* CONFIDENTIAL PORTIONS OF THIS DOCUMENT HAVE BEEN OMITTED AND FILED SEPARATELY
WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR
CONFIDENTIAL TREATMENT
PURCHASE AGREEMENT
FOR
TWELVE (12) JETSTREAM 4100 AIRCRAFT
BETWEEN
AERO INTERNATIONAL (REGIONAL)
as agent for and on behalf of
British Aerospace (Operations) Limited
and
ATLANTIC COAST AIRLINES
Dated: February 23, 1997
TABLE OF CONTENTS
PURCHASE AGREEMENT 3
SECTION 1. DEFINITIONS 4
SECTION 2. THE AIRCRAFT 7
SECTION 3. PURCHASE PRICE AND PAYMENT TERMS 9
SECTION 4. BUYER FINANCING 11
SECTION 5. [RESERVED] 14
SECTION 6. RESIDUAL VALUE GUARANTEE 15
SECTION 7. DELIVERY AND ACCEPTANCE 16
SECTION 8. TRANSFER OF TITLE AND FERRY 18
SECTION 9. INSURANCE 20
SECTION 10. EXCUSABLE AND INEXCUSABLE DELAY 22
SECTION 11. AIRCRAFT WARRANTY AND GUARANTEES 25
SECTION 12. TRAINING AND TECHNICAL REPRESENTATIVE 26
SECTION 13. [RESERVED] 28
SECTION 14. QUALIFIED ROTABLE SPARES FINANCING 29
SECTION 15. TAXES AND LICENSES 30
SECTION 16. REPRESENTATIONS AND WARRANTIES 32
SECTION 17. CONDITIONS PRECEDENT 35
SECTION 18. FURTHER ASSURANCES 36
SECTION 19. EVENT OF TERMINATION 37
SECTION 20. MISCELLANEOUS 40
EXHIBIT A - Jetstream 41 Aircraft Delivery Schedule
EXHIBIT B - Aircraft Warranty and Supplier Warranties
EXHIBIT B-1 - Addenda to Aircraft and Supplier Warranties
EXHIBIT C - Change Orders
EXHIBIT D - Form of Operating Lease Agreement
EXHIBIT D-1 - Backstop Terms
EXHIBIT E - Payment Instructions
EXHIBIT F-1 - Form of Residual Value Agreement
EXHIBIT F-2 - Form of Put Agreement
EXHIBIT F-3 - Table of Residual Values
EXHIBIT G - *
EXHIBIT H - Certificate of Acceptance
EXHIBIT I-1 - Amendments to Jetstream 32 Return Conditions
EXHIBIT I-2 - Amendments to Jetstream 32 Return Conditions
EXHIBIT I-3 - Amendments to Jetstream 32 Return Conditions
EXHIBIT J - Additional Product Support
EXHIBIT K - Purchase Price Revision
EXHIBIT L - Confirmation of Sale
EXHIBIT M - Dispute Resolution
EXHIBIT N - Jetstream 32 Aircraft
PURCHASE AGREEMENT FOR
JETSTREAM 41 AIRCRAFT
This PURCHASE AGREEMENT (the "Agreement") by and between AERO
INTERNATIONAL (REGIONAL) a Societe par Actions Simplifiee, having a share
capital of FF 300,000, whose registered office is situated at 0 Xxxxx Xxxxxx
Xxxxx, 00000 Xxxxxxx Xxxxx, Xxxxxx, registered at the Companies' Registry in
Toulouse under No B 402 685 507, acting as agent for and on behalf of British
Aerospace (Operations) Limited, (hereinafter referred to as "the Seller"); and
ATLANTIC COAST AIRLINES, a California corporation located at 000X Xxxx Xxxx,
Xxxxxx, Xxxxxxxx 00000 ("Buyer") is dated as of February 23, 1997.
WHEREAS Buyer has agreed to purchase certain additional Jetstream 41
aircraft from Seller (as hereinafter defined); and
WHEREAS in connection with Buyer's agreement to purchase the Jetstream 41
aircraft Seller has agreed to provide certain backstop financing pending, or in
certain cases, in the absence of, Buyer's completion of permanent financing;
and
* ; and
WHEREAS Seller will provide or will cause to be provided to Buyer certain
product support services and spare parts financing as provided for herein in
connection with the new Jetstream 41 aircraft acquired by Buyer; and
WHEREAS Seller will provide or will cause to be provided certain residual
value guarantees with respect to the Jetstream 41 aircraft purchased by Buyer
under this Agreement; and
WHEREAS Buyer and Manufacturer have entered into an agreement concerning
the refinancing of certain Jetstream 41 aircraft existing in Buyer's fleet,
NOW THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, and based upon the mutual
premises and promises herein contained, the parties hereto do hereby agree as
follows:
SECTION 1.- DEFINITIONS
Except as otherwise specified, the following terms have the respective
meanings set forth below:
Acceptance Flight Tests: Those flight tests as defined in Section 7.2.1 of this
Agreement.
Adjusted Base
Purchase Price: Has the meaning assigned to it in Section 3.2.
Affiliated Company: means any corporation, entity or individual
which directly or indirectly, controls, or is
controlled by, or is under a common control with, such
person or entity. For purposes of this definition,
"control" (including "controlled by" and "under common
control") shall mean the power, directly or
indirectly, to direct or cause the direction of the
management and policies of such person, whether
through the ownership of voting securities or by
contract or otherwise.
AIRAMS: means AI(R) Customer Support, Inc., a company
incorporated in Delaware and located at 00000 XxXxxxxx
Xxxx, Xxxxxxx, XX.
Aircraft: Jetstream Aircraft Limited Jetstream Series 4100 twin
engined turboprop transport aircraft, including the
airframe and two (2) installed engines and propellers.
Backstop Financing Means the lease financing described in Exhibit D-1.
Base Purchase Price: Has the meaning assigned to it in Section 3.1.
Business Days: Means any day other than a Saturday or Sunday or
a day on which commercial banks are required or
authorized to close in New York, New York or
Washington D.C.
CAA: The Civil Aviation Authority of the United Kingdom and
any successor agency.
Certificate of Acceptance: A certificate in respect of each Aircraft
substantially in the form attached hereto as Exhibit H.
Change Order: A written amendment to the Manufacturer's
Specification.
Conditions Precedent: Those events as defined in Section 17 of this
Agreement.
Customer Specification: The Manufacturer's Specification as modified by Change
Orders (i) executed in conjunction with this Agreement
and attached hereto as Exhibit C and (ii) executed
subsequent to the date hereof and incorporated as of
such subsequent date.
Delivery Date: With respect to each Aircraft, the actual date
of delivery thereof.
Event of Termination: Those events as defined in Section 19 of this
Agreement.
Excusable Delay: A failure or delay in performance as defined in Section
10.1 of this Agreement.
FAA: The Federal Aviation Administration of the United
States of America and any successor agency.
FARs: The Federal Aviation Regulations of the FAA.
JACO means Jet Acceptance Corporation, a Delaware
corporation.
Inexcusable Delay: Has the meaning assigned to it in Section 10.4.
Lease Agreement: Is a lease agreement substantially in the form of
Exhibit D pursuant to which Seller shall provide
Backstop Financing on the terms and subject to the
conditions set forth in Exhibit D-1 of this Agreement.
LIBOR means as applicable to each period indicated, the per
annum rate for deposits in dollars for six months
quoted two Business Days prior to the first day of such
period as such rate is published as the "British
Banker's LIBOR Fixing" for dollar deposits as of 11:00
am on such date.
Manufacturer: Means British Aerospace (Operations) Limited, a
company incorporated under the laws of England and
Wales under the Companies Act of 1985 having its
registered office at Warwick House, P.O. Box 87,
Farnborough Xxxxxxxxx Xxxxxx, Xxxxxxxxxxx Xxxxx XX00
0XX.
Manufacturer's Facility: Means the Manufacturer's facility at Prestwick,
Scotland.
Manufacturer's Specification: The Jetstream Aircraft Type Specification DV/M
490.262/96 (SEP94), Issue 6, dated June 1995.
Modification Program: Has the meaning assigned to it in Section 3.4.1.
Purchase Price: Has the meaning assigned to it in Section 3.3.
Qualified First Officer: Any pilot with at least one thousand five
hundred (1,500) total flight hours (including a minimum
of five hundred [500] flight hours on multi-engined
aircraft) who possesses multi-engined, commercial
aircraft and flight instrument ratings.
Qualified Flight Captain: Any pilot with at least two thousand five
hundred (2,500) total flight hours (including a minimum
of one thousand [1,000] flight hours on turboprop or
turbojet aircraft) who possesses multi-engined,
commercial aircraft, flight instrument and ATP ratings.
Qualified Rotable Spares: Any new and unused item of special tooling
uniquely required to maintain the Aircraft or any new
and unused serial numbered rotable spare part or
component for the Aircraft (excluding engines and
engine related parts) with an individual current list
price at time of delivery of Two Thousand U.S. Dollars
(U.S. $2,000) or more; excluding however any consumable
item or items and any quick engine change kits.
Regulatory Change: Has the meaning assigned to it in Section 2.3.
Return Payment: Has the meaning assigned to it in Section 13.4.
Scheduled Delivery Date: With respect to each Aircraft, that date specified in
the notice provided pursuant to Section 7.1.2 of this
Agreement.
Sublease Agreement Means a sublease agreement between Buyer, or its
Affiliated Company, and Jet Acceptance Corporation
("JACO"), or its Affiliated Company in respect of a
Jetstream 32 aircraft.
SECTION 2 - THE AIRCRAFT
2.1 Each Aircraft shall be manufactured and offered for delivery to Buyer in
a manner conforming to the Customer Specification.
2.2 Each Aircraft shall be offered for delivery to Buyer with a CAA
Certificate of Airworthiness for Export which shall qualify for the
issuance of a United States FAA Certificate of Airworthiness.
2.3 Buyer acknowledges and agrees that in the event any requirement,
regulation or mandate of the CAA or of the FAA or any law or any
interpretation thereof becomes effective between the date of this
Agreement and the Delivery Date of an Aircraft which has the effect of
requiring any changes or modifications to the Customer Specification or
to any work carried out or to be carried out in the manufacture of such
Aircraft or to the testing with respect thereto ("Regulatory Change"),
* Seller shall, without any obligation or requirement to secure the
permission or consent of Buyer, provided, however, that Seller shall
consult with Buyer on the proposed change or modification, make such
changes or modifications to the Customer Specification, or to the
Aircraft or carry out such testing, or if such modifications or changes
shall be embodied following the Delivery Date of an Aircraft, Seller
shall consult and agree with Buyer on a schedule for such Regulatory
Change to be embodied.
2.3.1 Seller shall undertake all modifications, changes and testing
required by such Regulatory Change at Seller's expense if such
Regulatory Change is exclusively required for the Aircraft *
and not generally applicable to turboprop passenger transport
aircraft certificated under the category applicable to the
Aircraft.
2.3.2 In the case of a Regulatory Change applicable to the Aircraft
* plus any other turboprop passenger transport aircraft
certified under the category applicable to the Aircraft, the Base
Purchase Price for the Aircraft may be increased to reflect the
cost of all changes, modifications and testing required by such
Regulatory Change, provided, however, that (i) * (ii) the
cost shall not exceed the cost charged for the same changes on
aircraft of other best customer operators of Jetstream 41 aircraft
or (ii) in order to standardize with other aircraft already in
Buyer's fleet, Buyer may elect to embody the Regulatory Change on
the Aircraft at its own cost by providing sufficient notice to
Seller.
2.3.3 Seller shall provide Buyer with written notice of each such
Regulatory Change and shall issue to Buyer a Change Order executed
by Seller stating the change or modifications to the Aircraft or
the testing required and the adjustment to the Base Purchase Price,
to the extent permitted by this Agreement, necessitated by such
change, modification or testing, which Change Order automatically
shall be binding on both parties hereto notwithstanding the absence
of Buyer's signature thereon.
2.3.4 Prior to the delivery of each Aircraft, Seller shall be entitled to
fly each Aircraft and to use any part thereof for such period or
periods as shall be necessary in connection with CAA or FAA
requirements related to the Aircraft and Seller shall be under no
liability to Buyer in respect of any reasonable use or depreciation
of the Aircraft occasioned thereby. Seller shall minimize its use
of any Aircraft or part or parts thereof as provided for in this
Section 2..3.4.
SECTION 3 - PURCHASE PRICE AND PAYMENT TERMS
3.1 The Base Purchase Price for each Aircraft is * .
3.2 The Base Purchase Price shall be adjusted to determine the "Adjusted
Base Purchase Price", as follows:
3.2.1 To include the cost of changes to the Customer Specification
required by Buyer after the date hereof.
3.2.2 To include the cost of Regulatory Changes pursuant to the terms
of Clause 2.3.2, except those paid directly by Buyer.
3.3 *
3.4 Buyer shall pay to Seller the Purchase Price for each Aircraft upon
execution by Buyer of the Certificate of Acceptance for such Aircraft,
provided, however, that with respect to any Aircraft delivered under a
Lease Agreement, Buyer shall pay all amounts specified in the Lease
Agreement due upon delivery of such Aircraft.
3.4.1 Subject to the conditions specified herein, the first Aircraft
delivered under this Agreement shall be delivered to Buyer under a
Lease Agreement. Buyer's obligation to pay the lease rentals due
under such Lease Agreement shall be waived until the later of (i)
March 1, 1997 or (ii) the date of completion of the J41
modification program currently being performed by Seller on
Buyer's existing fleet of Jetstream 41 aircraft (the "Modification
Program"), subject to the provisions of Section 3.4.2.
3.4.2 In the event the date of completion of the Modification Program is
delayed due to reasons resulting from the acts or omissions of
Buyer, the obligation to pay the lease rentals for such Aircraft
shall occur on the date the Modification Program would have been
completed if such acts or omissions of Buyer had not occurred.
3.5 *
3.6 All amounts payable by one party to the other pursuant to this Agreement
shall be payable in U.S. Dollars in immediately available funds, by
Federal Funds transfer or same day book entry transfer to the accounts
specified in Exhibit E attached hereto.
SECTION 4 - BUYER FINANCING
*
[THREE PAGES OF CONFIDENTIAL MATERIALS HAVE BEEN OMITTED].
SECTION 5 - RESERVED
This Section intentionally left blank.
SECTION 6 - RESIDUAL VALUE GUARANTEE
6.1 The Seller shall cause the Manufacturer to issue to Buyer or its
designated assignee (subject to the limitations on assignment by Buyer
provided in the residual value guarantee) for each Aircraft on the
Delivery Date, (or such subsequent date within one (1) year of the
Delivery Date) as requested by Buyer, for such Aircraft a residual value
guarantee (guaranteed by British Aerospace plc, if requested) which
shall be substantially in the form and substance of either (i) the
Residual Value Agreement attached hereto as Exhibit F-1 or the Put
Agreement attached hereto as Exhibit F-2, as Buyer may elect with
respect to each Aircraft. The value shall be based upon the term of the
residual value guarantee and the amounts as provided in Exhibit F-3
attached hereto.
6.2 Seller agrees to enter into discussions in good faith as reasonably
requested by Buyer with parties designated by Buyer on the forms in
Exhibit F-1 and F-2.
SECTION 7 - DELIVERY AND ACCEPTANCE
7.1 Each Aircraft shall be offered to Buyer for acceptance and delivery in
accordance with the Customer Specification at the Manufacturer's
Facility.
7.1.1 The Aircraft shall be delivered to Buyer in accordance with the
schedule contained in Exhibit A attached hereto and incorporated
herein and each delivery is subject to satisfaction of the
Conditions Precedent specified in Section 17 of this Agreement.
7.1.2 Seller shall provide Buyer initial notice of the Scheduled Delivery
Date for each Aircraft not less than forty five (45) days prior
thereto and final notice not less than ten (10) days prior thereto
which such notice shall, in addition to the general requirement for
notice herein, be sent via facsimile message to Buyer's Senior Vice
President of Operations which notice shall specify it is being
provided in accordance with this Section 7.1.2, provided, however,
that notice for the first two (2) Aircraft shall be provided within
five (5) Business Days of the date hereof, and provided further
that such Scheduled Delivery Date shall be during the month
specified in Exhibit A attached hereto.
7.1.3 Buyer acknowledges and agrees that the delivery schedule for the
Aircraft as set forth in Exhibit A attached hereto is subject to
modification on account of any change by Buyer to the Customer
Specification subsequent to the date of this Agreement or as a
result of a Regulatory Change.
7.2 Buyer shall have the right during the five (5) days following the
Scheduled Delivery Date of each Aircraft to perform a ground inspection
and a flight inspection of each Aircraft to enable Buyer to ascertain
that such Aircraft is in compliance with the terms of this Agreement.
7.2.1 Buyer may, as part of such inspection, request Seller to operate
each Aircraft for a period not to exceed three (3) hours (each an
"Acceptance Flight Test") to demonstrate in ambient conditions at
such location as specified in Section 7.1 that the Aircraft
complies with the requirements of this Agreement in respect of
those requirements which can only be demonstrated in flight.
7.2.1.1 Buyer may designate not more than three (3)
representatives to participate at Buyer's expense and risk in
the Acceptance Flight Tests and Seller hereby indemnifies and
holds Buyer (together with its respective directors, officers
and employees) harmless against any and all liability arising
therefrom, except in cases of gross negligence or willful
misconduct by Buyer or its representatives.
7.2.1.2 The Aircraft shall be operated only by Seller's
nominees during the Acceptance Flight Tests, although
Seller's nominees shall follow the reasonable instructions of
Buyer during the Acceptance Flight Tests.
7.2.2 In the event following such ground and flight inspection, Buyer
ascertains that any Aircraft is not in compliance with the
requirements of this Agreement, Buyer shall immediately notify
Seller in writing of each such noncompliance whereupon Seller shall
investigate the noncompliance and shall, at Buyer's option, either
rectify or have rectified the same within a reasonable period of
time or agree to rectify the noncompliance after delivery of the
Aircraft to Buyer. Upon Seller's rectification of the
noncompliance, Seller shall demonstrate to Buyer that the Aircraft
meets the contractual requirements of this Agreement, including
permitting Buyer to conduct additional ground or flight inspection,
or both, as necessary. Upon satisfactory demonstration by Seller
that the Aircraft complies with the requirements of this Agreement,
or upon Seller agreeing to rectify any noncompliance to the
satisfaction of Buyer after delivery of the Aircraft to Buyer,
Buyer shall accept the Aircraft and execute a Certificate of
Acceptance in respect to that Aircraft in accordance with Section
8.1 (noting any noncompliance to be rectified after delivery).
7.3 Buyer may refuse to accept any Aircraft by reason of Seller's failure to
meet the requirements of this Agreement unless such failure is minor and
does not materially affect the performance, economic operation,
appearance, or maintenance of the Aircraft; provided however, Seller
shall remedy such failure by a date to be agreed between the parties.
7.4 *
SECTION 8 - TRANSFER OF TITLE AND FERRY
8.1 Upon delivery of each Aircraft in compliance with this Agreement, Buyer
shall accept each Aircraft and shall execute a Certificate of Acceptance
with respect thereto.
8.2 With respect to each Aircraft purchased at delivery by Buyer, property
in, title to and risk of loss of or damage to each Aircraft shall pass
to Buyer upon acceptance by Buyer of the Aircraft and payment to the
Seller of the balance of the Purchase Price for each Aircraft in
accordance with the provisions of Section 3.4.
8.3 With respect to each Aircraft purchased at delivery by Buyer, each
Aircraft shall be delivered by Seller to Buyer with good, legal and
marketable title free and clear of all liens, encumbrances and rights of
others of any nature whatsoever and Seller will warrant and defend such
title forever against all claims and demands whatsoever. Seller shall
issue an executed confirmation of sale to Buyer in the form attached
hereto as Exhibit L.
8.4 *
8.5 If Buyer fails to make the necessary arrangements, or fails to comply
with its obligations under this Agreement to accept an Aircraft, *
except in cases due to reasons which are not within Buyer's reasonable
control, then without prejudice to any other remedies and rights of
Seller, Buyer shall, in respect of any subsequent period during which the
Aircraft remains at the Manufacturer's Facility, promptly reimburse
Seller for all reasonable costs and pay Seller's costs for storage,
maintenance, preservation and insurance accruing in consequence of
Buyer's failure to take delivery of such Aircraft.
8.6 Seller shall assist Buyer as reasonably requested to file any
applications and secure all necessary approvals for the purpose of
ferrying the Aircraft to a location in the Eastern United States as
designated by Buyer.
SECTION 9 - INSURANCE
9.1 At all times following delivery of an Aircraft * the Buyer shall
obtain and maintain at its own expense Third Party and Passenger Legal
Liability Insurance Policies as hereinafter provided in respect of the
Aircraft to be effective on transfer of title in accordance with Section
8.2. For each Aircraft delivered to Buyer under a Lease Agreement,
Buyer shall comply with all insurance requirements of the Lease
Agreement. Prior to the transfer of title, or the execution of the Lease
Agreement, all insurance in respect of the Aircraft shall be the
responsibility of the Seller.
9.2 Not less than ten (10) days before the Scheduled Delivery Date of each
Aircraft, or such shorter period as reasonably necessary to review such
insurance certificate, Buyer shall deliver or cause to be delivered to
the Seller a draft Certificate of Insurance and not less than two (2)
Business Days before the Delivery Date of each Aircraft the Buyer shall
deliver or cause to be delivered to the Seller a Certificate of
Insurance evidencing the insurance coverage required by this Section 9.
9.3 At all times following delivery of an Aircraft to Buyer, that Aircraft
shall in all respects remain at the Buyer's risk and the Buyer hereby:
9.3.1 indemnifies the Seller and the Manufacturer, except in case of
gross negligence or willful misconduct by Seller or Manufacturer,
against any claims, demands, or expenses whatsoever without any
limitation which may be made against the Seller, the Manufacturer,
or their servants or agents and which may arise either directly or
indirectly out of ferry flights made by the Aircraft using pilots
designated by Seller and accepted by Buyer and waives any claim of
its own against the Seller or Manufacturer arising out of such
flying unless such claim is made within the terms of Section 11,
and
9.3.2 undertakes to name the Seller and the Manufacturer in the Buyer's
Third Party and Passenger Legal Liability Insurance Policies (which
shall be taken out and maintained in a manner and with insurers
reasonably acceptable to Seller) for the period of such ferry
flights in such a manner that the Seller and Manufacturer are held
harmless under the Hull Policy and are indemnified as an additional
insured under the Third Party and Passenger Legal Liability
Insurance Policies. The said policies of insurance shall provide
the following minimum limits of cover:
Public Liability/Property Damage/Passenger Liability, any one
accident/occurrence/combined single limit: One Hundred Fifty
Million U.S. Dollars U.S. $150,000,000).
SECTION 10 - EXCUSABLE AND INEXCUSABLE DELAY
10.1 Seller shall not be liable to Buyer for any failure or delay in carrying
out its obligations to deliver an Aircraft under this Agreement,
including but not limited to, failure of Seller or Manufacturer to
deliver an Aircraft on the Scheduled Delivery Date due to causes not
within the Seller's or Manufacturer's reasonable control including, but
not limited to, acts of God or of the public enemy; war; warlike
operations, insurrections or riots; fires, floods or explosions;
epidemics or quarantine restrictions; any act of government or any
governmental priorities, allocations, regulation or orders affecting
materials seasonably ordered, facilities or Aircraft; failure of or
delays in transportation; strikes or other government recognized labor
troubles; inability after due and timely diligence to procure materials
or parts by Seller or Manufacturer; failure of the engine manufacturer to
furnish engines for the Aircraft provided such failure results from any
cause that is not within the reasonable control of such engine
manufacturer (excluding all labor troubles other than strikes); and
serious accidents (except accidents caused by the negligent acts or
omissions of Seller or the Manufacturer), or any other cause beyond
Seller's or Manufacturer's reasonable control or not occasioned by
Seller's or Manufacturer's fault or negligence and any such failure or
delay shall be considered an "Excusable Delay".
10.2 In the event of an Excusable Delay, Seller's obligations under this
Agreement shall be deferred only for such period or periods of time
during which the circumstances giving rise to the Excusable Delay are
present.
10.3 Seller shall notify Buyer of any Excusable Delay within a reasonable
period following receipt of actual knowledge of such delay and,
thereafter, Seller shall provide Buyer with reasonable updates of
Seller's performance, if any, under the Agreement with respect to such
delays.
10.4 Buyer acknowledges and agrees that, in the event Seller fails to deliver
any Aircraft on the Scheduled Delivery Date as provided for in Section
7.1.2 herein for any reason other than Excusable Delay (as defined in
Section 10.1 of this Agreement) and other than reasons specified in
Section 4 or 10.6, (hereinafter referred to as "Inexcusable Delay") and
such failure to deliver continues for more than * days after the
Scheduled Delivery Date, such failure will result in delay damages to
Buyer, the sum of which Buyer and Seller acknowledge and agree would be
impractical or difficult to ascertain.
10.4.1 As a reasonable estimate of the amount of damages Buyer shall
suffer in the event of an Inexcusable Delay, Seller shall pay to
Buyer as liquidated damages an amount equal to * per day for
the first * days and * per day thereafter. Such
damages shall become payable by Seller commencing upon the *
day after the Scheduled Delivery Date (which, for the purposes of
this Section 10.4, if the Seller does not notify Buyer pursuant to
Section 7.1.2 of a Scheduled Delivery Date, the last day of the
month shall be automatically deemed to be the Scheduled Delivery
Date) and continuing for each additional day thereafter through the
earliest of (i) the actual Delivery Date with respect to such
Aircraft, (ii) the date on which Buyer improperly refuses or delays
acceptance of the Aircraft, or (iii) the date on which Buyer
obtains the right to terminate this Agreement with respect to such
Aircraft in accordance with Section 10.4.2 hereof.
10.4.2 In the event the delivery of an Aircraft is delayed more than
* days beyond the Scheduled Delivery Date as provided for in
Section 7.1.2 herein, and such delay is due to Excusable Delay or
an Inexcusable Delay, Buyer shall have the right to terminate this
Agreement with respect to such Aircraft. Any termination in
accordance with this Section 10.4.2 shall be by Buyer providing
Seller with written notice of intent to so terminate within *
days after the expiration of such * day period. In the event
of the termination of this Agreement with respect to any Aircraft,
Seller shall return to Buyer all deposits and progress payments
theretofore made by Buyer with respect to such Aircraft.
10.4.3 Buyer acknowledges and agrees that the remedies as provided in this
Section 10.4 are its sole and exclusive remedies with respect to
Seller's failure to deliver any Aircraft as scheduled due to an
Inexcusable Delay and that any payments made pursuant to this
Section are in full and final settlement of all claims, liabilities
and damages for late delivery of any Aircraft or failure to deliver
any Aircraft and that in no event shall Seller be liable to Buyer
for damages in respect of delay in delivery or nondelivery with
respect to any individual Aircraft in excess of * , except in
cases of gross negligence or willful misconduct.
10.5 *
10.6 Buyer shall not be liable to Seller for any necessary delay in carrying
out its obligations to accept delivery of an Aircraft under this
Agreement on the Scheduled Delivery Date due to causes not within Buyer's
reasonable control, provided that such causes significantly impair
Buyer's ability to accept delivery of an Aircraft, including, but not
limited to, acts of God or of the public enemy; war; warlike operations,
insurrections or riots; fires, floods or explosions; epidemics or
quarantine restrictions; strikes or other government recognized labor
troubles; or any other similar impairments beyond Buyer's reasonable
control. Any delay in delivery of an Aircraft due to causes specified in
this Section 10.6 shall be excluded from Excusable Delay or Inexcusable
Delay.
SECTION 11 - AIRCRAFT WARRANTY & GUARANTEES
11.1 Seller shall provide Buyer with (i) a warranty for the Aircraft delivered
under this Agreement in accordance with Exhibit B attached hereto, (ii)
the Maintenance Cost Guarantee as set forth in Exhibit D attached to the
Agreement to Lease dated December 30, 1994, as modified in accordance
with Exhibit G attached hereto and the Operational Performance and
Operational Availability Guaranties in accordance with the Agreement to
Lease and the Product Support Agreement dated December 23, 1992, as
modified in accordance with Exhibit G attached hereto.
11.2 Seller undertakes to obtain vendors' warranties with respect to those
parts of the Aircraft excluded from the warranty provided in Exhibit B
hereto and, to the extent assignable, Seller shall assign to Buyer all
such vendor warranties with respect to the Aircraft.
11.3 Seller and Buyer hereby agree to certain warranty administration
procedures as provided in Exhibit B-1 and certain dispute resolution
measures as provided in Exhibit M attached hereto.
11.4 *
11.5 *
SECTION 12 - TRAINING AND TECHNICAL REPRESENTATIVE
12.1 Seller shall cause AIRAMS to provide Buyer ground instruction and flight
conversion training for Buyer's Qualified Flight Crews with respect to
the Aircraft as follows:
12.1.1 Seller shall provide * ground training course per Aircraft
delivered to Buyer, up to a maximum total of * ground
training courses, for the purpose of familiarizing with the
Aircraft up to * Qualified Flight Captains or *
Qualified First Officers, or any combination thereof, per Aircraft
delivered to Buyer, up to a combined maximum of * Qualified
Flight Captains or First Officers.
12.1.2 Seller shall provide flight conversion training not to exceed
* hours per pilot plus * hours per pilot for check
rides for those pilots who have completed the training specified in
Section 12.1.1. The flight conversion training shall be conducted
on the FAA approved Jetstream 41 flight simulator at the Reflectone
Training Center.
12.1.3 The training specified in Sections 12.1.1 and 12.1.2 shall be
carried out at such times as may be mutually agreed between the
parties but timed so as to facilitate the delivery schedule of the
Aircraft and the entry into commercial service of the Aircraft.
12.1.4 All ground instruction courses shall be provided at Reflectone's
training facility located at Sterling, Virginia near Dulles
International Airport.
12.1.5 The training specified above, including the cost of any course
materials, shall be free-of-charge to Buyer; provided however, all
cost of travel, subsistence, lodging and other expenses associated
with attendance of Buyer's personnel at such training courses and
the expenses of operating any Aircraft for training, including the
cost of fuel, fluids, repairs, maintenance and parts, shall be for
Buyer's account. Such training is for Buyer's personnel and does
not include any training for pilots which pay for their own
training and are hired subsequent to completing the training.
12.1.6 Seller shall provide Buyer with aircraft specific manuals for each
Aircraft upon delivery of such Aircraft to Buyer. Seller shall
also provide to Buyer at no additional charge revision service for
(i) a mutually agreed list of Buyer's Jetstream 41 manuals and a
mutually agreed list of Buyer's Jetstream 32 manuals, both through
the period ending * years from the date of delivery of the
first Aircraft hereunder.
12.2 Seller shall cause AIRAMS to make available to Buyer the services of a
technical representative, based at AIRAMS' facility in Herndon, Virginia
for a period of one (1) year from the delivery of the first Aircraft
delivered under this Agreement, provided, however, that such
representative may also be available to assist any other J41 operator in
the Eastern United States.
SECTION 13
[RESERVED]
SECTION 14 - QUALIFIED ROTABLE SPARES FINANCING
14.1 Seller shall provide or arrange lease or debt financing on behalf of
Buyer for initial provisioning Qualified Rotable Spares purchased by
Buyer from Seller for the Aircraft. The maximum aggregate amount of
financing available shall be in the amount of * with the actual
amount of financing, subject to the maximum amount, to be based upon the
value of initial provisioning, Qualified Rotable Spares purchased by
Buyer.
14.2 The terms and conditions of the Qualified Rotable Spares financing shall
be generally consistent with the Lease Agreement Covering Aircraft Spare
Parts for Tranche six (6) to be entered into between Seller's Affiliated
Company and Buyer. The rate of interest applicable to the financing
provided hereunder shall be based upon the U.S. Prime Rate published in
the Wall Street Journal as of the date of delivery of the spare parts,
plus a spread of * %, provided, however, that if the prime rate on
such date is equal to or greater than * %, the spread added to the
Prime Rate shall be reduced to * %.
14.3 Funding of the Qualified Rotable Spares shall take place in no more than
three (3) tranches, with the first financing tranche being available to
Buyer no earlier than the Delivery Date of the first Aircraft and the
final financing tranche occurring no later than the Delivery Date of the
last Aircraft and the second financing tranche to be available on a date
to be mutually agreed.
14.4 Any obligation of Seller to provide Buyer with financing for Qualified
Rotable Spares is conditional upon and subject to satisfaction of all of
the conditions precedent specified in Section 17 of this Agreement.
SECTION 15 - TAXES AND LICENSES
15.1 The Seller shall pay all taxes, duties, imposts, or similar charges
imposed on the Seller, Manufacturer, Buyer, or any of their respective
Affiliated Companies which may be levied by the Government of the United
Kingdom or any political subdivision thereof in connection with the
manufacture, sale, export, delivery, assembly, purchase, and storage of
the Aircraft or of any component or part, or services furnished
exclusively under this Agreement which accrue prior to or on the passing
of title of or execution of a Lease Agreement on the Delivery Date for
each Aircraft (as the case may be) or of the delivery date of such
service, component or part, provided, however, that the parties hereby
agree that, as between the parties, nothing in this Agreement, or in any
other agreement between the parties, shall be taken to impose any duty,
liability or obligation on the Seller or Buyer to pay any documentary or
stamp duty or tax assessed, payable or levied by the Government of the
United Kingdom on or in connection with any transfer document, including
a xxxx of sale for any Aircraft.
15.2 Subject to Clause15.4 hereof, all taxes, duties, imposts, or similar
charges imposed by the U.S. or any political subdivision thereof, (other
than the amount of those taxes, duties, imposts, or similar charges
based on or measured by the Seller's, Manufacturer's, or any of their
Affiliated Companies' gross or net income, except taxes in the nature of
sales, use or transfer taxes) which are imposed on the Seller,
Manufacturer, Buyer or any of their respective Affiliated Companies in
connection with this Contract shall be the responsibility of the Buyer.
Seller agrees to use commercially reasonable best efforts to take such
actions as Buyer may reasonably request to minimize any such taxes,
duties, imposts, or similar charges.
15.3 All other taxes, duties, imposts, or similar charges which are levied in
connection with this Agreement shall be the responsibility of the person
upon whom the tax is imposed.
15.4 Nothing contained herein shall be construed to override or supersede any
specific provision providing for indemnification or payment of taxes
contained in any other document entered into in connection with this
Agreement.
15.5 If a claim is made against either party to the Agreement for any taxes,
duties, imposts or similar charges, which is to be borne by the other
party to this Agreement, the first party shall promptly notify the
second party. If reasonably requested by the second party, the first
party shall, at the second party's expense, take such action as the
second party may reasonably direct to contest such claim, including
payment under protest, if such is necessary or appropriate. If payment
is made, the first party shall, at the second party's expense, seek to
recover such payment and if permitted by law, permit the second party in
the first party's name to file a claim, or prosecute an action to
recover such payment.
15.6 The obtaining of any import licenses or authorizations required to
import the Aircraft into the United States, and any associated costs,
shall be the responsibility of Buyer. Seller shall assist Buyer to
obtain necessary import licenses and authorizations to import the
Aircraft into the United States. The Buyer shall not be responsible for
any costs associated with obtaining the CAA C of A.
15.7 The Seller shall, at its sole cost and expense, apply in the name of the
Seller or Buyer as Consignor, whichever is appropriate, for a United
Kingdom export license where such an export license is required by the
United Kingdom Customs Authorities and be responsible for the customs
documentation and clearance of the Aircraft on departure from the United
Kingdom. Buyer shall cooperate as reasonably requested by Seller to
provide any assistance required to permit Seller to comply with this
Section.
SECTION 16 - REPRESENTATIONS AND WARRANTIES
16.1 Buyer represents and warrants to Seller that as of the date of this
Agreement and as of the Delivery Date of each Aircraft:
16.1.1 Buyer is a corporation organized and existing in good standing
under the laws of California and has the corporate power to own its
property and to carry on its business as now being conducted and is
duly qualified to do business and is in good standing in each
jurisdiction in which the character of the properties owned by it
therein or in which the transaction of its business makes such
qualification necessary except to the extent that the failure to be
so qualified would not have a material adverse effect on Buyer's
abilities to comply with its obligations under this Agreement,
taken as a whole.
16.1.2 Buyer has full power and authority to enter into this Agreement and
to incur the obligations provided for herein which have been duly
authorized by all proper and necessary corporate action and no
consent or approval of stockholders, lenders or any other person
or consent or approval of, notice to or filing with, any public
authorities is required as a condition to the execution, delivery
or validity of this Agreement.
16.1.3 Each person executing this Agreement or any document delivered in
connection with this Agreement is authorized to do so.
16.1.4 This Agreement constitutes a valid and legally binding obligation
of Buyer enforceable in accordance with its terms.
16.1.5 There are no proceedings pending or threatened against Buyer or any
affiliate of Buyer before any court or administrative agency that,
in the opinion of the executive officers of Buyer, will materially
adversely affect the financial condition or operations of Buyer.
16.1.6 There is no charter, bylaw or preference stock provision of Buyer
and no provision of any existing mortgage debenture, contract or
agreement binding on Buyer or effecting its properties that would
conflict with or in any way prevent the execution, delivery or
carrying out the terms of this Agreement by Buyer.
16.1.7 There is no material adverse change from the date hereof or as
otherwise represented to Seller by Buyer or on behalf of Buyer in
the financial condition of Buyer as evidenced in Buyer's financial
statements which would prevent Buyer from performing its duties and
obligations under this Agreement or under a Lease Agreement.
16.1.8 Buyer is in compliance with all the terms and conditions of this
Agreement and there exists no material, continuing default or Event
of Termination under this Agreement and no default under any other
agreement between Seller or its Affiliated Companies, or a Trident
company, and Buyer or its Affiliated Companies, notice of which has
been provided to Buyer.
16.1.9 There is no law or governmental regulation or order that would be
contravened by the execution, delivery and performance of this
Agreement by Buyer.
16.2 Seller represents and warrants to Buyer that as of the date of this
Agreement and as of the Delivery Date of each Aircraft:
16.2.1 Seller is a Societe par Actions Simplifiee duly organized and
validly existing pursuant to the laws of France, has the corporate
power and authority to carry on its business as now conducted and
to enter into and perform its obligations under the Agreement and
is duly qualified to transact business in each jurisdiction in
which the conduct of its business requires such qualification,
except to the extent that the failure to be so qualified would not
have a material adverse effect on Seller's and its Affiliated
Companies' abilities to comply with their obligations under this
Agreement, taken as a whole.
16.2.2 Seller has full power and authority to enter into this Agreement
and the authority to bind the Manufacturer, and with respect to
each, to incur the obligations provided for herein which have been
duly authorized by all proper and necessary corporate action and no
consent or approval of stockholders, lenders or any other person or
consent or approval of, notice to or filing with, any public
authorities is required as a condition to the execution, delivery
or validity of this Agreement.
16.2.3 Each person executing this Agreement or any document delivered in
connection with this Agreement is authorized to do so.
16.2.4 This Agreement constitutes a valid and legally binding obligation
of Seller enforceable in accordance with its terms.
16.2.5 There are no proceedings pending or threatened against Seller, or
any Affiliated Company, before any court or administrative agency
that, in the opinion of the executive officers of Seller, will
materially adversely affect the power or ability of Seller, or such
Affiliated Company, to perform its obligations under this
Agreement.
16.2.6 There is no charter, bylaw or preference stock provision of Seller
and no provision of any existing mortgage debenture, contract or
agreement binding on Seller or effecting its properties that would
conflict with or in any way prevent the execution, delivery or
carrying out the terms of this Agreement by Seller.
16.2.7 There is no law or governmental regulation or order that would be
contravened by the execution, delivery and performance of this
Agreement by Seller.
SECTION 17 - CONDITIONS PRECEDENT
17.1 As conditions precedent to Seller's obligations under this Agreement and
to the delivery of each Aircraft:
17.1.1 All representations and warranties of Buyer contained in this
Agreement shall be true and correct.
17.1.2 All legal matters and documents incident to this Agreement and to
the transactions contemplated hereby shall be completed and in form
and substance reasonably satisfactory to Seller.
17.2 As conditions precedent to Buyer's obligations under this Agreement to
accept delivery of each Aircraft and pay the Purchase Price for each
such Aircraft:
17.2.1 All representations and warranties of Seller contained in this
Agreement shall be true and correct.
17.2.2 With respect to the Backstop Financing, Seller has, or has caused
its designee, to provide the financing and enter into the related
agreements as provided for and subject to the limitations in this
Agreement.
17.2.3 *
SECTION 18 - FURTHER ASSURANCES
18.1 Each party shall execute and deliver to the other party promptly such
other documents and assurances and take such further action as either
party may reasonably request from time to time in order to effectively
carry out the intent and purposes of this Agreement, including, but not
limited to, (i) Seller's cooperation with Buyer and Buyer's financial
advisor to assist in the arrangement of Buyer's financing for the
Aircraft and (ii) Buyer providing Seller copies of such financial
information representing the financial condition and operations of Buyer
as requested by Seller including, but not limited to, all quarterly
financial statements and audited annual financial statements, and
permitting Seller access to Buyer's principal financial officers to
discuss the affairs, finances and accounts of Buyer.
18.2 Buyer shall furnish Seller information concerning the use, operation and
maintenance of the Aircraft as Seller may from time to time reasonably
request, and Buyer shall permit Seller to inspect the records maintained
for the Aircraft, provided such visits do not interfere unreasonably
with the operations of Buyer.
18.3 Seller agrees to hold in confidence any information obtained pursuant to
this provision unless such information has been otherwise disseminated to
the public or in the event Seller is required or compelled by law or by
regulatory authorities to disclose the same.
SECTION 19 - EVENT OF TERMINATION
19.1 Each of the following shall constitute an Event of Termination and upon
the occurrence thereof Seller may at its option terminate this Agreement:
19.1.1 If Buyer is in default with respect to any of its obligations under
this Agreement, provided that Seller shall have provided Buyer with
written notice of such default and provided an opportunity to cure
such default (within five (5) days of receipt of notice for payment
default and within thirty (30) days of such notice for all other
defaults), or if Buyer is in default under any other agreements
contemplated under this Agreement, or if Buyer or its Affiliated
Companies is in default under any other lease or sublease agreement
or any other agreement between Seller, Manufacturer, or their
Affiliated Companies or any Trident company and Buyer or its
Affiliated Companies, provided that Buyer shall have been notified
of such default and given time to cure such default in accordance
with the relevant provisions of the applicable agreement.
19.1.2 If Buyer admits in writing its inability to pay its debts as they
become due or makes a general assignment for the benefit of
creditors;
19.1.3 If Buyer files a voluntary petition under any state or federal
court in bankruptcy or insolvency laws or if such a petition is
filed against Buyer and such petition is not dismissed within sixty
(60) days;
19.1.4 If Buyer petitions for, or acquiesces in, the appointment of any
receiver, trustee or similar officer to liquidate or conserve its
business or any substantial part of its assets;
19.1.5 If Buyer ceases doing business as a going concern;
19.1.6 If Buyer commences under the laws of any competent jurisdiction any
proceeding involving its insolvency, readjustment of debt,
dissolution, liquidation or any other similar proceeding for the
relief of financially distressed debtors;
19.1.7 If Buyer becomes the object of any proceeding or action of the type
described in Subsections 19.1.3, 19.1.4 or 19.1.6 above relating to
a substantial part of its assets and such proceeding or action
remains undismissed or unstayed for a period of at least sixty (60)
days; or
19.1.8 If Buyer sells all or a substantial part of its assets; or
19.1.9 If any material warranty or representation made or furnished to
Seller by or on behalf of Buyer is false when made or furnished.
19.2 In addition to the foregoing rights of termination, Seller reserves the
right, at its sole option, to delay or cancel the delivery of any
Aircraft, or to terminate its obligation to provide Backstop Financing,
in the event of any material adverse change in the financial condition of
Buyer which in the reasonable opinion of Seller would materially prevent
Buyer from obtaining financing or from meeting its obligations under a
Lease Agreement with respect to any of the Aircraft in accordance with
the terms of this Agreement. Seller shall notify Buyer of its intention
to delay or cancel the delivery of any Aircraft pursuant to this Section
at least fifteen (15) days prior to such cancellation. In the event of a
cancellation of delivery of an Aircraft pursuant to this Section 19.2, no
party will have any liability or be subject to any additional penalty to
the other as a result of such cancellation.
19.3 If Seller shall terminate this Agreement following the occurrence of an
Event of Termination, Seller shall not be obligated to reimburse Buyer
for any deposit or other amounts paid with respect hereto or with respect
to any Aircraft.
19.4 If Buyer is in default under any other agreements between Seller,
Manufacturer, or any of their Affiliated Companies, and Buyer, which
default has been declared in writing by the party in interest and is
continuing, and which default shall permit the party in interest to
terminate said other agreement, it shall be deemed a default under any of
such agreements executed by the parties and shall be deemed a default
under this Agreement; in which event Buyer will be liable to Seller for
repayment of all damages incurred by Seller in respect of this Agreement
and Seller will have all rights permitted by law to recover from Buyer
such damages.
19.5 *
SECTION 20 - MISCELLANEOUS
20.1 EXCEPT AS PROVIDED FOR IN THIS AGREEMENT INCLUDING THE EXHIBITS HERETO,
SELLER AND MANUFACTURER MAKE NO WARRANTY OR REPRESENTATION OF ANY KIND,
EXPRESS OR IMPLIED, WITH RESPECT TO THE AIRCRAFT, OR ANY PART THEREOF,
INCLUDING WITHOUT LIMITATION ANY WARRANTY OF MERCHANTABILITY OF THE
AIRCRAFT OR THE FITNESS OF THE AIRCRAFT FOR ANY PARTICULAR PURPOSE AND
BUYER ACKNOWLEDGES AND AGREES THAT THE WARRANTY OBLIGATIONS AND
LIABILITIES OF SELLER AND MANUFACTURER HEREUNDER AND THE RIGHTS AND
REMEDIES OF BUYER HEREUNDER ARE EXCLUSIVE AND IN SUBSTITUTION FOR, AND
BUYER HEREBY WAIVES, ALL OTHER WARRANTIES, GUARANTEES, OBLIGATIONS RIGHTS
AND REMEDIES IN TORT, (EXCEPT WITH RESPECT TO SELLER'S OR MANUFACTURER'S
WILFUL MISCONDUCT OR GROSS NEGLIGENCE), CONTRACT OR OTHERWISE, EXPRESS OR
IMPLIED (EXCEPT AS OTHERWISE SPECIFICALLY STATED IN THIS AGREEMENT)
ARISING BY LAW OR OTHERWISE, INCLUDING, BUT NOT LIMITED TO, STRICT
LIABILITY IN TORT, NEGLIGENCE, ANY IMPLIED WARRANTY OF MERCHANTABILITY,
ANY IMPLIED WARRANTY ARISING FROM COURSE OF PERFORMANCE, DEALING, OR
USAGE OF TRADE, AND ANY IMPLIED WARRANTY OF FITNESS FOR A PARTICULAR
PURPOSE. BUYER ACKNOWLEDGES AND AGREES THAT, EXCEPT AS PROVIDED FOR
HEREIN, NEITHER SELLER, MANUFACTURER, THEIR PARENTS, NOR THEIR AFFILIATED
COMPANIES OR THEIR RESPECTIVE DIRECTORS, OFFICERS OR EMPLOYEES SHALL IN
ANY EVENT BE LIABLE PURSUANT TO THIS AGREEMENT WITH RESPECT TO THE
AIRCRAFT FOR SPECIAL, INCIDENTAL OR CONSEQUENTIAL DAMAGES, INCLUDING,
WITHOUT LIMITATION, LOSS OF USE OF THE AIRCRAFT, LOSS OF REVENUES OR
PROFITS.
20.2 The acceptance of any payment by Seller after it is due shall not be
deemed to be a waiver of any breach by Buyer of its obligations under
this Agreement.
20.3 If either party fails to make payments when due, a service charge on such
overdue amount shall then begin to accrue and be due and payable by the
nonpaying party at a rate equal to the lesser of * per month or the
lawful maximum rate.
20.4 This Agreement may not be amended or modified except in writing signed by
the parties, except as otherwise provided by this Agreement.
20.5 This Agreement cannot be assigned, in whole or in part, by any party
without the prior written consent of the other parties, provided,
however, the Buyer (i) may assign the Aircraft warranty and related
product support services and guarantees without such consent in
connection with the financing of any Aircraft, and (ii) may assign its
rights to purchase any Aircraft to an entity or trustee on behalf of an
entity which is financing the acquisition of an Aircraft, provided that
Buyer's rights to Backstop Financing shall not be assignable and Seller
shall be under no greater obligations than those specified herein; and
provided further that Seller may assign this Agreement to Manufacturer,
or any of their respective Affiliated Companies. Notwithstanding any
assignment of this Agreement, the assigning party shall remain fully
liable to the other party to perform all the obligations and duties of
the assigning party hereunder and the exercise by any assignee of any of
the rights assigned shall not release the assigning party from any of
its duties or obligations to the other party under this Agreement, save
to the extent that such exercise by the assignee shall constitute
performance of such duties and obligations.
20.6 This Agreement will be governed by and construed in accordance with the
laws of the Commonwealth of Virginia of the United States of America.
20.7 Any judicial proceeding brought against the Buyer or Seller involving any
matter in any way arising out of, related to or connected with this
Agreement or the Aircraft may be brought in the U.S. District Court for
the Eastern District of the Commonwealth of Virginia or in a state court
in the Commonwealth of Virginia in the Eastern District and, by execution
and delivery of this Agreement, Buyer and Seller each (a) accept,
generally and unconditionally and irrevocably submit to the exclusive
jurisdiction of such courts and any related appellate court, and
irrevocably agree to be bound by any final, nonappealable judgment
rendered thereby in any action or proceeding in connection with this
Agreement and (b) irrevocably waive any objection it may now or hereafter
have as to the venue of any such suit, action or proceeding brought in
such a court or that such court is an inconvenient forum or that the
party is immune from suit.
20.8 Nothing in this Agreement:
20.8.1 Will convey to Buyer the right to, and Buyer will not, reproduce or
cause or assist in the reproduction of an aircraft, or material
part thereof, of design identical with or similar to that of the
Aircraft or parts thereof; or
20.8.2 Will give to Buyer a license under any patents or other rights
owned or controlled by the Manufacturer or Seller.
20.9 Section headings used herein are for convenience of reference only and
will not affect or limit the interpretation of this Agreement.
20.10 This Agreement may be executed in any number of counterparts and by
different parties hereto in separate counterparts all of which once
executed and delivered shall be deemed to be an original and all of which
taken together shall constitute one in the same document.
20.11 The Seller indemnifies and saves harmless the Buyer against any claims,
(excluding, however, any losses relating to loss of profits or loss of
use) resulting from infringement by the Aircraft of any United Kingdom or
United States patent provided:
20.11.1 either (a) from the date of design of the Aircraft, or its
relevant component or part, until the date that the infringement
claim is determined, the United States shall have been a party to
the Chicago Convention on International Civil Aviation of 7th
December 1944 and are fully entitled to the benefits of Article
27 thereof or, (b) from the date of design until the date such
infringement claim is determined the United States shall have
been a party to the International Convention for the protection
of Industrial Property 20th March 1883 (the Paris Convention); and
20.11.2 that all claims shall be forthwith reported in writing to the
Seller who shall have the absolute conduct and control at its
expense of all negotiations and proceedings in the name of the
Buyer; and
20.11.3 that the Buyer shall take all reasonable steps in cooperation
with the Seller to reduce any royalties, damages and costs
arising out of such claims and shall furnish to the Seller all
data, papers, records and other assistance within the Buyer's
knowledge, possession or power relevant to resisting such claims,
actions or proceedings; and
20.11.4 that no condition, warranty, or indemnity, either express or
implied, is given in respect of patents or registered designs
except as stated herein.
20.12 The patent indemnity provided in Section 20.12 shall not extend to parts
or spares not manufactured by the Manufacturer or pursuant to
Manufacturer's detailed design. The Seller shall, however, so far as
possible and necessary, use reasonable efforts to obtain, and to the
extent obtained, to assign to the Buyer any rights the Seller may have
against the manufacturers of such other parts or spares.
20.13 All indemnity obligations of Buyer and Seller under this Agreement
shall survive and continue in full force and effect notwithstanding
delivery of the Aircraft or expiration or termination of this Agreement.
20.14 If any provisions of this Agreement shall be held to be invalid or
unenforceable, the validity and enforceability and the remaining
provisions hereof shall not be affected or impaired in any way.
20.15 All notices and requests in connection with this Agreement will be given
in writing and may be given by registered letter, by express delivery or
facsimile, addressed as follows:
Buyer: Atlantic Coast Airlines
000X Xxxx Xxxx
Xxxxxxxx, Xxxxxxxx 00000
Attention: President
Fax Number: (000) 000-0000
Seller: Aero International (Regional)
0 Xxxxx Xxxxxx Xxxxx
00000 Xxxxxxx Xxxxx
Xxxxxx
Attention: SVP Commercial
Fax Number: 00 000 00 0000
or to such other address as the party to receive the notice or request
will designate by notice to the other. Notices sent by registered letter
shall be deemed to have been received in the ordinary course of post;
notices sent by express delivery shall be deemed to have been received
on the second Business Day after it was dispatched; and notices sent by
facsimile shall be deemed to have been received (where receipt is
confirmed by any addressee by telephone) on the date of transmission.
20.16 This Agreement together with the exhibits, schedules and appendices
referenced herein (including all Exhibits listed in the Table of Contents
and hereby incorporated by such reference), constitute the entire
agreement of the parties and supersede all proposals, oral or written,
all prior negotiations and all other communications between Buyer and
Seller with respect to the subject matters contained herein.
20.17 Seller and Buyer each bear and shall be responsible for their own costs
and expenses associated with the negotiation, preparation and the
execution of this Agreement together with any other agreements or
documents relating to the subject matter of this Agreement.
20.18 BUYER HEREBY ACKNOWLEDGES AND AGREES THAT ALL INFORMATION REGARDING
JETSTREAM AIRCRAFT PRODUCTS, INCLUDING THE AIRCRAFT AND SPARES, PRICING,
GUARANTEES AND THE TERMS AND CONDITIONS CONTAINED IN THIS AGREEMENT ARE
FURNISHED BY SELLER TO BUYER AND IS BEING SUBMITTED TO BUYER UNDER AN
EXPRESS CLAIM OF CONFIDENTIALITY FOR THE SOLE AND ABSOLUTE PURPOSE OF
PROVIDING BUYER WITH JETSTREAM AIRCRAFT, THAT DISCLOSURE OF SUCH
INFORMATION WOULD LIKELY HAVE AN ADVERSE IMPACT ON THE COMPETITIVE
POSITION OF THE MANUFACTURER, SELLER, ITS PARENT OR ITS AFFILIATED
COMPANIES IN THE AIRCRAFT MANUFACTURING OR AIRLINE INDUSTRY AND THAT SUCH
INFORMATION SHALL BE HELD IN STRICT CONFIDENCE BY BUYER AND SHALL NOT BE
DISCLOSED BY BUYER OTHER THAN TO BUYER'S OFFICERS AND EMPLOYEES, BUYER'S
COUNSEL, FINANCIAL ADVISOR AND OTHER REPRESENTATIVES STRICTLY ON A
NEED-TO-KNOW BASIS OR AS OTHERWISE REQUIRED BY LAW OR REGULATION. IF
BUYER FILES THIS AGREEMENT WITH ANY GOVERNMENTAL AUTHORITY, BUYER AGREES
TO SEEK CONFIDENTIAL TREATMENT FOR SUCH PORTIONS OF THIS AGREEMENT AS
SELLER MAY REASONABLY REQUEST AND SHALL USE COMMERCIALLY REASONABLE
EFFORTS TO LIMIT DISCLOSURE HEREOF AND THE FILING OF THIS AGREEMENT TO
THE MAXIMUM EXTENT PERMITTED BY LAW OR REGULATION.
20.19 SELLER HEREBY ACKNOWLEDGES AND AGREES THAT ALL NONDISCLOSABLE INFORMATION
REGARDING BUYER'S BUSINESS, FINANCES AND OPERATIONS SUBMITTED TO SELLER
ARE FURNISHED TO SELLER UNDER AN EXPRESS CLAIM OF CONFIDENTIALITY, THAT
DISCLOSURE OF SUCH INFORMATION WOULD LIKELY HAVE AN ADVERSE IMPACT ON THE
COMPETITIVE POSITION OF BUYER AND THAT SUCH INFORMATION SHALL BE HELD IN
STRICT CONFIDENCE BY SELLER AND SHALL NOT BE DISCLOSED OTHER THAN TO
SELLER'S OFFICERS, EMPLOYEES AND AFFILIATED COMPANIES STRICTLY ON A
NEED-TO-KNOW BASIS OR AS OTHERWISE REQUIRED BY LAW OR REGULATION.
20.20 Neither of the parties may announce the signing of this Agreement without
the prior approval of the other and further provided that the content of
any notice has been agreed to in advance by the other party.
20.21 The effective date of this Agreement shall be that date first set forth
in the preamble.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their duly authorized officers.
ATLANTIC COAST AIRLINES AERO INTERNATIONAL (REGIONAL) SAS
as agent for and on behalf of
British Aerospace (Operations), Limited
By: By:
Its: Its:
Date: Date:
EXHIBIT A
JETSTREAM 41 AIRCRAFT DELIVERY SCHEDULE
*
EXHIBIT B
PART A - AIRCRAFT WARRANTY
Section 1. The Seller warrants that subject to all the conditions of this
Warranty, the Aircraft, including, but not limited to parts,
components and assemblies thereof manufactured or assembled by the
Manufacturer, together with all applicable documentation and
Manuals therefor in hard copy or otherwise (below in this Warranty
collectively referred to as "Manuals"), shall on the Delivery Date
conform to the Customer Specification referred to in this Purchase
Agreement and shall be free from defect due to:
1.1 defective material or
1.2 defective workmanship including process of manufacture or
1.3 defective design on the part of Manufacturer including (i)
selection of materials and (ii) process of manufacture having
regard to the state of the art at the date of such design.
1.4 in the case of Manuals manifest error.
Section 2. The Buyer's remedy and The Seller's obligations under this Warranty
shall be limited to defects which:
2.1 occur and are discovered by the Buyer within thirty six (36)
months of the date of the Certificate of Acceptance of the
Aircraft in which the defect occurs, and
2.2 are notified by the Buyer to the Seller on a Warranty Report
Form within * days of each discovery.
Section 3. This Warranty shall not extend to:
3.1 normal wear and tear.
3.2 any parts not manufactured by the Manufacturer or to its
detailed design, but it shall extend to any workmanship on
the part of the Manufacturer or Seller in installing any such
part in the Aircraft.
3.3 a part regarded as defective for the sole reason only that
some modification, alteration or replacement thereof is
required by a change in regulation on the part of an
airworthiness authority after acceptance of the Aircraft.
3.4 any part of the Aircraft which after acceptance has been
altered otherwise than by the Seller or with the Seller's
written approval unless it is proved that such alteration has
not been a contributory cause of the fault.
3.5 any part of the Aircraft from which the Manufacturer's
identification xxxx, name or serial number has been removed,
unless Buyer can otherwise verify such removed information..
3.6 any part of the Aircraft if the Aircraft or any part thereof
has been subjected to any experimental operation by the Buyer
or any type of operation or use in contravention of the
airworthiness regulations or the Manufacturer's design or
operational limitations then in force applicable to the
Aircraft or outside the type of operation or use for which
the Aircraft or the part was intended, unless it is proved
that any such use was not a contributory cause of the fault.
3.7 any Manual or part thereof of which the Seller or
Manufacturer is not the author nor embodiments incorporated
in Manuals at the direction or request of the Buyer.
3.8 a Manual or part thereof regarded as faulty for the sole
reason only that the Buyer has not incorporated amendments
offered to it by the Seller or Manufacturer.
Section 4. If any part of an Aircraft or Manual is proved to be defective and
within the terms of this Warranty the Seller at its option shall:
4.1 repair the part or rectify without charge, or
4.2 replace such part with a similar part free from defect, and
any part so replaced shall become the property of the Seller,
or
4.3 reimburse the Buyer's costs in rectifying the defect in
accordance with paragraph 6 below, or
4.4 in respect of defects in design replace such part without
charge with a modified part or parts and, similarly, supply
such modified part or parts in respect of all the Aircraft
purchased by the Buyer which are within Warranty and subject
to the same fault.
Section 5. If any part of an Aircraft or Manual is proved to be defective and
within the terms of this Warranty the Seller shall bear all
reasonable costs of packing, insurance and transport which may be
incurred in sending the said part to the Seller or Manufacturer and
in returning the repaired or rectified, replacement or modified
part or parts to the Buyer, provided that the Buyer will make no
charge for such transport on its own services and the Buyer will
bear the labor cost of component removal and replacement.
Section 6. Subject to the Seller's agreement which shall not be unreasonably
witheld the Buyer may carry out rectification by repair of any
defect within the terms of this Warranty. In that event:
6.1 The Seller shall reimburse to the Buyer the costs of such
rectification which shall not exceed the product of the
Seller's normal direct manhours for such rectification and
the Seller's then current direct labor rate, and
6.2 Neither the Seller nor Manufacturer shall be under any
liability whatsoever in respect of workmanship or material in
such rectification.
Section 7. The Seller shall diligently remedy a defect within the terms of
this Warranty and the provisions of this Warranty shall apply to
any repair, rectification, replacement or modification pursuant to
Section 4, provided however that in their application to such
replacement, rectification or repair, references to the date of the
Certificate of Acceptance for an Aircraft shall be construed as
referring either to the date of the handing back of an Aircraft or
part to the Buyer with the replacement, rectification or repair
incorporated therein, or to the date of the Seller's election in
the case of local repair, or to the date of delivery of the
replacement to the Buyer, whichever shall be the earliest date (as
the case may require). Notwithstanding the foregoing provisions of
this Clause, Neither the Seller nor Manufacturer shall in any
circumstances be under any liability in respect of any such
replacement, rectification or repair, for defects not discovered
within forty-eight (48) months after the date of the Certificate of
Acceptance for the Aircraft.
PART B - SUPPLIER WARRANTIES
Section 1. The Seller shall require Vendors or Suppliers of equipment
installed in the Aircraft to offer Warranty protection in respect
of such equipment and the Seller undertakes to assign to the Buyer
the benefits of such Warranties and to furnish a Vendor Warranty
Manual incorporating all such Warranties. The Buyer's sole rights
and remedies in respect of the failure of any such equipment shall
be as stated in such Warranties, and any other warranties
conditions or representations rights or remedies expressed or
implied by stature or common law regarding such equipment are to
the extent permitted by applicable law hereby excluded. Unless
otherwise stated therein such warranties shall be governed and
constructed under the laws of England.
Section 2. Notwithstanding the provision of paragraph 1. above the Seller
undertakes to take prompt and diligent action to mediate between
the Buyer and the appropriate Supplier in the event that the Buyer
notifies the Seller that its claim under the terms of the said
Supplier's Warranty has been unfairly rejected by, or has received
an inadequate or dilatory response from, the said Supplier
.
Section 3. Notwithstanding the provision of paragraph 1. above, the Seller
undertakes to offer warranty protection in respect of Vendor or
Supplier equipment installed in the Aircraft in the event such
Vendor or Supplier ceases doing business as a going concern. Such
warranty protection shall be in accordance with the terms and
conditions of the applicable Vendor or Supplier warranty.
EXHIBIT B-1
Addendum to Exhibit B, Part A - Aircraft Warranty
In addition to the provisions of Part A - Aircraft Warranty, the following
claim and other procedures shall apply:
1. In the event Buyer believes any Part of an Aircraft is defective and
within the terms of this warranty, the Buyer shall return the Part to
Seller's designee AIRAMS for a warranty adjudication.
2. The AIRAMS adjudication shall state the reason for the adjudication and
shall include a copy of the repairer's investigation report (if
applicable).
3. All adjudications will be provided to Buyer in writing within sixty (60)
days from the date of receipt by AIRAMS of the Part (unless otherwise
required by AIRAMS) and Warranty Claim Form, which ever is later.
4. Failure to supply Buyer with a written adjudication as provided for and
within the time frame stated in Section 3 above shall result in the
claim being deemed automatically accepted by AIRAMS and the transaction
including, but not limited to the cost of repairs and freight charges,
as applicable, will be processed free of charge.
5. In the event Buyer requests a unit exchange transaction, such
transaction shall be processed in accordance with the terms detailed in
the then current AI(R) Spares Price Book. Buyer shall return the
unserviceable part within thirty (30) days from the date of Buyer's
receipt of an exchanged unit. In the event Buyer fails to return the
unserviceable part within thirty (30) days from the date of Buyer's
receipt of an exchange unit (unless prevented by Force Majeure at that
term is defined in the Jetstream 41 Free of Charge Exchange Program
Agreement between the parties dated February 23, 1997), AIRAMS will
invoice Buyer for the price of a new unit as listed in the then current
AI(R) Spares Price Book (less any discounts as applicable). In the event
Buyer believes it had previously returned the unserviceable part to
AIRAMS, provided Buyer notified AIRAMS within thirty (30) days of
Buyer's receipt of the corresponding exchanged unit that it had returned
the unserviceable part to AIRAMS or that the unserviceable part had been
separated from the aircraft during operations, AIRAMS will not invoice
Buyer for such corresponding exchanged unit.
Addendum to Exhibit B, Part B - Supplier Warranties
In addition to the provisions of Part B - Supplier Warranties, the following
claim and other procedures shall apply:
1. In the event Buyer believes any vendor or supplier part of an Aircraft
is defective and within the terms of the applicable vendor or supplier
warranty, the Buyer may return the Part to its designee AIRAMS pursuant
to the Customer Property Warranty Repair provisions of the then current
AI(R) Spares Price Book for process and adjudication.
2. The AIRAMS adjudication shall state the reason for the adjudication and
shall include a copy of the repairer's investigation report (if
applicable).
3. All adjudications will be provided to Buyer in writing within *
days from the date of receipt by AIRAMS of the part and Warranty Claim
Form, which ever is later.
4. Failure to supply Buyer with a written adjudication as provided for and
within the time frame stated in Section 3 above shall result in the
claim being deemed automatically accepted by AIRAMS and the transaction
including, but not limited to the cost of repairs and freight charges,
as applicable, will be processed free of charge.
5. In the event Buyer requests a unit exchange transaction, such
transaction shall be processed in accordance with the terms detailed in
the then current AI(R) Spares Price Book. Buyer shall return the
unserviceable part within thirty (30) days from the date of Buyer's
receipt of an exchanged unit. In the event Buyer fails to return the
unserviceable part within thirty (30) days from the date of Buyer's
receipt of an exchange unit(unless prevented by Force Majeure at that
term is defined in the Jetstream 41 Free of Charge Exchange Program
Agreement between the parties dated February 23, 1997), AIRAMS will
invoice Buyer for the price of a new unit as listed in the then current
AI(R) Spares Price Book. In the event Buyer believes it had previously
returned the unserviceable part to AIRAMS, provided Buyer notified
AIRAMS within thirty (30) days of Buyer's receipt of the corresponding
exchanged unit that it had returned the unserviceable part to AIRAMS or
that the unserviceable part had been separated from the aircraft during
operations, AIRAMS will not invoice Buyer for such corresponding
exchanged unit.
EXHIBIT C
CHANGE ORDERS
*
[29 PAGES OF CONFIDENTIAL MATERIALS OMITTED]
EXHIBIT D
FORM OF OPERATING LEASE AGREEMENT
LEASE AGREEMENT
dated as of , 199
between
FIRST SECURITY BANK ,
NATIONAL ASSOCIATION
Not in its individual capacity but
solely as owner trustee
Lessor,
and
ATLANTIC COAST AIRLINES
Lessee,
Covering One British Aerospace (Operations) Limited
Jetstream Series 4100 Model Turboprop Aircraft
Serial Number U.S. Registration Number
TABLE OF CONTENTS
Heading Page
SECTION 1. DEFINITIONS. 1
SECTION 2. ACCEPTANCE UNDER LEASE AND CONDITIONS PRECEDENT 7
SECTION 3. TERM AND RENT 9
SECTION 4. NET LEASE, ETC. 9
SECTION 5. DISCLAIMER OF REPRESENTATIONS AND WARRANTIES AND QUIET
ENJOYMENT 10
SECTION 6. POSSESSION, OPERATION AND USE, MAINTENANCE, INSIGNIA
AND RESERVES 12
SECTION 7. CERTAIN NOTICES 17
SECTION 8. REPLACEMENT AND POOLING OF PARTS; ALTERATIONS, MODIFICATIONS
AND ADDITIONS 17
SECTION 9. RISK, LOSS, DESTRUCTION OR REQUISITION 19
SECTION 10. INSURANCE. 22
SECTION 11. LIENS 25
SECTION 12. TITLE, RECORDATION, FURTHER ASSURANCE, AND COOPERATION WITH
FINANCIERS. 26
SECTION 13. RETURN OF AIRCRAFT AND RECORDS 29
SECTION 14. TAX INDEMNITY, GENERAL INDEMNITY. 34
SECTION 15. EVENTS OF DEFAULT. 40
SECTION 16. REMEDIES 42
SECTION 17. LESSOR'S RIGHT TO PERFORM FOR LESSEE. 43
SECTION 18. COUNTERPARTS 44
SECTION 19. ASSIGNMENT 44
SECTION 20. MISCELLANEOUS 44
SECTION 21. REPRESENTATIONS, WARRANTIES
AND ASSURANCES OF LESSEE 47
SECTION 22. GENERAL UNDERTAKINGS OF LESSEE 49
Exhibit A - Lease Acceptance Supplement
Schedule 1 to Exhibit A - Description of Aircraft
Schedule 2 to Exhibit A - Schedule of Rental Payments
Schedule 3 to Exhibit A - Schedule of Stipulated Loss Values
Exhibit B - Schedule of Life-Limited Components
Exhibit C - Schedule of Present Insured Parties
Exhibit D - *
Exhibit E - Side Letter Re: Termination / Event of Loss Payments
Lease Agreement, dated as of ______, 19__, between FIRST SECURITY BANK,
NATIONAL ASSOCIATION, a national banking association, having its principal
place of business at 00 Xxxxx Xxxx Xxxxxx, Xxxx Xxxx Xxxx, Xxxx, 00000, not in
its individual capacity but solely as Owner Trustee under the Trust Agreement
(as hereinafter defined) ("Lessor"), and ATLANTIC COAST AIRLINES, a California
corporation, having its principal place of business at 000X Xxxx Xxxx,
Xxxxxxxx, Xxxxxxxx, 00000 ("Lessee").
WHEREAS, the purpose of this Lease is to lease to Lessee one British
Aerospace (Operations) Limited Jetstream Series 4100 Model ____ aircraft.
WHEREAS, First Security Bank, National Association, is the Owner Trustee
under the Trust Agreement, dated as of ______, 19__, with Owner Participant
British Aerospace Asset Management, Inc. (the "Trust Agreement").
NOW, THEREFORE, in consideration of the mutual covenants and agreements
contained herein, Lessor and Lessee agree as follows:
SECTION 1. DEFINITIONS.
The following terms shall have the following meanings for all purposes of
this Lease. Unless otherwise defined in this Lease: (i) references to
agreements shall be deemed to mean and include such agreements as the same may
be amended and supplemented from time to time, and (ii) references to parties
to agreements shall be deemed to include the successors and permitted assigns
of such parties.
"Agent" shall mean any Person party to a Financier Document designated as
Agent under such Financier Document;
"Aircraft" shall mean the Airframe leased and delivered under this Lease
and the Engines initially installed on such Airframe and the Propellers
initially installed on such Engines, or any engine or propeller substituted for
any of said Engines or Propellers under this Lease, as permitted by this Lease
whether or not any of said initial or substitute Engines or Propellers may from
time to time be installed on such Airframe.
"Airframe" shall mean and include: (i) the Aircraft (except Engines and
Propellers) leased by the Lessor to the Lessee, which Aircraft has the Federal
Aviation Administration Registration Number and manufacturer's serial number
specified in the Lease Acceptance Supplement executed and delivered on the
Delivery Date and (ii) any and all Parts so long as the same shall be
incorporated or installed in or attached to such Airframe, or, so long as the
same shall be leased hereunder, in accordance with the terms of Section 8 of
this Lease, after removal from such Airframe.
"Applicable Law" shall mean all applicable laws, treaties, judgments,
decrees, injunctions, writs and orders of any court, governmental agency or
authority and rules, regulations, orders, directives, licenses and permits of
any governmental body, instrumentality, agency or authority.
"Banks" shall mean the Persons party to any Financier Document and
notified to Lessee in writing as a Bank;
"Basic Rent" shall mean all rent payable pursuant to Section 3(b) for the
Term.
"Business Day" shall mean any day other than a Saturday, Sunday or a day
on which banks in the State of New York are authorized or permitted to be
closed.
"Certificated Air Carrier" shall mean any corporation (except the United
States Government) domiciled in the United States of America and holding a
certificate under 49 U.S.C. Section 41102 by the Department of Transportation
or any predecessor or successor agency thereof, or in the event such
certificates shall no longer be issued, any corporation (except the United
States Government) domiciled in the United States of America 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 aircraft capable of carrying 10 or
more individuals or 6,000 pounds or more of cargo.
"Code" shall mean the Internal Revenue Code of 1986, as amended.
"Default" shall mean any event which constitutes an Event of Default
under this Lease, but for any requirement in connection therewith for the
giving of notice or the lapse of time, or the happening of any further
condition, event or act.
"Delivery Date" shall mean the date on which the Aircraft is delivered to
the Lessee under this Lease, which date shall be set forth in the Lease
Acceptance Supplement.
"Engine" shall mean and include: (i) each of the two Allied Signal
Propulsion model TPE-331-14 engines (except propellers) initially installed on
the Airframe and listed by manufacturer's model and serial number in the Lease
Acceptance Supplement, whether or not from time to time thereafter installed on
the Airframe (ii) any engine which may at any time be conveyed to the Lessor or
its nominee pursuant to Section 9(b) or 13(b); and (iii) any and all Parts, so
long as the same shall be incorporated or installed in or attached to any
Engine subject to this Lease, or, so long as the same shall be leased
hereunder, in accordance with the terms of Section 8 of this Lease, after
removal from such Engine.
"Event of Default" shall have the meaning assigned thereto in Section 15
hereof.
"Event of Loss" with respect to the Airframe or any Engine or Propeller
shall mean any of the following events: (i) the actual or constructive total
loss thereof; (ii) such Airframe, Engine or Propeller shall become lost or
stolen for a period greater than 45 days, destroyed, damaged beyond repair or
permanently rendered unfit for use for any reason whatsoever; (iii) the
condemnation, confiscation, requisition or taking of title thereof; or (iv) the
condemnation, confiscation, requisition or taking of use for a period in excess
of six consecutive months by any government or instrumentality or agency
thereof, or for a period that extends beyond the end of the Term; provided
however that if the definition of Event of Loss in the Loan Agreement (or any
alternative expression thereunder corresponding to the definition of Event of
Loss hereunder) differs from the foregoing definition, but does not differ to
the point that the definition varies from reasonable aircraft insurance
practices, the foregoing shall be deemed to be substituted by the terms of the
relevant definition in the Loan Agreement. An Event of Loss with respect to
the Airframe shall constitute an Event of Loss with respect to the Aircraft.
"Federal Aviation Administration" or "FAA" shall mean the Federal
Aviation Administration and any successor agency.
"Federal Aviation Act" shall mean 49 U.S.C., Subtitle VII - Aviation
Programs, as may be amended from time to time.
"Financier(s)" means each financial institution(s), including each Bank,
which from time to time provides financing in respect of all or part of the
Aircraft to Lessor or Owner Participant, together with any Agent, trustee
(including, without limitation, Security Trustee) or guarantor thereof, or any
other party having or which it is proposed shall have any interest in the
Aircraft, whether directly or indirectly, by way of ownership or security.
"Financier Document" shall mean the Mortgage, the Loan Agreement, any
Lessor Assignment of Insurances and any other document entered into in
connection with any financing referred to in section 12(f) and designated as a
Financier Document by notice from Lessor or Owner Participant to Lessee;
"Financier's Liens" shall mean the Mortgage, any other liens arising as a
result of (i) claims against or affecting any of Agent, Banks or Security
Trustee in each case not related to the transactions contemplated by the Lease
and the Financier Documents or (ii) acts or omissions of any of Agent, Banks or
Security Trustee relating to the Lease and the Financier Documents.
"Hourly Reserve Rate" means Xxxxxxx Engine Division of Allied Signal's
then-current recommended hourly set-aside rate for the cost of major and
intermediate periodic inspections on the engines model TPE-331-14GR/HR engine,
adjustable as set forth below. If no recommended set-aside is available,
Hourly Reserve Rate shall be calculated by the sum of the estimated costs for a
major and an intermediate periodic inspection divided by the then approved TBO.
In the event that the engine is operated on an approved "on condition"
program, the Hourly Reserve Rate shall be calculated by dividing the Lessee's
fleet average cost of each comparable type of shop visit over the previous
twelve months by the Lessee's fleet average time between the shop visits. If
no such history is available, the amount shall be based on a rate to be
mutually agreed between Lessee and Lessor.
"Indemnified Parties" shall mean Lessor (both in its individual capacity
and as Owner Trustee), Owner Participant, and each Financier and the Security
Trustee , (including, each previous Lessor (both in its individual capacity and
as Owner Trustee), Owner Participant (including, Financier and Security Trustee
which has transferred its relevant interest as permitted hereunder), and
affiliates, successors, assigns, agents, servants, officers and employees of
each of the foregoing.
"Insured Parties" shall mean Lessor (both in its individual capacity and
as Owner Trustee), Owner Participant, Banks, Agent, Security Trustee, each
Financier, the Security Trustee (including, each previous Lessor (both in its
individual capacity and as owner Trustee), Owner Participant, Financier and
Security Trustee which has transferred its relevant interest as permitted
hereunder for a period of two (2) years from the date of such transfer), and
any other Person who Lessor notifies Lessee in writing is to be an Insured
Party. The present Insured Parties are identified in Exhibit C hereto, which
Exhibit shall be deemed amended by any proper notice from any Insured Party.
"Lease" or "Lease Agreement" shall mean this Lease Agreement dated as of
the date first stated above, between the Lessor, as lessor, and the Lessee, as
lessee.
"Lease Acceptance Supplement" shall mean a Lease Acceptance Supplement,
substantially in the form of Exhibit A hereto, entered into on the Delivery
Date covering the Aircraft leased hereunder.
"Leased Aircraft" shall mean any British Aerospace (Operations) Limited
Jetstream Series 4100 Model 4101 Turboprop aircraft (other than the Aircraft)
leased or subleased, bailed or consigned to Lessee by Lessor, Owner
Participant, Seller, Manufacturer, Trident, any of their affiliates, or any
trustee acting on behalf of any of them.
"Lessee Assignment of Insurances" shall mean a security assignment by
Lessee in favor of Lessor of all its rights, title and interest to and in all
policies and contracts of insurance from time to time in existence in respect
of or relating to the Aircraft as required by this Lease Agreement (and other
than third party liability insurances, insurances or coverage not required by
this Lease Agreement, or other policies or contracts of insurance taken out in
accordance with Section 10(f)) and all the benefit of all such policies and
contracts of insurances in form and substance satisfactory to each Insured
Party.
"Lessor Assignment of Insurances" shall mean a security assignment by
Lessor in favor of any Financier of all its right, title and interest to and in
all policies and contracts of insurance from time to time in existence in
respect of or relating to the Aircraft as required by this Lease Agreement (and
other than third party liability insurances, insurances or coverage not
required by this Lease Agreement, or other policies or contracts of insurance
taken out in accordance with Section 10(f)) and all the benefit of all such
policies and contracts of insurances in form and substance satisfactory to any
such Financier.
"Lessor's Liens" means any Liens arising as a result of (i) claims
against or affecting either the Lessor or Owner Participant, in each case not
related to the transactions contemplated by the Operative Agreements, or (ii)
acts or omissions of either the Owner Participant or Lessor in each case not
related to or contemplated by the Operative Agreements.
"Lien" shall mean any mortgage, pledge, security interest, lien,
encumbrance, title retention arrangement or other charge of any kind on
property (real, personal or mixed, tangible or intangible).
"Loan Agreement" shall mean the loan agreement which may be entered into
in connection with any financing referred to in Section 12(f) and designated as
a "Loan Agreement" by notice from Lessor to Lessee.
"Manufacturer" shall mean British Aerospace (Operations) Limited, a
company organized under the laws of England and Wales, and any corporation
which succeeds thereto by merger or consolidation or which acquires all or
substantially all of the assets thereof.
"Mortgage" shall mean any aircraft mortgage which may be entered into in
connection with any financing referred to in Section 12(f) and designated as a
"Mortgage" by notice from Lessor or Owner Participant to Lessee.
"Operative Agreements" shall mean and include this Lease, each Financier
Document, the Trust Agreement, the Lessee Assignment of Insurances, and any
other document, instrument or agreement required under any thereof or which is
entered into in connection with any thereof or is supplemental thereto.
"Overdue Rate" means the lesser of the lawful maximum rate or the prime
lending rate plus four percent (4%). Prime lending rate shall mean the rate
appearing in the Wall Street Journal on the fifteenth day (or the next
succeeding publication day) of the month preceding the date on which any
payment is due to Lessor, which prime lending rate shall be adjusted on the
fifteenth day of each succeeding month.
"Owner Participant" shall mean British Aerospace Asset Management, Inc.
and its successors and assigns.
"Parts" shall mean any and all appliances, parts, instruments,
appurtenances, accessories, furnishings, seats, and other equipment of whatever
nature (other than Engines or engines or Propellers or propellers and temporary
replacement parts as provided in Section 8 of this Lease), which may from time
to time be incorporated or installed in or attached to any Airframe, Engine or
Propeller.
"Permitted Liens" shall have the meaning assigned thereto in Section 11
hereof.
"Person" shall mean an individual, partnership, corporation, trust,
unincorporated organization, or government or any agency or political
subdivision thereof.
"Propeller" shall mean and include: (i) each of the two propellers for
the Aircraft listed by manufacturer's serial number in the Lease Acceptance
Supplement, whether or not from time to time thereafter installed on an Engine
or installed on any other engine; and (ii) any propeller which may at any time
be conveyed to the Lessor or its nominee pursuant to Section 9(c) or 13(b) of
this Lease in replacement for a Propeller leased hereunder, and (iii) any and
all Parts, so long as the same shall be incorporated or installed in or
attached to any Propeller subject to this Lease, or, so long as the same shall
be leased hereunder in accordance with the terms of Section 8 of this Lease,
after removal from such Propeller.
"Rent" shall mean all Basic Rent and Supplemental Rent hereunder.
"Rent Payment Dates" shall mean each day on which an installment of Basic
Rent is payable during the Term.
"Replacement Engine" shall mean any engine conveyed to the Lessor or its
nominee pursuant to Section 9(c) or 13(b) in replacement of an Engine Leased
hereunder.
"Replacement Propeller" shall mean any propeller conveyed to the Lessor
or its nominee pursuant to Section 9(c) or 13(b) in replacement of a Propeller
the leased hereunder.
"Responsible Officer" shall mean (a) when used with respect to any Person
any of the Chairman of the Board, the President, the Secretary, the Treasurer,
Company Secretary, or any Vice President, Assistant Secretary or Assistant
Treasurer of such Person and (b) when used with respect to the subject matter
of any covenant, agreement or obligation referred to in this Lease, any officer
or any managerial employee of such Person who in the performance of his
operational responsibilities would reasonably be expected to have knowledge of
such matters. In the case of Owner Participant, a Director shall also be
considered a responsible officer at such time that a non-U.S. company becomes
Owner Participant.
"Security Trustee" means such financial institutions as Lessor may from
time to time advise Lessee which act as Trustee under the Mortgage.
"Seller" shall mean Aero International (Regional), a Societe par Actions
Simplifee, acting as agent for and on behalf of the Manufacturer.
"Stipulated Loss Value" shall mean the amount determined in accordance
with Schedule 3 to the Lease Acceptance Supplement.
"Supplemental Rent" shall mean all amounts, liabilities and obligations
(other than Basic Rent) which the Lessee is obligated to pay hereunder,
including, without limitation, Stipulated Loss Value payments.
"Tax" means all license and registration fees and all taxes, levies,
imposts, duties, charges, assessments or withholdings of any nature whatsoever
together with any penalties, additions to tax, fines or interest thereon.
"Term" shall mean the period from and including the Delivery Date and
ending on the day immediately preceding the twelfth (12th) anniversary of the
Delivery Date except as otherwise provided in Exhibit D hereto.
"Trident" shall mean Trident Turboprop (Dublin) Limited, a company
organized under the laws of Ireland.
"Trust" shall mean the trust created by the Trust Agreement.
"Trust Agreement" shall mean the Trust Agreement dated as of , 19
between the Owner Participant and Lessor as amended, supplemented or otherwise
modified from time to time.
SECTION 2. ACCEPTANCE UNDER LEASE AND CONDITIONS PRECEDENT.
(a) Acceptance Under Lease. Lessor shall lease to Lessee, and Lessee
shall accept and lease from Lessor, the Aircraft on the terms and conditions
set forth herein, such leasing to be evidenced by the execution and delivery
of a Lease Acceptance Supplement.
(b) Conditions Precedent. Lessor's obligation to lease the Aircraft
to Lessee is subject to the fulfillment of the following conditions to the
satisfaction of Lessor on or before the date of acceptance of the Aircraft:
(i) Representations and Warranties. The representations,
warranties and assurances set forth in Section 21 shall be true on the
Delivery Date and no Event of Default specified in Section 15 shall have
occurred or be continuing, no event which shall have occurred and be
continuing, with the giving of notice or lapse of time or both would
constitute such an Event of Default, and Lessee shall have furnished to Lessor
a certificate of an officer of Lessee to such effect dated the Delivery Date
confirming such facts.
(ii) Corporate Action. Lessee shall have furnished to Lessor
satisfactory proof that Lessee has taken all corporate action necessary to
authorize this Lease and the transactions contemplated hereby.
(iii) No Change in Applicable Law. No change shall have occurred
after the date of execution and delivery of this Agreement in Applicable Law
or interpretation thereof by appropriate regulatory authorities which, in the
reasonable opinion of Lessor or its counsel, would make it illegal or
potentially illegal for Lessor to enter into, or to perform any of its
obligations under, this Lease.
(iv) No Litigation. No action or proceeding shall have been
instituted nor shall any action or proceeding be threatened before any court
or governmental agency, nor shall any order, judgment or decree have been
issued or proposed to be issued by any court or governmental agency, at the
time of delivery, to set aside, restrain, enjoin or prevent the completion and
consummation of this Lease, or which might have a material adverse effect on
the financial condition or business prospects of Lessee or the ability of
Lessee to carry on its business as presently proposed to be conducted.
(v) No Material Adverse Change. There shall not have been any
material adverse change in the business, assets, liabilities, financial
condition, results of operations or business prospects of Lessee.
(vi) Opinions of Counsel.
(A) Lessor shall receive from counsel for Lessee an
opinion dated the date of acceptance of the Aircraft reasonably satisfactory
to Lessor and Owner Participant as to certain of the matters set forth in
Section 21 of this Lease prior to the Delivery Date.
(B) Lessor shall receive from Xxxxxxxxx, Xxxxxx & Xxxxxxxx
special FAA counsel, an opinion reasonably satisfactory to Lessor and Owner
Participant, and dated the date of acceptance of the Aircraft as to the
registration of the Aircraft and the eligibility of this Lease for recordation
at the FAA and the due filing thereof for recordation at the FAA.
(vii) Approval of Lessor's Counsel. All matters incident to this
transaction shall be reasonably satisfactory to counsel for Lessor.
(viii) Insurance. Lessee shall have furnished to Lessor
certificates of insurance satisfactory to Lessor evidencing the insurance
required by Article 10 of this Lease.
(ix) Lessee Assignment of Insurances. Lessee shall have executed
in favor of Lessor the Lessee Assignment of Insurances, if requested.
(x) Additional Information. Lessee shall have furnished Lessor
with such other opinions, documents, evidence, materials and information as
Lessor may reasonably request.
(xi) Guaranty. Receipt of guaranty from Atlantic Coast Airlines,
Inc. a Delaware Corporation, in the form previously provided by Lessee for
other aircraft leased from Lessor, guaranteeing the obligations of the Lessee
hereunder.
(xii) Letter Re Termination/Event of Loss Payments. Lessor
and Lessee shall have executed and delivered a sideletter regarding
Termination/Event of Loss Payments in the form attached hereto as Exhibit E.
SECTION 3. TERM AND RENT.
(a) Term. The Term for the Aircraft shall commence on the Delivery
Date and shall continue until the last day of the Term.
(b) Basic Rent. Lessee agrees to pay Basic Rent for the Aircraft
monthly in the applicable amount set forth in Schedule 2 to Exhibit A hereto.
(c) Supplemental Rent. Lessee also agrees to pay to Lessor, or to
whomsoever shall be entitled thereto, any and all Supplemental Rent when the
same shall become due and owing, and in the event of any failure on the part
of the Lessee to pay any Supplemental Rent, Lessor shall have all rights,
powers and remedies provided for herein or by law or equity in the case of
nonpayment of Basic Rent. Lessee will also pay, on demand, as Supplemental
Rent, interest at the Overdue Rate on any part of any installment of Basic
Rent not paid within five (5) Business Days after it is due for any period for
which the same shall be overdue, provided, however, that such five business
day grace period shall not be available to Lessee more than once in each
fiscal quarter in each of its fiscal years during the Term and, to the extent
permitted by Applicable Law, on any payment of Supplemental Rent not paid when
due for the period until the same shall be paid.
(d) Manner of Payment. All Rent shall be paid by Lessee to Lessor at
its address referred to in Section 20 hereof, or as Lessor may otherwise
direct, in immediately available funds consisting of lawful currency of the
United States of America, so that Lessor receives the full amount of such
payment on the due dates thereof. If any Rent is due on a day which is not a
Business Day, such Rent shall be paid on the next succeeding Business Day.
SECTION 4. NET LEASE, ETC.
This Lease is a net lease. Lessee acknowledges and agrees that its
obligations to pay all Rent due and owing under the terms hereof shall be
absolute and unconditional and shall not be affected by any circumstance
whatsoever, including, without limitation (a) any set off, counterclaim,
recoupment, defense or other right which Lessee may have against the
Manufacturer, the Seller, Lessor, Owner Participant, any Financier any
affiliate of any of them, or anyone else for any reason whatsoever, (b) any
defect in the title, airworthiness, eligibility for registration under the
Federal Aviation Act, condition, design, operation or fitness for use of, or
any damage to or loss or destruction of, the Aircraft, or any interference,
interruption or cessation in or prohibition of the use or possession thereof
by Lessee for any reason whatsoever, including, without limitation, any such
interference, interruption, cessation or prohibition resulting from the act of
any governmental authority, or any violation by Lessor of Section 5(b) hereof,
(c) any Liens, encumbrances or rights of others with respect to the Aircraft,
(d) the invalidity or unenforceability or lack of due authorization or other
infirmity of this Lease or any lack of right, power or authority of Lessor or
Lessee to enter into this Lease, (e) any insolvency, bankruptcy,
reorganization or similar proceedings by or against Lessee, or any other
person, or (f) any other cause whether similar or dissimilar to the foregoing,
any present or future Applicable law notwithstanding, it being the intention
of the parties hereto that all Rent being payable by Lessee hereunder shall
continue to be payable in all events in the manner and at the times provided
herein. Such Rent shall not be subject to any abatement and the payments
thereof shall not be subject to any set off or reduction for any reason
whatsoever, including any present or future claims of Lessee against the
Lessor under this Lease or otherwise. Each Rent payment made pursuant to this
Lease by Lessee shall be final and Lessee will not seek to recover all or any
part of such payment from Lessor, Owner Participant, Agent, Bank, any
Financier or the Security Trustee, for any reason whatsoever. To the extent
permitted by Applicable Law, Lessee hereby waives any rights which it may now
have or which may be conferred upon it, by statute or otherwise, to terminate,
cancel, quit or surrender this Lease except in accordance with the terms
hereof. Nothing contained in this Section 4 shall be construed to limit the
right of Lessee to make any claim it might have against Lessor or any other
Person (including, without limitation, that Rent payments demanded from or
paid by the Lessee are or were erroneous) or to pursue such claim in such
manner as Lessee shall deem appropriate.
SECTION 5. DISCLAIMER OF REPRESENTATIONS AND WARRANTIES AND QUIET
ENJOYMENT.
(a) Disclaimer of Warranties. LESSOR LEASES AND LESSEE TAKES THE
AIRCRAFT "AS-IS, WHERE-IS". LESSEE ACKNOWLEDGES AND AGREES THAT AS BETWEEN
LESSEE AND EACH OF LESSOR (FOR THE PURPOSES OF THIS SECTION 5(A), IN ITS
INDIVIDUAL CAPACITY OR OTHERWISE), OWNER PARTICIPANT AND ANY FINANCIER: (i)
THE AIRFRAME AND EACH ENGINE ARE OF A SIZE, DESIGN, CAPACITY AND MANUFACTURE
SELECTED BY AND ACCEPTABLE TO LESSEE, (ii) LESSEE IS SATISFIED THAT THE
AIRFRAME AND EACH ENGINE ARE SUITABLE FOR THEIR RESPECTIVE PURPOSES, AND (iii)
NONE OF LESSOR, OWNER PARTICIPANT OR ANY FINANCIER MAKE, HAS MADE OR SHALL BE
DEEMED TO HAVE MADE, AND EACH WILL BE DEEMED TO HAVE EXPRESSLY DISCLAIMED, AND
LESSEE HEREBY WAIVES, RELEASES AND RENOUNCES, ANY WARRANTY, REPRESENTATION,
GUARANTY, LIABILITY AND OBLIGATION OF LESSOR, OWNER PARTICIPANT OR ANY
FINANCIER, AND ANY RIGHT, CLAIM AND REMEDY OF LESSEE AGAINST SUCH PARTIES,
EXPRESS OR IMPLIED, ARISING BY OPERATION OF LAW, COURSE OF PERFORMANCE, COURSE
OF DEALING, USAGE OF TRADE OR OTHERWISE, AS TO:
(i) THE TITLE, AIRWORTHINESS, VALUE, CONDITION, DESIGN,
OPERATION, ANY IMPLIED WARRANTY OF MERCHANTABILITY OR FITNESS FOR USE OR FOR
ANY PARTICULAR PURPOSE OF THE AIRFRAME, ANY ENGINE, ANY PROPELLER, ANY PART,
ANY DATA OR ANY OTHER THING DELIVERED, SOLD OR TRANSFERRED HEREUNDER,
(ii) THE QUALITY OF THE MATERIAL OR WORKMANSHIP WITH RESPECT TO
THE AIRFRAME, ANY ENGINE, ANY PROPELLER ANY PART, ANY DATA OR ANY OTHER THING
DELIVERED, SOLD OR TRANSFERRED HEREUNDER,
(iii) THE ABSENCE OF LATENT OR ANY OTHER DEFECT OR NONCONFORMANCE
IN THE AIRFRAME, ANY ENGINE, ANY PROPELLER ANY PART, ANY DATA OR ANY OTHER
THING DELIVERED, SOLD OR TRANSFERRED HEREUNDER, WHETHER OR NOT DISCOVERABLE,
OR
(iv) THE ABSENCE OF ANY ACTUAL OR ALLEGED INFRINGEMENT OF ANY
PATENT, TRADEMARK OR COPYRIGHT OR THE LIKE.
LESSEE FURTHER WAIVES, DISCLAIMS, RELEASES AND RENOUNCES ANY LIABILITY,
RIGHT, CLAIM, REMEDY OR OBLIGATION BASED ON TORT, INCLUDING STRICT LIABILITY,
WHETHER OR NOT ARISING FROM THE NEGLIGENCE (WHETHER ACTIVE, PASSIVE OR
IMPUTED) EXCEPT FOR WILLFUL MISCONDUCT OR GROSS NEGLIGENCE, OF LESSOR, OWNER
PARTICIPANT OR ANY FINANCIER, ANY OBLIGATION, LIABILITY, RIGHT, CLAIM OR
REMEDY FOR LOSS OF OR DAMAGE TO THE AIRFRAME, ANY ENGINE, ANY PROPELLER ANY
PART, ANY DATA OR ANY OTHER THING DELIVERED, SOLD OR TRANSFERRED HEREUNDER, OR
ANY OTHER REPRESENTATION OR WARRANTY WHATSOEVER, EXPRESS OR IMPLIED, WITH
RESPECT TO THE AIRFRAME, ANY ENGINE, ANY PROPELLER ANY PART, ANY DATA OR ANY
OTHER PHYSICAL THING DELIVERED, SOLD OR TRANSFERRED HEREUNDER.
Nothing contained in this Section 5(a) shall be deemed to modify or
otherwise affect any warranties or other obligation of any manufacturer,
subcontractor, or supplier to Lessee with respect to the Airframe or any
Propeller, Engine or Part or any other rights Lessee has under Section 4 of
this Lease.
(b) Quiet Enjoyment. Lessor covenants with Lessee that, subject to no
Default or Event of Default having occurred and continuing, subject to the
provisions of the Operative Agreements, unless compelled to do so by any
person claiming a right in or title to the Aircraft or any part thereof
superior to Lessor or unless compelled to do so by any Applicable Law, Lessor
will not knowingly disturb the quiet use, possession and enjoyment of the
Aircraft by Lessee.
(c) Subordination. Lessee acknowledges and agrees that this Lease and
the subleasing of the Aircraft hereunder are subject and subordinate to the
provisions of the Mortgage and the respective rights of Security Trustee and
each other Financier thereunder and that the interest of Lessee is subject to
and subordinate to the respective interests of Security Trustee, and each
other Financier. Lessor and Lessee accordingly acknowledge and agree that
Lessor's obligation to lease the Aircraft to Lessee hereunder and the Lessee's
obligation hereunder to pay Basic Rent for future periods shall automatically
terminate upon any enforcement of the Mortgage unless the Security Trustee,
Agent, Bank, or the other Financiers require otherwise.
(d) Compliance with Operative Agreements. Lessor hereby covenants and
agrees that it shall perform its obligations under the Operative Agreements
including the Lease provided that Lessor shall have no liability whatsoever to
Lessee for any failure to perform such obligations in circumstances where
(i) Lessee shall have failed to perform any corresponding obligations under
the Lease or (ii) such failure shall result, whether directly or indirectly,
from a failure by Lessee to perform any express and specific obligations under
the Lease or from the occurrence of a Default or an Event of Default.
SECTION 6. POSSESSION, OPERATION AND USE, MAINTENANCE, INSIGNIA AND
RESERVES.
(a) Possession. Lessee shall not sublease, or otherwise in any manner
deliver, relinquish or transfer possession of the Airframe, or any Engine or
Propeller leased hereunder to any Person or install any Engine, or permit any
Engine to be installed on any airframe other than the Airframe or install any
Propeller, or permit any Propeller to be installed, on any engine other than
an Engine during the Term, without, in each case, the prior written consent of
Lessor, provided that so long as no Event of Default has occurred which is
continuing Lessee, may, without the prior written consent of Lessor:
(i) deliver possession of the Airframe or any Engine or
Propeller to any organization for testing or other similar purposes or for
service, repair, maintenance or overhaul work on such Airframe, Engine or
Propeller or for alterations or modifications in or additions to such
Airframe, Engine or Propeller, to the extent required or permitted by the
terms of this Lease;
(ii) install any of the Engines or Propellers on an aircraft
owned by Lessee or leased by or hired to Lessee on terms whereby (i) Lessee
has full operational control of such aircraft (ii) title to the relevant
Engine or Propeller remains vested in the Lessor and (iii) such Engine or
Propeller does not thereby become subject to any Lien (other than a Permitted
Lien);
(iii) install on the Aircraft any engines or propellers owned by
Lessee, or leased by or hired to Lessee on terms whereby (i) title to each
Engine or Propeller (whether or not installed on the Aircraft) remains vested
in Lessor; and (ii) neither the Aircraft nor any Engine or Propeller (whether
or not installed on the Aircraft) thereby becomes subject to any Lien (other
than a Permitted Lien).
(b) Operation and Use. Lessee agrees not to (i) operate the Airframe
or any Engine or Propeller or permit the Airframe or any Engine or Propeller to
be operated except in a passenger configuration, in commercial or other
operations for which Lessee is duly authorized by the FAA or other governmental
authority having jurisdiction over Lessee or such Airframe, Engine or
Propeller; (ii) use or permit the Aircraft to be used for a purpose for which
the Aircraft is not designed or reasonably suitable; (iii) base the Aircraft
outside the United States or operate, use or locate any Airframe, Engine or
Propeller, or suffer such Airframe, Engine or Propeller to be operated, used or
located (A) in any area excluded from coverage by any insurance required by the
terms of Section 10 hereof or (B) outside the contiguous 48 United States or
Canada, or the Bahamas, or (C) in any recognized, or in Lessor's reasonable
judgment, threatened area of hostilities unless fully covered by war risk
insurance. Lessee will not permit the Aircraft or any Engine or Propeller to
be maintained, used or operated during the Term in violation of any Applicable
Law, or for matters not covered by Applicable Law, contrary to any
manufacturer's operating manuals or instructions. Lessee agrees not to operate
the Aircraft, or suffer the Aircraft to be operated or kept in any place
(i) unless the Aircraft is covered by insurance as required by the provisions
of Section 10 hereof, or (ii) contrary to or inconsistent with the terms of
such insurance and will not do or permit to be done or left undone anything
whereby any policy required hereunder would or might reasonably be expected to
be rendered in whole or in part invalid or unenforceable. Lessor will
favorably respond to requests as may be made by Lessee from time to time for
permission to utilize the Aircraft in countries located in the Caribbean region
in addition to the Bahamas, provided that the Aircraft will remain registered
and based in the United States, that the proposed countries of use are
identified reasonably in advance to Lessor based on a specific proposal for
utilization of the Aircraft, that Lessee obtains additional insurance coverage
as may be appropriate in light of the proposed foreign use which is consistent
with the obligations of Lessor under the Financier Documents, and that Lessor
can reasonably satisfy itself that said use will not result in any breach of
the Financier Documents or undue physical, political, or legal risk to the
Aircraft, to title thereto, or to any interest therein. Lessor reserves the
right to withdraw its consent to foreign use as a result of material changes in
circumstances involving any country for which permission was previously
granted, provided that Lessor will use its best efforts to provide thirty (30)
days prior written notice to Lessee prior to its withdrawal of such consent.
(c) Maintenance. Lessee, at its own cost and expense, shall service,
repair, maintain and overhaul, test or cause the same to be done to the
Airframe and each Engine and Propeller during the Term (i) so as to keep such
Airframe, Engine and Propeller in as good operating condition and appearance as
when delivered to Lessee by the Lessor hereunder, ordinary wear and tear
excepted, (ii) so as to keep such Airframe, Engine or Propeller in such
operating condition as may be necessary to enable a standard airworthiness
certificate for the Aircraft to be maintained in good standing at all times
under the applicable rules and regulations of the FAA and (iii) in accordance
with a maintenance program approved by the FAA and which Lessee would generally
apply to aircraft of the same type as the Aircraft. Lessee shall maintain all
records, logs technical data materials and other materials required in the
format required by the Department of Transportation or the FAA to be maintained
in respect of the Aircraft in an accurate, current and complete condition in
accordance with good commercial aviation practice and shall promptly furnish to
Lessor upon written request, or if verbally, confirmed in writing within
24 hours, such information as may be necessary to file any required reports
with any governmental authority because of Lessee's use or operation of the
Aircraft.
(d) Insignia. On or prior to the Delivery Date or as soon as is
practicable thereafter, Lessee shall place and maintain in the cockpit of the
Airframe in a location reasonably adjacent to the airworthiness certificate of
the Aircraft, in the cockpit or on the flight deck of the Aircraft and on each
Engine, a fireproof metal nameplate having dimensions of not less than six (6)
inches by four (4) inches identifying the leasehold interest of the Lessor and
the ownership interest of the Lessor in the Aircraft, as follows:
"This Aircraft/Engine together with its accessories installed thereon is
owned by First Security Bank, National Association in its capacity as Owner
Trustee, and is leased to Atlantic Coast Airlines [and is mortgaged to
.]"
and in addition, Lessee shall attach to and keep upon the Propellers such
labels, plates or markings as are necessary or advisable to evidence Lessor's
ownership thereof. Lessee will not allow the name of any Person other than
those listed in this Section 6(d) or their respective successors or assigns, to
be placed on the Aircraft or any Engine or Propeller as a designation that
might be interpreted as a claim of ownership, Lien, or of any interest therein,
provided, however, that Lessee may operate the Aircraft in its livery,
including its name and logo so long as the above mentioned fireproof nameplates
are not covered or painted over.
The size of the name plates to be affixed to the Aircraft and to each
Engine may be reduced to reasonably accommodate space limitations, provided
that the size of the name plate not be reduced to the extent that the effect
would be to diminish the prominence of the statement contained therein.
(e) Engine Maintenance Reserves/GED Agreement.
(i) Lessee shall enter into an agreement with Xxxxxxx Engine
Division of Allied Signal ("GED") or such comparable engine repair facility as
is acceptable to the parties (collectively, the "GED Agreement") for scheduled
and unscheduled maintenance and support of the Engines. Lessee shall be
permitted to provide for the maintenance and repair of Engines under the GED
Agreement under terms and conditions acceptable to Lessor in lieu of Lessee's
payment of Engine Maintenance Reserves to Lessor as provided below. Lessee
shall provide Lessor with: a copy of the GED Agreement; copies of any
amendments (to be provided prior to their effective date); and copies of any
renewals or extensions thereof (to be provided, to the extent possible at least
twelve months prior to the scheduled termination). Terms and prices contained
in the GED Agreement may be withheld from Lessor if required by GED, provided
that the Lessee does not impose such a restriction.
(ii) At any time during the term of this Lease that the Engines
are no longer eligible for maintenance and repair by GED under the GED
Agreement, or that Lessee is in default under the GED Agreement for nonpayment,
or that either Lessee or GED are in default under the GED Agreement for any
other reason which such default has been declared, Lessee shall commence
payments to Lessor. Such payments ("Engine Maintenance Reserves") will be
applied to scheduled and unscheduled maintenance and support of the Engine as
described in this Section 6(e). Engine Maintenance Reserves shall be paid
monthly in arrears on the fifteenth day of each succeeding month. The amount
of Engine Maintenance Reserves in respect of each Engine shall be in an amount
equal to the Hourly Reserve Rate times the aggregate number of Engine flight
hours occurring on the Engines since the prior intermediate and major shop
inspections on the Engines.
(iii) In the event that the GED Agreement is terminated for any
reason, Lessee shall pay an initial deposit to Lessor for Engine Maintenance
Reserves to cover time accrued to date. This initial deposit shall be paid to
Lessor (or to a party designated by Lessor to hold Engine Maintenance Reserves)
in addition to the ongoing payments provided in subparagraph (ii) above, and
shall be expended and applied, to the extent paid in, as Engine Maintenance
Reserves as provided in this Section 6(e). Such initial deposit shall in all
circumstances be due in full no later than twelve months following the date of
termination of the GED Agreement, and shall be paid in twelve monthly
installments, due at the time of payment of Engine Maintenance Reserves as
described in subparagraph (ii) above. The amount of the initial deposit due at
the end of twelve months will be the Hourly Reserve Rate multiplied by the
total number of hours accrued on all of the J41 Engines since the last major
periodic inspection on each of the J41 Engines as of the date of termination of
the GED Agreement, adjusted for any intermediate inspection that may have
occurred. To the extent there are any amounts owed to Lessee by GED with
respect of the Engines upon termination of the GED Agreement, such amount shall
be assigned to Lessor and Lessee's payment required in accordance with this
Section shall be reduced by an equivalent amount upon payment to Lessor of the
assigned amounts.
(iv) In the event of a Default or Event of Default under this
Lease Agreement or any other agreement between Lessor or Owner Participant (or
any agreement whereby Owner Participant is the beneficiary pursuant to a trust)
and Lessee or any affiliate of Lessee (a "Lessee Agreement"). Lessor shall
have the right at any time following such Default or Event of Default to apply
funds held as Engine Maintenance Reserves to cure any such Default or Event of
Default.
(v) Provided Lessee is not in default under this Lease Agreement,
disbursements from funds paid as Engine Maintenance Reserves by Lessee for the
Engines shall be made to Lessee by the party holding the Engine Maintenance
Reserves for costs actually incurred by Lessee in connection with intermediate
and major shop periodic inspections on the Engines. Such disbursements will be
made upon the written request of Lessee to Lessor, accompanied by evidence
satisfactory to Lessor (including invoices, purchase orders, etc.) that such
engine inspection has been performed by Lessee and expenses incurred and paid.
Advance disbursements to third parties will be made if necessary to proceed
with the work provided adequate protection is made to ensure proper completion
of the work and to ensure release of the Engine by said third party.
(vi) The amount required to be paid by Lessee as Engine
Maintenance Reserves shall be subject to adjustment annually to reflect both
Lessee's operational results and changes in the GED's recommendations as may be
mutually agreed. Such amount may also be adjusted in the event of a
significant change in maintenance intervals on Lessee's TPE-331-14GR/HR engine
fleet as mutually agreed by both Lessor and Lessee.
(vii) In the event that Engine Maintenance Reserves have been paid
under this Section 6(e), and upon the occurrence of an Event of Loss involving
the Aircraft on which the Engine is installed, Lessee shall be entitled to the
prompt return of Engine Maintenance Reserves payments. This reimbursement
shall take place at the time of settlement of any insurance claim provided no
Default or Event of Default has occurred which is continuing at the time of
insurance settlement. If there is an Event of Default at the time of
settlement, reimbursement will be made upon satisfactory cure of all such
Defaults or Events of Default. Reimbursement shall not be made in the event of
an Event of Loss involving an Engine that is to be replaced, but a positive or
negative adjustment will be made to the reserve account to reflect changes in
the hours and cycles between the original Engine and the Replacement Engine.
(f) Removal of Engines and Propellers. Lessee will ensure than
no Engine or Propeller installed on the Aircraft is at any time removed from
the Aircraft other than:
(i) if replaced as permitted by this Agreement; or
(ii) if the removal is of an obsolete item and is in
accordance with the Lessee's maintenance program;
(iii) (A) during the course of maintaining, servicing,
repairing, restoring or testing that Engine, Propeller or the Aircraft, as the
case may be; or (B) as part of a normal engine or propeller rotation program;
or (C) for the purpose of making such modifications to the Engine, Propeller or
the Aircraft, as the case may be, as are required under this Agreement, or by
the manufacturer of the Engines or Propellers; or
(iv) as provided for in Section 6(a)(i), (ii) or (iii);
and then in each case only if it is reinstalled or replaced by an engine or
propeller complying with the requirements in Section 6(g), or in the case of a
removal for the reasons set out in Section 6(f)(iii) the requirements of
paragraphs (i), and (iii) of Section 6(g) and not paragraph (ii) until the
expiration of the term of this Agreement or early termination of this
Agreement, as soon as practicable and in any event no later than the expiration
of the term of this Agreement or early termination of this Agreement.
(g) Installation of Engines and Propellers.
Lessee will ensure that, except as permitted by this Agreement, no
engine or propeller is installed on the Aircraft unless:
(i) it is an engine of the same model as, or an improved or
advanced version of the Engine or Propeller it replaces, which has the
same value and utility and which is in the same or better operating
condition (without regard to hours or cycles) assuming that such Engine
or Propeller was in the condition and repair as required to be maintained
by the terms of this Agreement;
(ii) in each case, it has become and remains the property of
Lessor free from any Liens except Lessor's Liens and the Lien of the
Mortgage and upon installation on the Aircraft will without further act
be subject to this Agreement; and
(iii) in each case, Lessee has all necessary information as to its
source and maintenance records.
SECTION 7. CERTAIN NOTICES.
As soon as possible and in any event within 30 days after the occurrence of
any Default or Event of Default which is continuing, Lessee shall notify
Lessor of such Default or Event of Default, setting forth in detail the nature
of such Default or Event of Default and the action which Lessee proposes to
take with respect thereto. Lessee shall immediately notify Lessor of any
"aircraft accident" as defined in 49 CFR Part 830 with respect to the Airframe
or any Engine or Propeller, which notice shall indicate the time, place and
nature of the accident, the damage caused to property and the names and
addresses of any persons injured.
SECTION 8. REPLACEMENT AND POOLING OF PARTS; ALTERATIONS, MODIFICATIONS AND
ADDITIONS
(a) Replacement of Parts. Lessee, at its own cost and expense, shall
promptly replace all Parts that may from time to time during the Term become
worn out, lost, stolen, destroyed, seized, confiscated, damaged beyond repair
or permanently rendered unfit for use for any reason whatsoever. In addition,
in the ordinary course of maintenance, service, repair, overhaul or testing,
Lessee may remove any Parts, provided that Lessee shall replace such Parts as
promptly as practicable with replacement Parts or temporary replacement parts
as provided in Section 8(c) hereof. All replacement Parts shall be free and
clear of all Liens (except Permitted Liens) and shall be in as good operating
condition as, and shall have a value and utility at least equal to, the Parts
replaced assuming such replaced Parts were in the condition and repair
required to be maintained by the terms hereof.
(b) Title to Parts. All Parts at any time removed from the Airframe
or any Engine or Propeller, shall remain subject to this Lease and the
Mortgage, no matter where located, until such time as such Parts shall be
replaced by Parts that have been incorporated or installed in or attached to
such Airframe, Engine or Propeller and that meet the requirements for
replacement Parts specified above. Immediately upon any replacement Part
(other than a temporary replacement Part) becoming incorporated or installed
in or attached to any Airframe, Engine or Propeller as above provided, without
further act, (i) title to such replacement Part shall thereupon immediately
vest in the Lessor; (ii) title to the replaced Part shall thereupon vest in
Lessee, free and clear of all rights of Lessor, Financier(s) and Owner
Participant, and shall no longer be deemed a Part hereunder; and (iii) such
replacement Part shall become subject to this Lease and the Lien of the
Financiers and be deemed part of such Airframe, Engine or Propeller, as the
case may be, for all purposes hereof to the same extent as the Parts
originally incorporated or installed in or attached to such Airframe, Engine
or Propeller.
(c) Pooling of Parts. Any Part removed from the Airframe or any
Engine or Propeller as provided in Section 8(a) hereof may be subjected by
Lessee to a normal pooling arrangement customary in the airline industry
entered into in the ordinary course of Lessee's business with any air carrier,
provided the part replacing such removed Part shall be incorporated or
installed in or attached to such Airframe, Engine or Propeller in accordance
with Sections 8(a) and 8(b) as promptly as possible after the removal of such
removed Part. In addition, any temporary replacement part when incorporated
or installed in or attached to any Airframe, Engine or Propeller in accordance
with Section 8(a) hereof may be owned by another airline or vendor as
customary in the airline industry, subject to such a normal pooling or leasing
arrangement, provided Lessee shall, at its own expense, as promptly thereafter
as reasonably possible, either (i) cause title to such temporary replacement
part to vest in Lessor in accordance with Section 8(b)(iii) hereof by Lessee
acquiring title thereto for the benefit of Lessor free and clear of all Liens
except Permitted Liens, at which time such temporary replacement part shall
become a Part and become subject to this Lease; or (ii) replace such temporary
replacement part by incorporating or installing in or attaching to such
Airframe, Engine or Propeller a further replacement Part owned by Lessee free
and clear of all Liens except Permitted Liens, and by causing title to such
further replacement Part to vest in Lessor in accordance with Section 8(b)
hereof.
(d) Alterations, Modifications and Additions. Lessee, at its own
expense, shall make such alterations and modifications in and additions to the
Airframe or any Engine or Propeller as may be required to be made from time to
time during the Term by Applicable Law regardless upon whom such requirements
are, by their terms, nominally imposed. Title to all Parts incorporated on,
installed in or attached or added to the Airframe or any Engine or Propeller
as the result of any alteration, modification or addition required by the
preceding sentence shall vest without further act in Lessor and become subject
to the Mortgage and this Lease and the Lien of the Financiers. In addition,
Lessee, at its own expense, may from time to time make or cause to be made
such alterations and modifications in and additions to the Airframe, any
Engine or any Propeller as Lessee may deem desirable in the proper conduct of
its business, (any such additions for purposes of this Section 8(d) called
"Additional Parts") including, without limitation, removal of Parts (for
purposes of this Section 8(d) called "Obsolete Parts"); provided that no such
alteration, modification, addition or removal shall materially diminish the
value or utility of the Airframe, such Engine or such Propeller, or impair the
condition or airworthiness thereof immediately prior to such alteration,
modification, addition or removal assuming the Airframe, such Engine or such
Propeller was then of the value and utility and in the condition and
airworthiness required to be maintained by the terms of this Lease.
Notwithstanding anything to the contrary, Lessee may, at any time during the
Term, remove any Additional Part; provided that (i) such Additional Part is in
addition to, and not in replacement of or substitution for, any Part
originally incorporated or installed in or attached to the Airframe, such
Engine or such Propeller at the time of delivery thereof hereunder or any part
in replacement of, or substitution for, any such Part, (ii) such Additional
Part is not required to be incorporated or installed in or attached or added
to such Airframe, Engine or Propeller pursuant to the first sentence of this
Section 8(d) and (iii) such Additional Part can be removed from the Airframe,
such Engine or such Propeller without materially diminishing or impairing the
value, utility, condition or airworthiness required to be maintained by the
terms of this Lease which the Airframe, such Engine or such Propeller would
have had at such time had such addition not occurred. Upon the removal by
Lessee of any Additional Part as provided in the immediately preceding
sentence or the removal of any Obsolete Part permitted by this Section 8(d),
title thereto shall, without further act, vest in Lessee, free and clear of
all rights of Owner Participant any Financier, the Security Trustee, or Lessor
as appropriate or any Lessor Liens and such Additional Part or Obsolete Part
shall no longer be deemed part of the Airframe, the Engine or Propeller from
which it was removed. Title to any Additional Part not removed by Lessee
prior to the return of the Airframe, such Engine or such Propeller to Lessor
hereunder shall vest in the Lessor without further act.
SECTION 9. RISK, LOSS, DESTRUCTION OR REQUISITION.
(a) Risk. Throughout the Term and until redelivery of the Aircraft in
accordance with Section 13, Lessee shall bear all risks of loss, theft, damage
and destruction of or to the Aircraft and every part thereof, and no such
loss, theft, damage or destruction, nor any other event or circumstance of any
nature whatsoever, shall impair or frustrate any obligation of Lessee under
this Lease (including without limitation as to the payment of Rent or other
payments) so that all such obligations shall continue in force and effect.
(b) Event of Loss with Respect to the Aircraft. Upon the occurrence
of an Event of Loss with respect to the Aircraft during the Term, Lessee shall
forthwith (and in any event within seven (7) days after such occurrence) give
Lessor written notice of such Event of Loss. On the "Casualty Termination
Date" (which is defined as the earlier of: (x) the date on which insurance
proceeds are paid, or (y) the date which is the first Rent Payment Date
occurring not less than 60 days after such Event of Loss), Lessee shall pay
Lessor an amount equal to the sum of (i) the Stipulated Loss Value of such
Aircraft as of the Casualty Termination Date, plus (ii) if not previously paid
by Lessee, all other Rent due and payable on or prior to such Casualty
Termination Date. Notwithstanding such Event of Loss, Lessee's obligation to
pay Basic Rent hereunder up to such Casualty Termination Date shall continue,
such Basic Rate to be payable on the due date therefor.
Upon payment in full of the Stipulated Loss Value for the Aircraft and
other Rent payable as provided in the immediately preceding paragraph, (xx)
this Lease (except for Supplemental Rent obligations surviving pursuant to
Section 14 hereof or which have otherwise accrued but not been paid as of the
date of such payment) shall terminate; (yy) any remaining insurance proceeds
(other than proceeds of policies maintained by Lessor for its own account)
shall be promptly paid over to Lessee; subject to the rights of any Insured
Party under the Operative Agreements and (zz) Lessor shall subject to the
rights of insurers and other Insured Parties seek to cause title to such
Airframe, Engines and Propellers to be conveyed to Lessee or its designee, as-
is, where-is, without recourse or warranty, express or implied, except for a
warranty from Lessor against Lessor's Liens, and shall exercise such rights as
it has to cause the release of the Lien of the Mortgage.
(c) With Respect to an Engine or Propeller. Upon the occurrence
during the Term of an Event of Loss with respect to an Engine or Propeller not
involving an Event of Loss with respect to the Aircraft, Lessee shall give
Lessor prompt written notice thereof and Lessee shall replace, at its sole
cost, such Engine or propeller as soon as reasonably practicable after the
occurrence of such Event of Loss by duly conveying to Lessor as a replacement
for said Engine or Propeller, title to another engine or propeller of the type
specified in the applicable Lease Acceptance Supplement which engine or
propeller shall be free and clear of all Liens except Permitted Liens and
shall have a value and utility at least equal to, and be in as good operating
condition as, the Engine or Propeller with respect to which such Event of Loss
occurred, assuming such Engine or Propeller was of the value and utility and
in the condition and repair required by the terms hereof immediately prior to
the occurrence of such Event of Loss. Lessee agrees that on the date that the
Replacement Engine or Replacement Propeller, as the case may be, is delivered
(hereinafter referred to in this Section 9(c) as the "Replacement Closing
Date") the following documents at the Lessee's sole cost and expense shall
have been duly authorized, executed and delivered by the respective party or
parties thereto and shall be in full force and effect, and the Lessee shall
deliver or cause to be delivered an executed counterpart of each thereof (or,
in the case of the Xxxx of Sale referred to below, a photocopy thereof) to
Lessor, each Financier:
(i) a Lease Supplement covering the Replacement Engine or
Replacement Propeller, as the case may be; and
(ii) a full warranty xxxx of sale (as to title), in form and
substance reasonably satisfactory to the Lessor and each Financier, covering
the Replacement Engine or Replacement Propeller, as the case may be, and to
deliver a certificate from a Responsible Officer of Lessee certifying that
such Replacement Engine or Replacement Propeller complies with this
Section 9(c). Lessee agrees to take such further action as Lessor may
reasonably request with respect to such Replacement Engine or Replacement
Propeller including, without limitation, the actions required to be taken by
it under this Section 9(c) but excluding, without limitation, an opinion of
counsel for Lessee relating to such Replacement Engine or Replacement
Propeller. Such Replacement Engine or Replacement Propeller, upon being
titled in the name of Lessor free of all Liens, shall be deemed an "Engine" or
"Propeller", as the case may be, as defined herein for all purposes hereof.
Upon full compliance with this Section 9(c), Lessor shall subject to the
rights of the insurers and other Insured Parties, seek to cause title in and
to the Engine or Propeller which suffered such Event of Loss to be conveyed to
Lessee, as-is, where-is, without recourse or warranty, express or implied,
except for a warranty from Lessor against Lessor's Liens, and shall exercise
such rights as it has to cause the release of the Lien of the Mortgage with
respect to the Engine or Propeller. No Event of Loss with respect to an
Engine or Propeller on any Aircraft under the circumstances contemplated by
the terms of this Section 9(c) shall result in any reduction in Rent or Lessee
obligation to pay Basic Rent hereunder. Lessee agrees that it shall at all
times during the term of this Lease maintain on each Airframe two Engines or
other engines suitable for use on such Airframe and a Propeller or other
propeller on each Engine suitable for use on such Engine.
(d) Payments from Governmental Authorities for Requisition of Title or
Use.
(i) Any payments on account of an Event of Loss (other than
insurance proceeds or other payments the application of which is provided for
in this Lease) received at any time by Owner Participant, Lessor, any
Financier, or by Lessee from any governmental authority or other Person will
be applied as follows:
(A) if such payments are received with respect to an
Airframe, so much of such payments as shall not exceed the Stipulated Loss
Value required to be paid by Lessee pursuant to Section 9(b) hereof, shall be
applied in reduction of Lessee's obligation to pay such Stipulated Loss Value,
to the extent not already paid by Lessee, and, to the extent already paid by
Lessee, shall be applied to reimburse Lessee for its payment of such
Stipulated Loss Value, and the balance, if any, of such payment remaining
thereafter shall be paid to or retained by Lessor; and
(B) if such payments are received with respect to an
Engine or Propeller under the circumstances contemplated by Section 9(c) or
9(d)(iii) hereof, such payments shall subject to the terms of the Operative
Agreement be paid over to, or retained by, Lessee, provided that Lessee shall
have fully performed the terms of Section 9(c) hereof with respect to the
Event of Loss for which such payments are made.
(ii) In the event of a requisition for use by any government, so
long as it does not constitute an Event of Loss, of the Aircraft during the
Term, Lessee shall promptly notify Lessor of such requisition and all the
Lessee's obligations under this Lease shall continue to the same extent as if
such requisition had not occurred except to the extent that any failure or
delay in the performance or observance of each obligation by Lessee shall have
been prevented or delayed by such requisition, provided that Lessee's
obligations for the payment of money and under Section 10 hereof shall in no
way be affected, reduced or delayed by such requisition. Any payments
received by Lessor or Lessee from such government with respect to such
requisition shall be paid over to or retained by, Lessee. If the Lessor shall
receive any such payments, Lessor shall use its best commercially reasonable
efforts to secure such payments on the behalf of Lessee.
(iii) In the event of the requisition for use by a government of
any Engine or Propeller (but not an Airframe) for a period exceeding 45 days,
Lessee shall replace such Engine or Propeller hereunder by complying with the
terms of Section 9(c) hereof to the same extent as if an Event of Loss had
occurred with respect to such Engine or Propeller, and any payments received
by Lessor, or Lessee from such government with respect to such requisition
shall be paid over to, or retained by, Lessee provided that, if the Airframe
and Engines or engines are not returned prior to the end of the Term then,
notwithstanding that the Term shall have ended, Lessee shall be obliged to
return the Airframe and such Engines or engines to Lessor pursuant to, and in
all other respects to comply with the provisions of, Section 13 promptly upon
their return and any payments received by Lessee in respect of any such period
after the end of the Term shall be paid over and belong solely to Lessor.
(e) Application of Payments During Existence of Event of Default. Any
amount referred to in this Section 9 or Section 10 hereof which is payable to
Lessee shall not be paid to Lessee, or, if it has been previously paid
directly to Lessee, shall not be retained by Lessee and shall be promptly paid
over to Lessor, if at the time of such payment an Event of Default shall have
occurred and be continuing, but shall be paid to and held by Lessor (or so
long as the Lien of the Security Trustee shall not have been discharged and
the Security Trustee so requires, the Security Trustee) as security for the
obligations of Lessee under this Lease, and at such time as there shall not be
continuing any such Event of Default such amount shall, subject to the terms
of the Operative Agreements be paid over to Lessee.
SECTION 10. INSURANCE.
(a) Third Party Liability Insurance. Lessee shall, without expense to
any Insured Party, maintain or cause to be maintained in effect, at all times
during the Term, with insurers of recognized reputation and responsibility,
comprehensive aircraft and general liability insurance against third party
bodily injury or property damage (including without limitation contractual
liability, cargo liability, passenger legal liability/property damage
including war risk and allied perils as clause AV52 (all paragraphs deleted
except B) or equivalent coverage) with respect to the Aircraft in an amount
not less than a $150,000,000 combined single limit, or such greater amounts as
Lessee may carry from time to time on other similar aircraft in its fleet.
Such insurance shall be of the type usually carried by corporations engaged in
the same or a similar business, similarly situated to Lessee and owing and
operating similar aircraft and engines, and covering such other risks as are
customarily insured against by such corporations.
(b) Insurance Against Loss or Damage to the Aircraft and Engines.
Lessee shall, without expense to any Insured Party, maintain or cause to be
maintained in effect, at all times during the Term, with insurers of
recognized reputation and responsibility, all-risk, agreed value ground and
flight hull insurance, excluding war risks and allied perils (but including
extended coverage against the type of risks excluded by clauses (c), (e) and
(g) of the War, Hijacking and Other Perils Exclusion Clause (AVN 48B)),
covering the Aircraft for an amount in respect of such Aircraft not less than
the Stipulated Loss Value from time to time. Such hull insurance shall cover
Engines and Propellers or engines and propellers and Parts temporarily removed
from the Airframe pending replacement by installation of the same or similar
engines, propellers or Parts on such Airframe. Such insurance shall be of the
type usually carried by corporations engaged in the same or a similar
business, similarly situated with and owning and operating similar aircraft,
engines and propellers and covering such other risks as are customarily
insured against by such corporations. If and to the extent that Lessee
maintains war risk and allied perils insurance (including governmental
confiscation insurance) in effect with respect to other similar owned or Lease
aircraft in its fleet, Lessee shall maintain such insurance in effect with
respect to the Aircraft in an amount in respect of such Aircraft not less than
the Stipulated Loss Value of such Aircraft from time to time.
(c) Additional Insureds; Loss Payee. Lessee shall cause all policies
of insurance carried in accordance with this Section 10 to name the Insured
Parties as additional insureds as their respective interests may appear (it
being understood that the Insured Parties have no operational interest). Such
policies shall provide with respect to such additional insureds that (i) none
of their respective interests in such policies shall be invalidated by any act
or omission or breach of warranty of Lessee or of any other named insured;
(ii) no cancellation or lapse of coverage for nonpayment of premium or
otherwise, and no material change of coverage which adversely affects the
interests of such additional insured, shall be effective as to such additional
insured until 30 days (or, with respect to war risk insurance such lesser
period as may be customary in the London market for such insurance in such
area of the world) after receipt by such additional insured of written notice
from the insurers of such cancellation, lapse, or change; (iii) the Insured
Parties shall have no liability for premiums, commissions, calls, assessments
or advances with respect to such policies; (iv) the insurers waive any rights
of set-off, counterclaim, deduction or subrogation against such additional
insureds and their respective directors, officers, employees and agents. Each
liability policy shall provide that (i) all the provisions thereof, except the
limits of liability, shall operate in the same manner as if there were a
separate policy covering each insured, (ii) such policies will be primary
without any right of contribution from any other insurance carried by such
additional insureds and (iii) to the extent of the coverage provided, coverage
shall include and insure the indemnity provisions of Section 14 of this Lease
and the indemnity provisions contained in the Financier Documents. Each hull
policy shall, where appropriate, include a 50/50 claim funding arrangement in
the form of AVS 103 (this being an agreement between insurers and not forming
part of the policies of insurance) and provide that, so long as the insurers
shall not have received written notice from the Lessor that an Event of
Default has occurred and is continuing, or the Security Trustee or the Lessor
requires payment of the relevant amounts to it pursuant to the Operative
Agreements, any proceeds of less than $500,000 shall be payable to Lessee to
be applied to repair of the Aircraft; any proceeds of over $500,000 but less
than an Event of Loss shall be payable to Lessor or if applicable under the
Operative Agreements the Security Trustee (with prior written notice of
payment of any proceeds of over $1,000,000 given to the Insured Parties) and
any proceeds in respect of an Event of Loss, or if the insurers shall have
received written notice that an Event of Default under the Financier Documents
has occurred and is continuing, any single loss, regardless of the amount,
shall be payable to the Security Trustee as long as the Mortgage is in effect
and to Lessor after the Lien of the Mortgage shall have been discharged.
Furthermore the insurances required to be maintained by this Section 10 shall
not be affected by any other insurance which may be available to any of Lessor
and the Financiers so as to reduce the amount payable to any Financier, it
being warranted by the relevant additional named insured that they will not
knowingly effect or authorize the placement of other insurances covering the
same subject matter except on a contingency or secondary basis.
(d) Deductibles and Self-Insurance. Lessee may from time to time self-
insure, by way of deductible provisions in insurance policies, the risks
required to be insured against pursuant to this Section 10 in such reasonable
amounts as are then applicable to similar owned or Leased aircraft in Lessee's
fleet but in no case shall such self-insurance exceed an aggregate hull and
liability self-insurance retention of $280,000 per Aircraft per occurrence, and
with deductibles under any liability policy not to exceed $1,250 for each and
every loss with respect to passenger baggage, and $5,000 for each and every
loss with respect to cargo.
(e) Application of Hull Insurance Proceeds. Any payments received by
Owner Participant or Lessor under policies of hull insurance required to be
maintained by Lessee pursuant to this Section 10, shall subject to the terms of
the Operative Agreements be applied as follows:
(i) If such payments are received with respect to loss or damage
(including an Event of Loss with respect to an Engine or Propeller) not
constituting an Event of Loss with respect to an Airframe, such payments shall
be paid over to or retained by Lessee or the repairer of the Aircraft upon, or
at Lessor's option in conjunction with, Lessee performance of its repair or
replacement obligations under this Lease; and
(ii) If such payments are received with respect to an Event of
Loss with respect to an Airframe, so much of such payments as shall not exceed
the amount required to be paid by Lessee pursuant to Section 9 hereof shall be
applied in reduction of Lessee's obligations to pay such amount if not already
paid by Lessee, and to reimburse Lessee if it shall have paid all or part of
such amount, and the balance, if any, of such payments, subject to the rights
of any Insured Party under the Operative Agreements shall be promptly paid over
to, or retained by, Lessee.
(f) Insurance for Own Account. Nothing in this Section 10 shall
prohibit any of the Lessee or the Insured Parties from obtaining insurance for
their own account and any proceeds payable thereunder shall be payable as
provided in the insurance policy relating thereto, provided that no such
insurance may be obtained which would limit or otherwise adversely affect the
coverage or payment of any insurance required to be obtained or maintained
pursuant to this Section 10.
(g) Reports, Etc. Lessee shall begin negotiations or cause
negotiations to begin for the renewal of each required policy at least 30 days
before its expiration. Lessee shall, both on the Delivery Date and during the
Term, furnish to the Insured Parties in satisfactory from evidence of insurance
or renewal of the insurance policies required pursuant to this Section 10 and
the Lessee Assignment of Insurances (in a form acceptable to the Insured
Parties) prior to the cancellation, lapse or expiration of such insurance
policies and, on the renewal dates of the insurance policies carried by Lessee
pursuant to this Section 10, a report signed by a firm of independent aircraft
insurance brokers, appointed by Lessee and reasonably satisfactory to Lessor,
stating the opinion of such firm that the insurance then carried and maintained
on the Aircraft complies with the terms hereof (including, without limitation,
with respect to war risk insurance, if required). Lessee will cause such firm
to advise each Insured Party in writing promptly of any default in the payment
of any premium and of any other act or omission on the part of the Lessee of
which they have knowledge and which would in such firm's opinion invalidate or
render unenforceable, in whole or in any material part, any insurance on the
Aircraft. Lessee will also cause such firm to advise each Insured Party in
writing at least 30 days prior to the termination or cancellation of, or
material adverse change in, such insurance carried and maintained on the
Aircraft pursuant to this Section 10. Lessee will also procure that the firm
shall confirm to Lessor and the Security Trustee that the terms and conditions
of any provision for cancellation and automatic termination contained in such
policy are in accordance with normal market practice.
(h) Amendments to Insurances. Without prejudice to the foregoing
provisions, if due to changes in aviation insurance market practice and custom
Lessee is unable at any time to comply with its obligations under this Section
10, any Insured Party is reasonably of the view that the insurances required to
be maintained pursuant to this Section 10 afford less protection to the Insured
Parties, than would reasonably be required, Lessor shall forthwith notify
Lessee and as soon as practicable thereafter the insurance broker for Lessee
and the insurance broker(s) for such Insured Party shall meet in good faith to
consider what (if any) changes might be made to the terms and conditions of the
insurances required hereunder in order to take account of the changes in
aviation insurance market practice and custom. On the basis of the
recommendations of such insurance brokers such Insured Party and Lessee will
meet as soon as practicable in order to negotiate in good faith with a view to
reaching agreement on what (if any) amendments should be made to such
provisions and upon such agreement being reached, the parties will take
appropriate steps to amend the insurances accordingly.
(i) Ground Insurance. When the insurances required hereunder are not
maintained in full force and effect, the Aircraft shall be grounded and Lessee
shall, if required by Lessor, maintain at its sole cost, such ground insurance
as is of the type customarily carried by operators of aircraft similar to the
Aircraft being adequately insured, and subject to the Aircraft being adequately
insured, Lessor may require the Aircraft to proceed to or remain at an airport
designated by Lessor acting reasonably (at Lessor's sole cost and expense)
until the provisions of this Section 10 shall be fully complied with.
SECTION 11. LIENS.
Lessee shall not during the Term, directly or indirectly create, incur,
assume or suffer to exist any Lien on or with respect to any Airframe, Engine
or Propeller or title thereto or the respective rights, title and interests
therein of Owner Participant, any Financier, or Lessor, or in this Lease except
(a) the respective rights of Lessor and Lessee as provided herein; the Lien of
the Mortgage and the rights of the parties to the other Operative Agreements;
(b) the rights of others under agreements or arrangements to the extent
expressly permitted in Section 6(a) and 8(c) thereof; (c) Liens for Taxes
either not yet due or being contested in good faith by appropriate proceedings
so long as such proceedings do not involve any material danger of the sale,
forfeiture or loss of the Airframe, Engines, Propellers or Parts; (d) material
suppliers', mechanics', airports', workers', repairers', employees' or other
like liens arising in the ordinary course of business and for amounts the
payment of which either is not yet delinquent or is being contested in good
faith by appropriate proceedings, and so long as such proceedings do not
involve a material danger of the sale, forfeiture or loss of any Airframe,
Engine or Propeller or Parts; (e) Liens arising out of judgments or awards
against Lessee (and for payment of which adequate reserves have been provided
with respect to which at the time an appeal or proceedings for review is being
prosecuted in good faith and there shall have been secured a stay of execution
pending such appeal or proceedings for review so long as such proceedings do
not involve a material danger of the sale, forfeiture or loss of any Airframe,
Engine, Propeller or Parts; and (f) Lessor's Liens; provided that the aggregate
amount of Liens permitted by clause (c), (d) and (e) shall not exceed $150,000
without the prior written consent of the Lessor (Liens described in clauses (a)
through (f) above (and to the extent approved to be outstanding in the case of
clauses (c), (d) and (e)) are referred to herein as "Permitted Liens"). Lessee
shall promptly, at its own expense, take such action as may be necessary to
duly discharge any such Lien not excepted above if the same shall arise at any
time. Lessee shall indemnify and hold Lessor harmless from and against any and
all losses which Lessor may sustain arising therefrom (including any claim by
Owner Participant or any Financier).
SECTION 12. TITLE, RECORDATION, FURTHER ASSURANCE, AND
COOPERATION WITH FINANCIERS.
(a) Title. Legal title to the Aircraft shall at all times be vested in
Lessor exclusively. The acceptance of the Aircraft by Lessee and Lessee's
possession thereof shall constitute merely a Lease. It is intended that this
Lease constitute a true lease for tax and all other purposes and Lessee has no
right, title or interest in the Aircraft other than as a Lessee hereunder and
shall not claim any interest other than as Lessee hereunder. Without limiting
the foregoing, Lessee shall not file any federal, state or local tax return
claiming ownership of the Aircraft.
(b) Registration. Prior to or concurrently with acceptance of the
Aircraft by Lessee, the Aircraft shall be registered by Lessor in the United
States and Lessee shall not take any action or allow any event to occur that
might jeopardize such registration and Lessor, except as permitted under this
Lease Agreement shall not take any action or allow any event to occur that
might jeopardize such registration.
(c) FAA Regulations. Lessee shall at all times comply with all FAA
regulations and other requirements of the FAA during the Term that are required
to maintain the Aircraft in a condition to satisfy the FAA Type Certificate and
a valid current U.S. Standard Airworthiness Certificate on the Aircraft,
including but not limited to all service, inspection, maintenance,
modification, repair and overhaul of the Aircraft; and in relation to the
flight crew standards and the operations of the Aircraft, whether performed by
Lessee or by others for Lessee. Lessee shall consult with Lessor and, if
necessary or appropriate, the FAA, with respect to the action required to meet
such requirements, including the execution of maintenance, flight operations
and other contracts with persons or firms duly authorized by the FAA. Lessee
and Lessor will execute all required documents and otherwise cooperate with all
reasonable requests of each other to complete the activities contemplated in
this Section 12(c).
(d) Recordation of Lease. Lessor shall cause this Lease, all exhibits
hereto, any Lease Supplements, and any and all additional instruments which
shall be executed pursuant to the terms hereof so far as permitted by
Applicable Law, to be kept, filed and recorded and to be re-executed, re-filed
and re-recorded at all times during the Term in the office of the FAA, pursuant
to the Federal Aviation Act and in such other places or with such other
governmental authority as Lessor may reasonably request to perfect and preserve
Lessor's rights hereunder. The schedule of rental payments shall not be filed
unless required by law or regulation.
(e) Further Assurances. Lessee shall promptly and duly execute and
deliver to Lessor such further documents (prepared at Lessor's sole expense)
and assurances and take such further action as Lessor may from time to time
during the Term reasonably request in order to establish and protect the rights
and remedies created in favor of the Indemnified Parties hereunder or under the
Operative Agreements or the title of Lessor to the Aircraft, including, without
limitation, if requested by Lessor, at the reasonable expense of Lessee, the
execution and delivery of supplements or amendments hereto, in recordable form,
subjecting any replacement or substituted engine or propeller to this Lease and
the recording of filing of counterparts hereof, or of financing statements with
respect hereto, in accordance with the laws of such jurisdiction as Lessor may
reasonably deem advisable.
(f) Cooperation with Financiers. Lessee acknowledges that Owner
Participant and Lessor will finance the acquisition of the Aircraft subsequent
to the date of this Lease and may refinance the outstanding obligations at any
time and from time to time (the initial and each subsequent financing are
referred to herein as a "Financing"). Lessee further acknowledges that Lessor
or Owner Participant may, at any time and from time to time prior to or during
the Term sell their respective interests in the Aircraft and this Lease to a
new owner, and that owner may at any time and from time to time prior to or
during the Term, grant Liens over the Aircraft or any part thereof (including,
without limitation, the Mortgage) and Lessor may, at any time and from time to
time prior to or during the Term, grant Liens over its rights under this
Agreement to a Financier as security for Owner Participant's or, as the case
may be, Lessor's obligations to such Financier. Lessee further acknowledges
that it will cooperate with Lessor with respect to a restructuring of the terms
hereof at the time of the first Financing, including the execution of a new
lease or sublease in replacement of this Lease on terms to be mutually agreed,
subject to the terms of Subsection (i) below.
(g) Notification of Status of Financing. Lessor undertakes to keep
Lessee informed as to the selection of the Financiers and the structure
arranging the implementation of any Financing.
(h) Assurances to Financiers. Lessee undertakes to provide all
reasonable assistance to every owner, Owner Participant, Lessor, and any
Financier and their respective representatives and advisers including
relocating the Aircraft to a selected jurisdiction at the time of any Financing
provided such relocation does not deprive Lessee of the Aircraft for a period
of more than 24 hours, and including entering into all additional documents,
including operative agreements and any assignment of insurances (including
amendments thereto) and amendments to or replacements of this Lease which may
be necessary to permit the Financing to be completed and in connection with the
perfection and maintenance of any Lien in relation to the Aircraft or any
operative agreements required by any Financier, including but without
limitation the making of all necessary filings and registrations. Lessee's
operations as an operator of commercial aircraft shall not be restricted or
otherwise impaired in any material way as a result of the implementation of any
such Financing. If any Financier shall impose upon Owner Participant or Lessor
any requirements as to insurance, reinsurance, maintenance, operation or
otherwise in respect of the Aircraft which are additional to or inconsistent
with the requirements of this Lease, Lessee shall, upon receipt of notice from
Lessor specifying such additional or inconsistent requirements and at all times
thereafter during the Term unless and until Lessor shall otherwise specify by
notice in writing, comply with such additional or inconsistent requirements in
addition to, or, as the case may be, instead of the requirements of this Lease.
(i) Effects of Financing and Assignments. Further to Subsections 12(f)
and 12(h) with respect to any Financing, and to Section 19 with respect to an
assignment by Lessor, Lessor hereby confirms the following:
(i) Lessee's operations as an operator of commercial aircraft, as
a provider of air transportation, and of the Aircraft shall not be restricted
or otherwise impaired in any material way as a result of the implementation of
any such Financing or assignment.
(ii) Except as provided in Section 5(c), such Financing or
assignment will not result in any limitation or diminution of Lessee's rights
or Lessor's obligations under the Lease.
(iii) In the event of Financing, Lessee will not be held
responsible under this Section 12 for the incremental cost of any ongoing
material obligations including but not limited to those referenced in the last
sentence of Section 12(h) required as a result of said Financing beyond: (A)
those existing as of the date immediately preceding such Financing, and (B)
those obligations identified in this Lease (except as specified in the last
sentence of Section 12(h)) but which do not apply until such time as a
Financing takes place.
(iv) In the event of a Financing, Lessee will not be held
responsible under Section 14 for the incremental cost of any obligations which
result in the Lessee being in a materially worse position than: (A) its
position at the date immediately preceding such Financing, and (B) the position
it will be in under the terms of this Lease at such time as a Financing takes
place. For the purpose of this clause, it is expressly understood that Lessee
would not be considered to be in a materially worse position under a Financing
involving tax depreciation benefits in the United States provided that such
Financing allows limited foreign use consistent with that permitted in this
Lease.
(v) Lessor will use its best efforts to minimize the imposition
on Lessee of administrative requirements or costs incurred at the time of
Financing as a result of said Financing or assignment. In the event of
untoward administrative requirements, Lessor will on a case by case basis
consider the reimbursement of Lessee's attorneys' fees for purposes of closing,
dependent on the extent of those requirements and on Lessee's use of its best
efforts to minimize those expenses. Lessor will also in any case reimburse
Lessee for any direct costs incurred in connection with an aircraft relocation
required to accommodate a Financing.
SECTION 13. RETURN OF AIRCRAFT AND RECORDS.
(a) Return of Aircraft. With respect to the Aircraft, at the
expiration of the Term, or upon the termination of this Lease pursuant to
Section 16, Lessee, at its own expense, shall, except as otherwise provided in
Section 16 hereof, return such Aircraft by delivering the same to Lessor at
such location within the continental United States as selected by Lessor, with
such Aircraft fully equipped with the Engines and the Propellers.
(b) Return of other Engines and Propellers. Lessee may return the
Airframe with an engine or propeller other than an Engine or Propeller (the
Engine or Propeller that is not being returned is referred to in this
paragraph as "Replaced Equipment" and that provided in its place is referred to
as "Substitute Equipment"), and the Substitute Equipment shall be deemed to be
an Engine or Propeller for all purposes hereof, provided that the following
conditions have been met:
(i) Lessee shall have provided Lessor with at least 30 days'
advance notice prior to the Return Date identifying the Substitute Equipment
including maintenance status and ownership interests.
(ii) Substitute Equipment shall have a value and utility at least
equal to, and shall be in as good operating condition as, Replaced Equipment
(other than as to accumulated hours, changes in which shall affect return
conditions calculations), shall be in the condition and repair required by the
terms hereof for an Engine or Propeller upon return, shall be of the same or
another manufacturer of the same or a comparable or improved model and suitable
for installation and use on the Aircraft with the other Engine and Propellers
duly installed on the Airframe.
(iii) Lessor, and all parties with ownership, leasehold or security
interests in Replaced Equipment shall be granted identical interests in
Substitute Equipment, free and clear of any other liens or interests. There
shall be delivered to and accepted by the appropriate party full warranty (as
to title) bills of sale, amendments to leases and security agreements,
opinions, and all other documents as deemed necessary or appropriate to create
identical interests in the Substitute Equipment.
(iv) Lessor, and all parties with ownership, leasehold or security
interests in the Replaced Equipment shall have conveyed title thereof to the
proper party and shall have released all liens and interests therein.
Conveyance of title to Replaced Equipment by Lessor as applicable shall be as-
is, where-is, without recourse or warranty, express or implied except a
warranty from Lessor against Lessor's Liens, and a warranty of all Lessor's
right, title and interest in and to the Replaced Equipment.
(v) Lessor or its agent shall be exclusively responsible for all
communications with all parties with ownership, leasehold or security interests
in Replaced Equipment and in any Substitute Equipment in which Lessor also has
an interest. Lessor makes no representation or warranty that the necessary
actions or approvals will be obtained or of the costs thereof. Lessee shall be
responsible for all communications with any other parties.
(vi) Lessee shall be responsible for all fees or expenses charged
in connection with this substitution by Lessor and by all parties with
ownership, leasehold or security interests in Replaced Equipment or Substitute
Equipment. Lessee shall also be responsible for recording fees and for
Lessor's attorneys' reasonable fees and reasonable expenses. Lessor shall not
charge a fee to Lessee for Lessor's services and will use reasonable efforts to
mitigate third party attorneys' fees.
(c) Maintenance Status. The maintenance status of individual
components on the Aircraft may vary from delivery condition but the overall
maintenance status of the Aircraft at the time of the Aircraft's return to
Lessor shall be subject to the following minimum standards:
(i) All parts, systems and components (other than Engines and
their associated line replaceable units) that are considered under the Lessee's
FAA maintenance program and the Manufacturer recommended maintenance program to
be "on-condition" shall be functioning and serviceable.
(ii) All Components (as hereinafter defined) that are listed in
Exhibit B as having a defined life between service, inspections, overhaul or
replacement by way of hours, cycles or calendar time shall have one-half time
remaining of the then defined life in hours, cycles or calendar time between
service, inspections, overhaul or replacement; provided that if subsequent to
the date hereof any Component is considered under the Lessee's FAA maintenance
program and the Manufacturer's recommended maintenance program to be "on-
condition", such Component shall be deleted from the list of Components in
Exhibit B and shall be returned to Lessor in the condition required by
Subsection (c)(i) hereof and; provided Aircraft shall be deemed to have
satisfied return conditions for Components if all Components on average meet
the half-life standard set forth in subsection (c)(ii).
Average half-life shall be measured by application of the formula set forth
below. In the event the Half-Life Variance is greater than zero, there shall
be deemed to be a deficiency in the overall maintenance status of the Aircraft,
and Lessee shall make a payment to Lessor in the amount of the Half-Life
Variance. In the event the Half-Life Variance is less than zero, there shall
be deemed to be a betterment in the overall maintenance status of the Aircraft,
and Lessor shall make a payment to Lessee in the amount of the Half-Life
Variance. The formula to calculate the Half-Life Variance is as follows:
Half-Life Variance = S (TBO/2 - TRr) x (Vo/TBO)
Where:
"Half-Life Variance" - is the sum of the difference in value for
all individual Components fitted on the Aircraft between the
maintenance standard as defined in subparagraph (c)(ii) above and
the value at the date of return of the Aircraft.
"Components" - as used in this Section, is defined in Section
13.(c)(ii). Engines (both HSI/GBI and hard-time overhaul) shall
not be included in the calculation.
"TBO" - is the limit between major maintenance events (overhauls,
inspections, or replacements) for each Component as specified in
Seller's Jetstream 41 Maintenance Manual as approved by the FAA,
and as generally accepted in the United States for operation of
such Aircraft, which limit shall be specified in Exhibit B hereto
but which is subject to adjustment from time to time to conform to
changes in the Jetstream 41 Maintenance Manual, provided, however,
that such change is generally accepted in the United States for
operation of Jetstream 41 Aircraft.
"Vo" - is the projected cost of each major maintenance event for
each Component based on the direct cost of overhaul, inspection or
replacement for said Components as required by the Lessee's FAA
approved maintenance program. Vo shall be agreed between Lessor
and Lessee from time to time during the term of this Lease based
upon Lessee's experienced cost of overhaul and that generally
available in the marketplace.
"TRr" - is the time remaining on each Component at the time of
return of the Aircraft until the next major maintenance event as
identified at the time of return of the Aircraft.
(iii) All exterior painted surfaces shall be in good condition,
ordinary wear and tear only excepted. The interior shall be in good, clean,
undamaged and untorn appearance and condition, ordinary wear and tear only
excepted.
(d) Records. Upon the return of the Aircraft, Lessee shall deliver to
Lessor all logs, manuals, certificates, data and inspection, modification,
repair, and overhaul records which are required to be maintained with respect
thereto under applicable rules and regulations of the FAA, Department of
Transportation or other government agency having jurisdiction over the
Aircraft. All records shall be in full compliance with Part 135 or Part 121 as
amended or superseded, whichever is applicable to Lessee. If Lessor so
requests, Lessee shall also provide a copy of the portions of the Lessee's
general maintenance manual which relate to the maintenance and records
practices for the Aircraft. Obligations with respect to the return of manuals
shall not be imposed on Lessee to the extent Lessee would be required to
acquire more individual copies of manuals than it has previously been required
to maintain as part of the operation of its fleet of Jetstream 41 aircraft.
Lessee shall be required to return such manuals that Lessee has been required
to maintain, to the extent that they become surplus to Lessee as a result of
the return of aircraft.
(e) General Condition of Aircraft. Upon return of the Aircraft, the
Aircraft's fuel tanks shall be full (provided that if the fuel tanks are not
full at delivery, Lessee will be obligated upon return to provide the same
level of fuel as at delivery) and the Aircraft shall (1) be in the same good
operating order, repair, condition and appearance as when received, ordinary
wear and tear excepted; (2) be free and clear of all Liens (other than Lessor's
Liens); (3) be clean by airline standard; (4) have installed the full
complement of parts, accessories and loose equipment delivered by Lessor in
respect of the Aircraft and any such parts, accessories and loose equipment as
is required for an Aircraft operating under FAR Part 135; (5) have a valid,
standard FAA Certificate of Airworthiness under FAR Part 135 or FAR Part 121 as
applicable of the Federal Aviation Regulations; (6) be in compliance with the
Manufacturer's original equipment specifications; (7) have undergone,
immediately prior to redelivery, a next scheduled check in accordance with the
Lessee's FAA approved equalised maintenance program; (8) be in compliance with
Lessee's FAA approved maintenance and corrosion control programs, (9) be in
compliance with all applicable airworthiness directives and Manufacturer's
mandatory service bulletins, applicable in reference to effective date, which
by the term thereof must be complied with on the Lease termination date,
however compliance may not be by way of recurring inspection unless the
Manufacturer has failed to provide a final corrective modification, to include
applicable part(s) for replacement, prior to the Lease termination date in
which case compliance may be by way of recurring inspection; (10) have
installed all applicable vendor's and Manufacturer's service bulletin kits
received free of charge by Lessee that are appropriate for the Aircraft or to
the extent not installed, those kits shall be furnished free of charge to
Lessor; (11) have any and all damage (or repairs of damage) to the Aircraft, be
demonstrated by Lessee to be within structural repair manual limits, or else be
covered by concessionary paperwork acceptable to the FAA; (12) have wings free
of fuel leaks noted as excessive or out of specified limits as defined in the
applicable Aircraft Maintenance Manual or Fuel Tank Component Maintenance
Manual; (13) have landing gear and wheel xxxxx clean and free of excessive or
out of specified limit leaks as defined in the applicable Aircraft Maintenance
Manual or Landing Gear Component Maintenance Manual; (14) have the fuselage,
wings and empennage in compliance with the latest applicable structural
inspection or within 12 months of the last structural inspection, as designated
in the approved maintenance program ; (15) a fuel tank treatment program shall
be in operation as required; (16) have emergency equipment that has a calendar
life a minimum of one (1) year or one hundred percent (100%) of its total
approved life, whichever is less, remaining; and (17) have all Lessee
identification (i.e., name and logo) removed from the Aircraft, if requested by
Lessor, at Lessee's cost and expense.
(f) Engines. Lessee agrees to maintain each Engine on a program as
contained in the Lessee's approved maintenance manual or included in the
Jetstream 41 Maintenance Review Board (MRB) Report. In the event Engines are
maintained on a hard time program, Lessee shall return Engines with an average
of half time remaining of the then approved Engine manufacturer's program
(provided that no individual Engine shall have less than one quarter time
remaining to the next /CAM inspection) or pay the financial equivalent as
determined by the formula below.. In the event Engines are maintained in
accordance with an on condition maintenance program, Lessee shall provide data
trend information substantiating that there are no less than 3000 hours
remaining before / a CAM inspection, and similar time remaining with respect to
line replaceable units or shall pay the financial equivalent as determined by
the formula below .
Variance = (Vo/TBO) x (T - [TBO - TSO])
Where:
Vo = Projected cost of shop visit if Engines are on hard time or
average price of shop visits over the fleet if Engines are on
condition.
TBO = Hard time between CAM inspection if Engines are operated on a
hard time program or the average time achieved by the fleet between
CAM inspection if applied to Engines on condition.
T = TBO/2 if an Engine is operated on hard time or 3,000 hours if
an Engine is operated on condition.
TSO = Time since last CAM.
(g) Half-Time Equivalency. To the extent that the Engines are returned
in a condition better than the standard required in paragraph (h)
above, Lessee may apply the betterment ( as determined by the
formula in paragraph (h) above) solely against amounts owning
Lessor under paragraph (c)(ii).
(h) Final Inspection. Immediately prior to return of the Aircraft,
Lessee, at its own expense, shall make the Aircraft available to Lessor for
inspection ("Final Inspection") at Lessee's primary maintenance location in
order to verify that the condition thereof complies with the provisions of this
Section 13. In the event that, due to delays caused by Lessee, any required
work, repairs or services delays the return of the Aircraft to Lessor beyond
the expiration or earlier termination of the Term of this Lease, Lessee shall
continue to pay Rent in the same manner as if there had been no expiration or
termination of this Lease for the number of days until such required work,
repair or servicing has been completed and the Aircraft is returned to Lessor
as provided hereinabove pending which Lessee shall have no right to use the
Aircraft. The period allowed for the Final Inspection shall have such duration
as to permit Lessor to conduct the following:
(i) inspection of all records, logs and other materials referred
to herein;
(ii) inspection of the Airframe, Engines, and Parts including
without limitation, data trend reports for Engines; and
(iii) an operational test flight or flights of a total duration not
exceeding three hours with Lessor's representatives as observers. Lessee shall
maintain adequate insurance coverage for such flight or flights in accordance
with the terms of this Agreement and such additional insurance coverage, if
any, as Lessor may reasonably require.
(i) Storage. Upon any expiration or termination of this Lease with
respect to the Aircraft, at the written request of Lessor received by Lessee
ten (10) days in advance of the date provided for redelivery to Lessor
hereunder, subject to availability of space at Lessee's facilities, Lessee
shall arrange, or shall cause to be arranged, storage of such Aircraft beyond
the Term for a period not exceeding ninety (90) days at Lessor's risk and
expense.
(j) Alterations. At the time of return of the Aircraft, if not
otherwise specified in Lessee's records returned to Lessor, Lessee shall notify
Lessor of any alterations made to the Aircraft as a result of any Applicable
Law, rule, regulation or order of any government or governmental authority.
SECTION 14. TAX INDEMNITY, GENERAL INDEMNITY.
(a) General Tax Indemnity. Subject to exclusions stated in Section
14(b) below, Lessee agrees to indemnify, defend and hold harmless each
Indemnified Party, against all Taxes, howsoever imposed (whether imposed upon
any Indemnified Party, all or any part of the Aircraft or otherwise), by any
Federal, state or local government, political subdivision, or taxing authority
in the United States, by any government or taxing authority of or in a foreign
country or of or in a territory or possession of the United States, or by any
international authority, upon or with respect to or in connection with, based
upon or measured by, in whole or in part:
(i) the Aircraft, the Airframe, the Engines, the Propellers, the
Parts, or any part of any of the foregoing or interest therein;
(ii) the manufacture, modification, purchase, financing, ownership,
delivery, non-delivery, leasing, possession, use, operation, return, storage,
transfer of title, sale, acceptance, rejection or other disposition of or
action or event with respect to the Aircraft, the Airframe, the Engines, the
Propellers, the Parts, or any part of any of the foregoing or interest
therein;
(iii) the rentals, receipts, income or earnings, gains or revenue
arising from the purchase, financing, ownership, delivery, leasing,
possession, use, operation, return, storage, transfer of title, sale,
substitution, or other disposition of the Aircraft, the Airframe, the Engines,
the Propellers, the Parts, or any part of any of the foregoing or interest
therein;
(iv) the Lease or the Rent or other sums payable by Lessor;
(v) the property, or the income or other proceeds received with
respect to the property, held by the Security Trustee under the Mortgage; or
(vi) the Operative Agreements or amendments or supplements thereto,
their execution or the transactions contemplated thereby.
(b) Taxes Excluded. The indemnity provided for in Section 14(a) above
shall not extend to any Taxes not due in whole or part to: (1) the acts or
omissions of Lessee; (2) the delivery or acceptance of the Aircraft by or to
Lessee; (3) the use, possession, maintenance or operation of the Aircraft by
Lessee; (4) the misrepresentations of Lessee; or (v) the breach of any
covenant or warranty by Lessee. The indemnity provided for in Section 14(a)
above shall not extend to any of the following:
(i) in the case of the Lessor and its respective successors,
transferees or assigns permitted under the terms of the Operative Agreements,
taxes on, based on, or measured by, the income, capital, franchises, excess
profits or conduct of business (other than taxes which are in the nature of
sales, use, value added, excise, license or property taxes) of such
Indemnified Party imposed by the United States of America or any state or
local or foreign government or other taxing authority (collectively, "Income
Taxes") other than "Covered Income Taxes" (as such term is defined below);
(ii) in the case of each Financier and the Security Trustee and
their respective successors, transferees or assigns permitted under the terms
of the Operative Agreements, taxes on, based on, or measured by income,
receipts, capital, franchises or conduct of business of such Indemnified
Party, other than such Taxes imposed by any taxing authority of any
jurisdiction to the extent such Taxes exceed the amount that would have been
imposed had the Aircraft never been operated to or used in such jurisdiction;
(iii) Taxes relating to the Aircraft for any period after the
expiration or early termination of the Term and return of the Aircraft by
Lessee, except that Taxes incurred in connection with the exercise of any
remedies pursuant to Section 16 hereof following the occurrence of an Event of
Default or pursuant to Exhibit D shall not be excluded from the indemnity
provided for in Section 14(a) hereof;
(iv) Taxes imposed against the Owner Trustee or Security Trustee
with respect to any fees received by it for services rendered in its capacity
as Security Trustee under the Mortgage and Taxes imposed on the Lessor with
respect to fees or compensation for services rendered in its capacity as
Trustee under the Trust Agreement;
(v) as to any Indemnified Party, Taxes in respect of the
Aircraft or the Operative Agreements which arise out of or are caused by the
willful misconduct or gross negligence of such Indemnified Party, or the
breach by such Indemnified Party of any express covenant, agreement or
representation in the Operative Agreements;
(vi) Taxes which become payable by reason of any transfer by an
Indemnified Party of all or any portion of its interest in the Aircraft, the
Mortgage, the Trust Estate, any interest in any Operative Agreement or shares
of stock in an Indemnified Party (other than transfers which occur as a result
of the exercise of any rights under Section 16 or Exhibit D hereof, or any
remedies under the Mortgage);
(vii) Income Taxes imposed on the Trust or the Owner Participant
other than Covered Income Taxes; and
(viii) Taxes imposed by way of deduction or withholding by
the U.S. Federal Government on payments to a Person who is not a United
States Person or, except for Covered Income Taxes, by any foreign
government on payments to any Person (provided, that if in any case any
such Taxes are imposed as a result of a change in a tax treaty after the
date hereof that is not already published as a proposed change on the
date hereof or on the date an Indemnified Party becomes an Indemnified
Party, Lessee and the applicable Indemnified Parties agree to negotiate
in good faith a restructuring of the transaction contemplated hereby to
eliminate such Taxes without changing the economic terms of this
transaction, but if such Taxes are not so eliminated within 90 days from
the date of the imposition of such Taxes, Lessor may (unless Lessee
agrees to extend the indemnity provided for in Section 14(a) above to
cover such Taxes) elect to terminate this Lease on not less than an
additional 90 days prior notice to Lessee, whereupon the Term of this
Lease shall terminate and Lessee shall return the Aircraft to Lessor in
the condition required under Section 13 hereof on the date so selected
by Lessor in its notice of termination).
For purposes of this Section 14(b), a "Covered Income Tax" shall mean an
Income Tax (including, without limitation, a tax imposed upon gross income or
receipts) imposed on an Indemnified Party by any taxing authority (excluding
the U.S. Federal Government) (A) in whose jurisdiction the Indemnified Party
(including for this purpose all entities with which it is combined, integrated
or consolidated in such taxing authority's jurisdiction) did not engage in
business, did not maintain an office or other place of business, and was not
otherwise located, but the term "Covered Income Tax" shall include any Income
Tax imposed by a jurisdiction in which the Indemnified Party is deemed to
engage in business, or be otherwise located, to the extent it results from
the operation of the Aircraft in such jurisdiction or the transactions
contemplated by the Operative Agreements, or (B) in whose jurisdiction the
Indemnified Party in fact is doing business, maintaining an office or other
place of business, or is otherwise located, if such circumstance was no factor
in the imposition of such Tax.
(c) Amount of Payment. The amount Lessee shall be required to pay
with respect to any Tax indemnified against under Section 14(a) hereof shall
be an amount which (after taking into account all United States Federal,
state or local, and any foreign income tax effects on the Indemnified Party
and the anticipated realization by such Indemnified Party of tax benefits
resulting from the transaction to which such indemnity is related, the present
value of any anticipated future tax benefits to be realized by such party as a
result of deducting or crediting such Tax or as a result of the matters
immediately giving rise thereto, and the loss of use of money between the time
indemnity payments are included in income and tax benefits are realized) will
be sufficient to restore the Indemnified Party to the same position such party
would have been in had such Tax not been incurred or paid. For purposes of
this Section 14(c), it shall be assumed that any payment made to any Person
shall be taxable to the Indemnified Party at the highest applicable United
States Federal, state, and local and foreign rates in effect for the taxable
year for which the computation is made. Computations involving the loss of
use of money and present values shall be based on the corporate base rate on
the date payment is made under Section 14, as adjusted for applicable income
tax effects and compounded quarterly on the Rent Payment Dates.
(d) Procedures. Any amount payable to an Indemnified Party pursuant
to Section 14(a) above shall be paid within 30 days after receipt of a written
demand therefor from such Indemnified Party accompanied by a written statement
describing in reasonable detail the basis for such indemnity and the
computation of the amount so payable, provided that such amount need not be
paid prior to the time such Taxes are due to be paid.
(e) Refund. If a payment with respect to Tax under this Section 14 as
calculated pursuant to Section 14(c) above turns out to have been incorrectly
made because the Tax was not payable by the Indemnified Party or should not
have been indemnified against then, upon receipt by an Indemnified Party of a
refund or credit of all or part of any Taxes which Lessee shall have paid for
such Indemnified Party or for which Lessee shall have reimbursed or
indemnified such Indemnified Party, and provided there shall not have occurred
any Event of Default, such Indemnified Party shall pay to Lessee (or if such
Indemnified Party is not Lessor, Lessor shall pay to Lessee) an amount which,
after subtraction of the amount of any further net tax savings (or addition of
the amount of any net tax detriment), if any, realized by such Indemnified
Party as a result of the receipt thereof and payment under this paragraph, is
equal to the amount of such refund and any interest received by such
Indemnified Party on such refund (or if such Indemnified Party is not Lessor
an amount equal to the amount received by Lessor pursuant to the Financier
Documents which is referable on any such Tax which Lessee has so paid or for
which Lessee has so reimbursed or indemnified); provided, however, that such
amount shall not be payable (i) before such time as Lessee shall have made all
payments or indemnities then due and payable to such Indemnified Party under
Section 14(a) and under any other provision of the Operative Agreements or
(ii) to the extent that the amount of such payment would exceed (A) the amount
of all prior payments (other than amounts attributable to interest) by Lessee
to such Indemnified Party with respect to such Taxes less (B) the amounts of
all prior payments (other than amounts attributable to interest) by Lessor to
Lessee with respect to such Taxes.
(f) Reports and Returns. In case any report or return is required to
be made with respect to any Tax which is subject to indemnification under
Section 14(a) hereof, Lessee will either make such report or return in such
manner as will show the ownership of the Aircraft in the Lessor and shall send
a copy of the applicable portion of such report or return to the Indemnified
Party or, where Lessee is not permitted to file such report or return, will
notify the Indemnified Party of such requirement and prepare and deliver such
report or return to the Indemnified Party in such manner as shall be
satisfactory to such Indemnified Party within a reasonable time prior to the
time such report or return is to be filed.
(g) Withholding Taxes. All payments of Rent hereunder will be free
and clear of all withholding taxes, and if any withholding taxes are required
with respect to any such payments, Lessee shall pay an additional amount such
that the net amount actually received will be equal to the amount that would
be due absent such withholding. Each Indemnified Party shall promptly pay to
Lessee the amount of any withholding taxes for which Lessee has no obligation
to indemnify such Indemnified Party under this Section 14.
(h) General Indemnity. The Lessee hereby agrees to assume liability
for, and does hereby agree to indemnify, protect, save and keep harmless
(provided such indemnity shall not extend to the Manufacturer of the Aircraft
or any of its component parts and their affiliates for any claims arising out
of Manufacturer's legal liability as a manufacturer, repairer or supplier of
the Aircraft or any of its component parts) each Indemnified Party from and
against any and all liabilities, obligations, losses, damages, penalties,
claims (including claims by an employee of the Lessee or any of its agents or
contractors), actions, suits and related costs, judgments, expenses and
disbursements, including reasonable legal fees and expenses, of whatsoever
kind and nature excluding Taxes (for purposes of this Section 14(h)
collectively called "Expenses"), imposed on, asserted against or incurred by
any Indemnified Party, in any way resulting from or arising out of (i) this
Lease and the other Operative Agreements, (ii) the construction, installation,
ownership, design, maintenance, storage, delivery, lease, sublease,
possession, use, operations or condition of any Airframe, Engine or Propeller
or engine or propeller used in connection with the Aircraft (including,
without limitation, latent and other defects, whether or not discoverable by
the Indemnified Party or the Lessee, and any claim for patent, trademark or
copyright infringement and any claim arising under the strict liability
doctrine in tort), or (iii) the sale or other disposition of any Airframe,
Engine or Propeller or any portion thereof pursuant to Section 8, 9 or 16 or
Exhibit D hereof. . Except to the extent fairly attributable to the failure
of Lessee fully to discharge its obligations under this Lease the indemnities
contained in this Section 14(h) shall not apply, as to any Indemnified Party,
to any Expense to the extent resulting from or arising out of one or more of
the following: (A) any breach of a representation or warranty in this Lease
of such Indemnified Party; or (B) a breach by such Indemnified Party of any
express covenant or other agreement in this Lease to be performed or observed
by such Indemnified Party; or (C) the gross negligence or willful misconduct
of such Indemnified Party; or (D) a disposition (voluntary or involuntary) by
such Indemnified Party of all or any part of such Indemnified Party's interest
in the Airframe, or any Engine or Propeller or the Operative Agreements (other
than as contemplated by Sections 8, 9 and 16 and Exhibit D or following the
occurrence of a Default or Event of Default); or (E) any Taxes whether or not
Lessee is required to indemnify for such Taxes pursuant to the other Sections
of this Section 14 hereof (it being agreed that the other Sections of this
Section 14 provide for Lessee's sole liability to indemnify with respect to
Taxes); or (F) acts or events with respect to the Airframe or any Engine or
Propeller after the later of (i) return of possession of the Airframe or such
Engine or such Propeller to the Lessor or its designee pursuant to the terms
of the Lease, or (ii) the termination of the Term with respect to the Airframe
or such Engine or Propeller in accordance with the Lease; or (G) the
authorization or giving of any future amendments, supplements, waivers or
consents with respect any of the Operative Agreements other than such as have
been requested by or consented to by Lessee or as contemplated hereunder or
resulting from or arising out of a Default or Event of Default. If Lessor
shall have knowledge of any claim or liability hereby indemnified against it
shall give prompt written notice thereof to the Lessee; provided, however,
that the failure of Lessor to give such notice shall not relieve the Lessee of
any of its obligations hereunder.
If Lessor shall obtain a recovery of all or any part of any Expense or
other amount which the Lessee shall have paid to Lessor or for which the
Lessee shall have reimbursed Lessor, pursuant to this Section 14(h), Lessor
shall pay to the Lessee an amount equal to the amount of such recovery,
adjusted as provided in Section 14(c).
(i) Payments. All amounts payable by the Lessee pursuant to
Section 14(h) shall (i) be payable on demand to Lessor, or at Lessor's written
request, payable directly to the parties entitled to indemnification and
(ii) be adjusted as provided for Taxes as provided for in Section 14(c)
hereof.
(j) Survival. All the indemnities contained in Section 14(h) shall
continue in full force and effect notwithstanding the expiration or other
termination of this Lease and shall, in that event, be enforceable by the
Lessor and each Indemnified Party. The Lessee's obligations under Section 14
shall be that of primary obligor irrespective of whether the Indemnified Party
shall also be indemnified with respect to the same matter under any other
agreement by any other Person.
(k) Contest Rights. If any claim is made against Lessor or Lessor is
otherwise liable, for any Taxes which Lessee is required to pay or indemnify
against pursuant to this Agreement, Lessor shall, promptly upon becoming aware
of the same, notify Lessee in writing. If reasonably requested by Lessee in a
written notice to Lessor, Lessor and Lessee shall (at the cost of Lessee) seek
the opinion of a reputable independent tax accountant or counsel in the
relevant jurisdiction or jurisdictions acceptable to Lessor. If in the
opinion of such accountant or counsel, a contest of the claim has merit and a
substantial chance of success, then to the extent that there are means
available by which to do so, Lessor shall in good faith take such action as
Lessee may reasonably request to contest (including pursuing all
administrative and one level of judicial appeals) the validity, applicability
or amount of such claim for taxes and shall:
(a) resist or seek postponement of payment thereof if available and
practicable;
(b) pay the same only under protest, if protest is necessary and
proper; or
(c) if payment shall be made, seek refund thereof in appropriate
administrative or judicial (including one level of judicial appeal)
proceedings;
Provided Always that:
(i) Lessee shall indemnify Lessor (and prior to Lessor taking
such action shall provide to Lessor security satisfactory to Lessor in respect
of any amounts so payable) against all losses, costs and expenses Lessor may
incur in connection with or as a result of contesting such claim or taking
such action, including, without limitation, all reasonable legal and
accountants' fees and disbursements, and the amount of any interest or
penalties which may be payable and any other loss or damage whatsoever which
may be incurred as a result of contesting such claim or taking such action;
(ii) if such contest is to be initiated by the payment of, and
the claiming of a refund for, such Taxes, Lessee shall have advanced to Lessor
sufficient funds (on an interest-free basis and, if such advance results in
taxable income to Lessor on an after-tax basis) to make such payment;
(iii) nothing herein shall require Lessor (acting reasonably and
in good faith) to disclose any information or provide any document Lessor
considers confidential to it or to any customer of it, or to take or refrain
from taking any action or doing anything which would (or might), in the
opinion of Lessor adversely affect either immediately or at any time in the
future in any respect of any of the business or commercial interest of Lessor
or any of its affiliates; and
(iv) Lessee shall give Lessor sufficient information concerning
such contest as they may request from time to time.
(l) Additional Contest Rights. Subject to (i) no Event of Default
having occurred and continuing, (ii) to the prior written approval of Lessor
(such approval not to be unreasonably withheld), and (iii) Lessee first
ensuring that Lessor is indemnified and secured to its satisfaction against
all costs, expenses and liabilities thereby incurred or to be incurred, Lessee
shall be entitled to take, in the name of Lessor, such action as Lessee shall
see fit to defend or avoid any such Expenses as are referred to in Section
14(h) or to recover the same from any third party; and so long as the
conditions described in clauses (i), (ii) and (iii) of this paragraph (l) are
continuing to be complied with, Lessor shall not without Lessee's prior
consent, which consent shall not be unreasonably withheld or delayed, settle,
compromise or pay any Expenses in respect of which Lessee is required to
indemnify Lessor pursuant to Section 14(h).
SECTION 15. EVENT OF DEFAULT.
The following events shall constitute Events of Default:
(a) The Lessee shall fail to make any payment of Rent, when due,
subject to a five business day grace period available once in each fiscal
quarter in each of Lessee's fiscal years during the Term; or
(b) There shall occur any failure of Lessee to procure any of the
insurance coverage required by Section 10 hereof or such insurance shall cease
to be in full force and effect; or
(c) Lessee shall fail to observe or perform any other of the
covenants, conditions, agreements or warranties to be performed or observed by
Lessee hereunder and such failure shall continue unremedied for the earlier to
occur of (i) a period of ten Business Days after written notice thereof by
Lessor, or (ii) a period of ten Business Days after any corporate officer of
Lessee who, in the normal course of his operational responsibilities, would
have knowledge of the matter and the requirements of this Lease with respect
thereto shall have obtained actual knowledge of such failure; provided,
however, removal of the Aircraft at any time from the continental limits of
the United States or Canada in a manner not permitted hereunder shall result
in an immediate Event of Default; or
(d) Any representation or warranty made by Lessee herein or any
document or certificate furnished Lessor pursuant hereto shall prove to have
been incorrect in any material respect when made and shall remain incorrect
and material; or
(e) Lessee shall consent to the appointment of or taking possession by
a receiver, assignee, custodian, sequestrator, trustee or liquidator (or other
similar official) of itself or of a substantial part of its property, or
Lessee shall fail to pay its debts generally as they come due (as provided in
11 U.S.C. s 303(h)(l)), or shall make a general assignment for the benefit of
its creditors, or Lessee shall commence a voluntary case or other proceeding
seeking liquidation, reorganization or other relief with respect to itself or
its debts under the Federal bankruptcy laws, as now or hereafter constituted
or any other applicable Federal or State bankruptcy, insolvency or other
similar law or shall consent to the entry of an order for relief in an
involuntary case under any such law or Lessee shall file an answer admitting
the material allegations of a petition filed against Lessee in any such
proceeding, or otherwise seek relief under the provisions of any now existing
or future Federal or State bankruptcy, insolvency or other similar law
providing for the reorganization or winding-up of corporations, or providing
for an agreement, composition, extension or adjustment with its creditors; or
(f) An order, judgment or decree shall be entered in any proceedings
by any court of competent jurisdiction appointing, without the consent of
Lessee, a receiver, trustee or liquidator of Lessee or of any substantial part
of its property, or any substantial part of the property of Lessee shall be
sequestered, and any such order, judgment or decree or appointment or
sequestration shall remain in force undismissed, unstayed or unvacated for a
period of 60 days after the date of entry thereof: or
(g) A petition against Lessee in a proceeding or case under the
bankruptcy laws or other insolvency laws (as now or hereafter in effect) shall
be filed and shall not be withdrawn or dismissed within 90 days thereafter,
or, in case the approval of such petition by a court of competent jurisdiction
is required, the petition as filed or amended shall be approved by such a
court as properly filed and such approval shall not be withdrawn or the
proceeding dismissed within 90 days thereafter, or a decree or order for
relief in respect of the Lessee shall be entered by a court of competent
jurisdiction in an involuntary case under the Federal bankruptcy laws, as now
or hereafter constituted, or any other applicable Federal or State bankruptcy,
insolvency or other similar law, as now or hereafter constituted, and such
decree or order shall remain unstayed in effect for a period of 90 days, or
if, under the provisions of any law providing for reorganization or winding-up
of corporations which may apply to Lessee, any court of competent jurisdiction
shall assume jurisdiction, custody or control of Lessee of any substantial
part of its property and such jurisdiction, custody or control shall remain in
force unrelinquished, unstayed or unterminated for a period of 90 days; or
(h) A final judgment or judgments by a court or courts or competent
jurisdiction for the payment of money in excess of $150,000, shall be rendered
against Lessee and the same shall remain undischarged for a period of 60 days
during which execution of such judgment shall not be effectively stayed,
provided, however, that Lessee has not provided for Lessor's benefit a bond or
has not placed cash or a cash equivalent in escrow, in each case sufficient to
pay the full amount of such judgment or judgments on terms reasonably
satisfactory to Lessor; or
(i) There occur, be continuing, and having been declared in writing by
the party in interest, an event of default under any other agreement between
Lessee or an affiliate thereof and Lessor, Owner Participant, Seller,
Manufacturer, Trident or any affiliate thereof, or any trustee acting on
behalf of any of them, or any lease or sublease with respect to a Leased
Aircraft or any sublease or lease of a Jetstream Model 3101, 3201, or 4101
Turboprop aircraft by Lessee or an affiliate of Lessee ("Other Agreements"),
such that pursuant to the terms of the Other Agreements the event of default
as defined therein shall permit the party in interest to terminate said Other
Agreement; or
(j) The code sharing agreement between Lessee or its affiliates, and
United Airlines, shall cease to be in full force and effect prior to its
expiration in accordance with its term or shall have been amended, modified or
supplemented and such amendment modification or supplement would materially
adversely affect the ability of Lessee or any affiliate or subsidiary of
Lessee to perform its obligations hereunder, provided, however, that nothing
contained herein shall preclude Lessee from entering into any code sharing
agreement with any other carrier, or
(k) If the Aircraft is flown without a valid certificate of
airworthiness or any other valid permit to fly issued by the FAA or the
registration of the Aircraft or recordation of this Lease is canceled except
where such cancellation is caused by the default or negligence of Lessor.
SECTION 16. REMEDIES.
Upon the occurrence of any Event of Default and at any time thereafter so long
as the same shall be continuing, Lessor may, at its option, declare by notice
to Lessee this Lease to be in default; and at any time thereafter so long as
Lessee shall not have remedied all outstanding Events of Default, Lessor may
do, and Lessee shall comply with, one or more of the following with respect to
the Airframe or any Engine or Propeller, as Lessor in its sole discretion
shall elect, to the extent permitted by, and subject to compliance with any
mandatory requirements of, Applicable Law then in effect:
(a) Repossession. Cause Lessee, upon the written demand of Lessor and
at Lessee's expense, to, and Lessee shall, promptly return the Airframe or any
Engine or Propeller as Lessor may demand to Lessor at such location in the
continental United States of America as selected by Lessor in the manner and
condition required by, and otherwise in accordance with all of the provisions
of, Section 13 hereof as if such Airframe, Engine or Propeller were being
returned at the end of the Term; or Lessor, at its option, may enter upon the
premises where the Airframe, Engine or Propeller is located or believed to be
located and take immediate possession of and peaceably remove such Airframe,
Engine or Propeller without the necessity for first instituting proceedings,
or by summary proceedings or otherwise, and Lessee shall comply therewith, all
without liability to Lessor for or by reason of such entry or taking
possession, whether for the restoration of damage to property caused by such
taking or otherwise;
(b) Keep Idle. Hold, use, operate, sublease to others or keep idle
all or any part of the Airframe, Engine or Propeller as Lessor, in its sole
discretion, may determine, in any such case free and clear of any rights of
Lessee except as hereinafter set forth in this Section 16 and without any duty
to account to Lessee with respect to such action or inaction or for any
proceeds with respect thereto;
(c) Rescission. Rescind this Lease as to the Airframe or any Engine
or Propeller; or
(d) Other Remedies. Exercise any other right or remedy which may be
available under applicable Law or proceed by appropriate court action to
enforce the terms hereof or to recover damages for the breach hereof.
In addition, Lessee shall be liable for any and all Supplemental Rent due
hereunder before or after any termination hereof, including all costs and
expenses (including reasonable attorney's fees and disbursements) incurred by
reason of the occurrence of any Event of Default or the exercise of Lessor's
remedies with respect thereto including all costs and expenses incurred in
connection with the return of any Airframe, Engine or Propeller in accordance
with the terms of Section 13 hereof or any appraisal of the Aircraft. No
remedy referred to in this Section 16 is intended to be exclusive, but each
shall be cumulative and in addition to any other remedy referred to above or
otherwise available to Lessor at law or in equity; and the exercise or
beginning of exercise by Lessor of any one or more of such remedies shall not
preclude the simultaneous or later exercise by Lessor of any or all such other
remedies. No express or implied waiver by Lessor of any Event of Default
hereunder shall in any way be or be construed to be, a waiver of any future or
subsequent Event of Default.
SECTION 17. LESSOR'S RIGHT TO PERFORM FOR LESSEE.
If Lessee fails to make any payment of Rent required to be made by it
hereunder or fails to perform or comply with any of its agreements contained
herein, Lessor may itself make such payment or perform or comply with such
agreement, and the amount of such payment and the amount of the reasonable
expenses of Lessor incurred in connection with such payment or the performance
of or compliance with such agreement, as the case may be, together with
interest thereon at the Overdue Rate, shall be deemed Supplemental Rent,
payable by Lessee upon demand. No such action shall be deemed a repossession
of any Airframe, Engine or Propeller, and no such payment or performance or
other act shall be deemed to relieve the Lessee from any default hereunder.
SECTION 18. COUNTERPARTS.
This Lease may be executed by the parties hereto in separate counterparts,
each of which when so executed and delivered shall, subject to the next
sentence and the legends appearing on the cover and signature page hereof, be
an original, but all such counterparts shall together constitute but one and
the same instrument. To the extent, if any, that this Lease constitutes
chattel paper (as the term is defined in the Uniform Commercial Code as in
effect in any applicable jurisdiction), no security interest in this Lease may
be created through the transfer or possession of any counterpart other than
the "original" counterpart which shall be identified as the counterpart
containing the receipt therefor executed by the Security Trustee on the
signature page thereof.
SECTION 19. ASSIGNMENT.
(a) Assignment by Lessor or Owner Participant. Lessor or Owner
Participant may, without the consent of Lessee sell, assign or otherwise
transfer any or all of its rights in the Aircraft or any or all of its rights
or obligations hereunder or under the Trust Agreement. In the event of such
an assignment by Lessor, Lessee agrees to execute all amendments to this Lease
necessary to reflect the interests of such assignee.
(b) Assignment by Lessee. Lessee may not assign any of its rights
hereunder. The prohibition against assignment by the Lessee can by waived with
the prior written approval by Lessor. If an approval is granted to an
assignment for the remainder of the Term, the Lessee will be relieved of its
obligation under Section 22(a) to continue to operate as an operator of
commercial aircraft and of the Aircraft.
SECTION 20. MISCELLANEOUS.
(a) Applicable Law. This Lease shall in all respects be governed by,
and construed in accordance with, the laws of the Commonwealth of Virginia.
This Lease shall be effective for all purposes as of the date first above
written.
(b) Notices. Unless otherwise specifically provided herein, all
notices required or permitted by the terms hereof shall be in writing and
shall be deemed to have been duly given when delivered personally or otherwise
actually received or five days after being deposited in the United States
mail, registered, postage prepaid, addressed as follows:
If to the Lessee:
Atlantic Coast Airlines
000X Xxxx Xxxx
Xxxxxxxx, Xxxxxxxx 00000
Attn: Chief Financial Officer
Fax: 000-000-0000
If to the Lessor:
First Security Bank , National Association
00 Xxxxx Xxxx Xxxxxx
Xxxx Xxxx Xxxx, Xxxx 00000
Attn: Corporate Trust Department
Fax: 000-000-0000
Phone: 000-000-0000
If to the Owner Participant:
British Aerospace Asset Management, Inc.
00000 Xxxxxxxxxx Xxxxxx Xxxxx, Xxxxx 000
Xxxxxxxxx, Xxxxxxxx 00000
Attn: Vice President and General Counsel
Fax: 000-000-0000
or at such other place as any such party may designate by notice given
in accordance with this Section to the other parties.
(c) Judicial Proceedings. Lessee and Lessor hereby each waive
personal service of process and consent that service of process upon each of
them may be made by certified or registered mail, return receipt requested, at
its address specified or determined in accordance with the provisions of
Section 20(b), and service so made shall be deemed completed on the third
Business Day after such service is deposited in the mail. Nothing herein shall
affect the right to serve process in any other manner permitted by law or
shall limit the right of the Lessor to bring proceedings against the Lessee in
the courts of any jurisdiction.
(d) Unenforceability. Any provision of this Lease which is prohibited
or unenforceable in any jurisdiction shall, as to such jurisdiction be
ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
(e) Residual Value. Nothing in this Lease shall be construed to be a
guarantee by Lessee of any particular residual value of the Aircraft,
provided, however, that this Section 20(e) shall not reduce Lessee's
obligations otherwise set forth in this Lease.
(f) Time of Essence. Time is of the essence of this Lease and of
every provision herein contained.
(g) Set-Off. Lessor shall be entitled to set-off or withhold from any
amount due and payable to Lessee by Lessor under this Lease, or any amount
standing to the credit of Lessee on any account between Owner Participant,
Lessee and Lessor, any amounts from time to time due and payable by Lessee to
Lessor or Owner Participant under any agreement in relation to the Leased
Aircraft or any spare parts for the Leased Aircraft or otherwise, and shall be
entitled to do so notwithstanding that any such amount or amounts may not be
expressed in the same currency.
Lessee agrees that, with respect to any claim which it may now or hereafter
have against Owner Participant, Lessor, Seller, Manufacturer, British
Aerospace Public Limited Company or any of their respective affiliates or
subsidiaries in connection with any other transaction whatsoever, Lessee shall
pursue any such claim independently of Lessee's obligations under this Lease
and Lessee agrees not to use any such claim as a defense against, set-off from
or counterclaim to Lessee's obligations hereunder.
(h) Integrated Agreement. This Lease means this Lease Agreement, the
Schedules and the Exhibits hereto, and embodies together with any letter
agreements dated of even date herewith the entire agreement and understanding
between Lessor and Lessee relating to the Lease of the Aircraft and other
items to be delivered hereunder. Any other previous oral or written
communications, representations, agreements or understandings between Lessor
and Lessee with respect to the leasing of the Aircraft are superseded and
canceled by this Lease.
(i) No Individual Liability. First Security Bank , National
Association is entering into this Lease solely as trustee under the Trust
Agreement and not in its individual capacity and in no case whatsoever shall
First Security Bank , National Association (or any entity acting as successor
trustee under the Trust Agreement) be personally liable on, or for any loss in
respect of, any of the statements, representations, warranties, agreements or
obligations of Lessor hereunder as to all of which Lessee, its successors and
assigns, agree with respect to First Security Bank , National Association (or
any entity acting as successor trustee under the Trust Agreement), to look
solely to the trust estate pursuant to the Trust Agreement referred to in this
Section 20(i), except for any loss caused by [First Security Bank , National
Association] in its individual capacity, and any of its past, present or
future stockholders, subscribers of capital stock, officers, directors or any
incorporators.
(j) Waivers, Headings. No term or provision of this Lease may be
changed, waived, discharged or terminated orally, but only by an instrument in
writing signed by the party against which the enforcement of the change,
waiver, discharge or termination is sought. This Lease shall constitute an
agreement of Lease, and nothing contained herein shall be construed as
conveying to Lessee any right, title or interest in the Aircraft except as a
Lessee only. The section and paragraph headings in this Lease and the table
of contents are for convenience or reference only and shall not modify,
define, expand or limit any of the terms or provisions hereof and all
references herein to numbered sections, unless otherwise indicated, are to
sections of this Lease.
SECTION 21. REPRESENTATIONS, WARRANTIES AND ASSURANCES OF LESSEE.
Lessee hereby makes the following representations and warranties on the
Delivery Date:
(a) Corporate Existence. Lessee is a corporation duly organized under
the laws of the State of California, validly existing and in good standing
under the laws of said state and is duly qualified and authorized, or is in the
process of obtaining such qualification and authorization, to do business as a
foreign corporation wherever the nature of its activities requires such
qualification and authorization.
(b) Corporate Authority. Lessee has full power and authority to
execute, deliver and perform its obligations under this Lease, the Acceptance
Supplement and all supporting documents, the same having been duly authorized
by all necessary corporate action of Lessee and duly executed and delivered by
the authorized officers of Lessee and constitute legal, valid and binding
obligations of Lessee and are enforceable in accordance with such terms, except
as enforceability thereof may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the enforcement of
creditors' rights generally as well as by general principles of equity
regardless of whether enforcement is sought in a proceeding in equity or at
law.
(c) Consistency with Governing Documents and Law. The execution and
delivery of this Lease, the Lease Acceptance Supplement, and all supporting
documents and the performance by Lessee of its obligations under this Lease,
the Lease Acceptance Supplement, and all supporting documents will not be
inconsistent with its charter or by-laws, do not contravene any presently
existing law, governmental rule or regulation, judgment or order applicable or
binding on Lessee, and do not contravene any provision of, or constitute a
material default or result in the creation of any material lien or encumbrance
with respect to this Lease or the Aircraft under any presently existing
indenture, mortgage, contract or other instrument to which Lessee is a party or
by which it or any of its properties is bound.
(d) Consents. No consent of shareholders of Lessee or of any trustee
or holders of any presently existing indebtedness or obligations of Lessee or
of any other person and no consent or approval of, giving notice to, or any
filing or registration with any governmental authority, body, commission or
agency is or will be required as a condition to the validity of this Lease or
as a condition to or in connection with the authorization, execution, delivery
or performance hereof by Lessee except those which have been duly made or
obtained, certified copies of which have been or will be delivered to Lessor
prior to delivery of the Aircraft to Lessee. To Lessee's knowledge, this Lease
and its performance do not and will not violate or contravene any law,
regulation, order, judgment or other similar obligation imposed by any
government or regulatory agency, court, administrative or legislative body.
(e) Pending Legal Actions. There is no action, suit or proceeding
pending or, to Lessee's knowledge, threatened, against or affecting Lessee or
any of its subsidiaries or associated companies before any court or before any
governmental commission, arbitrator, board, authority or administrative agency
which might result in any material adverse effect on the ability of Lessee or
any of its subsidiaries or associated companies to perform its obligations
under this Lease, the Lease Acceptance Supplement or any related documents, or
upon on assets, liabilities, business, prospects, profit, condition or
operations, financial or otherwise, of Lessee or any of its subsidiaries or
associated companies.
(f) Covenants, Terms and Conditions. Lessee is fully familiar with all
the covenants, terms and conditions of this Lease and is not in default with
respect thereto.
(g) Financial Statements. All financial statements and tax returns
that have heretofore been provided to Lessor in conjunction with this
transaction fairly and accurately represent the financial condition and income
of Lessee as of the dates given and as of the date hereof and as of such date
such financial statements or tax returns do not contain any untrue statements
of a material fact, nor do they omit to state a material fact required to be
stated therein or necessary in order to prevent such financial statements or
tax returns from being misleading; and there is no fact, situation or event
which, so far as can be foreseen by Lessee, will materially adversely affect
the properties, business assets, income, prospects or conditions, financial or
otherwise, of Lessee.
(h) Taxes. All Federal, state and local tax returns required to be
filed by Lessee have, in fact, been filed, and all taxes which are shown to be
due and payable in such returns have been paid. No material controversy in
respect of additional income taxes due for which adequate reserves have not
been provided is, to Lessee's knowledge, pending or threatened, which
controversy if determined adversely would materially and adversely affect
Lessee's ability to perform its obligations hereunder. The provision for taxes
on the books of Lessee is adequate for all open years, and for its current
fiscal period.
(i) 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(c) of ERISA or any tax imposed by Section 4975 of the Code; no
material liability of 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) with respect to any such employee
pension benefit plan. There is no event of termination of any such employee
pension benefit plan by the Pension Benefit Guaranty Corporation; 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.
(j) No Defaults Under Other Agreements. Lessee is not in default under
any indenture, mortgage, loan agreement or other agreement or instrument, in
each case of a material nature to which Lessee is now a party or by which it or
any of its properties is bound, unless such default has been waived; nor is
Lessee in violation of any law, order, injunction, decree, rule or regulation
applicable to Lessee of any court or administrative body, which violation could
materially and adversely affect the business, property or assets, operations or
condition, financial or otherwise of Lessee; and no event has occurred and is
continuing which, under the provisions of any such indenture, mortgage, loan
agreement or other agreement or instrument, with the lapse of time or the
giving of notice or both, would constitute a material default thereunder.
(k) No Defaults Under this Lease. No Default or Event of Default has
occurred and is continuing.
(l) Chief Executive Offices. Lessee's chief executive office (as that
term is defined in Article 9 of the Uniform Commercial Code as in effect in the
Commonwealth of Virginia) is located at the address set forth in the heading of
this Lease.
(m) Certificated Air Carrier. Lessee is a Certificated Air Carrier and
Lessor, as lessor of the Aircraft to Lessee, is entitled to the benefits of
Section 1110 of Title 11 of the United States Code with respect to the
Aircraft.
(n) Citizen of the United States. Lessee is a "citizen of the United
States" as defined in 49 U.S.C. Section 40102(a)(15)(c).
SECTION 22. GENERAL UNDERTAKINGS OF LESSEE.
Lessee covenants with Lessor that from the date of this Agreement and until all
its liabilities under the Lease have been fully discharged it will do the
following:
(a) Operation of Business. Lessee will remain in and continue to
operate the business of providing commercial air transportation services
possessing all necessary consents, licenses and authorizations required under
Applicable Law, preserve its corporate existence, conduct its business in an
orderly and efficient manner, satisfy its debts and obligations as they
generally fall due and keep and maintain all of its assets in good working
order and condition (Lessee's obligations under this Section 22(a) with respect
to its operation of the business of providing commercial air transportation
services will apply only until the termination of the Lease Agreements or until
an assignment of the Lease Agreements which has been approved by Lessor,
although a subsequent Lessee will be responsible for similar obligations for
the remainder of the Term. Lessee will not change its chief executive office
(as that term is defined in Article 9 of the Uniform Commercial Code as in
effect for the Commonwealth of Virginia) from that described in the heading of
this Lease, unless it gives Lessor notice thereof;
(b) No Defaults. Lessee will not willfully cause any Event of Default
to occur or knowingly permit any Event of Default to occur and shall notify
Lessor immediately of the occurrence of any Default or Event of Default or of
any occurrence which might have an adverse effect upon Lessee's ability to
perform any of its obligations under the Lease and provide Lessor with full
details of any steps which Lessee is taking, or is considering taking, in order
to remedy or mitigate the effect of any such Default or Event of Default;
(c) Notification of Potential Insurance Claims. In addition to any
formal notices required under this Lease, Lessee will notify Lessor as soon as
practicable after becoming aware of:
(i) any Event of Loss with respect to the Aircraft or any part
thereof or any damage to the Aircraft or any part thereof the cost of repair of
which is expected to be in excess of US$100,000 or equivalent;
(ii) any loss, arrest, hi-jacking, confiscation, seizure,
requisitioning, impounding taking in execution, detention or forfeiture of the
Aircraft any part thereof;
(iii) any death, sickness or injury of, or any loss or damage to
any property of, any third party caused by or in connection with, the Aircraft
which might reasonably be expected to give rise to a loss or liability in
excess of US$100,000 or equivalent in any other currency; and
(iv) any event in respect of the Aircraft which might reasonably
be expected to involve the Insured Parties loss or liability in excess of
US$100,000 or equivalent in any other currency;
(d) Protection of Aircraft. Lessee will not do or knowingly permit to
be done or omit or knowingly permit to be omitted anything which might expose
the Aircraft to penalty, forfeiture, impounding, detention or destruction or
abandon any part of the Aircraft in any location;
(e) Operational Interests. Lessee will not represent or hold out
Lessor the Insured Parties as carrying goods or passengers on the Aircraft or
as being in any way connected or associated with any operation or carriage
(whether for hire or reward or gratuitously) which Lessee may undertake nor
represent or hold out the Insured Parties as having any operational interest in
the Aircraft or any part thereof;
(f) Pledge of Credit. Lessee will not pledge the credit of the Insured
Parties for any maintenance, overhauls, replacement, repairs or modifications
to the Aircraft any part thereof or otherwise in connection with the use or
operation of the Aircraft or any part thereof;
(g) Release of Aircraft. In the event of any arrest, confiscation,
seizure, requisitioning, impounding, taking in execution, detention or
forfeiture of the Aircraft or any part thereof not constituting a casualty
occurrence, Lessee will take all steps necessary to procure the release thereof
at the earliest time possible;
(h) Attachments/Discharge of Liens. Lessee will discharge any and all
fees, charges to any third party in relation to the use or operation of the
Aircraft or any part thereof during the Term or any premises where the Aircraft
or any part thereof is situated during the Term and will keep the Aircraft or
any part thereof from being detained for rent, taxes or other outgoings or in
any way attached;
(i) Power to Sell. Lessee will not attempt to hold itself out as
having any power to sublease (without the prior written consent of Lessor),
sell, or otherwise dispose of or create any security interest over the Aircraft
or any part thereof. Lessee shall not claim depreciation allowances,
deductions or other tax benefits associated with ownership or deemed ownership
of the Aircraft;
(j) Landing and Navigation Fees. Lessee will pay and discharge whether
during or after the Term within the normal period of payment from time to time
permitted by the authority to which such charges are owed:
(i) all landing fees and other similar airport charges imposed by
the authorities or any airport from or to which the Aircraft may fly; and
(ii) all charges, if any, in respect of air navigation incurred by
Lessee in respect of the Aircraft.
(k) Financial Statements and Operational Reports. Lessee will submit
to Lessor, at the times indicated, the following:
(i) Within 90 days after the end of each fiscal year, a
consolidated balance sheet and consolidated statements of income and cash flow
for said fiscal year, audited by BDO Xxxxxxx or other independent accounting
firm acceptable generally to Lessor and without qualification as to the scope
of the audit or as to generally accepted accounting principles;
(ii) Within 45 days after the end of each quarter, through the
Term, the previous quarter's actual results as reported on the Lessee's
profit/loss statement, balance sheet, and cash flow statement;
(iii) At the time of filing or delivery to third parties, copies of
all financial statements, proxy statements, notices and reports as it shall
send to its security holders and all registration statements (without exhibits)
which it files with the Securities and Exchange Commission or any securities
exchange, copies of all press releases and other statements made generally
available by Lessee to the public concerning material developments in the
Lessee's business; and
(iv) Such other cost, revenue, and operational and financial
performance information as the Lessor may reasonably request, provided Lessee
shall not be required to provide information that would directly or indirectly
disclose confidential financial or operational information with respect to
aircraft other than British Aerospace products. On a quarterly basis, the
Lessee's Chief Financial Officer shall provide a written attestation of the
authenticity and completeness of all of the information supplied by Lessee.
(l) Inspection. Lessee will permit Lessor, any Financier, the
FAA and any person designated by Lessor to visit and inspect the Aircraft and
the records maintained in connection therewith at Lessee's facilities or at a
third party's facilities all at reasonable times and as often as Lessor may
reasonably request, and to obtain copies of such records at such person's
expense, provided that Lessor shall not interfere with Lessee's or such third
party's operations. Each such visit to such third party's facilities shall be
arranged through Lessee. During the Term, Lessee shall furnish to Lessor such
additional information concerning the location, condition, use and operation
of the Aircraft, engines, and parts as Lessor may reasonably request, and
Lessee shall permit (but only in connection with the monitoring of Lessee's
performance of its obligations under this Lease) any qualified person
designated by Lessor to fly on board the Aircraft on any flight on which space
is available (the Lessee being under no obligation to displace a revenue
passenger to accommodate the Lessor's representative) and where permitted by
regulations, in the Lessee's reasonable judgment, to sit in the cockpit of the
Aircraft in order to observe the condition and performance of the Aircraft in
flight.
[THE NEXT PAGE IS THE SIGNATURE PAGE]
IN WITNESS WHEREOF, Lessor and Lessee have each caused this Lease to be
duly executed by their authorized officers as of the day and year first above
written.
LESSOR:
FIRST SECURITY BANK ,
NATIONAL ASSOCIATION, not in its
individual capacity but solely as trustee
under a trust created under a
Trust Agreement dated as
of __________, 199__
By:
Its: Vice President
LESSEE:
ATLANTIC COAST AIRLINES
By:
Its:
By: _______________________________
Its: _______________________________
EXHIBIT A TO LEASE AGREEMENT
Atlantic Coast Airlines
Jetstream Series 4100 Model _____
Aircraft S/N ______, U.S. Reg. _______
Lease Agreement Dated as of __________, 199__
LEASE ACCEPTANCE SUPPLEMENT
THIS LEASE ACCEPTANCE SUPPLEMENT, dated ____________, 199__ is executed and
agreed by and between First Security Bank , National Association, a national
banking association, not in its individual capacity but solely as Owner
Trustee under Trust Agreement dated as of __________, 199__ (hereinafter
referred to as "Lessor"), and Atlantic Coast Airlines, a California
corporation (hereinafter referred to as "Lessee").
W I T N E S S E T H:
1. Lessor and Lessee have heretofore entered into a Lease Agreement dated
as of __________, 199__, (the "Lease") providing for the execution and
delivery of this Lease Acceptance Supplement. The terms defined in the Lease
shall have the same meanings when used herein.
2. Lessor hereby leases to Lessee, and Lessee hereby leases from Lessor,
the Aircraft described in Schedule 1 hereto and made a part hereof (the
"Aircraft"). Lessee hereby acknowledges and agrees, respecting the Aircraft:
(A) That Lessee has inspected the Aircraft fully and completely as to
size, model, function and conformity to the specification,
(B) That the Aircraft is of a size, design, function and manufacture
selected by Lessee,
(C) That Lessee is satisfied that the same is suitable for its
intended purposes and any special purposes of Lessee,
(D) LESSOR LEASES AND LESSEE TAKES THE AIRCRAFT "AS-IS, WHERE-IS".
LESSEE ACKNOWLEDGES AND AGREES THAT AS BETWEEN LESSEE AND EACH OF LESSOR (FOR
THE PURPOSES OF THIS SECTION 2(d), IN ITS INDIVIDUAL CAPACITY OR OTHERWISE),
OWNER PARTICIPANT AND ANY FINANCIER: (i) THE AIRFRAME AND EACH ENGINE ARE OF A
SIZE, DESIGN, CAPACITY AND MANUFACTURE SELECTED BY AND ACCEPTABLE TO LESSEE,
(ii) LESSEE IS SATISFIED THAT THE AIRFRAME AND EACH ENGINE ARE SUITABLE FOR
THEIR RESPECTIVE PURPOSES, AND (iii) NONE OF LESSOR, OWNER PARTICIPANT OR ANY
FINANCIER MAKE, HAS MADE OR SHALL BE DEEMED TO HAVE MADE, AND EACH WILL BE
DEEMED TO HAVE EXPRESSLY DISCLAIMED, AND LESSEE HEREBY WAIVES, RELEASES AND
RENOUNCES, ANY WARRANTY, REPRESENTATION, GUARANTY, LIABILITY AND OBLIGATION OF
LESSOR, OWNER PARTICIPANT OR ANY FINANCIER, AND ANY RIGHT, CLAIM AND REMEDY OF
LESSEE AGAINST SUCH PARTIES, EXPRESS OR IMPLIED, ARISING BY OPERATION OF LAW,
COURSE OF PERFORMANCE, COURSE OF DEALING, USAGE OF TRADE OR OTHERWISE, AS TO:
THE TITLE, AIRWORTHINESS, VALUE, CONDITION, DESIGN,
OPERATION, ANY IMPLIED WARRANTY OF MERCHANTABILITY OR FITNESS FOR USE OR FOR
ANY PARTICULAR PURPOSE OF THE AIRFRAME, ANY ENGINE, ANY PROPELLER, ANY PART,
ANY DATA OR ANY OTHER THING DELIVERED, SOLD OR TRANSFERRED HEREUNDER,
THE QUALITY OF THE MATERIAL OR WORKMANSHIP WITH RESPECT TO
THE AIRFRAME, ANY ENGINE, ANY PROPELLER, ANY PART, ANY DATA OR ANY OTHER THING
DELIVERED, SOLD OR TRANSFERRED HEREUNDER,
THE ABSENCE OF LATENT OR ANY OTHER DEFECT OR NONCONFORMANCE
IN THE AIRFRAME, ANY ENGINE, ANY PROPELLER, ANY PART, ANY DATA OR ANY OTHER
THING DELIVERED, SOLD OR TRANSFERRED HEREUNDER, WHETHER OR NOT DISCOVERABLE,
OR
THE ABSENCE OF ANY ACTUAL OR ALLEGED INFRINGEMENT OF ANY PATENT,
TRADEMARK OR COPYRIGHT OR THE LIKE.
LESSEE FURTHER WAIVES, DISCLAIMS, RELEASES AND RENOUNCES ANY LIABILITY,
RIGHT, CLAIM, REMEDY OR OBLIGATION BASED ON TORT, INCLUDING STRICT LIABILITY,
WHETHER OR NOT ARISING FROM THE NEGLIGENCE (WHETHER ACTIVE, PASSIVE OR
IMPUTED) EXCEPT FOR WILLFUL MISCONDUCT OR GROSS NEGLIGENCE, OF LESSOR, OWNER
PARTICIPANT OR ANY FINANCIER, ANY OBLIGATION, LIABILITY, RIGHT, CLAIM OR
REMEDY FOR LOSS OF OR DAMAGE TO THE AIRFRAME, ANY ENGINE, ANY PROPELLER, ANY
PART, ANY DATA OR ANY OTHER THING DELIVERED, SOLD OR TRANSFERRED HEREUNDER, OR
ANY OTHER REPRESENTATION OR WARRANTY WHATSOEVER, EXPRESS OR IMPLIED, WITH
RESPECT TO THE AIRFRAME, ANY ENGINE, ANY PROPELLER, ANY PART, ANY DATA OR ANY
OTHER PHYSICAL THING DELIVERED, SOLD OR TRANSFERRED HEREUNDER.
(E) That the Aircraft has been delivered to, is now in the possession
of, and is acceptable to Lessee.
(ii) Lessee hereby agrees to pay to Lessor as Basic Rent for the Aircraft the
amounts set forth in the Schedule of Rental Payments attached hereto as
Schedule 2.
(ii) In addition Lessee agrees to pay to Lessor when required by the Lease
the Stipulated Loss Value payments in the amounts set forth in Schedule 3
attached hereto and made a part hereof.
(ii) The date of delivery and acceptance of the Aircraft is the date of this
Lease Acceptance Supplement set forth in the opening paragraph hereof.
(ii) All of the rights and obligations hereunder, including matters of
construction, validity and performance shall be governed in the same manner
and under the same circumstances as the Lease.
(ii) Lessee hereby states that the Representatives, Warranties and Assurances
of Lessee in Section 21 of the Lease are valid and correct on the date hereof
and that no Default has occurred which is continuing.
[THE NEXT PAGE IS THE SIGNATURE PAGE]
IN WITNESS WHEREOF, the parties have set their hands and seals on the
first day written above.
LESSOR:
FIRST SECURITY BANK ,
NATIONAL ASSOCIATION, not in its
individual capacity but solely as
trustee under a trust created
under a Trust Agreement
dated as of __________, 199__
By: _________________________
Its: Vice President
LESSEE:
ATLANTIC COAST AIRLINES
By: __________________________
Its: __________________________
By: __________________________
Its: __________________________
EXHIBIT B TO LEASE AGREEMENT
Atlantic Coast Airlines
British Aerospace (Operations) Limited
Jetstream Series 4100 Model 4101 Aircraft
S/N ______, U.S. Reg. _______
Lease Agreement Dated as of __________, 199__
SCHEDULE OF LIFE-LIMITED COMPONENTS
MRB REF J41 COMPONENT INTERVAL
21-30-05 ELECTRIC-PNEUMATIC VALVE F/C3,900 HRS
21-30-06 ELECTRO-PNEUMATIC VALVE F/C6,000 HRS
21-30-08 CABIN AIR FILTER REPLACE 1,800 HRS
21-30-10 ALTITUDE SWITCH F/C1,500 HRS
23-71-02 COCKPIT VOICE RECORDER O/H6,000 HRS
23071-03/09 INERTIA SWITCH TEST 3 YRS
23-71-07 CVR LOCATOR BEACON BATTERY REPLACE 6 YRS
24-30-05 STANDBY POWER SUPPLY CAP CK 300 HR/12 MO
24-30-09 STARTER GENERATOR CMR O/H 600 HRS
24-002 GENERATOR CONTROL UNIT L/L 16,000 HRS
24-32-01 BATTERY DEEP CYC 3 MO
25-60-04 LIFEJACKETS INSP 30 DAYS
25-60-05 ELT BATTERY REPLACE 12 MO
26-21-01 FIRE BOTTLE CARTRIDGE REPLACE 10 YRS
26-21-07 FIRE BOTTLES (ENGINE) HYDRO 14 YRS
27-50-01 FLAP HYDRAULIC CONTROL UNIT F/C 3,000 HRS
29-10-04 MAIN/RETURN FILTER VALVE REPLACE 1,800 HRS
29-10-07 PRESSURE RELIEF VALVE B/C 6,000 HRS
29-20-04 EMERGENCY SELECTOR VALVE B/C 1,200 HRS
31-21-01/02 CLOCK BATTERY REPLACE 3 YRS
31-31-02 FLIGHT DATA RECORDER O/H 8,000 HRS
31-31-08 FDR LOCATOR BEACON BATTERY REPLACE 6 YRS
32-10-03 MAIN SHUT STRUT L/L 60,000 HRS
32-20-03 MAIN SHOCK STRUT L/L 60,000 HRS
MRB REF J41 COMPONENT INTERVAL
33-52-02 EMERGENCY LIGHT BATTERIES DEEP CYC 6 MO
35-10-05 CREW OXYGEN BOTTLE GAUGE CAL 3 YRS
35-10-06 CREW OXYGEN BOTTLE TEST 3 YRS
35-10-07 CREW OXYGEN XXXXX X/X 0 XXX
00-00-00 XXXXXXXX XXXXXX F/C 1,800 HRS
35-20-06 ALT COMPENSATING REGULATOR CAL 1,800 HRS
35-20-08 PAX OXYGEN BOTTLE TEST 3 YRS
61-00-09 PROPELLER INSP 3,000 HRS
71-00-04 ISOLATOR ELASTOMERIC L/L 6,000 HRS
72-00-07 OIL FILTER REPLACE 300 HRS
72-00-11 GEARBOX INSP 3,000 HRS
72-00 12 COMPRESSOR INSP 3,000 HRS
72-00-13 HOT SECTION INSP 1,500 HRS
72-00-12 SHOULDERED TIE SHAFT L/L 20,000 CYC
72-00-12 COMPRESSOR STUB SHAFT L/L 20,000 CYC
72-00-14 1st COMPRESSOR IMPELLER L/L 10,000 CYC
P/N 3105129-1
72-00-14 1st COMPRESSOR IMPELLER L/L 30,000 CYC
P/N 3105129, 3104276-4
72-00-14 2nd COMPRESSOR IMPELLER L/L 30,000 CYC
P/N 3104204-6/-7
72-00-16 CENTER ROTATING SEAL PLATE L/L 20,000 CYC
P/N 3104189
72-00-15 1st STAGE TURBINE DISK L/L 20,000 CYC
P/N 3104026-7
72-00-15 2nd STAGE TURBINE DISK L/L 20,000 CYC
P/N 3104142-5
72-00-15 3rd STAGE TURBINE DISK L/L 20,000 CYC
P/N 3104108-6
76-00-06 FLEXIBLE CONTROL ASSYs REPLACE 6,000 HRS
76-00-07 CONTROL CABLES REPLACE 20,000 FLT
79-00-06 OIL TEMP SWITCH INSP 15,000 HRS
If a life-limited component is subsequently fitted to or on the Aircraft, such
life
limited component shall be incorporated by reference into this Exhibit B.
EXHIBIT C TO THE LEASE AGREEMENT
Atlantic Coast Airlines
British Aerospace (Operations) Limited
Jetstream Series 4100 Model 4101 Aircraft
S/N ______, U.S. Reg. _______
Lease Agreement Dated as of __________, 199__
SCHEDULE OF PRESENT INSURED PARTIES
Lessor/Owner-Trustee:
Owner Participant:
Seller:
Security Trustee, Facility
Agent and Banker:
Lenders:
Manufacturer
EXHIBIT D TO LEASE AGREEMENT
Atlantic Coast Airlines
British Aerospace (Operations) Limited
Jetstream Series 4100 Model 4101 Aircraft
S/N ______, U.S. Reg. _______
Lease Agreement Dated as of __________, 199__
*
[TWO PAGES OF CONFIDENTIAL MATERIALS OMITTED]
EXHIBIT E TO LEASE AGREEMENT
Atlantic Coast Airlines
British Aerospace (Operations) Limited
Jetstream Series 4100 Model 4101 Aircraft
S/N ______, U.S. Reg. _______
Lease Agreement Dated as of __________, 199__
BAAM, INC. Letterhead
SIDE LETTER RE: TERMINATION / EVENT OF LOSS PAYMENTS
The Side Letter Re: Termination/ Event of Loss Payments shall be as follows:
*
[TWO PAGES OF CONFIDENTIAL MATERIALS OMITTED]
EXHIBIT D-1
BACKSTOP FINANCING TERMS
*
[FIVE PAGES OF CONFIDENTIAL MATERIALS OMITTED]
EXHIBIT E
PAYMENT INSTRUCTIONS
All payments due to Seller under this Agreement shall be made to:
Banque Generale du Commerce
00, Xxx Xxxxxxx
00000 XXXXX
Bank Code: *
Branch Code: *
Account Number: *
Swift Code: XXXXXXXX
All payments due to Buyer under this Agreement shall be made to:
Account Name: *
Account No: *
ABA No: *
Bank: Crestar Bank
Alexandria, VA
EXHIBIT F-3
Agreed Residual Value Table - New Aircraft
*
EXHIBIT G
*
[NINE PAGES OF CONFIDENTIAL MATERIALS OMITTED]
EXHIBIT H
CERTIFICATE OF ACCEPTANCE
IN ACCORDANCE WITH that certain Purchase Agreement dated
("Agreement"), by and between AERO INTERNATIONAL
(REGIONAL), acting as agent for and on behalf of British Aerospace
(Operations) Limited, ("Seller)", and the undersigned ATLANTIC COAST AIRLINES
("Buyer"), Buyer hereby accepts the below-described airframe, engines and
propellers ("Aircraft") and agrees that (a) the Aircraft has been delivered to
and accepted by Buyer in accordance with the conditions set forth in the
Agreement (b) any discrepancies listed below shall be rectified by Seller
subsequent to delivery and (c) there has been accepted with the Aircraft the
logs and other records required to be delivered pursuant to the Agreement:
Airframe
One (1) Jetstream Aircraft Ltd. Model Jetstream, Series 4100 aircraft,
with the following manufacturer's serial number and registration number:
Manufacturer's Serial Number FAA Registration Number
Engines
Two (2) Xxxxxxx AiResearch Model GPE331-14GR/HR engines with the
following manufacturer's serial numbers:
Propellers
Two (2) XxXxxxxx propellers with the following manufacturer's serial
numbers:
EXECUTED by a duly authorized representative of Buyer at
this day of ,
19 .
("Buyer")
By:
Name:
List of any Discrepancies to be Rectified by Seller subsequent to the Delivery
Date:
EXHIBIT I-1
AMENDMENT TO SUBLEASE AGREEMENT
Atlantic Coast Airlines
Jetstream 32 Aircraft
S/N ___, Reg. ______
THIS __________ AMENDMENT TO SUBLEASE AGREEMENT, dated as of ___________
__, ____, is entered into by and between Jet Acceptance Corporation,
("Sublessor"), and Atlantic Coast Airlines, a California corporation
("Sublessee").
WHEREAS, Sublessor and Sublessee are parties to a Sublease Agreement
dated as of __________ __, 19__ and to a Sublease Acceptance Supplement dated
__________ __, 19__, (such Sublease Agreement and Sublease Acceptance
Supplement, the "Sublease") providing for the sublease by Sublessor to
Sublessee of the aircraft (the "Aircraft") as identified above and as further
described in Schedule 1 to the Sublease Acceptance Supplement; and
WHEREAS, the Sublease was recorded by the Federal Aviation
Administration (the "FAA") as one instrument on ___________ __, ____ and was
assigned Conveyance No. ____________; and
WHEREAS, Sublessor and Sublessee have agreed to amend the Sublease as
hereinafter provided.
NOW THEREFORE, the parties hereto agree and do hereby amend the Sublease
as follows:
A. AMENDMENTS
1. Section 1 shall be amended to add the following definitions:
""Florida Engine" shall mean any engine delivered to Sublessee by
Sublessor or its affiliate pursuant to the Used J32 Agreement under any lease
or sublease, including each engine which at the time of such delivery was
mounted on any aircraft delivered to Sublessee pursuant to the Used J32
Agreement, each engine that was provided as a spare, and each Replacement
Engine."
""JACO Propeller" shall mean any propeller delivered to Sublessee by
Sublessor or its affiliate under any lease or sublease, including each
propeller that was provided as a spare, and each Replacement Propeller."
""Used J32 Agreement" shall mean the Used J32 Aircraft Agreement to
Lease dated as of October 30, 1992 by and between British Aerospace, Inc. and
Atlantic Coast Airlines."
2. Section 13 (a) shall be deleted in its entirety and replaced with the
following:
"Return of Aircraft. With respect to the Aircraft, at the expiration of
the Term, or upon the termination of this Sublease pursuant to Section 16,
Sublessee, at its own expense, shall, except as otherwise provided in Section
16, return such Aircraft by delivering the same to Sublessor at such place as
Sublessor may specify on Sublessee's route structure, or, at Sublessor's
expense, at any other location in the continental United States of America."
3. Section 13 (b) shall be deleted in its entirety and replaced with the
following:
"Return of Engines and Propellers. Upon return the Aircraft shall be
fully equipped with two Engines (or Florida Engines) duly installed on the
Airframe and two Propellers (or JACO Propellers) duly installed on such
Engines or Florida Engines. So long as Sublessee returns Engines or Florida
Engines and Propellers or JACO Propellers with each Airframe, free of liens
including Permitted Liens but excluding Lessor's Liens, Sublessee shall have
no obligation whether under this Section 13 (b) or otherwise, to take any
action or to incur or reimburse any expense with regard to title of Engines or
Florida Engines or Propellers or JACO Propellers. Sublessee shall, however,
cooperate with reasonable requests of the Sublessor with respect to the
documentation required to title such engines and propellers in the name of
Lessor or Sublessor as the case may be."
4. Section 13 (c) shall be amended to add the following ultimate sentence:
"Obligations with respect to the return of manuals shall not be imposed
on Sublessee to the extent the Sublessee would be required to acquire more
individual copies of manuals than it has previously been required to maintain
as part of the operation of its fleet of Jetstream 32 aircraft. Sublessee
shall be required to return to Sublessor such manuals as Sublessee has been
required to maintain to the extent that they become surplus to Sublessee as a
result of the return of aircraft."
5. Section 13 (d), shall be amended to add the following sentences to
paragraph one immediately after the first sentence:
"Prior to the return of the Aircraft, Sublessee shall be permitted to
remove any ACARS/FM equipment it has installed on the Aircraft, and will not
be required to provide substitute equipment to perform the tasks provided by
said equipment. It is expressly acknowledged that airframe checks are not
required under this Section 13."
6. Section 13 (d)(2), shall be amended to add the following proviso to the
first sentence:
", provided, however, that Sublessee shall not be required to repaint
the Aircraft or to replace any other customized equipment."
B. MISCELLANEOUS
1. Except as provided herein, nothing contained in this ______ Amendment to
Sublease Agreement shall be deemed to waive or release Sublessee from any of
its obligations or duties under the Sublease, including without limitation its
obligation to pay rent, all of which obligations and duties are hereby
expressly ratified and confirmed by Sublessee.
2. All capitalized terms used herein without definition shall have the
respective meaning assigned thereto in the Sublease. All references in the
Sublease to "this Agreement", "herein", "hereof" and the like shall be deemed
to refer to the Sublease as amended hereby.
3. Sublessee represents and warrants to Sublessor that (i) it has full
power and authority to execute, deliver and perform its obligations under this
______ Amendment to Sublease Agreement, (ii) the obligations herein constitute
the legal, valid and binding obligations of Sublessee and are enforceable in
accordance with their terms, (iii) the execution, delivery and performance of
this ______ Amendment to Sublease Agreement does not contravene any material
provision of or constitute a material default under any agreement or other
instrument to which Sublease is a party or by which it or its property is
bound, and (iv) Sublessee is not in default under the Sublease or any material
agreement or other instrument to which it is a party.
4. This ______ Amendment to Sublease Agreement shall in all respects be
governed by, and construed under the laws (without reference to the conflicts
laws) of the Commonwealth of Virginia, including all matters of construction,
validity and performance.
5. This ______ Amendment to Sublease 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.
[THE NEXT PAGE IS THE SIGNATURE PAGE]
IN WITNESS WHEREOF, the parties hereto have caused this ______ Amendment to
Sublease Agreement to be executed as of the date first above written by their
officers or agents thereunto duly authorized.
SUBLESSOR: SUBLESSEE:
JET ACCEPTANCE CORPORATION ATLANTIC COAST AIRLINES
By:__________________________ By:___________________________
Its:__________________________
Its:___________________________
By:___________________________
Its:___________________________
ACKNOWLEDGED AND CONSENTED TO:
ATLANTIC COAST AIRLINES, INC.
as Guarantor
By:__________________________
Its:__________________________
EXHIBIT I-2
AMENDMENT TO SUBLEASE AGREEMENT
Atlantic Coast Airlines
Jetstream 32 Aircraft
S/N ___, Reg. ______
THIS __________ AMENDMENT TO SUBLEASE AGREEMENT, dated as of ___________
__, ____, is entered into by and between Jet Acceptance Corporation,
("Sublessor"), and Atlantic Coast Airlines, a California corporation
("Sublessee").
WHEREAS, Sublessor and Sublessee are parties to a Sublease Agreement
dated as of __________ __, 19__ and to a Sublease Acceptance Supplement dated
__________ __, 19__, (such Sublease Agreement and Sublease Acceptance
Supplement, the "Sublease") providing for the sublease by Sublessor to
Sublessee of the aircraft (the "Aircraft") as identified above and as further
described in Schedule 1 to the Sublease Acceptance Supplement; and
WHEREAS, the Sublease was recorded by the Federal Aviation
Administration (the "FAA") as one instrument on ___________ __, ____ and was
assigned Conveyance No. ____________; and
WHEREAS, Sublessor and Sublessee have agreed to amend the Sublease as
hereinafter provided.
NOW THEREFORE, the parties hereto agree and do hereby amend the Sublease
as follows:
A. AMENDMENTS
1. Section 1 shall be amended to add the following definitions:
""JACO Propeller" shall mean any propeller delivered to Sublessee by
Sublessor or its affiliate under any lease or sublease, including each
propeller that was provided as a spare, and each Replacement Propeller."
""Purchase Agreement" shall mean the Amended and Restated Stock
Purchase Agreement dated as of September 30, 1991 among WestAir Holding, Inc.,
WestAir Commuter Airlines, Inc. and Atlantic Coast Airlines, Inc."
""WestAir Engine" shall mean any engine delivered to Sublessee by
Sublessor or its affiliate pursuant to the Purchase Agreement under any
lease or sublease, including each engine which at the time of such delivery
was mounted on any aircraft delivered to Sublessee pursuant to the Purchase
Agreement, each engine that was provided as a spare, and each Replacement
Engine."
2. Section 13 (a) shall be deleted in its entirety and replaced with the
following:
"Return of Aircraft. With respect to the Aircraft, at the expiration of
the Term, or upon the termination of this Sublease pursuant to Section 16,
Sublessee, at its own expense, shall, except as otherwise provided in Section
16, return such Aircraft by delivering the same to Sublessor at such place as
Sublessor may specify on Sublessee's route structure, or, at Sublessor's
expense, at any other location in the continental United States of America."
3. Section 13 (b) shall be deleted in its entirety and replaced with the
following:
"Return of Engines and Propellers. Upon return the Aircraft shall be
fully equipped with two Engines (or WestAir Engines) duly installed on the
Airframe and two Propellers (or JACO Propellers) duly installed on such
Engines or WestAir Engines. So long as Sublessee returns Engines or WestAir
Engines and Propellers or JACO Propellers with each Airframe, free of liens
including Permitted Liens but excluding Lessor's Liens, Sublessee shall have
no obligation whether under this Section 13 (b) or otherwise, to take any
action or to incur or reimburse any expense with regard to title of Engines or
WestAir Engines or Propellers or JACO Propellers. Sublessee shall, however,
cooperate with reasonable requests of the Sublessor with respect to the
documentation required to title such engines and propellers in the name of
Lessor or Sublessor as the case may be."
4. Section 13 (c) shall be amended to add the following ultimate sentence:
"Obligations with respect to the return of manuals shall not be imposed
on Sublessee to the extent the Sublessee would be required to acquire more
individual copies of manuals than it has previously been required to maintain
as part of the operation of its fleet of Jetstream 32 aircraft. Sublessee
shall be required to return to Sublessor such manuals as Sublessee has been
required to maintain to the extent that they become surplus to Sublessee as a
result of the return of aircraft."
5. Xxxxxxx 00 (x), xxxxxxxxx two shall be amended to add the following
proviso to the first sentence:
", provided, however, that Sublessee shall not be required to repaint
the Aircraft or to replace any other customized equipment."
6. Section 13 (d) shall be further amended to add the following penultimate
and ultimate sentences:
"Prior to the return of the Aircraft, Sublessee shall be permitted to
remove any ACARS/FM equipment it has installed on the Aircraft, and will not
be required to provide substitute equipment to perform the tasks provided by
said equipment. It is expressly acknowledged that airframe checks are not
required under this Section 13."
7. The third paragraph in Section 13 (e) shall be deleted in its entirety
and replaced with the following:
"For the purpose hereof the term "cycle life limited component" shall
mean the time controlled components fitted on the Aircraft as listed in
Schedule 4 to Exhibit A attached hereto."
B. MISCELLANEOUS
1. Except as provided herein, nothing contained in this ______ Amendment to
Sublease Agreement shall be deemed to waive or release Sublessee from any of
its obligations or duties under the Sublease, including without limitation its
obligation to pay rent, all of which obligations and duties are hereby
expressly ratified and confirmed by Sublessee.
2. All capitalized terms used herein without definition shall have the
respective meaning assigned thereto in the Sublease. All references in the
Sublease to "this Agreement", "herein", "hereof" and the like shall be deemed
to refer to the Sublease as amended hereby.
3. Sublessee represents and warrants to Sublessor that (i) it has full
power and authority to execute, deliver and perform its obligations under this
______ Amendment to Sublease Agreement, (ii) the obligations herein constitute
the legal, valid and binding obligations of Sublessee and are enforceable in
accordance with their terms, (iii) the execution, delivery and performance of
this ______ Amendment to Sublease Agreement does not contravene any material
provision of or constitute a material default under any agreement or other
instrument to which Sublease is a party or by which it or its property is
bound, and (iv) Sublessee is not in default under the Sublease or any material
agreement or other instrument to which it is a party.
4. This ______ Amendment to Sublease Agreement shall in all respects be
governed by, and construed under the laws (without reference to the conflicts
laws) of the Commonwealth of Virginia, including all matters of construction,
validity and performance.
5. This ______ Amendment to Sublease 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.
[THE NEXT PAGE IS THE SIGNATURE PAGE]
IN WITNESS WHEREOF, the parties hereto have caused this ______ Amendment to
Sublease Agreement to be executed as of the date first above written by their
officers or agents thereunto duly authorized.
SUBLESSOR: SUBLESSEE:
JET ACCEPTANCE CORPORATION ATLANTIC COAST AIRLINES
By:__________________________ By:___________________________
Its:__________________________
Its:___________________________
By:___________________________
Its:___________________________
ACKNOWLEDGED AND CONSENTED TO:
ATLANTIC COAST AIRLINES, INC.
as Guarantor
By:__________________________
Its:__________________________
EXHIBIT I-3
AMENDMENT TO SUBLEASE AGREEMENT
Atlantic Coast Airlines
Spare Xxxxxxx AiResearch Engines
Serial Nos. P66010, P66034, P66082, P66096, P66183, P66216
THIS __________ AMENDMENT TO SUBLEASE AGREEMENT, dated as of ___________
__, ____, is entered into by and between Jet Acceptance Corporation,
("Sublessor"), and Atlantic Coast Airlines, a California corporation
("Sublessee").
WHEREAS, Sublessor and Sublessee are parties to a Sublease Agreement
dated as of September 30, 1991 and to a Sublease Acceptance Supplement dated
January 1, 1992, (such Sublease Agreement and Sublease Acceptance Supplement,
the "Sublease") providing for the sublease by Sublessor to Sublessee of six
engines (the "Engines") as identified above and as further described in
Schedule 1 to the Sublease Acceptance Supplement; and
WHEREAS, the Sublease was recorded by the Federal Aviation
Administration (the "FAA") as one instrument on ___________ __, ____ and was
assigned Conveyance No. ____________; and
WHEREAS, Sublessor and Sublessee have agreed to amend the Sublease as
hereinafter provided.
NOW THEREFORE, the parties hereto agree and do hereby amend the Sublease
as follows:
A. AMENDMENTS
1. Section 1 shall be amended to add the following definitions:
""Purchase Agreement" shall mean the Amended and Restated Stock
Purchase Agreement dated as of September 30, 1991 among WestAir Holding, Inc.,
WestAir Commuter Airlines, Inc. and Atlantic Coast Airlines, Inc."
""WestAir Engine" shall mean any engine delivered to Sublessee by
Sublessor or its affiliate pursuant to the Purchase Agreement under any lease
or sublease, including each engine which at the time of such delivery was
mounted on any aircraft delivered to Sublessee pursuant to the Purchase
Agreement, each engine that was provided as a spare, and any replacement for
any such engine."
2. Section 13 (a) shall be deleted in its entirety and replaced with the
following:
"Return of Engines. With respect to each Engine, at the expiration of
the Term, or upon the termination of this Sublease pursuant to Section 16,
Sublessee, at its own expense, shall, except as otherwise provided in Section
16, return each Engine by delivering the same to Sublessor at such place as
Sublessor may specify on Sublessee's route structure, or, at Sublessor's
expense, at any other location in the continental United States of America.
So long as Sublessee returns each Engine, or a WestAir Engine in lieu thereof,
free of liens including Permitted Liens but excluding Lessor's Liens,
Sublessee shall have no obligation whether under this Section 13 (a) or
otherwise, to take any action or to incur or reimburse any expense with regard
to title of Engines or WestAir Engines. Sublessee shall, however, cooperate
with reasonable requests of the Sublessor with respect to the documentation
required to title such engines in the name of Lessor or Sublessor as the case
may be."
3. Section 13 (c) shall be amended to add the following ultimate sentence:
"The obligations in this Section 13 (c) notwithstanding, Sublessee shall
not be required to acquire more individual copies of manuals than it has
previously been required to maintain as part of the operation of its fleet of
Jetstream 32 aircraft. Sublessee shall be required to return to Sublessor
such manuals as Sublessee has been required to maintain to the extent that
they become surplus to Sublessee as a result of the return of aircraft."
4. The first paragraph in Section 13 (e) shall be deleted in its entirety
and replaced with the following:
"Overhaul Payment. At the time of return of each Engine or WestAir
Engine the then current cost of overhaul or hot section inspection shall be
determined (Vo). An aggregate "half-life value", Vh, of the overhaul and hot
section inspection shall be determined by taking one-half (1/2) of the sum of
the current cost of overhaul and hot section inspection. Thereafter an
amount, Vi, shall be calculated with respect to each overhaul and hot section
inspection as follows:
Vi = t * Vo
tTOT
Where
Vi = the portion of the current cost of overhaul or hot section
inspection consumed to date;
t = hours, calendar time or number of landings, as the
case may be, since the last overhaul or hot
section inspection of each Engine or WestAir
Engine;
tTOT= the FAA mandated time between overhaul or hot section
inspection, as the case may be, under Sublessee's then
FAA approved maintenance program;
Vo = the then current cost of overhaul or hot section inspection
of that component.
If the aggregate total of Vi with respect to the overhaul and hot
section inspection is greater than the half-life value of the overhaul and hot
section inspection, Sublessee shall pay Sublessor they difference. If the
aggregate total of Vi with respect to the overhaul and hot section inspection
is equal or less than the half-life value, Vh, then Sublessee shall have no
obligation to make any payment to Sublessor with respect thereto."
B. MISCELLANEOUS
1. Except as provided herein, nothing contained in this ______ Amendment to
Sublease Agreement shall be deemed to waive or release Sublessee from any of
its obligations or duties under the Sublease, including without limitation its
obligation to pay rent, all of which obligations and duties are hereby
expressly ratified and confirmed by Sublessee.
2. All capitalized terms used herein without definition shall have the
respective meaning assigned thereto in the Sublease. All references in the
Sublease to "this Agreement", "herein", "hereof" and the like shall be deemed
to refer to the Sublease as amended hereby.
3. Sublessee represents and warrants to Sublessor that (i) it has full
power and authority to execute, deliver and perform its obligations under this
______ Amendment to Sublease Agreement, (ii) the obligations herein constitute
the legal, valid and binding obligations of Sublessee and are enforceable in
accordance with their terms, (iii) the execution, delivery and performance of
this ______ Amendment to Sublease Agreement does not contravene any material
provision of or constitute a material default under any agreement or other
instrument to which Sublease is a party or by which it or its property is
bound, and (iv) Sublessee is not in default under the Sublease or any material
agreement or other instrument to which it is a party.
4. This ______ Amendment to Sublease Agreement shall in all respects be
governed by, and construed under the laws (without reference to the conflicts
laws) of the Commonwealth of Virginia, including all matters of construction,
validity and performance.
5. This ______ Amendment to Sublease 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.
[THE NEXT PAGE IS THE SIGNATURE PAGE]
IN WITNESS WHEREOF, the parties hereto have caused this ______ Amendment to
Sublease Agreement to be executed as of the date first above written by their
officers or agents thereunto duly authorized.
SUBLESSOR: SUBLESSEE:
JET ACCEPTANCE CORPORATION ATLANTIC COAST AIRLINES
By:__________________________ By:___________________________
Its:__________________________
Its:___________________________
By:___________________________
Its:___________________________
ACKNOWLEDGED AND CONSENTED TO:
ATLANTIC COAST AIRLINES, INC.
as Guarantor
By:__________________________
Its:__________________________
EXHIBIT J
ADDITIONAL PRODUCT SUPPORT
*
[THREE PAGES OF CONFIDENTIAL MATERIALS OMITTED]
EXHIBIT K
PURCHASE PRICE REVISION
*
EXHIBIT L
FORM OF CONFIRMATION OF SALE/LEGAL OPINION/EVIDENCE OF OWNERSHIP OF AIRCRAFT
1. CONFIRMATION OF SALE
By this Confirmation of Sale, by delivery, AERO INTERNATIONAL (REGIONAL) (the
"Seller") acting for and on behalf of British Aerospace (Operations) Limited
(the Manufacturer) acknowledges that on [ ] 199[ ] the Seller did deliver,
and Atlantic Coast Airlines, a California Corporation, (the "Buyer") did
accept delivery of physical possession of, one (1) British Aerospace aircraft
bearing Manufacturer's serial number [ ] with two AlliedSignal aircraft
engines bearing manufacturer's serial numbers [ ], and [ ] delivered
therewith (the Aircraft) pursuant to the Purchase Agreement dated
February 1997 between the Seller the Buyer (the Contract) and the
Buyer did pay to the Seller, in accordance with Clause 3.4 of the Contract,
the Purchase Price (as defined in the Contract) and that accordingly title to
the Aircraft had passed from the Manufacturer by delivery of the Aircraft from
the Seller to the Buyer in accordance with Clause 8.2 of the Contract.
The Manufacturer hereby warrants to Buyer, its successors and assigns, that
Manufacturer has conveyed to Buyer good title to the Aircraft, free and clear
of all liens and that the Manufacturer shall warrant and defend such title
forever against all claims and demands whatsoever; and that this Confirmation
of Sale is made and delivered pursuant to the provisions of the Contract,
dated as of [ ], between the Seller and Buyer.
Dated: , 199[ ]
For and on behalf of
BRITISH AEROSPACE (OPERATIONS) LIMITED
By
Title
2. LEGAL OPINION
, 199[ ]
Our Ref. /NWA
By Courier
Xx. Xxx Xxxxxxxx, Esq.
Xxxxxxxxx, Xxxxxx and Xxxxxxxx
000 Xxxxx Xxxxxxxx
000 Xxxx Xxxxx
Xxxxxxxx Xxxx, XX 00000
Dear Xxx:
ATLANTIC COAST AIRLINES
Please find enclosed originals of the following documents:
1) British Aerospace (Operations) Limited Legal Opinion
2) Evidence of Ownership of Aircraft (executed in counterpart)
Yours sincerely,
Name:
Title:
Enclosur
, 199[ ]
Our Ref. /Buyer
FOR THE ATTENTION OF MR. J. STANDELL
Xxxx Xxxxxxxx Aeronautical Center
Oklahoma City, Oklahoma, U.S.A.
Dear Sirs:
LEGAL CERTIFICATION
I am a Solicitor of [ } and Legal Advisor toBritish Aerospace
(Operations) Limited ("Manufacturer"), and I have reviewed the Purchase
Agreement ("Contract") between Atlantic Coast Airlines ("Buyer") and Aero
International (Regioinaal) dated .
Make
Model
Serial Number
FAA Registration Number
British Aerospace
Jetstream 4100
[ ]
[ ]
In this regard I have examined the instrument entitled Evidence of Ownership
of Aircraft executed by Seller on ,
a copy of which is attached.
Based upon my examination of the above-mentioned instrument, and assuming
execution by the Buyer, it is my opinion that, following the signing of the
Certificate of Acceptance by the Buyer, the receipt by the Seller of the
payment due under the Contract, and the delivery of physical possession of the
Aircraft at Prestwick, Scotland on ,
transfer of the title to the Aircraft from Manufacturer to Buyer was effected
and that as of the date of the said payment, title to the Aircraft was vested
in Buyer.
Yours faithfully,
Name:
Title:
3. EVIDENCE OF OWNERSHIP OF AIRCRAFT
Atlantic Coast Airlines, Inc. (Buyer), and Aero International (Regional)
(Seller) represent and certify that the following is an extract from that
Purchase Agreement between Buyer and Seller dated .
[Clause of Contract]
Buyer and Seller by these presents hereby represent and certify that the Buyer
signed the Certificate of Acceptance required by the above quoted paragraph,
on , and made the payment due and delivery of
physical possession took place on that date at Prestwick, Scotland, and that
all other conditions were met for the passage of title and risk from the
Manufacturer to the Buyer in the Aircraft, described as follows:
Make
Model
Serial Number
FAA Registration Number
British Aerospace
Jetstream 4100
[ ]
[ ]
The Buyer and Seller further represent and certify that as of the above date
hereof there are no other instruments of any nature affecting or conveying
title of the Aircraft and thus the provisions of the above quoted paragraph
constitute the only provisions in any instrument describing conveyance of
title to the Aircraft and that title to the Aircraft is in the Buyer.
This Certificate may be executed in counterparts, which taken together shall
constitute one and the same instrument, and the parties hereto may execute
this Certificate by signing any such counterpart.
Date:
Signed by
on behalf of the Seller
Title: Vice President - Legal
Signed by
on behalf of Buyer
Title:
EXHIBIT M
Dispute Resolution
*
[THREE PAGES OF CONFIDENTIAL MATERIALS OMITTED]
EXHIBIT N
JETSTREAM 32 AIRCRAFT
*
[FIVE PAGES OF CONFIDENTIAL MATERIALS OMITTED]
44
26
