EXHIBIT 10.1
EXECUTION VERSION
DATED AS OF MAY 4, 2004
BETWEEN
AVIATION FINANCIAL SERVICES INC.
AND
KITTY HAWK AIRCARGO, INC.
AIRCRAFT LEASE
COMMON TERMS AGREEMENT
CONFIDENTIAL TREATMENT HAS BEEN REQUESTED BY KITTY HAWK, INC. FOR CERTAIN
PORTIONS OF THIS DOCUMENT. CONFIDENTIAL PORTIONS HAVE BEEN FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION. OMITTED PORTIONS ARE INDICATED IN THIS
AGREEMENT WITH "*****".
CONTENTS
SECTION
PAGE
1. INTERPRETATION............................................................................................. 1
1.1 Definitions.......................................................................................... 1
1.2 Construction............................................................................................ 1
2. REPRESENTATIONS AND WARRANTIES............................................................................. 2
3. CONDITIONS PRECEDENT....................................................................................... 2
4. COMMENCEMENT............................................................................................... 3
5. PAYMENTS................................................................................................... 5
6. MANUFACTURERS' WARRANTIES.................................................................................. 18
7. LESSOR'S COVENANTS......................................................................................... 19
8. LESSEE'S COVENANTS......................................................................................... 21
9. INSURANCE.................................................................................................. 36
10. INDEMNITY............................................................................................... 38
11. EVENTS OF LOSS.......................................................................................... 40
12. RETURN OF AIRCRAFT...................................................................................... 42
13. DEFAULT................................................................................................. 43
14. ASSIGNMENT.............................................................................................. 47
15. MISCELLANEOUS........................................................................................... 49
16. DISCLAIMERS AND WAIVERS................................................................................. 55
17. BROKERS AND OTHER THIRD PARTIES......................................................................... 57
SCHEDULE 1 Definitions..................................................................................... 1
SCHEDULE 2 Representations And Warranties.................................................................. 1
SCHEDULE 3 Conditions Precedent............................................................................ 1
SCHEDULE 4 Pre-Delivery Procedures and Delivery Condition.................................................. 1
SCHEDULE 5 Certificate Of Acceptance....................................................................... 1
SCHEDULE 6 Procedures And Operating Condition At Redelivery................................................ 1
SCHEDULE 7 Insurance Requirements.......................................................................... 1
SCHEDULE 8 Form Of Legal OpinionS.......................................................................... 1
SCHEDULE 9 Events Of Default............................................................................... 1
SCHEDULE 10 Form of GuarantY.............................................................................. 1
SCHEDULE 11 [Omitted]...................................................................................... 1
SCHEDULE 12 Aircraft Passenger Cabin Interior Standard..................................................... 1
SCHEDULE 13 Form Of Assignment, Assumption And Release Agreement........................................... 1
Annex I to Assignment Agreement............................................................................ 1
Annex II To Assignment Agreement........................................................................... 1
Annex A To Notice of Assignment............................................................................ 1
Annex B To Notice of Assignment............................................................................ 1
SCHEDULE 14 Form Of Lease Supplement No. 1................................................................. 1
SCHEDULE 15 Form Of CERTIFICATE Lease Termination.......................................................... 1
SCHEDULE 16 Form Of Letter Of Credit....................................................................... 1
i
COMMON TERMS AGREEMENT
THIS COMMON TERMS AGREEMENT (this "CTA") is made as of May 4, 2004, BETWEEN:
Aviation Financial Services Inc. ("AFSI"); and Kitty Hawk Aircargo, Inc.
WHEREAS:
(A) From time to time, Kitty Hawk Aircargo, Inc. or one of its
Affiliates may wish to lease commercial aircraft from AFSI or
one of its Affiliates and AFSI or one of its Affiliates may
wish to lease commercial aircraft to Kitty Hawk Aircargo, Inc.
or one of its Affiliates;
(B) Each party hereto wishes to provide in one document for
certain common terms and conditions, as hereinafter provided
in this CTA, that will be applicable, unless otherwise stated,
to each such lease referred to in Recital (A); and
(C) Each such lease transaction will be concluded only on the
terms of an agreement entitled "Aircraft Lease Agreement,"
which together with this CTA (which will be incorporated into
and become part of such Aircraft Lease Agreement) will
constitute the lease for the applicable aircraft as identified
therein;
NOW, THEREFORE, for good and valuable consideration the receipt and
sufficiency of which are hereby acknowledged, the parties hereto hereby agree as
follows:
1. INTERPRETATION
1.1 DEFINITIONS
All references herein to "Lease" mean the various documents comprising
the Lease. In the Lease, capitalized words and expressions not
otherwise defined have the meanings set out for them in Schedule 1 or
in the Aircraft Lease Agreement.
1.2 CONSTRUCTION
(a) In the Lease, unless otherwise stated, a reference to:
(i) "Lessor," "Lessee," "GECAS," "Owner" or any other
Person includes any of their successors and assigns;
(ii) plural concepts shall include the singular and vice
versa;
CONFIDENTIAL TREATMENT HAS BEEN REQUESTED BY KITTY HAWK, INC. FOR CERTAIN
PORTIONS OF THIS DOCUMENT. CONFIDENTIAL PORTIONS HAVE BEEN FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION. OMITTED PORTIONS ARE INDICATED IN THIS
AGREEMENT WITH "*****".
- 1 -
(iii) any document, excluding this Common Terms Agreement,
shall include any changes to that document and any
replacement for it;
(iv) a Section or a Schedule is a reference to a section
of or a schedule to this CTA or the Aircraft Lease
Agreement as so indicated;
(v) any Regulation shall include any changes to that
Regulation and any replacement for it;
(vi) an obligation of a Person refers to any obligation
that Person has under or in relation to the Lease;
(vii) "includes," "including", "include" or similar terms
shall not be construed as limiting and shall mean
"including without limitation"; and
(viii) in the event of a conflict between the provisions of
the Aircraft Lease Agreement and the provisions of
this CTA, the provisions of the Aircraft Lease
Agreement shall control.
(b) Headings and Subheadings to Sections and Schedules in the
Lease are not intended to affect their meaning.
2. REPRESENTATIONS AND WARRANTIES
2.1 LESSEE'S REPRESENTATIONS AND WARRANTIES
Lessee hereby makes the representations and warranties set out in
Section 1.1 of Schedule 2 as of the date of execution of the Aircraft
Lease Agreement and as of the Delivery Date, and Lessee understands
that these statements must be true, both when the Aircraft Lease
Agreement is executed and on the Delivery Date.
2.2 LESSOR'S REPRESENTATIONS AND WARRANTIES
Lessor hereby makes the representations and warranties set out in
Section 1.2 of Schedule 2 as of the date of execution of the Aircraft
Lease Agreement and as of the Delivery Date, and Lessor understands
that these statements must be true, both when the Aircraft Lease
Agreement is executed and on the Delivery Date.
3. CONDITIONS PRECEDENT
3.1 CONDITIONS PRECEDENT
Lessee and Lessor will provide each of the Conditions Precedent in a
timely fashion. Lessor need not deliver and start the leasing of the
Aircraft under the Lease unless each of the Lessor Conditions Precedent
is satisfied or waived in writing by Lessor. Lessee need not accept and
start the leasing of the Aircraft under the Lease unless each of the
Lessee Conditions Precedent is satisfied or waived in writing by
Lessee.
- 2 -
3.2 WAIVER
If any Lessor Condition Precedent is not satisfied, or waived in
writing by Lessor, on or before the Delivery Date and Lessor (in its
absolute discretion) nonetheless agrees to deliver the Aircraft to
Lessee and to start the leasing of the Aircraft, Lessee will ensure
that such Lessor Condition Precedent is fulfilled within thirty (30)
days after the Delivery Date, and Lessor may treat as an Event of
Default the failure of Lessee to do so.
4. COMMENCEMENT
4.1 LEASING
(a) The Aircraft Lease Agreement will generally provide a
Scheduled Delivery Month. Unless a specific Scheduled Delivery
Week or a specific Scheduled Delivery Date has been agreed in
the Aircraft Lease Agreement, Lessor shall notify Lessee of
the Scheduled Delivery Week as soon as possible, but no later
than thirty (30) days prior to the anticipated Delivery Date,
and unless a specific Scheduled Delivery Date has been agreed
in the Aircraft Lease Agreement, Lessor shall notify Lessee of
the Scheduled Delivery Date as soon as practicable but no
later than one (1) week prior to the Scheduled Delivery Week,
and Lessor shall notify Lessee of any change in the Scheduled
Delivery Date as soon as practicable thereafter. Subject to
Section 4.4, Lessor will lease the Aircraft to Lessee and
Lessee will take the Aircraft on lease for the Term, which
shall be evidenced by Lessee's execution of Lease Supplement
No. 1.
(b) If (i) Lessee is unwilling or unable to accept delivery of the
Aircraft on the date on which Lessor tenders the Aircraft for
Delivery to Lessee under and in accordance with Section
4.3(a), or Lessee fails to fulfill any Lessor Condition
Precedent on or before such date, and (ii) the Lessee
Conditions Precedent are met (or would reasonably be expected
to be met if Delivery had occurred), then the Rent
Commencement Date for the Aircraft shall be deemed to have
occurred on the date on which the Aircraft is tendered by
Lessor for Delivery in accordance with subsection (ii) of this
Section 4.1(b), and Lessee shall be obligated to pay Rent for
the Aircraft on and from such date regardless of whether the
Delivery Date occurs or whether Lessee executes Lease
Supplement No. 1, but Lessor shall have no obligation to
deliver, and Lessee shall have no lease interest in the
Aircraft or other right to, possession of the Aircraft unless
and until Lessee fulfills all Lessor Conditions Precedent as
and when provided in the Lease and Lessee accepts delivery of
the Aircraft as evidenced by its execution of Lease Supplement
No. 1, and so long as no Default has occurred and is
continuing.
LESSEE WILL BE RESPONSIBLE FOR ALL RISKS ASSOCIATED WITH (I) THE USE
AND OPERATION OF THE AIRCRAFT AND (II) ANY LOSS OF OR DAMAGE TO THE
AIRCRAFT FROM THE DELIVERY DATE UNTIL POSSESSION OF THE AIRCRAFT IS
RETURNED TO LESSOR ON THE RETURN
- 3 -
OCCASION AND LESSOR EXECUTES AND DELIVERS THE ACKNOWLEDGEMENT
CONTEMPLATED BY SECTION 12.4.
4.2 PROCEDURE BEFORE DELIVERY
Lessor and Lessee will follow the Pre-Delivery Procedure.
4.3 DELIVERY AND ACCEPTANCE
After the Pre-Delivery Procedure has been carried out:
(a) Subject to Section 3.1, Lessor will tender delivery of the
Aircraft to Lessee at the Delivery Location.
(b) Subject to Section 3.1, Lessee will accept the Aircraft.
Lessee shall also provide evidence of its acceptance by
signing Lease Supplement No. 1 and delivering it to Lessor.
(c) Lessee's acceptance of the Aircraft shall be regarded as
absolute, unconditional and irrevocable.
The Term will commence on the Delivery Date, which Delivery Date is
scheduled to occur on the Scheduled Delivery Date, and will expire on
the Scheduled Expiry Date unless terminated earlier in accordance with
the provisions of the Lease.
4.4 DELAYED DELIVERY
(a) If Delivery takes place after the Scheduled Delivery Date or
does not happen due to an Unforeseen Event or for any other
reason (other than an act or omission of Lessor not relating
to, or caused by, an Unforeseen Event):
(i) Lessor will not be responsible for any Losses that
Lessee suffers resulting from the delay or from the
non-delivery of the Aircraft; and
(ii) Lessee will not, except in the circumstances
described in Section 4.4(b), be entitled to terminate
the Lease or to reject the Aircraft when it is
offered for Delivery because of the delay.
(b) If the Aircraft has not been tendered for Delivery, in
accordance with Section 4.3, by the Final Delivery Date,
either party may terminate the Lease by delivering notice to
the other party within ten (10) days following the Final
Delivery Date. Upon delivery of any such notice, all
obligations of each party under the Lease will end on the date
of such notice, except that Lessor will repay to Lessee an
amount equal to the Deposit (if any), return to Lessee or
agree to the cancellation of any Letter of Credit, and release
and return any Guarantee given in respect of the Lease. Lessee
will remain obligated under its indemnity set forth in Section
3 of Schedule 4.
- 4 -
(c) Lessee hereby agrees that its only right or remedy for a delay
in delivery of the Aircraft due to an Unforeseen Event or for
any other reason (other than an act or omission of Lessor not
relating to, or caused by, an Unforeseen Event) is the remedy
set forth in Section 4.4(b) above and Lessee hereby waives any
rights or remedies it may have under Section 2A-406 of the UCC
or otherwise for any delay in or failure of delivery.
5. PAYMENTS
5.1 DEPOSIT
Lessee shall pay Lessor the Deposit, if any, specified in the Aircraft
Lease Agreement.
5.2 RENTAL PERIODS
The first Rental Period will start on the Rent Commencement Date. Each
subsequent Rental Period will start on the date immediately following
the last day of the previous Rental Period. Each Rental Period will end
on the date immediately before the numerically corresponding day in the
next month, except that:
(a) if there is no numerically corresponding day in that month, it
will end on the last day of that month; and
(b) if a Rental Period would otherwise overrun the Expiry Date, it
will end on the Expiry Date.
5.3 RENT
(a) Time of Payment: Lessee will pay to Lessor or its order Rent
in advance, as specified in the Aircraft Lease Agreement, on
each Rent Date. Lessor must receive value for the payment on
each Rent Date. If a Rental Period begins on a day that is not
a Business Day, the Rent payable in respect of that Rental
Period shall be paid on the Business Day immediately before
that day.
(b) Amount: The Rent payable during the Term shall be calculated
as provided in the Aircraft Lease Agreement.
5.4 SUPPLEMENTAL RENT
(a) Amount: If, under the Aircraft Lease Agreement, Lessee is
required to pay Supplemental Rent, Lessee will pay that
Supplemental Rent, at the rates referred to in the Aircraft
Lease Agreement, to Lessor in relation to each calendar month
(or part of a month) of the Term, on the fifteenth (15th) day
following the end of that calendar month (except that the last
payment of Supplemental Rent in respect of the Term shall be
paid on the Expiry Date).
- 5 -
(b) Adjustment: The Supplemental Rent rates shall be adjusted
after the Delivery Date not more frequently than annually
(with any such adjustment having retrospective application as
appropriate to reflect the provisions of paragraphs (ii),
(iii) and (iv) below) based on the following:
(i) Annual Supplemental Rent Adjustment: by the Annual
Supplemental Rent Adjustment, compounded annually
commencing on the first anniversary of the Delivery
Date, as an agreed inflation adjustment.
(ii) Hour to Cycle Ratio Adjustment: Lessor and Lessee
acknowledge that the Aircraft Lease Agreement may
provide that the Engine Supplemental Rent rate and
the Engine LLP Supplemental Rent rate are based upon
the assumption that the Aircraft will operate on an
Assumed Ratio. If that assumption proves to be
incorrect at any time during the Term based upon
Lessee's actual operating experience during the most
recently preceding twelve (12) months that data is
available at the time of determination, and the hour
to cycle ratio differs from Assumed Ratio by more
than 0.2 during such twelve (12) month period, Lessor
shall have the right, upon written notice to Lessee,
to adjust the Engine Supplemental Rent rate and the
Engine LLP Supplemental Rent rate (in the case of a
decrease in the ratio below the Assumed Ratio) and
Lessor, upon written request from Lessee, will make
that adjustment (in the case of an increase in the
ratio above the Assumed Ratio). Any adjustment shall
be based on a table contained in the Aircraft Lease
Agreement. Actual hour to cycle ratios may fall
outside the ratios identified in that table. In that
case, the actual values shall be determined by
extrapolating the closest observed intervals in the
table.
(iii) Assumed Utilization Adjustment: Lessor and Lessee
acknowledge that the Aircraft Lease Agreement may
provide that any amounts of Airframe Supplemental
Rent, APU Supplemental Rent and Landing Gear
Supplemental Rent payable by Lessee are based upon
the assumption that the Aircraft will operate on an
Assumed Utilization. If that assumption proves to be
incorrect at any time during the Term based upon
Lessee's actual operating experience during the most
recently preceding twelve (12) months that data is
available at the time of determination, such that
Lessee's actual utilization of the Aircraft is (x)
***** or greater or (y) ***** or less than the
Assumed Utilization, Lessor may make, and notify
Lessee of, such adjustment up or down, as applicable,
as Lessor reasonably determines is necessary or
appropriate in its reasonable discretion to maintain
the rates of Airframe Supplemental Rent, APU
Supplemental Rent and Landing Gear Supplemental Rent
at levels which accurately reflect the costs
associated with obtaining relevant maintenance
services at prevailing industry rates.
CONFIDENTIAL TREATMENT HAS BEEN REQUESTED BY KITTY HAWK, INC. FOR CERTAIN
PORTIONS OF THIS DOCUMENT. CONFIDENTIAL PORTIONS HAVE BEEN FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION. OMITTED PORTIONS ARE INDICATED IN THIS
AGREEMENT WITH "*****".
- 6 -
(iv) Material Revision to Maintenance Program: If the
Lessee's Maintenance Program is materially revised
and the result of such revision is to materially
increase or decrease the cost of obtaining relevant
maintenance services above and beyond or below those
contemplated by any Supplemental Rent rate then in
effect, Lessor may make, and notify Lessee of, such
adjustment up or down, as applicable, as Lessor
reasonably determines is necessary or appropriate in
its reasonable discretion to maintain the
Supplemental Rent at levels which accurately reflect
the costs associated with obtaining relevant
maintenance services at prevailing industry rates.
(v) Each notice by Lessor specified in paragraphs (ii),
(iii) and (iv) above shall specify the relevant
revised Supplemental Rent rates and the effective
date of such revision and Lessee shall be bound by
such notice absent manifest error.
(vi) Lessee agrees to advise Lessor, in writing, within
thirty (30) days following any annualized calculation
which would result in the assumptions mentioned in
paragraphs (ii) and (iii) above becoming incorrect at
any time during the Term.
(c) Lessor's Property Rights: Lessee acknowledges and agrees that
Supplemental Rent is additional rent for the leasing of the
Aircraft and not cash collateral or other collateral security
for Lessee's maintenance obligations under the Lease. Once
paid, all Supplemental Rent is the property of Lessor, it is
not refundable to Lessee under any circumstances whatsoever
and Lessee has no interest therein whatsoever. For the
avoidance of doubt, the provisions of this Section 5.4(c) do
not derogate from the provisions set forth in Section 7.2 on
Maintenance Contributions.
5.5 PAYMENTS
All payments by Lessee to Lessor under the Lease will be made for value
on the due date in Dollars and in immediately available funds by wire
transfer to Deutsche Bank Trust Company Americas, 0 Xxxxxx Xxxxxx, Xxx
Xxxx, XX, ABA Number 021 001 033, Swift Code BKTRUS 33, for the account
of GE Capital Aviation Services, Inc., as Manager, Account number 50
234 585, or such other account as Lessor designates in writing from
time to time.
5.6 WITHHOLDING
(a) WITHHOLDING: Lessee must not deduct any amount from any of its
payments under the Lease, for or on account of any Taxes
(other than Lessor Taxes), unless it is required by Law to do
so, in which case Lessee must:
(i) deduct the minimum amount necessary to comply with
the Law;
- 7 -
(ii) pay Lessor an extra amount so that Lessor receives a
net amount on the relevant payment date that is equal
to the amount that it would have received if the
deduction had not been made. The amount of any such
payment to Lessor shall be made taking into account
the principles of Section 5.10 so that Lessor shall
be in no worse position than it would have been if
the deduction had not applied in the first place;
(iii) pay the Tax to the relevant taxing authority
according to the relevant Law; and
(iv) obtain a receipt (if one is available) from the
relevant taxing authority and give it to Lessor.
(b) REPAYMENT OF LESSOR TAXES: If, for any reason, Lessee is
required to make any payment of withholding Taxes to a taxing
authority (which payment was not deducted from the payment
made by Lessee to Lessor on whom such Taxes are imposed) with
respect to, or as a result of, any withholding Taxes imposed
with respect to a payment pursuant to the Lease which
withholding Tax is not the responsibility of Lessee under
Section 5.7(a) as a result of Section 5.7(c), then, upon
written request of Lessee, Lessor promptly (and in any event
within twenty days after receipt of notice of payment of the
withholding Taxes and appropriate payment documentation with
respect thereto) shall pay to Lessee an amount that equals
such withholding Taxes.
5.7 TAX INDEMNITY
*****
5.8 VALUE ADDED TAX
(a) For the purposes of this Section 5.8:
(i) "VAT" means value added tax and any goods and
services, sales or turnover tax, imposition or levy
of a like nature; and
(ii) "supply" includes anything on or in respect of which
VAT is chargeable.
(b) Lessee will pay to Lessor or the relevant taxing authority and
indemnify Lessor against the amount of any VAT chargeable in
respect of any supply for VAT purposes under the Lease. Lessee
shall provide evidence to Lessor, if available, in respect of
any payment it makes of such VAT. The amount of any such
payment to Lessor shall be made taking into account the
principles of Section 5.10;
CONFIDENTIAL TREATMENT HAS BEEN REQUESTED BY KITTY HAWK, INC. FOR CERTAIN
PORTIONS OF THIS DOCUMENT. FOUR (4) PAGES OF SECTION 5.7 HAVE BEEN OMITTED
PURSUANT TO THE CONFIDENTIAL TREATMENT REQUEST. CONFIDENTIAL PORTIONS HAVE BEEN
FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION. OMITTED PORTIONS
ARE INDICATED IN THIS AGREEMENT WITH "*****".
- 8 -
(c) Each amount stated as payable by Lessee under the Lease is
exclusive of VAT (if any);
(d) If, for any reason, Lessee is required to make any payment of
VAT to a taxing authority (which payment was not deducted from
the payment made by Lessee to Lessor on whom such Tax is
imposed) with respect to, or as a result of, any VAT imposed
with respect to a payment pursuant to the Lease which VAT is
not the responsibility of Lessee under Section 5.7(a) as a
result of Section 5.7(c), then, upon written request of
Lessee, Lessor promptly (and in any event within twenty days
after receipt of notice of payment of the VAT and appropriate
payment documentation with respect thereto) shall pay to
Lessee an amount that equals such VAT.
5.9 TAX CONTEST
(a) If a Tax Indemnitee receives a written claim for any Tax for
which Lessee would be required to pay an indemnity pursuant to
Section 5.7(a)(i), the Tax Indemnitee shall notify Lessee
promptly of such claim, provided that any failure to provide
such notice will not relieve Lessee of any indemnification
obligation pursuant to Section 5.7. If requested by Lessee in
writing promptly after receipt of the Tax Indemnitee's notice,
the Tax Indemnitee shall, upon receipt of indemnity reasonably
satisfactory to it and at the expense of Lessee (including all
costs, expenses, legal and accountants' fees and
disbursements, and penalties, interest and additions to tax
incurred in contesting such claim) in good faith contest or
(if permitted by applicable Law and the contest does not
relate to income Taxes) permit Lessee to contest such claim by
(i) resisting payment thereof if practicable and appropriate,
(ii) not paying the same except under protest if protest is
necessary and proper, or (iii) if payment is made, using
reasonable efforts to obtain a refund of such Taxes in
appropriate administrative and judicial proceedings. The Tax
Indemnitee shall determine the method of any contest conducted
by the Tax Indemnitee and (in good faith consultation with
Lessee) control the conduct thereof. Lessee shall determine
the method of any contest conducted by Lessee and (in good
faith consultation with the Tax Indemnitee) control the
conduct thereof. Lessee shall pay in full all payments of Rent
and other amounts payable pursuant to the Lease, without
reduction for or on account of any Tax, while such contest is
continuing. The Tax Indemnitee shall not be required to
contest, or to continue to contest, a claim for Taxes under
this Section 5.9 if (w) in the case of a contest related to
income Taxes, the amount of Taxes at issue is less than *****,
or (x) such contest would result in a risk of criminal
penalties or risk of a sale, forfeiture or loss of, or the
imposition of a Security
CONFIDENTIAL TREATMENT HAS BEEN REQUESTED BY KITTY HAWK, INC. FOR CERTAIN
PORTIONS OF THIS DOCUMENT. CONFIDENTIAL PORTIONS HAVE BEEN FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION. OMITTED PORTIONS ARE INDICATED IN THIS
AGREEMENT WITH "*****".
- 9 -
Interest (other than a Permitted Lien) on, the Aircraft, or
(y) Lessee shall not have furnished, at Lessee's expense, an
opinion of independent tax counsel selected by the Tax
Indemnitee and reasonably satisfactory to Lessee, that a
reasonable basis exists for such contest, or (z) a Default
shall be continuing (unless Lessee shall have provided
security reasonably satisfactory to the Tax Indemnitee
securing Lessee's performance of its obligations under this
Section 5.9). If the Tax Indemnitee contests any claim for
Taxes by making a payment and seeking a refund thereof, then
Lessee shall advance to the Tax Indemnitee, on an
interest-free basis, an amount equal to the Taxes to be paid
by the Tax Indemnitee in connection with the contest and shall
indemnify the Tax Indemnitee on an After-Tax Basis for any
adverse tax consequences to the Tax Indemnitee of such
interest-free advance. Upon the final determination of any
contest pursuant to this Section 5.9 in respect of any Taxes
for which Lessee shall have made an advance to the Tax
Indemnitee in accordance with the immediately preceding
sentence, the amount of Lessee's obligation shall be
determined as if such advance had not been made; any indemnity
obligation of Lessee to the Tax Indemnitee under this Section
5.9 and the Tax Indemnitee's obligation to repay the advance
will be satisfied first by setoff against each other, and any
difference owing by either party shall be paid within *****
days after such final determination.
(b) If any Tax Indemnitee obtains a refund or reimbursement of all
or any part of any Taxes for which a full indemnity was paid
by Lessee under Section 5.7 hereof or otherwise, such Tax
Indemnitee shall pay Lessee the amount of such refund or
reimbursement, reduced by any Taxes imposed on such Tax
Indemnitee on receipt or accrual of such refund or
reimbursement and increased by any Taxes saved by such Tax
Indemnitee by reason of the deductions, credits, allocations
or allowances in respect of such payment by Lessee. If, in
addition to such refund or reimbursement, a Tax Indemnitee
receives an amount representing interest on such refund or
reimbursement, such Tax Indemnitee shall pay to Lessee the
portion of such interest which is fairly attributable to such
refund, reduced by any Taxes imposed on such Tax Indemnitee on
receipt or accrual of such interest and increased by any Taxes
saved by reason of the deductions, credits, allocations or
allowances in respect of such payment. A Tax Indemnitee shall
not be required to make any payment to Lessee pursuant to this
Section 5.9 if, and for so long as, a Payment Default or an
Event of Default shall have occurred and be continuing.
(c) Any Tax Indemnitee in its sole discretion (by written notice
to Lessee) may waive its rights to indemnification pursuant to
Section 5.7 with respect to any claim for any Tax and may
refrain from contesting or continuing the contest of such
claim, in which event Lessee shall have no obligation to
indemnify such Tax Indemnitee for the Taxes that are the
subject of such claim. If any Tax Indemnitee agrees to a
settlement of any contest conducted pursuant to this Section
5.9 without the prior
CONFIDENTIAL TREATMENT HAS BEEN REQUESTED BY KITTY HAWK, INC. FOR CERTAIN
PORTIONS OF THIS DOCUMENT. CONFIDENTIAL PORTIONS HAVE BEEN FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION. OMITTED PORTIONS ARE INDICATED IN THIS
AGREEMENT WITH "*****".
- 10 -
written consent of Lessee, which consent shall not be
unreasonably withheld, then such Tax Indemnitee shall be
deemed to have waived its rights to the indemnification
provided for in Section 5.7 with respect to the Tax liability
accepted in such settlement.
(d) Information:
(i) If Lessee is required by any applicable Law, or by
any third party, to deliver any report or return in
connection with any Taxes for which Lessee would be
obligated to indemnify Lessor or any other Tax
Indemnitee under the Lease, Lessee will complete the
same and, on request, supply a copy of the report or
return to Lessor. Should Lessee require any
information exclusively within the Control of Lessor
or another Tax Indemnitee to properly complete and
deliver any such report or return, Lessor or such
other Tax Indemnitee shall, at Lessee's expense,
furnish such information to Lessee promptly after
request therefor.
(ii) If any report, return or statement is required to be
made by Lessor or any other Tax Indemnitee with
respect to any Tax for which there is an indemnity
obligation of Lessee under the Lease, and Lessee
knows of, or reasonably should have known of, such
return, report or statement, Lessee will promptly
notify Lessor of the requirement and:
(A) if permitted by applicable Law,
make and timely file such report,
return or statement (except for any
report, return or statement that
Lessor has notified Lessee that
Lessor or any other Tax Indemnitee
intends to prepare and file),
prepare such return in such manner
as will show Lessor as lessor of
the Aircraft and the ownership of
the Aircraft in Owner if required
or appropriate, and provide Lessor
upon request a copy of each such
report, return or statement filed
by Lessee, or
(B) if Lessee is not permitted by
applicable Law to file any such
report, return or statement, Lessee
will prepare and deliver to Lessor
a proposed form of such report,
return or statement within a
reasonable time prior to the time
such report, return or statement is
to be filed.
(iii) Lessee will provide such information and documents as
Lessor may reasonably request to enable Lessor or any
other Tax Indemnitee to comply with its tax filing,
audit and litigation obligations. Lessor or any other
Tax Indemnitee will provide such information or
documents, at Lessee's expense, that Lessee does not
otherwise have as Lessee may reasonably request and
which are necessary to enable Lessee to comply with
its obligations under the Lease (including Sections
5.6 and 5.7 of this CTA and in the Aircraft Lease
Agreement).
- 11 -
5.10 INDEMNITY PAYMENTS - AFTER-TAX BASIS; TAX CREDIT
(a) AFTER-TAX BASIS: The amount of any payment made under Section
5.6, Section 5.7 (including Section 5.7(d)), Section 5.8,
Section 5.21, Section 8.13, Section 10, Section 11.1(c),
Section 12.2, or Section 13 to or for the benefit of any
Indemnitee, shall include such amount as may be necessary to
hold such Indemnitee harmless on an After-Tax Basis from all
Taxes required to be paid by such Indemnitee with respect to
such payment or indemnity (including any payments pursuant to
this Section 5.10 determined based on the assumption that at
the time each such payment or indemnity is accrued by the
relevant Indemnitee, such payment or indemnity will be subject
to (i) United States federal income tax at the highest
marginal statutory tax rate applicable to corporations in the
highest taxable income bracket, (ii) United States state and
local income taxes at the composite of the highest marginal
statutory tax rates applicable to the Tax Indemnitee and (iii)
income taxes (if any) imposed by countries outside the United
States at the actual rates imposed on the relevant
Indemnitee).
(b) TAX CREDIT: If Lessor, in good faith, determines that it has
realized a tax benefit (by way of deduction, credit or
otherwise) as a result of any payment or Tax for which Lessee
is liable under Section 5.6(a) 5.7 or 5.8, Lessor shall pay to
Lessee as soon as practicable after the tax benefit has been
realized (but not before Lessee has made all payments and
indemnities to Lessor required under Section 5.6, 5.7 or 5.8)
an amount which will ensure that (after taking account of the
payment itself) Lessor is in no better and no worse position
than it would have been if the deduction had not applied.
Nothing in this Section 5.10(b) shall:
(i) interfere with the right of Lessor to arrange its tax
affairs in whatever manner it thinks fit; or
oblige Lessor to disclose any information relating to its Tax affairs
or any Tax computations (other than computations made with respect to
any amounts claimed by Lessor from Lessee pursuant to this Section 5.6,
Section 5.7 or Section 5.8 hereof); provided, however, that if any of
the information related to the computations is contained in tax returns
or other documents involving matters unrelated to the Lease or is
otherwise confidential information, then such information shall be
confirmed by Lessor's independent auditors.
5.11 LESSOR OBLIGATIONS FOLLOWING EXPIRY DATE
Within ninety-one (91) days (or such shorter period of not less than
thirty (30) days after the Expiry Date to which Lessor may agree after
Lessee demonstrates to Lessor's reasonable satisfaction that there is
no risk whatsoever of any payment made or to be made under the Lease
being avoided (or otherwise rescinded) under Xxxxxxx 000 xx xxx Xxxxxx
Xxxxxx Bankruptcy Code of 1978, as amended, or any similar occurrence
under any analogous provision of applicable United States federal or
state Law) after:
(a) redelivery of the Aircraft to Lessor in accordance with and in
the condition required by the Lease; or
- 12 -
(b) payment to Lessor of the Agreed Value following an Event of
Loss after the Delivery Date; or
(c) termination of the Lease prior to the commencement of the Term
in accordance with the provisions of the Lease; or
(d) or in each case such later time as Lessor is reasonably
satisfied that Lessee has irrevocably paid to Lessor all
amounts that may then be due and payable under the Lease and
the Other Agreements and in each case so long as no Default
has occurred and is continuing:
(i) Lessor will pay to Lessee an amount equal to the
balance of the Deposit (if any);
(ii) Lessor will pay to Lessee the amount of any Rent
received in respect of any period falling after the
date of redelivery of the Aircraft or payment of the
Agreed Value, as the case may be; and
(iii) Lessor will return to Lessee or agree to the
cancellation of any Letter of Credit.
5.12 NET LEASE
The Lease is a net lease. Lessee's obligation to pay Rent and to
perform all of its other obligations under the Lease is absolute and
unconditional no matter what happens and no matter how fundamental or
unforeseen the event, including any of the following:
(a) any right of set-off, counterclaim, recoupment, defense or
other right which either party to the Lease may have against
the other (including any right of reimbursement) or which
Lessee may have against the Manufacturer, any manufacturer or
seller of or any Person providing services with respect to the
Aircraft, any Engine or any Part or any other Person, for any
reason whatsoever;
(b) any unavailability of the Aircraft for any reason, including a
requisition of the Aircraft or any prohibition or interruption
of or interference with or other restriction against Lessee's
use, operation or possession of the Aircraft (whether or not
the same would, but for this provision, result in the
termination of the Lease by operation of law);
(c) any lack or invalidity of title or any other defect in title,
airworthiness, merchantability, fitness for any purpose,
condition, design, or operation of any kind or nature of the
Aircraft for any particular use or trade, or for registration
or documentation under the Laws of any relevant jurisdiction,
or any Event of Loss in respect of or any damage to the
Aircraft;
(d) any insolvency, bankruptcy, reorganization, arrangement,
readjustment of debt, dissolution, liquidation or similar
proceedings by or against Lessor, Lessee or any other Person;
- 13 -
(e) any invalidity or unenforceability or lack of due
authorization of, or other defect in, the Lease;
(f) any Security Interests or Taxes; and/or
(g) any other cause or circumstance which but for this provision
would or might otherwise have the effect of terminating or in
any way affecting any obligation of Lessee under the Lease.
Lessee acknowledges and agrees that it has used its own
judgment in selecting the Aircraft, and has not relied on
Lessor or on any information supplied by Lessor, that Lessor
is not a manufacturer of or dealer in aircraft and that Lessor
has all of the rights and benefits of a lessor under a lease
to which Section 2A-407 of the UCC applies as provided in such
Section 2A-407.
Except as expressly set forth elsewhere in the Lease, Lessee hereby
waives, to the extent permitted by applicable Law, any and all right
which it may now have or which at any time hereafter may be conferred
upon it, by statute or otherwise, to terminate, xxxxx, cancel, quit,
reduce, defer, suspend or surrender the Lease or the Aircraft or any
obligation imposed upon Lessee under the Lease (including payment of
Rent or Supplemental Rent).
Each payment of Rent or Supplemental Rent made by Lessee shall be
final. Lessee will not seek to recover all or any part of any payment
of Rent or Supplemental Rent for any reason whatsoever except manifest
error.
If for any reason whatsoever the Lease shall be terminated in whole or
in part by operation of Law, except as specifically provided in the
Lease, Lessee waives all rights (if any) to any termination or
diminution in its Rent or Supplemental Rent obligations under the Lease
and nonetheless agrees to pay to Lessor, an amount equal to each Rent
and Supplemental Rent payment at the time such payments would have
become due and payable in accordance with the terms of the Lease had
the Lease not been terminated in whole or in part and so long as such
payments are made and all other terms and conditions of the Lease are
complied with by Lessee, Lessor and Lessee will deem the Lease to
remain in full force and effect and Lessee shall continue in possession
of the Aircraft under the terms and conditions of the Lease.
Nothing in this Section 5.12 will be construed to limit Lessee's right to
institute separate legal proceedings against Lessor in the event of Lessor's
breach of the Lease as and to the extent permitted by Sections 7.1 and 16.3 of
this CTA and as otherwise permitted by applicable Law, or to limit Lessee's
rights and remedies against any other Person.
For the avoidance of doubt, nothing in this Section 5.12 shall be construed to
require any payment of Taxes other than those Taxes expressly payable by Lessee
under the Lease.
5.13 FURTHER PROVISIONS REGARDING DEPOSIT
(a) If, under the Aircraft Lease Agreement, Lessee is required to
pay a Deposit, Lessee hereby grants a security interest in the
Deposit to Lessor as security for Lessee's and Lessee
Affiliates' obligations under the Lease and all Other
- 14 -
Agreements (including any and all Losses suffered or incurred
by Lessor or any of its Affiliates in respect of which Lessee
or any Lessee Affiliate is obligated under the Lease or any
Other Agreement) and the remaining provisions of this Section
5.13 shall apply. Lessee agrees that Lessor shall be entitled
to commingle the Deposit with Lessor's general or other funds,
Lessor will have no obligation to pay any interest thereon,
Lessor will not hold any such funds as agent or in trust for
Lessee or in any similar fiduciary capacity and Lessee's right
to payment of any amounts equal to the Deposit is limited as
set forth in the Lease. In this regard, Lessee acknowledges
and agrees that it is not located in the State of New York
within the meaning of Section 7-101 1-c. (b) of the New York
General Obligations Law and, therefore, the requirements of
Section 7-101 of the New York General Obligations Law to the
effect that Lessor hold the Deposit in a separate, interest
bearing account do not apply.
(b) If Lessee fails to comply with any provision of the Lease or
the Other Agreements, or any Payment Default or Event of
Default shall have occurred and be continuing, in addition to
all rights and remedies accorded to Lessor elsewhere in the
Lease or under Law in respect of the Deposit, Lessor may
immediately or at any time thereafter, without prior notice to
Lessee, apply all or part of the Deposit in or towards the
payment or discharge of any matured obligation owed by Lessee
or any Lessee Affiliate under the Lease or the Other
Agreements, in such order as Lessor sees fit, and/or exercise
any of the rights of set-off described in Section 5.20 against
all or part of the Deposit.
(c) If Lessor exercises the rights described in Section 5.13(b),
Lessee shall, following a demand in writing from Lessor,
within two (2) Business Days restore the Deposit to the level
at which it stood immediately prior to such exercise.
5.14 LETTER OF CREDIT
(a) If, under the Aircraft Lease Agreement, Lessee is required or
elects to provide Lessor with a Letter of Credit, the
provisions of this Section 5.14 shall apply. Any Letter of
Credit provided by Lessee to Lessor will be issued and payable
by a Pre-Approved Bank or another bank acceptable to Lessor in
its sole and absolute discretion substantially in the form of
Schedule 16 or as otherwise required or approved by Lessor
from time to time, in its sole judgment, and, if not issued by
a Pre-Approved Bank or by the New York branch of a major
international bank acceptable to Lessor in its sole and
absolute discretion from time to time, will be confirmed by
and payable at the New York branch of a major international
bank acceptable to Lessor in its sole and absolute discretion
from time to time. The Letter of Credit will be issued as
security for all obligations of Lessee or any Lessee Affiliate
to Lessor or any of its Affiliates (including any and all
Losses suffered or incurred by Lessor or any of its Affiliates
in respect of which Lessee or any of its Affiliates is
obligated under the Lease or any Other Agreement), and shall
remain in full force and effect and may be drawn down by
Lessor upon demand at any time or times following the
occurrence of a Default until the Required LC Expiry Date.
- 15 -
(b) The Letter of Credit may have a validity period or periods
ending prior to the Required LC Expiry Date, provided that (i)
the Letter of Credit shall, in each case, be renewed, extended
or reissued and delivered to Lessor not later than thirty (30)
days prior to its expiry (if not so renewed or extended in
such time, Lessor may draw on the Letter of Credit); and (ii)
a Letter of Credit shall remain in force at all times up to
the Required LC Expiry Date. Following any such drawing, the
amount so drawn shall be held by Lessor as a Deposit, subject
to the terms of the Lease, until such time as Lessee furnishes
to Lessor a new Letter of Credit complying with the terms of
the Lease (whereupon Lessor shall return the full amount of
such drawing to Lessee).
(c) If at any time during the Term, Lessor determines in its sole
and absolute discretion that the current issuing or confirming
bank for the Letter of Credit is no longer an acceptable
issuing or confirming bank (whether by virtue of a material
adverse change in its financial condition, a decrease in any
credit rating of its long-term unsecured debt obligations or
for any other reason) Lessor shall notify Lessee of such fact
and Lessee shall within ten (10) Business Days after the date
of such notice cause the Letter of Credit to be replaced by a
Letter of Credit issued by another bank acceptable to Lessor
in its sole and absolute discretion and (if requested by
Lessor in its sole and absolute discretion) that such
replacement Letter of Credit is confirmed by another bank
acceptable to Lessor in its sole discretion.
(d) If Lessor makes a drawing under the Letter of Credit, Lessee
shall, following a demand in writing by Lessor, immediately
cause the maximum amount available for drawing under the
Letter of Credit to be restored to the level at which it stood
immediately prior to such drawing.
5.15 GUARANTEE
If Lessee is required to provide Lessor with a Guarantee under the
Aircraft Lease Agreement, Lessee will contemporaneously with the
execution of the Aircraft Lease Agreement, provide Lessor with the
Guarantee.
5.16 LATE PAYMENT INTEREST
If Lessee fails to pay any amount payable under the Lease on the due
date, Lessee will pay on demand from time to time to Lessor interest
(both before and after judgment) on that amount, from the due date to
the date of payment in full by Lessee to Lessor, at the Interest Rate.
All such interest will be compounded monthly and calculated on the
basis of the actual number of days elapsed in the month, assuming a
thirty (30) day month and a three hundred and sixty (360) day year.
5.17 CURRENCY
(a) Except for Losses and expenses suffered or incurred by Lessor,
which shall be payable by Lessee to Lessor in the currency and
in the amount in which such Loss is suffered or incurred, all
amounts payable to Lessor under the Lease shall be
- 16 -
payable in Dollars in New York and payment in Dollars in New
York is of the essence. Lessee must indemnify Lessor against
any Loss Lessor suffers if:
(i) Lessor receives an amount relating to Lessee's
obligations in a different currency from that in
which payments should be made under the Lease; or
(ii) Lessee pays a judgment or claim in a different
currency from that in which payments should be made
under the Lease.
Lessee relinquishes any right to pay any amount under the Lease in a
currency that is different from the currency provided in the Lease.
Notwithstanding any such receipt, judgment or claim described in
Section 5.17(a), Lessee shall have a separate obligation to pay, and
Lessor shall have a separate claim against Lessee for, amounts to be
indemnified by Lessee under this Section 5.17.
5.18 CERTIFICATES
Except where expressly provided in the Lease, any certificate or
determination by Lessor as to any rate of interest or as to any other
amount payable under the Lease will, in the absence of manifest error,
be presumed to be correct.
5.19 APPROPRIATION
If any sum paid or recovered by Lessor in respect of the liabilities of
Lessee under the Lease is less than the amount then due, Lessor may
apply that sum to amounts due under the Lease in such proportions and
order and generally in such manner as Lessor may determine in its sole
discretion.
5.20 SET-OFF
*****
5.21 EXPENSES
Lessee will pay to Lessor on demand all reasonable expenses (including
all legal fees and expenses and the fees and expenses of other
professional advisers) that Lessor suffers or incurs:
(a) to deal with any amendments, extensions, consents or waivers
that are requested by Lessee or required as a result of any
act or omission of Lessee in connection with the Lease (but
excluding any expenses incurred by Lessor or Owner in
connection with any change in the ownership or financing of
the Aircraft or a change in the Lease that is otherwise
requested by Lessor or Owner, and in each
CONFIDENTIAL TREATMENT HAS BEEN REQUESTED BY KITTY HAWK, INC. FOR CERTAIN
PORTIONS OF THIS DOCUMENT. CONFIDENTIAL PORTIONS HAVE BEEN FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION. OMITTED PORTIONS ARE INDICATED IN THIS
AGREEMENT WITH "*****".
- 17 -
case unrelated to any consent, waiver or amendment requested
by Lessee or any other act or omission of Lessee) or to deal
with any replacement of any Engine or Part;
(b) for FAA counsel and otherwise to act upon any advice and
obtain assistance to perfect the Lease in the State of
Registry and the State of Incorporation (and any other
appropriate place); and
(c) in contemplation of, or otherwise in connection with, the
enforcement or preservation of any of Lessor's rights under
the Lease (including under Section 10) or in respect of the
repossession of any Aircraft.
All amounts payable pursuant to this Section 5.21 will be paid in the
currency in which they are incurred by Lessor.
5.22 OTHER OUTGOINGS
Without duplication of amounts payable by Lessee under Section 5.7,
Lessee will promptly pay all Taxes, other than any Taxes described in
Section 5.7 (c), which it is required to pay and all other amounts of
any nature imposed by any Government Entity with respect to the
Aircraft and/or the Lease except to the extent that such payment is
being contested in good faith by appropriate proceedings in respect of
which adequate reserves have been provided by Lessee and non-payment or
contest of which does not give rise to any material risk of the
Aircraft or any interest therein being sold, forfeited or otherwise
lost or any risk of criminal liability on the part of Lessor or Owner.
6. MANUFACTURERS' WARRANTIES
(a) So long as no Payment Default or Event of Default has occurred
which is continuing, Lessor shall make available to Lessee
during the Term the benefit of all manufacturers' warranties
in relation to the repair or remedy of any defect in the
Aircraft, the Engines or any Part or component thereof
(including compensation for loss of use of the Aircraft) and
other product support for the Aircraft to the extent that it
is permitted to do so. In furtherance of the foregoing, Lessor
shall take such actions, at Lessee's cost and expense, as
Lessee may reasonably request to make such warranties
available to Lessee. Lessee will give Lessor prompt written
notice of any warranty claim that is settled with Lessee on
the basis of a cash payment.
(b) If a Default has occurred and is continuing Lessor may
immediately recover from Lessee the proceeds of any warranty
claims previously paid to Lessee to the extent that such
claims relate to any defect in the Aircraft not fully and
completely rectified by Lessee before such Default and Lessor
may:
(i) retain for its own account any such proceeds
previously paid to Lessor which would have been
remitted to Lessee under this Section 6 in the
absence of such Default; and
- 18 -
(ii) cause any proceeds of any pending claims to be paid
to Lessor, rather than Lessee.
Lessee will take all steps as are necessary at the end of the Term to
ensure that the benefit of any warranties relating to the Aircraft
(including those from manufacturers) that have not expired is vested in
Lessor.
7. LESSOR'S COVENANTS
7.1 QUIET ENJOYMENT
So long as no Event of Default has occurred and is continuing, Lessor
will not interfere or permit any other Person lawfully claiming by,
through or under Lessor to interfere with Lessee's right to quiet use
and possession of the Aircraft during the Term. Lessor will cause Owner
(if different from Lessor) to provide Lessee a letter of quiet
enjoyment in respect of Lessee's use and possession of the Aircraft in
a form substantially similar to Lessor's covenant in this Section 7.1.
Exercise by Lessor of its rights of inspection or other rights provided
to it under the Lease in the absence of an Event of Default shall not
be considered to be a breach of the foregoing covenant. Lessee agrees
that its only right with respect to a default by Lessor under the Lease
is to make a claim against Lessor for damages resulting directly
therefrom, subject to Section 16.3 hereof. Lessee hereby waives any and
all other rights or remedies it may have under Section 2A-211 of the
UCC or Sections 2A-508 through 2A-522 of the UCC or otherwise.
7.2 MAINTENANCE CONTRIBUTIONS
If, under the Aircraft Lease Agreement for the Aircraft, Lessee is
required to pay Supplemental Rent, then provided no Payment Default or
Event of Default has occurred and is continuing, Lessor will pay (as a
separate and independent obligation and not as a return of Supplemental
Rent) the following amounts to Lessee by way of contribution to the net
cost of maintenance of the Aircraft (after deduction for all rebates,
discounts, allowances, incentives, credits or any other reduction in
cost actually received by Lessee), UPON RECEIPT BY LESSOR, WITHIN SIX
(6) MONTHS AFTER COMMENCEMENT OF SUCH MAINTENANCE AND WITHIN SIXTY (60)
DAYS FOLLOWING THE EXPIRY DATE, of an invoice and supporting
documentation reasonably satisfactory to Lessor evidencing performance
of the following work by the Maintenance Performer:
(a) Airframe: With respect to the Airframe, the completion, in
accordance with the Lease, of the Airframe Structural Check,
the lesser of (x) the net cost as shown on that invoice and
(y) an amount equal to the aggregate amount of the Airframe
Supplemental Rent paid under the Lease for the period prior to
the date of such Airframe Structural Check, less the aggregate
amount previously paid by Lessor under this sub-section;
(b) Engine Life-Limited Parts: With respect to life-limited Parts
within any Engine, the performance, in accordance with the
Lease, of any replacement or repair of
- 19 -
those Parts ("Engine LLP Replacement"), the lesser of (x) the
net cost as shown on that invoice and (y) an amount equal to
the aggregate amount of the Engine LLP Supplemental Rent paid
in respect of that Engine under the Lease for the period prior
to the date of such replacement or repair, less (aa) any
credit granted by the Maintenance Performer to Lessee in
respect of any repairable life-limited Part which has been
replaced (with such credit being calculated by reference to
the then remaining life of such life-limited Part) and (bb)
the aggregate amount previously paid in respect of that Engine
by Lessor under this sub-section;
(c) Engine Refurbishment: With respect to any Engine, the
performance, in accordance with the Lease, of Engine
Refurbishment in respect of that Engine the lesser of (x) the
net cost as shown on that invoice and (y) an amount equal to
the aggregate amount of the Engine Supplemental Rent paid
under the Lease in respect of that Engine for the period prior
to the date of such Engine Refurbishment less the aggregate
amount previously paid in respect of that Engine by Lessor
under this sub-section;
(d) APU: With respect to the APU, the performance, in accordance
with the Lease, of all shop visits requiring APU removal and
disassembly, the lesser of (x) the net cost as shown on that
invoice and (y) an amount equal to the aggregate amount of the
APU Supplemental Rent paid under the Lease for the period
prior to the date of such shop visit, less the aggregate
amount previously paid by Lessor under this sub-section; and
(e) Landing Gear: With respect to the Landing Gear, the
performance in accordance with the Lease, of all work on the
Landing Gear in the nature of overhaul and requiring removal
and disassembly, the lesser of (x) the net cost as shown on
that invoice and (y) an amount equal to the aggregate amount
of the Landing Gear Supplemental Rent paid under the Lease for
the period prior to the date of such overhaul, less the
aggregate amount previously paid by Lessor under this
sub-section.
PROVIDED THAT Lessor will not pay any such contribution:
(i) in respect of paragraphs (a)-(e) above, for work arising as
a result of accidents or incidents (whether or not eligible
for recovery under Lessee's insurance), improper operation or
maintenance of the Aircraft or Airworthiness Directive work;
nor
in respect of paragraphs (b) and (c) above, for work arising as a
result of foreign object damage, the removal, installation, maintenance
and repair of QEC (Quick Engine Change Kits) and/or any replacement of
parts not required under the Lessee's Maintenance Program to be
replaced as part of the maintenance described in section (a) through
(e) above, as the case may be.
- 20 -
8. LESSEE'S COVENANTS
8.1 DURATION
Lessee shall perform and comply with its undertakings and covenants in
the Lease at all times during the Term. All such undertakings and
covenants shall, except where expressly otherwise stated, be performed
at the expense of Lessee.
8.2 INFORMATION
Lessee will:
(a) provide Lessor with a Technical Report for the Aircraft within
seven (7) days after the end of each calendar month throughout
the Term;
(b) promptly provide Lessor with the Financial Information to the
extent not otherwise readily available to Lessor via internet
access to the databases of the Securities Exchange Commission;
(c) promptly after the occurrence thereof, notify Lessor of any
Event of Loss or of any event which is likely to result in an
insurance claim in excess of the Damage Notification Threshold
and details of any negotiations with insurers or insurance
brokers relating to such claim;
(d) promptly after the occurrence thereof, notify Lessor of any
Default;
(e) provide Lessor, upon reasonable request, with evidence that
all Taxes and charges that are due and payable and were
incurred by Lessee in connection with the Aircraft, its
location and its operations, including those invoiced by
airports and air traffic control authorities, have been paid
in full (or are being contested in good faith by appropriate
proceedings in respect of which adequate reserves have been
provided by Lessee and non-payment of which does not give rise
to any risk of the Aircraft or any interest therein being
sold, forfeited or otherwise lost or of criminal liability on
the part of Lessor or Owner);
(f) provide Lessor with such other information concerning the
location, condition, use and operation of the Aircraft or
concerning the business or financial affairs of Lessee, as
Lessor may from time to time reasonably request;
(g) give Lessor not less than sixty (60) days prior written notice
as to the time and location of all Major Checks; and
(h) notify Lessor, promptly, of the removal of any Engine for a
period of more than seventy-two (72) hours or for the purpose
of Engine Refurbishment.
- 21 -
8.3 LAWFUL AND SAFE OPERATION
Lessee will operate the Aircraft for commercial purposes from the
Delivery Date until the Return Occasion from a base within the Habitual
Base or from such other base outside the State of Registry pursuant to
sub-lease or a wet-lease complying with Section 8.4(a), provided always
that Lessee must not use or operate the Aircraft or suffer or permit
the Aircraft to be used or operated:
(a) in violation of any applicable Regulations or in a manner
causing Lessor, Owner, any Financing Party or GECAS to be in
violation of any applicable Regulations;
(b) for any purpose for which the Aircraft was not designed or
which is illegal;
(c) to carry hazardous cargo other than in conformity with
industry procedures and requirements of the Air Authority for
the carriage and handling of such cargo;
(d) in any circumstances or place where the Aircraft is not
covered by Insurance; or
(e) for purposes of training, qualifying or re-confirming the
status of cockpit personnel except for the benefit of Lessee's
or a Permitted Sub-Lessee's cockpit personnel, and then only
if the use of the Aircraft for such purpose is not
disproportionate to the use for such purpose of other aircraft
of the same type operated by Lessee or any Permitted
Sub-Lessee, as the case may be.
FOR THE AVOIDANCE OF DOUBT, AS BETWEEN LESSEE AND THE
INDEMNITEES, LESSEE ACKNOWLEDGES AND AGREES THAT:
(i) LESSEE IS SOLELY RESPONSIBLE FOR THE DETERMINATION
AND IMPLEMENTATION OF ALL SECURITY MEASURES AND
SYSTEMS NECESSARY OR APPROPRIATE FOR THE PROPER
PROTECTION OF THE AIRCRAFT (WHETHER ON THE GROUND OR
IN FLIGHT) AGAINST (A) THEFT, VANDALISM, HIJACKING,
DESTRUCTION, BOMBING, TERRORISM OR SIMILAR ACTS,
DIRECTLY OR INDIRECTLY AFFECTING IN ANY WAY THE
AIRCRAFT OR ANY PART THEREOF, OR ANY PERSONS WHO
(WHETHER OR NOT ON BOARD THE AIRCRAFT) MAY SUSTAIN
ANY INJURY OR DAMAGE AS A RESULT OF ANY SUCH ACTS,
(B) THE USE OF THE AIRCRAFT IN ANY ACTS, INCLUDING
THOSE OF DESTRUCTION, BOMBING, TERRORISM OR SIMILAR
ACTS, AND (C) THE TAKING, THEFT OR USE OF ANY
PRODUCTS, CHEMICALS, GOODS, OR MATERIALS OF ANY KIND,
FORM, OR NATURE LOCATED ON BOARD THE AIRCRAFT OR
BEING TRANSPORTED VIA THE AIRCRAFT;
(ii) LESSEE'S IMPLEMENTATION OF SUCH SECURITY MEASURES AND
SYSTEMS IS AN OBLIGATION OF LESSEE UNDER THE LEASE,
AND THAT LESSOR SHALL HAVE ABSOLUTELY NO
RESPONSIBILITY THEREFOR, AND
- 22 -
(iii) LESSEE, BEING IN SOLE OPERATIONAL CONTROL OF THE
AIRCRAFT AND BEING IN THE BUSINESS OF OPERATING
COMMERCIAL AIRCRAFT, IS UNIQUELY IN A POSITION TO
IDENTIFY AND IMPLEMENT THOSE MAINTENANCE AND SECURITY
MEASURES AS ARE NECESSARY TO COMPLY WITH ALL
APPLICABLE REGULATIONS, AND AS ARE OTHERWISE
APPROPRIATE AND THAT IN DOING SO, LESSEE HAS NOT
RELIED UPON, AND SHALL NOT RELY UPON, ANY STATEMENT,
ACT, OR OMISSION OF LESSOR.
8.4 SUBLEASING
(a) AT NO TIME PRIOR TO THE RETURN OCCASION WILL LESSEE SUB-LEASE,
WET-LEASE OR OTHERWISE GIVE POSSESSION OR CONTROL OF THE
AIRCRAFT, ANY ENGINE OR PART TO, OR OTHERWISE PERMIT THE
AIRCRAFT, ANY ENGINE OR PART TO BE IN THE POSSESSION OR
CONTROL OF, ANY OTHER PERSON EXCEPT:
(i) when the prior written consent of Lessor has been
obtained; or
(ii) where the Aircraft, Engine or Part is delivered to a
manufacturer or maintenance facility for work to be
done on it as required or permitted under the Lease;
or
(iii) to a sub-lessee of the Aircraft to which Lessor
consents in writing (a "Permitted Sub-Lessee"),
pursuant to a sub-lease to which Lessor consents in
writing, such consent not to be unreasonably
withheld, and which complies with the conditions set
out in Section 8.4(b) (a "Permitted Sub-Lease"), and
provided that no Default shall have occurred and be
continuing at the commencement of such sub-lease;
(iv) provided that no Default has occurred and is
continuing, sub-lease up to two Aircraft at any one
time to one or more Certificated Air Carriers under a
Permitted Sub-Lease for a term of no longer than 6
months for each such Permitted Sub-Lease (a
"Short-term Sub-Lease"); provided, further that
Lessee will not enter into consecutive Short-term
Sub-Leases with the same operator.
(v) provided that no Payment Default or Event of Default
has occurred and is continuing, on a wet-lease which
complies with Section 8.4(d); or
(vi) with respect to an Engine or Part, as permitted under
Section 8.11.
(b) If Lessor grants its consent to a proposed sub-lessee and a
proposed sub-lease, in addition to any conditions required by
Lessor as part of any such consent of Lessor (which
conditions, if any, shall be reasonable) each of the following
conditions shall be required to be satisfied in relation to
any Permitted Sub-Lease prior to any sub-leasing pursuant to
this Section 8.4:
- 23 -
(i) Notification: at least thirty (30) days prior to
entering into any Permitted Sub-Lease, Lessee shall
give Lessor written notice, specifying the identity
of the Permitted Sub-Lessee, the term of the
Permitted Sub-Lease, the delivery date under the
Permitted Sub-Lease and the habitual base of the
Permitted Sub-Lessee;
(ii) Term: the term of the Permitted Sub-Lease shall not
be capable of extending beyond three (3) months
before the Scheduled Expiry Date;
(iii) Form: a Permitted Sub-Lease shall:
(A) not contain provisions inconsistent
with the provisions of the Lease
(but may impose additional or more
stringent obligations on any
Permitted Sub-Lessee than are
imposed on Lessee under the Lease);
(B) provide that no further subleases
of the Aircraft by such Permitted
Sub-Lessee are permitted; and
(C) include or incorporate by reference
provisions substantially identical
to or having substantially the same
effect as Sections 2.1, 5.6, 5.7,
5.8, 5.10, 5.12, 5.16, 5.17, 5.22,
8, 9, 10, 11, 13, 15.1, 15.8 and 16
and Schedules 2 (Section 1.1), 7
and 9 of this Common Terms
Agreement (but the Permitted Sub-
Lease may impose additional or more
stringent obligations on any
Permitted Sub-Lessee than are
imposed on Lessee under the Lease);
(iv) Subordination and Assignment: the Permitted Sub-Lease
shall provide that (aa) the Permitted Sub-Lease is
subject and subordinate to the Lease in all respects
and the rights of the Permitted Sub-Lessee under the
Permitted Sub-Lease are subject and subordinate in
all respects to the rights of Lessor under the Lease;
and (bb) prior to delivery of the Aircraft to the
Permitted Sub-Lessee (as a condition precedent
thereof), the Permitted Sub-Lessee shall provide an
acknowledgement to Lessor and Owner in a form
reasonably satisfactory to Lessor, confirming its
agreement to this provision and confirming that its
rights to possession of the Aircraft under the
Permitted Sub-Lease will terminate immediately upon
the termination of the Lease, and that it will
redeliver the Aircraft to Lessor, upon notification
from Lessor that an Event of Default has occurred and
that it has, as a result thereof, terminated Lessee's
right to possession of the Aircraft under the Lease
(the "Subordination Acknowledgement"). The Permitted
Sub-Lease shall be assigned, as security, to Lessor
for Lessee's obligations under the Lease, pursuant to
an agreement reasonably acceptable to Lessor (the
"Sub-Lease Assignment") (and, if applicable, Lessor's
interest in such Sub-Lease Assignment may
- 24 -
be reassigned, as security, to Owner and/or the
Financing Parties' Representative);
(v) Quiet Enjoyment: the Permitted Sub-Lease shall
provide that the Permitted Sub-Lessee shall have the
right to quiet enjoyment of the Aircraft for so long
as no Event of Default has occurred and is continuing
under the Lease;
(vi) Obligations of Lessee: Lessee shall remain primarily
liable under the Lease for the performance and
observance of all its obligations to the same extent
as if no Permitted Sub-Lease had been entered into.
To the extent that the Permitted Sub-Lessee properly
performs an obligation under the Permitted Sub-Lease,
Lessor agrees that such performance shall also be
regarded as discharging (to such extent) Lessee's
corresponding obligation;
(vii) Insurance: all insurance requirements herein shall be
complied with either by Lessee or by the Permitted
Sub-Lessee as if references in the insurance
provisions of the Lease to "Lessee" were references
to "the Permitted Sub-Lessee", and Lessee shall
provide or cause the Permitted Sub-Lessee to provide
the insurance certificate and brokers' letter of
undertaking referred to in Section 9.3(c)(iii) at
least five (5) Business Days prior to the
commencement of the Permitted Sub-Lease;
(viii) Registration: there shall be no change in the
registration of the Aircraft from its State of
Registry unless otherwise consented to by Lessor in
writing in its sole and absolute discretion;
(ix) Repossession or Political Risk Insurance: if
reasonably required by Lessor or if required of
Lessor by Owner or the Financing Parties'
Representative, (in either such case Lessor will
provide notice of such requirement to Lessee within
10 days after Lessee provides notice of the proposed
Permitted Sub-Lease under Section 8.4(b)(i)),
repossession or political risk insurance, as the case
may be, shall be obtained by Lessor at Lessee's cost
(which cost may be passed on by Lessee to the
Permitted Sub-Lessee under the Permitted Sub-Lease
but for which Lessee will remain liable vis-a-vis
Lessor in the event of non-payment by the Permitted
Sub-Lessee), provided that repossession or political
risk insurance, as the case may be, will not be
required if the Habitual Base and the State of
Registry are not being changed or if the proposed new
Habitual Base and the State of Registry are both
within states which are now members of the European
Union, the United States of America, Japan or Canada.
If repossession or political risk insurance is
required, the Permitted Sub-Lease must provide that,
if any such repossession or political risk insurance,
as the case may be, cannot be obtained or renewed, a
termination event under the Permitted Sub-Lease will
occur pursuant to which the Permitted Sub-Lease will
terminate upon notice by
- 25 -
Lessor to Lessee or the Permitted Sub-Lessee of an
inability to procure repossession or political risk
insurance, as the case may be;
(x) Legal Opinions: as a condition precedent to the
effectiveness of the Permitted Sub-Lease, Lessee
shall provide to Lessor the following legal opinions
(at Lessee's or Permitted Sub-Lessee's expense)
addressed to Lessor, Owner and the Financing Parties'
Representative from counsel reasonably acceptable to
Lessor;
(A) a legal opinion in relation to the
Permitted Sub-Lease in form and
substance reasonably satisfactory
to, and containing such other
matters set out in Schedule 8 as
requested by, Lessor and confirming
further that each of the
Subordination Acknowledgement, the
Permitted Sub-Lease and the
Sub-Lease Assignment is valid,
binding and (except as limited by
any equitable principles and
applicable bankruptcy, insolvency,
reorganization, moratorium or
similar Laws affecting creditors'
or lessors' rights generally)
enforceable against Permitted
Sub-Lessee and, in the case of the
Sub-Lease Assignment, properly
perfected as against Lessee;
(B) without prejudice to Lessor's right
to refuse consent to a change in
the State of Registry, in the case
of a Permitted Sub-Lease for which
the Habitual Base or the State of
Registry will be different from the
Habitual Base or the State of
Registry prior to the commencement
of the Permitted Sub-Lease, one or
more legal opinions in a form and
from counsel qualified in each
relevant jurisdiction reasonably
acceptable to Lessor to the effect,
inter alia, that Lessor's, Owner's
and Financing Parties'
Representative's interests in the
Aircraft will be recognized under
the Laws of such jurisdictions; and
(C) a legal opinion that Financing
Parties' Representative has a
perfected, first priority security
interest in the Aircraft, the Lease
and Sublease, if applicable.
Final forms of the foregoing opinion or opinions (x)
shall be forwarded promptly to Lessor at least five
(5) Business Days prior to the effective date of the
Permitted Sub-Lease, and (y) may, if different
opinions are required under the Lease, be made by a
single counsel qualified to render opinions in each
such country;
(xi) Filings: Lessee shall co-operate with Lessor (at no
cost to Lessor) in connection with the execution and
filing of any documents reasonably required by Lessor
to be executed and filed from time to time with any
registry or authority in the Habitual Base, the State
of Registry and State of Incorporation (of each of
Lessee and the Permitted Sub-Lessee) in order
- 26 -
to protect the interests of Lessor, Owner and
Financing Parties' Representative in and to the
Aircraft, the Lease or the Permitted Sub-Lease and/or
to ensure the validity, enforcement or priority
thereof;
(xii) Expenses: Lessee will pay to Lessor on demand all
reasonable and documented out of pocket expenses
(including reasonable legal, survey and other costs
not to exceed $50,000 for each Permitted Sub-Lease of
an Aircraft) and Taxes payable or incurred by Lessor,
Owner or Financing Parties' Representative, as
applicable, in connection with the review and
approval of the documentation required pursuant to
this Section 8.4 or otherwise incurred in connection
with any requested sub-lease or the sub-leasing of
the Aircraft thereunder;
(xiii) Permitted Sub-Lease: Promptly after its execution,
Lessee shall provide Lessor with a copy of the signed
Permitted Sub-Lease;
(xiv) Acknowledgement by Guarantor: If a Guarantee is
required under the Aircraft Lease Agreement, Lessee
shall provide to Lessor at least five (5) Business
Days prior to the effective date of the Permitted
Sub-Lease an acknowledgement by Guarantor of the
Permitted Sub-Lease and confirmation that the
Guarantee will remain in full force and effect during
the term of such Permitted Sub-Lease;
(xv) [Intentionally Omitted]; and
(xvi) Rent Sharing: If Lessee subleases the Aircraft under
a Permitted Sub-Lease which provides for scheduled
rental, power-by-the-hour rental or other similar
compensation that exceeds any Rent payable under the
Lease, Lessee shall pay one-half (1/2) of such excess
to Lessor as additional Rent within one (1) Business
Day after Lessee's receipt thereof.
(c) Notwithstanding anything to the contrary, Lessor may decline
consent to any sub-lease if such sub-lease would be to a
Person whom Lessor determines is not a suitable sub-lessee for
the Aircraft, for example based on such Person's credit or
operational ability.
Notwithstanding Section 8.4 (a), Lessee shall be permitted to wet lease
the Aircraft provided such wet lease constitutes an arrangement whereby
Lessee agrees to furnish the Aircraft to a third party pursuant to
which the Aircraft (i) shall be operated solely by regular employees of
Lessee or a Permitted Sub-Lessee which is a Lessee Affiliate, in each
case possessing all current certificates and licenses that are required
by applicable Regulations, including by the State of Registry, and
shall remain in the operational control and possession of Lessee or
such Permitted Sub-Lessee, (ii) shall be subject to insurance coverage
as provided for in the Lease, (iii) shall be used and operated in
accordance with the Lease and shall be maintained or caused to be
maintained by Lessee or such Permitted Sub-Lessee in accordance with
Lessee's Maintenance Program and Lessee's normal maintenance practices,
and (iv) shall not be subject to any change in its
- 27 -
State of Registry unless otherwise consented to by Lessor in writing in
its sole and absolute discretion; and provided always that, such
arrangement is expressly subordinated to the Lease and the rights of
Lessor and Owner thereunder and to the Aircraft, and Lessee provides
Lessor with all opinions, certificates and other documents requested by
Lessor which are required to be provided.
8.5 ACCESS
(a) Lessee will permit Lessor's, Owner's and the Financing
Parties' Representative's representatives access to the
Aircraft at any reasonable time. Unless a Default has occurred
and is continuing, any such Person will give Lessee prior
notice of not less than five (5) Business Days and will seek
to ensure that it does not result in an unreasonable
disruption to the operation of the Aircraft or to the conduct
of Lessee's business. Lessee shall comply with the reasonable
requests of Lessor's, Owner's and the Financing Parties'
Representative's representative, including any request to
travel on the flight deck of the Aircraft as an observer,
subject to any applicable Regulations and insurance
requirements.
(b) The cost of conducting a visit shall be borne by Lessor, Owner
or the Financing Parties' Representative, as the case may be,
unless an Event of Default has occurred and is continuing.
(c) No liability or obligation will be incurred by Lessor, Owner,
Financing Parties' Representative or the Financing Parties, as
the case may be, by reason of non-exercise by any of them of
the rights referred to in this Section 8.5. For the avoidance
of doubt, any viewing of the Aircraft by Lessor, Owner,
Financing Parties' Representative or the Financing Parties, as
the case may be, shall be for such Person's information
purposes only, and there shall be no inference or implication
there from that Lessee is in compliance with its obligations
under the Lease.
8.6 OWNERSHIP; PROPERTY INTERESTS; RELATED MATTERS
(a) Lessee will:
(i) fix and maintain Nameplates containing the Nameplate
Inscription as follows:
"This Aircraft/Engine is owned by [Name of Owner] and
is leased to [Name of Lessee] and may not be or
remain in the possession of or be operated by, any
other person without the prior written consent of
[Name of Owner];
(ii) in any circumstance where such interests are
relevant, take all reasonable steps to make sure that
all relevant Persons know about the rights or
interests of Owner, Lessor and the Financing Parties'
Representative in the Aircraft; and
- 28 -
(iii) pay all navigation charges, air traffic control
charges, landing charges or other amounts of any
nature imposed by any Government Entity with respect
to Lessee, the Aircraft and/or the Lease except to
the extent that, in the reasonable opinion of Lessor,
such payment is being contested in good faith by
appropriate proceedings in respect of which adequate
reserves have been provided by Lessee and non-payment
of which does not give rise to any material
likelihood of the Aircraft or any interest therein
being sold, forfeited or otherwise lost or of
criminal liability on the part of Lessor or Owner.
(b) Lessee will not:
(i) represent that it is the owner of the Aircraft or
that it has an economic interest (equivalent to
ownership) in the Aircraft for Tax treatment or other
purposes;
(ii) take any action or fail to take any action, other
than action required under the Lease (including under
Section 7.1) to be taken by Lessor, Affiliates of
Lessor, Owner or a Financing Party, if such action or
omission could result in a forfeiture or seizure of
the Aircraft or otherwise similarly put Owner's
and/or Lessor's and/or Financing Parties'
Representative's rights or interests at risk;
(iii) represent to others that Owner, Lessor or any
Financing Party is associated with or responsible for
the business activities and/or flight operations of
Lessee;
(iv) allow the Aircraft or Owner's, Lessor's or any
Financing Parties' Representatives' interest in it or
the Lease to become or remain subject to any Security
Interest (other than a Permitted Lien); or
(v) allow the name of any Person to be placed on the
Aircraft or any Engine as a designation that could
reasonably be interpreted as a claim of ownership or
as a Security Interest; provided that Lessee may
place thereon, or allow a Permitted Sub-Lessee to
place thereon, its customary livery, colors and
insignia.
8.7 GENERAL
Lessee will:
(a) maintain its business as a cargo airline, preserve its
corporate existence (other than as permitted in Section 8.7
(vii) below) and maintain all rights, privileges, licenses and
franchises material thereto or material to performing its
obligations under the Lease;
(b) not operate, maintain, insure or deal with, or keep records
with respect to, the Aircraft in a manner which discriminates
against the Aircraft adversely insofar as
- 29 -
Lessor's, Owner's or Financing Parties' interests are
concerned, when compared with the manner in which Lessee
operates, maintains, insures or deals with, or keep records
with respect to, similar aircraft, engines or parts in
Lessee's fleet;
(c) except upon thirty (30) days prior written notice thereof to
Lessor, not change (i) the designated service of process agent
set forth in Section 15.8(c), or (ii) its jurisdiction of
organization or otherwise be located (as defined in Section
9-307 of the UCC) at any place in the United States other
than: Kitty Hawk Aircargo, Inc., 0000 Xxxx 00xx Xxxxxx, P.O.
Box 612787, XXX Xxxxxxxxxxxxx Xxxxxxx, Xxxxx 00000.
(d) not liquidate or dissolve;
(e) remain a Certificated Air Carrier and maintain its status so
as to fall within the purview of Section 1110 of Title 11 of
the U.S.C. or any analogous statute;
(f) remain a "citizen of the United States" as defined in Section
40102(a)(15)(c) of Title 49 of the U.S.C.;
(g) not consolidate with or merge into or with any other
corporation or other Person, and not convey, transfer, lease
or otherwise dispose of all or substantially all of its
property and other assets to, or acquire all or any
substantial part of the property or other assets or capital
stock of (if such acquisition is analogous in either purpose
or effect to a consolidation or merger), any corporation or
other Person, unless Lessee provides Lessor with not less than
thirty (30) days prior written notice of such transaction
describing such transaction in reasonable detail and providing
Lessor with evidence reasonably satisfactory to Lessor
demonstrating that such transaction will comply with the
following requirements of this Section 8.7 and unless:
(i) such transaction shall not have any material adverse
effect on the rights of Lessor, Owner or the
Financing Parties' Representative under or in respect
of the Lease or the Aircraft;
(ii) the Person formed by or surviving such consolidation
or merger or the Person which acquires by conveyance,
transfer, lease or other disposition all or
substantially all of such property and other assets
or stock (the "Successor Entity"): (A) shall be a
corporation organized and existing under the Laws of
the State of Incorporation; (B) immediately after
giving effect to such transaction, shall be Lessee or
shall have acquired or succeeded to all or
substantially all of the property and other assets of
Lessee (if such assets are being transferred) as an
entirety, and shall have a tangible net worth of not
less than Lessee's tangible net worth (determined in
each case in accordance with GAAP) immediately prior
to such transaction; (C) shall be a "citizen of the
United States" of America as defined in Section
40102(a)(15)(c) of Title 49 of the U.S.C. and a
Certificated Air Carrier; and (D) shall execute and
deliver to Lessor such
-30-
recordations and filings with any Governmental Entity
and such other documents s Lessor determines shall be
reasonably necessary or advisable to evidence, or in
connection with, such consolidation, merger, sale,
lease, transfer or other disposition and an
agreement, in form and substance reasonably
satisfactory to Lessor which is a legal, valid,
binding and enforceable assumption by such Successor
Entity of the due and punctual performance and
observance of each covenant and condition of the
Lease and the other related documents to which Lessee
is a party, and an officer's certificate to such
effect and to the effect that the other requirements
of this Section 8.7 have been satisfied, and a legal
opinion from counsel to such effect and otherwise in
such form and substance reasonably satisfactory to
Lessor; and
(iii) no Event of Default shall have occurred and be
continuing or shall occur as a result thereof.
8.8 RECORDS
Lessee will keep all Aircraft Documents and Records:
(a) in the English language;
(b) so they meet the requirements of applicable Regulations
(including FAR 91.417) and Lessee's Maintenance Program.
For clarification, Lessee acknowledges and agrees that the Aircraft
Documents and Records, including all additions, supplements and
replacements thereto or thereof constitute part of the Aircraft, are
leased to Lessee hereunder and are the sole and exclusive property of
the Owner.
8.9 PROTECTION
Lessee will:
(a) take all lawful actions requested by Lessor that are within
Lessee's control to keep the Aircraft registered with the Air
Authority in the name of Owner and subject to a first priority
Security Interest in favor of Financing Parties'
Representative and, where applicable, comply with the Geneva
Convention;
(b) if permitted under the applicable Regulations, record on each
relevant register that Owner is the owner of the Aircraft and,
if such facilities exist (i) file the Lease (or particulars
thereof) on the public record and (ii) file notices as to the
interests of the Financing Parties (if any); and
(c) make any and all filings required to be made with the Air
Authority registry that are within its control and take all
other lawful actions within its control that are necessary or
advisable to reflect on the Air Authority registry any change
in the ownership of the Aircraft, or in the interests of
Lessor, Owner or the Financing
-31-
Parties' Representative in the Lease or the Aircraft, any
modification to the Aircraft (such as the permanent
replacement of any Engine or Part in accordance with the
Lease) or as a result of any change in applicable Regulation.
Lessor will bear any costs incurred in connection therewith as
a consequence of a transfer by Lessor, Owner or the Financing
Parties' Representative of the interests of Lessor, Owner or
the Financing Parties' Representative in the Lease or the
Aircraft or any other Transfer or a change in the identity of
Lessor, Owner or the Financing Parties' Representative (in
each case, unrelated to the replacement of any Engine or Part
or an Event of Default) and Lessee will bear any other costs
incurred in complying with this Section 8.9, including in
connection with the replacement of any Engine or Part.
8.10 MAINTENANCE AND REPAIR
(a) Lessee will maintain, overhaul and repair the Aircraft (or
arrange for the Aircraft to be maintained, overhauled and
repaired through the Maintenance Performer), so that:
(i) the Aircraft is kept in as good operating condition
and repair as the condition of the Aircraft as at
Delivery and after giving effect to any post-Delivery
modifications, repairs or maintenance paid for or
otherwise provided by or on behalf of Lessor, except
for ordinary wear and tear;
(ii) Lessee has a current certificate of airworthiness
(issued by the Air Authority in the appropriate
public transport category) for the Aircraft;
(iii) the Aircraft complies with all applicable Regulations
and the standards stipulated by FAR Part 121 and in a
manner to maintain all warranty and service life
policies and the requirements of all Airworthiness
Directives and all service bulletins designated by
the State of Design or State of Registry as
"mandatory," and to be carried out before the Return
Occasion or within the AD Compliance Period; and
(iv) all maintenance is carried out according to Lessee's
Maintenance Program and shall be performed in at
least the same manner and with at least the same
care, including maintenance scheduling, modification
status and technical condition, as is the case with
respect to similar aircraft owned or otherwise
operated by Lessee.
(v) No change shall be made to the Lessee's Maintenance
Program or the Maintenance Performer without first
giving reasonable written notice to Lessor of such
change.
(b) (b) If any Airworthiness Directive is issued by the FAA, or,
to the extent that the same have legal effect, the JAA, for
which terminating action is required to be performed by Lessee
pursuant to Section 8.10(a)(iii) and if the actual cost
incurred by Lessee (as documented in the same manner and paid
within the same time as required under Section 7.2 for a
Maintenance Contribution payment by
-32-
Lessor) in performing or causing to be performed such
Airworthiness Directive exceeds the AD Threshold, Lessor
shall, following receipt of the invoice in such amount and
provided no Payment Default or Event of Default has occurred
and is continuing, reimburse to Lessee an amount calculated in
accordance with the following formula:
***** WHERE:
A = *****
B = *****
C = *****
D = *****
8.11 REMOVAL OF ENGINES AND PARTS
(a) General: Lessee must replace, within thirty (30) days thereof,
any Engine that has suffered an Engine Event of Loss in
accordance with Section 8.11(b), and any Part that is
permanently removed from the Aircraft must be replaced in
accordance with Section 8.11(b). Any Part which otherwise is
lost, stolen, destroyed, seized, obsolete, confiscated,
damaged beyond repair or permanently rendered unfit for any
reason, must be replaced in accordance with Section 8.11(b).
Any Engine or Part may be installed on another aircraft Lessee
owns or leases in accordance with Section 8.11(c). Lessee may
temporarily install an engine or part in accordance with
Section 8.11(d). Lessee shall obtain from any person to whom
possession of an Engine is given, and from the lessor of any
airframe on which an Engine is installed and from any holder
of a Security Interest in any airframe on which an Engine is
installed, an agreement in writing (which agreement, in the
case of a lease or Security Interest, may be contained in the
applicable lease or Security Interest agreement covering such
airframe) that such Person will respect the interests of Owner
and Lessor as owner and lessor, respectively, and of the
Financing Parties' Representative, in such Engine and will not
acquire or claim any rights, title or interest in such Engine
as a result of such Engine being installed on such other
airframe at any time while such Engine is subject to the
Lease. In the event Lessee shall have received from a lessor
of or secured party holding a Security Interest in any
airframe leased to Lessee or owned by Lessee a written
agreement pursuant to the foregoing sentence and the lease or
Security Interest covering such airframe also covers an engine
or engines owned by the lessor under such lease or subject to
such Security Interest in favor of the secured party under
such Security Interest, Lessor hereby agrees for the benefit
of such lessor or secured party that Lessor will respect the
interest of such
CONFIDENTIAL TREATMENT HAS BEEN REQUESTED BY KITTY HAWK, INC. FOR
CERTAIN PORTIONS OF THIS DOCUMENT. CONFIDENTIAL PORTIONS HAVE BEEN
FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION. OMITTED
PORTIONS ARE INDICATED IN THIS AGREEMENT WITH "*****".
-33-
lessor or secured party and will not acquire or claim as
against such lessor or secured party, any rights, title or
interest in any such engine as a result of such engine being
installed on the Airframe at any time while such engine is
subject to such lease or Security Interest and owned by such
lessor or subject to a Security Interest in favor of such
secured party. Lessee will ensure that any Engine or Part not
installed on the Aircraft (or an aircraft permitted by Section
8.11(c)) is properly and safely stored and insured and kept
free of Security Interests.
(b) Permanent Replacement: If Lessee permanently replaces an
Engine or Part:
(i) in the case of an Engine, it must be a Replacement
Engine;
(ii) in the case of a Part, the replacement part must be
an OEM approved Part, be in good operating condition,
must not have been involved in any accident or
incident, must not have been installed on an aircraft
registered on a military aircraft register, must have
as much useful life available until the next expected
maintenance procedure, must be of the same or a more
advanced make and model and of the same
interchangeable modification status as the Part it is
replacing and it must otherwise of an equivalent
value and utility as the Part it is replacing;
(iii) upon installation on the Aircraft the Replacement
Engine or replacement part must have become and
remain, until replaced in accordance with this
Section 8.11, the property of Owner free from
Security Interests (other than Permitted Liens), and
subject to any applicable Financing Documents;
(iv) Lessee must have full details of the source and
maintenance records of the Replacement Engine or
replacement part. In the case of replacement
serialized parts, documentation shall be back to
birth and in the case of serialized rotable parts,
shall have a complete service history; and
(v) Lessee shall provide a legal opinion in respect of
the perfection of Financing Parties' Representative
interest in such replaced Engine or Part.
(c) Other Aircraft: An Engine or Part may be installed on an
aircraft which Lessee owns or leases, which is insured to
Lessor's reasonable satisfaction, if:
(i) no Event of Default has occurred and is continuing;
(ii) Lessee or a Permitted Sub-Lessee has operational
control over the aircraft;
(iii) Owner keeps the ownership of the Engine or Part
concerned until replaced in accordance with Section
8.11(b);
(iv) the Engine or Part does not become subject to a
Security Interest and the applicable airframe is not
subject to any Security Interest except a
-34-
Permitted Lien or a lease or Security Interest
described in Section 8.11(a) above; and
(v) the Engine or Part is replaced in accordance with
Section 8.11(b) and is removed from the aircraft as
soon as practicable under Lessee's engine rotation
program (in the case of an Engine) but not later than
the Expiry Date;
(d) Temporary Replacement: Lessee may install any engine or part
on the Aircraft as a temporary replacement if:
(i) no Event of Default has occurred and is continuing;
(ii) there is not available an engine or part complying
with the requirements of the Lease for a Replacement
Engine or Part;
(iii) it would result in an unreasonable disruption of the
operation of the Aircraft or the business of Lessee
to have the Aircraft grounded until such time as an
engine or part complying with the requirements of the
Lease for a Replacement Engine or Part becomes
available for installation;
(iv) as soon as practicable (under Lessee's engine
rotation program in the case of an engine) after an
engine or part is installed on the Aircraft, but
before the Expiry Date, Lessee removes that engine or
part and replaces it with the original Engine or Part
(or by an engine or part which is allowed by Section
8.11(b)); and
(v) the Insurance for the Aircraft is not adversely
affected.
(e) Pooling/Interchange: Lessee shall not subject any Engine or
Part to any pooling, interchange, lease or similar arrangement
unless Lessee obtains Lessor's prior written consent thereto,
which consent shall not be unreasonably withheld. Lessee shall
be allowed to temporarily loan an Engine or Part to another
operator for a period not to exceed thirty (30) days.
8.12 EQUIPMENT CHANGES
(a) Lessee will not make any modification or addition to the
Aircraft (each an "Equipment Change"), except for an Equipment
Change which:
(i) is expressly permitted or required by the Lease;
(ii) has (x) is in accordance with Manufacturer approved
data and at a cost (including labor) of less than
*****, or (y) the prior written approval of
CONFIDENTIAL TREATMENT HAS BEEN REQUESTED BY KITTY HAWK, INC. FOR CERTAIN
PORTIONS OF THIS DOCUMENT. CONFIDENTIAL PORTIONS HAVE BEEN FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION. OMITTED PORTIONS ARE INDICATED IN THIS
AGREEMENT WITH "*****".
-35-
Lessor and, in either case, does not diminish the
condition, utility, airworthiness or value of the
Aircraft; or
(iii) is required by Law or Regulation of any Government
Entity.
(b) So long as no Payment Default or Event of Default has occurred
and is continuing, Lessee may, subject to any applicable
Regulations, remove or reverse any Equipment Change provided
that the Equipment Change is not required pursuant to the
terms of the Lease or to maintain the Insurance and removal or
reversal does not diminish the value, utility, airworthiness
or condition of the Aircraft assuming that such Equipment
Change was not made and that the Aircraft is maintained in
accordance with the Lease. Furthermore, Lessor may require
Lessee to remove or reverse any Equipment Change prior to the
Return Occasion so that, on the Expiry Date the Aircraft is
restored to the condition it was in prior to that Equipment
Change. Any Equipment Change. Any Equipment Change not so
removed or reversed becomes the property of Lessor or Owner,
as the case may be, at the Expiry Date.
8.13 TITLE ON AN EQUIPMENT CHANGE
Title to any equipment that is installed on the Airframe shall, except
in the case of an engine or a temporary replacement of a Part in
accordance with Section 8.11(d), vest in Owner solely by virtue of its
attachment to the Airframe or an Engine and it shall then be subject to
the Lease and, if applicable, the Financing Documents, as if it were
attached to the Aircraft at Delivery. In the case of any replacement of
an Engine, and otherwise if so requested by Lessor, Lessee will provide
a properly executed xxxx of sale or similar instrument to evidence the
vesting of good and marketable title, free and clear of any Security
Interest (except Lessor Liens), to any such Replacement Engine or other
equipment in Owner and all documents required under the Financing
Documents. After Lessor has determined that Lessee has permanently
replaced an Engine in accordance with Section 8.11(b) and this Section
8.13, Lessor will, or will procure that Owner will, without recourse or
warranty (except as to the absence of Lessor Liens), transfer to Lessee
or will procure that Owner will transfer to Lessee all of Lessor's or
Owner's, as the case may be, rights to the engine that has been
replaced, on an AS IS, WHERE IS basis, and will at Lessee's expense
provide or will procure that Owner provides a xxxx of sale or similar
instrument as Lessee may reasonably request to evidence such transfer.
Lessee shall indemnify Lessor, Owner and each other Tax Indemnitee for
all fees, expenses and Taxes incurred by Lessor, Owner or any other Tax
Indemnitee in connection with any such transfer; provided that with
respect to Taxes, the obligations of Lessee hereunder shall be subject
to the exclusions set forth in Section 5.7(c) hereof with the exception
of clause (iii) thereof and to the contest rights set forth in Section
5.9 above.
-36-
9. INSURANCE
9.1 INSURANCE
Lessee will maintain the Insurance in full force during the Term, and
thereafter as expressly required in the Lease, which shall be in
accordance with best industry practice for comparable operators
operating similar aircraft in similar circumstances, and shall be
through such brokers and with such insurers and having such deductibles
and subject to such exclusions as may be described in Schedule 7. The
Insurance shall in any event meet the requirements set forth in
Schedule 7 which may be amended from time to time by mutual agreement
of Lessor and Lessee so that the scope and level of cover is maintained
and the interests of Lessor and each Indemnitee are prudently protected
in line with best industry practice and in any event as may be
reasonably acceptable to Lessor.
9.2 CHANGE
If at any time Lessor wishes to revoke its approval of any insurer,
reinsurer, insurance or reinsurance for any material reason, Lessor
and/or its brokers will consult with Lessee and Lessee's brokers (as
for the time being approved by Lessor) regarding whether that approval
should be revoked to protect the interests of the parties insured. If,
following such consultation, Lessor acting reasonably considers that
any change should be made, Lessee will then arrange or procure the
arrangement of alternative cover satisfactory to Lessor. Lessor
acknowledges that, as of the date of this Common Terms Agreement,
Lessee's current insurer and brokers are acceptable to Lessor.
9.3 INSURANCE UNDERTAKINGS AND INFORMATION
Lessee will:
(a) comply with the terms and conditions of each policy of any
Insurance and not do, consent or agree to any act or omission
which:
(i) invalidates or may invalidate any Insurance; or
(ii) renders or may render void or voidable the whole or
any part of any of any Insurance; or
(iii) brings any particular liability within the scope of
an exclusion or exception to any Insurance;
(b) not take out without the prior written approval of Lessor any
insurance or reinsurance in respect of the Aircraft other than
that which is required under the Lease unless relating solely
to hull total loss, business interruption, profit commission
and deductible risk;
(c) commence renewal procedures at least thirty (30) days prior to
expiry of any of any Insurance and provide to Lessor:
(i) if requested by Lessor, a written status report of
renewal negotiation fourteen (14) days prior to each
expiry date;
-37-
(ii) facsimile confirmation of completion of renewal prior
to each policy expiry date; and
(iii) certificates of insurance (and where appropriate
certificates of reinsurance), and broker's (and any
reinsurance broker's) letter of undertaking in a form
acceptable to Lessor, detailing the coverage and
confirming compliance with the specified insurance
requirements of the Lease and, in the case of the
broker's letter of undertaking, opining that the
Insurance complies with the requirements of the Lease
on or before each renewal date;
(d) on request, provide to Lessor copies of documents or other
information evidencing the Insurance; and
(e) provide any other insurance and reinsurance related
information, or assistance, in respect of the Insurance as
Lessor may reasonably require.
9.4 FAILURE TO INSURE
If Lessee fails to maintain any Insurance in compliance with the Lease,
each of the Indemnitees will be entitled but not bound (without
prejudice to any other rights of Lessor under the Lease):
(a) to pay the premiums due or to effect and maintain insurance
satisfactory to it or otherwise remedy Lessee's failure in
such manner (including to effect and maintain an "owner's
interest" policy) as it considers appropriate. Any sums so
expended by it will become immediately due and payable by
Lessee to Lessor together with interest thereon at the
Interest Rate, from the date of expenditure by it up to the
date of reimbursement by Lessee; and
(b) at any time while such failure is continuing, to require the
Aircraft to remain at any airport or to proceed to and remain
at any airport designated by it until the failure is remedied
to its reasonable satisfaction.
9.5 CONTINUING INSURANCE
Lessee shall effect and maintain insurance after the Expiry Date with
respect to its liability under Section 10 for two (2) years or until
completion of the next "D" check on the Aircraft, whichever is earlier,
and such insurance shall name each Indemnitee as an additional insured.
10. INDEMNITY
(a) EXCEPT AS PROVIDED IN SECTION 10(b) BELOW, LESSEE AGREES TO
ASSUME LIABILITY AND PAY FOR AND TO INDEMNIFY EACH OF THE
INDEMNITEES AGAINST AND AGREES TO PAY ON DEMAND ANY AND ALL
LOSSES WHICH AN INDEMNITEE MAY SUFFER OR INCUR AT
-38-
ANY TIME, WHETHER DIRECTLY OR INDIRECTLY, ARISING OUT OF,
RELATED TO OR IN ANY WAY CONNECTED WITH:
(i) THE OWNERSHIP, MAINTENANCE, REPAIR, POSSESSION, SALE
OR OTHER TRANSFER OF OWNERSHIP OR POSSESSION, IMPORT,
EXPORT, REGISTRATION, STORAGE, MODIFICATION, LEASING
(INCLUDING SUB-LEASING), INSURANCE, INSPECTION,
TESTING, DESIGN, USE, OPERATION, CONDITION, SECURITY
INTERESTS (OTHER THAN LESSOR LIENS) OR OTHER MATTERS
RELATING TO THE AIRCRAFT, ANY ENGINE OR PART OR THE
LEASE (REGARDLESS OF WHETHER IN THE AIR OR ON THE
GROUND, AND REGARDLESS OF WHETHER SUCH LOSSES ARE
BASED ON STRICT LIABILITY IN TORT, ANY ACT OR
OMISSION, INCLUDING THE NEGLIGENCE, OF ANY
INDEMNITEE, OR OTHERWISE); OR
(ii) ANY BREACH BY LESSEE OF ANY OF ITS OBLIGATIONS UNDER
THE LEASE (WITHOUT DUPLICATION OF AMOUNTS OTHERWISE
PAYABLE HEREUNDER); OR
(iii) THE DESIGN, TESTING OR USE OF ANY ARTICLE OR MATERIAL
IN THE AIRCRAFT, ANY ENGINE OR ANY PART OR ITS
OPERATION, INCLUDING ANY DEFECT IN DESIGN AND
REGARDLESS OF WHETHER IT IS DISCOVERABLE, AND ANY
INFRINGEMENT OF PATENT, COPYRIGHT, TRADEMARK, DESIGN
OR OTHER PROPRIETARY RIGHT CLAIMED BY ANY PERSON OR A
BREACH OF ANY OBLIGATION OF CONFIDENTIALITY CLAIMED
TO BE OWED TO ANY PERSON.
FOR THE AVOIDANCE OF DOUBT, THE REFERENCE TO "OWNERSHIP" IN
SECTION (i) SHALL NOT REQUIRE LESSEE TO INDEMNIFY LESSOR IN
RESPECT OF ANY DEFECT IN LESSOR'S OR OWNER'S TITLE TO THE
AIRCRAFT.
(b) Lessee is not required to indemnify any particular Indemnitee
(provided that Lessor and its Affiliates and its and their
officers, directors and employees shall be treated as a single
Indemnitee) under this Section 10, to the extent a particular
Loss is:
(i) results from or arises out of the gross negligence or
willful misconduct of that Indemnitee, other than
gross negligence imputed to that Indemnitee by reason
of its interest in the Aircraft or the Lease;
(ii) results from or arises out of Lessor's breach of the
Lease which does not result from a Default;
-39-
(iii) constitutes or is related to any Taxes (but without
prejudice to any Indemnitee's rights under any other
provision of the Lease relating to Taxes);
(iv) results from or arises out of an event which occurs
before the commencement of the Term (except where
(aa) the Loss is suffered during the Term as a result
of a pre-Delivery defect in or otherwise arises out
of or relates to or is any way connected with the
manufacture, design, maintenance, repair, rebuilding,
overhaul or modification of the Aircraft) or (bb) the
Aircraft has been purchased from Lessee (or a Lessee
Affiliate) and is to be leased back to Lessee under
the Lease);
(v) results from or arises out of an event that occurs
after the redelivery of the Aircraft to Lessor in
compliance with the Lease and is not attributable to
any act, omission, event or circumstance occurring
prior to such redelivery;
(vi) results from or arises out of any sale, assignment,
transfer or other disposition (whether voluntary or
involuntary) by such Indemnitee of the Aircraft or
Engine or any interest therein that is not a
replacement thereof under the Lease or is otherwise
not contemplated under the Lease, and unless such
sale, transfer or other disposition has resulted from
or arises as a result of the exercise of Lessor's
remedies following a Default;
(vii) results from or arises out of the performance by such
Indemnitee of its obligations under any Financing
Document or to any Financing Party, provided that
such performance does not arise out of a Default
under the Lease;
(viii) results from or arises out of a default under any
Financing Document which is not a Default under the
Lease;
(ix) results from or arises out of any change in or
restructuring of any Financing Document related to
the financing of the Aircraft, any Engine or any Part
thereof, unless resulting from a Default by Lessee
under the Lease or unless Lessee has expressly agreed
to undertake such obligations;
(x) consists of normal administrative costs and expenses
of such Indemnitee (but excluding any such costs or
expenses resulting from the exercise of Lessor's
remedies following a Default); or
(xi) consists of costs or expenses for which Lessor has
expressly agreed to be responsible under any other
provision of the Lease.
-40-
11. EVENTS OF LOSS
11.1 EVENTS OF LOSS
(a) If an Event of Loss occurs prior to Delivery of the Aircraft,
the Lease will immediately terminate and except as expressly
stated in the Lease or under any Other Agreement, neither
party will have any further obligation, other than pursuant to
Section 5.21 and Section 3 of Schedule 4, except that Lessor
will return the Deposit (if any) to Lessee and return to
Lessee or agree to the cancellation of any Letter of Credit in
respect of the Aircraft, in each case in accordance with the
provisions of Section 5.11 hereof.
(b) If an Event of Loss occurs after Delivery, Lessee will pay the
Agreed Value to Lessor on or prior to the earlier of (i) sixty
(60) days after the Event of Loss and (ii) the date of receipt
of insurance proceeds in respect of that Event of Loss.
(c) Subject to the rights of any insurers and reinsurers or other
third party, upon irrevocable payment in full to Lessor of the
Agreed Value and all other amounts which may be or become
payable to Lessor under the Lease, and if Lessee requests such
transfer, Lessor will, or will procure that Owner will,
without recourse or warranty (except as to the absence of
Lessor Liens) transfer to Lessee or will procure that Owner
transfers to Lessee legal and beneficial title, subject to no
Lessor Liens (but otherwise without warranty), to the
Aircraft, on an AS IS, WHERE IS basis, and will at Lessee's
expense, execute and deliver or will procure that Owner
executes and delivers, such bills of sale and other documents
and instruments as Lessee may reasonably request to evidence
(on the public record or otherwise) such transfer, free and
clear of all rights of Lessor and Owner and Lessor Liens.
Lessee shall indemnify Lessor, Owner and each other Tax
Indemnitee for all fees, expenses and Taxes incurred by
Lessor, Owner or any other Tax Indemnitee in connection with
any such transfer; provided that with respect to Taxes, the
obligations of Lessee hereunder shall be subject to the
exclusions set forth in Section 5.7(c) hereof and to the
contest rights set forth in Section 5.9 above.
11.2 REQUISITION
During any requisition for use or hire of the Aircraft, any Engine or
Part which does not constitute an Event of Loss:
(a) the Rent and other charges payable under the Lease will not be
suspended or abated either in whole or in part, and Lessee
will not be released from any of its other obligations (other
than operational obligations with which Lessee is unable to
comply solely by virtue of the requisition); and
(b) so long as no Payment Default or Event of Default has occurred
and is continuing, Lessee will be entitled to any compensation
paid by the requisitioning authority in respect of such
authority's use of the Aircraft, such Engine or such Part
during the Term. Lessee will, as soon as practicable after the
end of any such requisition, cause the Aircraft to be put into
the condition required by the Lease. Lessor will be entitled
to all compensation payable by the requisitioning authority in
respect of any change in the structure, state or condition of
the Aircraft arising during the
-41-
period of requisition, and Lessor will apply such compensation
in reimbursing Lessee for the cost of complying with its
obligations under the Lease in respect of any such change,
but, if any Default has occurred and is continuing, Lessor may
apply the compensation in or towards settlement of any amounts
owing by Lessee under the Lease and/or under any Other
Agreement.
12. RETURN OF AIRCRAFT
12.1 RETURN
On the Expiry Date or redelivery of the Aircraft pursuant to Section
13.2 or termination of the leasing of the Aircraft under the Lease,
Lessee will, unless an Event of Loss has occurred, redeliver the
Aircraft and the Aircraft Documents and Records at Lessee's expense to
Lessor at the Redelivery Location, in accordance with the procedures
and in compliance with the conditions set forth in Schedule 6, free and
clear of all Security Interests (other than Lessor Liens), in a
condition suitable for immediate operation under FAR Part 121 or as
otherwise agreed by Lessor and Lessee and, in any case, qualifying for
and having a valid and fully effective certificate of airworthiness
issued by the Air Authority. If requested by Lessor, Lessee shall
thereupon cause the Aircraft to be deregistered by the Air Authority.
12.2 NON-COMPLIANCE
If at the time of Final Inspection Lessee has not fully complied with
any of its obligations under the Lease (including Schedule 6), or
Lessee fails to make the Aircraft available to Lessor on a timely basis
for inspection and redelivery pursuant to Section 12.1 and Schedule 6
(whether such failure is due to any act or omission of Lessee or any
other circumstance whatsoever), the Term shall be extended until the
time when the Aircraft has been redelivered to Lessor in full
compliance with the Lease, for the sole purpose of enabling such
non-compliance or failure to be promptly rectified, and during such
extension period:
(a) Lessee shall not use the Aircraft in flight operations except
those related directly to the redelivery of the Aircraft to
Lessor;
(b) all Lessee's obligations and covenants under the Lease will
remain in full force until Lessee so redelivers the Aircraft;
and
(c) Lessee shall pay Rent to Lessor at a rate per month equal to
the amount of Rent payable in respect of the last scheduled
Rental Period plus ***** thereof, calculated on a per diem
basis.
Any such extension shall not prejudice Lessor's right to treat such
non-compliance or
CONFIDENTIAL TREATMENT HAS BEEN REQUESTED BY KITTY HAWK, INC. FOR
CERTAIN PORTIONS OF THIS DOCUMENT. CONFIDENTIAL PORTIONS HAVE BEEN
FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION. OMITTED
PORTIONS ARE INDICATED IN THIS AGREEMENT WITH "*****".
-42-
failure as an Event of Default at any time, and to enforce such rights
and remedies as may be available to Lessor in respect thereof under the
terms of the Lease or applicable Law. Without limiting the generality
of the foregoing, Lessee's Rent obligation under paragraph (c) above
shall be without prejudice to Lessor's rights to terminate the letting
of the Aircraft and to indemnification pursuant to Sections 10(a)(ii)
or 13.3.
Lessor may elect (either on first tender of the Aircraft by Lessee or
at any time during the said extension period) to accept redelivery of
the Aircraft notwithstanding non-compliance with Section 12.1 or
Schedule 6, in which case Lessee will indemnify Lessor and provide cash
to Lessor (in an amount satisfactory to Lessor) as security for that
indemnity in respect of the cost to Lessor of putting the Aircraft into
the condition required by the Lease.
12.3 REDELIVERY
Upon redelivery Lessee will provide to Lessor all documents necessary
to export the Aircraft from the Habitual Base and the State of Registry
(including a valid and subsisting export certificate of airworthiness
for the Aircraft) or required in relation to the deregistration of the
Aircraft with the Air Authority.
12.4 ACKNOWLEDGEMENT
Provided Lessee has complied with its obligations under Section 12 and
Schedule 6, following redelivery of the Aircraft by Lessee to Lessor at
the Redelivery Location, Lessor will deliver to Lessee an
acknowledgement confirming that Lessee has redelivered the Aircraft to
Lessor in accordance with the Lease which acknowledgement shall be
without prejudice to Lessor's accrued and continuing rights under the
Lease or any Other Agreement.
13. DEFAULT
13.1 EVENTS
The occurrence of any of the Events of Default will constitute a
repudiation (but not a termination) of the Lease by Lessee (whether the
occurrence of any such Event of Default is voluntary or involuntary or
occurs by operation of Law or pursuant to or in compliance with any
judgment, decree or order of any court or any order, rule or regulation
of any Government Entity).
13.2 RIGHTS AND REMEDIES
If an Event of Default occurs, Lessor may at its option (and without prejudice
to any of its other rights and remedies under the Lease, at law, in equity
and/or otherwise), at any time thereafter (without notice to Lessee except as
required under applicable Law) and subject to compliance with non-waivable
mandatory requirements of law:
-43-
(a) accept such repudiation and by notice to Lessee and with
immediate effect terminate the leasing of the Aircraft and/or
the Lease whereupon all rights of Lessee under the Lease shall
cease (but without prejudice to the continuing obligations of
Lessee that survive under the Lease, including, obligations to
provide Insurance, maintain and repair the Aircraft and/or
redeliver the Aircraft in the Redelivery Condition); and/or
(b) proceed by appropriate court action or actions to enforce
performance of the Lease or to recover damages sustained by
Lessor by reason of Lessee's breach of the Lease, and all
other amounts payable by Lessee to Lessor or to any Indemnitee
pursuant to the terms of the Lease; and/or
(c) take possession of and/or seize the Aircraft, for which
purpose Lessor may enter any premises belonging to or in the
occupation of or under the control of Lessee where the
Aircraft may be located; and/or
(d) by serving notice, require Lessee to redeliver the Aircraft in
Redelivery Condition at the time and on the date designated by
Lessor in its sole and absolute discretion and at the
Redelivery Location provided that if the Aircraft is not
redelivered in Redelivery Condition, Lessee shall reimburse
Lessor for all costs and expenses incurred to place the
Aircraft in Redelivery Condition; and/or
(e) by serving notice, require that Lessee pay to Lessor, and
Lessee shall be liable for and immediately pay to Lessor,
and/or proceed by appropriate court action or actions to
recover any or all of the following amounts, without
duplication:
(i) all Rent and other amounts which are or become due
and payable under the Lease prior to the earlier to
occur of the date Lessor sells or re-leases the
Aircraft or receives payment of the amount calculated
pursuant to clause (ii) below;
(ii) an amount equal to the Mitigated Rent Amount;
(iii) an amount equal to Lessor's reasonably anticipated
Enforcement and Remarketing Costs, Unwind Expenses
and Aircraft Condition Damages;
(iv) all amounts indemnified by Lessee pursuant to Section
13.3;
(v) such additional amount, if any, as may be necessary
to place Lessor in the same economic position as
Lessor would have been in if Lessee had timely
performed each of its obligations under the Lease;
and
(vi) all documented attorney's fees, costs and expenses
incurred to enforce the Lease or Lessor's rights
and/or remedies or as a result of Lessee's default
under the Lease or failure to comply with the
obligations under the Lease.
It being understood that, to the extent that any of the
foregoing amounts represents an estimate by Lessor of losses,
damages, costs or expenses which
-44-
Lessor expects to incur, (x) Lessor shall adjust the amount
thereof as needed to reflect the actual amount of such losses,
damages, costs or expenses incurred by Lessor when
substantially all of such amounts become known to Lessor, but
Lessee shall nevertheless be obligated to pay the amount
demanded by Lessor (subject to such subsequent adjustment),
and (y) notwithstanding the amount specified in such demand,
Lessor shall be entitled to claim such other (and greater or
additional) amount in any action against Lessee under the
Lease, subsequent demand and/or any other damages that Lessor
may sustain; and/or
(f) require Lessee to pay, and Lessee shall pay to Lessor,
interest on all unpaid amounts at the Interest Rate, from the
due date until the date of payment in full; and/or
(g) draw upon the Deposit or the Letter of Credit and apply such
amounts to any amounts owing or to be owing to Lessor under
the Lease; and/or make demand against any Guarantor for any or
all of the foregoing.
No remedy referred to in this Section 13.2, is intended to be
exclusive, but, to the extent permissible under the Lease or under
applicable Law, each shall be cumulative and in addition to any other
remedy referred to above or otherwise available to Lessor at Law or in
equity and in Lessor's sole and absolute discretion; and the exercise
by Lessor of any one or more of such remedies shall not preclude the
simultaneous or later exercise by Lessor of any or all of such other
remedies. No waiver by Lessor of any Default or Event of Default shall
in any way be, or be construed to be, a waiver of any future or
subsequent Default or Event of Default.
13.3 DEFAULT INDEMNITY
Lessee will indemnify Lessor on demand against any Loss which Lessor
may sustain or incur directly or indirectly as a result of any Event of
Default, including, the non-delivery of the Aircraft by reason of
failure of Lessee to satisfy any conditions to that delivery Lessor
will use reasonable endeavors to mitigate such Losses, but (i) Lessor
shall not be obliged to consult with Lessee concerning any proposed
course of action or to notify Lessee of the taking of any particular
action, and (ii) this provision is without prejudice to Lessor's rights
under Section 13.4.
13.4 SALE OR RE-LEASE
If an Event of Default occurs and is continuing, Lessor may sell at a
private or public sale or re-lease or otherwise deal with the Aircraft
at such time and in such manner and on such terms as Lessor considers
appropriate in its sole and absolute discretion, free and clear of any
rights and interest of Lessee, as if the Lease had never been entered
into. Lessor shall have no obligation or duty to sell the Aircraft and
Lessor shall be obligated to attempt to re-lease the Aircraft only to
the extent, if any, that it is required to do so under Article 2A of
the UCC.
13.5 REMOVAL OF LEASE FROM FAA REGISTRY
-45-
If an Event of Default occurs, Lessee will at the request of Lessor
immediately take all steps necessary to enable the Aircraft to be
redelivered to Lessor in accordance with the Lease and Lessee hereby
irrevocably and by way of security for its obligations under the Lease
appoints (which appointment is coupled with an interest) Lessor as its
attorney to execute and deliver any documentation, do any act or thing
required in connection with the foregoing and grant all the powers and
authorizations necessary for taking any of the foregoing actions during
the continuance of an Event of Default. Without limiting the foregoing,
Lessor may file with the FAA the Certificate of Lease Termination
provided to Lessor under the Lease.
13.6 ASSIGNMENT OF WARRANTIES
In the event of the return to or repossession by Lessor of the
Aircraft, the Airframe, an Engine or Part, any rights in any warranty
(express or implied) previously made or assigned to Lessee or otherwise
held by Lessee shall without further act, notice or writing be assigned
or reassigned to Lessor, if assignable.
13.7 WAIVER OF DEFENSES TO REPOSSESSION
Neither Lessee, nor anyone claiming through or under it, shall set up,
claim, invoke or seek to take advantage of any applicable Law now or
hereafter in force in any jurisdiction in which the Aircraft may be
situated in order to prevent, hinder or delay any effort on the part of
Lessor to regain possession of the Aircraft, or re-export the Aircraft
from any jurisdiction in which the Aircraft may be situated upon the
occurrence of an Event of Default under Section 13.1 or the comparable
clause under any Other Agreement and/or the Expiry Date and both prior
and subsequent to entry of a final award or judgment, and Lessee, for
itself and all who may at any time claim through or under it, hereby
waives, to the full extent that it may be lawful so to do, the benefit
of all such applicable Law (including any rights it may have, if any,
to avail itself of the protection provided by the Convention of 1933 on
the Unification of Certain Rules Relating to the Precautionary Arrest
of Aircraft, or any other similar law, treaty or convention applicable
to Lessee or the Aircraft which would limit the ability of Lessor to
repossess or otherwise recover the Aircraft upon the occurrence and
continuance of an Event of Default and/or the expiration or termination
of the Lease and prior and subsequent to entry of a final award or
judgment). Lessee and anyone claiming through or under it, hereby
consents to an order or judgment compelling redelivery or permitting
Lessor to take possession of the Aircraft upon the occurrence of an
Event of Default and/or the expiration or termination of the Lease, and
whether prior or subsequent to the entry of a final judgment, in any
action or proceeding.
13.8 POWER OF ATTORNEY
Lessee hereby appoints Lessor as the attorney-in-fact of Lessee, with
full authority in the place and stead of Lessee and in the name of
Lessee or otherwise, for the purpose of carrying out the provisions of
the Lease and taking any action and executing any instrument that
Lessor may deem necessary or advisable to accomplish the purposes of
the Lease; provided, however, that Lessor may only take action or
execute instruments
-46-
under this Section 13 after an Event of Default has occurred and is
continuing. Lessee hereby declares that the foregoing powers are
granted for valuable consideration, constitute powers granted as
security for the performance of the obligations of Lessee under the
Lease and are coupled with an interest and shall be irrevocable.
Without limiting the generality of the foregoing or any other rights of
Lessor under the Lease, upon the occurrence and during the continuation
of an Event of Default, Lessor shall have the sole and exclusive right
and power to (i) settle, compromise, compound, adjust or defend any
actions, suits or proceedings relating to or pertaining to the
Aircraft, Airframe or any Engine, or the Lease and (ii) make proof of
loss, appear in and prosecute any action arising from any policy or
policies of insurance maintained pursuant to the Lease, and settle,
adjust or compromise any claims for loss, damage or destruction under,
or take any other action in respect of, any such policy or policies.
14. ASSIGNMENT
14.1 LESSEE
LESSEE WILL NOT ASSIGN, DELEGATE OR OTHERWISE TRANSFER (VOLUNTARILY,
INVOLUNTARILY, BY OPERATION OF LAW OR OTHERWISE) ANY OF ITS RIGHTS OR
OBLIGATIONS UNDER THE LEASE (INCLUDING THE AIRCRAFT LEASE AGREEMENT OR
THIS CTA), OR CREATE OR PERMIT TO EXIST ANY SECURITY INTEREST OVER ANY
OF ITS RIGHTS UNDER THE LEASE (INCLUDING THE AIRCRAFT LEASE AGREEMENT
OR THIS CTA), AND ANY ATTEMPT TO DO SO SHALL BE NULL AND VOID. The
foregoing shall not be construed to prohibit a Permitted Sub-Lease or
any other act permitted to be taken by Lessee under the Lease.
14.2 LESSOR
Lessee acknowledges and agrees that Lessor may, if applicable under the
Financing Documents, assign as security Lessor's interest in the Lease
as described in the Acknowledgement and Agreement referred to in
Schedule 3.
Lessor may, without the consent of Lessee, assign, novate, delegate or
otherwise transfer all or any of its rights or obligations under the
Lease or all or any of its right, title or interest in and to the
Aircraft (each a "Transfer"), including pursuant to:
(a) a sale and leaseback; or
(b) a novation or assignment of the Lease and/or a sale of the
Aircraft (including to a special purpose or securitization or
monetization trust, fund, limited liability company,
corporation, partnership or other vehicle or in connection
with any other direct or indirect raising of capital); or
(c) a secured loan financing.
-47-
In connection with any such Transfer, Lessor and its assignee will
enter into an Assignment. Lessor will promptly notify Lessee of any
Transfer using a notice substantially in the form of Annex II to the
Assignment together with such information about the transferee as
Lessor has received from the transferee if not previously provided by
Lessor to Lessee, and Lessee agrees promptly to execute and deliver in
connection with any Transfer such documents and assurances (including
an acknowledgement of the Transfer, the absence of any Default under
the Lease, and other matters identified in the aforementioned notice)
and to take such further action as Lessor may reasonably request to
establish or protect the rights and remedies created or intended to be
created in favor of the transferee in connection with any Transfer.
After any Transfer, the transferee shall be entitled to be an
Indemnitee and to such other rights under the Lease as Lessor shall
specify. Upon an assignment or novation described in subsection (b)
above, Lessor shall be released from all obligations and liabilities
under the Lease to the extent such obligations and liabilities are
assumed by such transferee, and the Lease, including this CTA as in
effect at that time and as incorporated in the Aircraft Lease
Agreement, shall be deemed applicable as between Lessee and the
transferee of the Lease and may be amended, supplemented or otherwise
modified without the consent of the transferor (if this CTA is
applicable to the Other Agreements not so transferred, it shall remain
in full force and effect and may be amended, supplemented or otherwise
modified without the consent of the transferee). Notwithstanding any
such assignment or novation, Lessor, Owner, Financing Parties'
Representative and each other Indemnitee shall continue to be entitled
to indemnification under Section 10, and shall continue to be named as
an additional insured under all liability Insurance referred to in
Section 9 for a period of not less than two (2) years after such
Transfer. The agreements, covenants, obligations and liabilities
contained in the Lease, including all obligations to pay Rent and
indemnify each Indemnitee, are made for the benefit of Lessor (and, in
the case of Section 10, each other Indemnitee) and its or their
respective successors and assigns, notwithstanding the possibility that
any such Person was not originally a party to the Lease or may, at the
time such enforcement is sought, not be a party to the Lease.
14.3 CONDITIONS
In connection with any such Transfer by Lessor:
(a) Quiet Enjoyment: as a condition precedent to such Transfer
becoming effective, Lessor will procure that the transferee or
any new owner of the Aircraft (except where such new owner is
also the "Lessor" under the Lease) or any new holder of a
security interest over the Aircraft or any holder of an
interest in the Aircraft or the Lease (by way of security or
otherwise), as the case may be, shall execute and deliver to
Lessee a letter of quiet enjoyment in respect of Lessee's use
and possession of the Aircraft in a form substantially similar
to Lessor's covenant in Section 7.1; and
(b) Costs: Lessor shall reimburse to Lessee its reasonable
out-of-pocket expenses (including reasonable legal fees and
expenses) actually incurred in connection with co-operating
with Lessor in relation to any such Transfer referred to in
this Section 14, provided that (i) such expenses are
substantiated to Lessor's
-48-
reasonable satisfaction and (ii) no Payment or Event of
Default has occurred and is continuing.
(c) Transferee: Any transferee of Lessor's interest in the Lease
pursuant to a transfer described in clause (b) of Section
14.2, the effect of which is to result in a release of Lessor
from its obligations under the Lease, shall (i) at the time of
the transfer have a tangible net worth (determined in
accordance with GAAP) of at least *****, or (ii) at the time
of the transfer be a Person whose unsecured debt obligations
have an investment grade rating of BBB- or better by S&P or
the equivalent rating or better by Xxxxx'x Investors Services,
Inc. and Lessor's payment obligations owed to Lessee under the
Lease shall rank at least pari passu with any of such rated
debt obligations, or, in the absence of such rated
obligations, all of Lessor's unsecured, unsubordinated debt
obligations or (iii) have its payment obligations under the
Lease absolutely and unconditionally guaranteed by such a
Person described in the foregoing clause (i) or (ii).
(d) No Increase In Lessee's Indemnity or Payment Obligations: As a
condition to such Transfer, the Transfer shall not in any
material respect increase Lessee's indemnity or other payment
obligations under the Lease or diminish Lessee's rights under
the Lease (to be determined in each case at the time of such
Transfer by applying all applicable Laws as are in effect on
the effective date of the Transfer).
15. MISCELLANEOUS
15.1 [INTENTIONALLY OMITTED]
15.2 WAIVERS, REMEDIES CUMULATIVE
The rights of Lessor under the Lease may be exercised as often as
necessary, are cumulative and not exclusive of its rights under any
Law; and may be waived only in writing and specifically. Delay by
Lessor in exercising, or non-exercise of, any such right will not
constitute a waiver of that right.
CONFIDENTIAL TREATMENT HAS BEEN REQUESTED BY KITTY HAWK, INC. FOR CERTAIN
PORTIONS OF THIS DOCUMENT. CONFIDENTIAL PORTIONS HAVE BEEN FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION. OMITTED PORTIONS ARE INDICATED IN THIS
AGREEMENT WITH "*****".
15.3 DELEGATION
Lessor may delegate to any Person all or any of the rights, powers or
discretions vested in it by the Lease, and any such delegation may be
made upon such terms and conditions and subject to such regulations
(including power to sub-delegate) as Lessor in its absolute discretion
thinks fit.
15.4 SEVERABILITY
-49-
If a provision of the Lease is or becomes illegal, invalid or
unenforceable in any jurisdiction, that will not affect:
(a) the legality, validity or enforceability in that jurisdiction
of any other provision of the Lease; or
(b) the legality, validity or enforceability in any other
jurisdiction of that or any other provision of the Lease.
15.5 REMEDY
If Lessee fails to comply with any provision of the Lease, Lessor may,
without being in any way obliged to do so or responsible for so doing
and without prejudice to the ability of Lessor to treat such
non-compliance as a Default, effect compliance on behalf of Lessee,
whereupon Lessee shall become liable to pay immediately any sums
expended by Lessor together with all documented costs and expenses
(including reasonable and documented legal fees and expenses) in
connection with the non-compliance.
15.6 TIME OF ESSENCE
The time stipulated in the Lease for all payments payable by Lessee and
the prompt, punctual performance of Lessee's other obligations under
the Lease are of the essence of the Lease.
15.7 NOTICES
All notices and other communications under, or in connection with, the
Lease will, unless otherwise stated, be given in writing by hand
delivery, mail, overnight courier service, facsimile or email (where
such address is available). Any such notice or other communication is
deemed effectively given when received by the recipient (or if receipt
is refused by the intended recipient, when so refused).
The address, facsimile and email details for notices to Lessee and
Lessor are as set out below or as otherwise advised by one party to the
other in writing and in compliance with this Section 15.7 from time to
time:
Lessor Lessee
Address: c/o GECAS Inc. 0000 Xxxx 00xx Xxxxxx
000 Xxxx Xxxxx Xxxx X.X. Xxx 000000
Xxxxxxxx, XX 00000 DFW Int'l Xxxxxxx, XX 00000
XXX XXX
-50-
Attention: Contracts Leader General Counsel
Facsimile: x0 000-000-0000 000 000-0000
Email: XXxxxxxxx@xxxxx.xxx xxxxxxxxx@xxx.xxx
15.8 GOVERNING LAW; JURISDICTION; WAIVER OF JURY TRIAL
(a) PURSUANT TO AND IN ACCORDANCE WITH SECTION 5-1401 OF THE NEW
YORK GENERAL OBLIGATIONS LAW, THE PARTIES HERETO AGREE THAT
THE LEASE IN ALL RESPECTS SHALL BE GOVERNED BY, AND CONSTRUED
IN ACCORDANCE WITH, THE GOVERNING LAW AS APPLIED TO CONTRACTS
TO BE PERFORMED WHOLLY WITHIN THE STATE OF NEW YORK (EXCLUSIVE
OF SECTION 7-101 OF THE NEW YORK GENERAL OBLIGATIONS LAW WHICH
IS INAPPLICABLE TO THE LEASE). THE PARTIES AGREE THAT THE
LEASE WAS DELIVERED IN THE STATE OF NEW YORK.
(b) Pursuant to and in accordance with Section 5-1402 of the New
York General Obligations Law, Lessee and Lessor each agree
that the United States District Court for the Southern
District of New York and any New York state court sitting in
the County of New York, New York, and all related appellate
courts, are to have non-exclusive jurisdiction to settle any
disputes arising out of or relating to the Lease and submits
itself and its property to the non-exclusive jurisdiction of
the foregoing courts with respect to such dispute;
(c) Without prejudice to any other mode of service, Lessee:
(i) appoints C.T. Corporation, 0000 Xxxxxx Xxxxxx, 00xx
Xxxxx, Xxx Xxxx, Xxx Xxxx 00000 as its agent for
service of process relating to any proceedings before
the New York or federal courts in connection with the
Lease and agrees to maintain the process agent in New
York notified to Lessor;
(ii) agrees that failure by a process agent to notify
Lessee of the process shall not invalidate the
proceedings concerned; and
(iii) consents to the service of process relating to any
such proceedings by prepaid mailing of a copy of the
process to Lessee's agent at the address identified
in paragraph (i) or by facsimile or prepaid mailing
by air mail, certified or registered mail of a copy
of the process to Lessee at the facsimile number or
address, as applicable, notified by Lessee to Lessor
pursuant to the Lease.
(d) Without prejudice to any mode of service, Lessor:
-51-
(i) appoints C.T. Corporation, 0000 Xxxxxx Xxxxxx, 00xx
Xxxxx, Xxx Xxxx, Xxx Xxxx 00000 as its agent for
service of process relating to any proceedings before
the New York or federal courts in connection with the
Lease and agrees to maintain the process agent in New
York notified to Lessor;
(ii) agrees that failure by a process agent to notify
Lessor of the process shall not invalidate the
proceedings concerned; and
(iii) consents to the service of process relating to any
such proceedings by prepaid mailing of a copy of the
process to Lessor's agent at the address identified
in paragraph (i) or by facsimile or prepaid mailing
by air mail, certified or registered mail, of a copy
of the process to Lessor at the facsimile number or
address, as applicable, set forth in Section 15.7.
(e) Each of Lessee and Lessor:
(i) waives to the fullest extent permitted by Law any
objection which it may now or hereafter have to the
courts referred to in Section 15.8(b) on grounds of
inconvenient forum or otherwise as regards
proceedings in connection with the Lease;
(ii) waives to the fullest extent permitted by Law any
objection which it may now or hereafter have to the
laying of venue of any suit, action or proceeding
arising out of or relating to the Lease brought in
the courts referred to in Section 15.8(b); and
(iii) agrees that a judgment or order of any court referred
to in Section 15.8(b) in connection with the Lease is
conclusive and binding on it and may be enforced
against it in the courts of any other jurisdiction as
if made by the highest court in that other
jurisdiction and accordingly Lessee will not seek to,
nor be entitled to, contest and/or delay and/or
obstruct registration or enforcement of any such
judgment and/or award and/or order on grounds of
public policy or otherwise.
(f) This Section 15 shall survive, continue to take full effect
and not merge in any order or judgment and nothing in this
Section 15.8 limits the right of either party to bring
proceedings against the other in connection with the Lease:
(i) in any other court of competent jurisdiction; or
(ii) concurrently in more than one (1) jurisdiction.
(g) Each of Lessee and Lessor irrevocably and unconditionally:
(i) agrees that if the other brings legal proceedings
against it or its assets in relation to the Lease no
sovereign or other immunity from such legal
proceedings (which will be deemed to include suit,
court jurisdiction,
-52-
attachment prior to judgment, attachment in aid of
execution of a judgment, other attachment, the
obtaining of judgment, execution of a judgment or
other enforcement or legal process or remedy) will be
claimed by or on behalf of itself or with respect to
its assets;
(ii) waives any such right of immunity which it or its
assets now has or may in the future acquire and
agrees that the foregoing waiver shall have the
fullest extent permitted under the Foreign Sovereign
Immunities Act of 1976 of the United States of
America and is intended to be irrevocable for the
purposes of such Act; and
(iii) waives any requirement, of any kind whatsoever, for
Lessor to provide any form of security in respect of
the payment of any damages, costs, expenses or any
other financial obligation resulting from the
commencement or prosecution of proceedings or the
making of or service of any order and Lessee
undertakes (x) not to challenge the validity of any
proceedings or the making of any orders without any
requirement for the provision of such security (y) to
advise any court upon Lessor's request that Lessee
requires no such security and (z) to provide security
itself for any third party claims arising out of or
in connection with such proceedings and/or orders.
EACH OF LESSEE AND LESSOR HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES
ANY AND ALL RIGHTS TO A JURY TRIAL IN RESPECT OF ANY CLAIM OR CAUSE OF
ACTION BASED UPON OR ARISING OUT OF THE LEASE OR ANY DEALINGS BETWEEN
THEM RELATING TO THE SUBJECT MATTER OF THE TRANSACTIONS CONTEMPLATED
THEREBY OR THE LESSOR/LESSEE RELATIONSHIP BEING ESTABLISHED, INCLUDING,
CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS AND OTHER COMMON
LAW AND STATUTORY CLAIMS. EACH OF LESSOR AND LESSEE REPRESENTS AND
WARRANTS THAT EACH HAS REVIEWED AND VOLUNTARILY WAIVES ITS JURY TRIAL
RIGHTS FOLLOWING CONSULTATION WITH ITS LEGAL COUNSEL. THIS WAIVER IS
IRREVOCABLE, AND THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS,
RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THE LEASE. IN THE EVENT OF
LITIGATION, THIS SECTION 15.8 MAY BE FILED AS A WRITTEN CONSENT TO A
TRIAL BY THE COURT.
15.9 SOLE AND ENTIRE AGREEMENT; TRUE LEASE; SECTION 1110
(a) Entire Agreement: The Lease is the sole and entire agreement
between Lessor and Lessee in relation to the leasing of the
Aircraft, and supersedes all previous agreements,
representations and understandings in relation to that
leasing. Any amendments to the Lease must be made in writing
and signed on behalf of Lessor and Lessee.
(b) True Lease: The parties intend and agree that the Lease:
-53-
(i) constitutes a "true lease", and not a "security
interest" as defined in Section 1-201(37) of the UCC;
(ii) constitutes a "true lease" for United States federal
income tax purposes; and
(iii) confers only a leasehold interest on Lessee in and to
the Aircraft on and subject to the terms of the
Lease, and no ownership or other interest with
respect to the Aircraft is provided to Lessee under
the Lease.
Lessee shall not file a tax return that is inconsistent with
the provisions of this Section 15.9(b).
(c) Lessee acknowledges that Lessor would not have entered into
the Lease unless it had available to it the benefits of a
lessor under Section 1110 of Title 11 of the U.S.C. Lessee
covenants and agrees with Lessor that to better ensure the
availability of such benefits, Lessee shall not oppose any
motion, petition or application filed by Lessor with any
bankruptcy court having jurisdiction over Lessee whereby
Lessor seeks recovery of possession of the Aircraft under said
Section 1110 and shall not in any way oppose such action by
Lessor unless Lessee shall have complied with the requirements
of said Section 1110 to be fulfilled in order to entitle
Lessee to continued use and possession of the Aircraft under
the Lease. In the event said Section 1110 is amended, or if it
is repealed and another statute is enacted in lieu thereof,
Lessor and Lessee agree to amend the Lease and take such other
action not inconsistent with the Lease as Lessor reasonably
requests so as to afford to Lessor the rights and benefits as
such amended or substituted statute confers upon owners and
lessors of aircraft similarly situated to Lessor.
15.10 BENEFICIARIES
The Lease shall be binding upon and inure to the benefit of Lessor,
Lessee and their permitted successors and assigns. All rights expressed
to be granted to each Indemnitee (other than Lessor) under the Lease
are given to Lessor on behalf of that Indemnitee, and each Indemnitee
is an express third party beneficiary thereof. Except for Lessor,
GECAS, Financing Parties' Representative, each Indemnitee and each Tax
Indemnitee, no other Person shall be a third party beneficiary of the
Lease.
15.11 COUNTERPARTS
The Lease (including the Aircraft Lease Agreement and this CTA) may be
executed in two (2) or more counterparts, each of which shall be deemed
an original, but all of which together shall constitute one and the
same instrument. To the extent, if any, that the Lease constitutes
chattel paper (as such term is defined in the UCC as in effect in any
applicable jurisdiction), no security interest in the Lease may be
created through the transfer or possession of any counterpart other
than the original counterpart, which shall be identified as the
counterpart designated as the "original" on the signature page of the
-54-
Aircraft Lease Agreement by Financing Parties' Representative, Owner or
Lessor, as the case may be.
15.12 LANGUAGE
All notices to be given under the Lease will be in English. All
documents delivered to Lessor pursuant to the Lease will be in English,
or if not in English, will be accompanied by a certified English
translation. If there is any inconsistency between the English version
of the Lease and any version in any other language, the English version
will prevail.
15.13 SURVIVAL
Lessee's obligations under Section 3 of the applicable Part of Schedule
4, under Sections 5.6, 5.7, 5.8, 5.10, 5.11, 5.17, 5.21, 9.5, 10, 12,
13.2 and 15 and under any other provision of the Lease providing for an
obligation on the part of Lessee to indemnify Lessor or any other
Indemnitee shall survive the expiration or any termination of the Lease
and continue in full force and effect.
16. DISCLAIMERS AND WAIVERS
LESSOR AND LESSEE AGREE THAT THE DISCLAIMERS, WAIVERS AND CONFIRMATIONS
SET FORTH IN SECTIONS 16.1 THROUGH 16.4 BELOW SHALL APPLY AT ALL TIMES
DURING THE TERM. LESSEE'S ACCEPTANCE OF THE AIRCRAFT IN ACCORDANCE WITH
SECTION 4.3 SHALL BE CONCLUSIVE EVIDENCE THAT LESSEE HAS FULLY
INSPECTED THE AIRCRAFT, THE ENGINES AND EVERY PART THEREOF AND THAT THE
AIRCRAFT, THE ENGINES, THE PARTS AND THE AIRCRAFT DOCUMENTS AND RECORDS
ARE TECHNICALLY ACCEPTABLE TO LESSEE AND SATISFY THE DELIVERY CONDITION
REQUIREMENTS AND ARE IN SUITABLE CONDITION FOR DELIVERY TO AND
ACCEPTANCE BY LESSEE.
16.1 EXCLUSION
THE AIRCRAFT IS LEASED AND DELIVERED UNDER THE LEASE "AS-IS, WHERE-
IS," AND LESSEE AGREES AND ACKNOWLEDGES THAT:
(a) LESSOR WILL HAVE NO LIABILITY IN RELATION TO, AND LESSOR HAS
NOT AND WILL NOT BE DEEMED TO HAVE ACCEPTED, MADE OR GIVEN
(WHETHER BY VIRTUE OF HAVING DONE OR FAILED TO DO ANY ACT, OR
HAVING ACQUIRED OR FAILED TO ACQUIRE ANY STATUS UNDER OR IN
RELATION TO THE LEASE OR OTHERWISE), ANY GUARANTEES,
COVENANTS, WARRANTIES OR REPRESENTATIONS, EXPRESS OR IMPLIED,
WITH RESPECT TO, THE AIRCRAFT OR ANY ENGINE OR PART OR ANY
SERVICES PROVIDED BY LESSOR UNDER THE LEASE, INCLUDING THE
TITLE, DESCRIPTION, AIRWORTHINESS, COMPLIANCE WITH
-55-
SPECIFICATIONS, OPERATION, MERCHANTABILITY, QUALITY, FREEDOM
FROM INFRINGEMENT OF PATENT, COPYRIGHT, TRADEMARK OR OTHER
PROPRIETARY RIGHTS, FITNESS FOR ANY PARTICULAR USE OR PURPOSE,
VALUE, DURABILITY, DATE PROCESSING, CONDITION, OR DESIGN, OR
AS TO THE QUALITY OF THE MATERIAL OR WORKMANSHIP, THE ABSENCE
OF LATENT OR OTHER DEFECTS, WHETHER OR NOT DISCOVERABLE, OR AS
TO ANY OTHER MATTER WHATSOEVER, EXPRESS OR IMPLIED (INCLUDING
ANY IMPLIED WARRANTY ARISING FROM A COURSE OF PERFORMANCE OR
DEALING OR USAGE OF TRADE) WITH RESPECT TO THE AIRCRAFT, ANY
ENGINE OR ANY PART OR ANY SERVICES PROVIDED BY LESSOR UNDER
THE LEASE; AND
(b) LESSOR SHALL NOT HAVE ANY OBLIGATION OR LIABILITY WHATSOEVER
TO LESSEE (WHETHER ARISING IN CONTRACT OR IN TORT, AND WHETHER
ARISING BY REFERENCE TO NEGLIGENCE, MISREPRESENTATION OR
STRICT LIABILITY OF LESSOR OR OTHERWISE) FOR:
(i) ANY LIABILITY, LOSS OR DAMAGE CAUSED OR ALLEGED TO BE
CAUSED DIRECTLY OR INDIRECTLY BY THE AIRCRAFT OR ANY
ENGINE OR BY ANY INADEQUACY THEREOF OR DEFICIENCY OR
DEFECT THEREIN OR BY ANY OTHER CIRCUMSTANCE IN
CONNECTION THEREWITH (EXCEPT FOR DIRECT DAMAGES DUE
TO LESSOR'S BREACH AS AND TO THE EXTENT EXPRESSLY
PROVIDED IN SECTION 4.4 OR 7.1 HEREOF);
(ii) THE USE, OPERATION OR PERFORMANCE OF THE AIRCRAFT OR
ANY RISKS RELATING THERETO;
(iii) ANY INTERRUPTION OF SERVICE, LOSS OF BUSINESS OR
ANTICIPATED PROFITS OR ANY OTHER DIRECT (EXCEPT FOR
DIRECT DAMAGES DUE TO LESSOR'S BREACH AS AND TO THE
EXTENT EXPRESSLY PROVIDED IN SECTION 4.4 OR 7.1
HEREOF AND SUBJECT TO SECTION 16.3 BELOW), INDIRECT,
SPECIAL INCIDENTAL OR CONSEQUENTIAL LOSS OR DAMAGE;
OR
(iv) THE DELIVERY, OPERATION, SERVICING, MAINTENANCE,
REPAIR, IMPROVEMENT OR REPLACEMENT OF THE AIRCRAFT,
ANY ENGINE OR ANY PART.
16.2 WAIVER
LESSEE HEREBY WAIVES, AS BETWEEN ITSELF AND LESSOR, ALL ITS RIGHTS IN
RESPECT OF ANY CONDITION, WARRANTY OR REPRESENTATION, EXPRESS OR
IMPLIED, ON THE PART OF LESSOR AND
-56-
ALL CLAIMS AGAINST LESSOR HOWSOEVER AND WHENEVER ARISING AT ANY TIME IN
RESPECT OF OR OUT OF ANY OF THE MATTERS REFERRED TO IN SECTION 16.1.
16.3 DISCLAIMER OF CONSEQUENTIAL DAMAGES
EACH PARTY AGREES THAT, EXCEPT AS OTHERWISE EXPRESSLY SET FORTH HEREIN,
IT SHALL NOT BE ENTITLED TO RECOVER, AND HEREBY DISCLAIMS AND WAIVES
ANY RIGHT THAT IT MAY OTHERWISE HAVE TO RECOVER FROM ANY OTHER PARTY,
FOR INTERRUPTION OF SERVICE, LOSS OF BUSINESS, LOST PROFITS OR REVENUES
OR CONSEQUENTIAL DAMAGES (AS DEFINED IN SECTION 2A-520 OF THE UCC OR
OTHERWISE) OR ANY SPECIAL OR INDIRECT DAMAGES AS A RESULT OF ANY BREACH
OR ALLEGED BREACH BY THE OTHER PARTY OF ANY OF THE AGREEMENTS,
REPRESENTATIONS OR WARRANTIES CONTAINED IN THE LEASE (INCLUDING A
BREACH BY LESSOR UNDER SECTION 4.4 OR SECTION 7.1).
16.4 CONFIRMATION
LESSEE CONFIRMS THAT IT IS FULLY AWARE OF THE PROVISIONS OF THIS
SECTION 16 AND ACKNOWLEDGES THAT RENT AND OTHER AMOUNTS PAYABLE UNDER
THE LEASE HAVE BEEN CALCULATED BASED ON ITS PROVISIONS.
17. BROKERS AND OTHER THIRD PARTIES
17.1 NO BROKERS
Each of the parties hereby represents and warrants to the other that it
has not paid, agreed to pay or caused to be paid directly or indirectly
in any form, any commission, percentage, contingent fee, brokerage or
other similar payments of any kind, in connection with the
establishment or operation of the Lease, to any Person (other than fees
payable to legal advisers or portfolio services).
17.2 INDEMNITY
Each party agrees to indemnify and hold the other harmless from and
against any and all claims, suits, damages, costs and expenses
(including, reasonable legal fees and expenses) asserted by any agent,
broker or other third party for any commission or compensation of any
nature whatsoever based upon the Lease or the Aircraft, if such claim,
suit, damage, cost or expense arises out of any breach by the
indemnifying party, its employees or agents of Section 17.1.
-57-
IN WITNESS WHEREOF, the parties hereto have executed this Common Terms Agreement
on the date shown at the beginning of the document.
AVIATION FINANCIAL SERVICES INC.
By: ___________________________
Name: ___________________________
Title: ___________________________
Kitty Hawk AirCargo, Inc.
By: ___________________________
Name: ___________________________
Title: ___________________________
-S-
SCHEDULE 1
DEFINITIONS
The following words and expressions have the respective meanings set forth
below:
ACT means the Federal Aviation Act of 1958, as amended, and as recodified in
Title 49 of the U.S.C. pursuant to Public Law 103-272, or any similar
legislation of the United States of America as enacted in substitution or
replacement thereof.
AD COMPLIANCE PERIOD means the number of days after the Return Occasion
identified in the Aircraft Lease Agreement under AD Compliance Period.
AD FACTOR has the meaning given in the Aircraft Lease Agreement.
AD THRESHOLD has the meaning given in the Aircraft Lease Agreement.
AFFILIATE means as to any Person, any other Person that, directly or indirectly,
is in control of, is controlled by, or is under common control with, such
Person. For purposes of this definition, "control" of a Person means the power,
directly or indirectly, either to (a) vote greater than 50% of the securities
having ordinary voting power for the election of directors (or persons
performing similar functions) of such Person or (b) direct or cause the
direction of the management and policies of such Person, whether by contract or
otherwise.
AFTER-TAX BASIS means in the case of any amount payable on an "After-Tax Basis"
to or for the benefit of any Person (including any amount payable pursuant to
this definition), that the total amount otherwise payable will be increased so
that, after deduction of the net amount of all Taxes currently required to be
paid by such Person with respect to the receipt or accrual by it of such amount
(and assuming that such Person is subject to (i) United States federal income
tax at the highest marginal statutory rate imposed on corporations in the
highest taxable income bracket for the relevant period (in the case of a person
that is a U.S. Person within the meaning of Section 7701(a)(30) of the Internal
Revenue Code of 1986, as amended), (ii) United States of America state and local
income taxes at the composite of the highest marginal statutory rates imposed on
such Person for the relevant period, as such composite rate shall be certified
by a financial officer of such Person, and (iii) income taxes (if any) imposed
by countries outside the United States at the actual rates imposed on such
Person) the Person entitled to the payment will actually receive the amount
otherwise required to be paid.
AGREED VALUE means the amount identified in the Aircraft Lease Agreement or such
other greater amount as Lessor may from time to time notify to Lessee to reflect
an amount equal to 110% of the current market value of the Aircraft.
AIR AUTHORITY means the FAA.
AIRCRAFT means Aircraft and Engines identified in the Aircraft Lease Agreement
(which term includes, where the context admits, a separate reference to all
Engines, Parts and Aircraft Documents and Records).
1-1
AIRCRAFT CONDITION DAMAGES means, collectively, any loss, cost, expense or
liability, or damage to Lessor's residual interest in the Aircraft, sustained by
Lessor due to Lessee's failure to maintain the Aircraft in accordance with the
terms of the Lease or Lessee's failure to redeliver the Aircraft in the
Redelivery Condition.
AIRCRAFT DOCUMENTS AND RECORDS means the documents, data and records identified
in the list attached to the Certificate of Acceptance, and any other documents
and records required in connection with Lessee's obligations under Section 8.8,
and all additions, renewals, revisions and replacements from time to time made
to any of the foregoing in accordance with the Lease.
AIRCRAFT LEASE AGREEMENT means an aircraft lease agreement entered or to be
entered into between Lessor and Lessee.
AIRFRAME means the Aircraft, excluding the Engines and Aircraft Documents and
Records.
AIRFRAME STRUCTURAL CHECK has the meaning given in the Aircraft Lease Agreement.
AIRFRAME SUPPLEMENTAL RENT means the amount identified in the Aircraft Lease
Agreement for each Flight Hour operated by the Aircraft.
AIRWORTHINESS DIRECTIVE means an airworthiness directive issued by the State of
Design or the State of Registry.
ANNUAL SUPPLEMENTAL RENT ADJUSTMENT has the meaning given in the Aircraft Lease
Agreement.
APPRAISAL PROCEDURE means the following procedure for determining the "fair
market rental value" of the Aircraft pursuant to Section 13 of this CTA: (a)
Lessor shall select an internationally recognized, independent aircraft
appraiser certified by the International Society of Transport Aircraft Trading
in its sole and absolute discretion who shall make a determination of "fair
market rental value" of the Aircraft; and (b) the fees and expenses of the
appraiser shall be paid by Lessee. "Fair market rental value" shall mean the
value determined by an appraisal completed on an "as-is" and "where-is" basis.
APU means the auxiliary power unit installed on the Aircraft on the Delivery
Date and any replacement auxiliary power unit installed on the Aircraft and
title to which is transferred to Owner in accordance with the Lease.
APU SUPPLEMENTAL RENT means the amount identified in the Aircraft Lease
Agreement for each Flight Hour operated by the APU.
ASSUMED RATIO has the meaning given in the Aircraft Lease Agreement.
ASSUMED UTILIZATION has the meaning given in the Aircraft Lease Agreement.
1-2
ASSIGNMENT means the Assignment, Assumption and Release Agreement to be entered
into between Lessor and the assignee named therein in connection with a Transfer
referred to in Section 14.2 of this CTA, in substantially the form of Schedule
13.
BUSINESS DAY means any day other than a Saturday, Sunday or other day on which
banking institutions in New York, New York are authorized or required by Law to
be closed.
"C" CHECK means a "C" check in accordance with the Lessee's Maintenance Program
each in effect on the relevant date.
CERTIFICATE OF ACCEPTANCE means a certificate of acceptance in the form of Part
1 or Part 2, as applicable, of Schedule 5.
CERTIFICATE OF LEASE TERMINATION means a certificate of lease termination in the
form of Schedule 15.
CERTIFICATED AIR CARRIER means any Person (except the United States Government)
that is a "citizen of the United States of America" (as defined in Section 40102
of Title 49 of the U.S.C.) and holding a Certificate of Public Convenience and
Necessity issued under Section 41102 of Title 49 of U.S.C. by the Department of
Transportation or any predecessor or successor agency thereto, and an air
carrier operating certificate issued pursuant to Chapter 447 of Title 49 of
U.S.C. or, in the event such certificates shall no longer be applicable, any
Person (except the United States Government) that is a citizen of the United
States of America (as defined in Section 40102 of Title 49 of the U.S.C.) and
legally engaged in the business of transporting for hire passengers or cargo by
air predominantly to, from or between points within the United States of
America, and, in either event, operating commercial jet aircraft capable of
carrying ten (10) or more individuals or 6,000 pounds or more of cargo, which
also is certificated so as to entitle Lessor, as a lessor, to the benefits of
Section 1110 of Title 11 of U.S.C. with respect to the Aircraft.
COMMON TERMS AGREEMENT OR CTA has the meaning given in the heading hereof.
CONDITIONS PRECEDENT means the conditions specified in Schedule 3 and any others
specified in the Aircraft Lease Agreement.
CSO means Cycles since overhaul.
CYCLE means one take-off and landing of the Aircraft.
DAMAGE NOTIFICATION THRESHOLD means *****.
DEDUCTIBLE AMOUNT means *****.
CONFIDENTIAL TREATMENT HAS BEEN REQUESTED BY KITTY HAWK, INC. FOR CERTAIN
PORTIONS OF THIS DOCUMENT. CONFIDENTIAL PORTIONS HAVE BEEN FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION. OMITTED PORTIONS ARE INDICATED IN THIS
AGREEMENT WITH "*****".
1-3
DEFAULT means any Event of Default or any event or circumstance that, with the
giving of notice and/or lapse of time and/or determination of materiality and/or
fulfillment of any other condition, would constitute an Event of Default.
DEFECT means any defect, discrepancy or non-conformity with the Delivery
Condition Requirements notified by Lessee to Lessor during the Pre-Delivery
Procedure.
DELIVERY means delivery of the Aircraft by Lessor to Lessee under the Lease.
DELIVERY CONDITION REQUIREMENTS means the requirements set forth in Schedule 4
as the same may be varied in the Aircraft Lease Agreement provided that such
requirements are solely a description of the condition in which the Aircraft
must be in order for Lessee to be obligated to accept the Aircraft under the
Lease.
DELIVERY DATE means the date on which Delivery occurs.
DELIVERY LOCATION means the location identified in the Aircraft Lease Agreement
or such other location as Lessor and Lessee may mutually agree.
DEPOSIT has the meaning given in the Aircraft Lease Agreement.
DISCOUNT RATE means *****.
DOLLARS AND $ means the lawful currency of the United States of America.
ENFORCEMENT AND REMARKETING COSTS means, collectively, all documented costs,
expenses and other incidental damages and losses (but not consequential damages)
associated with Lessor's exercise of its remedies under the Lease or otherwise
incurred by Lessor as a result of an Event of Default or the exercise of rights
or remedies with respect thereto, including repossession costs, legal fees,
Aircraft storage, preservation, shipment, repair, refurbishment, modification,
maintenance and insurance costs, Aircraft re-lease or sale costs (including any
costs incurred to prepare the Aircraft for sale or lease, advertising costs,
sale or lease costs (including commissions) and any costs to transition the
Aircraft to the next operator's maintenance program) in any way related to the
Aircraft, any Engine or any Part, including to put the Aircraft in the
Redelivery Condition or in the location provided for in this Section 13.2, or
otherwise.
ENGINE means, whether or not installed on the Aircraft:
(a) each engine of the manufacture and model specified in the Aircraft Lease
Agreement for the Aircraft which Lessor offers to Lessee for delivery with
the Airframe on the Delivery
CONFIDENTIAL TREATMENT HAS BEEN REQUESTED BY KITTY HAWK, INC. FOR CERTAIN
PORTIONS OF THIS DOCUMENT. CONFIDENTIAL PORTIONS HAVE BEEN FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION. OMITTED PORTIONS ARE INDICATED IN THIS
AGREEMENT WITH "*****".
1-4
Date, such engines being described as to serial numbers on the Certificate
of Acceptance; and
(b) any Replacement Engine, with effect from the time when title thereto has
passed to Owner in accordance with the Lease;
and in each case includes all modules and Parts from time to time belonging to
or installed in that engine but excludes any properly replaced engine, title to
which should have passed to Lessee pursuant to the Lease.
ENGINE CYCLE means operation of an engine on an aircraft from and including a
take-off to and including the landing of that aircraft.
ENGINE EVENT OF LOSS means the occurrence, with respect to the Engine only,
whether or not installed on the Airframe, of any of those events described in
the definition of Event of Loss.
ENGINE FLIGHT HOUR means each hour or part thereof an Engine is operated,
elapsing from the moment the wheels of an aircraft on which such Engine is
installed leave the ground until the wheels of such aircraft next touch the
ground.
ENGINE LLP REPLACEMENT has the meaning given in Section 7.2(b).
ENGINE LLP SUPPLEMENTAL RENT means, in respect of the life-limited Parts for
each Engine, the amount identified in the Aircraft Lease Agreement for each
Cycle operated by that Engine.
ENGINE REFURBISHMENT means all scheduled and unscheduled off the wing Engine
maintenance and repair accomplished for each module in accordance with the
performance restoration or full overhaul sections of the Manufacturer's
workscope planning guide.
ENGINE SUPPLEMENTAL RENT means in respect of each Engine, the amount identified
in the Aircraft Lease Agreement for each Engine Flight Hour (or fraction
thereof) operated by that Engine.
ENGINE THRUST SETTING has the meaning given in the Aircraft Lease Agreement.
EQUIPMENT CHANGE has the meaning given in Section 8.12.
ERISA means the Employee Retirement Income Security Act of 1974, as amended.
EVENT OF DEFAULT means any event or condition specified in Schedule 9.
EVENT OF LOSS means with respect to the Aircraft (including for the purposes of
this definition the Airframe):
1-5
(a) the actual or constructive, compromised, arranged or agreed total loss of
the Aircraft; or
(b) the Aircraft being destroyed, damaged beyond economic repair as determined
by Lessor or permanently rendered unfit for normal use for any reason
whatsoever; or
(c) the Aircraft being condemned, confiscated or requisitioned for title, or
title to the Aircraft being otherwise compulsorily acquired by the
government of the State of Registry or any other Government Entity; or
(d) the Aircraft being hijacked, stolen, confiscated, detained, seized,
condemned or requisitioned for use or hire for the lesser of (i) a period
of more than thirty (30) days (or forty-five (45) days in the case of
requisition for use or hire by the government of the State of Registry) or
(ii) a period equal to or exceeding the remaining balance of the Term; or
(e) as a result of any rule, regulation, order or other action by the Air
Authority, the use of the Aircraft by Lessee or any Permitted Sub-Lessee
shall have been prohibited for a period of twelve (12) consecutive months.
EXPIRY DATE means the Scheduled Expiry Date or, if earlier (i) the date when
Lessor acting in accordance with the provisions of the Lease, terminates the
leasing of the Aircraft to Lessee under the Lease, or (ii) subject to the
provisions of Section 11.1 and 11.2, the date when Lessor receives the Agreed
Value together with any other amounts then due and unpaid under the Lease and
the Other Agreements following an Event of Loss; provided that if the Term is
extended pursuant to Section 12.2, the Expiry Date shall be extended to the date
to which the Term is extended pursuant to Section 12.2.
EXTENDED EXPIRY DATE, if applicable, has the meaning given in the Aircraft Lease
Agreement.
FAA means the Federal Aviation Administration of the United States of America
and any successor thereof.
FAR means the Federal Aviation Regulations set forth in Title 14 of the United
States Code of Federal Regulations, as amended and modified from time to time.
FINAL DELIVERY DATE has the meaning given in the Aircraft Lease Agreement.
FINAL INSPECTION has the meaning given in Section 1.1 of Schedule 6.
FINANCIAL INDEBTEDNESS means any indebtedness in respect of:
(a) moneys borrowed or raised;
(b) any liability under any debenture, bond, note, loan stock, acceptance,
documentary credit or other security;
(c) the acquisition cost of any asset to the extent payable before or after
the time of acquisition or possession (exclusive of trade payables); or
1-6
(d) any guarantee, indemnity or similar assurance against financial loss of
any person in respect of the above.
FINANCIAL INFORMATION MEANS:
(a) if requested by Lessor, the consolidated management accounts of Lessee (in
Dollars, and comprising a balance sheet and profit and loss statement and
cash flow forecasts, as well as operational statistics: available ton
miles, revenue ton miles and total tons) in English prepared for the most
recent previous fiscal quarter certified by a qualified financial officer
of Lessee as being true and correct and fairly presenting its financial
condition and results of operation in accordance with GAAP (subject to
year-end adjustments); and
(b) as soon as available but not in any event later than one hundred and
twenty (120) days after the last day of each fiscal year of Lessee, the
audited consolidated financial statements of Lessee (consisting of a
balance sheet and statements of operations and of retained earnings and
cash flows), prepared for the fiscal year then most recently ended
certified by the independent auditors of Lessee without qualification.
FINANCING DOCUMENTS means any mortgage, lease assignment, loan agreement,
conditional sale agreement, head lease or any other documents entered into by
Lessor or Owner with any Financing Party in connection with Lessor's or Owner's
financing of the Aircraft.
FINANCING PARTIES means any Person or Persons from time to time notified by
Lessor to Lessee as providing finance, or participating in a transaction the
purpose of which is to provide finance, to Lessor or Owner in respect of its
acquisition, ownership or leasing of the Aircraft, whether by way of loan,
superior lease or otherwise.
FINANCING PARTIES' REPRESENTATIVE means any one or more Financing Parties from
time to time notified to Lessee as being the Financing Parties' Representative.
FINANCING STATEMENTS means Uniform Commercial Code Financing Statements in
respect of the Lease and the Aircraft and Engines leased thereunder prepared in
a form acceptable for filing with the applicable Government Entities in the
state in which Lessee's location (as determined pursuant to Section 9-307 of the
Uniform Commercial Code as in effect in such state) and such other jurisdictions
as Lessor shall reasonably require.
FLIGHT HOUR means each hour or part thereof elapsing from the moment the wheels
of the Aircraft leave the ground on take off until the wheels of the Aircraft
next touch the ground.
GAAP means generally accepted accounting principles in the United States of
America.
GE CAPITAL means General Electric Capital Corporation.
GECAS means either or both of GE Capital Aviation Services, Limited and GE
Capital Aviation Services, Inc.
GENEVA CONVENTION means the Convention for the International Recognition of
Rights in Aircraft, signed (ad referendum) at Geneva, Switzerland, on June 19,
1948, and amended from
1-7
time to time, but excluding the terms of any adhesion thereto or ratification
thereof containing reservations to which the United States of America does not
accede.
GOVERNING LAW means the Laws of the State of New York, United States of America,
as applied to contracts to be performed wholly within the State of New York
(exclusive of Section 7-101 of the New York General Obligations Law which is
inapplicable to the Lease).
GOVERNMENT ENTITY MEANS:
(a) any national government, political subdivision thereof, or local
jurisdiction therein;
(b) any instrumentality, board, commission, court, or agency of any of the
above, however constituted; and
(c) any association, organization, or institution of which any of the above is
a member or to whose jurisdiction any thereof is subject or in whose
activities any of the above is a participant.
GUARANTEE means, if applicable, a guarantee in the form of Schedule 10 from
Guarantor if such guarantee is required by the Aircraft Lease Agreement; and
references to the Guarantee include references to any replacement or re-issued
guarantee.
GUARANTOR means, if applicable, the Person(s) identified as such in the Aircraft
Lease Agreement.
HABITUAL BASE means United States of America or, subject to the prior written
consent of Lessor, any other country or countries in which the Aircraft is for
the time being habitually based.
INDEMNITEE means each of Lessor, Owner, GE Capital, GECAS (in its capacity as
lease manager), any Financing Parties' Representative and any Financing Parties,
and their respective successors and permitted assigns, and each of their
respective shareholders, subsidiaries, Affiliates, members, partners,
contractors, directors, officers, representatives, agents and employees.
INSURANCE means insurance in respect of the Aircraft in form and substance
satisfactory to Lessor, and includes any insurance and reinsurance required by
Section 9 and Schedule 7.
INTEREST RATE means ***** prime rate plus ***** per annum, but not to exceed the
maximum amount permitted by Law.
JAA means the body referred to as the "Joint Aviation Authorities" established
by the members of the European Civil Aviation Conference.
JAR means the Joint Aviation Requirements of the JAA.
CONFIDENTIAL TREATMENT HAS BEEN REQUESTED BY KITTY HAWK, INC. FOR CERTAIN
PORTIONS OF THIS DOCUMENT. CONFIDENTIAL PORTIONS HAVE BEEN FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION. OMITTED PORTIONS ARE INDICATED IN THIS
AGREEMENT WITH "*****".
1-8
LANDING GEAR means the landing gear assembly of the Aircraft excluding any
rotable components.
LANDING GEAR SUPPLEMENTAL RENT means in respect of the Landing Gear, the amount
identified in the Aircraft Lease Agreement for each Flight Hour operated by the
Landing Gear.
LAW means and includes (a) any statute, decree, constitution, regulation, order,
judgment or other directive of any Government Entity; (b) any treaty, pact,
compact or other agreement to which any Government Entity is a signatory or
party; (c) any judicial or administrative interpretation or application of any
Law described in (a) or (b) above; and (d) any amendment or revision of any Law
described in (a), (b) or (c) above.
LC AMOUNT has the meaning given in the Aircraft Lease Agreement.
LEASE means an Aircraft Lease Agreement for the Aircraft and any Schedules,
supplements, amendments, modifications or side letter agreements related to the
Lease executed contemporaneously with or subsequently to the Aircraft Lease
Agreement, which incorporates this Common Terms Agreement.
LESSEE CONDITIONS PRECEDENT means the conditions specified in Part B of Schedule
3.
LEASE SUPPLEMENT means any Lease Supplement executed and delivered with respect
to the Lease.
LEASE SUPPLEMENT NO. 1 means a Lease Supplement No. 1 substantially in the form
of Schedule 14.1.
LESSEE means the Person named as Lessee in the applicable Aircraft Lease
Agreement.
LESSEE AFFILIATE means any Subsidiary or other Affiliate for the time being of
Lessee.
LESSEE CONDITIONS PRECEDENT means the conditions specified in Part B of Schedule
3.
LESSEE'S MAINTENANCE PROGRAM means the Maintenance Program, as at the date of
the Aircraft Lease Agreement, specifically approved by the Air Authority for
Lessee's maintenance of the Aircraft.
LESSOR means the Person named as Lessor in the Aircraft Lease Agreement.
LESSOR CONDITIONS PRECEDENT means the conditions specified in Part A of Schedule
3.
LESSOR LIEN means any Security Interest whatsoever from time to time created by
Lessor or Owner in connection with the financing of the Aircraft, including the
Financing Documents, and any other Security Interest in the Aircraft which
results from acts of or claims against Lessor or Owner or any other Person
lawfully claiming by, through or under Lessor or Owner that do not
1-9
relate to the transactions contemplated by or permitted under the Lease and is
not attributable to Lessee.
LESSOR/OWNER TAX JURISDICTION has the meaning given in the Aircraft Lease
Agreement.
LESSOR TAXES means Taxes for which Lessee is not obligated to indemnify Lessor
and/or Owner and/or a Financing Party as provided in Section 5.7(c).
LETTER OF CREDIT means any letter of credit issued in relation to the Lease
pursuant to Section 5.14 and any replacement or renewal of that letter of
credit.
LOSSES means any and all cost, expense (including any and all reasonable legal
fees and expenses and the fees and expenses of other professional advisers),
claims, proceedings, losses, liabilities, obligations, damages (whether direct,
indirect, special or incidental), suits, judgments, fees, penalties or fines
(whether criminal or civil) of any kind or nature whatsoever, including any of
the foregoing arising or imposed with or without any Indemnitee's fault or
negligence, whether passive or active or under the doctrine of strict liability.
MAINTENANCE CONTRIBUTIONS means, as and if applicable, all amounts payable by
Lessor pursuant to Section 7.2.
MAINTENANCE PERFORMER means such Person as is approved and internationally
recognized by the FAA or JAA to perform maintenance and/or modification services
on commercial aircraft and/or commercial aircraft engines, which Person shall be
reasonably agreed by Lessor and Lessee to have recognized standing and
experience, suitable facilities and equipment to perform such services on
aircraft and/or engines of the same or improved model as the Aircraft or, in the
case of engines, the Engines.
MAINTENANCE PROGRAM means an Air Authority approved maintenance program for the
Aircraft in accordance with the Manufacturer's and/or OEM's specifications,
requirements, service bulletins, planning documents, maintenance manuals and
documents and encompassing scheduled maintenance (including block maintenance),
condition-monitored maintenance, and/or on-condition maintenance of Airframe,
Engines and Parts, including servicing, testing, preventive maintenance,
repairs, structural inspections, system checks, overhauls, approved
modifications, service bulletins, engineering orders, airworthiness directives,
corrosion control, inspections and treatments.
MAJOR CHECKS means any C check, multiple C check or heavier check (including
structural inspections and a corrosion prevention and control program)
recommended for commercial aircraft of the same model as the Aircraft by its
manufacturer (however denominated) as set out in the Lessee's Maintenance
Program.
MANUFACTURER means the manufacturer of the Airframe or an Engine, as the case
may be, as identified in the Aircraft Lease Agreement.
1-10
MANUFACTURER'S MAINTENANCE PLANNING DOCUMENT means the recommended maintenance
program for the Aircraft issued by the Manufacturer as in effect at the time of
any applicable determination.
MINIMUM APU LIMIT has the meaning given in the Aircraft Lease Agreement.
MINIMUM COMPONENT CALENDAR LIFE has the meaning given in the Aircraft Lease
Agreement.
MINIMUM COMPONENT CYCLES has the meaning given in the Aircraft Lease Agreement.
MINIMUM COMPONENT FLIGHT HOURS has the meaning given in the Aircraft Lease
Agreement.
MINIMUM ENGINE CYCLES has the meaning given in the Aircraft Lease Agreement.
MINIMUM ENGINE LLP CYCLES has the meaning given in the Aircraft Lease Agreement.
MINIMUM ENGINE FLIGHT HOURS has the meaning given in the Aircraft Lease
Agreement.
MINIMUM LANDING GEAR CALENDAR TIME has the meaning given in the Aircraft Lease
Agreement.
MINIMUM LANDING GEAR CYCLES has the meaning given in the Aircraft Lease
Agreement.
MINIMUM LANDING GEAR FLIGHT HOURS has the meaning given in the Aircraft Lease
Agreement.
MINIMUM LIABILITY COVERAGE has the meaning given in the Aircraft Lease
Agreement.
MITIGATED RENT AMOUNT means an amount equal to the aggregate Rent for the
remainder of the Term (determined without reference to any right of Lessor to
cancel the leasing of the Aircraft, whether or not such right is exercised),
discounted periodically (equal to installment frequency) to present worth at the
Discount Rate to the date of payment by Lessee to Lessor, less the applicable
amount set forth below:
(a) in the event that Lessor has re-let the Aircraft, an amount equal to
the aggregate basic rental payments to become due under such
re-lease for the period coinciding with the remainder of the Term
(determined without reference to any right of Lessor to cancel the
leasing of the Aircraft, whether or not such right is exercised),
discounted periodically (equal to installment frequency) to present
worth at the Discount Rate to the date of payment by Lessee; or
(b) in the event that Lessor has not re-let the Aircraft or has sold the
Aircraft, an amount equal to the fair market rental value
(determined pursuant to the Appraisal Procedure) of the Aircraft for
the period commencing with the date that Lessor reasonably
anticipates that the Aircraft could be re-let at such rental rate
and ending with the date that the Term was scheduled to expire
(determined without reference to any right of Lessor to cancel the
leasing of the Aircraft, whether or not such right is exercised),
discounted periodically (equal to installment
1-11
frequency) to present worth at the Discount Rate to the date of
payment by Lessee.
NAMEPLATE INSCRIPTION means the inscription to be included on the Nameplates as
requested by Lessor from time to time.
NAMEPLATES means the fireproof plates to be installed on the Aircraft in
accordance with Section 8.6(a).
OEM means, in relation to any Part, the original equipment manufacturer of such
Part.
OTHER AGREEMENTS means any aircraft, engine or spare parts related lease or
financing agreement (including an aircraft, engine or spare parts related loan,
hire purchase, conditional sale, credit sale or security agreement) from time to
time entered into between Owner (or any Affiliate of Owner) and/or Lessor (or
any Affiliate of Lessor), on the one hand, and Lessee (or any Lessee Affiliate),
on the other hand.
OWNER means the Person identified in the Aircraft Lease Agreement as Owner or
such other Person of which Lessor may notify Lessee from time to time.
PART means, whether or not installed on the Aircraft:
(a) any module, component, furnishing or equipment (other than a
complete Engine or engine) incorporated or installed in or attached
to or furnished with the Aircraft on the Delivery Date or thereafter
if paid for or otherwise provided by or on behalf of Lessor; and
(b) any other module, component, furnishing or equipment (other than a
complete Engine or engine), with effect from the time when title
thereto has passed to Owner pursuant to the Lease;
but excludes any such items title to which has passed to Lessee pursuant to the
Lease.
PART 36 OR FAR PART 36 means Part 36 of the FAR, as amended or modified from
time to time.
PART 121 OR FAR PART 121 means Part 121 of the FAR, as amended or modified from
time to time.
PAYMENT DEFAULT means any Default by Lessee in respect of a payment obligation
under the Lease regardless of whether such payment obligation is scheduled or
not.
PERMITTED LIEN means:
(a) any lien for Taxes not assessed or, if assessed, not yet due and payable,
or being diligently contested in good faith by appropriate proceedings;
(b) any lien of a repairer, mechanic, hangar-keeper or other similar lien
arising in the ordinary course of business by operation of Law in respect
of obligations which are not overdue or are being diligently contested in
good faith by appropriate proceedings;
1-12
(c) any Lessor Lien; and
(d) the rights of others under any sub-lease or arrangements to the extent
expressly permitted under Section 8.4;
but only if (in the case of both (a) and (b)) (i) adequate reserves have been
provided by Lessee for the payment of such Taxes or obligations; and (ii) such
proceedings, or the continued existence of the lien, do not give rise to any
risk of the sale, forfeiture or other loss of the Aircraft or any interest
therein or of criminal liability on the part of Lessor or Owner.
PERMITTED SUB-LEASE means any sub-lease of the Aircraft to a Permitted
Sub-Lessee to which Lessor has consented as provided for in Section 8.4.
PERMITTED SUB-LESSEE means any sub-lessee of the Aircraft approved by Lessor in
writing under a Permitted Sub-Lease or which is otherwise permitted as provided
for in Section 8.4.
PERSON means any individual person, any form of corporate or business
association, trust, Government Entity, or organization or association of which
any of the above is a member or a participant.
PRE-APPROVED BANK means BankOne, Xxxxx Fargo or any bank organized under the
laws of the United States of America or any State thereof, or the New York
branch of a major international bank, in each case (a) for only so long as its
long-term Dollar denominated unsecured debt (or if it does not have long-term
unsecured Dollar denominated debt, its parent corporation's long-term unsecured
Dollar denominated debt) carries a rating from Standard & Poors of A+ or better,
and (b) so long as each Letter of Credit issued by any such bank to Lessor
permits drawings thereunder by facsimile.
PRE-DELIVERY PROCEDURE means the procedure leading to Delivery as specified in
Schedule 4.
REDELIVERY CHECK has the meaning given in the Aircraft Lease Agreement.
REDELIVERY CONDITION means the condition of the Aircraft at redelivery as
provided in Section 12 and Schedule 6 of the Lease.
REDELIVERY LOCATION means the location identified in the Aircraft Lease
Agreement as the Redelivery Location or such other location as may be agreed in
writing by Lessor and Lessee.
REGULATIONS means any Law or regulation (including any internal corporate
regulation), official directive or recommendation, mandatory requirement or
contractual undertaking, or airworthiness requirements or limitations which
applies to Lessee or the Aircraft and any Law or regulation, official directive
or recommendation or mandatory requirement which applies to Lessor, Owner,
Financing Parties' Representative or GECAS.
RENT means all amounts payable pursuant to Section 5.3.
RENTAL PERIOD means each period ascertained in accordance with Section 5.2.
1-13
RENT COMMENCEMENT DATE means the date on which Lessor tenders the Aircraft for
Delivery to Lessee under and in accordance with Section 4.3(a).
RENT DATE means the first day of each Rental Period.
REPLACEMENT ENGINE means an engine of the same manufacturer and model, or at
Lessee's option an engine of an improved model and having equivalent or better
value, utility, modification status, time elapsed since hot section
refurbishment, cold section refurbishment, reduction gear overhaul, life limited
part utility and remaining equivalent warranty status as the Engine it replaces
under Section 8.11, and is otherwise of an equivalent value and utility and
suitable for installation and use on the Airframe without impairing the value or
utility of the Airframe and compatible with the remaining installed Engine(s).
REQUIRED EGT MARGIN has the meaning given in the Aircraft Lease Agreement.
REQUIRED LC EXPIRY DATE means the date being ninety-one (91) days after the
Expiry Date.
RETURN OCCASION means the date on which the Aircraft is redelivered to Lessor in
accordance with Section 12.
SCHEDULED DELIVERY DATE means the date specified therefor in the Aircraft Lease
Agreement or, if no such date is specified, the date notified by Lessor pursuant
to and in accordance with Section 4.1(a).
SCHEDULED DELIVERY MONTH means the month specified therefor in the Aircraft
Lease Agreement, if such month is so specified.
SCHEDULED DELIVERY WEEK means the week specified therefor in the Aircraft Lease
Agreement or, if no such week is specified, the week notified by Lessor to
Lessee pursuant to Section 4.1(a) in which the Delivery is scheduled to occur.
SCHEDULED EXPIRY DATE means one of the following, as applicable: (i) the date
specified under "Duration of Term" in the Aircraft Lease Agreement; (ii) the day
preceding the numerically corresponding day to the Rent Commencement Date `X'
number of months after the Rent Commencement Date where `X' shall be the actual
number of months specified under "Duration of Term" in the Aircraft Lease
Agreement; or (iii) as to any Lease, if any extension option for that Lease has
been properly exercised, the Extended Expiry Date. If either such date in (i) or
(ii) above does not fall on a day that is a Business Day, then the Scheduled
Expiry Date shall be the immediately preceding Business Day, which date shall be
specifically set forth in Lease Supplement No. 1.
SECURITY INTEREST means any mortgage, chattel mortgage, security interest,
charge, pledge, lien, conditional sale agreement, title retention agreement,
equipment trust agreement, encumbrance, assignment, hypothecation, right of
detention or any other agreement or arrangement having the effect of conferring
security.
1-14
SRM has the meaning given in the introductory paragraph to Schedule 6.
STATE OF DESIGN means the state having jurisdiction over the Person responsible
for the type design of the Aircraft or any Engine or Part.
STATE OF INCORPORATION means Texas.
STATE OF REGISTRY means United States of America.
SUBSIDIARY MEANS:
(a) in relation to any reference to financial statements, any Person whose
financial statements are consolidated with the accounts of Lessee in
accordance with GAAP; or
(b) for any other purpose, an entity from time to time of which another has
direct or indirect control or owns directly or indirectly more than 50
percent (50%) of the voting share capital.
SUPPLEMENTAL RENT means collectively Airframe Supplemental Rent, APU
Supplemental Rent, Engine LLP Supplemental Rent, Engine Supplemental Rent, and
Landing Gear Supplemental Rent, as applicable.
TAXES means any and all present and future taxes, duties, withholdings, levies,
assessments, imposts, fees and other governmental charges of all kinds
(including any value added or similar tax and any stamp, documentary, license,
registration or similar fees or tax), imposed by a Government Entity, together
with any penalties, fines, surcharges and interest thereon and any additions
thereto.
TAX INDEMNITEES means Owner, Lessor, GECAS, each Financing Party, and GE Capital
and each member of the consolidated group of which GE Capital is a member for
U.S. Federal Income Tax purposes.
TECHNICAL REPORT means a monthly report of the Flight Hours, Cycles, Engine
Flight Hours and Engine Cycles operated by the Airframe and Engines in respect
of each calendar month in the form reasonably required by Lessor.
TERM means the period commencing on the Delivery Date and ending on the Expiry
Date.
TRANSFER has the meaning set forth in Section 14.2.
TSO means time (in Flight Hours) since overhaul.
UCC means the Uniform Commercial Code as in effect in the State of New York.
UNFORESEEN EVENT MEANS:
(a) war, civil disturbance or act of any Government Entity;
1-15
(b) natural disaster or any other act of God;
(c) any Law of, or any allocation or other action by, a Government Entity or
any unexpected shortage of labor, materials or facilities affecting the
Aircraft;
(d) any damage or Defect;
(e) labor disputes;
(f) breach of contract by any Person (other than Lessor), or other failure to
deliver or redeliver the Aircraft by any Person (whether or not a breach)
with possession or control of the Aircraft (other than by Lessor, if it
has possession and control of the Aircraft), including any failure to
deliver or delay in delivery by any prior lessee, any seller of the
Aircraft or any Person performing modifications or maintenance to the
Aircraft and any breach by any prior lessee, seller or modification or
maintenance performer or failure to cooperate by any prior lessee, seller
or modification or maintenance performer, or any "excusable" or
"inexcusable" delay under any previous lease, purchase or modification or
maintenance agreement for the Aircraft, or any purchase or modification or
maintenance agreement for the Aircraft terminating prior to Delivery
(including due to Lessor or an Affiliate of Lessor voluntarily terminating
such agreement);
(g) delays in obtaining the Aircraft or any equipment or services for the
Aircraft;
(h) any delay due to Air Authority certifications; or
(i) any other cause beyond the control of Lessor.
UNITED STATES OR US means the United States of America.
UNWIND EXPENSES means, collectively, any loss, premium, penalty or expense which
may be incurred in repaying funds raised to finance the Aircraft or in unwinding
any financial instrument relating in whole or in part to Lessor's financing of
the Aircraft.
U.S.C. means the United States Code.
1-16
SCHEDULE 2
REPRESENTATIONS AND WARRANTIES
1.1 Lessee's Representations and Warranties
Lessee's representations and warranties to Lessor are as follows:
(a) STATUS: It is duly organized, validly existing and in good standing
in its State of Incorporation.
(b) NON-CONFLICT: Execution, delivery and performance of the Lease do
not contravene or breach (i) any Regulation applicable to Lessee,
(ii) the constitutional documents of Lessee, or (iii) any document
which is binding on Lessee or any of its assets.
(c) POWER AND AUTHORITY: It has all corporate and other power and
authority to execute, deliver and perform the Lease, and the Lease
has been duly authorized, executed and delivered by Lessee.
(d) LEGAL VALIDITY: Its obligations under the Lease are legal, valid,
binding and enforceable against Lessee in accordance with their
terms, except as enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or other similar
laws affecting creditors' or lessors' rights or remedies generally
and by general principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at law).
(e) NO DEFAULT: No Default has occurred and is continuing or would occur
because of Delivery.
(f) LITIGATION: It is not involved in any litigation or other dispute
which, if adversely determined, could materially and adversely
affect its financial condition or its ability to perform its
obligations under the Lease.
(g) FINANCIAL INFORMATION: Its audited financial statements most
recently delivered to Lessor:
(i) have been prepared in accordance with GAAP; and
(ii) are true and correct and present fairly the financial
condition and results of operations of Lessee as at the date
thereof and for the period then ending.
(h) FULL DISCLOSURE: Neither the audited financial statements referred
to in paragraph (g) nor any other financial, operational or credit
related information provided to Lessor by Lessee for the purposes of
the Lease contains as of the date thereof any untrue statement of a
material fact or omits to state any material fact necessary in order
to make the statements therein not misleading in the light of the
circumstances under which they were made.
(i) LOCATION: Lessee's location (within the meaning of Article 9 of the
UCC) is as set forth in Section 8.7; and the records of the Lessee
concerning the Aircraft are maintained at such location or at the
Habitual Base of the Aircraft.
2-1
(j) CERTIFICATED AIR CARRIER: Lessee is a Certificated Air Carrier and
Lessor, as lessor of the Aircraft to Lessee, is entitled to the
benefits of Section 1110 of Title 11 of the U.S.C. with respect to
the Aircraft.
(k) CITIZEN OF THE UNITED STATES: Lessee is a "citizen of the United
States" as defined in Section 40102 of Title 49 of the U.S.C.
(l) ERISA: Lessee is not engaged in any transaction in connection with
which it could be subjected to either a civil penalty assessed
pursuant to Section 502 of ERISA or any tax imposed by Section 4975
of the Internal Revenue Code; no material liability to the Pension
Benefit Guaranty Corporation has been or is expected by Lessee to be
incurred with respect to any employee pension benefit plan (as
defined in Section 3 of ERISA) maintained by Lessee or by any trade
or business (whether or not incorporated) which together with Lessee
would be treated as a single employer under Section 4001 of ERISA
and Section 414 of the Internal Revenue Code; there has been no
reportable event (as defined in Section 4043(b) of ERISA) with
respect to any such employee pension benefit plan; no notice of
intent to terminate any such employee pension benefit plan has been
filed or is expected to be filed, nor has any such employee pension
benefit been terminated; no circumstance exists or is anticipated
that constitutes or would constitute grounds under Section 4042 of
ERISA for the Pension Benefit Guaranty Corporation to institute
proceedings to terminate, or to appoint a trustee to manage the
administration of, such an employee pension benefit plan; and no
accumulated funding deficiency (as defined in Section 302 of ERISA
or Section 412 of the Internal Revenue Code), whether or not waived,
exists with respect to any such employee pension benefit plan.
(m) MATERIAL ADVERSE CHANGE: There has been no material adverse change
in the financial condition or operations of Lessee and Lessee
Affiliates or in the ability of Lessee to comply with its
obligations under the Lease since the date of the financial
statements most recently provided to Lessor on or prior to the date
of the Aircraft Lease Agreement.
(n) TAXES: Lessee has delivered all necessary returns and payments due
to the tax authorities in the State of Incorporation, the State of
Registry and the Habitual Base and is not required by Law to deduct
any Taxes from any payments under the Lease.
1.2. LESSOR'S REPRESENTATIONS AND WARRANTIES
Lessor's representations and warranties to Lessee are as follows:
(a) STATUS: It is duly organized, validly existing and in good standing
in its jurisdiction of organization.
(b) NON-CONFLICT: Execution, delivery and performance of the Lease do
not contravene or breach (i) any Regulation applicable to Lessor,
(ii) the constitutional documents of Lessor, or (iii) any document
which is binding on Lessor or any of its assets.
(c) POWER AND AUTHORITY: It has all corporate and other power and
authority to execute, deliver and perform the Lease, and the Lease
has been duly authorized,
2-2
executed and delivered by Lessor and has (or will have on the
Delivery Date) title to, or the lawful right to lease, the Aircraft,
free and clear of all Security Interests (other than Lessor Liens).
(d) LEGAL VALIDITY: Its obligations under the Lease are legal, valid,
binding and enforceable against Lessor in accordance with their
terms.
(e) CITIZEN OF THE UNITED STATES: Lessor is a "citizen of the United
States" as defined in Section 40102 of Title 49 of the U.S.C.
2-3
SCHEDULE 3
CONDITIONS PRECEDENT
PART A - LESSOR CONDITIONS PRECEDENT
On or before the Scheduled Delivery Date, Lessee shall comply with the
Conditions Precedent set out below by ensuring that Lessor receives the
following documents and by taking the actions described below, in each case in a
manner satisfactory to Lessor. All documents delivered to Lessor pursuant to
this Schedule 3 will be in English, or if not in English, will be accompanied by
a certified English translation:
1. CONDITIONS PRECEDENT TO BE SATISFIED BY LESSEE
(a) PAYMENTS: all sums due to Lessor under the Lease on or before
the Delivery Date including the first payment of Rent and, if
applicable, the balance of the Deposit;
(b) OPINION: an original, signed opinion substantially in the form
of Schedule 8 will be issued on the Delivery Date by
independent legal counsel acceptable to Lessor with respect to
the Laws of the State of New York, the state of the Lessee's
location (as defined in Section 9-307 of the UCC) and the
State of Incorporation;
(c) APPROVALS/FILINGS: evidence that all approvals, licenses and
consents which may be required in relation to, or in
connection with the performance by Lessee of any of its
obligations under the Lease have been issued. In addition,
Lessee shall satisfy Lessor that all filings, registrations,
recordings and other actions have been or will be taken which
are necessary or advisable to ensure the validity,
effectiveness and enforceability of the Lease and to protect
the property rights of Owner in the Aircraft, any Engine or
any Part;
(d) IMPORT: evidence that any required import license, and all
customs formalities, relating to the import of the Aircraft
into the Habitual Base have been obtained or complied with (it
being acknowledged that some filings can only be made upon
Lessee's import of the Aircraft into the State of Registry)
and that import of the Aircraft into the Habitual Base is
exempt from Taxes;
(e) PROCESS AGENT: a letter from the process agent appointed by
(i) Lessee in the Lease and (ii) Guarantor (if any) in the
Guaranty, accepting that appointment;
(f) LICENSES: certified copies of Lessee's air transport license,
air operator's certificates and all other licenses,
certificates and permits required by Lessee in relation to, or
in connection with, the operation of the Aircraft, including
an air carrier operating certificate and evidence of authority
to operate under FAR Part 121 and a Certificate of Public
Convenience and Necessity issued under Section 40102 of Title
49 of U.S.C.;
(g) LETTER OF CREDIT (if applicable): the Letter of Credit;
3-1
(h) UCC: Financing Statements with respect to the Lease and the
Aircraft in a form acceptable to Lessor duly executed and
delivered by Lessee and duly filed in each jurisdiction
requested by Lessor;
(i) ACKNOWLEDGEMENT AND AGREEMENT RE ASSIGNMENT (if applicable):
an acknowledgement of and certain agreements with respect to
the assignment by Lessor of the Lease to Owner and Financing
Parties' Representative in the form previously provided to
Lessee or as Owner or Financing Parties' Representative may
otherwise reasonably request;
(j) INSURANCE: certificates of insurance (and where appropriate,
certificates of reinsurance), an opinion and undertaking from
Lessee's insurance broker (and any reinsurance broker) and
other evidence satisfactory to Lessor that Lessee is taking
the required steps to ensure due compliance with the
provisions of the Lease as to Insurance with effect on and
after the Delivery Date;
(k) FAA OPINION: evidence that there will be issued an opinion of
Xxxxx & Xxxxxxx or other counsel reasonably acceptable to
Lessor who are recognized specialists with regard to FAA
registration matters in a form reasonably acceptable to Lessor
as to the due filing for recordation of the Lease and, if
applicable, the Financing Documents, (the costs for which
shall be paid by Lessee);
(l) CERTIFICATE OF LEASE TERMINATION: a Certificate of Lease
Termination executed by a duly authorized officer of Lessee
acknowledging that the Lease is no longer in effect with
respect to the Aircraft and Engines, which certificate Lessor
will hold in escrow to be filed at the FAA upon the expiration
or other termination of the Lease;
(m) CERTIFICATE OF ACCEPTANCE AND LEASE SUPPLEMENT NO. 1: each of
Lease Supplement No. 1 and the Certificate of Acceptance,
dated and fully completed, and executed by Lessor and Lessee
and in the case of Lease Supplement No. 1, filed for recording
at the FAA together with the Lease; and
(n) GUARANTEE: (if applicable) the Guarantee, duly executed and
delivered by the Guarantor, and a legal opinion or legal
opinions of independent legal counsel acceptable to Lessor in
respect of the Guarantee in form and substance acceptable to
Lessor and its legal counsel; and
(o) GENERAL: such other documents as Lessor may reasonably
request.
2. ADDITIONAL CONDITIONS PRECEDENT TO BE SATISFIED BY LESSEE
Lessee shall comply with the following additional conditions precedent:
(a) REPRESENTATIONS/WARRANTIES: the representations and warranties
of Lessee in Schedule 2 shall be correct, and would be correct
if repeated on Delivery;
3-2
(b) NO DEFAULT: no Default shall have occurred and be continuing
on Delivery or might result from the leasing of the Aircraft
to Lessee under the Lease; and
(c) NO ADVERSE CHANGE: . no event or series of events shall have
occurred which, in the reasonable opinion of Lessor, could be
expected to have a material adverse effect on the financial
condition or operations of Lessee or Guarantor or on the
ability of Lessee to comply with its obligations under the
Lease or on the ability of Guarantor to comply with its
obligations under the Guarantee;
PART B - LESSEE CONDITIONS PRECEDENT
On or before the Scheduled Delivery Date, Lessor shall comply with the
Conditions Precedent set out below by ensuring that Lessee receives the
following documents and by taking the actions described below, in each
case in a manner satisfactory to Lessee. All documents delivered to
Lessor pursuant to this Schedule 3 will be in English:
(a) FINAL DOCUMENTS: Lessee shall receive on or before the
Delivery Date for the Aircraft each of the following:
(i) LEASE SUPPLEMENT NO. 1: Lease Supplement No. 1, dated
and executed by Lessor and filed for recording at the
FAA (together with the Lease);
(ii) ACKNOWLEDGEMENT RE QUIET ENJOYMENT: if Lessee is
required to deliver an acknowledgement of or
agreement with respect to the assignment by Lessor of
the Lease to Owner or Financing Parties'
Representative, an agreement by each such Person
(Owner, Financing Parties' Representative or both, as
the case may be) as to itself to the effect set forth
in Section 7.1; and
(iii) GUARANTEE: a guarantee from Aviation Financial
Services Inc. in respect of the obligations of Lessor
under the Lease.
(b) PROCESS AGENT: a letter from the process agent appointed by
Lessor in the Lease accepting that appointment;
(c) QUIET ENJOYMENT: if Lessor is not the Owner, an agreement by
Owner as to itself to the effect set forth in Section 7.1
(d) REPRESENTATIONS/WARRANTIES: the representations and warranties
of Lessor in Schedule 2 shall be true and correct in all
material respects, and would be true and correct in all
material respects if repeated on Delivery; and
(e) DELIVERY CONDITION REQUIREMENTS: tender by Lessor of delivery
of the Aircraft in compliance with the Delivery Condition
Requirements.
3-3
SCHEDULE 4
PRE-DELIVERY PROCEDURES AND DELIVERY CONDITION
REQUIREMENTS - PART 1 (NEW AIRCRAFT)
1.1 PRE-DELIVERY PROCEDURE
(a) LICENSES
(i) It is the responsibility of Lessee to obtain all
licenses, permits or approvals necessary to export or
transport the Aircraft from the Delivery Location
(although Lessor may request the Manufacturer to
apply for the required licenses, permits or approvals
as agent for Lessee).
(ii) Lessor will provide Lessee with any required data and
information relating to the Aircraft or Lessor (as
are reasonably available to Lessor) for the purposes
of obtaining any such licenses, permits or approvals.
(b) INSPECTION
Except as otherwise provided in the Aircraft Lease Agreement:
(i) Subject to any applicable purchase agreement, Lessee
shall inspect the Aircraft (including such rights as
Lessor has to be present and inspect, on an ongoing
basis, the manufacture of the Aircraft and including
a demonstration flight which shall be undertaken for
the benefit of Lessee at no expense to Lessee with up
to two (2) representatives of Lessee on the Aircraft
as observers) to determine whether the Aircraft
fulfills the Delivery Condition Requirements.
(ii) If Lessee's inspection of the Aircraft shows that the
Aircraft does not fulfill the Delivery Condition
Requirements, Lessor will correct any Defects and
make the Aircraft available for re-inspection by
Lessee provided that, in Lessor's reasonable opinion,
it is not impracticable or prohibitively expensive to
correct the Defect.
(iii) If Lessor notifies Lessee that it does not intend to
correct the Defect, either party may terminate the
Lease. In the event of such a termination, all
obligations of each party under the Lease will end on
the date of such notice, except that Lessor will
repay to Lessee an amount equal to the Deposit (if
any), return to Lessee or agree to the cancellation
of any Letter of Credit. Lessee will remain obligated
under its indemnity set forth in Section 1.1(c) of
Schedule 4.
If the Aircraft has been purchased from Lessee (or a Lessee
Affiliate) and is to be leased back to Lessee under the Lease,
then in respect of the leasing of the Aircraft (i) the
provisions of this Section 1.1(b) shall not apply, (ii)
Section 5.7 (c)(iv) of this CTA shall be deleted in its
entirety and replaced with the following: "(iv) a Tax
liability charged with respect to the period, or an event
occurring after the Expiry Date and unrelated to Lessor's
dealings with Lessee or to the transactions contemplated by
the
4-1-1
Lease", and (iii) Section 10(b)(iv) of this CTA shall be
deleted in its entirety and replaced with the following: "(iv)
[Intentionally Omitted]".
(c) INDEMNITY
LESSEE IS RESPONSIBLE FOR AND WILL INDEMNIFY EACH INDEMNITEE
AGAINST ALL LOSSES ARISING FROM DEATH OR INJURY TO ANY
OBSERVER, REPRESENTATIVE OR ANY EMPLOYEE OF LESSEE IN
CONNECTION WITH THE INSPECTION OF THE AIRCRAFT WHETHER OR NOT
SUCH LOSSES ARISE OUT OF OR ARE ATTRIBUTABLE TO ANY ACT OR
OMISSION, NEGLIGENT OR OTHERWISE, OF ANY INDEMNITEE, EXCEPT TO
THE EXTENT ARISING FROM THE GROSS NEGLIGENCE OR WILFUL
MISCONDUCT OF SUCH INDEMNITEE.
1.2 DELIVERY CONDITION
The Aircraft shall be new, ex-factory and painted in Lessee's livery.
4-1-2
PRE-DELIVERY PROCEDURES AND DELIVERY CONDITION
REQUIREMENTS - PART 2 (USED AIRCRAFT)
2.1 PRE DELIVERY PROCEDURE
(a) LICENSES
(i) It is the responsibility of Lessee to obtain all
licenses, permits or approvals necessary to export or
transport the Aircraft from the Delivery Location.
(ii) Lessor will provide Lessee with any required data and
information relating to the Aircraft or Lessor as are
reasonably available to Lessor for the purposes of
obtaining any such licenses, permits or approvals.
(b) INSPECTION
Except as otherwise provided in the Aircraft Lease Agreement:
(i) Subject to any applicable purchase agreement or prior
lease, Lessee shall inspect the Aircraft as more
particularly set forth in 2.2(a) below to determine
whether the Aircraft fulfills the Delivery Condition
Requirements.
(ii) If Lessee's inspection of the Aircraft shows that the
Aircraft does not fulfill the Delivery Condition
Requirements, Lessor will correct any Defects and
make the Aircraft available for re-inspection by
Lessee provided that, in Lessor's reasonable opinion,
it is not impracticable or prohibitively expensive to
correct the Defect.
(iii) If Lessor notifies Lessee that it does not intend to
correct the Defect, either party may terminate the
Lease. In the event of such a termination, all
obligations of each party under the Lease will end on
the date of such notice, except that Lessor will
repay to Lessee an amount equal to the Deposit (if
any), return to Lessee or agree to the cancellation
of any Letter of Credit. Lessee will remain obligated
under its indemnity set forth in Section 2.1(c) of
Schedule 4.
(iv) Lessee shall carry out the inspections contemplated
by Schedule 12 (Aircraft Passenger Cabin Interior
Standard) and Lessor shall procure that any
replacements, repairs or repainting required in
accordance with that Schedule shall be effected at
Lessor's cost prior to Delivery. If any such task is
not accomplished by Lessor prior to Delivery and such
failure does not affect the airworthiness or
operation of the Aircraft then, such task shall be
performed by Lessee subsequent to the Delivery Date,
at a time convenient to Lessee, and Lessor shall
reimburse Lessee for its actual net costs incurred in
performing such task subject to a receipt by Lessor
of an invoice from Lessee in relation to such costs.
For the purposes of this
0 -0-0
xxxxxxxxx (x) only, references in that Schedule
to "Maintenance Manual" shall be deemed to refer to
the previous operator's maintenance manual.
If the Aircraft has been purchased from Lessee (or a Lessee
Affiliate) and is to be leased back to Lessee under the Lease,
then in respect of the leasing of the Aircraft (i) the
provisions of this Section 2 shall not apply, (ii) Section
5.7(b)(iv) of this CTA shall be deleted in its entirety and
replaced with the following: "(iv) a Tax liability charged
with respect to the period, or an event occurring after the
Expiry Date and unrelated to Lessor's dealings with Lessee or
to the transactions contemplated by the Lease", and (iii)
Section 10(b)(iv) of this CTA shall be deleted in its entirety
and replaced with the following: "(iv) [Intentionally
Omitted]".
(c) INDEMNITY
LESSEE IS RESPONSIBLE FOR AND WILL INDEMNIFY EACH INDEMNITEE
AGAINST ALL LOSSES ARISING FROM DEATH OR INJURY TO ANY
OBSERVER, REPRESENTATIVE OR ANY EMPLOYEE OF LESSEE IN
CONNECTION WITH THE INSPECTION OF THE AIRCRAFT WHETHER OR NOT
SUCH LOSSES ARISE OUT OF OR ARE ATTRIBUTABLE TO ANY ACT OR
OMISSION, NEGLIGENT OR OTHERWISE, OF ANY INDEMNITEE, EXCEPT TO
THE EXTENT ARISING FROM THE GROSS NEGLIGENCE OR WILFUL
MISCONDUCT OF SUCH INDEMNITEE.
2.2 DELIVERY CONDITION
On the Delivery Date the Aircraft, subject to ordinary wear and tear of a kind
and to an extent consistent with similar aircraft engaged in commercial airline
operations, shall be delivered to Lessee by Lessor in accordance with the
procedures and in any event in the condition set out below.
(a) DELIVERY INSPECTION
Immediately prior to the Delivery Date, Lessor will make the Aircraft available
to Lessee for inspection ("Delivery Inspection") in order to verify that the
condition of the Aircraft complies with the Lease. The Delivery Inspection will
include, and be long enough to permit Lessee to perform or witness:
(i) inspection of the Aircraft Documents and Records;
(ii) inspection of the Aircraft, subject to non-interference in and
non obstruction of the maintenance in progress by the facility
contracted by the Lessor or the previous lessee (including an
examination of those compartments and bays, opened for
maintenance by the previous lessee during the pre-delivery
scheduled maintenance input performed immediately prior to the
Delivery Date), uninstalled Parts and the APU;
4 -2-2
(iii) inspection of the Engines, including (i) a complete video
borescope inspection of (A) the low pressure and high pressure
compressors and (B) turbine area (including combustors) and
(ii) engine condition runs (including full take-off power
engine run-up performed in accordance with the performance
test in the Manufacturer's maintenance manual, and the Engines
shall not exceed corrected limits for all parameters using
temperature corrected charts), and power assurance runs; and
(iv) observe a two hour demonstration flight at Lessor's cost (with
Lessee's representatives as on-board observers to the extent
permitted by FARs);
provided however that the Delivery Inspection shall not in any event
delay the completion of any pre-Delivery maintenance activity.
(b) GENERAL CONDITION
The Aircraft will:
(i) be clean by major cargo airline standards immediately prior to
the Delivery Date;
(ii) have installed a full complement of equipment, parts,
accessories and furnishings. Loose equipment installed at
Delivery shall be recorded. The Aircraft (including the
Aircraft Documents and Records) shall be in a condition
suitable for immediate operations under FAR Part 121, without
waiver or restriction;
(iii) have in existence a valid and effective certificate of
airworthiness (and if required by Lessee, a valid and
effective export certificate of airworthiness or equivalent)
issued by the air authority of the previous lessee. In the
case of an export certificate of airworthiness, such
certificate shall not be issued any earlier than ten (10) days
prior to the Delivery Date;
(iv) comply with the manufacturer's original specifications, except
as modified in accordance with the Manufacturer's service
bulletins or letters, Airworthiness Directives, Air Authority
approved data (all of which should have supporting State of
Design approval);
(v) have undergone, immediately prior to the Delivery Date, the
maintenance workscope specified in the Aircraft Lease
Agreement;
(vi) have had accomplished all outstanding Airworthiness Directives
affecting that model of Aircraft requiring compliance prior to
the Delivery Date and within the AD Compliance Period; for
this purpose, compliance shall be by terminating action if the
latest date permitted by such Airworthiness Directive for
required compliance by terminating action falls within the AD
Compliance Period.
In no event shall there be any time extensions, waivers,
deviations or alternative means of compliance with any
Airworthiness Directives or other regulations that are
non-transferable to Lessee.
(vii) have installed all applicable vendor's and manufacturer's
service bulletin kits received free of charge from previous
lessee that relate to the Aircraft and, to the extent not
installed, those kits will be furnished free of charge to
Lessee;
0 -0-0
(xxxx) xx in such external livery specified in the Aircraft Lease
Agreement;
(ix) have all signs and decals clean, secure and legible;
(x) meet the requirements of FAR Part 36, Appendix C, Stage 3
noise compliance as in effect at the Delivery Date, without
waiver or restriction;
(xi) have no open, deferred, continued, carry over, or placarded
maintenance items or watch items and all log book
discrepancies shall be cleared;
(xii) have had all repairs and damage requiring repetitive
inspections or future upgrading repaired to a permanent repair
standard such that future repetitive inspections or upgrading
shall not be required; and
(xiii) have all its systems serviceable and fully operational for
their intended functions in accordance with the Manufacturer's
maintenance manual specifications.
(c) COMPONENTS
(i) If the Aircraft Lease Agreement specifies Minimum Component
Flight Hours and/or Minimum Component Cycles, each Airframe
Flight Hour and Cycle controlled Hard Time Component (other
than the APU, but including the components installed on the
APU) shall have not less than the Minimum Component Flight
Hours and the Minimum Component Cycles of life remaining to
the next scheduled removal, in accordance with the previous
lessee's maintenance program or the Manufacturer's Maintenance
Planning Document (to the extent that the previous lessee's
maintenance program does not comply with the Manufacturer's
Maintenance Planning Document) and shall be supported by
documentation indicating date of installation and by
appropriate certification documentation indicating TSO and CSO
in the form of JAA Form 1 or FAA Form 8130-3 as applicable;
for this purpose "Hard Time Component" means any component
which has a limited on-wing life in accordance with the
Manufacturer's Maintenance Planning Document and which can
have life fully restored through appropriate maintenance;
(ii) If the Aircraft Lease Agreement specifies a Minimum Component
Calendar Life, each calendar-limited component including
safety equipment will have not less than its Minimum Component
Calendar Life remaining to the next scheduled removal in
accordance with the previous lessee's maintenance program or
the Manufacturer's Maintenance Planning Document (to the
extent that the previous lessee's maintenance program does not
comply with the Manufacturer's Maintenance Planning Document)
and shall be supported by documentation indicating date of
installation and by appropriate certification documentation
indicating date of manufacture (where applicable) and date of
overhaul in the form of JAA Form 1 or FAA Form 8130-3 as
applicable; for this purpose "Calendar Limited Component"
means any component which has a limited on-wing life in
accordance with the Manufacturer's Maintenance Planning
Document and which has a life limit specified as calendar time
since manufacture or which can have life fully restored
through appropriate maintenance;
(iii) Each "on-condition" and "condition-monitored" component will
be serviceable;
4 -2-4
(iv) If the Aircraft Lease Agreement specifies Minimum Component
Flight Hours and/or Minimum Component Cycles, each Airframe
Life-Limited Component will have not less than the Minimum
Component Flight Hours and the Minimum Component Cycles
remaining to next expected removal and will be supported by
certification documentation necessary to demonstrate total
cycles accumulated since new; for this purpose "Airframe-Life
Limited Component" means a component with an ultimate life
which cannot be restored through appropriate maintenance;.
(d) ENGINES
(i) Each Engine will be installed on the Aircraft and comply with
the following: If the Aircraft Lease Agreement specifies a
Minimum Engine Flight Hours and/or Minimum Engine Cycles, each
Engine will have not less than the Minimum Engine Flight Hours
and Minimum Engine Cycles expected life remaining to the next
expected removal and the life limited parts shall have not
less than the Minimum Engine Cycles release life remaining.
The expected life remaining will be determined by the
inspection and checks accomplished by Lessee in accordance
with Lease which shall include the following (historic data to
the extent that it is available):
(i) full borescope inspection;
(ii) analysis of trend data;
(iii) sea level outside air temperature limit assessment if
recommended by the engine manufacturer as an appropriate means
to determine engine condition (e.g. CFM 56 test CESM 15);
(iv) maximum power assurance runs;
(v) technical log analysis for a minimum of the preceding 3
months of operation;
(vi) previous shop visit assessment (if applicable); and
(vii) reference to the manufacturers maintenance manual.
(ii) Following the demonstration flight provided for by Section
2.2(a)(d) of this Schedule 4, Part 2, each Engine shall have
just accomplished at the Delivery Location a complete video
borescope inspection of all Engine gas path modules, which
inspection shall be performed at Lessor's expense, and a power
assurance run performed at Lessor's expense in accordance with
the Manufacturer's maintenance manual and any defects
discovered in such inspections which exceed the Engine
manufacturer's in-service limits shall be corrected at
Lessor's expense. Lessor shall cause such borescope
inspections to be performed and to be recorded on videotape by
an agency mutually acceptable to Lessor and Lessee and Lessor
shall provide Lessee with a copy of such videotape on the
Delivery Date. No Engine shall be on "watch" for any reason
requiring any special or out of sequence inspection. Each such
Engine shall comply with the operations specification of
Lessee without waiver or exceptions. All items beyond the
Engine manufacturer's in-service limits shall be repaired;
4 -2-5
(iii) If the Aircraft Lease Agreement specifies Minimum Engine LLP
Cycles, each Engine Life-Limited Part will have not less than
the Minimum Engine LLP Cycles remaining in accordance with the
manufacturer's then current limitations for the part number in
question, and will be supported by certification documentation
necessary to demonstrate Back-To-Birth traceability; for this
purpose "Life Limited Part" means a component with an ultimate
life which cannot be restored through appropriate maintenance
approved by the State of Design of the manufacturer and
"Back-To-Birth Traceability" means certified documentation
necessary to identify precisely where, when and with which
aircraft operator the expired life and previous maintenance in
relation to the Life Limited Part occurred since new;
(iv) Each Engine will have no less than the Minimum Engine Cycles
and the Minimum Engine Flight Hours before any defect,
condition or restriction requires any inspection, testing,
repair or replacement in accordance with the Engine
manufacturer's maintenance manual limits;
(v) Each Engine will be in a condition to operate at a maximum
rated take-off power at sea level under corner point or flat
rate conditions and with the Required EGT Margin; and
(vi) Each Engine shall be rated at the Engine Thrust Setting and
all redelivery conditions of this Section 1.4 are based on
such Engine Thrust Setting.
(e) FUSELAGE, WINDOWS AND DOORS
(i) The fuselage will be free of dents and abrasions which exceed
the limits specified in the Manufacturer's maintenance manual
or the SRM;
(ii) Cockpit windows will be free of delamination which exceeds the
limits specified in the Manufacturer's maintenance manual or
SRM;
(iii) Cabin windows will be substantially free of blemishes and
crazing and will be properly sealed;
(iv) Doors will be free moving, correctly rigged and be fitted with
serviceable seals.
(v) Lessee shall be provided with an exterior dent, repair,
scratch survey of the aircraft exterior on the
Delivery Date (with specific locations).
(f) WINGS AND EMPENNAGE
(i) Leading edges will be free from damage in excess of the limits
specified in the Manufacturer's maintenance manual or SRM; and
(ii) Unpainted surfaces of the wings and empennage will be
polished.
(g) INTERIOR AND COCKPIT
(i) Lessee may carry out the inspections contemplated by Schedule
12. Lessor shall ensure that any replacements, repairs or
repainting which are required in accordance with Schedule 12
are effected at Lessor's cost.
4 -2-6
(ii) Carpets and seat covers will be in good condition, clean and
free of stains and meet FAR fire resistance regulations.
(h) LANDING GEAR; WHEELS AND BRAKES
(i) The Landing Gear and wheel xxxxx will be clean, free of leaks
and repaired as necessary;
(ii) Each installed Landing Gear shall have no more Cycles
accumulated than the Airframe and, if the Aircraft Lease
Agreement specifies Minimum Landing Gear Flight Hours and/or
Minimum Landing Gear Cycles and/or Minimum Landing Gear
Calendar Time, have not less than the Minimum Landing Gear
Flight Hours and the Minimum Landing Gear Cycles and the
Minimum Landing Gear Calendar Time to the next scheduled
overhaul or removal, as the case may be, in accordance with
the Manufacturers Maintenance Planning Document; and
(iii) The wheels and brakes will have not less than half of their
useful life remaining.
(i) AUXILIARY POWER UNIT (APU)
The APU shall have just completed a borescope inspection and shall meet
all air outputs and temperature limitations under load in accordance
with the Manufacturer's maintenance manual, and any defects discovered
in such inspection, which exceed the APU manufacturer's in-service
limits, shall be corrected at Lessor's expense. If the Aircraft Lease
Agreement specifies a Minimum APU Limit, the APU shall have not more
than the Minimum APU Limit.
(j) CORROSION
(i) The Aircraft shall be in compliance with the Manufacturer's
corrosion prevention and control program (CPCP). All CPCP
inspections which would normally be accomplished while access
is provided during structural inspection in accordance with
the previous lessee's maintenance program shall have been
accomplished;
(ii) The entire fuselage will be substantially free from corrosion
and will be adequately treated in accordance with the previous
lessee's corrosion prevention program (which shall include the
requirements of the Manufacturers Maintenance Planning
Document); and
(iii) Fuel tanks will be free from contamination and corrosion and a
tank treatment program will be in operation.
(k) FUEL
The fuel on board shall be recorded on the Delivery Date for future
reconciliation on the Return Occasion.
4 -2-7
(l) MAINTENANCE PROGRAM
i. Prior to the Delivery Date Lessor will provide Lessee
reasonable access to the previous lessee's maintenance program
and the Aircraft Documents and Records in order to facilitate
the Aircraft's integration and bridging into Lessee's fleet;
ii. Lessee agrees that it will not disclose the contents of the
previous lessee's maintenance program to any Person except to
the extent necessary to monitor the Aircraft's compliance with
Delivery Condition Requirements and/or to bridge the
maintenance program for the Aircraft from the previous
operator's maintenance program to Lessee's Maintenance Program
upon Delivery.
(m) AIRCRAFT DOCUMENTS AND RECORDS
Lessor will deliver such of the following Aircraft Documents and Records to
Lessee as it shall have received from the previous operator of the Aircraft. If
Lessor does not deliver to Lessee any item listed below, Lessee will not be
entitled to reject the Aircraft when it is offered for Delivery or to make any
claim against Lessor in respect of such non-delivery unless such item is
designated as mandatory by the Air Authority, or unless such item is required
for any inspection by the Air Authority. To the extent that any of the below
listed Aircraft Documents and Records are not provided to Lessee at Delivery
then, provided such Aircraft Documents and Records are not mandatory, the same
Aircraft Documents and Records shall not be provided to Lessor on the Return
Occasion:
A. Certificates
A001 Certificate of Airworthiness
A002 Current Aircraft Registration
A003 C of A for Export (if applicable)
A004 Noise Limitation Certificate (AFM page)
A005 Radio Station License
A007 Aircraft deregistration confirmation
A008 Burn Certificates - Cabin Interiors - as follows:
Certification of compliance with the applicable fire blocking requirements as
outlined in FAR/JAR Part 25 including:
- Seat cushions*
- Back rest cushions*
- Dress covers*
4 -2-8
- Carpets
- Curtains
- Interior Surfaces (if refurbished)
* Including "in combination" burn certification
B. Aircraft Maintenance Status Summaries
B001 Certified current Time in Service (Hours & Cycles) and maintenance
status
B002 Certified status of Airworthiness Directives including method of
compliance
B003 Certified status of Service Bulletin Status
B004 Certified status of SSI
B005 Certified status of CPCP (if applicable)
B006 Certified inventory of Hard Time Components (Fitted listing)
B007 Certified inventory of OC/CM Components (Fitted listing)
B008 Certified status of all non-SB and Major Modifications/STC's including
acceptable State of Manufacture Certification
B009 Certified status of Check/Inspection History & Current Status of Checks
B010 List of Deferred Maintenance Items
B011 List of Out of Phase Checks, Special Requirements, Time Limited Repairs
(if any).
B012 Aircraft Accident & Incident Report.
B013 Structural repairs and damage (including Dent & Buckle Chart).
C. Aircraft Maintenance Records
C001 Technical Logs (Minimum of 2 years)
C002 A Checks
Last complete cycle of A Checks (or equivalent)
C003 C Checks
Last Complete cycle of C Checks (or equivalent)
C004 All Major Checks
4 -2-9
C005 CPCP Tasks (if applicable)
C006 Periodic Tasks
C007 Dirty Finger Print Certification - AD's
C008 Dirty Finger Print Certification - SB's
C009 Dirty Finger Print Certification - All other modification
C010 Last Weight Report including Schedule
C011 Compass Swing Report
C012 Last Test Flight Report
C013 Certified ETOPS compliance report (if applicable)
C014 Dirty Finger Print certification - All Structural repairs/structural
damage
C015 Details of State of Manufacture certification basis for non-SRM
Structural repairs
C016 Aircraft Log Book(s) if applicable
D. Configuration Status
D001 Approved and certified LOPA (if applicable)
X000 Xxxxxx Xxxxxxxx/Xxxxxxxxx XXX (if applicable)
D003 Emergency Equipment Drawing/Listing
D004 Loose Equipment Inventory
D005 Inventory Listing of Avionic installed Units.
E. Aircraft Historical Records
E001 C of A (Export) from State of Manufacture
E002 Manufacturer's AD Report
E003 Manufacturer's Inspection Report, Initial Equipment list
E004 Manufacturer's repair/alteration report
E005 Manufacturer's SB Report
E006 Service Difficulty Reports (if any)
4 -2-10
E007 Aircraft Historical Log
E008 Last Flight Data Recorder Read-Out & Corrections
E009 Weighing report
F. Engine Records
F001 Certified Statement of Status of Each Engine
F002 AD Compliance Report and Compliance Documents
F003 Manufacturer's Modifications & SB Status
F004 In-house Modifications (if applicable)
F005 Certified LLP Listing
F006 Certified listing of installed units
F007 Manufacturer Delivery Document
F008 Complete copies of all historical engine/module Shop Visit Reports
F009 State of Manufacture LLP Traceability
F010 Conditioning Monitoring Report
F011 Engine Log Book/Master Records of Installation/Removals
F012 Last Borescope Report, including video if available
F013 Test Cell Run Report
F014 Last On-Wing Ground Run
F015 Certified Statement that Engines are not involved in an Accident
F016 Approved Release to Service Certification for installed rotables
F017 Approved ETOPS compliance report (if applicable)
G. APU
G001 Certified Statement on Status of APU (if applicable)
G002 Certified SB Compliance Report/AD Status Report
G003 Approved Release to Service Certification for installed units
4 -2-11
G004 APU Log Book/Master Record of Installation/Removals
G005 Complete copies of all APU Shop Visit Reports & Reason for Removal
G006 Statement of APU Hours to Aircraft Flying Hours
G007 LLP Status and Full Traceability to birth
G008 APU Borescope Report
G009 Last On-Wing/Health Check Data sheets (if applicable)
G010 Last Test Cell Run
G011 Approved ETOPS compliance report
H. Component Records
H001 Approved Release to Service Certification for Hard Time Components
H002 Approved Release to Service Certification for OC/CM Components (to the
extent that this is required by the Air Authority including retention period)
I. Landing Gears
I001 Approved Release to Service Certification for major assemblies on each
Gear
I002 Approved LLP Listings for each Gear (evidencing total accumulated
cycles)
I003 Last Shop Visit Report (OH)
J. Manuals
All Manufacturer's Manuals delivered with the Aircraft under the Lease updated
to the latest revision standard (applicable as at the Return Occasion) or
provided with comprehensive approved supplements as may be reasonably requested
by Lessee
Microfilm or CD:
J006 WDM
J007 IPC
J008 Maintenance Manual
J009 Schematics
J010 Hook Up Listing
4 -2-12
K. Miscellaneous
K006 Maintenance Program Specifications (Operator's)
K007 Reference Material for Interpretation of Status Summaries, or
cross-reference for Part Numbers
4 -2-13
SCHEDULE 5
CERTIFICATE OF ACCEPTANCE
PART 1 (NEW AIRCRAFT)
This Certificate of Acceptance is delivered on the date set out below by
________ ("Lessee") to ________ ("Lessor") pursuant to the Aircraft Lease
Agreement dated ________ between Lessor and Lessee (the "Lease"). The
capitalized terms used in this Certificate shall have the meaning given to such
terms in the Lease unless otherwise indicated.
DETAILS OF ACCEPTANCE
Lessee hereby confirms to Lessor that Lessee has at [ ] o'clock on this ________
day of ________, at ________ , technically accepted the following, in accordance
with the provisions of the Lease:
________ Aircraft, Manufacturer's Serial Number ________;
________ Engines:
Engine Number Manufacturer's Serial Number
1 ________ ; and
2 ________ ;
Fuel Status: Kilos/lbs ________ ; and
APU: Manufacturer's Serial Number __________.
Loose Equipment Check List: in accordance with the list signed by Lessor and
Lessee and attached hereto.
Aircraft Documents and Records: in accordance with the list signed by Lessor and
Lessee and attached hereto.
LOPA drawing attached.
HOURS AND CYCLES DATA (as of Delivery Date)
Airframe:
Time Since New: Cycles Since New:
Landing Gear (Main and Nose)
Time Since New: Cycles Since New:
5-1-1
Engines:
Position Left Hand s/no. Time Since New:
Cycles Since New:
Position Right Hand s/no. Time Since New:
Cycles Since New:
Auxiliary Power Unit:
Number of Flight Hours/APU Hours
(as applicable) since New:
ACCEPTANCE:
Lessee hereby confirms that the Aircraft, Engines, Parts and Aircraft Documents
and Records are technically acceptable to it, satisfy all of the Delivery
Condition Requirements and are in the condition for delivery and acceptance as
required under the Lease.
IN WITNESS WHEREOF, Lessee and Lessor have, by their duly authorized
representative, executed this Certificate of Acceptance on the date in paragraph
1 above.
LESSEE: _________________________
By: _________________________
Title: _________________________
LESSOR: _________________________
By: _________________________
Title: _________________________
5-1-2
CERTIFICATE OF ACCEPTANCE
PART 2 (USED AIRCRAFT)
This Certificate of Acceptance is delivered, on the date set out below by
________ ("Lessee"), to ________ ("Lessor"), pursuant to the Aircraft Lease
Agreement dated as of ________ between Lessor and Lessee (the "Lease"). The
capitalized terms used in this Certificate shall have the meaning given to such
terms in the Lease unless otherwise indicated.
DETAILS OF ACCEPTANCE
Lessee hereby confirms to Lessor that Lessee has at [ ] o'clock on this ________
day of ________, at ________ , technically accepted the following, in accordance
with the provisions of the Lease:
________ Aircraft, Manufacturer's Serial Number ________;
________ Engines:
Engine Number Manufacturer's Serial Number
1 ________; and
2 ________;
Fuel Status: Kilos/lbs ________ ; and
APU: Manufacturer's Serial Number ___________.
Loose Equipment Check List: in accordance with the list signed by Lessor and
Lessee and attached hereto.
Aircraft Documents and Records: in accordance with the list signed by Lessor and
Lessee and attached hereto.
HOURS AND CYCLES DATA (as of Delivery Date)
Airframe:
Date of accomplishment of last Airframe Structural Check
Number of Hours since last Airframe Structural Check: ________ hours
Number of Cycles since last Airframe Structural Check: ________ cycles
"C" Check (or Equivalent)
Interval: _______________________
Time Since: _____________________
5-2-1
Landing Gear Overhaul:
Number of Cycles/Hours Since Last Overhaul:
Left Gear __________________________ cycles
Date of accomplishment of last Overhaul _______________________________
Right Gear __________________________cycles
Date of accomplishment of last Overhaul _______________________________Nose Gear
__________________________cycles
Date of accomplishment of last Overhaul _______________________________
Center Gear _________________________cycles
Date of accomplishment of last Overhaul _______________________________
Interval: Left Gear ____________________
Date of accomplishment of last Overhaul _______________________________
Right Gear __________________________
Date of accomplishment of last Overhaul _______________________________
Nose Gear __________________________
Date of accomplishment of last Overhaul _______________________________
Center Gear _________________________
Date of accomplishment of last Overhaul _______________________________
Engines:
Number of Hours Since Last Engine Refurbishment:
S/N __________ : __________ hours
S/N __________ : __________ hours
Time Since New:
S/N __________ : __________ hours
S/N __________ : __________ hours
5-2-2
Cycles Since New:
S/N __________ : __________ hours
S/N __________ : __________ hours
Hot Section Inspection:
Interval: ___________________________
Time Since (S/N __________) : ______________
Time Since (S/N __________) : ______________
Time Remaining to First Restriction:
Engine S/N:
Hours: _____________ Restriction: _____________
Cycles: _____________ Restriction: _____________
Engine S/N:
Hours: _____________ Restriction: _____________
Cycles: _____________ Restriction: _____________
Average Cycles in Life Limited Parts (see attached Schedule): _______________
Auxiliary Power Unit:
Number of APU Hours since Last Heavy Shop Visit:
______________ hours Date accomplished ___________
Hot Section Inspection:
Interval: _______________________
Time Since: _______________________
Interior Equipment:
LOPA - attached _______________________
Emergency drawing - attached _______________________
Galley Equipment _______________________
5-2-3
ACCEPTANCE:
Lessee hereby confirms that the Aircraft, Engines, Parts and Aircraft Documents
and Records are technically acceptable to it, satisfy all of the Delivery
Condition Requirements and are in the condition for delivery and acceptance as
required under the Lease.
IN WITNESS WHEREOF, Lessee and Lessor have, by their duly authorized
representative, executed this Certificate of Acceptance on the date in paragraph
1 above.
LESSEE:
By: _________________________
Title: _________________________
LESSOR:
By: _________________________
Title: _________________________
5-2-4
SCHEDULE 6
PROCEDURES AND OPERATING CONDITION AT REDELIVERY
On the Return Occasion the Aircraft, subject to ordinary wear and tear of a kind
and to an extent consistent with similar aircraft engaged in commercial airline
operations, will be redelivered to Lessor by Lessee in accordance with the
procedures and in any event in the condition set out below. For the avoidance of
doubt, any damage assessment and/or rectification criteria used in assessing the
redelivery condition shall be as prescribed in the Manufacturer's maintenance
manual and/or the Manufacturer's structural repair manual ("SRM"), as
appropriate. Any damage outside the scope of the SRM shall require FAA 8110-3
certification or the equivalent certification by the civil aviation authority by
the State of Design.
1.1 FINAL INSPECTION
Immediately prior to the Return Occasion, Lessee will make the Aircraft
available to Lessor and Owner for inspection ("Final Inspection") in
order to verify that the condition of the Aircraft complies with the
Lease. The Final Inspection will include, and be long enough to permit
Lessor to:
(a) inspect the Aircraft Documents and Records;
(b) inspect the Aircraft (including an examination of all
compartments and bays, with Lessee to open or remove panels as
reasonably required by Lessor or Owner during the Redelivery
Check), uninstalled Parts and the APU (including a complete
video borescope inspection of the APU);
(c) inspect the Engines, including (i) a complete video borescope
inspection of (A) the low pressure and high pressure
compressors and (B) turbine area (including combusters) and
(ii) engine condition runs (including full take-off power
engine run-up performed in accordance with the performance
test in the Manufacturer's maintenance manual, and the Engines
shall not exceed corrected limits for all parameters using
temperature corrected charts, and power assurance runs); and
(d) observe a two (2) hour demonstration flight at Lessee's cost
(with Lessor's and Owner's representatives as on-board
observers (to the extent permitted by FARs)).
Furthermore, Lessee acknowledges that a purchaser or the next operator
of the Aircraft may need to inspect the Aircraft, the Engines and the
Aircraft Documents and Records prior to redelivery and Lessee hereby
agrees to cooperate reasonably at all times during the Term with
Lessor, Owner and/or such purchaser or such next operator in order to
coordinate, assist and grant access for the above inspections and/or
meetings as necessary; provided that no such inspection shall
unreasonably interfere with or materially interrupt Lessee's normal
use, operation or maintenance of the Aircraft.
Lessor or Owner, as the case may be, is responsible for and will
indemnify Lessee against all Losses arising from the death or injury to
any observer or any employee of Lessor or Owner, as the case may be, in
connection with the inspection of the Aircraft under this Section 1.1.
6-1
1.2 GENERAL CONDITION
The Aircraft will:
(a) be clean by major cargo airline standards immediately prior to
redelivery and will be in the same configuration as at
Delivery subject to any post-Delivery modifications, repairs
or maintenance to the Aircraft which are permitted or required
by the Lease;
(b) have installed the full complement of equipment, parts,
accessories, furnishings and loose equipment as when
originally delivered to Lessee (and, in addition, shall
include any post-Delivery modifications, repairs or
maintenance which were paid for or otherwise provided by or on
behalf of Lessor or which are required or permitted by the
Lease or mutually agreed). The Aircraft (including the
Aircraft Documents and Records) shall be in a condition
suitable for immediate operations under FAR Part 121, without
waiver, unless, subject to Lessor's consent, the benefit of
such waiver is applicable to the next operator of the
Aircraft, or restriction (other than those applicable
generally to aircraft of similar make and model); and if any
of the engines or parts tendered for redelivery with the
Aircraft is not one of the Engines or Parts referred to in the
Certificate of Acceptance or a Replacement Engine installed
pursuant to Section 8.11 (a) following an Engine Event of Loss
in respect of an Engine, Lessor shall have no obligation to
accept such engine or part unless Lessee furnishes to Lessor
all the documents and evidence in respect of such engine or
part in accordance with Section 8.11 (b), as if such engine
were a Replacement Engine or such part were a replacement
Part, and otherwise complies with such Section 8.11(b) with
respect thereto;
(c) have in existence a valid and effective certificate of
airworthiness (and if required by Lessor, a valid and
effective export certificate of airworthiness) issued by the
Air Authority. In the case of an export certificate of
airworthiness, such certificate shall not be issued any
earlier than ten (10) days prior to the Return Occasion;
(d) comply with the manufacturer's original specifications as at
the Delivery Date, except as modified during the Term in
accordance with the Manufacturer's service bulletins or
letters, Airworthiness Directives, Air Authority approved data
(all of which should have supporting State of Design approval)
or otherwise as permitted by the Lease;
(e) have undergone, immediately prior to redelivery, the
Redelivery Check so that all Airframe and structural
inspections, including but not limited to corrosion prevention
and control program inspections falling due within the "C"
Check interval as defined in the Lessee's Maintenance Program
or the Manufacturer's Maintenance Planning Document (if, and
to the extent that, the Lessee's Maintenance Program does not
comply with the requirements of the Manufacturer's Maintenance
Planning Document), have been accomplished in accordance with
the Lessee's Maintenance Program on the Return Occasion;
(f) have had accomplished all outstanding Airworthiness Directives
affecting that model of Aircraft requiring compliance during
the Term or within the AD Compliance Period; for this purpose,
compliance shall be by terminating action if:
6-2
(i) Lessee has complied by terminating action for other
aircraft of the same model and series then operated
by Lessee; or
(ii) the latest date permitted by such Airworthiness
Directive for required compliance by terminating
action falls within the AD Compliance Period.
In no event shall there be any time extensions, waivers,
deviations or alternative means of compliance with any
Airworthiness Directives or other regulations that are
non-transferable by Lessee.
(g) have installed all applicable vendor's and manufacturer's
service bulletin kits received free of charge by Lessee that
relate to the Aircraft and, to the extent not installed, those
kits will be furnished free of charge to Lessor;
(h) be in such external livery (freshly painted) as may be
requested by Lessor, such painting to include the fuselage,
empennage, wings, engine cowlings and pylons, stripped (or
sanded if only two or less coats of paint) and painted in
accordance with standard industry practice, including any
required re-balancing of flight controls and required
re-weighing or recalculation of the Aircraft or the Aircraft
weight;
(i) have all signs and decals clean, secure and legible;
(j) meet the requirements of FAR Part 36, Appendix C, Stage 3
noise compliance as in effect at the Delivery Date, without
waiver or restriction;
(k) have no open, deferred, continued, carry over, or placarded
maintenance items or watch items and all log book
discrepancies shall be cleared;
(l) have had all repairs and damage requiring repetitive
inspections or future upgrading repaired to a permanent repair
standard such that future repetitive inspections or upgrading
shall not be required; and
(m) have all its systems serviceable and fully operational for
their intended functions in accordance with the Manufacturer's
maintenance manual specifications.
1.3 COMPONENTS
(a) If the Aircraft Lease Agreement specifies Minimum Component
Flight Hours and/or Minimum Component Cycles, each Flight Hour
and Cycle controlled Hard Time Component (other than the APU,
but including the components installed on the APU) shall have
not less than the Minimum Component Flight Hours and the
Minimum Component Cycles of life remaining to the next
scheduled removal, in accordance with the Lessee's Maintenance
Program or the Manufacturer's Maintenance Planning Document
(to the extent that Lessee's Maintenance Program does not
comply with the Manufacturer's Maintenance Planning Document)
and shall be supported by documentation indicating date of
installation and by appropriate certification documentation
indicating TSO and CSO in the form of JAA Form 1 or FAA Form
8130-3 as applicable; for this purpose "Hard Time Component"
means any component which has a limited on-wing life in
accordance with the Lessee's Maintenance Program and which can
have life fully restored through appropriate maintenance;
(b) If the Aircraft Lease Agreement specifies a Minimum component
Calendar Life, each Calendar Limited Component including
safety equipment will have not less
6-3
than its Minimum Component Calendar Life remaining to the next
scheduled removal in accordance with the Lessee's Maintenance
Program or the Manufacturer's Maintenance Planning Document
(to the extent that Lessee's Maintenance Program does not
comply with the Manufacturer's Maintenance Planning Document)
and shall be supported by documentation indicating date of
installation and by appropriate certification documentation
indicating date of manufacture (where applicable) and date of
overhaul in the form of JAA Form 1 or FAA Form 8130-3 as
applicable; for this purpose "Calendar Limited Component"
means any component which has a limited on-wing life in
accordance with the Lessee's Maintenance Program and which has
a life limit specified as calendar time since manufacture or
which can have life fully restored through appropriate
maintenance;
(c) Each "on-condition" and "condition-monitored" component will
be serviceable and those components installed on the Aircraft
within the last twenty-four (24) months shall be supported by
documentation indicating date of installation and by
appropriate certification documentation such as JAA Form 1 or
FAA Form 8130-3;
(d) [Intentionally omitted.]
(e) If the Aircraft Lease Agreement specifies Minimum Component
Flight Hours and/or Minimum Component Cycles, each Airframe
Life-Limited Component will have not less than the Minimum
Component Flight Hours and the Minimum Component Cycles
remaining to next expected removal and will be supported by
certification documentation necessary to demonstrate total
cycles accumulated since new; for this purpose "Airframe-Life
Limited Component" means a component with an ultimate life
which cannot be restored through appropriate maintenance.
1.4 ENGINES
(a) Each Engine (or a Replacement Engine as and to the extent
permitted by Section 1.2(b)) will be installed on the Aircraft
and comply with the following:
If the Aircraft Lease Agreement specifies Minimum Engine
Flight Hours and/or Minimum Engine Cycles and/or Minimum
Engine LLP Cycles, each Engine will have not less than the
Minimum Engine Flight Hours and Minimum Engine Cycles expected
life remaining to the next expected removal and the life
limited Parts shall have not less than the Minimum Engine LLP
Cycles release life remaining. The expected life remaining
will be determined by the inspection and checks accomplished
by Lessor in accordance with the Lease which shall include the
following:
(i) full borescope inspection;
(ii) analysis of trend data;
(iii) sea level outside air temperature limit assessment if
recommended by the Manufacturer as an appropriate
means to determine engine condition (e.g., CFM 56
test CESM 15);
(iv) maximum power assurance ground runs;
6-4
(v) technical log analysis for a minimum of the previous
three (3) months' of operation;
(vi) previous shop visit assessment (if applicable); and
(vii) reference to the manufacturer's maintenance manual;
(b) Following the demonstration flight provided for by Section
1.1(d) of this Schedule 6 each Engine shall have just
accomplished at the Redelivery Location a complete video
borescope inspection of all Engine gas path modules, which
inspection shall be performed at Lessor's expense, and a power
assurance run performed at Lessee's expense in accordance with
the Lessee's Maintenance Program or Manufacturer's maintenance
manual and any defects discovered in such inspections which
exceed the Engine manufacturer's in-service limits shall be
corrected at Lessee's expense. Lessee shall cause such
borescope inspections to be performed and to be recorded on
videotape by an agency selected by Lessor and shall provide
Lessor with a copy of such videotape on the Return Occasion.
No Engine shall be on "watch" for any reason requiring any
special or out of sequence inspection. Each such Engine shall
comply with the operations specification of Lessee without
waiver or exceptions. All items beyond the Engine
manufacturer's in-service limits shall be repaired;
(c) If the Aircraft Lease Agreement specifies Minimum Engine LLP
Cycles, each Engine Life-Limited Part will have not less than
the Minimum Engine LLP Cycles remaining in accordance with the
manufacturer's then current limitations for the part number in
question, and will be supported by certification documentation
necessary to demonstrate Back-to-Birth Traceability; for this
purpose "Life Limited Part" means a component with an ultimate
life which cannot be restored through appropriate maintenance
approved by the State of Design of the manufacturer and
"Back-to-Birth Traceability" means certified documentation
necessary to identify precisely where, when and with which
aircraft operator the expired life and previous maintenance in
relation to the Life Limited Part occurred since such Engine
Life-Limited Part was new;
(d) Each Engine will have no less than the Minimum Engine Cycles
and the Minimum Engine Flight Hours before any defect,
condition or restriction requires any inspection, testing,
repair or replacement in accordance with the Engine
manufacturer's maintenance manual limits;
(e) Each Engine will be in a condition to operate at a maximum
rated take-off power at sea level under corner point or flat
rate conditions and with the Required EGT Margin; and
(f) Each Engine shall be rated at the Engine Thrust Setting and
all redelivery conditions of this Section 1.4 are based on
such Engine Thrust Setting.
1.5 FUSELAGE, WINDOWS AND DOORS
(a) The fuselage will be free of dents and abrasions which exceed
the limits specified in the Manufacturer's maintenance manual
or the SRM;
(b) Cockpit windows will be free of delamination which exceeds the
limits specified in the Manufacturer's maintenance manual or
SRM;
6-5
(c) Cabin windows will be substantially free of blemishes and
crazing and will be properly sealed;
(d) Doors will be free moving, correctly rigged and be fitted with
serviceable seals; and
(e) To the extent that Lessee was provided with a dent, repair and
scratch survey of the Aircraft exterior at Delivery (with
specific locations) then Lessee shall provide an updated
survey to Lessor on the Return Occasion.
1.6 WINGS AND EMPENNAGE
(a) Leading edges will be free from damage in excess of the limits
specified in the Manufacturer's maintenance manual or SRM; and
(b) Unpainted surfaces of the wings and empennage will be
polished.
1.7 INTERIOR AND COCKPIT
(a) Lessor may carry out the inspections contemplated by Schedule
12. Lessee shall ensure that any replacements, repairs or
repainting which are required in accordance with Schedule 12
are effected at Lessee's cost. For the purposes of this
Section 1.7 only, references in Schedule 12 to "Maintenance
Manual" shall be deemed to refer to Lessee's Maintenance
Program manual.
(b) Carpets and seat covers will be in good condition, clean and
free of stains and meet FAR fire resistance regulations.
1.8 LANDING GEAR; WHEELS AND BRAKES
(a) The Landing Gear and wheel xxxxx will be clean, free of leaks
and repaired as necessary;
(b) Each installed Landing Gear shall have no more Cycles
accumulated than the Airframe and, if the Aircraft Lease
Agreement specifies Minimum Landing Gear Flight hours and/or
Minimum Landing Gear Cycles and/or Minimum Landing Gear
Calendar Time, in any event shall have not less than the
Minimum Landing Gear Flight Hours and the Minimum Landing Gear
Cycles and the Minimum Landing Gear Calendar Time to the next
scheduled overhaul or removal, as the case may be, in
accordance with Lessee's Maintenance Program which shall not
be less restrictive than the Manufacturer's Maintenance
Planning Document; and
(c) The wheels and brakes will have not less than half of their
useful life remaining.
1.9 RETURN OF AUXILIARY POWER UNIT (APU)
The APU shall have just completed a borescope inspection and shall meet
all air outputs and temperature limitations under load in accordance
with the Lessee's Maintenance Program and the Manufacturer's
maintenance manual, and any defects discovered in such inspection,
which exceed the APU manufacturer's in-service limits, shall be
corrected at Lessee's expense. If the Aircraft Lease Agreement
specifies a Minimum APU Limit, the APU shall have not more than the
Minimum APU Limit.
6-6
1.10 CORROSION
(a) The Aircraft shall be in compliance with the Manufacturer's
corrosion prevention and control program (CPCP) requirements
as implemented in Lessee's Maintenance Program. All CPCP
inspections which would normally be accomplished while access
is provided during structural inspection in accordance with
the Lessee's Maintenance Program during the Term shall have
been accomplished;
(b) The entire fuselage will be substantially free from corrosion
and will be adequately treated in accordance with Lessee's
corrosion prevention program (which shall include the
requirements of the Manufacturer's Maintenance Planning
Document); and
(c) Fuel tanks will be free from contamination and corrosion and a
tank treatment program will be in operation.
1.11 FUEL
At redelivery, Lessor will pay to Lessee or Lessee will pay to Lessor
(as the case may require) a cash adjustment in respect of the
difference in fuel on board at Delivery versus redelivery, at the then
prevailing cost of fuel at the Redelivery Location.
1.12 MAINTENANCE PROGRAM
(a) Prior to the Return Occasion and upon Lessor's or Owner's
request, Lessee will provide Lessor or Owner or its agent
reasonable access to the Lessee's Maintenance Program and the
Aircraft Documents and Records in order to facilitate the
Aircraft's integration into any subsequent operator's fleet;
and
(b) Upon redelivery of the Aircraft, Lessee will, if requested by
Lessor or Owner to do so, provide a certified true current and
complete copy of the Lessee's Maintenance Program to Lessor or
Owner. Lessor and any Person to whom Lessor grants access to
Lessee's Maintenance Program shall agree that it will not
disclose the contents of the Lessee's Maintenance Program to
any other Person except to the extent necessary to monitor
Lessee's compliance with the Lease and/or to bridge the
maintenance program for the Aircraft from the Lessee's
Maintenance Program to another program after the Return
Occasion.
1.13 AIRCRAFT DOCUMENTS AND RECORDS
At redelivery Lessee will return the following Aircraft Documents and Records to
Lessor; provided, however, that to the extent that an item on this list was not
provided to Lessee at Delivery and is not otherwise a mandatory requirement
under the provisions of the Lease, then Lessee will not be obligated to return
such document at redelivery:
A. Certificates
A001 Certificate of Airworthiness
A002 Current Aircraft Registration
6-7
A003 C of A for Export (if applicable)
A004 Noise Limitation Certificate (AFM page)
A005 Radio Station License
A007 Aircraft deregistration confirmation
A008 Burn Certificates - Cabin Interiors - as follows:
Certification of compliance with the applicable fire blocking requirements as
outlined in FAR/JAR Part 25 including:
- Seat cushions*
- Back rest cushions*
- Dress covers*
- Carpets
- Curtains
- Interior Surfaces (if refurbished)
* Including "in combination" burn certification
B. Aircraft Maintenance Status Summaries
B001 Certified current Time in Service (Hours & Cycles) and maintenance
status
B002 Certified status of Airworthiness Directives including method of
compliance
B003 Certified status of Service Bulletin Status
B004 Certified status of SSI
B005 Certified status of CPCP (if applicable)
B006 Certified inventory of Hard Time Components (Fitted listing)
B007 Certified inventory of OC/CM Components (Fitted listing)
B008 Certified status of all non-SB and Major Modifications/STC's including
acceptable State of Manufacture Certification
B009 Certified status of Check/Inspection History & Current Status of Checks
B010 List of Deferred Maintenance Items
B011 List of Out of Phase Checks, Special Requirements, Time Limited Repairs
(if any).
6-8
B012 Aircraft Accident & Incident Report.
B013 Structural repairs and damage (including Dent & Buckle Chart).
C. Aircraft Maintenance Records
C001 Technical Logs (Minimum of 2 years)
C002 A Checks
Last complete cycle of A Checks (or equivalent)
C003 C Checks
Last Complete cycle of C Checks (or equivalent)
C004 All Major Checks
C005 CPCP Tasks (if applicable)
C006 Periodic Tasks
C007 Dirty Finger Print Certification - AD's
C008 Dirty Finger Print Certification - SB's
C009 Dirty Finger Print Certification - All other modification
C010 Last Weight Report including Schedule
C011 Compass Swing Report
C012 Last Test Flight Report
C013 Certified ETOPS compliance report (if applicable)
C014 Dirty Finger Print certification - All Structural repairs/structural
damage
C015 Details of State of Manufacture certification basis - A non-SRM
Structural repairs
C016 Aircraft Log Book(s) if applicable
D. Configuration Status
D001 Approved and certified LOPA
X000 Xxxxxx Xxxxxxxx/Xxxxxxxxx XXX
X000 Emergency Equipment Drawing/Listing
D004 Loose Equipment Inventory
6-9
D005 Inventory Listing of Avionic installed Units.
E. Aircraft Historical Records
E001 C of A (Export) from State of Manufacture
E002 Manufacturer's AD Report
E003 Manufacturer's Inspection Report, Initial Equipment list
E004 Manufacturer's repair/alteration report
E005 Manufacturer's SB Report
E006 Service Difficulty Reports (if any)
E007 Aircraft Historical Log
E008 Last Flight Data Recorder Read-Out & Corrections
E009 Weighing report
F. Engine Records
F001 Certified Statement of Status of Each Engine
F002 AD Compliance Report and Compliance Documents
F003 Manufacturer's Modifications & SB Status
F004 In-house Modifications (if applicable)
F005 Certified LLP Listing
F006 Certified listing of installed units
F007 Manufacturer Delivery Document
F008 Complete copies of all historical engine/module Shop Visit Reports
F009 State of Manufacture LLP Traceability
F010 Conditioning Monitoring Report
F011 Engine Log Book/Master Records of Installation/Removals
F012 Last Borescope Report, including video if available
F013 Test Cell Run Report
F014 Last On-Wing Ground Run
6-10
F015 Certified Statement that Engines are not involved in an Accident
F016 Approved Release to Service Certification for installed rotables
F017 Approved ETOPS compliance report (if applicable)
G. APU
G001 Certified Statement on Status of APU (if applicable)
G002 Certified SB Compliance Report/AD Status Report
G003 Approved Release to Service Certification for installed units
G004 APU Log Book/Master Record of Installation/Removals
G005 Complete copies of all APU Shop Visit Reports & Reason for Removal
G006 Statement of APU Hours to Aircraft Flying Hours
G007 LLP Status and Full Traceability to birth
G008 APU Borescope Report
G009 Last On-Wing/Health Check Data sheets (if applicable)
G010 Last Test Cell Run
G011 Approved ETOPS compliance report
H. Component Records
H001 Approved Release to Service Certification for Hard Time Components
H002 Approved Release to Service Certification for OC/CM Components (to the
extent that this is required by the Air Authority including retention period)
I. Landing Gears
I001 Approved Release to Service Certification for major assemblies on each
Gear
I002 Approved LLP Listings for each Gear (evidencing total accumulated
cycles)
I003 Last Shop Visit Report (OH)
J. Manuals
All Manufacturer's Manuals delivered with the Aircraft under the Lease updated
to the latest revision standard (applicable as at the Return Occasion) or
provided with comprehensive approved supplements as may be reasonably requested
by Lessor
6-11
Microfilm or CD:
J006 WDM
J007 IPC
J008 Maintenance Manual
J009 Schematics
J010 Hook Up Listing
K. Miscellaneous
K006 Maintenance Program Specifications (Operator's)
K007 Reference Material for Interpretation of Status Summaries, or
cross-reference for Part Numbers
6-12
SCHEDULE 7
INSURANCE REQUIREMENTS
1.1 TYPES OF INSURANCE
The Insurance required to be maintained is as follows:
(a) HULL ALL RISKS of loss or damage while flying and on the
ground with respect to the Aircraft on an agreed value basis
for the Agreed Value and with a deductible not exceeding the
Deductible Amount or such other amount agreed by Lessor and
Lessee from time to time;
(b) HULL WAR AND ALLIED PERILS, being such risks excluded from the
Hull All Risks Policy to the fullest extent available from the
leading commercial insurance markets that is of the type and
covering the same risks as usually carried by similarly
situated air carriers operating similar aircraft, engaged in
the same or similar business, and similarly situated with
Lessee;
(c) SPARES ALL RISKS (INCLUDING WAR AND ALLIED RISK except when on
the ground or in transit other than by air) property insurance
on all Engines and Parts when not installed on the Aircraft on
an "agreed value" basis for their full replacement value and
including engine test and running risks; and
(d) AIRCRAFT THIRD PARTY, PROPERTY DAMAGE, PASSENGER, BAGGAGE,
CARGO AND MAIL AND AIRLINE GENERAL THIRD PARTY (INCLUDING
PRODUCTS, BUT EXCLUSIVE OF MANUFACTURERS PRODUCT LIABILITY
INSURANCE) LEGAL LIABILITY (bodily injury/property damage) of
an amount not less than the Minimum Liability Coverage for the
time being for any one occurrence (but in respect of products
and personal injury liability, this limit may be an aggregate
limit for any and all losses occurring during the currency of
the policy). War and Allied Perils Risks cover is to be
maintained from (i) leading commercial insurance markets for
similarly situated air carriers operating similar aircraft,
engaged in the same or similar business, and similarly
situated with Lessee; (ii) the FAA; or (iii) a combination of
clauses (i) and (ii), in the scope provided by AVN 52D as in
effect on April 1, 2004 or its equivalent and shall be for an
amount not less than the greater of (i) the Minimum Liability
Coverage and (ii) the amount carried by Lessee in respect of
similar aircraft owned or otherwise operated by Lessee.
1.2 TERMS OF HULL AND SPARES INSURANCE
All required hull and spares insurance, so far as it relates to the
Aircraft, will:
(a) ADDITIONAL INSUREDS: name Lessor, any intermediate lessor,
Owner, Financing Parties' Representative and the Person
serving as the Financing Parties' Representative in its
individual capacity as additional insureds for their
respective rights and interests (without imposing on any such
Person any obligation imposed on the insured, including the
liability to pay any calls, commissions or premiums);
(b) SETTLEMENT OF LOSSES: provide that any loss will be settled
jointly with Lessor and Lessee, and will be payable in Dollars
to Lessor, for the account of all interests, except where the
insurance payment does not exceed the Damage Notification
7-1
Threshold and no Payment Default or Event of Default is in
existence, in which case the loss or such portion of the loss
will be settled with and paid to Lessee;
(c) 50/50 PROVISION: if separate Hull "all risks" and "war risks"
insurances are arranged, include a 50/50 provision in
accordance with market practice (AVS. 103 is the current
London market language); and
(d) NO OPTION TO REPLACE: confirm that the insurers are not
entitled to replace the Aircraft in the event of an insured
Event of Loss.
1.3 TERMS OF LIABILITY INSURANCE
All required liability insurance will:
(a) ADDITIONAL INSUREDS: include each Indemnitee, as additional
insureds for its respective rights and interests, warranted,
each as to itself only, no operational interest (without
imposing on any such Person any obligation imposed on the
insured, including the liability to pay any calls, commissions
or premiums);
(b) SEVERABILITY: include a severability of interests clause which
provides that the insurance, except for the limit of
liability, will operate to give each insured the same
protection as if there was a separate policy issued to each
insured; and
(c) PRIMARY POLICY: contain a provision confirming that the policy
is primary without right of contribution and the liability of
the insurers will not be affected by any other insurance of
which Lessor, each Indemnitee or Lessee have the benefit so as
to reduce the amount payable to the additional insureds under
such policies.
1.4 TERMS OF ALL INSURANCE
All Insurance will:
(a) BEST INDUSTRY PRACTICE: be in accordance with best industry
practice of persons operating similar aircraft in similar
circumstances;
(b) DOLLARS: provide cover denominated in Dollars and any other
currencies that Lessor may reasonably require in relation to
liability insurance;
(c) WORLDWIDE: operate on a worldwide basis subject to such
limitations and exclusions as are generally included in the
policies obtained by similarly situated United States-based
international air carriers operating similar aircraft on
similar routes;
(d) BREACH OF WARRANTY: provide that, in relation to the interests
of each of the additional assureds, the Insurance will not be
invalidated by any act or omission by Lessee, or any other
person other than the respective additional assureds seeking
protection and shall insure the interests of each of the
additional assureds regardless of any breach or violation by
Lessee, or any other person other than the respective
additional assured seeking protection of any warranty,
declaration or condition, contained in such Insurance;
(e) SUBROGATION: provide that the insurers will hold harmless and
waive any rights of recourse or subrogation against the
additional insureds to the extent Lessee has
7-2
waived its rights by its agreements to indemnify the
additional insureds pursuant to the Lease. Upon
indemnification of an additional insured under Insurance, the
insurers may, with the consent of such additional insured
(such consent not to be unreasonably withheld) exercise
subrogation rights;
(f) PREMIUMS: provide that the additional insureds will have no
obligation or responsibility for the payment of any premiums
due (but reserve the right to pay the same should any of them
elect so to do) and that the insurers will not exercise any
right of set-off, counter-claim or other deduction, by
attachment or otherwise in respect of any premium due against
the respective interests of the additional insureds other than
outstanding premiums relating to the Aircraft, any Engine or
Part the subject of the relevant claim;
(g) CANCELLATION/CHANGE: provide that the Insurance will continue
unaltered for the benefit of the additional insureds for at
least thirty (30) days (ten (10) days in the event of
cancellation due to non-payment of premium) after written
notice by registered mail or facsimile of any cancellation,
material adverse change, event of non-payment of premium or
installment thereof has been sent by insurer(s) to Lessor, or
where an insurance broker is appointed to the insurance broker
who shall promptly send on such notice to Lessor, except in
the case of war risks for which seven (7) days (or such lesser
period as is or may be customarily available in respect of war
risks or allied perils) will be given, or in the case of war
between the five (5) great powers or nuclear peril for which
termination is automatic;
(h) REINSURANCE: if reinsurance is required for the Insurance to
be acceptable under the Lease, including the requirements of
Section 9 and Schedule 7, such reinsurance shall:
(i) be on the same terms as the original insurance and
will include the provisions of this Schedule;
(ii) provide that notwithstanding any bankruptcy,
insolvency, liquidation, dissolution or similar
proceedings of or affecting the reinsured that the
reinsurers' liability will be to make such payments
as would have fallen due under the relevant policy of
reinsurance if the reinsured had (immediately before
such bankruptcy, insolvency, liquidation, dissolution
or similar proceedings) discharged its obligations in
full under the original insurance policies in respect
of which the then relevant policy of reinsurance has
been effected; and
(iii) contain a "cut-through" clause in the following form
(or otherwise satisfactory to Lessor):
"The Reinsurers and the Reinsured hereby mutually agree that
in the event of any claim arising under the reinsurances in
respect of a total loss or other claim where as provided by
the Aircraft Lease Agreement dated as of _________ 20__ and
made between Lessor and Lessee such claim is to be paid to the
person named as sole loss payee under the primary insurances,
the Reinsurers will in lieu of payment to the Reinsured, its
successors in interest and assigns pay to the person named as
sole loss
7-3
payee under the primary insurances effected by the Reinsured
that portion of any loss due for which the Reinsurers would
otherwise be liable to pay the Reinsured (subject to proof of
loss), it being understood and agreed that any such payment by
the Reinsurers will (to the extent of such payment) fully
discharge and release the Reinsurers from any and all further
liability in connection therewith"; subject to such provisions
not contravening any Law of the State of Incorporation;
(j) INITIATING CLAIMS: contain a provision entitling any
Indemnitee to initiate a claim under any policy in the event
of the refusal or failure of Lessee to do so;
(k) INDEMNITIES: accept and insure the indemnity provisions of the
Lease to the extent of the risks covered by the policies; and
(l) SCOPE OF COVERAGE PROVIDED: The policies and insurance
provisions set forth above for the benefit of the additional
insureds are at all times subject to the policy terms,
conditions, limitations, exclusions and deductibles and shall
only apply to the extent that Lessee has agreed to protect the
additional insureds by its agreements to indemnify the
additional insureds pursuant to the Lease and then only in
their capacity as owner, lessor or lienholder.
1.5 DEDUCTIBLES
Lessee shall be responsible for any and all deductibles under the
Insurance.
1.6 APPLICATION OF INSURANCE PROCEEDS
The Insurance will be endorsed to provide for payment of proceeds as
follows:
(a) EVENT OF LOSS: all insurance payments received as the result
of an Event of Loss occurring during the Term will be paid to
Lessor, and Lessor will pay the remaining balance of those
amounts to Lessee after deduction of all amounts which may be
or become payable by Lessee to Lessor under the Lease and the
Other Agreements (including under Section 11.1(b));
(b) EXCEEDING DAMAGE NOTIFICATION THRESHOLD: all insurance
proceeds related to any property, damage or loss to the
Aircraft, any Engine or any Part occurring during the Term not
constituting an Event of Loss and in excess of the Damage
Notification Threshold will be paid to Lessor and applied in
payment (or to reimburse Lessee) for repairs or replacement
property upon Lessor being satisfied that the repairs or
replacement have been effected in accordance with the Lease;
(c) BELOW DAMAGE NOTIFICATION THRESHOLD: insurance proceeds in
amounts below the Damage Notification Threshold may be paid by
the insurer directly to Lessee;
(d) LIABILITY PROCEEDS: all insurance proceeds in respect of third
party liability will, except to the extent paid by the
insurers to the relevant third party, be paid to Lessor to be
paid directly in satisfaction of the relevant liability or to
Lessee in reimbursement of any payment so made; and
7-4
(e) DEFAULT: notwithstanding any of the foregoing paragraphs, if
at the time of the payment of any such insurance proceeds a
Default has occurred and is continuing, all such proceeds will
be paid to or retained by Lessor to be applied toward payment
of any amounts which may be or become payable by Lessee in
such order as Lessor may elect.
To the extent that insurance proceeds are paid to Lessee, Lessee agrees
to hold such proceeds in trust and comply with the foregoing provisions
and apply or pay over such proceeds as so required.
1.7 UNITED STATES GOVERNMENTAL INDEMNITY
Notwithstanding any of the foregoing paragraphs, in the event of a
Permitted Sub-Lease to, or a requisition of use by, the United States
or any Governmental Entity whose obligations have the full faith and
credit of the federal Government of the United States, Lessor agrees to
accept in lieu of insurance required hereunder indemnification or
insurance from the United States or such a Governmental Entity in a
form reasonably acceptable to Lessor and Owner and against such risks
and in such amounts and on such terms such that when added to the
Insurance maintained by Lessee, Lessee is in full compliance with the
requirements of Section 9 and this Schedule.
1.8 REPORT FROM FAA
In respect of any Insurances under of this Schedule 7 obtained by
Lessee from the FAA, Lessee shall (i) furnish to Lessor copies of any
certificates of insurance issued by the FAA in respect of such
insurance and (ii) notify Lessor and the Additional Insureds of any
cancellation, lapse or material change in such policy (including by
reason of any failure to renew or pay premiums) immediately following
Lessee's receipt of notice thereof or its publication in the Federal
Register.
7-5
SCHEDULE 8
FORM OF LEGAL OPINIONS
PART A - FORM OF ORRICK LEGAL OPINION
________, 200___
[LESSOR]
c/o GE Capital Aviation Services, Inc.
000 Xxxx Xxxxx Xxxx
Xxxxxxxx, Xxxxxxxxxxx 00000
Re: LEASE OF ONE (1) [DESCRIBE AIRCRAFT]; AIRCRAFT MANUFACTURER'S
SERIAL NO. ________
Ladies and Gentlemen:
We have acted as special counsel to Kitty Hawk AirCargo, Inc., a Texas
corporation ("Lessee"), Kitty Hawk Inc., a Delaware corporation ("KHI"), and
Kitty Hawk Cargo, Inc., a Texas corporation ("KHC"), in connection with the
transactions contemplated by the Aircraft Lease Agreement dated as of
______________, 200___ between [LESSOR] (the "Lessor") and the Lessee in respect
of the Aircraft bearing manufacturer's serial number ____________ ("Lease"). As
used herein, the term "Lease" means and includes the aforementioned Aircraft
Lease Agreement which incorporates the Common Terms Agreement (as defined
therein). Capitalized terms used in this opinion letter and not otherwise
defined herein shall have the meanings assigned thereto (or incorporated by
reference) in the Lease.
In connection with rendering the opinions contained herein, we have
examined executed originals or copies of the following:
(i) the Lease;
(ii) the Common Terms Agreement;
(iii) the Lessee Guaranty dated as of _______________ executed by
KHI;
(iv) the Lessee Guaranty dated as of _______________ executed by
KHC; and
(v) the Certificate of ________________, in [his/her] capacity as
General Counsel of the Lessee, KHI and KHC, respectively,
attached hereto as Attachment 1. [THIS CERTIFICATE TO COME
FROM IN-HOUSE COUNSEL]
The documents listed above in paragraphs (i) through (iv) are
collectively referred to herein as the "Principal Documents." The transactions
contemplated by the Principal Documents are referred to herein as the
"Transaction."
8-1
In addition, we have reviewed such other documents, agreements,
instruments, corporate records and certificates of the Lessee, KHI and KHC, and
have made such inquiries of such officers and representatives and have made such
investigations of law, as we have deemed relevant and necessary as a basis for
the opinions hereinafter set forth.
As to various questions of fact relevant to this letter, we have
relied, without independent investigation, upon certificates of public officials
and/or officers of the Lessee, KHI, KHC or their respective designees, and
representations and warranties in the Principal Documents of the parties
thereto, all of which we assume to be true, correct and complete. We have made
no investigation or review of any matters relating to the Lessee, KHI, KHC or
any other Person other than as expressly listed herein. Further, we have made no
special investigation of the business operations of the Lessee, KHI or KHC for
the purpose of identifying laws or regulations to which any of the Lessee, KHI
or KHC is subject. We wish to inform you that our knowledge is necessarily
limited due to scope of our review.
With your permission we have assumed the following: (a) the
authenticity of original documents and the genuineness of all signatures; (b)
the conformity to the originals of all documents submitted to us as copies; (c)
the truth, accuracy and completeness of the information, factual matters,
representations and warranties as to matters of fact contained in the records,
documents, instruments and certificates we have reviewed; (d) the legal capacity
of natural Persons; (e) the Lessee is a corporation validly existing under the
laws of Texas; (f) KHI is a corporation validly existing under the laws of
Delaware; (g) KHC is a corporation validly existing under the laws of Texas; (h)
the valid and due authorization, execution and delivery by each Person of the
Principal Documents to which they are a party; (i) the good standing of the
parties to the Principal Documents under the laws of all applicable
jurisdictions; (j) the full corporate, trust, partnership, limited liability or
other power of each of the parties to the Principal Documents, to execute,
deliver and perform its respective obligations under the Principal Documents;
(k) each of the Principal Documents constitutes the legal, valid and binding
obligation of each party thereto (other than the Lessee, KHI and KHC),
enforceable against each such party in accordance with its respective terms; (l)
the Lessee is and at all relevant times will be a "citizen of the United States"
as defined in 49 United States Code Section 40102(a)(15), (m) the Lessee is and
at all relevant times will be a Certificated Air Carrier, (n) the Lessee did not
have, at any time prior to the Aircraft becoming subject to the Lease, any
right, title or interest in the Aircraft and the only, right, title or interest
of Lessee in the Aircraft at all relevant times is and will be that arising from
the Lease and (o) no Person has any right, title or interest in or to the
Aircraft, other than the Lessor and the Lessee.
Based on such examination and having regard for legal considerations
that we deem relevant and subject to the assumptions and qualifications set
forth above and below, we are of the opinion that:
1. The Principal Documents to which the Lessee, KHI or KHC is a party
constitute the legal, valid and binding obligations of such entity
enforceable against such entity in accordance with their respective
terms.
8-2
2. No consent, approval or authorization of, or filing, registration or
qualification with, giving of notice to or the taking of other action
by or in respect of any New York State or United States Government
Entity (other than the Federal Aviation Administration and the United
States Department of Transportation, as to which we express no opinion)
is required for the execution, delivery and performance by each of the
Lessee, KHI and KHC of the Principal Documents to which it is a party,
except such consents, approvals, authorizations, filings,
registrations, qualifications, notices and other actions as have been
given, achieved or accomplished and are in full force and effect.
3. Except for (i) the registration of the Aircraft in the name of Lessor
with the FAA pursuant to the Transportation Code (as defined below) and
(ii) the filing and recordation pursuant to the Transportation Code of
the documents referenced in the opinion of
_________________________________________, special FAA counsel ("FAA
Counsel"), with respect to the transactions contemplated by the Lease,
no further action is necessary under the laws of the State of New York
or the federal laws of the United States in order to establish and
perfect Lessor's interest in the Aircraft under the Lease as against
the Lessee and any third party in any applicable jurisdiction within
the United States. We note that we do not opine with respect to the
necessity of any filing which may be required under the Uniform
Commercial Code as in effect in the State of Delaware and Texas, as to
which you are receiving an opinion of _____________, counsel to the
Lessee, KHI and KHC in such jurisdiction.
4. The Lessor is entitled to the benefits of Section 1110 of Title 11 of
the United States Code as currently in effect with respect to the
Airframe and Engines; provided, however, that no opinion is expressed
as to any replacement Airframe or replacement Engine.
In giving the opinion set forth in paragraph 2 above, we have relied on
certificates of officers of the Lessee, KHI and KHC as to the absence of any
judgment, decree, injunction, writ or order of any court, arbitration board or
other New York State or United States Government Entity which would require any
consent, approval, authorization, filing, registration, qualification, notice or
other action described in said paragraph 2.
We have assumed that no fraud, dishonesty, forgery, coercion, duress or
breach of fiduciary duty exists or will exist with respect to any of the matters
relevant to the opinion expressed in this opinion letter.
The validity, enforceability and binding nature of the Principal
Documents may be limited by and subject to (a) applicable liquidation,
conservatorship, receivership, bankruptcy, insolvency, reorganization,
fraudulent transfer or conveyance, arrangement, moratorium or other similar laws
relating to or affecting creditors' rights and remedies generally from time to
time in effect; (b) general principles of equity (regardless of whether applied
in a proceeding in equity or at law), including principles of commercial
reasonableness, good faith and fair dealing; (c) the power of the courts to
award damages in lieu of equitable remedies; and (d) the limitation that the
right to indemnification and contribution contained in the Principal Documents
may be limited by federal or state laws or the policies underlying such laws.
8-3
We express no opinion as to the enforceability of any provisions
contained in the Principal Documents purporting to: (a) allow the acceleration
of the maturity of any indebtedness or obligation, the institution of
foreclosure proceedings or the exercise of any other rights without notice to
the Lessee, KHI or KHC; (b) provide for specific performance, injunctive relief
or liquidated damages; (c) restrict or waive access to, or covenant not to
assert, legal or equitable remedies, set-off, claims or other rights (including,
without limitation, proper jurisdiction, forum non conveniens and venue), waive
rights of the Lessee, KHI or KHC or impose duties on any secured party in
violation of New York law, or waive any right or duty under any marshalling and
exemption law or the right to recover direct, special, exemplary, punitive or
consequential damages; (d) relate to delay or failure by the Lessor or any of
its representatives to exercise any right, remedy, or option under the Principal
Documents not operating as a waiver; (e) establish evidentiary standards; (f)
permit the Lessor or any of its representatives to set-off Transaction or
non-Transaction obligations against any assets belonging to a third party or
otherwise held in a fiduciary capacity or against any certificates of deposit or
permit any Affiliate of the Lessor to offset Transaction or non-Transaction
obligations against any assets of the Lessee, KHI or KHC or their Affiliates or
purporting to permit any set-off or application of monies without prior notice
to the Lessee, KHI or KHC (as applicable) or purporting to permit any set-off or
application of monies as to unliquidated amounts; (g) expressly or implicitly
constitute any Person as the attorney-in-fact of Lessee or any other Person or
otherwise grant the Lessor or any of its representatives an irrevocable power of
attorney to take actions on behalf of the Lessee, KHI or KHC for the benefit or
protection of the Lessor or any of its representatives to the extent that the
Lessor or any of its representatives could not otherwise take such actions; (h)
vest jurisdiction over any property in any court to the extent such property is
not located in such jurisdiction; (i) covenant to take actions, the taking of
which is discretionary with or subject to the approval of a third party or which
are otherwise subject to contingency, the fulfillment of which is not within the
control of the party so covenanting; (j) indemnify a party against liability for
its own wrongful or negligent acts or where such indemnification is contrary to
public policy; (k) impose penalties, forfeitures, late payment charges, or
increasing an interest rate upon delinquency in payment or upon the occurrence
of a default; (l) permit various self-help or summary remedies without notice or
opportunity for hearing or correction; (m) provide for a waiver of broadly or
vaguely stated rights or unknown future rights and/or providing that rights or
remedies are not exclusive, that every right or remedy is cumulative and may be
exercised in addition to, or with, any right or remedy or that the election of
some particular remedy or remedies does not preclude recourse to one or another
remedy; (n) permit any Person to determine, in its sole and absolute discretion,
the application of the proceeds from any disposition of collateral, where such
application may be contrary to statutory provisions governing such application;
(o) construe, interpret, and/or resolve any inconsistencies or ambiguities in
the Principal Documents in favor of a party; (p) provide for the submission by
the Lessee, KHI or KHC to the jurisdiction of any court other than a New York
State court or provide that venue is proper in any particular court; (q) provide
for enforcement of any judgment against Lessee, KHI or KHC in any court other
than a New York State court or a U.S. federal court sitting in New York, New
York; (r) provide for a waiver of rights to termination of the Lease or
diminution of Rent, Supplemental Rent or other amounts payable under the Lease
in the event the Lease is terminated in whole or in part by operation of Law; or
(s) provide for a waiver of jury trial. In addition, we express no opinion as to
the enforceability of (i) Section 15.8(g)(iii) of the Common Terms Agreement,
(ii) any provision
8-4
contained in the Principal Documents that a specific number of days constitutes
reasonable notice under applicable law or (iii) any provision contained in the
Principal Documents prohibiting oral amendments to or waivers of provisions of
such documents or limiting the effect of a course of dealing between parties
thereto.
The foregoing opinions are subject to the qualification that the
enforceability of certain waivers, rights and remedies provided in any of the
Principal Documents may be unavailable or limited by certain laws and judicial
decisions. In respect of such qualification, however, we are of the opinion that
such laws and judicial decisions do not, subject to the other exceptions and
limitations contained in this opinion, make the remedies (including, without
limitation, the remedy of sale following default) generally afforded by any of
the Principal Documents inadequate for the practical realization of the
principal benefits to be provided by the Principal Documents.
We note that the provisions of the Principal Documents that permit the
Lessor or any of its representatives to take actions or make determinations, or
to benefit from indemnities and similar undertakings by any other party thereto
may be subject to a requirement that such action be taken or such determination
be made, and that any action or inaction by such persons that may give rise to a
request for payment under such an undertaking be taken, or not taken, or a
reasonable basis and in good faith.
Without limiting the foregoing, we express no opinion as to the
enforceability or the effect of any demand sent in connection with any Guaranty
prior to the occurrence of any Default or Event of Default. We express no
opinion with respect to the effect on the enforceability of any Guaranty of any
modification or alteration affecting the obligations of Lessee or an election of
remedies by Lessor, which occurs without notice to or the consent of the
Guarantors.
We express no opinion as to matters governed by laws other than the
Included Laws (as defined below). We have made no special investigation or
review of any published constitutions, treaties, laws, rules or regulations, or
judicial or administrative decisions ("Laws"), other than a review of (i) the
laws of the State of New York and (ii) the federal laws of the United States of
America (except as excluded in the next sentence). For purposes of this opinion,
the term "Included Laws" means the items described in clauses (i) and (ii) of
the preceding sentence that are, in our experience, normally applicable to
transactions of the type contemplated in the Principal Documents. The term
Included Laws specifically excludes (a) Laws of any counties, cities towns,
municipalities, and special political subdivisions and any agencies thereof, (b)
Laws relating to land use, zoning, and building code issues, taxes,
environmental issues, intellectual property Laws, antitrust issues, Federal
Reserve Board margin regulation issues, federal or state antitrust laws, federal
or state laws relating to taxation, and federal or state securities or blue sky
laws, (c) matters arising under the Federal Aviation Act of 1958, as amended
("FAA Act"), and Subtitle VII of Xxxxx 00, Xxxxxx Xxxxxx Code (the
"Transportation Code") and the rules and regulations promulgated thereunder,
including, without limitation, FARs, and (d) laws, rules, and regulations
relating to the regulation of the conduct of the business of Lessee.
8-5
In rendering these opinions, as to all matters relating to the FAA Act
and the rules and regulations promulgated thereunder, including, without
limitation, FARs, we have assumed the correctness of the opinions contained in
an opinion letter of FAA Counsel dated the date hereof, which is being delivered
to you in connection with the transactions contemplated by the Principal
Documents, and we express no opinion regarding matters addressed by FAA Counsel.
This opinion letter addresses the legal consequences of only the facts
existing or assumed as of the date hereof. The opinions expressed herein are
based on an analysis of existing laws and court decisions and cover certain
matters not directly addressed by such authorities. Such opinions may be
affected by actions taken or omitted, events occurring, or changes in the
relevant facts, after the date hereof. We have not undertaken to determine, or
to inform any Person of, the occurrence or non-occurrence of any such actions,
events, or changes. This opinion is solely for you in connection with the
Transaction and may not be relied upon or used by, circulated, quoted, or
referred to, nor may copies hereof be delivered to, any other Person without our
prior written approval. We disclaim any obligation to update this opinion letter
for events occurring or coming to our attention after the date hereof.
Very truly yours,
XXXXXX XXXXXXXXXX & XXXXXXXXX LLP
8-6
Attachment 1
CERTIFICATE OF KITTY HAWK AIRCARGO, INC., A TEXAS CORPORATION
("LESSEE"), KITTY HAWK INC., A DELAWARE CORPORATION ("KHI"), AND KITTY
HAWK CARGO, INC., A TEXAS CORPORATION ("KHC")
I, ______________, the duly authorized General Counsel of Kitty Hawk
AirCargo, Inc., a Texas corporation ("Lessee"), Kitty Hawk Inc., a Delaware
corporation ("KHI"), and Kitty Hawk Cargo, Inc., a Texas corporation ("KHC"),
hereby certify for purposes of the opinion of Xxxxxx Xxxxxxxxxx & Xxxxxxxxx LLP
(the "Opinion") in connection with that certain Aircraft Lease Agreement dated
as of _______________ (the "Lease"), by and among the Lessee and [LESSOR] (the
"Lessor"), that:
1. No proceedings for the dissolution, liquidation, consolidation or
merger of the Lessee, KHI or KHC have been commenced or are threatened
as of the date hereof.
2. No consent, approval or authorization of, or filing, registration or
qualification with, giving of notice to or the taking of other action
by or in respect of any New York State or United States Government
Entity (other than the Federal Aviation Administration and the United
States Department of Transportation) is required for the execution,
delivery and performance by each of the Lessee, KHI and KHC of the
Principal Documents to which it is a party, except such consents,
approvals, authorizations, filings, registrations, qualifications,
notices and other actions as have been given, achieved or accomplished
and are in full force and effect.
Capitalized terms not otherwise defined herein are used as defined in
the Opinion, a copy of which has been furnished to the undersigned.
IN WITNESS WHEREOF, the undersigned duly authorized officer of the
Lessee, KHI and KHC has executed this Certificate this ___ day of _____________.
____________________________________
Name: ______________
Title: ______________
8-7
PART B - FORM OF IN-HOUSE LEGAL OPINION
________, 200___
[LESSOR]
c/o GE Capital Aviation Services, Inc.
000 Xxxx Xxxxx Xxxx
Xxxxxxxx, Xxxxxxxxxxx 00000
Re: LEASE OF ONE (1) [DESCRIBE AIRCRAFT]; AIRCRAFT MANUFACTURER'S
SERIAL NO. ________
Ladies and Gentlemen:
I am the General Counsel of Kitty Hawk, Inc., a Delaware corporation
("KHI"). Reference is made to the transactions contemplated by the Aircraft
Lease Agreement dated as of ______________, 200___ between [LESSOR] (the
"Lessor") and Kitty Hawk Aircargo, Inc., a wholly-owned subsidiary of KHI (the
"Lessee") in respect of the Aircraft bearing manufacturer's serial number
____________ ("Lease"). As used herein, the term "Lease" means and includes the
aforementioned Aircraft Lease Agreement which incorporates the Common Terms
Agreement (as defined therein). Capitalized terms used in this opinion letter
and not otherwise defined herein shall have the meanings assigned thereto (or
incorporated by reference) in the Lease.
In connection with rendering the opinions contained herein, I have
examined executed originals or copies of the following:
(i) the Lease;
(ii) the Common Terms Agreement;
(iii) the Lessee Guaranty dated as of _______________ executed by
KHI;
(iv) the Lessee Guaranty dated as of _______________ executed by
Kitty Hawk Cargo, Inc. ("KHC"); and
The documents listed above in paragraphs (i) through (iv) are
collectively referred to herein as the "Principal Documents." The transactions
contemplated by the Principal Documents are referred to herein as the
"Transaction."
In addition, I have reviewed such other documents, agreements,
instruments, corporate records and certificates of the Lessee, KHI and KHC, and
have made such inquiries of such officers and representatives and have made such
investigations of law, as I have deemed relevant and necessary as a basis for
the opinions hereinafter set forth.
8-8
As to various questions of fact relevant to this letter, I have relied,
without independent investigation, upon certificates of public officials and/or
officers of the Lessee, KHI, KHC or their respective designees, and
representations and warranties in the Principal Documents of the parties
thereto, all of which I assume to be true, correct and complete.
With your permission I have assumed the following: (a) the authenticity
of original documents and the genuineness of all signatures; (b) the conformity
to the originals of all documents submitted to me as copies; (c) the truth,
accuracy and completeness of the information, factual matters, representations
and warranties as to matters of fact contained in the records, documents,
instruments and certificates I have reviewed; (d) the legal capacity of natural
Persons; (e) that the Lessee is a corporation validly existing under the laws of
Texas; (f) that KHI is a corporation validly existing under the laws of
Delaware; (g) that KHC is a corporation validly existing under the laws of
Texas; (h) the valid and due authorization, execution and delivery by each
Person, of the Principal Documents to which they are a party; (i) the good
standing of the parties to the Principal Documents under the laws of all
applicable jurisdictions; (j) the full corporate, trust, partnership, limited
liability or other power of each of the parties to the Principal Documents, to
execute, deliver and perform its respective obligations under the Principal
Documents; (k) the due authorization, execution and delivery on behalf of each
of the respective parties thereto, of documents referred to herein and (l) that
each of the Principal Documents constitutes the legal, valid and binding
obligation of each party thereto, enforceable against each such party in
accordance with its respective terms; except, in the case of clauses (a), (h),
(i) and (k), with respect to Lessee, KHC and KHI.
Based on such examination and having regard for legal considerations
that I deem relevant and subject to the assumptions and qualifications set forth
above and below, I am of the opinion that:
1. Lessee is a "citizen of the United States" as defined in 00 Xxxxxx
Xxxxxx Code Section 40102(a)(15).
2. Lessee is a Certificated Air Carrier.
I express no opinion as to matters governed by laws other than the
Included Laws (as defined below). I have made no special investigation or review
of any published constitutions, treaties, laws, rules or regulations, or
judicial or administrative decisions ("Laws"), other than a review of the
federal laws of the United States of America, including, without limitation,
matters arising under the Federal Aviation Act of 1958, as amended ("FAA Act"),
and Subtitle VII of Xxxxx 00, Xxxxxx Xxxxxx Code (the "Transportation Code") and
the rules and regulations promulgated thereunder, including, without limitation,
FARs. For purposes of this opinion, the term "Included Laws" means the items
described in the preceding sentence that are, in my experience, normally
applicable to transactions of the type contemplated in the Principal Documents.
The term Included Laws specifically excludes (a) Laws of any counties, cities
towns, municipalities, and special political subdivisions and any agencies
thereof, (b) Laws relating to land use, zoning, and building code issues, taxes,
environmental issues, intellectual property Laws, antitrust issues, Federal
Reserve Board margin regulation issues, federal or state antitrust laws, federal
or state laws relating to taxation, and federal or state securities or blue sky
8-9
laws, and (c) laws, rules, and regulations relating to the regulation of the
conduct of the business of Lessee.
This opinion letter addresses the legal consequences of only the facts
existing or assumed as of the date hereof. The opinions expressed herein are
based on an analysis of existing laws and court decisions and cover certain
matters not directly addressed by such authorities. Such opinions may be
affected by actions taken or omitted, events occurring, or changes in the
relevant facts, after the date hereof. I have not undertaken to determine, or to
inform any Person of, the occurrence or non-occurrence of any such actions,
events, or changes. This opinion is solely for you in connection with the
Transaction and may not be relied upon or used by, circulated, quoted, or
referred to, nor may copies hereof be delivered to, any other Person without our
prior written approval. I disclaim any obligation to update this opinion letter
for events occurring or coming to our attention after the date hereof.
Very truly yours,
8-10
FORM OF LOCAL COUNSEL LEGAL OPINION
________, 200___
[LESSOR]
c/o GE Capital Aviation Services, Inc.
000 Xxxx Xxxxx Xxxx
Xxxxxxxx, Xxxxxxxxxxx 00000
Re: LEASE OF ONE (1) BOEING 737-300F; AIRCRAFT MANUFACTURER'S
SERIAL NO. ________
Ladies and Gentlemen:
We have acted as special counsel to Kitty Hawk Aircargo, Inc., a Texas
corporation ("Lessee"), Kitty Hawk, Inc., a Delaware corporation ("KHI"), and
Kitty Hawk Cargo, Inc., a Delaware corporation ("KHC"), in connection with the
transactions contemplated by the Aircraft Lease Agreement dated as of
______________, 200___ between [LESSOR] (the "Lessor") and the Lessee in respect
of the Aircraft bearing manufacturer's serial number ____________ ("Lease"). As
used herein, the term "Lease" means and includes the aforementioned Aircraft
Lease Agreement which incorporates the Common Terms Agreement (as defined
therein). Capitalized terms used in this opinion letter and not otherwise
defined herein shall have the meanings assigned thereto (or incorporated by
reference) in the Lease.
SCOPE OF EXAMINATION AND GENERAL
ASSUMPTIONS AND QUALIFICATIONS
In connection with rendering the opinions contained herein, we have
examined executed originals or copies of the following:
(i) the Lease;
(ii) the Common Terms Agreement;
(iii) the Lessee Guaranty dated as of _______________ executed by
KHI;
(iv) the Lessee Guaranty dated as of _______________ executed by
KHC;
(v) a certified copy of the Certificate of Incorporation, as
amended, of the Lessee, as certified by the Secretary of State
of the State of Texas on ______________ (the "Lessee
Certificate of Incorporation");
(vi) a copy of the Bylaws, as amended, of the Lessee certified as
current as of the date hereof (the "Lessee Bylaws");
(vii) a certified copy of the Second Amended and Restated
Certificate of Incorporation, as amended, of KHI, as certified
by the Secretary of State of the State of Delaware on
_______________ (the "KHI Certificate of Incorporation");
8-11
(viii) a copy of the Second Amended and Restated Bylaws, as amended,
of KHI certified as current as of the date hereof (the "KHI
Bylaws");
(ix) a certified copy of the Certificate of Incorporation of KHC,
as certified by the Secretary of State of the State of
Delaware on _______________ (the "KHC Certificate of
Incorporation");
(x) a copy of the Bylaws of KHC certified as current as of the
date hereof (the "KHC Bylaws");
(xi) a certificate from the Secretary of State of the State of
Texas indicating that the Lessee has an active status in the
State of Texas as of ____________;
(xii) a certificate from the Comptroller of Public Accounts of the
State of Texas certifying that Lessee is in good standing in
the State of Texas as of ____________;
(xiii) a certificate from the Secretary of State of the State of
Delaware indicating that KHI is in existence and in good
standing in the State of Delaware as of ____________;
(xiv) a certificate from the Secretary of State of the State of
Delaware indicating that KHC is in existence and in good
standing in the State of Delaware as of ____________;
(xv) a written consent of the Board of Directors of the Lessee with
respect to the Transaction (as defined below);
(xvi) resolutions of the Board of Directors of KHI and the Aircraft
Acquisition Committee of the Board of Directors of KHI with
respect to the Transaction;
(xvii) a written consent of the Board of Directors of KHC with
respect to the Transaction; and
(xviii) the Certificate of ________________, in his capacity as
General Counsel of the Lessee, KHI and KHC, attached hereto as
Attachment 1, to the effect that (a) the Lessee, KHI and KHC
have identified and delivered or made available to us copies
of all material agreements, indentures, or instruments to
which the Lessee, KHI or KHC is a party or by which it is
bound, a list of which is set forth in Exhibit A thereto (the
"Material Agreements"); (b) the Lessee, KHI and KHC have
delivered to us copies of all judgments, injunctions, writs,
decrees, and orders of any court or governmental agency to
which the Lessee, KHI or KHC is a party or by which it is
bound, a list of which is set forth in Exhibit B thereto (the
"Applicable Orders") and (c) the other matters addressed
therein.
The documents listed above in paragraphs (i) through (iv) are
collectively referred to herein as the "Principal Documents." The transactions
contemplated by the Principal Documents are referred to herein as the
"Transaction." The documents listed above in paragraphs (v) through (xviii) are
collectively referred to herein as the "Constituent Documents."
In addition, we have reviewed such other documents, agreements,
instruments, corporate records and certificates of the Lessee, KHI and KHC, and
have made such inquiries of such officers and representatives and have made such
investigations of law, as we have deemed relevant and necessary as a basis for
the opinions hereinafter set forth.
8-12
As to various questions of fact relevant to this letter, we have
relied, without independent investigation of their accuracy, upon certificates
of public officials and/or officers of the Lessee, KHI, KHC or their respective
designees, and representations and warranties in the Principal Documents of the
parties thereto, all of which we assume to be true, correct and complete. We
have made no investigation or review of any matters relating to the Lessee, KHI,
KHC or any other Person other than as expressly listed herein. Further, we have
made no special investigation of the business operations of the Lessee, KHI or
KHC for the purpose of identifying laws or regulations to which any of the
Lessee, KHI or KHC is subject. We wish to inform you that our knowledge is
necessarily limited due to scope of our review.
With your permission we have assumed the following: (a) the
authenticity of original documents and the genuineness of all signatures (other
than Lessee, KHI and KHC); (b) the conformity to the originals of all documents
submitted to us as copies; (c) the truth, accuracy and completeness of the
information, factual matters, representations and warranties as to matters of
fact contained in the records, documents, instruments and certificates we have
reviewed; (d) the legal capacity of natural Persons; (e) the valid and due
authorization, execution and delivery by each Person (other than the Lessee,
KHI, and KHC), of the Principal Documents to which they are a party; (f) the
good standing of the parties (other than the Lessee, KHI, and KHC) to the
Principal Documents under the laws of all applicable jurisdictions; (g) the full
corporate, trust, partnership, limited liability or other power of each of the
parties to the Principal Documents (other than the Lessee, KHI, and KHC), to
execute, deliver and perform its respective obligations under the Principal
Documents; (h) each of the Principal Documents constitutes the legal, valid and
binding obligation of each party thereto, enforceable against each such party in
accordance with its respective terms; (i) the Lessee is and at all relevant
times will be a "citizen of the United States" as defined in 49 United States
Code Section 40102(a)(15), (j) the Lessee is and at all relevant times will be a
Certificated Air Carrier, (k) the Lessee did not have, at any time prior to the
Aircraft becoming subject to the Lease, any right, title or interest in the
Aircraft and the only, right, title or interest of Lessee in the Aircraft at all
relevant times is and will be that arising from the Lease and (l) no Person has
any right, title or interest in or to the Aircraft, other than the Lessor and
the Lessee.
We have assumed, with your consent and without independent
verification, for the purpose of the opinions expressed herein that no mutual
mistake, misunderstanding or fraud exists with respect to any of the matters
relevant to such opinions. We have also assumed, with your consent, that Lessee,
KHI and KHC and their agents have acted in good faith and that consummation of
the transactions contemplated by the Principal Documents has complied or will
comply with any requirement of good faith, fair dealing and conscionability.
We express no opinion as to matters governed by laws other than the
Included Laws (as defined below). We have made no special investigation or
review of any published constitutions, treaties, laws, rules or regulations, or
judicial or administrative decisions ("Laws"), other than a review of (i) the
laws of the State of Texas, (ii) the federal laws of the United States of
America (except as excluded in the next sentence) and (iii) the General
Corporation Law of the State of Delaware. For purposes of this opinion, the term
"Included Laws" means the items described in clauses (i), (ii) and (iii) of the
preceding sentence that are, in our experience, normally applicable to
transactions of the type contemplated in the Principal Documents. The term
Included Laws
8-13
specifically excludes (a) Laws of any counties, cities towns, municipalities,
and special political subdivisions and any agencies thereof, (b) Laws relating
to land use, zoning, and building code issues, taxes, environmental issues,
intellectual property Laws, antitrust issues, Federal Reserve Board margin
regulation issues, federal or state antitrust Laws, federal or state Laws
relating to taxation, and federal or state securities or blue sky Laws, (c)
matters arising under the Federal Aviation Act of 1958, as amended ("FAA Act"),
and Subtitle VII of Xxxxx 00, Xxxxxx Xxxxxx Code (the "Transportation Code") and
the rules and regulations promulgated thereunder, including, without limitation,
FARs, and (d) Laws, rules, and regulations relating to the regulation of the
conduct of the business of Lessee.
In rendering these opinions, as to all matters relating to the FAA Act
and the rules and regulations promulgated thereunder, including, without
limitation, FARs, we have assumed the correctness of the opinions contained in
an opinion letter of FAA Counsel dated the date hereof, which is being delivered
to you in connection with the transactions contemplated by the Principal
Documents, and we express no opinion regarding matters addressed by FAA Counsel.
SPECIFIC LIMITATIONS AND QUALIFICATIONS ON
OPINION REGARDING GOOD STANDING, POWER, AUTHORITY AND AUTHORIZATION
Our opinion in paragraphs 1 and 2 below are based solely and
exclusively upon our review of the Constituent Documents.
SPECIFIC LIMITATIONS AND QUALIFICATIONS ON
OPINION REGARDING NO BREACHES, VIOLATIONS OR LIENS
In giving the opinion set forth in paragraph 3 below, we have relied on
certificates of officers of the Lessee, KHI and KHC as to the absence of any
judgment, decree, injunction, writ or order of any court, arbitration board or
other State of Texas or United States Government Entity which would be
contravened by the execution, delivery or performance by the Lessee, KHI or KHC
of any of the Principal Documents.
SPECIFIC LIMITATIONS AND QUALIFICATIONS ON
OPINION REGARDING CHOICE OF NEW YORK LAW
The Lease provides that the laws of the State of New York shall govern
all matters, including the construction, validity, and performance thereof.
Section 35.51 of the Texas UCC provides that if parties agree in writing that
the law of a particular jurisdiction governs an issue relating to a "qualified
transaction" (including the validity or enforceability of an agreement relating
to the transaction or a provision of the agreement) and the transaction bears a
"reasonable relation" to that jurisdiction, then the law, other than conflict of
laws rules, of that jurisdiction governs the issue regardless of whether the
application of that law is contrary to a fundamental or public policy of the
State of Texas or of any other jurisdiction. A "qualified transaction" includes
a transaction under which a party pays, or is obligated to pay, at least
$1,000,000. Section 35.51 of the Texas UCC provides that a transaction bears a
"reasonable relation" to a particular jurisdiction if the transaction, the
subject matter of the transaction, or a
8-14
party to the transaction is reasonably related to that jurisdiction. In
addition, Section 35.51 of the Texas UCC contains specific factual criteria, and
provides that the presence of any one of the criteria will satisfy the
"reasonable relation" test. Accordingly, for purposes of the opinion set forth
in paragraph 5 below, and in light of the factual criteria specified in Section
35.51 of the Texas UCC, we have, with your consent, assumed the following facts:
(a) all payments by Lessee will be paid to Lessor in the State of
New York;
(b) a substantial part of the negotiations relating to the
Transactions occurred in the State of New York; and
(c) the choice of governing law contained in the Principal
Documents was willingly and knowingly agreed to by all parties
thereto.
The Texas Legislature enacted SECTION 35.51 of the Texas UCC to allow
"PARTIES ENTERING INTO CERTAIN BUSINESS TRANSACTIONS INVOLVING SUBSTANTIAL
DOLLAR AMOUNTS TO CHOOSE, THROUGH WRITTEN AGREEMENT, THE LAW THAT WILL GOVERN
THEIR CONTRACTUAL RELATIONS." Xxxx Analysis, H.B. 1113, Committee on Business
and Industry. There is no evidence in the statute or any available legislative
history to suggest that the legislature intended to allow a court to consider
whether a choice of law was a sham or subterfuge if the transaction meets the
literal terms of the statute. As a result, it is reasonable to conclude that a
Texas court would give effect to the language of the statute and objectively
apply the facts, as outlined above, to uphold the choice of New York law.
We note that the determination of applicable law as to specific issues
may vary from the choice of law expressed in the Principal Documents, where
another statute of the State of Texas or a statute of the United States provides
that such issue is governed by the law of a particular jurisdiction. For
example, notwithstanding the choice of law contained in the Principal Documents,
certain matters pertaining to the power and authority of corporations,
partnerships, limited liability companies, and other entities will be governed
by the law of the jurisdiction of incorporation, formation, or organization of
each such entity.
SPECIFIC LIMITATIONS AND QUALIFICATIONS ON
OPINION REGARDING USURY
In giving the opinion set forth in paragraph 7 below, we have assumed
that the Lease is a true lease and not a financing lease.
OPINIONS
Based on such examination and having regard for legal considerations
that we deem relevant and subject to the assumptions and qualifications set
forth above and below, we are of the opinion that:
8-15
1. The Lessee is a corporation validly existing and in good standing under
the laws of the State of Texas. KHI is a corporation validly existing
and in good standing under the laws of the State of Delaware. KHC is a
corporation validly existing and in good standing under the laws of the
State of Delaware.
2. Each of the Lessee, KHI and KHC has all requisite corporate power and
authority to execute and deliver the Principal Documents to which it is
a party and to perform its respective obligations thereunder. The
execution, delivery and performance of the Principal Documents to which
it is a party by each of the Lessee, KHI and KHC, and the consummation
by each of the Lessee, KHI and KHC of the transactions contemplated
thereby have been authorized by all necessary corporate action on the
part of the Lessee, KHI and KHC.
3. The execution and delivery by the Lessee, KHI and KHC of each of the
Principal Documents to which it is a party and the performance by each
of the Lessee, KHI and KHC of its respective obligations thereunder
will not (a) contravene the Lessee Certificate of Incorporation, the
Lessee Bylaws, the KHI Certificate of Incorporation, the KHI Bylaws,
the KHC Certificate of Incorporation or the KHC Bylaws, (b) violate or
result in the creation or imposition of any material Lien on any of the
properties or revenues of the Lessee, KHI or KHC (except any Liens
created pursuant to the Principal Documents) pursuant to (i) any
Included Laws applicable to the Lessee, KHI or KHC or (ii) any
Applicable Orders, or (c) constitute a breach of, constitute a default
under or result in the creation or imposition of any material Lien on
any of the properties or revenues of the Lessee, KHI or KHC (except any
Liens created pursuant to the Principal Documents) pursuant to any of
the Material Agreements.
4. Assuming (i) the registration of the Aircraft in the name of Lessor
with the FAA pursuant to the Transportation Code (as defined below),
(ii) the filing and recordation pursuant to the Transportation Code of
the documents referenced in the opinion of
_________________________________________, special FAA counsel ("FAA
Counsel"), and (iii) the filing of a financing statement under Article
9 of the Uniform Commercial Code of the State of Texas (as to Lessee)
naming Lessee as debtor and Lessor as secured party, with respect to
such portion, if any, of the Aircraft as may not be covered by
recording pursuant to the Transportation Code to the extent the
Aircraft constitutes personal property for which perfection can be
achieved through the filing of a financing statement, no further filing
or recording of any document is necessary under applicable state Law in
order to establish and perfect Lessor's interest in the Aircraft under
the Lease as against Lessee and any third parties.
5. A Texas court, or a federal court sitting in the State of Texas as the
forum state and applying State of Texas conflict of laws rules, would
give effect to the choice of New York law set forth in the Lease with
respect to general issues of contract validity, enforcement, and
interpretation.
6. The Principal Documents to which Lessee is a party have been duly
executed and delivered on behalf of Lessee. The Principal Documents to
which KHI is a party have
8-16
been duly executed and delivered on behalf of KHI. The Principal
Documents to which KHC is a party have been duly executed and delivered
on behalf of KHC.
7. The Lease does not violate applicable usury statutes of the State of
Texas.
In addition, we hereby advise you that we are not aware of any statute
of the State of Texas that would invalidate the Lessee's submission pursuant to
Section 15.8(b) of the Lease to the non-exclusive jurisdiction of the United
States District Court for the Southern District of New York and any New York
state court sitting in the County of New York, New York, and all related
appellate courts.
This opinion letter addresses the legal consequences of only the facts
existing or assumed as of the date hereof. The opinions expressed herein are
based on an analysis of existing Laws and court decisions and cover certain
matters not directly addressed by such authorities. Such opinions may be
affected by actions taken or omitted, events occurring, or changes in the
relevant facts, after the date hereof. We have not undertaken to determine, or
to inform any Person of, the occurrence or non-occurrence of any such actions,
events, or changes. This opinion is solely for you in connection with the
Transaction and may not be relied upon or used by, circulated, quoted, or
referred to, nor may copies hereof be delivered to, any other Person without our
prior written approval. We disclaim any obligation to update this opinion letter
for events occurring or coming to our attention after the date hereof.
Very truly yours,
Xxxxxx and Xxxxx, LLP
8-17
Attachment 1
CERTIFICATE OF KITTY HAWK AIRCARGO, INC., A TEXAS CORPORATION
("LESSEE"), KITTY HAWK INC., A DELAWARE CORPORATION ("KHI"), AND KITTY
HAWK CARGO, INC., A DELAWARE CORPORATION ("KHC")
I, ______________, the duly authorized General Counsel of Kitty Hawk
Aircargo, Inc., a Texas corporation ("Lessee"), Kitty Hawk, Inc., a Delaware
corporation ("KHI"), and Kitty Hawk Cargo, Inc., a Delaware corporation ("KHC"),
hereby certify for purposes of the opinion of Xxxxxx and Xxxxx, LLP (the
"Opinion") in connection with that certain Aircraft Lease Agreement dated as of
_______________ (the "Lease"), by and among the Lessee and [LESSOR] (the
"Lessor"), that:
1. Attached hereto as Exhibit A is a list of all the material agreements,
indentures, or instruments to which the Lessee, KHI or KHC is a party
or by which either of them is bound (the "Material Agreements"). For
purposes of this clause (a), an agreement, indenture or instrument must
call for the payment of more than $9,000,000 in the aggregate to be
considered material.
2. Attached hereto as Exhibit B is a list of all judgments, writs,
decrees, and orders of any court or governmental agency to which the
Lessee, KHI or KHC is a party or by which any of them is bound (the
"Applicable Orders"). The execution and delivery by the Lessee, KHI and
KHC of each of the Principal Documents to which it is a party and the
performance by each of the Lessee, KHI and KHC of its respective
obligations thereunder will not violate any Applicable Orders.
3. Attached hereto as Appendix 1 is a true, correct and complete copy of
the Certificate of Incorporation of the Lessee and all amendments
thereto, as of the date hereof, duly certified by the Secretary of
State of the State of Texas. Such Certificate has not been modified,
amended, rescinded, revoked or changed and remains in full force and
effect as of the date hereof.
4. Attached hereto as Appendix 2 is a true, correct and complete copy of
the Second Amended and Restated Certificate of Incorporation of KHI and
all amendments thereto, as of the date hereof, duly certified by the
Secretary of State of the State of Delaware. Such Certificate has not
been modified, amended, rescinded, revoked or changed and remains in
full force and effect as of the date hereof.
5. Attached hereto as Appendix 3 is a true, correct and complete copy of
the Certificate of Incorporation of KHC and all amendments thereto, as
of the date hereof, duly certified by the Secretary of State of the
State of Delaware. Such Certificate has not been modified, amended,
rescinded, revoked or changed and remains in full force and effect as
of the date hereof.
8-18
6. Attached hereto as Appendix 4 is a true, correct and complete copy of a
written consent[s] of the Board of Directors of the Lessee dated May 3,
2004 and [__________, 20__], at which the Principal Documents to which
Lessee is a party and the Transaction were approved. The resolutions
therein have not been modified, amended, rescinded, revoked or changed
and remain in full force and effect as of the date hereof.
7. Attached hereto as Appendix 5 is a true, correct and complete copy of
(A) the minutes of the meeting of the Board of Directors of KHI at
meeting a held on April 25, 2004, at which the Aircraft Acquisition
Committee was formed and delegated the authority to approve the
Principal Documents and the Transaction, (B) the resolutions of the
Aircraft Acquisition Committee of the Board of Directors of KHI dated
as of May 3, 2004 at which the Principal Documents to which KHI is a
party and the Transaction were approved and (C) the resolutions of
_______________ dated as of [__________, 20__] at which _______________
was approved. The resolutions therein have not been modified, amended,
rescinded, revoked or changed and remain in full force and effect as of
the date hereof.
8. Attached hereto as Appendix 6 is a true, correct and complete copy of
written consent[s] of the Board of Directors of KHC dated May 3, 2004
and [____________, 20__], at which the Principal Documents to which KHC
is a party and the Transaction were approved. The resolutions therein
have not been modified, amended, rescinded, revoked or changed and
remain in full force and effect as of the date hereof.
9. Attached hereto as Appendix 7 is a true, correct and complete copy of
the current bylaws of the Lessee, as amended. Such bylaws have not been
modified, amended, rescinded, revoked or changed and remain in full
force and effect as of the date hereof.
10. Attached hereto as Appendix 8 is a true, correct and complete copy of
the current bylaws of KHI, as amended. Such bylaws have not been
modified, amended, rescinded, revoked or changed and remain in full
force and effect as of the date hereof.
11. Attached hereto as Appendix 9 is a true, correct and complete copy of
the current bylaws of KHC, as amended. Such bylaws have not been
modified, amended, rescinded, revoked or changed and remain in full
force and effect as of the date hereof.
12. Each of the officers and directors of the Lessee, KHI and KHC are duly
elected and qualified officers and directors of their respective
companies.
13. No proceedings for the dissolution, liquidation, consolidation or
merger of the Lessee, KHI or KHC have been commenced or are threatened
as of the date hereof.
14. Principal Documents were duly executed and delivered by the officers
indicated thereon as executing same, and there are no extrinsic
agreements or understandings concerning the Principal Documents or the
transactions contemplated thereby that would modify or interpret the
terms of the Principal Documents, or the respective rights or
obligations of the parties thereunder.
8-19
Xxxxxx and Xxxxx, LLP is hereby authorized to rely on the Officer's
Certificates and the Secretary's Certificates of Lessee, KHC and KHI, dated as
of the date hereof, being delivered to the Lessor in connection with the
Transaction, in connection with the rendering of the Opinion.
Capitalized terms not otherwise defined herein are used as defined in
the Opinion, a copy of which has been furnished to the undersigned.
[This Space Intentionally Left Blank]
8-20
IN WITNESS WHEREOF, the undersigned duly authorized officer of the
Lessee, KHI and KHC has executed this Certificate this ___ day of
_______________.
_________________________________
Name: ______________
Title: ______________
8-21
EXHIBIT A
Material Agreements
8-22
EXHIBIT B
List of Applicable Orders
[TBD]
8-23
APPENDIX 1
Lessee Certificate of Incorporation and Amendments
(see attached)
8-24
APPENDIX 2
KHI Certificate of Incorporation and Amendments
(see attached)
8-25
APPENDIX 3
KHC Certificate of Incorporation and Amendments
(see attached)
8-26
APPENDIX 4
Lessee Resolutions
(see attached)
8-27
APPENDIX 5
KHI Resolutions
(see attached)
8-28
APPENDIX 6
KHC Resolutions
(see attached)
0-00
XXXXXXXX 0
Xxxxxx Xxxxxx
(see attached)
8-30
APPENDIX 8
KHI Bylaws
(see attached)
8-31
APPENDIX 9
KHC Bylaws
(see attached)
8-32
SCHEDULE 9
EVENTS OF DEFAULT
Each of the following events or conditions constitutes an Event of Default:
(a) NON-PAYMENT: Lessee fails to make any payment of (i) Rent on the due
date and such failure continues for three (3) Business Days or more;
(ii) Supplemental Rent on the due date and such failure continues for
five (5) Business Days or more; or (iii) any other amount payable under
the Lease on the due date therefor and such failure continues for ten
(10) Business Days or more; or
(b) INSURANCE: Lessee fails to comply with any provision of Section 9 or
Schedule 7, or any insurance required to be maintained under the Lease
is cancelled or terminated, or a notice of cancellation is given in
respect of any such insurance and replacement policies meeting the
requirements of Section 9, Schedule 7 and the applicable Lease are not
obtained on or prior to the effective date of such cancellation or
termination; or
(c) BREACH: Lessee fails to comply with any other provision of the Lease
not referenced in this Schedule 9 and, if such failure is in the
reasonable opinion of Lessor capable of remedy, such failure continues
for more and thirty (30) days after notice from Lessor to Lessee; or
(d) REPRESENTATION: any representation or warranty made (or deemed to be
repeated) by Lessee in or pursuant to the Lease or in any document or
certificate or statement is or proves to have been incorrect in any
material respect when made or deemed to be repeated;
(e) CROSS-DEFAULT:
(i) any amount in respect of Financial Indebtedness of Lessee or
any Lessee Affiliate having a principal amount in excess of
***** is not paid when due (after giving effect to any
applicable grace period) and as a result of such failure, any
such Financial Indebtedness becomes due or capable of being
declared due prior to the date when it would otherwise have
become due; or becomes due as a result of an event of default
or termination event, howsoever described, on the part of
Lessee or any other Person prior to the date when it would
otherwise have become due; or
(ii) the security for any such Financial Indebtedness becomes
enforceable; or
(iii) any event of default or termination event, howsoever
described, occurs under any Other Agreement; or
CONFIDENTIAL TREATMENT HAS BEEN REQUESTED BY KITTY HAWK, INC. FOR CERTAIN
PORTIONS OF THIS DOCUMENT. CONFIDENTIAL PORTIONS HAVE BEEN FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION. OMITTED PORTIONS ARE INDICATED IN THIS
AGREEMENT WITH "*****".
9-1
(f) APPROVALS: any consent, authorization, license, certificate or approval
of or registration with or declaration to any Government Entity
required to be obtained or maintained by Lessee in connection with the
Lease and/or the operation of the Aircraft (including any airline
license or air transport license including authority to operate the
Aircraft under Part 121 of the FARs, a Certificate of Convenience and
Necessity issued under the Act and an air carrier operating certificate
issued under the Act) is modified in a materially prejudicial manner or
is withheld, or is revoked, suspended, cancelled, withdrawn, terminated
or not renewed, or otherwise ceases to be in full force; or
(g) INSOLVENCY:
(i) Lessee or any Lessee Affiliate consents to the appointment of
a custodian, receiver, trustee or liquidator of itself or all
or a material part of its property or its consolidated
property, or Lessee or any Lessee Affiliate admits in writing
its inability to, or is unable to, or does not, pay its debts
generally as they come due, or makes a general assignment for
the benefit of creditors, or Lessee or any Lessee Affiliate
files a voluntary petition in bankruptcy or voluntary petition
seeking reorganization in a proceeding under any bankruptcy or
insolvency Laws (as now or hereafter in effect), or an answer
admitting the material allegations of a petition filed against
Lessee in any such proceeding, or Lessee or any Lessee
Affiliate by voluntary petition, answer or consent seeks
relief under the provisions of any other bankruptcy,
insolvency or other similar Law providing for the
reorganization or winding-up of debtors, or provides for an
agreement, composition, extension or adjustment with its
creditors, or any board of directors or shareholder action is
taken by Lessee or any Lessee Affiliate in furtherance of any
of the foregoing, whether or not the same is fully effected or
accomplished; or
(ii) An order, judgment or decree is entered by any court
appointing, without the consent of Lessee or any Lessee
Affiliate, a custodian, receiver, trustee or liquidator of or
sequestering any of Lessee's or any Lessee Affiliate's
property, and any such order, judgment or decree of
appointment or sequestration remains in effect, undismissed,
unstayed or unvacated for a period of sixty (60) days after
the date of entry thereof or at any time an order for relief
is granted; or
(iii) An involuntary petition against Lessee or any Lessee Affiliate
or other proceeding under the United States Federal Bankruptcy
Laws or other insolvency Laws (as now or hereafter in effect)
is filed and is not withdrawn or dismissed within thirty (30)
days thereafter or at any time an order for relief is granted
in such proceeding, or if, under the provisions of any Law
providing for reorganization or winding-up of debtors which
may apply to Lessee or any Lessee Affiliate, any court of
competent jurisdiction assumes jurisdiction over, or custody
or control of, Lessee or any Lessee Affiliate or of all or any
material part of Lessee's or Lessee Affiliates' property, and
such jurisdiction, custody or control remains in effect,
unrelinquished, unstayed or unterminated for a period of sixty
(60) days or at any time an order for relief is granted in
such proceeding; or
9-2
(h) SUSPENSION OF BUSINESS: Lessee suspends or ceases or takes substantive
steps to suspend or cease to carry on all or a material part of its
business as a Certificated Air Carrier (other than as a result of a
labor dispute with Lessee's employees); or
(i) RIGHTS AND REMEDIES: Lessee or any other Person claiming by or through
Lessee challenges the existence, validity, enforceability or priority
of the Lease or the rights of Lessor as lessor or of Owner as owner in
respect of the Aircraft or Financing Parties' Representative as holder
of a first priority Security Interest in the Aircraft and the Lease; or
(j) CHANGE OF CONTROL: any single person or group of persons acting in
concert acquire control of Lessee or Guarantor without the previous
consent in writing of Lessor, such consent not to be unreasonably
withheld; or
(k) DELIVERY: Lessee fails to (i) comply with its obligation under Section
4 to accept delivery of the Aircraft after Lessor has fulfilled all of
the Lessee Conditions Precedent or (ii) fulfill the Conditions
Precedent to delivery of the Aircraft within the time periods provided
for by the Lease; or
(l) [INTENTIONALLY OMITTED], or
(m) LETTER OF CREDIT:
(i) the issuer of the Letter of Credit (if any) fails to make any
payment under that Letter of Credit when due; or
(ii) any such Letter of Credit is not in full force or, for any
reason ceases to constitute the legal, valid and binding
obligation of the issuer; or
(iii) any of the events listed in paragraph (e)(i) or (ii) or
paragraph (g) above applies to such issuer (references in
those sub-paragraphs to Lessee being deemed to be to the
issuer); or
(iv) where applicable, any Letter of Credit is not renewed,
extended or reissued within the time, or replaced when,
required by Section 5.14;
(v) and each reference in this paragraph (m) to "the issuer" shall
include a reference to any confirming bank for the Letter of
Credit.
(n) REDELIVERY: Lessee fails to return the Aircraft to Lessor on the Expiry
Date in accordance with Section 12; or
(o) LITIGATION: a judgment for the payment of money not covered by
insurance in excess of ***** (or the equivalent thereof in other
currencies) shall be rendered against Lessee or
CONFIDENTIAL TREATMENT HAS BEEN REQUESTED BY KITTY HAWK, INC. FOR CERTAIN
PORTIONS OF THIS DOCUMENT. CONFIDENTIAL PORTIONS HAVE BEEN FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION. OMITTED PORTIONS ARE INDICATED IN THIS
AGREEMENT WITH "*****".
9-3
any Guarantor and the same remains undischarged for a period of
forty-five (45) days, unless execution of such judgment shall have been
effectively stayed by agreement of the parties involved or by court
order or such judgment shall have been adequately bonded; or
(p) GUARANTEE:
(i) any representation or warranty made by Guarantor is or proves
to have been incorrect in any material respect when made or
deemed to be repeated or Guarantor fails to make any payment
or comply with any other obligation under the Guarantee when
due; or
(ii) the Guarantor repudiates, revokes or claims that it has no
further obligations under the Guarantee or the Guarantee
ceases to be in full force or, for any reason, ceases to be
the legal, valid and binding obligation of Guarantor; or
(iii) any of the events listed in paragraph (e) or (g) above occurs
in respect of Guarantor (and for purposes of this
paragraph(s), references in those paragraphs to Lessee shall
be deemed to be references to Guarantor); or
(q) UNLAWFUL: it becomes unlawful for Lessee to perform any of its
obligations under the Lease or the Lease becomes wholly or partly
invalid or unenforceable; or
(r) TRANSFER/LESSEE REQUIREMENTS: Lessee makes or permits any assignment or
transfer of the Lease, or any interest herein, or of the right to
possession of the Aircraft, the Airframe, or any Engine, or any
obligations under the Lease, or Lessee subleases the Aircraft, in any
case except as expressly permitted in the Lease; or Lessee breaches any
provision of Section 8.7; or
(s) ENGINE LOSS: Lessee fails to timely comply with its obligations under
Sections 8.11(a) and 8.11 (b) with respect to an Engine Event of Loss;
or
(u) SUSPENSION OF PAYMENTS: Lessee announces generally or advises Lessor
that Lessee (i) is declaring a moratorium on or suspension of any
payments in respect of its Financial Indebtedness or aircraft or
aircraft engine lease obligations or (ii) does not intend to pay all or
any portion of a payment of Rent that is not yet due or which has
become due but in respect of which the cure period has not expired
under the Lease or of any rent or other amount payable under any Other
Agreement that is not yet due or which has become due but in respect of
which any applicable cure period has not expired under such Other
Agreement. The foregoing Event of Default shall not in any way limit
any and all rights or remedies otherwise available to Lessor under
applicable Law in respect of any repudiation by Lessee of the Lease, or
advisement or declaration by Lessee that it does not intend to perform
any or all of its obligations under the Lease.
9-4
SCHEDULE 10
FORM OF GUARANTY
LESSEE GUARANTY
THIS GUARANTY (the "Guaranty"), dated as of _____________, is
given by ______________________________________________, a
_______________("Guarantor"), to _______________________________________
("Lessor"), for its benefit and the benefit of each of Owner and Financing
Parties' Representative as defined in the Lease referred to below (individually,
"Beneficiary" and, collectively, "Beneficiaries").
WITNESSETH:
WHEREAS, in connection with the leasing of that certain
______________ Aircraft bearing the Manufacturer's Serial Number _____________
(together with the engines installed thereon, the "Aircraft"), Lessor and Kitty
Hawk Aircargo, Inc., a Texas corporation ("Lessee"), are entering or have
entered into that certain Aircraft Lease Agreement, dated as of ________,_______
(incorporating by reference the Common Terms Agreement referred to therein, and
as amended, supplemented or modified from time to time, the "Lease"), providing
for the lease by Lessor, as lessor, to Lessee, as lessee, of the Aircraft; and
WHEREAS, Beneficiaries desire support for the due and punctual
payment, observance and performance of all of the obligations and liabilities of
Lessee under or in respect of the Lease and any related documents (together with
the Lease, as amended, supplemented or modified from time to time, the
"Operative Documents") to which Lessee is a party (the "Obligations"); and
WHEREAS, inasmuch as Lessee and Guarantor are members of a
unified group of companies conducting interrelated and mutually dependent
businesses, Guarantor, in furtherance of its business objectives, is willing to
provide such support on the terms and conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the foregoing premises,
and to induce Beneficiaries to enter into the Operative Documents, and for other
good and valuable consideration, the receipt and adequacy of which are hereby
acknowledged, Guarantor hereby agrees for the benefit of Beneficiaries as
follows:
1. Definitions. All capitalized terms used but not defined herein shall
have the meanings assigned thereto in the Lease.
2. Guaranty. For value received and to induce Beneficiaries to enter into
the Operative Documents, Guarantor, as a primary obligor and not as a
surety, does hereby absolutely, unconditionally and irrevocably
guarantee to Beneficiaries the due and punctual payment, observance and
performance by Lessee of all of the Obligations.
10-1
Accordingly, upon and during the occurrence and continuance of an Event
of Default under the Lease, Guarantor shall forthwith without demand of
any kind pay, perform and observe all of such Obligations to and for
the benefit of Beneficiaries, strictly in accordance with the terms of
the Lease and the other Operative Documents; provided, however, that
demand on Guarantor may be made prior to the occurrence and continuance
of the applicable Event of Default under the Lease but Guarantor's
payment, performance, and observance shall not be due and owing until
the occurrence and during the continuance of such Event of Default.
Guarantor further agrees to pay any and all reasonable and documented
out-of-pocket costs and expenses (including reasonable and documented
fees and disbursements of legal counsel and other professional
advisors) that may be paid or incurred by any Beneficiary in collecting
any Obligations, exercising its rights and remedies hereunder or in
preserving or enforcing any rights under this Guaranty or under the
Obligations.
3. Absolute and Continuing Guaranty. The obligations of Guarantor under
this Guaranty shall be absolute, continuing, unconditional and
irrevocable and this Guaranty shall remain in full force and effect
until such time as all of the Obligations are finally paid, performed
and observed in full. The obligations of Guarantor set forth herein
constitute the full recourse obligations of Guarantor enforceable
against it to the full extent of all its assets and properties,
notwithstanding any provision in the Lease or any other Operative
Documents limiting the liability of any Beneficiary or any other
Person.
4. Strict Observance. To the maximum extent permitted by applicable Law,
the obligations of Guarantor under this Guaranty shall not in any
manner be affected by: (a) any termination, amendment or modification
of, or deletion from, or addition or supplement to, or other change in
the Lease or any other any of the Operative Documents (including an
increase in the Rent or an extension of the Term), or any other
instrument or agreement applicable to any of the parties to such
agreements, or to the Aircraft or any part thereof, or any assignment,
mortgage or transfer of any thereof, or of any interest therein, or any
leasing of the Aircraft, or any furnishing or acceptance of any
security, or any release of any security, for the obligations of Lessee
under the Operative Documents, or the failure of any security or the
failure of any Person to perfect any interest in any collateral
security; (b) any failure, omission or delay on the part of Lessee or
any other Person to conform or comply with any term of any Operative
Document; (c) any exercise or nonexercise of any right, remedy, power
or privilege under or in respect of any Operative Document; (d) any
extension of time for payment of or settlement, compromise or
subordination of, Rent or any other Obligation; (e) the exchange,
surrender, substitution or modification of any collateral security or
guarantee for any-of the Obligations; (f) any failure, omission or
delay on the part of any of Beneficiaries to enforce, assert or
exercise any right, power or remedy conferred on it in this Guaranty,
or any such failure, omission or delay on the part of any of
Beneficiaries in connection with any Operative Document, or any other
action on the part of Beneficiaries; (g) any voluntary or involuntary
bankruptcy, insolvency, reorganization, arrangement, readjustment,
assignment for the benefit of creditors, composition, receivership,
conservatorship, custodianship, liquidation, marshalling of assets and
liabilities or similar proceedings with respect to Lessee, Guarantor,
any other Person, or any of their respective properties or creditors,
or any action taken by any trustee or receiver or by any
10-2
court in any such proceeding; (h) any invalidity, illegality or
unenforceability, in whole or in part, of any of the Operative
Documents; (i) any defect in the title, compliance with specifications,
condition, design, operation or fitness for use of, or any damage to or
loss or destruction of, the Aircraft, or any interruption or cessation
in the use of the Aircraft or any portion thereof by Lessee or any
other Person for any reason whatsoever (including any governmental
prohibition or restriction, condemnation, requisition, seizure or any
other act on the part of any governmental or military authority, or any
act of God or of the public enemy) regardless of the duration thereof
(even though such duration would otherwise constitute a frustration of
contract or an Event of Loss), whether or not resulting from accident
and whether or not without fault on the part of Lessee or any other
Person; (j) any permitted or non-permitted assignment of the Lease by
Lessee or any merger or consolidation of Lessee or Guarantor or any
Affiliate into or with any other corporation, or any sale, lease or
transfer of any of the assets of Lessee or Guarantor or any Affiliate
to any other Person; (k) any change in the ownership of any shares of
capital stock of Lessee or any Lessee Affiliate, or any change in the
corporate relationship between Lessee or any Lessee Affiliate and
Guarantor, or any termination of such relationship; (l) any release or
discharge, by operation of law, of Guarantor from the performance or
observance of any obligation, covenant or agreement contained in this
Guaranty, or any release, discharge or cancellation of the Obligations,
other than payment or performance in full of the Obligations; (m) the
imposition or operation of any currency exchange controls in any
country; (n) any failure of any Person to mitigate its damages; (o) the
effect of any foreign or domestic laws, rules, regulations or actions
of a court or governmental body or entity; or (p) any other condition,
event or circumstance which might otherwise constitute a legal or
equitable discharge, release or defense of a surety or guarantor or
otherwise, or which might otherwise limit recourse against Guarantor,
it being agreed that the obligations of Guarantor hereunder shall not
be discharged except by payment and performance in full as herein
provided. No failure to make demand or delay in making demand on
Guarantor for satisfaction of the obligations of Guarantor hereunder
shall prejudice the right of Beneficiaries to enforce the obligations
of Guarantor hereunder.
5. Waivers of Notice, Etc. To the maximum extent permitted by applicable
Law, Guarantor hereby waives diligence, presentment, demand, protest or
notice of any kind whatsoever (including (a) notice of acceptance of
this Guaranty, notice of nonpayment or nonperformance of any of the
Obligations, and (b) all notices required by statute, rule of law or
otherwise now or hereafter in effect to preserve any rights against
Guarantor), with respect to this Guaranty or the Obligations,
including: (w) any right to the enforcement, assertion or exercise
against Lessee or any other Person or the Aircraft or any other
collateral security for the Obligations of any right, power, privilege
or remedy conferred in any Agreement or otherwise, (x) any requirement
to exhaust any remedies, (y) any requirement of promptness in
commencing suit against any Person who may be or become liable thereon,
and (z) any other circumstance whatsoever which might otherwise
constitute a legal or equitable discharge, release or defense of
Guarantor or any surety or which might otherwise limit recourse against
Guarantor. Each of the Obligations shall be deemed conclusively to have
been created, contracted or incurred in reliance upon this Guaranty.
10-3
6. Extensions, Etc. Guarantor consents and agrees that Beneficiaries, or
any of them, may in their sole discretion, to the extent otherwise
permitted by the Operative Documents and to the maximum extent
permitted by applicable Law, at any time or from time to time, (i)
extend or shorten the Term of the Lease and/or renew, extend, or
increase or decrease or otherwise change or modify the amount, time,
manner, place or terms of payment, performance or observance of any or
all of the Obligations, (ii) apply payments by Lessee or Guarantor to
any Obligations, (iii) exchange, release or surrender any security or
property which may at any time be held by it, (iv) release any surety
or guarantor for or of any of the Obligations, (v) settle or compromise
any or all of the Obligations with Lessee or any other Person liable
thereon or (vi) subordinate the payment, performance or observance of
all or any part thereof to the payment, performance or observance of
any other debts or obligations which may be due or owing to them or any
other Person, all in such manner and upon such terms as Beneficiaries,
or any of them, may deem proper, without further assent from Guarantor,
who agrees to remain bound under this Guaranty notwithstanding any such
extension, change, modification, amendment, release, surrender,
settlement, compromise or subordination.
7. No Waiver. No failure on the part of any of Beneficiaries to exercise,
and no delay in exercising, any right or power under this Guaranty
shall operate as a waiver thereof, nor shall any single or partial
exercise of any such right or power preclude any other or further
exercise thereof or the exercise of any other right or power, or of any
remedy, of any Beneficiary under this Guaranty, the Operative Documents
or applicable law.
8. Guaranty of Performance. This Guaranty is a guaranty of payment and
performance and not of collection and Guarantor waives any right to
require that any action against Lessee or any Lessee Affiliate be taken
or exhausted prior to action being taken against Guarantor.
9. Representations and Warranties. Guarantor represents and warrants to
and for the benefit of each Beneficiary that:
(a) Due Organization. Guarantor is a company duly organized under
the Laws of _______ and has the full power and authority to
carry on its business as presently conducted and to enter into
and perform its obligations under this Guaranty and each of
the other Operative Documents to which it is or will be a
party.
(b) Due Authorization. This Guaranty and each of the other
Operative Documents to which Guarantor is or will be a party
have been duly authorized by all necessary corporate action on
the part of Guarantor, and do not require any stockholder
approval or approval or consent of any trustee or holders of
any indebtedness or other obligations of Guarantor, except
such, if any, as have been duly obtained, and neither the
execution and delivery hereof or thereof nor the consummation
of the transactions contemplated hereby or thereby will
contravene any United States federal or state Law applicable
to Guarantor or result in any breach of, or constitute any
default under, or result in the creation or imposition of any
Security Interest upon any property of Guarantor under, any
indenture, mortgage, deed of trust, conditional sales
contract, bank loan or credit agreement, corporate charter,
10-4
by-law, or other agreement or instrument to which Guarantor is
a party or by which Guarantor or its properties' or assets may
be bound or affected.
(c) Enforceability. This Guaranty and each of the other Operative
Documents to which Guarantor is or will be a party have been
or on the Delivery Date will have been duly entered into and
delivered by Guarantor and constitute or on the Delivery Date
will constitute the valid, legal, and binding obligations of
Guarantor, except as enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium
or other similar laws affecting creditors' or lessors' rights
or remedies generally and by general principles of equity
(regardless of whether such enforceability is considered in a
proceeding in equity or at law).
(d) Consents. The execution and delivery by Guarantor of this
Guaranty and each of the Operative Documents to which it is or
will be a party, and each of the transactions by Guarantor
contemplated hereby and thereby, have received, and Guarantor
has complied with every necessary consent, approval, order, or
authorization of, or registration with, or the giving of prior
notice to, any United States federal or state Government
Entity or other Government Entity having jurisdiction with
respect to the execution and delivery of this Guaranty or any
other Operative Document to which it is a party or the
validity and enforceability hereof or thereof or the
satisfaction of all monetary or other obligations hereunder or
thereunder.
(e) No Litigation. There are no suits, arbitrations or legal
proceedings (including any administrative proceeding) pending
or threatened before any Government Entity against Guarantor
or with respect to any property of Guarantor which, if
adversely determined, would have a material adverse effect
upon its ability to perform its obligations hereunder and each
of the other Operative Documents to which it is or will be a
party.
(f) Investment Company. Guarantor is not an "investment company"
as defined in the Investment Company Act of 1940, as amended.
(g) Submission to Jurisdiction. Guarantor has validly submitted to
the jurisdiction of the courts of the County of New York,
State of New York and the federal courts for the Southern
District of New York.
(h) No Broker. Except for one or more financial advisors to
Guarantor, the fees for which the Beneficiaries shall have no
liability, Guarantor has not retained or employed any broker,
finder or financial advisor to act on its behalf in connection
with the transactions contemplated hereby and it has not
authorized any broker, finder or financial advisor retained or
employed by any other Person to so act.
10. Certain Covenants. Guarantor covenants and agrees with each Beneficiary
as follows:
(a) Mergers, Consolidations and Sales. Guarantor shall not
liquidate or dissolve; and Guarantor shall not consolidate
with or merge with or into any other Person or
10-5
convey, transfer, lease or otherwise dispose of all or
substantially all of its property or other assets (in one or a
series of transactions) to any Person, unless Guarantor
provides Lessor with not less than thirty (30) days prior
written notice of such transaction describing such transaction
in reasonable detail and providing Lessor with evidence
reasonably satisfactory to Lessor that such transaction will
comply with the following requirements of this Section 10 and
unless:
(i) the Person formed by such consolidation or with or
into which Guarantor is merged or the Person that
acquired all or substantially all of the property or
other assets of Guarantor shall (A) be a corporation
incorporated under the Laws of the United States or a
state thereof, (B) immediately after giving effect to
such transaction, shall be Guarantor or shall have
acquired or succeeded to all or substantially all of
the property and other assets of Guarantor (if such
assets are being transferred) as an entirety, and
shall have a tangible net worth (as determined in
accordance with GAAP) of not less than Guarantor's
tangible net worth (as determined in accordance with
GAAP) immediately prior to such transaction, (C)
execute and deliver to Lessor (y) an agreement in
form and substance reasonably satisfactory to Lessor
containing an effective confirmation of this Guaranty
by Guarantor or assumption by such successor
corporation or transferee of the due and punctual
performance and observance of each covenant and
condition to be performed or observed by Guarantor
under this Guaranty, and (z) such other documents as
Lessor may reasonably request in connection with such
consolidation, merger or transfer, and (D) shall have
the requisite power and authority and legal right to
enter into and carry out the transactions
contemplated hereby;
(ii) immediately after giving effect to such transaction,
no Default shall have occurred and be continuing or
shall occur as a result thereof; and
(iii) Guarantor shall have delivered to each of Lessor (A)
a certificate signed by an officer of Guarantor
stating that (1) such consolidation, merger or
transfer and the assumption agreement mentioned in
subparagraph (i) of this Section 10(a) comply with
this Section 10(a) and (2) all conditions precedent
herein provided for relating to such transaction have
been complied with and (B) an opinion of Guarantor's
or the transferee's, as the case may be, counsel
(which may be internal counsel) to the effect that
the agreement referred to in such subparagraph (i) is
the legal, valid and binding confirmation of this
Guaranty by Guarantor or obligation of the successor
corporation or transferee enforceable against such
successor corporation or transferee, as the case may
be, in accordance with its terms and otherwise in
form and substance reasonably acceptable to Lessor.
(b) Guarantor's Financial Statements. Guarantor agrees that it
will furnish to Lessor, to the extent not otherwise readily
available to Lessor via internet access to the databases of
the Securities Exchange Commission:
10-6
(i) within forty-five (45) days after the last day of
each of its fiscal periods (other than the end of its
fiscal year), a copy of the unaudited consolidated
management accounts for Guarantor and its
consolidated subsidiaries for such period, certified
by an authorized officer of Guarantor to the effect
that such accounts present fairly the consolidated
financial condition of Guarantor and its consolidated
subsidiaries as of such date in accordance with GAAP
consistently applied except as noted and subject to
year-end adjustments; and
(ii) within ninety (90) days after the last day of each of
its fiscal years, a copy of the audited financial
statements for Guarantor and its consolidated
subsidiaries, together with a copy of the auditor's
unqualified certification in respect thereof.
11. Bankruptcy, Etc. Guarantor agrees that if at any time all or any part
of any payment or performance theretofore applied by any Beneficiary to
any of the Obligations is or must be rescinded or returned by any
Beneficiary for any reason whatsoever (including the insolvency,
bankruptcy or reorganization of Lessee), such Obligations shall, for
the purposes of this Guaranty, to the extent that such payment or
performance is or must be rescinded or returned, be deemed to have
continued in existence, notwithstanding such application by
Beneficiaries, and this Guaranty shall continue to be effective or be
reinstated, as the case may be, as to such Obligations, all as though
such application by a Beneficiary had not been made. If an Event of
Default shall at any time have occurred and be continuing, or the
exercise of any remedy pursuant to the Lease, shall at such time be
prevented by reason of the pendency against Lessee or any other Person
of a case or proceeding under a bankruptcy, insolvency or similar law,
or if the Lease or any other Operative Document shall be terminated as
a result of a rejection or disaffirmance in a bankruptcy, insolvency or
similar proceeding involving Lessee, Guarantor or any Affiliate of
either Lessee or Guarantor, Guarantor agrees that, for purposes of this
Guaranty and its obligations hereunder, the Lease or such other
Operative Documents shall be deemed to be in default with the same
effect as if the Lease or such other Operative Documents had been
enforceable in accordance with the terms thereof, and Guarantor shall
forthwith pay all amounts, or any of them, to be paid thereunder, any
interest thereon and any other amounts guaranteed hereunder or provided
herein. In the circumstance described in the preceding sentence, any
election of remedies and any determination of any such amount may be
made solely for purposes of this Guaranty and any required notice or
demand upon Lessee is hereby waived by the Guarantor and may, at the
option of a Beneficiary, be given or made upon the Guarantor. Guarantor
agrees that it shall be liable for the full amount of the Obligations
guaranteed hereby, irrespective of and without regard to, any
modification, limitation or discharge of liability, rejection or
disaffirmance that may result from or in connection with any
bankruptcy, insolvency or similar proceeding involving Lessee,
Guarantor, any Affiliate, or any other Person.
12. Jurisdiction. Guarantor hereby irrevocably and unconditionally submits
to the jurisdiction of the United States District Court for the
Southern District of New York and the courts of the State of New York
located in New York County with respect to any
10-7
disputes arising out of or in connection with this Guaranty or any
other Operative Document to which it is a party. Guarantor hereby
designates, appoints and empowers C.T. Corporation at 0000 Xxxxxx
Xxxxxx, 00xx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000, or such other Person as
may from time to time be designated by Guarantor, in writing to Lessor
to receive for it and on its behalf service of process issued out of
the courts referred to above in any legal action or proceedings arising
out of or in connection with this Guaranty or other Operative Document
to which it is a party. Guarantor further agrees that failure by its
process agent to notify it of the process shall not invalidate the
proceedings concerned and consents to the service of process relating
to any such proceedings provided that such service of process complies
with applicable Law. The submission to such jurisdiction shall not (and
shall not be construed so as to) limit the rights of any Beneficiary to
take proceedings against Guarantor in any other court of competent
jurisdiction, nor shall the taking of proceedings in any one or more
jurisdictions, preclude the taking of proceedings in any other
jurisdiction, whether concurrently or not. Guarantor agrees that in any
legal action or proceedings against it or its assets in connection with
this Guaranty, no immunity from legal action or proceedings (which
shall include, suit, attachment prior to judgment, other attachment,
the obtaining of judgment, execution or other enforcement) shall be
claimed by or on behalf of it or with respect to its assets,
irrevocably waives any such right of immunity which it or its assets
now have or may hereafter acquire or which may be attributed to it or
its assets and consents generally in respect of any such legal action
or proceedings to the giving of any relief or the issue of any process
in connection with such action or proceedings including the making,
enforcement or execution against any property whatsoever (irrespective
of its use or intended use) of any order or judgment which may be made
or given in such action or proceedings.
13. Judgments. A judgment against Guarantor, obtained in any suit in the
courts of the State of New York in New York County or in the United
States District Court for the Southern District of New York shall be
conclusive, and, to the extent permitted by applicable law, may be
enforced in other jurisdictions by suit on the judgment, a certified or
true copy of which shall be conclusive evidence of the fact and of the
amount of any indebtedness or liability of Guarantor therein described;
provided that the plaintiff at its option may bring suit, or institute
other judicial proceedings against, the defendant or any of its assets
in the courts of any country or place where the defendant or such
assets may be found. Nothing herein shall be construed as a waiver of
Guarantor's right to appeal any such judgment.
14. Assignment. Beneficiaries may at any time grant a Security Interest in
or sell, assign, transfer, delegate or otherwise dispose of all or any
part of their respective rights, titles and interests in and under this
Guaranty and, in such event, this Guaranty shall inure to the benefit
of, and be enforceable by, the applicable successors and assigns of
Beneficiaries. Guarantor shall not permit to exist any Security
Interest in respect of, or assign, delegate or otherwise transfer
(voluntarily, involuntarily, by operation of law or otherwise) any of
its rights or obligations hereunder, and any such action shall be null
and void.
10-8
15. Guarantor's Obligations; Setoff.
(a) Guarantor. Guarantor's obligation to make all payments due
hereunder and to perform its other obligations hereunder shall
be absolute and unconditional and shall in no event be subject
to any right of setoff, recoupment, deduction or counterclaim
or any other defense which Guarantor or any other Person may
now or hereafter have against any Beneficiary or any other
Person, which Guarantor hereby waives.
(b) Lessor. Lessor may set off any Obligation of Guarantor
hereunder against any obligation owed by Lessor or any of its
Affiliates to Lessee or Guarantor or any of their Affiliates.
16. Limitations on Subrogation. (a) Guarantor shall become entitled to
subrogation rights by reason of performance of any of its obligations
hereunder, provided, that such rights are and shall be subject and
subordinate to the rights of the Beneficiaries against Lessee under the
Lease in the event of any insolvency, bankruptcy, liquidation,
reorganization or other similar proceedings related to Lessee, or in
the event of any proceedings for voluntary liquidation, dissolution or
other winding up of Lessee, whether or not involving insolvency or
bankruptcy proceedings, such that the Obligations shall be finally paid
and performed in full before any payment in respect of a subrogation
claim by Guarantor shall be made by or on behalf of Lessee and (b)
notwithstanding the foregoing provisions, or any other provision of
this Guaranty or the Lease, if an Event of Default is in existence,
Guarantor hereby irrevocably waives and relinquishes any and all rights
of subrogation, contribution, reimbursement or other payment from
Lessee or Lessee's estate, whether arising by contract or operation of
law (including any such right arising under the United States
Bankruptcy Code) or otherwise arising out of, or on account of, any
sums which have been claimed or are thereafter claimable against
Guarantor under this Guaranty, which waiver shall be in effect unless
and until all of the Obligations shall have been finally paid and
performed in full. The waiver and relinquishment of rights provided for
in the immediately preceding sentence shall be irrevocable and
unconditional regardless of whether any such right is reduced to
judgment liquidated, unliquidated, fixed, contingent, matured,
unmatured, disputed, undisputed, secured, or unsecured. The provisions
of this paragraph are made for the express benefit of Lessee as well as
each Beneficiary and may be enforced independently by Lessee or any
such Beneficiary, in each case, after the date of such Event of
Default.
17. GOVERNING LAW. THIS GUARANTY HAS BEEN EXECUTED AND DELIVERED IN THE
STATE OF NEW YORK AND SHALL IN ALL RESPECTS BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE INTERNAL SUBSTANTIVE LAWS OF THE
STATE OF NEW YORK, INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND
PERFORMANCE.
18. Severability of Provisions. Any provision of this Guaranty that is
prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining portions
10-9
hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such
provision in any other jurisdiction.
19. Amendments. This Guaranty and any provision hereof may be terminated,
waived, amended, modified or supplemented only by an agreement or
instrument in writing, specifying the provision (or, if applicable, the
whole of this Guaranty) intended to be terminated, waived, amended,
modified or supplemented, and executed by Guarantor and Lessor.
20. Government Authorizations. Guarantor will obtain from time to time all
permits, licenses, approvals and authorizations of, and will file all
registrations and declarations with, all governmental authorities,
bureaus and agencies and will pay all stamp duties required in
connection with the execution, delivery, performance, validity or
enforceability of this Guaranty (including, payments hereunder, in the
lawful currency of the United States of America, of the Obligations)
and will take all actions necessary to maintain each such permit,
license approval authorization, registration or declaration in full
force and effect.
21. Withholding Taxes.
(a) Any and all amounts required to be paid by Guarantor hereunder
shall be paid in the lawful currency of the United States of
America strictly in accordance with the terms and provisions
of the Operative Documents, without set-off or counterclaim
and without deduction or adjustment for and free and clear of
any and all Taxes, provided, however, that Guarantor will not
be required to pay and discharge (and, if required by law,
shall withhold) any Taxes that it is not required to indemnify
the recipient against pursuant to subsection (b) (as limited
by subsection (c)) and (d). If any Taxes shall be required to
be deducted or withheld from any amounts payable to any
Beneficiary, Guarantor must deduct the minimum amount
necessary to comply with the Law and if required pursuant to
Subsection (b) (as limited by subsection (c)) below, pay
Beneficiary an extra amount so that Beneficiary receives a net
amount on the relevant payment date that is equal to the
amount it would have received if the reduction had not been
made. The amount of any such payment to Beneficiary must take
into account the tax treatment of that payment to Beneficiary
applying the principles of Section 5.10 of the Common Terms
Agreement such that Beneficiary shall be in no worse position
than it would have been if the deduction had not applied in
the first place.
(b) Guarantor further agrees that it will indemnify each
Beneficiary against, and reimburse each of them upon demand
for, Taxes levied or imposed against or upon or payable by
such Beneficiary, Lessee or Guarantor and arising from the
transactions pursuant to the Lease, including all Taxes
relating or attributable to Lessee, the Lease or the Aircraft
in connection with the importation, exportation, registration,
ownership (but only to the extent relating to or attributable
to or arising as a result of the possession, operation, use or
maintenance of the Aircraft by Lessee), leasing, sub-leasing,
purchase, delivery, possession, use, operation, repair,
maintenance, overhaul, transportation, landing, storage,
presence or
10-10
redelivery of the Aircraft or any part thereof or any rent,
receipts, insurance proceeds, income, indemnification payment
or other amounts arising therefrom, or the making of any
Equipment Change or the permanent replacement of any Engine.
Guarantor further agrees that it will indemnify each
Beneficiary against, and reimburse any of them upon demand
for, any Taxes and any loss, liability, claim or expense
(including interest, penalties and legal fees) that any of
them may incur at any time arising from or in connection with
any failure of Guarantor to make any payments of Taxes when
due. All Taxes indemnified pursuant to this subsection (b)
shall be paid by Guarantor directly to the appropriate taxing
authority (to the extent permitted by applicable Law) at or
before the time prescribed by applicable Law. After any
payment by Guarantor of any Tax directly to a taxing
authority, Guarantor shall furnish to the relevant
Beneficiary, on request, a certified copy of a receipt for
Guarantor's payment of such Tax or such other evidence of
payment of such Tax as is reasonably obtainable by Guarantor
and reasonably acceptable to Beneficiary. Any amount payable
by Guarantor to a Beneficiary pursuant to this subsection
shall be paid within ten Business Days after receipt of a
written demand therefore from the relevant Beneficiary
accompanied by a written statement describing in reasonable
detail the basis for such indemnity and the computation of the
amount so payable, provided that if an amount of any
indemnified Tax is being contested in accordance with Section
5.9 of the Common Terms Agreement included in the Lease and
Guarantor shall have duly performed (and shall continue to
perform) all its obligations under such Section 5.9 with
respect to such contest, then payment of the indemnity with
respect to such Tax under this subsection shall, at
Guarantor's election, be deferred until the date the contest
has been completed.
(c) Guarantor is not required to indemnify any Beneficiary, for
any Lessor Taxes.
(d) Notwithstanding Subsection (c) above, the Guarantor will be
required to indemnify any Beneficiary for any Tax imposed by
any government or taxing authority of or in any jurisdiction
if and to the extent that such tax would not have been imposed
but for the sites of organization, any place of business or
any activity of Guarantor in the jurisdiction imposing the
tax.
(e) The provisions of Section 5.9 of the Common Terms Agreement
included in the Lease shall apply to Guarantor's indemnities
in this Section 21, mutatis mutandis.
(f) If a Beneficiary, in good faith, determines that it has
realized a tax benefit (by way of deduction, credit or
otherwise) as a result of any payment or Tax for which
Guarantor is liable under Section 21(a), 21(b) or 21(c), such
Beneficiary shall pay to Guarantor as soon as practicable
after the tax benefit has been realized (but not before
Guarantor has made all payments and indemnities to such
Beneficiary required under Section 21(a), 21(b) or 21(c), as
applicable), an amount which will ensure that (after taking
account of the payment itself) Beneficiary is in no better and
no worse position than it would have been if the deduction had
not applied. Nothing in this subsection (f) shall (i)
interfere with the right of Beneficiary to arrange its tax
affairs in whatever manner it thinks fit; or (ii) oblige
Beneficiary to
10-11
disclose any information relating to its Tax affairs or any
Tax computations (other than computations made with respect to
any amounts claimed by Beneficiary from Guarantor pursuant to
Section 21(a), 21(b) or 21(c)); provided, however, that if any
of the information related to the computations is contained in
tax returns or other documents involving matters unrelated to
the Lease or is otherwise confidential information, then such
information shall be confirmed by Beneficiary's independent
auditors.
22. Currency of Payment. Guarantor acknowledges and agrees that the lawful
currency of the United States of America shall be the currency of
account in any and all events and guarantees that the obligations will
be paid in the lawful currency of the United States of America in
accordance with the terms and provisions of the Operative Documents,
regardless of any law, regulation or decree now or hereafter in effect
that might in any manner affect the Obligations or the rights of any
Beneficiary with respect thereto as against Lessee, or cause or permit
to be invoked any alteration in the time, amount or manner of payment
by Lessee of any of or all the Obligations. The obligation of Guarantor
hereunder to make payment in the lawful currency of the United States
of America shall not be discharged or satisfied by any tender or
recovery pursuant to any judgment or otherwise expressed in or
converted into any other currency except to the extent that such tender
or recovery results in the effective receipt by any Beneficiary of the
full amount in the lawful currency of the United States of America
payable to it under this Guaranty, and Guarantor shall indemnify each
Beneficiary for any difference between such full amount and the amount
effectively received by it pursuant to any such tender or recovery, and
each Beneficiary shall have an additional claim against Guarantor for
the additional amount necessary to yield the amount of the lawful
currency of the United States of America due and owing to such
Beneficiary, which difference Guarantor shall promptly pay to such
Beneficiary. In the event that any conversion as aforesaid results in a
Beneficiary receiving an amount in Dollars in excess of the amount
unpaid under this Guaranty, such Beneficiary shall return to Guarantor
the amount of such excess taking into account any tax on the currency
exchange not identified as provided herein.
23. Headings. Paragraph headings used herein are for convenience only and
shall not be used or construed to define, interpret, expand or limit
any provision hereof.
24. Entire Agreement. This Guaranty constitutes, on and as of the date
hereof, the entire agreement of Guarantor and Beneficiaries with
respect to the subject matter hereof, and supersedes all prior or
contemporaneous understandings or agreements, whether written or oral,
between Guarantor and Beneficiaries with respect to the subject matter
hereof.
25. Further Assurances. Guarantor shall execute and deliver all such
instruments and take all such actions as a Beneficiary may from time to
time reasonably request in order to effectuate and perfect fully the
purposes of this Guaranty , and any or all of any Beneficiary's rights,
titles, interest, benefits or remedies hereunder, including to effect
or facilitate any action by a Beneficiary referred to in the first
sentence of Section 13 hereof.
10-12
26. Successors and Assigns. This Guaranty shall be binding upon the
successors and assigns of the Guarantor, as and to the extent provided
in this Guaranty.
27. Notices. Every notice, request, demand or other communication under
this Guaranty shall be given and effective as set forth in the Lease.
Guarantor's address for notices is:
[Name of Guarantor]
0000 Xxxx 00xx Xxxxxx
P.O. Box 612787
DFW Int'l Xxxxxxx, Xxxxx 00000
Attn: General Counsel
Fax: [______________]
or to such other address or facsimile number as is notified by Guarantor to
Lessor under this Guaranty.
IN WITNESS WHEREOF, Guarantor has caused this Guaranty to be duly
executed as of the day and year first above written.
[NAME OF GUARANTOR]
By:__________________________
Title:
Accepted as of the
date below written:
____________________________
By:_________________________
Title:
Date:
10-13
SCHEDULE 11
[OMITTED]
11-1
SCHEDULE 12
AIRCRAFT PASSENGER CABIN INTERIOR STANDARD
******THIS SCHEDULE IS INTENDED LARGELY FOR PASSENGER AIRCRAFT.
TO THE EXTENT THAT ITEMS LISTED HEREIN ARE NOT INSTALLED ON
CARGO AIRCRAFT, THEN THESE ITEMS WILL BE IGNORED BY LESSEE AND
LESSOR, AS APPLICABLE, IN THE DELIVERY AND REDELIVERY OF
DEDICATED CARGO AIRCRAFT********
1. Introduction
The maintenance, repair and component manual requirements of the relevant
manufacturer must be complied with at all times in respect of any repairs,
replacements or repainting undertaken in the cabin interior of the Aircraft. Any
repairs incorporated outside of those already approved in such manuals must have
the approval of the relevant manufacturer and regulatory authority prior to the
release of the Aircraft from the relevant maintenance facility.
Repairs to cabin interior decorative finishes (including seat tables) which do
not restore the surface finish to an acceptable standard requires replacement of
the specific item.
The adherence to the FAR / JAR material flammability requirements must be
maintained at all times.
00-0
XXXXXXXX XXXXXXXXX CABIN INTERIOR STANDARD
A. FLIGHT DECK
01 Lining / Instrument Inspect all flight deck panels and carry out
Panels necessary repairs in accordance with the
Maintenance Manual.
02 Seat Inspection Carry out detailed visual inspection of flight deck
seat structure, harness, fittings, linings, and
coverings.
Carry out detailed visual inspection of the flight
deck seat rails
Carry out a seat operational check in accordance
with the Maintenance Manual.
03 Seat Repair Carry out flight deck seat repairs in accordance
with the Component Maintenance Manual.
Replace worn seat covers / damaged foams.
04 Seat Painting Following any required repainting ensure paint
condition is to a uniform shading standard.
05 Footrest Anti-Slip Renew anti-slip protection on pilot and co-pilot
Cover Replacement footrests / rudder pedals (as applicable)
06 Floor Covering Inspect floor covering and replace worn / torn /
stained segments.
07 Door Inspection Carry out detailed visual inspection of the flight
deck door. Check for cracks, missing or damaged
parts.
Check for correct door operation and locking
function
08 Door Repair Carry out all required repairs in accordance with
the Maintenance Manual.
09 Flight Deck Area Paint Inspect the paint condition of the following :-
: All lining panels
: Instrument panels
: CB panels
: Door.
Following any required repainting ensure paint
condition is to a uniform shading standard.
12-2
AIRCRAFT PASSENGER CABIN INTERIOR STANDARD
B. ENTRANCE AREAS
01 Door / Frame Lining Carry out a detailed visual inspection of door and
Inspection doorframe linings. Check for cracks, missing or
damaged parts.
Pay particular attention to the door and door
lining pressure seals.
02 Door / Frame Lining Repair or replace damaged or missing parts in
Repair accordance with the Maintenance Manual
03 Door / Frame Lining Inspect paint condition of all lining panels.
Painting Following any required repainting ensure paint
condition is to a uniform shading standard.
Replace damaged placards.
04 Doorframe Structure Prepare and repaint doorframe structure from all
Painting exits.
05 Entrance Area Ceiling Carry out a detailed visual inspection of entrance
Panel Inspection area ceiling panels. Check for cracks, missing or
damaged parts.
06 Entrance Area Ceiling Carry out repair or replacement of damaged or
Panel Repair missing parts in accordance with the Maintenance
Manual.
07 Entrance Area Ceiling Inspect paint condition of all ceiling panel outer
Panel Painting surfaces. Following any required repainting ensure
paint condition is to a uniform shading standard.
08 Entrance Area Carry out a detailed visual inspection of entrance
Floor Coverings area floor coverings. Replace damaged, worn and
stained segments.
09 Fwd Airstairs Replace worn stairway anti slip material
(As Applicable)
10 Ventral Stairway Carry out a detailed visual inspection of the
Tunnel Inspection ventral stairway lining panels for damaged and
(DC-9 /MD80 series/ missing parts.
B727 aircraft only)
11 Ventral Stairway Carry out all required repairs according to the
Tunnel Repair Maintenance Manual.
(DC-9 / MD80 series / Replace worn stairway anti slip material
B727 aircraft only)
00 Xxxxxxx Xxxxxxxx Inspect paint condition of all panel outer
Tunnel Painting surfaces.
(DC-9 / MD80 series / Following any required repainting ensure paint
B727 aircraft only) condition is to a uniform shading standard.
12-3
AIRCRAFT PASSENGER CABIN INTERIOR STANDARD
C. SEATS
01 Attendant Seats Carry out a detailed visual inspection of the
Inspection attendant seats for: -
: Structure
: Structural attachments
: Lining / Fairing panels
: Foams
: Dress covers
: Seatbelts.
02 Attendant Seats Repair Carry out all required repairs in accordance with
the Component Maintenance Manual.
Replace worn seat covers / damaged foams.
Ensure fire blocking labels on cushion and seat
backs are present and in good legible condition.
03 Attendant Seats Inspect paint condition of seat structure / lining
Structure / Lining surfaces. Following any required repainting ensure
Panel Painting paint condition is to a uniform shading standard.
04 Passenger Seats Carry out a detailed visual inspection of the
Inspection passenger seats:-
: Structure / Structural attachments
: Lining / Fairing panels / Armrest caps
: Foams / Dress covers
: Seatbelts
: Ashtrays / Ashtray Blanking caps (As applicable)
: Ensure seatback break overload within recommended
limits
: Seatbacks locked out bordering the overwing exits
access aisles
05 Passenger Seats Carry out a detailed visual inspection of the
Tray Tables passenger seat tray tables:-
Hinged, In-arm and : Cracked surfaces / Stains / Damaged trim /
Plug-In Disbonding
(As Applicable) : Secure hinge arms / No excessive side play /
Freedom of movement
: Positive locking in the stowed position
: Table level horizontally in the down position
06 Passenger Seats Repair Carry out all required repairs in accordance with
the Component Maintenance Manual.
Replace worn seat covers / damaged foams.
Ensure fire blocking labels on cushion and seat
backs are present and in good legible condition.
07 Passenger Seats Inspect paint condition of seat structure / lining
Structure / Lining surfaces.
Panel Painting Following any required repainting ensure paint
condition is to a uniform shading standard.
12-4
AIRCRAFT PASSENGER CABIN INTERIOR STANDARD
D. GALLEYS & STOWAGE UNITS
01 Galley Inspection Carry out a detailed visual inspection of galley
and stowage compartments for:-
: Structural integrity
: Corrosion - particularly of floor attachment
fittings (If accessible)
: Contamination
: Missing or damaged parts
: Perform an operational test on all doors, spring
flaps, guides, latches and worktop lights in
accordance with the Component Maintenance Manual.
02 Galley Wall Laminate Carry out a detailed visual inspection of the
Bulkhead Covering galley and stowage compartment laminates and
Inspection (As bulkhead covering for:-
Applicable) : Cracking
: Scratches / Disbonding / Discoloration / Stains
: Tearing of Material covering
03 Galley Repair Carry out repairs. Replace or renew damaged or
missing parts.
All work to be performed in accordance with the
Component Maintenance Manual.
04 Galley Painting Inspect paint condition of galley surfaces.
Following any required repainting ensure paint
condition is to a uniform shading standard.
05 Galley Ovens - Deep Carry out deep cleaning of all galley ovens and
Cleaning oven inserts
06 Galley Ovens / Coffee Carry out a detailed visual inspection of these
Makers / Water Boilers installations and ensure all units are fully
operational per the Maintenance Manual.
07 Galley Floor Coverings Carry out a detailed visual inspection of galley
area floor coverings. Replace damaged, worn and
stained segments.
00-0
XXXXXXXX XXXXXXXXX CABIN INTERIOR STANDARD
E. LAVATORIES
01 Lavatory Inspection Carry out a detailed visual inspection of all
lavatories for:-
: Structural integrity
: Corrosion - particularly of floor attachment
fittings (If accessible)
: Contamination
: Missing or damaged parts
: Proper sealing of all waste bin compartments
: Perform an operational test on all doors and
waste bin
: compartment spring flaps for correct operation
and locking in accordance with the Component
Maintenance Manual.
02 Lavatory - Carry out a detailed visual inspection of the
Bulkheads lavatory bulkheads and panel coverings for:-
Ceiling Panels : Cracking
Sink Unit Panels : Scratches
Toilet Unit Fairing : Disbonding
Panels : Discoloration / Stains
: Tearing of Material covering
03 Lavatory Floor Pan Carry out a detailed visual inspection of the
/ Floor covering lavatory floor pan / floor covering for
(As Applicable) satisfactory condition.
Replace / repair as applicable.
04 Lavatory Mirrors Carry out a detailed visual inspection of the
lavatory mirrors for:-
: Cracking
: Scratches
: Disbonding
: Discoloration
05 Lavatory Repair Carry out repair or replacement of damaged or
missing parts in accordance with the Component
Maintenance Manual.
06 Lavatory Painting Following any required repainting ensure paint
condition is to a uniform shading standard.
07 Lavatory Lights Carry out an operational check on all lavatory
and Return to Seat lights.
Indication Ensure Return to Seat indication lettering is
complete illuminating properly
08 Toilet & Washbasin Ensure washbasin and toilet bowl surfaces are clean
Bowls and free of damage.
Polished surfaces should be free of discoloration
12-6
AIRCRAFT PASSENGER CABIN INTERIOR STANDARD
F. PASSENGER CABIN LININGS & FURNISHINGS
01 Sidewall Panel Carry out a detailed visual inspection of the cabin
Inspection sidewall panels for:-
: Cracked surfaces
: Damaged parts
: Surface discoloration
: Cleanliness
: Lower sidewall covering material for torn and
worn areas
02 Sidewall Panel - Carry out a detailed visual inspection of the
Window Pane window panes and scratch panels for:-
& Scratch Panel : Scratches
: Loss of ultraviolet protection film
(If Applicable)
Thoroughly clean inner pane and scratch panel
03 Sidewall Panel - Carry out a detailed visual inspection of the
Window Sun Blinds window sun blinds for:-
: Creasing
: Torn surfaces
: Cleanliness and discoloration
: Check blind operation for full and free movement
04 Sidewall Panel Repair Carry out repair or replacement of damaged or
missing parts in accordance with the Maintenance
Manual
05 Floor Level Air Inlet Carry out a detailed visual inspection of all
Grill grills for damage and security
Repair / Replace damaged parts
06 Ceiling Panel Carry out a detailed visual inspection of all
Inspection ceiling panels for:-
: Damaged or missing parts
: Discoloration
: Paint condition
07 Ceiling Panel Repair Carry out repair or replacement of damaged or
missing parts in accordance with the Maintenance
Manual.
08 Ceiling Panel Painting Following any required repainting ensure paint
condition is to a uniform shading standard.
12-7
AIRCRAFT PASSENGER CABIN INTERIOR STANDARD
F. PASSENGER CABIN LININGS & FURNISHINGS (CONT'D)
09 Floor Carpet Carry out a detailed visual inspection of all floor
Inspection carpets for:-
: Stains
: Tearing
: Worn Areas
: Proper Fit
: Uniform Shading
Ensure Landing Gear lock inspection cut-out panels
are properly located and identified (If Applicable)
10 Cabin Ceiling and Carry out a detailed visual inspection of the
Sidewall Lights ceiling and sidewall light covers for evidence of
burn marks and discoloration.
Ensure that all lights are operating correctly and
that all florescent tubes are of the same color
(light intensity)
12-8
AIRCRAFT PASSENGER CABIN INTERIOR STANDARD
G. OVERHEAD BINS
01 Bin Inspection Carry out a detailed visual inspection of the
overhead bin interior and exterior structure for
the following:-
: Cracked / torn surfaces
: Missing / damaged parts
: Surface discoloration
: Paint condition
: Cleanliness
02 Bin Door Inspection Carry out a detailed visual inspection of the
overhead bin doors for the following:-
: Cracked / torn surfaces
: Surface distortion
: Missing / damaged parts
: Surface discoloration
: Paint condition
: Cleanliness
03 Bin Door Operation Perform an operational check on the overhead bin
doors for the following:-
: Correct fit
: Positive damper snubbing
: Positive locking
04 Bin and Bin Door Carry out repair or replacement of damaged or
Repair missing parts in accordance with the Maintenance
Manual
04 Bin Painting Following any required repainting ensure paint
condition is to a uniform shading standard.
05 Bin Filler Strip Carry out a detailed visual inspection on bin
Inspection filler strips for damage.
(As Applicable)
06 Bin Filler Strip Following any required repainting ensure paint
Painting condition is to a uniform shading standard with
(As Applicable) surrounding bin panels.
07 Passenger Service Carry out a detailed visual inspection of the
Units (PSU) Inspection following passenger service units components for
condition and correct operation:-
: Air louvers
: Call buttons
: Reading lights
: No Smoking / Fasten Seat Belt lights
12-9
AIRCRAFT PASSENGER CABIN INTERIOR STANDARD
H. MISCELLANEOUS
01 Passenger Cabin Inspect all cabin interior placards
Placards Replace all placards that are damaged or with
illegible lettering
Ensure that all seat row number decals are
correctly positioned on the overhead bin structure.
02 Seat Rail Covers Ensure that all seat rail covers are the correct
fit and color throughout the cabin.
03 Flight Deck and Ensure that all required emergency equipment is
Passenger Cabin located and secured in accordance with the approved
Emergency Equipment Location Chart.
Ensure all required equipment location decals /
placards are correctly positioned.
Ensure all `Next due date' labels on Emergency
Equipment are clearly legible.
04 Emergency Escape Ensure that installed system is fully operational
Floor Path Marking including all Emergency Exit lights.
Ensure all light covers are free from stains and
cracking.
Also the track capping strips (If applicable) are
fitting correctly with no gaps or exposed wiring.
05 Emergency Exit Check for required level of luminescence and
Photoluminescent validity of expiry date
Signs (If Installed)
12-10
SCHEDULE 13
FORM OF ASSIGNMENT, ASSUMPTION AND RELEASE AGREEMENT
THIS ASSIGNMENT, ASSUMPTION AND RELEASE AGREEMENT (MSN ___)
(this "Agreement"), dated as of ________ is entered into by and between
______________, a company incorporated under the laws of _______ ("Assignor"),
and __________, a ________ _________ ("Assignee").
W I T N E S S E T H:
WHEREAS, Kitty Hawk Aircargo, Inc., a company incorporated
under the Laws of Texas ("Lessee") and Assignor have heretofore entered into
that certain Aircraft Lease Agreement, dated as of ___________, 2004 ("ALA"),
which incorporates by reference therein a Common Terms Agreement dated as of
__________, 2004 between Aviation Financial Services Inc. and Lessee ("CTA"), as
amended and supplemented from time to time (collectively, the "Lease"), as more
particularly described in Annex 1 hereto (terms not otherwise defined herein
shall have the meanings assigned to them in the Lease), which Lease relates to
the Aircraft (as defined in Annex I hereto);
WHEREAS, Assignor and Assignee have entered into an aircraft
sale and purchase agreement dated on or prior to the date hereof ("Purchase
Agreement");
WHEREAS, pursuant to the Purchase Agreement, Assignor's
interest in the Lease is being transferred to Assignee, as contemplated by
Section 14.2 of the CTA;
WHEREAS, in connection with the foregoing, Assignor desires to
assign all of its right, title and interest in, to and under the Lease to
Assignee, Assignee desires to assume certain of Assignor's obligations under the
Lease, and, pursuant to the Lease, Lessee has agreed to release Assignor from
Assignor's obligations under the Lease to the extent agreed to be assumed by
Assignee hereunder, all on the terms and subject to the conditions hereinafter
set forth;
NOW, THEREFORE, for good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, Assignor and Assignee
hereby agree as follows:
Article 1. Definitions.
For purposes of this Agreement, the following terms shall have
the respective meanings set forth below.
"Effective Time" has the meaning given to such term in Section
6.4 below.
"Lien" shall mean a Security Interest as defined in the Lease
(without giving effect to the exclusion of Lessor Liens set forth therein).
13-1
"Permitted Lien" shall mean (i) any Lien which is created by
or results from debts or liabilities or actions of Lessor or its Affiliates and
(ii) any Lien (other than a Lessor Lien) which Lessee is permitted under the
Lease to allow to subsist (including rights conferred on Lessee or any third
parties by the Lease) or which is otherwise attributable to or for which Lessee
is responsible under the Lease.
"Prior Party" shall mean a prior lessor (other than Assignor)
under the Lease, if applicable.
Article 2. Assignment and Assumption.
2.1 Assignor for $10 and for other good and valuable consideration,
receipt of which is hereby acknowledged, does hereby assign, transfer, sell and
convey unto Assignee, without recourse or, except as provided below in this
Section 2.1, representation or warranty, all of Assignor's right, title and
interest accruing on or after the Effective Time hereof in, to and under the
Lease, free and clear of Liens other than Permitted Liens, to have and hold the
said Lease unto Assignee, its successors and assigns, to and for its and their
use forever; provided, however, that Assignor retains and does not assign to
Assignee any rights or benefits accrued or arising pursuant to the Lease in
respect of the period prior to the Effective Time hereof, including, Rent paid
in advance prior to the date hereof and which is allocable to the period prior
to the Effective Time, and Assignor retains and does not assign to Assignee
hereby Assignor's (or if applicable, a Prior Party's) rights under Sections 5.6,
5.7, 5.8, 5.9, 5.10, 5.12, 9 (as an additional insured in their capacity as an
Indemnitee for liability purposes only), 10 or 14.3 of the CTA as if Assignor
and such Prior Parties continued to be named as a Tax Indemnitee or Indemnitee,
as the case may be, thereunder in the capacity as "Lessor" (and/or Owner,
Financing Parties' Representative and Financing Party, as the case may be) for
the period prior to the Effective Time and in the capacity as a Prior Party for
the period after the Effective Time (collectively, the "Retained Rights"). In
furtherance of the foregoing, (i) Assignor shall pay to Assignee on the date of
the Effective Time an amount equal to all Rent paid in advance and allocable to
the period on or after the date of the Effective Time in accordance with the
terms and conditions of the Purchase Agreement and (ii) from the Effective Time,
Assignee shall be entitled to all rights, remedies and benefits of Lessor
provided for under the Lease, including, the right to make all inspections and
determinations and give all requests thereunder, the right to receive all
payments and other performance by Lessee thereunder and the right to exercise
all rights and remedies of Lessor with respect to Lessee or the Aircraft
thereunder other than in respect of Retained Rights.
2.2 Assignee hereby assumes all of the duties, liabilities, and
obligations of Lessor under the Lease arising or accruing on or after the
Effective Time, and agrees that it shall be bound by all the terms of, and shall
undertake all of the obligations of Lessor contained in, the Lease, arising on
or after the Effective Time hereof; provided, however, that Assignee does not
assume, and Assignor shall be and shall remain obligated to Lessee for, all
duties, liabilities and obligations of Lessor under the Lease arising or
accruing prior to the Effective Time (the "Retained Obligations"). For avoidance
of doubt, Assignee hereby confirms that, from the Effective Time, it is assuming
all the obligations of Lessor under the Lease (other than the
13-2
Retained Obligations) including, without limitation, the obligations, if any, of
Lessor under Sections 5.11, 7.1 and 7.2 of the CTA.
2.3 Assignee and Assignor hereby covenant and agree to execute and to
deliver to each other and to Lessee from time to time such other documents,
instruments and agreements as any of them reasonably may request in order to
further evidence the assignment, assumption and substitution effected hereby or
otherwise to carry out the purposes and intent of this Agreement. Assignee
agrees that, in all matters relating to any Retained Rights, Assignee shall not
amend the Lease or otherwise act in derogation of any Retained Rights.
2.4 In furtherance of the foregoing, Assignor hereby agrees to [pay to
Assignee an amount equal to the Deposit] [transfer to Assignee the Letter of
Credit] [and pay an amount equal to Lessor's maximum potential Maintenance
Contribution liability under Section 7.2 of the CTA as of the Effective Time].
[Assignor and Assignee shall execute and deliver a receipt for such payments,
which receipt shall be acknowledged by Lessee pursuant to which acknowledgment
Lessee shall agree that, upon Assignee's receipt of such payments, Assignor
shall not have any further obligations under the Lease relating to the Deposit,
Supplemental Rent or Maintenance Contributions or amounts payable in respect
thereof and Assignee's obligations in respect thereof as of the date hereof
shall be limited to the amounts set forth in such receipt.]
Article 3. Release.
3.1 For the avoidance of doubt, pursuant to Section 14.2 of the Lease,
Lessee shall be bound by the foregoing assignment and assumption, including,
Assignor's reservation of rights and benefits provided for above, and Assignor
(and all other Prior Parties) continuing as a "Tax Indemnitee" and an
"Indemnitee", as the case may be, under and for purposes of Sections 5.6, 5.7,
5.8, 5.9, 5.10, 5.12, 9 (as an additional insured in their capacity as an
Indemnitee for liability purposes only), 10 and 14.2 of the CTA as provided
above. Except as provided above with respect to Retained Rights and Retained
Obligations, on and as of the Effective Time, pursuant to Section 14.2 of the
Lease, Lessee shall be deemed to have agreed that Assignor is hereby released
and discharged from each and every obligation, liability (express or implied) or
duty under or pursuant to the Lease (included under Sections 5.11, 7.1 and 7.2
of the CTA) arising or accruing on or after the Effective Time hereof and, for
such purposes, Assignee shall be substituted in lieu of Assignor as the "Lessor"
under the Lease.
Article 4. Assignee's Representations and Warranties. Assignee represents and
warrants to Assignor and Lessee that:
4.1 [Assignee is a "citizen of the United States" within the meaning of
the Federal Aviation Act of 1958, as amended, and as recodifed in Subtitle VII
of Title 49 of the United States Code, and the regulations thereunder (including
with respect to voting trust or other voting rights arrangements).]
4.2 Assignee is a [corporation][limited liability company][national
banking association] organized and validly existing in good standing under the
laws of [_______] and has
13-3
the _______ power to own its assets and to carry on its business as presently
conducted and to enter into and perform this Agreement.
4.3 This Agreement has been duly authorized all necessary corporate
action on the part of Assignee and neither the execution and delivery hereof nor
the consummation of the transactions contemplated hereby nor compliance by
Assignee with any of the terms and provisions hereof does or will contravene any
law applicable to Assignee, conflict with the constitutional documents of
Assignee, or result in any breach of, or constitute any default under, or result
in the creation of any lien, charge or encumbrance upon any property of Assignee
under, any material credit agreement or instruments or other agreement or
instruments to which Assignee is a party or by which Assignee or its properties
or assets are bound.
4.4 Assignee has received every consent, approval or authorization of,
and has given every notice to, each Government Entity having jurisdiction with
respect to the execution, delivery or performance of this Agreement by Assignee.
4.5 This Agreement has been duly executed and delivered by Assignee and
constitutes a legal, valid and binding obligation of Assignee, enforceable
against Assignee in accordance with its terms, except as such enforceability may
be limited by bankruptcy, reorganization, insolvency, moratorium or other
similar laws affecting the enforcement of the rights of creditors generally and
by general principles of equity (regardless of whether such enforceability is
considered in a proceeding in equity or at law).
Article 5. Assignor's Representations and Warranties. Assignor represents and
warrants to Assignee and Lessee that:
5.1 Assignor is a [corporation][limited liability company][national
banking association] organized and validly existing in good standing under the
laws of [_______] and has the ______ power to own its assets and to carry on its
business as presently conducted and to enter into and perform this Agreement.
5.2 This Agreement has been duly authorized pursuant to all necessary
corporate action on the part of Assignor and neither the execution and delivery
hereof nor the consummation of the transactions contemplated hereby nor
compliance by Assignor with any of the terms and provisions hereof does or will
contravene any law applicable to Assignor, conflict with the constitutional
documents of Assignor, or result in any breach of, or constitute any default
under, or result in the creation of any lien, charge or encumbrance upon any
property of Assignor under, any material credit agreement or instruments or
other agreement or instruments to which Assignor is a party or by which Assignor
or its properties or assets are bound.
5.3 Assignor has received every consent, approval or authorization of,
and has given every notice to, each Government Entity having jurisdiction with
respect to the execution, delivery or performance of this Agreement by Assignor.
5.4 This Agreement has been duly executed and delivered by Assignor and
constitutes a legal, valid and binding obligation of Assignor, enforceable
against Assignor in
13-4
accordance with its terms, except as such enforceability may be limited by
bankruptcy, reorganization, insolvency, moratorium or other similar laws
affecting the enforcement of the rights of creditors generally and by general
principles of equity (regardless of whether such enforceability is considered in
a proceeding in equity or at law).
Article 6. Miscellaneous.
6.1 This Agreement shall be binding upon and inure to the benefit of
the parties hereto and their successors and assigns. Assignor and Assignee agree
that Lessee shall be a third party beneficiary of this Agreement.
6.2 This Agreement has been executed and delivered in the State of New
York, and this Agreement, including all matters of construction, validity and
performance, shall in all respects be governed by, and construed in accordance
with, the laws of the State of New York applicable to contracts made in such
State and to be performed entirely within such State.
6.3 This Agreement may be executed by the parties hereto in separate
counterparts, each of which when so executed and delivered shall be an original,
but all such counterparts shall together constitute but one and the same
instrument.
6.4 This Agreement shall become effective at the time of filing of this
Agreement for recordation with the FAA (the "Effective Time"). Assignor and
Assignee agree to notify Lessee of the Effective Time promptly after the
occurrence thereof pursuant to a Notice of Assignment substantially in the form
of Annex 2 hereto[, and to notify the applicable broker and/or insurers of the
substance of Section 2.1 of the Assignment Notice promptly after the Effective
Time].
13-5
IN WITNESS WHEREOF, the parties hereto have each caused this Assignment,
Assumption and Release Agreement to be duly executed and delivered by their
respective officers thereunto duly authorized as of the day and year first above
written.
ASSIGNOR: ________________________________
By: __________________________
Name:
Title:
ASSIGNEE: _________________________________
By: ___________________________
Name:
Title:
13-6
ANNEX I
TO ASSIGNMENT AGREEMENT
(MSN ___)
Description of Aircraft and Lease
Aircraft:
Lease:
Instrument Date of Instrument Recording Date and Number
Aircraft Lease Agreement
Common Terms Agreement
Annex I-1
ANNEX II
TO ASSIGNMENT AGREEMENT
(MSN ___)
Kitty Hawk Aircargo, Inc.
0000 Xxxx 00xx Xxxxxx
XXX Xxxxxxxxxxxxx Xxxxxxx
Xxxxxx, Xxxxx 00000, Xxxxxx Xxxxxx of America
NOTICE OF ASSIGNMENT RE: MSN ____________
Ladies and Gentlemen:
Please find attached hereto a fully executed Assignment, Assumption and Release
Agreement (MSN ___) between the Assignor and Assignee named therein (the
"Assignment Agreement") with respect to the lease of Aircraft bearing
manufacturer's serial number ___________. Terms used herein and not otherwise
defined have the meanings given to them in the Assignment Agreement.
1. Notice. Assignor and Assignee hereby notify Lessee of the assignment,
assumption and release with respect to the Lease provided for in the
attached Assignment Agreement, which assignment, assumption and release
are in full force and effect. The "Effective Time" as defined therein
occurred at ______.
2. Lease Amendments/Supplements. The following amendments and/or
supplements to the Lease are hereby made effective automatically on and
for the period from and after the Effective Time.
2.1 The definitions of the following terms in the CTA or the ALA, as
applicable, are hereby amended and/or supplemented as set forth below:
(a) The term "Indemnitees" in Schedule I to the CTA includes
Assignee as Lessor, _______ as Owner, _______. All Indemnitees
prior to the Effective Time remain as Indemnitees.
(b) The term "Lessor" in the ALA is hereby amended to refer to
Assignee.
(c) [The term "Owner" in the ALA is hereby amended to refer to
____________].
(d) The term "Tax Indemnitee" in Schedule I to the CTA includes
Assignee as Lessor, _______ as Owner. All Tax Indemnitees in
effect prior to the Effective Time shall remain Tax
Indemnitees.
2.2. Section 5.5 of the CTA is hereby deleted in its entirety and replaced
with the following:
"All payments by Lessee to Lessor under the Lease will be made for
value on the due date in Dollars and in immediately available funds by
wire transfer to
______________________, ABA Number ____________, Swift Code
___________, for the account of ________________________, Account
number ________________, or such other account as Lessor designates in
writing from time to time"
Annex II-1
2.3 Section 15.7 of the CTA is hereby amended by deleting Lessor's contact
information appearing therein and replacing it in its entirety with the
following:
Lessor:
Address:
Attn:
Facsimile:
Telephone
3. Lessee's Representation of Warranties. Upon receipt hereof, and in
consideration of Assignor's and Assignee's representations, warranties
and covenants contained in the Assignment Agreement, Lessee shall be
deemed to represent and warrant to Assignor of Assignee that:
3.1 Lessee is a corporation organized and validly existing in good standing
under the laws of Texas and has the corporate power to own its assets
and to carry on its business as presently conducted and to enter into
and perform the Lease.
3.2 As of the Effective Time the representations and warranties set forth
in Section 1.1 of Schedule 2 of the CTA were true and correct.
3.3 Except as notified in writing by Lessee to Assignee within ten (10)
days from the date hereof, the Lease is in full force and effect, and a
true, complete and current description of the Lease is attached hereto
as Annex B (and is accurately described in the Assignment Agreement),
which contains all written amendments, waivers or other modifications
thereto as of the date hereof, and there have been no oral amendments,
waivers or other modifications of any provisions of the Lease, in each
case which continue in effect on or after the Effective Time.
3.4 Except as notified in writing by Lessee to Assignee within ten (10)
days from the date hereof, Lessee has no disputes with Assignor, and,
to the knowledge of Lessee, Lessee has no claims against Assignor,
under or in respect of the Lease.
3.5 Except as notified in writing by Lessee to Assignee within ten (10)
days from the date hereof, no prior notice of assignment of the Lease
by Assignor has been received by Lessee [other than ______].
3.6 Except as notified in writing by Lessee to Assignee within ten (10)
days from the date hereof, neither the Aircraft nor any Engine is
subject to a requisition by any Government Entity, nor to any sublease,
interchange or charter.
3.7 Except as notified in writing by Lessee to Assignee within ten (10)
days from the date hereof, no unrepaired damage with the cost of repair
or replacement in excess of the Damage Notification Threshold, and no
Event of Loss or incipient Event of Loss, has occurred with respect to
the Aircraft or any Engine.
3.8 Except as notified in writing by Lessee to Assignee within ten (10)
days from the date hereof, no Default (including with respect to the
payment of Rent) has occurred and is continuing.
3.9 Lessee has made no prepayments of Rent.
Annex II-2
3.10 Except as notified in writing by Lessee to Assignee within ten (10)
days from the date hereof, as of the date hereof, the Agreed Value,
[and] the monthly Rent[, the Supplemental Rent amounts,][the
Deposit][the Letter of Credit][, and the amount of Lessor's maximum
Maintenance Contribution liability] are as set forth on Annex A
attached hereto.
4. Plates. Upon Lessee's acknowledgement hereof, Lessee shall be deemed to
have agreed that Lessee will, at Assignee's expense, procure that
replacement fireproof plates are affixed to the Aircraft in compliance
with Section 8.7(d) of the CTA at the next scheduled maintenance check
of the Aircraft and Assignee agrees that no Default shall occur under
the Lease due to Lessee's failure to install such replacement fireproof
plates prior to such time.
5. Further Assurances. Each of the parties hereto agrees from time to time
to do and perform such other and further acts and to execute and
deliver any and all such instruments as may be required by law or
reasonably requested by any other party hereto to establish, maintain
and protect the rights and remedies of the parties hereto and to carry
out and effect the intended purpose of the Assignment Agreement. In
particular, Lessee agrees that it will use reasonable commercial
efforts to obtain within ten (10) days from the date hereof an
acknowledgment from the applicable insurance broker or insurer that it
received the notice referred to in Section 6.4 of the Assignment
Agreement.
Annex II-3
Please acknowledge your receipt of this Notice of Assignment and confirmation of
the foregoing terms hereof by executing a counterpart hereof and returning it to
the Assignee.
[Assignor] [Assignee]
By: By:
Name: Name:
Title: Title:
Acknowledged and Confirmed:
Kitty Hawk Aircargo, Inc.
By:
Name:
Title:
Dated: _____________________
Annex II-4
ANNEX A
TO NOTICE OF ASSIGNMENT
(MSN ___)
Agreed Value: $__________
Rent: $__________
[Supplemental Rent: [amount payable by category]]
Deposit: $__________
Letter of Credit: __________
Annex A-1
ANNEX B
TO NOTICE OF ASSIGNMENT
(MSN ___)
Copy of complete Lease
Annex B-1
SCHEDULE 14
FORM OF LEASE SUPPLEMENT XX. 0
XXXXX XXXXXXXXXX XX. 0, dated as of ___________, 200_, between
____________________________________________, [a corporation organized under the
laws of ______________] [, not in its individual capacity, but solely as owner
trustee] ("Lessor"), and Kitty Hawk Aircargo, Inc., a corporation organized
under the laws of Texas ("Lessee").
Lessor and Lessee have previously entered into that certain Aircraft Lease
Agreement dated as of _____________________, including the Common Terms
Agreement as defined therein (collectively, herein referred to as the
"Agreement" and the defined terms therein being hereinafter used with the same
meaning). The Agreement provides for the execution and delivery from time to
time of a Lease Supplement substantially in the form hereof for the purpose of
leasing the aircraft described below under the Agreement as and when delivered
by Lessor to Lessee in accordance with the terms thereof.
The Agreement and this Lease Supplement relate to the Aircraft, Engines and
Parts as more precisely described below and in the Certificate of Technical
Acceptance. A counterpart of the Agreement is attached hereto and shall be filed
together with this Lease Supplement with the FAA.
In consideration of the premises and other good and sufficient consideration,
Lessor and Lessee hereby agree as follows:
1. Lessor hereby delivers and leases to Lessee under and pursuant to the
Agreement and Lessee hereby accepts, acknowledges receipt of possession and
leases from Lessor under and pursuant to the Agreement, that certain
[manufacturer, model, msn, registry number] aircraft, and the [manufacturer,
model, esn] Engines (each of which Engines has 750 or more rated takeoff
horsepower or the equivalent of such horsepower) described in Schedule 1 hereto,
together with the Aircraft Documents and Records described in the Agreement (the
"Delivered Aircraft").
2. The Delivery Date of the Delivered Aircraft is the date of this Lease
Supplement set forth in the opening paragraph hereof.
3. The Term for the Delivered Aircraft shall commence on the Delivery Date and
shall end on the Expiry Date, with respect to which the Scheduled Expiry Date
shall be [insert date].
4. The amount of Rent for the Delivered Aircraft is set forth in Schedule B to
the Agreement.
5. Lessee hereby confirms to Lessor that (i) the Delivered Aircraft and each
delivered Engine have been duly marked in accordance with the terms of Section
8.6(a) of the Agreement, (ii) the Aircraft is insured as required by the
Agreement, (iii) the representations and warranties of Lessee referred to in
Section 2.1 of the Agreement are hereby repeated with effect as of the date
first above written, (iv) having inspected the Delivered Aircraft, Lessee
acknowledges that the Delivered Aircraft satisfies all conditions required for
Lessee's acceptance of delivery as set
14-1
forth in the Agreement, and (v) the execution and delivery of this Lease
Supplement signifies absolute and irrevocable acceptance by Lessee of the
Delivered Aircraft for all purposes hereof and of the Agreement.
6. This Lease Supplement shall be governed by and construed in accordance with
the Laws of the State of New York. This Lease Supplement is hereby deemed
executed and delivered pursuant to the Agreement in the State of New York.
7. This Lease Supplement may be executed in any number of counterparts; each of
such counterparts, shall for all purposes be deemed to be an original; and all
such counterparts shall together constitute but one and the same Lease
Supplement; provided, that to the extent, if any, that this Lease Supplement
constitutes chattel paper (as such term is defined in the Uniform Commercial
Code as in effect in any applicable jurisdiction), no security interest in this
Lease Supplement may be created through the transfer or possession of any
counterpart other than the "Original", which shall be identified by Lessor's
receipt therefore indicated on the signature page thereof.
8. This Lease Supplement supplements and forms a part of the Agreement. The
Agreement, as supplemented hereby, is hereby ratified, approved and confirmed in
all respects.
IN WITNESS WHEREOF, Lessor and Lessee have caused this Lease Supplement No. 1 to
be duly executed as of the day and year first above written.
LESSOR, LESSEE,
[Lessor] KITTY HAWK AIRCARGO, INC.
By:_____________________________ By:_____________________________
Name:___________________________ Name:___________________________
Title:__________________________ Title:__________________________
14-2
SCHEDULE 15
FORM OF CERTIFICATE LEASE TERMINATION
The undersigned hereby certify that the Aircraft Lease Agreement dated as of
_________, ____ between the undersigned Lessor and undersigned Lessee, and as
further described in the Appendix attached hereto, has terminated (except as
described in Section 15.13 thereof) and the aircraft and aircraft engines
covered thereby are no longer subject to the terms thereof. This certificate may
be executed in one or more counterparts each of which when taken together shall
constitute one and the same instrument.
DATED this __________ day of ____________________, __________
LESSOR LESSEE
[LESSOR] KITTY HAWK AIRCARGO, INC.
By:________________________________ By:_______________________________
Title:_____________________________ Title:____________________________
15-1
SCHEDULE 16
FORM OF LETTER OF CREDIT
GE Capital Aviation Services, Inc.
000 Xxxx Xxxxx Xxxx
Xxxxxxxx, XX 00000
Dated _________
This Letter of Credit is provided in connection with the lease of that [AIRCRAFT
TYPE] aircraft [SERIAL NO.] to [LESSEE] (the "Lease"). This letter of credit
however creates primary obligations on us and is independent from the lease.
On the instructions of [LESSEE] and for its account, we hereby establish this
irrevocable Letter of Credit to authorize GE Capital Aviation Services, as
manager of the aircraft, to draw on [APPROPRIATE BRANCH/DEPARTMENT
DETAILS/ADDRESS OF ISSUING BANK] an amount or amounts not exceeding a total of
US$ [AMOUNT IN FIGURES (AMOUNT IN WORDS] United States Dollars) upon receipt by
us of a signed demand certificate from you in the following format (with the
square bracketed sections completed):
"On behalf of [LESSOR NAME], the undersigned as an authorized signatory or
representative of GE Capital Aviation Services hereby (i) certifies that GE
Capital Aviation Services is entitled to draw under you irrevocable Letter of
Credit dated [DATE OF THIS LETTER OF CREDIT] pursuant to the terms of the Lease
and (ii) draws upon your irrevocable Letter of Credit dated [DATE OF THIS LETTER
OF CREDIT] and instructs you to transfer US$ [AMOUNT IN FIGURES] ([AMOUNT IN
WORDS] United States Dollars) to [INSERT APPROPRIATE BANK DETAILS] immediately."
We will honor drawings under this Letter of Credit upon our receipt of such a
demand certificate (by facsimile to fax number: [BANK FAX NUMBER], mail, courier
service or by hand) and will make payment to the account specified in the demand
certificate, for value no later than close of business on the next succeeding
banking day following our receipt of the demand certificate. If any drawing
hereunder does not conform with these terms, we shall promptly notify you of
that, state the reason(s) why and hold the document(s) presented at your
disposal (or return them to you if you so request).
Partial drawings are permitted.
This letter of credit expires on [INITIAL EXPIRY DATE] ("Expiry Date") but shall
be automatically extended, without the need for amendment, for one year from the
said Expiry Date and annually thereafter unless at least sixty (60) days prior
to the then applicable Expiry Date we have notified you by registered mail that
we will not renew the letter of credit for the following year.
This Letter of Credit is transferable and constitutes an obligation to make
payment against documents.
18-1
Except as provided above, this Letter of Credit is issued subject to the Uniform
Customs and Practice for Documentary Credits (1993 Revision) International
Chamber of Commerce Publication No. 500 and is governed by New York law. Unless
you otherwise require, any disputes arising out of or in connection with this
letter of credit shall be resolved before the United States District Court for
the Southern District of New York and any New York state court sitting in the
County of New York, New York, and all related appellate courts.
All bank charges, including, but not by way of limitation, fees or commissions,
shall be for the applicant's account.
18-2
