AIRCRAFT SUBLEASE AGREEMENT
between
KOMMANDITBOLAGET FLYGPLANET XII
as Sublessor
and
Frontier Airlines, Inc
as Sublessee
Dated as of __ July 1999
Aircraft Make and Model: One Boeing 737-2Y5
Aircraft Manufacturer's Serial Number: 23040
Aircraft Registration Xxxx: N118RW
Engines Make and Model: Xxxxx & Whitney JT8D-15A Equipped
with Nordam LGW Hushkits
Engines Serial Numbers: 685527 and 700605
To the extent, if any, that this Agreement constitutes chattel paper under the
Uniform Commercial Code in any jurisdiction, no security interest in this
Agreement may be created through the transfer and possession of any counterpart
other than the original counterpart of this Agreement, so identified by the
signature of Lender on the receipt set forth on the signature page of such
original counterpart.
TABLE OF CONTENTS
1. DEFINITIONS Page 2
1.1 Definitions Page 2
1.2 Construction Page 12
2. REPRESENTATIONS AND WARRANTIES Page 13
2.1 Sublessee's Representations and Warranties Page 13
2.2 Sublessor's Representations and Warranties Page 17
2.3 Survival of Representations and Warranties Page 18
3. CONDITIONS PRECEDENT Page 18
3.1 Sublessor's Conditions Precedent Page 18
3.2 Waiver Page 20
3.3 Sublessee's Conditions Precedent Page 20
3.4 Waiver Page 20
4. DELIVERY CONDITION AND INSPECTION OF AIRCRAFT Page 21
4.1 Sublessee Selection of Aircraft Page 21
4.2 Condition at Delivery Page 21
4.3 Sublessee Inspection and Acceptance Flight Page 21
4.4 Delivery of Aircraft to Sublessee Page 21
4.5 Sublessee's Failure to take Delivery Page 22
5. SUBLEASE TERM Page 22
5.1 Sublease Term Page 22
5.2 Expiry Date Page 22
5.3 Early Termination Option Page 23
5.4 Survival of Certain Sublessee Obligations Page 23
5.5 Risk Page 24
6. DELIVERY Page 24
6.1 Location and Time of Delivery Page 24
6.2 Delay or Failure in Delivery Page 24
7. RENT Page 24
7.1 Basic Rent Period Page 25
7.2 Time of Payment of Basic Rent Page 25
7.3 Amount of Basic Rent Page 25
7.4 Maintenance Reserves Page 25
7.5 Supplemental Rent for Excess Cycles Page 25
8. SECURITY DEPOSIT Page 26
8.1 Security Deposit Page 26
8.2 Letter of Credit Page 26
8.3 Sublessor's Rights Page 26
9. MAINTENANCE RESERVES Page 27
9.1 Amount Page 27
9.2 Payments Page 27
9.3 Adjustment Page 27
9.4 Release of Maintenance Reserves Page 27
9.5 Costs in Excess of Maintenance Reserves Page 29
9.6 Reimbursement after Expiry Date Page 29
10. PAYMENTS Page 29
10.1 Account for Sublessee Payments Page 29
10.2 Default Interest Page 30
10.3 Absolute Obligations Page 30
10.4 Application of Payments to Sublessor Page 31
10.5 Currency Indemnity Page 31
10.6 Set-off Page 31
10.7 Time for Payments Page 32
11. Sublessor'S COVENANTS Page 32
11.1 Quiet Enjoyment Page 32
11.2 Sublessor Obligations Following Expiry Date Page 32
12. Sublessee'S COVENANTS Page 33
12.1 Duration Page 33
12.2 Information Page 33
12.3 Sublessor Visits Page 35
12.4 Periodic Estoppel Certificates Page 35
12.5 Airport and Navigation Charges Page 35
12.6 Operation of Aircraft Page 36
12.7 Areas of Operation Page 36
12.8 Non-Prejudicial Action Page 37
12.9 Non-Representation of Sublessor Page 37
12.10 Inspection Page 37
12.11 Registration Page 38
12.12 Name Plates Page 38
12.13 Geneva Convention Page 39
12.14 Merger and Shareholding Page 39
12.15 Ownership Page 39
12.16 Maintenance of Principal Business Place Page 40
12.17 Maintenance of Flight Records Page 40
13. POSSESSION Page 40
13.1 No Relinquishment of Possession Page 40
13.2 Copy of Sublease Page 43
13.3 Sublessee Primarily Liable Page 43
13.4 Recognition of Rights Page 44
14. SECURITY INTERESTS Page 44
14.1 Title Page 44
14.2 No Security Interests Page 44
14.3 Base of Aircraft Page 44
14.4 Notice to Sublessor Page 44
14.5 Procure Release Page 45
15. MAINTENANCE AND REPAIR Page 45
15.1 General Obligations Page 45
15.2 Specific Obligations Page 46
16. REPLACEMENT OF PARTS Page 47
16.1 Replacement of Parts Page 48
16.2 Title to Replacement Parts Page 48
16.3 Pooling of Parts Page 48
16.4 Alterations Page 49
16.5 Removal of Parts Page 50
16.6 Substitution of Engine Page 50
16.7 Temporary Removal of Parts Page 51
16.8 Parts Incapable of Transfer Page 52
17. MANUFACTURER'S WARRANTIES Page 52
17.1 Authorization Page 52
17.2 Proceeds Page 53
17.3 Agreements with Manufacturers Page 53
17.4 No Operation Contrary to Warranties Page 53
18. DISCLAIMERS Page 54
18.1 General Page 54
18.2 As Is, Where Is Page 54
18.3 Waiver of Warranty of Description Page 55
18.4 No Liability Under UCC Page 55
18.5 Sublessee Acknowledgment Page 55
18.6 Sublessee Waiver Page 55
18.7 Sublessee Examination of Aircraft Page 56
18.8 No Sublessor Liability for Losses Page 56
18.9 Exclusion Page 56
18.10 Waiver Page 57
18.11 No Waiver Page 57
18.12 Confirmation Page 57
19. INDEMNITIES Page 57
19.1 General Indemnity Page 57
19.2 Exception to General Indemnity Page 58
19.3 Time of Payment Page 58
19.4 Survival of General Indemnity Page 59
19.5 Notice to Sublessee Page 59
20. TAXATION Page 59
20.1 Gross-up Page 59
20.2 Tax Indemnity Page 60
20.3 Value Added Taxes Page 61
20.4 Taxation of Indemnity Payments Page 61
20.5 Benefit of Indemnities Page 62
20.6 Sublessor Indemnification Page 62
20.7 Survival of Tax Indemnities Page 62
20.8 Mitigation and Co-operation Page 62
20.9 Furnishing Forms Page 62
21. INSURANCE Page 63
21.1 Insurances Page 63
21.2 Reinsurance Page 63
21.3 Requirements Page 63
21.4 Insurance Covenants Page 64
21.5 Renewal of Insurances Page 65
21.6 Failure to Insure Page 66
21.7 Continuation of Insurances Page 66
21.8 Application of Insurance Proceeds Page 67
21.9 Pursuit of Claims Page 67
22. TOTAL LOSS AND REQUISITION Page 67
22.1 Total Loss Prior to Delivery Page 67
22.2 Total Loss After Delivery Page 68
22.3 Total Loss of Engines Page 69
22.4 Requisition Page 69
23. REDELIVERY Page 70
23.1 Redelivery of Aircraft Page 70
23.2 Final Inspection Page 71
23.3 Discrepancies Page 71
23.4 Non-compliance Page 72
23.5 Acknowledgment Page 73
23.6 Storage etc. Page 73
24. EVENTS OF DEFAULT Page 73
24.1 Notice Page 73
24.2 Events Page 73
24.3 Sublessor's Rights Page 78
24.4 Default Payments Page 79
24.5 Cumulative Rights Page 80
25. ASSIGNMENT AND TRANSFER Page 80
25.1 By Sublessee Page 80
25.2 By Sublessor Page 80
25.3 Assignment to Lender Page 80
25.4 Sublessee Co-operation Page 81
25.5 Sublessor Includes Sublessor's
Assignee and Lender Page 81
26. MISCELLANEOUS PROVISIONS Page 82
26.1 Rights Cumulative, Waivers Page 82
26.2 Delegation Page 82
26.3 Expenses Page 82
26.4 Time of Essence Page 83
26.5 Entire Agreement Page 83
26.6 Further Assurances Page 83
26.7 Language Page 83
26.8 Variation Page 83
26.9 Invalidity of any Provision Page 84
26.10 Survival Page 84
26.11 Reimbursement Page 84
26.12 Press Releases Page 84
26.13 Power of Attorney Page 84
26.14 Usury Laws Page 84
26.15 Confidentiality Page 85
26.16 Counterparts Page 85
26.17 Bankruptcy Page 85
27. NOTICES Page 86
28. GOVERNING LAW AND JURISDICTION Page 87
28.1 New York Law Page 87
28.2 Non-exclusive Jurisdiction in New York Page 87
28.3 Service of Process Page 87
28.4 Prevailing Party in Dispute Page 88
28.5 Waiver Page 88
SIGNATURE PAGE Page 89
SCHEDULE 1 Aircraft Specification Page 90
Annexure 1 Aircraft Documentation Page 93
SCHEDULE 2 Certain Business Terms Page 96
SCHEDULE 3 Insurance Requirements Page 99
SCHEDULE 4 Delivery Conditions Page 105
SCHEDULE 5 Acceptance Certificate Page 108
SCHEDULE 6 Certificate of Director Page 111
SCHEDULE 7 Form of Letter of Authority Page 113
SCHEDULE 8 Power of Attorney Page 114
SCHEDULE 9 Form of Opinion of Sublessee Counsel Page 116
SCHEDULE 10 Monthly Aircraft Utilisation
And Status Report Page 121
SCHEDULE 11 Form of Quiet Enjoyment Letter Page 123
SCHEDULE 12 Return Conditions Page 124
SCHEDULE 13 Return Acceptance Certificate Page 128
Annexure 1 Aircraft Documents Page 131
Annexure 2 Discrepancies Page 134
SCHEDULE 14 Sublease Supplement Page 135
THIS AGREEMENT is made as of __ July 1999.
BETWEEN:
(1) KOMMANDITBOLAGET FLYGPLANET XII a Swedish limited partnership whose address
and principal place of business is at Xxxxx Xxxxxxxxxxxxx 0, X-000 00 Xxxxx,
Xxxxxx, ("Sublessor"); and
(2) FRONTIER AIRLINES, INC. a Colorado corporation whose address and principal
place of business is at 00000 X. 00xx Xxxxxx, Xxxxxx, Xxxxxxxx, Xxxxxx Xxxxxx of
America ("Sublessee").
WHEREAS
Owner Trustee holds title to the Aircraft for the benefit of Sublessor;
Owner Trustee, as headlessor, leases the Aircraft to Sublessor under the terms
of the Headlease Agreement;
In consideration of and subject to the mutual covenants, terms and conditions
contained in this Agreement, and other valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, Sublessor agrees to sublease to
Sublessee and Sublessee agrees to sublease from Sublessor the Aircraft for the
Sublease Term and the parties further agree as follows:
1. DEFINITIONS
1.1 Definitions
In this Agreement the following words and expressions have the following
meanings unless the context otherwise requires:
Acceptance Certificate means a certificate of acceptance substantially in the
form set out in Schedule 5;
Agreed Value has the meaning ascribed to it in Schedule 2;
Aircraft means the Airframe, the Engines, the Parts and the Aircraft Documents,
collectively. As the context requires, the Aircraft may also mean the Airframe,
any Engine, any Part, the Aircraft Documents or any part thereof individually;
Aircraft Documents means the documents, data and records referred to in Annexure
1 to Schedule 1 of this Agreement and, at Delivery, more closely identified in
Annexure 1 to the Acceptance Certificate and all additions, renewals, revisions
and replacements from time to time made to any of the foregoing in accordance
with this Agreement;
Airframe means the airframe described in Schedule 1 together with all Parts
relating thereto (except Engines or engines);
Air Navigation Charges means all charges incurred with the furnishing, issue or
provision of information, directions and other facilities in connection with the
navigation or movement of the Aircraft (including the control or movement of
vehicles in any part of an airport used for the movement of aircraft);
Airport Charges means all charges incurred in connection with the landing,
parking or taking-off of aircraft at airports or for the use of, or for services
provided at, airports;
Airworthiness Directive means an airworthiness directive or other mandatory
requirement issued by the FAA or any other Aviation Authority or Government
Entity;
APU means the auxiliary power unit installed on the Aircraft on the Delivery
Date and any replacement auxiliary power unit installed in accordance with this
Agreement, title to which is transferred to Owner Trustee;
Aviation Authority means all and any of the authorities, government departments,
committees or agencies which under the laws of the State of Registration shall
from time to time:
(a) have control or supervision of civil aviation in that state; or
(b) have jurisdiction over the registration, airworthiness or operation
of, or other matters relating to, the Aircraft;
Basic Rent means all amounts payable pursuant to Clause 7;
Basic Rent Period means each period ascertained in accordance with Clause 7.1;
Business Day means any day (other than a Saturday or Sunday or holidays
scheduled by law) on which banks are open for foreign exchange business in
London, New York and Stockholm;
"C" Check means a "C" check (a complete zonal and systems check and the
corresponding lower "A" and "B" checks or equivalent in accordance with the MPD)
in accordance with the Maintenance Program;
Conditions Precedent means the conditions specified in Clause 3;
CPCP means corrosion prevention control program;
Cycle means one take-off and landing of the Airframe or, in relation to an
Engine or Part, one take-off and landing of the airframe to which that Engine or
Part may be attached;
"D" Check means a "C7" Check plus Structural Inspection (a complete system,
zonal, corrosion and structural inspection in accordance with the MPD);
Damage Notification Threshold has the meaning ascribed to it in Schedule 2;
Default means any Event of Default or any event which with the lapse of time or
giving of notice or making of any determination, would constitute an Event of
Default;
Default Rate means, for the relevant period, 3% percent above the rate of
interest at the start of that relevant period publicly quoted by Chase Manhattan
Bank N.A. as its prime rate;
Delivery means delivery of the Aircraft by Sublessor to Sublessee pursuant to
Clause 6;
Delivery Date means the date on which Delivery occurs;
Delivery Location means Arizona or such other location as Sublessor and
Sublessee may agree;
Dollars and US$ means the lawful currency of the United States of America;
Engine means, whether or not for the time being installed on the Aircraft:
(a) each engine of the manufacture, model and serial number specified in
Schedule 1 which Sublessor elects to tender to Sublessee, whether or
not installed on the Airframe on the Delivery Date, such engines
being described as to serial numbers on the Acceptance Certificate;
or
(b) any engine that has replaced that engine, title to which has, or
should have, passed to Owner Trustee in accordance with this
Agreement,
and in each case includes all modules and Parts from time to time belonging to
or installed in that engine but excludes any properly replaced engine title to
which has, or should have, passed to Sublessee pursuant to this Agreement;
Engine Agreed Value has the meaning ascribed to it in Schedule 2;
Engine Manufacturer means Xxxxx & Xxxxxxx;
Engine Performance Restoration Visit means any Overhaul, refurbishment, hot
section inspection, replacement of internal life limited parts, disassembly,
assembly and testing required thereof during an engine shop visit which
requires, as a minimum, a major disassembly of an Engine and the removal and
reinstallation of internal rotating parts;
Engine Total Loss means the occurrence with respect to an Engine only, whether
or not installed on the Airframe, of any of those events described in the
definition of Total Loss;
Event of Default means any event specified in Clause 24;
Expiry Date means the date determined in accordance with Clause 5.2;
FAA means the Federal Aviation Administration of the Department of
Transportation of the United States of America and any successor thereof;
FAR means the Federal Aviation Regulations set forth in Title 14 of the United
States Code of Federal Regulations, as amended, modified or replaced from time
to time and any successor regulation thereto;
Federal Aviation Act means Title 49 Subtitle VII of the U.S. Code, as amended,
modified or replaced from time to time;
Final Inspection has the meaning given to it in Clause 23.2;
Financial Indebtedness means any indebtedness in respect of:
(a) moneys borrowed or raised;
(b) payments due under finance or operating leases;
(c) any guarantee or indemnity in respect of obligations of the type
referred to in paragraphs (a) or (b);
Flight Hour means each hour or part thereof (rounded up to two decimal places)
elapsing from the moment the wheels of the Aircraft leave the ground at take off
until the wheels of the Aircraft next touch the ground at landing;
Geneva Convention means the Convention on the International Recognition of
Rights in Aircraft signed in Geneva, Switzerland on 19 June 1948, and amended
from time to time, but excluding the terms of any adhesion thereto or
ratification thereof containing reservations to which the State of Registration
does not accede;
Government Entity means:
(a) any national, state or local government, political subdivision
thereof, or local jurisdiction therein;
(b) any instrumentality, board, commission, court, or agency of any
thereof, however constituted including, for the avoidance of doubt,
the Aviation Authority; and
(c) any association, organization, or institution of which any of the
above is a member or to whose jurisdiction any thereof is subject or
in whose activities any of the above is a participant;
Headlease Agreement means the aircraft Headlease agreement entered into between
Owner Trustee and Sublessor dated as of July 10, 1998 as amended by the First
Amendment to Headlease Agreement dated as of the ___ day of July, 1999 and which
is being filed with the FAA simultaneously herewith;
Hushkits means the Nordam LGW Hushkit equipment installed on the Engines and
Airframe which meet FAR 36 Standards for Stage III noise compliance.
Indemnitees means Sublessor, Owner Trustee, Lender, or any parts or equipment
vendor or Maintenance Facility as identified by Sublessor from time to time and
any other person identified by Sublessor to have an interest in the Transaction
Documents and their respective successors and assigns, shareholders,
subsidiaries, affiliates, partners, contractors, directors, officers, servants,
agents and employees;
Insurances has the meaning ascribed to it in Clause 21.1;
Landing Gear means the landing gear assembly of the Aircraft, including all life
limited parts;
Lease Expiry Date has the meaning ascribed to it in Schedule 2;
Lender means any person or persons notified by Sublessor to Sublessee as
providing financing to Owner Trustee or Sublessor in respect of the acquisition,
ownership or leasing of the Aircraft from time to time (including any successors
in title or assignees of any such persons);
Letter of Credit has the meaning ascribed to it in Clause 8.2;
LLP means life limited part;
Loss means any and all loss, liability, obligation, action, claim, suits,
proceeding, judgement, penalty, fine, damages, fee, cost, disbursement and
expense and Losses shall be construed accordingly;
Maintenance Facility means a FAA approved maintenance facility or such other
maintenance facility as Sublessor may, in its absolute discretion, from time to
time approve in writing;
Maintenance Program means Sublessee's maintenance program as approved by the FAA
provided in compliance with the MPD or such other maintenance program as
Sublessor may, in its absolute discretion, approve in writing;
Maintenance Reserves means all amounts payable pursuant to Clause 9;
Manufacturer means the Boeing Company, a Delaware Corporation with its principal
office in the City of Seattle, State of Washington, United States of America;
Minimum Liability Coverage has the meaning ascribed to it in Schedule 2;
Monthly Report means a report substantially in the form of Schedule 10;
Mortgage means a mortgage over the Aircraft created for the benefit of Lender;
MPD mean the Maintenance Planning Document published by the Manufacturer and
applicable to the Aircraft;
Other Agreements means any other aircraft lease or sublease agreement or other
agreement from time to time entered into between Sublessor (or any parent
company, subsidiary, associate or affiliate of Sublessor) and Sublessee (or any
subsidiary, associate or affiliate of Sublessee);
Overhaul means the full refurbishment of the Aircraft, an Engine, the APU, a
Landing Gear, a module or a Part, as the case may be, in which such equipment
has been disassembled, cleaned, thoroughly inspected, repaired, reworked or had
a replacement of parts, reassembled, and tested to the tolerances and standards
specified by the applicable manufacturer's overhaul procedures manual or
equivalent;
Owner Trustee means First Security Bank, National Association;
Part means, whether or not for the time being installed in or attached to the
Airframe or any Engine:
(a) any component, furnishing or equipment (other than a complete Engine)
installed or attached to the Airframe or any Engine on the Delivery
Date; and
(b) any other component, furnishing or equipment (other than a complete
Engine) title to which has, or should have, passed to Owner Trustee
pursuant to this Agreement;
but excludes any such items title to which has, or should have, passed to
Sublessee pursuant to this Agreement;
Permitted Air Carrier has the meaning ascribed to it in Clause 13.1;
Permitted Lien means:
(a) any lien for Sublessee Taxes not assessed or, if assessed, not yet
due and payable, or being contested in good faith by appropriate
proceedings;
(b) any inchoate liens of a repairer, materialman, xxxxxxx, employee,
mechanic, carrier, hangar keeper or other similar lien arising in the
ordinary course of business in respect of obligations which are not
overdue or are being contested in good faith by appropriate
proceedings;
(c) any Sublessee liens arising out of judgements or awards with respect
to which at the time (i) an appeal proceeding for review is being
contested diligently and in good faith and (ii) a stay of execution
shall have been secured (and remains in force);
(d) any lien of the Owner Trustee as Owner Trustee or as Headlessor;
(e) any Sublessor Lien; and
(f) any Security Interest over the Aircraft created by Sublessee with the
written consent of Sublessor,
but only if (in the case of (a), (b) and (c)) (i) adequate resources are
available for the payment of those Taxes or obligations and (ii) such
proceedings, or the continued existence of the lien, do not involve any danger
(in the reasonable opinion of Sublessor or Lender) of the sale, forfeiture or
other loss of the Aircraft or any interest therein;
Redelivery Date means the Expiry Date or the earlier date of termination of the
leasing of the Aircraft in accordance with the terms of this Agreement;
Redelivery Location means a location in the continental US reasonably requested
by Sublessor or such other location as Sublessor and Sublessee may agree;
Rent means Basic Rent and Supplemental Rent;
Rent Date means the day preceding each Basic Rent Period;
Replacement Engine means an engine complying with Clause 16;
Return Conditions means the conditions specified in Schedule 12;
Scheduled Delivery Date has the meaning ascribed to it in Schedule 2;
Security Deposit has the meaning ascribed to it in Schedule 2;
Security Interest means any encumbrance or security interest, however and
wherever created or arising, including without limitation, any right of
ownership, security, mortgage, charge, pledge, lien, encumbrance, assignment,
hypothecation or any other agreement or arrangement conferring security;
Side Letter means Side Letter No. 1 to the Aircraft Sublease Agreement of even
date herewith between Sublessor and Sublessee including Exhibit 1 to Side Letter
No. 1.
State of Incorporation means the State of Colorado, United States of America;
State of Registration means in relation to the Aircraft, the United States of
America or any other state or territory in which the Aircraft is, in accordance
with the provisions hereof, registered from time to time;
Sublease Term has the meaning ascribed to it in Schedule 2;
Sublessor Lien means:
(a) any Security Interest from time to time created by or through
Sublessor in connection with the financing of the Aircraft;
(b) any other Security Interest in respect of the Aircraft that results
from acts of or claims against Sublessor not related to the
transactions contemplated by or permitted under this Agreement;
(c) any Security Interest in respect of the Aircraft for Sublessor Taxes;
(d) any Security Interest in respect of the Aircraft existing prior to
Delivery;
(e) any Security Interest arising as a result of any act or omission of
Sublessor that constitutes a breach by Sublessor of this Agreement;
or
(f) any Security Interest that results from any indebtedness, liability
or other obligation arising by, through or under Sublessor or any of
the Indemnitees and that is not indemnified against by Sublessee
under this Agreement;
Sublessor Taxes means Taxes:
(a) imposed as a result of activities of Sublessor in the jurisdiction
imposing the liability unrelated to this Agreement or the operation
of the Aircraft by Sublessee;
(b) imposed on the net income, profits or gains of Sublessor (but
excluding for the avoidance of doubt, taxes directly related to
payment made under this Agreement); or
(c) imposed with respect to (i) any event occurring prior to the Delivery
Date or after the Expiry Date or (ii) any period commencing and
ending prior to Delivery Date or any period commencing after the
Expiry Date;
Supplemental Rent means any and all amounts, liabilities and obligations (other
than Basic Rent) which Sublessee assumes, agrees or is otherwise obligated to
pay Sublessor hereunder including Maintenance Reserves, Total Loss Proceeds,
payment of Indemnity, interest or Default Interest;
Taxes means all present and future taxes, imports, levies, duties or charges,
deductions, withholdings of any nature (including without limiting the foregoing
any value added, franchise, transfer, sales, gross receipts, business, excise,
personal property, stamp, documentary, registration or other tax of whatsoever
nature) together with any assessments, fines, additions to tax or interest
thereon included and Tax and Taxation shall be construed accordingly;
Total Loss means with respect to the Aircraft (including for the purposes of
this definition the Airframe):
(a) the actual, constructive, compromised, arranged or agreed total loss
of the Aircraft; or
(b) the Aircraft being destroyed, damaged beyond economic repair or
permanently rendered unfit for normal use for any reason whatsoever;
or
(c) the requisition of title, confiscation, sequestration restraint,
detention, forfeiture or any compulsory acquisition or seizure or
requisition for hire by or under the order of any government (whether
civil, military or de facto) or public or local authorities or
courts; or
(d) the hi-jacking, theft or disappearance of the Aircraft or any other
occurrence resulting in loss of possession by Sublessee and/or
operation thereof for a period of thirty (30) consecutive days or
longer;
(e) any sale of the Aircraft in connection with a Sublessee bankruptcy
whether by an administrator, trustee or court;
(f) any other occurrence not permitted under this Agreement that deprives
Sublessee of use and possession for a period of thirty (30)
consecutive days or longer;
For the avoidance of doubt, a Total Loss of the Aircraft will be deemed to have
occurred when a Total Loss of the Airframe occurs even if there has not been a
Total Loss of an Engine or Engines;
Total Loss Date means:
(a) in the case of an actual total loss or destruction, damage beyond
repair, or being rendered permanently unfit, the date on which such
loss, destruction, damage or rendition occurs (or, if the date of
loss or destruction is not known, the date on which the Aircraft or
the relevant part thereof was last heard of);
(b) in the case of a constructive, compromised, arranged or agreed total
loss, whichever shall be the earlier of (i) the date being sixty (60)
days after the date on which notice claiming such total loss is
issued to the insurers or brokers, and (ii) the date on which such
loss is agreed or compromised by the insurers;
(c) in the case of paragraph (c) in the definition of Total Loss, the
date on which the referred to therein takes effect;
(d) in the case of paragraph (d) in the definition of Total Loss, the
final day of the said period of thirty (30) consecutive days;
(e) in the case of paragraph (e) in the definition of Total Loss, the
date on which the Aircraft is sold; and
(f) in case of paragraph (f) above the definition of Total Loss, the
final day of the said period of thirty (30) consecutive days;
Total Loss Proceeds means the proceeds of any insurance or any other
compensation or similar payment arising in respect of a Total Loss;
Transaction Documents means
(a) this Aircraft Sublease Agreement;
(b) the Acceptance Certificate;
(c) the acknowledgment by Sublessee of the security assignment or the
pledge of, inter alia, this Agreement in favor of the Lender and any
documents duly executed pursuant to any of the foregoing by Sublessee
or Sublessor;
(d) the Sublease Supplement; and
(e) the Side Letter;
US Air Carrier means an air carrier (a) operating under (i) a certificate of
public convenience and necessity issued under 49 U.S.C. 41102(a) and of the type
referred to in U.S.C. section 1110, which is in full force and effect and (ii)
an air carrier operators certificate issued pursuant to chapter 447 of the FAA
for aircraft capable of carrying ten or more individuals or 6,000 pounds or more
of cargo which is in full force and effect; and (b) qualifying as a debtor
subject to 11 U.S.C. section 1110;
1.2 Construction
1.2.1 References in this Agreement to:
(i) Clauses or Schedules are, unless otherwise specified,
references to Clauses of, and Schedules to, this
Agreement;
(ii) any statutory or other legislative provision shall be
construed as including any statutory or legislative
modification or re-enactment thereof, or any provision
enacted in substitution therefor;
(iii) the Aircraft includes any part of the Aircraft, and,
where the context so admits, any of the Aircraft
Documents, and references to any part of the Aircraft
include any part of any Engine;
(iv) the word person or persons or to words importing persons
include individuals, partnerships, limited liability
companies, corporations, government agencies,
committees, departments, authorities and other bodies,
corporate or unincorporated, whether having distinct
legal personality or not;
(v) Sublessor or Sublessee include any assignee or successor
in title to the Sublessor or the Sublessee respectively
(subject to the provisions of Clause 25);
(vi) any agreement or instrument shall include such agreement
or instrument as it may from time to time be amended,
supplemented or substituted;
(vii) an agreement shall also include a concession, contract,
deed, franchise, license, treaty or undertaking (in each
case, whether oral or written);
(viii) the assets of any person shall be construed as a
reference to the whole or any part of its business,
undertaking, property, assets and revenues (including
any right to receive revenues);
(ix) law includes common or customary law and any
constitution, decree, judgement, legislation, order,
ordinance, regulation, statute, treaty or other
legislative measure in any jurisdiction or any present
or future directive, regulation, request or requirement
in each case, whether or not having the force of law
but, if not having the force of law, the compliance with
which is in accordance with the general practice of
persons to whom the directive, regulation, request or
requirement is addressed;
(x) month are references to a period starting on one day in
a calendar month and ending on the day preceding the
numerically corresponding day in the next calendar month
(and references to months shall be construed
accordingly).
(xi) any statute or other legislative provision or regulation
shall be read to include any statutory or legislative or
administrative modification or re-enactment thereof, or
any substitution therefor;
(xii) the words "including" or "include" are used herein
without limitation to mean by way of example;
(xiii) the words "Agreement", "hereof", "herein", "hereinafter"
and "Sublease" refer to this entire Agreement; and
(xiv) the word "or" is used inclusively to mean "and/or".
1.2.2 Headings are for ease of reference only.
1.2.3 Where the context so admits, words importing the singular number only
shall include the plural and vice versa, and words importing neuter
gender shall include the masculine or feminine gender.
2. REPRESENTATIONS AND WARRANTIES
2.1 Sublessee's Representations and Warranties
Sublessee represents and warrants to Sublessor as of execution of
this Agreement and each other Transaction Document, and as of the
Delivery Date each of the following representations and warranties.
(i) Corporate Status: Sublessee is a corporation duly
incorporated, validly existing and in good standing
under the laws of the State of Incorporation and has the
corporate power and authority to carry on its business
as presently conducted and to perform its obligations
hereunder.
(ii) Government Approvals: No authorization, approval,
consent, license or order of, or registration with, or
the giving of notice to the Aviation Authority or any
other Government Entity is required for the valid
authorization, execution, delivery and performance by
Sublessee of the Transaction Documents or to make the
Transaction Documents admissible in evidence in the
State of Incorporation, except as will have been duly
effected as of the Delivery Date.
(iii) Binding: Sublessee's Board of Directors has authorized
Sublessee to enter into the Transaction Documents and
perform its obligations under the Transaction Documents.
This Agreement and the other Transaction Documents have
been duly executed and delivered by Sublessee and
represent the valid, enforceable and binding obligations
of Sublessee except as enforceability may be limited by
bankruptcy, insolvency, reorganization or other laws of
general application affecting the enforcement of
creditors' rights. When executed by Sublessee at
Delivery, the same will apply to the Acceptance
Certificate.
(iv) No Breach: The execution and delivery of the Transaction
Documents, the consummation by Sublessee of the
transactions contemplated herein and by the other
Transaction Documents and compliance by Sublessee with
the terms and provisions hereof do not and will not
contravene any law applicable to Sublessee, or result in
any breach of or constitute any default under or result
in the creation of any Security Interest upon any
property of Sublessee, pursuant to any mortgage, chattel
mortgage, deed of trust, conditional sales contract,
bank loan or credit agreement, corporate charter, by-law
or other agreement or instrument to which Sublessee is a
party or by which Sublessee or its properties or assets
may be bound or affected. When executed by Sublessee at
Delivery, the same will apply to the Acceptance
Certificate.
(v) Filings: Except for the filing or recording of this
Agreement with the FAA and a UCC-1 with the Secretary of
State in the State of Incorporation, no other filing or
recording of any instrument or document (including the
filing of any financial statement) is advisable under
the laws of the State of Registration to evidence the
interests of Owner Trustee, Sublessor and Lender in the
Aircraft or any Transaction Document.
(vi) Licenses: Sublessee holds, all licenses, certificates
and permits from all applicable Government Entities for
the conduct of its business as a certified air carrier
and performance of its obligations under the Transaction
Document.
(vii) No Suits: There are no suits, arbitrations or other
proceedings pending or threatened against Sublessee
before any court or administrative agency against or
affecting Sublessee that, if adversely determined, would
have a material adverse effect on the financial
condition or business of Sublessee or its ability to
perform its obligations under this Agreement or any
other Transaction Document.
(viii) No Withholding: Under the laws of the State of
Incorporation or the State of Registration, Sublessee
will not be required to deduct any withholding or other
Tax from any payment it may make under this Agreement.
(ix) General Obligations: The obligations of Sublessee under
this Agreement are direct, general and unconditional
obligations of Sublessee and rank or will rank at least
pari passu with all other present and future unsecured
and unsubordinated obligations (including contingent
obligations) of Sublessee, with the exception of such
obligations as are mandatorily preferred by law.
(x) Tax Returns: All necessary returns have been delivered
by Sublessee to all relevant taxation authorities in the
State of Incorporation and in the United States of
America and Sublessee is not in default in the payment
of any taxes due and payable.
(xi) No Material Adverse Effect: Sublessee is not in default
under any agreement to which it is a party or by which
it may be bound that would have a material adverse
effect on its business, assets or condition and no
material litigation or administrative proceedings before
any Government Entity is presently pending or to the
knowledge of Sublessee threatened against it or its
assets that would have a material adverse effect on the
business, assets or condition (financial or otherwise)
of Sublessee.
(xii) No Default under this Agreement: At the time of
execution of this Agreement, no Default has occurred and
is continuing.
(xiii) Financial Statements: The balance sheet and other
financial statements for Sublessee for the financial
year which ended 31st of March 1999 were prepared in
accordance with accounting principles consistently
applied and generally accepted in the State of
Incorporation and in the United States of America.
(xiv) No Winding Up: No meeting has been convened or other
action taken for winding up or dissolution, or for the
appointment of any receiver or similar officer, in
relation to Sublessee or any of its assets.
(xv) Continuation of Business: Sublessee will continue to
operate substantially the same business as it is
presently engaged in, will preserve its corporate
existence, conduct its business in an orderly and
efficient manner, satisfy its debts and obligations as
they fall due and keep and maintain all of its assets
and properties in good working order and condition.
(xvi) No Immunity: In any proceedings taken in the State of
Incorporation, or in any State or Federal Court in the
United States of America, in relation to the Transaction
Documents, it would not be entitled to claim for itself
or any of its assets any immunity from suit, execution,
attachment or other legal process.
(xvii) Information: All information furnished by or on behalf
of the Sublessee in connection with all transactions
contemplated by the Transaction Documents is complete,
true and correct in all material respects and all
relevant facts concerning the business and affairs of
the Sublessee have been disclosed to the Sublessor.
(xviii) Status: Sublessee is a US Air Carrier and a "citizen of
the United States" as defined in 49 U.S.C. Section
40102. Sublessee shall operate the Aircraft under Part
121 of the FAR and shall at all times remain a duly
certified US Air Carrier.
(xix) Principal Place of Business: Sublessee's principal place
of business and chief executive office are located at
the address specified in the preamble of this Agreement.
(xx) Flight Records: Sublessee's flight records are located
at Sublessee's principal place of business on the
address stated in Clause 27.
(xxi) Year 2000 Compliance: Sublessee has (i) initiated a
review and assessment of all areas within its business
and operations (including those affected by suppliers
and vendors) that could be adversely affected by the
"Year 2000 Problem" (this is, the risk that computer
applications used by Sublessee, or its suppliers,
customers and vendors, may be unable to recognise and
perform properly date-sensitive functions involving
certain dates prior to, on and any date after
December 31, 1999), (ii) developed a plan for addressing
the Year 2000 Problem on a time basis, and (iii) is in
the process of implementing such plan.
2.2 Sublessor's Representations and Warranties
Sublessor represents and warrants to Sublessee as of the Delivery
Date that:
(i) Title to Aircraft: Sublessor warrants that title to the
Aircraft will be vested in Owner Trustee and the
Aircraft shall be free and clear of any and all Liens
except for the Security Interests of Owner Trustee,
Sublessor's Lender and this Sublease.
(ii) Organizational Status: Sublessor is a limited
partnership created and validly existing under the laws
of Sweden, and has the organizational power and
authority to carry on its business as presently
conducted and to perform its obligations under this
Agreement and each other Transaction Document to which
it is a party.
(iii) Trust Agreement: The Trust Agreement dated as of May 28,
1998, by and between Owner Trustee and Sublessor as
beneficiary (the "Trust Agreement") has been duly
authorized, validly executed and delivered on the part
of Sublessor, is legally binding upon Sublessor, and
creates a legally enforceable trust (as hereinafter
defined as the "Trust"). Owner Trustee, in its capacity
as Trustee of the Trust, has legal power and authority
to take legal title to the Aircraft and has legal
authority and is qualified as the holder of legal title
to the Aircraft to register the Aircraft in accordance
with the terms of the Federal Aviation Act.
(iv) Government Approvals: No authorization, approval,
consent, license or order of, or registration with, or
the giving of notice to any Government Entity is
required for the valid authorization, execution,
delivery and performance by Sublessor of this Agreement,
except as will have been duly effected as of the
Delivery Date.
(v) Binding: This Agreement and the other Transaction
Documents to which Sublessor is a party have been duly
executed and delivered by Sublessor and represent the
valid, enforceable and binding obligations of Sublessor
except as enforceability may be limited by bankruptcy,
insolvency, reorganization or other laws of general
application affecting the enforcement of creditors'
rights.
(vi) No Breach: The execution and delivery of the Transaction
Documents, the consummation by Sublessor of the
transactions contemplated herein and compliance by
Sublessor with the terms and provisions hereof do not
and will not contravene any law applicable to Sublessor,
or result in any breach of or constitute any default
under or result in the creation of any Security Interest
upon any property of Sublessor, pursuant to any
indenture, mortgage, chattel mortgage, deed of trust,
conditional sales contract, bank loan or credit
agreement, corporate charter, by-law or other agreement
or instrument to which Sublessor is a party or by which
Sublessor or its properties or assets may be bound
or affected.
2.3 Survival of Representations and Warranties
All of the foregoing Sublessee's and Sublessor's representations and
warranties shall survive the execution and delivery of this Agreement
and the Delivery of the Aircraft.
3. CONDITIONS PRECEDENT
3.1 Sublessor's Conditions Precedent
Sublessor's obligation to deliver and lease the Aircraft to Sublessee
under this Agreement is subject to satisfaction of each of the
following conditions.
3.1.1 Receipt by Sublessor from Sublessee on or prior to the Delivery Date
of the following, each in form and substance reasonably satisfactory
to Sublessor:
(i) Officer's Certificate: A certificate of an officer of
Sublessee substantially in the form of Schedule 6;
(ii) Consents: Evidence that all governmental or other
consents, licenses, approvals and authorizations
required for the execution, delivery and performance by
Sublessee of the Transaction Documents have been
obtained or made and are in full force and effect;
(iii) Accounts: The balance sheet and other financial
statements of Sublessee for the financial year ended
March 31 1999;
(iv) Licences: Copies of Sublessee's Certificate of Public
Convenience and Necessity and Operating Certificate
covering its operation of 737-200's issued by the US
Department of Transportation and FAA, respectively;
(v) Transaction Documents: Originals of the Transaction
Documents (duly executed by all parties other than
Sublessor);
(vi) Insurances: Evidence that the Insurances are in place
together with an insurance broker's letter of
undertaking (in a form acceptable to Headlessor,
Sublessor and Lender) addressed to Headlessor, Sublessor
and Lender;
(vii) Opinions: Legal opinions from:
(a) Counsel to Sublessee addressed to Owner
Trustee, Sublessor and Lender substantially
in the form of Schedule 9 and otherwise in a
form and substance acceptable to Owner
Trustee, Sublessor and Lender; and
(b) Special FAA counsel to Sublessee addressed to
Owner Trustee, Sublessor and Lender
confirming that this Agreement and other
appropriate documents have been filed with
the FAA;
(viii) Security: Receipt by Sublessor of the Security Deposit
and the Letter of Credit;
(ix) Authority: A letter of authority substantially in the
form of Schedule 7 duly executed by Sublessee to such
addressees as requested by Sublessor;
(x) Power of Attorney: A power of attorney in the form of
Schedule 8 duly executed by Sublessee; and
(xi) Others: Any other documents, approvals, consents,
certificates that Sublessor or Lender may reasonably
require.
3.1.2 The representations and warranties of Sublessee under Clause 2.1
shall be correct and would be correct if repeated on Delivery.
3.1.3 No Default shall have occurred and be continuing.
3.2 Waiver
The Sublessor's Conditions Precedent are for the sole benefit of
Sublessor and may be waived or deferred by Sublessor in whole or in
part and with or without conditions. If any of the Conditions
Precedent are not satisfied on the Delivery Date and Sublessor (in
its absolute discretion) nonetheless agrees to deliver the Aircraft
to Sublessee, Sublessee shall ensure that such Conditions Precedent
are fulfilled within fifteen (15) days after the Delivery Date, and
Sublessor may treat the failure of Sublessee to do so as an Event of
Default.
3.3 Sublessee's Conditions Precedent
Sublessee's obligation to accept and lease the Aircraft from
Sublessor under this Agreement is subject to satisfaction of each of
the following conditions.
3.3.1 The Aircraft is substantially and materially in the condition set
forth in Schedule 4.
3.3.2 The receipt by Sublessee from Sublessor on or prior to the Delivery
Date of the following, each in form and substance reasonably
satisfactory to Sublessee:
(i) Evidence of Authority: Certified copies of evidence of
appropriate action approving the execution, delivery and
performance of the Transaction Documents by Sublessor
and of the person or persons authorized to sign the
Transaction Documents on behalf of Sublessor or any
other documents to be delivered to Sublessee by
Sublessor;
(ii) Specimen signatures: A certificate of an officer of
Sublessor setting out the names and signatures of the
persons authorized to sign on behalf of Sublessor the
Transaction Documents and any documents to be delivered
by Sublessor pursuant hereto contemporaneously herewith;
and
(iii) Transaction Documents: Originals of this Agreement and
the Side Letter (duly executed by Sublessor).
3.3.3 The representations and warranties of Sublessor under Clause 2.2
shall be correct and would be correct if repeated on Delivery.
3.4 Waiver
The Sublessee's Conditions Precedent are for the sole benefit of
Sublessee and may be waived or deferred by Sublessee in whole or in
part and with or without conditions.
4. DELIVERY CONDITION AND INSPECTION OF AIRCRAFT
4.1 Sublessee Selection of Aircraft
IN ADDITION TO THE DISCLAIMERS IN CLAUSE 18, SUBLESSEE REPRESENTS AND
WARRANTS TO SUBLESSOR THAT SUBLESSEE HAS USED ITS OWN JUDGEMENT IN
SELECTING THE AIRCRAFT AND HAS DONE SO BASED ON ITS SIZE, DESIGN AND
TYPE. SUBLESSEE ACKNOWLEDGES THAT SUBLESSOR IS NEITHER A MANUFACTURER
OF THE AIRCRAFT NOR A DEALER IN THE AIRCRAFT.
4.2 Condition at Delivery
In addition to the disclaimers in Clause 18, Sublessor has advised
Sublessee that at Delivery the Aircraft will be substantially and
materially in the condition set forth in Schedule 4, provided that
this confirmation expires as at Delivery.
4.3 Sublessee Inspection and Acceptance Flight
Sublessor will arrange for Sublessee to perform such ground
inspection of the Aircraft prior to the Scheduled Delivery Date as is
reasonable. Sublessor will procure that Sublessee may have up to two
(2) observers on board the Aircraft during delivery acceptance flight
from Sublessor. Sublessee acknowledges that, as between it and
Sublessor, in accepting the Aircraft it is relying on its own
inspection and knowledge of the Aircraft in determining whether it
meets the requirements of this Agreement.
4.4 Delivery of Aircraft to Sublessee
Sublessor will deliver the Aircraft to Sublessee at the Delivery
Location. Provided that the Aircraft is in the condition required by
Clause 4.2, upon the tender of the Aircraft by Sublessor to
Sublessee, Sublessee will accept the Aircraft and the date of tender
by Sublessor to Sublessee will be deemed to be the Delivery Date for
all purposes under this Agreement, including, but not limited to, the
commencement of Sublessee's obligation to pay Rent hereunder.
Sublessee shall execute and deliver the Acceptance Certificate to
Sublessor on the Delivery Date.
4.5 Sublessee's Failure to take Delivery
If Sublessee fails to (i) comply with the conditions contained in
Clauses 3.1 so as to allow Delivery to take place upon tender or (ii)
take delivery of the Aircraft when properly tendered for Delivery by
Sublessor in the condition required hereunder, Sublessee will
indemnify Sublessor for all costs and expenses, directly or
indirectly, incurred by Sublessor as a result thereof including (but
without limitation) any payments that Sublessor, or Sublessor's
General Partner, affiliates or related companies become obliged to
make to any third party to put the Aircraft in the condition set
forth in Schedule 4.
5. SUBLEASE TERM
5.1 Sublease Term
Sublessor shall lease the Aircraft to Sublessee and Sublessee shall
take the Aircraft on lease in accordance with this Agreement for the
duration of the Sublease Term.
5.2 Expiry Date
The Expiry Date shall be the Sublease Expiry Date subject to the
following provisions:
(i) If Sublessor, acting in accordance with Clause 3.2,
notifies Sublessee that it is terminating this
Agreement, Sublessee shall immediately redeliver the
Aircraft in accordance with Clause 23 and the Expiry
Date shall be the date upon which the Aircraft has been
redelivered in accordance with the terms hereof and
Sublessee has complied with all its obligations
hereunder;
(ii) If Sublessor, upon an Event of Default, exercises its
rights in accordance with Clause 24.3 and terminates the
leasing of the Aircraft to Sublessee under this
Agreement, Sublessee shall immediately redeliver the
Aircraft in accordance with Clause 23 and the Expiry
Date shall be the date upon which the Aircraft has been
redelivered in accordance with the terms hereof and
Sublessee has complied with all its obligations
hereunder;
(iii) If the Aircraft or the Airframe suffers a Total Loss
prior to Delivery, the Expiry Date shall be the Total
Loss Date;
(iv) If the Aircraft or the Airframe suffers a Total Loss
after Delivery, the Expiry Date shall be the date upon
which Sublessee has paid to Sublessor the Agreed Value
and all other sums due from Sublessee to Sublessor
hereunder;
(v) If Clause 23.4 becomes applicable, the Expiry Date shall
be the date when any non-compliance referred to in
Clause 23.4 has been fully rectified and Sublessor shall
have accepted redelivery of the Aircraft and Sublessee
shall have complied with all its obligations hereunder;
and
(vi) Under any other circumstances, the Expiry Date shall be
the date upon which the Aircraft is redelivered in
accordance with Clause 23 and the Return Acceptance
Receipt has been duly executed and delivered by
Sublessor in accordance with that clause.
5.3 Early Termination Option
5.3.1 So long as no Event of Default has occurred and is continuing
hereunder both on the date of exercise of the option and from such
date to the commencement date of the lease term with respect to such
option, Sublessee and Sublessor will have a mutually exercisable
option (the "Early Termination Option") to terminate the Sublease
prior to the Expiry Date provided that the Sublessor and Sublessee
enter into an agreement to replace the Aircraft with a Boeing 737-300
to be leased to Sublessee by Sublessor or its assigns.
5.3.2 In order to exercise the Early Termination Option, the Sublessor and
Sublessee must enter into a written letter of intent to replace the
Aircraft with a Boeing 737-300.
5.4 Survival of Certain Sublessee Obligations
5.4.1 For the avoidance of doubt, in respect of Clauses 5.2 (i), (ii), (v)
and (vi) the obligations of Sublessee in respect of payment of Rent
and all other obligations shall continue to be payable and valid in
respect of those days prior to the redelivery to Sublessor of the
Aircraft in the condition required under Clause 23.1, and in respect
of Clause 5.2 (iv) such obligations shall continue until payment of
the Total Loss Proceeds.
5.4.2 The obligations of Sublessee set forth in Clauses 12.5, 12.17, 19, 20
and 21.7 and any other obligations of Sublessee that were due to have
been performed but have not been fully performed prior to the
termination of the Agreement pursuant to this Clause 5.4, will
survive the Expiry Date.
5.5 Risk
5.5.1 Throughout the Sublease Term and until redelivery of the Aircraft in
the condition required under Clause 23.1, Sublessee shall bear all
risks of loss, theft, damage, confiscation and destruction of or to
the Aircraft and every part thereof.
5.5.2 If the Aircraft is lost, stolen, confiscated, damaged, destroyed or
otherwise rendered unfit and unavailable for use, Sublessor shall not
be liable to repair the same or supply any equipment in substitution
therefor, unless caused by the intentional act or gross negligence of
Sublessor, its employees or agents.
6. DELIVERY
6.1 Location and Time of Delivery
Sublessor will deliver the Aircraft to Sublessee at the Delivery
Location on or about the Scheduled Delivery Date. Sublessor will
notify Sublessee from time to time and in as timely a manner as is
possible of any changes to the Scheduled Delivery Date.
6.2 Delay or Failure in Delivery
6.2.1 Sublessee and Sublessor expressly acknowledge that Delivery of the
Aircraft to Sublessee is subject to and conditioned upon completion
of the Delivery Work. Sublessor will not be liable for any loss or
expense, or any loss of profit, arising from any delay or failure in
Delivery to Sublessee unless such delay or failure arises as a direct
consequence of the gross negligence or wilful default of Sublessor.
6.2.2 If a delay, not caused by Sublessor's or Sublessee's breach of this
Agreement, causes Delivery to be delayed beyond seventy-five(75) days
after the Scheduled Delivery Date either party will have the right to
terminate this Agreement by giving the other party written notice
within ten (10) Business Days after such date and this Agreement will
terminate on the date of receipt of such notice. In the event of such
termination, neither party will have any further obligation or
liability to the other under this Agreement, except that Sublessor
will repay to Sublessee under this Agreement any prepaid Rent, the
amount of the Security Deposit, if paid, and will return the Letter
of Credit. If either party does not give notice of termination within
such ten (10) Business Days, both parties lose all rights to
terminate under this Clause 6.2.2, unless otherwise agreed by the
parties.
7. RENT
7.1 Basic Rent Period
The first Basic Rent Period shall commence on the day following
Delivery and each subsequent Basic Rent Period shall commence on the
date succeeding the last day of the previous Rent Period within the
Sublease Term. Each Basic Rent Period shall end on the date
immediately preceding the numerically corresponding day one (1) month
thereafter, except that:
(i) if there is no such numerically corresponding day in
that month, it shall end on the last day of that month;
and
(ii) if a Basic Rent Period would otherwise end after the
Expiry Date, it shall end on the Expiry Date and the
Rent for such Basic Rent Period will be prorated on the
basis of a thirty (30) day month.
7.2 Time of Payment of Basic Rent
Sublessee shall pay Basic Rent to Sublessor or to its order in
advance on each Rent Date. Sublessee shall initiate payment
adequately in advance of each Rent Date to ensure that Sublessor
receives credit for the payment on such Rent Date. If a Rent Date is
a day which is not a Business Day, the Rent payable in respect of
that rent period shall be paid on the Business Day immediately
preceding the Rent Date.
7.3 Amount of Basic Rent
The Basic Rent payable on each Rent Date during the Sublease Term
shall be the amount set out as Basic Rent in Schedule 2.
7.4 Maintenance Reserves
Sublessee will pay to Sublessor Maintenance Reserves in accordance
with Clause 9 as Supplemental Rent, based on Sublessee's use of the
Aircraft during the Sublease Term.
7.5 Supplemental Rent for Excess Cycles
Sublessee shall pay to Sublessor Supplemental Rent based on
Sublessee's operation of the Aircraft in the amount and at the times
set forth in Schedule 2.
8. SECURITY DEPOSIT
8.1 Security Deposit
Sublessee shall pay to Sublessor a Security Deposit in the amount and
at the times set forth in Schedule 2. The Security Deposit will serve
as security for the performance by Sublessee of its obligations under
the Transaction Documents and the Other Agreements.
Upon Sublessor's receipt of the additional Security Deposit set forth
in Clause 8.2 the initial deposit set forth in this Clause 8.1 will
be credited to the payment of Rent during the Sublease Term.
8.2 Letter of Credit
Sublessee shall provide Sublessor with an additional Security Deposit
initially in the form of cash but to be replaced within 30 days from
the date of this Agreement with an irrevocable, assignable, standby
letter of credit in favor of Sublessor in the amount set forth in
Schedule 2 and issued by a major US Bank and in a form and substance
acceptable by Sublessor. Upon substitution of the Letter of Credit
for the cash deposit, Sublessor will return the cash deposit to
Sublessee. The Letter of Credit will serve as security for the
performance by Sublessee of its obligations under the Transaction
Documents and the Other Agreements.
8.3 Sublessor's Rights
8.3.1 If an Event of Default shall have occurred and be continuing, in
addition to all rights and remedies accorded to Sublessor elsewhere
in this Agreement or under applicable law in respect of the Security
Deposit or Letter of Credit, Sublessor may immediately, or at any
time thereafter, without prior notice to Sublessee, apply all or part
of the Security Deposit or Letter of Credit in or towards the payment
or discharge of any matured obligation owed by Sublessee under the
Transaction Documents or the Other Agreements, in such order as
Sublessor sees fit, and/or exercise any of the rights of set-off
described in Clause 10.6 against all or part of the Security Deposit
or Letter of Credit.
8.3.2 If Sublessor exercises the rights described in Clause 8.3.1,
Sublessee shall, following a demand in writing from Sublessor,
immediately restore the Security Deposit (if applicable) or Letter of
Credit to the level at which it stood immediately prior to such
exercise.
8.3.3 Sublessee acknowledges that Sublessor may commingle all or any part
of the Security Deposit with its general funds and that no interest
shall accrue in favour of Sublessee in respect of the Security
Deposit.
8.3.4 Sublessor's obligations in respect of return of the Security Deposit
and Letter of Credit shall be those of debtor and not those of a
trustee or other fiduciary.
9. MAINTENANCE RESERVES
9.1 Amount
Sublessee shall during the Sublease Term pay Maintenance Reserves to
Sublessor in the amount set forth in Schedule 2.
9.2 Payments
9.2.1 Sublessee shall pay the Maintenance Reserves in respect of each
calendar month during which the Maintenance Reserves accrue on the
tenth (10) day immediately following the end of that calendar month
on the basis of the information contained in the applicable Monthly
Report.
9.2.2 Sublessee acknowledges that Sublessor may commingle all or any part
of the Maintenance Reserves with its general funds and that no
interest shall accrue in favor of Sublessee in respect of the
Maintenance Reserves.
9.2.3 Sublessor's obligations to release the Maintenance Reserves as set
out hereinafter shall be those of debtor and not those of a trustee
or other fiduciary.
9.3 Adjustment
The amount payable by Sublessee to the Maintenance Reserves shall be
subject to escalation in accordance with the terms set forth in
Schedule 2.
9.4 Release of Maintenance Reserves
9.4.1 Airframe Maintenance Reserves
Sublessor will reimburse Sublessee from the actual Airframe
Maintenance Reserves, if paid by Sublessee, provided that no Default
has occurred and is continuing, for the actual cost of the structural
inspection portion of completed scheduled "D" Checks and the
rectification of any structural deficiencies resulting from such
inspection whenever such inspections and rectification work is
performed (provided that such inspection and rectification extends
the available life of the Aircraft). Work performed for all other
causes is excluded from such reimbursement, including the charges set
forth in Clause 9.4.5 below.
9.4.2 Engine Maintenance Reserves
Sublessor will reimburse Sublessee from the actual Engine Maintenance
Reserves, if paid by Sublessee, provided that no Default has occurred
and is continuing, for the actual cost of completed Engine
Performance Restoration Visits to the extent the work performed
during such Engine Performance Restoration Visits consisted of the
replacement of life/time limited components and/or performance
restoration, with work performed for all other causes excluded,
including those causes set forth in Clause 9.4.5below. Reimbursement
will be made up to the amount in the Engine Maintenance Reserve
applicable to such Engine.
9.4.3 Landing Gear Maintenance Reserves
Sublessor will reimburse Sublessee from the actual Landing Gear
Maintenance Reserves, if paid by Sublessee, provided that no Default
has occurred and is continuing, for the actual cost associated with
the completed Landing Gear Overhauls, with work performed for all
other causes excluded, including those causes set forth in Clause
9.4.5. Reimbursement will be made up to the amount in the Landing
Gear Maintenance Reserve at the time for the Landing Gear Overhaul.
9.4.4 APU Maintenance Reserves
Sublessor will reimburse Sublessee from the actual APU Maintenance
Reserves, if paid by Sublessee, provided that no Default has occurred
and is continuing, for the actual cost associated with the completed
APU performance restoration, with work performed for all other causes
excluded, including those causes set forth in Clause 9.4.5.
Reimbursement will be made up to the amount in the APU Maintenance
Reserve at the time for the APU performance restoration.
9.4.5 Exclusion
Each of the following causes shall be excluded from this Clause 9.4:
accomplishment of Airworthiness Directives and FAR's, accident,
faulty maintenance or installation, incident, improper operations,
abuse, neglect, misuse, optional parts replacement (where such
replacement does not increase operational life) or work covered by
manufacturer's service bulletins or which is reimbursed by a claim
under manufacturer's warranties or by insurance (with deductibles
being treated as reimbursable by insurance for this exclusion).
9.4.6 Remaining balance
For the avoidance of doubt, Sublessee has no right to payment of any
amount from the Maintenance Reserves not paid in cash by Sublessee
and, subject to Clause 9.6, any remaining balances of the Maintenance
Reserves on the Expiry Date, after application of the foregoing
provisions, shall be retained by Sublessor as its sole property.
9.5 Costs in Excess of Maintenance Reserves
Sublessee will be responsible for payment of all costs in excess of
the amounts reimbursed hereunder. If on any occasion the balance in
the relevant Reserve is insufficient to satisfy a claim for
reimbursement in respect of the Airframe, an Engine, the Landing
Gears or the APU, as the case may be, the shortfall may not be
carried forward or made the subject of any further claim for
reimbursement.
9.6 Reimbursement after Expiry Date
Sublessee may not submit any invoice for reimbursement from the
Maintenance Reserves after the Expiry Date unless on or prior to such
date Sublessee has notified Sublessor in writing that such
outstanding invoice will be submitted after the Expiry Date and the
anticipated amount of such invoice. So long as Sublessee has provided
such notice to Sublessor, Sublessee may then submit such outstanding
invoice at any time within three (3) months after the Expiry Date;
provided, however, if Sublessee contests any such invoice and
provides Sublessor with notice of such contest and periodic updates
of the progress of such contest, the time for submitting an invoice
shall be extended until the resolution of such contest.
10. PAYMENTS
10.1 Account for Sublessee Payments
All payments by Sublessee to Sublessor under this Agreement will be
made for value on the due date in dollars and in same day funds to:
Swedbank
Account No. 8901-1 202 2061
S.W.I.F.T.: SWED SESS
X-000 00 Xxxxxxxxx, Xxxxxx
Cover through: First Chicago, New York, NY
S.W.I.F.T.: FNB CUS333
For the account of: Kommanditbolaget Flygplanet XII
or to such other account as Sublessor may from time to time notify to
Sublessee in writing.
10.2 Default Interest
If Sublessee fails to pay any amount payable under this Agreement on
the due date, Sublessee shall pay to Sublessor on demand from time to
time interest both before and after judgement on that amount, from
the due date or, in the case of amounts expressed to be payable on
demand, from the date of receipt of such demand to the date of
payment in full by Sublessee to Sublessor, at the Default Rate. All
such interest will accrue on a day-to-day basis and be compounded
weekly and calculated on the basis of a 360 day year.
10.3 Absolute Obligations
This Agreement is a net lease and Sublessee's obligations under this
Agreement are absolute and unconditional, irrespective of any
contingency or circumstance whatsoever, including (but not limited
to):
(i) any right of set-off, counterclaim, recoupment,
reimbursement, defense or other right which Sublessor or
Sublessee may have against the other or against any
other person;
(ii) any unavailability of the Aircraft for any reason,
including, but not limited to, requisition of the
Aircraft or any prohibition or interruption of or
interference with or other restriction against
Sublessee's use, operation or possession of the
Aircraft;
(iii) any lack or invalidity of title or any other defect in
title, airworthiness, merchantability, fitness for any
purpose, condition, design, or operation of any kind or
nature of the Aircraft for any particular use or trade,
or for registration or documentation under the laws of
any relevant jurisdiction, or any Total Loss in respect
of or any damage to the Aircraft;
(iv) any insolvency, bankruptcy, reorganisation, arrangement,
readjustment of debt, dissolution, liquidation or
similar proceedings by or against Sublessor or Sublessee
or any other person;
(v) any invalidity, illegality, unenforceability or lack of
due authorization of, or other defect in, this
Agreement; and
(vi) any other cause or circumstance that, but for this
provision, would or might otherwise have the effect of
terminating or in any way affecting any obligation of
Sublessee under this Agreement.
10.4 Application of Payments to Sublessor
If any sum paid to Sublessor or recovered by Sublessor in respect of
the liabilities of Sublessee under this Agreement is less than the
amount then due, Sublessor may apply that sum to amounts due under
this Agreement in such proportions and order and generally in such
manner as Sublessor may determine.
10.5 Currency Indemnity
If under any applicable law, whether as a result of judgement against
Sublessee or the liquidation of Sublessee or for any other reason,
any payment under or in connection with this Agreement is made or is
recovered in a currency ("other currency") other than the currency in
which it is payable pursuant to this Agreement ("contractual
currency"), Sublessee shall, to the extent that the payment (when
converted into the contractual currency at the rate of exchange on
such date or, in the case of a liquidation, the latest date for the
determination of liabilities permitted by the applicable law) falls
short of the amount payable under this Agreement, as a separate and
independent obligation, fully indemnify Sublessor against the amount
of the shortfall. For the purposes of this sub-Clause "rate of
exchange" means the rate at which the Sublessor is able on the
relevant date to purchase the contractual currency in London or any
other place Sublessor may reasonably choose with the other currency.
10.6 Set-off
Sublessor may set-off any matured obligation owed by Sublessee under
the Transaction Documents or any Other Agreements against any
obligation, whether or not matured, owed by Sublessor to Sublessee.
10.7 Time for Payments
If any payment due under this Agreement other than a payment of Rent
(see Clause 7.4) would otherwise be due on a day that is not a
Business Day, it shall be due on the next succeeding Business Day.
11. SUBLESSOR'S COVENANTS
11.1 Quiet Enjoyment
Provided no Default has occurred and is continuing, Sublessor shall
not, and no one claiming by or through the acts or omissions of
Sublessor or Owner Trustee shall, interfere with the quiet use,
possession and enjoyment of the Aircraft by Sublessee during the
Sublease Term. Sublessor will cause Lender to confirm, substantially
in the form of Schedule 11 or such other form as Lender may
reasonably require, that it will not interfere with the quiet use,
possession and enjoyment of the Aircraft by Sublessee during the
Sublease Term, provided no Default has occurred and is continuing.
11.2 Sublessor Obligations Following Expiry Date
Within five (5) Business Days after:
(i) redelivery of the Aircraft to Sublessor in accordance
with and in the condition required by this Agreement; or
(ii) payment received by Sublessor of the Agreed Value
following a Total Loss after the Delivery Date;
or in each case such later time as Sublessor is reasonably satisfied
that Sublessee has irrevocably paid to Sublessor all amounts that may
then be outstanding or become payable under the Transaction Documents
and the Other Agreements, Sublessor shall (provided that no Default
has occurred and is continuing):
(a) pay to Sublessee an amount equal to the
balance of the Security Deposit, if any, paid
by Sublessee under this Agreement and then
held by Sublessor; and
(b) pay to Sublessee the amount of any Rent
received in respect of any period falling
after the Redelivery Date or the date of
payment of the Agreed Value, as the case may
be; provided, however, if there is a dispute
between Sublessor and Sublessee as to the
amount due to Sublessee, Sublessor shall
nevertheless pay to Sublessee such amount as
in Sublessor's reasonable judgement is not in
dispute or is in excess of the amount
Sublessor's claim is due; and
(c) return the Letter of Credit.
12. SUBLESSEE'S COVENANTS
12.1 Duration
Sublessee shall perform and comply with its undertakings and
covenants in this Agreement and the other Transaction Documents at
all times during the Sublease Term. All such undertakings and
covenants shall, except where expressly otherwise stated, be
performed at the expense of Sublessee.
12.2 Information
12.2.1 Sublessee shall notify Sublessor forthwith of the occurrence of a
Default or an Event of Default and the steps it is taking to cure
such Default or Event of Default.
12.2.2 Sublessee shall furnish to Sublessor:
(i) as soon as available, but not in any event later than
ninety (90) days after the last day of each financial
year of Sublessee, its audited consolidated balance
sheet as of such day and its audited consolidated profit
and loss statement for the year ending on such day
prepared in accordance with generally accepted
accounting principles in the United States (U.S. GAAP);
(ii) as soon as available, but not in any event later than
forty-five (45) days after the last day of each quarter
of Sublessee, its unaudited consolidated balance sheet
as of such day and its unaudited consolidated profit and
loss statement for the quarter ending on such day
prepared in accordance with generally accepted
accounting principles in the United States (U.S. GAAP);
(iii) such information as may reasonably be requested by
Sublessor to fulfil its Tax filing or other information
reporting requirements with respect to the transactions
contemplated by this Agreement;
(iv) within ten (10) days following the end of each month a
Monthly Report in the form of Schedule 10, detailed
technical reports following completion of each "C" Check
and other information reasonably requested by Sublessor
concerning the location, condition, use and operation of
the Aircraft; and
(v) such other information and documents regarding
Sublessee's business and financial condition as
Sublessor may from time to time reasonably request.
12.2.3 Sublessee shall promptly notify Sublessor in writing:
(i) of any loss, theft, damage or destruction to the
Aircraft, any Engine or any Part if the cost of the
repair or replacement thereof may exceed the Damage
Notification Threshold, or any modification to the
Aircraft if the potential cost of repair or of such
modification may exceed the Damage Notification
Threshold;
(ii) of any suit, arbitration or proceeding before any court,
administrative agency or Government Entity which, if
adversely determined, would materially adversely affect
Sublessee's financial condition, affairs, operations or
its ability to perform under this Agreement;
(iii) of any Total Loss to the Aircraft or any damage caused
to the Aircraft that is expected to be in excess of the
Damage Notification Threshold and the amount of the
deductible under the Insurance or equivalent in any
currency;
(iv) of any loss, arrest, hijacking, confiscation, seizure,
requisitioning, impounding, taking in execution, or
forfeiture of the Aircraft or any Engine or any major
part thereof;
(v) of any substantial injury or damage to a third party
caused by, or in connection with, the Aircraft which is
expected to give rise to any loss or liability on the
part of the Sublessor or to a loss or liability in
excess of the Damage Notification Threshold; and
(vi) of any other event in respect of the Aircraft which in
the reasonable opinion of the Sublessee might reasonably
be expected to involve the Sublessor in any loss or
liability.
(vii) promptly notify Sublessor in the event Sublessee is made
aware of or determines that any computer application
(including those of its suppliers, customers and
vendors) that is material to the business and operation
of Sublessee will not be year 2000 compliant (as
described in Clause 2.1 (xxii)) on a timely basis,
except to the extent that such failure could not
reasonably be expected to have a materially adverse
effect.
12.3 Sublessor Visits
Sublessor may visit, upon reasonable notice, Sublessee's premises to
discuss Sublessee's general affairs and finances with Sublessee's
principal officers.
12.4 Periodic Estoppel Certificates
Sublessee will, within ten (10) Business Days after receipt of
written notice from Sublessor (which will not occur more often than
four (4) times in any calendar year), execute, acknowledge and
deliver to Sublessor a written statement as to each of the following:
(i) certifying that this Agreement is unmodified and in full
force and effect (or, if modified, stating the nature of
such modification and certifying that this Agreement, as
so modified, is in full force and effect) and the date
to which the Rent and other charges are paid in advance,
if any;
(ii) acknowledging that there are not, to Sublessee's
knowledge, any uncured defaults on the part of Sublessor
hereunder, or specifying such defaults if there are any
claimed by Sublessee; and
(iii) acknowledging that Sublessee has no claims against
Sublessor by reason of the condition of the Aircraft as
of the Delivery Date or arising subsequent thereto to
the date of such statement.
If Sublessee does not deliver such statement within such time-limit,
the statements set forth in this Clause 12.4 will be deemed correct
and binding upon Sublessee.
12.5 Airport and Navigation Charges
12.5.1 Sublessee will promptly pay and discharge when due all landing fees
and other similar Airport Charges imposed by the authorities of any
airport from or to which the Aircraft may operate and any charges
(including without limitation, all Air Navigation Charges) imposed by
virtue of any regulations made by any relevant authority or any other
charges in respect of air navigation incurred, in each case in
respect of all aircraft of which it is t he operator, and will
indemnify and hold harmless Sublessor in respect of the same. This
indemnity will continue in full force and effect notwithstanding the
termination or expiration of this Agreement. Sublessee will ensure
that all such charges are paid on a regular basis and that invoices
are received (and, if not received, are specifically requested) by
it from the relevant authorities no more than three (3) months after
the event to which the charges relate.
12.5.2 If requested by Sublessor, Sublessee will provide Sublessor with a
list of the airports to which the Aircraft or Sublessee's other
aircraft are regularly operated. Sublessee hereby authorises any
Aviation Authority, any airport or any other creditor claiming rights
on the Aircraft or Sublessee's other aircraft to confirm the status
of Sublessee's payments to such creditor for the Aircraft and its
other aircraft, as and when requested by Sublessor. To evidence this
authority, Sublessee will at Sublessor's request execute one or more
authorities substantially in the form of Schedule 7.
12.6 Operation of Aircraft
Sublessee shall not maintain, use or operate the Aircraft in
violation of any law or any mandatory rule, regulation or order of
any Government Entity having jurisdiction in any country, state,
province or other political subdivision in or over which the Aircraft
is flown or in violation of any airworthiness certificate, license or
registration relating to the Aircraft issued by the Aviation
Authority or any similar authority or any jurisdiction in or over
which the Aircraft is flown. If any such law, rule, regulation or
order requires alteration of the Aircraft, Sublessee shall conform or
procure conformance thereto at its own expense and maintain or
procure maintenance of the Aircraft in proper operating condition
under such laws, rules, regulations and orders; provided that
Sublessee may in good faith contest, or procure the contest of, the
validity or application of any such law, rule, regulation or order in
any reasonable manner that does not adversely affect Sublessor or its
interest in the Aircraft. In particular, Sublessee will ensure that
the Aircraft at all times during the Sublease Term is operated by
duly qualified pilots and aircrew employees, and is not used to
transport contraband or illegal narcotics or hazardous or perilous
cargo (other than pursuant to applicable FAA and carrier
regulations). The Aircraft may be used or operated in flight crew
conversion, training for Sublessee's own employees and for
experimental flights; provided, however, prior to any such flights
Sublessee shall notify Sublessor and shall deliver to Sublessor
evidence that insurance coverage is in effect for such flights.
12.7 Areas of Operation
Sublessee shall not operate or locate the Airframe or any Engine or
Part or suffer the Airframe or any Engine or Part to be operated or
located (i) in any area, or for carriage of any goods, excluded from
coverage by the Insurances or (ii) in any recognized or threatened
area of hostilities unless fully covered by war risk insurance or
(iii) outside the United States of America, Mexico or Canada.
12.8 Non-Prejudicial Action
Sublessee shall not do anything that, or omit to do anything the
omission of which, prejudices any right Sublessor may have against
either the Manufacturer or the manufacturer or supplier of any part
of the Aircraft in respect of the Aircraft or any part thereof.
12.9 Non-Representation of Sublessor
Sublessee shall not at any time represent Sublessor, Owner Trustee or
Lender as carrying goods or passengers in the Aircraft or as being in
any way connected or associated with any operation or carriage being
undertaken by Sublessee or as having any operational interest in or
responsibility for the Aircraft.
12.10 Inspection
Sublessor may at all reasonable times on reasonable notice inspect,
or appoint an inspector (including Lender) on its behalf to inspect,
the Aircraft or any part thereof, provided that if no Default or
Event of Default has occurred and is continuing Sublessee shall not
be obliged hereunder to permit, or procure permission for, any such
inspection that would result in an unreasonable disruption of the
operation of the Aircraft or the operation of the business of
Sublessee as an airline. Sublessee agrees to reimburse the
out-of-pocket expenses of Sublessor incurred in making any such
inspection when such inspection shows that the Aircraft is not
materially in the condition required by the terms of this Agreement,
provided that Sublessee shall in all cases pay or reimburse Sublessor
for the costs of such inspection or survey if Sublessor is required
by law or change of law to make an inspection or survey. Sublessor
shall have no duty to make any such inspection and shall not incur
any liability or obligation by reason of not making any such
inspection. Sublessee shall provide Sublessor with such information
regarding the present and anticipated location and regarding the
condition of the Aircraft as Sublessor may reasonably require. For
the purposes mentioned in this Clause 12.10 and subject to the
limitations herein contained, Sublessor and any inspector may gain
access to the Aircraft, including the Aircraft Documents. Sublessee
shall forthwith effect such repairs to the Aircraft as such
inspection may reasonably show are required for the terms of this
Agreement to be complied with, but if it fails to do so after receipt
of notice requiring it to do so from Sublessor, Sublessor may at the
cost and expense of Sublessee, itself arrange for such repairs to be
carried out. Sublessee shall on demand reimburse the costs and
expenses incurred by Sublessor in effecting such repairs.
12.11 Registration
12.11.1 Sublessee shall at its own expense procure that the Aircraft and the
interests of the parties set out below is duly registered, recorded
or filed with the FAA as follows:
(i) Owner Trustee as owner;
(ii) the first priority security interest of Lender
(iii) Sublessor's interest, by filing the Sublease Supplement
according to Schedule 14;
(iv) Sublessee as operator of the Aircraft
and maintain or provide the maintenance of such registration
throughout the Sublease Term. Sublessee shall further provide that
the interests of any successors and assigns to the parties referred
to in this paragraph will be filed and recorded with the FAA and that
such recordation will be maintained in the same manner as required
herein. Sublessee will not take any action or omit to take any action
that will invalidate any such registration or recordation. Sublessee
shall provide Sublessor as soon as available with evidence of such
registration.
12.11.2 Sublessee shall at its own expense provide that at all times during
the Sublease Term, the Aircraft possesses a valid current FAA
Certificate of Airworthiness, and all such other certificates,
licenses, permits and authorizations as are from time to time
required for the use and operation of the Aircraft for the public
transport of passengers or cargo from any Government Entity having
jurisdiction in any country, state, province or other political
subdivision in or over which the Aircraft is flown including without
limitation any Aviation Authority. Sublessee shall, prior to the
Delivery Date, provide Sublessor with certified true copies of its
current Certificate of Public Convenience and Necessity and its
Operating Certificate, the latter of which shall include reference to
the Aircraft.
12.12 Name Plates
On the Delivery Date or as soon thereafter as is reasonably
practicable, Sublessee shall affix and thereafter maintain, or
procure the affixation and maintenance of, in a prominent position in
the cockpit of the Aircraft and on each Engine a fireproof metal
nameplate bearing a legible inscription in a form reasonably required
by Sublessor stating the Aircraft type, manufacturer's serial number
and current registration letters of the Aircraft and denoting the
name of (i) First Security Bank, National Association as Owner
Trustee and Headlessor; (ii) Finova Capital Limited as First Priority
Mortgagee; (iii) Kommanditbolaget Flygplanet XII as Sublessor of the
aircraft. Except as above provided Sublessee will not allow the name
of any person to be placed on the Airframe or on any Engine as a
designation that constitutes a claim of ownership or a claim of any
Security Interest; provided that nothing herein contained shall
prohibit Sublessee (or any person to which possession of the Airframe
or any Engine is delivered or transferred in accordance with Clauses
13 and 14) from placing its customary colors and insignia on the
Airframe.
12.13 Geneva Convention
Whenever the State of Registration is a signatory state that has
ratified the Geneva Convention, Sublessee shall, at its own cost, do
any and all things necessary in the State of Registration to perfect
recognition of the interests of Owner Trustee, Sublessor and Lender
to the Aircraft by every other signatory state that has ratified the
Geneva Convention.
12.14 Merger and Shareholding
Sublessee will not sell its business to or operate its business in
any other corporate form or entity (the new entity) unless (a) such
new entity is solvent and duly organized and existing under the law
of the State of Incorporation or any other State of the United States
of America, if applicable, and the new entity has executed and
delivered to Sublessor an agreement in form and substance acceptable
to Sublessor assuming the due and punctual performance and observance
of each of the terms of this Agreement and the other Transaction
Documents and (b) immediately after such sale or the giving effect to
such operation as that new entity, the tangible net worth of such new
entity is equal to or greater than that of Sublessee and the
creditworthiness of such new entity does not, in Sublessor's
reasonable opinion, adversely affect the ability of such new entity
to perform its obligations under this Agreement and the other
Transaction Documents or any Other Agreements. Sublessee will give
Sublessor prior written notice of any such proposed sale or change in
operation together with a non-refundable processing fee in the amount
as set forth in Schedule 2 and a request of Sublessor's approval.
Sublessee shall reimburse Sublessor within ten (10) days of
Sublessor's invoice for all out-of-pocket expenses incurred by
Sublessor as a result of such proposed merger whether or not
Sublessor approves and whether or not it actually occurs.
12.15 Ownership
Title to the Aircraft will be and remain vested in Owner Trustee.
Sublessee will have no right, title or interest in the Aircraft
except as provided for in this Agreement. Sublessee shall not hold
itself out as owner of the Aircraft and, on all occasions when the
ownership of the Aircraft or any part of it is relevant, will make
clear to third parties that title to the same is held by Owner
Trustee, subject to the Mortgage.
12.16 Maintenance of Principal Business Place
Sublessee shall maintain its principal place of business and chief
executive office and the office where it keeps its business and
financial records and files concerning the Transaction Documents at
the location specified in Clause 27. Sublessee shall hold and
preserve such records and files concerning the Transaction Documents
and shall permit representatives of Sublessor at any time during
normal business hours to inspect and make abstracts from such records
and files. Sublessee shall give Sublessor at least thirty (30) days
prior written notice of any change in Sublessee's principal place of
business and chief executive office, and shall co-operate with
Sublessor in executing and delivering all such documents as Sublessor
may reasonably request which are required or desirable as a result of
such change of principal place of business of Sublessee.
12.17 Maintenance of Flight Records
Sublessee shall maintain flight records pertaining to the Aircraft
required to be maintained pursuant to section 47.9(e) of the FAR at
the address given in Clause 27 and shall hold and preserve such
records at such address and permit inspection of such records by the
FAA, Sublessor, Owner Trustee and Lender. Sublessee shall give
Sublessor at least thirty (30) days prior written notice of change in
location of the flight records of the Aircraft.
13. POSSESSION
13.1 No Relinquishment of Possession
Sublessee shall not sub-lease or otherwise deliver, transfer or
relinquish possession of the Airframe or any Engine or install any
Engine or permit any Engine to be installed, on any airframe other
than the Airframe, provided that, (i) so long as no Default shall
have occurred and be continuing, (ii) Sublessee continues to be fully
responsible to Sublessor for all its obligations hereunder and (iii)
Sublessee in advance, obtains written acknowledgment(s) of Lender's
Security Interest in the Airframe and/or any Engines from any person
who will be in possession of the Airframe and/or any Engine in the
form and substance requested by Sublessor, Sublessee may:
13.1.1 subject any Engine to normal interchange or pooling agreements or
arrangements in each case customary in the airline industry and
entered into by Sublessee in the ordinary course of its business with
a commercial air operator which is approved by Sublessor in writing
and on terms and conditions that Sublessor has approved (such
approval not to be unreasonably withheld) (any such commercial air
operator being hereinafter called a Permitted Air Carrier) provided
that the terms of this Agreement shall be observed and if either:
(i) Owner Trustee's title to the Engine shall be divested
under the terms of any such agreement or arrangement, or
(ii) any Permitted Air Carrier shall have possession of any
such Engine under any such agreement or arrangement for
more than ninety (90) days,
Sublessee shall forthwith substitute, or procure the substitution of,
a Replacement Engine therefor in accordance with and which satisfies
the conditions of Clause 16.6;
13.1.2 deliver possession of the Airframe or any Engine to the manufacturer
thereof for testing or other similar purposes or to any organisation
for service, repair, maintenance or Overhaul work on the Airframe or
such Engine or any part thereof or for alterations or modifications
in or additions to the Airframe or such Engine to the extent required
or permitted by the terms of Clauses 16.4 and 16.5;
13.1.3 install an Engine on an airframe owned by Sublessee and operated by
and under the operating control of flight crew engaged by Sublessee
which is free and clear of all Security Interests, except (i)
Permitted Liens, (ii) Security Interests that apply only to the
engines (other than Engines), appliances, parts, instruments,
appurtenances, accessories, furnishings and other equipment (other
than Parts) installed on such airframe but not to the airframe as an
entirety and (iii) the rights of Permitted Air Carriers under normal
interchange agreements which are customary in the airline industry
and do not contemplate, permit or require the transfer of title to
the airframe or engines installed thereon;
13.1.4 install an Engine on an airframe operated by Sublessee that is owned
by or leased or subleased to Sublessee and/or subject to any security
agreement, provided that (i) such airframe is free and clear of all
Security Interests except the rights of the parties to any security
agreement covering such airframe and except Permitted Liens and any
Security Interests or rights of the type permitted by sub-paragraphs
(ii) and (iii) of Clause 13.1.3 and (ii) Sublessee shall have
obtained from the sub-sublessor or secured party, as relevant, of
such airframe a written agreement, which may be in the sublease
agreement or security agreement in respect of such airframe, in form
and substance satisfactory to Sublessor (it being understood that an
agreement from such sub-sublessor or secured party to substantially
the same effect as the agreement of Sublessor set forth in the final
sentence of Clause 13.4 shall be deemed to be satisfactory to
Sublessor), whereby such Sublessor or secured party expressly agrees
that neither it nor its successors or assignees will acquire or claim
any right, title or interest in any Engine by reason of such Engine
being installed on such airframe at any time while such Engine is
subject to this Agreement;
13.1.5 install an Engine on an airframe owned by Sublessee, leased or
subleased to Sublessee, or purchased by Sublessee, subject to any
security agreement under circumstances where neither Clause 13.1.1
nor 13.1.2 can be fulfilled in the circumstances, provided that it
would otherwise have resulted in an unreasonable disruption of the
operation of the Aircraft or the business of the Sublessee and in
such event Sublessee shall, as promptly as possible and in any event
within fifteen (15) days substitute a Replacement Engine therefor in
accordance with Clause 16.6 and which satisfies the conditions
specified in Clause 16.6;
13.1.6 sublease the Aircraft or Airframe to any person provided that the
Aircraft or Airframe is operated by, and remains throughout the term
of such sublease under the operational control of, flight crew
engaged by Sublessee, and provided further that:
(i) no Default has occurred and is continuing;
(ii) any such sublease will not result in any change in the
State of Registration;
(iii) the length of any such sublease does not extend beyond
the Expiry Date;
(iv) the relevant sub-sublessee shall acknowledge that its
rights are subordinate to Sublessor's rights under this
Agreement and the rights of Lender under any finance
document or security document entered into between Owner
Trustee or Sublessor in relation to the Aircraft;
13.1.7 sublease the Aircraft or Airframe to any wholly-owned subsidiary of
Sublessee on terms that the Aircraft or Airframe is not operated by,
and does not remain under the operational control of, flight crew
engaged by Sublessee provided that the following conditions are
satisfied in relation to any such sublease hereunder:
(i) no Default has occurred and is continuing;
(ii) the proposed sub-sublessee and the proposed form of the
sublease is approved by Sublessor and Lender in writing,
which approval will not be unreasonably withheld or
delayed provided all the following conditions set out in
this Clause 13.1.7 are satisfied;
(iii) the sublease shall terminate on or before termination of
this Agreement and the terms and conditions of the
sublease are not inconsistent with those contained in
this Agreement or any finance or security document
entered into between Sublessor and/or Owner Trustee
and/or Lender and the sub-sublessee shall acknowledge
that its rights are subordinate to Owner Trustee's,
Sublessor's and Lender's rights under this Agreement
(provided that the sublease shall not permit further
subleasing);
(iv) the Insurances are in full force and effect in
accordance with the terms of this Agreement and, if the
sub-sublessee is to maintain such insurances during the
term of such sublease, it shall have furnished to
Sublessor all such documents, evidence and information
relating to such insurances which Sublessee is required
to furnish or cause to be provided to Sublessor under
this Agreement;
(v) if the Aviation Authority for the duration of the
sublease is to be other than the FAA, Sublessor and
Lender approves the change of registration and Sublessor
receives (x) an opinion of counsel in the State of
Registration in form and substance reasonably
satisfactory to Sublessor and the Lender which opinion
must, at least, address the satisfactory recognition of
Owner Trustee's ownership of, and Lender's Security
Interest in the Aircraft and (y) evidence that all
actions recommended in such opinion have been or will be
duly taken.
13.2 Copy of Sublease
No less than three (3) Business Days after the execution of any
sublease entered into by Sublessee under Clause 13.1.6 or Clause
13.1.7 Sublessee shall provide Sublessor with a copy of such executed
sublease.
13.3 Sublessee Primarily Liable
Notwithstanding anything contained in Clause 13.1, Sublessee shall
remain primarily liable hereunder for the performance of all of the
terms of this Agreement to the same extent as if such transfer or
sublease had not occurred. No interchange agreement, sublease or
other relinquishment of possession of the Airframe or any Engine
permitted by this Clause 13 shall in any way discharge or diminish
any of Sublessee's obligations hereunder.
13.4 Recognition of Rights
If Sublessee shall have obtained from the sub-Sublessor or secured
party of any engine subleased to Sublessee or owned by Sublessee
subject to any Security Interest, a written agreement complying with
the terms of sub-paragraph (ii) of Clause 13.1.4, Sublessor hereby
agrees for the benefit of such sub-Sublessor or secured party that
Sublessor shall not acquire or claim, as against such sub-Sublessor
or secured party, any right, title or interest in any such engine as
a result of such engine being installed on the Airframe at any time
while such engine is subject to such sublease or security agreement
and owned by such sub-Sublessor or subject to a Security Interest in
favor of such secured party and Sublessor shall, at the request of
Sublessee, confirm such agreement in writing for any such
sub-Sublessor or secured party.
14. SECURITY INTERESTS
14.1 Title
Sublessee shall not do, or permit to be done, any act, which might
reasonably be expected to jeopardize the interest of Owner Trustee,
Sublessor or Lender. Sublessee shall make clear to all third parties
that legal title to the Aircraft is owned by Owner Trustee or the
relevant title holder advised by Owner Trustee.
14.2 No Security Interests
Sublessee shall not create, incur or permit to subsist over the
Aircraft or any part thereof or over the Transaction Documents any
Security Interest other than Permitted Liens.
14.3 Base of Aircraft
Sublessee shall not keep or habitually base the Aircraft or any part
thereof outside the State of Registration for any continuous period
exceeding ten (10) days.
14.4 Notice to Sublessor
Sublessee shall notify Sublessor:
(i) as and when it becomes aware of the same, of any
Security Interest (x) (excluding Permitted Liens)
arising over the Aircraft or any Engine or other major
part thereof or (y) (in the case of all Security
Interests including Permitted Liens) exercised over the
Aircraft or any Engine or other major part thereof or
(z) of any arrest or detention or purported or attempted
arrest or detention of the Aircraft; and
(ii) promptly on request of Sublessor, of the location of the
Airframe and each Engine including an Engine that is not
for the time being installed on the Airframe.
14.5 Procure Release
Sublessee shall as soon as possible and in any event within five (5)
Business Days of becoming aware of the same procure the release of
any Security Interest (other than Permitted Liens) arising over the
Aircraft or any part thereof and procure the release of the Aircraft
from any arrest or detention to which it is subject.
15. MAINTENANCE AND REPAIR
15.1 General Obligations
15.1.1 Sublessee shall, or procure that any sub-sublessee will, at its own
expense at all times during the Sublease Term:
(i) maintain, service, repair, Overhaul and test the
Aircraft and all Parts thereon and equipment thereon and
the Engines and all Parts and equipment therein (whether
or not such Parts and equipment are the property of
Sublessor), or procure the same, in accordance with the
applicable requirements of the FAA and the Insurances
and comply with all Airworthiness Directives and alert
service bulletins issued by the Manufacturer
(unless to do so would be in breach of the FAA's
requirements, in which case the FAA's requirements shall
prevail) and the MPD so as to keep the Aircraft in good
operating condition, ordinary wear and tear excepted,
and in accordance with sound international aviation
industry practice and in such condition as may be
necessary to enable (a) the airworthiness certification
of the Aircraft with the Aviation Authority to be
maintained in good standing at all times during the
Sublease Term (b) the issuance of a standard certificate
of airworthiness for transport category aircraft issued
by the FAA in accordance FAR Part 21 and, (c) the
Aircraft to be placed on the operations specifications
of a U.S. airline in accordance with Part 121 of the
FAR's;
(ii) maintain, service, repair, Overhaul and test the
Aircraft and the Engines, in the same manner and with
the same care as used by Sublessee with respect to
similar aircraft and engines operated by Sublessee and
without in any way adversely discriminating against the
Aircraft and the Engines; and
(iii) maintain, or procure the maintenance of, the Aircraft
Documents including technical records and any other
records, logs and other materials required by the FAA to
be maintained in respect of the Aircraft in the English
language and permit Sublessor to examine such records,
logs and other materials at any reasonable time upon
reasonable notice.
15.1.2 The performer of such maintenance and repairs as stated in this
Clause 15.1 shall be approved by the Sublessor with such approval not
to be unreasonably withheld.
15.2 Specific Obligations
Without limiting Clause 15.1, Sublessee agrees that the performance
by Sublessee or any sub-sublessee of such maintenance and repairs as
stated therein will include, but will not be limited to, each of the
following specific items:
(i) performance in accordance with the Maintenance Program
of all routine and non-routine maintenance work;
(ii) incorporation in the Aircraft of all applicable
Airworthiness Directives or equivalent, all alert
service bulletins of Manufacturer, Engine Manufacturer
and other vendors or manufacturers of Parts incorporated
on the Aircraft and any service bulletins which must be
performed in order to maintain the warranties on the
Aircraft, Engines and Parts;
(iii) incorporation in the Aircraft of all other service
bulletins of Manufacturer, the Engine Manufacturer and
other vendors which Sublessee schedules to adopt within
the Sublease Term for the major part of its fleet of
aircraft of the same make as the Aircraft. It is the
intent of the parties that the Aircraft will not be
discriminated from the rest of Sublessee's fleet in
service bulletin compliance (including method of
compliance) or other maintenance matters. Sublessee will
not discriminate against the Engines with respect to
overhaul build standards and life limited part
replacements;
(iv) incorporation into the Maintenance Program for the
Aircraft of a CPCP as recommended by Manufacturer, the
Aviation Authority and the FAA and the correction of any
discrepancies in accordance with the recommendations of
Manufacturer and the structural repair manual. In
addition, all inspected areas will be properly treated
with corrosion inhibitor as recommended by Manufacturer;
(v) incorporation into the Maintenance Program of an
anti-fungus/biological growth and contamination
prevention, control and treatment program of all fuel
tanks in accordance with Manufacturer's approved
procedures;
(vi) providing without delay written summaries of all
sampling programs and amendments thereof involving or
affecting the Aircraft;
(vii) maintaining in English and keeping in an up-to-date
status all relevant records and historical documents;
(viii) maintaining historical records, in English, for
condition-monitored, hard time and life limited Parts
(including tags from the manufacturer of such Part or a
repair facility which evidence that such Part is new or
Overhauled and establish authenticity, total time in
service and time since Overhaul for such Part), the
hours and cycles the Aircraft and Engines operate and
all maintenance and repairs performed on the Aircraft;
(ix) properly documenting all repairs, modifications and
alterations and the addition, removal or replacement of
equipment, systems or components in accordance with the
rules and regulations of the Aviation Authority and
reflecting such items in the Aircraft Documents. In
addition, all repairs, to the Aircraft will be
accomplished in accordance with Manufacturer's
structural repair manual, where possible, or approved
data from the Manufacturer accepted by the Aviation
Authority; and
(x) ensuring that Overhauls are accomplished utilising
maintenance and quality control procedures approved by
the Aviation Authority and that the repair agency
provides a complete record of all work performed during
the course of such Overhaul and certifies that such
Overhaul was accomplished, that the equipment is
airworthy and released for return to service and that
the Overhaul was in conformity with the original type
design.
16. REPLACEMENT OF PARTS
16.1 Replacement of Parts
Sublessee shall, at its own expense, promptly replace, or procure the
replacement of, all Parts that become worn out, lost, stolen,
destroyed, seized, confiscated, damaged beyond economical repair or
permanently rendered unfit for use for any reason whatsoever, except
as otherwise provided in Clause 16.4 or 16.5. In addition, Sublessee
may at its own cost and expense, remove, or permit the removal of any
Parts including Engines, whether or not worn out, lost, stolen,
destroyed, seized, confiscated, damaged beyond repair or permanently
rendered unfit for use, provided that Sublessee shall, except as
otherwise provided in Clause 16.7, at its own cost and expense,
immediately replace, or procure the replacement of, such Parts. Title
to all replacement Parts shall be vested in Owner Trustee, subject to
the Mortgage, free and clear of all Security Interests except
Permitted Liens and shall, except as otherwise provided in Clause
16.7, be in as good operating condition as, and shall have a value,
age, configuration and utility at least equal to, the replaced Parts,
assuming such replaced Parts were in the condition and repair
required to be maintained by the terms hereof, and shall have a
current "serviceable tag" of the manufacturer or maintenance facility
providing such items to Sublessee.
16.2 Title to Replacement Parts
All Parts at any time removed from the Airframe or any Engine shall
remain the property of Owner Trustee and subject to the terms of this
Agreement, no matter where located, until such time as such Parts
shall be replaced by Parts that have been incorporated or installed
in or attached or added to the Airframe or Engine and which meet the
requirements for replacement Parts specified above. Immediately upon
any replacement Part becoming incorporated or installed in or
attached or added to the Airframe or any Engine as above provided,
without further act, (a) title to the replaced Part shall thereupon
vest in Sublessee, shall cease to be subject to this Agreement and
shall no longer be deemed a Part hereunder and (b) title to such
replacement Part shall pass to Owner Trustee, subject to the
Mortgage, free and clear of all Security Interests except Permitted
Liens and such replacement Part shall become subject to this
Agreement and be deemed Part of the Airframe or Engine for all
purposes hereof to the same extent as the Parts originally
incorporated or installed in or attached or added to such Airframe or
Engine and shall become a Part hereunder.
16.3 Pooling of Parts
Any Part removed from the Airframe or any Engine as provided in
Clause 16.1 or 16.2 may be subjected to a normal pooling arrangement
customary in the airline industry entered into in the ordinary course
of Sublessee's business, provided that the part replacing such
removed Part shall be incorporated or installed in or attached to the
Airframe or such Engine in accordance with Clause 16.1 and 16.2 as
soon as practicable after the removal of such removed Part. Without
prejudice to the generality of the foregoing sentence, any
replacement Part when incorporated or installed in or attached to the
Airframe or any Engine may be owned by a third person subject to such
a normal pooling arrangement, provided that Sublessee, at its own
expense, as promptly thereafter as possible, either (a) causes title
to such replacement Part to vest in Owner Trustee in accordance with
Clause 16.1 and 16.2 free and clear of all Security Interests except
Permitted Liens, or (b) replaces or procures the replacement of such
replacement Part by the incorporation or installation in or
attachment to such Airframe or Engine of a further replacement Part
(which meets the requirements of this Clause 16) free and clear of
all Security Interests except Permitted Liens and by causing title to
such further replacement Part to vest in the Owner Trustee, subject
to the Mortgage, in accordance with Clause 16.1 and 16.2 and such
further replacement Part shall forthwith be deemed Part of the
Airframe or Engine to the same extent as the Part originally
incorporated or installed in or attached to the Airframe or such
Engine and shall become a Part hereunder.
16.4 Alterations
Sublessee shall at its own expense, make, or procure the making of,
such alterations and modifications in and additions to the Airframe
and Engines as may be required from time to time to meet the
standards of the Aviation Authority or any Government Entity having
jurisdiction in any country, state, county or other political
subdivision in or over which the Aircraft is flown or the FAA and any
mandatory or recommended service bulletins of the Manufacturer. In
addition, Sublessee may, at its own expense, from time to time, make,
or procure the making of, such alterations and modifications in and
additions including the making of any improvements to the Airframe or
any Engine as Sublessee may deem desirable in the proper conduct of
its business, including, removal of Parts (for purposes of this
Clause 16.4, Obsolete Parts) which Sublessee deems obsolete or no
longer suitable or appropriate for use in the Airframe or such
Engine, provided that no such alteration, modification, addition or
removal shall cost over US$ 200,000, or alter the fundamental nature
of the Aircraft as a passenger carrying aircraft, or change its
original type design or configuration, or materially diminish the
value or utility of the Airframe or any such Engine, or impair the
condition or airworthiness thereof, below the value, utility,
condition and airworthiness thereof immediately prior to such
alteration, modification, addition or removal assuming such Airframe
or Engine was then in the condition and repair required to be
maintained by the terms of this Agreement. Title to all Parts
incorporated or installed in or attached or added to the Airframe or
any such Engine as the result of such alteration, modification or
addition shall be vested in Owner Trustee, subject to the Mortgage,
and shall forthwith be deemed Part of the Airframe or such Engine.
Neither Owner Trustee, Lender nor Sublessor shall be required under
any circumstances to pay directly for any alteration, modification or
addition to the Aircraft or to reimburse Sublessee for the cost
thereof. Any other alterations other than those permitted according
to Clause 16.5 require Sublessor's prior written consent, which
consent shall not be unreasonably withheld or delayed.
16.5 Removal of Parts
Notwithstanding the foregoing, so long as no Default shall have
occurred and be continuing, Sublessee may remove, or permit the
removal of, at any time during the Sublease Term, any Part, provided
that (a) such 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 or any Engine at the time of Delivery or in
replacement of, or substitution for, any such Part, (b) such Part is
not required to be incorporated or installed in or attached or added
to the Airframe or such Engine pursuant to the terms of Clause 16.4
or 16.5, and (c) such Part can be removed from the Airframe or such
Engine without causing damage to the Airframe or such Engine or if it
causes any such damage is to be repaired and promptly thereafter is
repaired and without diminishing or impairing the value, utility,
condition or airworthiness required to be maintained by the terms of
this Agreement that the Airframe or such Engine would have had at
such time had such alteration, modification or addition not occurred
assuming it was in the condition and repair required to be maintained
under this Agreement. Upon the removal of any Part as provided in the
immediately preceding sentence and the removal of any Obsolete Part,
title thereto shall, without further act, vest in Sublessee, free and
clear of all rights of Owner Trustee, Lender and Sublessor and such
Part shall no longer be deemed part of the Airframe or Engine from
which it was removed. Any Part not so removed shall remain the
property of Owner Trustee, subject to the Mortgage.
16.6 Substitution of Engine
In addition to its rights under Clause 13, Sublessee shall have the
right at its option at any time, on at least thirty (30) days prior
written notice to Owner Trustee, Lender and Sublessor, to substitute
or procure the substitution of an engine of the same make and model
as the Engine specified in Schedule 1 or an engine of an improved
model suitable for installation and use on the Airframe for any such
Engine not then installed or held for use on the Airframe. Any such
substitute engine, the substitution of which is in accordance with
the provisions of this Clause 16.6 and which complies with the
requirements of this Clause 16.6 being a "Replacement Engine"
provided that title to the Replacement Engine shall be vested in
Owner Trustee, subject to the Mortgage, free and clear of all
Security Interests, other than Permitted Liens, and the Replacement
Engine shall have a value and utility and maintenance status,
including time since last Engine Performance Restoration Visit, at
least equal to the replaced Engine and time since new no greater than
the replaced Engine as reasonably determined by Sublessor, assuming
that such Engine was in the condition and repair required to be
maintained by the terms of this Agreement and Sublessee shall deliver
such documents including a xxxx of sale and opinion of counsel as to
title and recordation with the FAA, as Sublessor may reasonably
request to evidence the foregoing. In such event, immediately upon
the effectiveness of such substitution on the date set forth in such
notice and without further act:
(i) title to the replaced Engine shall thereupon vest in
Sublessee free and clear of all rights of Owner Trustee,
Lender and Sublessor, and the replaced Engine shall
cease to be subject to this Agreement and shall no
longer be deemed an Engine hereunder; and
(ii) title to such Replacement Engine shall vest in Owner
Trustee, subject to the Mortgage, free and clear of all
Security Interests except Permitted Liens and such
Replacement Engine shall become subject to this
Agreement and an Engine hereunder and be deemed part of
the Aircraft for all purposes hereof.
16.7 Temporary Removal of Parts
Sublessee shall be entitled, so long as no Default shall have
occurred which has not been remedied or waived to the reasonable
satisfaction of Sublessor, to substitute, replace or renew any Part
with a part that does not satisfy the requirements of Clause 16.1 or
16.2 provided that:
(i) there shall not have been available to Sublessee, at the
time and in the place that such substitute or
replacement part was required to be installed on the
Airframe or Engines a substitute or replacement part
complying with the requirements of Clause 16.1 and 16.2;
(ii) it would have resulted in an unreasonable disruption of
the operation of the Aircraft or the business of
Sublessee as an airline to have grounded the Aircraft
until such time as a substitute or replacement part
complying with the requirements of Clause 16.1 and 16.2
became available for installation in or on the Aircraft;
(iii) Sublessee shall have notified Sublessor prior to or, in
the case of an extreme urgency as soon as possible
after, the making of such substitution, replacement or
renewal of any material Part; and
(iv) as soon as possible after installation of the same in or
on the Airframe or Engine (and in any event no later
than fifteen (15) days thereafter) Sublessee shall
remove any such part not complying with the requirements
of Clause 16.1 and 16.2 and replace or substitute the
same with a Part complying with such requirements.
16.8 Parts Incapable of Transfer
If any replacement Part is incapable of becoming the property of
Owner Trustee free of all Security Interests (other than Permitted
Liens) as required by Clause 16 the part which it has replaced shall,
unless Sublessor shall otherwise agree in writing, be kept and
maintained by the Sublessee or any sub-sublessee, as the case may be,
until the Expiry Date and be placed on the Aircraft in good working
order before the Aircraft is redelivered to the Sublessor on the
Expiry Date.
17. MANUFACTURER'S WARRANTIES
17.1 Authorization
17.1.1 With effect from Delivery, Sublessor authorises Sublessee to exercise
such rights as Sublessor may have in relation to any warranty with
respect to the Aircraft, any Engine or any Part made by any
manufacturer, vendor, subcontractor, maintenance facility or supplier
subject to Sublessee notifying Sublessor in writing of any warranty
claim of a material nature and keeping Sublessor continuously
informed of the development of such warranty claim. To the extent
that the same may not be available to Sublessee, Sublessor agrees to,
at the sole cost and expense of Sublessee, enforce such rights as
Sublessor may have with respect thereto for the benefit of Sublessee.
Sublessor shall also have the right, rather than enforcing or making
such claim on behalf of Sublessee under such warranties, to appoint
Sublessee as its agent for such purpose, and in such instance,
Sublessee agrees to accept such appointment and make such claims and
enforce such warranties at its sole cost and expense. This
authorization shall cease on the Expiry Date. Sublessee shall not be
entitled to exercise its authorisation hereunder while a Default is
continuing (during which time all such rights shall revert to
Sublessor and Sublessor hereby agrees to exercise and enforce such
rights during such period).
17.1.2 Sublessee shall give Sublessor prompt written notice of any warranty
claim that is settled with Sublessee on the basis of a total or
partial cash payment. Any cash payments shall be applied to remedy
the defect subject to such warranty claim unless Sublessor otherwise
consents in writing. Any cash payments to Sublessee in respect of
warranty claims that (either with Sublessor's written consent or
because the defect can not be remedied) are not applied to the repair
or remedy of defects in the Aircraft or to compensate Sublessee for
the costs incurred for any such repair or remedy, and which are not
in respect of compensation for loss of use of the Aircraft, an Engine
or Part during the Sublease Term due to a defect covered by such
warranty, shall be for Sublessor's account.
17.2 Proceeds
So long as no Default has occurred and is continuing, Sublessor
agrees, subject to Clause 17.1, to co-operate with Sublessee to cause
any proceeds from any warranty referred to in Clause 17.1 to be paid
directly to Sublessee, and, if any such proceeds are nonetheless paid
to Sublessor, Sublessor agrees to remit promptly such proceeds to
Sublessee. However, while a Default is continuing, Sublessor may
immediately:
(i) retain for its own account any such proceeds previously
paid to Sublessor which would have been remitted to
Sublessee under this Clause 17.2 in the absence of such
Default or Event of Default; and
(ii) cause any proceeds of any pending claims to be paid to
Sublessor, rather than to Sublessee.
Once the Default is cured, Sublessor shall reimburse Sublessee to the
extent that it would have been obliged to under this Clause 17.2 had
no such Default occurred.
17.3 Agreements with Manufacturers
To the extent that any warranties relating to the Aircraft are made
available under an agreement between any manufacturer, vendor,
subcontractor or supplier and Sublessee, Sublessee will:
(i) apply the proceeds of any claim under such agreement in
accordance with Clause 17.2; and
(ii) take all such steps as are necessary at the end of the
Sublease Term to ensure that the benefit of any of those
warranties that have not expired is vested in Sublessor.
17.4 No Operation Contrary to Warranties
Sublessee shall not operate the Aircraft contrary to the terms of any
warranty referred to in Clause 17.1.1, provided that Sublessor has
advised Sublessee of the terms of such warranties.
18. DISCLAIMERS
18.1 General
SUBLESSOR AND SUBLESSEE AGREE THAT THE DISCLAIMERS, WAIVERS AND
CONFIRMATIONS SET FORTH IN CLAUSES 18.2 THROUGH 18.12 BELOW SHALL
APPLY AS BETWEEN SUBLESSOR AND SUBLESSEE AT ALL TIMES DURING THE
Sublease Term WITH EFFECT FROM SUBLESSEE'S ACCEPTANCE OF THE AIRCRAFT
BY EXECUTION OF THE ACCEPTANCE CERTIFICATE, WHICH SHALL BE CONCLUSIVE
EVIDENCE THAT SUBLESSEE HAS FULLY INSPECTED THE AIRCRAFT AND EVERY
PART THEREOF AND THAT THE AIRCRAFT, THE ENGINES, THE PARTS AND THE
AIRCRAFT DOCUMENTS ARE IN ALL RESPECTS ACCEPTABLE TO SUBLESSEE (SAVE
AS EXPRESSLY NOTED ON THE ACCEPTANCE CERTIFICATE) AND ARE IN SUITABLE
CONDITION FOR DELIVERY TO AND ACCEPTANCE BY SUBLESSEE.
18.2 AS IS, WHERE IS
PRIOR TO DELIVERY HEREUNDER, SUBLESSEE HAD THE OPPORTUNITY TO INSPECT
THE AIRCRAFT, ACCORDINGLY, SUBLESSEE UNCONDITIONALLY ACKNOWLEDGES AND
AGREES THAT NEITHER OWNER TRUSTEE, LENDER OR SUBLESSOR, NOR ANY OF
THEIR RESPECTIVE OFFICERS, DIRECTORS, EMPLOYEES OR REPRESENTATIVES
HAVE MADE OR WILL BE DEEMED TO HAVE MADE ANY TERM, CONDITION,
REPRESENTATION, WARRANTY OR COVENANT EXPRESSED OR IMPLIED (WHETHER
STATUTORY OR OTHERWISE) AS TO (i) THE CAPACITY, AGE, AIRWORTHINESS,
VALUE, QUALITY, DURABILITY, DESCRIPTION, CONDITION (WHETHER OF THE
AIRCRAFT, ANY ENGINE, ANY PART THEREOF OR THE AIRCRAFT DOCUMENTS),
DESIGN, WORKMANSHIP, MATERIALS, MANUFACTURE, CONSTRUCTION, OPERATION,
STATE, MERCHANTABILITY, PERFORMANCE, FITNESS FOR ANY PARTICULAR USE
OR PURPOSE (INCLUDING THE ABILITY TO OPERATE OR REGISTER THE AIRCRAFT
OR USE THE AIRCRAFT DOCUMENTS IN ANY OR ALL JURISDICTIONS) OR
SUITABILITY OF THE AIRCRAFT OR ANY PART THEREOF, AS TO THE ABSENCE OF
LATENT OR OTHER DEFECTS, WHETHER OR NOT DISCOVERABLE, KNOWN OR
UNKNOWN, APPARENT OR CONCEALED, EXTERIOR OR INTERIOR, (ii) THE
ABSENCE OF ANY INFRINGEMENT OF ANY PATENT, TRADEMARK, COPYRIGHT OR
OTHER INTELLECTUAL PROPERTY RIGHTS, (iii) ANY IMPLIED WARRANTY
ARISING FROM COURSE OF PERFORMANCE, COURSE OF DEALING OR USAGE OF
TRADE, OR (iv) ANY OTHER REPRESENTATION OR WARRANTY WHATSOEVER,
EXPRESS OR IMPLIED WITH RESPECT TO THE AIRCRAFT OR ANY PART THEREOF,
ALL OF WHICH ARE HEREBY EXPRESSLY EXCLUDED AND EXTINGUISHED.
18.3 Waiver of Warranty of Description
SUBLESSEE HEREBY AGREES THAT ITS ACCEPTANCE OF THE AIRCRAFT AT
DELIVERY AND ITS EXECUTION AND DELIVERY OF THE ACCEPTANCE CERTIFICATE
WILL RE-AFFIRM AND INDEPENDENTLY CONSTITUTE ITS WAIVER OF THE
WARRANTY OF DESCRIPTION AND ANY CLAIMS IT MAY HAVE, AND OF ANY RIGHT
TO MAKE ANY CLAIM AGAINST LENDER OR Sublessor BASED UPON THE FAILURE
OF THE AIRCRAFT TO CONFORM WITH SUCH DESCRIPTION OR ANY AIRCRAFT
SPECIFICATIONS AND ITS AGREEMENT NOT TO LOOK TO OWNER TRUSTEE, LENDER
OR SUBLESSOR FOR DAMAGES OR RELIEF ARISING OUT OF THE FAILURE OF THE
AIRCRAFT TO CONFORM TO SUCH DESCRIPTIONS OR SPECIFICATIONS,
NOTWITHSTANDING ANY ASSURANCES FROM Sublessor, THE DIFFICULTY OF
DISCOVERING ANY DEFECT OR ITS ASSUMPTION THAT ANY NONCONFORMITY WOULD
BE CURED.
18.4 No Liability Under UCC
SUBLESSEE HEREBY WAIVES ANY AND ALL RIGHTS IT MAY HAVE TO THE
REMEDIES SET FORTH IN ARTICLE 2A-508 THROUGH 2A-522 OF THE UNIFORM
COMMERCIAL CODE AS CODIFIED AND INTERPRETED UNDER THE LAWS OF THE
STATE OF NEW YORK.
18.5 Sublessee Acknowledgment
SUBLESSEE AGREES THAT IT IS LEASING THE AIRCRAFT "AS IS, WHERE IS AND
WITH ALL FAULTS".
18.6 Sublessee Waiver
Sublessee hereby waives as between itself and Sublessor and agrees
not to seek to establish or enforce any rights and remedies, express
or implied (whether statutory or otherwise) against Sublessor, Owner
Trustee, Lender or the Aircraft relating to any of the matters
mentioned in Clause 18.1 through 18.7 and the leasing thereof by
Sublessor to Sublessee.
18.7 Sublessee Examination of Aircraft
DELIVERY BY SUBLESSEE TO SUBLESSOR OF THE ACCEPTANCE CERTIFICATE IS
CONCLUSIVE PROOF AS BETWEEN SUBLESSOR AND SUBLESSEE THAT SUBLESSEE'S
TECHNICAL EXPERTS HAD EXAMINED AND INVESTIGATED THE AIRCRAFT, ENGINES
AND EACH PART THEREOF AND DETERMINED THAT (i) EACH WAS AIRWORTHY AND
IN GOOD WORKING ORDER AND REPAIR AND (ii) THE AIRCRAFT, ENGINES, EACH
PART THEREOF AND THE AIRCRAFT DOCUMENTS WERE WITHOUT DEFECT (WHETHER
OR NOT DISCOVERABLE AT DELIVERY) AND IN EVERY WAY SATISFACTORY TO
SUBLESSEE.
18.8 No Sublessor Liability for Losses
Sublessee agrees that Sublessor will not be liable to Sublessee, any
sub-sublessee or any person, whether in contract, tort or otherwise
and however arising, for any unavailability, loss of use or service,
cost, loss (consequential or otherwise), liability, damage or delay
of or to or in connection with the Aircraft, any person or property
whatsoever, whether on board the Aircraft or elsewhere and
irrespective of whether such occurrences arise from any act or
omission or the active or passive negligence of Sublessor or Owner
Trustee or their agents or representatives excepting only Sublessor's
or Owner Trustee or their respective agents' or representatives'
gross negligence or wilful misconduct.
18.9 Exclusion
Neither Owner Trustee, Lender, nor Sublessor shall have any
obligation or liability whatsoever to Sublessee, any sub-sublessee or
any other person whether arising in contract, tort or otherwise and
whether arising by reference to negligence or strict liability of
Sublessor, Owner Trustee or Lender or otherwise for:
(i) any liability, loss or damage (consequential or
otherwise) caused or alleged to be caused directly or
indirectly by the Aircraft or any Engine or by any
inadequacy thereof or deficiency or defect therein or by
any other circumstance in connection therewith;
(ii) the use, operation or performance of the Aircraft or any
risks relating thereto;
(iii) any interruption of service, loss of business or
anticipated profits or any other direct, indirect or
consequential loss or damage; or
(iv) the delivery, operation, servicing, maintenance, repair,
improvement or replacement of the Aircraft, any Engine
or any Part except as otherwise expressly provided under
this Agreement.
18.10 Waiver
Sublessee hereby waives, as between itself and Owner Trustee, Lender
and Sublessor, all its rights in respect of any warranty or
representation, express or implied, on the part of Owner Trustee,
Lender or Sublessor and all claims against Owner Trustee, Lender or
Sublessor howsoever and whenever arising at any time in respect of or
out of the matters referred to in Clause 18.
18.11 No Waiver
Nothing in this Clause 18 or elsewhere in this Agreement will be
deemed to be a waiver by Sublessee of any rights it may have against
the Manufacturer, the Engine Manufacturer or any other person.
18.12 Confirmation
Sublessee confirms that the foregoing provisions of this Clause 18
and the following provisions in Clause 19 have been taken into
account by both parties in negotiating the rent and other amounts
payable under this Agreement.
19. INDEMNITIES
19.1 General Indemnity
Sublessee agrees to defend, indemnify and hold harmless on an after
Tax basis each of the Indemnitees on demand from and against any and
all Losses arising from events occurring during the Sublease Term:
(i) that may at any time be suffered or incurred directly or
indirectly as a result of or in connection with the
possession, delivery, performance, management,
ownership, registration, import, control, maintenance,
condition, service, repair, Overhaul, leasing,
subleasing, deregistration, export, manufacture,
storage, transportation, design, testing, replacement,
use, operation or redelivery of the Aircraft, any Engine
or Part (either in the air or on the ground) whether or
not such Losses may be attributable to any defect in the
Aircraft, any Engine or any Part or to their respective
design, testing or use or otherwise, and regardless of
when the same arises (but excluding any injuries or
claims which arise prior to Delivery) or whether it
arises out of or is attributable to any act or omission,
negligent (active or passive) or otherwise, of any
Indemnitee (including without limitation claims for
death, personal injury, property damage, other loss or
harm to any person and claims relating to any Laws,
including without limitation environmental control,
noise and pollution laws rules or regulations);
(ii) that may at any time be suffered or incurred as a
consequence of any breach of the Transaction Documents
by the Sublessee or by misrepresentation of or breach of
warranty by Sublessee; and
(iii) that may at any time be suffered or incurred as a
consequence of any design, article or material in the
Aircraft, any Engine or any Part or its operation or use
constituting an infringement of patent, copyright,
trademark, design or other proprietary right or a breach
by Sublessee, or anyone acting by or through Sublessee,
of any obligation of confidentiality owed to any person
in respect of any of the matters referred to in this
Clause 19.1 (iii).
19.2 Exception to General Indemnity
The indemnity provided for in Clause 19.1 will not extend to any Loss
in relation to a particular Indemnitee to the extent that such Loss:
(i) arises as a direct result of the gross negligence or
wilful misconduct of such Indemnitee; or
(ii) arises as a direct result of Sublessor Taxes, a
Sublessor Lien or a willful breach by Sublessor of its
obligations under any of the Transaction Documents; or
(iii) constitutes a Tax or liability for Taxes.
19.3 Time of Payment
Sublessee will pay an Indemnitee for Losses within ten (10) Business
Days after receipt of a written demand therefor from such Indemnitee
accompanied by a written statement describing in reasonable detail
the basis for such indemnity.
19.4 Survival of General Indemnity
Notwithstanding anything in this Agreement to the contrary, the
provisions of Clause 19.1 shall survive the Expiry Date for two (2)
years and continue in full force and effect notwithstanding any
breach by Sublessor or Sublessee of the terms of this Agreement, the
termination of the Sublease of the Aircraft to Sublessee under this
Agreement or the repudiation by Sublessor or Sublessee of this
Agreement.
19.5 Notice to Sublessee
Sublessor shall promptly after obtaining actual knowledge thereof
notify the Sublessee of any claim as to which indemnification is
sought; provided that a failure to so notify will not diminish or
relieve Sublessee of any obligations hereunder, unless such failure
materially adversely affects Sublessee's defence of such claim and
directly results in a material increase in liability of the Sublessee
in respect of such claim or prevents it from materially reducing
liability therefor, in which case the Sublessee shall not be required
to indemnify such Indemnitee for the amount by which such liability
was increased or not reduced.
20. TAXATION
20.1 Gross-up
20.1.1 All payments by Sublessee under or in connection with this Agreement
shall be made in full without any set-off or counterclaim, free and
clear of and without deduction or withholding for or on account of
all Taxes, except Sublessor Taxes, unless Sublessee is required by
law to make any such deduction or withholding.
20.1.2 If any Taxes, except Sublessor Taxes, are required to be deducted or
withheld from any amount payable hereunder, Sublessee shall pay to
Sublessor by way of Supplemental Rent such additional amounts, in the
same currency as such payment as may be necessary in order that the
amount of the net payment received by Sublessor on the date of such
payment, after deduction or withholding for all such Taxes, will be
equal to the amount that Sublessor would have received if such Taxes
had not been deducted or withheld.
20.1.3 If any payment is made by Sublessee under Clause 19.2 and Sublessor
in good faith determines that it is entitled to receive a credit
against, or relief or remission for, or repayment of, any Tax paid or
payable by Sublessor in respect of or calculated with reference to
the deduction or withholding giving rise to such payment, Sublessor
shall, to the extent that it can do so without prejudice to the
retention of the amount of such credit, relief, remission or
repayment and without leaving Sublessor in any worse net after tax
position than that in which it would have been had such deduction or
withholding not been required to be made, promptly pay to Sublessee
such amount as Sublessor shall reasonably have determined to be
attributable to the relevant deduction or withholding.
20.2 Tax Indemnity
20.2.1 Sublessee shall indemnify Sublessor on demand against all Taxes
(other than Sublessor Taxes) levied or imposed against or upon
Headlessor, Sublessor, Sublessee or the Aircraft directly or
indirectly in connection with the importation, exportation,
registration, ownership, leasing, subleasing, purchase, delivery,
sale, possession, use, operation, repair, maintenance, Overhaul,
transportation, landing, storage, presence or redelivery of the
Aircraft or any part thereof or any rent, receipts, insurance
proceeds, income or other amounts arising therefrom except to the
extent that such liability for such Taxes:
(i) arises as a result of a Sublessor Lien; or
(ii) arises in respect of the period ending prior to Delivery
and commencing immediately after the Expiry Date; or
(iii) is directly attributable to Sublessor's gross negligence
or willful misconduct; or
(iv) relates to any deduction or withholding on any payment
to be made to Sublessor that is covered by Clause 20.1;
or
(v) imposed as a direct result of the sale, transfer or
assignment or other disposition of the Aircraft or this
Agreement by Sublessor, other than by Sublessor to
Sublessee, or by any party claiming by or through
Sublessor and except (a) any sale, transfer, assignment
or other disposition that is made solely as a result of
the occurrence of an Event of Default or Total Loss of
the Aircraft or any part thereof or interest therein and
(b) any Taxes imposed by the State of Registration.
20.2.2 If Sublessor becomes aware of any claim against Sublessor for any
Loss that Sublessee is required to pay or indemnify against pursuant
to this Clause 20.2, Sublessor shall as soon as is reasonably
practicable notify Sublessee in writing of such claim. If requested
in writing by Sublessee that it wishes Sublessor to contest such
claim, Sublessor will consult with Sublessee with a view to
determining whether there are grounds for contesting such claim.
Sublessor will consider in good faith any representation made by
Sublessee in this respect. Sublessor shall not be under any
obligation to bring any proceedings in respect of any such claim in
any court of law or other relevant forum except that Sublessor shall
bring such proceedings in the event that tax counsel reasonably
acceptable to Sublessor in the relevant jurisdiction provides
Sublessor with a legal opinion to the effect that there are
legitimate grounds for contesting such claim. Any costs and expenses
of any such contest shall be fully indemnified by Sublessee. Further
Sublessor shall be under no obligation to take any action in respect
of any claim unless it shall previously have been provided with
security in an amount equal to the amount of such claim and
reasonable costs and otherwise satisfactory in its absolute
discretion for any such costs. Any amount payable under this Clause
20.2 shall be paid to or on behalf of Sublessor or, if so directed by
Sublessor, directly to the relevant taxing authority, promptly after
receipt by Sublessee of a written demand therefor.
20.3 Value Added Taxes
The Rent and other amounts payable by Sublessee under this Agreement
are exclusive of any value added tax, turnover tax or similar tax or
duty. If a value added tax or any similar tax or duty is payable in
any jurisdiction in respect of any Rent or other amounts as
aforesaid, Sublessee will pay all such tax or duty and indemnify
Sublessor against any claims for the same and any related claims,
losses or liabilities.
20.4 Taxation of Indemnity Payments
20.4.1 Notwithstanding any other provision of this Agreement, if and to the
extent that any sums payable to any Indemnitee by Sublessee under
this Agreement by way of indemnity are insufficient, by reason of any
Taxes payable in respect of those sums, for such Indemnitee to
discharge the corresponding liability to the relevant third party
(including any taxation authority), or to reimburse such Indemnitee
for the cost incurred by it to a third party (including any taxation
authority) Sublessee shall pay to such Indemnitee such sum as will
after the tax liability has been fully satisfied leave that
Indemnitee with the same amount as it would have been entitled to
receive in the absence of that liability.
20.4.2 If and to the extent that any sums constituting (directly or
indirectly) an indemnity to an Indemnitee but paid by Sublessee to
any person other than such Indemnitee are treated as taxable in the
hands of such Indemnitee, Sublessee shall pay to such Indemnitee such
sum as will, after the tax liability has been fully satisfied,
indemnify such Indemnitee to the same extent as it would have been
indemnified in the absence of such liability.
20.5 Benefit of Indemnities
All rights expressed to be granted to each Indemnitee (other than
Sublessor) under this Agreement are given to Sublessor on behalf of
that Indemnitee.
20.6 Sublessor Indemnification
Without prejudice to Clause 20.5, Sublessor shall be entitled (but
not obliged) to indemnify Indemnitees (other than Sublessor) on terms
equivalent to the indemnities given by Sublessee under this Agreement
and the obligations of Sublessee to Sublessor shall extend to
reimbursement of Sublessor of any amount properly paid by Sublessor
to such other Indemnitee provided always that nothing in this Clause
20.6 shall operate to increase the obligations or liabilities of
Sublessee.
20.7 Survival of Tax Indemnities
Notwithstanding anything in this Agreement to the contrary, the
provisions of Clause 19 shall survive the Expiry Date and continue in
full force and effect notwithstanding any breach by Sublessor or
Sublessee of the terms of this Agreement, the termination of the
Sublease of the Aircraft to Sublessee under this Agreement or the
repudiation by Sublessor or Sublessee of this Agreement.
20.8 Mitigation and Co-operation
In any case where Sublessee would be obliged to bear Taxes or make
additional payment on account of Taxes pursuant to the provisions of
this Agreement as a result of any change in applicable laws or
regulations or practice, Sublessor shall at the written request of
Sublessee, without limiting, reducing or otherwise qualifying the
rights of Sublessor and the Security Interest of Lender, consult with
Sublessee in good faith as to such steps which Sublessor and
Sublessee can mutually accept and agree upon in order to mitigate or
avoid the effects of such circumstances. In case Sublessor and
Sublessee can not agree within a period of thirty (30) days after
Sublessee has made a written request, Sublessor shall not have any
further obligation towards Sublessee.
20.9 Furnishing Forms
Sublessor agrees to furnish, and to procure that any other Indemnitee
furnishes to Sublessee, or to such other person as Sublessee may
designate, at Sublessee's sole cost and expense, such duly executed
and properly completed forms as such Indemnitee may be permitted and
legally able to deliver and as may be necessary or appropriate in
order to claim any reduction of, or exemption from any Tax which
Sublessee may be required to indemnify against hereunder, unless such
Indemnitee reasonable determines that furnishing such forms may have
an adverse effect on either the business, tax status, tax liability
or operations of such Indemnitee.
21. INSURANCE
21.1 Insurances
21.1.1 Sublessee shall, at its own expense, maintain in full force and
effect during the Sublease Term insurances in respect of the Aircraft
that, subject to this Clause 21, comply with the requirements set out
in Schedule 3 (the Insurances).
21.1.2 The Insurances shall be effected through brokers of international
standing and repute in the London or New York aviation insurance
markets as may be approved by Sublessor, such approval not to be
unreasonably withheld.
21.1.3 For the avoidance of doubt it is understood that the Insurances to be
provided for by Sublessee are not Sublessor's sole remedy and
protection under this Agreement as the obligations of Sublessee are
in excess of the requirements of the Insurances.
21.2 Reinsurance
Any reinsurance will be maintained with reinsurers and brokers
approved by Sublessor, such approval not to be unreasonably withheld.
Such reinsurance will contain each of the following terms and will in
all other respects (including amount) be satisfactory to Sublessor:
(i) The same terms as the original insurance;
(ii) A cut-through and assignment clause satisfactory to
Sublessor;
(iii) Payment will be made notwithstanding (a) any bankruptcy,
insolvency, liquidation or dissolution of any of the
original insurers and/or (b) that the original insurers
have made no payment under the original insurance
policies.
21.3 Requirements
The current requirements as to the Insurances are as specified in
this Clause 21 and in Schedule 3. Sublessor and Lender may from time
to time stipulate other requirements for the Insurances so that (a)
the scope and level of cover are maintained in line with best
international airline practice, and (b) the interests of Sublessor,
Headlessor and Lender continue to be protected. Sublessee shall
procure that such changes are effected.
21.4 Insurance Covenants
Sublessee shall:
(i) ensure that all requirements as to insurance of the
Aircraft, any Engine or any Part which may from time to
time be imposed by the laws of the State of Registration
or any state to, from or over which the Aircraft may be
flown, in so far as they affect or concern the operation
of the Aircraft, are complied with;
(ii) comply with the terms and conditions of each policy of
the Insurances and not do, consent or agree to any act
or omission which:
(a) invalidates or may invalidate the Insurances;
or
(b) renders or may render void or voidable the
whole or any part of any of the Insurances;
or
(c) brings any particular insured liability
within the scope of an exclusion or exception
to the Insurances;
(iii) not make any modification or alteration to the
Insurances material and adverse to the interests of any
of the Indemnitees;
(iv) be responsible for any deductible under the Insurances;
(v) provide any other information and assistance in respect
of the Insurances that Sublessor may from time to time
reasonably require including, for the avoidance of
doubt, lists of the underwriters and the exposures of
each of those underwriters which may carry the
Insurances from time to time; and
(vi) not use or keep or permit the Aircraft or any part
thereof to be used or kept for any purpose, in any
manner or in any place not covered by the required
policies;
(vii) not cause or permit the Aircraft or any part thereof to
be employed in any place or in any manner or for any
purpose inconsistent with the terms or outside the cover
provided by any required policy;
(viii) not knowingly effect or authorise the placement of
insurance covering the same subject matter as that
covered by the Insurances (except on a contingent or
other secondary basis); and
(ix) furnish to Sublessor:
(a) not later than seven (7) days prior to the
Scheduled Delivery Date and thereafter within
seven (7) days after each renewal date of
each policy, a certificate or certificates
signed by the insurers or the insurance
broker and a letter of undertaking by the
insurance brokerproviding evidence of
insurance coverage pursuant to this
Agreement;
(b) on request, confirmation of payment by, or at
the direction of the Sublessor of each sum
payable under or in connection with any
required policy;
(c) on request, such evidence as the Sublessor
may require of the Sublessee's compliance
with its obligations under this Agreement;
and
(d) any notice received from the insurers or the
insurance brokers (within three (3) Business
Days of receipt) relating to or in connection
with any cancellation of the Insurances or
any material alteration of the Insurances.
21.5 Renewal of Insurances
Sublessee shall commence renewal procedures at least thirty (30) days
prior to expiry of any of the Insurances, and provide to Sublessor:
(i) confirmation of completion of renewal at least fifteen
(15) days prior to each expiry date of any of the
Insurances;
(ii) certificates of insurance and a brokers' letter of
undertaking in a form acceptable to Sublessor and in
English, detailing the coverage and confirming the
insurers' agreement to the specified insurance
requirements of this Agreement within seven (7) days
after each renewal date; and
(iii) any other information as Sublessor may reasonable
request be provided by the insurance broker at least
fifteen (15) days before such expiry.
21.6 Failure to Insure
If Sublessee fails to maintain the Insurances in compliance with this
Agreement, Sublessee shall:
(i) forthwith ground or cause to be grounded the Aircraft
and shall keep or procure that the Aircraft be kept
grounded until such time as all the Insurances shall
again be in full force and effect; and
(ii) immediately notify Sublessor of the non-compliance of
the Insurances and provide Sublessor with full details
of any steps which Sublessee is taking or proposes to
take, in order to remedy such non-compliance;
and each of the Indemnitees will be entitled but not bound, without
prejudice to any other rights of Sublessor under this Agreement:
(a) to pay the premiums due or to effect and
maintain insurances satisfactory to Sublessor
and substantially the same as the Insurances
required hereunder or otherwise remedy
Sublessee's failure in such manner, including
to effect and maintain an "owner's interest"
policy, as Sublessor considers appropriate.
Any sums so expended by Sublessor will become
immediately due and payable by Sublessee to
Sublessor together with interest thereon at
the Default Rate, from the date of
expenditure by Sublessor up to the date of
reimbursement by Sublessee; and
(b) at any time while such failure is continuing
to require the Aircraft to remain at any
airport or to proceed to and remain at any
airport designated by Sublessor until the
failure is remedied to Sublessor's
satisfaction.
21.7 Continuation of Insurances
Sublessee agrees to effect and maintain at Sublessee's cost airline
general third party liability insurances in the form required by this
Agreement for two (2) years after the Expiry Date whether or not
Sublessee or Sublessor continues to have any interest in the
Aircraft, and to continue to name the parties listed in Schedule 3 -
Insurance Requirements, to this Agreement as Additional Insureds for
that period.
21.8 Application of Insurance Proceeds
As between Sublessor and Sublessee:
(i) all insurance payments received as the result of a Total
Loss occurring during the Sublease Term will be paid to
Sublessor or to Lender pursuant to the terms of any
security given by Owner Trustee and Sublessor;
(ii) all insurance proceeds of any damage or loss to the
Aircraft, any Engine or any Part occurring during the
Sublease Term not constituting a Total Loss and in
excess of the Damage Notification Threshold will be paid
to Sublessor and applied in payment (or to reimburse
Sublessee) for repairs or replacement property, upon
Sublessor being satisfied that the repairs or
replacement have been effected in accordance with this
Agreement; and
(iii) notwithstanding Clauses 21.8 (i) or 21.8 (ii) above, if
at the time of the payment of any such insurance
proceeds a Default has occurred and is continuing, all
such proceeds will be paid to or retained by Sublessor
to be applied toward payment of any amounts which may be
or become payable by Sublessee in such order as
Sublessor sees fit or as Sublessor may elect.
21.9 Pursuit of Claims
The parties shall co-operate in the pursuit of any claims under the
Insurances. In pursuing any such claims, the parties shall take
account of each others interests but, if there is any material
disagreement between the parties in respect of how any such claim
shall be pursued, the interests of Sublessor shall be paramount.
22. TOTAL LOSS AND REQUISITION
22.1 Total Loss Prior to Delivery
If a Total Loss occurs prior to Delivery, this Agreement shall
immediately terminate, and except as expressly stated in this
Agreement neither party will have any further obligation or liability
under this Agreement, except that Sublessor will repay to Sublessee
any prepaid Rent, the amount of Security Deposit, if paid, and return
the Letter of Credit under this Agreement.
22.2 Total Loss After Delivery
22.2.1 If a Total Loss occurs after Delivery, Sublessee shall pay the
Sublessor on or prior to the earlier of:
(i) thirty (30) days after the Total Loss Date; and
(ii) the date of receipt of insurance proceeds in respect of
such Total Loss,
the aggregate of (x) the Agreed Value and (y) Rent and all other
amounts accrued under this Agreement to the date of payment and (z)
interest on the Agreed Value accruing on a daily basis at the Default
Rate for the period, if any, from the Total Loss Date to the date of
payment.
22.2.2 Subject to the rights of any insurers or other third parties, upon
irrevocable payment in full to Sublessor of the Agreed Value and all
other amounts which may be or become payable to Sublessor under this
Agreement, Sublessor shall direct Owner Trustee to transfer to
Sublessee all of Owner Trustee's and Sublessor's rights (if any) to
(x) the Airframe or any Engines and Parts whether or not installed
when the Total Loss occurred, on an as-is where-is basis and without
recourse or warranty (save as to freedom from Sublessor Liens), and
Sublessor shall procure the execution and delivery of such bills of
sale and other instruments as Sublessee may reasonably request to
evidence such transfer, free and clear of all rights of Owner Trustee
and Sublessor and (y) any other rights in respect of the Aircraft or
any part thereof or any further requisition or insurance proceeds in
respect thereof. Sublessee shall indemnify Owner Trustee and
Sublessor for all fees, expenses and Taxes incurred by Owner Trustee
and Sublessor in connection with any such transfer.
22.2.3 If a Total Loss of the Aircraft or the Airframe occurs during the
Sublease Term, Sublessee's obligation to pay Rent shall continue in
full force and effect until the date of payment of the Agreed Value
and all other amounts due under this Agreement and upon payment of
the Agreed Value and all other sums due under this Agreement, the
leasing of the Aircraft shall immediately terminate, but without
prejudice to the continuing obligations of Sublessee (as to indemnity
or otherwise) under this Agreement and Sublessor and, if not already
recovered, Sublessee shall proceed diligently and co-operate fully
with each other in the recovery of the Total Loss Proceeds.
22.3 Total Loss of Engines
22.3.1 Upon an Engine Total Loss of any Engine not installed on the
Aircraft, or an Engine Total Loss of an Engine installed on the
Airframe not involving a Total Loss of the Airframe (in either case,
a Destroyed Engine), Sublessee shall give Sublessor prompt written
notice thereof and Sublessee shall replace the Destroyed Engine as
soon as reasonably possible by procuring that Owner Trustee acquires,
at Sublessee's expense, title to another engine complying with the
requirements of Clause 16.6. Such Replacement Engine shall upon
acquisition by Owner Trustee be an Engine as defined herein.
22.3.2 Sublessee agrees to take such action as Sublessor may reasonably
request in order that any such Replacement Engine shall be the
property of Owner Trustee, and leased hereunder on the same terms as
the Destroyed Engine. Sublessee's obligation to pay Rent shall
continue in full force and effect, but an amount equal to the Total
Loss Proceeds received by Sublessor or Lender, as the case may be,
with respect to the Destroyed Engine, less any cost, expenses, Taxes
or duties incurred in connection with the collection thereof, shall,
subject to Sublessor's right to deduct therefrom any amounts then due
and payable by Sublessee under this Agreement, be paid to Sublessee.
22.3.3 Immediately upon the effectiveness of such substitution, and without
further act, title to the replaced Engine shall thereupon vest in
Sublessee, in an as-is, where-is condition, free and clear of all
rights and Security Interests of Owner Trustee, Lender and Sublessor
and shall no longer be deemed an Engine hereunder.
22.4 Requisition
22.4.1 During any requisition for use or hire of the Aircraft, any Engine or
Part that does not constitute a Total Loss:
(i) the Rent and other amounts payable under this Agreement
will not be suspended or abated either in whole or in
part, and Sublessee will not be released from any of its
other obligations under the Agreement (other than
operational obligations with which Sublessee is unable
to comply solely by virtue of the requisition);
(ii) so long as no Default or Event of Default has occurred
and is continuing, Sublessee shall be entitled to any
hire paid by the requisitioning authority in respect of
the Sublease Term;
(iii) Sublessee shall, as soon as practicable after the end of
any such requisition, cause the Aircraft to be put into
the condition required by this Agreement.
22.4.2 If the Aircraft is under requisition for hire at the Expiry Date, the
leasing of the Aircraft under this Agreement shall continue until the
earlier of (x) when the Aircraft becomes a Total Loss and Sublessor
receives the Agreed Value together with any other amounts then due
and unpaid under this Agreement and (y) when the Aircraft is returned
prior to becoming a Total Loss, and Sublessee satisfies the Return
Conditions provided that:
(i) the obligations of Sublessee including in respect of
payment of Rent including Maintenance Reserves, if any,
shall continue in full force and effect until the
leasing ends except that during the continuation of the
requisition for hire while it does not constitute a
Total Loss, Sublessee shall be released from those of
its obligations that it is prevented from performing as
a result of the requisition of the Aircraft;
(ii) unless a Total Loss has occurred (in which case Clause
22.2 shall apply), Sublessee shall be obliged to
redeliver the Aircraft to Sublessor in accordance with
Clause 23;
(iii) provided no Default or Event of Default is continuing,
Sublessee shall be entitled to receive and retain any
requisition payments made in respect of the Aircraft;
and
(iv) Sublessee shall indemnify Sublessor for any Losses which
Sublessor suffers (Sublessor undertakes to use its
reasonable best efforts to mitigate such Losses) as a
result of Sublessee returning the Aircraft to Sublessor
after the Expiry Date.
23. REDELIVERY
23.1 Redelivery of Aircraft
On the Redelivery Date, Sublessee shall, unless a Total Loss has
occurred, redeliver the Aircraft and the Aircraft Documents to
Sublessor at Sublessee's cost and expense at the Redelivery Location.
If the Aircraft has been damaged and is being repaired in a timely
manner, then the term of the Sublease will be extended and
Sublessee's obligations under this Agreement shall continue in full
force and effect and during the course of such repair and, so long as
no Default or Event of Default shall have occurred and be continuing,
the Sublessor will make insurance proceeds available to accomplish
such repairs as provided in Clause 22. When the repairs are
completed, the Aircraft shall be redelivered to Sublessor. At the
time of the redelivery of the Aircraft:
(i) the Aircraft shall be free and clear of all Security
Interests other than Sublessor Liens;
(ii) all maintenance to the Aircraft due for performance on
or before the Redelivery Date shall have been completed
in accordance with this Agreement;
(iii) the Aircraft shall be in compliance with the Return
Conditions;
(iv) the Aircraft shall comply with such other reasonable
requirements as Sublessor may request that Sublessee has
had timely notice of and that Sublessor has agreed to
pay for; provided, however, that if compliance with
Sublessor's request is the sole cause of a delay in the
return of the Aircraft beyond the Expiry Date, then Rent
shall xxxxx for the period of such delay solely
attributable to Sublessee's compliance with Sublessor's
request; and
(v) any service bulletin kits which are allocated to the
Aircraft at no charge by the Manufacturer and not
delivered to Sublessor as at the Redelivery Date will be
shipped to a location specified by Sublessor at
Sublessee's cost.
23.2 Final Inspection
Immediately prior to redelivery of the Aircraft, Sublessee shall make
the Aircraft available to Sublessor for inspection (Final Inspection)
at the Redelivery Location in order to verify that the condition of
the Aircraft complies with the Return Conditions. The Final
Inspection shall be long enough to permit Sublessor to:
(i) inspect the Aircraft Documents;
(ii) inspect the Aircraft and uninstalled Parts;
(iii) inspect the Engines, including without limitation (i) a
video borescope inspection of (A) the low pressure and
high pressure compressors and (B) turbine area and (ii)
engine condition runs.
23.3 Discrepancies
Sublessee shall repair all discrepancies discovered during the Final
Inspection and demonstration flight, which exceed maintenance manual
allowable limits, and shall correct all discrepancies in the Aircraft
Documents. When Sublessee has complied with the provisions of this
Clause 23.3, Sublessee shall redeliver the Aircraft to Sublessor at
Sublessee's cost and expense at the Redelivery Location.
23.4 Non-compliance
23.4.1 To the extent that, at the time of Final Inspection, the condition of
the Aircraft does not comply with this Agreement (except Clause 23.1
(iv)), Sublessee shall at Sublessor's option:
(i) immediately rectify the non-compliance and to the extent
the non-compliance extends beyond the Redelivery Date,
the Sublease Term will be automatically extended until
the non-compliance has been rectified and Sublessee
shall be required to pay Rent to Sublessor during that
period at the rate equal to two (2) times the daily
Basic Rent (Basic Rent per month divided by thirty (30))
per day payable monthly or, if earlier, on the date on
which the non-compliance is rectified and the return of
the Aircraft is accepted by Sublessor; or
(ii) redeliver the Aircraft to Sublessor and indemnify
Sublessor, and provide cash to Sublessor in an amount
reasonably satisfactory to Sublessor as security for
that indemnity, against the cost of putting the Aircraft
into the condition required by this Agreement.
23.4.2 Sublessor's option in Clause 23.4 is not available to Sublessor
provided that (i) Sublessee has notified Sublessor of its intent to
rectify the non-compliance prior to the Redelivery Date and (ii)
Sublessee will in the reasonable opinion of Sublessor be able to
rectify such non-compliance on or before Redelivery Date.
23.4.3 For the avoidance of doubt, Sublessor shall not be entitled to
exercise its option under Clause 23.4.1 and Sublessee shall suffer no
loss or penalty to the extent that the Aircraft does not, on Final
Inspection, comply with Clause 23.1 (iv) but is otherwise in
compliance with the Return Conditions.
23.5 Acknowledgment
Provided Sublessee has complied with its obligations under this
Agreement, following redelivery of the Aircraft by Sublessee to
Sublessor at the Redelivery Location, the parties shall execute an
acknowledgment confirming that Sublessee has redelivered the Aircraft
to Sublessor in accordance with this Agreement substantially in the
form of Schedule 13.
23.6 Storage
Notwithstanding the performance in full by Sublessee of all its
obligations under this Clause 23, Sublessor may require Sublessee to
continue to lease the Aircraft from Sublessor for a period of up to
thirty (30) days from the Expiry Date. During this period, Sublessee
will have no obligations under this Agreement except to park and
store the Aircraft in accordance with Manufacturer's recommended
short term storage program at one of Sublessee's storage facilities
and to continue Insurances in respect of the Aircraft at Sublessee's
cost. Such parking and storage is being made at the risk of Sublessor
and Sublessee shall have no liability for Losses beyond those covered
by the Insurances except for any Losses arising out of Sublessee's
gross negligence or willful misconduct arising during such period.
Sublessee also agrees during this period to ferry/fly the Aircraft to
such location as Sublessor may require. Sublessee will not otherwise
utilise the Aircraft during this period. Any out of pocket costs or
expenses incurred by Sublessee during this period with respect to the
Aircraft for storage, insurance or such ferry/flight shall be
reimbursed by Sublessor to Sublessee promptly after demand and upon
receipt by Sublessor of an invoice and documentation, reasonably
satisfactory to Sublessor, of such costs and expenses.
24. EVENTS OF DEFAULT
24.1 Notice
Sublessee will promptly notify Sublessor if Sublessee becomes aware
of the occurrence of any Default.
24.2 Events
Each of the following events will constitute an Event of Default and
a material breach of this Agreement:
(i) Non-payment: Sublessee fails to pay any amount payable
by it under the Transaction Documents or the Other
Agreements in the currency in which such sum fell due in
respect of payments of Rent or Maintenance Reserves, if
any, within three (3) Business Days of the due date for
payment thereof and, in respect of any other payments,
within five (5) Business Days of the date of receipt of
written notice for payment thereof;
(ii) Insurance: Insurance cover on or with respect to the
Aircraft for the benefit of Sublessor (and any
additional insured) is not maintained in accordance with
the provisions of this Agreement or the Aircraft is
operated outside the scope of such insurance coverage;
or
(iii) Delivery: Sublessee fails to take Delivery of the
Aircraft when obligated to do so under the terms of this
Agreement; or
(iv) Redelivery: Sublessee fails to return the Aircraft to
Sublessor on the Redelivery Date in accordance with
Clause 23; or
(v) Breach: Sublessee defaults in the due performance and
observance of any other obligations contained in the
Transaction Documents and such default is not remedied
within fourteen (14) days of becoming aware of such
default; or
(vi) Representation: Any representation, warranty or
statement made or deemed to be made by Sublessee in the
Transaction Documents or in any certificate, statement
or opinion delivered by it hereunder or in connection
herewith is incorrect, inaccurate or misleading in any
material respect when made or deemed to be made or if
the effects or consequences of the incorrect, inaccurate
or misleading representation, warranty or statement are
capable of cure and Sublessee fails to cure such effects
or consequences within twenty (20) days after becoming
aware of such default; or
(vii) Approvals: Any governmental or other consent, license or
authorization required by law for the validity or
legality of the Transaction Documents or the performance
hereof or thereof (other than any such which may be
required to be obtained by Sublessor) is withdrawn or
ceases, for any reason, to be in full force and effect
or is not renewed or obtained when required and such
withdrawal, cessation, non-renewal or non-obtaining in
the opinion of Sublessor may prejudice the rights of
Sublessor under this Agreement or in the reasonable
opinion of Sublessor may have a material adverse effect
on Sublessee's obligation to perform its obligations
under this Agreement; or
(viii) Registration:
(a) the Registration of the Aircraft is canceled
other than as a result of an act or omission
of Sublessor or another Indemnitee including
Owner Trustee or an affiliate of the Owner
Trustee and Sublessor;
(b) Sublessee ceases to be a certified US Air
Carrier authorised to transport passengers in
common carriage in accordance with the
requirements of the Federal Aviation Act of
1958, as amended, and the rules, regulations
and standards prescribed thereunder; or
(ix) Possession: Sublessee abandons the Aircraft or the
Engines, or Sublessee or any Permitted Air Carrier no
longer has unencumbered control (other than Permitted
Liens) or possession of the Aircraft or Engines, except
as otherwise permitted by this Agreement; or
(x) Discontinuation: Sublessee threatens to or temporarily
or permanently discontinues business or sells or
otherwise disposes of all or substantially all of its
assets; or
(xi) Adverse Change: A material adverse change occurs in the
financial condition of Sublessee which in the reasonable
opinion of Sublessor may have a material negative impact
on Sublessee's ability to perform its obligations
hereunder; or
(xii) Cross Default: Any Financial Indebtedness of Sublessee
(in an aggregate amount in excess of US$1,000,000 or its
equivalent in other currencies) becomes due and payable,
or may be declared due and payable, prior to its stated
maturity by reason of default by Sublessee (having
regard to any applicable grace period) or any such
Financial Indebtedness is not paid on the due date for
payment thereof (as extended by any applicable grace
period); or
(xiii) Insolvency: Sublessee is declared bankrupt or becomes
insolvent or is unable to pay its debts as and when the
same fall due or declares a moratorium on the payment of
its indebtedness or makes an assignment for the benefit
of creditors generally or is subject to bankruptcy,
liquidation, debt negotiations or any analogous
proceedings; or
(xiv) Proceedings: Any proceedings, resolutions, filings or
other steps are instituted or threatened with respect to
the Sublessee or a substantial part of Sublessee's
property relating to the bankruptcy, liquidation,
reorganisation or protection from creditors of
Sublessee. If instituted by Sublessee or done by the
Sublessee, the same will be an immediate Event of
Default. If instituted by another person, the same will
be an Event of Default if not dismissed, remedied or
relinquished within twenty (20) days; or
(xv) Judgements: Any order, judgement or decree is entered by
any court of competent jurisdiction appointing a
receiver, trustee or liquidator of Sublessee or a
substantial part of its property or if a substantial
part of its property is to be sequestered. If instituted
by Sublessee or done by the Sublessee, the same will be
an immediate Event of Default. If instituted by another
person, the same will be an Event of Default if not
dismissed, remedied or relinquished within twenty (20)
days; or
(xvi) Air Navigation Charges: Any competent authority has
unpaid Air Navigation Charges due from Sublessee (unless
such charges are being contested in good faith and by
appropriate proceedings and such proceedings do not
involve any danger of the detention, interference with
the use or operation, sale, forfeiture or loss of the
Aircraft) and such charges remain outstanding of a
period of ten (10) days from the due date thereof;
provided that such ten (10) day grace period will not
apply if there is a danger of detention, interference
with the use or operation, sale, forfeiture or loss of
the Aircraft; or
(xvii) Airport Charges: Any airport has unpaid Airport Charges
due from Sublessee (unless such charges are being
contested in good faith and by appropriate proceedings
and such proceedings do not involve any danger of the
detention, interference with the use or operation, sale,
forfeiture or loss of the Aircraft) and such charges
remain outstanding for a period of ten (10) days from
the due date thereof; provided that such ten (10) day
grace period will not apply if there is a danger of
detention, interference with the use or operation, sale,
forfeiture or loss of the Aircraft;
(xviii) Other Default: An Event of Default is continuing
unremedied under any Other Agreement between Sublessee
and Sublessor or another Sublessor or sub-sublessor that
either (i) shares the same general partner or
controlling shareholder with Sublessor or (ii) whose
beneficiary shares the same general partner or
controlling shareholder with Sublessor; or
(xix) Sub-sublessee: Any approved sub-sublessee acts so as to
prevent present or future performance by Sublessee of
its obligations under this Agreement.
24.3 Sublessor's Rights
24.3.1 Upon the occurrence of any Event of Default, all rights of Sublessee
under this Agreement and with respect to the Aircraft will
immediately cease and terminate, but without prejudice to the
continuing obligations of Sublessee under this Agreement. Without
prejudice and in all cases in addition to any other rights of
Sublessor under this Agreement or under applicable law, Sublessor may
upon the occurrence of any Event of Default exercise all or any of
the following rights at its option:
(i) require that Sublessee immediately move the Aircraft to
a location specified by Sublessor;
(ii) for Sublessee's account do anything that may reasonably
be required to cure any default and recover from
Sublessee all reasonable costs, including reasonable
legal fees and expenses incurred in doing so and
interest thereon at the Default Rate; or
(iii) proceed by appropriate court action or actions to
enforce performance of this Agreement or to recover
damages for the breach of this Agreement; or
(iv) enter upon the premises where the Airframe or any or all
Engines or any or all Parts are located or believed to
be located and take immediate possession of and remove
such Airframe, Engine or Parts without the necessity for
first instituting proceedings, or by summary proceedings
or otherwise, and Sublessee shall comply therewith, all
without liability to Sublessor for or by reason of such
entry or taking possession, whether for the restoration
or damage to property caused by such taking or
otherwise;
(v) apply all or any portion of the Security Deposit, the
Letter of Credit and any other security deposit held by
Sublessor pursuant to any Other Agreements to any
amounts due.
24.3.2 Whether or not Sublessor shall have exercised, or shall thereafter
any time exercise, any of its rights under Clause 24.3.1 (i) or (iv)
above with respect to all or any part of the Aircraft, Sublessor may,
by written notice to Sublessee specifying a payment date not earlier
than ten (10) days from the date of such notice, demand that
Sublessee pay to Sublessor, and Sublessee shall pay Sublessor, on the
payment date specified in such notice as liquidated damages and not
as a penalty (in lieu of the installments of Rent due for periods
commencing on or after the payment date in such notice), any unpaid
installments of Rent due for periods prior to the payment date
specified in such notice plus the present value of the remaining
installments of Rent during the Sublease Term, using in each case a
discount rate of the amount of interest then paid on U.S. Treasury
Bills of similar maturity. In addition, Sublessee shall be liable for
the amounts set forth in 24.4 (ii ) and (iii).
24.3.3 If an Event of Default occurs, Sublessor may sell or re-lease or
otherwise deal with the Aircraft at such time and in such manner as
Sublessor considers appropriate in a commercially reasonable manner,
free and clear of any interest of Sublessee as if this Agreement had
never been entered into and as if Sublessee had never made any
payments hereunder. While an Event of Default is continuing,
Sublessee will not operate the Aircraft without the consent of
Sublessor.
24.3.4 If an Event of Default has occurred and is continuing, Sublessor may
take all steps necessary to de-register the Aircraft in and export
the Aircraft from the State of Registration.
24.4 Default Payments
Sublessee shall be liable for:
(i) any and all unpaid Rent due hereunder before or after
any termination hereof;
(ii) any and all unpaid Supplemental Rent due hereunder
before or after any termination hereof;
(iii) all costs and expenses (including attorney's fees and
disbursements) incurred by Sublessor in connection with
or as a result of any Event of Default or exercise of
remedies hereunder, including, but not limited to, (i)
all costs and expenses incurred in connection with
recovering possession of the Aircraft and in carrying
out any works or modifications required to place the
Aircraft in the condition specified in Clause 23.1 and
remarketing the Aircraft, (ii) interest at the Default
Rate on any amount not paid when due under this
Agreement and (iii) an amount sufficient to fully
compensate Sublessor for any loss of or damage to
Sublessor's residual interest in the Aircraft.
All costs and expenses referred to in the preceding sentence shall be payable by
Sublessee upon demand by Sublessor unless otherwise specified in this Agreement.
All such obligations shall survive any termination of this Agreement or the
leasing of the Aircraft or any portion thereof hereunder.
24.5 Cumulative Rights
Except as otherwise expressly provided above, no remedy referred to
in this Clause 24 is intended to be exclusive, but each shall be
cumulative and in addition to any other remedy referred to above or
otherwise available to Sublessor at law or in equity. The exercise or
beginning of exercise by Sublessor of any one or more of such
remedies shall not preclude the simultaneous or later exercise by
Sublessor of any or all such other remedies. No express or implied
waiver by Sublessor 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.
25. ASSIGNMENT AND TRANSFER
25.1 By Sublessee
No assignment, novation, transfer or Security Interest may be made by
Sublessee in any of its rights with respect to the Aircraft, Engine,
Parts, this Agreement or the other Transaction Documents (other than
Permitted Liens).
25.2 By Sublessor
Subject to Sublessee's rights pursuant to this Agreement, Sublessor
may at any time and without Sublessee's consent sell, assign or
transfer its rights and interest hereunder and under the other
Transaction Documents to a third party, (Sublessor's Assignee).
Sublessor will in good faith co-operate with Sublessee to ensure
minimum practical disturbance or cost in connection with such
assignment or transfer of rights and interest hereunder. Sublessee
agrees to co-operate in good faith with Sublessor in such sale,
assignment or transfer and provide Sublessor and Sublessor's Assignee
with such reasonable assistance as Sublessor may require, including
but not limited to assisting in any of Sublessor's and Sublessor's
Assignee's efforts to minimise or eliminate any Taxes related to such
assignment or transfer. For a period of two (2) years after any such
sale or assignment and at Sublessee's cost, Sublessee will continue
to name Owner Trustee, Sublessor, Lender and any Maintenance
Facilities or parts or equipment vendors identified by Sublessor as
additional insureds in accordance with the insurance requirements set
out in Clause 21.
25.3 Assignment to Lender
Subject to Sublessee's rights under this Agreement, Owner Trustee and
Sublessor may at any time grant Security Interests over the Aircraft
and the benefit of this Agreement, the other Transaction Documents
and any other agreement related to the Aircraft to any lender as
security for Owner Trustee's obligations to such lender. Owner
Trustee's rights to grant any such Security Interests shall be
subject only to receipt by Sublessee of an acknowledgment from or on
behalf of Lender relating to quiet enjoyment by Sublessee of the
Aircraft as referred to in Clause 25.4.2.
25.4 Sublessee Co-operation
25.4.1 On request by Sublessor, Sublessor's Assignee, Owner Trustee or
Lender, Sublessee will, at Sublessee's sole expense, promptly execute
all such documents as Sublessor, Sublessor's Assignee, Owner Trustee
or Lender may reasonably require (including such estoppel certificate
as referred to in Clause 12.4 to confirm Sublessee's obligations
under this Agreement and the other Transaction Documents), to obtain
Sublessee's confirmation that no Default is outstanding and for the
purpose of perfecting and ensuring and maintaining the perfection of
any Security Interest granted by Owner Trustee and Sublessor over the
Aircraft, this Agreement, the other Transaction Documents or any
other agreement related to the Aircraft. Sublessee will promptly
provide all other reasonable assistance and co-operation at
Sublessor's expense to Sublessor, Sublessor's Assignee, Owner Trustee
or Lender in connection with any of the matters referred to in this
Clause 25 or the perfection and maintenance of any related Security
Interest, the making of any necessary changes to the Insurances, the
making of any necessary filings and registrations in the State of
Incorporation or the State of Registration or the provision of any
appropriate counsel's opinions in relation to Sublessee's obligations
25.4.2 Sublessor will obtain for the benefit of Sublessee an acknowledgement
from Sublessor's Assignee or Lender that, so long as no Default has
occurred and is continuing hereunder, such person will not interfere
with Sublessee's quiet, peaceful use and enjoyment of the Aircraft,
substantially in the form of Schedule 11 or such other form as
Sublessor's Assignee or Lender may reasonably require.
25.5 Sublessor Includes Sublessor's Assignee and Lender
Wherever the term "Sublessor" is used in this Agreement in relation
to any of the provisions relating to registration, title, disclaimer,
indemnity and insurance respectively, the term "Sublessor" will be
deemed to include Sublessor's Assignee and Lender.
26. MISCELLANEOUS PROVISIONS
26.1 Rights Cumulative, Waivers
The rights of Sublessor under this Agreement are cumulative, may be
exercised as often as Sublessor considers appropriate and are in
addition to Sublessor's rights under the general law. The rights of
Sublessor against Sublessee or in relation to the Aircraft, whether
arising under this Agreement or the general law, shall not be capable
of being waived or varied otherwise than by an express waiver or
variation in writing; and in particular any failure to exercise or
any delay in exercising any of such rights shall not operate as a
waiver or variation of that or any other such right; any defective or
partial exercise of any of such rights shall not preclude any other
or further exercise of that or any other such right; and no act or
course of conduct or negotiation on Sublessor's part or on its behalf
shall in any way preclude it from exercising any such right or
constitute a suspension or any variation of any such right.
26.2 Delegation
Sublessor may delegate to any person or persons all or any of its
rights, powers or discretions vested in it by this Agreement, and any
such delegation may be made upon such terms and conditions and
subject to such regulations (including power to sub-delegate) as
Sublessor in its absolute discretion thinks fit.
26.3 Expenses
So long as the Aircraft is tendered for Delivery to Sublessee
pursuant to this Agreement, Sublessee shall pay to Sublessor on
demand:
(i) all reasonable expenses including legal, professional,
and out-of-pocket expenses incurred or payable by
Sublessor in connection with any amendment to or
extension of or other documentation requested by
Sublessee in connection with, or the granting of any
waiver or consent under this Agreement or the monitoring
of compliance by Sublessee with this Agreement, but in
the case of such monitoring of compliance, only if upon
such monitoring Sublessee is found to be in Default
under this Agreement; and
(ii) all expenses including legal, survey and other costs
payable or incurred by Sublessor following a Default in
connection with the enforcement of or preservation of
any of Sublessor's rights under this Agreement, or in
respect of the repossession of the Aircraft.
All expenses payable pursuant to this Clause 26.3 shall be paid in
the currency in which they are incurred by Sublessor.
26.4 Time of Essence
The time stipulated in this Agreement for all payments by Sublessee
to Sublessor and for the prompt performance of Sublessee's other
obligations under this Agreement will be of the essence for this
Agreement.
26.5 Entire Agreement
The Transaction Documents are the sole and entire agreements between
Sublessor and Sublessee in relation to the leasing of the Aircraft,
and supersede all previous agreements in relation to that leasing.
26.6 Further Assurances
The parties shall take such action as Sublessor and Sublessee
reasonably consider to be in furtherance of the commercial intent of
the parties under the Transaction Documents including, without
limitation, such action as may be required properly to transfer title
to engines and parts as contemplated in this Agreement in compliance
with the laws of the lex situs of the relevant engine or part at the
relevant time.
26.7 Language
All notices to be given under this Agreement will be in English. All
documents delivered to Sublessor pursuant to this Agreement will be
in English or, if not in English, will be accompanied by a certified
English translation. If there is any inconsistency between the
English version of this Agreement and any version in any other
language, the English version will prevail.
26.8 Variation
The provisions of this Agreement shall not be varied or amended
otherwise than by an instrument in writing executed by or on behalf
of Sublessor and Sublessee.
26.9 Invalidity of any Provision
If any provision of this Agreement becomes invalid, illegal or
unenforceable in any respect under any law, the validity, legality
and enforceability of the remaining provisions shall not in any way
be affected or impaired.
26.10 Survival
All indemnities and other obligations of Sublessee which arise or are
attributable to circumstances occurring during the Sublease Term
shall survive, and remain in full force and effect, notwithstanding
the expiration or other termination of this Agreement or the leasing
of the Aircraft hereunder.
26.11 Reimbursement
If Sublessee defaults in the performance of any of its obligations
under this Agreement that can be rectified by the spending of money,
Sublessor shall be entitled (but not obliged) to expend money to
rectify such matter and Sublessee shall reimburse Sublessor on demand
the money so expended. Any expenditure by Sublessor pursuant to this
Clause 26.11 shall not prejudice the rights of Sublessor in respect
of any Default or Event of Default.
26.12 Press Releases
The parties will give copies to one another, in advance if possible,
of all news, articles and other releases provided to the public media
regarding this Agreement or the Aircraft.
26.13 Power of Attorney
Sublessee hereby irrevocably appoints Sublessor as its attorney for
the purpose of putting into effect the intent of this Agreement
following an Event of Default, including without limitation, the
return, repossession, deregistration and exportation of the Aircraft.
To evidence this appointment, Sublessee has executed the power of
attorney in the form of Schedule 8. Sublessee will take all steps
required under the laws of the State of Registration to provide such
power of attorney to Sublessor.
26.14 Usury Laws
Notwithstanding anything to the contrary in the Transaction
Documents, Sublessee will not be obligated to pay Default Interest or
other interest in excess of the maximum non-usurious interest rate,
as in effect from time to time, which may by applicable law be
charged, contracted for, reserved, received or collected by Sublessor
in connection with the Transaction Documents. During any period of
time in which the then applicable highest lawful rate is lower than
the Default Interest rate, Default Interest will accrue and be
payable at such highest lawful rate; however, if at later times such
highest lawful rate is greater than the Default Interest rate, then
Sublessee will pay Default Interest at the highest lawful rate until
the Default Interest which is paid by Sublessee equals the amount of
interest which would have been payable in accordance with the
interest rate set forth in Schedule 2.
26.15 Confidentiality
The Transaction Documents and all non-public information obtained by
either party about the other are confidential and are between
Sublessor and Sublessee only and the commercial terms and other
material provisions of this Agreement will not be disclosed by a
party to third parties (other than to such party's auditors, lenders
and legal advisors) without the prior written consent of the other
party except in connection with enforcement of rights hereunder. If
disclosure is required as a result of applicable law, Sublessee and
Sublessor will co-operate with one another to obtain confidential
treatment as to the commercial terms and other material provisions of
this Agreement; provided, however, if they are unable to obtain such
confidential treatment and disclosure is required by applicable law,
then such disclosure may be made in accordance with such law.
26.16 Counterparts
This Agreement may be executed in any number of identical
counterparts, each of which will be deemed to be an original, and all
of which together will be deemed to be one and the same instrument
when each party has signed and delivered one such counterpart to the
other party. Delivery of an executed counterpart of this Agreement by
facsimile will be deemed effective as delivery of an originally
executed counterpart. Any party delivering an executed counterpart of
this Agreement by facsimile will also deliver an originally executed
counterpart; provided, however, the failure of any party to deliver
an originally executed counterpart of this Agreement will not affect
the validity or effectiveness of this Agreement.
26.17 Bankruptcy
It is the intention of the parties that the Sublessor shall be
entitled to the benefits of 11 U.S.C. 1110 with respect to the right
to repossess the Airframe, Engines and Parts as provided herein, and
in any circumstances where more than one construction of the terms
and conditions of this Agreement is possible, a construction which
would preserve such benefits shall control over any construction
which would not preserve such benefits or would render them doubtful.
To the extent consistent with the provisions of 11 U.S.C. 1110 or any
analogous section of the Federal bankruptcy laws, as amended from
time to time, it is hereby expressly agreed and provided that,
notwithstanding any other provisions of the Federal bankruptcy laws,
as amended from time to time , any right of the Sublessor to take
possession of the Aircraft in compliance with the provisions of this
Agreement shall not be affected by the provisions of 11 U.S.C. 362 or
363, as amended from time to time, or any analogous provisions of any
superseding statute or any power of the bankruptcy court to enjoin
such taking of possession. This Agreement is a true lease and not one
intended as security.
27. NOTICES
Any notice or other communication under or in connection with this
Agreement shall be in writing and shall be delivered personally, by
reputable overnight courier or express service or by post or
facsimile transmission to the respective addresses or facsimile
numbers given below or such other address or facsimile number as the
recipient may have notified to the sender in writing. Proof of
posting or despatch shall be deemed to be proof of receipt. Notice
shall be deemed received:
(i) in the case of a letter, on the fifth Business Day after
posting; and
(ii) in the case of a facsimile, on the Business Day
immediately following the date of despatch or
transmission.
In the case of a notice sent by expedited delivery, notice will be
deemed received on the date of delivery set forth in the records of
the person which accomplished the delivery. If any notice is sent by
more than one of the above listed methods, notice will be deemed
received on the earliest possible date in accordance with the above
provisions. Notices will be addressed as follows:
Sublessor: KOMMANDITBOLAGET FLYGPLANET XII
Address: Sodra Xxxxxxxxxxxxx 0
XX-000 00 Xxxxx, Xxxxxx
Attention: Legal Department
Facsimile: x00 00 000000
Sublessee: FRONTIER AIRLINES, INC.
Address: 00000 X. 00xx Xxxxxx
Xxxxxx, Xxxxxxxx 00000-0000
X.X.X.
Attention: General Counsel
Facsimile: (000) 000 0000
28. GOVERNING LAW AND JURISDICTION
28.1 New York Law
This Agreement will in all respects be governed by and construed in
accordance with the laws of the State of New York including all
matters of construction, validity and performance but excluding
section 7-101 of the General Obligations Law (notwithstanding the
conflict laws of the State of New York).
28.2 Non-exclusive Jurisdiction in New York
Each of Sublessor and Sublessee (a) irrevocably submit to the
non-exclusive jurisdiction of the Commercial Part of the Supreme
Court of the State of New York, sitting in the County of New York, or
for matters not within the jurisdiction of such court, in any state
or federal court sitting in New York County for the purposes of any
suit, action, or other proceeding arising out of this Agreement or
the Transaction Documents or the subject matter hereof or thereof or
the transactions contemplated hereby or thereby brought by the other
party or its successor or assign and (b) to the extent permitted by
applicable law, irrevocably waives and agrees not to assert by way of
motion, as defence or otherwise any claim that it is not personally
subject to the jurisdiction of the above named courts; that the suit,
action or proceeding is brought in an inconvenient forum, that venue
is improper or that this Agreement or the other Transaction Documents
or the subject matter hereof or thereof may not be enforced in or by
such court. Nothing herein contained shall prevent either party from
bringing suit in any other court of competent jurisdiction.
28.3 Service of Process
With respect to actions, suits and proceedings brought in the courts
named in Clause 28.2. each of Sublessor and Sublessee hereby waives
personal service of process and agrees that service of process may be
made upon certified or registered mail, return receipt requested, at
the address specified in Clause 27 and that such service shall be
deemed completed on the fifth business day after service is deposited
in the mail. Nothing herein shall affect the right to service process
in any other manner provided by applicable law or accordance with the
Hague Convention if applicable.
28.4 Prevailing Party in Dispute
If any legal action or other proceeding is brought in connection with
or arises out of any provisions in this Sublease, the prevailing
party will be entitled to recover reasonable attorneys' fees and
other reasonable costs incurred in such action or proceedings. The
prevailing party will also, to the extent permissible by law, be
entitled to receive pre- and post-judgment Default Interest.
28.5 Waiver
Sublessee and Sublessor hereby waive the right to a trial by jury.
Sublessee hereby irrevocably waives any objection which it may now or
hereafter have to the laying ofvenue of any suit, action or
proceeding arising out of or related to this Agreement brought in any
of the Courts referred to in Clause 28.2, and hereby further
irrevocably waives any claim that any such suit, action or proceeding
brought in any such Court has been brought in an inconvenient forum.
SIGNATURE PAGE
IN WITNESS whereof the parties hereto have executed this Agreement as of the day
and year first above written.
SIGNED on behalf of KOMMANDITBOLAGET FLYGPLANET XII
By: ___________________________
Name: ___________________________
Title: ___________________________
SIGNED on behalf of FRONTIER AIRLINES, INC.
By: ___________________________
Name: ___________________________
Title: ___________________________
Receipt of the "original" counterpart of this Agreement is hereby acknowledged.
SCHEDULE 1
AIRCRAFT SPECIFICATION
Model Boeing 737-2Y5
Serial Number 23040
Registration Xxxx N118RW
Line Number 955
Date of Manufacture March, 1983
Engines Xxxxx & Whitney JT8D-15A with
Nordam LGW Xxxxxxxx
XXX Xxxxxxx XXXX00-000
Present Operator Frontier Airlines
WEIGHTS Kgs Lbs.
Max Taxi Weight 56,700 125,000
Max Take Off Weight 56,470 124,500
Max Landing Weight 48,535 107,000
Max Zero Fuel Weight 43,090 95,000
Basic Empty Weight 27,875 61,454
Max Fuel capacity 15,213 Kgs. 5,160 US Gallons
INTERIOR CONFIGURATION
Seating 122Y Xxxxx
Galleys 5 Xxxxxxxx
0 Xxxxx (X0 xxxX0)
0 Xxxx (X0, X0 and G6)
Lavatories 2 Xxxxx
1 Forward left, 1 Rear left
AIRFRAME STATUS (As of July 16, 1999)
Total Hours 52,151
Total Cycles 24,081
C-Check last performed July 1999
D-Check C-7 Structural Inspection last performed
February, 1998 (49,409 hours/22,224 cycles)
AIRFRAME MAINTENANCE PROGRAM
CHECK SCHEDULE
A Check 125 flight hours
B Check 3,600 hours or 18 months
7C 25,200 hours
Structural 20,000 hours
ENGINES (As of July 16, 1999)
#1 Position #2 Position
Serial Number 685527 700605
Total Hours 60,567.4 33,741
Total Cycles 41,592 20,002
Next Limiter 5,002 cycles 7,671 cycles
TSLSV 0 0
LANDING GEAR (As of June 10, 1999)
Right/Left Main TSO 8,888 hours
Nose TSO 8,888 hours
Overhaul limit (TBO) 20,000 hours
APU (As of June 10, 1999)
Serial Number P-50202
Total Hours 2,742 hours
Time since HSI 1,857
NAVIGATIONAL, COMMUNICATION, ELECTRONIC SYSTEMS,
FURNISHING & EQUIPMENT LIST
DESCRIPTION MANUFACTURER MODEL OR
PART NUMBER
Autopilot Sperry SP77
Flight Director Xxxxxxx XX-110
Steering Computer Xxxxxxx 562A-5F5
WX-Radar Honeywell Primus 00
XXX Xxxxxxxxxxxx Xxxxxxx 000X-0
HF Communicator Xxxxxxx 628T
Selcal decoder Motorola N1401A
Passenger Address Xxxxxxx 346D-2B
ADF Xxxxxxx 51-Y7
CADC Honeywell HG480B13
VOR/ILS Xxxxxxx 51RC-4B
Marker Xxxxxxx 51Z-4
Omega Xxxxxx LTN-211
DME Xxxxxxx 860E-5
ATC Xxxxxxx 621A-6
Altitude Alert Honeywell JG1052AC01
Compass Xxxxxx XX-206A
Performance Data Xxxx Xxxxxxx 10-61962-55-01
CVR Xxxxxxxxx 15630-601
Digital Flight
Data Recorder Sundstrand 980-4100-GQUS
TCAS Computer Allied Signal 000-00000-0000
Transponder Allied Signal TPA-81A 000-00000-0000
Windshear
Computer/GPWS Allied Signal MK VII 000-0000-000/001
Annexure 1
AIRCRAFT DOCUMENTATION
Note: This Annexure 1 is to be used for reference purposes only. The Aircraft
Documents will be more closely identified in Annexure 1 to the Acceptance
Certificate.
A. Certificates
- Certificate of Airworthiness
- Certificate of Registration
B. Aircraft Status Records
- Technical Log Book
- Airframe Maintenance Status Report
- Manufacturer's Service Bulletin Status Report
- Airworthiness Directive Compliance Report (terminated and repetitive)
- Local Modification Status Report List with Substantiating Data
- Last Weighing Report
- Repair Data Structural Repairs
C. Aircraft Maintenance Records
- Test Flight Reports
- Last Boeing "C" check and maintenance check Work Cards for each "C"
check multiple (or segment)
D. Aircraft History Records
- Aircraft Structural Repair History (if applicable)
- Service Difficulty Report (if applicable)
- Accident or Incident Report (if applicable)
E. Engine Records (for each engine)
- Log Books
- Last overhaul and repair documents for each module
- Airworthiness Directive Compliance Report (terminated and repetitive)
- Manufacturer's Service Bulletin Status Report
- Engine Disk Sheet
- Engine Data Submittal Sheet
- Condition Monitoring Status Report
F. APU Records
- Log Book
- Last overhaul and repair documents
- Manufacturer's Service Bulletin Status Report
G. Component Records (including components installed engines and APU)
- Time Controlled Component Status Report with remaining hours and
cycles (if applicable)
- Serviceability tags or back-up documentation, as available, for
components replaced since delivery from Boeing, as provided to
Frontier at Delivery.
H. Manuals
- Airplane Flight Manual
- Quick Reference Handbook
- Aircraft Operation Manual
- Weight and Balance Manual Supplement
- Wiring Diagram Manual (microfilm)
- Illustrated Parts Catalog (microfilm)
- Aircraft Maintenance Manual (microfilm)
- Xxxxx & Xxxxxxx Illustrated Parts Catalog
- Vendor Manual Seats
- Vendor Manual Galleys
- Vendor Manual Ovens
- Vendor Manual Coffee makers
- Nordam Maintenance Manual Supplements
I. Miscellaneous Technical Documents
- Maintenance Program Specifications/Requirements
- Interior Configuration Drawings
- Loose Equipment Inventory List
- Delivery documentation ex Boeing
- Export Certificate of Airworthiness
- Aircraft Readiness Log
- Rigging Record Brochure
- Miscellaneous Delivery Record Brochure
- Fuel Measuring Stick Calibration Brochure
- FAA Airworthiness Directive Compliance Record
SCHEDULE 2
CERTAIN BUSINESS TERMS
1. Agreed Value
Agreed Value means US$ (*).
2. Basic Rent
The Basic Rent payable on each Rent Date during the Sublease Term
shall be US$ (*).
3. Damage Notification Threshold
Damage Notification Threshold means US$ (*).
4. Engine Agreed Value
Engine Agreed Value means for each engine US$ (*).
5. Lease Expiry Date
Means the date falling 51 months from the Delivery Date subject to
the Early Termination Option.
6. Sublease Term
Means the period commencing on the Delivery Date and ending on the
Sublease Expiry Date;
7. Letter of Credit
The Sublessee shall provide the Sublessor with an additional Security
Deposit initially in the form of cash but to be replaced with an
irrevocable, assignable standby letter of credit in the amount of
US$ (*) issued within 30 days from the date of this Agreement by a
major US Bank in a form and substance acceptable by Sublessor. Upon
substitution of the Letter of Credit for the cash deposit, Sublessor
will return the cash deposit to Sublessee. The Letter of Credit will
serve as security for the performance by Sublessee of its obligations
under the Transaction Documents and the Other Agreement.
8. Maintenance Reserves
Sublessee shall during the Sublease Term pay the following
Maintenance Reserves to Sublessor:
(i) Airframe Maintenance Reserve
US$(*)for each Flight Hour that the Airframe is operated
(ii) Engine Maintenance Reserve, Refurbishment and LLP's
US$(*) for each Flight Hour that each Engine is operated
(iii) Landing Gear Maintenance Reserve
US (*)for each Flight Hour that the Aircraft is operated
(iv) APU Maintenance Reserve
US$ (*) for each Flight Hour that the APU is operated.
The amounts payable by Sublessee to the Maintenance Reserves as set
out herein shall be subject to annual escalation of (*) % on each
anniversary date of the first day of the Sublease Term and are also
subject to upward or downward adjustment where the hour to cycle
ratio changes from that assumed.
9. Minimum Liability Coverage
Minimum Liability Coverage means US$ (*) on each occurrence.
10. Scheduled Delivery Date
Scheduled Delivery Date means on or about July 23, 1999 or such other
date as the parties may mutually agree and Sublessor may be able to
deliver the Aircraft to Sublessee.
11. Security Deposit
Sublessee has paid to Sublessor a cash Security Deposit in the amount
of US$ (*) and shall provide Sublessor with additional Security
Deposit according to Clause 7 of this Schedule 2.
The cash Security Deposit of US$ (*) will be credited to the first
payment of Rent payable by Sublessee during the Sublease Term. The
Security Deposit will be non-refundable in the event of failure by
Sublessee to take delivery of the Aircraft in accordance with this
Agreement.
12. Supplemental Rent for Excess Cycles
If on each of the anniversary dates of the first day of the Sublease
Term, based on the previous twelve (12) month period (or portion
thereof) of the Sublease Term the Aircraft has been operated more
Cycles than the number of Cycles which would result from an average
Flight Hour/Cycle ratio of (*), Sublessee will pay Sublessor as
Supplemental Rent US$(*)for each Cycle the Aircraft actually operated
during such twelve (12) month period (or portion thereof) in excess
of the number of Cycles which result from an average Flight
Hour/Cycle ratio of. A calculation will be made as of the last day of
each anniversary of the first day of the Sublease Term each year and
such Supplemental Rent will be due and payable by Sublessee on the
date on which the next Maintenance Reserve payment is due (in
accordance with Clause 9.2) following such Flight Hour/Cycle
calculation period.
SCHEDULE 3
INSURANCE REQUIREMENTS
1.1 Types of Insurance
The Insurances required to be maintained are as follows:
(a) an All Risks Hull Insurance Policy on the Aircraft on an agreed value
basis in an amount not less than the Agreed Value with insurers not
entitled to replace the Aircraft in the event of an insured Total
Loss;
(b) an All Risk Hull Insurance Policy on each Engine when not installed
on the Aircraft on an agreed value basis not less than the Engine
Agreed Value;
(c) insurance covering all risks of physical loss or damage howsoever
occasioned in respect of engines, spare parts and equipment forming
part of the Aircraft but which for the time being are removed from
the Aircraft, and are not insured by the Aircraft's hull and war risk
insurance in an agreed value of not less than their replacement cost;
(d) a War Risks Insurance Policy on the Aircraft covering all of those
risks which are currently enumerated in Lloyds Form AVN 48B War,
Hi-jacking and Other Perils Exclusion Clause (Aviation), other than
paragraph (b) thereof to the fullest extent possible and any
additional risks which may hereafter be included therein or in any
form succeeding to any of its functions on an agreed value basis in
any amount not less than the Agreed Value;
(e) Liability Insurance, being Aircraft Third Party Legal Liability,
Passenger, Contractual Legal Liability, Baggage Legal Liability,
Cargo and Mail Legal Liability and Airline General Third Party Legal
Liability including war and allied perils to the fullest extent
available for a combined single limit of liability bodily
injury/property damage of not less than the Minimum Liability
Coverage any one accident provided that if the Sublessor on the basis
of advice received from an independent insurance adviser believes
that the relevant liabilities shall be unlimited or that such limit
should be revised upwards, it shall be replaced by unlimited
liability or such higher limit as may be appropriate in the light of
circumstances prevailing in the international airline industry at the
time and provided further that the Sublessor shall not be obliged by
this Clause to effect and maintain insurance in respect of any
inability to recover from any manufacturer of the Airline, Engines or
any Part, losses and liabilities incurred as a result of negligent
manufacture.
1.2 Terms of Hull and Spares Insurance
All required hull and spares insurance, so far as it relates to the
Aircraft, will:
(a) Settlement of Losses: provided that any loss will be payable in
Dollars to Lender, if none, to Sublessor or at the request of
Sublessor to Lender. In respect of any other claim, the relevant
policy shall provide that settlement (net of any relevant policy
deductible) shall be made with such parties as may be necessary to
repair the Aircraft or as otherwise agreed after consultation between
the Lender, the Owner Trustee, the Sublessor and the Sublessee. The
relevant policy shall provide that such payments shall only be made
provided the same are in compliance with all applicable laws and
regulations.
(b) 50/50 Provision: if separate hull "all risks" and "war risks"
insurances are arranged, include a 50/50 provision in accordance with
market practice (AVN 103 is the current market language);
(c) Deductibles: provide for deductibles in respect of the Aircraft All
Risks Hull Insurance Policy or War Risks Insurance Policy of no more
than US$ (*) (or the minimum deductible amount carried under the
airline's insurance policy if less than US$ (*)).
(d) Customary Risks: cover at least such risks as are customarily insured
against in the airline industry for any amount not less than the
Agreed Value;
(e) Sound Practice: be in accordance with sound international airline
practice; and
1.3 Terms of Liability Insurance
All required liability insurances will:
(a) cover at least such risks as are customarily insured against in the
airline industry and names the additional assured as additional named
insured for their respective rights and interest;
(b) be in form and substance in accordance with sound international
airline practice (having regard to the type of aircraft or engines
involved);
(c) provide that upon payment of any loss or claim by the insurers in
accordance with the endorsement relating to the relevant policy
naming the additional assured as additional assureds, the insurers
shall to the extent and in respect of such payment be thereupon
subrogated to all legal and equitable rights of the additional
assured indemnified under such endorsement relating to the Insurances
(but not against any additional assured) and further provides that
the insurers shall not exercise such rights without the consent of
those additional assured such consent not to be unreasonably withheld
and at the expense of the insurers such additional assured shall do
all things reasonably necessary to assist the insurers to exercise
the said rights;
(d) provide that except in respect of any provision for automatic
termination or cancellation specified in the policy or any
endorsement thereof, cover for the interests added by the endorsement
relating to the relevant policy may only be canceled or materially
altered in a manner adverse to the additional assured by the giving
of not less than thirty (30) days (but seven (7) days or such lesser
period as may be customarily available in respect of War risks)
notice in writing to the insurance brokers and that notice shall be
deemed to commence from the date such notice is given by the insurers
and that such notice will not be given at the normal expiry date of
the policy or any endorsement;
(e) is primary without right of contribution from any other insurance
which may be available to the additional assured;
(f) subject to the provisions naming the additional assured as additional
assured, operates in all respects as if a separate policy had been
issued covering each additional assured;
(g) provides that none of the additional assured shall be responsible for
any premiums in respect thereof, and that the insurers shall waive
any right of set-off or counterclaim against the additional assured
(except in respect of any outstanding premiums in respect of the
Aircraft);
(h) provides that the insurance thereunder shall not be invalidated by
any act or omission, including misrepresentation and non-disclosure,
of any other person which results in breach of any term, condition or
warranty of the relevant policy provided that the additional assured
so protected has not caused or contributed to or knowingly condoned
the said act or omission;
(i) has a deductible in respect of passenger baggage and cargo of an
amount which, at any time, is customary in the international aviation
market at the time for Boeing 737-200 aircraft in each case in
respect of any one claim;
(j) contains a provision insuring (to the extent of the risks covered by
the policy) the indemnity provisions of security document entered
into in favor of the Lender; and
(k) specifically refers to any security document entered into in favor of
the Lender or any loan agreement.
1.4 Terms of All Insurances
All Insurances will:
(a) Dollars: provide cover denominated in dollars;
(b) World-wide: operate on a world-wide basis subject to such limitations
and exclusions as the parties and the insurance market may agree;
(c) Additional Assureds: name Owner Trustee/Headlessor, Sublessor,
Sublessor's Lenders, Aviation Management Systems, Inc. and their
respective successors and assigns, shareholders, subsidiaries,
affiliates, partners, contractors, directors, officers, servants,
agents and employees as additional assureds for their rights and
interests warranted no operation interest for the term of the
Sublease of the Aircraft, plus two years after the Expiry Date for
the liability insurances;
(d) Acknowledgment: acknowledge the insurer is aware and has seen a copy
of this Agreement, that the Aircraft is owned by Owner Trustee for
the benefit of and the existence of any financing or security
documents to which Lenders may be party;
(e) Breach of Warranty: provide that, in relation to the interests of
each of the additional assureds, the Insurances will not be
invalidated by any act or omission, including misrepresentation and
non-disclosure, by Sublessee, or any other person provided that such
additional assureds regardless of any breach or violation by
Sublessee, or any other person other than the respective additional
assured seeking protection of any warranty, declaration or condition,
contained in such Insurances has not caused or contributed to or
knowingly condoned the said act or omission;
(f) Subrogation: provide that upon payment of any loss or claim by the
insurers in accordance with the endorsement relating to the relevant
policy naming the additional assured as additional assureds, the
insurers shall to the extent and in respect of such payment be
thereupon subrogated to all legal and equitable rights of the
additional assured indemnified under such endorsement relating to the
Insurances (but not against any additional assured) and further
provides that the insurers shall not exercise such rights without the
consent of those additional assured such consent not to be
unreasonably withheld and at the expense of the insurers such
additional assured shall do all things reasonably necessary to assist
the insurers to exercise the said rights;
(g) Premiums: provide that the additional assureds will have no
obligation or responsibility for the payment of any premiums due but
reserve the right to pay the same should any of them elect so to do
and that the insurers will not exercise any right of set-off or
counter-claim in respect of any premium due against the respective
interests of the additional assureds other than outstanding premiums
relating to the Aircraft, any Engine or Part the subject of the
relevant claim;
(h) Cancellation/Change: provide that the Insurances will continue
unaltered for the benefit of the additional assureds for at least
thirty (30) days after written notice by registered mail or telex of
any cancellation, change, event of non-payment of premium or
installment thereof has been sent to Sublessor, except in the case of
war risks for which 7 days or such lesser period as is or may be
customarily available in respect of war risks or allied perils will
be given and that notice shall be deemed to commence from the date
such notice is given by the insurers and that such notice will not be
given at the normal expiry date of the policy or any endorsement;
(i) Indemnities: accept and insure the indemnity provisions of this
Agreement to the extent of the risks covered by the policies;
(j) Endorsement: contains an endorsement naming:
(i) the Lender as loss payee in the case of a Total Loss;
(ii) provided that any loss will be payable in Dollars to
Lessor's Lender, if none, to Sublessor or at the request
of Sublessor to Sublessor's Lender except where the loss
does not exceed the Damage Notification Threshold, and
Sublessor has not notified the insurers to the contrary,
in which case the loss will be settled with and paid to
Sublessee;
(iii) 50/50 Provision: if separate hull "all risks" and "war
risks" insurances are arranged, include a 50/50
provision in accordance with market practice AVN 103 is
the current market language;
(k) specifically refer to each loan agreement or charge between the
Sublessor and any Lender.
1.5 Deductibles
Sublessee shall be responsible for any and all deductibles under the
Insurances.
1.6 AVN 67B
Notwithstanding the foregoing, if Sublessee provides insurance
certificates in compliance with AVN 67B it shall be regarded as
having satisfied those of the insurance provisions set out above that
are covered by that endorsement.
1.7 AVN 2000 (or similar)
If AVN 2000 or similar "Date Recognition Exclusion Clause" applies in
respect of the Insurances then:
(a) the Insurance certificate shall state that this is the
case; and
(b) the Insurances must provide for AVN 2001 (aircraft
exposures) and AVN 2002 (non-aircraft exposures) or
similar "Date Recognition Limited Coverage Clauses" and
the insurance certificates must state that this is the
case.
SCHEDULE 4
DELIVERY CONDITIONS
The Aircraft will be delivered "AS IS, WHERE IS" at the Delivery Location and
will conform to the conditions outlined in this Schedule 4.
The actual condition of the Aircraft at Delivery will be documented on the
Acceptance Certificate as noted in Schedule 5 of the Aircraft Sublease
Agreement.
Certification:
A United States Standard Certificate of Airworthiness suitable for Part 121
operations. The Aircraft will be airworthy (conform to type design and be in a
condition for safe operation), with all Aircraft equipment, components and
systems operating in accordance with their intended use and within limits
established by the Aircraft Maintenance Manual.
Configuration:
An all economy 122 seat interior. (Note. Sublessee may sell seats for its own
account , provided replacement seats acceptable to Sublessor are installed,
title is transferred to Sublessor and the replacement seats are returned with
the Aircraft at Redelivery)
Paint:
"AS IS."
Airframe:
Fresh from next Block C Check, excluding hours and cycles used on the
Demonstration/ Ferry Flights, with a minimum of 17,000 hours remaining until the
next due C7 Check/Structural Inspection.
1. The Aircraft will have no deferred maintenance items, unique
inspections or temporary repairs at Delivery.
B. Modifications and Repairs installed on the Aircraft at Delivery will
have been accomplished in accordance with FAA approved data.
3. The Aircraft will be in compliance with the Manufacturer's CPC program.
1.
D. If available, any No Charge Service Bulletin Kits not installed by
Sublessor will be loaded onboard the Aircraft as cargo.
E. Fuel tanks will be free from contamination.
Engines:
JT8D-15A equipped with Nordam LGW Hushkits
ESN 685527 will be fresh from performance restoration shop visit and have at
least 7,400 hours and 5,000 cycles remaining on each LLP and ESN 700605 will be
fresh from performance restoration shop visit and have at least 8,200 hours and
7,600 cycles remaining on each LLP.
Each Engine will pass a Performance Engine Run in accordance with the Aircraft
Maintenance Manual.
Each Engine will pass a hot and cold section borescope inspection.
APU:
Serviceable
Components:
Unless otherwise agreed, each component that is time controlled will have at
least 3,000 flight hours or cycles remaining until next inspection/overhaul.
Each component that is calendar controlled will have at least 12 months
remaining until its next inspection/ overhaul. Condition Monitored/On Condition
components will be serviceable.
Landing Gear:
Each Landing Gear will have at least 11,000 hours remaining until the next
inspection or overhaul based on a 20,000 hour overhaul interval.
Airworthiness Directives (AD's):
Airworthiness Directives requiring compliance on or before Delivery will be in
compliance.
Demonstration Flight:
Sublessee will perform a one and one half hour flight demonstrating the
satisfactory operation of the Aircraft at Sublessor's expense with no more than
two Sublessee observers, as designated by Sublessee, on board during such
Demonstration Flight.
Records:
Documentation required to maintain a United States Standard Certificate of
Airworthiness will be in English.
Aircraft Documentation:
The Aircraft Documents will be identified in Annexure 1 to the Acceptance
Certificate.
SCHEDULE 5
ACCEPTANCE CERTIFICATE
This Acceptance Certificate is delivered, on the date set out below by FRONTIER
AIRLINES, INC. (Sublessee), to KOMMANDITBOLAGET FLYGPLANET XII(Sublessor),
pursuant to the Aircraft Sublease Agreement dated __ July 1999 between Sublessor
and Sublessee (the Sublease). Capitalized terms used in this Certificate shall
have the meanings given to such terms in the Sublease.
1. Details of acceptance
Sublessee hereby confirms to Sublessor that Sublessee has at _____o'clock on
this ___ day of ______, at _____ accepted the following, in accordance with the
provisions of the Sublease:
(a) Airframe
Type: B737-2Y5 Reg.: N118RW S/N: 23040
(b) Engines
Type: JT8D-15A S/N No.1: 685527 S/N No. 2: 700605
Nordam LGW hushkits installed
(c) APU:
MSN Total Flight Hours Flight Hours/ Cycles Flight Hours/Cycles
remaining until next HSI remaining on turbine
inspection and compressor life
limited parts
(d) Landing Gears
Position Serial No. Total Flight Flight Hours/ Flight Hours/
Hours/Cycles Cycles since last Cycles to next
Overhaul sched. Removal
Nose __________ _____ Flight Hrs _____ Flight Hrs _____ Flight Hrs
_____ Cycles _____ Cycles _____ Cycles
Right Main __________ _____ Flight Hrs _____ Flight Hrs _____ Flight Hrs
_____ Cycles _____ Cycles _____ Cycles
Left Main __________ _____ Flight Hrs _____ Flight Hrs _____ Flight Hrs
_____ Cycles _____ Cycles ____ Cycles
(e) Equipment Check List: as per list signed by Sublessor and Sublessee
and attached hereto; and
(f) Aircraft Documents List: as per list signed by Sublessor and
Sublessee and attached hereto; and
(g) Place of Acceptance: ________________________________________________
2. Confirmation
Sublessee confirms to Sublessor that as at the time indicated above, being the
Delivery Date:
(a) the representations and warranties contained in Clause 2.1 of the
Sublease are hereby repeated;
(b) the Aircraft is insured as required by the Sublease; and
(c) Sublessee's authorized technical experts have inspected the Aircraft
and the Aircraft Documents to ensure that the Aircraft and the
Aircraft Documents conform to Sublessee's requirements. The Aircraft
and the Aircraft Documents are in accordance with the specifications
of the Sublease and satisfactory in all respects except as may be
noted herein.
3. Fuel at Delivery
Fuel on board at Delivery: ___________ kilos (_________ gallons).
Annexed hereto is details of any damage to the Aircraft as at
Delivery.
The Airframe, Engines and Parts had the following Flight Hours/Cycles
at Delivery:
(a) Airframe:
Total hours Total landings Since last "C" Check Since last "A" Check
_________ ________ ______ Flight Hours ______ Flight Hours
______ Cycles ______ Cycles
(b) Engines:
Position Serial Total Flight Total Cycles Since last Since last
No. Hours shop visit Engine
Performance
Restoration
Visit
____ Flight ____ Flight
Hours Hours
____ Cycles ____ Cycles
See attached Engine run records and disc sheets for further description of
Engines at Delivery.
IN WITNESS WHEREOF, Sublessee has, by its duly authorized representative,
executed this Certificate on the date specified in paragraph 1 above.
Sublessee: FRONTIER AIRLINES, INC.
By: _________________________
Title: _________________________
Annexure 1 Aircraft Documents
Annexure 2 Aircraft Equipment List
Annexure 3 Damage Chart
SCHEDULE 6
CERTIFICATE OF OFFICER
OF
FRONTIER AIRLINES, INC.
I, _____________________, do hereby certify that:
1. I am a duly and acting Officer of Frontier Airlines, Inc., a Colorado
corporation (the "Company").
2. Attached hereto as Exhibit A is a true, correct and complete copy of
the Certificate of Incorporation of the Company, as amended to the
date hereof, and such Certificate of Incorporation remains in full
force and effect on the date hereof.
3. Attached hereto as Exhibit B is a true, correct and complete copy of
the Articles of Association to of the Company and by-laws, as amended
to the date hereof, and such Articles of Association and by-laws
remain in full force and effect on the date hereof.
4. Attached hereto as Exhibit C is true, correct and complete copy of
resolutions duly adopted by the Board of Officers of the Company at a
meeting duly called and held in [ ] approving the execution, delivery
and performance of the Aircraft Sublease Agreement dated as of __
July 1999 between KOMMANDITBOLAGET FLYGPLANET XII as Sublessor and
the Company as Sublessee (the "Lease") and the other Transaction
Documents (as defined in the Sublease) to which the Company is a
party, and said resolutions have not been revoked, rescinded or
modified and, at the date hereof, are in full force and effect.
5. The following persons are duly qualified and acting officers of the
Company, and each of such officers certifies that the signature
appearing opposite the name of each other officer is his genuine
signature:
6. I do hereby certify that all of the Company's representations and
warranties set forth in the Sublease are true and correct at the date
hereof.
Title Name Signature
------------------- ------------------- ----------------------
IN WITNESS WHEREOF, the undersigned has executed this Certificate as of the ____
day of ___________.
I, ___________________________, acting as special counsel to Frontier Airlines,
Inc., do hereby certify that ________________________________ is a duly elected,
qualified and acting Officer of Frontier Airlines, Inc. and that the signature
set forth above is his genuine signature.
IN WITNESS WHEREOF, the undersigned has executed this Certificate as of the ___
day of ____________, 1999.
SCHEDULE 7
FORM OF LETTER OF AUTHORITY
[ Addressee ]
AUTHORITY
This Authority is given on _________.
Pursuant to an Aircraft Sublease Agreement (the Sublease) dated as of __ July
1999, made between KOMMANDITBOLAGET FLYGPLANET XII as Sublessor (Sublessor) and
Frontier Airlines, Inc. as Sublessee (Sublessee) relating to one (1) Boeing
737-2Y5 aircraft bearing manufacturer's serial number 23040 and registration
xxxx N118RW (the Aircraft), Sublessee will operate the Aircraft during the term
of the Sublease.
Sublessee hereby irrevocably authorizes yourselves, during the term of the
Sublease, to disclose to Sublessor or to anyone duly appointed by it, upon
request by the same, particulars of any and all outstanding charges due to or
collectable by you and incurred in respect of:
(i) the Aircraft; and
(ii) any other aircraft being operated by Sublessee on the
date such request, from time to time, is made.
IN WITNESS WHEREOF a duly authorized representative of Sublessee has granted
this Authority on the day and year first above mentioned.
Signed by:
-------------------------
for and on behalf of
-------------------------
SCHEDULE 8
POWER OF ATTORNEY
The undersigned, Frontier Airlines, Inc. (Sublessee) refers to the Aircraft
Sublease Agreement dated as of __ July 1999, as amended and supplemented from
time to time (the Sublease) between, KOMMANDITBOLAGET FLYGPLANET XII (Sublessor)
and Sublessee with respect to one (1) Boeing 737-2Y5 Aircraft bearing
manufacturer's serial number 23040 and registration xxxx N118RW (the Aircraft).
In consideration of the sum of US$ 1 paid by Sublessor to Sublessee (the receipt
and sufficiency of which is hereby acknowledged), Sublessee irrevocably appoints
Sublessor (Attorney) as its true and lawful attorney to:
Execute and to do and perform upon its behalf and in its name or otherwise to
deliver any documents, instruments or certificates with such amendments thereto
(if any) which may be required to obtain deregistration of the Aircraft from the
register of aircraft maintained by the Federal Aviation Administration of the
United States of America and the export of the Aircraft from the State of
Registration (as defined in the Sublease) upon the lawful termination of the
Sublease of the Aircraft;
AND generally to do any and all such acts and things and to execute under seal
or hand (as appropriate) and deliver any and all documents under seal or under
hand (as appropriate) as may be requested or required for such deregistration
and export;
AND Sublessee hereby undertakes from time to time and at all times to indemnify
the Attorney against all costs, claims, expenses and liabilities howsoever
incurred by all such Attorney in connection herewith and further undertakes to
ratify and confirm whatsoever the Attorney shall lawfully do or cause to be done
in or by virtue of this Power of Attorney;
AND for the better doing, performing and executing of the matters and things
aforesaid Sublessee hereby further grants unto the Attorney full power and
authority to substitute and appoint in its place one or more attorney or
attorneys to exercise for them as attorney or attorneys of Sublessee any or all
the powers and authorities hereby conferred and to revoke any such appointments
from time to time and to substitute or appoint any other or others in the place
of such attorney or attorneys as each attorney shall from time to time think
fit.
This Power of Attorney shall be subject to, governed by and construed in
accordance with the laws of -------------------------.
SIGNED ON BEHALF OF FRONTIER AIRLINES, INC.
By: _______________________
Title: ______________________
SCHEDULE 9
FORM OF OPINION OF SUBLESSEE COUNSEL
to be addressed to [ Sublessor ]
and
[ Lender ]
Note: This form is made on the assumption that the State of Incorporation and
the State of Registration are the same [herein "State"].
We have acted as counsel in [ Country of Sublessee ] as counsel to [ Name of
Sublessee ] ("Sublessee") in connection with an Aircraft Sublease Agreement
dated [ ] and made between [ Name of Sublessor ] as Sublessor and Sublessee as
the Sublessee in respect of one [ Type of Aircraft ] bearing manufacturer's
serial number [ ] (the "Aircraft") (the "Lease") and owned by Sublessor, and
have examined a copy of the following documents;
(i) the Sublease;
(ii) the Acceptance Certificate;
(iii) the Letter(s) of Authority;
(iv) the Power of Authority;
(v) [ other documents ]; and
(vi) [ ]
and such other documents as we have considered it necessary or desirable to
examine in order that we may give this opinion.
The documents referred to under (i) to (v) above are referred to as the
"Relevant Documents".
Terms defined in the Sublease shall have the same meaning herein.
On the basis on the foregoing we are of the opinion that:
(a) Sublessee is duly incorporated in [ State ] for an
indefinite period as a limited company and is a validly
existing separate legal entity, which is subject to suit
in its own name, in good standing, and, to the best of
my knowledge, no steps have been, or are being, taken to
appoint a receiver, liquidator, trustee or similar
officer over Sublessee, or to wind up Sublessee or
commence any other insolvency proceedings with respect
to Sublessee or to have Sublessee dissolved by merger;
(b) Sublessee has the corporate power to enter into and
perform, and has taken all necessary corporate action to
authorize the entry into, performance and delivery of
the Sublease and the transactions contemplated by the
Sublease and the Sublease constitutes the legal binding
obligations of the Sublease, enforceable against the
Sublessee in accordance with its terms;
(c) the entry into and performance by Sublessee of, and the
transactions contemplated by, the Sublease does not and
will not:
(i) conflict with any laws binding on Sublessee;
(ii) conflict with the constitutional documents of
Sublessee; or
(iii) result in the creation of any Security
Interest upon any property of Sublessee,
pursuant to any mortgage, chattel mortgage,
deed of trust, conditional sales contract,
bank loan or credit agreement, corporate
charter, by-law or other agreement or
instrument to which Sublessee is a party or
by which Sublessee or its properties or
assets may be bound or affected;
(d) Sublessee has obtained all authorizations, consents,
licences, approvals and registrations necessary to be
obtained from any governmental or other regulatory
authorities in [ State ] to enable Sublessee:
(i) to enter into and perform the transactions
contemplated by the Sublease;
(ii) to import the Aircraft into [ State ];
(iii) to conduct commercial air transport with the
Aircraft in, to and from [ State ] in
accordance with the applicable [ State's ]
rules and regulations;
(iv) to effect all payments provided for in the
Sublease.
(e) no registration, recording, filing or notarization in
any public office or elsewhere in [ State ] is necessary
and no payment of any tax or duty is necessary to ensure
the validity, enforceability or admissibility in
evidence of the Sublease, or the priority, if any, of
the respective rights of Sublessor and Lender under the
Sublease other than [please advise if applicable] and no
other instrument is required to ensure the priority,
enforceability and validity of the obligations of
Sublessee under the Sublease and the Sublease is in
proper legal form under the laws of [ State ] for the
enforcement thereof, if applicable, in the courts of
[ State ];
(f) the Aircraft may be registered on the [ State's ]
aircraft registry in the name of Sublessor and no other
steps are necessary or desirable to record or perfect
either Sublessor's interest in the Aircraft in [State];
(g) a mortgage over the Aircraft may be registered on the
aircraft registry in [State] and with [ Name of
authority ] for the benefit of Sublessor and will upon
registration constitute a valid and perfected security
over the Aircraft under the laws of [ State ];
(h) upon termination of the Sublease in accordance with its
terms (whether on expiry or earlier termination)
Sublessor would be entitled:
(i) to repossess the Aircraft without requiring
any further permissions or approvals of any
regulatory authority in [ State ];
(ii) to de-register the Aircraft from the register
of aircraft maintained by the Aviation
Authority and to export the Aircraft from [
State ] without requiring any further
permissions or approvals of any authority in
[ State ] or any further regulators consent
from Sublessee or any third party, provided
no mortgages are registered over the
Aircraft, in which case the mortgagees have
to consent to the de-registration;
(i) the Relevant Documents have been properly signed and
delivered on behalf of Sublessee and the obligations on
the part of Sublessee contained therein, assuming them
to be valid and binding according to the laws of Sweden,
are valid and legally binding on and enforceable against
Sublessee under the laws of [ State ] and in the courts
of [ State ];
(j) the obligations of Sublessee under the Relevant
Documents are direct, general and unconditional, and
rank or will rank at least pari passu with all other
present and future unsecured and un-subordinated
obligations of Sublessee, with the exception of such
obligations as are mandatorily preferred by law and not
by reason of any security interest;
(k) under the laws of [ State ] the execution and delivery
of the Relevant Documents, and the carrying out of the
transactions thereby contemplated and the observance and
performance by all parties of their respective
obligations thereunder do not and will not result in any
prejudice to or impairment or diminution of Sublessor's
interest in the Aircraft except for the express rights
of possession of Sublessee under the Sublease;
(l) the Sublease does not grant to Sublessee any title
rights in the Aircraft, nor does it give Sublessee any
capability of passing valid title to a purchaser or to
create a mortgage over the Aircraft;
(m) Sublessee, or any of its properties, assets, are not
entitled to claim immunity from suit, execution,
attachment or other legal process in [ State ] or any
other jurisdiction affecting Sublessee; the entry into
and performance of the Sublease Agreement by the company
constitute private and commercial acts;
(n) there is no applicable usury or interest limitation law
in [ State ] which restricts the recovery of payments of
Default Interest in accordance with the Sublease;
(o) Sublessee is not in default under any agreement to which
it is a party or by which is may be bound which would
have a material adverse effect on its business, assets
or condition and no material litigation or
administrative proceedings before any Government entity
is presently pending or, to the knowledge of Sublessee,
threatened against it or its assets which would have a
material adverse effect on the business, assets or
condition (financial or otherwise) of Sublessee;
(p) the financial position of Sublessee is represented by
its audited financial statements prepared in accordance
with accounting principles generally accepted in [ State
];
(q) it is not necessary under the laws and constitution of [
State ], in order to enable the Sublessor to enforce its
rights under the Agreement or by reason of the execution
of the Agreement or the performance by each of them of
its obligation thereunder, that any of them should be
licensed, qualified or entitled to carry on business in
[ State ];
(r) there are under the laws of [ State ] no present
restrictions on Sublessee to make the payments required
by the Transaction Documents;
(s) there are no registration, stamp or other taxes or
duties of any kind payable in [ State ] by Sublessor in
connection with the signature, entering into,
registration or performance of the Sublease or the
registration of title of ownership or a mortgage over
the Aircraft except the following:
(i) registration of mortgages in [ State ];
(ii) registration of the Sublease Agreement;
(ii) registration of title or ownership: [ ];
and
(iv) registration of the mortgages in the [ Name
of Authority ]: [ ].
(t) Sublessor will not violate any law or regulation in [
State ] nor become liable to tax in [ State ] by reason
of Sublessor entering into the Sublease with Sublessee,
or performing its obligations thereunder;
(u) the choice of the laws of [ Applicable Law ] to govern
the [ Lease/Relevant Documents ] is a valid and binding
choice of law and will be recognized and applied by the
courts of [ State ];
(v) Sublessee's submission to the jurisdiction of the courts
of [ Relevant Court(s) ] in the Sublease is its legally
valid and binding obligation;
(w) any judgement by the courts of [ Relevant Court(s) ]
against Sublessee which is enforceable in [ Relevant
jurisdiction of Court(s)] is enforceable against
Sublessee in [ State ] provided [ advise conditions ];
(x) there is no withholding tax or other tax to be deducted
from any payment whatsoever which may be made by the
Sublessee to the Sublessor under the Sublease; the
provisions in the Sublease providing for the full
compensation of the Sublessor by the Sublessee for any
amount so withholding (and any amount withheld on such
additional compensation) is legally binding upon
Sublessee and enforceable in accordance with the laws of
[ State ].
SCHEDULE 10
MONTHLY AIRCRAFT UTILISATION AND STATUS REPORT
To: KOMMANDITBOLAGET FLYGPLANET XII
Xxxxx Xxxxxxxxxxxxx 0
X-000 00 Xxxxx Xxxxxx Fax: 000-00-00-000000
From: Frontier Airlines Page 1 of 2
Aircraft Type: Boeing 737-2Y5
Registration Xxxx: N118RW
Serial Number: 23040 Month of: ______________
Aircraft Total Time (Flight Hours) Since New:
Aircraft Total Cycles Since New:
Airframe Flight Hours Flown During Month:
Airframe Cycles/Landing During Month:
Time Remaining to C7 Check/Structural:
Engine Serial Number: Engine Serial Number:
Original Position: Original Position:
Actual Location: Actual Location:
Total Time Since New: Total Time Since New:
Total Cycles Since New: Total Cycles Since New:
Flight Hours During Month: Flight Hours During Month:
Cycles During Month: Cycles During Month:
Time Since Last Boroscope: Time Since Last Boroscope:
Time Until Next Boroscope: Time Until Next Boroscope:
MONTHLY AIRCRAFT UTILISATION AND STATUS REPORT
Page 2 of 2
Landing Gear: Time Since Time Since Cycles Since Cycles Since
Overhaul: New: Overhaul: New:
RH Main:
LH Main:
Nose:
Note: If an Engine is removed or installed on another Aircraft (subject to the
provisions of the Agreement) it must be reported monthly on this form.
Any service bulletins, Airworthiness Directives, engineering modifications or
changes:
Hours/Cycles x US$ Per Flight = Reserve
During Month Hour/Cycle Payment
Airframe: Hours: x $ (*) =
Original Engine Hours: x =
Serial Number:
Original Engine Hours: x =
Serial Number:
Total Engines: Hours: x $ (*) =
Landing Gear: Cycles: x $ (*) =
APU: Hours: x $ (*) =
Total
SCHEDULE 11
FORM OF QUIET ENJOYMENT LETTER
From: [ Lender ]
To: [ Sublessee ]
Dated: [ ]
Dear Sirs,
[ ] Aircraft bearing Manufacturer's Serial Number [ ] (the Aircraft) equipped
with two (2) [ ] Engines bearing Serial Numbers [ ] and [ ] (the Engines)
With reference to that certain Aircraft Sublease Agreement dated [ ] between [ ]
as Sublessor (Sublessor) and [ ] as Sublessee (Sublessee) in relation to the
Aircraft and the Engines (the Sublease), we, the undersigned, hereby undertake
that we shall not by our own acts interfere with Sublessee's rights under the
Sublease during the Sublease Term (as defined therein), including without
limitation its rights to quiet use, possession and peaceful enjoyment of the
Aircraft and the Engines, provided that no Default (as defined in the Sublease)
shall have occurred and be continuing.
-------------------
signed for and on behalf of [Lender]
SCHEDULE 12
RETURN CONDITIONS
On the Redelivery Date the Aircraft will be in the same condition as at
Delivery, ordinary wear and tear excepted.
Location:
A city in the continental United States of America (48 contiguous states)
reasonably requested by Sublessor.
Certification:
A United States Standard Certificate of Airworthiness suitable for Part 121
operations or an Export Certificate of Airworthiness as requested by Sublessor.
The Aircraft will be airworthy (conform to type design and be in a condition for
safe operation), with all Aircraft equipment, components and systems operating
in accordance with their intended use and within limits established by the
Aircraft Maintenance Manual.
Configuration:
An all economy 122 seat interior.
Paint:
`AS IS." Sublessee agrees to strip and/or sand and paint the Aircraft (to the
extent that the facility used by Sublessee for the performance of the return
check has such capability) during the end of lease C check, at Sublessor's
expense, provided Sublessor gives Sublessee at least one (1) month prior written
notice.
Airframe:
Fresh from next due Block C Check, excluding hours and cycles used on the
demonstration / Ferry Flights, with a minimum of 3,600 hours and 18 months
remaining until the next due C7 Check /Structural Inspection.
1. The Aircraft will have no deferred maintenance items, unique
inspections or temporary repairs at Redelivery.
B. Modifications and Repairs installed on the Aircraft since Delivery
will have been accomplished in accordance with FAA approved data.
C. Aircraft will be in compliance with the Manufacturer's CPC program.
4. If available, any No Charge Service Bulletin Kits not installed by
Present Sublessee will be loaded onboard the Aircraft as cargo.
E. Fuel tanks will be free from contamination.
Engines:
Each Engine will have no more time since last engine shop visit than as of
Delivery and have the same life remaining on LLP's as at Delivery and have at
least a minimum of 7,000 hours and 5,000 cycles remaining until the next LLP
replacement on one Engine (ESN 685527) and have at least a minimum of 8,000
hours and 7,000 cycles remaining until the next LLP replacement on the other
Engine (ESN 700605).
Each Engine will pass a Performance Engine Run in accordance with the Aircraft
Maintenance Manual.
Each Engine will pass a hot and cold section borescope inspection.
APU:
Serviceable
Components:
Each component that is time controlled will have at least 3,000 hours or cycles
remaining until next inspection/ overhaul. Each component that is calendar
controlled will have at least 12 months remaining until its next
inspection/overhaul. Condition Monitored/On Condition components will be
serviceable.
Landing Gear:
Each Landing Gear will have at least 11,000 hours remaining until the next
inspection or overhaul based on a 20,000 hour overhaul interval.
Airworthiness Directives (AD's):
Airworthiness Directives requiring compliance on or before Redelivery will be in
compliance.
Demonstration Flight:
Sublessee will perform a one and one half hour flight demonstrating the
satisfactory operation of the aircraft at Sublessee's expense with no more than
two observers, as designated by Sublessor, on board during such Demonstration
Flight.
Records:
Documentation delivered to Sublessee at Delivery will be returned to Sublessor
along with the up to date Aircraft Maintenance Records that the Sublessee has
collected during the Sublease Term.
Aircraft Documentation
Sublessee will prepare the Aircraft Documents in one location at least ten (10)
days prior to redelivery of the Aircraft. The Aircraft Documents, as identified
in Annexure 1 to the Acceptance Certificate, will be redelivered in their latest
revision to Sublessor at the Redelivery Date.
SCHEDULE 13
RETURN ACCEPTANCE CERTIFICATE
1. Frontier Airlines, Inc. (Sublessee) and KOMMANDITBOLAGET FLYGPLANET
XII (Sublessor) have entered into an Aircraft Sublease Agreement
dated __ July 1999, (Sublease). Unless otherwise defined, capitalised
terms used herein will have the meanings set forth in the Sublease.
2. Sublessor has this _____ day of ______ (Time: _____) at _______
received from Sublessee possession of:
(a) one (1) Boeing 737-2Y5 Aircraft, bearing manufacturer's
serial number 23040, registration xxxx N118RW together
with two (2) Xxxxx & Whitney JT8D-15A engines bearing
serial numbers 685527 and 700605, all Parts attached
thereto and thereon in an airworthy condition; and
(b) all Aircraft Documents as listed in the Document Receipt
attached hereto.
3. The Airframe, Engines and Parts had the following Flight Hours/Cycles
at return:
(a) Airframe:
Total hours Total landings Since last "C" Check Since last "A" Check
______ _____ ______ Flight Hours _____ Flight Hour
_______ Cycles _____ Cycles
(b) Engines: JT8D-15A equipped with Nordam LGW Hushkits
Position Serial Total Flight Total Since last Since last
No. Hours Cycles shop visit Engine
Performance
Restoration
Visit
_____ _____ _____ ______ ____ Flight ____ Flight
Hours Hours
____ Cycles ____ Cycles
Time Remaining to next life limited part removal
MSN: _____ _____
MSN: _____ _____
(c) APU:
MSN Total Flight Flight Hours/ Cycles Flight Hours/Cycles
Hours remaining until next HSI remaining on turbine and
inspection compressor life limited
parts
----- ---- ------ -----
(d) Landing Gears:
Position Serial Total Flight Flight Hours/ Flight Hours/
No. Hours/Cycles Cycles since last Cycles to next
Overhaul sched. Removal
Nose ____ ___ Flight Hours ___ Flight Hours ___ Flight Hours
___ Cycles ___Cycles ___ Cycles
Right Main ____ ___ Flight Hours ___ Flight Hours ___ Flight Hours
___ Cycles ___Cycles ___ Cycles
Left Main ____ ___ Flight Hours ___ Flight Hours ___ Flight Hours
___ Cycles ___Cycles ___ Cycles
(e) Status of components or Parts with time/Cycle and
calendar limits (see attached sheet);
(f) Fuel on board at return: ___kilos (____ gallons)
4. Other technical information regarding the Aircraft and its components
are correctly set forth on the Aircraft report attached hereto.
5. The above specified Aircraft, Engines and documents are hereby
accepted by Sublessor subject to:
(a) the provisions of the Sublease; and
(b) correction by Sublessee of the discrepancies specified
in Annex 2 hereto (which correction Sublessee hereby
undertakes to perform as soon as reasonably possible).
6. Subject to Paragraph 7, the leasing of the Aircraft by Sublessor to
Sublessee pursuant to the Sublease is hereby terminated without
prejudice to Sublessee's continuing obligations under the Sublease
including, without limitation, Clauses 19 and 20.
1.
7. Sublessee represents and warrants that during the term of the
Sublease all maintenance and repairs to the Airframe and Engines were
performed in accordance with the requirements contained in the
Sublease. Sublessee further confirms that all of its obligations
under the Sublease whether accruing prior to the date hereof or which
survive the termination of the Sublease by their terms and accrue
after the date hereof, will remain in full force and effect until all
such obligations have been satisfactorily completed. Sublessee
represented that the documents delivered and listed in Annex 1 are
true and accurate.
8. This Return Acceptance Certificate is executed and delivered by the parties
in ____________.
IN WITNESS WHEREOF, the parties hereto have caused this Return Acceptance
Receipt to be executed in their respective corporate names by their duly
authorised representatives as of the day and year first above written.
FRONTIER AIRLINES, INC.
By:____________________________________
Title:___________________________________
KOMMANDITBOLAGET FLYGPLANET XII
By:_____________________________________
Title:____________________________________
ATTACHMENTS:
Annexure 1. Aircraft Documents
Annexure 2. List of Discrepancies
Annexure 1
AIRCRAFT DOCUMENTS
Note: This Annexure 1 is to be used for reference purposes only. The Aircraft
Documents will be more closely identified in Annexure 1 to the Acceptance
Certificate.
A. Certificates
- Certificate of Airworthiness
- Certificate of Registration
B. Aircraft Status Records
- Technical Log Book
- Airframe Maintenance Status Report
- Manufacturer's Service Bulletin Status Report
- Airworthiness Directive Compliance Report (terminated and repetitive)
- Local Modification Status Report List with Substantiating Data
- Last Weighing Report
- Repair Data Structural Repairs
C. Aircraft Maintenance Records
- Test Flight Reports
- Last Boeing "C" check and maintenance check Work Cards for each "C"
check multiple (or segment)
D. Aircraft History Records
- Aircraft Structural Repair History (if applicable)
- Service Difficulty Report (if applicable)
- Accident or Incident Report (if applicable)
E. Engine Records (for each engine)
- Log Books
- Last overhaul and repair documents for each module
- Airworthiness Directive Compliance Report (terminated and repetitive)
- Manufacturer's Service Bulletin Status Report
- Engine Disk Sheet
- Engine Data Submittal Sheet
- Condition Monitoring Status Report
F. APU Records
- Log Book
- Last overhaul and repair documents
- Manufacturer's Service Bulletin Status Report
G. Component Records (including components installed engines and APU)
- Time Controlled Component Status Report with remaining hours and
cycles (if applicable)
- Serviceability tags or back-up documentation, as available, for
components replaced since delivery from Boeing, as provided to
Frontier at Delivery and any tags or backup documentation for
components replaced by Frontier since Delivery
H. Manuals
- Airplane Flight Manual
- Quick Reference Handbook
- Aircraft Operation Manual
- Weight and Balance Manual Supplement
- Wiring Diagram Manual (microfilm)
- Illustrated Parts Catalog (microfilm)
- Aircraft Maintenance Manual (microfilm)
- Xxxxx & Xxxxxxx Illustrated Parts Catalog
- Vendor Manual Seats
- Vendor Manual Galleys
- Vendor Manual Ovens
- Vendor Manual Coffee makers
- Nordam Maintenance Manual Supplements
I. Miscellaneous Technical Documents
- Maintenance Program Specifications/Requirements
- Interior Configuration Drawings
- Loose Equipment Inventory List
- Delivery documentation ex Boeing
- Export Certificate of Airworthiness
- Aircraft Readiness Log
- Rigging Record Brochure
- Miscellaneous Delivery Record Brochure
- Fuel Measuring Stick Calibration Brochure
- FAA Airworthiness Directive Compliance Record
Annexure 2
Discrepancies
SCHEDULE 14
SUBLEASE SUPPLEMENT
LEASE SUPPLEMENT NO. 1 dated July __, 1999, between KOMMANDITBOLAGET FLYGPLANET
XII (the "Sublessor") and
FRONTIER AIRLINES, INC. (the "Sublessee").
Sublessor and Sublessee have previously entered into that certain Aircraft
Sublease Agreement dated as of July __, 1999 (herein called the "Sublease" and
the defined terms therein being hereinafter used with the same meaning). The
Sublease provides for the execution and delivery from time to time of a Lease
Supplement substantially in the form hereof for the purpose of leasing the
aircraft described below under the Sublease as and when delivered by Sublessor
to Sublessee in accordance with the terms thereof.
The Sublease relates to the Aircraft, Parts and Engines as more specifically
described below. A counterpart of the Sublease is attached hereto and this
Sublease Supplement and the Sublease shall form one document.
In consideration of the premises and other good and sufficient consideration,
Sublessor and Sublessee hereby agree as follows:
1. Sublessor hereby delivers and leases to Sublessee under the Sublease
and Sublessee hereby accepts and leases from Sublessor under the
Sublease, that certain used Boeing Model 737-2Y5 Aircraft bearing FAA
Registration Xxxx N118RW, including the Airframe bearing
manufacturers serial number 23040 and the two (2) Xxxxx & Xxxxxxx
JT8D-15A Engines equipped with Nordam Stage III LGW Hushkits bearing
manufacturer's serial numbers 700605 and 685527 described in Schedule
1 herewith ("Delivered Aircraft").
2. The Delivery Date of the Aircraft is the date of this Sublease
Supplement set forth in the opening paragraph hereof.
3. The Sublease Term for the Aircraft shall commence on the Delivery
Date and shall end on the Sublease Expiry Date.
4. The amount of Rent for the Aircraft is set forth in the Sublease and
is payable as provided in the Sublease.
5. Sublessee hereby confirms to Sublessor that (i) the Aircraft and each
Engine installed thereon or belonging thereto have been duly marked
in accordance with the terms of Clause 12.12 of the Sublease, (ii)
Sublessee has inspected the Aircraft and the Aircraft satisfies the
conditions set forth in the Sublease and (iii) Sublessee has accepted
the Aircraft for all purposes hereof and of the Sublease.
6. All of the terms and provisions of the Sublease are hereby
incorporated by reference in this Sublease Supplement to the same
extent as if fully set forth herein.
7. This Sublease Supplement may be executed in any number of
counterparts, each of such counterparts, except as provided on the
front page of the Sublease, shall for all purposes be deemed to be an
original; and all such counterparts shall together constitute but one
and the same Sublease Supplement.
8. This Sublease Supplement has been delivered in New York.
SIGNATURE PAGE
IN WITNESS WHEREOF, Sublessor and Sublessee have caused this Sublease Supplement
to the Sublease to be duly executed as of the day and year first above written.
Sublessor,
KOMMANDITBOLAGET FLYGPLANET XII
By:_____________________________________
Title:____________________________________
Sublessee,
FRONTIER AIRLINES, INC.
By:______________________________________
Title:_____________________________________
