenses: Whether or not the Aircraft is delivered to Lessee pursuant
to this Agreement, Lessee is to pay to Lessor on an After-Tax Basis
on demand:-
(a) all costs associated with perfecting Lessor's rights in
the Aircraft and/or this Agreement in the State of
Registration, the Habitual Base of the Aircraft (and other
states as appropriate given the operation of the
Aircraft), including (but not limited to) the provision of
legal opinions, tax advice, stamp duties, translations and
registrations, whether required by Lessor or Lessee.
(b) all expenses (including legal, professional, and
out-of-pocket expenses) incurred or payable by Lessor
related to any amendment to or extension of or other
documentation in connection with, or the granting of any
waiver or consent under this Agreement requested by Lessee
or the monitoring of compliance by Lessee with this
Agreement; and
(c) all expenses (including legal, survey and other costs)
payable or incurred by Lessor in contemplation of, or
otherwise in connection with, the enforcement of or
preservation of any of Lessor's or Owner's rights under
this Agreement, or in respect of the repossession of the
Aircraft.
All expenses payable pursuant to this Clause 16.9 will be paid in the
currency in which they are incurred by Lessor.
16.10 Time of Essence: The time stipulated in this Agreement for all
payments payable by Lessee to Lessor and the prompt, punctual and
performance of Lessee's other obligations under this Agreement are of
the essence of this Agreement.
16.11 Notices: All notices under, or in connection with, this Agreement
will, unless otherwise stated, be given in writing by letter,
facsimile or SITA. Any such notice is deemed effectively to be given
as follows:-
(i) if by letter, on the earlier of the date when delivered or
the *th day after dispatch;
(ii) if by facsimile or SITA, when transmitted and full
transmission has been separately notified by telephone by
the transmitting party.
The address, telex numbers, SITA, facsimile and telephone numbers of
Lessee, Lessor and Owner are as follows:-
Lessee: Address: 00000 Xxxx 00xx Xxxxxx, Xxxxx 000
Xxxxxx, Xxxxxxxx 00000
Xxxxxx Xxxxxx of America
Attn: General Counsel
SITA: DENGAF9
Facsimile: (000) 000-0000
Telephone: (000) 000-0000
Lessor: Address: Aviation Financial Services, Inc.
c/o GE Capital Aviation Services, Inc.
000 Xxxx Xxxxx Xxxx
Xxxxxxxx, XX 00000-0000
Attn: Contracts - Leader North America
Facsimile: (000) 000-0000
Telephone: (000) 000-0000
16.12 Governing Law and Jurisdiction:
(a) THIS AGREEMENT IN ALL RESPECTS SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE GOVERNING LAW (WITHOUT REFERENCE TO CONFLICT OF
LAWS PRINCIPLES);
(b) Pursuant to and in accordance with Section 5-1402 of the New York
General Obligations Law, Lessee and Lessor each agree that the United
States District Court for the Southern District of New York and any
New York state court sitting in the City of New York, New York are to
have nonexclusive jurisdiction to settle any disputes arising out of
or relating to this Agreement and each party submits itself and its
property to the nonexclusive jurisdiction of the foregoing courts
with respect to such disputes;
(c) Without prejudice to any other mode of service,
(i) (A) Lessee appoints Corporation Service Company, 00 Xxxxx
Xxxxxx, 0xx Xxxxx, Xxxxxx, Xxx Xxxx 00000-0000 as its
agent for service of process relating to any proceedings
before the New York courts in connection with this
Agreement and agrees to maintain the process agent in New
York notified to Lessor and (B) Lessor appoints General
Electric Capital Corporation, a New York corporation, 000
Xxxx Xxxxx Xxxx, Xxxxxxxx, Xxxxxxxxxxx 00000 as its agent
for service of process relating to any proceedings before
the New York courts in connection with this Agreement and
agrees to maintain the process agent in New York notified
to Lessee;
(ii) Each of Lessor and Lessee agrees that failure by a process
agent to notify the other party of the process shall not
invalidate the proceedings concerned;
(iii) Each of Lessor and Lessee consents to the service of
process relating to any such proceedings by prepaid
mailing of a copy of the process to the other party's
agent at the address identified in paragraph (i)(A) or (i)
(B), respectively, or by prepaid mailing by air mail,
certified or registered mail of a copy of the process to
Lessee or Lessor, respectively, at the address set forth
in Clause 16.11;
(d) Lessee: -
(i) waives to the fullest extent permitted by Law any
objection which lessee may now or hereafter have to the
COURTS REFERRED TO IN CLAUSE 16.12(b) ABOVE on grounds of
inconvenient forum or otherwise as regards proceedings in
connection with this Agreement;
(ii) waives to the fullest extent permitted by Law any
objection which lessee may now or hereafter have to the
laying of venue of any suit, action or proceeding arising
out of or relating to this agreement brought in the courts
REFERRED TO IN CLAUSE 16.12(b);
(iii) agrees that a judgment or order of any court REFERRED TO
IN CLAUSE 16.12(b) in connection with this Agreement is
conclusive and binding on it and may be enforced against
it in the courts of any other jurisdiction;
(e) Nothing in this Clause 16.12 limits the right of Lessor to bring
proceedings against Lessee in connection with this Agreement: -
(i) in any other court of competent jurisdiction; or
(ii) concurrently in more than one jurisdiction;
(f) Lessee irrevocably and unconditionally: -
(i) agrees that if Lessor brings legal proceedings against it
or its assets in relation to this Agreement no immunity
from such legal proceedings (which will be deemed to
include without limitation, suit, attachment prior to
judgment, other attachment, the obtaining of judgment,
execution or other enforcement) will be claimed by or on
behalf of itself or with respect to its assets;
(ii) waives any such right of immunity which it or its assets
now has or may in the future acquire;
(iii) consents generally in respect of any such proceedings to
the giving of any relief or the issue of any process in
connection with such proceedings including, without
limitation, the making, enforcement or execution against
any property whatsoever (irrespective of its use or
intended use) of any order or judgment which may be made
or given in such proceedings.
16.13 Sole and Entire Agreement: This Agreement and the other Operative
Documents to which each is a party are the sole and entire agreement
between Lessor and Lessee in relation to the leasing of the Aircraft,
and supersede all previous agreements in relation to that leasing.
16.14 Indemnitees: All rights expressed to be granted to each Indemnitee
under this Agreement (other than Lessor) are given to Lessor on
behalf of that Indemnitee.
16.15 Counterparts: This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument. To the
extent, if any, that this Agreement constitutes chattel paper (as
such term is defined in the Uniform Commercial Code as in effect in
any applicable jurisdiction) no Security Interest in this Agreement
may be created through the transfer or possession of any counterpart
other than the counterpart that has been marked "Counterpart No. 1"
on the cover page thereof.
16.16 Language: All notices to be given under this Agreement will be in
English. All documents delivered to Lessor pursuant to this Agreement
will be in English, or if not in English, will be accompanied by a
certified English translation. If there is any inconsistency between
the English version of this Agreement and any version in any other
language, the English version will prevail.
16.17 No Brokers: Lessee hereby represents and warrants that it has not
paid, agreed to pay or caused to be paid directly or indirectly in
any form, any commission, percentage, contingent fee, brokerage or
other similar payments of any kind, in connection with the
establishment or operation of this Agreement, to any employee of
Lessor or to any person or entity in the State of Registration or
elsewhere, except to Excluded Persons, as herein defined. Lessor
hereby represents and warrants that it has not paid, agreed to pay or
caused to be paid directly or indirectly in any form, any commission,
percentage, contingent fee, brokerage or other similar payments of
any kind, in connection with the establishment or operation of this
Agreement, to any employee of Lessee or to any person or entity in
the State of Registration or elsewhere, except to Excluded Persons,
as herein defined. For the purposes hereof, the term "Excluded
Persons" shall mean (x) in the case of Lessor, any of its officers,
directors, employees, attorneys or other professional advisors,
whether located in the State of Registration or elsewhere, and (y) in
the case of Lessee, any of its officers, directors, employees,
attorneys or other professional advisors, whether located in the
State of Registration or elsewhere. Each party agrees to indemnify
and hold the other harmless from and against any and all claims,
suits, damages, costs and expenses (including, but not limited to
reasonable attorneys' fees) asserted by any agent, broker or other
third party for any commission or compensation of any nature
whatsoever based upon this Agreement or the Operative Documents to
which Lessor and Lessee are a party or the Aircraft, if such claim
damage, cost or expense arises out of any action or alleged action by
the indemnifying party, its employees or agents.
17. DISCLAIMERS AND WAIVERS
17.1 Exclusion: THE AIRCRAFT IS TO BE LEASED AND DELIVERED HEREUNDER "AS
IS, WHERE IS" AND LESSEE AGREES AND ACKNOWLEDGES THAT, SAVE AS
EXPRESSLY STATED IN THIS AGREEMENT, LESSOR WILL HAVE NO LIABILITY IN
RELATION TO, AND LESSOR HAS NOT AND WILL NOT BE DEEMED TO HAVE MADE
OR GIVEN (WHETHER BY VIRTUE OF HAVING DONE OR FAILED TO DO ANY ACT,
OR HAVING ACQUIRED OR FAILED TO ACQUIRE ANY STATUS UNDER OR IN
RELATION TO THIS AGREEMENT OR OTHERWISE), ANY WARRANTIES OR
REPRESENTATIONS, EXPRESS OR IMPLIED, WITH RESPECT TO, THE AIRCRAFT,
INCLUDING BUT NOT LIMITED TO: -
(a) THE TITLE, DESCRIPTION, AIRWORTHINESS, COMPLIANCE WITH
SPECIFICATIONS, OPERATION, MERCHANTABILITY, FREEDOM FROM CLAIMS OF
INFRINGEMENT OR THE LIKE, FITNESS FOR ANY PARTICULAR USE OR PURPOSE,
VALUE, DURABILITY, DATE PROCESSING, CONDITION, OR DESIGN, OR AS TO
THE QUALITY OF THE MATERIAL OR WORKMANSHIP, THE ABSENCE OF LATENT OR
OTHER DEFECTS, WHETHER OR NOT DISCOVERABLE, OR AS TO ANY OTHER
REPRESENTATION OR WARRANTY WHATSOEVER, EXPRESS OR IMPLIED (INCLUDING
ANY IMPLIED WARRANTY ARISING FROM A COURSE OF PERFORMANCE OR DEALING
OR USAGE OF TRADE) WITH RESPECT TO THE AIRCRAFT, ANY ENGINE OR ANY
PART; OR
(b) ANY OBLIGATION, LIABILITY, RIGHT, CLAIM OR REMEDY IN CONTRACT OR IN
TORT OUT OF ANY NEGLIGENCE OR STRICT LIABILITY OF LESSOR OR
OTHERWISE; FOR: -
(i) ANY LIABILITY, LOSS OR DAMAGE CAUSED OR ALLEGED TO BE
CAUSED DIRECTLY OR INDIRECTLY BY THE AIRCRAFT OR ANY
ENGINE OR BY ANY INADEQUACY THEREOF OR DEFICIENCY OR
DEFECT THEREIN OR BY ANY OTHER CIRCUMSTANCE IN CONNECTION
THEREWITH;
(ii) THE USE OPERATION, OR PERFORMANCE OF THE AIRCRAFT OR ANY
RISKS RELATING THERETO;
(iii) ANY INTERRUPTION OF SERVICE, LOSS OF BUSINESS OR
ANTICIPATED PROFITS OR CONSEQUENTIAL DAMAGES;
(iv) THE DELIVERY, OPERATION, SERVICING, MAINTENANCE, REPAIR,
IMPROVEMENT OR REPLACEMENT OF THE AIRCRAFT, ANY ENGINE OR
ANY PART; OR
(v) ANY OTHER DIRECT, INCIDENTAL OR CONSEQUENTIAL DAMAGES.
17.2 Waiver: LESSEE HEREBY WAIVES, AS BETWEEN ITSELF AND THE LESSOR, ALL
ITS RIGHTS IN RESPECT OF ANY WARRANTY OR REPRESENTATION, EXPRESS OR
IMPLIED, ON THE PART OF LESSOR AND ALL CLAIMS AGAINST LESSOR
HOWSOEVER AND WHENEVER ARISING AT ANY TIME IN RESPECT OF OR OUT OF
THE POSSESSION, OPERATION OR PERFORMANCE OF THE AIRCRAFT, ANY ENGINE
OR ANY PART OR THIS AGREEMENT OR THE OTHER OPERATIVE DOCUMENTS EXCEPT
TO THE EXTENT ARISING UNDER CLAUSE 2.4.
17.3 Disclaimer of Consequential Damages: LESSEE AGREES THAT IT SHALL NOT
BE ENTITLED TO RECOVER, AND HEREBY DISCLAIMS AND WAIVES ANY RIGHT
THAT IT MAY OTHERWISE HAVE TO RECOVER, CONSEQUENTIAL DAMAGES AS A
RESULT OF ANY BREACH OR ALLEGED BREACH BY LESSOR OF ANY OF THE
AGREEMENTS, REPRESENTATIONS OR WARRANTIES OF LESSOR CONTAINED IN THIS
AGREEMENT OR THE OTHER OPERATIVE DOCUMENTS.
17.4 Confirmation: LESSEE CONFIRMS THAT IT IS FULLY AWARE OF THE
PROVISIONS OF THIS CLAUSE AND ACKNOWLEDGES THAT RENT AND OTHER
AMOUNTS HAVE BEEN CALCULATED BASED ON ITS PROVISIONS.
18. SECTION 1110
Lessee acknowledges that Lessor would not have entered into the Lease
unless it had available to it the benefits of a lessor under Section
1110 of Title 11 of the U.S.C. Lessee covenants and agrees with
Lessor that to better ensure the availability of such benefits,
Lessee shall support any motion, petition or application filed by
Lessor with any bankruptcy court having jurisdiction over Lessee
whereby Lessor seeks recovery of possession of the Aircraft under
said Section 1110 and shall not in any way oppose such action by
Lessor unless Lessee shall have complied with the requirements of
said Section 1110 to be fulfilled in order to entitle Lessee to
continued use and possession of the Aircraft hereunder. In the event
said Section 1110 is amended, or if it is repealed and another
statute is enacted in lieu thereof, Lessor and Lessee agree to amend
the Lease and take such other action not inconsistent with the Lease
as Lessor reasonably deems necessary so as to afford to Lessor the
rights and benefits as such amended or substituted statute confers
upon owners and lessors of aircraft similarly situated to Lessor.
19. USURY LAWS: The parties intend to contract in strict compliance
with the usury Laws of the States of New York and Colorado and, to
the extent applicable, the United States of America. Notwithstanding
anything to the contrary in the Operative Documents, Lessee will not
be obligated to pay any interest in excess of the maximum
non-usurious interest rate, as in effect from time to time, which
may by applicable Law be charged, contracted for, reserved, received
or collected by Lessor in connection with the Operative Documents.
During any period of time in which the then-applicable highest
lawful rate is lower than the rate specified in Clauses 5.11 or
13.2, interest will accrue and be payable at such highest lawful
rate; however, if at later times such highest lawful rate is greater
than the rate specified in Clauses 5.11 or 13.2, then Lessee will
pay interest at the highest lawful rate until the aggregate amount
of interest paid by Lessee equals the amount of interest that would
have been payable in accordance with the interest rate specified in
Clauses 5.11 or 13.2.
20. MODIFICATION OR REVISION:
Neither this Agreement nor any term of this Agreement may be
modified, rescinded, changed waived, discharged or terminated except
by a writing signed by the party to be charged. Lessor and Lessee
acknowledge their agreement to the provision of this Clause 20 by
their initials below: -
LESSOR: __________ LESSEE: ____________
21. IN WITNESS whereof the parties hereto have executed this Agreement on
the date shown at the beginning of this Agreement.
WITNESS SIGNED on behalf of
AVIATION FINANCIAL SERVICES INC.
By: ___________________________
Name: ___________________________
Title: ___________________________
WITNESS SIGNED on behalf of FRONTIER AIRLINES, INC.
By: ___________________________
Name: ___________________________
Title: ___________________________
SCHEDULE 1
PART 1
DESCRIPTION OF AIRCRAFT
AIRCRAFT
MANUFACTURER: Boeing
MODEL: 737-36E
SERIAL NUMBER: 25159
ENGINES
ENGINE TYPE: CFM-56-3B2
SERIAL NOS: XX 000000 and
SN 724977
Part A Description of Aircraft
On the Delivery Date each Aircraft shall comply with the following conditions:
1. The Aircraft will have accomplished all outstanding airworthiness
directives by terminating action, if required, and mandatory orders
affecting that model of Aircraft issued by the Air Authority and the
DGAC which, if the Aircraft was registered with either of such air
authorities, would have to be complied with within * days after the
Delivery Date.
2. The Aircraft will have in existence a valid Export Certificate of
Airworthiness with respect to the Aircraft issued by the DGAC and shall
have all systems operational and shall be eligible for 14 C.F.R. Part
121 operations.
3. The Aircraft shall be in 148Y (tourist/load class seats).
4. The Aircraft shall be fully serviceable with no carried forward defects
and shall be clean by airline standards.
5. Airframe: Ex a block MPD 'C7-SI' check in accordance with the
Manufactures maintenance planning document, including
100% compliance with the CPCP program and aging
aircraft program.
Engines: Minimum expected life of * hours and * cycles,
verified by power assurance runs. Plus Boroscope
inspections to establish the internal condition of
the engine. The engines will be able to achieve full
take off power at 22,000 thrust rating of minimum
OATL of 34 degrees Celsius.
Components: Minimum of * hours, * cycles on hard time limited
items and * months or full life if Full life is less
than * months on calendar limited items and shall be
supported by appropriate certification documentation
such as JAR form 1 or FAA form 8130-1, where the FAA
approval agency is a JAA listed company: for this
purpose "Hard Time Component" means any component
which has a limited on-wing life in accordance with
Manufactures Maintenance Planning Document and which
can have life fully restored through appropriate
maintenance.
The installed components as a group will have an
average of total flight time since new of not more
than that of the Airframe; and
APU: Serviceable and capable of operating under full load
without limitation
Livery Painting: Freshly painted white.
Demonstration
Flight: At delivery Lessor will provide a demonstration
flight not exceeding two hours in duration.
Detail Specification: Aircraft shall comply with the
aircraft detail specification No D6-76300-87 except
for systems which have been modified to comply with
JAR ops requirements and shall have TCAS and VHF 8.33
spacing installed.
MTOW: 138,000 LBS
6. FUSELAGE, WINDOWS AND DOORS
The aircraft will be ex a D Check as specified in 5 above.The fuselage
will be free of major dents and abrasions, and loose or pulled or
missing rivets. All repairs will be permanent Class 1 repairs and where
possible flush as defined by the Manufacturer's structural repair
manual or have specific Manufacturer approval accepted by the FAA.
7. WINGS AND EMPENNAGE
(a) Leading edges will be free from damage.
(b) Unpainted surfaces will be polished during the D Check;
(c) Control surfaces will be cleaned and polished or painted as
per Previous operator's policy during the "D" Check; and
(d) Wings will be free of fuel leaks.
8. INTERIOR
(a) Ceilings, sidewalls and bulkhead panels will be serviceable.
(b) Carpets and seat covers will be in good condition, and meet
JAR/FAR fire resistance regulations;
(c) Seats will be serviceable, in good condition having been
removed, inspected and repaired.
(d) Emergency equipment having a calendar life will have a minimum
of * year or *% of its total approved life, whichever is less,
remaining; and
(e) All signs and decals shall be clean, secure and legible.
9. COCKPIT
(a) Fairing panels shall be substantially free of stains and
cracks, will be clean secure and repainted as necessary;
(b) Floor coverings will be clean;
(c) Seat covers will be in serviceable , clean and free of stains.
(d) Seats will be serviceable, in good condition and will be
repainted as necessary; and
(e) All signs and decals shall be clean, secure and legible.
10. CARGO COMPARTMENTS
(a) Panels will be serviceable; and
(b) Nets will be in servicable.
PART 2
AIRCRAFT DOCUMENTS
Part C
A. Certificates
A001 Certificate of Airworthiness
A002 Current Aircraft Registration
A003 C of A for Export (if applicable)
A004 Noise Limitation Certificate (AFM page)
A005 Radio Station License
A007 Aircraft deregistration confirmation
A008 Burn Certificates - Cabin Interiors - as follows:
Certification of compliance with the fire blocking requirements as outlined in
JAR/FAR Part 25 including:
- Seat cushions*
- Back rest cushions*
- Dress covers*
- Carpets
- Curtains
- Interior Surfaces (if refurbished)
* Including "in combination" burn certification
B. Aircraft Maintenance Status Summaries
B001 Certified current Time in Service ( Hours & Cycles) and maintenance
status
B002 Certified status of Airworthiness Directives including method of
compliance
B003 Certified status of Service Bulletin Status
B004 Certified status of SSI
B005 Certified status of CPCP (if applicable)
B006 Certified inventory of Hard Time Components (Fitted listing)
B007 Certified inventory of OC/CM Components (Fitted listing)
B008 Certified status of all non-SB and Major Modifications/STC's including
acceptable State of Manufacture Certification
B009 Certified status of Check/Inspection History & Current Status of Checks
B010 List of Deferred Maintenance Items
B011 List of Out of Phase Checks, Special Requirements, Time Limited Repairs
(if any).
B012 Aircraft Accident & Incident Report.
B013 Structural repairs and damage (including Dent & Buckle Chart).
C. Aircraft Maintenance Records
C001 Technical Logs (Minimum of 2 years or as required by the FAA)
C002 A Checks
Last complete cycle of A Checks (or equivalent)
C003 C Checks
Last Complete cycle of C Checks (or equivalent)
C004 All Major Checks
C005 CPCP Tasks (if applicable)
C006 Periodic Tasks
C007 Dirty Finger Print Certification - AD's
C008 Dirty Finger Print Certification - SB's
C009 Dirty Finger Print Certification - All other modification
C010 Last Weight Report including Schedule
C011 Last Test Flight Report
C012 Certified ETOPS compliance report (if applicable)
C013 Dirty Finger Print certification - All Structural repairs/structural
damage
C014 Details of State of Manufacture certification basis - A non-SRM
Structural repairs
C015 Aircraft Log Book(s) if applicable
D. Configuration Status
D001 Approved and certified LOPA
X000 Xxxxxx Xxxxxxxx/Xxxxxxxxx XXX
X000 Emergency Equipment Drawing/Listing
D004 Loose Equipment Inventory
D005 Inventory Listing of Avonic installed Units.
E. Aircraft Historical Records
E001 C of A (Export) from State of Manufacture
E002 Manufacturer's AD Report
E003 Manufacturer's Inspection Report, Initial Equipment list
E004 Manufacturer's repair/alteration report
E005 Manufacturer's SB Report
E006 Service Difficulty Reports (if any)
E007 Aircraft Historical Log
E008 Last Flight Data Recorder Read-Out & Corrections
E009 Weighing report
F. Engine Records
F001 Certified Statement of Status of Each Engine
F002 AD Compliance Report and Compliance Documents
F003 Manufacturer's Modifications & SB Status
F004 In-house Modifications (if applicable)
F005 Certified LLP Listing
F006 Certified listing of installed units
F007 Manufacturer Delivery Document
F008 Complete copies of all historical engine/module Shop Visit Reports
F009 State of Manufacture LLP Traceability
F010 Conditioning Monitoring Report
F011 Engine Log Book/Master Records of Installation/Removals
F012 Last Borescope Report, including video if available
F013 Test Cell Run Report
F014 Last On-Wing Ground Run
F015 Certified Statement that Engines are not involved in an Accident
F016 Approved Release to Service Certification for installed rotables
F017 Approved ETOPS compliance report (if applicable)
G. APU
G001 Certified Statement on Status of APU (if applicable)
G002 Certified SB Compliance Report/AD Status Report
G003 Approved Release to Service Certification for installed units
G004 APU Log Book/Master Record of Installation/Removals
G005 Complete copies of all APU Shop Visit Reports & Reason for Removal
G006 Statement of APU Hours to Aircraft Flying Hours
G007 LLP Status and Full Traceability to birth
G008 APU Borescope Report
G009 Last On-Wing/Health Check Data sheets (if applicable)
G010 Last Test Cell Run
G011 Approved ETOPS compliance report
H. Component Records
H001 Approved Release to Service Certification for Hard Time Components
H002 Approved Release to Service Certification for OC/CM Components
I. Landing Gears
I001 Approved Release to Service Certification for major assemblies on each Gear
I002 Approved LLP Listings for each Gear (with FULL Traceability to Birth) I003
Last Shop Visit Report (OH)
J. Manuals
All Manufacturer's Manuals delivered with the Aircraft updated to the latest
revision standard as may be reasonably requested by Purchaser
Microfilm:
J006 WDM
J007 IPC
J008 Maintenance Manual
J009 Schematics
J010 Hook Up Listing
K. Miscellaneous
K006 Maintenance Programme Specifications (Operator's)
K007 Reference Material for Interpretation of Status Summaries, or
cross-reference for Part Numbers
SCHEDULE 2
CERTIFICATE OF TECHNICAL ACCEPTANCE
This Certificate of Technical Acceptance is delivered, on the date set out below
by Frontier Airlines, Inc. ("Lessee"), to AVIATION FINANCIAL SERVICES INC.
("Lessor"), pursuant to the Aircraft Lease Agreement dated as of the 7th of
January, 2000 between Lessor and Lessee (the "Agreement"). The capitalized terms
used in this Certificate shall have the meaning given to such terms in the
Agreement.
1. DETAILS OF ACCEPTANCE
Lessee hereby confirms to Lessor that Lessee has at [ ] o'clock on
this [ ] day of [ ], 2000, at [ ], accepted the following, in
accordance with the provisions of the Agreement:
(a) Boeing Model 737-36E airframe, Manufacturer's Serial No. 25159;
(b) CFM-56-3B2 Engines: -
Engine Manufacturer's Serial Nos.
1) [______]
2) [______]
(Each of which shall have more than 750 rated takeoff horsepower or
the equivalent of such horsepower);
(c) Fuel on Board Status: [ ] (lbs.) (gals.)
(d) Loose Equipment Check List: as per list signed by Lessor and Lessee
and attached hereto; and
(e) Aircraft Documents: as per list signed by Lessor and Lessee and
attached hereto.
2. HOURS AND CYCLES DATA (as of Delivery Date)
(a) Airframe:
---------
Number of Hours since last block "D" Check (Heaviest Check): __ hours
-----------------------------------------------------------
"C" Check (or Equivalent):
-------------------------
Interval: ___________________________
Time Since: _______________________
(b) Landing Gear Overhaul:
---------------------
Number of Cycles Since Last Overhaul:
Left Gear __________________________ cycles
Right Gear _________________________ cycles
Nose Gear _________________________ cycles
Center Gear ________________________ cycles
Interval: Left Gear _________________________
Right Gear _________________________
Nose Gear _________________________
Center Gear ________________________
(c) Engines:
-------
Number of Hours Since Last Heavy Shop Visit:
S/N :______ hours
-----------
S/N :______ hours
-----------
Number of Hours Since Last Hot Section Refurbishment:
S/N :______ hours
-----------
S/N :______ hours
-----------
Number of Hours Since Last Cold Section Refurbishment:
S/N :______ hours
-----------
S/N :______ hours
-----------
Hot Section Inspection:
Interval: ___________________________
Time Since (S/N ): __________________________
--------------
Time Since (S/N ): __________________________
--------------
Time Remaining to First Restriction:
Engine S/N: _
------------------
Hours: __________ Restriction: __________
Cycles: __________ Restriction: __________
Engine S/N: _
------------------
Hours: __________ Restriction: __________
Cycles: __________ Restriction: __________
Average Cycles in Life Limited Parts (see attached Schedule):________
(d) Auxiliary Power Unit:
--------------------
Number of APU Hours Since Last Heavy Shop Visit:
__________ hours Date accomplished __________
Hot Section Inspection:
Interval: ________________________
Time Since: ________________________
(e) Time Controlled Components:
--------------------------
(f) Interior Equipment:
------------------
Number of Passenger Seats and Configuration:_______________ _________
Number of Galleys and Location: _________ __________
Number of Lavatories and Location: _________ __________
LOPA - Attached __________ __________
List of Loose Equipment on Board:
-------------------------------------- -----------------
-------------------------------------- -----------------
-------------------------------------- -----------------
-------------------------------------- -----------------
-------------------------------------- -----------------
-------------------------------------- -----------------
(g) Avionics: Description Model Part No.
-------- ----------- ----- --------
-------------------------------------- --------- -----------
-------------------------------------- --------- -----------
-------------------------------------- --------- -----------
-------------------------------------- --------- -----------
-------------------------------------- --------- -----------
-------------------------------------- --------- -----------
3. ACCEPTANCE:
The undersigned hereby confirms that the Aircraft, Engines, Parts and
Aircraft Documents are acceptable to it, satisfy all of the Delivery
Condition Requirements relating to the technical condition of the
Aircraft and are in the condition for delivery to and acceptance by
Lessee as required under the Agreement, except as described on the
EXCEPTIONS LIST attached hereto. LESSEE'S EXECUTION AND DELIVERY OF
THIS CERTIFICATE SIGNIFIES LESSEE'S ABSOLUTE AND IRREVOCABLE
TECHNICAL ACCEPTANCE OF THE AIRCRAFT FOR ALL PURPOSES HEREOF AND OF
THE AGREEMENT.
IN WITNESS WHEREOF, Lessee has, by its duly authorized
representative, executed this Certificate on the date in paragraph 1
above.
LESSEE: FRONTIER AIRLINES, INC.
By: _________________________
Title: _________________________
ATTACHMENT
EXCEPTIONS LIST
The items set forth below represent non-conformities to the Delivery
Condition Requirements as of the Delivery Date, the corrective action (or
payment to Lessee in lieu thereof), if any, to be taken by Lessor and the date
of accomplishment. LESSEE ACKNOWLEDGES AND AGREES THAT LESSOR'S UNDERTAKINGS SET
FORTH HEREIN ARE IN FURTHERANCE OF AND SUBJECT TO THE AIRCRAFT LEASE AGREEMENT
DATED AS OF JANUARY 7, 2000 BETWEEN LESSOR AND LESSEE (THE "LEASE"), THAT LESSOR
MAKES NO REPRESENTATIONS OR WARRANTIES OF ANY KIND, EXPRESS OR IMPLIED,
HEREUNDER AND THAT LESSORS UNDERTAKINGS ARE SUBJECT TO EACH AND EVERY DISCLAIMER
OF LESSOR SET FORTH IN THE LEASE INCLUDING, WITHOUT LIMITATION, THOSE SET FORTH
IN CLAUSE 17 THEREOF.
LESSOR LESSEE
By: _________________________ By:___________________________
Title: _________________________ Title:__________________________
--------------------------------------
1. ______________________________________
--------------------------------------
-------------------------------------- ------------ ----------
2. ______________________________________
======================================
-------------------------------------- ------------- ----------
3. ______________________________________
======================================
-------------------------------------- ------------- ----------
-
SCHEDULE 3
OPERATING CONDITION AT REDELIVERY
On the Expiry Date the Aircraft, subject to fair wear and tear
generally, will be in the condition set out below:-
1. GENERAL CONDITION
The Aircraft will:-
(a) be in the same configuration as on the Delivery Date or as reasonably
requested by Lessor;
(b) be clean by commercial airline standards;
(c) have installed the full complement of engines and other equipment,
parts, furnishings and accessories as is normally installed in the
Aircraft and the loose equipment as was installed in the Aircraft at
the time of Delivery, and be in a condition suitable for immediate
operation in commercial service;
(d) have in existence a valid certificate of airworthiness (or if
required by Lessor, a valid export certificate of airworthiness) with
respect to the Aircraft issued by the Air Authority and be in
compliance without waiver with all current FAR Part 121 requirements;
(e) comply with the manufacturer's original specifications or as modified
by Lessee with the approval of Lessor, and as required to meet the
regulations of the Air Authority at the Expiry Date;
(f) have undergone, immediately prior to redelivery, a block `C' Check so
that all inspections falling due within the next following * Flight
Hours, * Cycles or the next following * months of operation in
accordance with Lessee's Maintenance Program, have been accomplished;
(g) have had accomplished all outstanding (i.e. at or prior to the Expiry
Date) mandatory inspection and modification requirements,
airworthiness directives and similar requirements applicable to the
Aircraft, any Engine or Part having a compliance date during the Term
or within * days after the Expiry Date and which are required by the
Air Authority, and/or mandated by any manufacturer of the Aircraft,
any Engine or Part, for this purpose, compliance shall be by
terminating action if: the latest date permitted by such
Airworthiness Directive for compliance by terminating action falls
within * days after the Expiry Date;
(h) have installed all applicable vendor's and manufacturer's service
bulletin kits received free of charge by Lessee that are appropriate
for the Aircraft and to the extent not installed, those kits will be
furnished free of charge to Lessor;
(i) have its fuselage, engine cowlings, and vertical fin and rudder
freshly painted in an all white livery and the paint on the wings and
the horizontal stabilizer surfaces shall be clean and in good
condition, free from cracks, peeling, blistering and erosion and
shall be uniform in color and free from areas of local touch up;
(j) have all signs and decals clean, secure and legible;
(k) shall have no open, deferred, continued, carryover or placarded log
book items; and
(l) meet the requirements of FAR Part 36, Appendix C, Stage 3 noise
compliance as then in effect without waiver or restriction.
2. COMPONENTS
(a) Each Flight Hour and Cycle limited component (other than the APU)
shall have not less than * Flight Hours and * Cycles (whichever is
the more stringent test) of life remaining to the next expected
removal, in accordance with Lessee's Maintenance Program and shall be
supported by documentation indicating Time Since New, Cycles Since
New, Time Since Overhaul and Cycles Since Overhaul and shall be
accompanied by appropriate certification documentation acceptable to
the Air Authority from the last overhaul or zero time shop visit such
as JAR form 1 or FAA form 8130-1;
(b) Each calendar-limited component including safety equipment will have
not less than * months life remaining to the next scheduled removal
in accordance with Lessee's Maintenance Program and shall be
supported by documentation indicating Time Since New, Cycles Since
New, Time Since Overhaul, Cycles Since Overhaul and shall be
accompanied by appropriate certification documentation acceptable to
the Air Authority from the last overhaul or zero time shop visit such
as JAR form 1 or FAA form 8130-1;
(c) Each life-limited component will be supported by certification
documentation necessary to demonstrate traceability of utilization
since new (i.e. back-to-birth traceability);
(d) Each "on-condition" and "condition monitored" component will be
serviceable;
(e) The APU will be serviceable and capable of operating under full load
without limitation; and
(f) The installed components as a group will have an average of total
flight time since new of not more than that of the Airframe.
3. ENGINES
Each Engine will be installed on the Aircraft and if not the engines
installed on the Delivery Date will be accompanied by all
documentation Lessor may require to evidence that title thereto is
properly vested in Owner and will:-
(a) have not less than * Engine Flight Hours or * Cycles (whichever is
the more restrictive factor) remaining to next scheduled life limited
part replacement and have an expected on-wing remaining life of not
less than * Engine Flight Hours or * Cycles (whichever is the more
restrictive factor). The expected life remaining will be determined
by the inspection and checks accomplished by Lessor in accordance
with this Agreement;
(b) not be "on watch". (For purposes of the Agreement "on watch" shall
mean any maintenance condition that would require an Engine removal
and/or reinspection or airworthiness directive action that would
require an Engine removal within * flight hours and * Cycles of the
Expiry Date); and
(c) be in a condition which can operate at maximum rated take off power
at sea level at a temperature of 34oC.
4. FUSELAGE, WINDOWS AND DOORS
(a) The fuselage will be free of major dents and abrasions, and any dents
and abrasions that require a repetitive inspection or future repair,
temporary repairs, and loose or pulled or missing rivets and all
structural repairs shall be in accordance with the manufacturer's and
Air Authority's approved data for permanent repair;
(b) Windows will be free of delamination, blemishes, crazing and will be
properly sealed; and
(c) Doors will be free moving, correctly rigged and be fitted with
serviceable seals.
5. WINGS AND EMPENNAGE
(a) Leading edges will be free from damage;
(b) Unpainted control surfaces will be waxed and polished;
(c) Unpainted cowlings and fairings will be polished; and
(d) Wings will be free of fuel leaks.
6. INTERIOR
(a) Ceilings, sidewalls and bulkhead panels will be clean and free of
cracks and stains;
(b) Carpets and seat covers will be in good condition, clean and free of
stains and meet FAR fire resistance regulations;
(c) Seats will be serviceable, in good condition and repainted as
necessary; and
(d) Emergency equipment having a calendar life will have a minimum of *
year or *% of its total approved life, whichever is less, remaining.
7. COCKPIT
(a) Fairing panels shall be free of stains and cracks, will be clean
secure and repainted as necessary;
(b) Floor coverings will be clean and effectively sealed;
(c) Seat covers will be in good condition, clean and free of stains and
will conform to FAR fire resistance regulation; and
(d) Seats will be serviceable, in good condition and will be repainted as
necessary.
8. CARGO COMPARTMENTS
(a) Panels will be in good condition; and
(b) Nets will be in good condition.
9. LANDING GEAR
The landing gear and wheel xxxxx will be clean, free of leaks and
repaired as necessary. Wheels and brakes shall be in a half life
condition or better.
(a) The landing gear and w heel xxxxx will be clean, free of leaks and
repaired as necessary.
(b) Each wheel and b rake assembly shall be in a half life condition or
better.
10. CORROSION
(a) The Aircraft shall be in compliance with the Manufacturer's corrosion
prevention and control program (CPCP) requirements. All CPCP
inspections which would normally be accomplished while access is
provided during structural inspection in accordance with Lessee's
Maintenance Program during the Term shall have been accomplished.;
(b) The entire fuselage will be substantially free from corrosion and
will be adequately treated and an approved corrosion prevention
program will be in operation; and
(c) Fuel tanks will be free from contamination and corrosion and a tank
treatment program will be in operation.
SCHEDULE 4
INSURANCE REQUIREMENTS
The Insurances required to be maintained are as follows:-
(a) HULL ALL RISKS of Loss or Damage whilst flying and on the ground with
respect to the Aircraft on an "agreed value basis" for the Agreed
Value and with a deductible not exceeding the Deductible Amount set
forth in Letter Agreement No. 1, or such other amount agreed by
Lessor from time to time;
(b) HULL WAR AND ALLIED PERILS, being such risks excluded from the Hull
All Risks Policy to the fullest extent available from the leading
international insurance markets including confiscation and
requisition by the State of Registration for the Agreed Value,
however, when the Aircraft is being operated solely in or over the
United States of America and/or Canada, coverage may be limited to
such perils as are customarily insured by comparable airlines,
operating similar equipment in similar circumstances;
(c) ALL RISKS (INCLUDING WAR AND ALLIED RISK except when on the ground or
in transit other than by air) property insurance on all Engines and
Parts when not installed on the Aircraft on an "agreed value" basis
for their full replacement value and including engine test and
running risks;
(d) AIRCRAFT THIRD PARTY, PROPERTY DAMAGE, PASSENGER, BAGGAGE, CARGO AND
MAIL AND AIRLINE GENERAL THIRD PARTY (INCLUDING PRODUCTS) LEGAL
LIABILITY for a Combined Single Limit (Bodily Injury/Property Damage)
of an amount not less than the Minimum Liability Coverage for the
time being any one occurrence (but in respect of products and
personal injury liability this limit may be an aggregate limit for
any and all losses occurring during the currency of the policy). War
and Allied Risks are also to be covered under the Policy in line with
prudent market practice for comparable airlines, operating similar
equipment in similar circumstances;
(e) All required hull and spares insurance (as specified above), so far
as it relates to the Aircraft will: -
(i) name Lessor and its respective successors and assigns as
additional assureds for their respective rights and
interests, warranted, each as to itself only, no
operational interest;
(ii) provide that any loss will be settled jointly with Lessor
and Lessee and will be payable in Dollars to Lessor except
where the loss does not exceed the Damage Notification
Threshold, and Lessor has not notified the insurers to the
contrary, in which case the loss will be settled with and
paid to Lessee;
(iii) if separate Hull "all risks" and "war risks" insurances
are arranged, include a 50/50 provision in accordance with
market practice (AVS. 103 is the current market language);
(iv) confirm that the insurers are not entitled to replace the
Aircraft in the event of an insured Event of Loss;
(v) confirm that the insurers will not obtain a valid
discharge of the obligations under the Insurances by
payment to the broker, notwithstanding market practice to
the contrary;
(f) All required liability insurances (specified above) will:-
(i) include Lessor, GECASI, GECASL, Viva, and their respective
successors and assigns and their respective shareholders,
subsidiaries, directors, officers, agents, employees and
indemnitees as additional insureds for their respective
rights and interests, warranted, each as to itself only,
no operational interest; provided, however, that Viva
shall be named as an additional assured solely for the
period commencing on the Delivery Date and ending on the
earlier to occur of (i) * years following the Delivery
Date and (ii) the completion of the next heavy maintenance
visit;
(ii) include a Severability of Interest Clause which provides
that the insurance, except for the limit of liability,
will operate to give each assured the same protection as
if there was a separate policy issued to each assured;
(iii) contain a provision confirming that the policy is primary
without right of contribution and the liability of the
insurers will not be affected by any other insurance of
which Lessor or Lessee have the benefit so as to reduce
the amount payable to the additional insureds under such
policies;
(g) All Insurances will:-
(i) be in accordance with normal industry practice of persons
operating similar aircraft in similar circumstances;
(ii) provide cover denominated in Dollars and any other
currencies which Lessor may reasonably require in relation
to liability insurance;
(iii) operate on a worldwide basis subject to such limitations
and exclusions as Lessor may agree;
(iv) acknowledge the insurer is aware (and has seen a copy) of
this Agreement and that the Aircraft is owned by Lessor;
(v) provide that, in relation to the interests of each of the
additional assureds the Insurances will not be invalidated
by any act or omission by Lessee, or any other person
other than the respective additional assured seeking
protection and shall insure the interests of each of the
additional assureds regardless of any breach or violation
by Lessee, or any other person other than the respective
additional assured seeking protection of any warranty,
declaration or condition, contained in such Insurances;
(vi) provide that the insurers will hold harmless and waive any
rights of recourse and/or subrogation against the
additional assureds, including GECASI and GECASL or to be
subrogated to any rights of Lessor against Lessee;
(vii) provide that the additional assureds will have no
obligation or responsibility for the payment of any
premiums due (but reserve the right to pay the same should
any of them elect so to do) and that the insurers will not
exercise any right of set-off or counter-claim in respect
of any premium due against the respective interests of the
additional assureds other than outstanding premiums
relating to the Aircraft, any Engine or Part the subject
of the relevant claim;
(viii) provide that the Insurances will continue unaltered for
the benefit of the additional assureds for at least * days
after written notice by registered mail or telex of any
cancellation, change, event of non-payment of premium or
installment thereof has been sent to Lessor, except in the
case of war risks for which * days (or such lesser period
as is or may be customarily available in respect of war
risks or allied perils) will be given, or in the case of
war between the 5 great powers or nuclear peril for which
termination is automatic;
(ix) if reinsurance is a requirement of this Agreement such
reinsurance will (i) be on the same terms as the original
insurances and will include the provisions of this
Schedule, (ii)provide that notwithstanding any bankruptcy,
insolvency, liquidation, dissolution or similar
proceedings of or affecting the reinsured that the
reinsurers' liability will be to make such payments as
would have fallen due under the relevant policy of
reinsurance if the reinsured had (immediately before such
bankruptcy, insolvency, liquidation, dissolution or
similar proceedings) discharged its obligations in full
under the original insurance policies in respect of which
the then relevant policy of reinsurance has been effected;
and (iii) contain a "cut-through" clause in the following
form (or otherwise, satisfactory to Lessor): "The
Reinsurers and the Reinsured hereby mutually agree that in
the event of any claim arising under the reinsurances in
respect of a total loss or other claim where as provided
by th e Aircraft Lease Agreement dated March 25, 1997 and
made between Lessor and Lessee such claim is to be paid to
the person named as sole loss payee under the primary
insurances, the Reinsurers will in lieu of payment to the
Reinsured, its successors in interest and assigns pay to
the person named as sole loss payee under the primary
insurances effected by the Reinsured that portion of any
loss due for which the Reinsurers would otherwise be
liable to pay the Reinsured (subject to proof of loss), it
being understood and agreed that any such payment by the
Reinsurers will (to the extent of such payment) fully
discharge and release the Reinsurers from any and all
further liability in connection therewith"; subject to
such provisions not contravening any law of the State of
Incorporation;
(x) contain a provision entitling Lessor or any insured party
to initiate a claim under any policy in the event of the
refusal or failure of Lessee to do so; and
(xi) accept and insure the indemnity provisions of this
Agreement to the extent of the risks covered by the
policies.
SCHEDULE 5
[Intentionally Omitted]
SCHEDULE 6
LEASE SUPPLEMENT NO. __
LEASE SUPPLEMENT NO. ___, dated , 2000, between Aviation Financial Services
Inc., a corporation organized under the laws of Delaware and a wholly owned
subsidiary of General Electric Capital Corporation (Lessor"), and Frontier
Airlines, Inc. a corporation organized under the laws of the State of Colorado
(Lessee").
Lessor and Lessee have previously entered into that certain Aircraft
Lease Agreement dated as of January 7, 2000 (herein referred to as the
"Agreement" and the defined terms therein being hereinafter used with the same
meaning). The Agreement provides for the execution and delivery from time to
time of a Lease Supplement substantially in the form hereof for the purpose of
leasing the aircraft described below under the Agreement as and when delivered
by Lessor to Lessee in accordance with the terms thereof.
The Agreement and this Lease Supplement relate to the Aircraft, Engines
and Parts as more precisely described below. A counterpart of the Agreement is
attached hereto and this Lease Supplement and the Agreement shall form one
document.
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 Agreement and
Lessee hereby accepts, acknowledges receipt of possession and leases
from Lessor under the Agreement, that certain Boeing Model 737-300
commercial jet Aircraft, and the two (2) CFM International
CFM-56-3-B2 Engines (each of which Engines has 750 or more rated
takeoff horsepower or the equivalent of such horsepower) described in
Schedule 1 hereto, together with the Aircraft Documents described in
the Agreement (the "Delivered Aircraft").
2. The Delivery Date of the Delivered Aircraft is the date of this Lease
Supplement set forth in the opening paragraph hereof.
3. The Term for the Delivered Aircraft shall commence on the Delivery
Date and shall end on the Expiry Date.
4. The amount of Rent for the Delivered Aircraft is set forth in Letter
Agreement No. 1 to the Agreement.
5. Lessee hereby confirms to Lessor that (i) the Delivered Aircraft and
each delivered Engine have been duly marked in accordance with the
terms of Clause 8.7(d) of the Agreement, (ii) the Aircraft is insured
as required by the Agreement, (iii) the representations and
warranties of Lessee referred to in Clause 2 of the Agreement are
hereby repeated with effect as of the date first above written, (iv)
having inspected the Delivered Aircraft, Lessee acknowledges that the
Delivered Aircraft satisfies all conditions required for Lessee's
acceptance of delivery as set forth in the Agreement, except as noted
in the Exceptions List attached to the Certificate of Technical
Acceptance, and (v) the execution and delivery of this Lease
Supplement signifies absolute and irrevocable acceptance by Lessee of
the Delivered Aircraft for all purposes hereof and of the Agreement.
6. All of the terms and provisions of the Agreement are hereby
incorporated by reference in this Lease Supplement to the same extent
as if fully set forth herein.
7. This Lease Supplement may be executed in any number of counterparts,
each of such counterparts, shall for all purposes be deemed to be an
original; and all such counterparts shall together constitute but one
and the same Lease Supplement.
IN WITNESS WHEREOF, Lessor and Lessee have caused this Lease Supplement
No. __ to be duly executed as of the day and year first above written.
LESSOR, LESSEE,
AVIATION FINANCIAL SERVICES INC. FRONTIER AIRLINES, INC.
By:_____________________________ By:_________________________
Name:__________________________ Name:______________________
Title:____________________________ Title:________________________
SCHEDULE 1
TO
LEASE SUPPLEMENT NO.
One
Boeing 737-300
Airframe
Registration Xxxx
N_____
Manufacturer's
Serial No. Total Time* Total Cycles*
---------- ---------- ------------
25159 _________ _________
Installed CFM International, Inc.
Engines
Model No. Serial No. Total Time* Total Cycles*
--------- ---------- ---------- ------------
CFM-56-3-B2 [______] ____________ ____________
CFM-56-3-B2 [______] _____________ ____________
Each of the above-described Aircraft Engines is 750 or more rated
takeoff horsepower or its equivalent.
* The total time and total cycles referred to above are as of Time, , .
Such times and cycles are within hours and cycles of the actual hours
and cycles at the time of this Lease Supplement.
SCHEDULE 7
FORM OF
LEASE TERMINATION CERTIFICATE
The undersigned hereby certify that the Aircraft Lease Agreement dated as of
January 7, 2000 between the undersigned Lessor and undersigned Lessee, and as
further described in the Appendix attached hereto, has terminated and the
aircraft and aircraft engines covered thereby are no longer subject to the terms
thereof. This certificate may be executed in one or more counterparts each of
which when taken together shall constitute one and the same instrument.
DATED this __________ day of ____________________, __________
LESSOR LESSEE
AVIATION FINANCIAL SERVICES INC. FRONTIER AIRLINES, INC.
By:________________________________ By:___________________________
Title:_______________________________ Title:_________________________
APPENDIX
FAA Recording Date FAA Conveyance No.
SCHEDULE 8
FORM OF AIRCRAFT USAGE REPORT
FOR PERIOD BEGINNING ON __________, 2000____
AND ENDING ON ___________, 2000____
The undersigned Officer of Frontier Airlines, Inc. ("Lessee") hereby certifies
as follows:
1. This report is submitted to Aviation Financial Services Inc. ("Lessor") under
that certain Aircraft Lease Agreement dated as of January 7, 2000, between
Lessor and Lessee (the "Lease"), and capitalized terms used and not otherwise
defined herein have the meanings ascribed to them in the Lease.
2. The Aircraft covered by this report is:
Aircraft: Boeing 737-36E
Serial No: 25159
U.S. Reg. No.: N_____
3. During the period covered by this report, the Airframe which is the subject
of the Lease was operated for the following number of Flight Hours and Cycles as
such terms are defined in the Lease:
_________ Flight Hours __________ Cycles
4. During the period covered by this report, the CFM-56-B2 Engines Bearing
respective serial numbers __________ and ____________ which are the subject of
the Lease, where each operated for the following number of Engine Flight Hours
and Cycles, as defined in the Lease:
Engine Flight Hours Cycles
SN ________ _______________ _________________
SN ________ _______________ _________________
This Aircraft Usage Report is dated __________________, 200_,
FRONTIER AIRLINES, INC.
By:________________________________
Title:_______________________________
