EXHIBIT 10.6
OPERATING LEASE [920]
Dated as of November 24, 1997
between
Jet Acceptance Corporation,
as the Lessor,
and
CCAIR, Inc.,
as the Lessee,
-------------------------------
Covering One British Aerospace Jetstream Super 31
The Aircraft covered by this Operating Lease is owned by, and title thereto is
held by, First Security Bank, National Association, as trustee (the
"Owner-Trustee"), under the Trust Agreement (32-91-4) dated as of June 15, 1991,
with AT&T Capital Holdings International, Inc.. and has been leased to Jet
Acceptance Corporation pursuant to the Lease Agreement, dated as of June 15,
1991, between the Owner-Trustee and by Jet Acceptance Corporation as Sublessor
to, and is subject to a security interest in favor of, the Owner-Trustee under
the Assignment of Sublease and Security Agreement, dated as of June 15, 1991 (as
such Assignment of Sublease and Security Agreement may be amended or
supplemented as permitted thereby). The Owner-Trustee has further assigned this
Operating Lease to and has granted a security interest in favor of, State Street
Bank and Trust Company of Connecticut, N.A., as Security Trustee under the
Security Agreement-Trust Deed, dated as of June 15, 1991 (as such Security
Agreement-Trust Deed may be amended or supplemented as permitted thereby), for
the benefit of the holders of Secured Notes referred to in such Security
Agreement-Trust Deed. This Operating Lease has been executed in several
counterparts. To the extent, if any, that this Operating Lease constitutes
chattel paper (as such term is defined in the Uniform Commercial Code as in
effect in any applicable jurisdiction), no security interest in this Operating
Lease may be created through the transfer or possession of any counterpart other
than the original counterpart that contains the receipt therefor executed by
State Street Bank and Trust Company of Connecticut, N.A., as Security Trustee,
on the signature page thereof.
TABLE OF CONTENTS
Section Page
SECTION 1. DEFINITIONS AND INTERPRETATION .....................................
(a) Definitions ...........................................................
(b) Terms Defined in the Commercial Supplement ............................
(c) Interpretation ........................................................
(d) Inconsistency .........................................................
(e) Effectiveness .........................................................
SECTION 2. CONDITIONS PRECEDENT ...............................................
(a) Acceptance of Aircraft ................................................
(b) Insurance .............................................................
(c) Opinion of Counsel ....................................................
(d) No Defaults............................................................
(e) Conditions Set Forth in the Commercial Supplement .....................
SECTION 3. REPRESENTATIONS AND WARRANTIES .....................................
(a) Mutual Representations and Warranties .................................
(b) Further Representation and Warranty ...................................
SECTION 4. TERM; DELIVERY; ACCEPTANCE .........................................
(a) Term ..............................................................
(b) Delivery ..............................................................
(c) Delay in Delivery - Force Majeure .....................................
(d) Inspection ............................................................
(e) Inspection Indemnity ..................................................
(f) Deficiencies and delays ...............................................
(g) Acceptance Supplement .................................................
SECTION 5. RENT
(a) Basic Rent ............................................................
(b) Manner of Payment .....................................................
SECTION 6. NET LEASE ..........................................................
SECTION 7. DISCLAIMER OF WARRANTIES AND QUIET ENJOYMENT .......................
(a) Disclaimer of Warranties...............................................
(b) Quiet Enjoyment........................................................
SECTION 8. POSSESSION .........................................................
(a) Possession ............................................................
(b) Engines and Propellers ................................................
SECTION 9. REGISTRATION, INSIGNIA, USE AND OPERATION ..........................
(a) Registration ..........................................................
(b) Insignia ..............................................................
(c) Basing and Geographical Use ...........................................
(d) Limitations on Use ....................................................
SECTION 10. MAINTENANCE AND REPAIR ............................................
(a) General Maintenance Obligations .......................................
(b) Modifications/Structural Repairs.......................................
(c) Maintenance of Records.................................................
SECTION 11. EVENT OF LOSS .....................................................
(a) Risk of Loss ..........................................................
(b) Event of Loss of Aircraft .............................................
(c) Event of Loss of an Engine, Propeller or Part .........................
(d) Evidence of Conveyance ................................................
SECTION 12. INSURANCE .........................................................
(a) Required Insurance ....................................................
(b) Insurance Requirements for All Policies ...............................
(c) Deductibles ...........................................................
(d) Application of Hull Insurance Proceeds ................................
(e) Insurance for Own Account .............................................
(f) Certificates ..........................................................
(g) Reports, Etc ..........................................................
SECTION 13. LIENS .............................................................
SECTION 14. RETURN OF AIRCRAFT ................................................
(a) Return of Aircraft ....................................................
(b) Fuel ..............................................................
(c) Records
(d) Final Inspection ......................................................
(e) Storage
(f) Return Certificate ....................................................
SECTION 15. LESSEE GENERAL COVENANTS ..........................................
(a) Aircraft Information and Inspection ...................................
(b) Financial and Other Information to be Supplied ........................
(c) Corporate Existence ...................................................
(d) Merger, Consolidation .................................................
(e) General Indemnity .....................................................
(f) Taxes against Lessor or the Aircraft ..................................
(g) Further Assurances ....................................................
SECTION 16. EVENTS OF DEFAULT .................................................
SECTION 17. REMEDIES ..........................................................
SECTION 18. MISCELLANEOUS .....................................................
(a) Applicable Law ........................................................
(b) Notices
(c) Judicial Proceedings ..................................................
(d) Unenforceability ......................................................
(e) Assignment ............................................................
(f) Lessor's Rights to Perform for the Lessee..............................
(g) Survival ..............................................................
(h) Integrated Agreement ..................................................
(i) Waivers, headings .....................................................
(j) Time ..............................................................
(k) Counterparts ..........................................................
Exhibit A Form of Acceptance Supplement.....................................
Schedule I Aircraft Description..........................................
Schedule II Time and Cycles...............................................
Schedule III Aircraft Documentation........................................
Schedule IV Loose Equipment...............................................
Schedule V Work Package..................................................
Exhibit B Form of Return Certificate....................................
Schedule I Aircraft Description..........................................
Schedule II Time and Cycles...............................................
Schedule III Aircraft Documentation........................................
Schedule IV Return Condition Discrepancies................................
OPERATING LEASE [920], dated as of November 24, 1997 between Jet Acceptance
Corporation, a Delaware corporation, as lessor (the "Lessor"), and CCAIR, Inc.,
a
Delaware corporation, as lessee (the "Lessee").
The Lessee and the Lessor agree as follows:
SECTION 1. DEFINITIONS AND INTERPRETATION.
(a) Definitions.
The following terms have the respective meanings set forth below for all
purposes of the Lease:
"Acceptance Supplement" means the Acceptance Supplement in
substantially the form of Exhibit A hereto.
"Address for Payments" means the address for payments to the Lessor set
forth on the signature page under the Lessor's signature or such other address
as the Lessor may from time to time specify.
"Air Carrier Operating Certificate" means an air carrier operating
certificate issued to the Lessee by the FAA pursuant to Section 44705 of the
Federal Aviation Act authorizing, among other things, the commercial passenger
operation of aircraft of the same type as the Aircraft under the Applicable FAR.
"Aircraft" means the Airframe leased pursuant to the Lease together
with the Engines, the Propellers and the Loose Equipment.
"Airframe" means the airframe specified by manufacturer's model and
serial number and U.S. registration number in the Acceptance Supplement.
"Applicable FAR" means Federal Aviation Regulations Part 121.
"Applicable Law" means, with respect to any Person or thing, any
constitution, treaty, statue, law decree, regulation, order, rule or directive
of any applicable governmental or judicial entity applicable to such Person or
thing.
"Certificate of Airworthiness" means a standard certificate of
airworthiness, transport category, issued by the FAA and of the type required
for commercial passenger aircraft operation under the Applicable FAR.
"Certificated Air Carrier" means an air carrier (as such term is
defined in the Federal Aviation Act) holding a certificate of convenience and
necessity issued pursuant to Section 41102(a)(1) of the Federal Aviation Act or
operating as an air taxi pursuant to an exemption issued under Section 40190(f)
of the Federal Aviation Act.
"Claim" has the meaning specified in Section 15(e).
"Commercial Supplement" means the Commercial Supplement to this
Operating Lease.
"Default" means any Event of Default or any event or condition which
with the passage of time and/or the giving of notice would constitute an Event
of Default.
"Delivery Date" means the date the Aircraft is delivered to and
accepted by the Lessee under the Lease, as evidenced by the Acceptance
Supplement.
"Engine" means each engine specified in the Acceptance Supplement until
replaced pursuant to Section 11(c) and any engine which may from time to time
replace such Engine pursuant to Section 11(c).
"Event of Default" means each of the events specified in Section 16.
"Event of Loss" with respect to the Aircraft or any Engine, Propeller
or Part means:
(i) the actual or constructive total loss thereof;
(ii) the loss or theft, hijacking or disappearance thereof for
a period of greater than 45 days or any damage or destruction thereto beyond
repair or rendition thereof permanently unfit for normal use for any reason
whatsoever;
(iii) the condemnation, confiscation, or seizure of, or
requisition or taking of title thereto;
(iv) the requisition or taking of the use thereof by any
governmental entity for a period beyond the Basic Term or Renewal Term of the
Head Lease, as those terms are defined in the Head Lease;
(v) any damage thereof which results in an insurance
settlement with respect thereof on the basis of a total loss;
(vi) as a result of any rule, regulation, order or other
action by the FAA (or any other governmental authority), the use thereof in the
normal course of business of passenger air transportation shall have been
prohibited or (in the case of the Aircraft) the type certification of British
Aerospace Jetstream Series 3200 Model 3201 Turboprop aircraft shall have been
terminated, in each case for a period of six consecutive months unless Lessee,
prior to the expiration of such six-month period, shall have undertaken or shall
cause to be diligently carried forward all steps which are necessary or
desirable to permit the normal use thereof by Lessee or, in any event, if such
use shall have been prohibited for a period of eighteen consecutive months or is
continuing at the end of the Term;
(vii) with respect to the Aircraft, the operation or location
of the
Aircraft, while under requisition for use by the Government, in
any area excluded from coverage by any insurance policy in effect with respect
to the Aircraft required by Section 12 hereof, if Lessee shall be unable to
obtain indemnity in lieu thereof from the Government in such form as shall be
reasonably satisfactory to the Lessor and as shall be comparable to the
insurance required to be maintained by Section 12 hereof;
provided, that if in the event, facts and circumstances
constituting such Event of Loss described in clauses (ii), (vi), or (vii) above
shall cease to exist and the Aircraft shall be returned to Lessee in a usable
condition prior to the Loss Payment Date (as defined in Section 9(a) of the Head
Lease) or the Loss Termination Date (as defined in Section 9(b) of the Head
Lease), as the case may be, then such Event of Loss shall, upon the written
election of the Lessee delivered prior to such Loss Payment Date or Loss
Termination Date, as the case may be, to the Financing Parties, be deemed not to
have occurred.
An Event of Loss with respect to the Airframe will constitute an Event of Loss
with respect to the Aircraft. Any Part subjected to a pooling arrangement
pursuant to Section 8(a)(ii) will be deemed to have suffered an Event of Loss.
"FAA" means the United States Federal Aviation Administration.
"Federal Aviation Act" means Subtitle VII (Aviation Programs) of Title
49 of the United States Code.
"Force Majeure" means acts of God or public enemy, civil, war,
insurrection or riot, fire, flood, explosion, earthquake, accident, epidemic,
quarantine restriction, law, governmental priority, allocation, regulation or
order affecting materials, facilities or any part of the Aircraft, strike or
labor dispute causing cessation, slowdown or interruption of work; inability
after due and timely diligence to procure equipment, data and materials from
suppliers; the late delivery of the Aircraft by a previous lessee; delay due to
the requirement to comply with directives or modifications issued by the FAA or
other governmental authority under Applicable Law following the date of the
Lease; or any other cause beyond the control of Lessor, including, without
limitation, any failure by the Owner or any other Financing Party to observe or
perform any of its respective obligations under the Head Lease or any other
Financing Document provided that such failure is not attributable to any
corresponding act or omission of Lessor under any provision thereof.
"Lease" means this Operating Lease together with the Acceptance
Supplement and the Commercial Supplement.
"Lessor Lien" means any Lien arising from the act or omission of the
Lessor not related to the transactions contemplated by the Lease.
"Lien" means any mortgage, pledge, security interest, lien,
encumbrance, title retention agreement or other charge of any kind on real or
personal property.
"Loose Equipment" means all items identified and listed on the
Acceptance Supplement as "Loose Equipment".
"Major Shop Visit" means hard time overhauls (together with hot section
inspections, if applicable) at an interval no greater than that interval which
is generally recommended by the Engine Manufacturer.
"Manufacturer" means, with respect to the Airframe or any Engine,
Propeller or Part, the manufacturer thereof.
"Overdue Rate" means as of any date the rate of interest for a "bank
prime loan" set forth in Federal Reserve Statistical Release H.15(519) for such
date plus 4% per annum, or, if less, the maximum rate of interest permitted by
law, calculated on the basis of the actual number of days elapsed in a calendar
year.
"Part" means each of the appliances, parts, accessories, instruments,
furnishings, seats and other equipment of any kind (other than Engines or
Propellers) initially installed on the Airframe or any Engine or Propeller and
each item of Loose Equipment, in each case until replaced pursuant to Section
11(c) and any part which may from time to time replace such Part pursuant to
Section 11(c).
"Permitted Lien" has the meaning specified in Section 13.
"Person" means any individual, partnership, limited liability company,
corporation, trust, unincorporated organization or governmental entity.
"Propeller" means each propeller specified in the Acceptance Supplement
until replaced pursuant to Section 11(c) and any propeller which may from time
to time replace such Propeller pursuant to Section 11(c).
"Rent" means any Basic Rent or Supplemental Rent.
"Return Certificate" means a return certificate, substantially in the
form of Exhibit B hereto and dated the date the Aircraft is return pursuant to
Section 14.
"Supplemental Rent" means any amount payable under the Lease other than
Basic Rent.
"Tax" means all taxes (including, without limitation, income,
franchise, excise, gross receipts, sales, use occupational capital, value-added,
leasing, subleasing, leasing use, subleasing use, landing, airport use, property
and stamp taxes and taxes imposed in respect of items of tax preference),
levies, imposts, duties, charges, assessments or withholdings of any nature
whatsoever imposed by any governmental entity together with any penalties,
additions to tax, fines and interest thereon.
(b) Terms Defined in the Commercial Supplement.
The terms: "Approved Engine Service Plan", "Approved Maintenance Program", "BAI
Term Sheet", "Basic Rent", "Claim Notification Amount", "Cycle", "Damage Payment
Threshold", "Delivery Location", "Estimated Delivery Date", "Expiration Date",
"Final Delivery Date", "Financing Documents", "Financing Parties", "Flight
Hours", "Geographical Limits", "Head Lease", "Head Lessor", "Indemnified
Parties", "Insurance Deductible Amount", "Insured Parties", "Legend", "Lien
Limitation", "Loss Payee", "Memorandum of Understanding", "Minimum Liability
Coverage", "Owner", "Payment Date", and "Stipulated Loss Value"; have the
respective meanings set forth in the Commercial Supplement.
(c) Interpretation.
Unless otherwise indicated or the context shall otherwise require:
(i) references to any Person will include such Person's
successors and assigns;
(ii) references to the Airframe or an Engine or Propeller
includes all parts thereto;
(iii) references to any law, rule or regulation will include
such provision as amended, modified, substituted, reissued or reenacted; and
(iv) references to any agreement will mean such agreement as
amended, modified or supplemented from time to time.
(d) Inconsistency.
In the event of any inconsistency among the provisions of this Operating Lease,
the Acceptance Supplement and the Commercial Supplement, the provisions of the
Commercial Supplement will prevail over the provisions of either of this
Operating Lease or the Acceptance Supplement and the provisions of the
Acceptance Supplement will prevail over the provisions of this Operating Lease.
(e) Effectiveness.
The Lease will not be effective, and will not constitute an enforceable
obligation of either party hereto, unless and until the Commercial Supplement
has been executed and delivered by each of the Lessor and the Lessee.
SECTION 2. CONDITIONS PRECEDENT.
The Lessor's obligation to deliver the Aircraft to the Lessee is
subject to the satisfaction of each of the following conditions:
(a) Acceptance of Aircraft.
The Lessee shall have accepted the Aircraft under the Lease as evidenced by the
Lessee's execution and delivery of the Acceptance Supplement;
(b) Insurance.
The Lessee shall have furnished to the Lessor certificates of insurance
evidencing compliance with the requirements of Section 12 and a report of the
Lessee's independent insurance brokers meeting the requirements of Section
12(f);
(c) Opinion of Counsel.
The Lessee shall have furnished the Lessor with an opinion of counsel to the
Lessee (which opinion and counsel will each be reasonably acceptable to the
Lessor) as to the matters set forth in Section 3 insofar as applicable to the
Lessee;
(d) No Defaults.
The Lessee shall not be in default under the Lease or under any other agreement
between or among the Lessee and the Lessor or any of its affiliate companies;
and
(e) Conditions Set Forth in the Commercial Supplement.
The Lessee shall have satisfied any additional conditions precedent specified in
the Commercial Supplement.
SECTION 3. REPRESENTATIONS AND WARRANTIES.
(a) Mutual Representations and Warranties.
Each party represents and warrants to the other that:
(i) It is a corporation duly organized, validly existing and
in good standing under the laws of its jurisdiction of incorporation;
(ii) It has the power to execute and deliver, and to perform
its obligations under, the Lease and has taken all necessary action to authorize
such execution, delivery and performance;
(iii) The execution, delivery and performance of the Lease by
it do not violate or conflict with any Applicable Law, or provision of its
corporate charter or bylaws, any order or judgment of any court or governmental
authority applicable to it or any of its assets or any contractual restriction
binding on it or affecting any of its assets;
(iv) All governmental and other consents that are required to
have been obtained by it with respect to the Lease have been obtained, are in
full force and effect and all conditions of any such consents have been
satisfied; and
(v) Its obligations under the Lease constitute its legal,
valid and binding obligations, enforceable against it in accordance with their
respective terms (subject to applicable bankruptcy, reorganization, insolvency,
moratorium or similar laws affecting creditors' rights generally).
(b) Further Representation and Warranty.
The Lessee further represents and warrants to the Lessor that the Lessee is a
Certificated Air Carrier and holds an Air Carrier Operating Certificate and that
no action has been instituted or, to the knowledge of the Lessee, threatened by
the Department of Transportation, the FAA or any other governmental authority to
revoke, suspend or terminate its rights or status as a Certificated Air Carrier
or its Air Carrier Operating Certificate.
SECTION 4. TERM; DELIVERY; ACCEPTANCE.
(a) Term.
The lease of the Aircraft will commence on the Delivery Date and, unless sooner
terminated or canceled pursuant to the terms hereof, will continue until the
Expiration Date (the "Term").
(b) Delivery.
Subject to the provisions of the Lease, the Aircraft shall be delivered by
Lessor to and accepted by Lessee on the Delivery Date at the Delivery Location
or such other location as the parties shall otherwise agree in writing, shall
possess a valid Certificate of Airworthiness and shall meet FAA Part 121
equipment requirements. Following Lessee's acceptance of the Aircraft, as
evidenced by Lessee's signature of the Acceptance Supplement, Lessee shall ferry
the Aircraft to a maintenance facility where the Aircraft, at Lessor's expense,
shall undergo the work required to implement the work package set forth in
Schedule V of the Acceptance Supplement.
As at the date of this Lease, Lessor has advised Lessee that delivery of the
Aircraft is scheduled to occur on the Estimated Delivery Date. Lessor shall
promptly on ascertaining the same, notify Lessee of the actual date when it
expects delivery to take place (if it differs from the Estimated Delivery Date).
(c) Delay in Delivery - Force Majeure.
Lessor shall have no responsibility or liability for any failure to deliver the
Aircraft on the Estimated Delivery Date or thereafter due to the occurrence of
an event of Force
Majeure. Upon the occurrence of an event of Force Majeure, Lessor shall promptly
notify Lessee of the circumstance thereof and shall use reasonable endeavors to
avoid the consequences of such event of Force Majeure. Lessee shall not be
entitled to refuse to accept delivery of the Aircraft when tendered by Lessor on
the Delivery Date or to cancel its obligation to take the Aircraft on lease from
Lessor as a consequence of any delay due to an event of Force Majeure; provided,
however, that if as a result of Force Majeure the Aircraft shall not have been
delivered to and accepted by Lessee prior to the Final Delivery Date, Lessee
shall be entitled by notice in writing to cancel its obligation to take the
Aircraft on lease from Lessor.
(d) Inspection.
Prior to the Delivery Date, Lessee shall be given an opportunity to inspect the
Aircraft at the Delivery Location. If the Aircraft generally accords with the
requirements of the Memorandum of Understanding, Lessee shall be obliged to
accept the Aircraft. Lessor shall correct any recordable defect and/or
non-conformity as promptly as possible after acceptance of the Aircraft by
Lessee or, if prompt remedy is not possible, Lessor shall propose a program for
the remedy of such defect or non-conformity acceptable to Lessor and Lessee. No
such defect or non-conformity shall prejudice or otherwise impair the
obligations of Lessee (including without limitation as to the payment of Rent
and other amounts) under the Lease.
(e) Inspection Indemnity.
Lessee shall indemnify and hold harmless Lessor, the Financing Parties and their
respective officers, agents and employees from and against any and all
liabilities, damages and losses (including costs and expenses incidental
thereto) arising by reason of death or injury to any employee or other
representative of Lessee, arising out of, or in any way connected with the
inspection of the Aircraft. Notwithstanding the foregoing, Lessee will not be
required to indemnify any such Person for any such liability, damage or loss
solely attributable to such person's willful misconduct or recklessness.
(f) Deficiencies and Delays.
Lessor shall not be liable for any liability, claim, loss, damage or expense of
any kind or nature caused directly or indirectly by the Aircraft or any part
thereof, by any inadequacy thereof for any purpose or any deficiency or defect
therein (except that Lessor shall be liable to remedy any recordable defect
and/or non-conformity which it has undertaken to remedy following the Delivery
Date), by the use or performance thereof, by repairs or servicing thereto, by
any delay in the delivery thereof for any reason, by any interruption or loss of
service or use thereof or by any loss of business or other consequential damage
or any damage whatsoever and howsoever caused prior to re-delivery of the
Aircraft to Lessor.
(g) Acceptance Supplement.
On the Delivery Date Lessee shall, subject to the provisions of Section 4(d),
indicate and confirm its unconditional acceptance of the Aircraft for lease
under the Lease without any reservation whatsoever (other than in respect of any
recordable defect and/or non-conformity which has not been remedied prior to the
Delivery Date) by the execution and delivery to Lessor of the Acceptance
Supplement. For the avoidance of doubt, Lessee acknowledges that the execution
and delivery of the Acceptance Supplement shall constitute conclusive proof of
Lessee's agreement to Lessor's remedial program (if any) with regard to any
recordable defect or non-conformity.
SECTION 5. RENT.
(a) Basic Rent.
The Lessee will pay Basic Rent in arrears on each Payment Date in the amount
specified in the Commercial Supplement.
(b) Manner of Payment.
Rent will not be considered as having been paid until the date received by the
Lessor at the Address for Payment in immediately available funds consisting of
lawful currency of the United States. If any amount of Rent is not so received
by the Lessor on the date due, then without prejudice to any other remedy, the
Lessor may have hereunder, the Lessee will pay the Lessor, on demand, interest
at the Overdue Rate on such amount of Rent from the date due until the date so
received.
Rent and any other payments due to Lessor under this Lease shall be paid by wire
transfer in immediately available funds to the Address for Payments set forth on
the signature page hereto and in accordance with the Second Amendment and
Restatement of the Special Account and Disbursement Authorization Agreement
dated as of May 28, 1996 by and among the Bank of New York, Lessee, British
Aerospace Holdings, Inc., British Aerospace Asset Management, Inc. and Lessor as
the same may be amended from time to time. Lessor from time to time by written
notice to Lessee, and any Financing Party, upon written notice to Lessee that an
Event of Default under this Lease has occurred and is continuing, may designate
that such payments be made to such other place, person or person's account as
may be set forth in such notice, and any such payment made by Lessee to such
other place or person as designated by such Financing Party, as the case may be
shall be deemed payment to Lessor for purposed of this Section 5(b).
SECTION 6. NET LEASE.
This is a net lease and the Lessee's obligation to pay Rent and to
perform all covenants, conditions and agreements as and when required under this
Lease shall be absolute and unconditional and at the sole risk, cost and expense
of the Lessee and shall not be subject to any abatement, contribution,
reduction, set-off, defense counterclaim, interruption, deferment or recoupment
for any reason whatsoever.
SECTION 7. DISCLAIMER OF WARRANTIES AND QUIET ENJOYMENT.
(a) Disclaimer of Warranties.
Lessee expressly agrees to take the Aircraft "as is where is". None of the
Lessor, any Financing Parties or any of their respective affiliates has made or
shall have been deemed to have made and shall not be deemed to have made, and
shall be deemed to expressly disclaimed, any representation or warranty, express
or implied, as to the airworthiness, value, condition, workmanship, design,
operation, fitness for use for a particular purpose of the Aircraft or any Part
thereof, as to the absence of latent or other defects, whether or not
discovered, as to the absence of any infringement of any patent, trademark or
copyright, as to the absence of obligations based on tort including strict
liability in tort, whether or not arising from the negligence of Lessor or any
Financing Party or any of their respective affiliates, or any other
representation or warranty whatsoever, express or implied with respect to the
Aircraft or any Part thereof.
(b) Quiet Enjoyment.
The Lessor covenants that neither the Lessor nor anyone claiming through or
under the Lessor shall at any time during the Term take or cause to be taken any
action inconsistent with Lessee's right to quiet enjoyment of, or otherwise
interrupt or interfere with the continuing possession, use or operation of, the
Aircraft by Lessee. The Lessee acknowledges that its rights under the Lease are
subject and subordinate to the Financing Documents and may be terminated by the
Financing Parties in the exercise of their rights under the Financing Documents.
SECTION 8. POSSESSION.
(a) Possession.
The Lessee will not lease or sublease, or otherwise in any manner deliver,
relinquish or transfer possession of the Aircraft or any Engine, Propeller or
Part to any Person without the consent of the Lessor which consent shall not be
unreasonably withheld; provided, that the Lessee may:
(i) deliver possession of the Aircraft or any Engine,
Propeller or Part to the manufacturer thereof or any third party maintenance
provider for testing, service, repair, maintenance, overhaul, alterations or
modifications to the extent required or permitted by the Lease;
(ii) subject any Engine, Propeller or Part removed from the
Airframe or any Engine or Propeller in the ordinary course of maintenance,
service, repair, overhaul and testing to a normal pooling arrangement customary
in the airline industry and entered into in the ordinary course of the Lessee's
business with any manufacturer, maintenance provider or air carrier; provided,
that such Engine, Propeller or Part will be promptly replaced pursuant to
Section 11(c); and provided, further, that if the Head
Lessor's title to or interest in any such Engine or Propeller shall be divested
under any such arrangement, such divestiture shall be deemed to be an Event of
Loss with respect to such Engine or Propeller, as the case may be, and Lessee
shall comply with Section 11(c).
(b) Engines and Propellers.
The Lessee will not install any Engine or Propeller on any other aircraft
without the consent of the Lessor; provided, that, an Engine or Propeller may be
installed on an aircraft owned by or leased or subleased to the Lessee so long
as:
(i) no Default shall have occurred and be continuing;
(ii) the Lessee has operational control over such aircraft;
(iii) title to such Engine or Propeller remains vested in the
Owner; and
(iv) such Engine or Propeller does not become subject to any
Lien other than a Permitted Lien.
SECTION 9. REGISTRATION, INSIGNIA, USE AND OPERATION
(a) Registration.
The Lessee will not take any action which would cause the Aircraft to be
deregistered from the United States aircraft registry. The lessee will not claim
title to, or the right to sell, lease, sublease or otherwise dispose of, the
Airframe or any Engine, Propeller or Part and will not claim depreciation
allowances or other deductions or tax benefits associated with ownership of the
Airframe or any Engine, Propeller or Part.
(b) Insignia.
The Lessee will place and maintain in the cockpit of the Airframe and on each
Engine a fireproof metal nameplate having dimensions of not less than 150 mm by
100 mm bearing the Legend.
(c) Basing and Geographical Use.
The Lessee will not base the Aircraft outside the continental United States
shall operate the Aircraft predominantly within the United States and will not
use, operate or locate the Aircraft outside the Geographical Limits.
(d) Limitations on Use.
The Lessee will not use or operate the Aircraft:
(i) in violation of Applicable Law;
(ii) for any purpose for which the Aircraft was not designed
or is not suitable;
(iii) unless the insurance required by Section 12 hereof is in
full force and effect or contrary to or inconsistent with the terms, conditions,
or warranties of such insurance or in any area excluded from coverage by such
insurance; or
(iv) in any recognized or threatened area of hostilities
unless fully covered by war risk insurance acceptable to Lessor.
SECTION 10. MAINTENANCE AND REPAIR
(a) General Maintenance Obligations.
During the Term, Lessee, at its sole cost and expense, shall service, repair,
maintain and overhaul, test or cause the same to be done to the Airframe and
each Engine, Propeller and Part:
(i) so as to keep such Airframe, Engines, Propellers and Parts
in as good operating condition and repair as when delivered to Lessee on the
Delivery Date, ordinary wear and tear excepted;
(ii) so as to keep the Aircraft in such operating conditions
as may be necessary to enable a current valid Certificate of Airworthiness for
the Aircraft to be maintained in good standing at all time;
(iii) in accordance with all Airworthiness Directives issued
by the FAA and all Service Bulletins designated by the Manufacturer as
"Mandatory", in each case which are required to be complied with during the
Term; and
(iv) in accordance with the Approved Maintenance Program.
(b) Modifications/Structural Repairs.
(i) All structural repairs made to the Aircraft during the
Term of this Lease shall be made by the Lessee, at Lessee's sole cost and
expense, in accordance with the Manufacturer's approved Structural Repair Manual
or other data approved by the Manufacturer and shall be supported by appropriate
paperwork in accordance with the Applicable FAR.
(ii) Lessee shall, at its sole cost and expense, make such
alterations, modifications and additions to the Airframe or any Engine or
Propeller as may be required to be made from time to time during the Term by
Applicable Law, regardless upon whom such requirements are, by their terms,
nominally imposed. No other
alterations, modifications or additions to the Airframe or any Engine, Propeller
or Part shall be made during the Term without the express prior written consent
to the Lessor.
(iii) Except for any Engine, Propeller or Part removed from
the Airframe or any Engine or Propeller in the ordinary course of maintenance,
service, repair, overhaul and testing (which shall be promptly replaced), Lessee
shall not remove any Engine, Propeller or Part from the Airframe without the
express prior written consent of Lessor.
(iv) Title to all parts incorporated on, installed in or
attached to added to the Airframe or any Engine or Propeller shall vest without
further act in the Owner and become subject to the Financing Documents and this
Lease.
(c) Maintenance of Records.
Lessee shall keep all logs, manuals, certificates, data and inspection,
modifications repair, and overhaul records which are required to be maintained
with respect to the Aircraft under to Approved Maintenance Program or under
applicable rules and regulations of the FAA, Department of Transportation or
other government agency having jurisdiction over the Aircraft.
SECTION 11. EVENT OF LOSS.
(a) Risk of Loss.
The Lessee will bear all risks of loss, theft, damage or destruction of or to
the Airframe and each Engine, Propeller and Part.
(b) Event of Loss of Aircraft.
If an Event of Loss with respect to the Airframe or the Aircraft occurs, on the
first Payment Date occurring at least 30 days after such Event of Loss (or, if
earlier, on the Expiration Date) the Lessee will pay to the Lessor the
Stipulated Loss Value and such other Rent then due and payable under the Lease.
Upon payment in full of the Stipulated Loss Value and such other Rent, if any,
the Lease will terminate and the Lessor will cause title to the Aircraft to be
conveyed to the Lessee or its designee "AS IS, WHERE IS" and without recourse or
warranty express or implied (except for a warranty against Lessor Liens).
(c) Event of Loss of an Engine, Propeller or Part.
If an Event of Loss with respect to any Engine, Propeller or Part shall occur
which does not also involve an Event of Loss with respect to the Airframe, the
Lessee will promptly replace such Engine, Propeller or Part with another engine,
propeller or part, as the case may be, of the same or an improved make and
model, the maintenance condition, maintenance history, records and pattern of
usage of which shall be acceptable to the
Lessor and the Lessee will cause title to such replacement engine, propeller or
part, as the case may be, to be conveyed to the Lessor its designee free and
clear of all Liens. Upon compliance by the Lessee with the requirements to this
Section 11(c), the Lessor will cause title to the replaced Engine, Propeller or
Part to be conveyed to the Lessee or its designee, "AS IS, WHERE IS" and without
recourse or warranty, express or implied (except for a warranty against Lessor
Liens).
(d) Evidence of Conveyance.
In the event of any conveyance of title to the Aircraft or any Engine,
Propeller, or Part pursuant to this Section 11, each of the Lessor or the Lessee
will execute such documents and assurances and take such further action as the
other party may reasonably request in order to effect the conveyance of such
title and/or the subjecting of any replacement engine, propeller or part to the
Lease.
SECTION 12. INSURANCE.
(a) Required Insurance.
The Lessee, at its sole cost and expense, will at all times during the Term
maintain in effect with respect to the Aircraft, with insurers of recognized
reputation and responsibility reasonably acceptable to the Lessor, hull war
risks, spares all risks and third party liability insurance of the type, in the
amounts and covering the risks set forth below:
(i) Third Party Liability Insurance. Comprehensive aircraft
and general liability insurance against third party bodily injury or property
damage (including without limitation) contractual liability, cargo liability (up
to $1,000,000), passenger legal liability/property damage (including war risk
and allied perils clause AV52C (all paragraphs deleted except B) or equivalent
coverage and exclusive of manufacturer's product liability insurance)) with
respect to the Aircraft for a combined single limit of liability in an amount
not less than the Minimum Liability Coverage, or such greater amount as the
Lessee may carry from time to time on other similar aircraft in its fleet;
(ii) Insurance Against Loss or Damage to the Aircraft. Hull
all risk insurance for ground, taxiing and flight on an agreed value basis,
excluding war risks and allied perils (but including extended coverage against
the type of risks excluded by clauses (c), (e) and (g) of the War, Hijacking and
Other Perils Exclusion Clause (AVN 48B)), covering the aircraft for an amount
not less than the Stipulated Loss Value from time to time and spares all risk
insurance (including allied perils to the extent available) covering Engines and
Propellers and Parts temporarily removed from the Airframe.
All such insurance will be of the type usually carried by corporations engaged
in the same or a similar business, similarly situated to the Lessee and
operating similar aircraft, and will cover such other risks as are customarily
insured against by such corporations. If and to the extent that the Lessee
maintains war risk and allied perils insurance
(including governmental confiscation insurance) in effect with respect to other
similar aircraft in its fleet, the Lessee will maintain such insurance in effect
with respect to the Aircraft in an amount not less than the Stipulated Loss
Value.
(b) Insurance Requirements for All Policies.
The Lessee will cause all policies of insurance carried in accordance with this
Section 12 to name the Insured Parties as additional insureds (including their
officers, directors, employees and agents with respect to liability insurance)
as their respective interests may appear (it being understood that the Insured
Parties have no operational interest). Such policies will provide with respect
to the Insured Parties that:
(i) none of their respective interests in such policies will
be invalidated by any act or omission or breach of warranty of the Lessee or of
any other named insured;
(ii) no cancellation or lapse of coverage for nonpayment of
premium or otherwise, and no material change of coverage which adversely affects
the interests of such additional insured, will be effective as to such
additional insured until 30 days (or, with respect to war risk insurance such
lesser period as may be customary in the London market for such insurance in
such area of the world) after receipt by such additional insured of written
notice from the insurers of such cancellation, lapse, or change;
(iii) the Insured Parties will have no liability for premiums,
commissions, calls, assessments or advances with respect to such policies;
(iv) the insurers waive any rights of set-off, counterclaim,
deduction or subrogation against such Insured Parties and their respective
directors, officers, employees and agents; and
(v) any other insurance which may be available to any of the
Insured Parties will not reduce the amount payable to such Insured Party under
such policies, it being warranted by each Insured Party that it will not
knowingly effect or authorize the placement of other insurance covering the same
subject matter except on a contingency or secondary basis.
Each hull policy will additionally provide that all proceeds will be
payable to the Loss Payee, provided, that any proceeds for a claim not
constituting an Event of Loss will be payable as follows: (x) so long as the
insurers have not received notice that an Event of Default has occurred and is
continuing, so much of such proceeds as do not exceed the Damage Payment
Threshold will be payable to the Lessee to be applied to the repair of the
Aircraft and (y) the balance, if any, will be payable to the Lessor.
(c) Deductibles.
The insurance required to be maintained by the Lessee pursuant to this
Section 12
may contain deductible amounts in such reasonable amounts as are then
applicable to similar owned or leased aircraft in the Lessee's fleet but in no
case will such deductibles exceed the Insurance Deductible Amount per
occurrence.
(d) Application of Hull Insurance Proceeds.
Any payments received by the Lessor or the Loss Payee under policies of hull
insurance required to be maintained by the Lessee pursuant to this Section 12,
will be applied as follows:
(i) If such payments are received with respect to loss or
damage (including an Event of Loss with respect to an Engine, Propeller or Part)
not constituting an Event of Loss with respect to an Airframe, such payments
will be paid over to the Lessee or to any repairer upon receipt by Lessor of
satisfactory evidence that the repair or replacement of such loss or damage as
contemplated by the Lease has been accomplished and all amounts due in
connection with such repair or replacement has been or will be paid; and
(ii) If such payments are received with respect to an Event of
Loss with respect to an Airframe, so much of such payments as will not exceed
the amount required to be paid by the Lessee pursuant to Section 11 hereof will
be applied in reduction of the Lessee's obligations to pay such amount if not
already paid by the Lessee, and the balance, if any, of such payments will be
promptly paid over to, or retained by, the Lessee.
(e) Insurance for Own Account.
Nothing in this Section 12 will prohibit the Lessee or any of the Insured
Parties from obtaining insurance for their own account and any proceeds payable
thereunder will be payable as provided in the insurance policy relating thereto,
provided, that no such insurance may be obtained which would limit or otherwise
adversely affect the coverage or payment of any insurance required to be
obtained or maintained to this Section 12.
(f) Certificates.
Lessee shall furnish to Lessor certificates of insurance evidencing compliance
with the requirements of this Section 12.
(g) Reports, Etc.
The Lessee will begin negotiations for the renewal of each required policy at
least 30 days before its expiration. On the Delivery Date and on or prior to the
cancellation, lapse or expiration of any of the insurance required to be
maintained by this Section 12, the Lessee will deliver to the Lessor
satisfactory evidence that the Lessee has either renewed such insurance or has
obtained other insurance (which complies with the requirements of this Section
12) in replacement for such insurance together with a report signed by a firm
of independent aircraft insurance brokers, appointed by the Lessee and
reasonably satisfactory to the Lessor, stating the opinion of such firm that the
insurance then carried and maintained on the Aircraft complies with the terms
hereof (including, without limitation, with respect to war risk insurance, if
required). The Lessee will cause such firm to: (i) advise each Insured Party in
writing promptly of any default in the payment of any premium and of any other
act or omission on the part of the Lessee of which such firm has knowledge and
which would in such firm's opinion invalidate or render unenforceable, in whole
or in any material part, any insurance on the Aircraft; (ii) advise each Insured
Party in writing at least 30 days prior to the termination or cancellation of,
or material adverse change in, such insurance carried and maintained on the
Aircraft pursuant to this Section 12 and (iii) confirm to the Lessor that the
terms and conditions of any provision for cancellation and automatic termination
contained in such policy are in accordance with normal market practice.
SECTION 13. LIENS.
The Lessee will not, directly or indirectly, create, incur, assume or
suffer to exist any Lien on or with respect to the Airframe or any Engine,
Propeller, or Part or title thereto or the respective rights, title and
interests of the Financing Parties or the Lessor therein or in the Lease except:
(a) the respective rights of the Lessor, the Lessee and the Financing
Parties as provided herein and any Liens created by the Financing Documents;
(b) the rights of others under agreements or arrangements to the extent
expressly permitted in Section 8(a) (ii);
(c) Liens for Taxes which are either not yet due or being contested in
good faith by appropriate proceedings provided that (i) such proceedings do not
involve any danger of the sale, forfeiture or loss of the Airframe or any
Engines, Propellers or Parts and (ii) the Lessee shall have established reserves
in an amount sufficient to satisfy such Liens; and
(d) material suppliers', mechanics', airports', workers', repairers',
employees' or other like Liens arising in the ordinary course of business and
for amounts the payment of which are either not yet due or being contested in
good faith by appropriate proceedings provided that (i) such proceedings do not
involve any danger of the sale, forfeiture or loss of the Airframe or any
Engines, Propellers or Parts and (ii) the Lessee shall have established reserves
in an amount sufficient to satisfy such Liens; and
(e) Lessor Liens;
provided, that the aggregate amount of Liens permitted by clauses (c) and (d)
will not exceed the Lien Limitation without the prior written consent of the
Lessor (Liens described in clauses (c) and (d), only to the extent the same do
not exceed in the aggregate the Lien Limitation, are referred to as "Permitted
Liens").
SECTION 14. RETURN OF AIRCRAFT.
(a) Return of Aircraft.
On the Expiration Date or, earlier cancellation, expiration or termination of
this Lease (other than pursuant to Section 11), the Lessee, at its sole cost and
expense, shall, return the Aircraft and all Loose Equipment to Lessor at such
location within the continental United States as designated by Lessor, in its
sole and absolute discretion, in compliance with each of the following
provisions:
(i) the Aircraft shall be in as good operating condition,
repair and appearance (ordinary wear and tear excepted) as when delivered to the
Lessee on the Delivery Date, with all equipment, components and systems
functioning in accordance with the applicable manufacturer's specified
recommended limits;
(ii) the Aircraft shall be fully equipped and configured as of
the Delivery Date including, without limitation, with respect to the Aircraft
interior, seat covers and cushions, carpet, windows, sidewalls, bulkheads and
baggage compartments, and with the same (as identified by the manufacturer's
serial number ) Engines and Propellers installed as were originally delivered on
the Aircraft on the Delivery Date; provided however, in the event of a
replacement of any original Engine or original Propeller pursuant to Section 11,
Lessee shall return the Aircraft with such replacement Engine or Replacement
Propeller, as applicable;
(iii) the Aircraft shall have a current valid Certificate of
Airworthiness;
(iv) the Aircraft shall be airworthy and in a condition to
immediately comply without any qualification or exception for operation in
scheduled passenger revenue service in accordance with the Applicable FAR and
otherwise be in a condition which demonstrates full compliance with all of the
maintenance and repair obligations of the Lessee under Section 10 of this Lease;
(v) the Aircraft shall be in compliance (through terminating
action) with and shall have accomplished all FAA Airworthiness Directives and
Manufacturer's Service Bulletins which are designated "mandatory" and which in
either case, require the compliance on or before the Expiration Date (without
regard to any deviation, exemption, extension, or waiver which Lessee may have
obtained);
(vi) the Aircraft shall have had installed all applicable
vendor's or manufacturer's service kits delivered free of charge to the Lessee;
(vii) the Aircraft shall be in compliance with the Approved
Maintenance Program with no open, continued, deferred or placarded items or
discrepancies (including, without limitation, minimum equipment list (XXX) and
configuration deviation list (CDL) items); provided however, in the event Lessee
has
been granted any deviation, exemption, extension or waiver for scheduled
maintenance with respect to any Engine, Propeller or other Part on the Aircraft
beyond the applicable manufacturer's recommended interval for such event, Lessee
shall perform a hardtime overhaul at return;
(viii) any and all damage (or repairs of damage) to the
Aircraft shall be demonstrated by Lessee to the satisfaction of the Lessor, in
Lessor's sole and absolute discretion, to be within the Manufacturer's
Structural Repair Manual limits;
(ix) the Aircraft shall be free of fuel and hydraulic leaks as
defined within the Manufacturer's limit over a five (5) consecutive hour period;
(x) the Aircraft shall be current on the Manufacturer's
recommended Corrosion Preventive Control Program (CPCP);
(xi) each Engine Line Replacement Unit (LRU) and each low
cycle fatigue unit (LCF) on an Engine shall have time remaining equal to or in
excess of the time remaining to the next scheduled overhaul for such Engine;
(xii) the Airframe shall have had freshly undergone the same
major airframe inspection and all such lesser included airframe inspections as
were performed prior to the Delivery Date;
(xiii) within the lesser of (x) the ninety (90) day period or
(x) 600 Flight Hours or cycles following return of the Aircraft in accordance
with the provisions of this Section 14, no time or calendar controlled component
on the Aircraft or any Engine, Propeller or Part shall require a schedule
overhaul or replacement, and no Engine shall require a hot section inspection;
(xiv) the Aircraft shall be free from all of Lessee's
distinctive identification (i.e. name, markings, coloring, stripes, and logos)
and the Aircraft will be re-delivered in all-over white exterior paint;
provided, however, this requirement shall not be construed to require the Lessee
to freshly paint the Aircraft unless its exterior is returned in other than
all-over white paint; and
(xv) the Airframe and each Engine, Propeller and Part shall be
free and clear of all Liens (other than Lessor's Liens).
In addition, at the time of return, Lessee shall comply with any additional
return conditions for the Aircraft set forth in the Commercial Supplement.
(b) Fuel.
At the times of inspection and return of the Aircraft, the fuel tanks on the
Aircraft shall be full.
(c) Records.
(i) Upon the return of the Aircraft, Lessee shall, at its sole
cost and expense, deliver to Lessor all logs, manuals, certificates,
data and inspection, modification, repair, and overhaul records which
are required to be maintained with respect to the Aircraft under the
Approved Maintenance Program or under applicable rules and regulations
of the FAA, Department of Transportation or other government agency
having jurisdiction over the Aircraft, including, without limitation,
those set forth below:
Records
1. Current Logbooks recording total time in service for the Airframe
and each Engine and Propeller.
2. Current status of all life-limited parts on the Airframe and each
Engine and Propeller including historical records to show total time, origin and
service history.
3. Time since last overhaul, and detailed records including strip
reports for that overhaul, for all items required to be overhauled on a
specified time basis.
4. Current inspection status of all scheduled maintenance performed in
accordance with the approved program during period of lease.
5. Current status of all applicable Airworthiness Directives and
Mandatory Service Bulletins including method of compliance.
6. List of all major and minor alterations and repairs performed during
period of lease with supporting Supplemental Type Certificate, Form 337,
Engineering Order or equivalent approvals.
7. List of all serialized components changed during period of lease.
Documents
1. Current standard FAA Certificate of Airworthiness.
Manuals
1. Currently revised Aircraft Flight Manual.
2. Currently revised Crew Manual or Manufacturers Operations Manual
(Vols. 1 & 2).
3. Weight & Balance Manual with current weight statement.
4. Other maintenance related manuals supplied under the contract.
5. Copy of the appropriate sections of Lessee's General Maintenance
Manual relating to maintenance and records practices.
(ii) Upon return, all such records shall be in full compliance
with the Approved Maintenance Program and the Applicable FAR. In the event of
missing or incomplete or other otherwise unacceptable records or documentation,
Lessee shall be responsible for the full cost of repeating or completing the
maintenance tasks reasonably necessary to reproduce records to a standard
acceptable to the Lessor under the Approved Maintenance Program and the
Applicable FAR.
(d) Final Inspection.
Lessee shall remove the Aircraft from service no less than thirty (30) days from
the scheduled expiration of the Term in order to permit the Lessor a reasonable
period of time to inspect the Aircraft and Aircraft records for compliance with
the return conditions contained in this Lease. Within such thirty day period,
Lessee, at its sole cost and expense, shall make the Aircraft and Aircraft
records available to Lessor for inspection ("Final Inspection") at a location
nominated by Lessor in order to verify that the condition thereof complies with
the provisions of this Section 14. In the event any required work, repairs or
services should delay the return of the Aircraft to Lessor beyond the expiration
or earlier termination of the Term of this Lease, Lessor shall notify Lessee in
writing and Lessee shall continue to pay Basic Rent and Aircraft Maintenance
Payments in the same manner as if there had been no expiration or termination of
this Lease until such required work, repair or servicing has been completed and
the Aircraft is returned to Lessor as provided in this Section 14. The period
allowed for the Final Inspection shall have such duration as to permit the
conduct by Lessor, acting diligently, of the following:
(i)inspection of all records, logs and other materials
referred to herein;
(ii) inspection of the Airframe, Engines, Propellers and
Parts; and
(iii) operational test flights and Engine health checks
inclusive of Lessor's representatives as observers as may be necessary for
Lessor to determine that the Aircraft is in full compliance with the return
conditions specified in this Lease. Lessee shall maintain adequate insurance
coverage for such flight or flights in accordance with the terms of this Lease
and such additional insurance coverage, if any, as Lessor may reasonably
require.
(e) Storage.
Upon any expiration or termination of this Lease with respect to the Aircraft,
at the written request of Lessor received by Lessee ten (10) days in advance of
the date
provided for redelivery to Lessor pursuant to this Lease, Lessee shall arrange,
or shall cause to be arranged, storage of such Aircraft beyond the Term for a
period not exceeding one hundred eighty (180) days, at Lessor's risk and
expense.
(f) Return Certificate.
At the time the Aircraft is accepted for return by the Lessor, the Lessor and
the Lessee shall execute and deliver a Return Certificate in substantially the
form attached hereto as Exhibit B, with all blanks completed. In the absence of
manifest error or a condition that the Final Inspection would not have
reasonably discovered, any information set forth in the Return Certificate shall
be conclusive with respect to the condition of the Aircraft at the time of its
return.
SECTION 15. LESSEE GENERAL COVENANTS.
(a) Aircraft Information and Inspection.
The Lessee will furnish to the Lessor such information concerning the location,
condition, use and operation of, or other matters relating to, the Aircraft as
the Lessor may from time to time reasonably request, and the Lessee, at such
times as the Lessor may reasonably request, will permit any person or persons
designated by the Lessor in writing to visit the property of the Lessee to
inspect the Aircraft, its condition, use and operation, and the inspection,
modification, overhaul and other records maintained in connection therewith, and
to obtain copies of such records, at such person's or persons' expense.
(b) Financial and Other Information to be Supplied.
The Lessee agrees to furnish to the Lessor:
(i) as soon as possible and in any event within 10 days after
the occurrence of any Default or Event of Loss or any event which is expected to
result in a claim under any insurance required by Section 12 in excess of the
Claim Notification Amount, a certificate of a responsible officer of the Lessee
setting forth in reasonable detail the nature of such Default, Event of Loss or
event;
(ii) as soon as available, and in any event within 45 days
after the end of each of the first three fiscal quarters in each fiscal year of
the Lessee, a balance sheet of the Lessee as of the end of such quarter and
related statements of income, shareholders' equity and changes in financial
condition of the Lessee for such quarter and for the portion of the year ending
with the end of such quarter, certified (subject to year-end audit adjustments)
by the chief financial officer of the Lessee as having been prepared in
accordance with generally accepted accounting principles and practices;
(iii) as soon as available, and in any event within 90 days
after the end of each fiscal year of the Lessee, a copy of the balance sheets of
the Lessee as of the end
of such fiscal year and related statements of income, shareholders' equity and
changes in financial condition of the Lessee for such fiscal year, certified by
independent certified public accountants of national standing as having been
prepared in accordance with generally accepted accounting principles and
practices consistently applied (except as noted therein; provide that any
changes in accounting principles or practices must be approved by such
accountants);
(iv) prior to the beginning of each fiscal year and updated
thereafter as necessary to reflect material changes, an annual budget,
forecasting on a monthly basis the consolidated balance sheet and consolidated
statements of income and cash flows;
(v) within 45 days after the end of each quarter, reports of
aircraft summary statistics for that quarter, identified by route and fleet
type, including: passengers enplaned, passenger revenue, ASM's, RPM's, load
factor, yield, cost per ASM, break-even load factor, flight hours, block hours,
operating expenses per block hour, number of aircraft in revenue service, cities
served, daily utilization, departures scheduled, departures completed, average
stage length, average passenger haul, dispatch reliability, maintenance
delay/cancellations, daily average utilization, and average flight hours per
cycle;
(vi) from time, such other information relating to its
financial, operational or business affairs or conditions as the Lessor may
reasonable request;
(vii) as soon as possible, and in any event within 10 days,
after the Lessee obtains knowledge thereof, notice of the commencement of any
administrative or judicial proceedings by the Department of Transportation, the
FAA or any other governmental authority to suspend, revoke, terminate or
materially restrict the Lessee's status as an Certificated Air Carrier or its
Air Carrier Operating Certificate;
(viii) as soon as possible after the Lessee obtains knowledge
of any accident which is required to be reported as an "aircraft accident" as
defined in 49 CFR Part 830 connected with the use, operation or malfunction of
the Aircraft, including a summary of such "aircraft accident"; and
(ix) promptly upon request such information as may be
necessary to file any required reports with any governmental authority because
of Lessee's use or operation of the Aircraft.
(c) Corporate Existence.
The Lessee will at all times maintain its corporate existence, its rights and
status as a Certificated Air Carrier and its Air Carrier Operating Certificate.
The Lessee will not change its corporate name or operate under an assumed name
or relocate its chief executive office (as such term is defined in Article 9 of
the Uniform Commercial Code) unless it has given the Lessor thirty days prior
written notice of such action.
(d) Merger, Consolidation.
The Lessee will not consolidate with or merge into any other corporation unless
the Lessee is the survivor, there is no material adverse affect on the Lessee's
financial condition or its ability to perform its obligations under the Lease
and no Default has occurred and is continuing (or would occur as a result of
such consolidation or merger).
(e) General Indemnity.
The Lessee hereby agrees to assume liability for, and to defend, indemnify,
protect, save and keep harmless each Indemnified Party on an after-tax basis
from and against, any and all claims, proceedings, losses, liabilities, suits
judgments, costs, expenses (including reasonable attorneys fees and expenses),
penalties or fines (each a "Claim") other than Claims arising out of the
liability of Lessor as a manufacturer, repairer, supplier, or servicing agent of
the Aircraft, which may at any time be suffered or incurred, directly or
indirectly, as a result of or connected with the leasing, possession, use,
maintenance, repair or operation of the Aircraft during the Term of the Lease.
Notwithstanding the foregoing, the Lessee will not be required to indemnify an
Indemnified Party for any Claim solely attributable to (i) such Indemnified
Party's own willful misconduct or gross negligence, (ii) a Lessor Lien, (iii)
any breach or default in a Financing Document which does not result from a
Default under the Lease, (iv) acts, omissions or events that occur after full
and final compliance by the Lessee with all the terms of this Lease unless such
claim arises out of and relates to an act, omission or event occurring prior to
the such date, (v) acts, omissions or events that occur after the date on which
the Aircraft or any Part of the Aircraft is no longer subject to this Lease, or
(vi) any failure on the part of Lessor to comply in any material respect with
any term of this Lease or any agreement relating hereto.
(f) Taxes Against Lessor or The Aircraft.
(i) Lessee agrees that each rental payment as required by
Section 5 of this Sublease shall be free and clear of withholdings of any nature
whatsoever, and in the event Lessee shall be required by law to make any such
withholdings from any such payments (x) the sum payable shall be increased as
may be necessary so that after making all required payments Lessor receives an
amount equal to the sum it would have received had no withholding been required,
(y) the Lessee shall make such withholdings and (z) the Lessee shall pay the
full amount withheld to the relevant taxation authority or other authority in
accordance with relevant law and notify Lessor of the amount of such withholding
tax, and provide Lessor with a receipt or other document appropriately
evidencing payment of such withholding tax. In addition and without prejudice to
the foregoing sentence, Lessee hereby assumes liability for and shall pay on
demand, indemnify, protect, defend, save and keep Lessor harmless on an
after-tax basis from and against any and all fees and Taxes together with any
penalties, fines or interest thereon (all of the foregoing being herein
collectively called "Impositions") imposed against Lessor, Lessee or the
Aircraft or any part thereof or interest therein by any Federal, state or local
government or taxing authority or by any foreign government, foreign
governmental subdivision, or other foreign or international taxing authority:
(w) upon or with respect to the Aircraft or any part thereof or any interest in
the Aircraft or any part thereof; or (x) upon or with respect to the
manufacture, acquisition, construction, importation, installation, purchase,
delivery, ownership, lease, sublease, possession, rental, use, operation,
transportation, financing, insuring, improvement, return sale, replacement,
storage or transfer of title, return of other disposition of the Aircraft or any
part thereof; or (y) upon or with respect to the rentals, receipts, earnings or
gains arising from the Aircraft or any part thereof or the income or proceeds
with respect to the Aircraft; or (z) upon or with respect to this Sublease or
any other Financing Document or any payment made pursuant thereto including the
performance of any of the transactions, obligations or indemnities contemplated
hereby and thereby, or the issuance, acquisition or transfer of the Notes,
excluding, however;
(A) Impositions which are based on, or measured by, the net income of Lessor to
the extent imposed by the United States of America;
(B) Impositions which are based on, or measured by, the net income of Lessor to
the extent imposed by any state, city or municipality in which Lessor's
principal office is located or by any political subdivision of such state, city
or municipality;
(C) Impositions which are imposed with respect to any period, or with respect to
any act, occurring after the termination of this Sublease and the return of the
Aircraft to Lessor in the manner and condition required by Section 14 hereof and
otherwise in accordance with the provision of this Sublease;
So long as no Default or Event of Default has occurred and is continuing, any
Impositions imposed as a result of a transfer of other disposition by Lessor of
its interest in the Aircraft or the Sublease or any part thereof to the extent
such Impositions exceed those that would have been imposed had not such transfer
or disposition occurred; provided, that Lessee agrees to pay any such
Impositions referred to in the foregoing clauses which are in substitution for
or relieve Lessor from any Impositions or indemnity therefor which Lessee would
otherwise be obligated to pay under the terms of this Section 15(f) and
provided, further, that, with respect to this Section 15(f), if any Imposition
for which Lessee would be required to indemnify Lessor, if imposed on Lessor, is
imposed on another Indemnified Party, Lessee shall indemnify Lessor for the
amounts payable by Lessor to such other Indemnified Party under the Head Lease
or any other Financing Document;
Intangible or similar taxes; and
(F) Taxes that result from the willful misconduct or gross negligence of an
Indemnified Party or a breach of any Indemnified Party of any representation,
warranty or covenant of such Indemnified Party set forth in this Lease or any
related document, provided that this clause (F) shall not apply if such breach
results from a breach by Lessee of any of its representations, warranties or
covenants, and Lessor or any other Indemnified Party, to the extent permitted by
law, shall have no duty to avoid any such
Taxes or mitigate the damages that would otherwise follow from such breach.
(ii) With respect to any payment or indemnity under this
Section 15(f), such payment or indemnity shall include any amount necessary to
hold Lessor harmless on a net after-tax basis (taking into account any tax
benefit or detriment realized by Lessor as a result of such payment) from all
taxes required to be paid by Lessor with respect to such payment or indemnity
under the laws of any Federal, state or local government or taxing authority in
the United States of America or any territory or possession thereof or any
foreign government, foreign governmental subdivision, or foreign or
international taxing authority. In case any report or return is required to be
filed with respect to any obligation of Lessee, Lessee will promptly notify
Lessor of such requirement and to the extent permitted by Lessor, Lessee will
either make such report or return in such manner as will show the ownership of
the Aircraft in Lessor or will notify Lessor of such requirement and make such
report or return in such manner as shall be satisfactory to Lessor.
(iii) Upon the commencement of any proceeding (including the
written claim or written threat of any proceeding) involving one or more
Impositions with respect to which Lessee has an indemnification obligation
pursuant to this Section 15(f), Lessor shall promptly, upon receiving written
notice thereof, given notice of such commencement to Lessee; provided, however,
that the failure by Lessor to so notify Lessee shall not relieve Lessee of any
liability that it may have hereunder but, any payment by Lessee under this
Section 15(f) shall not be deemed to constitute a waiver or release of any right
or remedy (including any remedy of damages) which it may have against Lessor if,
solely as a result of the failure by Lessor to give it notice in accordance with
this paragraph 15(f)(iii), it is unable to contest the liability indemnified
against. Upon receipt of an indemnity satisfactory to Lessor, the Lessee shall
be entitled to require that such claim be contested, at the expense of the
Lessee (including, without limitation, all costs, expenses, losses, legal and
accounting fees and disbursements), by, at the option of Lessor's sole
discretion (after consultation with the Lessee), (x) resisting payment thereof
if Lessor shall determine such course of action to be appropriate, (y) not
paying the same except under protest, if protest is necessary or proper, or (z)
if payment is made, using reasonable efforts to obtain a refund thereof in
appropriate administrative and/or judicial proceedings. In addition, the Lessee
shall be entitled (A) in any proceeding that involves solely a claim for one or
more Impositions indemnified under this Section 15(f) to assume responsibility
for and control thereof; (B) in any proceeding involving a claim for one or more
Impositions indemnified under this Section 15(f) and other claims related or
unrelated to the transactions contemplated by the Sublease, to assume
responsibility for and control of such claim for an Imposition to the extent
that the same may be and is severed from such other claims (and Lessor shall use
reasonable efforts to obtain such severance unless, in the opinion of counsel
for Lessor, such severance or assumption of responsibility and control by the
Lessee may adversely affect the resolution of such other claims); or (C) in any
other case, to be consulted by Lessor (who shall consider, in good faith, all
reasonable requests of the Lessee) with respect to all proceedings; provided,
however, that the Lessee shall, if so requested by Lessor, assume responsibility
for and control of such claim and the portion of the cost of defending any such
nonseverable
claim not indemnified against which is allocated to Lessor shall be for the
account of Lessor. Notwithstanding any of the foregoing, (A) the Lessee shall
not be entitled to assume the responsibility for and control of any proceedings
if (x) such Imposition relates in any way to the business of Lessor, other than
the ownership and leasing of the Aircraft and Engines, or (y) the claims, in the
opinion of independent counsel for Lessor, have a possibility of compromising or
jeopardizing any substantial interest of Lessor other than those relating to the
ownership and leasing of the Aircraft and Engines, and (B) Lessor shall not be
required to contest, or continue to contest after such contest has begun, any
Imposition if (w) a Default or any Event of Default shall have occurred and be
continuing under the Sublease, (x) the Impositions involved are less than
$50,000 in the aggregate in the period of one year provided, that such amount
shall be reduced by the amount of any tax indemnity payments made in respect of
such Imposition with respect to prior taxable periods and by the estimated
amount, in the opinion of Lessor, of any such tax indemnity payments for
subsequent taxable period, (y) such proceedings, in the opinion of Lessor, will
involve any possibility of the sale, forfeiture or loss of the Aircraft or any
part thereof, or the Lessor has exercised or is in the process of exercising any
of the remedies contained in Section 18 of the Head Lease, or (z) the Lessee
shall not have furnished Lessor with an opinion of independent counsel
reasonably satisfactory to Lessor to the effect there exists a meritorious basis
for contesting such Imposition. Lessor may participate at its own expense in any
proceeding controlled by the Lessee pursuant to the preceding provision. If
Lessor shall elect to contest any claim by paying the Impositions and seeking a
refund thereof, then the Lessee shall furnish Lessor with the funds necessary to
pay the Impositions.
Nothing contained in this Section 15(f) shall require Lessor to contest or
permit the Lessee to contest a claim which it would otherwise be required to
contest pursuant to this Section 15(f) if Lessor shall waive payment by the
Lessee of any amount that might otherwise be payable by the Lessee under this
Section 15(f) by way of indemnity in respect of such claim.
(iv) Lessor shall supply the Lessee with such information
requested by the Lessee as is necessary or advisable for the Lessee to control
or participate in any proceeding to the extent permitted by this Section 15(f).
Unless a Default or an Event of Default has occurred and is continuing under the
Sublease, Lessor shall not enter into a settlement or other compromise with
respect to any Imposition which it is required to contest hereunder without
prior written consent of the Lessee, which consent shall not be unreasonably
withheld or delayed, unless Lessor waives its right to be indemnified with
respect to such Imposition under this Section 15(f), and any such settlement or
concession of such Imposition by Lessor without the Lessee's prior written
consent shall be deemed a release of the Lessee of its obligation to indemnify
Lessor solely with respect to such Imposition.
(v) If Lessor shall obtain a repayment of any Imposition paid
by the Lessee pursuant to this Section 15(f), and if no Default or Event of
Default under the Sublease shall have occurred and be continuing, Lessor shall
promptly pay to the LESSEE the amount of such repayment, together with any
interest (other than interest for
the period, if any, after such Imposition was paid by Lessor) until such
Imposition was paid or reimbursed by the Lessee; provided, however, that such
amount shall in no event be payable before such time as the Lessee shall have
made all payments and indemnities then due under this Sublease; provided,
further, however, that the aggregate amount of all payments made by the Lessee
pursuant to this Section 15(f) hereof with respect to such Imposition.
(vi) If Lessor utilizes an Imposition indemnified under this
Section 15(f) which is imposed by any foreign government or taxing authority or
governmental subdivision of a foreign country as a credit against United States
Federal or any other income taxes otherwise payable by Lessor assuming for this
purpose that Lessor utilizes first, all foreign taxes (including foreign taxes
which are carried over to the taxable year for which a determination is being
made other than those arising out of the transactions contemplated by this
Sublease), then Lessor shall pay to the Lessee an amount equal to the reduction
in its United States Federal or any state income taxes resulting from such
utilization; provided, however, that the amount payable with respect to any
Imposition pursuant to this Section 15(f)(vi) shall not exceed the amount
previously paid by the Lessee with respect to such Imposition pursuant to this
Section 15(f). If the utilization as a credit by Lessor of such Imposition later
results in (x) the expiration of any foreign tax credit carryovers or carrybacks
of Lessor that would not otherwise have expired, or (y) the inability of Lessor
to use another foreign tax as a credit against United States Federal income
taxes for a particular year if such tax would otherwise have been utilized
(either in the current year or by way of carryback or carryover), then the
Lessee shall, upon demand, pay to Lessor the amount of such Impositions. Any
determination as to the utilization of Impositions as a credit shall be made in
good faith by Lessor, which determination shall be conclusive and binding on the
Lessee in the absence of manifest error.
(vii) The Lessee agrees to use its best efforts to obtain
official receipts indicating the payment of all foreign taxes that are subject
to indemnification under this Section 15(f) and shall promptly send to Lessor
each such receipt obtained by the Lessee.
In the event Lessee shall fail to make any payment or to do any act as herein
provided, then Lessor shall have the right, but not the obligation, without
notice to or demand upon Lessee, and without releasing Lessee from any
obligation hereunder, to make or do the same, and to pay, purchase, contest or
compromise any encumbrance, charge or lien which in Lessor's judgment places the
Head Lessor's title to the Aircraft, any Financing Party's security interest in
the Aircraft, Lessor's leasehold interest in the Aircraft, or Lessee's
possession of the Aircraft in jeopardy and in exercising any such rights, incur
any liability and expend whatever reasonable amount Lessor, the Head Lessor or
such Financing Party in their respective absolute discretion may deem necessary
therefore. All sums so incurred or expended or reimbursed by Lessor shall be,
without demand, immediately due and payable by Lessee and shall bear interest at
the Overdue Rate.
(ix) The provisions of this Section shall survive the
expiration or termination of this Sublease and the other Operative Documents but
only to the extent
that the event or the last of a series of events giving rise to any Imposition
imposed against Lessor shall have occurred prior to the return of the Aircraft
to Lessor upon the expiration or termination of this.
(x) For purposes of Section 15(e) and this Section 15(f),
"Lessor" shall include all corporations making a consolidated or combined return
in which Lessor is included and the agents, employees, servants, successors and
assigns of any thereof.
(xi) Lessee further agrees that neither Lessee, nor any
affiliate thereof, nor any user or person in possession of the Aircraft will
take, directly or indirectly, any action or any position on any tax return or
other document inconsistent with the assumptions in Section 1 of the Tax
Indemnification Agreement and the Lessee and each affiliate of Lessee and each
user or person in possession of the Aircraft will file those returns, take those
actions and execute those documents that may be reasonably necessary to
facilitate accomplishing the intent underlying those assumptions. In addition,
without limiting the generality of the foregoing, the Lessee shall furnish
Lessor within 30 days after the end of each calendar year, included in whole or
in part in the term, a report with respect to the location of the Aircraft
during such calendar year in sufficient detail to enable the Head Lessor to
determine the portion of income and deductions with respect to the transaction
approximately treated as allocable to the United States within the meaning of
Section 861 of the Code.
(g) Further Assurances.
The Lessee will promptly execute and deliver such further documents and
assurances and take such further action as the Lessor may from time to time
reasonable request in order effectively to carry out the intent and purpose of
the Lease.
SECTION 16. EVENTS OF DEFAULT
The following events will constitute Events of Default:
(a) The Lessee shall fail to make any payment of Rent when the same
shall have become due;
(b) The Lessee shall fail to carry and maintain insurance on or with
respect to the Aircraft in accordance with the provisions of Section 12; or
(c) The Lessee shall fail to perform or observe any covenant, condition
or agreement to be performed by it under Section 8(a), Section 9(c), Section 13,
Section 15(c), Section 15(d) or Section 18(e)(i); or
(d) The Lessee shall fail to perform or observe any other covenant,
condition or agreement to be performed or observed by it hereunder and such
failure shall continue unremedied for a period of 30 days; or
(e) Any representation or warranty made by the Lessee in the Lease
shall
prove to have been incorrect in any material respect at the time made; or
(f) A case under the Federal Bankruptcy Code shall have commenced with
respect to the Lessee or any event or condition shall have occurred which would
permit a court to order the commencement of a case under Section 303 of the
Federal Bankruptcy Code against the Lessee; or
(g) The FAA or the Department of Transportation or any other
governmental authority shall have suspended, revoked, terminated or materially
restricted the Lessee's rights or status as a Certificated Air Carrier or its
Air Carrier Operating Certificate; or
(h) The Lessee shall be in default (i) in respect of any obligation for
borrowed money or any lease (whether a finance lease or an operating lease) of
any aircraft or other equipment material to the Lessee's operations or (ii) in
respect of any other agreement with the Lessor or any of its Affiliates; or
(i) Any event or condition shall occur which, in the reasonable opinion
of the Lessor, constitutes or results in a material adverse change in the
Lessee's financial condition or the Lessee's ability to perform its obligations
under the Lease; or
(j) Any security, deposit, guaranty or other credit enhancement
required by the Commercial Supplement shall lapse, cease to be maintained or
become unenforceable (or Lessee shall assert that the same is unenforceable) in
whole or in any material part; or
(k) Any additional Event of Default specified in the Commercial
Supplement shall have occurred and be continuing.
SECTION 17. REMEDIES.
Upon the occurrence of any Event of Default and at any time thereafter
so long as the same shall be continuing, the Lessor may, at its option, declare
the Lease to be in default by a written notice to the Lessee (provided that the
Lease shall be deemed to have been declared in default without the necessity of
such written notice upon the occurrence of any Event of Default described in
paragraph (f) of Section 16 hereof) and at any time thereafter, so long as the
Lessee shall not have remedied all outstanding Events of Default, the Lessor may
do one or more of the following as the Lessor in its sole discretion shall
elect, to the extent permitted by, and subject to compliance with any mandatory
requirements of, Applicable Law then in effect:
(a) cause the Lessee, upon the written demand of the Lessor and at the
Lessee's expense, to return promptly all or such part of the Aircraft as the
Lessor may so demand to the Lessor or its order in the manner and condition
required by, and otherwise in accordance with all the provisions of Section 14
as if the Aircraft were being returned at the end of the Term, or the Lessor, at
its option, may enter upon the premises where all or any part of the Aircraft is
located and take immediate possession of and remove the same by summary
proceedings or otherwise, all without liability accruing to the Lessor
for or by reason of such entry or taking of possession or removal, whether for
the restoration of damage to property caused by such taking or otherwise; or
(b) hold, use, operate, lease to others or keep idle all or any part of
the Airframe or such Engine as the Lessor, in its sole discretion, may
determine, all free and clear of any rights of the Lessee except as hereinafter
set forth in this Section 17 and without any duty to account to the Lessee with
respect to such action or inaction or for any proceeds with respect thereto,
except to the extent required by paragraph (d) below if the Lessor elects to
exercise its rights under such paragraph (d) in lieu of its rights under
paragraph (c) below; or
(c) whether or not the Lessor shall have exercised, or shall thereafter
at any time exercise, any of its rights under paragraph (a) or paragraph (b)
above with respect to all or any part of the Aircraft, the Lessor, by written
notice to the Lessee specifying a Payment Date, may demand that the Lessee pay
to the Lessor, and the Lessee shall pay the Lessor, on such Payment Date, as
liquidated damages for loss of a bargain and not as a penalty (in lieu of the
Basic Rent due on such Payment Date and for the remainder of the Term), an
amount equal the excess, if any of the net present value (discounted at the
interest rate set forth in Federal Reserve Statistical Release H.15(519) for
Treasury constant maturities having a maturity nearest to the Expiration Date)
of the Basic Rent which would have been payable to and including the Expiration
Date under the Lease had the Lease not been declared in default minus the net
present value (discounted as aforesaid) of the fair market rental value of the
Aircraft for such period; or
(d) in the event Lessor, pursuant to paragraph (b) above, shall have
leased the Aircraft, in lieu of exercising its rights under paragraph (c) above
with respect to the Aircraft, the Lessee may, if is shall so elect, demand that
the Lessee pay the Lessor, and the Lessee shall pay to the Lessor, on the date
of such lease, as liquidated damages for loss of a bargain and not as a penalty
(in lieu of the Basic Rent due on such Rent payment Date and for the remainder
of the Term), an amount equal to the excess, if any of the net present value
(discounted as aforesaid) of the basic rent payable under such lease for the
period ending on the earlier of its scheduled term or the Expiration Date; or
(e) the Lessor may cancel the Lease, or may exercise any other right or
remedy which may be available to it under Applicable Law or proceed by
appropriate court action to enforce the terms or to recover damages for the
breach hereof. Any payment of liquidated damages under paragraph (c) or (d)
above shall be deducted from any award of damages herein.
In addition, the Lessee shall be liable, except as otherwise provided
in paragraphs (c) and (d) above, for any and all unpaid Rent due hereunder
before, after or during the exercise of any of the foregoing remedies and for
all legal fees and other costs and expenses incurred by reason of the occurrence
of any Event of Default or the exercise of the Lessor's remedies with respect
thereto, including all costs and expenses incurred in connection with the
retaking or return of the Aircraft in accordance with the terms of Section 14 or
in placing Aircraft in the condition and airworthiness required by such
Section. For purposes of paragraph (c) above, "fair market rental value" shall
be the amount which a lessee, under no compulsion to lease, would agree to pay
for the lease of the Aircraft in its then existing condition for a period ending
on the Expiration Date. Except as otherwise expressly provided above, no remedy
referred to in this Section 17 is intended to be exclusive, but each shall be
cumulative and in addition to any other remedies.
SECTION 18. MISCELLANEOUS
(a) Applicable Law.
The Lease will in all respects be governed by, and construed in accordance with,
the laws of the Commonwealth of Virginia (excluding the conflict laws provisions
thereof).
(b) Notices.
Unless otherwise specifically provided herein, all notices required or permitted
by the terms hereof will be in writing and will be deemed to have been duly
given when delivered personally or otherwise actually received or five days
after being deposited in the United States mail, registered, postage prepaid,
addressed if to the Lessor or the Lessee at the address for notices set forth
below its signatures to the Lease and if to any Financing Party at the address
set forth in the Commercial Supplement or pursuant to Section 18(e), or at such
other place as any such party may designate by notice given in accordance with
the Section to the other parties.
(c) Judicial Proceedings
(i) Any judicial proceeding brought against the Lessee with
respect to the Lease may be brought in any court of competent jurisdiction in
the Commonwealth of Virginia, and, by execution and delivery of the Lease, the
Lessee (x) accepts, generally and unconditionally, the nonexclusive jurisdiction
of such courts and any related appellate court, and irrevocably agrees to be
bound by any judgment rendered thereby in connection with Lease and (y)
irrevocably waives any objection it may now or hereafter have as to the venue of
any such suit, action or preceding brought in such a court or that such court is
an inconvenient forum. The Lessee hereby waives personal service of process and
consents that service of process upon it may be made by certified or registered
mail, return receipt requested, at its address specified or determined in
accordance with the provisions of Section 18(b), and service so made will be
deemed completed on the third Business Day after such service is deposited in
the mail. Nothing herein will affect the right to serve process in any other
manner permitted by law or will limit the right of the Lessor to bring
proceedings against the Lessee in the courts of any other jurisdiction.
(ii) Any judicial proceeding by the Lessee against the Lessor
involving, directly or indirectly, any matter in any way arising out of, related
to, or connected with the Lease will be brought only in a court located in the
Commonwealth of
Virginia.
(iii) The Lessee and the Lessor hereby waive trial by jury in
any judicial proceeding to which they are both parties involving, directly or
indirectly, any matter (whether sounding in tort, contract or otherwise) in any
way arising out of, related to, or connected with the Lease or the relationship
established hereunder.
(d) Unenforceability.
Any provision of the Lease which is prohibited or unenforceable in any
jurisdiction will, as to such jurisdiction be ineffective to the extent of such
prohibition or unenforceability without invalidating the remaining provisions
hereof, and any such prohibition or unenforceability in any jurisdiction will
not invalidate or render unenforceable such provision in any other jurisdiction.
(e) Assignment.
(i) Prohibition of Assignment by the Lessee. The Lessee will
not assign, convey or otherwise dispose of any of its rights or obligations
under the Lease without first obtaining the prior written consent of the Lessor
and the Financing Parties, which consent from the Lessor sahll not be
unreasonably witheld.
(ii) Assignment by the Lessor. The Lessor may, without the
consent of the Lessee, assign any of its rights or obligations under the Lease
or any of its right, title or interest in and to the Aircraft, including
(without limitation) pursuant to a sale-leaseback, a securitization or mortgage
financing pursuant to which the rights of any head lessor or secured party may
be superior to the rights of the Lessee hereunder in the event that the Lessor
defaults under its obligations thereunder. The Lessor will promptly notify the
Lessee of any such assignment and the Lessee agrees to promptly execute and
deliver in connection with any such assignment such documents and assurances
(including, without limitation, a consent to Assignment) and to take such
further action as the Lessor may reasonably request to establish or protect the
rights and remedies created or intended to be created in favor or any assignees
in connection with any such assignment.
(f) Lessor's Rights to Perform for the Lessee.
If the Lessee fails to perform or observe any covenant, condition or agreement
to be performed or observed by the Lessee under the Lease, the Lessor may
perform or observe such covenant, condition or agreement at the cost and expense
of the Lessee, and the Lessee will reimburse the Lessor for such cost and
expense on demand.
(g) Survival.
The Lessee's obligations to indemnify the Lessor and the Financing Parties set
forth in Sections 15(e) and 15(f) will survive the termination or other
cancellation of the Lease
and the return of the Aircraft pursuant to Section 14.
(h) Integrated Agreement.
The Lease embodies the entire agreement and understanding between the Lessor and
the Lessee relating to the lease of the Aircraft and other items to be delivered
hereunder. Any other previous oral or written communications, representations,
agreements or understandings between the Lessor and the Lessee with respect to
the leasing of the Aircraft are superseded and canceled by the Lease.
(i) Waivers, headings.
No term or provision of the Lease may be changed, waived, discharged or
terminated orally, but only by an instrument in writing signed by the party
against which the enforcement of the change, waiver, discharge or termination is
sought. The Lease will constitute an agreement of lease, and nothing contained
herein will be construed as conveying to the Lessee any right, title or interest
in the Aircraft except as lessee only. The section and paragraph headings in the
Lease and the table of contents are for convenience or reference only and will
not modify, define, expand or limit any of the terms or provisions hereof and
all references herein to numbered sections, unless otherwise indicated, are to
sections of the Lease.
(j) Time.
Time is of the essence.
(k) Counterparts.
This Operating Lease, the Acceptance Supplement and the Commercial Supplement
may be signed in any number of counterparts, each of which will be an original,
with the same effect as if the signatures thereto were upon the same instrument.
[The remainder of this page is intentionally blank.]
IN WITNESS WHEREOF, this Operating Lease [920] has been executed and delivered
by the duly authorized representatives of the Lessor and the Lessee as of the
date hereof.
Jet Acceptance Corporation
By:_____________________
Name:
Title: Vice President
Address for Notices:
00000 Xxxxxxxxxx Xxxxxx Xxxxx
Xxxxx 000
Xxxxxxxxx, Xxxxxxxx 00000
Attn: Vice President, Commercial
Address for Payments:
All payment of Rent should
be sent as follows:
CITIBANK
Wilmington, Delaware
Routing No. 000000000
Account No. 3855-8704
for British Aerospace Asset Management Turboprops
CCAIR, Inc.
By:______________________
Name:
Title:
Address for Notices:
0000 Xxxxxxxx Xxxx
Xxxxx 000
Xxxxxxxxx, Xxxxx Xxxxxxxx 00000
Attention: President
Receipt of this original counterpart of the foregoing Operating Lease [920] is
hereby acknowledged this ___ day of ____________, 199__.
STATE STREET BANK AND TRUST COMPANY OF CONNECTICUT, NATIONAL ASSOCIATION,
Security Trustee
By: _______________________
Title: ______________________
Exhibit A
Form of Acceptance Supplement
ACCEPTANCE SUPPLEMENT [920], dated December __, 1997, between Jet
Acceptance Corporation, a Delaware corporation, as lessor (the "Lessor"), and
CCAIR, Inc., a Delaware corporation, as lessee (the "Lessee").
WHEREAS, the Lessor and the Lessee have entered into that certain
Operating Lease [920], dated as of November 24, 1997 (the "Operating Lease";
capitalized terms used herein without other definition have the respective
meanings set forth in the
Operating Lease) which provides for the acceptance of the Aircraft to be
evidenced by the execution and delivery of an Acceptance Supplement;
WHEREAS, the Lessor has tendered the Aircraft to the Lessee for
acceptance under the Lease and the Lessee has agreed to accept the Aircraft for
lease under the Lease;
NOW THEREFORE, the Lessor and the Lessee hereby agree as follows:
1. The Lessor hereby delivers and leases to the Lessee under the Lease
and the Lessee hereby accepts and leases from the Lessor under the Lease the
Aircraft more fully described in Schedule I hereto at ______ (time) on the date
hereof at _______ (location).
2. Unless sooner canceled or terminated in accordance with the terms of
the Lease, the Lease will terminate on January 1, 1999 (the "Expiration Date").
3. On the date hereof, the remaining life of the time and cycle limited
parts of the Aircraft is as set forth in Schedule II hereto.
4. The Aircraft has been delivered with the logs, manuals,
certificates, data and inspection, modification, repair and overhaul records
listed in Schedule III hereto and the loose equipment listed in Schedule IV
hereto.
5. The Lessee acknowledges that the Aircraft conforms to the Lessee's
requirements with the exception of the items listed in the work package set
forth in Schedule V hereto and that the Lessee has accepted the Aircraft under
the Lease "AS IS, WHERE IS". Lessor and Lessee, after Lessee's inspection of the
Aircraft at the maintenance facility, shall make any changes to the Schedule V
work package necessary for the Aircraft to meet airworthiness and FAA Part 121
equipment requirements on the Delivery Date. Lessor and Lessee shall sign a
delivery receipt incorporating such revised Schedule V and evidencing Lessee's
irrevocable acceptance of the Aircraft.
6. The Lessee confirms that the Delivery Date is the date hereof.
7. Subject to the provisions of Section 1(d) of the Operating Lease,
all of the terms and provisions of the Operating Lease are incorporated in this
Acceptance Supplement to the same extent as if fully set forth herein.
[Signatures to follow on next page]
IN WITNESS WHEREOF, this Acceptance Supplement [920] has been executed and
delivered by the duly authorized representatives of the Lessor and the Lessee as
of the date hereof.
Jet Acceptance Corporation
By_____________________
Name:
Title: Vice President
CCAIR, Inc.
By_____________________
Name:
Title:
Schedule I Aircraft Description
Airframe:
Manufacturer: British Aerospace
Model: Jetstream Super 31 (3201)
Serial Number: 920
U.S. Registration Number: N920AE
Engines:
Manufacturer: Xxxxxxx AiResearch
Model: TPE331-12UAR-704H
Serial Numbers: P66251 and P66288
Propellers:
Manufacturer: XxXxxxxx
Model: 4HFR34C653/L106FA-0
Serial Numbers: 902204 and 902206
Schedule II Time and Cycles
On the Delivery Date, the time and cycles on the Airframe, Engines and
Propellers were as follows:
Schedule III Aircraft Documentation
The following documentation was delivered with the Aircraft:
Schedule IV Loose Equipment
The following Loose Equipment was delivered with the Aircraft:
Schedule V Work Package
Exhibit B Form of Return Certificate
RETURN CERTIFICATE [920], dated ______, ___, between Jet Acceptance
Corporation, a Delaware corporation, as lessor (the "Lessor"), and CCAIR, Inc.,
a Delaware corporation, as lessee (the "Lessee").
WHEREAS, the Lessor and the Lessee have entered into that certain
Operating Lease [920], dated as of November 24, 1997 (the "Operating Lease";
capitalized terms used herein without other definition have the respective
meanings set forth in the Operating Lease);
WHEREAS, the Lessee has on the date hereof tendered the Aircraft for
return to the Lessor pursuant to Section 14 of the Lease and the Lessor has
agreed to accept the return of the Aircraft;
NOW THEREFORE, the Lessor and the Lessee hereby agree as follows:
1. the Lessee hereby redelivers to the Lessor the Aircraft more fully
described in Schedule I hereto on _________(date and time) at
________________(location).
2. On the date hereof, the remaining life of the time and cycle limited
parts of the Aircraft is as set forth in Schedule II hereto.
3. The Aircraft has been returned with the logs, manuals, certificates,
data and inspection, modification, repair and overhaul records listed in
Schedule III hereto and the loose equipment listed in Schedule IV hereto.
4. The Lessor hereby accepts the return of the Aircraft and confirms to
the Lessee that, except as set forth in Schedule V hereto, the Aircraft has been
returned in compliance with Section 14 of the Lease.
IN WITNESS WHEREOF, this Return Certificate [920] has been executed and
delivered by the duly authorized representatives of the Lessor and the Lessee as
of the date hereof.
Jet Acceptance Corporation
By:___________________________
Name:
Title:
CCAIR, Inc.
By:___________________________
Name:
Title:
[Each of the Schedules to this Return Certificate are to be initialed by the
Lessor and the Lessee.]
Schedule I Aircraft Description
Airframe:
Manufacturer: British Aerospace
Model: Jetstream Super 31 (3201)
Serial Number: 920
U.S. Registration Number:
Engines:
Manufacturer: Xxxxxxx AiResearch
Model: TPE331-12
Serial Numbers:
Propellers:
Manufacturer: XxXxxxxx
Model:
Serial Numbers:
Schedule II Time and Cycles
On the date of return of the Aircraft, the time and cycles on the Airframe,
Engines and Propellers were as follows:
Schedule III Aircraft Documentation
The following Aircraft Documentation was returned with the Aircraft:
Schedule IV Return Condition Discrepancies
[Discrepancies or reservations to be listed or "None" should be indicated].
Commercial Supplement [920]
COMMERCIAL SUPPLEMENT [920], dated November 24, 1997 between Jet
Acceptance Corporation, a Delaware corporation, as lessor (the "Lessor"), and
CCAIR, Inc., a Delaware corporation, as lessee (the "Lessee").
WHEREAS, the Lessor and the Lessee have entered into that certain
Operating Lease[920], dated as of November 24, 1997 (the "Operating Lease";
capitalized terms used herein without other definition have the respective
meanings set forth in the Operating Lease), which Operating Lease contemplates
that certain terms will be set forth in a Commercial Supplement;
NOW THEREFORE, the Lessor and the Lessee hereby agree as follows:
Section 1. Definitions. The following terms will have the meanings set
forth below for all purposes of the Lease:
"Additional Financing Parties" mean each of the Persons specified as an
"Additional Financing Party" on Schedule I or other Persons which the Lessor
from time to time notifies Lessee pursuant to Section 18(e) of the Lease are to
be an Additional Financing Party.
"Aircraft Maintenance Payment" means the applicable amount per Flight
Hour or Cycle payable monthly in arrears with respect to the Airframe, Engines
and Propellers as specified in Schedule I hereto.
"Approved Engine Service Plan" means an agreement, in form and
substance reasonably satisfactory to the Lessor, with the Manufacturer of the
Engines or such other third party maintenance provider reasonably satisfactory
to the Lessor, providing for scheduled and unscheduled maintenance of the
Engines, as the same may be amended, modified or supplemented from time to time
with the consent of the Lessor.
"Approved Maintenance Program" means the Manufacturer's recommended
maintenance program with respect to the Aircraft as approved by the FAA for use
by the Lessee, which maintenance program shall require, inter alia, that the
Lessee maintain (x) each Engine on a maintenance schedule which incorporates
each Major Shop Visit and (y) each other time controlled component on the
Aircraft on a maintenance schedule which incorporates hardtime overhauls at an
interval which is no greater than that which is recommended for such event by
the component's manufacturer.
"BAAM" means British Aerospace Asset Management, Inc., a Delaware
corporation formerly known as JSX Capital Corporation.
"BAI Term Sheet" means the BAI Term Sheet signed by British Aerospace,
Inc. (now British Aerospace Holdings, Inc. as successor in interest), Lessor and
Lessee as incorporated into The Plan by the Order Confirming Plan entered by the
Bankruptcy Court for the Western District of North Carolina in the case In Re:
CCAir, Inc., No. C-B-90-30927.
"Basic Rent" means all rent payable pursuant to Section 5(a) of the
Operating Lease and, with respect to any Payment Date, the amount set forth in
Schedule I hereto with respect to such Payment Date.
"British Aerospace Entities" means, collectively and individually,
Lessor, British Aerospace Holdings, Inc. and BAAM.
"Cycle" shall mean as that term is defined by the applicable
Manufacturer.
"Damage Threshold Amount" means the amount set forth in Schedule I
hereto.
"Delivery Location" means Kingman, Arizona or any other location
mutually agreed by the parties.
"Estimated Delivery Date" means December 23, 1997.
"Expiration Date" means the date specified in Schedule I hereto and the
Acceptance Supplement.
"Fair Market Value" means, with respect to Major Shop Visit or hard
time overhaul of any Aircraft component, including without limitation, any
Engine or Propeller, that price which is the arithmetic mean price then
obtainable for such service (exclusive of shipping and insurance) from three FAA
approved service centers none of which is affiliated with the Lessee, two of
which shall selected by the Lessor and one of which shall be selected by the
Lessee; provided however each such quote shall be stated in writing by the
vendor.
"Final Delivery Date" means March 23, 1998.
"Financing Documents" means each of the documents or agreements
specified as "Financing Documents" on Schedule I or such other agreements or
documents which the Lessor from time to time notifies the Lessee pursuant to
Section 18(e) of the Lease are to be Financing Documents.
"Financing Parties" means each of the Persons specified as a "Financing
Party" on Schedule I or such other Persons that the Lessor from time to time
notifies the Lessee pursuant to Section 18(e) of the Lease are to be a Financing
Party.
"Flight Hour" means each hour or part thereof elapsing from the moment
at which the wheels of the Aircraft leave the ground on the take-off of the
Aircraft until the wheels of the Aircraft touch the ground on the next landing
of the Aircraft. For the purpose of all calculations under this Lease measured
in "Flight Hours", such hours, including fractions thereof measured in minutes,
shall be accumulated throughout each Rental Period.
"Geographical Limits" means the continental United States, Canada,
Mexico, Bermuda, and the Bahamas.
"Head Lease" means the Lease Agreement between First Security Bank,
National Association (formerly known as First Security Bank of Utah, National
Association), not in its individual capacity but solely as owner trustee under a
Trust Agreement dated June 15, 1991(the "Trust Agreement"), as lessor, and
Lessor, as lessee, dated as of June 15, 1991.
"Head Lessor" means First Security Bank, National Association, not in
its individual capacity but solely as owner trustee under the Trust Agreement
"Indemnified Parties" means the Lessor, each Financing Party, each
Additional Financing Party, and all affiliates, successors, assigns, agents,
servants, officers and employees of each of the foregoing.
"Insurance Deductible Amount" means the amount set forth in Schedule I
hereto.
"Insured Parties" means each of the Financing Parties, the Lessor, the
Additional Financing Parties, and any other Person which the Lessor from time to
time notifies the
Lessee is to be an Insured Party.
"Legend" means the legend to be set forth in the nameplate referred to
in Section 9(b): first security bank, n.a., as owner-trustee, owner, and lessor
state street bank and trust company of connecticut, n.a, as security trustee and
mortgagee
or such other legend which the Lessor from time notifies the Lessee is to be set
forth in such nameplate.
"Lien Limitation" means $25,000.
"Loan Agreement" means the Amended and Restated Loan Agreement between
Lessee and BAAM dated February 10, 1995 as the same has been or may hereafter be
amended.
"Loss Payee" means First Security Bank, National Association.
"MACRO Program" means a materials and component repair and overhaul
agreement with respect to the Aircraft between Lessee and AI(R) American
Support, Inc. the terms and conditions of which shall be acceptable to Lessor.
"Memorandum of Understanding" means the Memorandum of Understanding
dated November 11, 1997 between British Aerospace Asset Management, Inc. and
Lessee in respect of, inter alia, the Aircraft.
"Minimum Liability Coverage" means the amount set forth in Schedule I
hereto.
"Owner" means First Security Bank, National Association.
"Payment Date" means each of the dates listed in Schedule I hereto
under "Basic Rent" under the column titled "Payment Date".
"Plan" means the Plan by Order Confirming Plan entered by the
Bankruptcy Court for the Western District of North Carolina in the case styled
In Re: CCAir, Inc. No. C-B-90-30927.
"Rental Period" means the period from and including any Payment Date
(or, in the case of the first Rental Period, from and including the Delivery
Date) to and including the day preceding the next Payment Date or, in the case
of the final Rental Period, the Expiration Date.
"Stipulated Loss Value" means, with respect to any Payment Date, the
amount set forth in Schedule I hereto with respect to such Payment Date.
Section 2. Additional Conditions Precedent.
(a) Lessee shall execute such security agreements, and any financing
statement required by Lessor, granting Lessor a security interest in and to all
presently existing and subsequently created accounts receivable of Lessee and
all proceeds thereof and all ticket stock owned or held by Lessee or by any
party on behalf of Lessee and all proceeds thereof (the "Receivables Security
Interest"). The Receivables Security Interest shall secure all of Lessee's
obligations to Lessor (including but not limited to Lessee's obligations under
this Lease) or British Aerospace Entities, other than Plan payments. The
Receivables Security Interest in favor of Lessor shall be subject only to: (x)
the setoff rights in favor of USAirways arising under the code sharing agreement
dated as of November 1, 1988 as amended through January 23, 1991, effected under
the Airline Clearing House Agreement, and pursuant to the Order entered by the
Bankruptcy Court in the Bankruptcy Case on July 16, 1990; and (y) a security
interest in favor of BAAM to secure the Loan as that term is defined in the Loan
Agreement as the same has been or may hereafter be amended.
(b) Lessee shall submit to Lessor a business plan in form and substance
acceptable to Lessor and accepted by Shorts outlining the terms and conditions
of Lessee's removal of the Shorts 360 aircraft from its fleet and the financing
transaction related thereto;
(c) Lessee shall submit to Lessor its plan for recapitalization and
such plan shall provide for Lessee's receipt of at least $1,500,000 of
additional equity and shall be in form and substance acceptable to Lessor;
(d) Lessee shall be current in making rent and any other payments
pursuant to any other sublease agreements for Jetstream 3101 aircraft and
aircraft spare parts between Lessor or any British Aerospace Entity and Lessee
and shall be in full compliance with any return conditions or other terms and
conditions under such sublease agreements with regard to any of such Jetstream
3101 aircraft and aircraft spare parts; and
(e) Lessee shall submit to Lessor its current and projected financial
statements and business plan and such financial statements and business plan
shall be in form and substance acceptable to Lessor; and
(f) The Aircraft shall be enrolled in the MACRO program.
Section 3. Specific Maintenance and Return Conditions.
(a) Additional Return Conditions.
In the event that at the time of expiration or termination of this
Lease, an Event of Default has occurred and is continuing under the MACRO
Program or the Aircraft is not enrolled in the MACRO Program; and there exists a
difference in the overall maintenance status of the Aircraft at the time of the
Aircraft's return to Lessor from the overall maintenance status of the Aircraft
at the time of original delivery and acceptance of the
Aircraft under this Lease with respect to hours, cycles or calendar-time
remaining on those time controlled Aircraft components listed on Schedule II
attached hereto other than Engines, Lessor of Lessee, as the case may be, shall
pay the other party of positive or negative overall contribution to the value of
the maintenance condition of the Aircraft based upon the following formula:
Adjustment=((TRd-TRr)*(Vo/TBO)
Where:
"Adjustment" - is the sum of the difference in value for all individual
Components (as defined below) fitted on the Aircraft between the maintenance
standard as defined above and the value at the date of return.
"Components" - as used in this Section, is defined as all time
controlled components (other than Engines) fitted on the Aircraft as listed in
Schedule II attached hereto and incorporated into this Agreement by reference;
"TBO" - is the limit between major maintenance events (overhauls,
inspections, or replacements) for each Component as specified in Aircraft
Manufacturer's Recommended Maintenance Manual applicable to the Aircraft and as
generally accepted in the United States for operation of such Aircraft as
adjusted or amended by the Manufacturer from time to time; provided however,
that such change is universally recommended by the Aircraft Manufacturer and not
merely recognized as an alternative or option under such program.
"Vo" - is the projected cost of each major maintenance event for each
Component based on the direct cost of overhaul, inspection or replacement for
said Components at the then published Manufacturer's flat rate for such service
or replacement.
"TRd" - is the time remaining on each Component at the original
delivery and acceptance of the Aircraft under the applicable Lease of the
Aircraft until the next scheduled major maintenance event, as identified at the
time of delivery.
"TRr" - is the time remaining on each Component at the time of return
of the Aircraft until the next scheduled major maintenance event, as identified
at the time of return.
(1) Notwithstanding any provision to the contrary contained in this
Lease, in the event that the time between hard time overhaul for any component
is generally extended by the manufacturer beyond that limit specified in
Schedule II prior to Aircraft return, the applicable limit in Schedule II shall
be modified to mirror such extension.
(2) Any financial adjustments made pursuant to this Section 3 shall be
based on the then Fair Market Value available for such overhaul at the time of
Aircraft return.
(3) In the event any monies are owing by Lessee pursuant to the
calculation set forth in this Section 3, any net balances of Aircraft
Maintenance Payments remaining after application to all qualifying outstanding
maintenance events excluding amounts collected with respect to Engines shall be
applied as a reduction against such amount otherwise due from Lessee in
accordance with the calculation.
(ii).....Upon return of the Aircraft, the Engines shall be
freshly overhauled or, alternatively, the Lessee shall pay for all time consumed
on the Engines (including its life cycle fatigue components) since the last hard
time overhaul and since the last hot section inspection in an amount equal to
the number of Flight Hours accumulated on each Engine since the last such event
(as applicable) multiplied by the then applicable Aircraft Maintenance Payment
set aside rate for the Engines as specified in accordance with this Lease,
taking into account any net balances of such reserves then remaining with
respect to the Engines after application to all qualifying hot section
inspections and overhauls.
(c) Engine Service Plan. If at any time during the Term of this Lease,
Lessee is requested in writing by Lessor, Lessee shall enroll and maintain the
Engines under an Approved Engine Service Plan.
Section 4. Additional Events of Default.
(a) Lessee shall be in default under the MACRO Program; or
(b) A Default or breach of any term of the Plan, including, but without
limitation, a Default in payments under the Plan; or
(c) The Receivables Security Interest shall cease to be in full force
and effect; or
(d) [Not Used]
(e) The code sharing agreement between Lessee and USAirways shall cease
to be in full force and effect or shall have been amended, modified or
supplemented without Lessor's consent and such amendment, modification, or
supplement would materially adversely affect the ability of Lessee or any
affiliate subsidiary of Lessee to perform its obligations hereunder or under any
other lease between Lessee and Lessor.
Section 5. Subordination; assignment.
(a) Anything in the Operating Lease to the contrary notwithstanding,
Lessee's rights thereunder to the possession, use and enjoyment of the Aircraft
shall be subject to the rights of the Owner Trustee under the Head Lease in and
to the Aircraft and the rights of the Security Trustee in respect of the
Aircraft, and Lessee confirms and agrees that its rights and interests under the
Operating Lease are in all events subject and junior to the rights and interests
of the Owner Trustee and the Security Trustee. Upon written notice
to Lessee by the Owner Trustee or the Security Trustee that an Event of Default
has occurred and is continuing under the Head Lease, the Owner Trustee or the
Security Trustee may require that all rentals and other sums due under the
Operating Lease in respect of the Aircraft shall thereafter be paid directly to
the Owner Trustee or the Security Trustee (in each case, without further
liability to make such payments to Lessor) and that in the event the Head Lease
shall have been terminated pursuant to Section 18 thereof, the Owner Trustee or
the Security Trustee, as the case may be, may, at its option, by written notice
to Lessee after the date of such termination:
(i) require Lessee to enter into an agreement in form and
substance satisfactory to the Owner Trustee or the Security Trustee, as the case
may be, and its counsel, attorning to and recognizing the Owner Trustee or the
Security Trustee, as the case may be, as the Lessor thereunder; or
(ii) terminate the Operating Lease and require prompt delivery
by Lessee of the Aircraft to the Owner Trustee or the Security Trustee, as the
case may be, in accordance with the provisions of Section 14 thereof.
(b) Unless and until Lessee shall have received any such written notice
from the Owner Trustee or the Security Trustee requiring attornment or
terminating the Operating Lease, Lessee shall be and remain fully obligated
under the Operating Lease notwithstanding the continuance of any Event of
Default under the Head Lease or the termination thereof pursuant to Section 18
thereof.
(c) Lessee hereby acknowledges notice of, and hereby consents to, the
assignment of this Operating Lease to the Owner Trustee pursuant to the terms of
a sublease security assignment and from Lessor to the Security Trustee pursuant
to the terms of a security agreement.
Section 6. Incorporation of Terms of Lease. Subject to the provisions
of Section 1(d) of the Lease, all of the terms and provisions of the Operating
Lease are incorporated in this Commercial Supplement to the same extent as if
fully set forth herein.
Section 7. Confidentiality. This Commercial Supplement contains
confidential financial information and is intended to be proprietary and
confidential and each of the parties hereto agrees to treat this Commercial
Supplement as proprietary and confidential. No information contained in this
Commercial Supplement will be made available by any party hereto to anyone
except (A) in the case of the Lessor, to existing or prospective Financing
Parties and their respective counsel, independent insurance brokers or other
agents, who agree to hold such information proprietary and confidential, (B) to
the Lessee's or the Lessor's counsel or independent certified public
accountants, independent insurance brokers or other agents who agree to hold
such information proprietary and confidential, (C) as may be required by any
statute, court or administrative order or decree or governmental ruling or
regulation or (D) as may be necessary for purposes of protecting the interests
of any such Person or for enforcement of the Lease; provided, that any and all
disclosures permitted by clauses (C) or (D) above will be made only to the
extent necessary to meet the specific requirements or needs of the Persons to
whom such disclosures are hereby permitted.
IN WITNESS WHEREOF, this Commercial Supplement [920] has been executed and
delivered by the duly authorized representatives of the Lessor and the Lessee as
of the date hereof.
Jet Acceptance Corporation
By:___________________________
Name:
Title: Vice President
CCAIR, Inc.
By:___________________________
Name:
Title:
Schedule I
Certain Terms
a. Basic Rent:
Basic Rent will be payable monthly in arrears on each Payment Date in
the amount set forth opposite such Payment Date below:
Payment Date :
Basic Rent:
Delivery Date until March 23, 1998
$0
March 24, 1998 to Expiration Date
$15,000.00
b. Stipulated Loss Value:
The Stipulated Loss Value as of any Payment Date will be the amount set
forth below opposite such Payment Date:
[See attached Stipulated Loss Value Table]
c. Expiration Date.
Unless sooner canceled or terminated in accordance with the terms of
the Lease, the Lease will terminate on January 1, 1999 (the "Expiration Date").
d. Insurance:
"Claim Notification Amount" means $250,000.
"Damage Payment Threshold" means $250,000.
"Insurance Deductible Amount" means $250,000.
"Minimum Liability Coverage" means $150,000,000.
e. Financing Parties:
Each of the following Persons is a "Financing Party":
First Security Bank, National Association
AT&T Capital Holdings International, Inc.
State Street Bank and Trust Company of Connecticut, National
Association
PFL Life Insurance Company
Monumental Life Insurance Company
Pacific Fidelity Life Insurance Company
Western Reserve Life Assurance Company of Ohio
Xxxxxxxxx Xxxxxxxx Life Insurance Company of America
First Xxxxxxxxx Xxxxxxxx Life Insurance Company of America
Additional Financing Parties:
Each of the following Persons is an "Additional Financing Party":
Xxxx Leasing, Inc.
Sentinel Investment (Xxxxxxx) Limited
Woodchester Finance Limited
Xxxx Xxxxxx Bank Limited
Xxxx Xxxxxx (Jetstream) Limited
British Aerospace Holdings, Inc.
Financing Document:
Each of the following documents or agreements is a "Financing
Document":
Participation Agreement among Head Lessor, Lessor, AT&T Capital
Holdings International, Inc., PFL Life Insurance Company, Monumental Life
Insurance Company, Pacific Fidelity Life Insurance Company, Western Reserve Life
Assurance Company of Ohio, Xxxxxxxxx Xxxxxxxx Life Insurance Company of America,
First Xxxxxxxxx Xxxxxxxx Life Insurance Company of America, and State Street
Bank and Trust Company, N. A. dated as of June 15, 1991
Trust Agreement between Head Lessor and AT&T Capital Holdings
International, Inc. dated as of June 15, 1991
Security Agreement-Trust Deed between Head Lessor and State Street Bank
and Trust Company, N.A. dated as of June 15, 1991
Lease Agreement between Head Lessor and Lessor dated as of June 15,
1991, as supplemented and amended from time to time
Tax Indemnity Agreement between Lessor and AT&T Capital Holdings
International, Inc. dated as of June 15, 1991
Assignment of Sublease between Lessor and Head Lessor dated as of June
15, 1991
This Operating Lease [920], Acceptance Supplement [920], and Commercial
Supplement [920]
Schedule II
HOUR, CYCLE OR CALENDAR-TIME CONTROLLED AIRCRAFT COMPONENTS
