Exhibit 4.36
MASTER AIRCRAFT LEASE AGREEMENT
(Steelcase Trust No. 2000-1)
Dated as of May 26, 2000
among
FIRST SECURITY BANK, NATIONAL ASSOCIATION
not in its individual capacity except
as expressly provided herein, but
solely as Certificate Trustee under Steelcase Trust No. 2000-1,
as Lessor,
and
STEELCASE INC.,
as Lessee
CERTAIN OF THE RIGHT, TITLE AND INTEREST OF LESSOR IN AND TO THIS LEASE AND THE
RENT DUE AND TO BECOME DUE HEREUNDER (EXCLUDING THE EXCLUDED AMOUNTS) HAVE BEEN
ASSIGNED AS COLLATERAL SECURITY TO, AND ARE SUBJECT TO A SECURITY INTEREST
GRANTED BY LESSOR, AS DEBTOR, IN FAVOR OF, FIRST SECURITY TRUST COMPANY OF
NEVADA, AS ADMINISTRATIVE AGENT FOR THE BENEFIT OF THE LENDERS AND CERTIFICATE
HOLDERS, AS SECURED PARTY. INFORMATION CONCERNING SUCH SECURITY INTEREST MAY BE
OBTAINED FROM FIRST SECURITY TRUST COMPANY OF NEVADA, AS ADMINISTRATIVE AGENT,
AT ITS ADDRESS SET FORTH IN THE PARTICIPATION AGREEMENT. SEE SECTION 25.2 OF
THIS LEASE FOR INFORMATION CONCERNING THE RIGHTS OF THE HOLDERS OF THE VARIOUS
COUNTERPARTS HEREOF INCLUDING WITHOUT LIMITATION THE ORIGINAL CHATTEL PAPER COPY
HEREOF.
TABLE OF CONTENTS
PAGE
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SECTION 1. Definitions....................................................................................... 1
SECTION 2. Acceptance and Leasing of Aircraft................................................................ 1
SECTION 3. Lease Term and Rent............................................................................... 1
3.1 Lease Term........................................................................................ 1
3.2 Basic Rent........................................................................................ 2
3.3 Supplemental Rent................................................................................. 2
3.4 Manner of Payments................................................................................ 2
SECTION 4. Finance Lease..................................................................................... 3
4.1 Finance Lease..................................................................................... 3
SECTION 5. Disclaimer of Warranties; Quiet Enjoyment......................................................... 4
SECTION 6. Delivery of Aircraft; Condition of Aircraft; Delivery to Lessor................................... 5
6.1 Delivery of Aircraft.............................................................................. 5
6.2 General Condition of Aircraft and Airframes....................................................... 5
6.3 Return of other Engines with Airframe............................................................. 7
6.4 Manuals and Service Bulletin Kits................................................................. 7
6.5 Sale Inspection; Storage.......................................................................... 8
6.6 Injunctive Relief................................................................................. 8
SECTION 7. Liens............................................................................................. 8
SECTION 8. Maintenance; Registration; Subleasing; Operation; Insignia........................................ 9
8.1 Maintenance; Registration; Subleasing............................................................. 9
8.2 Operation......................................................................................... 10
8.3 Insignia.......................................................................................... 11
SECTION 9. Replacement of Parts; Alterations, Modifications and Additions.................................... 11
9.1 Replacement of Parts.............................................................................. 11
9.2 Title to Replaced and Replacement Parts........................................................... 12
9.3 Alterations, Modifications, and Additions......................................................... 12
SECTION 10. Loss, Destruction, Requisition, Etc............................................................... 13
10.1 Risk of Loss, Damage or Destruction............................................................... 13
10.2 Payment of Lease Balance.......................................................................... 13
10.3 Replacement Airframe.............................................................................. 14
10.4 Event of Loss with respect to a Related Engine.................................................... 16
10.5 Application of Other Payments Upon Event of Loss.................................................. 17
10.6 Application of Payments Not Relating to an Event of Loss.......................................... 18
10.7 Requisition for Use............................................................................... 18
10.8 Application of Payments During Existence of Significant Defaults and Lease Events of Default...... 18
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SECTION 11. Insurance......................................................................................... 19
11.1 Bodily injury liability and property damage liability insurance................................... 19
11.2 Insurance against loss or damage to an Aircraft................................................... 19
11.3 Reports, Etc...................................................................................... 20
11.4 Self-Insurance.................................................................................... 20
11.5 Additional Insurance by Lessor and Lessee......................................................... 20
11.6 Indemnification by government in lieu of insurance................................................ 21
11.7 Terms of insurance policies....................................................................... 21
SECTION 12. Inspection........................................................................................ 22
SECTION 13. Events of Default................................................................................. 22
SECTION 14. Remedies.......................................................................................... 23
14.1 Remedies.......................................................................................... 23
SECTION 15. Further Assurances; Expenses...................................................................... 25
15.1 Further Assurances................................................................................ 25
15.2 Expenses.......................................................................................... 25
SECTION 16. Lessor's Right to Perform......................................................................... 25
SECTION 17. Assignment by Lessor.............................................................................. 25
SECTION 18. Net Lease, Etc.................................................................................... 26
SECTION 19. Notices........................................................................................... 27
SECTION 20. Assignment, Sublease or Transfer.................................................................. 27
SECTION 21. Early Termination Options; Obligation to Purchase; Substitution................................... 27
21.1 Early Termination Options......................................................................... 27
21.2 Required Purchase................................................................................. 29
21.3 Replacement of Aircraft........................................................................... 29
SECTION 22. End of Term Options; Early Purchase Options....................................................... 30
22.1 End of Term Options............................................................................... 30
22.2 Election of Options............................................................................... 30
22.3 Renewal Options................................................................................... 31
SECTION 23. Sale Option....................................................................................... 31
23.1 Sale Option Procedures............................................................................ 31
23.2 Sale.............................................................................................. 32
23.3 Application of Sale Proceeds and Recourse Payments in Connection with the Sale Option............. 33
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SECTION 24. Limitation of Lessor's Liability.................................................................. 33
SECTION 25. Miscellaneous..................................................................................... 34
25.1 Governing Law; Waiver of Jury Trial; Severability................................................. 34
25.2 Execution in Counterparts......................................................................... 35
25.3 Amendments and Waivers............................................................................ 35
25.4 Business Days..................................................................................... 35
25.5 Directly or Indirectly............................................................................ 35
25.6 Uniform Commercial Code........................................................................... 35
25.7 TRUTH IN LEASING.................................................................................. 36
EXHIBIT A Lease Supplement
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MASTER AIRCRAFT LEASE AGREEMENT
(Steelcase Trust No. 2000-1)
THIS MASTER AIRCRAFT LEASE AGREEMENT (Steelcase Trust No. 2000-1) is
dated as of May 26, 2000 (as amended, modified, supplemented, restated and/or
replaced from time to time, the "Lease") among FIRST SECURITY BANK, NATIONAL
ASSOCIATION, a national banking association, not in its individual capacity
except as expressly provided herein, but solely as Certificate Trustee under
Steelcase Trust No. 2000-1 (together with its successors and assigns permitted
hereunder, the "Lessor") and STEELCASE INC., a Michigan corporation (together
with its successors and assigns permitted hereunder, "Lessee").
W I T N E S S E T H :
SECTION 1. DEFINITIONS.
Unless the context otherwise requires, all capitalized terms used
herein without definition shall have the respective meanings set forth in
Appendix A of that certain Participation Agreement (Steelcase Trust No. 2000-1)
dated as of the date hereof (the "Participation Agreement"), among the Lessor
(in its individual and trust capacities), Steelcase Inc., as Lessee, First
Security Trust Company of Nevada, in its individual capacity and as
Administrative Agent, Hatteras Funding Corporation, as CP Lender, the persons
named on Schedule I thereto as Certificate Holders, the persons named on
Schedule II thereto as Facility Lenders and Bank of America, National
Association as Administrator, for all purposes of this Lease. The General
Provisions of Appendix A of the Participation Agreement are hereby incorporated
by reference herein.
SECTION 2. ACCEPTANCE AND LEASING OF AIRCRAFT.
Subject to the satisfaction of the conditions set forth in Section 4 of
the Participation Agreement, Lessor agrees to accept delivery of and
simultaneously lease to Lessee hereunder, and Lessee agrees to lease from
Lessor, hereunder, on each Delivery Date the Aircraft delivered on such date as
evidenced by the execution by Lessor and Lessee of a Lease Supplement
(substantially in the form of Exhibit A hereto) covering such Aircraft. Lessor
hereby authorizes Lessee or an authorized representative of Lessee to act on
behalf of Lessor to accept delivery of each Aircraft, all in accordance with
Section 2.3(c) of the Participation Agreement. Lessee hereby agrees that
acceptance of delivery of any Aircraft by it or its authorized representative on
behalf of Lessor shall, without further act, irrevocably constitute acceptance
by Lessee of such Aircraft for all purposes of this Lease.
SECTION 3. LEASE TERM AND RENT.
3.1 LEASE TERM.
The base term of this Lease (the "Base Term") for any Aircraft shall
commence on the Base Term Commencement Date for such Aircraft and, subject to
earlier termination pursuant to
Sections 10, 14 or 21 shall expire on the Base Term Expiration Date for such
Aircraft. Subject and pursuant to Section 22.1, the Lessee may elect to extend
the Lease of any or all Aircraft in each case for up to two (2) successive
additional one-year terms beyond the respective Base Term for such Aircraft
(each a "Renewal Term"). With respect to any Aircraft, the Base Term together
with any Renewal Term actually entered into shall be referred to herein as the
"Lease Term" for such Aircraft.
3.2 BASIC RENT.
Lessee hereby agrees to pay Basic Rent to Lessor for each Aircraft in
consecutive installments payable in arrears on each Payment Date throughout the
Lease Term of such Aircraft.
3.3 SUPPLEMENTAL RENT.
Lessee hereby agrees to pay to Lessor, or to such other Person to which
such payment shall be required to be paid hereunder or in accordance with the
other Operative Documents, in any case without duplication of amounts paid by
Lessee under any other Operative Document, any and all Supplemental Rent owing
pursuant to any Operative Document, on the date due and owing, or where no due
date is specified, upon written demand by the Person entitled thereto, and in
the event of any failure on the part of Lessee to pay any Supplemental Rent,
Lessor (or such other Person, as the case may be) shall have all rights, powers
and remedies provided for herein or by applicable law or equity or otherwise as
in the case of nonpayment of Basic Rent. In clarification of the foregoing and
not in limitation of Lessee's general obligation to pay all amounts of
Supplemental Rent due and owing by it from time to time, Lessee hereby agrees to
pay as Supplemental Rent (a) on demand, to the extent permitted by Applicable
Laws and Regulations, an amount equal to interest at the applicable Overdue Rate
on (i) any part of any installment of Basic Rent not paid when due for any
period for which the same shall be overdue and (ii) any payment of Supplemental
Rent not paid when due for the period from such due date until the same shall be
paid, (b) an amount equal to the applicable Break Funding Amount, if any,
payable by the Certificate Trustee under the Loan Agreement or the Trust
Agreement, (c) all fees, costs and expenses which are indicated to be paid by
the Certificate Trustee under the Operative Documents and (d) the indemnities
and obligations assumed by the Lessee in Section 7 of the Participation
Agreement.
3.4 MANNER OF PAYMENTS.
All Rent (excluding Excluded Amounts) shall be paid by Lessee to the
Administrative Agent at the Administrative Agent's Payment Office or at such
other account or location in the United States as may be specified by the
Administrative Agent by not less than five (5) Business Days written notice from
time to time hereafter. All Rent and other amounts payable hereunder from time
to time shall be paid by Lessee in funds consisting of lawful currency of the
United States, which shall be immediately available to the recipient not later
than 11:00 A.M. (Eastern time) on the date of such payment. Subsequent to the
discharge of the Loan Agreement pursuant to its terms, and receipt by Lessee of
written notification thereof from the Administrative Agent, all Rent payable to
the Administrative Agent pursuant to the first sentence of this Section 3.4
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shall be paid to Lessor (or its designee) to an account or location in the
United States as may be specified by such Person by not less than five (5)
Business Days written notice from time to time hereafter. Excluded Amounts shall
be paid by Lessee or such other Person to the Person to whom payable at such
Person's Payment Office specified in Schedule III to the Participation Agreement
or at such other account or location in the United States as may be specified by
such Person by not less than five (5) Business Days written notice from time to
time hereafter.
SECTION 4. FINANCE LEASE.
4.1 FINANCE LEASE.
(a) Finance Lease. Lessor and Lessee intend this Lease to
constitute a finance lease and not a true lease. Lessor and Lessee further
intend and agree that, for the purpose of securing the Lessee's obligations
hereunder, (i) this Lease shall be deemed to be a security agreement and
financing statement within the meaning of Article 9 of the Uniform Commercial
Code with respect to each of the Aircraft and all proceeds (including without
limitation insurance proceeds thereof) of the conversion, voluntary or
involuntary, of the foregoing into cash, investments, securities or other
property, whether in the form of cash, investments, securities or other
property, (ii) Lessee hereby grants to Lessor, a Lien on all of Lessee's right,
title and interest in and to the Aircraft and all proceeds (including without
limitation insurance proceeds thereof) of the conversion, voluntary or
involuntary, of the foregoing into cash, investments, securities or other
property, whether in the form of cash, investments, securities or other property
and (iii) notifications to Persons holding such property, and acknowledgments,
receipts or confirmations from financial intermediaries, bankers or agents (as
applicable) of Lessee shall be deemed to have been given for the purpose of
perfecting such Lien under applicable law. Lessor and Lessee shall promptly take
such reasonable actions as may be necessary or advisable in either party's
reasonable opinion (including without limitation the filing of this Lease and
the various Lease Supplements) to ensure that the Lien on the items referenced
above will be deemed to be a perfected Lien of first priority (subject to
Permitted Liens) under Applicable Law and Regulations and will be maintained as
such throughout the Lease Term of each Aircraft; provided, however, that Lessee
agrees to pay all costs associated with such perfection. In addition to and
without limiting the foregoing, the Lessor and Lessee hereby acknowledge, and
agree, to the provisions of Section 2.5 of the Participation Agreement.
(b) Power of Attorney. Subject to the provisions hereof, Lessee
does hereby constitute Lessor the true and lawful attorney of Lessee,
irrevocably, coupled with an interest and with full power of substitution, and
with full power (in the name of Lessee or otherwise) during the occurrence and
continuation of a Lease Event of Default after written notice to Lessee thereof
to ask for, require, demand, and receive, any and all monies and claims for
monies (in each case including insurance and requisition proceeds except as
herein otherwise provided) due and to become due under or arising out of any
agreement assigned or pledged under clause (a) above, and all other property now
or hereafter pledged herein, to endorse any checks or other instruments or
orders in connection therewith and to file any claims or to take any action or
to institute any proceedings which Lessor or the Administrative Agent may deem
to be necessary or advisable to exercise its remedies hereunder. Without
limiting the provisions of the foregoing, during the continuance of any Lease
Event of Default and after written notice to the Lessee
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thereof but subject to the terms hereof, Lessor shall have the right under such
power of attorney to xxx for, compound and give acquittance for, to accept any
offer of any purchaser to purchase any Aircraft as provided herein and upon such
purchase to execute and deliver in the name of and on behalf of the Lessee an
appropriate xxxx of sale and other instruments of transfer relating to such
Aircraft, when purchased by such purchaser, and to perform all other necessary
or appropriate acts with respect to any such purchase, and in its discretion to
file any claim or take any other action or proceedings, either in its own name
or in the name of the Lessee or otherwise, which Lessor or the Administrative
Agent may reasonably deem necessary or appropriate to protect and preserve the
right, title and interest of Lessor and the Administrative Agent in and to the
Aircraft and such rents and other sums and the security intended to be afforded
hereby; provided, no action of Lessor pursuant to this paragraph shall increase
the obligations or liabilities of Lessee to any Person beyond those obligations
and liabilities specifically set forth in this Lease and the other Operative
Documents.
SECTION 5. DISCLAIMER OF WARRANTIES; QUIET ENJOYMENT.
LESSEE ACKNOWLEDGES AND AGREES THAT, AS BETWEEN LESSEE AND LESSOR, (A)
EACH AIRCRAFT IS OF A SIZE, DESIGN, CAPACITY AND MANUFACTURE SELECTED BY AND
ACCEPTABLE TO LESSEE, (B) LESSEE IS SATISFIED THAT EACH AIRCRAFT IS SUITABLE FOR
ITS PURPOSES, (C) NEITHER LESSOR, ANY PARTICIPANT, ANY CERTIFICATE HOLDER NOR
THE ADMINISTRATIVE AGENT IS A MANUFACTURER OR A DEALER IN PROPERTY SIMILAR TO
SUCH AIRCRAFT, (D) EACH AIRCRAFT IS LEASED HEREUNDER SUBJECT TO ALL APPLICABLE
LAWS NOW IN EFFECT OR HEREAFTER ADOPTED, (E) LESSOR LEASES AND LESSEE TAKES EACH
AIRCRAFT "AS-IS", "WHERE-IS" AND "WITH ALL FAULTS", IN WHATEVER CONDITION IT MAY
BE, AND LESSEE ACKNOWLEDGES THAT NEITHER LESSOR, AS LESSOR OR IN ITS INDIVIDUAL
CAPACITY, ANY PARTICIPANT, ANY CERTIFICATE HOLDER NOR THE ADMINISTRATIVE AGENT
MAKES NOR SHALL BE DEEMED TO HAVE MADE, AND EACH EXPRESSLY DISCLAIMS, ANY AND
ALL WARRANTIES OR REPRESENTATIONS, EITHER EXPRESS OR IMPLIED, AS TO THE VALUE,
CONDITION, FITNESS FOR ANY PARTICULAR PURPOSE, DESIGN, OPERATION,
MERCHANTABILITY THEREOF OR AS TO THE TITLE OF ANY SUCH AIRCRAFT, THE QUALITY OF
THE MATERIAL OR WORKMANSHIP THEREOF OR CONFORMITY THEREOF TO SPECIFICATIONS,
FREEDOM FROM PATENT, COPYRIGHT OR TRADEMARK INFRINGEMENT, THE ABSENCE OF ANY
LATENT OR OTHER DEFECT, WHETHER OR NOT DISCOVERABLE, OR AS TO THE ABSENCE OF ANY
OBLIGATIONS BASED ON STRICT LIABILITY IN TORT OR ANY OTHER EXPRESS OR IMPLIED
REPRESENTATION OR WARRANTY WHATSOEVER WITH RESPECT THERETO AND (F) LESSEE HEREBY
WAIVES ANY CLAIM (INCLUDING WITHOUT LIMITATION INCIDENTAL OR CONSEQUENTIAL
DAMAGE) OR EXPENSE CAUSED BY ANY AIRCRAFT OR BY LESSEE'S LOSS OF USE THEREOF FOR
ANY REASON WHATSOEVER; WITHOUT LIMITING THE GENERALITY OF THE FOREGOING, LESSOR
SHALL NOT BE LIABLE OR RESPONSIBLE FOR ANY DEFECTS, EITHER PATENT OR LATENT
(WHETHER OR NOT DISCOVERABLE BY LESSEE), IN ANY AIRCRAFT, OR FOR ANY DIRECT OR
INDIRECT DAMAGE TO PERSONS OR
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PROPERTY RESULTING THEREFROM, OR FOR LESSEE'S LOSS OF USE OF ANY AIRCRAFT OR FOR
ANY INTERRUPTION IN LESSEE'S BUSINESS CAUSED BY LESSEE'S INABILITY TO USE ANY
AIRCRAFT FOR ANY REASON WHATSOEVER, except that (i) Lessor and the Trust Company
represent and warrant that on each Delivery Date, Lessor shall have received the
title to the Aircraft delivered on such date conveyed to Lessor by the
applicable Seller and each such Aircraft will be free of Certificate Trustee
Liens attributable to Lessor or to the Trust Company, and (ii) each of Lessor
and the Trust Company hereby covenants that it will not, through its own actions
or inactions, interfere in the quiet enjoyment, use, operation or possession of
any Aircraft by Lessee unless a Lease Event of Default shall have occurred and
be continuing. Lessor hereby appoints and constitutes Lessee as its agent during
the Lease Term to assert and enforce, from time to time, in the name and for the
account of Lessor and Lessee, as their interests may appear, but in all cases at
the sole cost and expense of the Lessee, whatever claims and rights that Lessor
may have against the manufacturers, suppliers, or any prior owners or lessees of
the Aircraft and Lessee hereby accepts such appointment; provided, however, that
if at any time a Lease Event of Default or Significant Default shall have
occurred and be continuing, at Lessor's option, such agency shall terminate, and
Lessor may assert and enforce, at Lessee's sole cost and expense, such claims
and rights. Lessee's delivery of a Lease Supplement shall be conclusive evidence
as between Lessee and Lessor that any Aircraft described therein is in all the
foregoing respects satisfactory to Lessee.
SECTION 6. DELIVERY OF AIRCRAFT; CONDITION OF AIRCRAFT; DELIVERY TO LESSOR.
6.1 DELIVERY OF AIRCRAFT.
On the Expiration Date in respect of any Aircraft and assuming Lessee
has not purchased such Aircraft in accordance with the terms of this Lease,
Lessee will deliver possession of such Aircraft to the Person that is purchasing
such Aircraft (or the Lessor, as applicable) in the condition required by this
Section 6 at facilities suitable for storage of such Aircraft at a location
designated by such Person (or the Lessor, as applicable) in the continental
United States (a "Return Location"). All costs and expenses for delivery of such
Aircraft shall be borne by the Lessee. In addition, Lessee shall upon request of
the purchaser (or the Lessor, as applicable) of any Aircraft, assign any and all
of Lessee's title to such Aircraft and all of Lessee's rights under any
manufacturer's or supplier's warranties with respect to such Aircraft to such
Person.
6.2 GENERAL CONDITION OF AIRCRAFT AND AIRFRAMES.
(a) Registration and General Condition. With respect to any
Aircraft, at the time of such delivery such Aircraft will be registered under
the laws of the United States of America. In addition, at the time of delivery
pursuant to this Section 6.1, each Aircraft shall satisfy each of the following
requirements, as applicable, and any other applicable requirements of the
Operative Documents:
(i) Such Aircraft shall be certified as an airworthy
aircraft by the Federal Aviation Administration and shall be equipped
so as to be eligible for operations, in each case, under Part 91 of the
Federal Aviation Regulations;
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(ii) Such Aircraft shall be free and clear of all Liens
(other than Certificate Trustee Liens);
(iii) Such Aircraft shall be in as good an operating
condition as when delivered to Lessee hereunder (ordinary wear and tear
excepted) and in compliance with the Maintenance Program for such
Aircraft;
(iv) Such Aircraft shall be clean with all systems and
components operable;
(v) Such Aircraft shall have all of Lessee's and any
sublessee's exterior markings removed or painted over with the areas
thereof refinished to match adjacent areas;
(vi) Any appliance, part, instrument, appurtenance,
accessory, furnishing or other equipment leased by the Lessee from a
third party (other than Lessor) and incorporated in such Aircraft shall
be removed prior to the date of such return without any damage to such
Aircraft and without diminishing or impairing the value, utility,
remaining useful life or condition which such Aircraft would have had
at such time had such equipment not been installed, and Lessee shall
make all repairs which are required as a result of such removal; and
(vii) Such Aircraft shall have installed thereon all
Related Engines and, unless removed and not replaced as permitted under
the terms of this Lease, all Parts installed thereon on the Delivery
Date or replacements therefor made in accordance with the terms of this
Lease.
(b) Other Conditions. Upon delivery of an Aircraft at the
expiration or early termination of the Lease with respect to such Aircraft, such
Aircraft shall be in the condition required by Section 8 hereof and satisfy the
following requirements:
(i) The Related Airframe will have completed the next
scheduled heaviest maintenance inspection within 25 hours of return;
(ii) All airworthiness directives will be terminated, and
all service bulletins complied with, in each case applicable to the
Related Airframe, any Related Engine and any Part thereof or the
related records;
(iii) All aspects of the applicable corrosion control
program will be complete to date;
(iv) All landing gear will have been overhauled within
three months prior to return;
(v) All hard time components will have been overhauled or
refurbished within 25 hours of return; and
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(vi) The Related Engines shall not have been used more
than 25 hours or cycles since a complete overhaul or refurbishment.
6.3 RETURN OF OTHER ENGINES WITH AIRFRAME.
(a) Replacement Engine. In the event that any engine which is not
a Related Engine shall be delivered with an Airframe, such engine shall be the
same make and model as the Related Engine (or an improved model engine
manufactured by Engine Manufacturer) or an engine of another manufacturer, in
each case suitable for installation and use on such Airframe and fully
compatible with the other Related Engine(s) or engine(s) installed on such
Airframe having an economic value, residual value, utility and remaining useful
life at least equal to, and be in as good operating condition and repair as, the
Related Engine so replaced (assuming such Related Engine had an economic value,
residual value, utility, and remaining useful life as maintained in accordance
with the terms of the Lease). At the time of such replacement, such engine shall
be airworthy and at the time such Airframe is delivered shall fully comply with
all the requirements of this Lease which are applicable to Related Engines.
(b) Conveyance of Title. Upon delivery of an Aircraft pursuant to
Section 6.1, the Lessee shall duly convey to the Person purchasing such Aircraft
(or the Lessor, as applicable), good title to any such replacement engine, free
and clear of Liens other than Certificate Trustee Liens; and upon such
conveyance and as a condition thereto, Lessee will (a) furnish, or cause to be
furnished, to the Person purchasing such Aircraft (or the Lessor, as
applicable), a full warranty xxxx of sale as to title with respect to any such
replacement engine, in form and substance reasonably satisfactory to the Person
purchasing such Aircraft (or the Lessor, as applicable), together with an
opinion of counsel to the effect that such xxxx of sale has been duly authorized
and delivered and is enforceable in accordance with its terms (subject to
customary exceptions), and (b) take such other action as the Person purchasing
such Aircraft (or the Lessor, as applicable), may reasonably request in order
that title to such replacement engine may be duly and properly vested in the
Person purchasing such Aircraft (or the Lessor, as applicable) to the same
extent as the Related Engine replaced thereby. Upon compliance by the Lessee
with the foregoing, Lessor will, so long as no Lease Event of Default or Lease
Default has occurred and is continuing, transfer to Lessee or its designee all
of Lessor's right, title and interest in and to any Related Engine which is not
installed on the Airframe to which it relates at the time of the delivery of
such Airframe by a xxxx of sale "as is", "where is", without recourse or
warranty (except for a warranty as to the absence of Certificate Trustee Liens).
6.4 MANUALS AND SERVICE BULLETIN KITS.
(a) Manuals. When delivering each Aircraft to the Person
purchasing the same (or the Lessor, as applicable) Lessee shall deliver or cause
to be delivered to such Person) (i) all logs, manuals, data, and inspection,
maintenance, modification, and overhaul records (a) received by Lessee from the
Manufacturer of such Aircraft and (b) required to be maintained for such
Aircraft under the applicable rules and regulations of the FAA, (ii) all other
maintenance service, inspection and overhaul records maintained and retained by
Lessee for such Aircraft which are reasonably necessary to transition such
Aircraft to a new operator, updated through the date of return and (iii) all
current and historical records delivered with such Aircraft by the
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Manufacturer and Engine Manufacturer, and records acquired or prepared by Lessee
or any sublessee during the Lease Term therefor, including time logs showing
Related Engine hours and cycles on any given date, documents, manuals (revised
up to and including the most current revisions issued by the manufacturer and
accurately reflecting the status of such Aircraft or Related Engine), data, and
overhaul records, log books, original engine delivery documents, serviceable
parts tags (including teardown reports for time-controlled Parts that have been
overhauled), FAA forms, modification records, inspection records, and all other
documentation pertaining to each Related Engine and Part and/or any other engine
then installed thereon. All records shall be in English or have official English
translations (which may be by microfilm or microfiche, as permitted), and any
records discrepancies shall be corrected, and any missing records shall be
reconstructed, by Lessee on or prior to the return of such Aircraft.
(b) Service Bulletin Kits. All service bulletin kits received by
or on behalf of Lessee from Manufacturer, Engine Manufacturer or vendors for the
respective Aircraft and not incorporated therein shall be returned at no charge
to Lessor as cargo on board such Aircraft at the time of its return.
6.5 SALE INSPECTION; STORAGE.
(a) Sale Inspection. Prior to the end of the Lease Term with
respect to any Aircraft, the Person that is purchasing such Aircraft (or Lessor,
as applicable) shall have the right to inspect (at the sole cost and expense of
the Lessee) any such Aircraft that are to be delivered pursuant to this Section
6 to ensure that such Aircraft is in compliance with the conditions set forth
herein. Such inspections shall be in accordance with the provisions of Section
12 hereof.
(b) Storage. Lessee will, if requested by the Person purchasing
any Aircraft (or the Lessor, as applicable) in writing, at Lessee's sole cost
and expense arrange parking facilities for such Aircraft at the Return Location
for a period of ninety (90) days from the Expiration Date of such Aircraft (or
such longer period as shall be necessary for Lessor to sell or re-lease such
Aircraft in the event of a return pursuant to Section 14 hereof). During such
period the Lessee (i) will insure, maintain and keep such Aircraft in good order
and repair in accordance with the provisions of the Operative Documents, and
(ii) upon prior notice during business hours will permit the Person purchasing
such Aircraft (or the Lessor, as applicable) or a designee thereof, including
without limitation the authorized representative or representatives of any
prospective purchaser, lessee or user of such Aircraft, to inspect the same.
6.6 INJUNCTIVE RELIEF.
The provisions of this Section 6 are of the essence of this Lease, and
upon application to any court of equity having jurisdiction, Lessor shall be
entitled to a decree against Lessee requiring specific performance of the
covenants of Lessee set forth in this Section 6.
SECTION 7. LIENS.
Lessee will not directly or indirectly create, incur, assume, permit or
suffer to exist any Lien on or with respect to any Airframe, Related Engine, or
Part or Lessee's leasehold interest
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therein under this Lease, except Permitted Liens, and Lessee shall promptly, at
its sole cost and expense, take such action or cause such action to be taken as
may be necessary to duly discharge to the reasonable satisfaction of Lessor and
the Administrative Agent (by bonding or otherwise) any such Lien not excepted
above, whether now existing or arising at any time after the date of this Lease.
SECTION 8. MAINTENANCE; REGISTRATION; SUBLEASING; OPERATION; INSIGNIA.
8.1 MAINTENANCE; REGISTRATION; SUBLEASING.
(a) Maintenance and Registration Lessee agrees not to maintain,
repair, overhaul, use or operate any Aircraft, any Related Engine or any Part in
violation of any Applicable Laws and Regulations of any Authority having
jurisdiction (domestic or foreign) over Lessee or such Aircraft, or in violation
of any airworthiness certificate, license or registration relating to such
Aircraft issued by any such Authority. If such Applicable Laws and Regulations
require alteration of the Airframe, any Related Engine or any Part of such
Aircraft, Lessee will conform thereto or obtain conformance therewith at no
expense to Lessor and will maintain the same in proper operating condition under
such Applicable Laws and Regulations. Lessee also agrees not to fly any
Aircraft, or suffer any Aircraft to be flown or any Related Engine to be located
(i) in any area excluded from coverage by any insurance required by Section 11,
(ii) in any country with which the United States does not maintain diplomatic
relations, or (iii) in any area of actual or threatened armed hostilities unless
fully covered to Lessor's reasonable satisfaction by war risk insurance or
unless such Aircraft is operated or used under contract with the United States
under which contract the United States assumes liability and provides indemnity
in an amount not less than the amount of insurance and providing coverage,
supported by the full faith and credit of the United States, as full and
complete as otherwise required by Section 11 for any damage, loss, destruction
or failure to return possession thereof at the end of the term of such contract
and for injury to Persons and damage to property of others. Each Aircraft shall
at all times be and remain registered in accordance with the laws of the United
States.
(b) Subleasing. Lessee shall not sublease, or otherwise in any
manner deliver, relinquish or transfer possession of the Aircraft or any Related
Engine or any Part thereof or any part of Lessee's rights hereunder to any
Person without the prior written consent of Lessor; provided, however that, if
no Significant Default or Lease Event of Default exists, Lessee may, without the
prior written consent of Lessor, (i) deliver possession of any Aircraft or any
Related Engine to the manufacturer thereof for testing or other similar purposes
or to any organization for service, repair, maintenance or overhaul work or for
alterations or modifications of or additions to such Aircraft or Related
Engines, to the extent required or permitted by this Lease, (ii) subject any
Related Engine or any Part to normal pooling or similar arrangements provided,
in the case of a Related Engine, that such arrangements do not result in the
transfer of title to the Related Engine, (iii) transfer possession of any
Related Engine or Part to any Person for the purpose of shipment (in the
ordinary course of business) not otherwise permitted hereby; and (iv) sublease
any Aircraft to wholly owned Subsidiaries of the Lessee and to any other Person
(x) headquartered in the United States, Canada, Great Britain, France or Germany
and (y) with its senior long-term unsecured debt rated at least BBB- by S&P and
Baa3 by Xxxxx'x at the time such sublease is entered into.
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The rights of any transferee who receives possession by reason of a
transfer permitted by this Section 8.1(b) shall be subject and subordinate to,
and any sublease shall be made expressly subject to, all the terms of this
Lease, and to Lessor's rights, powers, and remedies hereunder and thereunder,
including, without limitation, the right to repossession pursuant to Section
14.1 hereof and to void such sublease upon repossession. Notwithstanding any
language contained herein to the contrary, (i) the respective Aircraft shall all
times remain registered with the FAA under the laws of the United States, and
(ii) Lessee shall remain primarily liable hereunder for the performance of all
the terms of this Lease to the same extent as if such sublease or transfer had
not occurred. Lessee shall deliver to Lessor, within five Business Days after
execution of any sublease, a written representation that such sublease is in
compliance with the provisions of this Section 8.1(b). No sublease, transfer, or
other relinquishment of possession of any Aircraft shall in any way discharge or
diminish any of Lessee's obligations to Lessor hereunder.
8.2 OPERATION.
During the Lease Term of any Aircraft, Lessee, at its own cost and
expense, shall:
(i) service, repair, maintain, test and overhaul such
Aircraft so as to keep such Aircraft in good operating condition and,
ordinary wear and tear excepted, in the same condition as when
delivered to Lessee hereunder, and so as to comply with each of the
following standards:
(A) to establish and keep such Aircraft in
compliance with (1) Lessee's FAA-approved maintenance program,
which shall include a corrosion control program (the
"Maintenance Program"), that is, with respect to the Related
Airframe, either a phased maintenance program (a "Phased
Maintenance Program") or a periodic medium and heavy
block-hour interval overhaul program (a "Block-Time
Maintenance Program") and that provides for all FAA required
inspection, servicing, overhaul and replacement of all
components thereof; (2) all applicable airworthiness
directives issued by the FAA; and (3) all manufacturer's
mandatory service bulletins;
(B) to keep such Aircraft in such condition as
may be necessary to enable the airworthiness certification of
such Aircraft to be maintained in good standing at all times
under the Federal Aviation Act; and
(C) to keep the Aircraft maintained, serviced,
repaired, tested or overhauled in at least the same manner and
with the same care as used by Lessee with similar aircraft
owned or leased by Lessee and maintained under the Maintenance
Program;
(ii) not install replacement components with excessive
wear or exchange components on or of such Aircraft for other aircraft
components in Lessee's possession for use on aircraft that will remain
in Lessee's possession after such return in order to reduce or avoid
future maintenance requirements; and
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(iii) maintain in the English language all records, logs
and other materials required by the FAA, and any other Authority having
jurisdiction over such Aircraft or Lessee, to be maintained in respect
of such Aircraft, so as to enable operation of such Aircraft under the
laws of the United States, which records logs and materials will
conform to good commercial practice for records regarding all
maintenance carried out with respect to the Aircraft.
8.3 INSIGNIA.
Lessee shall for each Aircraft and Related Engine leased by it, on or
prior to the Delivery Date therefor (or, with respect to the Aircraft delivered
on the Closing Date, within ninety (90) days of such Closing Date), affix
placards bearing the inscription "This [aircraft] [engine] is owned by First
Security Bank, National Association, not in its individual capacity, but solely
as Certificate Trustee, and subject to a security interest in favor of First
Security Trust Company of Nevada, as Administrative Agent" and assure such
placards remain on each Airframe and Related Engine; provided that so long as no
Lease Event of Default or Significant Default shall have occurred and be
continuing, any Aircraft may be placarded identifying the interests of the
Lessee in addition thereto.
Except as otherwise specified pursuant to the preceding paragraph
Lessee will not allow the name of any Person other than the Lessor, the
Administrative Agent, or their respective successors or assigns, to be placed on
any Airframe or Related Engine as a designation that might be interpreted as a
claim of ownership or of any security interest therein, provided that Lessee may
cause or permit an Airframe or Related Engine to be lettered, painted or marked
in an appropriate manner for convenience of identification of the interest of
Lessee (including without limitation the customary colors and insignia of the
Lessee).
SECTION 9. REPLACEMENT OF PARTS; ALTERATIONS, MODIFICATIONS AND ADDITIONS.
9.1 REPLACEMENT OF PARTS.
Lessee shall promptly replace, or cause to be replaced, all Parts which
may from time to time become worn out, lost, stolen, destroyed, seized,
confiscated, damaged beyond repair, or permanently rendered unfit for use for
any reason whatsoever, except as otherwise provided in Section 9.3. In addition,
in the ordinary course of maintenance, service, repair, overhaul, or testing,
Lessee may remove a Part, whether or not worn out, lost, stolen, destroyed,
seized, confiscated, damaged beyond repair, or permanently rendered unfit for
use provided that, except as otherwise provided in Section 9.3, Lessee shall
promptly replace such Part. All replacement Parts shall be free and clear of all
Liens, except Permitted Liens, and shall have an economic value, residual value,
utility and remaining useful life at least equal to the original Parts replaced,
assuming such original replaced Parts were in the condition and repair required
to be maintained by the terms hereof.
Notwithstanding the requirements of Section 9.3 or this Section 9.1,
but without limiting the provisions of Section 6, as the case may be, Lessee may
on a non-discriminatory basis install
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or permit the installation of an engine or part on a Related Airframe or a part
on a Related Airframe or a Related Engine by way of substitution or replacement
if:
(i) there shall not have been available to Lessee at the
time and in the place that such engine or part was required to be
installed on such Related Airframe or Related Engine, a replacement
engine or replacement part complying with the requirements of Section
8.1 or this Section 9.1, as the case may be; and
(ii) it would have resulted in a disruption of the
operation of the Aircraft to have grounded such Aircraft and/or to have
permitted the Related Engine or the relevant Part to continue to be
unserviceable or unrepaired until such time as another engine or part
complying with the requirements of Section 8.1, Section 9.3 or this
Section 9.1, as the case may be, became available for installation on
such Related Airframe or Related Engine; and
(iii) such engine or part (A) is suitable for installation
and use on the Related Airframe or Related Engine, and (B) is
operationally compatible with the Related Airframe or Related Engines;
and
(iv) as soon as practicable, but in any event within the
earlier of sixty (60) days or the end of the Lease Term after
installation of the same on such Related Airframe or Related Engine,
Lessee shall cause any such engine or part not complying with the
requirements of Section 8.1, Section 9.3 or this Section 9.1, as the
case may be, to be removed and replaced or substituted by a part
complying with the requirements of Section 8.1, Section 9.3 or this
Section 9.1, as the case may be.
9.2 TITLE TO REPLACED AND REPLACEMENT PARTS.
All Parts removed from any Aircraft shall remain the property of
Lessor, and subject to this Lease and the Lien of the Security Agreement, no
matter where located, until such time as such Parts shall be replaced by Parts
which have been incorporated in such Aircraft and which meet the requirements
for replacement Parts specified above. Immediately upon any replacement Part's
becoming incorporated in an Aircraft as above provided, without further act (i)
title to the replaced Part shall vest in Lessee, free and clear of all rights of
Lessor and the other Financing Parties; (ii) such replaced Part shall no longer
be deemed a Part hereunder; (iii) title to the replacement Part shall thereupon
vest in Lessor (subject to no Lien other than Permitted Liens), and (iv) such
replacement Part shall become subject to this Lease and be deemed to be a Part
hereunder and subject to the Lien of the Security Agreement to the same extent
as the Parts originally incorporated in such Aircraft.
9.3 ALTERATIONS, MODIFICATIONS, AND ADDITIONS.
Lessee will make (or cause to be made) such alterations, modifications
and additions to each Aircraft as may be required during the Lease Term of such
Aircraft to comply with the applicable standards of the FAA or any other
Applicable Laws and Regulations ("Required Alterations"). In addition, Lessee
may from time to time make such alterations and
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modifications in and additions to an Aircraft as Lessee may deem desirable in
the proper conduct of its business, including removal of Parts which Lessee
deems to be obsolete or no longer suitable or appropriate for use on such
Aircraft; provided that no such alteration, modification, removal or addition
impairs the condition or airworthiness of such Aircraft, or diminishes the
economic value, residual value, utility and remaining useful life of such
Aircraft assuming such Aircraft was then in the condition required to be
maintained by the terms of this Lease ("Improvements"). All parts incorporated
or installed in or attached or added to any Aircraft as the result of such
alteration, modification or addition (except those parts which Lessee has leased
from others and Parts which may be removed by Lessee pursuant to the next
sentence) (the "Additional Part" or "Additional Parts") shall, without further
act, become the property of Lessor and subject to the Lien of the Security
Agreement. Notwithstanding the foregoing, Lessee may, at any time during the
Lease Term of any Aircraft, so long as no Lease Event of Default shall have
occurred and be continuing, remove any Additional Part, provided that such
Additional Part (i) is in addition to, and not in replacement of or substitution
for, any Part originally incorporated or installed in or attached to such
Aircraft at the time of delivery thereof hereunder or any Part in replacement of
or substitution for any such Part, (ii) is not required to be incorporated or
installed in or attached or added to such Aircraft pursuant to the terms of
Section 8 hereof or the first sentence of this Section 9.3, and (iii) can be
removed from such Aircraft without impairing the airworthiness of such Aircraft
or diminishing the economic value, residual values utility and remaining useful
life of such Aircraft which such Aircraft would have had at such time had such
alteration, modification or addition not occurred. Upon the removal thereof as
provided above, such Additional Part shall no longer be deemed the property of
Lessor, subject to the Lien of the Security Agreement or part of the Aircraft
from which it was removed. Any Additional Part not removed as above provided
prior to the delivery of an Aircraft to Lessor or any other Person under the
terms of Section 6.1 of this Lease shall remain the property of Lessor or such
other Person.
SECTION 10. LOSS, DESTRUCTION, REQUISITION, ETC.
10.1 RISK OF LOSS, DAMAGE OR DESTRUCTION.
Lessee hereby assumes all risk of loss, damage, theft, taking,
destruction, confiscation, requisition or commandeering, partial or complete, of
or to any Aircraft, however caused or occasioned, such risk to be borne by
Lessee with respect to such Aircraft from the Delivery Date with respect to such
Aircraft, and continuing until such Aircraft has been delivered in accordance
with the provisions of Section 6 hereof or purchased in accordance with Sections
21, 22 or 23 hereof. Lessee agrees that no occurrence specified in the preceding
sentence shall impair, in whole or in part, any obligation of Lessee under this
Agreement, including without limitation the obligation to pay Rent.
10.2 PAYMENT OF LEASE BALANCE.
Upon the occurrence of an Event of Loss with respect to an Airframe, or
such Airframe and the Related Engines and/or any other engine then installed
thereon, during the Lease Term of such Airframe, the Lessee shall forthwith (and
in any event within ten (10) Business Days after such occurrence) give Lessor
and the Administrative Agent written notice of such Event of Loss
13
and of its election to perform one of the following options (it being agreed
that if Lessee shall not have given Lessor and the Administrative Agent written
notice of such election within such ten (10) Business Days after such
occurrence, Lessee shall be deemed to have elected to perform the option set
forth in the following clause (ii), provided that Lessee shall not have the
right to select the option set forth in the following clause (i) if a Lease
Event of Default or a Section 13(a), (d), or (f) Lease Default shall have
occurred and be continuing and in such circumstance shall be deemed to have
selected the option set forth in the following clause (ii):
(i) As promptly as practicable, and in any event within
sixty (60) days of the occurrence of such Event of Loss, the Lessee
shall (x) with respect to an Event of Loss of an Airframe, convey or
cause to be conveyed to Lessor pursuant to Section 10.3, and to be
leased by Lessee hereunder in replacement for such Airframe, a
Replacement Airframe, and (y) with respect to an Event of Loss to a
Related Engine convey or cause to be conveyed to Lessor a replacement
engine pursuant to Section 10.4 in replacement of such Related Engine,
such Replacement Airframe or replacement engine to be free and clear of
all Liens (other than Permitted Liens); provided that, if Lessee shall
not perform its obligation to effect such replacement under this clause
(i) during the period of time provided herein, then Lessee shall
promptly give notice to Lessor, and shall be deemed (whether or not
Lessee shall have so given such notice) to have elected to perform the
option set forth in clause (ii) below by the date and pursuant to the
terms specified in said clause (notwithstanding such Event of Loss,
Lessee's obligation to pay Rent shall continue).
(ii) On the Payment Date next following the earlier of
sixty (60) days after the occurrence of such Event of Loss and the date
of receipt of insurance proceeds in respect of such occurrence (the
"Loss Payment Date"), Lessee shall pay Lessor the sum of (a) the Lease
Balance of such Aircraft as of such Payment Date, plus (b) the Basic
Rent due for such Aircraft on such Payment Date, plus (c) all accrued
and unpaid Basic Rent therefor, plus (d) all Supplemental Rent, if any,
then due and payable thereon. Upon payment in full of the amounts
specified in clauses (a) through (d) of the preceding sentence, (1) the
obligation of Lessee to pay Basic Rent hereunder with respect to such
Aircraft shall terminate, (2) the Lease Term of such Aircraft shall end
and (3) Lessor will transfer to Lessee, or Lessee's designee, at
Lessee's expense, its title to such Aircraft on an "as-is, where-is and
with all faults" basis, without recourse or any warranty, expressed or
implied.
10.3 REPLACEMENT AIRFRAME.
Prior to or at the time of any conveyance of a Replacement Airframe
Lessee, at its own expense, will furnish, or cause to be furnished, to the
Lessor and the Administrative Agent the following documents (in form and
substance satisfactory to Lessor and the Administrative Agent) which shall have
been duly authorized, executed and delivered by the respective parties thereto
and shall be in full force and effect on the date of such conveyance:
(i) a Lease Supplement and Security Agreement Supplement
covering such Replacement Airframe which shall have been duly filed for
recordation with the FAA;
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(ii) a full warranty xxxx of sale (as to title) covering
such Replacement Airframe and an FAA Xxxx of Sale covering such
Replacement Airframe executed by the owner thereof in favor of Lessor;
(iii) such Uniform Commercial Code financing statements as
are deemed necessary or desirable by counsel for Lessor to protect the
interests of Lessor and the Administrative Agent in such Replacement
Airframe and in any sublease;
(iv) an officer's certificate of Lessee certifying that
such Replacement Airframe is in as good operating condition and repair
as the Airframe it replaces assuming such Airframe had been maintained
in the operating condition and repair required hereunder ; and
(v) furnish a certificate signed by a duly authorized
officer of Lessee providing; (i) a description of the Airframe which
shall be identified by manufacturer, model, U.S. registration number
and manufacturer's serial number; (ii) provides a description of the
replacement airframe to be received (including the manufacturer, model,
U.S. registration number and manufacturer's serial number); (iii) that
on the date of the Lease Supplement relating to the Replacement
Airframe Lessor will be the owner of such Replacement Airframe and that
such Replacement Airframe will be subject to the Lien of the Security
Agreement, in each case, free and clear of all Liens Permitted Liens
and that such Replacement Airframe has been or, substantially
concurrently therewith, will be duly registered under the Federal
Aviation Act and that an airworthiness certificate has been duly issued
under such Federal Aviation Act with respect to such Replacement
Airframe, and that such registration and certificate is in full force
and effect, and that Lessee will have the full right and authority to
use such Replacement Airframe; (iv) the existence of the insurance (or
self insurance) required by Section 11 hereof with respect to such
Replacement Airframe and the payment of all premiums then due on any
such insurance and (v) that each of the conditions specified in this
Section 10.3 with respect to such Replacement Airframe have been
satisfied.
(vi) furnish the appropriate instruments assigning to
Lessor the benefit of all manufacturer's and vendor's warranties
generally available with respect to such replacement airframe or
replacement engine.
(vii) deliver a certificate from GRA Aviation Specialists,
Inc. or another firm of independent aircraft appraisers reasonably
satisfactory to Lessor with respect to the appraised economic value,
residual value, utility and remaining useful life of the Replacement
Aircraft and Administrative Agent.
(viii) upon request by Lessor, Lessee shall furnish Lessor
with (1) an opinion of counsel, to the effect that such xxxx of sale is
sufficient to convey title to such Replacement Airframe to Lessor, free
and clear of Liens (other than Permitted Liens), (2) an opinion of
qualified FAA counsel as to the due recordation of the Lease Supplement
and Security Agreement Supplement (in each case, if necessary) and all
15
other documents or instruments the recordation of which is necessary to
perfect and protect the rights of Lessor and the Administrative Agent
in such Replacement Airframe and Related Engines and (3) such evidence
of compliance with the insurance provisions of Section 11 with respect
to such Replacement Airframe as Lessor or the Administrative Agent may
reasonably request.
Upon full compliance by the Lessee with the terms of this Section 10.3,
Lessor shall convey to Lessee, at Lessee's cost and expense, all of Lessor's
right, title and interest, "as-is, where-is and with all faults", without
recourse or warranty, express or implied, in and to such replaced Airframe, with
respect to which such Event of Loss occurred and such replaced Airframe shall no
longer be deemed an Airframe hereunder and shall cooperate with the Lessee in
having the Administrative Agent release the Lien of the Security Documents with
respect to such Aircraft and take such further action as reasonably requested by
Lessee and at Lessee's sole cost and expense, to effect such transfer, including
the transfer of any manufacturer's and maintenance provider's warranties
covering such Aircraft. No Event of Loss with respect to an Airframe under the
circumstances contemplated by the terms of this Section 10.3 shall result in any
reduction in Rent or Lessee's obligation to pay Rent hereunder.
The Lessee further agrees to take such further action as Lessor or the
Administrative Agent may reasonably request with respect to such Replacement
Airframe to perfect the interest of Lessor and the Administrative Agent in such
Replacement Airframe.
10.4 EVENT OF LOSS WITH RESPECT TO A RELATED ENGINE.
Upon the occurrence of an Event of Loss with respect to a Related
Engine under circumstances in which there has not occurred an Event of Loss with
respect to the Related Airframe (or an Event of Loss has occurred with respect
to the Related Airframe and such Related Airframe is being replaced pursuant to
Section 10.2(i)) then, the Lessee shall forthwith (and in any event within ten
(10) Business Days after such occurrence) give Lessor written notice thereof and
shall, within sixty (60) days after the occurrence of such Event of Loss, convey
or cause to be conveyed to Lessor, as replacement for the Related Engine with
respect to which such Event of Loss occurred, title to another engine of the
same make and model as such Related Engine (or an engine of the same or another
manufacturer of an equivalent or an improved model and in the case of a Related
Engine, suitable for installation and use on its Related Airframe and compatible
with the other Related Engine to such Related Airframe leased hereunder) free
and clear of all Liens (other than Permitted Liens) and having an economic
value, residual value, utility and remaining useful life at least equal to, and
being in as good an operating condition, as the Related Engine subject to such
Event of Loss (assuming that such Related Engine had been maintained in
accordance with this Lease). Prior to or at the time of any such conveyance,
Lessee will;
(i) furnish Lessor with a warranty xxxx of sale, in form
and substance reasonably satisfactory to Lessor and Administrative
Agent, with respect to such replacement engine,
16
(ii) cause a Lease Supplement and Security Agreement
Supplement with respect to such replacement engine to be duly executed
and filed for recording pursuant to the Federal Aviation Act and take
such further actions, including the filing of Uniform Commercial Code
financing statements, necessary to protect the interest of the Lessor
and the Administrative Agent in such Related Engine,
(iii) furnish Lessor and Administrative Agent with an
opinion of Lessee's counsel to the effect that such xxxx of sale is
sufficient to transfer title to such engine,
(iv) furnish a certificate signed by a duly authorized
officer of Lessee providing (1) a description of the Related Engine
which shall be identified by manufacturer's serial number; (2) a
description of the replacement engine (including the manufacturer's
name and serial number); (3) that on the date of the Lease Supplement
relating to the replacement engine the Lessor will be the owner of such
replacement engine and that such replacement engine will be subject to
the Lien of the Security Agreement, in each case, free and clear of all
Liens except Permitted Liens; and (4) that each of the conditions
specified in this Section 10.4 below with respect to such replacement
engine have been satisfied, and
(v) furnish Lessor with such evidence of compliance with
the insurance provisions of Section 11 hereof with respect to such
replacement engine as Lessor may reasonably request.
Upon full compliance by Lessee with all of the terms of this Section 10.4,
Lessor will convey to Lessee, at Lessee's cost and expense, all of Lessor's
right, title and interest, "as-is, where-is and with all faults", without
recourse or warranty expressed or implied, in and to such Related Engine with
respect to which such Event of Loss occurred and such replaced Related Engine
shall no longer be deemed an Related Engine hereunder and shall cooperate with
Lessee in having the Administrative Agent release the Lien of the Security
Documents with respect to such Related Engine and take such further action as
reasonably requested by Lessee and at Lessee's sole cost and expense to effect
such transfer, including the transfer of any manufacturer's and maintenance
provider's warranties covering such Related Engine. No Event of Loss with
respect to a Related Engine under the circumstances contemplated by the terms of
this Section 10.4 shall result in any reduction of Rent or Lessee's obligation
to pay Rent hereunder.
10.5 APPLICATION OF OTHER PAYMENTS UPON EVENT OF LOSS.
Except as set forth in Section 10.8 hereof, any payments (including
without limitation insurance proceeds) received at any time by Lessor,
Administrative Agent or by Lessee from any insurer, governmental authority or
other party or insurer as a result of the occurrence of an Event of Loss will be
applied as follows: (i) any such payments which in the aggregate are less than
$2,000,000 shall be paid to or retained by the Lessee to satisfy its obligations
under Section 10.2 hereof; and (ii) any such payments received at any time by
Lessee which in the aggregate are greater than $2,000,000 shall be promptly paid
to the Administrative Agent and so much of such payments as shall not exceed the
amount of the Lease Balance for the Aircraft suffering such
17
Event of Loss and other amounts required to be paid by Lessee pursuant to
Section 10.2 hereof shall be applied by the Administrative Agent in reduction of
Lessee's obligation to pay such amounts, if not already paid by Lessee, or, if
already paid by Lessee, shall be applied to reimburse Lessee for its payment of
such amounts and the balance, if any, of such payments remaining thereafter
shall be paid to or retained by Lessee.
10.6 APPLICATION OF PAYMENTS NOT RELATING TO AN EVENT OF LOSS.
Any payments (including without limitation insurance proceeds) received
at any time by Lessor, Administrative Agent or Lessee from any insurer,
governmental authority or other party with respect to any condemnation,
confiscation, theft or seizure of, or requisition of title to or use of, or loss
or damage to any Airframe or Related Engine not constituting an Event of Loss,
will be applied directly in payment of repairs or for replacement of property in
accordance with the provisions of Sections 8 and 9 hereof, if not already paid
by the Lessee, or if already paid by Lessee and subject to the provisions of
Section 10.8 hereof, shall be applied to reimburse Lessee for such payment, and
any balance remaining after compliance with said Sections with respect to such
loss or damage shall be paid to Lessee.
10.7 REQUISITION FOR USE.
In the event of a requisition for use by any government during the
Lease Term (so long as it shall not constitute an Event of Loss) of any
Aircraft, Lessee shall promptly notify Lessor and the Administrative Agent of
such requisition and all of Lessee's obligations under this Lease shall continue
to the same extent as if such requisition had not occurred. Subject to the
provisions of Section 10.8 hereof, any payments received by Lessor or Lessee
from such government with respect to such requisition of use during such Lease
Term shall be paid over to, or retained by, Lessee. In the event of an Event of
Loss of an Airframe or Related Engine resulting from the requisition for use by
a government of such Airframe or Related Engine, the Lessee may, if it shall be
so entitled to pursuant to the provisions of Section 10, replace such Airframe
or Related Engine hereunder by complying with the terms of Sections 10.3 and
10.4, as applicable, and any payments received by Lessor or Lessee from such
government with respect to such requisition shall be paid over to, or retained
by, Lessee; provided that, Lessor may hold any such payment as security for the
performance of Lessee's obligations under Sections 10.3 and 10.4, as applicable,
with respect to such Event of Loss and shall release the same upon completion
of, or in connection with a closing for, such replacement.
10.8 APPLICATION OF PAYMENTS DURING EXISTENCE OF SIGNIFICANT
DEFAULTS AND LEASE EVENTS OF DEFAULT.
Any amount referred to in this Section 10 which is payable to or
retainable by Lessee shall not be paid to or retainable by Lessee if at the time
of such payment or retention a Significant Default or a Lease Event of Default
shall have occurred and be continuing, but shall be held by or paid over to the
Administrative Agent as security for the obligations of the Lessee under this
Lease and upon the written request of the applicable Lessee, or at the option of
the Lessor, applied against such obligations as and when due. At such time as
there shall not be continuing any such Significant Default or Lease Event of
Default or after the exercise of
18
remedies hereunder all of the obligations of Lessee hereunder and under the
other Operative Documents shall have been fully and indefeasably satisfied, such
amount shall be paid to the applicable Lessee to the extent not previously
applied in accordance with the preceding sentence.
SECTION 11. INSURANCE.
11.1 BODILY INJURY LIABILITY AND PROPERTY DAMAGE LIABILITY
INSURANCE.
Subject to the right to self insure to the extent permitted by Section
11.4, Lessee will at all times throughout the Lease Term for each Aircraft carry
and maintain or cause to be carried and maintained with insurers of recognized
responsibility with respect to such Aircraft, comprehensive aircraft liability
insurance including passenger legal liability, property damage liability, and
contractual liability (exclusive of manufacturer's product liability insurance)
in an amount not less than $50,000,000 per occurrence for each Aircraft of the
type and covering the same risks and in the same amounts as from time to time
applicable to aircraft owned or leased by Lessee and customary for corporations
in the industry for similarly situated lessees.
11.2 INSURANCE AGAINST LOSS OR DAMAGE TO AN AIRCRAFT.
Subject to the provisions of Section 11.4 permitting self-insurance,
Lessee shall at all times throughout the Lease Term for each Aircraft carry and
maintain or cause to be carried and maintained in effect with insurers of
recognized responsibility, with respect to such Aircraft, "all risk" aircraft
hull insurance covering such Aircraft including coverage of Related Engines and
Parts while temporarily removed from such Aircraft and not replaced by similar
components, including, without limitation, war risk and governmental
confiscation and expropriation and hijacking insurance, if and to the extent (x)
the same is maintained by Lessee (or any sublessee) with respect to other
aircraft owned, leased, or operated by Lessee (or such sublessee) on the same
routes or (y) such Aircraft is operated in any recognized or threatened areas of
hostilities, and fire, transit and extended coverage with respect to any Related
Engines while removed from such Aircraft provided, that such insurance shall at
all times while such Aircraft is subject to this Lease be for an amount (taking
into account self-insurance to the extent permitted by Section 11.4) not less
than the Lease Balance for such Aircraft. In the case of a loss with respect to
an engine (other than a Related Engine) installed on an Airframe, Lessor shall
hold any payment received by it of any insurance proceeds in respect of such
loss for the account of Lessee or any other third party to the extent Lessee or
such third party is entitled to receive such proceeds.
Except during a period when a Lease Event of Default or a Significant
Default has occurred and is continuing (in which case all losses will be
adjusted by the loss payee), all losses will be adjusted with the insurers by
Lessee. As between Lessor, the Administrative Agent and Lessee it is agreed that
all insurance payments received as the result of an Event of Loss will be
applied in accordance with the provisions of Section 10 hereof.
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11.3 REPORTS, ETC.
Lessee will furnish, or cause to be furnished, to Lessor and each other
Additional Insured on or before the Delivery Date of any Aircraft and on or
before the renewal dates of Lessee's (or the sublessee's) relevant insurance
policies during the Lease Term, a report, signed by (a) recognized independent
firm of insurance brokers, which brokers may be regularly retained by Lessee
(the "Insurance Brokers"), describing in reasonable detail the hull and
liability insurance (and property insurance for detached engines and Related
Engines) then carried and maintained with respect to the Aircraft. Lessee will
cause such Insurance Brokers to agree to advise Lessor and each other Additional
Insured in writing of any default in the payment of premium and to advise Lessor
and each other Additional Insured at least thirty (30) days (seven (7) days in
the case of any war risk and allied perils coverage) prior to the cancellation
or material adverse change of any insurance maintained pursuant to this Section
11, provided that if the notice period specified above is not obtainable, the
Insurance Brokers shall provide for as long a period of prior notice as shall
then be obtainable. In addition, Lessee will also cause such Insurance Broker to
deliver to Lessor and each other Additional Insured on or prior to the date of
expiration of any insurance policy referenced in a previously delivered
certificate of insurance, a new certificate of insurance, substantially the same
as delivered by Lessee to such parties on the Delivery Date of the Aircraft to
which it relates except for the changes in the report or the coverage consistent
with the terms hereof. In the event that Lessee shall fail to maintain or cause
to be maintained insurance as herein provided, Lessor may at its sole option
provide such insurance and, in such event, Lessee shall, upon demand, reimburse
Lessor as Supplemental Rent for the cost thereof.
11.4 SELF-INSURANCE.
Lessee may self-insure, by way of deductible, premium adjustment
provisions in insurance policies, or otherwise, under a program applicable to
all aircraft in Lessee's fleet, the risks required to be insured against
pursuant to Sections 11.1 and 11.2 but in no case shall the self-insurance with
respect to any Aircraft exceed $500,000 per occurrence; provided, however, that
nothing contained in this Section 11.4 limiting Lessee's right to self-insure
shall be deemed to apply to any minimum per aircraft (or, if applicable, per
policy period or per annum), hull or liability insurance deductible imposed by
the hull or liability insurers.
11.5 ADDITIONAL INSURANCE BY LESSOR AND LESSEE.
Lessee may at its own expense carry insurance with respect to its
interest in an Aircraft in amounts in excess of that required to be maintained
by this Section 11 and proceeds of such insurance shall be payable directly to
Lessee. The Lessor and any other Additional Insured each may carry for its own
account at its sole cost and expense insurance with respect to its interest in
an Aircraft, provided that such insurance does not prevent Lessee from carrying
the insurance required or permitted by this Section 11 or adversely affect such
insurance provided hereunder or the cost thereof.
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11.6 INDEMNIFICATION BY GOVERNMENT IN LIEU OF INSURANCE.
Notwithstanding any provisions of this Section 11 requiring insurance,
Lessor agrees to accept, in lieu of insurance against any risk with respect to
an Aircraft, indemnification from, or insurance provided by, the government of
the United States of America or any agency or instrumentality thereof the
obligations of which are supported by the full faith and credit of the
government of the United States of America, against such risk in an amount
which, when added to the amount of insurance against such risk maintained by
Lessee shall be at least equal to the amount of insurance against such risk
otherwise required by this Section 11 (taking into account self insurance
permitted by Section 11.4). Lessee shall furnish, in advance of attachment of
such indemnity or insurance, if practical to do so, a certificate of a
responsible financial or legal officer of Lessee confirming in reasonable detail
the amount and scope of such indemnification or insurance and that such
indemnification or insurance complies with the preceding sentence.
11.7 TERMS OF INSURANCE POLICIES.
Any policies carried in accordance with Sections 11.1 and 11.2 covering
an Aircraft, and any policies taken out in substitution or replacement for any
such policies, as applicable, (1) shall name the Lessor and each other Financing
Party as additional insureds (the "Additional Insureds"), as their interests may
appear, (2) shall name the Administrative Agent as sole loss payee to the extent
provided in clause (12) below, (3) may provide for self-insurance to the extent
permitted in Section 11.4, (4) shall provide that if the insurers cancel such
insurance for any reason whatsoever or if any material change is made in the
insurance which adversely affects the interest of any Additional Insured, such
cancellation or change shall not be effective as to the Additional Insureds for
thirty (30) days after receipt by (but, in the case of any war risk and allied
perils coverage, and failure to pay premium seven (7) days and ten (10) days,
respectively, after sending to) the Additional Insureds of written notice by
such insurers of such cancellation or change, provided, however, that if any
notice period specified above is not obtainable, such policies shall provide for
as long a period of prior notice as shall then be obtainable, (5) shall provide
that in respect of the Additional Insureds' interest in such policies the
insurance shall not be invalidated by any action or inaction of Lessee (or any
sublessee) and shall insure the respective interests of the Additional Insureds
regardless of any breach or violation of any warranty, declaration or condition
contained in such policies by Lessee (or any sublessee), (6) shall be primary
without any right of contribution from any other insurance which is carried by
any Additional Insured, (7) shall expressly provide that all of the provisions
thereof, except the limits of liability, shall operate in the same manner as if
a separate policy covered each insured, (8) shall waive any right of the
insurers of subrogation or to set-off or counterclaim or any other deduction,
whether by attachment or otherwise, in respect of any liability of any
Additional Insured, (9) shall provide that losses (other than for total loss of
the Aircraft) shall be adjusted with Lessee (or, if a Lease Event of Default or
Significant Default shall have occurred and be continuing, with the
Administrative Agent), (10) shall provide that the Additional Insureds are not
liable for any insurance premiums, (11) shall be effective with respect to both
domestic and international operations, (12) shall provide that (i) except as
specified in subclause (ii) of this clause (12), in the event of a loss
involving proceeds in excess of $2,000,000, all proceeds in respect of such loss
shall be payable to the Administrative Agent to be held by the Administrative
Agent (whether such payment is made to Lessee (or any sublessee)
21
or any third party) and applied in accordance with the provisions of Section
10.5 hereof, it being understood and agreed that in the case of any proceeds
payable to the Administrative Agent other than in respect of an Event of Loss of
the Aircraft, the Administrative Agent shall, upon receipt of evidence
reasonably satisfactory to it that the damage giving rise to such payment shall
have been repaired or that such payment shall then be required to pay for
repairs then being made or the replacement of property, apply the amount of such
proceeds in accordance with the provisions of Section 10.6, and (ii)
notwithstanding any language to the contrary contained herein, if a Significant
Default or Lease Event of Default shall have occurred and be continuing and the
insurers have been notified thereof by the Administrative Agent, all proceeds of
loss shall be payable to the Administrative Agent and (13) if war risk coverage
is maintained, shall contain a 50/50 clause per AVS 103.
SECTION 12. INSPECTION.
During the Lease Term with respect to any Aircraft, Lessee shall
furnish to Lessor and any Participant such information as Lessee possesses or is
available to it concerning the location, condition, use, and operation of such
Aircraft as Lessor or such Participant reasonably requests. Lessee shall permit,
and use reasonable efforts to cause each sublessee to permit, any person
designated in writing by Lessor, at Lessor's expense (except during the
occurrence and continuation of a Lease Event of Default or a Significant
Default, in which case at Lessee's cost and expense), to visit and inspect (at
any reasonable time upon reasonable notice, provided that such inspection shall
not unreasonably interfere in any respect with Lessee's operation or maintenance
of any Aircraft and provided further that, unless a Lease Event of Default or a
Significant Default is continuing, Lessor shall be limited to one such
inspection during any period of twelve (12) consecutive months) each Aircraft
and the records maintained in connection therewith and except, at Lessor's
expense (except during the occurrence and continuation of a Lease Event of
Default or a Significant Default, in which case at Lessee's cost and expense),
to make copies of such records as Lessor may reasonably designate. Neither
Lessor nor any Participant shall have any duty to make any such inspection or
incur any liability or obligation by reason of not making any such inspection.
Upon written request from Lessor or the Administrative Agent, Lessee shall
provide Lessor or the Administrative Agent, as the case may be, with the
anticipated dates of any scheduled maintenance visit involving any Aircraft
within the four-month period following such request.
SECTION 13. EVENTS OF DEFAULT.
The term "Lease Event of Default", wherever used herein, shall mean any
of the following events under this Lease, whatever the reason for such Lease
Event of Default and whether it shall be voluntary or involuntary, or come about
or be effected by operation of law, or be pursuant to or in compliance with any
judgment, decree or order of any court or any order, rule or regulation or any
administrative or governmental body:
(a) Payment. Lessee shall fail to make (i) any payment of Basic
Rent within three (3) Business Days after the same is due and payable or (ii)
any payment of Supplemental Rent within ten (10) days after receipt of written
notice to Lessee that the same is due and payable; or
22
(b) Certain Covenants. Lessee shall fail to observe or perform any
of the covenants or agreements of Lessee set forth in Sections 6, 10.2(ii), 11,
21, 22 or 23 hereof; or
(c) Other Covenants. Lessee shall fail to perform or observe any
other covenant, condition, or agreement to be performed or observed by it under
this Lease, or in any agreement or certificate executed and delivered by Lessee
to any Financing Party in connection with the transactions evidenced by the
Operative Documents, and such failure shall continue unremedied for 30 days
after written notice to Lessee specifying such failure and demanding the same to
be remedied; provided, however, that if Lessee shall have undertaken to cure any
such failure and, notwithstanding the reasonable diligence of Lessee in
attempting to cure such failure, such failure is not cured within said 30 days
period but is curable with future due diligence, there shall exist no Lease
Event of Default under this Section 13 for such further time, not to exceed 30
days, as may reasonably be required to effect such cure, so long as Lessee is
proceeding with due diligence to cure such failure; or
(d) Bankruptcy; Insolvency. An Insolvency Event with respect to
Lessee shall occur; or
(e) Misrepresentation. Any representation, warranty, statement or
certification made by Lessee under this Lease or in any other Operative Document
to which Lessee is a party or in any document or certificate executed and
delivered by Lessee to any Financing Party in connection herewith or pursuant
hereto shall prove to be untrue or incorrect in any material respect when made,
or shall be breached in any material respect and, in each case, shall remain
material at the time of discovery; or
(f) Cross Default. An "Event of Default" (as therein defined)
under the Credit Agreement shall have occurred and be continuing.
SECTION 14. REMEDIES.
14.1 REMEDIES.
(a) Remedial Options. Upon and after the occurrence and during the
continuance of any Lease Event of Default, Lessor may, at its option, at any
time thereafter, exercise one or more of the following remedies, as Lessor in
its sole discretion shall lawfully elect (and in any event, upon the occurrence
of an Insolvency Event, clause (i) below shall apply without demand by Lessor):
(i) demand that Lessee forthwith pay as liquidated damages, for loss of a
bargain and not as a penalty, an amount equal to the aggregate Lease Balance for
all the Aircraft then subject to this Lease and leased by it together with all
Rent and other amounts due and payable by it for all periods up to and including
the Payment Date following the date on which such Lease Event of Default
occurred and upon receipt of such payment thereof, Lessor shall promptly
transfer "as is," "where is," all of its right, title and interest in and to
such Aircraft to Lessee free of Certificate Trustee Liens; (ii) demand that
Lessee pay, and Lessee shall thereafter promptly pay, all amounts due for
failure to maintain and/or return the Aircraft as provided herein and cause
Lessee to assign to Lessor Lessee's rights under any warranty in force for the
Aircraft; (iii) proceed by appropriate court action, either at law or in equity,
to enforce the performance by
23
Lessee of the applicable covenants, agreements, or other obligations of the
Operative Documents or to recover damages for breach hereof; (iv) by notice in
writing terminate this Lease, whereupon all rights of the Lessee to use of the
Aircraft shall absolutely cease and terminate, and Lessee shall forthwith
deliver the Aircraft to Lessor or its designees in accordance with Section 6;
(v) lawfully enter the premises, with or without legal process, where any
Aircraft is believed to be and take possession thereof; (vi) sell or otherwise
dispose of any Aircraft in accordance with the Uniform Commercial Code of New
York at private or public sale, in bulk or in parcels, with or without notice,
and without having such Aircraft present at the place of sale; (vii) lease or
keep idle all or part of any Aircraft; and (viii) collect from the Lessee all
costs, charges and expenses, including reasonable legal fees and disbursements,
incurred by Lessor and any other Financing Party by reason of the occurrence of
any Lease Event of Default or the exercise of Lessor's remedies with respect
thereto. In the event that Lessor sells the Aircraft pursuant to this section
and receives net proceeds therefrom in excess of all amounts due hereunder and
under the Operative Documents, Lessee shall be entitled to its respective
valuable interest in such excess.
(b) Cumulative Remedies. The foregoing remedies are cumulative,
and any or all thereof may be exercised in lieu of or in addition to each other
or any remedies at law, in equity, or under statute.
(c) Application of Proceeds from Aircraft. Lessor shall have the
right to receive for application any proceeds of sale, lease or other
disposition of any Aircraft, if any, and shall have the right to apply same in
the following order of priorities: (i) to pay all of any Financing Party's
costs, charges and expenses incurred in enforcing its respective rights
hereunder or in taking, removing, holding, repairing, selling, leasing or
otherwise disposing of the Aircraft; then, (ii) to the extent not previously
paid by Lessee, to pay all sums due and owing or accrued from Lessee pursuant to
the Operative Documents; then (iii) any remaining balance shall be paid to
Lessee.
(d) Limited Effect of Waiver. Waiver of any Lease Event of Default
shall not be a waiver of any other or subsequent Lease Event of Default.
Lessor's effecting compliance in accordance with Section 16 hereof shall not
constitute a waiver of a Lease Event of Default. The failure or delay of Lessor
in exercising any rights granted it hereunder upon any occurrence of any of the
contingencies set forth herein shall not constitute a waiver of any such right
upon the continuation or recurrence of any such contingencies or similar
contingencies and any single or partial exercise of any particular right by
Lessor shall not exhaust the same or constitute a waiver of any other right
provided for in this Lease.
(e) Obligation for Supplemental Rent. In addition, Lessee shall be
liable in accordance with the provisions of Section 3.3 hereof for any and all
unpaid Supplemental Rent due hereunder before or during the exercise of any of
the foregoing remedies, and for reasonable legal fees and other costs and
expenses incurred by any Financing Party by reason of the occurrence of any
Lease Event of Default or the exercise of Lessor's remedies with respect
thereto, including without limitation the repayment in full of any costs and
expenses necessary to be expended in repairing any Aircraft in order to cause it
to be in compliance with all maintenance standards imposed by this Lease and all
Applicable Laws and Regulations and all other costs and expenses, including
without limitation reasonable legal fees, involved in any
24
appearance by any Financing Party in any bankruptcy or insolvency proceeding
with respect to Lessee.
SECTION 15. FURTHER ASSURANCES; EXPENSES.
15.1 FURTHER ASSURANCES.
Lessee will duly execute and deliver to the Lessor and the
Administrative Agent such further documents and assurances and take such further
action as may be required by Applicable Laws and Regulations in order to
effectively establish and protect the rights and remedies created in favor of
such parties hereunder and under the Operative Documents, including without
limitation the execution and delivery of supplements or amendments hereto and to
the Operative Documents in recordable form and such filings as are required or
desirable to Lessor or the Administrative Agent to maintain the right, title and
interest of Lessor in and to the Aircraft and the remainder of the Trust Estate
and to maintain the validity and perfection of the Lien of the Security
Agreement on the Collateral, or as Lessor or the Administrative Agent may from
time to time deem reasonably advisable; provided, that in connection with the
foregoing Lessee shall also take such further action as is reasonably requested
by Lessor or the Administrative Agent.
15.2 EXPENSES.
Lessee will pay all reasonable out of pocket costs, charges and
expenses (including without limitation reasonable attorneys' fees and expenses)
incident to any filing, refiling, recording and rerecording or depositing and
redepositing of any instruments or incident to the taking of action in
accordance with Section 15.1.
SECTION 16. LESSOR'S RIGHT TO PERFORM.
If Lessee fails to make any payment required to be made by it hereunder
or fails to perform or comply with any of its other agreements contained herein
which requires the payment of money, Lessor may itself make such payment or
perform or comply with such agreement which requires the payment of money, after
giving prior written notice thereof to Lessee, but Lessor shall not be obligated
hereunder to do so, and the amount of such payment, together with interest
thereon at the Overdue Rate, to the extent permitted by Applicable Laws and
Regulations, shall be deemed to be Supplemental Rent, payable by Lessee to
Lessor within 30 days after written demand.
SECTION 17. ASSIGNMENT BY LESSOR.
Lessee and Lessor hereby confirm that concurrently with the execution
and delivery of this Lease, Lessor has executed and delivered, to the
Administrative Agent, the Security Agreement, which is intended to assign as
collateral security and xxxxx x Xxxx in favor of the Administrative Agent in, to
and under (among other things) this Lease and the Rent payable hereunder
(excluding Excluded Amounts), all as more explicitly set forth in the Security
Agreement. Lessor agrees that it shall not otherwise assign or convey its right,
title and interest in and to this Lease and the Rent payable hereunder or any
other part of the Collateral, except (a)
25
as expressly permitted by and subject to the provisions of the Participation
Agreement, the Trust Agreement and the Security Agreement or (b) following the
discharge of the Lien of the Security Agreement in accordance with its terms.
Lessee hereby consents to such assignment and to the creation of such
Lien and consents to the terms and provisions thereof. Lessee (x) acknowledges
that the Security Agreement provides for the exercise by the Administrative
Agent of all rights of Lessor hereunder to give any consents, approvals,
waivers, notices or the like, to make any elections, demands or the like
(excluding with regard to the Excluded Amounts), (y) acknowledges receipt of an
executed counterpart of the Security Agreement as in effect on the date hereof
and consents to all of the provisions thereof and (z) agrees that, to the extent
provided in the Security Agreement, the Administrative Agent shall have all the
rights of Lessor hereunder (excluding such rights relating to any Excluded
Amounts) as if the Administrative Agent had originally been named as Lessor
herein, to the extent provided in the Security Agreement. Notwithstanding any
provision of this Lease or any other Operative Document but without prejudice to
Lessor's rights expressly provided for in the Security Agreement, so long as
Lessor's interest in this Lease and the Rent payable hereunder (excluding the
Excluded Amounts) is subject to the Lien of the Security Agreement, Lessee shall
make all payments of Rent (excluding Excluded Amounts) to the Administrative
Agent to such account as the Administrative Agent may specify to the Lessee from
time to time for distribution in accordance with the terms of the Operative
Documents, and the obligation of Lessee to make all such payments shall not be
subject to any defense, counterclaim, setoff or other right or claim of any kind
which Lessee may be able to assert against Lessor, or any other Financing Party
in any action regarding this Lease or otherwise.
SECTION 18. NET LEASE, ETC.
This Lease is a net lease and Lessee's respective obligation to pay all
Rent payable by it hereunder shall be absolute, unconditional and irrevocable
and shall not be affected by any circumstance of any character including without
limitation (a) any set-off, abatement, counterclaim, suspension, recoupment,
reduction, rescission, defense or other right that Lessee may have against
Lessor or any other Person for any reason whatsoever, (b) any defect in title,
merchantability, condition, design, compliance with specifications, operation or
fitness for use of all or any part of any Aircraft, or any interruption or
cessation in or prohibition of the use or possession of any Aircraft for any
reason whatsoever, (c) any damage to, or removal, abandonment, requisition,
taking, condemnation, loss, theft or destruction of all or any part of any
Aircraft or any interference, interruption, restriction, curtailment or
cessation in the use or possession of any Aircraft by Lessee or any other Person
for any reason whatsoever or of whatever duration, (d) any insolvency,
bankruptcy, reorganization or similar proceeding by or against Lessee, Lessor or
any other Person, (e) the invalidity, illegality or unenforceability of this
Lease, any other Operative Document, or any other instrument referred to herein
or therein or any other infirmity herein or therein or any lack of right, power
or authority of Lessee to enter into this Lease or any other Operative Document
to which it is a party or to perform the obligations hereunder or thereunder or
consummate the transactions contemplated hereby or thereby or any doctrine of
force majeure, impossibility, frustration or failure of consideration, or (f)
any other circumstance or happening whatsoever, foreseeable or unforeseeable,
whether or not similar to any of the foregoing. To the extent permitted by
Applicable Laws and
26
Regulations, Lessee hereby waives any and all rights which it may now have or
which at any time thereafter may be conferred upon it, by law or otherwise, to
terminate, cancel, quit or surrender this Lease with respect to any Aircraft,
except in accordance with the express terms hereof. Each payment of Rent made by
Lessee hereunder shall be final and Lessee shall not seek or have any right to
recover all or any part of such payment from Lessor or any other Person for any
reason whatsoever. If for any reason whatsoever this Lease shall be terminated
by operation of law or otherwise except as expressly provided herein, Lessee
shall nonetheless pay an amount equal to each Rent payment at the time and in
the manner that such payment would become due and payable hereunder if this
Lease had not been terminated.
SECTION 19. NOTICES.
Unless otherwise specifically provided herein, all notices required or
permitted by the terms hereof shall be given in the manner provided in the
Participation Agreement.
SECTION 20. ASSIGNMENT, SUBLEASE OR TRANSFER.
EXCEPT AS OTHERWISE PROVIDED HEREIN, LESSEE WILL NOT, WITHOUT THE PRIOR
WRITTEN CONSENT OF LESSOR AND THE ADMINISTRATIVE AGENT (WHICH SHALL BE GIVEN OR
WITHHELD IN SUCH PARTY'S REASONABLE DISCRETION), ASSIGN, SUBLEASE OR OTHERWISE
TRANSFER ITS RIGHTS OR OBLIGATIONS WITH RESPECT TO ANY AIRCRAFT, HEREUNDER OR
UNDER ANY OF THE OTHER OPERATIVE DOCUMENTS EXCEPT AS EXPRESSLY PERMITTED BY THE
TERMS OF THIS LEASE, AND ANY ATTEMPTED ASSIGNMENT, SUBLEASE OR OTHER TRANSFER BY
LESSEE WITHOUT SUCH CONSENT SHALL BE NULL AND VOID.
SECTION 21. EARLY TERMINATION OPTIONS; OBLIGATION TO PURCHASE; SUBSTITUTION.
21.1 EARLY TERMINATION OPTIONS.
(a) Without limitation of Lessee's purchase obligation pursuant to
Section 21.2, provided no Lease Default under Section 13(d) hereof or Lease
Event of Default shall have occurred and be continuing, Lessee may on any
Payment Date after the first anniversary of the Closing Date (or such earlier
Payment Date if an Insolvency Event (as such term is defined in the LAPA) occurs
with respect to the CP Lender or if the Commercial Paper Notes are not rated at
least A-1 by S&P and P-1 by Moody's) terminate the Lease Term with respect to
all or any Aircraft upon providing written notice of the date of such
termination (the "Voluntary Termination Date") to Lessor at least thirty (30)
days (but no more than 45 days) prior to the Voluntary Termination Date. Lessee
may exercise such early termination option (the "Voluntary Termination Option")
to the extent on the Voluntary Termination Date designated for such sale, the
Lessee pays to Lessor the Purchase Amount for such Aircraft (in good,
immediately available funds). Upon receipt of all funds then due and owing to
Lessor hereunder, Lessor shall transfer all of its right, title and interest in
and to such Aircraft to Lessee on an "as-is," "where-is" and "with all faults"
basis free of Certificate Trustee Liens and deliver a xxxx of sale and all other
27
documentation reasonably necessary to transfer all of Lessor's right, title and
interest in and to such Aircraft and shall cooperate with the Lessee in having
the Administrative Agent release the Lien of the Security Documents with respect
to such Aircraft and take such further action as reasonably requested by Lessee
and at Lessee's sole cost and expense to effect such transfer, including the
transfer of any manufacturer's and maintenance provider's warranties covering
such Aircraft.
(b) Provided no Lease Default under Section 13(d) hereof or Lease
Event of Default shall have occurred and be continuing, the Lessee may, upon
providing Lessor with thirty (30) days (but no more than 45 days) irrevocable
prior written notice, on any Payment Date (the "Early Sale Option Date"),
terminate the Lease Term with respect to all or any Aircraft and sell such
Aircraft on behalf of Lessor for cash to a purchaser or purchasers on an
"as-is", "where-is" and "with all faults" basis, without recourse to or
representation or warranty by Lessor, except for a warranty against Certificate
Trustee Liens. Lessee shall within five (5) Business Days of the Early Sale
Option Date of any Aircraft certify to Lessor in writing the amount and terms of
such sale and the name and address of the party or parties acquiring such
Aircraft. Any sale of any Aircraft pursuant to this Section 21.1(b) shall be
completed on the Early Sale Option Date for such Aircraft and if such sale is
not completed on such date, Lessee shall be deemed to have elected the Voluntary
Termination Option with respect to such Aircraft for such date and comply with
the provisions of Section 21.1(a) hereof as if such option had been elected.
Lessee shall bear its own expense and pay the reasonable expenses of Lessor and
each Financing Party in connection with any such sale process pursuant to this
Section 21.1(b). None of the foregoing costs or expenses shall be deducted from
the Sale Proceeds or serve to reduce the purchase price to be paid for any
Aircraft. On the Early Sale Option Date with respect to any Aircraft, the Lessor
shall, at the Lessee's expense, and subject to receipt by the Lessor and each
other Financing Party of all amounts due and owing to it by the Lessee hereunder
and under the other Operative Documents, convey to the Lessee or its designee
all right, title and interest of Lessor in and to such Aircraft, "as-is",
"where-is", and "with all faults", without recourse to or representation or
warranty by Lessor, except for a warranty against Certificate Trustee Liens, and
shall execute and deliver to Lessee or its designee bills of sale and such other
appropriate instruments of transfer reasonably requested by Lessee to evidence
such conveyance and shall cooperate with the Lessee in having the Administrative
Agent release the Lien of the Security Documents with respect to such Aircraft
and take such further action as reasonably requested by Lessee and at Lessee's
sole cost and expense to effect such transfer, including the transfer of any
manufacturer's and maintenance provider's warranties covering such Aircraft.
Lessee may make any other representation or warranty to the buyer at Lessee's
own risk. All sale proceeds shall be paid to Lessor. As a condition to Lessee's
rights hereunder, Lessee shall obtain all necessary governmental consents and
approvals and make all governmental filings required by Lessee or Lessor in
connection with such sale. No Financing Party shall have any responsibility for
procuring any purchaser.
On the Early Sale Option Date of any Aircraft, Lessee shall pay to
Lessor all Rent then due together with all other amounts due and payable by
Lessee to Lessor, any Financing Party or any Indemnitee under the Operative
Documents. Lessor shall retain from the aggregate net Sale Proceeds with respect
to any Aircraft an amount equal to the aggregate outstanding Lease Balance for
such Aircraft as of such Early Sale Option Date (as determined after the payment
of
28
all Rent due on such date). If the net Sale Proceeds with respect to any
Aircraft actually and irrevocably received by Lessor exceed the Lease Balance
for such Aircraft as of the relevant Expiration Date plus any unpaid Rent due
and owing on such date, Lessor shall pay to the Lessee the portion of such net
Sale Proceeds in excess thereof. If the net Sale Proceeds with respect to any
Aircraft are less than the aggregate outstanding Lease Balance for such
Aircraft, the Lessee shall pay or shall cause to be paid to Lessor, as
Supplemental Rent, on the Early Sale Option Date, in addition to such net Sale
Proceeds, an amount equal to the amount by which the Lease Balance for such
Aircraft exceeds such net Sale Proceeds actually and irrevocably received by
Lessor. The obligation of Lessee to pay the amounts determined pursuant to this
Section 21.1(b) shall be recourse obligations of Lessee.
21.2 REQUIRED PURCHASE.
Provided that Lessor has not exercised any other remedy inconsistent
therewith, Lessee shall be obligated to purchase the Aircraft then subject to
this Lease for the Purchase Amount (a) automatically and without notice upon the
occurrence and during the continuation of any Lease Event of Default arising as
a result of an Insolvency Event and (b) immediately upon written demand of
Lessor upon the occurrence and during the continuation of any other Lease Event
of Default. Upon payment to the Lessor of the Purchase Amount, Lessor shall
transfer its right, title and interest in such Aircraft to the Lessee pursuant
to Section 23.2 hereof.
21.3 REPLACEMENT OF AIRCRAFT.
Lessee shall have the option, provided no Significant Default or Lease
Event of Default shall have occurred and be continuing, to replace an Aircraft
originally leased under this Lease upon providing written notice of the date of
such replacement (the "Replacement Date") to Lessor at least ninety (90) days
(but no more than 120 days) prior to the Replacement Date. On the Replacement
Date, Lessee shall convey or cause to be conveyed to Lessor, in accordance with
Sections 10.3 and 10.4 hereof, as if an Event of Loss had occurred to the
Aircraft being replaced, a Replacement Airframe and replacement engines, free
and clear of all Liens (other than Permitted Liens). Upon full compliance by
Lessee with the terms of this Section 21.3, Lessor shall convey to Lessee, at
Lessee's cost and expense, all of Lessor's right, title and interest, "as is",
"where is" and "with all faults" without recourse or warranty, express or
implied, in and to such Aircraft being replaced, and such Aircraft shall no
longer be deemed an "Aircraft" hereunder, and shall cooperate with the Lessee in
having the Administrative Agent release the Lien of the Security Documents with
respect to such Aircraft and take such further action as reasonably requested by
Lessee and at Lessee's sole cost and expense to effect such transfer, including
the transfer of any manufacturer's and maintenance provider's warranties
covering such Aircraft. No replacement of an Aircraft pursuant to this Section
21.3 shall result in any reduction of Rent or Lessee's obligation to pay Rent
hereunder.
29
SECTION 22. END OF TERM OPTIONS; EARLY PURCHASE OPTIONS.
22.1 END OF TERM OPTIONS.
At least ninety (90) days before the scheduled expiration date of the
Lease Term of any Aircraft, Lessee shall, by delivery of written notice to
Lessor and the Administrative Agent, exercise one of the following options with
respect to such Aircraft:
(a) Renew this Lease with respect to such Aircraft for an
additional one-year Renewal Term (the "Renewal Option") on the terms and
conditions set forth herein and in the other Operative Documents; provided that
the Renewal Option shall not be available for any Aircraft at the end of the
second (2nd) Renewal Term of such Aircraft; or
(b) Purchase for cash in the amount of the Purchase Amount for
such Aircraft on the last day of the Lease Term for such Aircraft (the "Purchase
Option"); and if Lessee shall have elected the Purchase Option, with respect to
such Aircraft Lessor shall, upon the payment to Lessor of the Purchase Amount
for each such Aircraft, convey to Lessee or its designee all right, title and
interest of Lessor in and to such Aircraft, "as-is", "where-is", and "with all
faults", without recourse to or representation or warranty by Lessor, except for
a warranty against Certificate Trustee Liens, and shall execute and deliver to
Lessee or its designee bills of sale and such other appropriate instruments of
transfer reasonably requested by Lessee to evidence such conveyance and shall
cooperate with the Lessee in having the Administrative Agent release the Lien of
the Security Documents with respect to such Aircraft.
(c) Sell on behalf of Lessor for cash to a purchaser or purchasers
not in any way affiliated with Lessee or any of its Affiliates such Aircraft
then subject to this Lease (and not subject to an Event of Loss or subject to an
event or condition which with notice or lapse of time or both would become an
Event of Loss) on the last day of the Lease Term for such Aircraft and
simultaneously pay the Lessor all of the proceeds of such sale (the "Sale
Option"). Lessee's right to sell any Aircraft pursuant to the Sale Option shall
be conditioned upon and subject to (i) the fulfillment by Lessee of each of the
terms and conditions set forth in Section 23 and (ii) there not being at the
time of such sale any existing subleases relating to such Aircraft. Following
Lessee's election of the Sale Option, Lessee shall not remove any Additional
Parts.
22.2 ELECTION OF OPTIONS.
To the extent that the Renewal Option is available for any Aircraft,
and unless Lessee shall have affirmatively elected in accordance with the
provisions hereof the Purchase Option or the Sale Option with respect to any
Aircraft with the same Base Term Expiration Date, Lessee shall be deemed to have
elected the Renewal Option for such Aircraft. To the extent that the Renewal
Option is not available for any reason, unless Lessee shall have (a)
affirmatively elected the Sale Option within the time period provided for in
Section 22.1 and (b) satisfied each of the requirements in Section 23, Lessee
shall be deemed to have elected the Purchase Option with respect to such
Aircraft. In addition, the Sale Option shall automatically be revoked, if there
exists and there shall be continuing a Lease Default or a Lease Event of Default
at any time after the Sale Option is properly elected or Lessee fails to comply
with each of the terms and
30
conditions set forth in Section 22 and Lessor shall be entitled to exercise all
rights and remedies provided in Section 14. No Lessee may elect the Sale Option
if there exists and there shall be continuing on the date the election is made a
Lease Default or a Lease Event of Default.
22.3 RENEWAL OPTIONS.
The exercise of any Renewal Option with respect to any Aircraft by
Lessee shall be subject to satisfaction of the following conditions:
(i) on the Expiration Date then in effect for such
Aircraft and on the date Lessee gives notice of its exercise of the
Renewal Option, no Significant Default or Lease Event of Default shall
have occurred and be continuing; and
(ii) Lessee shall not have exercised the Sale Option or
the Purchase Option with respect to such Aircraft. Lessee's exercise of
a Renewal Option shall be deemed to be a representation by Lessee that
on both the applicable Expiration Date and the date Lessee gives notice
of its exercise of the Renewal Option, no Significant Default or Lease
Event of Default shall have occurred and be continuing.
SECTION 23. SALE OPTION.
23.1 SALE OPTION PROCEDURES.
If Lessee elects the Sale Option with respect to any Aircraft, Lessee
shall use its best commercial efforts as nonexclusive agent for Lessor for the
remainder of the Lease Term of such Aircraft to obtain the highest all cash
purchase price for the purchase of such Aircraft, and in the event Lessee
receives any bid, Lessee shall within five (5) Business Days after receipt
thereof, and at least twenty (20) Business Days prior to the applicable
Expiration Date, certify to Lessor in writing the amount and terms of such bid,
the name and address of the party or parties (who shall not be Lessee or any
Affiliate of Lessee or any Person with whom Lessee has an understanding or
arrangement regarding their future use, possession or ownership of the
Aircraft), but who may be any Financing Party, any Affiliate thereof, or any
Person contacted by any Financing Party (other than any Person referred to in
the foregoing parenthetical) submitting such bid. Any sale of any Aircraft
pursuant to the Sale Option shall be completed on the Expiration Date for such
Aircraft. Unless, pursuant to the terms of the bids submitted the Sale Proceeds
shall exceed the aggregate outstanding Lease Balance of the Aircraft being sold
pursuant to the Sale Option as of the Expiration Date, any Financing Party may
submit a bid to the Lessee not later than five (5) Business Days prior to the
applicable Expiration Date. Lessee shall bear its own expense and pay the
reasonable expenses of Lessor and each Financing Party in connection with any
such bidding and sale process pursuant to this Section 23.1 as well as all
reasonable costs and expenses incurred by any party (including a buyer or
potential buyer) to place any Aircraft in the condition required by Section 6.
None of the foregoing costs or expenses shall be deducted from the Sale Proceeds
or serve to reduce the purchase price to be paid for any Aircraft. After the
Lessee shall have certified to Lessor all bids received, if all such bids
received on an all cash basis are for less than the aggregate outstanding Lease
Balance for the Aircraft being sold pursuant to the Sale Option as of the
applicable Expiration Date, any
31
Financing Party, any Affiliate thereof, or any Person contacted by any Financing
Party may submit a further bid or bids to Lessee not later than five (5)
Business Days prior to such Expiration Date. On or before the applicable
Expiration Date, so long as no Lease Event of Default or Lease Default shall
have occurred and be continuing: (i) Lessor shall transfer all of Lessor's
right, title and interest in the Aircraft so sold, or cause such Aircraft to be
transferred, to the bidder, if any, which shall have submitted the highest bid
therefor at least twenty (20) Business Days (or in the case of a Financing
Party, any Affiliate thereof or Person contacted by a Financing Party, five (5)
Business Days) prior to such Expiration Date, in the same manner and in the same
condition and otherwise in accordance with all of the terms of this Lease; (ii)
subject to the prior or current payment by the Lessee of all amounts due under
clause (iii) of this sentence, Lessor shall comply with any conditions to
transfer set forth in Section 23.2 in order to transfer Lessor's right, title
and interest in and to the relevant Aircraft for cash to such bidder; and (iii)
Lessee shall simultaneously pay to Lessor all of the amounts required pursuant
to Section 23.3. All reasonable costs related to a sale and delivery pursuant to
this Section 23.1 including the cost of sales agents retained by Lessee, Lessor
or the Financing Parties, delivery of documents, filing and documentary transfer
fees, Taxes relating to or arising as a result of such transfer, legal costs,
costs of notices, any advertisement or other similar costs shall be borne
entirely by the Lessee, without regard to whether such costs were incurred by
Lessor, Lessee or any potentially qualified buyer, and shall in no event be paid
by the purchaser of any Aircraft or from any of the Sale Proceeds or as a
reduction to the purchase price. No Financing Party shall have any
responsibility for procuring any purchaser; provided, however, that Lessor and
its designees may, at the direction of the Administrative Agent, engage in
activities to market and sell the Aircraft at Lessee's cost and expense. Any
such activities undertaken by Lessor pursuant to this Section 23.1 shall not
reduce Lessee's obligations under this Section 23.1 to use its best commercial
efforts to sell the Aircraft in accordance with the requirements of this Section
23.
23.2 SALE.
Lessor shall, on the respective Expiration Date of any Aircraft at the
Lessee's expense, and subject to receipt by the Lessor and each other Financing
Party of all amounts due and owing to it by the Lessee hereunder and under the
other Operative Documents and the provisions of Section 23.4, convey to the
Lessee or its designee all right, title and interest of Lessor in and to such
Aircraft, "as-is", "where-is", and "with all faults", without recourse to or
representation or warranty by Lessor, except for a warranty against Certificate
Trustee Liens, and shall execute and deliver to Lessee or its designee bills of
sale and such other appropriate instruments of transfer reasonably requested by
Lessee to evidence such conveyance and shall cooperate with the Lessee in having
the Administrative Agent release the Lien of the Security Documents with respect
to such Aircraft. Lessee may make any other representation or warranty to the
buyer at Lessee's own risk. All sale proceeds shall be paid to Lessor. As a
condition to Lessee's rights hereunder, Lessee shall obtain all necessary
governmental consents and approvals and make all governmental filings required
by Lessee or Lessor in connection with any third party sale. Lessee shall
cooperate with the purchaser of any Aircraft in order to facilitate the
ownership and operation of such Aircraft by such purchaser after the date of the
sale or transfer, including providing all books, reports and records regarding
the maintenance, repair and ownership of such Aircraft. As a further condition
to Lessee's rights hereunder, Lessee shall pay the total cost for all Required
Alterations or Improvements commenced or required to be commenced prior to the
32
respective Expiration Date and for the repair and rebuilding of any Aircraft so
that on the date of sale such Aircraft is in the condition required by Section 6
hereof. All Required Alterations or Improvements and all such repairs and
rebuilding shall be completed prior to the date of Lessee's election of the Sale
Option. The obligations of Lessee under this Section 23.2 shall survive the
expiration or termination of this Lease. Unless Lessee shall have exercised or
been deemed to have exercised its Purchase Option with respect to any Aircraft,
Lessor shall at the Lessee's expense be entitled to perform such investigation,
including obtaining reports of appraisers as to the condition and state of
repair and maintenance of such Aircraft required by this Section 23.2 and as to
the compliance of such Aircraft with Applicable Laws and Regulations, as it
deems appropriate. Lessee, at its sole cost and expense, shall cause the repair
or other remediation of any discrepancies between the actual condition of any
Aircraft and the condition required by Section 6 hereof, such repair or
remediation to be completed not later than the Expiration Date of such Aircraft.
23.3 APPLICATION OF SALE PROCEEDS AND RECOURSE PAYMENTS IN
CONNECTION WITH THE SALE OPTION.
(a) On the Expiration Date of any Aircraft in connection with an
exercise of the Sale Option with respect to such Aircraft, Lessee shall pay to
Lessor all Rent then due together with all other amounts due and payable by
Lessee to Lessor, any Financing Party or any Indemnitee. Lessor shall retain
from the aggregate net Sale Proceeds with respect to any Aircraft an amount
equal to the aggregate outstanding Lease Balance for such Aircraft as of such
Expiration Date (as determined after the payment of all Rent due on such date).
If the net Sale Proceeds with respect to any Aircraft actually and irrevocably
received by Lessor exceed the Lease Balance for such Aircraft as of the relevant
Expiration Date plus any unpaid Rent due and owing on such date, Lessor shall
pay to the Lessee the portion of such net Sale Proceeds in excess thereof. If
the net Sale Proceeds with respect to any Aircraft are less than the aggregate
outstanding Lease Balance for such Aircraft, the Lessee shall pay or shall cause
to be paid to Lessor, as Supplemental Rent, on the Expiration Date, in addition
to such net Sale Proceeds, an amount equal to the lesser of (x) the Sale
Recourse Amount for the Aircraft so sold and (y) the amount by which the Lease
Balance for such Aircraft exceeds such net Sale Proceeds actually and
irrevocably received by Lessor. The provisions of this Section 23.3(a) shall not
apply with respect to the early termination options under Section 21.1.
(b) The obligation of Lessee to pay the amounts determined
pursuant to Section 23.3(a) shall be recourse obligations of Lessee, and such
payments by Lessee shall not limit any other obligation of Lessee under the
Operative Documents, including pursuant to Section 7 of the Participation
Agreement.
SECTION 24. LIMITATION OF LESSOR'S LIABILITY.
It is expressly agreed and understood that all representations,
warranties and undertakings of Lessor hereunder (except as expressly provided
herein) shall be binding upon Lessor only in its capacity as Certificate Trustee
under the Trust Agreement and in no case shall the Trust Company be personally
liable for or on account of, any statements, representations, warranties,
covenants or obligations stated to be those of Lessor hereunder, except that the
Trust Company
33
(or any successor Certificate Trustee) shall be personally liable for its gross
negligence, fraud or willful misconduct or the failure to use ordinary care in
the handling of funds and for its breach of its covenants, representations and
warranties contained herein to the extent covenanted or made in its individual
capacity.
SECTION 25. MISCELLANEOUS.
25.1 GOVERNING LAW; WAIVER OF JURY TRIAL; SEVERABILITY.
THIS LEASE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
INTERNAL LAWS AND DECISIONS OF THE STATE OF NEW YORK; WITHOUT REGARD TO THE
CONFLICTS OF LAWS PRINCIPLES OF SUCH STATE (EXCEPT TITLE 14 OF ARTICLE 5 OF THE
NEW YORK GENERAL OBLIGATIONS LAW) PROVIDED, THAT THE PARTIES SHALL BE ENTITLED
TO ALL RIGHTS CONFERRED BY ANY APPLICABLE FEDERAL LAW. EACH OF THE LESSOR AND
THE LESSEE, (I) HEREBY IRREVOCABLY SUBMITS FOR ITSELF AND ITS PROPERTY TO THE
NON-EXCLUSIVE JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK IN NEW YORK
COUNTY, AND TO THE NON-EXCLUSIVE JURISDICTION OF THE UNITED STATES DISTRICT
COURT FOR THE SOUTHERN DISTRICT OF NEW YORK, FOR THE PURPOSES OF ANY SUIT,
ACTION OR OTHER PROCEEDING ARISING OUT OF THIS AGREEMENT OR ANY OTHER OPERATIVE
DOCUMENT TO WHICH IT IS A PARTY, THE SUBJECT MATTER OF ANY THEREOF OR ANY OF THE
TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY BROUGHT BY ANY PARTY OR PARTIES
THERETO, OR THEIR SUCCESSORS OR ASSIGNS, (II) HEREBY WAIVES, AND AGREES NOT TO
ASSERT, BY WAY OF MOTION, AS A DEFENSE, OR OTHERWISE, IN ANY SUCH SUIT, ACTION
OR PROCEEDING, TO THE EXTENT PERMITTED BY APPLICABLE LAW, THAT THE SUIT, ACTION
OR PROCEEDING IS BROUGHT IN AN INCONVENIENT FORUM, THAT THE VENUE OF THE SUIT,
ACTION OR PROCEEDING IS IMPROPER, OR THAT THIS AGREEMENT OR ANY OTHER OPERATIVE
DOCUMENT TO WHICH IT IS A PARTY OR THE SUBJECT MATTER OF ANY THEREOF OR ANY OF
THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY MAY NOT BE ENFORCED IN OR BY
SUCH COURTS AND (III) HEREBY WAIVES ITS RIGHT TO A JURY TRIAL. EACH OF THE
LESSOR AND THE LESSEE CONSENTS TO THE SERVICE OF ANY AND ALL PROCESS IN ANY SUCH
PROCEEDING BY THE MAILING OF COPIES OF SUCH PROCESS TO SUCH PARTY AT ITS ADDRESS
SPECIFIED IN THE PARTICIPATION AGREEMENT.
LESSEE AND LESSOR HEREBY IRREVOCABLY WAIVE, TO THE FULLEST EXTENT THAT
THEY MAY EFFECTIVELY DO SO THE RIGHT TO A TRIAL BY JURY.
Whenever possible, each provision of this Lease shall be interpreted in
such manner as to be effective and valid under applicable law, but if any
provision of this Lease shall be prohibited by or invalid under the laws of any
jurisdiction, such provision, as to such jurisdiction, shall be, to the extent
permitted by law, ineffective to the extent of such prohibition or invalidity,
without invalidating the remainder of such provision or the remaining provisions
of this Lease in any other jurisdiction.
34
25.2 EXECUTION IN COUNTERPARTS.
This Lease may be executed in any number of counterparts, each executed
counterpart constituting an original and in each case such counterparts shall
constitute but one and the same instrument; provided, that to the extent this
Lease constitutes chattel paper (as such term is defined in the Uniform
Commercial Code) no Lien on this Lease may be created through the transfer or
possession of any counterpart hereof other than the counterpart bearing the
receipt therefor executed by the Administrative Agent on the signature page
hereof, which counterpart shall constitute the only "original" hereof for
purposes of the Uniform Commercial Code.
25.3 AMENDMENTS AND WAIVERS.
No term, covenant, agreement or condition of this Lease may be
terminated, amended or compliance therewith waived (either generally or in a
particular instance, retroactively or prospectively) except by an instrument or
instruments in writing executed by each party hereto and except as may be
permitted by the terms of the other Operative Documents.
25.4 BUSINESS DAYS.
If any payment is to be made hereunder or any action is to be taken
hereunder on any date that is not a Business Day, such payment or action
otherwise required to be made or taken on such date shall be made or taken on
the immediately succeeding Business Day with the same force and effect as if
made or taken on such scheduled date and as to any payment; provided, any such
payment is made on such succeeding Business Day; provided, further
notwithstanding the foregoing, (a) where the next succeeding Business Day falls
in the next succeeding calendar month such payment shall be made on the next
preceding Business Day, (b) no Payment Date shall extend beyond the Maturity
Date and (c) where a rent period (for purposes of calculation of installments of
Basic Rent) begins on a day for which there is no numerically corresponding day
in the calendar month in which such rent period is to end, such rent period
shall end on the last Business Day of such calendar month.
25.5 DIRECTLY OR INDIRECTLY.
Where any provision in this Lease refers to action to be taken by any
Person, or which such Person is prohibited from taking, such provision shall be
applicable whether such action is taken directly or indirectly by such Person.
25.6 UNIFORM COMMERCIAL CODE.
The parties hereto intend that this Lease be construed as a "finance
lease" under Article 2-A of the New York Uniform Commercial Code.
Notwithstanding any other provision herein to the contrary, the parties hereto
agree that, to the extent permitted by law, Article 2-A-401 of the Uniform
Commercial Code of the State of New York shall not be applicable to this Lease
or the obligations of the parties hereunder.
35
25.7 TRUTH IN LEASING.
THE AIRCRAFT, AS EQUIPMENT, BECAME SUBJECT TO THE MAINTENANCE
REQUIREMENTS OF PART 91 OF THE FEDERAL AVIATION REGULATIONS ("FARS") UPON THE
REGISTRATION OF THE AIRCRAFT WITH THE FAA. LESSEE CERTIFIES THAT DURING THE 12
MONTHS (OR PORTION THEREOF DURING WHICH THE AIRCRAFT HAS BEEN SUBJECT TO U.S.
REGISTRATION) PRECEDING THE EXECUTION OF THIS LEASE, THE AIRCRAFT HAS BEEN
MAINTAINED AND INSPECTED UNDER PART 91 OF THE FARS. LESSEE CERTIFIES THAT THE
AIRCRAFT WILL BE MAINTAINED AND INSPECTED UNDER PART 91 OF THE FARS FOR
OPERATIONS TO BE CONDUCTED UNDER THE LEASE. UPON EXECUTION OF THIS LEASE, AND
DURING THE TERM HEREOF, THE LESSEE CERTIFIES THAT THE LESSEE SHALL BE
RESPONSIBLE FOR THE OPERATIONAL CONTROL OF THE AIRCRAFT UNDER THE LEASE. THE
LESSEE FURTHER CERTIFIES THAT IT UNDERSTANDS ITS RESPONSIBILITIES FOR COMPLIANCE
WITH APPLICABLE FARS. AN EXPLANATION OF FACTORS BEARING ON OPERATIONAL CONTROL
AND PERTINENT FARS CAN BE OBTAINED FROM THE NEAREST FEDERAL AVIATION FLIGHT
STANDARD DISTRICT OFFICE, GENERAL AVIATION DISTRICT OFFICE OR AIR CARRIER
DISTRICT OFFICE.
[The remainder of this page is intentionally left blank]
36
IN WITNESS WHEREOF, Lessor and Lessee have caused this Lease to be duly
executed and delivered by their respective officers as of the day and year first
above written.
LESSOR:
FIRST SECURITY BANK, NATIONAL
ASSOCIATION, not in its individual
capacity except as expressly provided
herein, but solely as Certificate Trustee
under Steelcase Trust No. 2000-1
By: /s/ Xxx X. Xxxxx
-------------------------------------
Name: Xxx X. Xxxxx
Title: Vice President
LESSEE:
STEELCASE INC.
By: /s/ Xxxxx Xxxxxxx-Xxxxxxx
-------------------------------------
Name: Xxxxx Xxxxxxx-Xxxxxxx
Title: Sr. VP - Finance and CFO
*Receipt of the original counterpart of the foregoing Lease is hereby
acknowledged on this 26th day of May, 2000.
FIRST SECURITY TRUST COMPANY OF NEVADA,
as Administrative Agent
By: /s/ Xxx X. Xxxxx
-------------------------------------
Name: Xxx X. Xxxxx
Title: Trust Officer
----------------
* This acknowledgment is executed in the original counterpart only.
Steelcase Trust No. 2000-1
EXHIBIT A
LEASE SUPPLEMENT AND ACCEPTANCE CERTIFICATE NO. __
(Steelcase Trust No. 2000-1)
LEASE SUPPLEMENT AND ACCEPTANCE CERTIFICATE NO. __ (Steelcase Trust No.
2000-1) dated as of _______________ ____, ______ (as amended, modified,
supplemented, restated and/or replaced from time to time, the "Lease
Supplement") between FIRST SECURITY BANK, NATIONAL ASSOCIATION, not in its
individual capacity except as expressly provided herein, but solely as
Certificate Trustee under Steelcase Trust No. 2000-1 (together with its
successors and assigns permitted hereunder, the "Lessor"), and Steelcase Inc., a
Michigan corporation (together with its successors and assigns permitted under
the Lease referred to below, the "Lessee");
W I T N E S S E T H:
Lessor and Lessee have heretofore entered into that certain Master
Aircraft Lease Agreement (Steelcase Trust No. 2000-1) dated as of May 26, 2000
(as amended, modified, supplemented, restated and/or replaced from time to time,
the "Lease"). The Lease provides for the execution and delivery of a Lease
Supplement substantially in the form hereof for the purpose of confirming the
acceptance and lease of the Aircraft under the Lease as and when delivered by
Lessor to Lessee in accordance with the terms thereof. Unless otherwise defined
herein, capitalized terms used herein shall have the meanings specified in or by
reference in, the Lease. For purposes of this Lease Supplement, "Aircraft" shall
refer to the Aircraft identified on Schedule 1 attached hereto.
NOW, THEREFORE, in consideration of the premises and other good and
sufficient consideration, Lessor and Lessee hereby agree as follows:
1. Lessee hereby acknowledges and confirms Section 5 of the
Lease, with respect to the Aircraft.
2. Lessor hereby confirms delivery and lease to Lessee, and
Lessee hereby confirms acceptance and lease from Lessor, under the Lease as
hereby supplemented, the Aircraft.
3. Lessee hereby represents and warrants that to the best of its
knowledge no Event of Loss has occurred with respect to the Aircraft set forth
on Schedule 1 hereto as of the date hereof.
4. The Equipment Cost of the Aircraft leased hereunder is set
forth in Schedule 1 herein.
5. The Base Term Commencement Date for the Aircraft is
___________, _____. The Base Term Expiration Date for the Aircraft is
___________ ___, _____. The Fixed Basic Rent for the Aircraft is set forth in
Schedule 2 attached hereto.
A-1
6. The Sale Recourse Amount, for the Aircraft subject to this
Lease Supplement is an amount equal to the Equipment Cost for such Aircraft
multiplied by ____% on the Base Term Expiration Date; ____%, on last day of the
first Renewal Term, if any; and ____% on the last day of the second Renewal
Term, if any.
7. The Delivery Date for the Aircraft subject to this Lease
Supplement is [THE DATE HEREOF] [__________________, 2000].
8. All of the terms and provisions of the Lease are hereby
incorporated by reference into this Lease Supplement and Lessee hereby confirms
its agreement, in accordance with the Lease as supplemented by this Lease
Supplement, to pay Rent to Lessor or such other Person, as appropriate, as
provided for in the Lease.
9. Any and all notices, requests, certificates and other
instruments executed and delivered after the execution and delivery of this
Lease Supplement may refer to the "Master Aircraft Lease Agreement, dated as of
May 26, 2000", the "Lease Agreement, dated as of May 26, 2000," or the "Lease,
dated as of May 26, 2000," or may identify the Lease in any other respect
without making specific reference to this Lease Supplement, but nevertheless all
such references shall be deemed to include this Lease Supplement, unless the
context shall otherwise require.
10. This Lease Supplement shall be construed in connection with
and as part of the Lease, and all terms, conditions and covenants contained in
the Lease (a) are hereby incorporated herein by reference as though restated in
their entirety and (b) shall be and remain in full force and effect.
11. This Lease Supplement may be executed in any number of
counterparts, each executed counterpart constituting an original but all
together one and the same instrument.
12. This Lease Supplement shall in all respects, including without
limitation all matters of construction, validity and performance, be governed by
and construed in accordance with the internal laws of the State of New York
without regard to conflict of laws principles of such state (except Title 14 of
Article 5 of the New York General Obligations Laws).
[The remainder of this page is intentionally left blank]
A-2
IN WITNESS WHEREOF, Lessor and Lessee have caused this Lease Supplement
No. ____ to be duly executed and delivered by their respective officers as of
the day and year first above written.
LESSOR:
FIRST SECURITY BANK, NATIONAL
ASSOCIATION, not in its individual
capacity except as expressly provided
herein, but solely as Certificate Trustee
under Steelcase Trust No. 2000-1
By: _____________________________________
Name: ___________________________________
Title: __________________________________
LESSEE:
STEELCASE INC.,
By: _____________________________________
Name: ___________________________________
Title: __________________________________
*Receipt of the original counterpart of the foregoing Lease Supplement
is hereby acknowledged on this _____ day of _____________________, ______.
FIRST SECURITY TRUST COMPANY OF NEVADA,
as Administrative Agent
By: _____________________________________
Name: ___________________________________
Title: __________________________________
---------------------
* This acknowledgment is executed in the original counterpart only.
A-3
Schedule 1 to
Lease Supplement No. ___
(Steelcase Trust No. 2000-1)
Description of the Aircraft/Equipment Cost
A-4
Schedule 2 to
Lease Supplement No. ___
(Steelcase Trust No. 2000-1)
Fixed Basic Rent Schedule
Schedule II-1
