Exhibit 4.
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LEASE AGREEMENT
(FEDERAL EXPRESS CORPORATION TRUST NO. N677FE)
Dated as of June 15, 1998
Amended and Restated as of August 1, 1998
between
STATE STREET BANK AND TRUST COMPANY OF CONNECTICUT,
NATIONAL ASSOCIATION,
Not in its Individual Capacity,
but Solely as Owner Trustee,
Lessor
and
FEDERAL EXPRESS CORPORATION,
Lessee
COVERING ONE AIRBUS A300F4-605R AIRCRAFT
SERIAL NO. 791, REGISTRATION NO. N677FE
CERTAIN OF THE RIGHT, TITLE AND INTEREST IN AND TO THIS LEASE
AGREEMENT OF STATE STREET BANK AND TRUST COMPANY OF CONNECTICUT, NATIONAL
ASSOCIATION, AS OWNER TRUSTEE, HAS BEEN ASSIGNED TO AND IS SUBJECT TO A LIEN
AND SECURITY INTEREST IN FAVOR OF FIRST SECURITY BANK, NATIONAL ASSOCIATION, AS
INDENTURE TRUSTEE UNDER THE TRUST INDENTURE AND SECURITY AGREEMENT (FEDERAL
EXPRESS CORPORATION TRUST NO. N677FE) DATED AS OF JUNE 15, 1998, AS AMENDED AND
RESTATED AS OF AUGUST 1, 1998 FOR THE BENEFIT OF THE HOLDERS OF THE
CERTIFICATES REFERRED TO IN SUCH TRUST INDENTURE AND SECURITY AGREEMENT. THIS
LEASE AGREEMENT HAS BEEN EXECUTED IN SEVERAL COUNTERPARTS. ONLY THE
CHATTEL-PAPER "ORIGINAL" COUNTERPART CONTAINS THE RECEIPT THEREFOR EXECUTED BY
FIRST SECURITY BANK, NATIONAL ASSOCIATION, AS INDENTURE TRUSTEE, ON THE
SIGNATURE PAGES THEREOF.
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TABLE OF CONTENTS
Page
Initial Recitals............................................................ 1
ARTICLE 1
DEFINITIONS
ARTICLE 2
ACCEPTANCE UNDER THE LEASE
Section 2.01. Sale and Lease of Aircraft; Term........................ 2
ARTICLE 3
RENT AND RENT ADJUSTMENT
Section 3.01. [Reserved].............................................. 2
Section 3.02. Basic Rent.............................................. 2
Section 3.03. Supplemental Rent....................................... 3
Section 3.04. Adjustments to Basic Rent, Stipulated Loss Value,
Termination Value and the EBO Price After the
Delivery Date...................................... 3
Section 3.05. Minimum Basic Rent...................................... 4
Section 3.06. Payment to Indenture Trustee............................ 5
Section 3.07. Costs and Expenses...................................... 5
ARTICLE 4
RENEWAL OPTIONS AND PURCHASE OPTIONS
Section 4.01. Renewal Options......................................... 5
Section 4.02. Purchase Options........................................ 6
Section 4.03. Appraisal Procedures.................................... 8
ARTICLE 5
REPRESENTATIONS AND WARRANTIES
Section 5.01. Disclaimer of Representations and Warranties............ 9
Section 5.02. No Modification of Other Warranties..................... 10
Section 5.03. Certain Agreements of the Lessee........................ 11
ARTICLE 6
LIENS
Section 6.01. Liens................................................... 11
ARTICLE 7
AIRCRAFT REGISTRATION, MAINTENANCE AND OPERATION
Section 7.01. Registration, Maintenance and Operation................. 12
Section 7.02. Possession and Permitted Transfer and Sublease.......... 14
Section 7.03. Insignia................................................ 19
ARTICLE 8
REPLACEMENT AND POOLING OF PARTS
Section 8.01. Replacement of Parts.................................... 20
Section 8.02. Pooling of Parts........................................ 21
ARTICLE 9
ALTERATIONS, MODIFICATIONS AND ADDITIONS
Section 9.01. Required Alterations and Modifications.................. 21
Section 9.02. Other Alterations and Modifications..................... 22
ARTICLE 10
VOLUNTARY TERMINATION
Section 10.01. Right of Termination Upon Obsolescence or Surplus...... 23
Section 10.02. Retention of Aircraft by the Lessor.................... 25
Section 10.03. Voluntary Termination as to Engines.................... 27
ARTICLE 11
LOSS, DESTRUCTION, REQUISITION
Section 11.01. Lessee's Election Rights............................... 27
Section 11.02. Payment of Stipulated Loss Value....................... 27
Section 11.03. Replacement of Airframe and Engines.................... 28
Section 11.04. Event of Loss with Respect to an Engine................ 32
Section 11.05. Application of Payments from the Government
or Others.......................................... 34
Section 11.06. Requisition of an Airframe and the Installed Engines
for Use by Government.............................. 35
Section 11.07. Requisition for Use by Government of an Engine
Not Installed on the Airframe...................... 36
Section 11.08. Application of Payments During Existence of Certain
Defaults........................................... 36
ARTICLE 12
RETURN OF AIRCRAFT
Section 12.01. Return of Aircraft..................................... 36
Section 12.02. Return of Engines...................................... 37
Section 12.03. Return of Manuals...................................... 37
Section 12.04. Condition of Aircraft.................................. 38
Section 12.05. Delayed Return of Aircraft............................. 39
Section 12.06. Storage................................................ 40
Section 12.07. Special Markings....................................... 40
Section 12.08. Lessor's Option to Purchase Parts...................... 40
ARTICLE 13
INSURANCE
Section 13.01. Comprehensive Airline Liability and Property Damage
Liability Insurance................................ 41
Section 13.02. Insurance Against Loss or Damage to Aircraft
and Engines........................................ 43
Section 13.03. Application of Insurance Proceeds...................... 45
Section 13.04. Reports................................................ 46
Section 13.05. Lessor's Insurance..................................... 47
Section 13.06. Self-Insurance......................................... 47
ARTICLE 14
INSPECTION
Section 14.01. Right of Inspection.................................... 47
Section 14.02. No Obligation to Inspect............................... 48
ARTICLE 15
ASSIGNMENT
Section 15.01. Lessee's Right to Assign............................... 48
Section 15.02. Citizenship............................................ 49
ARTICLE 16
EVENTS OF DEFAULT
Section 16.01. Events of Default...................................... 49
ARTICLE 17
REMEDIES
Section 17.01. Remedies Upon Lessee's Default......................... 51
Section 17.02. Cumulative Remedies.................................... 54
Section 17.03. Waiver................................................. 54
Section 17.04. Lessor's Right to Perform for Lessee................... 55
ARTICLE 18
COVENANT OF QUIET ENJOYMENT
Section 18.01. Quiet Enjoyment........................................ 55
ARTICLE 19
FURTHER ASSURANCES
Section 19.01. Further Assurances..................................... 55
ARTICLE 20
NET LEASE
Section 20.01. Nature of Lease........................................ 56
ARTICLE 21
SUCCESSOR LESSOR
Section 21.01. Successor Lessor....................................... 57
ARTICLE 22
SECURITY FOR LESSOR'S OBLIGATIONS
Section 22.01. Security for Lessor's Obligations to Holders........... 58
Section 22.02. [Reserved]............................................. 58
Section 22.03. Consent of Lessee to Assignment of Lease as Security... 58
ARTICLE 23
SECURITY FUNDS
Section 23.01. Investment of Security Funds........................... 59
ARTICLE 24
CONCERNING THE LESSOR
Section 24.01. Lessor's Entry Into Lease.............................. 60
ARTICLE 25
NOTICES
Section 25.01. Notices................................................ 61
ARTICLE 26
MISCELLANEOUS
Section 26.01. Section Headings and Captions.......................... 62
Section 26.02. References............................................. 62
Section 26.03. APPLICABLE LAW......................................... 62
Section 26.04. Severability........................................... 62
Section 26.05. No Oral Modification................................... 62
Section 26.06. Agreement as Chattel Paper............................. 62
Section 26.07. Counterparts........................................... 62
Section 26.08. Public Release of Information.......................... 63
ARTICLE 27
TRUE LEASE
Section 27.01. Intent of the Parties.................................. 63
Section 27.02. Section 1110 Compliance................................ 63
Section 27.03. Finance Lease.......................................... 63
Schedule I Definitions
Schedule II Basic Rent
Schedule III Stipulated Loss Values
Schedule IV Termination Values
Schedule V Purchase Option Schedule
Exhibit A Form of Lease Supplement
Exhibit B Form of Purchase Agreement Assignment, Consent and
Agreement and AVSA Consent and Agreement
Exhibit C Form of Engine Warranty Assignment and Engine Consent
LEASE AGREEMENT
(FEDERAL EXPRESS CORPORATION TRUST NO. N677FE)
LEASE AGREEMENT (FEDERAL EXPRESS CORPORATION TRUST NO. N677FE)
dated as of June 15, 1998, as amended and restated as of August 1, 1998 (this
"Lease") between STATE STREET BANK AND TRUST COMPANY OF CONNECTICUT, NATIONAL
ASSOCIATION, a national banking association, not in its individual capacity but
solely as Owner Trustee under the Trust Agreement (as defined in Article 1
below) (the "Lessor"), and FEDERAL EXPRESS CORPORATION, a Delaware corporation
(the "Lessee").
W I T N E S S E T H :
WHEREAS, all capitalized terms used herein shall have the
meanings assigned thereto as provided in Article 1 below;
WHEREAS, the Lessor and the Lessee have heretofore entered into
the Original Lease dated as of June 15, 1998;
WHEREAS, because the Original Lease was executed prior to
delivery of the Aircraft, the Original Lease was not filed with the Federal
Aviation Administration; and
WHEREAS, subject to the terms and conditions set forth in the
Participation Agreement (as hereinafter defined), the Lessee desires on the
Delivery Date (as hereinafter defined) to lease from the Lessor and the Lessor
is willing to lease to the Lessee the Aircraft (as hereinafter defined) in
accordance with the terms and conditions set forth in this Lease.
NOW, THEREFORE, in consideration of the mutual promises herein,
and other good and valuable consideration, the receipt and adequacy of which is
hereby acknowledged by the parties, the Lessor and the Lessee agree that the
Original Lease be and the same is hereby amended and restated in its entirety
as follows:
ARTICLE 1
DEFINITIONS
Unless the context otherwise requires, the capitalized terms
herein shall have the meanings given in Schedule I hereto, for all purposes of
this Lease and shall be equally applicable to both the singular and the plural
forms of the terms defined.
ARTICLE 2
ACCEPTANCE UNDER THE LEASE
Section 2.01. Sale and Lease of Aircraft; Term. The Lessor,
subject to satisfaction or waiver of the conditions set forth in this Lease and
in the Participation Agreement, hereby agrees to purchase the Aircraft from
AVSA on the Delivery Date and agrees immediately thereafter to lease the
Aircraft to the Lessee pursuant to this Lease, and the Lessee hereby agrees to
lease the Aircraft from the Lessor, such lease to be evidenced by the execution
by the Lessor and the Lessee of a Lease Supplement leasing the Aircraft
hereunder. Such lease shall last for the Term, at all times during which full
legal title to the Aircraft shall remain vested with the Lessor to the
exclusion of the Lessee, notwithstanding the possession and use thereof by the
Lessee or any other Person. The Lessee agrees that the Lessor will authorize
one or more employees of the Lessee, designated by the Lessee in writing, as
the authorized representative or representatives of the Lessor to accept
delivery of the Aircraft pursuant to the sale of the Aircraft described in the
Participation Agreement. The Lessee hereby agrees that in the event delivery
of the Aircraft shall be accepted by an employee or employees of the Lessee
pursuant to such authorization by the Lessor, such acceptance of delivery by
such employee or employees on behalf of the Lessor shall, without further act,
irrevocably constitute acceptance by the Lessee of the Aircraft for all
purposes of this Lease.
ARTICLE 3
RENT AND RENT ADJUSTMENT
Section 3.01. [Reserved].
Section 3.02. Basic Rent. The Lessee agrees to pay to the
Lessor in immediately available funds, on each Rent Payment Date, Basic Rent
for the Aircraft during the Basic Term, each payment being set forth on
Schedule II hereto opposite the applicable Rent Payment Date, subject to
increase or decrease as provided in Section 3.04 of this Lease. Each payment
of Basic Rent shall be made in arrears or in advance, all as stated in
ScheduleII hereto. Each payment of Basic Rent designated as advance rent shall
be allocated over the six-month period beginning on the Rent Payment Date on
which such advance rent payment is scheduled to be made, and each installment
of Basic Rent that is designated as payable in arrears shall be accrued over
the six-month period ending on and including the day immediately preceding the
Rent Payment Date on which such arrears payment is scheduled to be made, other
than the payment of Basic Rent made on the first Rent Payment Date, which shall
be allocated over the period from the Delivery Date to such first Rent Payment
Date and the payment of Basic Rent made on the final Rent Payment Date, which
shall be allocated over the period from the penultimate Rent Payment Date to
the final Rent Payment Date.
Section 3.03. Supplemental Rent. The Lessee agrees to pay or
cause to be paid to the Lessor, or to whomever shall be entitled to it, any and
all Supplemental Rent promptly as the same shall become due. If the Lessee
fails to pay any Supplemental Rent when due, the Lessor shall have all rights,
powers and remedies provided for in this Lease, or by law or equity or
otherwise in the case of nonpayment of Basic Rent. The Lessee will also pay to
the Person entitled thereto, on demand, as Supplemental Rent, to the extent
permitted by applicable law, an amount equal to interest at the Past Due Rate
on any part of any installment of Basic Rent not paid when due, for any period
until the same shall be paid and on any payment of Supplemental Rent not paid
when due, for the period until the same shall be paid. In addition, the Lessee
will pay to the Lessor, as Supplemental Rent, in the case of any prepayment of
the Certificates pursuant to Section 6.02 of the Indenture (except in the case
of any prepayment resulting from an Indenture Event of Default in the absence
of an Event of Default) or any prepayment or purchase of the Certificates
pursuant to clause (ii) of the first sentence of Section 8.02(a) of the
Indenture, an amount equal to the aggregate amount of any Make-Whole Premium
payable on such prepayment or purchase. The expiration or other termination of
the Lessee's obligation to pay Basic Rent shall not limit or otherwise modify
the obligations of the Lessee with respect to the payment of Supplemental Rent.
Section 3.04. Adjustments to Basic Rent, Stipulated Loss Value,
Termination Value and the EBO Price After the Delivery Date. The percentages
for Basic Rent referred to in ScheduleII hereto and the percentages for
Stipulated Loss Value and Termination Value referred to in ScheduleIII and
ScheduleIV hereto, and the EBO Price shall be adjusted (upward or downward)
subject to the minimum value established by Section 3.05 hereof and the
definitions of Stipulated Loss Value and Termination Value to reflect (i) any
costs and expenses paid by the Lessor or the Owner Participant pursuant to
Section 10.01 of the Participation Agreement being greater or less than the
Estimated Expense Amount, (ii) any Refinancing pursuant to Section 15.01 of the
Participation Agreement or (iii) the Delivery Date being other than August 27,
1998. Each such adjustment pursuant to the first sentence of this Section 3.04
shall maintain the Owner's Economic Return (and, while maintaining such Owner's
Economic Return, minimize the aggregate Net Present Value of Rents to the
Lessee) and shall not cause the EBO Price to be less than the greater of (i)
the Termination Value as of such Rent Payment Date and (ii) the estimate set
forth in the Appraisal of the Fair Market Value of the Aircraft at the time of
exercise of the purchase option under Section 4.02(a)(F) hereof. The Owner
Participant shall promptly notify the Lessee and the Lessor and the Lessee
shall promptly notify the Owner Participant and the Lessor of the need for any
such adjustment pursuant to this Section 3.04. As promptly as feasible after
any such notification, the Lessor shall furnish the Lessee with a notice
setting forth the amount of any such adjustments together with the calculations
upon which the adjustments are based; provided, however, that the Lessor and
the Owner Participant shall not be required to disclose to the Lessee in such
notice any confidential or proprietary information (including methodology or
assumptions) relating to such calculations. At the request and, subject to the
next succeeding sentence, expense of the Lessee, the accuracy of the
calculation of such adjustments and the consistency of the calculation with the
calculation used to determine Basic Rent, Stipulated Loss Values, Termination
Values and the EBO Price shall be verified first, by First Chicago Leasing
Corporation or such other financial advisor chosen by the Lessee and second, if
such adjustments are still believed to be in error and are not reconciled with
the Owner Participant within fifteen (15) Business Days, by a firm of
nationally recognized independent public accountants selected by the Lessee and
reasonably acceptable to the Owner Participant and, in order to enable them to
verify such adjustments, the Owner Participant shall make available to such
accountants (for their own confidential use and not to be disclosed to the
Lessee or any other Person and subject to the execution of a confidentiality
agreement reasonably satisfactory to the Owner Participant) all information
reasonably necessary for such verification, including the name of the lease
analysis program used by the Owner Participant to calculate such adjustments.
Notwithstanding anything to the contrary contained herein, the Owner
Participant shall not be required to release its tax returns to any verifying
firm unless such firm is that Owner Participant's regular outside accounting
firm. The Lessee will pay the reasonable costs and expenses of the verification
process under this Section 3.04 unless as a result of such verification process
by the independent public accountants Basic Rent is adjusted and such
adjustment causes the Net Present Value of Rents to decline by 10 or more basis
points (in which event the Owner Participant shall pay the reasonable costs and
expenses of such verification process). The Lessor and the Lessee shall execute
and deliver an amendment to this Lease to reflect each adjustment under this
Section 3.04.
All adjustments under this Section 3.04 shall be in compliance
with the requirements of Revenue Procedure 75-21, 1975-1 C.B. 715, Sections
4.02(5), 4.07(1), 4.07(2) and 4.08(1) of Revenue Procedure 75-28, 1975-1 C.B.
752 and Section 1.467-3(c)(2)(i) of the Treasury Regulation and shall be
structured so as to not cause the Lease to be a "disqualified leaseback or
long-term agreement" within the meaning of Section 467 of the Code.
Section 3.05. Minimum Basic Rent. Notwithstanding any other
provisions of the Operative Agreements to the contrary, each installment of
Basic Rent due on each Rent Payment Date and not constituting an Excepted
Payment shall be, under any and all circumstances, an amount at least
sufficient to pay in full any installment of principal of and interest on the
Certificates required to be paid pursuant to the Certificates (other than
amounts becoming due on account of the exercise of remedies pursuant to Article
17 hereof) on such Rent Payment Date.
Section 3.06. Payment to Indenture Trustee. All Rent payable by
the Lessee to the Lessor shall be paid to the Lessor at 000 Xxxxxx Xxxxxx,
Xxxxxxx Square, Hartford, Connecticut 06103, Attention: Corporate/Muni
Administration, or as the Lessor may otherwise direct, by wire transfer of
immediately available funds in U.S. Dollars with sufficient information to
identify sources and applications of such funds no later than 10:30 a.m., New
York time on the due date of such payment; provided, however, that so long as
the Lien of the Indenture shall not have been discharged the Lessor hereby
directs, and the Lessee agrees, that all Rent (other than Excepted Payments not
constituting Basic Rent, which shall be paid by the Lessee directly to the
Person entitled thereto) (all without set-off or counterclaim as and to the
extent provided in Article 20 hereof) shall be paid directly to the Indenture
Trustee at its principal office at 00 Xxxxx Xxxx Xxxxxx, Xxxx Xxxx Xxxx, Xxxx
00000, Attention: Corporate Trust Department, or as the Indenture Trustee may
otherwise direct by wire transfer of immediately available funds in U.S.
Dollars no later than 10:30 a.m., New York time, on the due date of such
payment. In any case where a scheduled Rent Payment Date shall not be a
Business Day such Rent Payment Date shall be adjourned to the next succeeding
Business Day without interest thereon for the period of such extension
(provided that payment is made on such next succeeding Business Day).
Section 3.07. Costs and Expenses. As between the Lessor and the
Lessee, all obligations under this Lease shall be done, performed and complied
with at the Lessee's cost and expense, whether or not so expressed, unless
otherwise expressly stated to the contrary.
ARTICLE 4
RENEWAL OPTIONS AND PURCHASE OPTIONS
Section 4.01. Renewal Options. (a) Election to Renew or
Purchase. The Lessee shall provide the Lessor with irrevocable written notice
(the "Preliminary Notice") not more than 360 days nor less than 180 days prior
to the end of the Basic Term or the preceding Renewal Term, as the case may be,
whether it will exercise its options either to renew this Lease pursuant to
this Section 4.01 or to purchase the Aircraft pursuant to Section 4.02(a)(B)
hereof or, if a further Renewal Term is available, pursuant to Section
4.02(a)(C) hereof.
Provided that (i) no Payment Default, Bankruptcy Default or Event
of Default shall have occurred and be continuing at the time of renewal, (ii)
this Lease has not otherwise expired or terminated, and (iii) the Lessee shall
have timely delivered the respective Preliminary Notice, the Lessee may, by
irrevocable written notice delivered to the Lessor not less than 30 days prior
to the end of the Basic Term or any prior Renewal Term, extend the Term for one
or two Fixed Renewal Terms of one (1) year not to exceed two (2) years. The
Lessee shall pay the Fixed Renewal Rent during any Fixed Renewal Term. In
addition, provided that (i) no Payment Default, Bankruptcy Default or Event of
Default shall have occurred and be continuing at the time of renewal, (ii) this
Lease has not otherwise expired or terminated, and (iii) the Lessee shall have
delivered the Preliminary Notice, the Lessee may, on no more than two
occasions, by written notice delivered to the Lessor not less than 30 days
prior to the end of the Basic Term or the preceding Renewal Term, as the case
may be, elect to extend the Term for a Renewal Term or further Renewal Term
commencing on the expiration of the Basic Term or the preceding Renewal Term
and ending one or two years thereafter for a rent equal to the then-current
Fair Market Rental of the Aircraft. The Term may be extended pursuant to this
paragraph for an aggregate of no more than two years following the Basic Term
or any Fixed Renewal Term, if applicable.
(b) Terms and Conditions. Any such renewal shall be on the same
terms and conditions as provided herein, except that (i) rent for the Aircraft
due during any Renewal Term shall be payable semi-annually in arrears on the
dates corresponding to the Rent Payment Dates during such Renewal Term, and
(ii) during any Renewal Term, the Stipulated Loss Value for the Aircraft shall
as of any Stipulated Loss Value Determination Date during the Renewal Term be
equal to the higher of the Stipulated Loss Value and the Fair Market Value of
the Aircraft as of the end of the Basic Term.
Section 4.02. Purchase Options. (a) Election to Purchase.
Provided that (i) this Lease has not otherwise expired or terminated, (ii)
either no Event of Default shall have occurred and be continuing at the time of
the notice provided below or, if an Event of Default occurs after such notice
has been given, the Lessee shall have provided evidence reasonably satisfactory
to the Lessor and the Owner Participant of its financial ability to purchase
the Aircraft and (iii) the Lessee shall have previously given the Preliminary
Notice under Section 4.01(a) hereof (in the case of paragraph (B) below or, if
a further Renewal Term is available, paragraph (C) below) or the applicable
notice for each other paragraph below, as the case may be, the Lessee may:
(A) by written notice delivered to the Lessor, the Indenture
Trustee and the Owner Participant, not more than 360 nor less than 90 days
prior to the applicable Rent Payment Date, elect to terminate the Lease
and purchase the Aircraft on the Rent Payment Date falling on either
January 15, 2016 or July 15, 2019, for, at the Lessee's option, either (1)
an amount in immediately available funds equal to the greater of the Fair
Market Value or the Termination Value on such date or (2)(i) the
assumption by the Lessee, pursuant to Section 7.11 of the Participation
Agreement, of all of the obligations of the Lessor under the Indenture,
the Certificates and Section 7.04 of the Participation Agreement and (ii)
the payment to the Lessor of an amount equal to the excess of (A) the
greater of the Fair Market Value or the Termination Value on such date
over (B) the unpaid principal of the Certificates plus accrued interest as
of such date. Such notice (which shall be revocable by the Lessee upon at
least 30 days' written notice prior to the applicable Rent Payment Date)
shall either direct the Lessor to prepay the Certificates in full on such
Termination Date pursuant to Section 6.02 of the Indenture or state that
the Lessee shall exercise its option to assume the Certificates pursuant
to Section7.11 of the Participation Agreement; or
(B) by irrevocable written notice delivered to the Lessor and
the Owner Participant not more than 360 nor less than 30 days prior to the
end of the Basic Term, elect to purchase the Aircraft on the last day of
the Basic Term for an amount equal to the Fair Market Value thereof on
such date; or
(C) by irrevocable written notice delivered to the Lessor and
the Owner Participant not more than 360 days nor less than 180 days (30
days if a Preliminary Notice shall have been previously given) prior to
the end of any Renewal Term, elect to terminate the Lease and purchase the
Aircraft on the last day of such Renewal Term at a price equal to the Fair
Market Value of the Aircraft on such day; provided, however, that the
Lessee shall have paid all Rent due and payable under this Lease on or
prior to the expiration of any such Renewal Term; or
(D) exercise the purchase option in this Section 4.02(a)(D)
which is more particularly described in Schedule V hereto by reference to
this Section 4.02(a)(D) and which shall be in an amount not less than the
greater of the amount specified in Schedule V hereto and the Fair Market
Value;
(E) exercise the purchase option in this Section4.02(a)(E) which
is more particularly described in Schedule V hereto by reference to this
Section 4.02(a)(E) and which shall be in an amount not less than the
greater of the amount specified in Schedule V hereto and the Fair Market
Value; or
(F) to terminate this Lease on January 15, 2018 and purchase the
Aircraft on such Rent Payment Date for an amount equal to the percentage
of the Purchase Price set forth in Ancillary Agreement I with respect to
this Section 4.02(a)(F) ("EBO Price") which amount shall not be less than
the greater of (i) the Termination Value as of such Rent Payment Date and
(ii) the estimate set forth in the Appraisal of the Fair Market Value at
the time of exercise of the purchase option under this Section 4.02(a)(F).
The Lessee shall give the Lessor, the Owner Participant and the
Indenture Trustee not more than 360 days and not less than 90 days' prior
written notice of its election to purchase pursuant to Section 4.02(a)(D),
4.02(a)(E) or 4.02(a)(F) hereof. Such notice shall either direct the Lessor to
prepay the Certificates in full on such Termination Date pursuant to Section
6.02 of the Indenture or state that the Lessee shall exercise its option to
assume the Certificates pursuant to Section 7.11 of the Participation Agreement
and Section 2.12 of the Indenture. In the event that the Lessee shall have
given notice to purchase the Aircraft under Section 4.02(a)(A), 4.02(a)(D),
4.02(a)(E) or 4.02(a)(F) hereof and shall fail to make payment (and, if
applicable, assume the Certificates) on the applicable Termination Date, the
Lease shall continue and the Lessee shall pay to the Owner Trustee any losses,
costs and expenses of the Owner Participant incurred in connection with such
failure.
(b) Terms and Conditions. If the Lessee elects to purchase the
Aircraft pursuant to Section 4.02(a) hereof, the Lessee shall pay to the Lessor
on the applicable Termination Date by wire transfer of immediately available
funds any Basic Rent payable on such Termination Date (if payable in arrears
but not if in advance), the applicable purchase price together with any other
amounts past due hereunder and all other Supplemental Rent then due under this
Lease including, without limitation, the aggregate amount of any Make-Whole
Premium applicable to any Certificate (if such purchase occurs prior to the
Premium Termination Date for such Certificate) and amounts due under the
Participation Agreement and the Tax Indemnity Agreement, whereupon (and upon
discharge of the Lien of the Indenture in accordance with Section 14.01
thereof) the Lessor will transfer to the Lessee, without recourse or warranty
(except as to the absence of Lessor's Liens), all of the Lessor's right, title
and interest in and to the Aircraft on an "as-is, where is" basis. In
connection with such transfer, the Lessee shall prepare and the Lessor shall
execute or arrange for the execution of a xxxx of sale evidencing such transfer
and such other documents as the Lessee may reasonably require. In connection
with any termination or proposed termination of this Lease, the Lessee shall
pay, at the time of the applicable Termination Date, all related reasonable
costs and expenses of the Owner Participant, the Lessor and the Indenture
Trustee.
Section 4.03. Appraisal Procedures. (a) Generally. Whenever
Fair Market Rental or Fair Market Value is required to be determined under this
Lease (unless otherwise provided herein), it shall be determined by the mutual
agreement of the Lessor and the Lessee in accordance with the definitions of
such terms in Schedule I hereto. If the Lessee and the Lessor cannot agree by
the date 60 days prior to the date for exercise of the applicable option, such
amount shall be determined by independent appraisal conducted by appraisers
selected pursuant to Section 4.03(b) hereof. At any time prior to final
determination of such amount pursuant to Section 4.03(b) hereof, the Lessee and
the Lessor shall be entitled to submit to the appraisers (and shall submit to
each other any bids submitted to the appraisers) any bids from unrelated third
parties, and such bids shall be accorded the weight such appraisers deem
appropriate. The Lessor and the Lessee shall each have an opportunity to
comment on any such bids after receiving a copy thereof.
(b) Selection. If an independent appraisal is required pursuant
to this Lease, the Lessor and the Lessee shall consult for the purpose of
appointing a mutually acceptable, qualified aircraft appraiser. If they are
unable to agree on a single appraiser within ten (10) Business Days, then the
independent appraisal shall be arrived at by mutual agreement of two nationally
recognized, independent aircraft appraisers, one chosen by the Lessor and one
chosen by the Lessee, or, if such appraisers cannot agree on the amount of such
appraisal, their appraisals shall be treated in the manner described in Section
4.03(c) hereof with an appraisal arrived at by a third nationally recognized,
independent aircraft appraiser chosen by the mutual consent of such two
appraisers; provided, however, that if either party shall fail to appoint an
appraiser within fifteen (15) Business Days after a written request to do so by
the other party, or if such two appraisers cannot agree on the amount of such
appraisal and fail to appoint a third appraiser within twenty (20) Business
Days after the date of the appointment of the second of such appraisers, then
either party may initiate an arbitration proceeding with the American
Arbitration Association for purposes of appointing a nationally recognized,
independent aircraft appraiser.
(c) Valuation. If one appraiser is chosen, the value determined
by such appraiser shall be final and binding upon the Lessor and the Lessee.
If two appraisers are chosen, one appraiser by the Lessor and one by the
Lessee, and such appraisers agree on the value, such value shall be final and
binding upon the Lessor and the Lessee. If three appraisers shall be appointed
and the difference between the determination which is farther from the middle
determination is more than 125% of the difference between the middle
determination and the third determination, then such farther determination
shall be excluded, the remaining two determinations shall be averaged, and such
average shall be final and binding upon the Lessor and the Lessee. Otherwise,
the average of all three determinations shall be final and binding upon the
Lessor and the Lessee.
(d) Rules of Appraisal. Any appraisal pursuant to this Section
4.03 shall be conducted in accordance with the commercial rules of the American
Arbitration Association as then in effect, as modified by this Section 4.03 and
the definitions of Fair Market Value and Fair Market Rental. All expenses of
any independent appraisal shall be borne by the Lessee, except that each of the
Lessee and the Owner Participant (in the case of the Lessor) shall bear any
fees, costs and expenses of its respective attorneys in connection with such
appraisal except in the case of an Event of Default or in the case of a
revocation by the Lessee of its election to terminate the Lease under Section
4.02 hereof, in which case such expenses shall be borne by the Lessee.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES
Section 5.01. Disclaimer of Representations and Warranties. THE
LESSEE ACKNOWLEDGES AND AGREES THAT (i) THE AIRFRAME AND EACH ENGINE IS OF A
SIZE, DESIGN, AND CAPACITY AND MANUFACTURE SELECTED BY AND ACCEPTABLE TO THE
LESSEE, (ii) THE LESSEE IS SATISFIED THAT THE AIRFRAME AND EACH ENGINE IS
SUITABLE FOR ITS PURPOSES, (iii) NEITHER THE OWNER PARTICIPANT NOR THE LESSOR
IS A MANUFACTURER OR A DEALER IN PROPERTY OF SUCH KIND AND (iv) THE AIRFRAME
AND EACH ENGINE IS LEASED HEREUNDER SUBJECT TO ALL APPLICABLE LAWS AND
GOVERNMENTAL REGULATIONS, NOW IN EFFECT OR HEREAFTER ADOPTED, WITHOUT
REPRESENTATION OR WARRANTY OF ANY KIND BY THE LESSOR (IN ITS INDIVIDUAL
CAPACITY OR AS OWNER TRUSTEE), THE INDENTURE TRUSTEE, THE OWNER PARTICIPANT OR
ANY HOLDER. THE LESSOR LEASES THE AIRFRAME AND EACH ENGINE, AS-IS, WHERE-IS,
AND NEITHER THE LESSOR (IN ITS INDIVIDUAL CAPACITY OR AS OWNER TRUSTEE), THE
INDENTURE TRUSTEE, THE OWNER PARTICIPANT NOR ANY HOLDER MAKES, HAS MADE OR
SHALL BE DEEMED TO HAVE MADE, AND EACH HAS AND WILL HAVE BEEN DEEMED TO HAVE
EXPRESSLY DISCLAIMED, ANY WARRANTY OR REPRESENTATION EITHER EXPRESS OR IMPLIED,
AS TO (A) THE TITLE, AIRWORTHINESS, WORKMANSHIP, CONDITION, VALUE, FITNESS FOR
ANY PARTICULAR USE OR PURPOSE, DESIGN, OPERATION OR MERCHANTABILITY OF THE
AIRFRAME, EACH ENGINE OR ANY PART THEREOF, (B) THE ABSENCE OF LATENT OR OTHER
DEFECTS, WHETHER OR NOT DISCOVERABLE, (C) THE ABSENCE OF ANY INFRINGEMENT OF
ANY PATENT, TRADEMARK OR COPYRIGHT, (D) THE ABSENCE OF OBLIGATIONS BASED ON
STRICT LIABILITY IN TORT, (E) THE LESSOR'S TITLE THERETO, (F) THE LESSEE'S OR
ANY SUBLESSEE'S RIGHT TO THE QUIET ENJOYMENT THEREOF (EXCEPT AS PROVIDED IN
ARTICLE 18 HEREOF) OR (G) ANY OTHER MATTER WHATSOEVER. IT IS AGREED THAT ALL
RISKS INCIDENT TO THE MATTERS DISCUSSED IN THE PRECEDING SENTENCE, AS AMONG THE
LESSOR, THE INDENTURE TRUSTEE, THE OWNER PARTICIPANT AND THE LESSEE, ARE TO BE
BORNE BY THE LESSEE. The provisions of this Section 5.01 have been negotiated
by the Lessor and the Lessee and, except as provided in Article 7 of the
Participation Agreement, are intended to be a complete exclusion and negation
of any representations or warranties of the Lessor, the Indenture Trustee and
the Owner Participant, express or implied, with respect to the Airframe and
each Engine that may arise pursuant to any law now or hereafter in effect, or
otherwise.
Section 5.02. No Modification of Other Warranties. None of the
provisions of this Article 5 or any other provision of this Lease shall be
deemed to amend, modify or otherwise affect the representations, warranties or
other obligations (express or implied) of the Lessee, AVSA, the Manufacturer or
the Engine Manufacturer or any of their respective subcontractors or suppliers,
with respect to the Airframe, the Engines or any Parts incorporated or
installed in or attached to the Airframe or Engines, or to release the Lessee,
AVSA, the Manufacturer or the Engine Manufacturer or any of their respective
subcontractors or suppliers from any such representation, warranty or
obligation. So long as an Event of Default shall not have occurred and be
continuing under this Lease and to the extent permitted under the applicable
warranty, patent indemnity, or service-life policy, (i) the Lessor shall assign
or otherwise make available to the Lessee such rights as the Lessor may have
under any warranty, patent indemnity, or service-life policy made or given by
the Manufacturer, AVSA or the Engine Manufacturer or any of their respective
subcontractors or suppliers, and any other claims against the Manufacturer,
AVSA and the Engine Manufacturer or any such subcontractor or supplier with
respect to the Aircraft, including all rights to demand, accept and retain all
rights in and to property (other than the Aircraft), data and services of any
kind which the Manufacturer, AVSA and the Engine Manufacturer are obligated to
provide and do provide pursuant to the Purchase Agreement or the GTA with
respect to the Aircraft; and (ii) all payments pursuant to any manufacturer's
or subcontractor's warranty, patent indemnity, or service-life policy
obligation shall be paid to the Lessee and the Lessee shall apply such payments
to the cost of repair or correction of any condition of the Aircraft which gave
rise to such payments.
Section 5.03. Certain Agreements of the Lessee. The Lessee
agrees with the Lessor for the benefit of the Owner Participant that the Lessee
shall perform the agreements, covenants and indemnities of the Lessee set forth
in the Participation Agreement to the extent the same are applicable to the
Owner Participant, as fully and to the same extent and with the same force and
effect as if set forth in full in this Article 5.
ARTICLE 6
LIENS
Section 6.01. Liens. The Lessee will not directly or indirectly
create, incur, assume or suffer to exist, and will promptly, at its own cost
and expense, take such action as may be necessary to discharge, any Lien on or
with respect to the Lessor's Estate or this Lease or the Aircraft, the Airframe
or any Engine or any Part or title thereto or any interest therein except:
(a) the respective rights of the Lessor and the Lessee as
provided in this Lease, the security interest and Lien of the Indenture
and the rights of the Owner Participant, the Lessor and the Indenture
Trustee under the Trust Agreement, the Indenture and the Participation
Agreement;
(b) the rights of any sublessee or transferee or other Person
under a sublease, transfer, assignment or other such arrangement expressly
permitted by the terms of this Lease;
(c) Lessor's Liens and Indenture Trustee's Liens to the extent
required to be discharged by the Owner Participant, the Lessor or the
Indenture Trustee, as the case may be, in accordance with Section 7.03(b),
7.04(b) or 7.05(b) of the Participation Agreement;
(d) Liens for Taxes imposed against the Lessee either not yet
due or being contested in good faith by appropriate proceedings so long as
such Liens or proceedings do not involve any material danger of the sale,
forfeiture or loss of the Lessor's Estate, the Aircraft, the Airframe or
any Engine or any interest therein or any material risk of civil
liabilities (unless the Owner Trustee, the Indenture Trustee and the Owner
Participant shall be indemnified to its satisfaction against such
liabilities by the Lessee) or any risk of the assertion of criminal
charges against the Lessor, the Owner Participant, the Indenture Trustee
or any Holder;
(e) materialmen's, mechanics', workmen's, repairmen's,
employees' or other like Liens arising against the Lessee in the ordinary
course of the Lessee's business for amounts the payment of which is either
not yet due or is being contested in good faith by appropriate proceedings
so long as such Liens or proceedings do not involve any material danger of
the sale, forfeiture or loss of the Lessor's Estate, the Aircraft, the
Airframe or any Engine or any interest therein; and
(f) Liens arising from judgments or awards against the Lessee
with respect to which (i) at the time an appeal or proceeding for review
is being prosecuted in good faith and with respect to which there shall
have been secured a stay of execution pending such appeal or proceeding
for review and then only for the period of such stay and (ii) there is
not, and such proceedings do not involve, any material danger of the sale,
forfeiture or loss of the Lessor's Estate, the Aircraft, Airframe or any
Engine or any interest therein.
ARTICLE 7
AIRCRAFT REGISTRATION, MAINTENANCE AND OPERATION
Section 7.01. Registration, Maintenance and Operation. The
Lessee, at its own cost and expense, shall:
(a) upon payment by the Lessor of the Purchase Price on the
Delivery Date, cause the Aircraft to be duly registered in the name of the
Lessor as owner, pursuant to the Transportation Code and, subject to the
proviso to Section 6.03(b) of the Participation Agreement, to remain at
all times duly registered pursuant to the Transportation Code and at all
times act in accordance with the rules and regulations of the Aeronautics
Authority or the applicable laws, rules and regulations of any other
jurisdiction in which the Aircraft may then be registered in accordance
with Section 6.03(b) of the Participation Agreement;
(b) maintain, inspect, service, repair, test and overhaul the
Aircraft (or cause the same to be done) so as to keep the Aircraft (and
any engine which is not an Engine but is installed on the Aircraft) in as
good operating condition as when delivered to the Lessor on the Delivery
Date, ordinary wear and tear excepted, and in any event (i) in accordance
with the applicable regulations of the Aeronautics Authority or of the
regulatory agency or body of any other jurisdiction in which the Aircraft
may then be registered pursuant to Section 6.03(b) of the Participation
Agreement and the Lessee's maintenance program approved by the Aeronautics
Authority or such agency or body, (ii) in the same manner and with the
same care used by the Lessee with respect to other A300-600 series
aircraft and XX0-00X0- X0X series engines (or other engines permitted by
the terms of this Lease to be used on the Aircraft) owned, operated or
leased by the Lessee, to the extent that the same regulations, and the
Lessee's FAA-approved maintenance program shall apply to any such aircraft
and related engines, owned or leased by the Lessee, and utilized in
similar circumstances, and without discriminating against the Aircraft,
with respect to its use, operation or maintenance in contemplation of the
expiration or termination of this Lease other than withdrawal of the
Aircraft from use and operation as is necessary to prepare the Aircraft
for return to the Lessor upon such expiration or termination, and (iii) so
as to keep the Aircraft in such condition as may be necessary to enable
its airworthiness certification to be maintained in good standing at all
times under the Transportation Code or any applicable rule or regulation
of the applicable regulatory agency or body of any other jurisdiction in
which the Aircraft may then be registered;
(c) maintain, or cause to be maintained, all records, logs and
other materials in respect of the Aircraft required by the Aeronautics
Authority, or the applicable regulatory agency or body of any other
jurisdiction in which the Aircraft may then be registered, all such
records and logs to be maintained in the English language, to the extent
required by the Transportation Code (which records, logs and other
materials shall, as between the Lessor and the Lessee and all parties
claiming through the Lessee, be the property of the Lessor but shall
become the property of the Lessee upon purchase by the Lessee of the
Aircraft pursuant to the terms of this Lease or upon the occurrence of an
Event of Loss and the Lessee's compliance with Section 11.03 hereof);
(d) promptly furnish to the Lessor such information within the
Lessee's possession as may be required to enable the Lessor to file any
reports to be filed by the Lessor with any governmental authority because
of the Lessor's ownership of or the Owner Participant's interest in the
Aircraft;
(e) not maintain, service, repair, overhaul, use or operate the
Aircraft or any Engine in violation of any airworthiness certificate or
registration relating thereto, or in violation of any law or any license,
rule, regulation or order of or by any government or governmental
authority having jurisdiction over the Lessee or the Aircraft or any
Engine or for any purpose for which the Aircraft or any Engine is not
designed; provided, however, that the Lessee (or if a sublease shall then
be in effect, the sublessee thereunder) may in good faith contest the
validity or application of any such law, license, rule, regulation or
order in any manner that does not adversely affect the Lessor, its right,
title or interest in the Aircraft or any Engine or the interests of the
Indenture Trustee or the Owner Participant therein, or in any Operative
Agreement (excluding any interests indemnified for under the Tax Indemnity
Agreement) and such contest or non-compliance will not result in any
material risk of loss, forfeiture or damage to the Aircraft or in any risk
of criminal liability to the Lessor, the Indenture Trustee or the Owner
Participant; and if any such law, license, rule, regulation or order
requires alteration of the Aircraft or any Engine, the Lessee will conform
the same therewith at its own cost and expense and will maintain the
Aircraft or any Engine in compliance with such law, license, rule,
regulation or order; and
(f) not operate or locate the Airframe or any Engine, or suffer
the Airframe or any Engine to be operated or located (x) in any area
excluded from coverage by any insurance policy required by the terms of
Article 13 hereof or (y) in any war zone or in the Lessee's reasonable
judgment, area of recognized hostilities, unless the Lessee has obtained,
prior to the operation or location of the Airframe or any Engine in such
area, indemnification from the Government, or other insurance, against the
risks and in the amounts required by, and in compliance with, Article 13
hereof covering such area (except, in the case of a requisition for use by
the Government, to the extent that the Lessee certifies that such
insurance is unobtainable after diligent effort or is obtainable only at
unreasonably high rates or on unduly financially burdensome terms and
conditions) (and naming the Lessor, or so long as this Lease is assigned
to the Indenture Trustee, the Indenture Trustee, as sole loss payee in
respect of indemnification or insurance payable in respect of casualties
to the Aircraft) or unless the Aircraft is only temporarily located in
such area as a result of an isolated occurrence attributable to a
hijacking, medical emergency, equipment malfunction, weather conditions,
navigational error or other similar unforeseen circumstances and the
Lessee is using its good faith efforts to remove the Aircraft from such
area.
The Lessee may, at any time during the Term, install an engine or
engines on the Airframe and operate the Aircraft with such engine or engines
installed thereon and the Lessor shall have no right, title or interest in and
to any such engine until such time, if any, that such engine is returned to the
Lessor under Section 12.02 hereof.
Section 7.02. Possession and Permitted Transfer and Sublease.
(a) Conditions. The Lessee will not, without the prior written consent of the
Lessor, sublease or otherwise in any manner deliver, transfer or relinquish
possession of the Aircraft, the Airframe or any Engine or install any Engine,
or permit any Engine to be installed, on any airframe other than the Airframe;
provided, that, so long as (i) in the case of clause (i) below, no Payment
Default, Bankruptcy Default or Event of Default shall have occurred and be
continuing, (ii) the Lien of the Indenture is not impaired thereby, (iii) all
applicable governmental approvals in connection therewith have been obtained
and (iv) the Lessee shall comply with the provisions of Article 13 hereof, the
Lessee may without the prior written consent of the Lessor:
(i) so long as the sublessee is generally meeting its material
obligations as they come due and is not subject to a proceeding or final
order under applicable bankruptcy, insolvency or reorganization laws on
the date the sublease is entered into (and on the date of notice from the
Lessee) and with 30 days' prior written notice to the Lessor and the Owner
Participant, (A) sublease the Aircraft or any Engine to a U.S. Air
Carrier, (B) sublease the Aircraft or any Engine to an Air Carrier which
is principally based in and domiciled in one of the countries listed on
Schedule III of the Participation Agreement, (C) sublease the Aircraft or
any Engine to an Air Carrier that is principally based in and a
domiciliary of a country which is a party to the International Convention
on the Recognition of Rights in Aircraft, or (D) sublease the Aircraft or
any Engine to any other Air Carrier not described in this Section which
shall be reasonably acceptable to the Lessor as evidenced by its prior
written consent; provided, that, with respect to clauses (B) and (C)
above, at the time of any such sublease the United States of America
maintains full diplomatic relations with the country in which such Air
Carrier is principally based and domiciled. In the case of any sublease
(x) such sublease shall include the provisions required by Section 7.02(b)
hereof and expressly require the sublessee to operate and maintain the
Aircraft in compliance with the applicable provisions of this Lease, (y)
such sublease shall provide that such sublessee will not transfer
possession of, or any other rights to, the subleased Airframe or any
Engine to any other Person without the prior written consent of the Lessor
(except as permitted by subparagraphs (ii) through (viii) below) and (z)
such sublease shall expire not later than the expiration of the Basic Term
or any applicable Renewal Term hereof. Prior to any sublease to an Air
Carrier permitted under Section 7.02(a)(i)(C): (I) the maintenance
standards of the aeronautical authority of the country of domicile or
principal operation of the sublessee taken as a whole shall not be
materially less stringent than those of the FAA and the sublease will
provide that the maintenance performed during such sublease will meet in
all material respects such maintenance standards; (II) the Lessee will
provide opinions of counsel (such counsel and the form and substance of
such opinions to be reasonably satisfactory to the Lessor and the
Indenture Trustee) with respect to (A) the legality, validity and
enforceability of the Operative Agreements and the sublease in such
country, (B) that the laws of such country require fair compensation by
the government of such country payable in a currency freely convertible
into U.S. dollars for the loss of the use of or title to the Aircraft in
the event of a requisition of use or title by such government, (C) the
Lessor's title to the subleased equipment will be recognized, (D) the
required agreement of such foreign air carrier that its rights under the
sublease are subject and subordinate to all the terms of this Lease is
enforceable against such foreign air carrier under applicable law (subject
only to customary exceptions to enforceability), (E) that it is not
necessary for the Owner Participant, the Lessor or the Indenture Trustee
to register or qualify to do business in such country as a result of the
proposed sublease or in order for the Owner Participant, the Lessor or the
Indenture Trustee to enforce the terms and conditions of the Operative
Agreements, (F) there is no tort liability of the owner of an aircraft not
in possession thereof or of Persons lending money to such an owner for the
purchase of an aircraft, under the laws of such jurisdiction other than
tort liability which might have been imposed on such owner or Persons
under the laws of the United States or any state thereof (it being
understood that, in the event that such latter opinion cannot be given in
a form satisfactory to the Lessor, such opinion shall be waived if
insurance reasonably satisfactory to the Lessor is available to cover such
risk to the Owner Participant and is provided at or before the execution
of such a sublease, at the Lessee's cost and expense) and (G) that there
exist no possessory rights in favor of such sublessee under the laws of
such country which would, upon bankruptcy or insolvency of the Lessee (and
assuming that at such time such sublessee is not bankrupt or insolvent)
prevent the return of the Aircraft in accordance with the terms of this
Lease; (III) all necessary governmental approvals required for the
subleased equipment, the Airframe or any Engine, as the case may be, to be
imported and, to the extent reasonably obtainable, exported from the
applicable country of domicile upon repossession of such subleased
equipment by the Lessor (and the Lessee as sublessor), shall have been
procured at the Lessee's own cost and expense by the Lessee prior to
commencement of any such sublease; (IV) duties and tariffs, if applicable,
shall be paid for by the Lessee; and (V) the Lessee shall effect or cause
to be effected at the Lessee's own cost and expense all recordings and
filings that are required to continue the Lessor's right, title and
interest to the Aircraft and rights under the Lease (and sublease) and to
perfect and maintain the priority of the Lien of the Indenture;
(ii) subject the Airframe or permit the Airframe to be subjected
to normal interchange agreements or subject the Engines or permit any
Engine to be subjected to normal interchange or pooling agreements or
arrangements, in each case customary in the airline industry, entered into
by the Lessee in the ordinary course of its business with a vendor
domiciled in the United States or in a country with which the United
States maintains full diplomatic relations or (x) any U.S. Air Carrier or
(y) any foreign Air Carrier which is (I) organized in a country listed on
Schedule III to the Participation Agreement, (II) organized in a country
with which the United States then maintains full diplomatic relations,
(III) is a party to the Convention on the International Recognition of
Rights in Aircraft or (IV) otherwise provides equivalent protection to
owners, lessors and mortgagees of aircraft; provided that no transfer of
the registration of the Airframe or any Engine shall be effected and that
throughout the period that the Airframe or any Engine is subjected to such
interchange or pooling agreement or arrangement the terms of this Lease
shall be observed; and provided, further, that no such agreement or
arrangement contemplates or requires the transfer of title to or
registration of the Airframe or any Engine, and if the Lessor's title to
any Engine shall nonetheless be divested under any such agreement or
arrangement, such divestiture shall be deemed to be an Event of Loss with
respect to such Engine and the Lessee shall comply with Section 11.04 of
this Lease in respect of such Engine;
(iii) deliver or permit the delivery of possession of the
Airframe or any Engine to their respective manufacturers or certified
maintenance providers for testing, service, repair, maintenance or
overhaul work or for alterations or modifications in or additions to the
Airframe or any Engine to the extent required or permitted by the terms of
Article 9 hereof;
(iv) transfer or permit the transfer of possession of the
Airframe or any Engine pursuant to a contract or agreement with the
Government or pursuant to the Civil Reserve Air Fleet Program administered
pursuant to Executive Order No. 12056, as amended ("CRAF Program"), or any
similar or substitute programs of the Government, so long as the Lessee
(or any permitted sublessee or transferee pursuant to this Section) shall
promptly notify the Lessor upon such transfer of possession and provide
the Lessor and the Indenture Trustee with the name and address of the
Contracting Officer or representative of the Military Aircraft Command of
the United States Air Force to whom notices must be given in respect of
the Aircraft, provided, that if such transfer of possession continues
beyond the end of the Basic Term or the then-current Renewal Term, the
Basic Term or the Renewal Term, as applicable, shall be automatically
extended (including the obligation to pay Rent per diem at a rate equal to
the Fair Market Rental or such higher compensation being paid by the
Government pursuant to the CRAF Program) for six (6) months after the end
of the Term (or, if shorter, until the date of return of the Aircraft, so
long as the Lessor receives at least six (6) months' notice of such date
of return);
(v) install or permit the installation of an Engine on an
airframe which is owned by the Lessee or any permitted sublessee free and
clear of all Liens, except (A) Liens of the type permitted under Section
6.01 hereof, (B) Liens which apply only to the engines (other than an
Engine), appliances, parts, instruments, appurtenances, accessories,
furnishings and other equipment (other than Parts) installed on such
airframe and which do not apply to substantially all of such airframe and
(C) the rights of an Air Carrier under normal interchange or pooling
agreements which are customary in the airline industry and do not
contemplate or require the transfer of title to such airframe or the
engines installed on it;
(vi) install or permit the installation of an Engine on an
airframe leased to the Lessee or any permitted sublessee or transferee or
purchased by the Lessee subject to a conditional sale or other security
agreement, provided that (A) such lease, conditional sale or other
security agreement does not cover the Engine so installed and the Lessee
shall have received from the lessor, conditional vendor or secured party
of such airframe an agreement (which may be the lease or conditional sale
or other security agreement covering such airframe), whereby such lessor,
conditional vendor or secured party expressly agrees that neither it nor
its successors or assigns will acquire or claim any right, title or
interest in any Engine by reason of such Engine being installed on such
airframe at any time, and (B) such airframe is and remains free and clear
of all Liens except the rights of the parties to the lease or conditional
sale or other security agreement covering such airframe and Liens of the
type permitted by subparagraph (v) of this Section 7.02(a);
(vii) install or permit the installation of an Engine on an
airframe owned by the Lessee, leased to the Lessee or purchased by the
Lessee subject to a conditional sale or other security agreement under
circumstances where neither subparagraph (v) nor subparagraph (vi) of this
Section 7.02(a) is applicable, provided that such installation shall be
deemed an Event of Loss with respect to such Engine and the Lessee shall
comply with Section 11.04 hereof in respect of such Engine, the Lessor not
intending to waive any right, title or interest it may have to or in such
Engine under applicable law until compliance by the Lessee with such
Section 11.04; and
(viii) enter into a wet lease under which the Lessee has
effective control of the Aircraft in the ordinary course of the Lessee's
business which shall not be considered a transfer of possession hereunder,
provided that the Lessee's obligations under this Lease shall continue in
full force and effect notwithstanding any such wet lease.
(b) Rights of Transferee. Notwithstanding the provisions of
Section 7.02(a) hereof, the rights of any transferee who takes possession of
the Aircraft, the Airframe or any Engine by reason of a transfer permitted by
Section 7.02(a) hereof shall be subject and subordinate to, and any sublease or
wet lease permitted by Section 7.02(a) hereof shall be made expressly subject
and subordinate to, all the terms of this Lease, including, without limitation,
the Lessor's right to repossession pursuant to Article 17 hereof and to avoid
such sublease upon such repossession, and the Lessee shall remain primarily
liable for the performance of all the terms of this Lease to the same extent as
if such sublease or transfer had not occurred. Any such sublease shall include
appropriate provisions for the maintenance, inspection (as required by Section
14.01 hereof), operation, use and insurance of the Aircraft, the Airframe and
each Engine in accordance with the provisions of this Lease and shall provide
assurances reasonably satisfactory to the Lessor that the sublessee may not
further sublease any of such equipment. The Lessee shall give the Lessor, the
Owner Participant and the Indenture Trustee 10 Business Days' prior written
notice of any sublease of the Airframe with a term in excess of one year. The
Lessee shall promptly provide the Lessor, the Owner Participant and the
Indenture Trustee a copy of any sublease which has a term in excess of one year
(and, if so requested by the Lessor, a copy of any other sublease) and, prior
to execution and delivery of any sublease deliver to Lessor all other documents
required hereunder relating to such sublease or transfer of possession.
(c) No Release of Lessee/Costs of Subleasing. No sublease,
interchange or pooling agreement or other relinquishment of possession
permitted under this Article 7 of any of the Aircraft, the Airframe or any
Engine shall in any way discharge or diminish any of the Lessee's obligations
to the Lessor, the Indenture Trustee or the Owner Participant under this Lease,
the Participation Agreement or the Tax Indemnity Agreement or constitute a
waiver of any of the Lessor's rights and remedies hereunder or thereunder or
extend beyond the end of the Term (except as provided in Section 7.02(a)(iv)
hereof). Subject to the terms and conditions of this Lease, the Lessee will
retain the right to cure any default by any sublessee permitted pursuant to
this Section 7.02 and to terminate such sublease upon such default. The Lessee
shall pay all costs of the Owner Participant, the Indenture Trustee and the
Lessor incurred in connection with any subleasing or proposed subleasing.
(d) Certain Notifications. Prior to any sublease of the
Aircraft pursuant to Section 7.02(a) hereof, the Lessee shall deliver to
Xxxxx'x written notice identifying the Aircraft to be subleased, together with
the name of the sublessee and the country of domicile of such sublessee. In
connection with any sublease to an Air Carrier permitted under Section
7.02(a)(i)(C) hereof the Lessee shall, if so requested by Xxxxx'x, provide
Xxxxx'x with the opinions to be provided pursuant to Section 7.02(a)(i)(II)
hereof and information on the insurance coverage referred to in Section
7.02(a)(i)(II)(F) hereof.
Section 7.03. Insignia. (a) Nameplate. On or prior to the
Delivery Date or as soon thereafter as possible, the Lessee agrees to affix to
and maintain in the cockpit of the Airframe, in a clearly visible location, and
on each Engine, a clearly visible metal nameplate bearing the inscription
"STATE STREET BANK AND TRUST COMPANY OF CONNECTICUT, NATIONAL ASSOCIATION, AS
OWNER TRUSTEE, OWNER AND LESSOR," and, so long as such Airframe or Engines
shall be subject to the Lien of the Indenture, the additional inscription
"FIRST SECURITY BANK, NATIONAL ASSOCIATION, AS INDENTURE TRUSTEE, MORTGAGEE"
(such nameplate to be replaced, if necessary, from time to time, with a
nameplate reflecting the name of any successor Lessor or successor Indenture
Trustee, in each case as permitted by the Operative Agreements).
(b) Lessee's Marks. Except as provided in Section 7.03(a)
hereof, the Lessee will not allow the name of any Person to be placed on the
Airframe or on any Engine as a designation that might be interpreted as a claim
of ownership; provided, that during the Term, the Lessee may cause the Aircraft
to be lettered "Federal Express Corporation" or may letter, paint or xxxx it in
some other appropriate manner for convenience of identification of the Lessee's
interest or the interest of any permitted sublessee (including but not limited
to the Lessee's or any permitted sublessee's customary colors and insignia) and
to bear insignia plates or other markings identifying the supplier or
manufacturer of the Airframe or the Engines or any Parts of either.
ARTICLE 8
REPLACEMENT AND POOLING OF PARTS
Section 8.01. Replacement of Parts. (a)Generally. The Lessee,
at its own cost and expense, will replace or cause to be replaced as promptly
as practicable all Parts which may from time to time be incorporated or
installed in or attached to the Airframe or any Engine and 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, except as
otherwise provided in Section 9.01 or 9.02 hereof. In addition, the Lessee
may, at its own cost and expense, remove or cause to be removed in the ordinary
course of maintenance, service, repair, overhaul or testing, any Parts, whether
or not worn out, lost, stolen, destroyed, seized, confiscated, damaged beyond
repair or permanently rendered unfit for use, provided that the Lessee, except
as otherwise provided in Sections 9.01 or 9.02 hereof, will, at its own cost
and expense, replace such Parts as promptly as practicable. All replacement
parts shall be free and clear of Liens (except for pooling arrangements to the
extent permitted by Section 8.02 hereof and Liens permitted under Section 6.01
hereof) and shall be in at least as good operating condition as, and shall have
a value and utility at least equal to, the Parts replaced, and in any event not
less than the condition and repair required to be maintained by the provisions
of this Lease.
(b) Title. All Parts at any time removed from the Airframe or
any Engine shall remain the property of the Lessor until such Parts shall be
replaced by parts which have been incorporated or installed in or attached to
the Airframe or such Engine and which meet the requirements for replacement
parts specified in Section 8.01(a) hereof. Immediately upon any replacement
part (other than, to the extent permitted by Section 8.02 hereof, a replacement
part subject to a pooling arrangement) becoming incorporated or installed in or
attached to the Airframe or any Engine, and without further act:
(i) title to the replaced Part shall vest in the Lessee, free
and clear of all rights of the Lessor, and such replaced Part shall no
longer be deemed a Part under this Lease;
(ii) title to such replacement part shall vest in the Lessor
free and clear of all Liens (except for Liens permitted by Section 6.01
hereof) and shall thereupon be and become a Part; and
(iii) such replacement part shall become subject to this Lease
and to the Lien of the Indenture, and shall be deemed part of the Airframe
or such Engine for all purposes to the same extent as the Parts originally
incorporated or installed in or attached to the Airframe or such Engine.
Section 8.02. Pooling of Parts. Any Part removed from the
Airframe or any Engine as permitted in Section 8.01(a) hereof may be subjected
by the Lessee to any normal pooling arrangement customary in the U.S. airline
industry and entered into with vendors and other Air Carriers in the ordinary
course of the Lessee's business, provided that the part replacing such removed
Part shall be incorporated or installed in or attached to the Airframe or such
Engine in accordance with Section 8 hereof, as promptly as practicable after
the removal of such removed Part. In addition, any replacement part when
incorporated or installed in or attached to the Airframe or any Engine in
accordance with Section 8.01(a) hereof may be owned by another Air Carrier
subject to such normal pooling arrangement, provided that the Lessee, at its
own cost and expense and as promptly as possible, either:
(a) causes title to such replacement part to vest in the Lessor
in accordance with Section 8.01(b) hereof by the Lessee acquiring title to
such replacement part for the benefit of, and transferring such title to,
the Lessor free and clear of all Liens (other than Liens permitted under
Section 6.01 hereof); or
(b) replaces such replacement part by incorporating or
installing in or attaching to the Airframe or such Engine a further
replacement part owned by the Lessee free and clear of all Liens (other
than Liens permitted under Section 6.01 hereof) and by causing title to
such further replacement part to vest in the Lessor in accordance with
Section 8.01(b) hereof.
All such replacement parts and further replacement parts shall
meet the standards set forth in the last sentence of Section 8.01(a) hereof.
ARTICLE 9
ALTERATIONS, MODIFICATIONS AND ADDITIONS
Section 9.01. Required Alterations and Modifications. The
Lessee, at its own cost and expense, shall make or cause to be made such
alterations and modifications in and additions to the Airframe and each Engine
as may be required from time to time to meet the applicable requirements of the
Aeronautics Authority or any other governmental authority with jurisdiction
over the Lessee's or any sublessee's operations and aircraft; provided,
however, that the Lessee or sublessee, as the case may be, may in good faith
contest the validity or application of any such requirements in any reasonable
manner that does not involve any material risk of civil liabilities (unless
indemnified by the Lessee) or any risk of criminal penalties being imposed on
or against the Indenture Trustee, the Owner Participant or the Lessor, that
does not involve any material risk or danger of loss, forfeiture or sale of the
Aircraft or any Engine and that does not adversely affect the Lessor, its title
or interest in the Aircraft or any Engine, the first and prior perfected Lien
and security interest of the Indenture, or the interests of the Indenture
Trustee or the Owner Participant in the Airframe or any Engine, or in any
Operative Agreement (excluding any interests indemnified for under the Tax
Indemnity Agreement). All such alterations, modifications or additions shall
be made on or before the date mandated therefor, taking into account authorized
postponements resulting from a contest or otherwise and shall be made at such
time and in such a manner so as not to discriminate against the Aircraft
whether by reason of its leased status or otherwise.
Section 9.02. Other Alterations and Modifications. (a)
Generally. The Lessee, at its own cost and expense, may from time to time make
such alterations and modifications in and additions to the Airframe or any
Engine as the Lessee may deem desirable in the proper conduct of its business,
including, without limitation, removal of Obsolete Parts, provided that no such
alteration, modification, addition or removal, individually or in the
aggregate, shall create any adverse tax consequences for the Owner Participant
not otherwise indemnified for, diminish the value, remaining useful life, or
utility of the Airframe or the value or utility of any Engine or impair its
condition or state of airworthiness below its value, remaining useful life (in
the case of the Airframe only), utility, condition and state of airworthiness
immediately prior to such alteration, modification, addition or removal,
assuming that the Airframe or such Engine was then in the condition and state
of airworthiness required to be maintained by the terms of this Lease, or cause
the Airframe or any Engine to become "limited use property" within the meaning
of Revenue Procedure 76-30, 1976-2 C.B. 647, except that the value (but not the
remaining useful life, utility, condition or state of airworthiness) of the
Aircraft may be reduced by the value, if any, of any such Obsolete Parts which
shall have been removed; provided that in no event shall the aggregate value of
all such Obsolete Parts which shall have been so removed and not replaced
exceed $500,000.
(b) Title to Installed Parts. Title to each part incorporated
or installed in or attached or added to the Airframe or any Engine as the
result of any alteration, modification, removal or addition made pursuant to
Section 9.01 or 9.02(a) hereof shall without further act vest in the Lessor and
become subject to this Lease; provided, however, that the Lessee may remove any
such Part at any time during the Term if:
(i) such Part is in addition to, and not in replacement of or
substitution for, any Part originally incorporated or installed in or
attached or added to the Airframe or such Engine on the Delivery Date or
any Part in replacement of, or substitution for, any such Part;
(ii) such Part is not required to be incorporated or installed
in or attached or added to the Airframe or such Engine pursuant to the
terms of Article 7 hereof or the first sentence of Section 9.01 hereof;
and
(iii) such Part can be removed from the Airframe or such Engine
without (A) causing material damage to the Airframe or such Engine (it
being understood that the Lessee shall repair any damage caused by a
permitted removal) or diminishing or impairing the value, utility,
condition or state of airworthiness or remaining useful life of the
Airframe required to be maintained by the terms of this Lease or (B)
diminishing the value, utility or remaining useful life (in the case of
the Airframe) or the value and utility (in the case of such Engine) which
the Airframe or such Engine would have had at such time had such
alteration, modification, removal or addition not occurred, assuming the
Airframe or such Engine was then in the condition required to be
maintained by the terms of this Lease.
(c) Title to Removed Parts. Upon the removal by the Lessee of
any such Part as provided in subsection (b) above, title thereto shall, without
further act, vest in the Lessee and such Part shall no longer be deemed a Part.
Any Part not removed by the Lessee as above provided prior to the return of the
Aircraft to the Lessor hereunder shall remain the property of the Lessor and
subject to this Lease.
ARTICLE 10
VOLUNTARY TERMINATION
Section 10.01. Right of Termination Upon Obsolescence or
Surplus. (a) Option to Terminate. So long as no Payment Default, Bankruptcy
Default or Event of Default shall have occurred and be continuing, the Lessee
shall have the right, at its option, on any Termination Date, on at least 180
days' prior written notice (which notice shall state the proposed Termination
Date (the "Proposed Termination Date")) to the Lessor and the Owner Participant
to terminate this Lease as of a Termination Date if the Aircraft shall have
become obsolete or surplus to the operations of the Lessee; provided that the
Lessee shall have furnished to the Lessor, the Indenture Trustee and the Owner
Participant a certificate of the Lessee's President, Chief Executive Officer,
Chief Financial Officer, Chief Operating Officer, Treasurer or Assistant
Treasurer stating the determination of the Lessee that the Aircraft is obsolete
or surplus to its needs. Unless the Lessor has elected to retain the Aircraft
as herein provided, the Lessee shall on no more than two occasions have the
right to revoke its notice of termination not less than ten (10) days prior to
the Proposed Termination Date whereupon this Lease shall continue in full force
and effect; provided that the Lessee may not revoke its notice if a cash bid
which is for an amount greater than or equal to Termination Value has been
submitted for the purchase of the Aircraft.
(b) Sale Procedure. During the period from the giving of notice
pursuant to Section 10.01(a) hereof until the Proposed Termination Date, the
Lessee, as non- exclusive agent for the Lessor, shall use its reasonable
efforts to obtain bids for the cash purchase on the Proposed Termination Date
(or such earlier date as shall be consented to in writing by the Lessor) of the
Aircraft. On the Proposed Termination Date, the Engines shall be installed on
the Airframe (provided that the Airframe may be sold with engines meeting the
requirements set forth herein for Replacement Engines in lieu of the Engines so
long as the aggregate number of Engines and Replacement Engines being sold with
the Airframe equals two). The Lessor may, if it desires to do so, seek to
obtain such bids. The Owner Participant shall not inspect any bids received by
the Lessee with respect to the Aircraft, unless the Owner Participant has given
to the Lessee binding and irrevocable notice that neither the Owner Participant
nor any of its Affiliates nor any Person acting for the Owner Participant or
such Affiliate will submit a bid for the purchase of the Aircraft and if such
notice has been given, the Lessee will provide the Lessor with copies of bids
received by the Lessee. No bid may be submitted by the Lessee or any Person
affiliated with the Lessee (or with whom or which there is any arrangement or
understanding as to the subsequent use of the Aircraft by the Lessee or any of
its Affiliates) or any agent or Person acting on behalf of the Lessee. The
Lessee may reject any bid which is less than the sum of the applicable
Termination Value, the aggregate amount of any Make-Whole Premium and all other
expenses incurred by the Lessor, the Owner Participant and the Indenture
Trustee in connection with the sale. Subject to the provisions of Section
10.02 hereof, on the Proposed Termination Date or such earlier date of sale as
shall be consented to in writing by the Lessor, the Lessee shall deliver the
Airframe which shall have the Engines installed on it (provided that the
Airframe may be delivered with installed engines meeting the requirements set
forth herein for Replacement Engines in lieu of the Engines so long as the
aggregate number of Engines and Replacement Engines being delivered with the
Airframe equals two and the Lessee shall comply with the provisions of Section
11.04 hereof as if an Event of Loss occurred with regard to the Engines) to the
bidder which shall have submitted the highest cash bid (whether certified to
the Lessor by the Lessee or directly received by the Lessor and certified to
the Lessee) in the same manner as if delivery were made to the Lessor pursuant
to Article 12 hereof, at a location specified by such bidder, and shall duly
transfer to the Lessor title to any such engines not owned by the Lessor, and
the Lessor shall, upon payment in full of the bid price and all amounts due and
owing pursuant to Section 10.01(c) hereof by wire transfer of immediately
available funds and upon discharge of the Lien of the Indenture in accordance
with Article XIV thereof, sell the Airframe and Engines or engines to such
bidder without recourse or warranty (except as to the absence of Lessor's
Liens).
(c) Payments to the Lessor. The total selling price realized at
a sale pursuant to Section 10.01(b) hereof net of all expenses of the sale
(including commissions and any sales or transfer taxes) (the "Net Sales Price")
shall be retained by the Lessor (or the Indenture Trustee as long as the
Indenture is in force) and, in addition, on or before the Proposed Termination
Date, the Lessee shall pay to the Lessor (or the Indenture Trustee as long as
the Indenture is in force), by wire transfer of immediately available funds,
the sum of:
(i) the excess, if any, of the Termination Value for the
Aircraft computed as of the Proposed Termination Date over the Net Sales
Price; plus
(ii) the installment of Basic Rent due with respect to the
Aircraft on the Proposed Termination Date if payable in arrears but not if
payable in advance; plus
(iii) all other amounts then due and payable by the Lessee
(including, without limitation, the aggregate amount of any Make-Whole
Premium, if the Proposed Termination Date occurs prior to the applicable
Premium Termination Date) under this Lease and any other Operative
Agreement.
(d) Transfer of Uninstalled Engines. Upon payment of the
amounts described in Section 10.01(c) hereof and upon transfer to the Lessor of
title to engines which have been returned in lieu of Engines as provided in
Section 10.01(b) hereof, and upon payment of all other amounts then due under
this Lease, the Lessor will transfer to the Lessee, without recourse or
warranty (except as to the absence of Lessor's Liens), all of the Lessor's
right, title and interest in and to any Engines which were replaced with
engines pursuant to Section 10.01(b) hereof, and shall deliver to the Lessee
such instrument as the Lessor shall have received from the Indenture Trustee
releasing such Engines from the Lien of the Indenture.
(e) Limitation on the Lessor's Duties. The Lessor shall be
under no duty to solicit bids, to inquire into the efforts of the Lessee to
obtain bids or otherwise to take any action in connection with any such sale
other than to transfer to the purchaser named in the highest cash bid
(determined as described in Section 10.01(b) above) as referred to above (or to
such purchaser and to the Lessee, as the case may be), without recourse or
warranty (except as to the absence of Lessor's Liens), all of the Lessor's
right, title and interest in and to the Aircraft, against receipt by the Lessor
of the payments provided for.
(f) Termination of the Lessee's Obligations. Upon the sale of
the Aircraft pursuant to this Section 10.01 and upon compliance by the Lessee
with the further provisions of this Article 10, the obligation of the Lessee to
pay Basic Rent with respect to the Aircraft shall cease for any Rent Payment
Date occurring after the Proposed Termination Date and the Term shall end
effective as of the Proposed Termination Date. If no sale shall have occurred
on or before the Proposed Termination Date, this Lease shall continue in full
force and effect and, for purposes of Section 10.01(a) hereof, it shall be
deemed that the Lessee has rescinded its notice of termination, and the Lessee
shall pay the expenses incurred by the Lessor, the Indenture Trustee and the
Owner Participant in connection with the proposed sale.
Section 10.02. Retention of Aircraft by the Lessor. (a)
Generally. Notwithstanding Section 10.01 hereof, the Lessor may, subject to
Section 10.02(b) hereof, elect to retain the Aircraft after receipt of the
Lessee's notice of termination given in accordance with Section 10.01(a)
hereof, by giving the Lessee and the Indenture Trustee written irrevocable
notice of such election not less than thirty (30) days prior to the Proposed
Termination Date. If the Lessor so elects, the Lessee shall pay to the Lessor
on the Proposed Termination Date, by wire transfer of immediately available
funds the sum of:
(i) the installment of Basic Rent due with respect to the
Aircraft on the Proposed Termination Date if payable in arrears but not if
payable in advance; plus
(ii) all other amounts then due and payable by the Lessee under
this Lease and any other Operative Agreement, including the aggregate
amount of any Make- Whole Premium (if the Proposed Termination Date occurs
prior to the applicable Premium Termination Date), on or prior to the
Payment Date.
(b) Payment of the Certificates. It shall be an absolute
condition precedent to the Lessor's right to retain the Aircraft and to the
termination of the Term pursuant to this Section 10.02 that the Lessor (or the
Lessee to the extent set forth in Section 10.02(a) hereof) shall have paid to
the Holders and such Holders shall have received the entire outstanding
principal amount of, the aggregate amount of any Make-Whole Premium and accrued
interest on the Certificates on the Proposed Termination Date and all other
sums due and owing to the Indenture Trustee and the Holders on or prior to the
Proposed Termination Date under this Lease, the Indenture or any other
Operative Agreement.
(c) Delivery of Aircraft to Lessor; Title to Engines. If the
Lessor elects to retain the Aircraft pursuant to this Section 10.02, the Lessee
shall deliver the Airframe and the Engines (provided that the Airframe may be
delivered with engines meeting the requirements set forth herein for
Replacement Engines in lieu of the Engines so long as the aggregate number of
Engines and engines being delivered with the Airframe equals two and provided
that the other requirements of Section 11.04 hereof are met as if an Event of
Loss has occurred with regard to the Engines) to the Lessor in the same manner
as if delivery were made to the Lessor pursuant to Article 12 hereof, and shall
duly transfer to the Lessor right, title and interest to any such engines not
owned by the Lessor, all in accordance with Article 12 hereof. Upon such
delivery of the Airframe and Engines or engines to the Lessor and payment by
the Lessee of any amounts required to be paid by the Lessee pursuant to Section
10.02(a) hereof, the Lessor will transfer to the Lessee, without recourse or
warranty (except as to the absence of Lessor's Liens), all of the Lessor's
right, title and interest in and to any Engines which were replaced by engines
pursuant to this Section 10.02(c), and shall deliver to the Lessee such
instrument as the Lessor shall have received from the Indenture Trustee
releasing such Engines from the Lien of the Indenture.
(d) Termination of the Lessee's Obligations. Upon compliance by
the Lessor and the Lessee with the provisions of this Section 10.02 and upon
compliance by the Lessee with the further provisions of this Article 10, the
obligation of the Lessee to pay Basic Rent with respect to the Aircraft shall
cease for any Rent Payment Date occurring after the Proposed Termination Date
and the Term shall end effective as of the Termination Date.
Section 10.03. Voluntary Termination as to Engines. The Lessee
shall have the right at its option and at any time, on at least thirty (30)
days' prior written notice to the Lessor, to terminate this Lease with respect
to any Engine not then installed or held for use on the Airframe, provided that
prior to the date of such termination, the Lessee shall comply with the terms
of Section 11.04 hereof to the same extent as if an Event of Loss had occurred
with respect to such Engine.
ARTICLE 11
LOSS, DESTRUCTION, REQUISITION
Section 11.01. Lessee's Election Rights. The Lessee shall
notify the Lessor, the Indenture Trustee and the Owner Participant as soon as
practicable but in no event more than 10 Business Days following the occurrence
of an event which constitutes, or would with the passage of time constitute, an
Event of Loss with respect to the Airframe or with respect to the Airframe and
the Engines or engines then installed on the Airframe. By written notice to
the Lessor, the Indenture Trustee and the Owner Participant delivered within 60
days of the occurrence of any Event of Loss, the Lessee shall have the right to
elect the alternative set forth in Section 11.02 hereof or the alternative set
forth in Section 11.03 hereof. The Lessee's failure to make such election
within said 60-day period shall be deemed to be an election of the alternative
set forth in Section 11.02 hereof.
Section 11.02. Payment of Stipulated Loss Value. (a) The Lessee
shall, if it has so elected or is deemed to have so elected under Section 11.01
hereof, pay to the Lessor, by wire transfer of immediately available funds on
the earlier of (i) the third Business Day following receipt in full of
insurance proceeds or requisition proceeds, described in Section 11.05 hereof,
in connection with such Event of Loss and (ii) the 120th day after the
occurrence of such Event of Loss (the earlier of such dates being referred to
herein as the "Loss Payment Date"), the sum of (A) the Stipulated Loss Value
for the Aircraft, determined as of the Stipulated Loss Value Determination Date
next preceding the Loss Payment Date (or, if the Loss Payment Date occurs on a
Stipulated Loss Value Determination Date, determined as of such Stipulated Loss
Value Determination Date) together with interest on such amount at the Debt
Rate from such Stipulated Loss Value Determination Date to the Loss Payment
Date, plus (B) any and all Basic Rent due and payable on or prior to the
relevant Stipulated Loss Value Determination Date and unpaid, plus (C) any and
all Supplemental Rent due and payable on or prior to such Loss Payment Date,
plus (D) all other amounts owing by the Lessee or the Owner Trustee to the
Indenture Trustee or the Holders under the Indenture and the other Operative
Agreements, plus (E) any reasonable out-of-pocket expenses incurred in
connection with such Event of Loss and the related prepayment of the
Certificates by the Lessor, the Owner Participant and the Indenture Trustee,
minus (F) if the relevant Stipulated Loss Value Determination Date is a Rent
Payment Date, the portion, if any, of the Basic Rent installment due and paid
by the Lessee on such Stipulated Loss Value Determination Date pursuant to
Section 3.02 hereof to the extent such Basic Rent installment (or portion
thereof) is designated on Schedule II hereto as being payable in advance,
together with an imputed interest amount in respect of such advance payment of
Basic Rent (or portion thereof) at the Debt Rate from the date of payment of
such Basic Rent installment (or portion thereof) by the Lessee to the Loss
Payment Date; provided that in no event shall there be subtracted pursuant to
clause (F) an amount such that the Holders shall not be paid in full.
(b) Termination of Lease; Title Transfer. Upon payment in full
of the amounts due pursuant to Section 11.02(a) hereof, the obligation of the
Lessee to pay Basic Rent on any Rent Payment Date occurring subsequent to the
payment of such amounts shall terminate and the Term shall end. Further, upon
such payment, the Lessor will transfer to the Lessee, without recourse or
warranty (except as to the absence of Lessor's Liens), all of the Lessor's
right, title and interest, if any, in and to the Airframe, Engines and engines
with respect to which such Event of Loss occurred, as well as all of the
Lessor's right, title and interest in and to any Engines constituting part of
the Aircraft but not installed on the Airframe when such Event of Loss
occurred, and will deliver to the Lessee such instrument as the Lessor shall
have received from the Indenture Trustee, releasing the Aircraft from the Lien
of the Indenture.
Section 11.03. Replacement of Airframe and Engines. (a)
Generally. So long as no Payment Default, Bankruptcy Default or Event of
Default shall have occurred and be continuing, and subject to Section 11.01
hereof, if the Lessee has elected to replace the Airframe and Engines suffering
an Event of Loss pursuant to this Section 11.03, the Lessee shall cause to be
duly conveyed to the Lessor within one hundred twenty (120) days after the
occurrence of such Event of Loss, as replacement for the Airframe and Engines
with respect to which such Event of Loss has occurred, good and marketable
title to an Airbus A300-600 series airframe manufactured no earlier than
January 1, 1997 (the "Replacement Airframe") and good and marketable title to a
number of Replacement Engines equal to the number of Engines with respect to
which an Event of Loss has occurred, provided that following compliance with
all other terms of this Section 11.03 each Engine shall be of identical make
and model and, in the case of such Replacement Airframe and each such
Replacement Engine, owned by the Lessee free and clear of all Liens not
excepted in Sections 6.01(a), (b), (c) and (e) hereof, duly certified as an
airworthy aircraft by the Aeronautics Authority, and having in the case of the
Replacement Airframe a value, remaining useful life and utility, and in the
case of the Replacement Engines a value and utility, at least equal to, and
being in as good operating condition as, the Airframe and Engines with respect
to which such Event of Loss occurred, assuming that the Airframe and Engines
were then in the condition and state of airworthiness required to be maintained
by the terms of this Lease immediately prior to the occurrence of such Event of
Loss. In such case and as a condition to such substitution the Lessee, at its
own cost and expense, will also promptly:
(i) furnish the Indenture Trustee with originals of, and the
Lessor with copies of, full warranty bills of sale, in form and substance
satisfactory to the Lessor and the Indenture Trustee, with respect to such
Replacement Airframe and Replacement Engines together with an assignment
in form and substance satisfactory to the Lessor and the Indenture Trustee
of any and all manufacturer's warranties applicable thereto and a consent
reasonably satisfactory to the Lessor and the Indenture Trustee from such
manufacturer or manufacturers to such assignment;
(ii) cause such Replacement Airframe and Replacement Engines to
be duly registered in the name of the Lessor pursuant to the
Transportation Code or the applicable laws of any other jurisdiction in
which the Aircraft may then be registered in accordance with Section
6.03(b) of the Participation Agreement;
(iii) cause a Lease Supplement with respect to such Replacement
Airframe and Replacement Engines to be duly executed by the Lessee and
recorded pursuant to the Transportation Code, or the applicable laws,
rules and regulations of any other jurisdiction in which the Aircraft may
then be registered as permitted by Section 6.03(b) of the Participation
Agreement;
(iv) furnish the Lessor, the Indenture Trustee and the Owner
Participant with an appraisal or other report of a nationally recognized
aircraft appraiser based on an inspection of such Replacement Airframe and
Replacement Engines reasonably satisfactory to the Indenture Trustee and
the Owner Participant certifying that such Replacement Airframe has a
value, remaining useful life and utility, and such Replacement Engines
have a utility and, in the aggregate, value, at least equal to, and are in
as good operating condition as, the Airframe and Engines replaced,
assuming such Airframe and Engines were in the condition and repair
required by the terms of this Lease immediately prior to the occurrence of
such Event of Loss;
(v) furnish the Lessor, the Indenture Trustee and the Owner
Participant with such evidence as the Lessor or the Indenture Trustee may
reasonably request of compliance with the insurance provisions of Article
13 hereof with respect to such Replacement Airframe and Replacement
Engines;
(vi) provide the Owner Participant and the Lessor with (A) an
opinion of counsel selected by the Owner Participant and reasonably
acceptable to the Lessee (which opinion shall be reasonably satisfactory
in form and substance to the Owner Participant and the Lessor) that the
Owner Participant and the Lessor will suffer no adverse tax consequence
not otherwise indemnified for as of the Delivery Date as a result of such
substitution or (B) an indemnity reasonably acceptable to the Lessor and
the Owner Participant against such consequences, which indemnity shall be
bonded or otherwise secured to the reasonable satisfaction of the Lessor
and the Owner Participant, together with an opinion of counsel (otherwise
complying with clause (vi)(A) above) that there is Substantial Authority
(as defined in the Tax Indemnity Agreement) that neither the Owner
Participant nor the Lessor will suffer any adverse tax consequences as a
result of such substitution or, at the Lessee's discretion, a More Likely
than Not Opinion (as so defined) to the same effect;
(vii) comply with the provisions of Section 9.08 of the
Indenture;
(viii) cause an Indenture and Security Agreement Supplement with
respect to such Replacement Airframe and Replacement Engines to be duly
executed by the Lessor and the Indenture Trustee and recorded pursuant to
the Transportation Code, or the applicable laws, rules and regulations of
any other jurisdiction in which the Aircraft may then be registered as
permitted by Section 6.03(b) of the Participation Agreement in order that
the Lien of the Indenture shall constitute a first priority, duly
perfected Lien and security interest on and in respect of such Replacement
Airframe and Replacement Engines;
(ix) take such other action, including the filing of UCC
financing statements naming the Indenture Trustee as a secured party with
the Secretary of State of Connecticut and the filing of a notice with the
Secretary of State of Tennessee, as the Lessor or the Indenture Trustee
may reasonably request in order that such Replacement Airframe and
Replacement Engines shall be duly and properly titled in the Lessor,
leased under this Lease and subjected to the Lien of the Indenture to the
same extent as the replaced Airframe and Engines;
(x) furnish the Indenture Trustee with an opinion (reasonably
satisfactory in form and substance to the Lessor, the Owner Participant
and the Indenture Trustee) of counsel to the Lessee (which may be the
Lessee's General Counsel) addressed to the Indenture Trustee and the Owner
Participant to the effect that (A) the Lessor has good title to such
Replacement Airframe and Replacement Engines, and (B) such Replacement
Airframe and Replacement Engines have been validly subjected to the Lien
of the Indenture (with the effect and result that the Indenture
constitutes a first priority duly perfected security interest and Lien on
such Replacement Airframe and Replacement Engines); and
(xi) cause to be delivered to the Lessor, the Owner Participant
and the Indenture Trustee an opinion of counsel to the Lessee addressed to
the Lessor, the Owner Participant and the Indenture Trustee as to the due
registration of the Aircraft and the due recordation of the requisite
documents or instruments and the validity and perfection of the Lien in
such Replacement Airframe and Replacement Engines.
(b) Title to Replaced Equipment. Upon compliance by the Lessee
with the terms of Section 11.03(a) hereof, the Lessor will transfer to the
Lessee (subject to any insurer's salvage rights), without recourse or warranty
(except as to the absence of Lessor's Liens), all of the Lessor's right, title
and interest, if any, in and to the Airframe and Engines with respect to which
such Event of Loss occurred. In connection with such transfer, the Lessee
shall prepare and the Lessor shall execute or forward to the Indenture Trustee
for execution, as the case may be, all in recordable form, a xxxx of sale
evidencing such transfer, a release of the Airframe and Engines with respect to
which such Event of Loss occurred from the Indenture and such other documents
as the Lessee reasonably requests, all at the Lessee's sole cost and expense.
Any Engine constituting part of the Aircraft, but not installed on the Airframe
when such Event of Loss occurred, shall continue to be property of the Lessor
and leased under this Lease as part of the same equipment as the Replacement
Airframe and Replacement Engines.
(c) Definitions. Each Replacement Airframe and Replacement
Engine shall be deemed part of the property leased under this Lease, each such
Replacement Airframe shall be deemed an "Airframe," each such Replacement
Engine shall be deemed an "Engine" and each such Replacement Airframe and
Replacement Engine shall be deemed part of the same Aircraft as was the
Airframe or Engine replaced.
(d) Rent Adjustments. An Event of Loss covered by this Section
11.03 shall not result in any change in Basic Rent, Stipulated Loss Values or
Termination Values but may result in payments pursuant to the Tax Indemnity
Agreement and the Participation Agreement.
(e) Time Limitations. If the Lessee has elected to proceed
under this Section 11.03 but has not fully performed its obligations under this
Section 11.03 within 120 days of the occurrence of the applicable Event of
Loss, in the event that any amounts held by the Lessor (or, so long as the
Indenture shall be in effect, the Indenture Trustee) in respect of such Event
of Loss are less than the Stipulated Loss Value thereof, the Lessee will
deposit with the Lessor or the Indenture Trustee, as the case may be, the
amount of any deficiency as security on such 120th day. If the Lessee has
elected to proceed under this Section 11.03 but has not fully performed its
obligations under this Section 11.03 within 180 days of the occurrence of such
Event of Loss, the Lessee shall be deemed to have elected to proceed under
Section 11.02 hereof and shall immediately perform its obligations thereunder,
and the Indenture Trustee, or the Lessor if the Indenture shall have been
discharged, shall apply the amounts held by it pursuant to the preceding
sentence as a credit against such obligations.
Section 11.04. Event of Loss with Respect to an Engine. (a)
Generally. Upon the occurrence of an Event of Loss with respect to an Engine
under circumstances in which there has not occurred an Event of Loss with
respect to the Airframe, the Lessee shall give the Lessor and the Indenture
Trustee prompt written notice thereof and shall, as soon as practicable but in
any event within sixty (60) days after the occurrence of such Event of Loss,
duly convey or cause to be conveyed to the Lessor, a Replacement Engine for the
Engine with respect to which such Event of Loss occurred, good and marketable
title to a Replacement Engine, free and clear of all Liens not excepted in
Sections 6.01(a), (b), (c) and (e) hereof and having a value and utility at
least equal to, and being in as good operating condition as, the Engine with
respect to which such Event of Loss occurred, assuming such Engine was of the
value and utility and in the condition and repair required by the terms of this
Lease immediately prior to the occurrence of such Event of Loss, provided that
after any replacement, both Engines shall be of identical make and model and
any Replacement Engines of a different manufacturer than the original Engines
shall be then commonly in use in the commercial aviation industry on Airbus
A300-600 series airframes. The standards set forth in this Section with
respect to Replacement Engines shall apply upon any replacement or substitution
of an Engine with a Replacement Engine pursuant to any other provision of this
Lease.
(b) Conditions Precedent. Prior to or at the time of any
conveyance of an Engine pursuant to Section11.04(a) hereof, the Lessee, at its
own cost and expense will:
(i) furnish the Lessor with an original of, and the Indenture
Trustee with a copy of, a full warranty xxxx of sale, in form and
substance satisfactory to the Lessor, with respect to such Replacement
Engine together with an assignment in form and substance satisfactory to
the Lessor and the Indenture Trustee of any and all manufacturer's
warranties applicable thereto and a consent reasonably satisfactory to the
Lessor and the Indenture Trustee from such manufacturer to such
assignment;
(ii) cause a Lease Supplement covering such Replacement Engine
to be duly executed by the Lessee and filed for recordation pursuant to
the Transportation Code, or the applicable laws, rules and regulations of
any other jurisdiction in which the Aircraft may then be registered as
permitted by Section 6.03(b) of the Participation Agreement and, if the
Engine being replaced was registered under the applicable laws of the
jurisdiction in which the Aircraft is then registered, the Replacement
Engine shall be registered in the same fashion;
(iii) furnish the Lessor and the Indenture Trustee with a
certificate of a nationally recognized aircraft appraiser reasonably
satisfactory to the Lessor and the Indenture Trustee certifying that such
Replacement Engine has a value and utility at least equal to, and is in as
good operating condition as, the Engine replaced, assuming such Engine was
in at least the condition and repair required by the terms of this Lease
immediately prior to the occurrence of such Event of Loss;
(iv) furnish the Lessor with such evidence of compliance with
the insurance provisions of Article 13 hereof with respect to such
Replacement Engine as the Lessor or the Indenture Trustee may reasonably
request;
(v) provide the Owner Participant and the Lessor with (A) an
opinion of counsel selected by the Owner Participant and reasonably
acceptable to the Lessee (which opinion shall be reasonably satisfactory
in form and substance to the Owner Participant and the Lessor) that it
will suffer no adverse tax consequences not otherwise indemnified for as
of the effective date of this Agreement as a result of such substitution
or (B)an indemnity reasonably acceptable to the Lessor and the Owner
Participant against such consequences, which indemnity shall be bonded or
otherwise secured to the reasonable satisfaction of the Lessor and the
Owner Participant;
(vi) comply with the provisions of Section 9.08 of the
Indenture;
(vii) cause an Indenture and Security Agreement Supplement with
respect to such Replacement Engine to be duly executed by the Lessor and
the Indenture Trustee and recorded pursuant to the Transportation Code, or
the applicable laws, rules and regulations of any other jurisdiction in
which the Aircraft may be registered as permitted by Section 6.03(b) of
the Participation Agreement in order that the Indenture shall constitute a
first priority duly perfected Lien and security interest on and in respect
of such Replacement Engine;
(viii) take such other action, including the filing of UCC
financing statements naming the Indenture Trustee as Secured Party with
the Secretary of State of Connecticut and a notice filing with the
Secretary of State of Tennessee, as the Lessor or the Indenture Trustee
may reasonably request in order that such Replacement Engine be duly and
properly titled in the Lessor, leased under this Lease and subjected to
the Lien of the Indenture to the same extent as the replaced Engine;
(ix) furnish the Lessor, the Owner Participant and the Indenture
Trustee with an opinion (reasonably satisfactory in form and substance to
the Lessor, the Owner Participant and the Indenture Trustee) of counsel to
the Lessee (which may be the Lessee's General Counsel) addressed to the
Lessor, the Indenture Trustee and the Owner Participant to the effect that
(A) the Lessor has good title to such Replacement Engine, and (B) such
Replacement Engine has been validly subjected to the Lien of the Indenture
(with the effect and result that the Indenture constitutes a first
priority duly perfected security interest and Lien on such Replacement
Engine); and
(x) take such other action as the Indenture Trustee may
reasonably request in order that such Replacement Engine be duly and
properly subjected to the Lien of the Indenture to the same extent as the
replaced Engine.
(c) Title Transfer. Upon compliance by the Lessee with the
terms of Sections 11.04(a) and (b) hereof, the Lessor will transfer to the
Lessee (subject to any insurer's salvage rights), without recourse or warranty
(except as to the absence of Lessor's Liens), all of the Lessor's right, title
and interest, if any, in and to the Engine with respect to which such Event of
Loss occurred. In connection with such transfer, the Lessee shall prepare and
the Lessor shall execute or forward to the Indenture Trustee for execution, as
the case may be, all in recordable form, a xxxx of sale evidencing such
transfer, a release of the Engine with respect to which such Event of Loss
occurred from the Indenture and such other documents as the Lessee reasonably
requests, all at the Lessee's sole cost and expense. Each Replacement Engine
shall, after such conveyance, be deemed part of the property leased under this
Lease. An Event of Loss covered by this Section 11.04 shall not result in any
change in Basic Rent, Stipulated Loss Values or Termination Values, but may
result in payments to be made pursuant to the Tax Indemnity Agreement and the
Participation Agreement.
Section 11.05. Application of Payments from the Government or
Others. (a) Generally. Any payments (other than insurance proceeds the
application of which is provided for in Section 13.03 hereof) received at any
time by the Lessor or by the Lessee from any governmental authority or any
other party, foreign or domestic, with respect to an Event of Loss resulting
from the condemnation, confiscation, theft or seizure of, or requisition of
title to or use of, the Airframe or any Engine will be applied, as appropriate,
in accordance with Section 11.05(b) or Section 11.05(c) hereof.
(b) Payments of Stipulated Loss Value. If the payments
described in Section 11.05(a) hereof are received with respect to the Airframe
or with respect to the Airframe and Engines or engines then installed on the
Airframe and the Lessee has elected the alternative set forth in Section 11.02
hereof, so much of such payments as shall not exceed the amount required to be
paid by the Lessee pursuant to Section 11.02 hereof shall be paid to the Lessor
(or, if the Lien of the Indenture has not been discharged, the Indenture
Trustee) in reduction of the Lessee's obligations under Section 11.02 hereof if
not already paid by the Lessee, or, if such obligations have already been
discharged in full by the Lessee, such payments shall be applied to reimburse
the Lessee for its payment of such Stipulated Loss Value and, if and to the
extent specifically included in such payment, to pay to the Lessee interest on
such amount of Stipulated Loss Value at the rate included in such payment if
any, or otherwise at the applicable Debt Rate, for the period from the date of
payment by the Lessee of the Stipulated Loss Value to the date of reimbursement
of the Lessee under this Section 11.05(b). The excess, if any, remaining after
such application shall be divided between the Lessor and the Lessee as their
respective interests may appear.
(c) Payment if the Lessee Elects Replacement. If the payments
described in Section 11.05(a) hereof are received with respect to the Airframe
or with respect to the Airframe and the Engines or engines then installed on
the Airframe and the Lessee has elected the alternative set forth in Section
11.03 hereof, or if such payments are received with respect to an Engine not
then installed on the Airframe under the circumstances contemplated by Section
11.04 hereof, all such payments shall, subject to Section 11.08 hereof, be paid
over to or retained by the Lessee, provided that the Lessee shall have fully
performed its obligations pursuant to Section 11.03 or Section 11.04 hereof, as
the case may be, with respect to the Event of Loss for which such payments are
made.
Section 11.06. Requisition of an Airframe and the Installed
Engines for Use by Government. In the event of the requisition for use by the
Government or any other government of registry of the Aircraft, or any agency
or instrumentality of either (a "Requisitioning Government") of the Airframe
and the Engines or engines then installed on the Airframe during the Term,
which requisition does not constitute an Event of Loss, the Lessee shall
promptly notify the Lessor, the Indenture Trustee and the Owner Participant of
such requisition and all of the Lessee's obligations under this Lease with
respect to such Airframe and Engines or engines shall continue to the same
extent as if such requisition had not occurred except to the extent that any
failure or delay in the performance or observance of such obligations (other
than obligations for the payment of Rent and, subject to Section 7.01(f)
hereof, the maintenance of required insurance) by the Lessee shall have been
caused by such requisition. All payments received by the Lessor, the Lessee or
any permitted sublessee or transferee from the Requisitioning Government for
such use of the Airframe and Engines or engines during the Term (other than any
such requisition which constitutes an Event of Loss, as to which the provisions
of Section11.05 hereof shall govern) shall, subject to Section11.08 hereof, be
paid over to, or retained by the Lessee or such permitted sublessee or
transferee unless a Payment Default, Bankruptcy Default or Event of Default
shall have occurred and be continuing (in which case such proceeds shall be
held (unless applied) pursuant to Section 23.01 hereof as security for Lessee's
obligations hereunder and under the Participation Agreement). All payments
received by the Lessor, the Lessee or any such permitted sublessee or
transferee from the Requisitioning Government for the use of the Airframe and
Engines or engines after the Term shall be paid over to, or retained by, the
Lessor (or the Lessee if it shall have purchased the Lessor's interest therein
in accordance with the provisions hereof). In the event of any such
requisition for use, the Lessee agrees to use reasonable efforts to obtain
reimbursement from the Requisitioning Government to the Lessor for damages
suffered by the Lessor and the Owner Participant as a result of such
requisition for use. The Lessee will endeavor to keep the Lessor informed as
to any negotiations between the Lessee and/or any permitted sublessee or
transferee and a Requisitioning Government with respect to any such requisition
and will consult with the Lessor regarding methods or procedures that are
appropriate to effect recovery from such Requisitioning Government for any
damages suffered by the Lessor and the Owner Participant by reason of such
requisition for use.
Section 11.07. Requisition for Use by Government of an Engine
Not Installed on the Airframe. In the event of the requisition for use by a
Requisitioning Government of registry of the Aircraft or any agency or
instrumentality thereof of any Engine not then installed on the Airframe, the
Lessee shall replace such Engine by complying with the terms of Section 11.04
hereof to the same extent as if an Event of Loss had occurred with respect to
such Engine as of the date of such requisition, and any payments received by
the Lessor or the Lessee from the Requisitioning Government with respect to
such requisition shall, subject to Section 11.08 hereof, be paid over to or
retained by the Lessee, provided that the Lessee shall have fully performed its
obligations under Section 11.04 hereof.
Section 11.08. Application of Payments During Existence of
Certain Defaults. Any amount referred to in Section 11.05, 11.06 or 11.07
hereof which is payable to the Lessee shall not be paid to the Lessee, or, if
it has been previously paid directly to the Lessee, shall not be retained by
the Lessee, if at the time of such payment a Payment Default, Bankruptcy
Default or Event of Default shall have occurred and be continuing, but shall be
paid to and held by the Lessor (or the Indenture Trustee so long as the Lien of
the Indenture is in effect) as provided in Article 23 hereof as security for
the obligations of the Lessee under this Agreement, and at such time as there
shall not be continuing any such Payment Default, Bankruptcy Default or Event
of Default, such amount to the extent not theretofore applied as provided
herein, shall be paid to the Lessee.
ARTICLE 12
RETURN OF AIRCRAFT
Section 12.01. Return of Aircraft. Unless the Aircraft is
purchased by the Lessee as provided in Section 4.02 hereof, at the end of the
Term, or upon the termination of this Lease pursuant to Article 10 or Article
17 hereof or otherwise, the Lessee, at its own cost and expense, will return
the Aircraft by delivering it to the Lessor on the last day of the Term or on
the Termination Date, as the case may be, at the Lessee's principal maintenance
facility in Memphis, Tennessee or such other location specified by the Lessor
pursuant to the next succeeding sentence (and reasonably acceptable to the
Lessee), within the continental United States (on the Lessee's route structure
as in effect on the return date) and the Airframe shall be fully equipped with
two Engines of the same or an improved make and model as were delivered on the
Delivery Date (or Replacement Engines), free and clear of all Liens (other than
Lessor's Liens), including any rights of third parties under pooling,
interchange, overhaul, repair or similar agreements or arrangements, it being
understood that all such Engines and Replacement Engines so returned shall be
of identical make and model and that any Replacement Engine shall be in at
least as good operating condition and have at least the same value and utility
as the Engines being replaced, assuming such Engines were in the condition
required hereunder. The Lessor will give the Lessee at least thirty (30) (or
five (5) in the case of a return pursuant to Article 17 hereof) days' prior
written notice of the place of such return; provided, however, that if the
Lessor shall have made the request for storage pursuant to Section 12.06
hereof, the Lessee shall return the Aircraft to the Lessor at the site of the
storage and provided further that if notice is not delivered the Aircraft shall
be returned in Memphis, Tennessee.
Section 12.02. Return of Engines. If any engine not owned by
the Lessor shall be delivered with the Airframe as set forth in Section 12.01
hereof, the Lessee, concurrently with such delivery, will, at its own cost and
expense furnish the Lessor with (i) a full warranty xxxx of sale, in form and
substance reasonably satisfactory to the Lessor, with respect to such engine,
(ii) an opinion of the Lessee's counsel to the effect that, upon such return,
the Lessor will acquire full right, title and interest to such engine free and
clear of all Liens (other than Lessor's Liens) and (iii) a certificate as
described in Section 11.04(b)(iii) hereof. The Lessee shall take such other
action as the Lessor may reasonably request in order that such Replacement
Engine shall be duly and properly titled in the Lessor free and clear of all
Liens (other than Lessor's Liens), and the Lessor will then (i) transfer to the
Lessee, without recourse or warranty (except as to the absence of Lessor's
Liens), and subject to the disclaimers provided in Section 5.01 hereof, all the
Lessor's right, title and interest in and to any Engine in lieu of which a
Replacement Engine has been delivered pursuant to Section 12.01 hereof, "as is,
where is" and (ii) deliver to the Lessee such instrument as the Lessor shall
have received from the Indenture Trustee, releasing such Engine from the Lien
of the Indenture.
Section 12.03. Return of Manuals. Upon the return of the
Aircraft, the Lessee shall deliver to the Lessor all original (or photocopied
or microfilmed copies thereof, if then permitted to be maintained in such form
under applicable law) logs, manuals (including, any service kits previously
furnished by a manufacturer at no cost to the Lessee), certificates and
technical data, and inspection, modification and overhaul records pertaining to
the Airframe, Engines or engines, which are required to be maintained under
applicable rules and regulations of the Aeronautics Authority or pursuant to
the Lessee's or any permitted sublessee's Aeronautics Authority-approved
maintenance program or which the Lessee would otherwise discard upon such
return and all original (or photocopied or microfilmed copies thereof, if then
permitted to be maintained in such form under applicable law) records
maintained with respect to the Aircraft under the maintenance program approved
by the aeronautical authority of any other country of registry of the Aircraft.
All records shall be returned in the format necessary to allow the Lessee or
any sublessee to comply with Section 12.04(a)(i) hereof.
Section 12.04. Condition of Aircraft. (a) Required Condition.
The Aircraft when returned to the Lessor shall, at the Lessee's own cost and
expense, meet the following requirements:
(i) it shall, unless otherwise requested by the Lessor not less
than 90 days prior to the end of the Term to retain the then-existing
registration of the Aircraft, be duly registered in the name of the Lessor
or its designee pursuant to the Transportation Code;
(ii) it shall be clean by airline and cargo handling operating
standards;
(iii) the Airframe shall be returned with the Engines, or any
replacements thereto as herein authorized, provided that the Airframe
shall have an aggregate of two Engines or engines (as herein authorized
under Section 12.02 hereof), both of the same make and model, installed
thereon, together with the equipment, accessories or parts installed
thereon on the Delivery Date or replacements therefor (as herein
authorized) and alterations, modifications and additions thereto made in
accordance with the provisions of this Lease;
(iv) it shall be in the condition required by Section 12.04(b)
hereof and in as good operating condition as when delivered to the Lessor
on the Delivery Date, ordinary wear and tear excepted;
(v) it shall have a currently effective airworthiness
certificate issued by the Aeronautics Authority;
(vi) it shall comply with any then applicable rules and
regulations imposed by the Aeronautics Authority and, without limitation
of the foregoing, terminate all airworthiness directives of, and mandatory
modifications required by, the Aeronautics Authority (or any government or
governmental authority, domestic or foreign, having jurisdiction over the
Aircraft) to be terminated during the Term of the Lease and each Engine
(including any Replacement Engine) shall be serviceable in accordance with
the Lessee's FAA-approved maintenance program;
(vii) it shall be free and clear of all Liens and rights of
others (other than Lessor's Liens) including, without limitation, rights
of third parties under pooling, interchange, overhaul, repair and other
similar agreements or arrangements referred to in Section 7.02(a) hereof;
and
(viii) it shall be in a standard cargo configuration.
(b) Remaining Time. If, at the time of return of the Aircraft,
the Airframe is not being maintained under a continuous maintenance program,
then the Airframe shall have remaining until the next scheduled "C" check at
least 25% of the allowable hours between "C" checks permitted under the
Lessee's FAA-approved maintenance program. If, at the time of return of the
Aircraft, the Airframe is subject to a continuous maintenance program, there
will be no time-before-overhaul requirement. If, at the time of return of the
Aircraft, the Engines are not being maintained under an on-condition
maintenance program, then the average number of hours on such Engines remaining
until the next scheduled engine heavy maintenance visit shall be at least 25%
of the allowable hours between engine heavy maintenance visits permitted under
the Lessee's FAA-approved maintenance program. If, at the time of return of
the Aircraft, the Engines are subject to an on-condition maintenance program,
there will be no time-before-overhaul requirement. With respect to maintenance
under the Lessee's FAA-approved maintenance program, the Lessee shall have
treated the Aircraft in a nondiscriminatory manner with other Airbus A300-600
series aircraft in the Lessee's fleet, and the Aircraft shall be free and clear
of all Liens and rights of others other than Lessor's Liens and shall be in
compliance in every material respect with the Lessee's maintenance program as
if the Term were not ending.
Section 12.05. Delayed Return of Aircraft. (a)If the return of
the Aircraft to the Lessor in compliance with the terms of this Lease shall be
delayed beyond the scheduled end of the Term because of the occurrence of an
event described in clause (iii)(2)(B) of the definition of Event of Loss, this
Lease shall not terminate but shall continue in full force and effect until the
expiration of the six-month period (or, so long as the Lessor shall have
received at least six month's notice of the date on which such shorter period
ends, such shorter period referred to in said clause (iii)(2)(B)) after the
scheduled end of the Term, provided that (i) Stipulated Loss Value and
Termination Value during such extension shall be an amount determined in
accordance with Section 4.01(b) hereof, (ii) the Lessee shall pay on demand, as
Basic Rent for each day of such delay and this Lease shall continue, an amount
equal to the daily equivalent of the average Basic Rent paid during the Basic
Term and any then expiring Renewal Term, or such higher compensation being paid
by the Government pursuant to the CRAF Program and (iii) neither the Lessee nor
any other Person shall use or operate the Aircraft in any manner, except
pursuant to the activation of such CRAF Program.
(b) In any other situation in which the Aircraft is not returned
to the Lessor upon the expiration of the Term (other than due to a purchase of
the Aircraft by the Lessee pursuant to this Lease or by a purchaser under
Article 10 hereof), the Lessee shall pay on demand as Basic Rent for each day
of such delay an amount equal to the Rent per diem at a rate equal to the Fair
Market Rental and this Lease shall continue for up to six (6) months after the
end of the Term; provided, however, that nothing in this paragraph shall be
deemed (i) to relieve the Lessee in any respect from any Default or Event of
Default or claims with respect thereto arising from the failure to return the
Aircraft at the time or in the condition required by the Operative Agreements
or (ii)to permit the Lessee or any sublessee to operate or use the Aircraft
otherwise than in connection with effecting such return.
Section 12.06. Storage. Upon any expiration or termination of
this Lease, at the written request of the Lessor given at least 15 days prior
to such expiration or termination, the Lessee will arrange, or will cause to be
arranged, at no charge to the Lessor (subject, however, to the last sentence of
this Section 12.06), storage at a ramp storage facility for the Aircraft at the
Lessee's principal maintenance facilities in Memphis, Tennessee or one of the
Lessee's other maintenance facilities or at a location selected by the Lessee
used as a location for the parking or storage of aircraft for a period of up to
30 days; provided that if storage is available at no additional cost or expense
to the Lessee at the location at which the Lessor has specified pursuant to
Section 12.01 hereof that return of the Aircraft shall take place, the Lessee
shall provide storage at such location. At the end of such 30 day period, if
the Lessor so requests within 10 days of before the end of such period, the
Lessee will continue to provide such ramp storage facility at such facility or
location for an additional 30 days at the Lessor's expense. If the Lessee is
required to move the Aircraft from one storage facility to another, such move
shall be at the risk and expense of the Lessor. The maintenance and risk of
loss of, and responsibility for obtaining insurance on, the Aircraft shall be
the responsibility of the Lessor during any period of storage; provided,
however, the Lessee will, upon written request of the Lessor and at the
Lessor's expense, not to exceed the Lessee's incremental cost of such service,
obtain insurance for such property (including, if possible, coverage through
its fleet policy).
Section 12.07. Special Markings. If requested by the Lessor,
the Lessee shall, at the Lessee's cost, remove or paint over all insignias and
other distinctive markings of the Lessee or any sublessee on the Aircraft and
repaint the stripped down areas in a workmanlike manner to match exterior
colors.
Section 12.08. Lessor's Option to Purchase Parts. At any time
after the Lessee has advised the Lessor that it has determined not to renew
this Lease or purchase the Aircraft, or the Aircraft is otherwise to be
returned to the Lessor, the Lessee shall advise the Lessor of any Part which
the Lessee intends, and is permitted, to remove as provided in Section 9.02(b)
above, and the Lessor may, at its option, upon 30 days' notice to the Lessee,
purchase any or all of such Parts from the Lessee upon the expiration of the
Term at their then Fair Market Value determined in accordance with the
provisions of Section 4.03 hereof. Upon any return of the Aircraft pursuant to
this Article 12, if the Lessor does not elect to exercise its option under this
Section 12.08, the Lessee will, at its own cost and expense, remove such Parts
described in subparagraph (i), (ii) or (iii) of Section 9.02(b) hereof as the
Lessor may request.
ARTICLE 13
INSURANCE
Section 13.01. Comprehensive Airline Liability and Property
Damage Liability Insurance. (a) Comprehensive Airline Liability and Property
Damage Liability Insurance. The Lessee, at its own cost and expense, will
maintain or cause to be maintained with respect to the Aircraft, comprehensive
airline liability insurance including, without limitation, passenger legal
liability and property damage liability insurance and cargo legal liability in
such amounts, against such risks (including, without limitation, contractual
liability and war risk and allied perils liability), with such retentions as
the Lessee customarily maintains with respect to similar aircraft and engines
which comprise the fleet of the Lessee (subject to the limitations set forth in
Section 13.06 hereof), and with such insurers (which shall be insurers of
recognized responsibility), and such insurance against such other risks as is
usually carried by similar corporations engaged in the same or similar business
and similarly situated as the Lessee and owning or operating aircraft and
engines similar to the Aircraft and Engines; provided that in no event shall
the limits of liability for all comprehensive airline liability insurance be
less than the amount, per occurrence, as set forth on the insurance certificate
delivered on the Delivery Date unless and only so long as the Aircraft is not
operated and appropriate insurance for the Aircraft on the ground is
maintained. The Lessee will also be required to maintain war risk insurance if
the Aircraft is operated in a war zone if such insurance is available on
commercially reasonable terms and if it is the custom for major international
Air Carriers flying comparable routes to carry such insurance.
(b) Government Indemnification. Notwithstanding Section
13.01(a) hereof, in the event of the requisition for use by the Government of
the Airframe or the Airframe and the Engines or engines then installed on the
Airframe, the Lessee shall maintain throughout the period of such requisition
such insurance as would otherwise be required under this Section 13.01;
provided that the Lessor shall accept, in lieu of such insurance coverage,
written indemnification or insurance from the Government which is substantially
the same as otherwise required under this Article 13.
(c) Policy Terms. Any policy of insurance carried and
maintained in accordance with this Section 13.01, and any policy taken out in
substitution or replacement for any such policy subject to the terms,
conditions and limitations thereof, shall:
(i) name or be amended to name the Lessor in its individual
capacity and as owner of the Aircraft, the Indenture Trustee in its
individual capacity and as trustee/mortgagee of the Aircraft, the Pass
Through Trustee, each Liquidity Provider, the Owner Participant and the
Owner Participant Guarantor and each of their respective officers and
directors in their respective capacities as such as additional insureds
(hereinafter in this paragraph (c) sometimes referred to as "Additional
Insured");
(ii) provide that, in respect of the interest of any Additional
Insured in such policies, the insurance shall not be invalidated by any
action or inaction of the Lessee or any Additional Insured as defined
under the policy of insurance required under this Section 13.01 (other
than any action or inaction of such Additional Insured) and shall insure
each Additional Insured regardless of any breach or violation of any
warranty, declaration or condition contained in such policies by the
Lessee or any other Additional Insured (other than any breach or violation
of any warranty, declaration or condition by such Additional Insured) as
defined under the policy of insurance required under this Section 13.01;
(iii) provide that if such insurance is cancelled for any reason,
or any substantial change is made in the policies which adversely affect
the scope of the coverage required herein, or if such insurance is allowed
to lapse for nonpayment of premium, such cancellation, change or lapse
shall not be effective as to any Additional Insured for thirty (30) days
(except in the case of war risk coverage in which event the applicable
period shall be seven (7) days or such other period as may be customary)
after receipt by each such Additional Insured of written notice from such
insurers or such insurers' broker of such cancellation, change or lapse;
(iv) provide that the insurers shall waive any rights of
subrogation against each Additional Insured, to the extent that the Lessee
has waived its rights under this Lease and the Participation Agreement;
provided that the exercise by insurers of rights of subrogation derived
from rights retained by the Lessee shall not, in any way, delay payment of
any claim that would otherwise be payable by such insurers but for the
existence of rights of subrogation derived from rights retained by the
Lessee;
(v) provide that all of the provisions of such policy shall
operate in the same manner as if there were a separate policy covering
each Additional Insured; provided, that such policies shall not operate to
increase any insurer's limit of liability;
(vi) be primary, without right of contribution from any other
insurance which is carried by any Additional Insured with respect to its
interest in the Aircraft;
(vii) provide that no Additional Insured shall have any
obligation or liability for premiums or other payments, if any, in
connection with such insurance; and
(viii) provide that such insurer shall waive the right of such
insurer to any set-off or counterclaim or any other deduction, whether by
attachment or otherwise, in respect of any liability of any Additional
Insured.
Section 13.02. Insurance Against Loss or Damage to Aircraft and
Engines. (a) Hull Insurance. The Lessee, at its own cost and expense, shall
maintain or cause to be maintained in effect, with insurers of recognized
responsibility, all-risk ground and flight aircraft hull insurance covering the
Aircraft and all-risk coverage with respect to any Engines and Parts while
temporarily removed from the Aircraft and not replaced by similar Engines or
Parts, including in each case war-risk and allied perils, hijacking (air
piracy) and governmental confiscation and expropriation insurance (except in
the country of registry) with such retentions (subject to the limitations set
forth in Section 13.06 hereof) and in such form, upon such terms and conditions
(including coverage for cost of claims), and in amounts as the Lessee
customarily maintains with respect to the aircraft in the Lessee's fleet of the
same type and model and operated on the same routes as the Aircraft (except
that the Lessee shall be required to maintain war-risk, hijacking (air piracy)
and governmental confiscation and expropriation insurance (except in the
country of registry) if the Aircraft is operated on routes where the custom is
for major international Air Carriers flying comparable routes to carry such
insurance), provided that such insurance shall at all times while the Aircraft
is subject to this Lease and the Lien of the Indenture be on an agreed-value
basis for an amount not less than an amount equal to the Stipulated Loss Value
for the relevant period for the Aircraft as set forth on Schedule III to this
Lease.
(b) Policy Terms. Any policies carried and maintained in
accordance with this Section 13.02 and any policies taken out in substitution
or replacement for any such policies subject to the terms, conditions and
limitations thereof shall:
(i) name or be amended to name the Lessor in its individual
capacity and as owner of the Aircraft (or, so long as the Indenture shall
not have been discharged, the Indenture Trustee) as an additional insured
and as the sole loss payee (hereinafter in this paragraph (b) sometimes
referred to as "Loss Payee");
(ii) provide with respect to coverage provided under this
Section 13.02, that (i) in the event of a loss involving proceeds in the
aggregate in excess of $6,000,000, the proceeds in respect of such loss up
to an amount equal to the Stipulated Loss Value for the Aircraft shall be
payable to the Lessor (or, so long as the Indenture shall not have been
discharged, the Indenture Trustee), it being understood and agreed that in
the case of any payment to the Lessor (or the Indenture Trustee) otherwise
than in respect of an Event of Loss, the Lessor (or the Indenture Trustee)
shall, unless a Payment Default, a Bankruptcy Default or an Event of
Default shall have occurred and be continuing, upon receipt of evidence
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, pay the amount of such payment to the Lessee or
its order, and (ii) the entire amount of any loss involving proceeds in
the aggregate of $6,000,000 or less or the amount of any proceeds of any
loss in excess of the Stipulated Loss Value for the Aircraft shall be paid
to the Lessee or its order unless a Payment Default, a Bankruptcy Default
or an Event of Default shall have occurred and be continuing and the
insurers have been notified thereof by the Lessor or the Indenture Trustee
(and if the insurers have notice of a Payment Default, a Bankruptcy
Default or an Event of Default, such payment shall be made to the
Indenture Trustee);
(iii) provide that if such insurance is cancelled for any reason
or any substantial change is made in the policies which adversely affect
the scope of the coverage required herein, or if such insurance is allowed
to lapse for nonpayment of premium, such cancellation, change or lapse
shall not be effective as to the Loss Payee for thirty days (except in the
case of war-risk coverage in which event the applicable period shall be
seven (7) days or such other period as may be customary) after receipt by
the Loss Payee of written notice from such insurer of such cancellation,
change or lapse;
(iv) provide that, in respect of the interest of the Lessor (in
its individual capacity and as the Owner Trustee), the Owner Participant
or the Indenture Trustee (in their respective capacities as such) in such
policies, the insurance shall not be invalidated by any action or inaction
of the Lessee or the Loss Payee (other than any action or inaction of such
Loss Payee) and shall insure the Lessor (in its individual capacity and as
Owner Trustee), the Owner Participant and the Indenture Trustee regardless
of any breach or violation of any warranty, declaration or condition
contained in such policies by the Lessee or the Loss Payee (other than any
breach or violation of any warranty, declaration or condition by the Loss
Payee) as defined under the policy of insurance required under this
Section 13.02;
(v) provide that the insurers shall waive any rights of
subrogation against the Lessor (in its individual capacity and as Owner
Trustee), the Owner Participant and the Indenture Trustee to the extent
that the Lessee has waived its rights under this Lease or the
Participation Agreement; provided that the exercise by insurers of rights
of subrogation derived from rights retained by the Lessee shall not, in
any way, delay payment of any claim that would otherwise be payable by
such insurers but for the existence of rights of subrogation derived from
rights retained by the Lessee;
(vi) be primary and without rights of contribution from any
other insurance which is carried by the Loss Payee with respect to its
interest in the Aircraft;
(vii) provide that (except in the case of insurance with respect
to Engines and spare parts that have been removed from the Aircraft and
replaced with other Engines or engines, or spare parts, as the case may
be) such insurer shall waive any right of such insurer to any set-off or
counterclaim or any other deduction, whether by attachment or otherwise,
in respect of any liability of the Loss Payee;
(viii) provide that (except in the case of insurance with respect
to Engines and spare parts that have been removed from the Aircraft and
replaced with other Engines or engines or spare parts, as the case may be)
no Loss Payee shall have any obligation or liability for premiums or other
payments, if any, in connection with such insurance; and
(ix) in the event that separate policies are maintained to cover
all-risk ground and flight aircraft, hull and war risks and allied perils
insurance, include a 50/50 provisional claims settlement clause as
contained in the policies of insurance maintained by the Lessee with
respect to all other aircraft in the Lessee's fleet, and a copy of the
50/50 provisional claims settlement clause in effect on the Delivery Date
shall be attached to the insurance certificate issued on the Delivery
Date.
Section 13.03. Application of Insurance Proceeds. (a)
Generally. All insurance proceeds (other than proceeds from policies carried
by the Lessor, the Indenture Trustee or the Owner Participant) received under
policies described in Section 13.02 hereof as the result of the occurrence of
an Event of Loss with respect to the Airframe or an Engine will be applied as
follows:
(i) if such proceeds are received with respect to the Airframe
or with respect to the Airframe and the Engines or engines then installed
on the Airframe and the Lessee has elected or is deemed to have elected
the alternative set forth in Section 11.02 hereof, so much of such
proceeds as shall not exceed the amounts required to be paid by the Lessee
pursuant to said Section 11.02 hereof shall be applied in reduction of the
Lessee's obligation to pay such amounts if not already paid by the Lessee,
or if already paid by the Lessee, shall be applied to reimburse the Lessee
for its payment of such amounts, provided that no Payment Default,
Bankruptcy Default or Event of Default shall have occurred and be
continuing, and the balance, if any, of such proceeds remaining will be
paid to the order of the Lessee; if and so long as the foregoing proviso
is not satisfied, such proceeds shall be held (unless applied) pursuant to
Section 23.01 hereof as security for the Lessee's obligations hereunder
and under the Participation Agreement; or
(ii) if such proceeds are received with respect to the Airframe
or the Airframe and the Engines or engines then installed on the Airframe
and the Lessee has elected the alternative set forth in Section 11.03
hereof, or if such proceeds are received with respect to an Engine not
then installed on the Airframe and not replaced by an Engine or engine
under the circumstances contemplated by Section 11.04 hereof, all such
proceeds shall be paid to the Indenture Trustee (unless the Indenture has
been discharged in which case paid to the Lessor) for disbursement to the
order of the Lessee, after the Lessee shall have fully performed the terms
of Section 11.03 or 11.04 hereof, as applicable, with respect to the Event
of Loss for which such proceeds are paid, provided that no Payment
Default, Bankruptcy Default or Event of Default shall have occurred and be
continuing; if and so long as the foregoing proviso is not satisfied, such
proceeds shall be held (unless applied) pursuant to Section 23.01 hereof
as security for the Lessee's obligations hereunder and under the
Participation Agreement.
(b) Payment if no Event of Loss. The insurance proceeds of any
property damage loss not constituting an Event of Loss with respect to the
Airframe or an Engine will be applied in payment (or to reimburse the Lessee)
for repairs or for replacement property in accordance with Articles 7 and 8
hereof, if not already paid for by the Lessee, and any balance remaining after
compliance with said Articles 7 and 8 hereof with respect to such loss shall be
paid to the order of the Lessee, provided that no Payment Default, Bankruptcy
Default or Event of Default shall have occurred and be continuing; if and so
long as the foregoing proviso is not satisfied, such proceeds shall be held
(unless applied) pursuant to Section 23.01 hereof as security for the Lessee's
obligations hereunder and under the Participation Agreement.
(c) Information. If any Additional Insured becomes subject to
any claim covered by any insurance policy maintained pursuant to this Article
13, the Lessee shall make available any information required by such Additional
Insured in connection with such claim.
Section 13.04. Reports. On or before the Delivery Date and
thereafter annually on or before the scheduled expiration date for such policy
during the Term, the Lessee shall cause an aviation insurance broker to furnish
to the Lessor and the Indenture Trustee a signed report, stating in reasonable
detail the types of coverage and limits carried and maintained on the Aircraft
and certifying that such insurance complies with the terms and conditions of
this Lease. The Lessee will cause its aviation insurance broker to advise the
Lessor, the Owner Participant and the Indenture Trustee in writing promptly of
any default in the payment of any premium and of any other act or omission on
the part of the Lessee of which it has knowledge and which might invalidate,
cause cancellation of or render unenforceable all or any part of any insurance
carried by the Lessee with respect to the Aircraft. The Lessee will cause such
insurance broker to agree to advise the Lessor, the Indenture Trustee and the
Owner Participant in writing if and when it becomes evident to such broker that
any insurance policy carried and maintained on the Aircraft pursuant to this
Article 13 will not be renewed at the expiration date. If the Lessee shall
fail to maintain insurance as required, the Lessor may, at its option, provide
such insurance, and in such event, the Lessee shall, upon demand, reimburse the
Lessor, as Supplemental Rent, for the cost of such insurance; provided,
however, that no exercise of said option shall affect the provisions of this
Lease, including the provisions that failure by the Lessee to maintain the
prescribed insurance shall constitute an Event of Default or otherwise
constitute a waiver of any other rights the Lessor may have against the Lessee.
Section 13.05. Lessor's Insurance. The Lessor, the Indenture
Trustee or the Owner Participant may insure the Airframe or any Engine at its
own cost and expense, including insuring the Aircraft for amounts in excess of
the Stipulated Loss Value of the Aircraft, provided that any insurance so
maintained by the Lessor, the Indenture Trustee or the Owner Participant shall
not result in a reduction of coverage or amounts payable under insurance
required or permitted to be maintained by the Lessee under this Article 13 or
increase the cost to the Lessee of maintaining such insurance; provided
further, that any insurance policies of the Lessor, the Indenture Trustee or
the Owner Participant insuring the Airframe or any Engine shall provide for a
release to the Lessee of any and all salvage rights in and to the Airframe or
any Engine.
Section 13.06. Self-Insurance. The Lessee may self-insure the
risks required to be insured against by Sections 13.01 and 13.02 hereof in such
reasonable amounts as are then applicable to other aircraft or engines of the
Lessee of value comparable to the Aircraft, but in no case shall such
self-insurance with respect to all aircraft in the Lessee's fleet in aggregate
exceed for any 12-month policy year an amount equal to the lesser of (i) 50% of
the highest insured value of any single aircraft in the Lessee's fleet and (ii)
1.5% of the average aggregate insured value from time to time of the Lessee's
entire aircraft fleet provided that a standard deductible per occurrence per
aircraft not in excess of the amount customarily allowed as a deductible in the
industry shall be permitted in addition to the above-mentioned self-insurance.
The foregoing shall not permit the Lessee to discriminate as between insurance
coverage on the Aircraft and insurance which the Lessee maintains with respect
to similar aircraft owned or operated by the Lessee operating on similar routes
in similar locations.
ARTICLE 14
INSPECTION
Section 14.01. Right of Inspection. At reasonable times, and
upon at least five (5) Business Days' prior written notice to the Lessee, the
Lessor, the Indenture Trustee or the Owner Participant, or their respective
authorized representatives, may inspect the Aircraft and upon at least ten (10)
Business Days' prior written notice, all Aeronautics Authority required books
and records of the Lessee and any sublessee relating to the maintenance of the
Aircraft and such Persons shall keep any information obtained thereby
confidential and shall not disclose the same to any Person, except to a Person
described in Section 18.01 of the Participation Agreement. Any such inspection
of the Aircraft shall be a visual, walk-around inspection of the interior and
exterior of the Aircraft and shall not include opening any panel, bays or the
like without the express consent of the Lessee (except to the extent any such
inspection takes place when any such panel, bays or the like are open).
Notwithstanding the previous sentence, unless a Payment Default, Bankruptcy
Default, material Default relating to maintenance (without giving effect to the
provisos to Section 7.01(b) hereof) or an Event of Default shall have occurred
and be continuing, the Lessor, the Indenture Trustee, the Owner Participant or
their respective authorized representatives shall each be entitled to inspect
the Aircraft only one time during any consecutive twelve-month period. If
following any reregistration of the Aircraft, the Aircraft is located outside
the United States at the time of a proposed inspection, the Lessee shall have
thirty (30) days to relocate the Aircraft within the United States and, if
unable to do so within such time period, shall pay the reasonable incremental
out-of-pocket costs of the Lessor, the Owner Participant or their authorized
representatives incurred in connection with any such inspection outside the
United States. The Lessee shall make any permitted sublease or transfer
permitted under Section 7.02 hereof expressly subject to inspection rights
consistent with this Article 14. The Lessee agrees to respond in a timely
fashion to any of the Owner Trustee's, the Indenture Trustee's or the Owner
Participant's inquiries regarding (x) the location of the Aircraft or any
Engine or (y) the scheduling of any letter check or heavy maintenance visit
with respect to the Aircraft (at which representatives of the Owner
Participant, the Lessor or the Indenture Trustee may be present without regard
to the one-year limitation set forth above).
Section 14.02. No Obligation to Inspect. None of the Lessor,
the Indenture Trustee or the Owner Participant shall have any duty to make any
inspection pursuant to Section 14.01 hereof and no such party shall incur any
liability or obligation by reason of making or not making any such inspection.
ARTICLE 15
ASSIGNMENT
Section 15.01. Lessee's Right to Assign. The Lessee shall not,
and shall have no authority or power to assign, convey or sublease any of its
rights under this Lease without the prior written consent of the Lessor except
(i) as expressly provided in Section 7.02 hereof, or in the case of any
requisition by the Government referred to in Section 7.01 of this Lease, or
(ii) to a wholly-owned domestic subsidiary of the Lessee which shall be a
certificated U.S. Air Carrier. Any such assignment, conveyance or sublease
shall in no way relieve the Lessee from any obligation hereunder or under any
other Operative Agreement or any written agreement of the Lessee entered into
in connection with the transactions contemplated by the Operative Agreements,
which shall be and remain obligations of the Lessee. The Lessor agrees that it
will not assign or convey its right, title and interest in and to this Lease or
the Aircraft except as contemplated by or provided in this Lease, the Trust
Agreement, the Indenture or the Participation Agreement. The terms and
provisions of this Lease shall be binding upon and inure to the benefit of the
Lessor and the Lessee and their respective successors and permitted assigns,
and shall inure, to the extent expressly provided herein and therein, to the
direct benefit of, and in accordance with the provisions of the Indenture and
the Participation Agreement shall be enforceable by, the Indenture Trustee, the
Lessor and their respective successors and permitted assigns.
Section 15.02. Citizenship. The Lessee will at all times be a
duly certificated U.S. Air Carrier under the Transportation Code.
ARTICLE 16
EVENTS OF DEFAULT
Section 16.01. Events of Default. Each of the following events
shall constitute an Event of Default, whether any such event shall be voluntary
or involuntary or come about or be effected by operation of law or pursuant to
or in compliance with any judgment, decree or order of any court or any order,
rule or regulation of any administrative or governmental body:
(a) the Lessee shall fail to make any payment of Basic Rent,
Renewal Rent, Stipulated Loss Value or Termination Value, as the case may
be, or any payment pursuant to Section 17.02 of the Participation
Agreement, within ten Business Days after the date when due (except that
with respect to any failure to pay Excepted Payments, such failure shall
constitute an Event of Default at the discretion of the Owner
Participant); or
(b) the Lessee shall fail to make any payment of Supplemental
Rent (other than amounts described in clause (a) above) within 30 days
after the Lessee has received written notice from the Person entitled to
receive such payment stating that such payment is due (except that with
respect to any failure to pay Excepted Payments for such period, such
failure shall constitute an Event of Default at the discretion of the
Owner Participant); or
(c) (i) the Lessee shall fail to procure, carry and maintain
insurance on or in respect of the Aircraft at any time in accordance with
the provisions of Article 13 or such insurance lapses or is cancelled,
provided that no such lapse or cancellation shall constitute an Event of
Default until the earlier of (A) 20 days (or seven days or such shorter
time as may be standard in the industry with respect to war risk coverage)
after receipt by any Additional Insured of written notice of such lapse or
cancellation and (B) the date that such lapse or cancellation is effective
as to any Additional Insured and provided further that such failure shall
not constitute an Event of Default as long as the Aircraft is insured as
required while on the ground and not operated, or (ii) the Aircraft shall
be operated at any time when comprehensive airline liability insurance
required under Section 13.01 hereof shall not be in effect (it being
understood that the Lessee is not required to maintain such insurance
under Section 13.01 hereof while the indemnification or insurance referred
to in the proviso to Section 13.01(b) hereof is in effect); or
(d) the Lessee shall fail to perform or observe any other
covenant, condition or agreement to be performed or observed by it under
any Operative Agreement (excluding the Tax Indemnity Agreement) or any
other written agreement of the Lessee entered into in connection with the
transactions contemplated by the Operative Agreements and such failure
shall continue unremedied for a period of thirty (30) days after the date
a Responsible Officer of the Lessee has actual knowledge of the failure or
the Lessee shall have received written notice from the Lessor or the Owner
Participant of such failure, provided, that in the event such failure is
curable and so long as (but for no longer than 150 days after such 30-day
period) the Lessee shall have promptly undertaken such cure after the
earlier of actual knowledge of a Responsible Officer of the Lessee or
notice thereof which undertaking shall be diligently and continuously
pursued using the Lessee's reasonable best efforts, such failure shall not
constitute an Event of Default; provided, further, that failure of the
Lessee to maintain the registration of the Aircraft under the
Transportation Code pursuant to the Lessee's covenants and agreement in
Section 6.03(b) of the Participation Agreement and in Section 7.01(a) of
this Lease, when the lapse of such registration is solely because the
Owner Participant or the Lessor has ceased to be a Citizen of the United
States, shall not constitute a Default or an Event of Default; or
(e) an order for relief shall be entered in respect of the
Lessee by a court having jurisdiction in the premises in an involuntary
case under the federal bankruptcy laws as now or hereafter in effect; or
the Lessee shall consent to the appointment of a custodian, receiver,
trustee or liquidator of itself or of a substantial part of its property;
or the Lessee is not paying, or shall admit in writing its inability to
pay, its debts generally as they come due or shall make a general
assignment for the benefit of creditors; or the Lessee shall file, or the
Board of Directors of the Lessee shall authorize the filing of, or grant
one or more persons authority (at their discretion) to make a filing for,
a voluntary petition in bankruptcy or a voluntary petition or an answer
seeking reorganization in a proceeding under any bankruptcy laws (as now
or hereafter in effect) or an answer admitting the material allegations of
a petition filed against the Lessee in any such proceeding; or the Lessee
shall file, or the Board of Directors of the Lessee shall authorize the
Lessee to, or grant one or more persons authority (at their discretion)
to, seek relief by voluntary petition, answer or consent, under the
provisions of any other or future bankruptcy or other similar law
providing for the reorganization or winding-up of corporations, or
providing for an agreement, composition, extension or adjustment with its
creditors; or
(f) an order, judgment or decree shall be entered by any court
of competent jurisdiction appointing, without the consent of the Lessee, a
custodian, receiver, trustee, or liquidator of the Lessee or of any
substantial part of its property, or sequestering any substantial part of
the property of the Lessee, or granting any other relief in respect of the
Lessee under the federal bankruptcy laws or other insolvency laws, and any
such order, judgment or decree of appointment or sequestration shall
remain in force undismissed or unvacated for a period of ninety (90) days
after the date of its entry; or
(g) a petition against the Lessee in a proceeding under the
federal bankruptcy law or other insolvency laws (as now or hereafter in
effect) shall be filed and shall not be withdrawn or dismissed within
ninety (90) days, or under the provisions of any law providing for
reorganization or winding-up of corporations which may apply to the
Lessee, any court of competent jurisdiction shall assume jurisdiction,
custody or control of the Lessee or of any substantial part of its
property and such jurisdiction, custody or control shall remain in force
unrelinquished or unterminated for a period of ninety (90) days; or
(h) any representation or warranty made by the Lessee in this
Lease or in the Participation Agreement or in any document or certificate
furnished by the Lessee in connection with or pursuant to this Lease or
the Participation Agreement (except for the Tax Indemnity Agreement) shall
at any time prove to have been incorrect at the time made in any respect
material to the transactions contemplated by this Lease and, if originally
made by the Lessee in good faith, shall remain material and unremedied for
a period of thirty (30) days after a Responsible Officer of the Lessee
shall have actual knowledge or the Lessee shall have received written
notice of such misstatement.
ARTICLE 17
REMEDIES
Section 17.01. Remedies Upon Lessee's Default. (a) Remedies
Generally. Upon the occurrence of any Event of Default and at any time after
such occurrence so long as the same shall be continuing, the Lessor may, at its
option, declare this Lease to be in default (except that no such declaration
shall be required in the case of an Event of Default pursuant to paragraph (e),
(f) or (g) of Section 16.01 hereof and this Lease shall be deemed declared in
default without any further act or notice), and at any time thereafter the
Lessor may do, and the Lessee shall comply with, one or more of the following
with respect to all or any part of the Airframe and the Engines, as the Lessor
in its sole discretion shall elect, to the extent permitted by, and subject to
compliance with, any mandatory requirements of applicable law then in effect:
(i) Demand in writing that the Lessee shall, and upon such
written demand the Lessee shall, at the Lessee's own cost and expense,
return promptly to the Lessor all or such part of the Airframe and the
Engines as the Lessor may demand in the manner and condition required by,
and otherwise in accordance with all of the provisions of this Lease
(provided that, unless the Lessor shall require otherwise, the Aircraft
shall be returned within the continental United States), or the Lessor, at
its option, may enter upon the premises where such Airframe or Engines are
located or believed to be located and take immediate possession of and
remove such Airframe and Engines (together with any engine which is not an
Engine but is installed on the Airframe, subject to all of the rights of
the owner, lessor, Lien holder or secured party of such engine) without
the necessity for first instituting proceedings, or by summary proceedings
or otherwise, all without liability of the Lessor to the Lessee for or by
reason of such entry or taking of possession, whether for the restoration
of damage to property caused by such action or otherwise;
(ii) With or without taking possession thereof, sell or
otherwise dispose of the Airframe or any Engine, at public or private sale
and with or without advertisement or notice to the Lessee, as the Lessor
may determine, and the Lessor may hold the Lessee liable for any
installment of Basic Rent and Renewal Rent due on or before the date of
such sale (and, if Basic Rent or Renewal Rent is payable in arrears, the
pro rata portion of the installment of Basic Rent or Renewal Rent due on
the next succeeding Rent Payment Date in respect of any period commencing
on the immediately preceding Rent Payment Date to the date of such sale),
or hold, use, operate, lease to others or keep idle all or any part of the
Airframe or any Engine as the Lessor, in its sole discretion, may
determine, in any such case free and clear of any rights of the Lessee
except as otherwise set forth in this Article 17, and without any duty to
account to the Lessee with respect to such action or inaction or for any
proceeds except to the extent required by Section 17.01(a)(iv) hereof; in
the event the Lessor elects to exercise its rights under said Section, and
in connection with any sale of the Aircraft or any part thereof pursuant
to this Article 17, the Lessor, the Indenture Trustee, the Owner
Participant or any Holder may bid for and purchase such property;
(iii) Whether or not the Lessor shall have exercised or shall
later at any time exercise any of its rights under Section 17.01(a)(i) or
17.01(a)(ii) hereof, the Lessor, by written notice to the Lessee
specifying a payment date not earlier than 10 days from the date of such
notice, may demand that the Lessee pay to the Lessor, and the Lessee shall
pay to the Lessor on the payment date specified in such notice, as
liquidated damages for loss of a bargain and not as a penalty (in lieu of
the Basic Rent or Renewal Rent due on Rent Payment Dates occurring after
the payment date specified in such notice), any installment of Basic Rent,
Renewal Rent and any Supplemental Rent due on or before such payment date
(and, if Basic Rent or Renewal Rent is payable in arrears, the pro rata
portion of the installment of Basic Rent or Renewal Rent due on the next
succeeding Rent Payment Date in respect of the period commencing on the
Stipulated Loss Value Determination Date referred to below and ending on
the date of such payment), plus an amount equal to the excess, if any, of
the Stipulated Loss Value for the Aircraft, computed as of the Stipulated
Loss Value Determination Date on or next preceding the payment date
specified in such notice over the Fair Market Value of the Aircraft,
computed as of such Stipulated Loss Value Determination Date, together
with (A), if Basic Rent is payable in advance, interest, to the extent
permitted by applicable law, at the Debt Rate on the amount of such
Stipulated Loss Value from such Stipulated Loss Value Determination Date
to the date for payment set forth in such notice from the Lessor and (B)
in all cases, interest, to the extent permitted by applicable law at the
Past Due Rate on the excess of such Stipulated Loss Value over such Fair
Market Value, from the date as of which such Stipulated Loss Value is
payable to the date of actual payment of such amount; provided, however,
that if (and in any event prior to the time for payment hereunder) the
Lessor is unable within a reasonable period of time to recover possession
of the Aircraft, or any portion thereof, pursuant to clause (i) above
unencumbered by this Lease and free and clear of all Liens (other than
Lessor's Liens), the Fair Market Value of the Aircraft or such portion
shall, at the option of the Lessor to the extent legally enforceable, be
zero and, if the Fair Market Value of the Aircraft is deemed to be zero,
after payment in full by the Lessee of the amount specified above and all
other amounts due from the Lessee under this Lease and the other Operative
Agreements, the Lessor shall promptly transfer (without recourse or
warranty other than as to the absence of the Lessor's Liens) all of its
right, title and interest in the Aircraft or such portion, to the Lessee;
(iv) In the event the Lessor, pursuant to Section 17.01(a)(ii)
hereof, shall have sold the Airframe and/or any Engine, the Lessor, in
lieu of exercising its rights under Section 17.01(a)(iii) hereof, may, if
it shall so elect, demand that the Lessee pay the Lessor, and the Lessee
shall pay to the Lessor, on the date of such sale, as liquidated damages
for loss of a bargain and not as a penalty (in lieu of the Basic Rent or
Renewal Rent due after the date on which such sale occurs) any unpaid
Basic Rent or Renewal Rent due on or before the date on which such sale
occurs (and, if Basic Rent or Renewal Rent is payable in arrears, the pro
rata portion of the installment of Basic Rent or Renewal Rent due on the
next succeeding Rent Payment Date in respect of any period commencing on
the Stipulated Loss Value Determination Date referred to below and ending
on the date of such sale), and any Supplemental Rent due on or before the
date on which such sale occurs, plus an amount equal to the excess, if
any, of (A) the Stipulated Loss Value for the Aircraft, computed as of the
Stipulated Loss Value Determination Date next preceding the sale date,
over (B) the net proceeds of such sale (after deduction of all of the
Lessor's costs and expenses of such sale, including, without limitation,
sales or transfer taxes, costs of storage, overhaul, maintenance,
preparation and transportation of the Aircraft and brokers' and attorneys'
fees) together with (x), if Basic Rent is payable in advance, interest, to
the extent permitted by applicable law, at the Debt Rate on such
Stipulated Loss Value from such Stipulated Loss Value Determination Date
to the date of such sale and (y) in all cases, interest to the extent
permitted by applicable law at the Past Due Rate, on the amount of such
excess from the date of such sale to the date of actual payment by the
Lessee;
(v) Proceed by appropriate court action to enforce the terms of
this Lease or to recover damages for its breach;
(vi) Terminate or rescind this Lease as to the Airframe or any
or all of the Engines; or
(vii) Exercise any other right or remedy which may be available
to the Lessor under applicable law.
(b) Cost of Exercise of Remedies. In addition, the Lessee shall
be liable, except as otherwise provided above, for any and all unpaid Rent due
before, after or during the exercise of any of the Lessor's remedies, for all
amounts payable by the Lessee under the Participation Agreement before or after
any termination hereof, and for all reasonable legal fees and other costs and
expenses incurred by the Lessor, the Indenture Trustee or the Owner Participant
by reason of the occurrence of any Event of Default or the exercise of the
Lessor's remedies, including, without limitation, all costs and expenses
incurred in connection with the return of the Airframe or any Engine in
accordance with the terms of Article 12 hereof or in placing the Airframe or
Engines in the condition and state of airworthiness required by such Article or
in connection with any inspection, use, operation, maintenance, insurance,
storage, or leasing carried out as part of such exercise.
Section 17.02. Cumulative Remedies. Except as otherwise
provided, no remedy referred to in this Article 17 is intended to be exclusive,
but each shall be cumulative and in addition to any other remedy referred to
above or otherwise available to the Lessor at law or in equity; and the
exercise or beginning of exercise by the Lessor of any one or more of such
remedies shall not preclude the simultaneous or later exercise by the Lessor of
any or all of such other remedies.
Section 17.03. Waiver. No express or implied waiver by the
Lessor of any Event of Default shall in any way be, or be construed to be, a
waiver of any future or subsequent Event of Default. To the extent permitted
by applicable law, the Lessee waives any rights now or in the future conferred
by statute or otherwise which may require the Lessor to sell, lease or
otherwise use the Airframe or any Engine in mitigation of the Lessor's damages
or which may otherwise limit or modify any of the Lessor's rights or remedies
under this Article 17. The Lessor's access to the Aircraft is of the essence
and shall not be impaired.
Section 17.04. Lessor's Right to Perform for Lessee. If the
Lessee fails to make any required payment of Rent or fails to perform or comply
with any of its agreements contained in this Lease, whether or not such failure
shall constitute an Event of Default hereunder, the Lessor may (but shall not
be obligated to) make such payments or perform or comply with such agreement,
and the amount of such payment and the amount of the reasonable costs and
expenses of the Lessor incurred in connection with such payment or the
performance of or compliance with such agreement, together with interest (to
the extent permitted by applicable law) at the Past Due Rate from the date of
the making of such payment or the incurring of such costs and expenses by the
Lessor to the date of payment of such Rent or other amount by the Lessee, shall
be deemed Supplemental Rent payable by the Lessee upon demand. No such payment
or performance by the Lessor shall be deemed to waive any Default or Event of
Default or relieve the Lessee of its obligations hereunder.
ARTICLE 18
COVENANT OF QUIET ENJOYMENT
Section 18.01. Quiet Enjoyment. So long as no Event of Default
shall have occurred and be continuing, the Lessor covenants that neither it nor
any other Person lawfully claiming through it (other than the holder of a Lien
which the Lessee is obligated to discharge pursuant to Article 6 hereof, and it
being understood that the Lessor shall not be liable for any act or omission of
the Indenture Trustee or any other Person claiming through the Indenture
Trustee) shall interfere with the Lessee's right to quietly enjoy the Aircraft
without hindrance or disturbance by it or any such other Person.
ARTICLE 19
FURTHER ASSURANCES
Section 19.01. Further Assurances. Promptly upon the execution
and delivery of the Lease Supplement and the Indenture and Security Agreement
Supplement, the Lessee will cause each of them and this Lease, the Trust
Agreement and the Indenture, to be duly filed for recordation in accordance
with the Transportation Code and will maintain the recordation of the Indenture
until the Lien of the Indenture shall have been discharged pursuant to the
terms of the Indenture. In addition, the Lessee will, at the Lessee's own cost
and expense, promptly and duly execute and deliver to the Lessor, the Owner
Participant and the Indenture Trustee such further documents and assurances to
carry out the intent and purpose of this Lease and the Indenture and to
establish and protect the rights and remedies created or intended to be created
in favor of the Lessor under this Lease, and of the Owner Participant under the
Trust Agreement, and of the Indenture Trustee under the Indenture, including,
without limitation, the execution and filing of UCC financing and continuation
statements, the execution and delivery of supplements and amendments to this
Lease and the Indenture, in recordable form, subjecting to this Lease and the
Indenture any Replacement Airframe and/or Replacement Engines delivered by the
Lessee pursuant to Section 11.03 hereof and any Replacement Engine delivered by
the Lessee pursuant to Section 11.04 hereof and the recording and filing of
counterparts of this Lease and the Indenture in accordance with the laws of
such jurisdictions as the Lessor or the Indenture Trustee may from time to time
deem advisable. The foregoing does not impose upon the Lessor any additional
liabilities not otherwise contemplated by this Lease.
ARTICLE 20
NET LEASE
Section 20.01. Nature of Lease. (a) This Lease is a net lease,
it being the intention of the parties hereto that the obligations of the Lessee
to pay all costs and expenses of every character, whether seen or unforeseen,
ordinary or extraordinary, or structural or nonstructural, in connection with
the use, operation, maintenance, repair and reconstruction of the Airframe and
each Engine by the Lessee, including, without limitation, the costs and
expenses particularly set forth in this Lease (unless expressly excluded from
the terms hereof, the costs and expenses of the Lessor and the Owner
Participant shall include the reasonable fees and expenses of their respective
outside counsel), shall be absolute and unconditional, shall be separate and
independent covenants and agreements, and shall continue unaffected unless and
until the covenants have been terminated pursuant to an express provision of
this Lease. The obligation to pay Rent and all amounts payable by the Lessee
under this Lease or the Participation Agreement shall be absolute and
unconditional and (except as otherwise expressly provided with respect to
Supplemental Rent) shall be paid without notice or demand and such obligation
shall not be affected by any circumstance, including, without limitation:
(i) any set-off, counterclaim, recoupment, defense or other
right which the Lessee may have against the Lessor, the Owner Participant,
any Holder, the Indenture Trustee or anyone else for any reason
(including, without limitation, any breach by the Lessor or the Owner
Participant or the Indenture Trustee or any Holder of their respective
representations, warranties, agreements or covenants contained in any of
the Operative Agreements);
(ii) any defect in the title, airworthiness, registration,
eligibility for registration under the Transportation Code (and the
regulations thereunder) or under any of the laws or regulations of any
other country of registry of the Aircraft, condition, design, operation,
merchantability or fitness for use of, suitability for a particular
purpose of, or any damage to or loss or destruction of, the Aircraft or
any portion thereof, or any interruption or cessation in the use or
possession of the Aircraft by the Lessee or any sublessee for any reason
including, without limitation, by reason of governmental action or any
doctrine of force majeure or impossibility of performance;
(iii) any insolvency, bankruptcy, reorganization or similar case
or proceedings by or against the Lessor, the Lessee, the Indenture Trustee
or the Owner Participant or any other Person;
(iv) any Liens, encumbrances or rights of any other Person with
respect to the Aircraft, the invalidity or unenforceability or lack of due
authorization or other infirmity of this Lease or any other Operative
Agreement or document or instrument executed pursuant hereto or thereto,
or any lack of right, power or authority of the Lessor or the Lessee or
any sublessee or any other party to any other Operative Agreement to enter
into this Lease or any other Operative Agreement or any such document or
instrument; or
(v) any other circumstance, happening or event whatsoever,
whether or not unforeseen, or similar to any of the foregoing.
(b) To the extent permitted by applicable law, the Lessee waives
any and all rights which it may now have or which at any time it may have
conferred upon it, by statute or otherwise, to terminate, cancel, quit, rescind
or surrender this Lease, the Airframe, or any Engine or part thereof, other
than in accordance with the terms hereof.
(c) Except as expressly provided herein, each payment of Rent
made by the Lessee shall be final as to the Lessor and the Lessee, and the
Lessee will not seek to return nor to recover, xxxxx, suspend, defer or reduce
all or any part of any such payment of Rent from the Lessor or from the
Indenture Trustee for any reason.
ARTICLE 21
SUCCESSOR LESSOR
Section 21.01. Successor Lessor. The Lessee agrees that in the
case of the appointment of any successor trustee for the Lessor pursuant to the
terms of the Participation Agreement, such successor trustee shall, upon
written notice by such successor to the Lessee, succeed to all the rights,
powers and title of the Lessor under this Lease and shall be deemed to be the
Lessor and the owner of the Aircraft for all purposes of this Lease without the
necessity of any consent or approval by the Lessee and without in any way
altering the terms of this Lease or the Lessee's obligations. One such
appointment and designation of a successor trustee shall not exhaust the right
to appoint and designate a further successor trustee pursuant to the
Participation Agreement, but such right may be exercised repeatedly so long as
this Lease shall be in effect.
ARTICLE 22
SECURITY FOR LESSOR'S OBLIGATIONS
Section 22.01. Security for Lessor's Obligations to Holders. In
order to secure the indebtedness evidenced by the Certificates, the Indenture
provides among other things, for the assignment by the Lessor to the Indenture
Trustee of this Lease and the Lease Supplement and for the creation of a first
mortgage and security interest in favor of the Indenture Trustee on the
Aircraft. The Lessee consents to and acknowledges such assignment (subject to
the reservations and conditions therein set forth) and the receipt of a copy of
the Indenture.
Section 22.02. [Reserved].
Section 22.03. Consent of Lessee to Assignment of Lease as
Security. The Lessee hereby accepts and consents, pursuant to the terms of the
Indenture, the Indenture Trustee's rights to receive payments (other than
Excepted Payments not constituting Basic Rent) due under this Lease, the right
to transfer or assign title to the Aircraft subject to this Lease, to make all
waivers and agreements except as otherwise provided in the Indenture, to give
all notices, consents and releases and to take all action upon the happening of
a Default or Event of Default under this Lease (except as otherwise
specifically provided in the Indenture), or to do any and all other things
whatsoever which the Lessor is or may become entitled to do under this Lease
(except as otherwise provided in the Indenture); all or any of which rights,
obligations, benefits and interests may, pursuant to the terms of the
Indenture, be reassigned or retransferred by the Indenture Trustee at any time
and from time to time (except as otherwise provided in the Indenture);
provided, however, that the Lessor, except to the extent, and for such time as,
it is unable to do so by virtue of the Indenture, shall remain liable for the
performance of all the terms, conditions, covenants and provisions for which it
is obligated under this Lease notwithstanding such assignment.
ARTICLE 23
SECURITY FUNDS
Section 23.01. Investment of Security Funds. (a) Any amounts
otherwise payable to the Lessee shall be held by the Lessor as security for,
and may be applied by the Lessor against, the obligations of the Lessee under
this Lease during such time as there shall have occurred and be continuing a
Payment Default, Bankruptcy Default or Event of Default, and, at such times as
there shall not be continuing a Payment Default, Bankruptcy Default or Event of
Default, such amounts, net of any amounts which have been applied by the Lessor
against the Lessee's obligations hereunder, shall be paid to the Lessee as
provided in this Lease. Any amounts which are held by the Lessor pending
payment to the Lessee shall, until paid to the Lessee or applied against the
Lessee's obligations hereunder, be invested by the Lessor, as directed from
time to time, in writing (and in the absence of a written direction by the
Lessee, the Lessor shall invest such monies in direct obligations of the United
States of America), by the Lessee and at the expense and risk of the Lessee, in
the following securities (which in the case of securities referred to in
subparagraphs (i) through (iv) of this Section 23.01(a) hereof shall mature
within ninety (90) days of the date of purchase):
(i) direct obligations of the United States of America; or
(ii) obligations fully guaranteed by the United States of
America; or
(iii) certificates of deposit issued by, or bankers' acceptances
of, or time deposits or a deposit account with, any bank, trust company or
national banking association incorporated or doing business under the laws
of the United States of America or one of its States (which may include
the Owner Trustee or the Indenture Trustee in their respective individual
capacities or any Affiliate thereof), having a combined capital and
surplus of at least $500,000,000 and having a rating of "A" or better from
Moody's or S&P; or
(iv) commercial paper rated A-1/P-1 by S&P and Moody's,
respectively (or if neither such organization shall rate such commercial
paper at any time, a rating by any nationally recognized statistical
rating organization in the United States of America equal to the highest
rating assigned by such rating organization) (which may include commercial
paper issued by the Owner Trustee or the Indenture Trustee in their
respective individual capacities or any Affiliate thereof).
(b) At any time any invested funds are distributed to the
Lessee, there shall be promptly remitted to the Lessee any gain (including
interest received) realized as the result of any investment pursuant to
Section23.01(a) hereof (net of any fees, commissions and other costs and
expenses, if any, incurred by the Lessor in connection with such investment),
unless a Payment Default, Bankruptcy Default or Event of Default shall have
occurred and be continuing in which case such funds shall be applied in the
same manner as the principal so invested. The Lessee shall be responsible for
and will promptly pay to the Indenture Trustee or the Lessor, as the case may
be, on demand, the amount of any loss realized as the result of any such
investment (together with any fees, commissions and other costs and expenses,
if any, incurred by the Indenture Trustee or the Lessor in connection with such
investment), such amount to be disposed of in accordance with the terms of the
Indenture or the Lease, as the case may be.
ARTICLE 24
CONCERNING THE LESSOR
Section 24.01. Lessor's Entry Into Lease. Except as expressly
provided herein, the Lessor and the Lessee agree that this Lease is executed by
SSB not individually but solely as Owner Trustee under the Trust Agreement in
the exercise of the power and authority conferred and vested in it as such
Owner Trustee, that each and all of the representations, undertakings and
agreements by the Lessor herein are for the purpose and with the intention of
binding only the Lessor's Estate, and that in no case whatsoever shall SSB be
personally liable for any loss in respect of such representations, undertakings
and agreements, that actions to be taken by the Lessor pursuant to its
obligations hereunder may, in certain instances, be taken by the Lessor only
upon specific authority of the Owner Participant that nothing herein contained
shall be construed as creating any liability on SSB, individually or
personally, to perform any covenant, either express or implied, herein, all
such liability, if any, being expressly waived by the Lessee and by each and
every Person now or hereafter claiming by, through or under the Lessee except
with respect to the gross negligence or willful misconduct of SSB, and that so
far as SSB, individually or personally is concerned, the Lessee and any Person
claiming by, through or under the Lessee shall look solely to the Lessor's
Estate for the performance by the Lessor of any of its obligations under this
Lease; provided, that nothing in this Section 24.01 shall be construed to limit
in scope or substance those representations and warranties of SSB in its
individual capacity set forth in the Participation Agreement or the Trust
Agreement. The term "Lessor" as used in this Lease shall include any trustee
succeeding SSB as Owner Trustee under the Trust Agreement. Any obligation of
the Lessor hereunder may be performed by the Owner Participant, and any such
performance shall not be construed as revocation of the trust created by the
Trust Agreement. Nothing contained in this Lease shall restrict the operation
of the provisions of the Trust Agreement with respect to its revocation of the
resignation or removal of the Owner Trustee hereunder.
ARTICLE 25
NOTICES
Section 25.01. Notices. All notices, demands, declarations and
other communications required by this Lease shall be in writing and shall be
deemed received (a) if given by telecopier, when transmitted and the
appropriate telephonic confirmation received if transmitted on a Business Day
and during normal business hours of the recipient, and otherwise on the next
Business Day following transmission, (b) if given by certified mail, return
receipt requested, postage prepaid, five Business Days after being deposited in
the United States mail and (c) if given by FedEx service (or, if a Default or
Event of Default shall have occurred and be continuing, by other comparable
courier service), when received or personally delivered, addressed:
(a) If to the Lessee, to its office at 0000 Xxxxxxxxx Xxxxxx,
Xxxxxxx, Xxxxxxxxx 00000, Attention: Senior Vice President and Chief
Financial Officer with a copy to Senior Vice President and General
Counsel; telephone (000) 000-0000, facsimile (000) 000-0000; or at such
other address as the Lessee shall from time to time designate in writing
to the Lessor, the Indenture Trustee and the Owner Participant;
(b) If to the Lessor or Owner Trustee, to its office at 000
Xxxxxx Xxxxxx, Xxxxxxx Square, Hartford, Connecticut 06103, Attention:
Corporate/Muni Administration, facsimile (000) 000-0000 with a copy to
State Street Bank and Trust Company, Xxx Xxxxxxxxxxxxx Xxxxx, 0xx Xxxxx,
Xxxxxx, Xxxxxxxxxxxxx 00000, Attention: Corporate Trust Department,
telephone (000) 000-0000, facsimile (000) 000-0000; or to such other
address as the Lessor shall from time to time designate in writing to the
Lessee and the Indenture Trustee, with a copy to Owner Participant at the
Owner Participant's address as provided in subsection (c) below;
(c) If to the Owner Participant, in accordance with the
Participation Agreement;
(d) If to the Indenture Trustee, to its office at 00 Xxxxx Xxxx
Xxxxxx, Xxxx Xxxx Xxxx, Xxxx 00000, Attention: Corporate Trust
Department, telephone (000) 000-0000, facsimile (000) 000-0000; or to such
other address as the Indenture Trustee shall from time to time designate
in writing to the Lessor, the Lessee and the Owner Participant; and
(e) If to Moody's, to its office at Xxxxx'x Investors Service,
00 Xxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention: Corporate
Department-Industrials, telephone (000) 000-0000, facsimile (212)
553-4661; or to such other address as Moody's shall from time to time
designate in writing to the Lessee.
ARTICLE 26
MISCELLANEOUS
Section 26.01. Section Headings and Captions. All article and
section headings and captions used in this Lease are purely for convenience and
shall not affect the interpretation of this Lease.
Section 26.02. References. Any reference to a specific article
or section number shall be interpreted as a reference to that article or
section of this Lease unless otherwise expressly provided.
Section 26.03. APPLICABLE LAW. THIS LEASE SHALL IN ALL RESPECTS
BE GOVERNED BY, AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW
YORK, INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE BUT
WITHOUT GIVING EFFECT TO PRINCIPLES OF CONFLICTS OF LAWS, AND IS BEING
DELIVERED IN NEW YORK.
Section 26.04. Severability. Any provision of this Lease which
is prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof, and any
such prohibition or unenforceability in any jurisdiction shall not invalidate
or render unenforceable such provision in any other jurisdiction.
Section 26.05. No Oral Modification. The terms and provisions
of this Lease may not be changed, waived, discharged or terminated orally, but
only by an instrument in writing signed by the party against which enforcement
of the change, waiver, discharge or termination is sought. Any such change,
waiver, discharge or termination is also subject to the provisions of Section
8.01 and Article XIII of the Indenture.
Section 26.06. Agreement as Chattel Paper. To the extent that
this Lease constitutes chattel paper (as such term is defined in the UCC as in
effect in any applicable jurisdiction), no security interest in this Lease may
be created through the transfer or possession of any counterpart other than the
original chattel-paper counterpart, which shall be the counterpart containing
the receipt executed by the Indenture Trustee on its signature page.
Section 26.07. Counterparts. This Lease may be executed in any
number of counterparts, each of which shall be an original (except that only
the counterpart bearing the receipt executed by the Indenture Trustee shall be
the original for purposes of perfecting a security interest therein as chattel
paper under the UCC), but all of which taken together shall constitute one and
the same instrument and any of the parties hereto may execute this Lease by
signing any such counterpart.
Section 26.08. Public Release of Information. Provided no Event
of Default shall have occurred and be continuing, each party shall in each
instance obtain the prior written approval of each party concerning the exact
text and timing of news releases, articles and other informational releases to
the public media concerning this Lease.
ARTICLE 27
TRUE LEASE
Section 27.01. Intent of the Parties. It is the intent of the
parties to this Lease that for all purposes (including, without limitation,
U.S. Federal income tax purposes) this Lease will be a true lease, and that
this Lease conveys to the Lessee no right, title or interest in the Aircraft
except as a lessee.
Section 27.02. Section 1110 Compliance. Notwithstanding any
provision herein or elsewhere contained to the contrary, it is understood and
agreed among the parties hereto that the transactions contemplated by this
Lease and the other Operative Agreements are expressly intended to be, shall be
and should be construed so as to be, entitled to the full benefits of Section
1110 of the Bankruptcy Code and any successor provision thereof.
Section 27.03. Finance Lease. This Lease is a "finance lease"
within the meaning of Section 2-A103(g) of the UCC.
IN WITNESS WHEREOF, the Lessor and the Lessee have each caused
this Lease to be duly executed as of the date first above written.
LESSOR: STATE STREET BANK AND TRUST COMPANY OF
CONNECTICUT, NATIONAL ASSOCIATION,
not in its individual capacity,
but solely as Owner Trustee
By: ______________________________________________
Name: Xxxx X. Xxxxx
Title: Vice President
LESSEE: FEDERAL EXPRESS CORPORATION
By: ______________________________________________
Name: Xxxxxx X. Xxxxxxx
Title: Vice President and Treasurer
Receipt of this original counterpart of the Lease is hereby
acknowledged on this __ day of August, 1998.
Indenture Trustee: FIRST SECURITY BANK, NATIONAL ASSOCIATION,
not in its individual capacity,
but solely as Indenture Trustee
By: _______________________________________
Name: Xxxx X. Xxxxxx
Title: Vice President
SCHEDULE I
DEFINITIONS
(FEDERAL EXPRESS CORPORATION TRUST NO. N677FE)
GENERAL PROVISIONS
The following terms shall have the following meanings for all
purposes of the Operative Agreements (other than the Pass Through Agreement,
the Series Supplements, the Intercreditor Agreement and the Liquidity
Facilities) referred to below, unless otherwise defined in an Operative
Agreement or the context thereof shall otherwise require. In the case of any
conflict between the provisions of this Schedule and the provisions of any
Operative Agreement, the provisions of such Operative Agreement shall control
the construction of such Operative Agreement.
Unless the context otherwise requires, (i) references to
agreements shall be deemed to mean and include such agreements as amended and
supplemented from time to time, and (ii) references to parties to agreements
shall be deemed to include the successors and permitted assigns of such
parties.
DEFINED TERMS:
Additional Insured. As defined in Section 13.01(c)(i) of the
Lease.
Adjustment Date. The date of any decrease in the principal
amount of the Series C Certificates pursuant to Section 2.19 of the Indenture.
Aeronautics Authority. As appropriate, the Federal Aviation
Administration and/or the Administrator of the Federal Aviation Administration,
any successor to the former United States Civil Aeronautics Board, or any
Person, governmental department, bureau, commission or agency located in the
United States succeeding to the functions of any of the foregoing.
Affidavits. The affidavits of citizenship of the Owner Trustee
and the Owner Participant.
Affiliate. With respect to any Person, any other Person directly
or indirectly controlling, controlled by or under common control with such
Person. For the purposes of this definition, "control" (including "controlled
by" and "under common control with") shall mean the power, directly or
indirectly, to direct or cause the direction of the management and policies of
such Person whether through the ownership of voting securities or by contract
or otherwise. In no event shall the Owner Trustee or the Lessor be deemed an
Affiliate of the Owner Participant and SSB shall not be deemed to be an
Affiliate of any of the Owner Trustee, the Lessor or the Owner Participant.
After-Tax Basis. A basis such that any payment received or
deemed to have been received by a Person (the "Original Payment") shall be
supplemented by a further payment to such Person so that the sum of the two
payments shall be equal to the Original Payment, after taking into account (x)
all Taxes that would result from the receipt or accrual of such payments and
(y) any reduction in Taxes that would result from such increased Taxes. In the
case of amounts payable to the Lessor, the Owner Participant, or any corporate
Affiliate of the Owner Participant, it shall be presumed that such Person is at
all times subject to Federal income tax at the maximum marginal rate generally
applicable to corporations from time to time and actual state, local and
foreign income taxes.
Air Carrier. Any U.S. Air Carrier and any "foreign air carrier"
(as defined in the Transportation Code) as to which there is in force a permit
granted under Section 41302 of the Transportation Code.
Airbus Guaranty. The Guaranty to be dated the Delivery Date
executed by the Manufacturer and guaranteeing AVSA's Warranty Xxxx of Sale.
Aircraft. The Airframe to be sold by AVSA to the Owner Trustee as
provided in the Participation Agreement and to be leased under the Lease (or
any permitted substitute airframe thereunder) together with two Engines
(whether either is an initial Engine or a Replacement Engine) whether or not
any of such initial or Replacement Engines may from time to time be installed
on such Airframe or may be installed on any other airframe or on any other
aircraft, including any aircraft substituted pursuant to Section 11.03 of the
Lease.
Airframe. The Airbus A300F4-605R aircraft (excluding the Engines
or engines from time to time installed thereon) to be leased by the Lessor to
the Lessee pursuant to the Lease and the initial Lease Supplement and having
the United States FAA Registration Number initially and manufacturer's serial
number specified in the initial Lease Supplement, including (i) all Parts in
respect thereof and (ii) any Replacement Airframe which may be substituted
pursuant to Section 11.03 of the Lease.
Ancillary Agreement. Any written agreement of the Lessee to
which the Lessor is a party or to which the Lessor has consented in writing
entered into on or prior to the Delivery Date or any date thereafter in
connection with the transactions contemplated by the Operative Agreements, as
such agreement may be amended and supplemented from time to time with the
consent of the Lessor and delivered to the Owner Trustee, the Indenture
Trustee, the Pass Through Trustee, the Subordination Agent, each Liquidity
Provider and the Owner Participant.
Ancillary Agreement I. The Ancillary Agreement I (Federal
Express Corporation Trust No. N677FE), dated the Delivery Date, among the
Lessee, the Owner Trustee, not in its individual capacity, but solely as Owner
Trustee, the Owner Participant and the Indenture Trustee not in its individual
capacity, but solely as Indenture Trustee, as originally executed or as
amended, modified or supplemented with the consent of all the parties thereto.
Application. The application for registration of the Aircraft
with the FAA in the name of the Owner Trustee.
Appraisal. The report prepared by BK Associates, Inc. and to be
delivered to the Owner Participant (with a copy of the fair market value letter
to the Lessee) on the Delivery Date pursuant to Section 4.01(h) of the
Participation Agreement.
Average Life Date. For any Certificate, the date which follows
the prepayment date by a period equal to the Remaining Weighted Average Life of
such Certificate.
AVSA. AVSA S.A.R.L., a societe a responsabilite limitee,
organized and existing under the laws of France.
AVSA Consent and Agreement. The Consent and Agreement dated as
of August 1, 1998, executed by AVSA.
AVSA's FAA Xxxx of Sale. The xxxx of sale for the Airframe on AC
Form 8050- 2, or such other form as may be approved by the Aeronautics
Authority, executed by AVSA in favor of the Owner Trustee and to be dated the
Delivery Date.
AVSA's Warranty Xxxx of Sale. The full warranty xxxx of sale
covering the Aircraft (and specifically referring to each Engine) executed by
AVSA as owner of the Aircraft in favor of the Owner Trustee and to be dated the
Delivery Date.
Bankruptcy Code. The Federal Bankruptcy Code of 1978, as
amended, and any successor thereto.
Bankruptcy Default. An event specified in Section 16.01(e), (f)
or (g) of the Lease which either does or, with the giving of notice or lapse of
time or both, would constitute an Event of Default.
Basic Rent. The periodic rent payable for the Aircraft
throughout the Basic Term pursuant to Section 3.02 of the Lease, adjusted
pursuant to Article 3 of the Lease.
Basic Term. The period commencing at the beginning of the day on
the Delivery Date and ending at the end of the day on August 27, 2023, or such
earlier date on which the Lease shall be terminated as provided therein.
Beneficial Interest. The interest of the Owner Participant (or
the Initial Owner Participant, as the case may be) under the Trust Agreement.
Business Day. Any day on which commercial banks are not
authorized or required to close in New York, New York, Memphis, Tennessee and
the city in the United States in which the office or agency is maintained by
the Pass Through Trustee for the payment of the Pass Through Certificates, and
after the Lien of the Indenture is discharged, Boston, Massachusetts.
Certificate Closing Date. July 7, 1998.
Certificates. The Equipment Trust Certificates (Federal Express
Corporation Trust No. N677FE), issued by the Owner Trustee pursuant to the
Indenture and any certificate issued in exchange therefor or replacement
thereof pursuant to the Indenture.
Change in Tax Law. Any change in the Code or the Treasury
regulations promulgated thereunder or the publication of any revenue ruling,
revenue procedure or any informational release by the Internal Revenue Service
or the Department of Treasury on or before the Delivery Date, either of which
would change or would allow a change in the tax assumptions or structure upon
which the lease economics in the Commitment Letter were based; provided that
the Owner Participant or the Lessee has notified the other party of such change
in writing on or prior to the Delivery Date.
Citizen of the United States. A citizen of the United States as
defined in Section 40102(a)(15) of the Transportation Code, or any analogous
part of any successor or substituted legislation or regulation at the time in
effect.
Class A Liquidity Provider. Kreditanstalt fr Wiederaufbau, a
corporation organized under the public law of the Federal Republic of Germany
together with any Replacement Liquidity Provider (as defined in the
Intercreditor Agreement).
Class B Liquidity Provider. Kreditanstalt fr Wiederaufbau, a
corporation organized under the public law of the Federal Republic of Germany
together with any Replacement Liquidity Provider (as defined in the
Intercreditor Agreement).
Code. Except as otherwise provided, the Internal Revenue Code of
1986, as amended from time to time.
Collateral Account. The deposit account established and
maintained pursuant to Section 2.13 of the Indenture.
Collateral Agreement. The Collateral Account Control Agreement
(Federal Express Corporation Trust No. N677FE) dated as of June 15, 1998, among
State Street Bank and Trust Company, the Indenture Trustee and the Owner
Trustee.
Commitment. The amount of the Owner Participant's participation
in the Purchase Price required to be made available or paid on the Delivery
Date, as provided in Section 3.02 of the Participation Agreement and as set
forth in Schedule I of the Participation Agreement.
Commitment Letter. The Commitment Letter dated June 29, 1998 by
the Lessee to the Owner Participant.
Consent and Agreement. The Consent and Agreement dated as of
August 1, 1998 executed by the Manufacturer.
Consent and Guaranty. The Consent and Guaranty of the
Manufacturer attached to the Purchase Agreement.
Corporate Trust Administration. The Corporate Trust
Administration office of the Owner Trustee located at 000 Xxxxxx Xxxxxx,
Xxxxxxx Square, Hartford, Connecticut 06103, Attention: Corporation Trust
Administration, or such other office at which the Owner Trustee's corporate
trust business shall be administered which the Owner Trustee shall have
specified by notice in writing to the Lessee, the Owner Participant and the
Indenture Trustee.
Corporate Trust Department. The Corporate Trust Department
office of the Indenture Trustee located at 00 Xxxxx Xxxx Xxxxxx, Xxxx Xxxx
Xxxx, Xxxx 00000, Attention: Corporate Trust Department, or such other office
at which the Indenture Trustee's corporate trust business shall be administered
which the Indenture Trustee shall have specified by notice in writing to the
Lessee, the Owner Participant and the Owner Trustee.
CRAF Program. Has the meaning specified in Section 7.02(a)(iv)
of the Lease.
Cut-Off Date. November 24, 1998.
Debt Portion. The amount specified as such on Schedule I to the
Participation Agreement.
Debt Rate. The weighted average (based on Outstanding principal
amount) rate of interest on the Certificates issued pursuant to the Indenture.
Default. Any event or condition which, with the lapse of time or
the giving of notice, or both, would constitute an Event of Default.
Delivery Date. The date on which the Aircraft is delivered and
sold by AVSA to the Lessor and leased by the Lessor to the Lessee under the
Lease, which date shall also be the date of the initial Lease Supplement.
Delivery Notice. Notice of the Aircraft's Delivery Date, given
by the Lessee as provided in Section 3.01 of the Participation Agreement and
including any notice with respect to a postponed Delivery Date given by the
Lessee pursuant to Section 3.05(c) of the Participation Agreement.
EBO Price. Has the meaning set forth in Section 4.02(a)(F) of
the Lease.
Eligible Deposit Account. Either (a) a segregated account with
an Eligible Institution or (b) a segregated trust account with the corporate
trust department of a depository institution with corporate trust powers
organized under the laws of the United States or any state thereof, or the
District of Columbia, and whose deposits are insured by the Federal Deposit
Insurance Corporation, provided that such institution also has a combined
capital and surplus of at least $100,000,000 and a rating of A or better from
the Thomson Bank Watch.
Eligible Institution. A depository institution organized under
the laws of the United States or any one of the states thereof, or the District
of Columbia, or any domestic branch of a foreign bank, which in any such case
at all times (a) has either (x) a long-term unsecured debt rating of at least
Aa2 by Moody's or (y) a short-term certificate of deposit rating of P-1 by
Moody's, (b) has either (x) a long-term unsecured debt rating of a least AA by
S&P or (y) a short-term certificate of deposit rating of A- 1+ by S&P and (c)
is a member of the Federal Deposit Insurance Corporation.
Engine. Each of the two General Electric CF6-80C2-A5F engines
listed by its manufacturer's serial number in the initial Lease Supplement and
leased pursuant to the Lease, whether or not from time to time installed on the
Airframe or installed on any other airframe or on any other aircraft, and any
Replacement Engine which may from time to time be substituted for an Engine
pursuant to Section 7.02(a)(vii), 10.02(c), 10.03, 11.03, 11.04 or 12.02 of the
Lease, together with all Parts related thereto. Except as otherwise provided,
at such time as a Replacement Engine shall be so substituted and the Engine for
which the substitution is made shall be released from the Lien of the
Indenture, such replaced Engine shall cease to be an "Engine" under the Lease.
The term "Engines" means, as of any date of determination, both Engines then
leased to the Lessee pursuant to the Lease.
Engine Consent. The Engine Consent dated as of August 1, 1998,
executed by the Engine Manufacturer.
Engine Manufacturer. General Electric Company, a New York
corporation.
Engine Warranty Assignment. The Engine Warranty Assignment
(Federal Express Corporation Trust No. N677FE), dated as of August 1, 1998,
between the Lessor and the Lessee.
ERISA. The Employee Retirement Income Security Act of 1974, as
amended.
ERISA Plan. An employee benefit plan subject to Title I of
ERISA, or an individual retirement account or plan subject to Section 4975 of
the Code.
Estimated Expense Amount. Has the meaning specified in Section
10.01(a) of the Participation Agreement.
Event of Default. Each of the events specified in Article 16 of
the Lease.
Event of Loss. Any of the following events with respect to the
Aircraft, the Airframe or any Engine: (i) loss of such property or its use (A)
for a period in excess of 30 days due to theft or disappearance or such longer
period not to exceed 60 days from the end of such initial 30-day period if and
so long as the location of such property is known to the Lessee and the Lessee
is diligently pursuing recovery of such property, or to the end of the Term, if
less (unless such loss constitutes an Event of Loss under clause (ii) of this
definition) or (B) for a period in excess of 60 days due to the destruction,
damage beyond economic repair or rendition of such property permanently unfit
for normal use by Lessee for any reason whatsoever; (ii) any damage to such
property which results in an insurance settlement with respect to such property
on the basis of a total loss, or constructive or compromised total loss; (iii)
(1) condemnation, confiscation or seizure of, or requisition of title to such
property by the Government, any foreign government or purported government or
any agency or instrumentality thereof, or (2) condemnation, confiscation, or
seizure of, or requisition or taking of, use of such property (A) by a foreign
government or instrumentality or agency of any such foreign government, for a
period in excess of 180 days (or such shorter period ending on the earlier of
the expiration of the Term or on the date on which an insurance settlement with
respect to such property on the basis of a total loss or constructive or
compromised total loss shall occur) or (B) by the Government for a period
extending beyond the Term, provided that no Event of Loss shall be deemed to
have occurred, and the Term shall be extended automatically for a period of six
months (or the date of return of the Aircraft, if shorter, so long as the
Lessor receives at least six months notice of such date of return) beyond the
end of the Term in the event that the Aircraft, the Airframe or any Engine is
requisitioned by the Government pursuant to an activation as part of the CRAF
Program described in Section 7.02(a)(iv) of the Lease; and (iv) as a result of
any law, rule, regulation, order or other action by the Aeronautics Authority
or other governmental body having jurisdiction, the use of the Aircraft or
Airframe in the normal course of air transportation of cargo shall have been
prohibited by virtue of a condition affecting all Airbus A300-600 series
aircraft equipped with engines of the same make and model as the Engines for a
period of six (6) consecutive months, unless the Lessee, prior to the
expiration of such six (6) month period, shall be diligently carrying forward
all steps which are necessary or desirable to permit the normal use of the
Aircraft or Airframe or, in any event, if such use of the Aircraft or the
Airframe shall have been prohibited for a period of twelve (12) consecutive
months, unless the Lessee, prior to the expiration of such twelve (12) month
period shall have conformed at least one Airbus A300-600 series aircraft (but
not necessarily the Aircraft or the Airframe) to the requirements of any such
law, rule, regulation, order, or other action and shall have commenced regular
commercial use and shall be diligently carrying forward, on a
non-discriminatory basis, all steps necessary or desirable to permit the normal
use of the Aircraft by the Lessee. The date of such Event of Loss shall be (s)
the 31st day or the 91st day, as the case may be, following loss of such
property or its use due to theft or disappearance (or the end of the Term, if
earlier); (t) the 61st day following the date of any destruction, damage beyond
economic repair or rendition of such property permanently unfit for normal use;
(u) the date of any insurance settlement on the basis of a total loss or
constructive or compromised total loss; (v) the date of any condemnation,
confiscation, seizure or requisition of title of such property; (w) the 181st
day following condemnation, confiscation, seizure or requisition for use of
such property by a foreign government referred to in clause (iii)(2)(A) above
(or the end of the Term or the date of any insurance settlement described
therein, if earlier than such 181st day); (x) the last day of the Term in the
case of requisition for use of such property by the Government; (y) the last
day of the 6 month or 12 month period, referred to in clause (iv) above. An
Event of Loss with respect to the Aircraft shall be deemed to have occurred if
any Event of Loss occurs with respect to the Airframe.
Excepted Payments. Collectively, (i) indemnity or other payments
(and interest thereon to the extent provided in the Operative Agreements) paid
or payable by the Lessee in respect of the Owner Participant, the Owner Trustee
in its individual capacity or any of their respective successors, permitted
assigns, directors, officers, employees, servants and agents or Affiliates,
pursuant to the Participation Agreement or any indemnity hereafter granted to
the Owner Participant or the Owner Trustee in its individual capacity pursuant
to the Lease or the Participation Agreement, (ii) proceeds of public liability
insurance (or government indemnities in lieu thereof) in respect of the
Aircraft payable as a result of insurance claims paid for the benefit of, or
losses suffered by, the Owner Trustee or the Indenture Trustee in their
respective individual capacities or by the Owner Participant, or their
respective successors, permitted assigns or Affiliates, (iii) proceeds of
insurance maintained with respect to the Aircraft by the Owner Participant
(whether directly or through the Owner Trustee) maintained in accordance with
the provisions of but not required under Article 13 of the Lease, (iv) payments
of Supplemental Rent by the Lessee in respect of any amounts payable under the
Tax Indemnity Agreement, (v) any amounts payable by the Lessee to the Owner
Participant or the Owner Trustee in its individual capacity, after the release
thereof from the Lien of the Indenture, (vi) the payment of incremental
out-of-pocket expenses of the Owner Trustee, the Owner Participant or their
respective authorized representatives payable by the Lessee under Section
6.03(b) of the Participation Agreement or Section 14.01 of the Lease following
any reregistration of the Aircraft and (vii) proceeds of, and any right to
demand, collect or otherwise receive and enforce the payment of any amount
described in clauses (i) through (vii) above.
Expense; Expenses. Have the meaning specified in Section 9.01(a)
of the Participation Agreement.
FAA. The United States Federal Aviation Administration and any
successor agency or agencies thereto.
Fair Market Renewal Term. A term with respect to which the
Lessee has exercised its option to renew the Lease pursuant to the second
paragraph of Section 4.01(a) thereof and with respect to which the conditions
set forth in such Section 4.01(a) are met.
Fair Market Rental. An amount determined on the basis of, and
equal in amount to, the rental which would be obtained in an arm's-length
transaction between an informed and willing lessee and an informed and willing
lessor unaffiliated with such lessee, neither being under any compulsion to
lease. In such determination, it shall be assumed that the Aircraft is in the
condition required under the Lease in the case of return of the Aircraft
pursuant to Article 12 of the Lease. Fair Market Rental shall be determined in
accordance with the provisions of Section 4.03 of the Lease.
Fair Market Value. An amount determined on the basis of, and
equal in amount to, the value which would be obtained in an arm's-length
transaction between an informed and willing purchaser under no compulsion to
buy and an informed and willing seller unaffiliated with such purchaser and
under no compulsion to sell, assuming that the Aircraft (or other property) is
unencumbered by the Lease. Unless otherwise provided in the applicable
provisions of any Operative Agreement, in such determination it shall be
assumed that the Aircraft is in the condition required under the Lease in the
case of return of the Aircraft pursuant to Article 12 of the Lease; provided
that in connection with any determination pursuant to or for the purposes of
Article 17 of the Lease, the Aircraft shall be appraised on an "as is, where
is" basis. Fair Market Value shall be determined in accordance with the
provisions of Section 4.03 of the Lease.
Federal Aviation Administration. The United States Federal
Aviation Administration and any successor agency or agencies thereto.
FedEx. Federal Express Corporation.
Final Drawing. Has the meaning specified in Section 1.01 of the
Intercreditor Agreement.
Fixed Renewal Rent. Semi-annual payments of rent during the
Fixed Renewal Term equal to the amount set forth in Ancillary Agreement I.
Fixed Renewal Term. The term with respect to which the Lessee
has exercised its option to renew the Lease pursuant to the first paragraph of
Section 4.01(a) thereof and with respect to which the conditions set forth in
such Section 4.01(a) are met.
French Pledge Agreement. The French Pledge Agreement (Federal
Express Corporation Trust No. N677FE) dated as of August 1, 1998, between the
Owner Trustee and the Indenture Trustee.
FSB. First Security Bank, National Association, a national
banking association.
Government. The United States of America or an agency or
instrumentality thereof the obligations of which bear the full faith and credit
of the United States of America.
GTA. The General Terms Agreement dated as of July 3, 1991
between the Engine Manufacturer and the Lessee related to the purchase by the
Lessee of the Engines as originally executed or as modified, amended or
supplemented in accordance with the terms thereof, but only insofar as the
General Terms Agreement relates to the Engines, to the extent assigned to the
Owner Trustee pursuant to the Engine Warranty Assignment.
Holder of a Certificate; Certificate Holder; Holder. As of any
particular time, the Person in whose name a Certificate shall be registered
(but not including the holder of any Pass Through Certificate).
Indemnitee. Each of SSB, in its individual capacity and as Owner
Trustee and Lessor, the Owner Participant, the Indenture Trustee, in its
individual capacity and as trustee, the Subordination Agent, in its individual
capacity and in its capacity as Subordination Agent, each Liquidity Provider,
the Owner Participant Guarantor, if any, and any successor (including any
trustee which may succeed to the Lessor's interest under the Lease), Affiliate,
assign, officer, director, employee, agent and servant of any of the foregoing,
the Lessor's Estate and the Trust Indenture Estate. Neither the Pass Through
Trustee nor any holder of a Pass Through Certificate shall be deemed to be an
Indemnitee.
Indenture. The Trust Indenture and Security Agreement (Federal
Express Corporation Trust No. N677FE), dated as of June 15, 1998, as amended
and restated as of August 1, 1998, between the Lessor and the Indenture
Trustee, as supplemented by the Indenture and Security Agreement Supplement.
Indenture and Security Agreement Supplement. The Indenture and
Security Agreement Supplement No. 1 (Federal Express Corporation Trust No.
N677FE) to be dated the Delivery Date, substantially in the form of Exhibit A
to the Indenture.
Indenture Default. Any event or condition which, with the lapse
of time or the giving of notice, or both, would constitute an Indenture Event
of Default.
Indenture Documents. Has the meaning specified in the Granting
Clause of the Indenture.
Indenture Event of Default. Each of the events specified in
Section 7.01 of the Indenture.
Indenture Trustee. First Security Bank, National Association, a
national banking association, not in its individual capacity but solely as
Indenture Trustee under the Indenture.
Indenture Trustee's Liens. Any Lien against, on or with respect
to the Aircraft, the Lessor's Estate or the Trust Indenture Estate or any part
thereof resulting from (i) claims against the Indenture Trustee not related to
the administration of the Trust Indenture Estate or any transactions pursuant
to the Indenture or any document included in the Trust Indenture Estate, (ii)
any act or omission of the Indenture Trustee which is not related to the
transactions contemplated by the Operative Agreements or is in violation of any
of the terms of the Operative Agreements or (iii) Taxes imposed against the
Indenture Trustee in its individual capacity against which the Lessee has not
indemnified (and is not obligated to indemnify) the Indenture Trustee in such
capacity.
Independent Investment Banker. An independent investment banking
institution of national standing appointed by the Lessee that is independent in
fact, does not have any direct financial interests, or any material indirect
financial interest, in the Lessee or any Affiliate of the Lessee, and is not
connected with the Lessee or any Affiliate of the Lessee, as an officer,
employee, promoter, underwriter, trustee, partner, director or Person
performing similar functions; provided, that if the Indenture Trustee shall not
have received written notice of such an appointment at least 10 days prior to
the Prepayment Date, "Independent Investment Banker" shall mean such an
institution appointed by the Indenture Trustee.
Initial Owner Participant. Federal Express Corporation, a
Delaware corporation.
Intercreditor Agreement. The Intercreditor Agreement dated as of
June 15, 1998, among the Pass Through Trustee, the Class A Liquidity Provider,
the Class B Liquidity Provider and the Subordination Agent.
Interest Drawing. Has the meaning specified in Section 1.01 of
the Intercreditor Agreement.
Invoice. The invoice for the Aircraft given by AVSA to the
Lessor.
LC Bank. Kreditanstalt fr Wiederaufbau, a corporation organized
under the public law of the Federal Republic of Germany.
Last Cut-Off Date. The later of (i) the Cut-Off Date and (ii)
the "Cut-Off Date" (as defined in the relevant Related Indenture) for the last
Related Aircraft to be delivered.
Lease. The Lease Agreement (Federal Express Corporation Trust
No. N677FE) dated as of June 15, 1998, as amended and restated as of August 1,
1998, entered into by the Lessor and the Lessee concurrently with the execution
and delivery of the Indenture, including, without limitation, supplementation
by one or more Lease Supplements entered into pursuant to the applicable
provisions of the Lease.
Lease Supplement. The Lease Supplement No. 1 (Federal Express
Corporation Trust No. N677FE) to be dated the Delivery Date, substantially in
the form of Exhibit A to the Lease.
Lease Term. The period commencing on the Delivery Date and
ending at the end of the Basic Term.
Lessee. Federal Express Corporation, a Delaware corporation.
Lessee Documents. Has the meaning set forth in Section 6.01(b)
of the Participation Agreement.
Lessee Shortfall. Has the meaning set forth in Section 3.02(a)
of the Participation Agreement.
Lessor. State Street Bank and Trust Company of Connecticut,
National Association, a national banking association, not in its individual
capacity but solely as Owner Trustee under the Trust Agreement.
Lessor's Estate. All estate, right, title and interest of the
Owner Trustee in and to the Collateral Account, the Liquid Collateral, the
Aircraft, the Lease, any Lease Supplement, the Participation Agreement, AVSA's
FAA Xxxx of Sale, AVSA's Warranty Xxxx of Sale, the Airbus Guaranty, the
Purchase Agreement, the Purchase Agreement Assignment, the Consent and
Agreement, the AVSA Consent and Agreement, the Consent and Guaranty (to the
extent assigned by the Purchase Agreement Assignment), any Ancillary Agreement,
the GTA, the Engine Warranty Assignment, the Engine Consent, any warranty with
respect to the Airframe and the Engines, all amounts of Basic Rent and
Supplemental Rent, including without limitation, insurance proceeds (other than
insurance proceeds payable to or for the benefit of the Owner Trustee in its
individual capacity, the Owner Participant or the Indenture Trustee) and
requisition, indemnity or other payments of any kind for or with respect to the
Aircraft (except amounts owing to the Owner Participant, to the Indenture
Trustee, to the Owner Trustee in its individual capacity, or to any of their
respective directors, officers, employees and agents pursuant to Articles 8 and
9 of the Participation Agreement), and all other property of the Owner Trustee
purportedly subjected to the Lien of the Indenture by the Granting Clause
thereof; provided that in no event shall "Lessor's Estate" include any Excepted
Payment.
Lessor's Liens. Liens against, on or with respect to the
Aircraft, the Lessor's Estate or the Trust Indenture Estate or any part
thereof, title thereto or any interest therein arising as a result of (i)
claims against the Lessor, in its individual capacity or as Owner Trustee, or
the Owner Participant, in each case not related to the transactions
contemplated by the Operative Agreements, (ii) acts or omissions of the Lessor
in its individual capacity or as Owner Trustee, and, in the case of the Lessor
in its individual capacity, arising from its gross negligence or willful
misconduct or expressly prohibited under the Operative Agreements and any act
or omission of the Owner Participant which is in violation of any of the terms
of the Operative Agreements, (iii) Taxes or Expenses imposed against the
Lessor, in its individual capacity or as Owner Trustee, the Owner Participant,
Lessor's Estate or the trust created by the Trust Agreement which are not
required to be indemnified against by the Lessee pursuant to the Participation
Agreement by reason of Section 8.01(b) or 9.01(b) thereof or which are not
required to be indemnified against by the Lessee pursuant to the Tax Indemnity
Agreement, or (iv) claims against the Lessor or the Owner Participant arising
from the voluntary transfer by the Lessor or the Owner Participant of its
interests in the Aircraft other than a transfer of the Aircraft pursuant to
Section 4.02(a) or Article 7, 8, 9, 10 or 11 of the Lease and other than a
transfer pursuant to the exercise of the remedies set forth in Article 17 of
the Lease.
Letter of Credit. The Irrevocable Standby Letter of Credit,
dated the Certificate Closing Date, in the form of ExhibitG to the Original
Participation Agreement and with a Maximum Stated Amount equal to the amount
specified under "Letter of Credit Maximum Stated Amount" on Schedule IV to the
Original Participation Agreement, from the LC Bank to and for the benefit of
the Subordination Agent.
Lien. Any mortgage, pledge, lien, charge, encumbrance, lease or
security interest or other similar interest.
Liquid Collateral. All amounts and securities deposited from
time to time in the Collateral Account and all the products, investments,
earnings and proceeds of the foregoing, including, but not limited to, all
proceeds of the investment or conversion thereof, voluntary or involuntary,
into cash, Specified Investments or other property, all rights to payment of
any and every kind, and other forms of obligations, and instruments and other
property which at any time constitute all or part or are included in the
proceeds of any of the foregoing.
Liquidity Facility. Has the meaning specified in Section 1.1 of
the Intercreditor Agreement.
Liquidity Provider. Kreditanstalt fr Wiederaufbau, a corporation
organized under the public law of the Federal Republic of Germany together with
any Replacement Liquidity Provider (as defined in the Intercreditor Agreement).
Losses. Has the meaning specified in Section 17.02(a) of the
Participation Agreement.
Loss Payee. Has the meaning specified in Section 13.02(b)(i) of
the Lease.
Majority in Interest of Certificate Holders. As of a particular
date of determination, the Holders of more than 50% of the aggregate unpaid
principal amount of all Certificates outstanding as of such date excluding for
purposes of this definition any Certificates held by (i) the Owner Trustee or
the Owner Participant or any interests of the Owner Participant unless all
Certificates then outstanding shall be held by the Owner Participant, (ii)the
Lessee or (iii)any Affiliate of any thereof.
Make-Whole Premium. With respect to any Certificate, the amount
(as determined by an Independent Investment Banker reasonably acceptable to the
Indenture Trustee and the Owner Participant) by which (i) the present value of
the remaining scheduled payments of principal and interest to the Maturity of
such Certificate computed by discounting such payments on a semiannual basis on
each Payment Date (assuming a 360-day year of twelve 30-day months) using a
discount rate equal to the Treasury Yield exceeds (ii) the outstanding
principal amount of such Certificate plus accrued interest.
Mandatory Document Terms. The terms set forth on Schedule V to
the Original Participation Agreement.
Mandatory Economic Terms. The terms set forth on Schedule VI to
the Original Participation Agreement.
Manufacturer. Airbus Industrie G.I.E., a groupement d'interet
economique formed under the laws of France.
Maturity. With respect to any Certificate, the date on which the
final principal amount of such Certificate is scheduled to be due and payable.
Maximum Stated Amount. The amount specified under "Letter of
Credit Maximum Stated Amount" on Schedule IV to the Original Participation
Agreement.
Moody's. Xxxxx'x Investors Service, Inc.
Net Present Value of Rents. The net present value, as of the
Delivery Date, of Basic Rent set forth in Schedule II of the Lease, discounted
at a rate equal to the Debt Rate per annum compounded semi-annually.
Non-U.S. Person. Any Person other than a U.S. Person.
Obsolete Parts. Parts which the Lessee in good faith determines
to be obsolete or no longer suitable or appropriate for use on the Airframe or
any Engine.
Officer's Certificate. When delivered pursuant to the Indenture,
a certificate signed by a Responsible Officer of the Lessee or the Owner
Trustee, as the case may be, and delivered to the Indenture Trustee. Each such
certificate shall include the statements provided for in Section 15.07 of the
Indenture.
Operative Agreements. The Participation Agreement, the Trust
Agreement, AVSA's FAA Xxxx of Sale, AVSA's Warranty Xxxx of Sale, the Airbus
Guaranty, the Purchase Agreement, the Purchase Agreement Assignment, the GTA,
the Engine Warranty Assignment, the French Pledge Agreement, the Lease, the
Lease Supplement, the Owner Participant Guaranty, the Owner Trustee Guaranty,
if any, any Ancillary Agreement entered into by or with the written consent of
the Indenture Trustee, which by its terms is an Operative Agreement, the
Certificates outstanding at the time of reference, the Indenture, the Indenture
and Security Agreement Supplement, the Consent and Agreement, the AVSA Consent
and Agreement, the Consent and Guaranty (to the extent assigned by the Purchase
Agreement Assignment), the Engine Consent, the Tax Indemnity Agreement, each
Liquidity Facility, the Intercreditor Agreement, the Collateral Agreement, the
Letter of Credit and the Reimbursement Agreement.
Opinion of Counsel. When delivered pursuant to the Indenture, a
written opinion of legal counsel, who in the case of counsel (a) for the Lessee
may be (i) an attorney employed by the Lessee who is generally empowered to
deliver such written opinions, (ii) Xxxxx Xxxx & Xxxxxxxx or a successor firm
or (iii) other counsel designated by the Lessee and reasonably satisfactory to
the Indenture Trustee and (b) for the Owner Trustee or the Indenture Trustee,
an attorney selected by such Person and, in the case of the Owner Trustee,
reasonably satisfactory to the Indenture Trustee.
Original Agreements. The documents and instruments delivered on
the Certificate Closing Date in connection with the transactions contemplated
by the Original Participation Agreement.
Original Indenture. The Trust Indenture and Security Agreement
(Federal Express Corporation Trust No. N677FE), dated as of June 15, 1998,
between the Owner Trustee and the Indenture Trustee originally executed and
delivered on the Certificate Closing Date.
Original Lease. The Lease Agreement (Federal Express Corporation
Trust No. N677FE), dated as of June 15, 1998, between the Owner Trustee as
lessor, and the Lessee originally executed and delivered on the Certificate
Closing Date.
Original Participation Agreement. The Participation Agreement
(Federal Express Corporation Trust No. N677FE), dated as of June 15, 1998,
among the Lessee, the Initial Owner Participant, the Indenture Trustee, the
Owner Trustee, the Pass Through Trustee and the Subordination Agent originally
executed and delivered on the Certificate Closing Date.
Original Trust Agreement. The Trust Agreement (Federal Express
Corporation Trust No. N677FE), dated as of June 15, 1998, between the Initial
Owner Participant and the Owner Trustee originally executed and delivered on
the Certificate Closing Date.
Outstanding. When used with respect to Certificates, as of the
date of determination and subject to the provisions of Section 10.04 of the
Indenture, all Certificates theretofore executed and delivered under the
Indenture, with the exception of the following:
(i) Certificates theretofore cancelled by the Indenture
Trustee or delivered to the Indenture Trustee for cancellation
pursuant to Section 2.08 of the Indenture or otherwise;
(ii) Certificates for which prepayment money in the necessary
amount has been theretofore deposited with the Indenture Trustee
in trust for the Holders of such Certificates pursuant to Section
14.01 of the Indenture; provided, that if such Certificates are
to be prepaid, notice of such prepayment has been duly given
pursuant to the Indenture or provision therefor satisfactory to
the Indenture Trustee has been made; and
(iii) Certificates in exchange for or in lieu of which other
Certificates have been executed and delivered pursuant to Article
II of the Indenture.
Outstanding C Account. The collateral account established and
maintained under a Related Indenture relating to an undelivered aircraft.
Owner Participant. The Person to whom on the Delivery Date the
Initial Owner Participant shall transfer its Beneficial Interest pursuant to
Section 3.02 of the Original Participation Agreement and any successors
thereto, and any Person to which the Owner Participant transfers, in accordance
with the Trust Agreement, its right, title and interest in and to the Operative
Agreements and the Lessor's Estate.
Owner Participant Guarantor. Textron Financial Corporation, a
Delaware corporation, and any other provider of an Owner Participant Guaranty.
Owner Participant Guaranty. The Owner Participant Guaranty
(Federal Express Corporation Trust No. N677FE) dated the Delivery Date, by the
Owner Participant Guarantor in favor of the Lessee, the Owner Trustee, the
Indenture Trustee and the Pass Through Trustee, and any guaranty delivered in
compliance with Article 5 of the Trust Agreement.
Owner Trust. Federal Express Corporation Trust No. N677FE.
Owner Trustee. SSB, not in its individual capacity except as
otherwise expressly stated, but solely as Owner Trustee under the Trust
Agreement.
Owner Trustee Guarantor. The provider, if any, of an Owner
Trustee Guaranty.
Owner Trustee Guaranty. Any guaranty delivered in compliance
with Section 11.01(b)(ii) of the Participation Agreement.
Owner's Economic Return. The Owner Participant's anticipated net
after-tax book yield and aggregate after-tax cash during the Basic Term
utilizing the multiple investment sinking fund method of analysis, computed on
the basis of the same methodology and assumptions as were utilized by the Owner
Participant in determining Basic Rent, Stipulated Loss Value and Termination
Value percentages and the EBO Price, as such assumptions may be adjusted for
events which have been the basis of adjustments to Rent pursuant to Section
3.04 of the Lease.
Participation Agreement. The Participation Agreement (Federal
Express Corporation Trust No. N677FE), dated as of June 15, 1998, as amended
and restated as of August 1, 1998, among the Lessee, the Owner Trustee not in
its individual capacity except as otherwise expressly provided therein, but
solely as owner trustee, the Owner Participant, the Indenture Trustee not in
its individual capacity except as otherwise expressly provided therein, but
solely as indenture trustee, the Pass Through Trustee not in its individual
capacity except as otherwise expressly provided therein, but solely as pass
through trustee, and the Subordination Agent not in its individual capacity
except as otherwise expressly provided therein, but solely as subordination
agent.
Parts. All appliances, parts, components, instruments,
appurtenances, accessories, furnishings and other equipment of whatever nature
(other than complete Engines or engines) which may from time to time be
incorporated or installed in or attached to the Airframe or any Engine or title
to which remains vested in the Lessor pursuant to Article 8 of the Lease.
Pass Through Agreement. The Pass Through Trust Agreement dated
as of May 1, 1997, between the Lessee and the Pass Through Trustee.
Pass Through Certificates. Any of the Pass Through Certificates,
1998-1-A, the Pass Through Certificates, 1998-1-B or the Pass Through
Certificates, 1998-1-C, in each case as issued by the related Pass Through
Trust; and "Pass Through Certificates" means all of the Pass Through
Certificates issued by each of the Pass Through Trusts.
Pass Through Closing Date. July 7, 1998.
Pass Through Trust. The Federal Express Corporation 1998-1 Pass
Through Trust Class A, Federal Express Corporation 1998-1 Pass Through Trust
Class B and Federal Express Corporation 1998-1 Pass Through Trust Class C, in
each case formed pursuant to the related Series Supplement in accordance with
the Pass Through Agreement; and "Pass Through Trusts" means all of such Pass
Through Trusts.
Pass Through Trustee. First Security Bank, National Association,
a national banking association, in its capacity as Pass Through Trustee under
the Pass Through Agreement and each Pass Through Trust.
Past Due Rate. In respect of (A) any amount payable to the Owner
Participant or the Owner Trustee a rate per annum during the period from and
including the due date to but excluding the date on which such amount is paid
in full equal to 2% plus the Debt Rate and (B) any principal of or interest on
any Certificate or any other amount payable under the Indenture, any
Certificate or any other Operative Agreement that is not paid when due (whether
at Maturity, by acceleration, by optional or mandatory prepayment or otherwise)
to any Holder, the Indenture Trustee or the Pass Through Trustee, a rate per
annum during the period from and including the due date to but excluding the
date on which such amount is paid in full equal to (i) in the case of any such
amount payable to the Holder of any Certificate, 2% plus the interest rate
applicable to such Certificate and (ii) in the case of any other such amount,
2% plus the Debt Rate.
Payment Date. Each January 15 and July 15 commencing on January
15, 1999.
Payment Default. Any event specified in Section 16.01(a) or
16.01(b) of the Lease which with the giving of notice or lapse of time or both
would constitute an Event of Default.
Permitted Investments. Those investments enumerated in Section
23.01(a) (i), (ii), (iii) and (iv) of the Lease.
Person. Any individual, sole proprietorship, partnership, joint
venture, joint stock company, trust, unincorporated organization, association,
corporation, institution, entity or government (federal, state, local, foreign
or any agency, instrumentality, division or body thereof).
Pool Balance. Has the meaning specified in Article I to the
Series Supplement.
Pool Factors. Has the meaning specified in Article I to the
Series Supplement.
Preliminary Notice. Has the meaning specified in Section 4.01(a)
of the Lease.
Premium Termination Date. With respect to the Series A
Certificates, the scheduled maturity date of the Series A Certificates, with
respect to the Series B Certificates, the scheduled maturity date of the Series
B Certificates and with respect to the Series C Certificates, the scheduled
maturity date of the Series C Certificates.
Prepayment Date. Has the meaning specified in Section 6.02(b) of
the Indenture.
Prepayment Price. Has the meaning specified in Section 6.02(b)
of the Indenture.
Principal Amount. With respect to a Certificate means the stated
original principal amount of such Certificate and, with respect to all
Certificates, means the aggregate stated original principal amounts of all
Certificates.
Property. Any right or interest in or to property of any kind
whatsoever, whether real, personal or mixed and whether tangible or intangible.
Proposed Termination Date. Has the meaning specified in Section
10.01(a) of the Lease.
Purchase Agreement. The Airbus A300-600R Freighter Purchase
Agreement, dated as of July 3, 1991 between AVSA and the Lessee, including all
exhibits, appendices and letter agreements attached thereto as originally
executed or as modified, amended or supplemented in accordance with the terms
thereof, but only to the extent that the foregoing relates to the Aircraft and
to the extent assigned pursuant to the Purchase Agreement Assignment.
Purchase Agreement Assignment. The Purchase Agreement Assignment
(Federal Express Corporation Trust No. N677FE), dated as of August 1, 1998,
between the Lessor and the Lessee.
Purchase Price. Has the meaning specified in Ancillary Agreement
I.
Rating Agencies. Collectively, at any time, each nationally
recognized rating agency which shall have been requested to rate the Pass
Through Certificates and which shall then be rating the Pass Through
Certificates. The initial Rating Agencies will be Moody's and S&P.
Rating Agency Confirmation. With respect to any Operative
Agreement that is to be modified in any material respect on the Delivery Date a
written confirmation from each of the Rating Agencies that the use of such
Operative Agreement with such modifications would not result in (i) a reduction
of the rating for any Class of Pass Through Certificates below the then current
rating for such Class of Pass Through Certificates or (ii) a withdrawal or
suspension of the rating of any Class of Pass Through Certificates.
Record Date. With respect to Payment Dates under the Indenture
(except a date for payment of defaulted interest), December 31 for January 15
Payment Dates and June 30 for July 15 Payment Dates, whether or not such date
is a Business Day.
Recourse Amount. Has the meaning specified in Section 17.10 of
the Participation Agreement.
Refinancing. A non-recourse loan to the Lessor arranged pursuant
to Section 15.01 of the Participation Agreement.
Register. Has the meaning set forth in Section 3.02 of the
Indenture.
Registrar. Has the meaning set forth in Section 3.02 of the
Indenture.
Regulation D. Regulation D of the Board of Governors of the
Federal Reserve System (or any successor), as the same may be modified and
supplemented and in effect from time to time.
Reimbursement Agreement. The Standby Letter of Credit
Application and Agreement, dated the Pass Through Closing Date, between the
Lessee and the LC Bank.
Related Aircraft. Each of the aircraft relating to a Related
Indenture.
Related Indentures. Collectively, the Trust Indenture and
Security Agreement for each of Federal Express Corporation Trust Nos. N585FE,
N678FE, N679FE, N680FE, N681FE, N682FE, N620FE, N621FE and N623FE, each dated
as of June 15, 1998, between State Street Bank and Trust Company of
Connecticut, National Association, as owner trustee and First Security Bank,
National Association, as indenture trustee, the Trust Indenture and Security
Agreement for Federal Express Corporation Trust No. N590FE, dated as of May 1,
1998, as amended and restated as of June 15, 1998, between State Street Bank
and Trust Company of Connecticut, National Association, as owner trustee and
First Security Bank, National Association, as indenture trustee, the Trust
Indenture and Security Agreement for Federal Express Corporation Trust No.
N675FE, dated as of June 1, 1998, as amended and restated as of June 15, 1998,
between State Street Bank and Trust Company of Connecticut, National
Association, as owner trustee and First Security Bank, National Association, as
indenture trustee, and the Trust Indenture and Security Agreement for Federal
Express Corporation Trust No. N676FE, dated as of June 15, 1998, as amended and
restated as of July 15, 1998, between State Street Bank and Trust Company of
Connecticut, National Association, as owner trustee and First Security Bank,
National Association, as indenture trustee.
Related Participation Agreements. Collectively, with respect to
each Related Indenture, the "Participation Agreement" as defined therein.
Remaining Weighted Average Life. On a given date with respect to
any Certificate the number of days equal to the quotient obtained by dividing
(i) the sum of each of the products obtained by multiplying (a) the amount of
each then remaining scheduled payment of principal of such Certificate by (b)
the number of days from and including such prepayment date to but excluding the
dates on which each such payment of principal is scheduled to be made; by (ii)
the then outstanding principal amount of such Certificate.
Renewal Rent. The amount payable by the Lessee as rent in
accordance with Section 4.01 of the Lease during any Renewal Term.
Renewal Term. One or more terms with respect to which the Lessee
has exercised its option to renew the Lease pursuant to Section 4.01(a)
thereof.
Rent. All payments due from the Lessee under the Lease as Basic
Rent, Renewal Rent and Supplemental Rent, collectively.
Rent Payment Date. Each January 15 and July 15 commencing on
January 15, 1999, and the last day of the Basic Term.
Replacement Aircraft. Any aircraft substituted for the Aircraft
pursuant to Section 11.03(a) of the Lease.
Replacement Airframe. Has the meaning set forth in Section 11.03
of the Lease.
Replacement Engine. A General Electric CF6-80C2-A5F engine (or
an engine of the same or another manufacturer) of the same or of equal or
greater value, remaining useful life and utility as the Engine being replaced,
together with all Parts relating to such engine; provided, however, that if
such replacement engine is not a General Electric CF6-80C2-A5F engine, such
replacement engine must then be commonly used in the commercial aviation
industry on Airbus A300-600 airframes.
Responsible Officer. With respect to the Owner Trustee (except
for purposes of the Trust Agreement in which case the definition of Responsible
Officer set forth in Section 3.10 of the Trust Agreement is applicable) or the
Indenture Trustee, any officer in its Corporate Trust Administration, as the
case may be, designated by such Person to perform obligations under the
Operative Agreements, and with respect to any other party, any corporate
officer or (except in the case of the Owner Participant) other employee of a
party who, in the normal performance of his or her operational
responsibilities, with respect to the subject matter of any covenant, agreement
or obligation of such party pursuant to any Operative Agreement, would have
responsibility for and knowledge of such matter and the requirements of any
Operative Agreement with respect thereto.
S&P. Standard & Poor's Ratings Group.
Scheduled Delivery Date. The Delivery Date specified in the
Delivery Notice pursuant to Section 3.01 of the Participation Agreement.
SEC. The Securities and Exchange Commission of the United States
and any successor agencies or authorities.
Secured Obligations. Has the meaning specified in the Granting
Clause of the Indenture.
Securities Act. The Securities Act of 1933, as amended.
Series "A" or "Series A Certificates". Certificates issued and
designated as "Series A" under the Indenture, in the Principal Amount and
maturities and bearing interest as specified in Exhibit B to the Indenture
under the heading "Series A".
Series "B" or "Series B Certificates". Certificates issued and
designated as "Series B" under the Indenture, in the Principal Amount and
maturities and bearing interest as specified in Exhibit B to the Indenture
under the heading "Series B".
Series "C" or "Series C Certificates". Certificates issued and
designated as "Series C" under the Indenture, in the Principal Amount and
maturities and bearing interest as specified in Exhibit B to the Indenture
under the heading "Series C".
Series C Prepayment Date. July 15, 1999 or any other date
designated by the Lessee, but in no event later than the fifteenth day after
the Last Cut-Off Date.
Series Supplement or Series Supplements. The Series Supplement
1998-1- A, the Series Supplement 1998-1-B or the Series Supplement 1998-1-C,
each dated the Certificate Closing Date, between the Lessee and the Pass
Through Trustee.
Sinking Fund Redemption Date. Has the meaning specified in
Section 6.06 of the Indenture.
Sinking Fund Redemption Price. Has the meaning specified in
Section 6.06 of the Indenture.
Special Aviation Counsel. Xxxxxxxxx, Xxxxxx & Xxxxxxxx.
Special Distribution Date. Has the meaning specified in Article
I to the Series Supplement.
Specified Investments. Shall mean (a) direct obligations of the
United States of America or obligations fully guaranteed by the United States
of America; (b) commercial paper rated A-1/P-1 by S&P and Moody's, respectively
or, if such ratings are unavailable, rated by any nationally recognized rating
organization in the United States equal to the highest rating assigned by such
rating organization; (c) investments in negotiable certificates of deposit,
time deposits, banker's acceptances, commercial paper or other direct
obligations of, or obligations guaranteed by, commercial banks organized under
the laws of the United States or of any political subdivision thereof (or any
U.S. branch of a foreign bank) with issuer ratings of at least B/C by Thomson
Bankwatch, having maturities no later than 90 days following the date of such
investment; (d) overnight federal funds transactions with members of the
Federal Reserve System arranged by federal funds brokers; or (e) overnight
repurchase agreements with respect to the securities described in clause (a)
above entered into with an office of a bank or trust company which is located
in the United States of America or any bank or trust company which is organized
under the laws of the United States or any state thereof and has capital,
surplus and undivided profits aggregating at least $500 million.
SSB. State Street Bank and Trust Company of Connecticut,
National Association, a national banking association or any successor Owner
Trustee in its individual capacity.
Stipulated Loss Value. As of any Stipulated Loss Value
Determination Date during the Basic Term, the amount determined by multiplying
the Purchase Price by the percentage set forth in Schedule III of the Lease
under the heading "Stipulated Loss Value Factor" opposite such date (as such
Schedule III may be adjusted from time to time as provided in Section 3.04 of
the Lease), and during any Renewal Term, the amount determined pursuant to
Section 4.01(b) of the Lease. Notwithstanding any other provisions of the
Lease or the Participation Agreement or the Indenture, each Stipulated Loss
Value shall be, under any circumstances and in any event, an amount, together
with so much of the arrears portion of Basic Rent due and owing through the
date of payment of Stipulated Loss Value as does not constitute an Excepted
Payment, at least sufficient to pay in full as of such date of payment the
aggregate unpaid principal amount of and accrued interest on the Certificates
outstanding on such date of payment. Subject to the immediately preceding
sentence, it is understood and agreed that the amounts set forth on Schedule
III of the Lease, for dates other than Rent Payment Dates on which arrears
Basic Rent is due, fully reflect appropriate Basic Rent accruals and credits of
unearned Basic Rent and, accordingly, no further accrual or credit shall be
required whenever Stipulated Loss Value is to be calculated with reference to
any such date.
Stipulated Loss Value Determination Date. Each date set forth on
Schedule III of the Lease.
Subordination Agent. First Security Bank, National Association,
a national banking association, not in its individual capacity but solely as
Subordination Agent.
Supplemental Rent. (a) All amounts, liabilities and obligations
which the Lessee assumes or agrees to perform or pay under the Lease or under
the Participation Agreement or Tax Indemnity Agreement or any Ancillary
Agreement or any other Operative Agreement to SSB, the Lessor, the Owner
Participant, the Indenture Trustee, the Subordination Agent, any Liquidity
Provider or others, including, without limitation, payments of Stipulated Loss
Value, EBO Price and amounts calculated by reference to Termination Value and
all amounts required to be paid by Lessee under the agreements, covenants and
indemnities contained in the Lease or in the Participation Agreement or the Tax
Indemnity Agreement or any other Operative Agreement, but excluding Basic Rent
and (b) all amounts that the Owner Trustee is obligated to pay in accordance
with clause (b) of the last paragraph of Section 2.04 of the Indenture.
Tax. Shall have the meaning set forth in Section 8.01(a) of the
Participation Agreement.
Tax Indemnity Agreement. The Tax Indemnity Agreement (Federal
Express Corporation Trust No. N677FE), dated as of August 1, 1998, between the
Lessee and the Owner Participant.
Term. The Basic Term of the lease for the Aircraft under the
Lease and, if renewed pursuant to Section 4.01 of the Lease, each Renewal Term
for the Aircraft for which the Lease is renewed, or such earlier date on which
the Lease is terminated pursuant to its terms.
Termination Date. A Rent Payment Date during the Basic Term that
is on or after December 31, 2005 in the case of Article 10 of the Lease, and in
the case of (i) Section 4.02(a)(A) of the Lease, the Rent Payment Date falling
on January 15, 2016 or July 15, 2019, as the case may be, (ii) Section
4.02(a)(D) or (E) of the Lease, a Rent Payment Date that is on or after the
eighth anniversary of the Delivery Date and (iii) Section 4.02(a)(F) of the
Lease, January 15, 2018.
Termination Value. As of any Termination Date, the amount
determined by multiplying the Purchase Price by the percentage set forth in
Schedule IV of the Lease under the heading "Termination Value Factor" opposite
such Termination Date (as such Schedule IV may be adjusted from time to time as
provided in Section 3.04 of the Lease). Notwithstanding any other provisions
of the Lease, the Participation Agreement or the Indenture, each Termination
Value shall be, under any circumstances and in any event, an amount, together
with so much of the arrears portion of Basic Rent due and owing through the
date of payment of any amount calculated by reference to Termination Value as
does not constitute an Excepted Payment, at least sufficient to pay in full as
of such date of payment the aggregate unpaid principal amount of and accrued
interest on the Certificates outstanding on such date of payment. Subject to
the immediately preceding sentence, it is understood and agreed that the
amounts set forth on Schedule IV of the Lease, for dates other than Rent
Payment Dates on which arrears Basic Rent is due, fully reflect appropriate
Basic Rent accruals and credits of unearned Basic Rent and, accordingly, no
further accrual or credit shall be required whenever Termination Value is to be
calculated with reference to any such date.
Transaction Costs. Those costs and expenses set forth in Section
10.01(a) of the Participation Agreement.
Transportation Code. Title 49 of the United States Code, as
amended and in effect on the date of the Lease or as subsequently amended, or
any successor or substituted legislation at the time in effect and applicable,
and the regulations promulgated pursuant thereto.
Treasury Yield. At the time of determination with respect to any
Certificate, the interest rate (expressed as a semi-annual equivalent and as a
decimal and, in the case of United States Treasury bills, converted to a bond
equivalent yield) determined to be the per annum rate equal to the semi-annual
yield to maturity for United States Treasury securities maturing on the Average
Life Date on such Certificate and trading in the public securities markets
either as determined by interpolation between the most recent weekly average
yield to maturity for two series of United States Treasury securities, trading
in public securities markets, (i) one maturing as close as possible to, but
earlier than, the Average Life Date of such Certificate and (ii) the other
maturing as close as possible to, but later than, the Average Life Date of such
Certificate, in each case as published in the most recent H.15(519) or, if a
weekly average yield to maturity for United States Treasury securities maturing
on the Average Life Date of such Certificate is reported on the most recent
H.15 (519), such weekly average yield to maturity as published in such
H.15(919). "H.15(519)" means the weekly statistical release designated as
such, or any successor publication, published by the Board of Governors of the
Federal Reserve System. The date of determination of a Make-Whole Premium will
be the third Business Day prior to the applicable prepayment date and the "most
recent H.15(519)" means the H.15(519) published prior to the close of business
on the third Business Day prior to the applicable prepayment date.
Trust Agreement. The Trust Agreement (Federal Express
Corporation Trust No. N677FE), dated as of June 15, 1998, as amended and
restated as of August 1, 1998, between the Owner Participant and the Owner
Trustee in its individual capacity.
Trust Estate. The Lessor's Estate.
Trust Indenture Act. The Trust Indenture Act of 1939, as
amended.
Trust Indenture Estate. All estate, right, title and interest of
the Indenture Trustee in and to any of the property, rights, interests and
privileges granted to the Indenture Trustee pursuant to the Granting Clause of
the Indenture, other than Excepted Payments and any and all other rights of the
Owner Trustee or the Owner Participant expressly reserved to the Owner Trustee
or the Owner Participant pursuant to the Indenture, and the Letter of Credit
and any rights thereunder.
UCC. Uniform Commercial Code.
Underwriters. Xxxxxx Xxxxxxx & Co. Incorporated, Chase
Securities Inc., Citicorp Securities, Inc., Credit Suisse First Boston
Corporation and X.X. Xxxxxx Securities Inc.
Underwriting Agreement. The Underwriting Agreement dated June
30, 1998, among the Lessee and the Underwriters.
United States, U.S. or US. The United States of America.
U.S. Air Carrier. Any United States air carrier as to which
there is in force a certificate issued pursuant to Section 41102(a) or Section
41103 of the Transportation Code, and as to which there is in force an air
carrier operating certificate issued pursuant to Chapter 447 of the
Transportation Code and Part 121 of the regulations under such Transportation
Code, for aircraft capable of carrying ten (10) or more individuals or 6,000
pounds or more of cargo, or which may operate as an air carrier by
certification or otherwise under any successor or substitute provision thereof
or in absence thereof.
U.S. Person. A Person described in Section 7701(a)(30) of the
Code.
SCHEDULE II
BASIC RENT
(As a Percentage of Purchase Price)
Rent
Payment
Date Advance Arrears
-------- ------- -------
[On each Payment Date, Lessee will pay as Basic Rent an amount that will
be at least sufficient to pay in full, as of such Payment Date, the
aggregate unpaid principal amount of due and unpaid installments on the
Certificates outstanding on such Payment Date, together with the accrued
and unpaid interest thereon.]
SCHEDULE III
STIPULATED LOSS VALUES
Stipulated Loss
Date Value Factor
---- ----------------
[Stipulated Loss Value will be an amount at least sufficient to pay in
full, as of the date of payment thereof, the aggregate unpaid principal
amount of the Certificates outstanding on such date of payment, together
with the accrued and unpaid interest thereon.]
SCHEDULE IV
TERMINATION VALUES
Termination Termination
Date Value Factor
----------- ------------
[Termination Value will be an amount at least sufficient to pay in full,
as of the date of payment thereof, the aggregate unpaid principal amount
of the Certificates outstanding on such date of payment, together with the
accrued and unpaid interest thereon.]
SCHEDULE V
PURCHASE OPTION SCHEDULE
(D) Purchase Option Referred to in Section 4.02(a)(D) of the
Lease. In the event of any Significant Expenditure (as defined below)
with respect to the Aircraft, which the Lessee has certified in a
certificate of the Lessee's President, Chief Executive Officer, Chief
Financial Officer, Chief Operating Officer, Treasurer or Assistant
Treasurer furnished to the Lessor, the Indenture Trustee and the Owner
Participant, is (as determined by the Lessee in its sole discretion)
necessary, desirable or required to be made at any time on or after the
eighth anniversary of the Delivery Date, the Lessee may elect to terminate
the Lease and purchase the Aircraft on the first Rent Payment Date
occurring at least six months after the Owner Participant has notified the
Lessee that they will not permit such Significant Expenditure to be
financed as contemplated in clause (ii) of the definition of "Significant
Expenditure" below, for, at the Lessee's option, either (1) the payment to
the Lessor in immediately available funds of an amount equal to the
greater of the Fair Market Value of the Aircraft and the Termination Value
for the Aircraft, determined in each case as of such Rent Payment Date, or
(2) the assumption by the Lessee, pursuant to Section 7.11 of the
Participation Agreement and Section 2.12 of the Indenture, of all of the
Lessor's obligations under the Indenture, the Certificates and Section
7.04 of the Participation Agreement, and the payment to the Lessor in
immediately available funds of an amount equal to the excess of (A) the
greater of (I) the Termination Value for the Aircraft, and (II) the Fair
Market Value of the Aircraft, both computed as of such Rent Payment Date,
over (B) the unpaid principal amount of the Certificates outstanding plus
accrued interest as of such date; it being understood that the Fair Market
Value for this purpose shall be determined without regard to any
Significant Expenditure not yet made.
For purposes of this paragraph (D) the term "Significant
Expenditure" means a single expenditure or a series of related
expenditures in respect of non-severable improvements (i.e. improvements
which cannot by the terms of Section 9.02(b) of the Lease be removed from
the Aircraft) which (i) in the Lessee's reasonable judgment would exceed
$10,000,000, and (ii) the Owner Participant will not permit to be financed
on similar terms and conditions then available for similar transactions
through the issuance of additional non-recourse notes of the Lessor or
through additional equity investments of the Owner Participant or both (it
being understood that Section 4.02(a)(D) of the Lease shall not impose any
obligation on the Owner Participant to provide such financing). The
Lessee, prior to notifying the Owner Participant and the Indenture Trustee
in accordance with Paragraph (F) of this Schedule V of its election to
purchase the Aircraft pursuant to Section 4.02(a)(D) of the Lease, shall
notify the Owner Participant of the non-severable improvements which would
satisfy the conditions described in clause (i) of the preceding sentence,
and provide the Owner Participant with a reasonable opportunity to permit
the financing thereof as contemplated in clause (ii) of such sentence.
The Owner Participant shall notify the Lessee of their decision with
respect to such financing within 60 days after the Lessee has given the
notice described in the preceding sentence.
(E) Purchase Option Referred to in Section 4.02 (a)(E) of the
Lease. In the event that a Burdensome Indemnity Payment (as defined
below) shall occur at any time on or after the eighth anniversary of the
Delivery Date, the Lessee may elect to terminate the Lease and purchase
the Aircraft on the first Rent Payment Date (the "Burdensome Indemnity
Payment Date") following the date that the Owner Participant provide the
Lessee with a written notice of any Loss (as defined in Section 5 of the
Tax Indemnity Agreement) that is a Burdensome Indemnity Payment for, at
the Lessee's option, either (1) the payment to the Lessor in immediately
available funds of an amount equal to the greater of the Fair Market Value
of the Aircraft and Termination Value for the Aircraft, determined in each
case as of such Burdensome Indemnity Payment Date, or (2) the assumption
by the Lessee, pursuant to Section 7.11 of the Participation Agreement and
Section 2.12 of the Indenture, of all of the obligations of the Lessor
under the Indenture, the Certificates and Section 7.04 of the
Participation Agreement and the payment to the Lessor in immediately
available funds, of an amount equal to the excess of (A) the greater of
(I) the Termination Value for the Aircraft and (II) the Fair Market Value
of the Aircraft, both computed as of the Burdensome Indemnity Payment
Date, over (B) the unpaid principal of the Certificates outstanding plus
accrued interest as of such date.
For purposes of this paragraph (E), the term "Burdensome
Indemnity Payment" means a Loss as defined in the Tax Indemnity Agreement
resulting from any act, event or circumstance which is outside the control
of the Lessee or any Affiliate of the Lessee which causes the aggregate
net present value as of the determination date, discounted semi-annually
at the Debt Rate, of all such Losses (but excluding any Losses for which
the Owner Participant shall have waived its right to payment under the Tax
Indemnity Agreement) paid or payable by the Lessee which can be avoided
through a purchase by the Lessee of the Aircraft, to exceed 3.0% of the
Purchase Price.
(F) Notice from the Lessee. The Lessee shall give the Lessor,
the Owner Participant and the Indenture Trustee not more than 360 days nor
less than 90 days prior written notice of its election to purchase
pursuant to Section 4.02(a)(D) or 4.02(a)(E) of the Lease. Such notice
shall either direct the Lessor to prepay the Certificates in full on such
Termination Date pursuant to Section 6.02 of the Indenture or state that
the Lessee shall exercise its option to assume the Certificates pursuant
to Section 7.11 of the Participation Agreement and Section 2.12 of the
Indenture. The Lessee's notice pursuant to Section 4.02(a)(D) or
4.02(a)(E) of the Lease shall become irrevocable 10 days prior to the
applicable purchase date designated in such notice but if any such notice
is revoked, the Lessee shall no longer be entitled to purchase the
Aircraft as a result of the facts and circumstances originally giving rise
to such right.
Exhibit A
to
Lease Agreement
---------------
THE INTEREST OF LESSOR UNDER THIS LEASE SUPPLEMENT
NO. __ IS SUBJECT TO A SECURITY INTEREST
LEASE SUPPLEMENT NO. __
(Federal Express Corporation Trust No. N677FE)
LEASE SUPPLEMENT NO. __ (Federal Express Corporation Trust No.
N677FE), dated ________ __, ____, between STATE STREET BANK AND TRUST COMPANY
OF CONNECTICUT, NATIONAL ASSOCIATION, a national banking association, not in
its individual capacity, but solely as Owner Trustee under the Trust Agreement
(Federal Express Corporation Trust No. N677FE) dated as of June 15, 1998, as
amended and restated as of August 1, 1998 (the "Lessor"), and FEDERAL EXPRESS
CORPORATION, a Delaware corporation (the "Lessee").
W I T N E S S E T H :
WHEREAS, the Lessor and the Lessee have entered into that certain
Lease Agreement (Federal Express Corporation Trust No. N677FE) dated as of June
15, 1998, as amended and restated as of August 1, 1998 (the "Lease", the
defined terms in the Lease being used in this Lease Supplement with the same
meaning as in the Lease), which provides for the execution and delivery of a
Lease Supplement, substantially in the form of this Lease Supplement No. __,
for the purpose of leasing under the Lease the aircraft and engines described
below ("Aircraft") as and when delivered by the Lessor to the Lessee in
accordance with the terms of the Lease;
WHEREAS, the Lease relates to the Aircraft;
WHEREAS, a counterpart of the Lease is attached to and made a
part of this Lease Supplement, and this Lease Supplement, together with such
attachment, is being filed for recordation on this date with the FAA as one
document.
NOW, THEREFORE, for and in consideration of the premises and
other good and sufficient consideration, the Lessor and the Lessee agree as
follows:
Section 1. Delivered Aircraft. The Lessor hereby delivers and
leases to the Lessee under the Lease, and the Lessee hereby accepts and leases
from the Lessor under the Lease, the following described Airbus A300F4-605R
Aircraft (the "Delivered Aircraft"), which Delivered Aircraft as of the date of
this Lease Supplement consists of the following:
(a) Airbus X000X0-000X Xxxxxxxx; U.S. Registration Number
______; Manufacturer's Serial No. ___; and
(b) Two (2) General Electric CF6-80C2-A5F Engines bearing,
respectively, Manufacturer's Serial Nos. ___-___ and ___-___ (each of
which engines has 750 or more rated takeoff horsepower or the equivalent
of such horsepower).
Section 2. Delivery Date. The Delivery Date of the Delivered
Aircraft is the date of this Lease Supplement.
Section 3. Purchase Price. The Purchase Price of the Delivered
Aircraft shall be the amount set forth in Ancillary Agreement I.
Section 4. Term. The Term for the Delivered Aircraft shall
commence on the Delivery Date, and shall terminate on ______, ____, unless
earlier terminated or extended pursuant to the terms of the Lease.
Section 5. Rent. The Lessee hereby agrees to pay the Lessor
Rent for the Delivered Aircraft throughout the Term thereof in accordance with
the terms and provisions of the Lease.
Section 6. Lessee's Acceptance of Delivered Aircraft. The
Lessee hereby confirms to the Lessor that the Delivered Aircraft has been duly
marked in accordance with Section 7.03 of the Lease and that the Lessee has
accepted the Delivered Aircraft for all purposes hereof and of the Lease, and
as being free and clear of all Liens except Lessor's Liens. Such acceptance by
the Lessee shall be without prejudice to any rights of the Lessor or the Lessee
against AVSA, the Manufacturer, the Engine Manufacturer or any vendor of
equipment included in the Aircraft.
Section 7. Incorporation of Lease By Reference. All the
provisions of the Lease are hereby incorporated by reference in this Lease
Supplement to the same extent as if fully set forth in this Lease Supplement.
Section 8. Governing Law. THIS LEASE SUPPLEMENT SHALL IN ALL
RESPECTS BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE
OF NEW YORK, INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE
BUT WITHOUT GIVING EFFECT TO PRINCIPLES OF CONFLICTS OF LAWS, AND IS BEING
DELIVERED IN THE STATE OF NEW YORK.
Section 9. Agreement as Chattel Paper. To the extent that this
Lease Supplement constitutes chattel paper (as such term is defined in the UCC
as in effect in any applicable jurisdiction), no security interest in this
Lease Supplement may be created through the transfer or possession of any
counterpart other than the original chattel-paper counterpart, which shall be
the counterpart containing the receipt executed by the Indenture Trustee on its
signature page.
Section 10. Counterparts. This Lease Supplement may be executed
in any number of counterparts, each of which shall be an original (except that
only the counterpart bearing the receipt executed by Indenture Trustee shall be
the original for purposes of perfecting a security interest therein as chattel
paper under the UCC), but all of which taken together shall constitute one and
the same instrument and any of the parties hereto may execute this Lease
Supplement by signing any such counterpart.
IN WITNESS WHEREOF, the Lessor and the Lessee have caused this
Lease Supplement to be duly executed as of the day and year first above
written.
LESSOR: STATE STREET BANK AND TRUST COMPANY OF
CONNECTICUT, NATIONAL ASSOCIATION,
not in its individual capacity,
but solely as Owner Trustee
By: ________________________________________
Name: Xxxx X. Xxxxx
Title: Vice President
LESSEE: FEDERAL EXPRESS CORPORATION
By: ________________________________________
Name: Xxxxxx X. Xxxxxxx
Title: Vice President and Treasurer
Receipt of this original counterpart of the Lease Supplement is
hereby acknowledged on this ___ day of ______ 1998.
Indenture Trustee: FIRST SECURITY BANK, NATIONAL ASSOCIATION,
not in its individual capacity,
but solely as Indenture Trustee
By: ___________________________________________
Name: Xxxx X. Xxxxxx
Title: Vice President
Exhibit B
to
Lease Agreement
[See Exhibit E to the Participation Agreement]
Exhibit C
to
Lease Agreement
[See Exhibit F to the Participation Agreement]
