SUBLEASE AGREEMENT
dated as of
March 18, 1996
Between
TACA INTERNATIONAL AIRLINES, S.A.,
as Sublessor,
and
WESTERN PACIFIC AIRLINES, INC.
as Sublessee
One Used Boeing Model B737-3S3 Aircraft,
current United States Registration Xxxx N375TA and
Manufacturer's Serial No. 23787 with
two CFM International, Inc., Model CFM 56-3B2 Engines,
Manufacturer's Serial Nos. 721150 and 721743, Respectively
ALL THE RIGHT, TITLE AND INTEREST IN AND TO THIS SUBLEASE AGREEMENT ON THE PART
OF TACA INTERNATIONAL AIRLINES, S.A. HAS BEEN ASSIGNED TO AND IS SUBJECT TO A
SECURITY INTEREST IN FAVOR OF ING AVIATION LEASE B.V. ONLY THE ORIGINAL
COUNTERPART CONTAINS THE RECEIPT THEREFOR EXECUTED BY ING AVIATION LEASE B.V. ON
THE SIGNATURE PAGE THEREOF.
THIS IS NOT THE ORIGINAL COUNTERPART
CODED FOR TABLE OF CONTENTS
EXHIBIT A AIRCRAFT DESCRIPTION
EXHIBIT B FORM OF ACCEPTANCE CERTIFICATE
EXHIBIT C FORM OF RETURN ACCEPTANCE RECEIPT
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TABLE OF CONTENTS
Page
Section 1. Definitions........................................... 1
Section 2. Sublease; Sublease Term; Delivery of
Aircraft.............................................. 7
(a) Sublease; Sublease Term.......................... 7
(b) Delays........................................... 7
(c) Condition of Aircraft at Delivery................ 7
Section 3. Security Deposit and Other Payments................... 8
(a) Security Deposit................................. 8
(b) Basic Rent....................................... 8
(c) Commission....................................... 9
(d) Supplemental Rent................................ 9
(e) Manner of Payment................................ 9
(f) Late Payments.................................... 9
(g) No Setoff, Counterclaim, etc..................... 9
Section 4. Conditions Precedent and Other
Requirements......................................... 11
(i) ................................................. 11
(a) Execution and Delivery of
Documents..................................... 11
(b) Representations, Warranties, No
Default....................................... 11
(c) Resolutions, etc................................ 11
(d) Security Deposit and Basic Rent................. 12
(e) Side Letter..................................... 12
(f) Insurance Certificate........................... 12
(g) Filings; Financing Statements................... 12
(h) Opinions of Counsel............................. 12
(i) No Event of Loss................................ 12
(j) Acceptance by Process Agent..................... 12
(k) Net Worth....................................... 12
(l) Other Documents................................. 13
(ii) ................................................ 13
(a) Delivery of Assignments of
Warranties.................................... 13
(b) Resolutions, etc................................ 13
(c) Consents to Sublease............................ 13
(d) Extension of Lease.............................. 13
(e) Certificate of No Default....................... 13
(f) Delivery of Sublease Supplement................. 13
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(g) Certificate of Airworthiness.................... 13
(h) Acceptance by Process Agent..................... 14
(i) Broker.......................................... 14
Section 5. Disclaimer; Manufacturer and Vendor
Warranties........................................... 14
(a) Disclaimer by Sublessor......................... 14
(b) Sublessor's Representations,
Warranties and Covenants...................... 15
(c) Manufacturer and Vendor
Warranties.................................. 16
Section 6. Maintenance; Alterations, Modifications
and Additions........................................ 16
(a) Maintenance................................. 16
(b) Maintenance Reserves........................ 19
(c) Replacement of Parts............................ 22
(d) Pooling of Parts............................ 23
(e) Alterations, Modifications and
Additions................................... 24
Section 7. Title and Registration; Liens;
Possession........................................... 25
(a) Title and Registration...................... 25
(b) Liens....................................... 26
(c) Operation, Quiet Enjoyment.................. 27
(d) Possession.................................. 27
(e) Identification Plates....................... 29
(f) Reporting Requirements...................... 29
(g) Inspections................................. 29
Section 8. Loss, Destruction, Requisition, etc.................. 30
(a) Event of Loss with Respect to the
Aircraft.................................... 30
(b) Event of Loss with Respect to an
Engine...................................... 30
(c) Application of Payments from
Governmental Authorities.................... 32
(d) Requisition of Use of the
Aircraft.................................... 32
(e) Quiet Enjoyment............................. 33
Section 9. Insurance............................................ 33
(a) Liability................................... 34
(b) Other Insurance............................. 34
(c) Terms of Insurance.......................... 35
(d) Application of Insurance.................... 37
(e) Reports..................................... 38
(f) Failure to Insure........................... 39
(g) Additional Insurance........................ 39
(h) Notice of Claims............................ 39
(i) Stipulated Loss Value....................... 39
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Section 10. Return of Aircraft............................................. 40
(a) Redelivery upon Termination................. 40
(b) Condition of Aircraft-- General............. 40
(c) Condition of Airframe....................... 42
(d) Condition of Controlled
Components.................................. 43
(e) Condition of Engines........................ 43
(f) Ground Inspection by Sublessor.............. 44
(g) Operational Ground Check.................... 44
(h) Demonstration Flight........................ 44
(i) Ferry Flight................................ 45
(j) Deferred Discrepancy Correction............. 45
(k) Flight Cost................................. 45
(l) Aircraft Documentation...................... 46
(m) Service Bulletin Kits....................... 46
(n) Non-U.S. Manufactured Items................. 46
(o) Sublessee's Continuing
Obligations................................. 46
Section 11. Representations, Warranties and
Covenants of Sublessee............................... 47
Section 12. Indemnification...................................... 51
(a) General Indemnity and Expenses.............. 51
(b) General Tax Indemnity....................... 53
(c) Calculation of Tax Indemnity
Payments.................................... 56
(d) Contest; Reports............................ 57
(e) Payment..................................... 60
(f) Survival.................................... 60
Section 13. Assignment; Sublease Subject and
Subordinate.......................................... 60
(a) No Impermissible Sublease by
Sublessee................................... 60
(b) Assignment by Sublessor..................... 60
(c) Sublease Subject and Subordinate............ 61
(d) Assignments by Sublessor or
Lessor...................................... 61
Section 14. Events of Default; Remedies.......................... 62
(a) Events of Default........................... 62
(b) Remedies.................................... 64
Section 15. Notices.............................................. 67
Section 16. Governing Law and Jurisdiction....................... 68
(a) Governing Law............................... 68
(b) Jurisdiction; Service of Process............ 68
(c) Waiver of Immunity.......................... 69
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Section 17. Miscellaneous........................................ 69
(a) Entire Agreement............................ 69
(b) English Language............................ 69
(c) Sublessor's Right to Perform for
Sublessee............................... 69
(d) Application of Payments During
Existence of Default.................... 69
(e) Expenses.................................... 70
(f) Further Assurances.......................... 70
(g) Judgment Currency........................... 70
(h) Invalidity of any Provision................. 70
(i) Changes in Law.............................. 71
(j) Headings.................................... 71
(k) Consent..................................... 71
(l) Third-Party Beneficiaries................... 71
(m) Counterparts................................ 71
EXHIBIT A AIRCRAFT DESCRIPTION
EXHIBIT B FORM OF ACCEPTANCE CERTIFICATE
EXHIBIT C FORM OF RETURN ACCEPTANCE RECEIPT
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This SUBLEASE AGREEMENT, dated as of March 19, 1996, between TACA
INTERNATIONAL AIRLINES, S.A., a corporation organized and existing under the
laws of El Salvador with its principal place of business in San Salvador, El
Salvador, and its successors and assigns ("Sublessor"), and WESTERN PACIFIC
AIRLINES, INC., a corporation organized and existing under the laws of Delaware
with its principal place of business in Colorado Springs, Colorado
("Sublessee").
Sublessor and Lessor (such term and other capitalized terms are used as
hereinafter defined) are parties to the Lease.
Sublessee desires to sublease the Aircraft from Sublessor and Sublessor
is willing to sublease the Aircraft to Sublessee upon and subject to the terms,
conditions and covenants herein set forth.
In consideration of and subject to the mutual covenants, terms and
conditions contained in this Sublease, Sublessor and Sublessee agree as follows:
Section 1. Definitions.
(a) Unless the context otherwise requires the following terms shall
have the following meanings for all purposes of this Sublease and shall be
equally applicable both to the singular and plural forms of the terms defined.
Any agreement defined below shall include each amendment, modification and
supplement thereto and waiver thereof in effect from time to time.
"Additional Insurance" shall have the meaning ascribed to it in Section
9(f) hereof.
"Additional Insureds" shall have the meaning ascribed to it in Section
9(c) hereof.
"Aircraft" shall mean (i) the Airframe, together with two (2) Engines
initially installed on such Airframe at the Commencement Date or any Replacement
Engine substituted for any such Engine, whether or not any of said initial
Engines or Replacement Engines may from time to time no longer be installed on
such Airframe or may be installed upon another airframe and the Parts; and (ii)
the Aircraft Documentation. As the context requires, "Aircraft" shall also mean
the Airframe, any Engine (including a Replacement Engine), any Part, the
Aircraft Documentation, or any part thereof individually.
"Aircraft Documentation" shall mean all (i) log books, aircraft
records, manuals and other data or documents provided to Sublessee on or before
the Commencement Date, as evidenced by any Schedule attached to the Acceptance
Certificate as a receipt
thereof; and, (ii) any other documents, drawings, or data which are required to
be maintained during the Sublease Term pursuant hereto or by the FAA or the
Maintenance Program.
"Airframe" shall mean that certain Boeing model 737-3S3 airframe
bearing manufacturer's serial number 23787.
"Airframe Reserve Amount" shall have the meaning ascribed to it in
Section 6(b).
"Agent" shall mean ING Aviation Lease, B.V., as agent for the Lenders,
its successors and assigns.
"Approved Repair Facility" shall have the meaning ascribed to it in
Section 6(a)(ii).
"Basic Rent" shall have the meaning ascribed to it in Section 3(b)
hereof.
"Credit Agreement" shall mean the Credit Agreement dated as of November
4, 1993 between First Security Bank of Utah, National Association, as owner
trustee, as borrower, Amerilease Capital Corporation, as owner participant and
guarantor and the Agent, as may be amended or supplemented from time to time.
"Commencement Date" shall mean the date upon which the Aircraft is
tendered to Sublessee in conformity with this Sublease and the Sublease
Supplement is executed and delivered.
"Cycle" shall mean any flight of the Aircraft or, in the case of an
engine not attached to an aircraft, any airframe to which an Engine is attached,
consisting of one take-off and one landing regardless of time elapsed between
take-off and landing and distance flown.
"Debt" shall mean, with respect to any Person, (a) all obligations of
such Person for borrowed money or with respect to deposits and advances of any
kind, whether evidenced by bonds, debentures, notes or other instruments, (b)
all obligations of such Person upon which interest charges at customarily paid,
(c) all obligations of such Person under conditional sale or other title
retention agreements relating to property purchased by such Person, (d) all
obligations of such Person issued or assumed as the deferred purchase price of
property or services, (e) any lease obligation that, in accordance with
generally accepted accounting principles has been or should be capitalized on
the books of such Person, and (f) all guarantees of such Person of the debts or
obligations for borrowed money of any other Person, whether direct or indirect,
absolute, contingent or otherwise.
"Default" shall mean any event that, with the passage of time or the
giving of notice or both, would become an Event of Default.
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"Dollars" and "US$" shall mean lawful currency of the United States of
America.
"Engine" shall mean (i) each of the two CFM International Inc. Model
CFM 56-3B2 jet aircraft engines bearing manufacturer's serial numbers 721150 and
721734, respectively, whether or not from time to time installed on such
Airframe or installed on any other airframe, and (ii) any Replacement Engine
that may from time to time be substituted as contemplated by Section 8(b) for an
Engine subleased hereunder; together in each case with any and all Parts
incorporated or installed in or attached thereto or any and all Parts removed
therefrom so long as title thereto shall remain vested in Sublessor in
accordance with the terms of Section 6(c) after removal from any such Engine.
Except as otherwise set forth herein, at such time as a Replacement Engine shall
be so substituted and the Engine for which the substitution is made shall be
released from the Lien of the Mortgage, such replaced Engine shall cease to be
an Engine hereunder. The term "Engines" means, as of any date of determination,
all Engines then subleased hereunder. Each Engine has and any Replacement Engine
hereunder will have not less than 750 rated takeoff horsepower.
"Engine Loss Value" shall mean, in respect of each engine, three
million two hundred thousand United States Dollars (US$3,200,000).
"Engine Reserve Amount" shall have the meaning ascribed to it in
Section 6(b) hereof.
"Event of Default" shall have the meaning ascribed to it in Section
14(a) hereof.
"Event of Loss" with respect to the Aircraft, the Airframe or any
Engine (hereinbelow referred to as "property") shall mean any of the following
events with respect to such property: (i) loss of such property or the use
thereof due to theft, disappearance, destruction, damage beyond repair or
rendition of such property permanently unfit for normal use for any reason
whatsoever; (ii) any damage to such property that results in the receipt of
insurance proceeds with respect to such property on the basis of a total loss;
(iii) the condemnation, confiscation or seizure of, or requisition of title to,
such Property by any authority, or a requisition for use of such property by any
authority other than a Government Entity of the United States of America; (iv)
as a result of any rule, regulation, order or other action by the FAA, or other
governmental body having jurisdiction thereof or any other occurrence, the use
of such property in the normal course of air transportation of persons shall
have been prohibited for a period of three consecutive months unless Sublessee,
prior to the expiration of such three-month period, shall have undertaken and
shall be diligently carrying forward all steps that are necessary or desirable
to permit the normal use of such property by Sublessee or, in any event, if such
use
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shall have been prohibited for a period of six consecutive months; (v) the
inability for any reason of Sublessor to obtain possession of such Aircraft
within 30 days after this Sublease shall have been declared to be in default
pursuant to Section 14, free and clear of all liens (other than Sublessor's
Liens); and (vi) in the case of an Engine, as described in clause (iii) of
Section 7(d). An Event of Loss with respect to the Aircraft shall be deemed to
have occurred if an Event of Loss occurs with respect to the Airframe.
"FAA" shall mean the United States Federal Aviation Administration and
any successor agency thereto.
"Federal Aviation Act" shall mean the United States Federal Aviation
Act of 1958 as amended, and the regulations promulgated thereunder.
"First Security" shall mean Lessor, in its individual capacity.
"Flight Hour" shall mean each hour or part thereof elapsing from the
moment the wheels of the Airframe (or other airframe on which an Engine is then
installed) leave the ground on takeoff until the wheels of the Airframe (or such
other airframe) touch the ground on landing following such flight. For purposes
of all calculations under this Sublease measured in Flight Hours, such hours,
including fractions thereof, shall be measured to two decimal places.
"Government Entity" means (i) any national, state or local government
of the United States of America or any other country where the Aircraft may be
flown and operated by Sublessee, (ii) any board, commission, department,
division, instrumentality, court, agency or political subdivision of any entity
described in (i) above, however constituted, and (iii) any association,
organization, or institution of which any entity described in (i) or (ii) above
it a Member or to whose jurisdiction any thereof is subject or in whose
activities any thereof is a participant.
"Indemnitee" shall have the meaning ascribed to it in Section 12(a)
hereof.
"Lease" shall mean that certain Aircraft Lease Agreement dated as of
November 4, 1993, between Lessor and Sublessor, as originally executed or as
modified, amended or supplemented pursuant to the applicable provisions hereof.
"Lenders" shall mean ING Aviation Lease, B.V. and each Person who shall
become a Lender in accordance with the provisions of the Credit Agreement.
"Lessor" shall mean First Security Bank of Utah, National Association,
not in its individual capacity but solely as owner trustee under that certain
Trust Agreement dated as of
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November 4, 1993, between First Security and the owner participant named
therein.
"Lien" shall mean any mortgage, pledge, lien, charge, encumbrance,
lease, exercise of rights, security interest or claim of any nature whatsoever.
"Maintenance Program" shall have the meaning ascribed to it in Section
6(a) hereof.
"Maintenance Reserves" shall have the meaning ascribed to it in Section
6(b) hereof.
"Manufacturer" shall mean The Boeing Company, a corporation organized
and existing under the laws of Delaware.
"Mortgage" shall mean the Mortgage and Security Agreement, dated as of
November 4, 1993, between Lessor and Agent relating to the Aircraft, as the same
may be amended, supplemented or modified from time to time.
"Parts" shall mean any and all appliances, parts, avionics,
attachments, accessions, instruments, appurtenances, accessories, furnishings
and other equipment of whatever nature (other than complete Engines or engines).
"Payment Date" shall mean the fifteenth (15) day of each consecutive
calendar month commencing with the calendar month immediately following the
Commencement Date and each consecutive calendar month thereafter during the
Sublease Term; provided however that Sublessee, on or prior to the Commencement
Date, shall pay Basic Rent in respect of the Aircraft corresponding to the first
month of the Sublease Term.
"Permitted Lien" shall have the meaning ascribed to it in Section 7(b)
hereof.
"Person" shall mean an individual, corporation, partnership, joint
venture, trust, unincorporated organization or any other juridical entity, or a
Government Entity.
"Post-Default Rate" shall mean a rate per annum equal to three percent
(3%) above the rate publicly announced from time to time by Citibank, N.A., New
York, New York (or any successor institution) as its "prime rate" (or, if no
such rate exists, any comparable reference rate established by such institution)
on the basis of the actual number of days elapsed over a 360-day year.
"Process Agent" shall have the meaning ascribed to it in Section 16(b)
hereof.
"Rent" shall mean Basic Rent and Supplemental Rent.
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"Replacement Engine" shall mean a CFM International, Inc. CFM 56-3B2
jet aircraft engine (or engine of the same manufacturer of the same or an
improved model) approved by Sublessor, that has a value, utility and thrust at
least equal to those of the Engines, together with all Parts relating to such
engine.
"Security Assignments" shall mean an instrument or instruments, in form
and substance satisfactory to Lessor and Lender, pursuant to which Sublessor
assigns to Lessor (and Lessor further assigns to Agent) all of Sublessor's right
and interest in and to this Sublease.
"Security Deposit" shall have the meaning ascribed to it in Section
3(a) hereof.
"Stipulated Loss Value" shall mean in respect of the Aircraft as of any
particular date, such amount as is set forth on Schedule 1 hereto.
"Sublease," "this Sublease Agreement," "this Sublease," "this
Agreement," "herein," "hereunder," "hereby," or other words shall mean this
Sublease as originally executed or as modified, amended or supplemented pursuant
to the applicable provisions hereof.
"Sublease Supplement" shall mean the Sublease Supplement dated as of
even date herewith, in form and substance satisfactory to Sublessor.
"Sublease Term" shall have the meaning ascribed to it in Section 2(a)
hereof.
"Sublessor Lien" shall mean any Lien arising as a result of (i) claims
against Sublessor or Lessor not related to the transactions contemplated by this
Sublease, (ii) Taxes imposed against Sublessor or Lessor that are not
indemnified against by Sublessee pursuant to Section 12(b), (iii) the Lease,
(iv) the Mortgage or (v) claims against Sublessor or Lessor arising out of the
transfer by either of them of all or any part of its interest in the Aircraft
other than by reason of the occurrence of an Event of Loss or following an Event
of Default.
"Supplemental Rent" shall mean all amounts, sums, monies, indebtedness,
liabilities and obligations (other than Basic Rent) that Sublessee assumes,
agrees or otherwise becomes liable to pay to Sublessor or others hereunder or
under any other document or agreement entered into by Sublessee and Sublessor in
connection herewith or with the transactions contemplated hereby and thereby
including, without limitation, payments of Maintenance Reserves, Stipulated Loss
Value and any interest payable with respect to payments pursuant to Section
3(e).
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"Tax" or "Taxes" shall mean any and all fees (including, without
limitation, license and registration fees), taxes (including, without
limitation, gross receipts, income, sales, rental, use, turnover, value added,
property (tangible or intangible), excise and stamp taxes, levies, imposts,
duties, charges, assessments or withholdings of any nature whatsoever, together
with any and all penalties, fines, additions to tax and interest thereon or
computed by reference thereto).
"Taxing Authority" shall have the meaning ascribed to it in Section
12(b) hereof.
Section 2. Sublease; Sublease Term; Delivery of Aircraft.
(a) Sublease; Sublease Term. Sublessor hereby subleases to Sublessee,
for a period (the "Sublease Term") commencing on the Commencement Date and
ending, unless earlier terminated pursuant to the provisions of this Sublease,
on such date as shall fall 120 consecutive calendar months following the
Commencement Date (the "Expiration Date").
(b) Delays. Sublessor will not be liable for any delay in commencement
of the Sublease which is beyond Sublessor's reasonable control, but if such
delay causes the Commencement Date of the Sublease Term of the Aircraft to be
delayed beyond March 31, 1996, either party may terminate this Sublease and
neither party shall have any further liability to the other hereunder, other
than Sublessor's obligation to return the Security Deposit (and other monies
heretofore paid by Sublessee to Sublessor) to Sublessee.
(c) Condition of Aircraft at Delivery. On the Commencement Date, the
Aircraft (i) shall be in an airworthy condition and have all systems functioning
in accordance with manufacturer's recommendations, (ii) shall have a current and
valid Certificate of Airworthiness issued by the FAA, (iii) shall be painted
white, (iv) shall be fresh from its last scheduled "C" check, other than hours
flown in respect of test and ferry flights, (v) shall be in a 136Y (136 seats,
single class cabin) configuration, and (vi) shall be in accord with the
description thereof set forth in Exhibit A hereto. Sublessee acknowledges that
it has inspected and technically accepted the Aircraft prior to the date hereof,
and Sublessee agrees to accept the Aircraft under the terms of this Sublease
when duly tendered by Sublessor in accordance herewith. Upon such tender,
Sublessee shall execute a Sublease Supplement, which will be conclusive proof as
between Sublessor and Sublessee that Sublessee has examined the Aircraft, that
the Aircraft and the Aircraft Documentation are satisfactory to Sublessee and
that Sublessee has accepted the Aircraft for all purposes hereof without any
reservations whatsoever (except as noted therein).
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Section 3. Security Deposit and Other Payments.
(a) Security Deposit. Sublessee has heretofore paid to Sublessor the
amount of US$356,062.50 in partial fulfillment of its obligation to pay the
Security Deposit. On or prior to the Commencement Date, Sublessee shall deliver
to Sublessor the balance of the security deposit (the "Security Deposit") such
that as of the Commencement Date Sublessor shall have received the total sum of
Seven Hundred Five Thousand Dollars (US$705,000) (the "Security Deposit
Amount"). The Security Deposit shall be held by Sublessor during the Sublease
Term as security for the full and punctual performance by Sublessee of all of
its obligations hereunder. During the Sublease Term, the Security Deposit may be
commingled by Sublessor with other funds. Interest, if any, earned on the
Security Deposit shall be for Sublessor's sole account. Sublessor may, but shall
not be obligated to, apply the Security Deposit, in whole or in part for the
payment of any Basic Rent owing hereunder or any other amount owing from time to
time by Sublessee hereunder, or utilize the Security Deposit in whole or in part
to perform any of Sublessee's obligations hereunder or otherwise remedy any
Event of Default, without prejudice to any other remedy of Sublessor. Sublessee
shall not attempt to subject the Security Deposit to any Lien or to assign any
interest therein to any Person and, to the extent of its interest therein.
Sublessee hereby grants to Sublessor a Lien in the Security Deposit and assigns
and transfers to Sublessor any and all of Sublessee's right, title and interest
therein, as security as provided above, and Sublessor shall be entitled to the
remedy of offset against and application of the Security Deposit, without any
prior notice to or demand against Sublessee (except to the extent otherwise
required by applicable law), all of which are hereby waived. If Sublessor uses
or applies all or a portion of the Security Deposit, such application shall not
be deemed a cure of any Event of Default, until and unless Sublessee shall have
replenished the amount applied hereunder within the time period provided herein.
Sublessee shall replenish any portion or all of the Security Deposit applied by
Sublessor to satisfy, in whole or in part, any Event of Default by depositing
with Sublessor in immediately available funds an amount sufficient to restore
the Security Deposit to the Security Deposit Amount within three (3) Business
Days after Sublessor's demand therefor. Within fifteen (15) days after
redelivery of the Aircraft to Sublessor by Sublessee, and provided the Aircraft
is delivered in full conformity with the return conditions set forth in Section
10 hereof, and that Sublessee has paid in full, all amounts owing by Sublessee
hereunder and performed all of its obligations hereunder, Sublessor will return
to Sublessee the Security Deposit, without interest, less any amounts applied by
Sublessor and not replenished by Sublessee.
(b) Basic Rent. Sublessee agrees to pay Sublessor, or, for so long as
the Mortgage remains in effect, Agent, rent with respect to the aircraft,
monthly, in advance on each Payment
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Date, in the amount of Two Hundred Thirty-five Thousand Dollars (US$235,000) per
month ("Basic Rent"). All payments of Basic Rent shall be made in immediately
available funds, in Dollars by 2:00 p.m. New York time on the date when due;
provided, however, that in the event that any payment should be due on a day
that is not a Business Day, then such payment shall be made on the next
succeeding Business Day without any penalty for late payment.
(c) Commission. Sublessee shall pay to Sublessor the amount of Two
Thousand Three Hundred Fifty Dollars (US$2,350) per month ("Commission
Payment"), monthly, in advance on or before each Payment Date during the
Sublease Term and any renewals thereof, if applicable, as payment or
reimbursement for and in respect of the commission payable to Cauff, Xxxxxxx &
Xxxxx Aviation, Inc. as sole brokers in respect of this Sublease. Sublessor
shall pay such commission to Cauff, Xxxxxxx & Xxxxx Aviation, Inc.
(d) Supplemental Rent. Sublessee also agrees promptly to pay to
Sublessor any and all Supplemental Rent, as the same shall become due and owing,
and in the event of any failure on the part of Sublessee to pay any Supplemental
Rent, Sublessor shall have all rights, powers and remedies provided for herein
or by law or equity or otherwise in the case of nonpayment of Basic Rent.
(e) Manner of Payment. All Basic Rent and Supplemental Rent (other than
the Security Deposit and Maintenance Reserves) required to be made to Sublessor
hereunder shall be paid (i) so long as the Mortgage remains in effect, directly
to Agent at: The Northern Trust International Banking Corp., New York, New York,
account of ING Bank, Acct. No. 100628-20230 for further credit to ING Aviation
Lease B.V., Amsterdam, The Netherlands, Acct. No. 5007.2102; and (ii)
thereafter, to such bank accounts as Sublessor shall specify by written notice
to Sublessee. All payments of Supplemental Rent shall be made in immediately
available funds in Dollars by 2:00 p.m. New York time, on the daft when due;
provided, however, that in the event that any Payment should be due on a day
that is not a Business Day then such payment shall be made on the Business Day
next succeeding such day without any penalty for late payment.
(f) Late Payments. As to any (i) amount due under this Sublease that is
not paid when due as herein provided, or (ii) advance made by Sublessor of any
amount required to be paid by sublessee as herein provided and not so paid by
Sublessee, Sublessee shall pay to Sublessor at the time of payment thereof, as
Supplemental Rent, interest thereon at the Post-Default Rate, from either the
due date thereof (as to amounts referred to in clause (i)) or the date of the
advance by Sublessor (as to amounts referred to in clause (ii)), as the case may
be, to the date such late payment is paid in full.
(g) No Setoff, Counterclaim, etc. Notwithstanding anything to the
contrary herein and except as otherwise set forth in this
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Section 3(f), Sublessee's obligations and liabilities to pay all amounts payable
hereunder shall be absolute and unconditional and shall not be affected by any
circumstance, including, without limitation, (i) any setoff, counterclaim,
recoupment, defense or other right that Sublessee may have against Sublessor or
any other Person for any reason whatsoever, (ii) any defect in the title caused
directly by an act or omission of Sublessee, airworthiness, condition, design,
operation or fitness for use of or any damage to or loss or destruction of, the
Aircraft, the Airframe, any Engine or any Part of any thereof or any
interruption or cessation in the use or possession of any thereof by Sublessee
for any reason whatsoever, (iii) any insolvency, bankruptcy, reorganization or
similar proceedings by or against Sublessee, (iv) the disaffirmance or rejection
of this Sublease by Sublessor or any trustee in bankruptcy (or similar party)
provided that there shall have been no change materially adverse to the
Sublessee in any of the terms or conditions of this Sublease in connection with
applicable bankruptcy proceedings, (v) claims against the Manufacturer or
manufacturers of the Aircraft, the Airframe, any Engine, Part or component
thereof, (vi) enforceability or lack of enforceability of any of the terms or
conditions of this Sublease, (vii) breach by Sublessor of any warranty, express
or implied, with regard to the Aircraft, the Airframe, any Engine any Part of
any thereof, including, without limitation, merchantability or fitness for any
purpose or use relating to or otherwise made or alleged to be made by Sublessor
to Sublessee or any of it agents, representatives or employees with regard to
the Aircraft, the Airframe, any Engine or any Part of any thereof, (viii) any
right, claim, demand, xxxx, action or suit whatsoever by or against or on the
part of Sublessee against Sublessor, including, without limitation, whether
arising out of legal action or otherwise (x) at law or in equity, (y) whether
affirmative, negative or defensive in nature for or on account of the legality,
enforceability, validity or other infirmity as to (A) any of the terms or
conditions of this Sublease, (B) any express or implied warranty as to the
Aircraft, the Airframe, any Engine or any Part of any thereof or (C) arising out
of or as a result of any contract, agreement, assignment or transaction between
Sublessor and Sublessee whether direct or indirect, written or oral, (ix) any
interruption or cessation in the use or possession of the Aircraft by or
availability of the Aircraft to Sublessee for any reason whatsoever whether
arising out of relating to an act or omission of Sublessee; or (x) any other
circumstances, happening or event whatsoever, whether or not similar to any of
the foregoing which but for this provision might have the effect of terminating
this sublease, it being the intention of the Sublessor and Sublessee that all
Rent and other amounts payable by Sublessee hereunder shall be payable in all
events unless the obligation to pay the same shall be terminated pursuant to the
express provisions of this Sublease. Sublessee hereby waives, to the fullest
extent permitted by applicable law any and all rights it may now have or that at
any time hereafter may be conferred upon it, by statute or otherwise, to
terminate, cancel, quit or surrender this Sublease except in accordance with
-10-
the express terms hereof. Notwithstanding anything contained in this Section
3(f) in the event that as a result of a breach by Sublessor or anyone claiming
by through or under Sublessor of its covenant of quiet enjoyment (including any
defect in title not caused by an act or omission of Sublessee which defect in
title shall have caused the Aircraft to be deregistered under the Federal
Aviation Act), Sublessee shall be deprived of possession or use of the Aircraft
under and in accordance with this Sublease, Sublessee shall not be required to
pay Basic Rent and Maintenance Reserves in respect of such period of
non-possession of or inability to use the Aircraft. Each payment of Rent made by
Sublessee shall be final as to Sublessor and Sublessee, and Sublessee will not
seek to recover all or any part of any such payment of Rent from Sublessor or
its successors or assigns for any reason whatsoever.
Nothing in this Section 3(f) or elsewhere in this Sublease shall be
construed to limit Sublessee's right to seek a recovery of any payment of Rent
or any other amount which is not due and payable hereunder, or to limit
Sublessee's rights and remedies to pursue, in a court of law or otherwise, any
claim it may have against Sublessor on account of any failure of Sublessor to
perform its obligations hereunder or in connection herewith.
Section 4. Conditions Precedent and Other Requirements.
(i) The obligation of Sublessor to sublease the Aircraft to Sublessee
on the terms and conditions herein set forth is subject to the satisfaction, on
or before the Commencement Date, of each of the following conditions:
(a) Execution and Delivery of Documents. Sublessee shall have duly
executed and delivered to Sublessor (i) this Sublease, (ii) an Acceptance
Certificate in the form of Exhibit B hereto covering the Aircraft and effective
as of the Commencement Date, (iii) the Sublease Supplement, and (iv) a consent
or consents to the Security Assignments in form and substance satisfactory to
Lessor and Agent.
(b) Representations, Warranties, No Default. (i) All of the
representations and warranties of Sublessee contained in this Sublease shall be
true and correct on and as of the Commencement Date as though made on such date
or, if they relate solely to an earlier date, as of such date and (ii) no
Default or Event of Default shall have occurred and be continuing or would
result from Sublessee's execution, delivery and performance of this Sublease,
and Sublessor shall have received an Officer's Certificate in form and substance
satisfactory to it, to the effect of each of the foregoing.
(c) Resolutions, etc. Sublessor shall have received, in form and
substance satisfactory to its (i) certificate of the Secretary or an Assistant
Secretary of Sublessee with respect to the resolutions of the Board of Directors
of Sublessee
-11-
authorizing the execution, delivery and performance by Sublessee of this
Sublease and all other documents and certificates contemplated hereby to be
executed on behalf of Sublessee, and the authority and signatures of the persons
authorized to execute and deliver such documents on behalf of Sublessee; and
(ii) such other documents and evidence with respect to Sublessee as Sublessor
may reasonably request in order to establish the consummation of the
transactions contemplated by this Sublease, the taking of all proceedings in
connection therewith and compliance with the conditions set forth in this
Section 4.
(d) Security Deposit and Basic Rent. On or before the Commencement Date
(i) Sublessor shall have received immediately available funds in the amount of
the balance of the Security Deposit Amount and (ii) Agent shall have received
the first Basic Rent payment.
(e) Side Letter. On or before the Commencement Date, Sublessor shall
have received all amounts due to it under that certain side letter dated as of
even date herewith.
(f) Insurance Certificate. Sublessor shall have received, on or prior
to the Commencement Date, in form and substance satisfactory to it and to Agent,
an insurer's or broker's certificate as to the due compliance by Sublessee with
the insurance provisions of Section 9.
(g) Filings; Financing Statements. Sublessor shall have received
evidence satisfactory to it that this Sublease and the Security Assignments
shall each have been duly filed for recordation with the FAA pursuant to the
Federal Aviation Act. If requested by Sublessor, Sublessee shall have executed
(as debtor) and delivered to Sublessor one or more precautionary Uniform
Commercial Code financing statements for filing in such places in the United
States as, in the Sublessor's opinion, are necessary or desirable.
(h) Opinions of Counsel. Sublessor shall have received a favorable
opinion or opinions addressed to Sublessor and Lessor from Winthrop, Stimson,
Xxxxxx & Xxxxxxx and Sparks, Dix, counsel for Sublessee, dated as of the
Commencement Date.
(i) No Event of Loss. No Event of Loss shall have occurred with respect
to the Aircraft or any Engine.
(j) Acceptance by Process Agent. CT Corporation System shall have
accepted its appointment as Process Agent on behalf of Sublessee by one or more
instruments in writing delivered to Sublessor.
(k) Net Worth. On and as of the Commencement Date Sublessee shall have
a net worth of not less than U.S.$50,000,000, as determined in accordance with
generally accepted accounting principles.
-12-
(l) Other Documents. Sublessor shall have received such other documents
and matters incident to foregoing as Sublessor, Lessor or Agent may reasonably
request and such other agreements as Sublessor, Lessor or Agent may reasonably
request, as each deems necessary or desirable to consummate the transactions
contemplated hereby.
(ii) The obligation of Sublessee to sublease the Aircraft from
Sublessor pursuant hereto is subject to the satisfaction, on or before the
commencement date, of each of the following conditions:
(a) Delivery of Assignments of Warranties. Sublessee shall have
received from Sublessor Assignments of Warranties in form and substance
reasonably acceptable to Sublessee, duly accepted by the Manufacturers of the
Airframe and the Engine.
(b) Resolutions, etc. Sublessee shall have received, in form and
substance reasonably satisfactory to it: (i) a certificate of the Secretary or
an Assistant Secretary of Sublessor, in the form attached as part of Exhibit D
hereto, with respect to the resolutions of the Board of Directors of Sublessor
authorizing the execution, delivery and performance by Sublessor of this
Sublease and all other documents and certificates contemplated hereby to be
executed on behalf of Sublessor, and the authority and signatures of the persons
authorized to execute and deliver such documents on behalf of Sublessor; and
(ii) such other documents and evidence with respect to Sublessor as Sublessee
may reasonably request in order to establish the consummation of the
transactions contemplated by this Sublease, the taking of all proceedings in
connection therewith and compliance with the conditions set forth in this
Section 4.
(c) Consents to Sublease. Sublessee shall have received the written
consents of Lessor and Agent to this Sublease.
(d) Extension of Lease. Sublessee shall have received a copy of that
certain Amendment to Lease dated on or prior to the date hereof pursuant to
which the terms of the Lease shall have been extended such that it shall be at
least coterminous herewith.
(e) Certificate of No Default. Sublessee shall have received a
certificate of a duly authorized officer of Sublessor to the effect that no
Default or Event of Default, as defined therein, has occurred and is continuing
under the Lease or the Mortgage.
(f) Delivery of Sublease Supplement. Sublessor shall have delivered to
Sublessee the Sublease Supplement.
(g) Certificate of Airworthiness. The Certificate of Airworthiness for
the Aircraft shall not have been withdrawn.
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(h) Acceptance by Process Agent. Xxxxxxxxx, Traurig et al. shall have
accepted its appointment as Process Agent on behalf of Sublessor.
(i) Broker. Sublessee shall have received a letter from Cauff, Xxxxxxx
& Xxxxx Aviation, Inc., addressed to and in form and substance satisfactory to
it, to the effect that Cauff, Xxxxxxx & Xxxxx Aviation will not seek to recover
any amounts in respect of the Aircraft, Engines or Parts from Sublessee.
Section 5. Disclaimer; Manufacturer and Vendor Warranties.
(a) Disclaimer by Sublessor. PRIOR TO THE EXECUTION OF THIS SUBLEASE,
SUBLESSEE HAS SELECTED THE TYPE OF AIRCRAFT, AIRFRAME, ENGINES AND PARTS. EXCEPT
AS OTHERWISE EXPRESSLY PROVIDED IN SECTION 5(B) BELOW, NEITHER SUBLESSOR,
LESSOR, AGENT, ANY LENDER NOR ANY SUCCESSOR IN INTEREST TO EITHER HAS MADE NOR
SHALL BE DEEMED TO HAVE MADE AND ACCORDINGLY MAKES NO WARRANTY, EXPRESS OR
IMPLIED, AS TO ANY MATTER WHATSOEVER, INCLUDING THE CONDITION OF THE AIRCRAFT,
AIRFRAME, ENGINES AND PARTS, THEIR MERCHANTABILITY OR THEIR FITNESS FOR ANY
PARTICULAR PURPOSE, AND SUBLESSOR (FOR ITSELF, LESSOR, AGENT AND ANY LENDERS)
EXPRESSLY DISCLAIMS THE SAME AND AS RESPECTS SUBLESSOR. SUBLESSEE LEASES THE
AIRCRAFT, AIRFRAME, ENGINES AND PARTS "AS IS" AND "WHERE IS". EXCEPT AS
OTHERWISE EXPRESSLY PROVIDED IN SECTION 5(B) BELOW, SUBLESSOR HEREBY EXPRESSLY
DISCLAIMS ANY WARRANTY EITHER EXPRESS OR IMPLIED (WHETHER STATUTORY OR
OTHERWISE) RELATING TO THE CAPACITY, AGE, QUALITY, DESCRIPTION, STATE,
CONDITION, DESIGN, CONSTRUCTION, USE, OPERATION, OR PERFORMANCE OF THE AIRCRAFT
OR THE SUITABILITY OF THE AIRCRAFT OR ITS FITNESS FOR ANY PARTICULAR PURPOSE OR
AS TO ITS AIRWORTHINESS. SUBLESSOR, LESSOR, AGENT AND ANY LENDER SHALL HAVE NO
LIABILITY TO SUBLESSEE FOR ANY CLAIM, LOSS OR DAMAGE WHATSOEVER INCLUDING, BUT
NOT LIMITED TO, INCIDENTAL OR CONSEQUENTIAL DAMAGES, CAUSED OR ALLEGED TO BE
CAUSED DIRECTLY OR INDIRECTLY BY THE AIRCRAFT OR AIRFRAME, ANY OF THE ENGINES OR
PARTS, OR BY ANY INADEQUACY THEREOF OR DEFICIENCY OR DEFECT THEREIN OR BY ANY
INCIDENT WHATSOEVER IN CONNECTION THEREWITH ARISING IN STRICT LIABILITY,
NEGLIGENCE, GROSS NEGLIGENCE OR OTHERWISE, OR IN ANY ACTION RELATED TO OR
ARISING OUT OF THIS SUBLEASE OR ANY OTHER DOCUMENT AND WHETHER INVOLVING
PERSONAL INJURY, PROPERTY DAMAGE OR OTHERWISE, EXCEPT AS EXPRESSLY PROVIDED IN
SECTION 5(b) BELOW, SUBLESSEE HEREBY WAIVES AS BETWEEN ITSELF, SUBLESSOR AND ANY
PERSON CLAIMING BY, THROUGH OR UNDER SUBLESSOR, LESSOR, AGENT AND ANY LENDER,
ALL ITS RIGHTS, EXPRESS OR IMPLIED (WHETHER STATUTORY OR OTHERWISE), AGAINST
SUBLESSOR OR ANY OTHER SUCH PERSON IN AND TO THE AIRCRAFT RELATING TO THE
CAPACITY, AGE, QUALITY, DESCRIPTION, STATE, CONDITION, DESIGN, CONSTRUCTION,
USE, OPERATION OR PERFORMANCE OF THE AIRCRAFT AND THE LEASING THEREOF BY
SUBLESSOR TO SUBLESSEE, OR TO THE MERCHANTABILITY OR SUITABILITY OF THE AIRCRAFT
OR ITS FITNESS FOR ANY PARTICULAR PURPOSE OR AS TO ITS AIRWORTHINESS. In
particular and without prejudice to the generality of the foregoing, neither
Sublessor nor any such other Person shall be
-14-
under any liability whatsoever and howsoever arising, whether in contract or
tort or both, in respect of any loss, liability, damage or delay of or to or in
connection with any of the Aircraft or any Person or property whatsoever,
whether on board the Aircraft or elsewhere, irrespective of whether such loss,
damage or delay shall arise (x) from the unairworthiness of the Aircraft, or (y)
from any action or omission of Sublessor or any other such Person (other than
any action or omission that constitutes willful misconduct or gross negligence
of Sublessor).
(b) Sublessor's Representations, Warranties and Covenants.
Notwithstanding and as the sole exception to Section 5(a), Sublessor represents
and warrants that (1) it is a Sociedad anonima, duly formed and validly existing
under the laws of El Salvador and has legal right to own its properties and to
carry on its business as presently conducted and to perform its obligations
under this Sublease, (ii) unless a Default or an Event of Default shall have
occurred and be continuing neither Sublessor or Lessor nor anyone claiming by,
under or through Sublessor or Lessor shall take any actions inconsistent with
Sublessee's right of quiet enjoyment, (iii) the Aircraft and the Aircraft
Records have been maintained in accordance with TACA's FAA approved maintenance
program during the period that such Aircraft has been leased to Sublessor, (iv)
Sublessor shall indemnify and hold Sublessee harmless from any claims or damages
arising out of that certain prior Letter of Intent by and between Sublessor and
Transbrasil S.A. Linhas Aereas concerning the Aircraft; (v) holds all material
licenses, certificates and permits necessary for the conduct of its business as
now conducted; (vi) the execution, delivery and performance of this Sublease has
been duly authorized by all necessary corporate action of Sublessor, and does
not and will not (a) result in the violation of the provisions of the charter
documents or bylaws of Sublessor as in effect on the date hereof, (b) require
stockholder approval or approval or consent of any trustee or holders of any
indebtedness of Sublessor, except such approvals which have been obtained and
are in full force and effect, (c) contravene any law, rule or regulation or any
order of any Government Entity binding on Sublessor, and (d) conflict with or
result in a breach of any terms or provisions of or constitute a default under,
or result in or require the creation or imposition of any Lien upon any material
property or assets of Sublessor under, any indenture, mortgage or other
agreement or instrument as in effect on the date hereof to which Sublessor is a
party or by which it or any of its property is bound, or any applicable law,
rule or regulation, judgment, order or decree of any Government Entity or court
having jurisdiction over Sublessor or any of its properties; (vii) this Sublease
constitutes the legal, valid and binding obligation of Sublessor, enforceable
against Sublessor in accordance with its terms except as may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or other similar
laws affecting creditors' rights generally and, to the extent that certain
remedies require or may require enforcement by a court of equity, by such
principles of equity
-15-
(regardless of whether such enforceability is considered in a proceeding at law
or in equity) as a court having jurisdiction may impose; (viii) at least fifty
percent (50%) of the issued and outstanding shares, representing 50% or more in
value of Sublessor, are owned by residents of El Salvador; and (viii) no Default
or Event of Default as defined therein has occurred and is continuing under the
Lease or the Mortgage.
(c) Manufacturer and Vendor Warranties. Sublessor hereby assigns to
Sublessee for the duration of the Sublease Term (so long as no Event of Default
shall have occurred and be continuing) all assignable warranties, if any, given
by the Manufacturer and other vendors with respect to the Aircraft and Engines
and shall obtain Manufacturer's consent to such Assignment. Sublessee will
diligently and promptly pursue any valid claims it may have under such
warranties and will provide notice of the same to Sublessor. To the extent that
any warranty given by the Manufacturer or others with respect to the Aircraft or
Engines is not assignable or otherwise made available to Sublessee, Sublessor
agrees, at its option, either (i) to authorize Sublessee to take such action to
enforce such warranty in the name of Sublessor as Sublessee sees fit or (ii) to
exert reasonable efforts at Sublessee's request and expense (and subject to
Sublessee making adequate provision to the satisfaction of Sublessor with
respect to such expense) to enforce any such warranties for the benefit of
Sublessee. Effective on the return of the Aircraft or the termination of this
Sublease, whichever is earlier, Sublessee hereby assigns any remaining
warranties, and any claims thereunder, to Sublessor or its designee. Upon
exercise by Sublessor or any Party claiming by, through or under Sublessor of
any remedies in respect of an Event of Default, and at the latest, upon
expiration of the Sublease Term, the benefit of all warranties referred to
herein shall immediately revert and be deemed to have been reassigned by
Sublessee to Sublessor.
Section 6. Maintenance; Alterations, Modifications and
Additions.
(a) Maintenance.
(i) So long as Sublessor has not committed a breach of its
covenant of quiet enjoyment which shall have the effect of depriving
Sublessee of the use or possession of the Aircraft, during the Sublease
Term and until the Aircraft is returned to Sublessor, Sublessee shall,
at its sole cost and expense, service, inspect, test, maintain,
overhaul and repair the Aircraft, the Engines and all of the Parts in
accordance with Sublessee's FAA approved airworthiness maintenance and
inspection program, a copy of which has been or will be delivered to
Sublessor on or prior to the Commencement Date (the "Maintenance
Program") and in Conformity with the rules and regulations of the FAA,
(A) so as to keep the Aircraft in as good condition (operating and
-16-
otherwise), appearance and repair as when delivered to Sublessee
hereunder, ordinary wear and tear excepted and otherwise to enable the
airworthiness certification of the Aircraft to be maintained in good
standing at all times under applicable law, and to be and remain
registered in the United States pursuant to the Federal Aviation Act,
and (B) in the same manner and with the same care as used by Sublessee
with respect to similar aircraft and engines owned or operated by
Sublessee (it being the intention of the parties hereto that Sublessee
shall not discriminate against the Aircraft in respect of any
maintenance matters). Sublessee shall be authorized to amend its
Maintenance Program; provided, however, that notwithstanding such
amendment, the Maintenance Program shall, it all times during the
Sublease Term, be in full conformity with the requirements set forth
above and, further provided, that Sublessee shall have obtained
Sublessor's prior written consent to any material amendment or change
in or to the Maintenance Program. All service, inspection, maintenance,
modification, repair and overhaul shall be performed or caused to be
performed by Sublessee in accordance with all applicable FAA
requirements and under the Maintenance Program, and shall be
accomplished in accordance with all applicable service, inspection,
maintenance, modification, repair and overhaul manuals and bulletins
published by the Manufacturer or the manufacturers of the Engines or
engines, equipment, accessories or Parts installed on the Aircraft.
Without limiting the generality of the foregoing or the obligations of
Sublessee hereunder, Sublessee agrees that such maintenance and repairs
will include but will not be limited to each of the following:
(A) to perform in accordance with the
Maintenance Program all routine and non-routine
maintenance work;
(B) to comply on a terminating basis with
all outstanding mandatory orders, airworthiness directives and
instructions issued by the FAA affecting the Aircraft that
have an effective date for compliance prior to, or sooner than
one hundred eighty (180) days after, the return date of the
Aircraft;
(C) to incorporate in the Aircraft all
service bulletins of the Manufacturer, the Engine manufacturer
and other vendors which Sublessee schedules to incorporate
during the Sublease Term on aircraft or engines in its Boeing
737 fleet;
(D) to incorporate in to maintenance
schedule for the Aircraft a corrosion control program as
recommended by Manufacturer and the FAA and to carry out such
work as may be required to comply therewith, including
periodic inspections of fuel tanks, periodic
-17-
inspection and clean-up under galleys and lavatories, the
cleaning and treating of all mild and moderate corrosion and
the correcting of all severe and exfoliated corrosion in
accordance with the recommendations of the Manufacturer; and
(E) to maintain, in the English language (1)
the Aircraft Documentation and (2) any other records, logs or
other documents, information or materials relating to the
service, inspection, testing, maintenance, modification,
overhaul and repair of the Aircraft, any Engine and any Part
which are required by the FAA or by applicable law, all of
which shall at all times be kept current and up-to-date, shall
conform with the laws of any Government Entity having
jurisdiction and with normal practices of commercial air
carriers, shall disclose the location of any Engine or Part
not installed on the Airframe and shall be made available for
review by Sublessor on reasonable notice.
(ii) Sublessee shall have designated persons in its employment
authorized by the FAA to perform service, inspection, modifications
repair and alterations of the Aircraft, and to return the Aircraft to
Sublessee's revenue service after such performance has been
accomplished by Sublessee or shall have the same performed on its
behalf by an FAA approved repair and overhaul station in conformity
with FAR 145 ("Approved Repair Facility"). For purposes hereof,
Sublessor acknowledges that Sublessee's maintenance and repairs in
connection with "C" checks and "D" checks (or the equivalent thereof)
are being Performed by Tramco, Inc. of Seattle, Washington. In the
event Sublessee has a third party accomplish, on a continuous basis,
some or all of the maintenance requirements under the Maintenance
Program (excluding "A," preflight and transit checks) such maintenance
by said third party must be accomplished in accordance with the
provisions of this Section 6(a). Sublessor shall be entitled and
Sublessee shall ensure that Sublessor is permitted to reasonably visit
the facilities of any such third party maintenance performer to inspect
the maintenance work performed on and the maintenance records of the
Aircraft including any Engine or Part.
(iii) Sublessor may request that Sublessee accomplish changes
desired by Sublessor to the Aircraft during Sublessee's layup of the
Aircraft for maintenance under the Maintenance Program in those
circumstances where such changes are not required under this Section
6(c). No such request shall be unreasonably denied by Sublessee
provided that no such changes shall require Sublessee to keep the
Aircraft out of service for any longer period than the period which
Sublessee's maintenance of the Aircraft was scheduled to require. With
respect to such requested changes, Sublessor, at its expense, shall
provide retrofit
-18-
kits of parts and installation instructions to Sublessee. Sublessor
shall, within thirty (30) days (or such earlier period as may be
required by any Authorized Repair Facility performing the requested
change(s)) of receipt of an invoice detailing the same, pay all costs
thereof which costs shall have been agreed upon prior to performance of
the requested changes.
(iv) Sublessee shall give Sublessor not less than thirty (30)
days' prior written notice of the anticipated date, location and
Approved Repair Facility in respect of any "C" check or "D" check (or
its equivalent) to be performed on the Aircraft.
(v) Repairs will be accomplished as follows: (A) any repair to
the Aircraft shall be accomplished pursuant to the appropriate
manufacturer's repair manual instructions under an FFA approved
program; and (B) any material repair to the Aircraft that is not
covered by appropriate manufacturer's repair manual instructions shall
be subject to Sublessor's prior written approval and shall be made
under an FAA approved program.
(vi) Notwithstanding anything to the contrary contained herein
and provided that the same shall not violate the terms of or conflict
with any lease, sublease, credit or security agreement to which such
engine, an aircraft engine that is not an Engine, but that is installed
on the Airframe, shall be maintained in accordance with this Section
6(a).
(b) Maintenance Reserves.
(i) Sublessee shall pay Sublessor, as Supplemental Rent for
the use of the Aircraft during the Sublease Term, within fifteen (15)
days following the last day of each calendar month during the Sublease
Term and on the redelivery date, the following sums ("Maintenance
Reserves"): (A) with respect to each Engine, the amount (the "Engine
Reserve Amount") determined by multiplying the number of Flight Hours
of operation of such Engine during the immediately preceding month
(irrespective of whether such Engine is installed on the Airframe or
any other airframe) times One Hundred and Twenty Dollars (US$120.00)
(of which Seventy Dollars (US$70.00) shall be for restoration shop
visits (the "Shop Visit Portion") and Fifty Dollars (US$50.00)shall be
towards the cost of life-limited parts (the "LLP Portion")), and (B)
with respect to the Airframe, the amount (the "Airframe Reserve
Amount") determined by multiplying the number of Flight Hours of
operation of the Airframe during such month times Seventy Dollars
(US$70.00). It is the intent of the parties hereto that the Aircraft
and Engines be operated during the Sublease Term at an average
Hour/Cycle ratio (the "Ratio")
-19-
greater than one and seven-tenths Hours to one Cycle (1.7:1). In the
event that during any calendar quarter during the Sublease Term, the
average of the Ratios corresponding to each month during such calendar
quarter shall be less (as determined in increments of one tenth of an
hour, any measurement being rounded up to the next tenth of an hour if
equal to or greater than fifty one hundredths of an hour or rounded
down to the lower one tenth of an hour if less than fifty one
hundredths of an hour) than 1.7 Hours to each Cycle (1.7:1), the LLP
Portion of the Engine Reserve Amount in respect of the next succeeding
calendar quarter shall be increased in inverse proportion to the
decrease in Ratio as evidenced by the average of the Ratios
corresponding to each month during such calendar quarter. In the event
that during any calendar quarter the average of the Ratios
corresponding to each month during such calendar quarter shall be
greater (as determined in increments of one tenth of an hour, any
measurement being rounded up to the next tenth of an hour if equal to
or greater than fifty one hundredths of an hour or rounded down to the
lower one tenth of an hour if less than fifty one hundredths of an
hour) than the one and seven tenths (1.7:1), the amount of the LLP
Portion of the Engine Reserve Amount shall be decreased in inverse
proportion to the increase in the Ratio. Any excess Maintenance
Reserves remaining at the expiration of the Sublease Term or earlier
termination of this Sublease shall be retained by Sublessor.
(ii) Sublessee shall be entitled to reimbursement from the Shop
Visit Portion of the Engine Reserve Amount held for an Engine for
Sublessee's actual costs (without xxxx-up) incurred with respect to
heavy maintenance of such Engine requiring a shop visit, excluding any
costs associated with replacement of life limited parts and the cost
of any repairs or maintenance required due to accidents, abuse,
misuse, mishandling, faulty maintenance, foreign object damage,
elective part replacement or any insured event. Such reimbursement
shall be made within ten (10) Business Days after presentation to
Sublessor of appropriate written evidence of such expenses (which
shall include a copy of an invoice from an FAA-approved maintenance
facility indicating that the maintenance has been completed and
identifying those engine maintenance tasks accomplished and the labor
and material breakdown thereof, and a receipt from the maintenance
facility for payment of the invoice, or at least such amount thereof
as shall exceed the portion of the Maintenance Reserves available to
Sublessee hereunder); provided, that (A) the amount reimbursed to
Sublessee shall not exceed the amount of the Maintenance Reserves paid
by Sublessee (and not previously disbursed) allocable to the Shop
Visit Portion of the Engine Reserve Amount for the Engine requiring a
shop visit, and (B) in no event shall Sublessee be entitled to
reimbursement for any expenses related to removal or installation of
any Engine for
-20-
maintenance or any other shipping or transportation expenses. To the
extent that any amount reimbursable hereunder has not been paid by
Sublessee, such amount shall be paid directly to the maintenance
facility which performed the services for which reimbursement is
sought.
(iii) Sublessee shall be entitled to reimbursement from the
LLP Portion of the Engine Reserve Amount (i) for the full replacement
cost of life limited parts having a remaining life of up to and
including one thousand two hundred fifty (1250) Cycles. Upon
reimbursement of such replacement costs, Sublessee shall deliver the
removed life limited parts to Sublessor at the overhaul facility and
cause title thereto to vest in Sublessor free and clear of all Liens
other than Sublessor Liens, and (ii) of such portion of the replacement
cost of life limited parts having a remaining life in excess of one
thousand two hundred fifty (1250) Cycles as corresponds to the utilized
(non-remaining) portion of the life of such life limited parts as
compared to the total life thereof when new, as expressed in Cycles.
With respect to such life limited parts having a remaining life in
excess of one thousand two hundred fifty (1250) Cycles, title to such
life limited parts shall be deemed to vest in Sublessee upon
installation of replacement parts on an Engine. Such reimbursement
shall be made within ten (10) Business Days after presentation to
Sublessor of appropriate written evidence of such costs (which shall
include a copy of an invoice from an FAA-approved supplier of such life
limited parts, identifying those purchased and receipt of payment
therefor or at least payment for such portion as shall exceed the LLP
Portion of the Engine Reserve Amount available to Sublessee hereunder
and of the Approved Repair Facility indicating that such life limited
parts have been installed on an Engine; provided, that (A) the amount
reimbursed to Sublessee shall not exceed the amount of the Maintenance
Reserves paid by Sublessee (and not previously disbursed) allocable to
the LLP Portion of the Engine Reserve Amount for the Engine requiring a
shop visit, and (B) in no event shall Sublessee be entitled to
reimbursement for any expenses related to removal, shipping or
transportation expenses. To the extent that any amount reimbursable
hereunder has not been paid by Sublessee, such amount shall be paid
directly to the supplier of the life limited part(s) for which
reimbursement is sought.
(iv) Sublessee shall be entitled to reimbursement from the
Airframe Reserve Amount for the costs incurred pursuant to a full
structural and systems "D" check (or its equivalent) to occur during
the Sublease Term. Such reimbursement shall be made within ten (10)
Business Days after presentation to Sublessor of appropriate written
evidence of such expenses (which shall include a copy of an invoice
from an FAA-approved maintenance facility indicating that the "D" check
(or its equivalent) has been completed
-21-
and identifying those maintenance tasks accomplished and the labor and
material breakdown thereof, and a receipt from the maintenance facility
for payment of the invoice, or at least such amount thereof as shall
exceed the portion of the Maintenance Reserves available to Sublessee
from the Airframe Reserve Amount hereunder); provided, that (A) the
amount reimbursed to Sublessee shall not exceed the amount of the
Maintenance Reserves paid by Sublessee (and not previously disbursed)
allocable to the Airframe Reserve Amount, and (B) in no event shall
Sublessee be entitled to reimbursement for any expenses related to
removal, shipping or transportation expenses. To the extent that any
amount reimbursable hereunder has not been paid by Sublessee, such
amount shall be paid directly to the maintenance facility which
performed the "D" check for which reimbursement is sought.
(v) In respect of any maintenance work to be performed or
replacement of life limited parts for which reimbursement from the
applicable portion of the Maintenance Reserves will be requested,
Sublessee, prior to the performance of such maintenance or replacement
of life limited parts, shall deliver to Sublessor a detailed work scope
to be performed with an estimate of all costs to be incurred in
connection with such maintenance and/or replacement of life limited
parts, including, without limitation, the estimated cost of labor,
materials and parts for which reimbursement is available under this
Section 6(b).
(vi) Provided that no breach by Sublessor of Sublessor's
covenant of quiet enjoyment depriving Sublessee of its use or
possession of the Aircraft has occurred and is continuing, nothing
therein shall modify, limit or otherwise affect Sublessee's obligation
to maintain and repair the Aircraft in accordance with the terms of
this sublease and, except as specifically provided herein, any and all
maintenance and repairs on or to the aircraft shall be at sublessee's
sole cost and expense.
(c) Replacement of Parts. Sublessee, at its own cost and expense
(except as otherwise expressly provided herein), will promptly replace all Parts
that may from time to time be incorporated or installed in or attached to the
Aircraft or any Engine and that may from time to time become worn out, lost,
stolen, destroyed, seized, confiscated, damaged beyond repair or permanently
rendered unfit for use for any reason whatsoever, except as otherwise provided
in Section 6(e). In addition, Sublessee may, at its own cost and expense, remove
in the ordinary course of maintenance, service, repair, overhaul or testing, any
Parts, whether or not worn out, lost, stolen, destroyed, seized, confiscated,
damaged beyond repair or permanently rendered unfit for use; provided that
Sublessee, except as otherwise provided in Section 6(e), will, at its own cost
and expense, replace such Parts as promptly as possible.
-22-
All replacement Parts shall (i) be free and clear of all Liens (except Permitted
Liens, as hereinafter defined, and except for pooling arrangements to the extent
permitted by Section 6(d)), (ii) be in airworthy and good operating condition
and of at least equivalent model and modification status and have a value and
utility at least equal to, the Parts replaced (assuming such replaced Parts were
in the condition and repair required to be maintained by the terms hereof) and
(iii) if applicable, have a current "serviceable tag" of the manufacturer or
maintenance facility providing such items to Sublessee, indicating that such
Parts are new, serviceable or overhauled. All Parts at any time removed from the
Aircraft or any Engine shall remain subject to this Sublease, no matter where
located, until such time as such Parts shall be replaced by Parts that have been
incorporated or installed in or attached to the Aircraft or such Engine and that
meet the requirements for replaced Parts specified above. Immediately upon any
replacement Part becoming incorporated or installed in or attached to the
Aircraft or any Engine as above provided, without further act, (i) title to the
replaced Part shall thereupon vest in Sublessee, free and clear of Sublessor's
Liens and all rights of Sublessor, Agent and the Lenders and shall no longer be
deemed a Part hereunder provided, however, that in the case of any Part that is
replaced by a replacement Part subject to a pooling arrangement, title to such
replaced Part shall not vest in Sublessee until Sublessee has complied with the
provisions of Section 6(d), (ii) title to such replacement Part shall vest in
Sublessor and such replacement Part shall thereupon become subject to this
Sublease (subject only to a pooling arrangement to the extent permitted by
Section 6(d)) and (iii) such replacement Part shall be deemed part of the
Aircraft or such Engine for all purposes hereof to the same extent as the Parts
originally incorporated or installed in or attached to the Aircraft or such
Engine.
Notwithstanding the provisions of this Section 6(c), provided that no
Event of Default has occurred and is continuing, Sublessee may install any
engine or part on the Aircraft by way of temporary replacement if: (i) there is
not available to Sublessee at the time and in the place that an engine or part
is required to be installed on the Aircraft, a Replacement Engine or, as the
case may be, Part complying with the requirements of Section 6(c); (ii) it would
result in an unreasonable disruption of the operation of the Aircraft and/or the
business of Sublessee to ground the Aircraft until an Engine or Part, as the
case may be, complying with Section 6(c) becomes available for installation on
the Aircraft; and (iii) as soon as practicable after installation of the same on
the Aircraft but, in any event, no later than the date of the next major
maintenance check (except as such time may be extended pursuant to Section
8(b)), Sublessee removes any such engine or part and replaces it with an Engine
or Part, as the case may be, complying with Section 6(c).
(d) Pooling of Parts. Any Part (other than Engines) removed from the
Aircraft as provided in Section 6(c) may be
-23-
subjected by Sublessee to a normal pooling arrangement customary in the airline
industry entered into in the ordinary course of Sublessee's business with
financially and operationally responsible air carriers; provided no Default of
Event of Default shall have occurred and be continuing and further provided that
the Part replacing such removed Part shall be incorporated or installed in or
attached to the Aircraft in accordance with Section 6(c) after the removal of
such removed Part. In addition, any replacement Part when incorporated or
installed in or attached to the Aircraft in accordance with Section 6(c) may be
owned by a financially and operationally responsible air carrier subject to such
a normal pooling arrangement; provided that Sublessee, at its expense, either
(i) causes such replacement Part to become subject to this Sublease in
accordance with Section 6(c) by Sublessee acquiring title thereto for the
benefit of Sublessor free and clear of all Liens other than Permitted Liens or
(ii) replaces such replacement Part by incorporating or installing in or
attaching to the Aircraft a further replacement Part owned by Sublessee free and
clear of all Liens other than Permitted Liens and by causing such further
replacement Part to become subject hereto in accordance with Section 6(c).
(e) Alterations, Modifications and Additions. EXCEPT FOR SUCH
ALTERNATIONS AND MODIFICATIONS TO THE AIRCRAFT AND THE ENGINES AS MAY BE
REQUIRED FROM TIME TO TIME TO MEET THE STANDARDS OF THE FAA OR OTHER
GOVERNMENTAL ENTITY HAVING JURISDICTION AND AS REQUIRED TO CONFORM TO
MANUFACTURERS' MANDATORY SERVICE BULLETINS, SUBLESSEE SHALL MAKE NO ALTERATIONS,
MODIFICATIONS OR ADDITIONS TO THE AIRCRAFT OR ANY ENGINE WITHOUT THE PRIOR
WRITTEN CONSENT OF SUBLESSOR. Sublessee, at its own expense, will make such
alterations and modifications to the Aircraft and the Engines as may be required
from time to time to meet the standards of the FAA or other Governmental Entity
having jurisdiction and as required to conform to Manufacturers' mandatory
service bulletins, and shall notify Sublessor of the nature and schedule for
making such changes and, upon submission of the Monthly Report for the month
during which competition of the same shall have occurred, of completion thereof.
Unless expressly required by the FAA or Manufacturer's mandatory service
bulletins, no alteration, modification or addition shall diminish the value or
utility of the Aircraft or such Engine, or impair the condition or airworthiness
thereof, below the value, utility, condition and airworthiness thereof
immediately prior to such alteration, modification or addition (assuming the
Aircraft or such Engine was then of the value or utility and in the condition
and airworthiness required to be maintained by the terms of this Sublease), it
being understood that any such alteration, modification or addition that
adversely affects interchangeability of Parts shall be deemed to diminish the
value of the Aircraft. Promptly upon request therefor, Sublessee shall provide
to Sublessor copies of all drawings and data with respect to any proposed
alteration, modification or addition not mandated by the FAA. Sublessor may
impose as a condition to its consent
-24-
to all or any part of such proposed alteration, modification or addition that,
prior to the return of the Aircraft to Sublessor in accordance with Section 10,
such alteration, modification or addition be removed and the Aircraft returned,
all at Sublessee's expense, to the condition it was in prior to such alteration,
modification or addition, and otherwise as required by Section 10. All parts
incorporated or installed in or attached or added to the Aircraft or such Engine
as the result of such alteration, modification or addition shall, without
further act, become subject to this Sublease. Notwithstanding the foregoing
sentence of this Section 6(e), so long as no Default or Event of Default shall
have occurred and be continuing, Sublessee may remove any Part; provided that
(i) such Part is in addition to, and not in replacement of or substitution for,
any Part originally incorporated or installed in or attached to the Aircraft or
any engine at the time of delivery thereof hereunder or any Part in replacement
of, or substitution for any such Part, (ii) such Part is not required to be
incorporated or installed in or attached or added to the Aircraft or such Engine
pursuant to the terms of this Section 6(e) and (iii) such Part can be removed
from the Aircraft or such Engine without diminishing or impairing the value,
utility, condition or airworthiness required to be maintained by the terms of
this Sublease that the Aircraft or such Engine would have had at such time had
such removal not occurred. Upon the removal by Sublessee of any Part as above
provided, title thereto shall, without further act, vest in Sublessee and such
Part shall no longer be deemed part of the Aircraft or such Engine from which it
was removed. Any Part removed by Sublessee in any manner other than as above
provided prior to the return of the Aircraft or such Engine to Sublessor
hereunder shall remain the property of Sublessor.
Notwithstanding anything herein to the contrary, Sublessee shall be
permitted to install and remove, at its sole cost and expense, new galleys,
seats, video and entertainment systems and telephones, provided that Sublessee
shall store any galleys and video, entertainment and telephone systems currently
installed on the Aircraft and removed therefrom by Sublessee, in a safe manner
and at its sole cost and expense and, provided, except as otherwise agreed
between Sublessee and Sublessor, that any such equipment installed upon the
Aircraft by Sublessee is removed by Sublessee at its sole cost and expense and
Sublessee shall return the Aircraft with the Sublessor's equipment reinstalled
thereon or, if lost or damaged, with the equivalent thereof, satisfactory to
Sublessor, and further provided that Sublessee shall repair at its sole cost and
expense and to Sublessor's reasonable satisfaction, any damage to the Aircraft
caused by or in connection with such installation and removal.
Section 7. Title and Registration; Liens; Possession.
(a) Title and Registration. Sublessee acknowledges and agrees that as
between Sublessee and Sublessor, title shall at all times be and remain vested
solely and exclusively in Lessor,
-25-
and Sublessee shall have no right, title or interest in the Aircraft except the
right to use the Aircraft as provided herein. The Aircraft has been duly
registered, and shall at all times during the Sublease Term remain duly
registered, in the name of Lessor under the laws of the United States, except as
otherwise required by the Federal Aviation Act. Sublessee, at its sole cost and
expense, shall from time to time do or cause to be done any and all acts and
things then required by law (including the Geneva Convention on International
Recognition of Rights in Aircraft, if applicable) or by practice, custom or
understanding or as Sublessor may reasonably request to protect, preserve and
perfect Sublessor's, Lessor's, Agent's and any Lender's rights and interests in
the Aircraft, the Lease and this Sublease in the United States or in any other
jurisdiction into or over which Sublessee may operate the Aircraft or to which
Sublessee is subject. Without limiting the generality of the foregoing, if at
any time any filing or recording is necessary or advisable to perfect, protect
and/or preserve the rights and interests of Sublessor, Lessor, Agent or any
Lender in the Aircraft (including Engines and Parts), the Lease or this
Sublease, Sublessee shall, at its own cost and expense, cause this Sublease, the
Lease, financing statements with respect hereto or thereto, and any and all
additional documents or instruments which shall be executed pursuant to the
terms hereof or thereof, so far as permitted by applicable law, to be kept,
filed and recorded and to be reexecuted, refiled and rerecorded at all times in
the appropriate offices pursuant or in relation to the applicable laws and
regulations of the United States, and shall furnish to Sublessor an opinion of
counsel and/or other evidence satisfactory to Sublessor of such registrations,
recordation and filings required hereunder.
(b) Liens. Sublessee will not directly or indirectly create, incur,
assume or suffer to exist any Lien on or with respect to the Airframe or any
Engine, title thereto or any Part or interest therein or in this Sublease except
(i) the respective rights of Sublessor and Sublessee as herein provided, (ii)
the rights of others under agreements or arrangements to the extent expressly
permitted by the terms of Sections 6(d), (iii) Sublessor Liens, (iv) Liens for
Taxes either not yet due or being contested in good faith (and, in respect of
such contest, for the payment of which adequate reserves have been provided) by
appropriate proceedings diligently pursued so long as such proceedings do not
involve any material danger of the sale, forfeiture or loss of the Airframe or
any Engine or Part or interest therein and (v) materialmen's, mechanics',
workmen's, repairmen's, employees' or other like Liens arising in the ordinary
course of business for amounts the payment of which is either not yet delinquent
or is being contested in good faith (and, in respect of such contest, for the
payment of which adequate reserves or other adequate provisions for payment by
way of security or otherwise, have been provided) by appropriate proceedings
diligently pursued so long as such proceedings do not involve any danger of the
sale, forfeiture or loss of the
-26-
Airframe or any Engine or Part or interest therein (each of the Liens referred
to in clauses (i) to (v) being herein referred to as "Permitted Liens").
Sublessee will notify, as soon as reasonably practicable, Sublessor and shall
promptly, at its sole cost and expense, take such action as may be necessary to
discharge any such lien not excepted above if the same shall arise at any time.
Sublessee hereby further agrees that no mechanics' or similar Lien for any
labor, services or materials supplied directly by Sublessee, shall attach to or
otherwise affect the Aircraft, any Engine or any Part and Sublessee hereby
irrevocably waives disclaims and releases any such Lien.
(c) Operation, Quiet Enjoyment. Sublessee shall not operate or locate
the Aircraft, or suffer the Aircraft to be operated or located, (i) in violation
of any applicable law or the Aircraft's certificate of airworthiness, (ii) other
than on regularly scheduled or charter commercial passenger or cargo flights
between any points in the Americas except (inclusive of any landings) in Cuba
except if otherwise required to ferry the Aircraft to an Approved Repair
Facility, (iii) in any area excluded from coverage by any insurance required by
the terms of Section 9, or (iv) in any recognized or threatened area of
hostility without Sublessor's written consent and unless fully covered to
Sublessor's satisfaction by war risk, confiscation and hijacking insurance.
Sublessee shall not use the Aircraft for testing or for training of flight
crewmembers other than Sublessee's own crewmembers. Except as otherwise provided
herein, Sublessee shall pay all costs incurred in the operation of the Aircraft
during the Sublease Term, for profit or otherwise, including the costs of flight
crews, cabin personnel, fuel, oil, lubricants, maintenance, insurance, storage,
landing and navigation fees, airport charges, passenger service and any and all
other expenses of any kind or nature, directly or indirectly, in connection with
or related to the use, movement and operation of the Aircraft. Provided no
Default or Event of Default shall occur and be continuing, Sublessor shall not
take or cause or permit to be taken any action inconsistent with Sublessee's
right of quiet enjoyment of, or otherwise in any way interfere with or interrupt
the continuing use, operation and possession of the Aircraft, the Airframe or
any Engine by Sublessee.
(d) Possession. EXCEPT AS OTHERWISE PROVIDED IN THIS SECTION 7(d),
SUBLESSEE SHALL HAVE NO RIGHT WHATSOEVER TO SUBLEASE THE AIRCRAFT OR ANY ENGINE
TO ANY PERSON WITHOUT HAVING OBTAINED THE PRIOR WRITTEN CONSENT OF SUBLESSOR,
LESSOR AND AGENT. Sublessor agrees that it will not unreasonably withhold its
consent to a proposed sublease by Sublessee. In addition and notwithstanding
anything in this Sublease to the contrary, Sublessee will not in any manner
without Sublessor's prior written consent deliver, transfer or relinquish
possession of the Aircraft, the Airframe or any Engine or install any Engine, or
permit any Engine to be installed, on any airframe other than the Airframe;
provided, that, so long as no Default or Event of
-27-
Default shall have occurred and be continuing, and so long as the action to be
taken shall not deprive Lessor of its interest in the Aircraft or Lender of the
perfected first priority Lien of the Mortgage, Sublessee may, from time to time,
take any of the following actions:
(i) deliver possession of the Airframe or any Engine to the
manufacturer thereof or to any organization for testing, service,
repair, maintenance or overhaul work on the Airframe or any Engine or
any Part of any thereof or for alterations or modifications in or
additions to such Airframe or any Engine to the extent required or
permitted by the terms of Section 6(c); or
(ii) to the extent permitted by this Section 7(d), subject any
appliances, parts or other equipment owned by Lessor and removed from
the Airframe or any Engine to any pooling arrangement referred to in
Section 6(d) of the Sublease; or
(iii) install the Engines on any airframe owned or leased by
Sublessee; provided that, no lien shall attach to any such Engine by
virtue of or in connection with such installation, and the owner,
lessor, or any party having a security interest in any such airframe
grants reciprocal rights to Sublessor, Lessor and Lender; and further
provided that, Sublessee shall maintain any and all insurance required
to be maintained upon or in respect of the Engines hereunder at all
times during the Sublease Term and until redelivery of the same in the
conditions required in Section 10 hereof; or
(iv) transfer possession of the Airframe or any Engine to any
Government Entity of the United States pursuant to a sublease, a copy
of which shall be promptly furnished to Sublessor, provided that such
sublease shall (A) not extend beyond the end of the Sublease Term and
(B) Lessee shall have delivered to Sublessor signed copies of a notice
of assignment of such sublease in favor of Sublessor and each of the
Lenders under the Assignment of Claims Act of 1940, as amended (31
U.S.C. Section 3727, 41 U.S.C. Section 15) or any superseding or
successor provisions thereto, and in compliance with the applicable
provisions of 32 C.F.R. Section 7-103.8 and 41 C.F.R. Section 1-30.7,
or superseding or successor laws and regulations, and Sublessor may at
any time when a Default or Event of Default shall have occurred and
then be continuing, file such sublease and an original and three copies
of such notice of assignment with the proper contracting and disbursing
officers and otherwise comply with all applicable provisions of 32
C.F.R. Section 7-103.8 or any superseding or successor provisions
thereto.
Any "wet lease" or other similar arrangement under which Sublessee
maintains operational control of, and continues to
-28-
maintain and insure the Aircraft, for a term not exceeding twelve (12) months
(including all extensions and renewals), shall not constitute a sublease,
transfer or relinquishment of possession for purposes of this Section 7(d).
Sublessee shall notify Sublessor concurrently with entering into any "wet lease"
with a term, including renewals of more than six (6) months.
No sublease, transfer or relinquishment of possession of the Airframe
or any Engine permitted under this Section 7(d) shall in any way discharge or
diminish any of Sublessee's obligations hereunder, or constitute a waiver of any
of Sublessor's rights and remedies hereunder. Notwithstanding any sublease,
transfer or relinquishment of possession permitted under this Section 7(d),
Sublessee shall remain primarily liable hereunder for the performance of all of
the terms of this Sublease to the same extent as if any such transfer or
relinquishment of possession had not occurred.
(e) Identification Plates. Sublessee shall at all times maintain in a
prominent position in the cockpit of the Airframe and on each Engine the
identification plates installed thereon or attached thereto. Sublessee shall
promptly replace any such identification plate that becomes illegible, lost,
damaged or destroyed for any reason.
(f) Reporting Requirements. Commencing with a report furnished fifteen
(15) days after the end of the calendar month of the Commencement Date,
Sublessee will furnish to Sublessor a Monthly Report in the form attached hereto
as Exhibit G, which report will include (i) the hours/cycles operated for the
Airframe and each of the Engines (and their location by airframe). On at least a
quarterly basis Sublessee's report will also contain a list of those service
bulletins, ADs and engineering modifications incorporated on the Aircraft. Each
Monthly Report will be furnished within fifteen (15) days after the end of each
calendar month, except that the Monthly Report pertaining to the last month (or
any portion thereof) of the Sublease Term will be furnished to Lessor on the
last day of the Sublease Term.
(g) Inspections. During the Sublease Term Sublessee shall furnish
Sublessor such information concerning the location, condition, use and operation
of the Aircraft as Sublessor may reasonably request. Sublessee shall give
Sublessor reasonable prior notice of the anticipated date of any major
maintenance checks, in order to enable Sublessor to inspect the Aircraft (should
it choose to do so) at the time and place such major checks occur. Sublessor
shall be entitled to have its technical representatives present during any major
maintenance checks. On reasonable notice, Sublessor and/or its authorized agents
or representatives shall have the right to inspect the Aircraft and Aircraft
documentation (whether in connection with scheduled major maintenance checks or
otherwise) and/or make copies of the Aircraft documentation; provided, that such
inspections do not
-29-
unreasonably disrupt Sublessee's commercial operations or operation of the
Aircraft. Sublessor shall have no duty to make any such inspection and shall not
incur any liability or obligation by reason of making or not making any such
inspection or by reason of any reports it receives or any reviews it may make of
the Aircraft records.
Section 8. Loss, Destruction, Requisition, etc. During the
Sublease Term except as otherwise expressly provided herein, Sublessee shall
bear the entire risk of loss of or damage to the
Aircraft. Accordingly:
(a) Event of Loss with Respect to the Aircraft. Upon the occurrence of
an Event of Loss with respect to the Aircraft, Sublessee shall forthwith (and,
in any event, within seven (7) days after such occurrence) give Sublessor
written notice of such Event of Loss. On or before the earlier to occur of (x)
the actual receipt by Sublessee of any insurance proceeds in respect of such
Event of Loss and (y) the one hundred twentieth (120th) day after the date of
such Event of Loss, but in no case later than the last day of the Sublease Term,
Sublessee shall pay to Agent in immediately available funds the Stipulated Loss
Value, whereupon (1) the obligation of Sublessee to pay Basic Rent with respect
to the Aircraft for any period commencing after the date of payment of such
Stipulated Loss Value shall terminate; provided the Sublessee shall remain
liable for all payments of Basic Rent due on or before the date of such payment
of Stipulated Loss Value, (2) the Sublease Term shall end and (3) Sublessor,
after compliance by Sublessee with all of its other obligations hereunder,
including without limitation payment of Supplemental Rent then due, will cause
Lessor to transfer to Sublessee, without recourse or warranty, title to the
Aircraft free and clear of Sublessor Liens and shall cause Agent to execute and
deliver to Sublessee an appropriate instrument releasing the Aircraft from the
Lien of the Mortgage.
(b) Event of Loss with Respect to an Engine. Upon the occurrence of an
Event of Loss with respect to an Engine only, Sublessee shall give Sublessor
prompt written notice thereof and shall, as soon as practical but in any event
within one hundred twenty (120) days after the occurrence of such Event of Loss,
convey or cause to be conveyed to Lessor, as replacement for the Engine with
respect to which such Event of Loss occurred, title to a Replacement Engine free
and clear of all Liens, other than Permitted Liens, and having a value, utility,
mod status at least equal to, and of the same or improved model, service
bulletin status, and maintenance status (i.e., total time, hours/cycles
remaining until next inspection, overhaul or scheduled removal) and in at least
as good operating condition as, the Engine with respect to which such Event of
Loss occurred, assuming such Engine was of the value, utility and remaining life
and in the condition and repair required by the terms hereof immediately prior
to the occurrence of such Event of Loss. Prior to or at the time of any such
conveyance, Sublessee, at its own expense,
-30-
will promptly (i) furnish Lessor with a xxxx of sale, in form and substance
satisfactory to Lessor, with respect to such Replacement Engine; (ii) cause a
supplement hereto, in form and substance reasonably satisfactory to Sublessor,
subjecting such Replacement Engine to this Sublease, to be duly executed by
Sublessee, and recorded pursuant to the Federal Aviation Act; (iii) furnish
Sublessor, Lessor and Agent with such evidence of title to such Replacement
Engine and of compliance with the insurance provisions of Section 9 with respect
to such Replacement Engine as either of them may reasonably request; (iv)
furnish Sublessor, Lessor and Agent with an opinion of Sublessee's counsel to
the effect that title to such Replacement Engine has been duly conveyed to
Lessor free and clear of all Liens, encumbrances and rights of others (except
Permitted Liens) and is duly leased hereunder; (v) furnish Sublessor with a
certificate signed by a duly authorized financial officer or executive of
Sublessee certifying that Sublessee's representations and warranties set forth
in Section 11 are true and accurate on and as of said date as though made on and
as of said date and that upon consummation of such replacement, no Default or
Event of Default will exist hereunder; (vi) furnish Sublessor with such
documents and evidence with respect to Sublessee as Sublessor or Lessor may
reasonably request in order to establish the consummation of the transactions
contemplated by this Section 8(b), the taking of all corporate proceedings in
connection therewith and compliance with the conditions set forth in this
Section 8(b), in each case in form and substance satisfactory to such party;
(vii) furnish Sublessor with a certificate of a duly authorized officer of
Sublessee to the effect that no Event of Default has occurred and is continuing;
and (viii) furnish Sublessor with Uniform Commercial Code financing statements
covering such Replacement Engine. Upon full compliance by Sublessee with the
terms of this subparagraph (b), such Engine shall no longer be subject to the
terms of this Sublease and Sublessor will cause Lessor to transfer to Sublessee
title to the Engine with respect to which the Event of Loss occurred, without
recourse or warranty (except that the Engine is free and clear of Sublessor
Liens) and shall cause Agent and Lessor to execute and deliver to Sublessee an
instrument releasing the Engine from the Lien of the Mortgage and the Lease. For
all purposes hereof, each such Replacement Engine shall be deemed part of the
property leased hereunder, shall be deemed an "Engine" as defined herein and
shall be deemed part of the Aircraft as was the Engine replaced thereby. No
Event of Loss covered by this Section 8(b) shall result in any reduction in
Basic Rent. Notwithstanding the foregoing, if, as of the one hundred twentieth
(120th) day following the occurrence of the Event of Loss, Sublessee shall not
have furnished a Replacement Engine as required hereunder and conforming to the
requirements set forth above, at Sublessor's option (i) Sublessor shall extend
the time period within which Sublessee may perform its obligations to furnish a
Replacement Engine hereunder, or, (ii) Sublessee shall forthwith pay to
Sublessor, an amount equal to the Engine Loss Value and upon receipt of such
payment Sublessor
-31-
shall, as soon as practicable but in any event prior to the end of Sublease
Term, convey or cause to be conveyed to Lessor, and to be leased to Sublessor
and subleased to Sublessee hereunder, a Replacement Engine complying with the
conditions of this Section 8(b). Notwithstanding the provisions of Section 6(c)
hereof any engine installed by Sublessee on the Aircraft following an Event of
Loss to an Engine may remain thereon until replaced by a Replacement Engine as
hereinafter provided.
(c) Application of Payments from Governmental Authorities. Any payments
(other than insurance proceeds the application of which is provided for in
Section 9) received at any time by Sublessor or by Sublessee from any Government
Entity or other Person with respect to an Event of Loss resulting from the
condemnation, confiscation, theft or seizure of, or requisition of title to or
use of, the Aircraft or any Engine, other than a requisition for use by a
Government Entity of the United States not constituting an Event of Loss, will
be applied as follows:
(i) if such payments are received with respect to the Airframe
or the Airframe and one or more Engines or engines installed on the
Airframe, such payment shall be paid to or retained by Sublessor and
applied in reduction of Sublessee's obligation to pay the Stipulated
Loss Value, if not already paid by Sublessee, or, if already paid by
Sublessee, shall be paid to or retained by Sublessee and applied to
reimburse Sublessee for its payment of such Stipulated Loss Value, and
the balance, if any, of such payment remaining thereafter shall be
distributed to Sublessee; and
(ii) if such payments are received with respect to an Engine,
such payments shall be held by the Sublessor until (A) replacement of
the Engine by Sublessee by a Replacement Engine at which time said
payments shall be paid to Sublessee; (B) if Sublessor shall have
elected to provide a Replacement Engine as provided in Section 9(b)
said payments shall be applied in reduction of Sublessee's obligation
to pay the Engine Loss Value, if not already paid by Sublessee; or if
already paid by Sublessee, shall be paid to Sublessee and applied to
reimburse Sublessee for its payment of such Engine Loss Value; and, (C)
the balance, if any, of such payment remaining thereafter to Sublessee.
(d) Requisition of Use of the Aircraft. In the event of the requisition
for use of the Aircraft by a Government Entity of the United States and one or
more related Engines or engines during the Sublease Term under circumstances not
constituting an Event of Loss, Sublessee shall promptly notify Sublessor of such
requisition. All of Sublessee's obligations under this Sublease with respect to
such Aircraft including, but not limited to Sublessee's obligation to pay Rent,
shall continue to the same extent as if such requisition had not occurred. In
the event of a breach of Sublessee's obligations pursuant to this Section
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8(d), all payments received by Sublessor or Sublessee from such Government
Entity for the use of such Aircraft and Engines or engines shall be paid over
to, or retained by, Sublessor to the extent of Sublessee's obligations under
this Sublease.
(e) Quiet Enjoyment. Notwithstanding the provisions of this Section 8,
if (i) Sublessee has been deprived of both use and possession of the Aircraft or
any Engine or Part thereof solely as a result of the breach by Sublessor of its
covenant of quiet enjoyment set forth herein and (ii) Sublessee shall have
provided Sublessor written notice to the effect that Sublessee has been deprived
of such use and possession and that Sublessee intends to cancel its insurance
with respect to the Aircraft or any such Engine or Part on a date specified in
such notice (which date shall not be earlier than thirty (30) days after the
date of Sublessor's receipt of such notice), then, from and after the date so
specified, but only during the period that Sublessee shall continue to be
deprived of both use and possession of the Aircraft or such Engine or Part (the
"Suspension Period"), (A) Sublessor shall bear the entire risk of loss or damage
thereof (other than loss or damage caused by an act or omission of Sublessee
during the Suspension Period), and (B) Sublessee shall be relieved of its
obligation to maintain insurance, as set forth in Section 9 hereof, with respect
thereto. In the event of an Event of Loss of the Aircraft during any such
period, the Sublease shall terminate and, upon such termination (i) the Aircraft
shall be deemed to have been redelivered to Sublessor in the condition required
as of the date on which such deprivation of use or possession first occurred,
(ii) Sublessee shall be relieved of all further obligations hereunder except
such as are expressly stated to survive the termination of this Sublease and
(iii) Sublessor, shall, return the Security Deposit to Sublessor as provided in
Section 3. In the event of an Event of Loss with respect to an Engine not
involving an Event of Loss with respect to the Airframe during any such period,
Sublessor shall at its sole cost and expense, as soon as practicable but in any
event within 120 days after the date of such Event of Loss, provide a
Replacement Engine complying with all terms of this Sublease and meeting all
conditions otherwise imposed hereunder on Sublessee in the event of an Event of
Loss with respect to an Engine. Immediately upon Sublessee being restored use
and possession of the Aircraft or any Engine or Part with respect to which the
risk of loss shall have passed from Sublessee to Sublessor in accordance with
this Section 8(e), the entire risk of loss thereof shall again be borne by
Sublessee in accordance with the terms of this Sublease.
Section 9. Insurance. Except as otherwise set forth in Section 8(e)
hereof in respect of any Suspension Period, Sublessee, at its sole cost and
expense, shall maintain or cause to be maintained throughout the Sublease Term
and until the return of the Aircraft to Sublessor in such condition as is
required under Section 10 hereof with insurers of recognized responsibility and
good repute and under policies reasonably
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satisfactory to Sublessor all such insurance as is required to be procured and
maintained pursuant to this Section 9. Such insurance shall include:
(a) Liability. Public liability (including, without limitation,
aircraft third-party, baggage, cargo, contractual and passenger legal liability
including war risks), property damage liability insurance with respect to the
Aircraft and general airline third party legal liability (including products
liability insurance) with insurers of recognized responsibility and good repute
specializing in aviation insurance in the leading international markets, in form
satisfactory to Sublessor and Lender and in amounts at least equal to the
greater of (a) Three Hundred Fifty Million Dollars (US$350,000,000) per
occurrence subject to no deductible except deductibles as to baggage and cargo
that are standard in the airline industry in respect of carriers operating in
the countries in which Sublessee operates and (b) the amount of such insurance
carried by Sublessee applicable to other aircraft of similar type in Sublessee's
fleet.
(b) Other Insurance.
(i) all-risk (including, without limitation, ground and
flight) aircraft hull insurance with respect to the Aircraft in an
amount which shall not at any time while the Aircraft is subject to
this Sublease be less than Stipulated Loss Value;
(ii) hull war-risk insurance with respect to the Aircraft in
an amount which shall not be less than the Stipulated Loss Value of the
Aircraft; provided, further, however, that such insurance shall include
but not be limited to, coverage against (1) war, invasion, acts of
foreign enemies, hostilities (whether war be declared or not), civil
war, rebellion, revolution, insurrection, martial law, military or
usurped power or attempts at usurpation of power, (2) strikes, riots,
civil commotions or labor disturbances, (3) any act of one or more
persons, whether or not agents of a sovereign power, for political or
terrorist purposes and whether the loss or damage resulting therefrom
is accidental or intentional, (4) any malicious act or act of sabotage,
(5) confiscation, nationalization, seizure, restraint, detention,
appropriation, requisition of title or use (other than requisition for
use by a Government Entity of the United States) by or under the order
of any government (whether civil, military or de facto) or any public
or local authority and (6) hijacking or any unlawful seizure or
wrongful exercise of control of the Aircraft or crew in flight
(including any attempt at such seizure or control) made by any person
or persons on board the Aircraft acting without the consent of
Sublessee;
(iii) All-risk (including, without limitation, fire, transit
and extended coverage) insurance, and war-risk insurance of the type
specified in Section 9(b)(ii) to the extent available, with respect to
each Engine when not installed on the
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Airframe in an amount not less than the Engine Loss Value of such Engine;
(iv) such other insurance as Sublessee carries in respect of
other similar aircraft in its fleet.
Notwithstanding anything in the foregoing to the contrary, no insurance
shall have a deductible in excess of $750,000.
(c) Terms of Insurance.
(i) Without limiting any of Sublessee's obligations hereunder,
any policies carried in accordance with Section 9(a) of this Sublease
covering the Aircraft or the Engines and any policies taken out in
substitution or replacement for any such policies shall:
(A) insure the interests of, and name as
additional insureds, each Indemnitee (the "Additional
Insureds") and provide that the Additional Insureds bear no
liability for the payment of premiums;
(B) provide that if the insurers cancel such
insurance for any reason whatever, or the same is allowed to
lapse for nonpayment of premium, or if there is any
alteration, termination, or cancellation (whether by Sublessee
or any other Person and for whatever reason) of the insurance,
such cancellation, lapse, alteration, termination or
cancellation shall not be effective as to the Additional
Insureds for thirty (30) days (with respect to war risk
insurance seven (7) days or the maximum shorter or longer
period available in the market for any portion of the required
war risk coverage) after receipt by such Additional Insureds
of notice from such insurers thereof;
(C) provide that in respect of the interest
of Sublessor and each other Additional Insured in such
policies, such insurance shall not be invalidated by any
action or inaction of Sublessee or any other Person and shall
insure Sublessor's and the Additional Insureds' interests,
regardless of any breach or violation by Sublessee or any
other Person of any warranties declarations or conditions
contained in such policies;
(D) Shall contain a waiver by the insurers
of (i) all rights of subrogation against any and all of the
Additional Insureds and (ii) any rights of set-off,
counterclaim or any other deductions whether by attachment or
otherwise, which they may have against any Additional Insured;
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(E) shall by primary and without right of
contribution from any other insurance carried by any of the
Additional Insureds, and shall expressly provide that all of
the provisions provide that all of the provisions thereof
(except limits of liability) shall operate in the same manner
as if there were a separate policy covering each Additional
Insured; and
(F) shall, with respect to hull risk, hull
war risk and allied perils insurance, include a 50%-50%
provision.
(ii) Any policies carried in accordance with Section 9(b) of
this Sublease covering the Aircraft or the Engines and any policies
taken out in substitution or replacement for any such policies shall:
(A) insure the interests of, and name as
additional insureds, each Indemnitee (the "Additional
Insureds") and provide that the Additional Insureds bear no
liability for the payment of premiums;
(B) during any time period during which the
Mortgage shall remain in effect, be made payable in the United
States to the extent of the Stipulated Loss Value to Agent as
sole "loss payee" and thereafter to Lessor, as sole "loss
payee" (except that proceeds with respect to partial loss or
damage of less than $750,000 to Sublessee subject to the last
sentence of Section 9(d));
(C) provide that if the insurers cancel such
insurance for any reason whatever, or the same is allowed to
lapse for nonpayment of premium, or if there is any
alteration, termination or cancellation (whether by Sublessee
or any other Person and for whatever reason) of the insurance,
such cancellation, lapse, alteration, termination or
cancellation shall not be effective as to the Additional
Insureds for thirty (30) days (with respect to war risk
insurance seven (7) days or the maximum shorter or longer
period available in the market for any portion of the required
war risk coverage) after receipt by such Additional Insureds
of notice from such insurers thereof;
(D) provide that in respect of the interest
of Sublessor and each other Additional Insured in such
policies, such insurance shall not be invalidated by any
action or inaction of Sublessee or any other Person and shall
insure Sublessor's and the Additional Insureds' interests,
regardless of any breach or violation by Sublessee or any
other Person of any warranties declaration or conditions
contained in such policies;
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(E) shall contain a waiver by the
insurers of all rights of subrogation against any and all of
the Additional Insureds; and
(F) shall be primary and without right
of contribution form any of the Additional Insureds; and
(iii) All amounts payable under policies carried in accordance
with this Section 9 shall be paid in immediately available, freely
transferable Dollars in the United States. In the case of a lease or
contract with the United States or any Government Entity thereof in
respect of the Aircraft, a valid agreement duly assigned to Sublessor
to indemnify Sublessee against the same risks that Sublessee is
required under Section 9(b) to insure against by the United States or
such Government Entity in an amount at least equal to the Stipulated
Loss Value shall be considered adequate insurance with respect to the
Aircraft to the extent of the risks and in the amounts that are the
subject of any such agreement to indemnify.
(iv) All insurance maintained pursuant to this Section 9 shall
be (A) maintained with recognized aircraft and aviation insurance
companies in the United States or international markets that normally
participate in aviation insurance or (B) supported by 99% reinsurance
issued by recognized aircraft and aviation insurance companies in the
international markets that normally participate in international
aviation insurance. Any such reinsurance shall be with insurers, in
form and in amounts reasonably satisfactory to Sublessor and Lender and
shall be subject to "cut through" endorsements or other endorsements or
agreements satisfactory in form and substance to Sublessor and Agent
which shall provide that all payments under such reinsurance in respect
of losses shall be paid (x) in the case of insurance maintained
pursuant to Section 9(a) hereof, to the applicable Additional Insured
or (y) in the case of insurance maintained pursuant to Section 9(b)
hereof, to Agent for so long as the Mortgage shall remain in effect and
thereafter to Lessor as sole "loss payee" (except as provided in
Section 9(c)(ii)(B)) and not to any such primary insurance company.
(d) Application of Insurance. All insurance or indemnity payments
received as the result of the occurrence of an Event of Loss with respect to the
Airframe or an Engine will be applied as follows:
(i) if such payments are received with respect to the
Airframe, the Engines or engines installed thereon, such payments shall
be applied in the following order of priority: (A) to Agent, of if the
Mortgage has been discharged, to Lessor in the amount required to be
paid by Sublessee pursuant to Section 8(a), which amount shall be
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applied in reduction of Sublessee's obligation to pay such amount if
not already paid by Sublessee or, to the extent such amount has been
paid by Sublessee to Agent or Lessor, as the case may be, to Sublessee
to reimburse Sublessee for its payment thereof and (B) to Sublessee the
balance, if any, of such payment; and
(ii) if such payments are received with respect to an Engine,
such payments shall be held by the insurer until (A) replacement of the
Engine by Sublessee by a Replacement Engine at which time said payments
shall be paid to Sublessee; (B) if Sublessor shall have elected to
provide a Replacement Engine as provided in Section 9(b) said payments
shall be paid to Sublessor to be applied in reduction of Sublessee's
obligation to pay the Engine Loss Value, if not already paid by
Sublessee, or if already paid by Sublessee, shall be paid to Sublessee
and applied to reimburse Sublessee for its payment of such Engine Loss
Value; and (C) the balance of such payment, if any, to Sublessee.
The insurance payments with respect to any property damage
loss not constituting any Event of Loss with respect to the Airframe or
an Engine will be paid to Sublessor and applied by Sublessor in payment
(or to reimburse Sublessee) for repairs to or replacement of property
in accordance with the terms of Section 8 against evidence satisfactory
to Sublessor that such repairs and replacement have been made, or, if
such repairs or replacement have already been paid for by Sublessee,to
reimburse Sublessee therefor, and any balance remaining after
compliance with such Section with respect to such loss shall be paid to
Sublessee. Any amount referred to in the preceding sentence or in
paragraph (i) or (ii) of this Section 9(d) that is payable to Sublessee
shall not be paid to Sublessee if at the time of such payment an Event
of Default or Default shall have occurred and be continuing, but shall
be held by Sublessor as security for and may be applied to the
obligations of Sublessee under this Sublease and, at such time as there
shall not be continuing any such Default or Event of Default, such
amount not previously so applied shall be paid to Sublessee.
Notwithstanding the provisions of this paragraph, payments in respect
of partial losses of less than Seven Hundred Fifty Thousand Dollars
(US$750,000) shall be paid directly to Sublessee toward the cost of
repair or replacement of such property in conformity herewith.
(e) Reports. On or before the Commencement Date, Sublessee will furnish
or cause to be furnished to Sublessor a report signed by a firm of independent
aircraft insurance brokers, appointed by Sublessee and acceptable to Sublessor,
stating the opinion of such firm that the insurance then carried and maintained
on the Aircraft complies with the terms hereof. Sublessee will cause such firm
to advise Sublessor and each other Additional Insured in writing promptly of any
default in the
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payment of any premium, of any other act or omission on the part of Sublessee of
which such firm has knowledge that might invalidate or render unenforceable, in
whole or in part, any insurance on the Aircraft and of each claim made by
Sublessee in respect of the Aircraft. Sublessee will also cause such firm to
advise Sublessor and each other Additional Insured in writing at least thirty
(30) days prior to the expiration or termination of any insurance carried and
maintained on the Aircraft pursuant to this Section 9.
(f) Failure to Insure. In the event that Sublessee shall fail to
maintain or cause to be maintained insurance as herein provided, Sublessor may,
at its option, but without liability to Sublessee for failure to do so, provide
such insurance and, in such event, Sublessee shall, upon written demand,
reimburse Sublessor for the cost thereof as Supplemental Rent. At any time while
such failure is continuing, Sublessor may require the Aircraft to remain at any
airport or (as the case may be) proceed to and remain at any airport within the
United States as designated by Sublessor, until such failure is remedied to
Sublessor's satisfaction.
(g) Additional Insurance. Nothing contained in this Sublease shall
prevent Sublessor, Sublessee, Lessor, Agent or any Lender each at its own
expense and for its exclusive benefit, from carrying insurance covering the
Aircraft in addition to the insurance required under this Section 9 (any such
additional insurance, "Additional Insurance"); provided, however, that such
Additional Insurance shall be excess and non-contributory to the insurance
required to be procured and maintained by Sublessee hereunder. The insurance
payments for any property damage loss covered by Additional Insurance shall be
paid directly to the party carrying such Additional Insurance. Sublessee may
carry hull all risks or hull war and allied perils on the Aircraft in excess of
the Stipulated Loss Value only to the extent such excess insurance which would
be payable to Sublessee following an Event of Loss does not prejudice the
insurances required herein or the recovery by Sublessor, Lessor, Agent or any
Lender thereunder. Sublessee agrees that it will not create or permit to exist
any Liens (other than Sublessor Liens) over the insurances required hereunder,
or its interest therein, except as constituted by this Sublease.
(h) Notice of Claims. Sublessee shall give Sublessor and Lender notice
in writing of any claim or request for payment of an amount in excess of
$750,000 under any physical damage insurance policy required to be maintained
hereunder promptly (but in any event within five (5) days) of the filing of such
claim or request for payment.
(i) Stipulated Loss Value. At any time following the first
anniversary of the Commencement Date, Sublessee may propose a revision
to the Stipulated Loss Value Schedule set forth as Schedule I hereof,
and, upon receipt of any such proposal,
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Sublessor and Sublessee shall negotiate in good faith a
revised Schedule I of this Sublease.
Section 10. Return of Aircraft. The provisions of this Section 10 shall
apply to any return of the Aircraft to Sublessor upon termination of this
Sublease (including, without limitation, such return resulting from an Event of
Default); provided, that if this Sublease is terminated pursuant to Section 14
and the Aircraft is repossessed by Sublessor, any action that is required to be
taken by Sublessee pursuant to this Section 10 prior to the return of the
Aircraft shall be taken immediately after the return of such Aircraft.
(a) Redelivery upon Termination. On the date of termination of this
Sublease, Sublessee shall at its sole cost and expense, return the Aircraft to
Sublessor, at Sublessor's facilities in San Salvador, El Salvador (provided that
if this Sublease shall be terminated as a result of a default by Sublessor under
the Lease or a default by Lessor under the Mortgage the Aircraft shall be
returned to a point in the United States reasonably requested by Lessor or
Agent). If there shall be any Tax imposed by a Government Entity of the United
States, imposed upon Sublessee solely by virtue of redelivery of the Aircraft to
El Salvador, Sublessee and Sublessor shall, in good faith, negotiate a
reasonable alternate redelivery location; provided, however, that no alternate
location shall be deemed reasonable if Sublessor shall incur any Taxes by virtue
of accepting redelivery and/or removing the Aircraft from such location. At the
time of return of the Aircraft to Sublessor, Sublessor and Sublessee shall
execute a Return Acceptance Receipt in substantially the form of Exhibit C
hereto.
(b) Condition of Aircraft -- General. The Aircraft at the time of its
return to Sublessor shall have been maintained and repaired in accordance with
the Maintenance Program as if such Aircraft were to be kept in further service
by Sublessee, shall be free and clear of all Liens (other than Sublessor Liens)
and shall meet the following requirements:
(i) The Aircraft shall be in good operating condition with all
of the Aircraft equipment, components and systems functioning in
accordance with Manufacturer's limitations, irrespective of deviations
or variations authorized by the Minimum Equipment List or Configuration
Deviation List prepared and authorized by the Manufacturer or
authorized by the FAA.
(ii) The interior of the Aircraft shall be in as good
condition as upon delivery (normal wear and tear excepted).
(iii) The brakes and tires shall have a remaining life at
least equal to the remaining life of the brakes and tires installed
upon the Aircraft as of March 6, 1996.
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(iv) The Aircraft shall be clean by international commercial
airline standards.
(v) The Aircraft shall have, and be in compliance with, a
current valid standard certificate of airworthiness issued by the FAA
and shall meet the requirements of FAR Part 121 as applied to
Sublessee's then current operations without any corrections, repairs,
modifications, alterations or overhauls having to be performed to meet
such standards and rules.
(vi) The Aircraft shall have had accomplished thereon, at
Sublessee's sole cost and expense, on a terminating action basis, and
be in compliance with all outstanding airworthiness directives and
mandatory service bulletins issued by the FAA affecting the Aircraft
that have an effective date for compliance prior to, or sooner than one
hundred eighty (180) days after the return date of the Aircraft. In the
event Sublessee has obtained a waiver or deviation from the FAA from
having to comply with any such FAA airworthiness directives and
mandatory service bulletins Sublessee shall, irrespective of such
waiver or deviation, comply with all such mandatory orders,
airworthiness, directives, service bulletins and instructions covered
by such waiver or deviation prior to return of the Aircraft to
Sublessor.
(vii) All outstanding pilot discrepancies and deferred
maintenance items shall have been cleared on a terminating action
basis.
(viii) The Aircraft shall have had accomplished thereon the
cleaning and treating of all mild and moderate corrosion and correcting
of all severe or exfoliated corrosion in accordance with the provisions
of the Manufacturer's Maintenance Planning Document, Corrosion
Prevention Manual or 737 Structural Repair Manual criteria, in each
case, without discrimination as between the Aircraft and Sublessee's
other Boeing 737-300 aircraft.
(ix) Except as otherwise permitted in Section 6(e) hereto, the
Aircraft shall be in the same configuration and condition with all
equipment installed therein as that in which the Aircraft was delivered
to Sublessee by Sublessor under this Sublease, excepting only ordinary
wear and tear, replacements and substitute parts and equipment as may
have been properly made by Sublessee pursuant to this Sublease.
(x) The Aircraft will be free of fuel, oil and hydraulic
leaks. Any temporary fuel leak repairs will have been replaced by
permanent repairs.
(xi) The Aircraft fluid reservoirs (including oil, hydraulic,
water and waste tanks) will be serviced to full
-41-
in accordance with Manufacturer's instructions, and each fuel tank
shall contain at least the quantity of fuel as was contained therein
when the Aircraft was delivered to Sublessee on the Commencement Date;
or, in the case of any deficiency, Sublessee shall pay Sublessor for
such deficiency at Sublessor's then current cost of fuel.
(xii) No special or unique Manufacturer, Engine manufacturer
or FAA inspection or check requirements which are specific to the
Aircraft or Engines and have which arisen during the Sublease Term (as
opposed to all aircraft or engines of their types) will exist with
respect to the Airframe, Engines and Aircraft equipment components and
systems.
(xiii) All repairs, modifications and alterations made to the
Aircraft or the addition or removal of equipment, systems or components
will have been made in accordance with FAA approved data and properly
documented in accordance with the rules and regulations of the FAA.
(xiv) No Part or component of the Airframe shall be older than
the Airframe.
(c) Condition of Airframe. The Airframe at the time of its return to
Sublessor shall have a currently effective U.S. certificate of airworthiness,
shall meet the requirements of FAR 121 as applied to Sublessee's then current
operations, shall meet the requirements and shall have such hours and cycles
remaining under the Maintenance Program as set forth below:
(i) The Airframe shall have accomplished the next complete
structural and systems "C" check sufficient to clear the Aircraft for
3,000 hours, 3,000 cycles or, at least twelve (12) months of operations
determined with reference to the Maintenance Program.
(ii) The installed main landing gear and nose landing gear
shall each have at least 8,000 hours or 4,000 cycles remaining before
overhaul.
(iii) Perform an internal and external corrosion inspection as
required pursuant to the pre-return "C" check as per the Maintenance
Program and CPCP and correct any discrepancies in accordance with the
recommendations of Manufacturer and the Structural Repair Manual.
(iv) Remove Sublessee's exterior markings, including all
exterior paint and decals, by scuff/sanding the paint from the Airframe
and repaint the Airframe white.
(v) Permanently repair in accordance with Manufacturer's
Structural Repair Manual damage to the Aircraft that exceeds
Manufacturer's limits and replace any
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non-flush structural patch repairs installed on the Airframe by
Sublessee, unless otherwise recommended by Manufacturer, if required by
Manufacturer's maintenance and repair guidelines with flush-type
repairs.
(d) Condition of Controlled Components. Each life-limited part or
component and aircraft hour and/or cycle controlled components of the Aircraft
and of each Engine at the time of redelivery of the Aircraft to Sublessor shall
have remaining at least 3,000 hours and/or 3,000 cycles, whichever is more
limiting, between scheduled removals for overhaul, testing, or disassembly. All
components controlled on a calendar basis shall have remaining at least 12
months before scheduled removal for testing or overhaul. Such hour/cycle or
calendar controlled components are defined as those components controlled under
the Maintenance Program. However, if the component or part has a check interval
limit that is less than the above stated hours, cycles or calendar time limit
requirement, the check interval limit shall prevail.
(e) Condition of Engines.
(i) Each Engine at the time of return to Sublessor whether or
not installed on the Airframe shall have been maintained on an
"on-condition" program.
(ii) Each Engine shall have no more cycles or hours since the
last shop visit for full performance restoration, as described in the
Aviall Caledonian Workscope definitions, than such Engine had when
delivered.
(iii) Perform a full and complete video borescope on each
Engine and its modules in accordance with the Engine manufacturer's
maintenance manual, with Sublessor or its representatives entitled to
be present. Sublessee will provide evidence to Sublessor's satisfaction
that such inspection does not reveal any condition which would cause
the Engine or any module to be unserviceable, beyond serviceable
limits, or serviceable with limitations under the Engine manufacturer's
maintenance manual. Sublessee will correct any discrepancies in
accordance with the guidelines set out by the Engine manufacturer which
may be discovered during such inspection.
(iv) Each Engine shall have an exhaust gas temperature margin
remaining of 15 degrees or higher and shall, at a minimum, meet all the
requirements of the maximum power assurance run criteria for CFM 56-3B2
engines.
(v) The Aircraft shall be capable of certificated, full rate
performance without limitations throughout the entire operating
envelope as defined in the Manufacturer's flight manual applicable to
the Aircraft which performance compliance will be demonstrated at the
time of the demonstration flight referred to in Section 10(h) and/or by
on-wing static inspection and testing of the powerplants
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(engines, nacelles and accessories) in accordance with the maintenance
manual applicable to such Engine, at Sublessor's option.
(vi) The auxiliary power unit or units installed in the
Aircraft at the time of return to Sublessor shall have no more than 500
Hours since the last overhaul as per the Garret Workscope definition,
shall be in good operating condition and shall have a borescope
inspection and "on- condition" check performed in accordance with the
Maintenance Program. Satisfactory evidence shall be provided to
Sublessor reflecting the correction of any discrepancies found during
such inspection or such check, as the case may be.
(f) Ground Inspection by Sublessor. The Aircraft (including the
Aircraft documentation and other related documents to be returned therewith as
provided in Section 10(l)) shall be made available to Sublessor for ground
inspection by Sublessor at Sublessee's facilities or those of its FAA approved
maintenance provider during the pre-redelivery "C" check. Such inspection shall
commence not less than seven working days prior to the date of return of the
Aircraft to Sublessor. Sublessee shall remove the Aircraft from scheduled
service and open the areas of the Aircraft as required to perform the necessary
checks as contemplated by this Sublease and shall allow Sublessor to accomplish
its inspection in order to determine that the Aircraft (including the Aircraft
documentation) and other related documents are in the condition set forth in
Section 10. During such pre-delivery "C" check, Sublessor's personnel shall have
the right to reasonably request that adjacent additional panels or areas be
opened in order to allow further inspection by Sublessor personnel. Sublessee
shall promptly correct any discrepancies from the condition required by the
provisions of Section 10 that are observed during such inspection and are
communicated by Sublessor to Sublessee.
(g) Operational Ground Check. Promptly after completion of any
corrections required under Section 10(f), Sublessee shall conduct an operations
ground check (including an engine power assurance run and a flight control
operational and rigging check) in accordance with the Manufacturer's maintenance
manual criteria for the purpose of demonstrating that each of the following
systems meet applicable manufacturer's criteria: (i) full fuel tank leak check;
(ii) altimeter calibration; (iii) ATC transponder system operational check; (iv)
audible ignition check (both systems); (v) pilot and static systems check; (vi)
hydraulic system internal leak check; and (vii) brake wear check. Promptly after
the operational ground check, Sublessee shall repair any discrepancies resulting
therefrom.
(h) Demonstration Flight. Promptly after completion of any corrections
required under Sections 10(f) and 10(g), the Aircraft shall be flown by
Sublessee, using qualified flight test
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personnel and the applicable Manufacturer's test flight document, for
approximately one and one-half hours for the purpose of demonstrating to
Sublessor the satisfactory operation of the Aircraft and its equipment. During
such test flight, command, care, custody and control of the Aircraft shall at
all times remain with Sublessee. Representatives of Sublessor may participate in
such flight as observers. A qualified pilot designated by Sublessor shall occupy
the cockpit observer's seat as an observer during such demonstration flight.
Upon completion of such demonstration flight, the representatives of Sublessee
and Sublessor participating in such demonstration shall agree in writing upon
any discrepancies in the Aircraft required to be corrected by Sublessee in order
to comply with the provisions of this Section 10 and Sublessee shall promptly
correct any such discrepancies. Subsequent to corrections of such discrepancies,
Sublessor shall inspect and technically accept the Aircraft for redelivery
subject to the requirements of this Section 10(h) and Sections 10(i) and (j)
below. If any of the discrepancies referred to in Sections 10(f) and 10(g) or
this Section 10(h) continue to persist, Sublessor may, at its option, agree to
accept redelivery of the Aircraft and apply the procedure set forth in Section
10(j) for such discrepancies.
(i) Ferry Flight. Upon completion of the demonstration flight and after
Sublessee has corrected discrepancies as required to comply with the provisions
of this Section 10, or Sublessor has agreed to apply the procedure set forth in
Section 10(j), the Aircraft shall be ferried by Sublessee to the redelivery
point set forth in Section 10(a) hereof. Upon arrival of the Aircraft at such
redelivery point, Sublessee shall correct any discrepancies arising during such
ferry flight. Sublessor's representatives may participate in such ferry flight
as non-revenue passengers and observers.
(j) Deferred Discrepancy Correction. Any discrepancies found during the
ground inspection, operational ground check, demonstration flight and ferry
flight provided for in Sections 10(f), 10(g), 10(h) and 10(i), respectively,
that were not corrected by Sublessee prior to return of the Aircraft to
Sublessor may be corrected by Sublessor or its designee after return of the
aircraft and Sublessee shall reimburse Sublessor for the expenses incurred by
Sublessor or its designee for accomplishing such discrepancy corrections.
Sublessee shall pay Sublessor for such expenses incurred within thirty (30) days
of the date of Sublessor's invoice therefor.
(k) Flight Cost. All flights pursuant to Sections 10(h) and 10(i) shall
be made at Sublessee's expense and Sublessee shall pay or reimburse Sublessor
for any costs associated with such flights including, but not limited to, costs
for fuel, oil, airport fees, insurance, takeoff/landing fees, airway
communication fees and ground handling fees.
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(l) Aircraft Documentation. Sublessee shall return to Sublessor at the
time the Aircraft is returned to Sublessor, all of the Aircraft records
documents, manuals and data provided to Sublessee by Sublessor prior to, on or
after the Commencement Date, updated and maintained by Sublessee through the
date of return of the Aircraft. In addition, Sublessee shall also provide
Sublessor at the time the Aircraft is returned to Sublessor with all records,
documents, manuals, authorizations, drawings and data, in each case in the
English language, that were developed or caused to be developed by Sublessee
and/or required by the appropriate governmental agency having jurisdiction
updated and maintained by Sublessee for the Aircraft through the date of return
of such Aircraft. Any such Aircraft documentation not already owned by
Sublessor, when delivered to Sublessor pursuant to this Section 10(l), shall
thereupon become the property of Sublessor. In the event Sublessor requires
copies of any of such Aircraft documentation prior to the return of the Aircraft
to Sublessor to enable Sublessor to plan or accomplish modifications,
recertification, sale, lease or other disposition of or utilization of the
Aircraft upon such return, Sublessee shall, promptly upon receipt of each such
Sublessor request, provide to Sublessor a reasonable number of copies of such
Aircraft documentation requested by Sublessor at Sublessor's sole cost and
expense.
(m) Service Bulletin Kits. All vendor and Manufacturer supplied
mandatory service bulletin kits delivered to Sublessee for the Aircraft but not
installed therein shall be return with the Aircraft, as part of the Aircraft at
the time of the return of the Aircraft, and shall be loaded by Sublessee on
board the Aircraft as cargo. Title to such kits shall pass to Sublessor
concurrently with the delivery of the Aircraft to Sublessor.
(n) Non-U.S. Manufactured Items. Sublessee shall provide to Sublessor
at the time of the return of the Aircraft a complete list, describing by Part
number and name, all non-United States manufactured equipment, components and
parts, if any, installed on such Aircraft by Sublessee during the Sublease Term.
Such list shall include quantity, the acquisition price and the manufacturer's
name and country in respect of each such item.
(o) Sublessee's Continuing Obligations. In the event that Sublessee
does not return the Aircraft to Sublessor upon termination of this Sublease
(including, without limitation, any termination resulting from an Event of
Default by Sublessee) and in the condition required herein for any reason, the
obligations of Sublessee under this Sublease shall continue; provided, however,
that such failure to return the Aircraft to Sublessor in such condition shall
not be the result of a breach by Sublessor of its covenant of quiet enjoyment
which has resulted in Sublessee having been deprived of use and possession of
the Aircraft immediately prior to such termination, in which case the Aircraft
shall be returned in its then condition provided that, immediately prior to such
breach by Sublessor of its covenant of
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quiet enjoyment such Aircraft shall have been in such condition as to meet the
requirements of Section 8 hereof but for such breach. Such continuation of
Sublessee's obligations shall not be considered a renewal of the terms of this
Sublease or of Sublessee's rights to use the Aircraft, an extension of the
Sublease Term or a waiver of any Default or Event of Default or any right of
Sublessor hereunder. Until such time as the Aircraft is redelivered to Sublessor
as required herein, Sublessee agrees, during the first thirty (30) days
following the termination hereof, to pay Basic Rent with interest at the Post-
Default Rate and thereafter to pay twice the amount of Basic Rent for each day
from such thirtieth (30th) day after the termination hereof until redelivery of
the Aircraft in the condition required hereunder (the monthly Basic Rent payable
being prorated based on the actual number of days in the applicable month).
Section 11. Representations, Warranties and Covenants of
Sublessee. Sublessee represents and warrants to, and covenants with Sublessor
as follows:
(a) Sublessee (i) has been duly incorporated and is validly existing as
a corporation in good standing under the laws of the State of Delaware, (ii) has
full corporate power and authority and legal right to own its properties and to
carry on its business as presently conducted and to perform its obligations
under this Sublease, (iii) is the holder of an air carrier certificate duly
issued pursuant to the Federal Aviation Act and such certificate is in full
force and effect, and (iv) holds all material licenses, certificates and permits
from all Government Entities of the United States and other jurisdictions
necessary for the conduct of its business as now conducted and for the operation
of the Aircraft.
(b) The execution, delivery and performance of this Sublease has been
duly authorized by all necessary corporate action of Sublessee, and does not and
will not (i) result in the violation of the provisions of the charter documents
or bylaws of Sublessee as in effect on the date hereof, (ii) require stockholder
approval or approval or consent of any trustee or holders of any indebtedness of
Sublessee, except such approvals which have been obtained and are in full force
and effect, (iii) contravene any law, rule or regulation or any order of any
Government Entity binding on Sublessee, or (iv) conflict with or result in a
breach of any terms or provisions of or constitute a default under, or result in
or require the creation or imposition of any Lien upon any material property or
assets of Sublessee under, any material indenture, mortgage or other agreement
or instrument as in effect on the date hereof to which Sublessee is a party or
by which it or any of its property is bound, or any applicable law, rule or
regulation, judgment, order or decree of any Government Entity or court having
jurisdiction over Sublessee or any of its properties.
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(c) No authorization, approval, consent, license or order of, or
registration with, or the giving of notice to, or the taking of any other action
in respect of, any Government Entity is required for the valid authorization,
execution, delivery and performance by Sublessee of this Sublease or the
consummation of any of the transactions contemplated hereby, except (i)
approvals, authorization, consents, licenses, certificates and orders of the FAA
and any other regulatory authority having jurisdiction with respect to the
ownership, use and operation of the Aircraft and the transactions contemplated
hereby, all of which have been (or on the Delivery Date will have been) duly
obtained and are (or will on the Delivery Date be) in full force and effect,
(ii) the filing of this Sublease or other necessary documentation with the civil
aviation authority of each country (other than the United States) in which the
Aircraft may be operated or located which filings have been made, or will be
made as to each such country prior to such Aircraft being operated or located in
such country and (iii) any normal periodic and other reporting requirements and
renewals and extensions of any of the foregoing, in each case to the extent
required to be given or obtained only after the Delivery Date.
(d) Except for (i) the filing and recording pursuant to the Federal
Aviation Act of this Sublease, (ii) the filing of duly executed financing
statements naming Sublessee as debtor and Sublessor as secured party (and
continuation statements with respect to such financing statements) with the
Secretary of State of the State of Colorado and, if applicable, the appropriate
filing authority in El Paso County, Colorado and (ii) the retention by Lessor of
the original counterpart of the Sublease to the extent, if any, that the
Sublease constitutes chattel paper (as such term is defined in the Uniform
Commercial Code as in effect in any applicable jurisdiction), no further action,
including any filing or recording of any document (including any financing
statement in respect thereof under Article 9 of the Uniform Commercial Code of
any applicable jurisdiction), is necessary in order to establish and perfect
Lessor's title to the Aircraft or Lender's security interest in this Sublease as
against Sublessee and any third parties in any applicable jurisdictions in the
United States.
(e) This Sublease constitutes the legal, valid and binding obligation
of Sublessee, enforceable against Sublessee in accordance with its terms except
as may be limited by applicable bankruptcy, insolvency, reorganization,
moratorium or other similar laws affecting creditors' rights generally and, to
the extent that certain remedies require or may require enforcement by a court
of equity, by such principles of equity (regardless of whether such
enforceability is considered in a proceeding at law or in equity) as a court
having jurisdiction may impose.
(f) There are no suits or proceedings pending or, to Sublessee's
knowledge, threatened in any court of before any Government Entity against or
affecting Sublessee that would, if
-48-
adversely determined, (i) prevent or adversely affect Sublessee's ability to
perform its obligations under this Sublease or (ii) materially adversely affect
the financial condition or operations of Sublessee and its consolidated
subsidiaries, taken as a whole.
(g) The chief executive office (as such term is used in Article 9 of
the Uniform Commercial Code) of Sublessee and the office where Sublessee will
keep its corporate records concerning the Aircraft is located in El Paso County,
Colorado. Sublessee will notify Sublessor thirty (30) days in advance of moving
either such office to another location.
(h) Neither Sublessee nor Sublessor has retained or employed any
broker, finder or financial advisor other than Cauff, Xxxxxxx & Xxxxx Aviation,
Inc. to act on its behalf in connection with its lease of the Aircraft and has
not authorized any broker, finder or financial advisor retained or employed by
any other person so to act.
(i) Neither Sublessee nor any of its property has any immunity from
jurisdiction of any court located in the United States or from any legal process
in the Untied States (whether through service or notice, attachment prior to
judgment, attachment in aid of execution, execution or otherwise).
(j) There is no Tax, levy, impost, deduction, charge or withholding
imposed by the State of Colorado or any Taxing Authority thereof or therein
either (i) on or by virtue of the execution or delivery of this Sublease or (ii)
on any payment made or to be made by Sublessee under this Sublease.
(k) The obligations of Sublessee under this Sublease rank at least pari
passu in right of payment with all other unsecured obligations of Sublessee,
with the exception of such obligations as are mandatorily preferred by law.
(l) Sublessee will promptly give notice to Sublessor upon obtaining
actual knowledge of any Default or Event of Default; and
(m) Sublessee acknowledges that in the event Sublessee files a petition
or otherwise seeks relief under the Bankruptcy Code or an involuntary petition
is filed against Sublessee, it is the intention of Sublessor that Sublessor,
Lessor, Agent and any Lenders shall be entitled to the benefits of Title 11
U.S.C. ss. 1110 and any similar or analogous provisions of any successor statute
("Section 1110") with respect to the Aircraft, the Lease and this Sublease, and
Sublessee agrees that it shall not oppose any motion, petition or application
filed by Sublessor, Lessor, Agent or any Lender with any bankruptcy court having
jurisdiction over Sublessee whereby Sublessor, Lessor, Agent or any Lender seeks
recovery of possession of the Aircraft under Section 1110 unless Sublessee shall
have complied with the requirements of
-49-
Section 1110 to be fulfilled in order to entitle Sublessee to continue use and
possession of the Aircraft hereunder.
(n) Without having obtained the prior written consent of Sublessor,
Sublessee will not consolidate with or merge into, sell or lease, in one
transaction or a series of transactions, all or substantially all of its assets
to another corporation or other entity unless such other corporation or
subsidiary thereof is engaged in the airline business, the net worth of the
corporation resulting from such merger or consolidation or corporation or other
entity to which such sale or lease is made would be at least equal to the net
worth of Sublessee at the date hereof, such corporation or other entity assumes
all of Sublessee's obligations under this Sublease in a manner and by documents
and agreements satisfactory to Sublessor in its sole discretion, such
corporation or other entity immediately subsequent to such merger,
consolidation, lease or sale is not in default hereunder and if Sublessor,
Lessor and Agent receive an opinion of counsel satisfactory to them as to such
assumption and documentation.
(o) Sublessee agrees to furnish to Sublessor as soon as practicable,
but in no event later than (i) sixty (60) days after the end of each of the
first three quarterly fiscal periods in each fiscal year of Sublessee, a
consolidated balance sheet of Sublessee and its subsidiaries prepared by it as
of the close of such period, together with the related consolidated statements
of income and of surplus and statements of changes in financial position for
such period (this requirement may be satisfied by delivery to Sublessor of a
copy of Sublessee's Form 10-Q), (ii) one hundred and twenty (120) days after the
close of each fiscal year of Sublessee, a consolidated balance sheet of
Sublessee and its subsidiaries as of the close of such fiscal year, together
with the related consolidated statements of income and of surplus and statements
of changes in financial position for such fiscal year, as certified by
independent public accountants, including their accompanying opinion letter
related thereto, (iii) with each such financial statement, a certificate of
Sublessee signed by a duly authorized financial officer of Sublessee, to the
effect that the signer has reviewed the relevant terms of this Sublease and has
made, or caused to be made under his supervision, a review of the transactions
and condition of Sublessee during the accounting period covered by the financial
statements and that such review had not disclosed the existence during such
accounting period, nor does the signer have knowledge of the existence as at the
date of such certificate, of any condition or event that constitutes a Default
or Event of Default, or, if any such condition or event existed or exists,
specifying the nature and period of existence thereof and what action Sublessee
has taken or is taking or proposes to take with respect thereto and (iv) from
time to time, such other information as Sublessor, Lessor or Lender may
reasonably request; provided that such other information is either in the
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public domain or is provided to Lessor or Sublessor of aircraft to Sublessee or
to creditors of Sublessee.
(p) Sublessee shall, within fifteen (15) days of the end of each and
every calendar month during the Sublease Term, deliver to Sublessor a monthly
report, in such form and containing such information as set forth in Exhibit F
hereof.
(q) Sublessee shall, at the end of each calendar quarter, have a long
term debt to equity ratio of not more than 4:1 as determined in accordance with
generally accepted accounting principles consistently applied. For purposes
hereof, debt shall exclude all off balance sheet financing and operating leases.
(r) Sublessee shall, at the end of each calendar quarter have a ratio
of current assets to current liabilities of not less than 1:1 as determined in
accordance with generally accepted accounting principals consistently applied.
Section 12. Indemnification.
(a) General Indemnity and Expenses. Sublessee hereby assumes liability
for and hereby agrees to, indemnify, protect, save and keep harmless Sublessor,
Lessor, Agent, each Lender and their respective Affiliates, agents, officers,
directors, employees, successors and permitted assigns (each of the foregoing
and their respective Affiliates, agents, officers, directors, employees,
successors and assigns being hereinafter referred to as an "Indemnitee" and any
reference herein to an Indemnitee shall include its respective Affiliates,
agents, officers, directors, employees, successors and permitted assigns) from
and against, and on written demand to pay, or to reimburse each Indemnitee for
the payment of, as the case may be, any and all liabilities, obligations,
losses, damages, penalties, claims (including, without limitation, claims
arising out of negligence or involving strict liability in tort), suits,
actions, costs, expenses and disbursements, including without limitation legal
fees and expenses, of whatsoever kind and nature imposed on, incurred by or
asserted against any Indemnitee relating to or arising out of (A) this Sublease,
any payments made pursuant hereto or the exercise of rights or remedies
hereunder, (B) the preparation, negotiation, execution and delivery of any
amendments, modifications or waivers required by this Sublease or requested by
Sublessee (or resulting from any requests of Sublessee) hereunder, (C) the
Aircraft, each Engine and any Part thereof, whether or not arising out of the
airworthiness, delivery, nondelivery, sublease, presence, storage, modification,
substitution, replacement, alteration, maintenance, inspection, failure to
inspect, repair, release, possession, repossession after an Event of Default,
registration (unless, in respect to Sublessor, any act or omission of Sublessor
shall cause the deregistration of the Aircraft under the Federal Aviation Act),
use, operation, condition, condition upon return, return, exportation,
importation, transfer or other application or
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disposition thereof (including, in each case and without limitation, latent or
other defects, whether or not discoverable), any claim for patent, trademark or
copyright infringement arising as a result of or in connection with Sublessee's
patents, trademarks, copyrights, servicemarks or logos or those of Sublessee's
advertisers, sponsors, and others whose designs and/or logos appear on the
Aircraft, at any time, any claim based on strict or absolute liability,
statutory liability or tort and any liability for any injury to or death of any
person or loss of or damage to any property including, without limitation, any
such arising out of any test flight, demonstration flight or ferry flight
performed by Sublessee or any entity to which Sublessee may have further
subleased the Aircraft pursuant to Section 7 hereof and (D) any breach of,
noncompliance with or misrepresentation made or deemed made in, under or in
connection with this Sublease or any agreement to which Sublessee is a party
concerning the Aircraft or any warranty, certificate or agreement made or
delivered in, under or in connection therewith made or deemed to have been made
by Sublessee or anyone claiming by, through or under Sublessee; provided, that
Sublessee shall not be required to indemnify any Indemnitee hereunder (w) for
any liability attributable to acts or events which occur prior to the
Commencement Date or after the Sublease Term or the property return of the
Aircraft to Sublessor in the condition required hereunder whichever shall occur
later, (x) for liability resulting solely and directly from acts of gross
negligence or misconduct of such Indemnitee (other than gross negligence or
willful misconduct attributed to such Indemnitee solely by reason of its
interest in the Aircraft, any Engine or any Part), it being agreed that gross
negligence or willful misconduct of an Indemnitee shall not affect the rights to
be indemnified hereunder of any other Indemnitee (other than the rights of any
Indemnitee that is an Affiliate, agent, officer, director, employee or successor
of any such Indemnitee that is so grossly negligent or guilty of such
misconduct), (y) for any Taxes that Sublessee has not agreed to indemnify
against pursuant to the provisions of Section 12(b) or (z) for any liability
imposed or any Indemnitee arising as a result of a disposition of all or any
part of such Indemnitee's interest in the Aircraft, other than by reason of the
occurrence of a Default or an Event of Default and further provided that no
indemnification hereunder shall be paid by Sublessee to Indemnitees in respect
of any claim arising during any period during which Sublessee is deprived of use
and possession of the Aircraft as a result of a breach by Sublessor of its
covenant of quiet enjoyment provided that such claim is not caused by any act or
omission of Sublessee.
If any Indemnitee shall have knowledge of any claim or liability
required to be indemnified against under this Section 12(a), such Indemnitee
shall give prompt written notice thereof to Sublessee, but the failure of such
Indemnitee so to notify Sublessee shall not relieve Sublessee from any liability
that it would otherwise have to such Indemnitee hereunder except to the
-52-
extent that Sublessee's rights respecting any defense thereto are irrevocably
and materially impaired directly and solely as a result of such failure.
Sublessee shall be obligated to such Indemnitee under this Section
12(a) irrespective of whether any Indemnitee shall also be indemnified with
respect to the same matter under any other agreement, and each Indemnitee may
proceed directly against Sublessee under this Section 12(a) without first
resorting to any such other rights of indemnification.
Any payment or indemnity pursuant to this Section 12(a) shall include
the amount, if any, necessary to hold each Indemnitee harmless on a net
after-tax basis from all Taxes required to be paid by such recipient with
respect to such payment or indemnity under laws, rules or regulations of any
Government Entity or Taxing Authority. If any Indemnitee is entitled to a
permanent tax benefit (whether by way of deduction, credit or otherwise) not
taken into account pursuant to the preceding sentence as a result of the matter
indemnified against under this Section 12(a), such Indemnitee shall promptly pay
to Sublessee, after such permanent tax benefit is realized but not before
Sublessee shall have made all payments theretofore due to such Indemnitee under
this Sublease and any other agreement in respect of the Aircraft, an amount
that, after subtraction of any further tax savings to which such Indemnitee is
entitled as a result of the payment thereof, is equal to the amount of such
permanent tax benefit; provided, however, that such Indemnitee shall not be
obligated to make any payment to Sublessee pursuant to this sentence so long as
a Default or Event of Default shall have occurred and be continuing or any Rent
or Supplemental Rent then due and owing shall not have been paid.
Upon the indefeasible payment in full of any indemnities due and owing
under this Section 12(a), Sublessee shall be subrogated to any right of the
Indemnitee in respect of the matter against which indemnity has been given.
(b) General Tax Indemnity.
(i) Sublessee agrees that each payment of Rent or any amount
payable hereunder shall be free of all withholdings of any nature
whatsoever, and in the event that any withholding is required,
Sublessee shall pay an additional amount of Rent such that after the
deduction of all amounts required to be withheld, the net amount of
Rent that is actually received by Sublessor, will equal the amount of
Rent or any such amount payable hereunder or such other amount, as the
case may be, that would be due absent such withholding,
(ii) Sublessee hereby agrees to indemnify and hold harmless
from and against, and on written demand to pay or reimburse each
Indemnitee for the payment of, as the case may be, any and all Taxes
imposed upon or asserted against any Indemnitee
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or the Aircraft, the Airframe, any Engine, or any Part thereof or
interest therein, or this Sublease, or the rentals received under this
Sublease, by any federal, state or local government or other taxing
authority in the United States, in any territory or possession thereof
or by any foreign government or any political subdivision or taxing
authority thereof or therein (the foregoing being referred to herein
individually as a "Taxing Authority" and collectively as "Taxing
Authorities") upon or with respect to (a) the acceptance, rejection,
delivery, transport, insuring, registration, deregistration,
reregistration, assembly, possession, repossession, operation, use,
presence, condition, maintenance, repair, return, abandonment,
preparation, installation, storage, redelivery, manufacture,
subleasing, modification, rebuilding, or importation of, or the
imposition of any Lien (other than a Sublessor Lien) (or the insurance
of any liability to refund or pay over any amount as a result of any
Lien (other than a Sublessor Lien)) on the Aircraft, the Airframe, any
Engine or any Part thereof or interest therein, (b) payments of Basic
Rent or Supplemental Rent, (c) the Aircraft, the Airframe, any Engine,
or any Part thereof or any interest therein or the applicability of
this Sublease to the Aircraft, the Airframe, any Engine, or any Part
thereof or any interest therein, (d) any or all of the documents and
agreements relating to the Aircraft, contemplated hereby and amendments
or supplements hereto and thereto, or the execution, delivery, filing
or recording thereof, or (e) otherwise with respect to or in connection
with the transactions effected under this Sublease and the documents
and agreements contemplated hereby including the exercise of remedies
hereunder.
(iii) The provisions of Section 12(b)(i) and (ii) shall not
apply to, and Sublessee shall have no lability to Sublessor or any
other person thereunder with respect to Taxes to the extent excluded
under any of the following provisions or any combination thereof:
(A) Taxes imposed by any country, taxing
authority or governmental subdivision thereof or therein or
any international authority except to the extent that such
Taxes would not have been due (whether or not from the same
person on whom they are actually imposed) but for the
transactions contemplated by this Agreement, provided that
the presence or activities of any person other than Sublessor
in any jurisdiction shall not be imputed for purposes of this
subparagraph (A);
(B) Taxes (I) imposed as a result of a sale,
assignment, transfer or other disposition (whether voluntary
or involuntary) (a "Transfer') (x) by Sublessor or any other
person (other than Sublessee or any affiliate or transferee
of or successor to Sublessee) of any legal or beneficial
interest in the Aircraft or in or arising under this
Agreement or (y) of any direct or indirect interest in
Sublessor or any such other person having any such legal or
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beneficial interest (any event described in (x) or (y) being
a "Sublessor Transfer") or (II) to the extent such taxes
exceed the amount of taxes that would have been imposed and
indemnified against by Sublessee had there not been a
"Sublessor Transfer," provided that the exclusion set forth
in this subparagraph (B) shall not apply to a Transfer (other
than a sale of the Aircraft or any interest therein)
resulting from the exercise of any remedies provided for in
this Agreement in connection with an Event of Default or an
Event of Loss;
(C) Taxes incurred in respect of any period
after the occurrence of any of the following events: (I) the
sale or return of the Aircraft or any part thereof or
interest therein to the extent the Taxes relate solely to
such part or interest) in accordance with the terms of this
Agreement; (II) the termination of this Agreement and the
return of the Aircraft or (III) the sale or other transfer of
the Aircraft and the return of the Aircraft (or any part
thereof or interest therein to the extent the Taxes release
solely to such part or interest) following a Total Loss with
respect to the Aircraft, provided that the exclusion set
forth in this subparagraph (C) shall not apply to Taxes to
the extent such Taxes relate to periods prior to, or events
occurring or matters arising prior to or simultaneously with,
such event;
(D) Taxes to the extent imposed as a result
of (I) the willful misconduct or gross negligence of
Sublessor, (II) the breach by Sublessor of any of its
representations, warranties or covenants contained in this
Agreement or (III) Sublessor's Liens;
(E) Taxes either not yet due or being
contested in accordance with the provisions of Section 12(d);
(F) Taxes on, based on, measured by or with
respect to the net or gross income, or net or gross receipts,
including any capital gains Taxes, minimum Taxes, Taxes on or
measured by any items of tax preference and withholding
Taxes, including Taxes imposed under Subtitle A of the
Internal Revenue Code of 1986, as amended (the "Code") or
Section 3406 of the Code or any successor provisions required
to be withheld from any payment under this Agreement),
capital, net worth, franchise, or conduct of business of
Sublessor or any other person (other than Taxes in the nature
of sales, use, rental, property, or value-added Taxes)
imposed by any federal, state or local government or taxing
authority in the United States;
(G) Taxes on, based on, measured by or with
respect to the net or gross income or net or gross receipts
(including any capital gains Taxes, minimum Taxes, Taxes on
or measured by any items of tax preference and withholding
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Taxes), capital, net worth, franchise, or conduct of business
of Sublessor or any other person (other than Taxes in the
nature of sales, use, rental, property, or value-added Taxes)
imposed by any foreign government subdivision or other
foreign taxing authority or by any territory or possession of
the United States, or by any international authority,
provided that the exclusion set forth in this subparagraph
(G) shall not exclude such Taxes if and to the extent that
such Taxes (i) would not have been imposed but for the
operation, presence or registration in such jurisdiction of
the Aircraft or any part thereof, or (ii) would have not been
imposed solely as a result of (x) the presence in such
jurisdiction of a permanent establishment or fixed place of
business of Sublessee, or any user or person in possession of
the Aircraft or any part thereof, (y) the residence,
nationality or place of management and control of Sublessee
or any user or person in possession of the Aircraft or any
part thereof, (z) the payment from such jurisdiction by
Sublessee or any user or person in possession of the Aircraft
or any part thereof of any amount due under the Lease, or
(iii) any combination of clauses (i) and (ii);
(H) Taxes that would not have been imposed
but for any failure of Lessor or Sublessor to (x) file proper
and timely reports or returns or to pay any Taxes when due,
or (y) comply with any certification, information,
documentation, reporting or other similar requirements
concerning the nationality, residence, identity or connection
with the jurisdiction imposing such Taxes, if such compliance
is required to obtain or establish relief or exemption from
or reduction in such Taxes and Lessor or Sublessor was
eligible to comply with such requirement provided, however,
that this exclusion shall not apply to any obligation to
file, pay or certify, other than an obligation imposed under
the laws of El Salvador, of which Sublessor was unaware.
(I) Taxes imposed under Section 887 of the
Code.
Notwithstanding any provision in this Section 12 to the
contrary, Sublessee shall in no event be obligated to pay any amount pursuant to
this Section 12 in excess of the Taxes Sublessee would be required by this
Section 12 to pay if (i) Sublessor were the Sublessor of the Aircraft and (ii)
no person other than the owner participant as of the date hereof pursuant to the
Trust Agreement dated as of November 4, 1993 between Lessor and such owner
participant, Sublessor, Sublessee or any sublessee or other user or person in
possession of the Aircraft or any part thereof had any interest in the Aircraft
or part thereof.
(c) Calculation of Tax Indemnity Payments.
(i) Any payment that Sublessee shall be required to make to or
for the account of any Indemnitee with respect to any
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Tax that is subject to indemnification under Section 12(b) shall
include the amount necessary to hold such Indemnitee harmless on a net
after-tax basis from he net amount of all Taxes required to be paid by
such Indemnitee as the result of such payment pursuant to the laws of
any Taxing Authority.
(ii) If Sublessor shall realize a Tax benefit as a result of
or with respect to any Taxes paid or indemnified against by Sublessee
under this Section 12 (whether by way of deduction, credit or
otherwise), Sublessor shall pay to Sublessee, promptly after
realization of such Tax benefit, an amount that, prior to the
application of any withholding tax to that payment but after
subtraction of any further Tax savings Sublessor realizes as a benefit,
provided that if any such Tax benefit is subsequently disallowed, lost
or reduced, Sublessee shall, upon written notice from Sublessor,
promptly repay the amounts paid to the Sublessee with respect to such
Tax benefit, provided further that Sublessor shall not be obligated
under this Section 12(c)(ii) to pay Sublessee any amounts with respect
to Tax benefits realized s a result of any Taxes not paid or
indemnified against by Sublessee. Notwithstanding anything to the
contrary in this Section 12, if, at the time any payments would
otherwise be due to Sublessee pursuant to this Section 12(c)(ii), an
Event of Default shall have occurred and be continuing, Sublessor shall
hold the amount of such payment as security for the obligations of the
Sublessee to Sublessor under the Sublease and at such time as there
shall not be continuing any such Event of Default, shall pay such
amount to Sublessee. Sublessor shall use reasonable efforts in good
faith in filing its Tax returns and in dealing with taxing authorities
to seek and to claim any such Tax benefit or savings and to minimize
the Taxes payable or indemnifiable by Sublessee hereunder.
(iii) At Sublessee's request, the computation by Sublessor of
any amount payable to Sublessee pursuant to this Section 12 shall be
verified by an independent accounting firm of national reputation
selected by Sublessor. The fees of such accountants shall be paid by
Sublessee unless such accountants determine that the amount payable to
Sublessee is at least 25% more, or the amount payable by Sublessee is
at least 25% less, than the amount computed by Sublessor, in which case
such fees shall be payable by Sublessor.
(d) Contest; Reports.
(i) If a claim is made in writing against Sublessor (whether
on audit or otherwise) for any Taxes that Sublessee is required to pay
or indemnify against pursuant to Section 12(b), Sublessor shall notify
Sublessee in writing within 30 Business Days of the receipt of such
claim, provided that a failure to so notify will not diminish or
relieve Sublessee or any obligations under Section 12(b), except to the
extent Sublessee is entitled
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to contest or to cause Sublessor to contest such Taxes and Sublessee's
or Sublessor's successful defense of such claim is materially
prejudiced or precluded thereby. If the amount of the claim exceeds
$25,000 and if requested by Sublessee in accordance with this Section
12(d) and in writing within 30 Business Days after receipt by Sublessee
of the notice described in the preceding sentence, Sublessor shall in
good faith and with due diligence contest (including pursuing all
administrative and judicial appeals) in the name of Sublessor or, if
permitted by law and requested by Sublessee in the name of Sublessee,
the validity, applicability or amount of such Taxes in appropriate
administrative or judicial proceedings to be determined by Sublessor,
provided that (1) prior to taking such action, Sublessee shall have
agreed to pay Sublessor all out-of-pocket costs and expenses that
Sublessor may incur in connection with contesting such claim,
including, without limitation, all reasonable legal and accountant's
fees and disbursements and costs of administrative and judicial
proceedings, and the amount of any interest or penalties that may be
attributable to and payable as a result of contesting such claim (or,
at Sublessor's request, Sublessee shall advance to Sublessor funds with
which to pay the foregoing amounts, and Sublessor's obligation to
contest any Tax shall be suspended during any period Sublessee does not
advance sufficient funds to pay such amounts as they accrue or become
payable), (2) if such contest is to be initiated by the payment of, and
the claiming of a refund for such Taxes (and any interest and penalties
that also must be paid), Sublessee shall have advanced Sublessor
sufficient funds (on an interest-free basis) to make such payment, (3)
no Event of Default has occurred and is continuing, (4) the action to
be taken will not result in a material risk of sale, forfeiture or loss
of Sublessor's title to the Aircraft (unless Sublessee provides a bond
or other security satisfactory to Sublessor), and (5) at Sublessor's
request, Sublessee shall provide to Sublessor a written opinion in form
and substance satisfactory to Sublessor of independent legal counsel
satisfactory to Sublessor that there is a reasonable basis for such
contest. Notwithstanding that the conditions set forth in clauses (1),
(2), (3), (4) and (5) above may have been satisfied, Sublessor, after
consulting in good faith with Sublessee, may elect to pursue any
contest or proceeding pursuant to the preceding sentence or elect to
discontinue (by settlement or otherwise) any such contest or proceeding
commenced pursuant to the preceding sentence, but such election shall
constitute a waiver by Sublessor of any right to payment or
indemnification pursuant to Section 12(b) with respect to the
adjustment that was the subject of such proposed contest or proceeding
(and any other adjustment the contest of which is precluded by such
failure to contest) and, if Sublessee has theretofore paid or provided
Sublessor with funds to pay any amount with respect to such adjustment,
Sublessor shall promptly repay such amount to Sublessee. If Sublessor
shall obtain a refund in whatever form of all or any part of any Taxes
that Sublessee shall have paid or reimbursed to Sublessor hereunder,
Sublessor shall, provided that no Event of Default shall have
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occurred and be continuing, pay to Sublessee an amount that is equal to
the sum of the amount of such refund or credit, plus any interest
received on such refund fairly attributable to any Taxes paid by or
with funds provided by Sublessee prior to receipt of such refund,
reduced by an Taxes incurred by Sublessor by reason of the receipt or
accrual of such refund and interest and net of any expenses described
in clause (1) of the second sentence of this Section 12(d) that have
not been previously reimbursed, and increased by any Tax benefit
realized by Sublessor as a result of any payment by Sublessor made
pursuant to this sentence, provided further that, if, at the time of
such payment an Event of Default shall have occurred and be continuing,
Sublessor shall hold the amount of such payment as security for the
obligations of Sublessee to Sublessor under the Lease, and at such time
as there shall not be continuing any such Event of Default, shall pay
such amount to the Sublessee. Sublessor hereby agrees that it will
inform Sublessee of the time and place of, and Sublessor will not
object to Sublessee's presence at any proceeding conducted pursuant to
this Section 12(d) provided that Sublessee's presence also must be
allowed by applicable law and provided further that the conditions set
forth in clauses (1), (2), (3), (4) and (5) above shall have been, and
shall continue to be, satisfied.
(ii) Sublessee shall provide Sublessor with such information
in the possession of Sublessee or otherwise reasonably available to it
as Sublessor may reasonable require to enable Sublessor to fulfill its
tax filing obligations under this Section 12 and any audit information
request arising in connection with the Taxes subject to this Section
12. Sublessor shall provide Sublessee with such information in the
possession of Sublessor or otherwise reasonable available to it as
Sublessee may reasonably request to fulfill its tax filing requirements
under this Section 12 and any audit information request arising in
connection with the Taxes subject to this Section 12. If any report or
return is required to be made with respect to any obligation of
Sublessee under this Section 12, Sublessee will make such report or
return, provided that Sublessee shall have no obligation to file any
such return or report if (A) Sublessor, after Sublessee's written
request therefor, shall have failed to furnish Sublessee with such
information as is peculiarly within the control of, or reasonably
available to Sublessor and is necessary for the filing of such report
or return, or (B) such return or report would or should have been filed
by Sublessor even if it had not entered into the Sublease.
(iii) Sublessor shall furnish from time to time to Sublessee
or to such other person as Sublessee may designate, such returns,
statements or other documentation ("Tax Forms") (including, without
limitation, if then required, information as to the ultimate beneficial
owners of Sublessor and the stock interests in Sublessee held actually
and constructively by Sublessor, if not otherwise known to Sublessee)
in such form and with such substance as are necessary or appropriate to
enable Sublessor or Sublessee, to claim an available reduction of or
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exemption from Taxes which Sublessee may be required to pay or
indemnify against hereunder, provided that Sublessee shall have
provided Sublessor with any information within the Sublessee's control
or reasonably available to Sublessee that is necessary to prepare such
return, statement or other documentation. Any such Tax Forms shall be
provided promptly after receipt of a written request therefor from the
Sublessee.
(e) Payment. Unless otherwise requested by the appropriate Indemnitee,
Sublessee shall pay when due any Tax for which it is liable pursuant to Section
12(b) directly to the appropriate Taxing Authority, or, upon written demand,
shall reimburse the appropriate Indemnitee for the payment of any such Tax made
by such Indemnitee. Within 30 days after the date of each payment by Sublessee
of any Tax referred to in the proceeding sentence, Sublessee shall furnish the
appropriate Indemnitee evidence of payment of such Tax acceptable to such
Indemnitee. Sublessee shall also cause to be furnished, promptly upon request,
such data as any Indemnitee may reasonably require from Sublessee to enable such
Indemnitee to comply with the requirements of any Taxing Authority in respect of
any tax referred to in Section 12(b).
(f) Survival. The obligations contained in this Section 12 shall
survive the termination of this Sublease, to the extent they have accrued, or
relate to events that have occurred, on or before the date of such termination;
provided that obligations arising as a result of the occurrence of a Default or
an Event of Default shall in any event, without limiting the foregoing, survive
until payment in full and performance of all obligations owing to each
Indemnitee under the foregoing agreements and all other agreements referred to
herein or contemplated hereby. The obligations of Sublessee in respect of all
such indemnities, obligations, adjustments and payments are expressly made for
the benefit of, and shall be enforceable by, each Indemnitee entitled thereto at
the option of such Indemnitee without declaring this Sublease to be in default
or taking any other action hereunder.
Section 13. Assignment; Sublease Subject and Subordinate.
(a) No Impermissible Sublease by Sublessee. EXCEPT AS OTHERWISE
EXPRESSLY PROVIDED HEREIN, SUBLESSEE SHALL NOT ASSIGN OR OTHERWISE TRANSFER IN
ANY MANNER ANY OF ITS RIGHTS OR INTERESTS WITH RESPECT THIS SUBLEASE, THE
AIRCRAFT, ANY ENGINE OR ANY PART THEREOF.
(b) Assignment by Sublessor. Pursuant to the Security Assignments,
Sublessor's right, title and interest in and to this Sublease has been assigned
to Lessor as security for Sublessor's obligations under the Lease, and further
assigned by Lessor to Agent as security for Lessor's obligations to Agent and
the Lenders under the Credit Agreement and the Mortgage. Sublessee hereby
accepts and consents to the Security Assignments and the assignment of all of
Sublessor's right, title and interest in and
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to this Sublease to Agent pursuant to the terms thereof, including, without
limitation, the right to make all waivers and agreements, to give all notices,
consents and releases, to exercise Sublessor's rights and remedies upon an Event
of Default hereunder and take all action upon the happening of an Event of
Default hereunder or to do any and all other things whatsoever that Sublessor is
or may become entitled to do under this Sublease, all or any of which right,
remedies, obligations, benefits and interests may be reassigned or retransferred
by Agent at any time and from time to time.
(c) Sublease Subject and Subordinate. Sublessee acknowledges and agrees
that this Sublease, and Sublessee's rights hereunder, are subject and
subordinate in all respects to all the terms and conditions of the Lease and the
Mortgage and the rights and remedies of Lessor and Agent thereunder, including,
without limitation, (i) Lessor's rights to repossession of the Aircraft pursuant
to the Lease and to avoid this Sublease upon a default by Sublessor under the
Lease and (ii) Agent's rights to repossession of the Aircraft pursuant to the
Mortgage upon a default by Lessor thereunder, as the case may be.
Notwithstanding anything to the contrary herein, upon the occurrence of an event
of default entitling Lessor or Agent, as the case may be, to demand return of
the Aircraft by Sublessor under the Lease or an event of default by Lessor under
the Mortgage, Sublessee shall, if requested to do so by Lessor or Agent, as the
case may be, return the Aircraft to Agent or Lessor, as the case may be.
(d) Assignments by Sublessor or Lessor. Subject to Sublessee's rights
hereunder and at Sublessor's cost and expense, Sublessor or Lessor may at any
time and without Sublessee's consent sell, assign or transfer its rights and
interest hereunder or with respect to the Aircraft to a third party and/or xxxxx
x Xxxx over the Aircraft and the benefit of this Sublease to Lender or any other
Person as security for Sublessor's or Lessor's obligations to such Person (each
such transferee, assignee or other Person, an "Assignee"). On request by
Sublessor, Sublessee will execute all such documents (such as a lease assignment
agreement) as Sublessor or Lessor may reasonably require to confirm Sublessee's
obligations under this Sublease. No sale, assignment or transfer of Sublessor's
or Lessor's interest or creation of any Lien by Sublessor or Lessor shall
adversely affect Sublessee's rights hereunder or increase Sublessee's duties,
expenses or the liabilities of Sublessee in respect of any Tax or under any of
its indemnification obligations or otherwise. Sublessee will provide all other
reasonable assistance and cooperation to Sublessor, Lessor and any Assignee in
connection with any such sale or assignment or the perfection and maintenance of
any Lien granted in connection therewith, including, at Sublessor's sole cost
and expense, making all necessary filings and registrations including filings or
registrations of mortgages, financing statements and reregistration of the
Aircraft. Upon any such assignment or
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transfer, Sublessor shall cause any Assignee to deliver to Sublessee evidence of
its corporate authority to enter into any such sale, assignment or transfer and
such Assignee shall grant to Sublessee the same covenant(s) of quiet enjoyment
as are set forth herein. Wherever the terms "Sublessor", "Lessor" or "Lender"
are used in this Sublease in relation to any of the provisions relating to
disclaimer, title and registration, indemnity and insurance, such terms shall be
construed to include each Assignee, as applicable.
Section 14. Events of Default; Remedies.
(a) Events of Default. The occurrence of any of the following events
shall constitute an "Event of Default" (whether any such event shall be
voluntary or involuntary or come about or be effected by operation of law or
pursuant to or in compliance with any judgment, decree or order of any court or
any order, rule or regulation of any administrative or governmental body) and
each such Event of Default shall be deemed to exist and continue so long as it
shall not have been remedied:
(i) Sublessee shall fail to make any payment of Basic Rent,
Maintenance Reserves, Stipulated Loss Value or Supplemental Rent
hereunder within five (5) Business Days after the same shall have
become due and payable;
(ii) Sublessee shall fail to carry and maintain insurance on
or with respect to the Aircraft in accordance with the provisions of
Section 9 hereof or Sublessee shall fail to provide an insurer's
certificate evidencing the renewal or replacement of such policy, upon
the renewal or replacement thereof, in accordance with the terms
hereof;
(iii) any document required to be filed or recorded by
Sublessee pursuant thereto is not duly filed and recorded by Sublessee
as required to perfect and continue the perfection of the interests of
Sublessor, Lessor, and Agent in the Aircraft or the filings and
recordings provided for herein are not made by the time required; or
Sublessee shall fail to perform or observe any other covenant, term,
condition or agreement to be performed or observed by it hereunder or
under any instrument, document or agreement furnished by Sublessee to
Sublessor, or Lender in connection with the transactions referred to
herein or contemplated hereby, and such failure shall continue
unremedied for a period of thirty (30) days after written notice
thereof to Sublessee or thirty (30) days after Sublessee, assuming
exercise of reasonable diligence, should have known of such failure;
provided, however, such failure to observe any covenant, term,
condition or agreement does not pose a material danger to the
respective rights and interests of Sublessor, Lessor, Agent or any
Lender in the Aircraft and the same is of such a nature that it can be
cured; and further provided that Sublessee shall have commenced and
shall diligently pursue
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such cure, Sublessee shall have an additional thirty (30) day period
within which to cure the same;
(iv) any representation or warranty made by Sublessee herein
or in any document, or certificate furnished by Sublessee in connection
herewith shall at any time prove to have been false or incorrect or any
material respect at the time made;
(v) Sublessee shall (A) voluntarily commence any proceeding or
file any petition seeking relief under any applicable bankruptcy,
insolvency, liquidation or similar law now or hereafter in effect, (B)
consent to the institution of, or fail to contravene in a timely and
appropriate manner, any such proceeding or the filing of any such
petition, (C) apply for or consent to the appointment of a receiver,
trustee, custodian, sequestrator or similar official for itself or for
a substantial part of its property or assets, (D) file an answer
admitting the material allegations of a petition filed against it any
such proceeding, (E) make a general assignment for the benefit of
creditors, (F) become unable, admit in writing its inability or fail
generally to pay its debts as they become due or (G) take corporation
action for the purpose of effecting any of the foregoing;
(vi) an involuntary proceeding shall be commenced or for
involuntary petition shall be filed in a court of competent
jurisdiction seeking (A) relief in respect of Sublessee, or of a
substantial part of the property or assets of Sublessee under any
applicable bankruptcy, insolvency, receivership or similar law, (B) the
appointment of a receiver, trustee, custodian, sequestrator or similar
official for Sublessee or for a substantial part of the property of
Sublessee or (C) the winding-up or liquidation of Sublessee; and such
proceeding or petition shall continue undismissed, unstayed or unbonded
for sixty (60) days or an order or decree approving or ordering any of
the foregoing shall continue unstayed and in effect for thirty (30)
days;
(vii) Sublessee or any subsidiary thereof, the debt of which
has been guaranteed by Sublessee thereof shall fail to pay, in
accordance with its terms and when due and payable, the principal of or
interest on any Debt the principal amount of which exceeds $2,000,000
and the maturity of any such Debt, in accordance with the provisions of
any such Debt or any contract evidencing, providing for the creation of
or concerning such Debt shall have been accelerated or any event shall
have occurred and be continuing that would permit any holder or holders
of such Debt, any trustee or agent acting on behalf of such holder or
holders or any other Persons so to accelerate such maturity;
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(viii) final judgment for the payment of money in excess of
$750,000 not fully covered by insurance (or the equivalent in another
currency) shall be rendered against Sublessee and the same shall remain
undischarged for a period of thirty (30) days during which execution of
such judgment shall not be effectively stayed or bonded in a manner
satisfactory to Sublessor;
(ix) Sublessee shall fail to remain a "certificated
air-carrier" within the meaning of the Federal Aviation Act;
(x) Sublessee shall voluntarily suspend all or substantially
all of its commercial airline operations, or the franchises,
concessions, permits, rights or privileges acquired for the conduct of
the business and operations of Sublessee shall be revoked, canceled or
otherwise terminated or the free and continued use and exercise thereof
curtailed or prevented;
(xi) except as otherwise permitted pursuant to Section 11(n)
hereof, Sublessee shall merged with or into or consolidate with or into
or convey, transfer, lease or otherwise dispose of (whether in one
transaction or in a series of transactions) all or substantially all of
its assets (whether now owned or hereafter acquired) to any Person or
fifty-one percent (51%) or more of the capital stock of Sublessee shall
be acquired in a single transaction or series of transactions, directly
or indirectly by any Person and/or its Affiliates not a shareholder of
Sublessee on the Commencement Date;
(xii) possession of the Aircraft, the Airframe or any Engine
shall be transferred to another Person, other than in accordance with
the express provisions of Section 7(d); and/or
(xiii) the Aircraft shall cease to be (or cease to be eligible
to be) registered in the United States as a result of any act or
omission of Sublessee.
(b) Remedies. Upon the occurrence of any Event of Default and at any
time thereafter so long as the same shall be continuing, Sublessor may, at its
option, declare this Sublease to be in default by notice to Sublessee; and at
any time thereafter, so long as Sublessee shall not have remedied all
outstanding Events of Default before Sublessor shall have commenced to exercise
its rights or remedies hereunder, Sublessor may exercise one or more of the
following rights and remedies with respect to all or any part of the Aircraft,
Airframe or any Engine as Sublessor 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:
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(i) cause Sublessee, upon the written demand of Sublessor and
at Sublessee's expense, to return promptly, and Sublessee shall return
promptly (and in no event later than two days after such demand), all
or such part of the Aircraft, the Airframe or any Engine as Sublessor
may demand, to Sublessor or its order in the manner and condition
required by, and otherwise in accordance with all the provisions of,
Section 10 as if such Aircraft, Airframe or Engine were being returned
at the end of the Sublessee Term, or Sublessor, at its option, may
enter upon the premises where all or any part of the Aircraft, Airframe
or any Engine is located and take immediate possession of and remove
the same;
(ii) hold, use, operate, keep idle or lease to others all or
any part of the Aircraft, with or without taking possession thereof as
Sublessor in its sole discretion may determine, free and clear of any
rights of Sublessee and without any duty to account to Sublessee with
respect to such action or inaction or for any proceeds with respect
thereto, except that Sublessee's obligation to pay Basic Rent pursuant
to the Lease for any periods in respect of the Aircraft or part thereof
accruing after Sublessee shall have been deprived of possession of such
Aircraft or part thereof pursuant to this Section 14 shall be reduced
by the net proceeds, if any, received by Sublessor from leasing the
Aircraft or part thereof to any Person other than Sublessee for the
same periods or any portions thereof;
(iii) Sublessor may exercise any other right or remedy that
may be available to it under applicable law or proceeds by appropriate
court action to enforce the terms hereof or to recover damages for the
breach or to rescind this Sublease;
(iv) Sublessor may terminate this Sublease; and/or
(v) whether or not Sublessor shall have exercised, or shall
thereafter at any time exercise, any of its rights under clause (i),
(ii), (iii) or (iv) above, Sublessor, by written notice to Sublessee
specifying a payment date not earlier than five (5) Business Days after
the date of such notice, may terminate this Sublease and demand that
Sublessee pay to Sublessor and Sublessee shall pay to Sublessor, on the
payment date specified in such notice, as liquidated damages for loss
of a bargain and not as a penalty, the sum of: (A) any unpaid Basic
Rent due under this Agreement for periods ending on or prior to the
payment date specified in such notice and any unpaid Supplemental Rents
due on or prior to such payment date, plus (B), an amount equal to the
aggregate unpaid Basic Rent which would otherwise have accrued
hereunder over the remainder of the Sublease Term but for the Event of
Default, discounted to present value as of the date specified for
payment in such
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notice, less (C), if applicable, for any period until the expiration of
the Sublease Term that Sublessor has not been able to sublease the
Aircraft but has been able, in the normal course of its operations to
use the Aircraft, the Basic Rent payable by Sublessee to Sublessor for
the lease of the Aircraft during any such period of use discounted to
present value as of the date specified for payment in such notice. The
amounts specified in such notice shall bear interest at the
Post-Default Rate from the payment date specified in such notice until
payment is made. In calculating Sublessor's damages hereunder upon an
Event of Default, all Basic Rent which would have become due during the
remainder of the Sublease Term if an Event of Default had not occurred
will be calculated on a present value basis using a discounting rate
equal to the rate of interest on United States Treasury Bills having a
maturity which will most closely approximate the period equal to the
remainder of the Sublease Term, as quoted in the Wall Street Journal on
the date of Sublessor's notice.
In addition, Sublessee shall be liable, except as otherwise provided
above, for any and all Unpaid Basic Rent and Supplemental Rent then due
hereunder before or during or after the exercise of any of the foregoing
remedies and for all legal fees and other costs and expenses incurred by
Sublessor by reason of the occurrence of any Event of Default or the exercise of
Sublessor's remedies with respect thereto, including all costs and expenses
incurred in connection with return of all or any part of the Aircraft in
accordance with Section 10 or this Section 14 or in storing or maintaining the
Aircraft or any part thereof or placing the same in the condition and
airworthiness required by Section 10.
Except as otherwise expressly provided above, no remedy referred to
herein is intended to be exclusive, but each shall be cumulative and in addition
to any other remedy referred to herein or otherwise available to Sublessor at
law or in equity, and the exercise or beginning of exercise by Sublessor or any
one or more of such remedies shall not preclude the simultaneous or later
exercise by Sublessor of any or all such other remedies; provided, that
Sublessor may recover only once from each element of damages sustained and,
provided further, that the preceding proviso shall not be deemed to require
proof of damages actually sustained in the case of liquidated damages provided
for herein. No express or implied waiver by Sublessor of any Default or Event of
Default shall in any way be, or be construed to be, a waiver of any future or
subsequent Default or Event of Default. To the extent permitted by law,
Sublessee hereby waives any rights now or hereafter conferred by statute or
otherwise
(A) that may confer any right to prior
notice or judicial hearing in connection with Sublessor's
taking possession or disposing of the Aircraft including,
without limitation, any and all prior notice and hearing for
any prejudgment remedy or remedies and any such right that
Sublessee might otherwise have under applicable law,
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(B) except as provided in this Section 14,
that impose any requirements as to the time, place or terms
of lease other disposition or other requirements with respect
to the enforcement of Sublessor's rights and remedies
hereunder, (C) all rights of redemption, appraisement,
valuation, stay, extension or moratorium now or hereafter in
effect under applicable law that may have the effect of
delaying the enforcement of this Sublease or the absolute
lease or other disposition of the Aircraft, or (D) except as
otherwise provided herein, that may otherwise limit or modify
any of Sublessor's rights or remedies hereunder. The failure
or delay of Sublessor in exercising any right or remedy
granted it hereunder upon any occurrence of any of the
contingencies set forth herein shall not constitute a waiver
of any such right or remedy upon the continuation or
reoccurrence of any such contingencies or similar
contingencies and any single or partial exercise hereunder of
any particular right or remedy of Sublessor shall not exhaust
the same or constitute a waiver of any other right provided
herein.
Notwithstanding anything contained in this Section 14 to the contrary,
Sublessor shall use reasonable efforts to mitigate damages.
Section 15. Notices. All notices required or permitted hereunder shall
be in writing and shall be delivered in person or sent by telecopier,
international courier service or letter (mailed certified and return receipt
requested), addressed to the parties as follows:
if the Sublessor: Alto Edificio Caribe, 2d Piso
San Salvador, El Salvador
Attention: President
Telecopier: (503) 98-0827
with a copy to: Greenberg, Traurig, Hoffman,
Lipoff, Xxxxx & Xxxxxxx, P.A.
0000 Xxxxxxxx Xxxxxx
Xxxxx, Xxxxxxx 00000
Attention: Xxxxxxx X. Xxxxxxx, Esq.
Telecopier: 305-579-0717
if to Sublessee: Western Pacific Airlines, Inc.
0000 X. Xxxxxx Xxxxx, Xxxxx 0000
Xxxxxxxx Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxx X. Xxxxxxx,
President & CEO
Telecopier: (000) 000-0000
with a copy to: Winthrop, Stimson, Xxxxxx & Xxxxxxx
Xxx Xxxxxxx Xxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxx Xxxxxxxxx, Esq.
Telecopier: (000) 000-0000
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or at such other address as Sublessee or Sublessor shall from time to time
designate in writing to the other. In the case of a notice will be deemed
received upon actual receipt. In the case of a mailed letter, notice will be
deemed received on the tenth (10th) Business Day after deposit in the mail, with
proper postage for registered or certified first-class mail prepaid. All notices
required or permitted under the Lease shall be given in the manner set forth in
Section 18 of the Lease.
Section 16. Governing Law and Jurisdiction.
(a) Governing Law. This Sublease shall in all respects be governed by,
and construed in accordance with, the internal laws of the State of New York,
inclusive of all matters of construction, validity and performance.
(b) Jurisdiction; Service of Process. Sublessee and Sublessor hereby
irrevocably submit to the jurisdiction of any New York State or federal court
sitting in New York City in any action or proceeding arising out of or relating
to this Sublease, and hereby irrevocably agree that all claims in respect of
such action or proceeding may be heard and determined in such New York State
court or, to the extent permitted by law, in such federal court. Sublessee and
Sublessor hereby irrevocably waive, to the fullest extent they may effectively
do so, the defense of an inconvenient forum to the maintenance of such action or
proceeding. Sublessee hereby irrevocably appoints CT Corporation System, with an
office on the date hereof at 0000 Xxxxxxxx, Xxx Xxxx, Xxx Xxxx 00000, and
Sublessor hereby irrevocably appoints Greenberg, Traurig, Hoffman, Lipoff, Xxxxx
& Xxxxxxx, 000 Xxxx 00xx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000 (the "Process Agent"),
as their respective agents to receive on their behalf and in respect of their
proper service of copies of the summons and complaint and any other process that
may be served in any such action or proceeding. Such service may be made by
mailing or delivering a copy of such process to Sublessee or Sublessor, as the
case may be, in care of their respective Process Agents at such Process Agent's
above address, and Sublessee and Sublessor hereby irrevocable authorize and
direct their respective Process Agents to accept such service on their behalf.
As an alternative method of service, Sublessee and Sublessor also irrevocably
consent to the service of any and process in any such action or proceeding by
the mailing of copies of such process to the address specified in Section 16.
Sublessee and Sublessor agree that a final judgment in any such action or
proceeding shall be conclusive and may be enforced in other jurisdictions by
suit on the judgment or in any other manner provided by law. Nothing in this
Section 16(b) shall affect the right of any Person (including Lessor and Lender)
to serve legal process in any other manner permitted by law or affect the right
of any other party to bring any action or proceeding against Sublessee or
Sublessor, or their respective properties in the courts of other jurisdictions.
SUBLESSEE AND SUBLESSOR HEREBY WAIVE TRIAL BY JURY IN ANY JUDICIAL PROCEEDING
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TO WHICH THEY ARE PARTIES INVOLVING, DIRECTLY OR INDIRECTLY, ANY MATTER ARISING
OUT OF OR RELATING TO THIS SUBLEASE.
(c) Waiver of Immunity. To the extent that Sublessor or Sublessee has
or hereafter may acquire any sovereign immunity, Sublessor and Sublessee hereby
irrevocably waive such immunity in respect of their respective obligations under
this Sublease and all other documents and agreements relating to the Aircraft
and the transactions referred to or contemplated herein.
Section 17. Miscellaneous.
(a) Entire Agreement. This Sublease constitutes the entire agreement
between the parties concerning the subject matter hereof, and supersedes all
previous proposals, agreements, understandings, negotiations and other written
and oral communications in relation hereto. NO SUBLEASE TERM OR PROVISION OF
THIS SUBLEASE MAY BE CHANGED, WAIVED, DISCHARGED OR TERMINATED, EXCEPT (i) WITH
THE PRIOR WRITTEN CONSENT OF LESSOR AND AGENT AND (ii) BY AN INSTRUMENT IN
WRITING SIGNED BY A DULY AUTHORIZED REPRESENTATIVE OF THE PARTY AGAINST WHICH
THE ENFORCEMENT OF THE CHANGE, WAIVER, DISCHARGE OR TERMINATION IS SOUGHT.
Nothing herein shall be construed as conveying to Sublessee any right, title or
interest in the Aircraft, the Airframe or any Engine or Part except as Sublessee
under this Sublease.
(b) English Language. All notices, communications, reports, opinions
and other documents given under this Sublease shall be in the English language.
(c) Sublessor's Right to Perform for Sublessee. If Sublessee fails to
make any payment of Rent or Supplemental Rent required to be made by it
hereunder or fails to perform or comply with any of its agreements contained
herein, Sublessor may itself make such payment or perform or comply with such
agreement, and the amount of any expenses of Sublessor incurred in connection
with such payment or the performance of or compliance with such agreement, as
the case may be, shall be deemed Supplemental Rent payable by Sublessee upon
demand; provided, however, that no such payment, performance or compliance by
Sublessor shall (i) be deemed to have satisfied the obligation of Sublessee to
make such payment or to perform or comply with such agreement, as the case may
be, unless and until Sublessee shall have paid all such Supplemental Rent
payable pursuant to this section by reason of such failure or (ii) be deemed a
waiver of Sublessor's rights and remedies against Sublessee hereunder.
(d) Application of Payments During Existence of Default. Any amount
referred to herein that is payable to Sublessee shall not be paid to Sublessee,
or if it has been previously paid directly to Sublessee, shall not be retained
by Sublessee, if at the time of such payment a Default or Event of Default shall
have occurred and be continuing, but shall be paid to and held by
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Sublessor as security for and may be applied to the obligations of Sublessee
under this Sublease and, at such time as Sublessor shall receive evidence in
form and substance satisfactory to it that there is not continuing any such
Default or Event of Default, all such amounts in excess of amounts so paid on
obligations of Sublessee shall be paid to Sublessee.
(e) Expenses. Whether or not the transactions contemplated hereby shall
be consummated, Sublessee agrees to reimburse Sublessor, Lessor and Agent for
their respective out-of-pocket costs and expenses, including attorneys' fees
(except for the fees of Greenberg, Traurig, Hoffman, Lipoff, Xxxxx & Quentel,
P.A.), incurred in connection with the preparation, negotiation and delivery of
this Sublease, any other documents or instruments required in connection
herewith and the transactions contemplated hereby. Sublessee further agrees to
reimburse Sublessor, Lessor, Agent and any Lender for their out-of-pocket costs
and expenses, including attorneys' fees, incurred in connection with any
amendments, modifications or waivers required by this Sublease or requested by
Sublessee (or resulting from any requests of Sublessee) hereunder.
(f) Further Assurances. Sublessee will promptly and duly execute and
deliver to Sublessor such further documents and assurances and take such further
action as Sublessor may from time to time reasonably request in order to more
effectively carry out the intent and purpose of this Sublease and to establish
and protect the rights and remedies created or intended to be created in favor
of Sublessor hereunder, including, without limitation, if requested by
Sublessor, Lessor or Agent, at the expense of Sublessee, the execution and
delivery of supplements or amendments hereto, in recordable form, subjecting to
this Sublease any Replacement Engine and the recording or filing of counterparts
hereof, and all such other documents and instruments, in accordance with the
laws of such jurisdictions as Sublessor may from time to time deem advisable.
(g) Judgment Currency. The obligations of Sublessee in respect of any
sum due from it to Sublessor hereunder shall, notwithstanding any judgment in a
currency other than Dollars, be discharged only to the extent that Sublessor may
in accordance with normal banking procedures purchase, or cause to be purchased
for its account Dollars with such other currency; if the Dollars so purchased
are less than the sum originally due in Dollars, Sublessee agrees to indemnify
Sublessor against such loss, and if the Dollars so purchased exceed the sum
originally due to Sublessor in Dollars, Sublessor agrees to remit to Sublessee
such excess.
(h) Invalidity of any Provision. Any provision of this Sublease that is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
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unenforceablity in any jurisdiction shall not invalidate or render unenforceable
such provision in any other jurisdiction. To the fullest extent permitted by
applicable law, Sublessee hereby waives any provision of law that renders any
provision hereof prohibited or unenforceable in any respect.
(i) Changes in Law. If there shall be any change (or such change shall
be enacted or made by notice or otherwise and shall be scheduled to become
thereafter effective) in the laws or treaties of the United States that has a
material adverse effect on the validity, legality, perfection or enforceability
of Sublessor's, Lessor's or Lender's rights or interest in the Aircraft or this
Sublease or the validity, legality, perfection, or enforceability of this
Sublease, or the perfection of the Security Assignments or the Mortgage,
Sublessor may terminate this Agreement, whereupon Sublessee shall promptly
return the Aircraft to Sublessor or its designee in the condition required
hereunder.
(j) Headings. All section and paragraph headings and captions are
purely for convenience of reference only and shall not modify, define, expand,
limit or otherwise affect any of the terms or provisions hereof and all
references herein to numbered sections, unless otherwise indicated, are to
sections of this Sublease.
(k) Consent. Whenever in this Sublease, the consent (whether or not, in
writing) of either Sublessor or Sublessee is required, such consent shall not be
unreasonably withheld or delayed.
(l) Third-Party Beneficiaries. Sublessee recognizes that this Sublease
confers certain rights and interests on the Indemnitees. Notwithstanding that
the Indemnitees are not parties to this Sublease, the Indemnitees are intended
third party beneficiaries of such rights and interests and Sublessor hereby
acknowledges that the Indemnitees may enforce such rights and interests
directly, as if they were parties to this Sublease.
(m) Counterparts. This Sublease may be executed in any number of
identical counterparts, all of which together will be deemed to be one and the
same instrument. Delivery of an executed counterpart of this Sublease by
facsimile will be deemed effective as delivery of an originally executed
counterpart. Any party delivering an executed counterpart of this Sublease by
facsimile will also deliver an originally executed counterpart; provided the
failure of any party to deliver an originally executed counterpart of this
Sublease will not affect the validity or effectiveness of this Sublease.
[CONTINUED ON SIGNATURE PAGE]
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IN WITNESS WHEREOF, Sublessor and Sublessee have each caused
this Sublease to be duly executed as of the day and year first above written.
TACA INTERNATIONAL AIRLINES, S.A.,
as Sublessor
By: _____________________________
Name:
Title:
WESTERN PACIFIC AIRLINES, INC.,
as Sublessee
By: _____________________________
Name:
Title:
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SCHEDULE 1
SUBLEASE AGREEMENT
STIPULATED LOSS VALUE
The Stipulated Loss Value as of any date shall be equal to the amount
of U.S. dollars set forth in the table below and set forth opposite such date.
Stipulated Loss Value
Stipulated
Loss Value
Lease Period Dates (In U.S. Dollars)
-----------------
March 18, 1996 - March 17, 1997 $27,000,000
March 18, 1997 - March 17, 1998 26,500,000
March 18, 1998 - March 17, 1999 26,000,000
March 18, 1999 - March 17, 2000 25,500,000
March 18, 2000 - End of Lease Term 25,000,000
-73-
EXHIBIT A
AIRCRAFT DESCRIPTION
Xxx Xxxxxx Xxxxx X000-0X0 Xxxxxxxx, Xxxxxx Xxxxxx Registration Xxxx N375TA and
Manufacturer's Serial No. 23787 with two CFM International, Inc. Model CFM
56-3B2 Engines, Manufacturer's Serial Nos. 721734 and 721150, respectively in a
136-seat, single class configuration.
AIRFRAME*:
Aircraft Total Time (Hours) _______
Aircraft Total Landings (Cycles) _______
Time since last "C" Check _______
Time since last "D" Check _______
ENGINES*:
Time to Next
Total Replacement of
Serial Engine Total Time Since Lowest Life
Number Cycles Time Overhaul Limited Part
------ ------ ----- ---------- --------------
721734
721150
---------------
*as of March __, 1996
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EXHIBIT B
ACCEPTANCE CERTIFICATE
WESTERN PACIFIC AIRLINES, INC., a corporation organized and existing
under the laws of ________________ with its principal place of business in
Colorado Springs, Colorado ("Sublessee") does hereby represent, acknowledge,
warrant and agree as follows:
(a) Sublease and TACA INTERNATIONAL AIRLINES, S.A. ("Sublessor") have
entered into a Sublease of Lease Agreement dated as of March __, 1996
(hereinafter referred to as the "Sublease"). Capitalized words used herein and
not otherwise defined will have the meanings set forth in the Sublease.
(b) Sublessee has this __ day of March, 1996 (Time: ___ ________), at
El Salvador International Airport, received from Sublessor possession of:
(i) One (1) Boeing 737-3S3 Aircraft bearing
Manufacturer's serial number 23787 and two (2) CFM
International, Inc. Model CFM 56-3B2 Engines, Manufacturer's
Serial Nos. 721734 and 721150 (the "Aircraft"); and
(ii) The manuals, logbooks, flight records and
historical information regarding the Aircraft, Engines and
Parts listed in Attachment 1 hereto (the "Aircraft
Documentation").
(c) Except as noted on Attachment 2 hereto, Sublessee hereby confirms
and agrees that the above described Aircraft and Aircraft Documentation have
been duly accepted by Sublessee pursuant to the terms and provisions of the
Sublease.
(d) As of the date hereof, the Aircraft and Engines had the following
hours/cycles:
AIRFRAME: Aircraft Total Time (Hours) ________
Aircraft Total Landings (Cycles) ________
Time since last "C" Check ________
Time since last "D" Check ________
Time to Next
Total Replacement of
Serial Engine Total Time Since Lowest Life
Number Cycles Time Overhaul Limited Part
------ ------ ----- ---------- --------------
721734
721150
(e) Quantity of fuel on board the Aircraft at delivery:_________.
IN WITNESS WHEREOF, Sublessee has caused this Acceptance Certificate to
be executed by its duly authorized representative as of the day and year set
forth above.
WESTERN PACIFIC AIRLINES, INC.
By:____________________________
Name:
Title:
ATTACHMENTS: 1. List of Aircraft Documentation
2. List of Discrepancies
-2-
ATTACHMENT 1
TO ACCEPTANCE CERTIFICATE
AIRCRAFT DOCUMENTATION
MANUALS
Name
----
FAA Approved Airplane Flight Manual
Manufacturer's Operations Manual - Volume No. ______
Quick Reference Handbook
Maintenance Manuals
Wiring Diagram Manuals
Structural Repair Manual
Illustrated Parts Catalog
Vendor Illustrated Parts Catalog
Overhaul Manuals
Vendor Overhaul Manuals
Drawings (Major Assembly and Installation)
Weight and Balance Control and Loading Manual
Weight and Balance Manuals Supplement
Actual Weight and Balance Compliance
Rigging Document
AIRCRAFT RECORDS AND HISTORICAL DOCUMENTS
-----------------------------------------
Aircraft log book (current file copies)
Aircraft Readiness Log (revised to time of return)
Maintenance Time Control Report (components, maintenance visit, special items
next, due Airframe hours and cycles)
Aircraft previous maintenance visit record including the last inspection
performed.
Airworthiness Directive Compliance Summary
Serviceable Tags for all rotable components installed (Airframe & Engines)
Ads requiring continuous surveillance
Service bulletin terminated accomplished status
Service bulletin requiring continuous surveillance summary and maintenance
control action
Airframe and component history records
FAA Form 337 for Airframe, repair/overhaul certification of last major visit
FAA Form 337 for each Engine, repair/overhaul certification of last shop visit
Engine Readiness Log for each Engine (components installed)
Summary of Service Bulletins accomplished for each Engine
Summary of AD's accomplished for each Engine
SD and AD status requiring continuous surveillance with maintenance, control
action for each engine
Engine time summary sheet including life limited items (for each Engine)
Engine log books for each Engine (current and file copies)
-2-
Receipt of the foregoing documents except as noted, is hereby acknowledged.
-3-
ATTACHMENT 2
TO ACCEPTANCE CERTIFICATE
DISCREPANCIES
EXHIBIT C
FORM OF RETURN ACCEPTANCE RECEIPT
WESTERN PACIFIC AIRLINES, INC. ("Sublessee") and TACA INTERNATIONAL
AIRLINES, S.A. ("Sublessor") have entered into a Sublease of Lease Agreement
dated as of March __, 1996 (hereinafter referred to as "Sublease"). Capitalized
words used herein and not otherwise defined will have the meanings set forth in
the Sublease.
(a) Sublessor has this __ day of ______, _____ (Time: ___ _________),
at [return location], received from Sublease possession of:
(i) One (1) Boeing 737-3S3 Aircraft bearing
Manufacturer's serial number 23787 and two (2) CFM
International, Inc. Model CFM 56-3B2 Engines, Manufacturer
Serial Nos. 72134 and 721150 (the "Aircraft"); and
(ii) The manuals, logbooks, flight records and
historical information regarding the Aircraft, Engines and
Parts listed in Attachment 1 hereto (the "Aircraft
Documentation").
(b) Except as noted on Attachment 2 hereto, the above specified
Aircraft and Aircraft Documentation are hereby accepted by Sublessor pursuant to
the terms and provisions of the Sublease.
(c) As of the date hereof, the Aircraft and Engines had the following
hours/cycles:
AIRFRAME: Aircraft Total Time (Hours) ________
Aircraft Total Landings (Cycles) ________
Time since last "C" Check ________
Time since last "D" Check ________
Time to Next
Total Replacement of
Serial Engine Total Time Since Lowest Life
Number Cycles Time Overhaul Limited Part
------ ------ ----- ---------- --------------
721734
721150
(d) Quantity of fuel on board the Aircraft at redelivery:
-----------------.
IN WITNESS WHEREOF, Sublessee and Sublessor have caused this Return
Acceptance Receipt to be executed by their duly authorized representatives as of
the day and year set forth above.
WESTERN PACIFIC AIRLINES, INC.
By:____________________________
Name:
Title:
TACA INTERNATIONAL AIRLINES, S.A.
By:____________________________
Name:
Title:
ATTACHMENTS: 1. List of Aircraft Documentation
2. List of Discrepancies
-2-
ATTACHMENT 1
TO RETURN ACCEPTANCE RECEIPT
AIRCRAFT DOCUMENTATION
(NOTE: At time of Aircraft return list all of the records,
manuals, documents and data (by title/description,
identification number and quantity) which were provided
to Sublessee by Sublessor with delivery of the Aircraft
under the Sublease. Also list all additional
records/data developed for and returned with the
Aircraft by Sublessee.)
MANUALS
Name
----
FAA Approved Airplane Flight Manual
Manufacturer's Operations Manual - Volume No. _______
Quick Reference Handbook
Maintenance Manuals
Wiring Diagram Manuals
Structural Repair Manual
Illustrated Parts Catalog
Vendor Illustrated Parts Catalog
Overhaul Manuals
Vendor Overhaul Manuals
Drawings (Major Assembly and Installation)
Weight and Balance Contra and Loading Manual
Weight and Balance Manual Supplement
Actual Weight and Balance Compliance
Rigging Document
AIRCRAFT RECORDS AND HISTORICAL DOCUMENTS
Aircraft log book (current file copies)
Aircraft Readiness Log (revised to time of return)
Maintenance Time Control Report (components, maintenance visit, special items
next due, Airframe hours and cycles)
Aircraft previous maintenance visit record including the last inspection
performed.
Airworthiness Directive Compliance Summary
Serviceable Tags for all rotable components installed (Airframe & Engines)
Ads requiring continuous surveillance
Service bulletin terminated accomplishment status
Service bulletin requiring continuous surveillance summary and maintenance
control action
Airframe and component history records
FAA Form 337 for Airframe, repair/overhaul certificate of last shop visit
Engine Readiness Log for each Engine (component installed)
Summary of Service Bulletin's accomplished for each Engine
Summary of AD accomplished for each Engine
SB and AD status requiring continuous surveillance with maintenance, control
action of each Engine
Engine time summary sheet including life limited items (for each Engine)
Engine log books for each Engine (current and file copies)
Receipt of the foregoing documents, except as noted, in hereby acknowledged.
-2-
ATTACHMENT 2
TO RETURN ACCEPTANCE RECEIPT
DISCREPANCIES
EXHIBIT D
FORM OF CERTIFICATES OF Sublessee
OFFICER'S CERTIFICATE
Reference is hereby made to the Sublease of Lease Agreement dated as of
March ___, 1996, between TACA International Airlines, S.A., as Sublessor and
WESTERN PACIFIC AIRLINES, INC. (the "Sublease"). Capitalized terms used herein
shall, except as otherwise defined herein, have the respective meanings assigned
thereto or incorporated by reference to any other document in the Sublease.
Pursuant to Section 4(a) of the Sublease, in connection with the Sublease, the
undersigned hereby certifies as follows:
1. The undersigned is the duly appointed, qualified and acting
President of WESTERN PACIFIC AIRLINES, INC. (the "Sublessee"), a corporation
duly organized and existing under the laws of [Delaware], with its principal
place of business in Colorado Springs, Colorado;
2. All of the representations and warranties made by Sublessee in the
Sublease are true and accurate as of the date hereof, except to the extent that
such representations and warranties relate solely to an earlier date (in which
case, the undersigned reaffirms that such representations and warranties are
true and accurate as of such earlier date); and
3. No Default or Event of Default has occurred and is continuing, or
will result from Sublessee's execution, delivery and performance of the
Sublease.
IN WITNESS WHEREOF, the undersigned has signed this Officer's
Certificate this ___ day __________________, 1996.
-----------------------------
Name:
Title:
-2-
SECRETARY'S CERTIFICATE
Reference is hereby made to the Sublease of Lease Agreement dated as of
March ___, 1996, between TACA International Airlines, S.A., as Sublessor and
WESTERN PACIFIC AIRLINES, INC., as Sublessee, (the "Sublease"). Capitalized
terms used herein, have the respective meanings assigned thereto or incorporated
by reference to any other documents in the Sublease. In connection with the
Sublease and pursuant to Section 4(b) of the Sublease, the undersigned hereby
certifies as follows:
1. The undersigned is the duly appointed, qualified and acting
[Secretary][Assistant Secretary] of Sublessee, a corporation duly organized
under the laws of Delaware, with its principal place of business in Colorado
Springs, Colorado.
2. Attached as Annex A is a true and complete copy of the Articles of
Incorporation and the By-laws of Sublessee, as in effect on the date hereof.
3. There is no pending or contemplated proceeding for the amendment of
the Articles of Incorporation or By-laws of Sublessee.
4. Attached as Annex B is a true and complete copy of resolutions of
the Board of Directors of Sublessee, as duly adopted by the Board of Directors
in accordance with the Articles of Incorporation and By-laws of Sublessee, duly
authorizing the execution, delivery and performance by Sublessee of this
Sublease and all other agreements, documents and certificates contemplated
hereby or thereby to be executed on behalf of Sublessee, and such resolutions
have not been amended, rescinded, modified or revoked and are in full force and
effect on the date hereof.
5. Set forth below are/is the genuine signature of the Executive
President of Sublessee, who is the person duly authorized to execute and deliver
the Sublease and such other documents and instruments required to be delivered
under the Sublease, and who continues to hold his office as of the date hereof:
Name Title Signature
IN WITNESS WHEREOF, the undersigned has signed this Secretary's
Certificate this ___ day of _________________, 1996.
-----------------------------
Name:
Title:
The undersigned, being one of the officers referred to in the foregoing
Secretary's Certificate, does hereby certify as of the date of the foregoing
Certificate that _________________ is the [Secretary/Assistant Secretary] of
WESTERN PACIFIC AIRLINES, INC. and the signature above is his genuine signature.
-----------------------------
Name:
Title:
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EXHIBIT E
FORM OF OPINION OF SUBLESSEE'S COUNSEL
To Each Person Listed
on Schedule A Hereto
Gentlemen:
We have acted as counsel for WESTERN PACIFIC AIRLINES, INC., a
corporation organized and existing under the laws of _______________________
("WPA") in connection with the preparation, execution and delivery of the
Sublease of Lease Agreement dated as of March ___, 1996 (the "Sublease"),
between TACA International Airlines, S.A., as Sublessor, and WPA, as Sublessee,
relating to the lease of the Aircraft. Capitalized terms used herein and not
otherwise defined shall have the meanings defined in the Sublease.
In that connection we have examined the following: (i) the Sublease;
(ii) the Lease; (iii) the Security Subleases; (iv) the Mortgage; (v) the
Articles of Incorporation and bylaws of WPA and all amendments thereto (the
"Charter"); and (vi) such other documents, agreements and instruments as we have
deemed necessary as a basis for the opinions hereinafter expressed. We have also
examined originals or copies, certified or otherwise identified to our
satisfaction, of such other records and such other instruments and certificates
of public officials and of officers and representatives of WPA as we have deemed
necessary or appropriate as a basis for the opinions hereinafter expressed.
In arriving at the opinions expressed below, we have assumed the
genuineness of all signatures and the due authorization, execution and delivery
by the parties thereto (other than WPA) of each of the documents listed above.
In addition, we have made such investigations of law as we have deemed
appropriate for the purpose of giving the opinions expressed below.
On the basis of the foregoing, the further assumptions set forth below
and our consideration of such other matters of fact and questions of law as we
have deemed relevant in the circumstances, and subject to the limitations set
forth below, we are of the opinion that:
(1) WPA is a corporation duly organized, validly existing and in good
standing under the laws of ____________ and has the corporate power and
authority to carry on its business as presently conducted and to enter into and
perform its obligations under the Sublease, the Lease and all other documents
contemplated thereby to which it is or will become a party (collectively the
"Documents"), and holds all material licenses,
certificates and permits from all Government Entities of __________________
necessary for the conduct of its business as now conducted.
(2) The execution, delivery and performance by WPA of the Documents (a)
have been duly authorized by all necessary corporate action on the part of WPA,
(b) do not require any stockholder approval, or approval or consent of any
trustee or holders of any indebtedness or obligations of WPA, (c) do not
contravene any law, rule or regulation of any Government Entity binding on WPA,
(d) do not contravene any order binding on WPA, (e) do not contravene any
provision of the Charter of WPA, and (f) do not contravene the provisions of, or
constitute a default under, or result in the creation of any lien upon any
property or assets of WPA under any indenture, mortgage, contract or other
agreement to which WPA is a party or by which it or its properties may be bound
or affected or any applicable law, rule or regulation, judgment, order or decree
of any Government Entity or court having jurisdiction over WPA or any of its
properties or assets. Each of the Documents has been duly executed and delivered
by WPA.
(3) No authorization or approval (including exchange control approval)
or other action by, and no notice to or filing with, any Governmental Entity is
required for the due execution, delivery and performance by WPA of the
Documents, but the failure so to record or file the Sublease will not affect the
enforceability of WPA's obligations under the Documents. The Documents are in
proper form for filing and recording.
(4) The Documents are the legal, valid and binding obligations of WPA
enforceable against WPA in accordance with their respective terms.
(5) The obligations of WPA under the Documents rank at least pari passu
in all respects with all other unsecured obligations of WPA and are not subject
to any law, rule or regulation of ___________ or any Governmental Entity thereof
with regard to any preference for payment of obligations or any rescheduling of
the payment of any debt or other obligations.
(6) The Lease, as assigned to WPA pursuant to the Sublease, creates a
valid leasehold interest in the Aircraft.
(7) There is no pending or, to the best of our knowledge after due
inquiry, threatened action or proceeding affecting WPA or any of its
subsidiaries before any court, governmental agency or arbitrator, or which
affects or purports to restrain the making or performance of, or affects the
legality, validity or enforceability of the Documents or the transactions
contemplated thereby.
(8) Neither WPA nor any of its property has any immunity from
jurisdiction of any court or from any legal process (whether
-2-
through service or notice, attachment prior to judgment, attachment in aid of
execution, execution or otherwise).
(9) There is and will be no Tax, levy, impost, deduction, charge or
withholding imposed by any Taxing Authority of any relevant jurisdiction therein
or thereof either (i) on or by virtue of the execution or delivery of the
Documents or any other document to be furnished thereunder or in connection
therewith or (ii) on any payment made, or to be made, by WPA pursuant to any of
the Documents.
(10) It is not necessary to take any action in Colorado or under the
laws of Ecuador to perfect the interest of the Lessor in the Aircraft or the
security interests in favor of the Lender which the Mortgage or the Security
Subleases purport to create in the Aircraft, the Lease or any other portion of
the Security (as defined in the Mortgage). No person, by performing any act in
Colorado including, without limitation, the execution or recording of a xxxx of
sale or any security interest, can acquire any interest prior in right to the
Lessor or the interests in favor of the Lender which the Mortgage purports to
create in the Aircraft or any other portion of the Security.
(11) It is not necessary under the laws of Colorado (i) in order to
enable the Sublessor to enforce its rights under the Sublease, the Lessor to
enforce its rights under the Lease or the Lender to enforce its rights under the
Mortgage, or (ii) by reason of the execution, delivery and performance of any of
the Documents that the Sublessor, the Lessor, the Lender or any Lender should be
licensed, qualified or otherwise entitled to carry on business in Colorado.
(12) Neither Sublessor, Lessor nor Lender will be deemed to be a
resident domiciled or carrying on business or subject to taxation or other
unfavorable consequences in Colorado by reason only of the execution, delivery,
performance and/or enforcement of the Sublease or the Security Subleases.
(13) Neither WPA nor any of its subsidiaries is, to the best of our
knowledge after due inquiry, in breach of or default under any agreement to
which it is a party or which is binding on it or any of its assets.
(14) The choice of New York law set forth (a) in the Sublease, the
Lease, the Security Subleases and the Mortgage, in each case to govern such
respective document and to control the construction thereof, is in each case,
under the laws of Colorado, a valid, effective and enforceable choice of law.
(15) A judgment obtained against WPA in a court in the State of New
York pursuant to service of process in accordance with the Sublease would be
enforceable in Colorado against WPA's assets located therein, and execution
against WPA's assets in Ecuador to satisfy such a judgment could be obtained in
Ecuador.
-3-
(16) WPA has legally, validly, effectively and irrevocably submitted to
the jurisdiction of any United States or state courts in New York City, New
York, and has legally, validly, effectively and irrevocably appointed CT
Corporation System as its authorized agent for the purposes described in the
Sublease.
Very truly yours,
-4-
EXHIBIT F
FORM OF MONTHLY REPORT
MONTHLY AIRCRAFT UTILIZATION AND STATUS REPORT
To: TACA INTERNATIONAL AIRLINES, S.A. (the "Sublessor")
Alto Edificio Caribe, 2d. Piso
San Salvador, El Salvador
Attention: President
Telecopier: (503) 98-0827
From: WESTERN PACIFIC AIRLINES, INC. (the "Sublessee")
Re: AIRCRAFT TYPE: Boeing 737-3S3
REGISTRATION:
SERIAL NUMBER: 23787
MONTH OF ________ 19__
================================================================================
AIRCRAFT TOTAL TIME SINCE NEW HRS:
--------------------------------------------------------------------------------
AIRCRAFT TOTAL CYCLES SINCE NEW CYCLES:
--------------------------------------------------------------------------------
AIRFRAME FLIGHT HOURS DURING MONTH HRS:
--------------------------------------------------------------------------------
AIRFRAME BLOCK HOURS DURING MONTH HRS:
--------------------------------------------------------------------------------
AIRFRAME CYCLES/LANDING DURING MONTH CYCLES:
--------------------------------------------------------------------------------
TIME REMAINING TO D OR HEAVY MAINTENANCE
CHECK
================================================================================
Date of next scheduled "C" check: __________
================================================================================
ENGINE SERIAL NUMBER ______ ENGINE SERIAL NUMBER ________
ORIGINAL POSITION _________ ORIGINAL POSITION ___________
--------------------------------------------------------------------------------
ACTUAL LOCATION: ACTUAL LOCATION:
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
HOURS: HOURS:
--------------------------------------------------------------------------------
TOTAL TIME SINCE NEW TOTAL TIME SINCE NEW
--------------------------------------------------------------------------------
TOTAL CYCLES SINCE NEW TOTAL CYCLES SINCE
NEW
--------------------------------------------------------------------------------
FLIGHT HOURS FLOWN FLIGHT HOURS FLOWN
DURING MONTH DURING MONTH
--------------------------------------------------------------------------------
CYCLES DURING MONTH CYCLES DURING MONTH
--------------------------------------------------------------------------------
TIME REMAINING TO HSI TIME REMAINING TO HSI
--------------------------------------------------------------------------------
TIME REMAINING TO EHM TIME REMAINING TO EHM
================================================================================
NOTE: IF LESSOR OWNED ENGINE IS REMOVED OR INSTALLED ON
ANOTHER AIRCRAFT IT MUST BE REPORTED MONTHLY ON THIS
FORM.
SERVICE BULLETINS, AIRWORTHINESS DIRECTIVES, ENGINEERING MODIFICATIONS OR
CHANGES SCHEDULED OR COMPLETED (INDICATE DATE SCHEDULED FOR COMPLETION OR DATE
OF COMPLETION, AS APPLICABLE):
================================================================================
================================================================================
================================================================================
================================================================================
WARRANTY CLAIMS MADE OR SETTLED SINCE LAST REPORT (INDICATE NATURE OF CLAIM AND
SETTLEMENT, AS APPLICABLE):
================================================================================
================================================================================
================================================================================
================================================================================
-2-
SUBLEASE SUPPLEMENT
SUBLEASE SUPPLEMENT, dated March 29, 1996, between: TACA
INTERNATIONAL AIRLINES, S.A. ("Sublessor") and WESTERN PACIFIC AIRLINES, INC., a
corporation formed under the laws of Delaware (together with its Sublessors and
permitted assigns, the "Sublessee").
Sublessor and Sublessee have heretofore entered into that
certain Sublease Agreement dated as of March 18, 1996 relating to one Boeing
737-3S3 aircraft (the "Sublease"). Capitalized terms used herein without
definition shall have the meanings set forth in the Sublease. The Sublease
provides for the execution and delivery of a Sublease Supplement for the purpose
of leasing the Aircraft under the Sublease as and when delivered by Sublessor to
Sublessee in accordance with the terms thereof. The Sublease relates to the
Aircraft and Engines described below.
NOW, THEREFORE, in consideration of the premises and other
good and sufficient consideration, Sublessor and Sublessee hereby agree as
follows:
1. Sublessor hereby delivers and leases to Sublessee under the
Sublease, and Sublessee hereby accepts and leases from Sublessor under the
Sublease, the following Boeing 737-3S3 aircraft (the "Aircraft") and Engines,
all as more particularly described in the Sublease, together with the Aircraft
Documentation:
(i) Aircraft: FAA Registration No. N375TA; manufacturer's
serial no. 23787;
(ii) two (2) CFM International, Inc. Model CFM56-3B2 engines
bearing, respectively manufacturer's serial nos. 721150 and 721734
(each of which has 750 or more rated takeoff horsepower or the
equivalent of such horsepower).
2. The Commencement Date is the date of this Sublease
Supplement set forth in the opening paragraph hereof.
3. Sublessee hereby confirms to Sublessor that as between
Sublessee and Sublessor, Sublessee has accepted the Aircraft for all purposes
hereof and of the Sublease as being airworthy, in accordance with
specifications, in good working order and repair and without defect or inherent
vice in condition, design, operation or fitness for use, whether or not
discoverable by Sublessee as of the date hereof; provided that nothing contained
herein or in the Sublease shall in any way diminish or otherwise affect any
right Sublessee or Sublessor may have with respect to the Aircraft against the
Manufacturer or any subcontractor or supplier of the Manufacturer under the
Purchase Agreement or otherwise.
4. Sublessee hereby confirms that on the date hereof no
Default or Event of Default has occurred and is continuing or would result from
Sublessee's execution, delivery and performance of the Sublease.
5. All the terms and provisions of the Sublease are hereby
incorporated by reference in this Sublease Supplement to the same extent as if
fully set forth herein.
IN WITNESS WHEREOF, Sublessor and Sublessee have caused this
Sublease Supplement to be duly executed on the day and year first above written.
TACA INTERNATIONAL AIRLINES, S.A.,
as Sublessor
By _______________________________
Name:
Title:
WESTERN PACIFIC AIRLINES, INC.,
as Sublessee
By________________________________
Name:
Title:
-2-
-------------------------------------------------------------
ASSIGNMENT
OF
SUBLEASE AGREEMENT
Dated as of March ___, 1996
Between
TACA INTERNATIONAL AIRLINES, S.A.,
Assignor
and
FIRST SECURITY BANK OF UTAH, NATIONAL ASSOCIATION,
not in its individual capacity,
but solely as Trustee under
the Trust Agreement,
Assignee
Sublease Agreement, dated as of March 18, 1996, between
TACA International Airlines, S.A., as Sublessor and
Western Pacific Airlines, Inc., as Sublessee
Covering One Boeing Model 737-3S3 Aircraft,
and Two CFM International, Inc. CFM 56-3B2 Engines
-------------------------------------------------------------
The right and interest of the Assignee in and to this
Assignment, dated as of the date hereof, has been assigned as security to ING
Aviation Lease B.V., as Agent for itself and each of the Lenders (the "Lenders")
under the Credit Agreement dated as of November 4, 1993, to the extent provided
in the Assignment of Security Document dated as of March __, 1996. No security
interest in and to this Assignment and the Assignment of Security Document may
be created through the transfer or possession of any counterpart other than the
original counterpart which shall be identified as the counterpart containing the
receipt therefor executed by the Lender.
THIS ASSIGNMENT OF SUBLEASE AGREEMENT dated as of March ___,
1996 between TACA International Airlines, S.A. (the "Assignor") and First
Security Bank of Utah, National Association, not in its individual capacity, but
solely as Trustee under the Trust Agreement dated as of November 4, 1993 between
itself and Amerilease Capital Corporation Ltd. (the "Assignee").
W I T N E S S E T H:
WHEREAS, the Assignor and Assignee have entered into that
certain Lease Agreement dated as of November 4, 1993 (the "Lease Agreement"),
which Lease, together with Lease Supplement No. 1 dated November 10, 1993 and
the Mortgage, were recorded by the FAA on November 12, 1993 as Conveyance No.
S091609; and
WHEREAS, the Assignor and Western Pacific Airlines, Inc.
("Western Pacific") have entered into a Sublease Agreement dated as of March 18,
1996 (the "Sublease"), pursuant to which the Assignor has agreed to sublease the
Aircraft to Western Pacific, for the period and subject to the terms and
conditions and for such value and consideration received as specified in the
Sublease; and
WHEREAS, the Assignor remains liable under the Lease Agreement
to perform all of its obligations thereunder and be governed by the terms and
conditions of such Lease Agreement; and
WHEREAS, capitalized terms used in this Assignment that are
not otherwise defined in this Assignment are used as they are defined in the
Sublease:
NOW THEREFORE, the parties hereby agree as follows:
1. Assignment of Sublease. For value received and to secure
the due and punctual payment and performance of all the Assignor's obligations
under the Lease Agreement, the Assignor hereby assigns, transfers and conveys to
the Assignee, its successors and assigns, all its right, title and interest in,
to
and under (but not any of its obligations under) the Sublease, including but not
limited to:
(a) the Sublease, and all the Assignor's rights
and interests thereunder;
(b) any and all rents, insurance and condemnation
proceeds, and all other payments and other moneys due or to
become due, and any and all claims, rights, powers, remedies,
title and interest of the Assignor in and to or under or
arising out of the Sublease (including without limitation all
claims for damages or other sums arising upon sale or other
disposition of or loss of use of or requisition of title to or
use of the Aircraft and any part thereof at any time subject
to the Sublease or upon any event of default specified therein
(hereinafter referred to as a "Assignment Event of Default");
(c) all rights, powers, privileges, remedies and
other benefits of the Assignor under the Sublease and all
rights to make determinations, exercise options or elections,
give or withhold consents, waivers and approvals, give notices
and exercise remedies (including the right to declare or
exercise remedies with respect to an Assignment Event of
Default and to repossess any property), to take any other
action under or in respect of the Sublease or accept any
surrender or redelivery of the Aircraft and any part thereof,
as well as all the rights, powers and remedies on the part of
the Assignor, whether arising under the Sublease or by statute
or at law or in equity or otherwise, as a result of any
Assignment Event of Default or event that, with the giving of
notice or the lapse of time, or both, would become an
Assignment Event of Default (hereinafter referred to as a
"Assignment Default"); and
(d) all proceeds of the foregoing.
This Assignment is a present assignment and shall be
effective, and the security interest created hereby shall attach, immediately
upon execution of this Assignment; provided, however, that the Assignee shall
not be entitled to exercise, and the Assignor alone shall be entitled to
exercise, any of the rights, powers, privileges, remedies and other benefits of
the Assignor described above, unless and until an Event of Default under the
Lease Agreement or Credit Agreement shall have occurred and be continuing.
2. Performance of Assignor's Obligations. It is expressly
agreed that anything herein contained to the contrary notwithstanding (i) the
Assignor shall remain liable under the Lease Agreement to perform all of its
obligations thereunder to
-2-
the same extent as if the Sublease had not been executed, (ii) neither the
Assignee nor any other party other than the Assignor shall have any obligation
or liability under the Sublease by reason of or arising out of this Assignment,
nor shall the Assignee or any such other party be required or obligated in any
manner to perform or fulfill any obligation of the Assignor under or pursuant to
the Sublease, or to make any payment, or to make any inquiry as to the nature or
sufficiency of any payment received by it, or to present or file any claim or to
take any other action to collect or enforce the payment of any amounts to which
it or they may be entitled under the Sublease at any time or times and (iii) at
any time when an Event of Default under the Lease Agreement has occurred and is
continuing at the Assignee's option, the Assignee may, but shall be under no
obligation to, perform, or cause to be performed, all or any part of the
obligations and agreements of the Assignor under the Sublease, without releasing
the Assignor therefrom.
3. Event of Default. Upon the occurrence of an Event of
Default under the Lease Agreement or under the Credit Agreement and at any time
thereafter so long as the same shall be continuing, the Assignee may, at its
option, exercise one or more of the remedies set forth below and/or available to
it under this Assignment and the Sublease or which may be available to it under
the New York Uniform Commercial Code whether or not applicable in the relevant
jurisdiction, as the Assignee in its sole discretion may determine, which
remedies are cumulative and in addition to every other right or remedy provided
by law.
3.1 Collection of Sublease Payments. The Assignee may collect
and retain all rents, proceeds, payments and other moneys due or to become due
under the Sublease or any other property assigned thereunder and apply such
amount to the payments due under the Lease Agreement, all as the Assignee, in
its discretion, shall determine;
3.2 Maintenance of Sublease. The Assignee may assume all or
any part of the Assignor's right, title and interest in the Sublease and/or any
other property assigned thereunder and maintain the Sublease and such other
property assigned thereunder in full force and effect, with the Assignee
substituted for the Assignor thereunder, and in any such event all the right,
title and interest of the Assignor therein shall be extinguished and the
Assignee shall be entitled to collect and retain all rents and payments
thereunder; and/or
3.3 Sale. The Assignee may sell at public or private sale,
without appraisal, for such price as it may deem fair, the Sublease and all the
Assignor's right, title and interest therein, in which case the Assignee shall
give the Assignor at least 15 days' notice of the date fixed for any public sale
or of the date on or after which will occur the execution of any contract
providing for any private sale thereof, and each purchaser at any such sale
shall hold such property absolutely
-3-
free from any claim or right on the part of the Assignor, the Assignor hereby
waiving and releasing (to the extent permitted by law) all rights of redemption,
stay, appraisal, reclamation and turnover that the Assignor now has or may at
any time in the future have under any rule of law or statute now existing or
hereafter enacted.
4. Expenses and Fees. The Assignor shall pay to the Assignee
and its successors and assigns on demand all reasonable attorney's fees and
other reasonable expenses incurred by the Assignee in protecting its interest
granted hereunder or in exercising its rights and remedies provided hereunder.
5. Waiver, Invalidity of Remedies. The Assignor waives any
right to require the Assignee to pursue any other remedy it may have against the
Assignor. The invalidity or unenforceability of any remedy in any jurisdiction
shall not invalidate such remedy or render it unenforceable in any other
jurisdiction. The invalidity or unenforceability of any of the remedies provided
herein in any jurisdiction shall not in any way affect the right to enforcement
in such jurisdiction or elsewhere of any of the other remedies provided herein.
6. Power of Attorney. The Assignor does hereby constitute the
Assignee and its successors and assigns, the Assignor's true and lawful
attorney-in-fact, with full power (in the name of the Assignor or otherwise) and
at the expense of the Assignor but for the use and benefit of the Assignee, at
any time after an Event of Default under the Lease Agreement has occurred and
for so long as it is continuing, to enforce each and every term and provision of
the Sublease and any other property assigned thereunder, to ask, require,
demand, receive, collect, compound and give acquittance and discharge for any
and all moneys and claims for moneys due and to become due under or arising out
of the Sublease, to endorse any checks or other instruments or orders in
connection therewith, to settle, compromise, compound or adjust any such claims,
to exercise and enforce any and all claims, rights, powers or remedies of every
kind and description of the Assignor under or arising out of the Sublease, to
file, commence, prosecute, compromise and settle in the name of the Assignor,
the Assignee, or otherwise any suits, actions or proceedings at law or in equity
in any court, to collect any such moneys or to enforce any rights in respect
thereto on all other claims, rights, powers and remedies of every kind and
description of the Assignor under or arising out of the Sublease or any other
property assigned thereunder and generally to sell, assign, transfer, pledge,
make any agreement with respect to or otherwise deal with any of such claims,
rights, powers and remedies as fully and completely as though the Assignee were
the absolute owner thereof for all purposes, and at such times and in such
manner as may seem to the Assignee to be necessary or advisable or convenient or
proper in its absolute discretion.
-4-
7. Execution of Documents. The Assignor agrees that at any
time or from time to time, upon the written request of the Assignee, the
Assignor shall promptly and duly execute and deliver any and all such further
instruments, documents and financing statements and do such other acts and
things as the Assignee may deem necessary or desirable in order to obtain the
full benefits of this Assignment and the rights and powers granted herein.
8. Further Assignment. The Assignee may at any time sell,
assign, transfer or otherwise dispose of its interest in the Sublease or this
Assignment and in the property and security created thereby and hereby, but only
in accordance with the express provisions of the Lease Agreement. The Assignor
shall not assign, delegate, pledge or otherwise encumber any of its rights or
obligations hereunder.
9. Assignor's Representations and Warranties. The Assignor
represents and warrants that, as to itself, the Sublease is in full force and
effect, that the Assignor is not in default thereunder and that it has not
assigned, transferred or pledged, and hereby covenants that it will not assign,
transfer or pledge, the whole or any part of the rents, moneys, claims, rights,
powers, remedies, titles or interests hereby assigned to anyone other than the
Assignee, its successors and assigns.
10. Governing Law. This Assignment is being delivered in the
State of New York, United States of America. This Assignment, including all
matters of construction, validity and performance, shall in all respects be
governed by, and construed in accordance with, the laws of the State of New York
applicable to contracts made in such State by residents thereof and to be
performed entirely within such State.
11. Counterparts. This Assignment may be executed in several
counterparts, each of which shall be deemed an original, and all such
counterparts shall constitute one and the same instrument.
12. Miscellaneous. This Assignment may not be amended,
supplemented, modified or waived without the prior written consent of the
Assignee and the Assignor. This Assignment shall be binding upon, and inure to
the benefit of, the parties hereto and their respective successors and permitted
assigns. Except as otherwise provided in this Assignment, all notices hereunder
shall be in writing and shall be given in the manner and at the addresses
provided for notices under the Lease Agreement and the Sublease.
-5-
IN WITNESS WHEREOF, the Assignor and the Assignee have duly
executed this Assignment as of the date first set forth above.
TACA INTERNATIONAL AIRLINES, S.A.
By:______________________________
Title:
FIRST SECURITY BANK OF UTAH,
NATIONAL ASSOCIATION, not in its
individual capacity, but solely as
Trustee under the Trust Agreement
By:______________________________
Title:
-6-
IN WITNESS WHEREOF, the Assignor and the Assignee have duly
executed this Assignment as of the date first set forth above.
TACA INTERNATIONAL AIRLINES, S.A.
By:______________________________
Title:
FIRST SECURITY BANK OF UTAH,
NATIONAL ASSOCIATION, not in its
individual capacity, but solely as
Trustee under the Trust Agreement
By:______________________________
Title:
-----------------------------------------
ASSIGNMENT
OF
SECURITY DOCUMENT
Dated as of March 29, 1996
Between
FIRST SECURITY BANK OF UTAH, NATIONAL ASSOCIATION,
not in its individual capacity,
but solely as Trustee under
the Trust Agreement,
Assignor
and
ING AVIATION LEASE B.V.
Assignee
Assignment of Sublease Agreement, dated as of
March 18, 1996, between TACA International
Airlines, S.A., as Assignor, and First Security Bank of Utah,
National Association, not in its individual
capacity, but solely as Trustee under the Trust agreement,
as Assignee, Covering One Boeing Model 737-3S3 Aircraft,
and Two CFM International Inc. CFM 56-3B2 Engines
-----------------------------------------
THIS ASSIGNMENT OF SECURITY DOCUMENT dated as of March 29,
1996 between First Security Bank of Utah, National Association, not in its
individual capacity, but solely as Trustee under the Trust Agreement dated as of
November 4, 1993 between itself and Amerilease Capital Corporation, Ltd. (the
"Assignor"), and ING Aviation Lease B.V. (the "Assignee") as agent for itself
and each of the Lenders under the Credit Agreement (the "Credit Agreement")
dated as of November 4, 1993.
W I T N E S S E T H :
WHEREAS, the Assignor and Assignee are parties to the
above-referenced Credit Agreement, pursuant to which the Lenders made certain
loans to the Assignor;
WHEREAS, the Assignor and TACA International Airlines, S.A.
(the "Lessee") are parties to the Lease Agreement dated as of November 4, 1993
(the "Lease), which Lease, together with Lease Supplement No. 1 dated November
10, 1993 and the Mortgage, were recorded by the FAA on November 12, 1993 as
Conveyance No.
S091609;
WHEREAS, the Lessee and Western Pacific Airlines, Inc.
("Western Pacific") have entered into a Sublease Agreement dated as of March 18,
1996 (the "Sublease"), pursuant to which the Lessee has agreed to Sublease the
Aircraft to Western Pacific for the such period, subject to such terms and
conditions, and for value and consideration received as specified in the
Sublease; and
WHEREAS, the Assignor and the Lessee have entered into an
Assignment of Sublease Agreement dated as of March 29, 1996 (the "Lessee
Assignment"), pursuant to which the Lessee has agreed to assign, transfer and
convey to the Assignor, its successors and assigns, all its right, title and
interest in, to and under the Sublease; and
WHEREAS, it is a condition to the Assignee's consent to the
transaction contemplated by the Sublease that Assignor assign to Assignee all of
its right and interest under the Sublease as further security for Assignor's
obligation to Assignee under the Credit Agreement; and
WHEREAS, capitalized terms used in this Assignment that are
not otherwise defined in this Assignment are used as they are defined in the
Credit Agreement;
NOW, THEREFORE, the parties hereby agree as follows:
1. Assignment. For value received and to secure the due
and punctual payment and performance of all the Assignor's obligations under the
Credit Agreement and the Mortgage, the
Assignor hereby assigns, transfers and conveys to the Assignee, it successors
and assigns, all its right, title and interest in, to and under (but not any of
its obligations under) the Lessee Assignment, including but not limited to:
(a) the Lessee Assignment, and all the Assignor's
rights and interests thereunder;
(b) any and all rents, insurance and condemnation
proceeds, and all other payments and other moneys due or to become due,
and any and all claims, rights, powers, remedies, title and interest of
the Assignor in and to or under or arising out of the Lessee Assignment
(including without limitation all claims for damages or other sums
arising upon sale or other disposition of or loss of use of or
requisition of title to or use of the Aircraft and any part thereof at
any time subject to the Lessee Assignment or upon any event of default
specified in the Sublease (hereinafter referred to as an "Assignment
Event of Default"));
(c) all rights, powers, privileges, remedies and
other benefits of the Assignor under the Lessee Assignment and all
right to make determinations, exercise options or elections, give or
withhold consents, waivers and approvals, give notices and exercise
remedies (including the right to declare or exercise remedies with
respect to an Assignment Event of Default and to repossess any
property), to take any other action under or in respect of the Lessee
Assignment or accept any surrender or redelivery of the Aircraft and
any part thereof, as well as all the rights, powers and remedies on the
part of the Assignor, whether arising under the Lessee Assignment or by
statute or at law or in equity or otherwise, as a result of any
Assignment Event of Default or event that, with the giving of notice or
the lapse of time, or both, would become an Assignment Event or Default
(hereinafter referred to as an "Assignment Default"); and
(d) all proceeds of the foregoing.
This assignment is a present assignment and shall be
effective, and the security interest created hereby shall attach, immediately
upon execution of this Assignment; provided however, that the Assignee shall not
be entitled to exercise, and the Assignor alone shall be entitled to exercise,
any of the rights, powers, privileges, remedies and other benefits of the
Assignor described above, unless and until an Event of Default under the Credit
Agreement or the Mortgage shall have occurred and be continuing.
2. Performance of Assignor's Obligations. It is
expressly agreed that anything herein contained to the contrary notwithstanding,
(i) the Assignor shall remain liable under the Credit Agreement and the Mortgage
to perform all of its
-2-
obligations thereunder to the same extent as if the Lessee Assignment had not
been executed, (ii) neither the Assignee nor any other party other than the
Assignor shall have any obligation or liability under the Sublease or Lessee
Agreement by reason of or arising out of this Assignment, nor shall the Assignee
or any such other party be required or obligated in any manner to perform or
fulfill any obligation of the Assignor under or pursuant to the Sublease or
Lessee Agreement, or to make any payment, or to make any inquiry as to the
nature or sufficiency of any payment received by it, or to present or file any
claim or to take any other action to collect or enforce the payment of any
amounts to which it or they may be entitled hereunder at any time or times and
(iii) at any time when an Event of Default under the Credit Agreement and the
Mortgage has occurred and is continuing, at the Assignee's option, the Assignee
may, but shall be under no obligation to, perform, or cause to be performed, all
or any part of the obligations and agreements of the Assignor under the Sublease
or the Lessee Assignment, without releasing the Assignor therefrom.
3. Event of Default. Upon the occurrence of an Event of
Default under the Credit Agreement and at any time thereafter so long as the
same shall be continuing, the Assignee may, at its option, exercise one or more
of the remedies set forth below and/or available to it under this Assignment,
the Lessee Assignment, Lease Agreement or under the Credit Agreement or the
Mortgage or which may be available to it under the New York Uniform Commercial
Code whether or not applicable in the relevant jurisdiction, as the Assignee in
its sole discretion may determine, which remedies are cumulative and in addition
to every other right or remedy provided by law.
3.1 Collection of Payments under Lessee Assignment.
The Assignee may collect and retain all rents, proceeds, payments and
other moneys due or to become due under the Lessee Assignment or any
other property assigned thereunder and apply such amount to the
payments due under the Credit Agreement, all as the Assignee, in its
discretion, shall determine;
3.2 Maintenance of Lessee Assignment. The Assignee
may assume all or any part of the Assignor's right, title and interest
in the Lessee Assignment and/or any other property assigned thereunder
and maintain the Lessee Assignment and such other property assigned
thereunder in full force and effect, with the Assignee substituted for
the Assignor thereunder, and in any such event all the right, title and
interest of the Assignor therein shall be extinguished and the Assignee
shall be entitled to collect and retain all rents and payments
thereunder; and/or
3.3 Sale. The Assignee may sell at public or private
sale, without appraisal, for such price as it may deem fair, the Lessee
Assignment and all the Assignor's
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right, title and interest therein, in which case the Assignee shall
give the Assignor at least 15 days' notice of the date fixed for any
public sale or the date on or after which will occur the execution of
any contract providing for any private sale thereof, and each purchaser
at any such sale shall hold such property absolutely free from any
claim or right on the part of the Assignor, the Assignor hereby waiving
and releasing (to the extent permitted by law) all rights of
redemption, stay, appraisal, reclamation and turnover that the Assignor
now has or may at any time in the future have under any rule of law or
statute now existing or hereafter enacted.
4. Expenses and Fees. The Assignor shall pay to the
Assignee and its successors and assigns on demand all reasonable attorney's fees
and other reasonable expenses incurred by the Assignee in protecting its
interest granted hereunder or in exercising its rights and remedies provided
hereunder.
5. Waiver, Invalidity of Remedies. The Assignor waives
any right to require the Assignee to pursue any other remedy it may have against
the Assignor. The invalidity or unenforceability of any remedy in any
jurisdiction shall not invalidate such remedy or render it unenforceable in any
other jurisdiction. The invalidity or unenforceability of any of the remedies
provided herein in any jurisdiction shall not in any way affect the right to
enforcement in such jurisdiction or elsewhere of any of the other remedies
provided herein.
6. Power of Attorney. The Assignor does hereby
constitute the Assignee and its successors and assigns, the Assignor's true and
lawful attorney-in-fact, with full power (in the name of the Assignor or
otherwise) and at the expense of the Assignor but for the use and benefit of the
Assignee, at any time after an Event of Default under the Credit Assignment or
the Mortgage has occurred and for so long as it is continuing, to enforce each
and every term and provision of the Lessee Assignment and any other property
assigned thereunder, to ask, require, demand, receive, collect, compound and
give acquittance and discharge for any and all moneys and claims for moneys due
and to become due under or arising out of the Lessee Assignment, or any other
property assigned thereunder, to endorse any checks or other instruments or
orders in connection therewith, to settle, compromise, compound or adjust any
such claims, to exercise and enforce any and all claims, rights, power or
remedies of every kind and description of the Assignor under or arising out of
the Lessee Assignment, or any other property assigned thereunder, to file,
commence, prosecute, compromise and settle in the name of the Assignor, the
Assignee, or otherwise any suits, actions or proceedings at law or in equity in
any court, to collect any such moneys or to enforce any rights in respect
thereto on all other claims, rights, powers and remedies of every kind and
description of the Assignor under or arising out of the Lessee Assignment or any
other property assigned
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thereunder and generally to sell, assign, transfer, pledge, make any agreement
with respect to or otherwise deal with any of such claims, rights, powers and
remedies as fully and completely as though the Assignee were the absolute owner
thereof for all purposes, and at such times and in such manner as may seem to
the Assignee to be necessary or advisable or convenient or proper in its
absolute discretion.
7. Execution of Documents. The Assignor agrees that at
any time or from time to time, upon the written request of the Assignee, the
Assignor shall promptly and duly execute and deliver any and all such further
instruments, documents and financing statements and do such other acts and
things as the Assignee may deem necessary or desirable in order to obtain the
full benefits of this Assignment and the rights and powers granted herein.
8. Assignment; Payments. The Assignee may at any time
sell, assign, transfer or otherwise dispose of its interest in the Lessee
Assignment or this Assignment and in the property and security created thereby
and hereby, but only in accordance with the express provisions of the Mortgage.
The Assignor shall not assign, delegate, pledge or otherwise encumber any of its
rights or obligations hereunder.
9. Assignor's Representations and Warranties. The
Assignor represents and warrants that, as to itself, the Lessee Assignment is in
full force and effect, that the Assignor is not in default thereunder and that
it has not assigned, transferred or pledged, and hereby covenants that it will
not assign, transfer or pledge, the whole or any part of the rents, moneys,
claims, rights, powers, remedies, titles or interests hereby assigned to anyone
other than the Assignee, its successors and assigns.
10. Governing Law. This Assignment is being delivered in
the State of New York, United States of America. This Assignment, including all
matters of construction, validity and performance, shall in all respects be
governed by, and construed in accordance with, the laws of the State of New York
applicable to contracts made in such State by residents thereof and to be
performed entirely within such State.
11. Counterparts. This Assignment may be executed in
several counterparts, each of which shall be deemed an original, and all such
counterparts shall constitute one and the same instrument.
12. Miscellaneous. This Assignment may not be amended,
supplemented, modified or waived without the prior written consent of the
Assignee and the Assignor. This Assignment shall be binding upon, and inure to
the benefit of, the parties hereto and their respective successors and permitted
assigns. Except as otherwise provided in this Assignment, all
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notices hereunder shall be in writing and shall be given in the manner and at
the addresses provided for notices under the Credit Agreement.
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IN WITNESS WHEREOF, the Assignor and the Assignee have duly
executed this Assignment as of the date first set forth above.
FIRST SECURITY BANK OF UTAH, NATIONAL
ASSOCIATION, not in its individual capacity,
but solely as Trustee under the Trust
Agreement
By:_________________________________
Title:
ING AVIATION LEASE B.V.
By:__________________________________
Title:
AMENDMENT NO. 1 TO AIRCRAFT LEASE AGREEMENT
This AMENDMENT NO. 1 TO AIRCRAFT LEASE AGREEMENT dated as of
March 29, 1996 (the "Amendment"), is entered into between TACA INTERNATIONAL
AIRLINES, S.A. ("LESSEE") and FIRST SECURITY BANK OF UTAH, NATIONAL ASSOCIATION,
not in its individual capacity (except as otherwise specified) but solely as
trustee, under the Trust Agreement ("LESSOR").
WHEREAS, LESSOR and LESSEE are parties to that certain
Aircraft Lease Agreement dated as of November 4, 1993 (the "Lease") (capitalized
terms used herein and not otherwise defined shall have the meanings ascribed
thereto in the Lease), which, together with Lease Supplement No. 1 thereto dated
as of November 10, 1993 and the Mortgage, were recorded by the FAA on November
12, 1993 as Conveyance No. S091609;
WHEREAS, pursuant to the Lease, LESSOR has leased to LESSEE
one (1) Boeing B737-3S3 aircraft bearing manufacturer's serial number 23787 and
United States registration N375TA, equipped with two (2) CFM International, Inc.
Model CFM 56-3B2 engines bearing manufacturer's serial nos. 720890 and 721734,
respectively (the "Aircraft");
WHEREAS, LESSEE, as sublessor, and Western Pacific Airlines,
Inc., as sublessee ("Sublessee"), have entered into that certain Sublease
Agreement dated as of the date hereof (the "Sublease"), pursuant to which LESSEE
has agreed to lease the Aircraft to Sublessee for the term and on the conditions
set forth therein;
WHEREAS, LESSEE has requested that LESSOR consent to the
Sublease, and LESSOR has agreed to consent to Sublease provided that LESSOR and
LESSEE amend the lease as hereinafter set forth.
In consideration of the premises, LESSOR and LESSEE hereby
agree as follows:
1. Amendments to Section 1 of the Lease. Section 1 of
the Lease is hereby amended by the addition of the following definitions:
"Insured Value" shall mean (i) if the Sublease is in effect,
the Stipulated Loss Value, and (ii) at all times while that the
Sublease is not in effect, 117% of the Stipulated Loss Value.
"Stipulated Loss Value" shall mean as of any particular date
(i) if the Sublease is in effect, the amount set forth in Schedule 1 to
the Sublease, and (ii) at all times that the Sublease is not in effect,
the amount set forth in Schedule 1 to the Lease with reference to such
date.
"Sublease" shall mean that certain Sublease Agreement
dated as of March 18, 1996, between Lessee, as sublessor, and
Sublessee, as sublessee, as originally executed or as modified, amended
or supplemented pursuant to the applicable provisions thereof.
"Sublessee" shall mean Western Pacific Airlines,
Inc., a Delaware corporation.
2. Amendment to Section 3(a) of the Lease. Section 3(a)
of the Lease is hereby amended by deleting such section in its entirety and
substituting in its place the following:
"(a) Term. The Term shall be the period commencing on the
Delivery Date (November 10, 1993) and ending, unless earlier terminated
pursuant to the provisions of this Lease, on the later to occur of (i)
the tenth (10th) anniversary of such Delivery Date, and (ii) the date
on which the Sublease Term (as defined in the Sublease) expires or is
terminated in accordance with the provisions of the Sublease."
3. Amendment to Section 3(b) of the Lease. Section 3(b)
of the Lease is hereby amended by adding the following sentence to the end of
such section:
"At any time during the Term while the Sublease is in effect,
the Basic Rent payable by Lessee shall be increased to the
amount of "Basic Rent" actually paid by the Sublessee to
Lessee pursuant to the Lease (if such amount is higher than
the Basic Rent otherwise payable hereunder)."
4. Amendment to Section 3(c) of the Lease. Section 3(c)
of the Lease is hereby amended by adding the following sentence to the end of
such section:
"Lessee also agrees to pay to Lessor, as Supplemental Rent,
any and all amounts paid to Lessee by Sublessee as Maintenance
Reserves (as defined in the Sublease) pursuant to the
Sublease; provided, that Lessor shall return to Lessee any
amount of the Maintenance Reserves that Lessee is required to
reimburse to Sublessee, at the times required by and otherwise
in accordance with the provisions of the Sublease"
5. Amendment to Section 10(b) of the Lease. The first
sentence of Section 10(b) of the Lease is hereby amended by deleting such
sentence in its entirety and substituting in its place the following:
"Upon the occurrence of an Event of Loss with respect to an
Engine only, Lessee shall give Lessor prompt written notice
thereof and shall, within one hundred twenty (120) days after
the occurrence of such Event of
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Loss, convey or cause to be conveyed to Lessor, as replacement
for the Engine with respect to which such Event of Loss
occurred, title to a Replacement Engine free and clear of all
Liens other than Permitted Liens and having a value, utility
and remaining life (determined by reference to the hours or
cycles remaining on all life-limited Parts installed in such
Replacement Engine) at least equal to, and being in as good
operating condition as, the Engine with respect to which such
Event of Loss occurred, assuming such Engine was of the value
or utility and in the condition and repair required by the
terms hereof immediately prior to the occurrence of such Event
of Loss."
6. No Further Amendments. Except as expressly modified
by this Amendment all of the terms and conditions of the lease shall remain
unchanged and in full force and effect.
7. Effectiveness; Counterparts. This Amendment shall
become binding and effective upon execution of the Amendment by the parties
hereto. This Amendment may be executed in counterparts, each of which will be
deemed to be an original and all of which together will be deemed to be one and
the same instrument. Delivery of an executed counterpart of this Amendment by
facsimile will be deemed effective as delivery of an originally executed
counterpart. Any party delivering an executed counterpart of this Amendment by
facsimile will also deliver an originally executed counterpart; provided, the
failure of any party to deliver an originally executed counterpart of this
Amendment will not affect the validity or effectiveness of this Amendment.
(Continued on Signature Page)
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IN WITNESS WHEREOF, LESSOR and LESSEE have each caused this
Amendment No. 1 to Aircraft Lease Agreement to be duly executed as of the day
and year first above written.
TACA INTERNATIONAL AIRLINES, S.A.
By:________________________________
Title: Vice President Finance
FIRST SECURITY BANK OF UTAH,
NATIONAL ASSOCIATION, not in its
individual capacity (except as
otherwise specified) but solely as
trustee under the Trust Agreement
By:___________________________________
Title: Assistant Vice President
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