EXHIBIT 10.5
LEASE AGREEMENT
RELATING TO
ONE (1) AIRBUS A300B4-200
AIRCRAFT BEARING MANUFACTURER'S
SERIAL NUMBER 211 AND
TWO GENERAL ELECTRIC CF6-50C2 ENGINES
between
EAL (DELAWARE) VIII CORP.
AS LESSOR
and
PAN AMERICAN AIRWAYS, INC.
AS LESSEE
Dated as of August 26, 1996
This Lease Agreement may be executed in several counterparts. To the extent, if
any, that this Lease Agreement constitutes chattel paper (as such term is
defined in the Uniform Commercial Code as in effect in any applicable
jurisdiction) no security interest in this Lease Agreement may be created or
perfected through the transfer or possession of any counterpart other than the
original executed counterpart which is identified as the counterpart containing
receipt therefor executed by Lessor on the signature page of this Lease
Agreement.
THIS LEASE AGREEMENT is made as of the 26th day of August, 1996.
BETWEEN:
(A) EAL (DELAWARE) VIII CORP., a Delaware corporation (hereinafter
referred to as "LESSOR"); and
(B) PAN AMERICAN AIRWAYS, INC., a corporation organized and existing under
the laws of the State of Florida, having its principal office at 0000
X.X. 00xx Xxxxxx, Xxxxx, Xxxxxxx (hereinafter referred to as "LESSEE").
R E C I T A L S :
WHEREAS, Lessee and ING executed the Letter Agreement, dated
February 5, 1996, pursuant to which Lessee and ING set forth the principal terms
pursuant to which Lessee would lease three Airbus A300B4-200 aircraft (including
the Aircraft, as hereinafter defined) from Lessor;
WHEREAS, Lessee and Lessor have entered into the Lease
Agreement, dated as of April 15, 1996, which was amended and supplemented by the
Lease Supplement, Acceptance Certificate and Amendment No. 1 (as so amended, the
"INTERIM LEASE"), pursuant to which Lessee leased from Lessor the Aircraft
described below on a short term basis pending the completion by Lessee of its
proving runs and the issuance by the Secretary of Transportation of an air
carrier's operating certificate under Chapter 447 of Title 49, U.S. Code;
WHEREAS, upon the earlier to occur of the issuance to Lessee
of such certificate and the last day of the Lease Term under the Interim Lease,
Lessee shall return the Aircraft to Lessor thereunder;
WHEREAS, if, at the expiration of such Lease Term, such
certificate has been issued to Lessee and the other conditions precedent to the
obligations of Lessor hereunder are
satisfied, then, simultaneously with the expiration of such Lease Term,
Lessee shall lease the Aircraft from Lessor under this Lease and Lessor shall
lease the Aircraft to Lessee hereunder; provided, however, that, notwithstanding
any other provision of any Lease Document, such lease hereunder shall not occur
and the Aircraft shall not for any purpose be considered leased to Lessee
hereunder, unless and until Lessee is a Certificated Air Carrier; and
WHEREAS, Lessor desires to lease to Lessee and Lessee desires
to lease from Lessor the Aircraft under this Agreement.
NOW, THEREFORE, the parties hereby agree as follows:
AGREEMENT:
CLAUSE 1. DEFINITIONS AND INTERPRETATION
1.1 In this Agreement the following terms shall, except where the context
otherwise requires, have the following meanings (in any case in which
any capitalized term is used herein with a meaning defined in the
Interim Lease, such case shall be identified parenthetically as such):
"AD COST" shall have the meaning specified in Clause 13.7 of this Agreement.
"ADDITIONAL NAMED INSURED" shall have the meaning specified in Clause 10.1(a) of
this Agreement.
"AIRCRAFT" means the Airframe together with (i) the two (2) Engines, whether or
not any of such initial or substituted Engines may from time to time no
longer be installed on the Airframe or may be installed on any other aircraft so
long as title thereto shall remain vested in Lessor in accordance with the terms
of this Agreement, (ii) all Parts and all components thereof, (iii) all
ancillary equipment or devices furnished with the Aircraft (including Schedules
A, B, D and E) and (iv) all substitutions, replacements and renewals of any and
all thereof.
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"AIRCRAFT DOCUMENTATION" shall mean all historical records referred to in this
Agreement, including Schedules A, B, D and E, delivered with the Aircraft for
work accomplished prior to the Delivery Date and current records for work
accomplished subsequent to the Delivery Date, including, but not limited to, all
documents, manuals, data, overhaul records, life limited part traceability, log
books, original Aircraft and Engine delivery documents, serviceable parts tags,
FAA forms, modification records, inspection records, any and all other
documentation pertaining to the Aircraft, Engine or Parts.
"AIRFRAME" means (i) the Airbus A300B4-200 airframe bearing Manufacturer's
Serial Number 211 further described in this Agreement, including Schedules A, B,
D and E, and in the Lease Supplement and Acceptance Certificate executed
pursuant hereto on the Delivery Date and (ii) any and all Parts (except the
Engines or engines from time to time installed thereon) so long as the same
shall be incorporated or installed in or attached to such airframe, or so long
as title thereto shall remain vested in Lessor in accordance with the terms of
Clause 13.4, after removal from such airframe.
"APU" means the Garret model TSCP 700-5 auxiliary power unit.
"AVIALL" means AVIALL Caladonian Engine Services, Xxxxxxxx Xxxxxxxx, Xxxx Xxxx
Xxxxxxxxxx Xxxxxx, Xxxxxxxxx International Airport, Prestwick, Xxxxxxxx,
Xxxxxxxx XX0 0XX.
"AVIALL ENGINE MAINTENANCE AND POOLING CONTRACT" means the contract entered into
between Lessee, ING and AVIALL, as amended from time to time. For the
avoidance of doubt, the parties hereto expressly agree that in case of any
conflict between the terms of the AVIALL Engine Maintenance and Pooling Contract
and the terms of this Agreement, the latter shall prevail.
"BASIC RENT" shall have the meaning set forth in Clause 4.
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"BUSINESS DAY" means a day (other than a Saturday, Sunday or holiday scheduled
by law) on which banks are open for business in Miami, Florida; New York, New
York; and Amsterdam, The Netherlands.
"BUSINESS PLAN" shall have the meaning specified in Clause 8.2(viii) of this
Agreement.
"CERTIFICATED AIR CARRIER" means any corporation domiciled in the United States
of America that is a "citizen of the United States" (as defined in Section 40102
of the Federal Aviation Act), and holding a Certificate issued under Chapter 447
of Title 49, U.S. Code issued by the United States Department of Transportation
or any predecessor or successor agency thereto, or, in the event such
Certificates shall no longer be issued, any corporation domiciled in the United
States of America and legally and regularly engaged in the business of
transporting for hire passengers or cargo by air predominantly to, from or
between points within the United States of America, and, in either event,
operating commercial jet aircraft, which also is certificated so as to fall
within the purview of Section 1110 or any analogous statute.
"CLAIMS" shall have the meaning specified in Clause 16 of this Agreement.
"CONSULTING AGREEMENT" means the Consulting Agreement, dated as of February 20,
1996 and attached hereto as Schedule K, between ING and Lessee, as supplemented,
amended and otherwise in effect from time to time.
"CYCLE" means with respect to the Aircraft, an Engine or other engine, one
take-off and landing of the Aircraft or (as the case may be), Airframe or other
airframe on which such Engine or other engine is installed.
"DEBT INSTRUMENT" shall have the meaning specified in Clause 17.1 of this
Agreement.
"DEFAULT" means an Event of Default or an event which, with the giving of notice
or the lapse of time or both, would or could become an Event of Default.
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"DEFERRED RENT" shall have the meaning specified in Clause 4.2.
"DELIVERY" means the delivery of the Aircraft by Lessor to Lessee and the
acceptance by Lessee hereunder on the Delivery Date.
"DELIVERY DATE" means the date on which Lessee accepts delivery of the Aircraft
from Lessor, which shall be the date of the Lease Supplement and Acceptance
Certificate and which shall occur on the date that is the last day of the "Lease
Term," as defined in the Interim Lease, unless Lessor elects not to deliver the
Aircraft to Lessee hereunder due to the occurrence of an Event of Default (as
defined herein or in the Interim Lease).
"DELIVERY LOCATION" shall have the meaning specified in Clause 2.2(i) of this
Agreement.
"DOLLARS" or "$" or "USD$" means the lawful currency of the United States of
America.
"ELIGIBLE CLAIM" means a claim submitted by Lessee for payment or reimbursement
of Lessee for labor, parts and materials costs paid by Lessee in performing, in
relation to the Aircraft in accordance with the Maintenance Program, any or all
of the maintenance processes referred to in subdivisions (i) through (vi) of
Clause 5.1, except to the extent that such claim relates to any remedial action
necessitated by foreign object or other accidental damage to the Aircraft,
negligent or other improper maintenance, repair, modification, alteration, use
or operation of the Aircraft, or an Inherent Defect or any cost which is
reimbursable from insurance or warranty claims after due diligence.
"EMERGENCY EQUIPMENT LIST" means the emergency equipment list set forth in
Schedule E-2 hereto.
"ENGINE" means each of the two (2) General Electric CF6-50C2 aircraft engines
bearing the manufacturer's serial numbers specified in the Lease Supplement and
Acceptance Certificate and
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further described in this Agreement, including Schedules A, B and D, which
are initially installed on the Airframe when delivered and leased hereunder (or
in lieu of any such engine, a Replacement Engine subsequently substituted
therefor pursuant to Clause 11.2), whether or not from time to time no longer
installed on the Airframe or installed on any other airframe or aircraft so long
as title thereto shall remain vested in Lessor in accordance with the terms of
this Agreement, together in each case with any and all Parts incorporated or
installed in, or attached to, such engine (or Replacement Engine) when delivered
and leased hereunder or at any time thereafter, or after removal therefrom any
and all Parts removed therefrom so long as title thereto shall remain vested in
Lessor in accordance with the terms of Clause 13.4. The term "ENGINE" means, as
of any date of determination, if the context so requires, all Engines then
delivered and leased hereunder. Notwithstanding the foregoing, Lessor may, prior
to the Delivery Date under the Interim Lease, substitute any General Electric
CF6-50C2 aircraft engine for any engine that is identified by serial number in
this Lease, so long as (i) Lessor shall furnish Lessee with notice of such
substitution immediately upon becoming aware thereof; (ii) such substitute
engine is airworthy and is accompanied by all relevant Aircraft Documentation
relating to engines; (iii) Lessor shall make available to Lessee all related
Aircraft Documentation; and (iv) any such substitute engine shall comply with
the requirements of Schedule A applicable to "Engines"; and, upon such
substitution, such replacement engine shall constitute an "Engine" hereunder.
"EVENT OF DEFAULT" means the occurrence of any of the events specified in
Clause 17.1.
"EVENT OF LOSS" means, with respect to the Aircraft or the Airframe or any
Engine (the "PROPERTY"), any of the following events with respect to the
Property: (i) loss of the Property or the use thereof due to hijacking, theft,
disappearance, destruction, damage beyond repair or rendition of such property
permanently unfit for normal use for any reason whatsoever (in the case of
hijacking, theft or disappearance, an Event of Loss shall be deemed to have
occurred on the expiration of a period of 30 consecutive days during which
Lessee or the lawful possessor of the Property continuously loses possession or
use thereof); (ii) any damage to such Property which results in an insurance
settlement with respect to such Property on the basis of an actual
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total loss or constructive total loss; (iii) the condemnation or taking of,
or requisition of title to or use of, such Property or the confiscation or
seizure of such Property by any governmental body; (iv) the prohibition of the
use of the Property by Lessee for a period in excess of 60 days (or such longer
period as may be agreed by Lessor) as a result of any rule, regulation, order or
other action by any governmental body; and (v) any other case which by
subsequent agreement the parties hereto may deem to be an "Event of Loss"
subject, with respect to the Event of Loss described in this clause (v), to the
insurers' consent thereto.
"EXPIRATION DATE" means (i) the Initial Lease Term Expiration Date or (ii) if
Lessee exercises the first Extension Option, the First Extension Lease
Termination Date or (iii) if Lessee exercises the second Extension Option, the
Second Extension Lease Termination Date.
"EXTENSION LEASE TERM" means the period of time covered by the First Extension
Lease Term or the Second Extension Lease Term as to which the related Extension
Option was exercised.
"EXTENSION OPTION" shall have the meaning specified in Clause 3.2(i) of this
Agreement.
"FAA" means the Federal Aviation Administration of the United States of America
or its successor agency from time to time charged with the administration or
enforcement of United States aviation law.
"FAR" means the United States Federal Aviation Regulations.
"FAR PART 121" means PART 121-OPERATIONS: CERTIFICATION AND OPERATIONS:
DOMESTIC, FLAG, AND SUPPLEMENTAL AIR CARRIERS AND COMMERCIAL OPERATORS OF
LARGE AIRCRAFT, of the regulations of the FAA, 14 C.F.R. xx.xx. 121 ET SEQ., as
amended and in effect from time to time.
"FEDERAL AVIATION ACT" or "ACT" means Subtitle VII, Part A of Title 49 of the
United States Code.
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"FIRST EXTENSION LEASE TERM" means the Extension Lease Term commencing on the
Initial Lease Term Expiration Date and expiring on the First Extension Lease
Termination Date.
"FIRST EXTENSION LEASE TERMINATION DATE" means the date that is two and one-half
years after the Initial Lease Term Expiration Date.
"FIRST REFUSAL PURCHASE AGREEMENT" means that Right of First Refusal Purchase
Agreement between ING and the Lessee, in the form attached as Schedule L hereto.
"FLIGHT HOUR" means, with respect to the Airframe, each hour or part thereof
which elapses from takeoff to touchdown and, with respect to each Engine, each
hour or part thereof which elapses from takeoff to touchdown of the Airframe or
of any other airframe on which such Engine is then installed (whether such
Engine is installed on the Airframe or another airframe), in each case as
recorded in the Aircraft or other aircraft log book or in any other document
recording flight time accepted by the FAA.
"GAAP" means generally accepted accounting principles, as in effect in the
United States, consistently applied from period to period.
"INDEMNITEE" or "INDEMNITEES" means each of Lessor, ING and their respective
successors, assigns, agents, directors and employees.
"INDEPENDENT MAINTENANCE CONTRACTOR" shall mean any person approved by the FAA
and Lessor to perform maintenance on the Aircraft in accordance with this Lease.
"ING" means ING Lease (Nederland) B.V., a Netherlands corporation or, as the
context requires, ING Aviation Lease B.V. or any Affiliate of either thereof,
and, in any case, its successors and assigns.
"INHERENT DEFECT" means any defect in the Aircraft or any part thereof arising
out of a fault or
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error in the design, manufacture or construction thereof.
"INITIAL LEASE TERM" means the period commencing on the Initial Lease Term
Commencement Date and ending on the Initial Lease Term Expiration Date.
"INITIAL LEASE TERM COMMENCEMENT DATE" shall mean the "Expiration Date," as
defined in the Interim Lease, which is expected to occur on or about September
15, 1996, subject to paragraph 3 of Schedule A.
"INITIAL LEASE TERM EXPIRATION DATE" means the fifth anniversary of the Delivery
Date (as "Delivery Date" is defined in the Interim Lease).
"INTERIM LEASE" has the meaning specified in the first Whereas clause of this
Lease.
"LAW" means and includes (i) any statute, decree, constitution, regulation,
order or any directive of any government entity; (ii) any treaty, pact, compact
or other agreement to which any government entity is a signatory or party; and
(iii) any amendment or revision of any thereof.
"LEASE", "THIS LEASE", "THIS AGREEMENT", "HEREIN", "HEREUNDER", "HEREBY" or
other like words mean this Lease Agreement, as it may be supplemented from time
to time or amended pursuant to the applicable provisions hereof.
"LEASE DOCUMENTS" means this Agreement, the Lease Supplement and Acceptance
Certificate, the Consulting Agreement, the Spare Parts Lease (when and if
executed), the First Refusal Purchase Agreement, the Other Leases and all other
documents, instruments and agreements required hereunder or thereunder.
"LEASE SUPPLEMENT AND ACCEPTANCE CERTIFICATE" means the Lease Supplement and
Acceptance Certificate to be executed and delivered by Lessee and countersigned
by Lessor on the Delivery Date pursuant to Clause 2.2, substantially in the form
of Schedule B hereto.
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"LEASE TERM" means the term of leasing of the Aircraft hereunder commencing on
the Delivery Date and terminating on the Expiration Date.
"LESSOR LIEN" means any Lien created over the Aircraft by Lessor or exercised,
asserted or claimed against the Aircraft or any part thereof in respect of a
debt, liability or other obligation (whether financial or otherwise) of Lessor
(other than (i) a debt, liability or other obligation arising from the operation
of the Aircraft or any part thereof by Lessee, and (ii) any such Lien created by
or through Lessor pursuant to and in accordance with the terms of any of the
Lease Documents).
"LIEN" means any mortgage, pledge, lien, charge, encumbrance, lease or other
security interest of any kind (including any conditional sale or other title
retention agreement).
"LOOSE EQUIPMENT LIST" means the loose equipment list set forth in Schedules E-1
and E-2 hereto.
"MPD" means the Airbus Industrie's Maintenance and Planning Document for the
Aircraft.
"MAINTENANCE MANUAL" means, for the Aircraft, any Engine or Part, the applicable
manufacturer's maintenance manual for such item.
"MAINTENANCE PAYMENTS" means those payments required to be made by Lessee
pursuant to Clauses 5.1 and 5.2 of this Agreement.
"MAINTENANCE PROGRAM" means Lessee's FAA approved maintenance program in effect
from time to time for the Aircraft encompassing scheduled maintenance,
condition-monitored maintenance, maintenance of the Airframe, Engines and Parts
of the Aircraft as approved and accepted by Lessor or such other maintenance
program approved and accepted by Lessor (such acceptances and approvals of
Lessee's FAA approved maintenance program not to be
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unreasonably withheld).
"MAINTENANCE RESERVE ACCOUNT" shall have the meaning specified in Clause 5.1 of
this Agreement.
"MANUFACTURER" means Airbus Industrie.
"MONTHLY ANNIVERSARY DATE" means the date in each calendar month subsequent to
the calendar month in which the Delivery Date occurs which numerically
corresponds to the Delivery Date; PROVIDED that if no date numerically
corresponds to the Delivery Date in any calendar month, the Monthly Anniversary
Date for such month shall be the last day of such month.
"MONTHLY PERIOD" means (i) the period beginning on the Delivery Date and ending
on the first Monthly Anniversary Date and (ii) each subsequent period beginning
on a Monthly Anniversary Date and ending on the following Monthly Anniversary
Date.
"OTHER LEASES" means the Interim Lease and those Lease Agreements (as in effect
from time to time, including any interim or short term lease and any replacement
thereof) entered into between Lessor and Lessee or ING and Lessee relating to
the lease of Airbus model A300 aircraft (other than the Aircraft), as such
agreements may be supplemented, amended and otherwise in effect from time to
time.
"PARTS" means all appliances, components, parts, instruments, appurtenances,
avionics, accessories, furnishings and other equipment of whatever nature (other
than complete Engines or engines) which may from time to time be incorporated or
installed in or attached to the Airframe or any Engine.
"PERMITTED LIEN" means any Lien of the type described in subclause (i), (ii),
(iii) and (iv) of Clause 9.1;
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"PERSON" means any individual, company, partnership, joint venture, trust or
unincorporated association, or any state or government or any agency,
instrumentality or political subdivision of any state or government.
"POWER OF ATTORNEY" means the power of attorney, substantially in the form
attached hereto as SCHEDULE I, executed by Lessee and delivered to ING and to be
effective only after an Event of Default has occurred.
"REDELIVERY" means the redelivery of the Aircraft by Lessee to Lessor and the
acceptance by Lessor hereunder on the Redelivery Date.
"REDELIVERY DATE" means the date on which Lessor accepts redelivery of the
Aircraft from Lessee, which shall be the date of the Return Acceptance
Certificate executed by Lessor.
"RENT" means Basic Rent and Supplemental Rent.
"RENT PAYMENT DATE" means the Initial Lease Term Commencement Date and the date
in each calendar month subsequent to the calendar month in which the Initial
Lease Term Commencement Date occurs which numerically corresponds to the Initial
Lease Term Commencement Date; PROVIDED, HOWEVER, that (i) if for any month no
date numerically corresponds with such date, then the Rent Payment Date shall be
the last day of such month and (ii) if for any month such day is not a Business
Day, then the Rent Payment Date shall be the next Business Day.
"RENT PAYMENT PERIOD" means the one-month period commencing on the Initial Lease
Term Commencement Date or any Rent Payment Date, and ending on the next
succeeding Rent Payment Date or, in the case of the last Rent Payment Period,
the Expiration Date.
"REPLACED ENGINE" shall have the meaning set forth in Clause 11.3.
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"REPLACEMENT ENGINE" means a replacement engine which shall have been leased
hereunder pursuant to Clause 11.2.
"RETURN ACCEPTANCE CERTIFICATE" means the Return Acceptance Certificate to be
executed and delivered by Lessor and countersigned by Lessee on the Redelivery
Date, substantially in the form of Schedule H hereto.
"RETURN LOCATION" means Lessee's maintenance headquarters in the continental
United States or such other location as Lessor and Lessee shall mutually agree;
PROVIDED, HOWEVER, that, in connection with any return or repossession of the
Aircraft upon or following the occurrence of an Event of Default, "Return
Location" means such location within the continental United States as Lessor
shall specify to Lessee.
"REVIMA" means Associete pour la Revision a et L'Envretien du Materiel
Aeronautique.
"REVIMA APU MAINTENANCE AND POOLING CONTRACT" means the contract entered into
between Lessor and Revima, as amended from time to time. For the avoidance of
doubt, the parties hereto expressly agree that in case of any conflict between
the terms of the Revima APU Maintenance and Pooling Contract and the terms of
this Agreement, the latter shall prevail.
"SCHEDULED DELIVERY DATE" means August 8, 1996 or such other date as Lessor and
Lessee shall mutually agree.
"SECOND EXTENSION LEASE TERM" means the Extension Lease Term commencing on the
First Extension Lease Termination Date and terminating on the Second
Extension Lease Termination Date.
"SECOND EXTENSION LEASE TERMINATION DATE" means the date that is two and
one-half years after the First Extension Lease Termination Date.
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"SECTION 1110" means Section 1110 of the U.S. Bankruptcy Code (11 U.S.C.
ss. 1110), as amended and in effect from time to time.
"SECURITY AGREEMENT" means the Aircraft Security Agreement, dated as of February
15, 1990 between the Lessor, as mortgagor and ING, as mortgagee, as supplemented
and amended.
"SECURITY DEPOSIT" and "SECURITY DEPOSITS" have the meaning specified in Clause
30.
"SPARE PARTS LEASE" means the Spare Parts Lease Agreement, when and if executed,
between ING (or an affiliate of ING) and Lessee, as supplemented, amended and
otherwise in effect from time to time.
"STIPULATED LOSS VALUE" means $18,000,000, subject, however, to such adjustment
as may be agreed upon as a result of negotiations to occur on or about each
anniversary of the Delivery Date.
"SUPPLEMENTAL RENT" means all amounts, liabilities and obligations (other than
Basic Rent) which Lessee assumes or agrees to pay to Lessor hereunder or under
any of the Lease Documents, including payments of Stipulated Loss Value and
amounts calculated by reference thereto, Maintenance Payments and indemnity
payments.
"TAXES" means any and all present or future taxes (including, without
limitation, income, receipts, value added, turnover, property (tangible or
intangible), sales, use, excise and other taxes), levies, imposts, duties,
charges or fees, deductions or withholdings of any nature imposed, levied,
collected, withheld or assessed by any government or taxing authority.
"TECHNICAL DATA AND MANUALS LIST" means a list in the form set out in Schedule D
hereto.
"UNITED STATES AIR CARRIER" means any "air carrier" (as defined in Section
40102(2) of the Federal Aviation Act) that is certificated under Chapter 411 of
such Act and that is operating
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pursuant to a certificate issued under 14 C.F.R. Part 121 (or which has like
authority under any similar or successor provision).
1.2 The Schedules to this Agreement shall form an integral part hereof.
Reference herein to any agreement or other instrument shall be deemed
to include references to such agreement or other instruments as varied
or amended or supplemented or replaced from time to time. Where the
context permits, any reference to Lessee or Lessor or any other person,
company or other legal entity also include their respective successors
and permitted assigns and (where applicable) their servants and agents.
Where the context permits, words importing the singular number only
shall include the plural and vice versa, words importing any gender
shall include all other genders and words importing persons shall
include corporations, and vice versa. The headings or sub-headings of
Clauses to this Agreement and the Contents are inserted for convenience
of reference only and shall not in any way affect the interpretation of
this Agreement.
CLAUSE 2. AGREEMENT TO LEASE
2.1 AGREEMENT TO LEASE. Subject to the terms and conditions of this
Agreement, Lessor hereby agrees to lease to Lessee hereunder, and
Lessee hereby agrees to lease from Lessor hereunder, the Aircraft
during the Lease Term unless earlier terminated pursuant to Clause 11.1
or Clause 17 hereof. The right to lease the Aircraft conferred hereby
shall include the use of all Aircraft Documentation and any other
documents relating to the Aircraft delivered pursuant to this Agreement
and any other records, books, manuals, handbooks, data, drawings,
schedules and other documentation relating to the Aircraft or Airbus
A300B4-200 aircraft; provided that, throughout the Lease Term, title to
the same shall remain with Lessor except as otherwise expressly
provided for herein.
2.2 (i) DELIVERY. Except as otherwise provided herein, and subject to
the terms and conditions of this Agreement, delivery to and
acceptance of the Aircraft by Lessee under this Agreement
shall take place "AS IS, WHERE IS" and SUBJECT TO
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EACH AND EVERY DISCLAIMER OF WARRANTY AND REPRESENTATION SET
FORTH IN CLAUSE 8 HEREOF on or about the Scheduled Delivery
Date at Miami, Florida (the "DELIVERY LOCATION"), or such
other location as Lessor and Lessee shall mutually agree.
(ii) [This clause is reserved.]
(iii) [This clause is reserved.]
(iv) ACCEPTANCE OF DELIVERY. On the Delivery Date, Lessee shall
cause an officer or other duly authorized employee to execute
the Lease Supplement and Acceptance Certificate, substantially
in the form of Schedule B to this Agreement. Execution and
delivery of such Lease Supplement and Acceptance Certificate
on behalf of Lessee, without the necessity of any further act,
shall irrevocably constitute technical acceptance by Lessee of
the Aircraft in its then present condition for delivery to it
in accordance herewith.
(v) EXCLUSION OF LIABILITY. Without prejudice to Clause 8.1,
Lessor shall not have any responsibility or liability to
Lessee for, or arising out of, any delay in the delivery of
the Aircraft or any Part thereof or for any damage incurred in
the course of delivery except when due to the willful
misconduct of Lessor.
(vi) CASUALTY TO THE AIRCRAFT PRECEDING DELIVERY. In the event the
Aircraft is lost or damaged beyond economical repair prior to
the Scheduled Delivery Date, Lessor shall immediately advise
Lessee in writing and the obligation to make the Aircraft
available to the Lessee shall terminate and the Down Payment
shall be promptly returned by Lessor to Lessee.
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CLAUSE 3. LEASE TERM
3.1 LEASE TERM. The Lease Term hereunder shall be initially for a period of (i)
60 months commencing on the Delivery Date (subject to extension or earlier
termination as hereinafter set forth), LESS (ii) the number of months comprising
the Lease Term under the Interim Lease (it being the intent of the parties that
the Lease Term under the Interim Lease and under this Lease is contemplated to
be of a duration of 60 months).
3.2 LEASE EXTENSION OPTION.
(i) Lessee will have two options (each, an "EXTENSION OPTION"),
each to extend the term of this Agreement for an additional
two and one-half year period commencing on the Initial Lease
Term Expiration Date and the First Extension Lease Term
Expiration Date, as the case may be; PROVIDED, HOWEVER, in
each case, that it shall be a condition precedent to Lessee's
right to exercise any Extension Option, that (a) no Default
and no Event of Default shall have occurred and be continuing
on the date on which Lessee exercises such Extension Option,
(b) Lessee shall have exercised any preceding Extension
Option, and (c) Lessee shall have provided Lessor and ING with
the irrevocable written notice of the exercise thereof
pursuant to Clause 3.2(ii) below.
(ii) In order to exercise any Extension Option, Lessee must give
irrevocable written notice to Lessor and ING (i) with respect
to the First Extension Lease Term, not later than 120 days
prior to the Initial Lease Term Expiration Date and (ii) with
respect to the Second Extension Lease Term, not later than 120
days prior to the First Extension Lease Term Expiration Date,
each of which shall state that Lessee is exercising the
applicable Extension Option hereunder and shall certify that
no Default and no Event of Default has occurred and is
continuing as of the date of such notice. Any such notice
shall specify the first and last day of the applicable
Extension Lease Term and shall constitute Lessee's irrevocable
and unconditional
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obligation to continue to lease the Aircraft for the
applicable Extension Lease Term in accordance with the terms
of this Agreement.
CLAUSE 4. BASIC RENT
4.1 BASIC RENT.
(i) During the Initial Lease Term, Lessee shall, unless otherwise
agreed in writing, pay Basic Rent in respect of each Rent
Payment Period in advance on each Rent Payment Date on which
such Rent Payment Period commences according to the following
schedule:
RENT PAYMENT DATE BASIC RENT
1-2 USD$ 4,000
3-5 29,000
6-8 54,000
9 129,000
10-59 159,000
The foregoing schedule was prepared on the basis of the
assumption that the Lease Term (as defined in the Interim
Lease) is one month in duration and that Lessee does not
exercise the Extension Option (as defined therein). If,
however, Lessee exercise the Extension Option under the
Interim Lease and the Lease Term thereunder is therefore of
two months duration, then Basic Rent hereunder shall be
payable according to the following schedule: RENT PAYMENT DATE
BASIC RENT
1 USD$ 4,000
2-4 29,000
5-7 54,000
8 129,000
9-58 159,000
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The intent of the both of the foregoing schedules is to defer
Lessee's first year rental obligations in the sum of $1.0
million in respect of the Aircraft in accordance with such
schedules above over the first ten months (which period
includes the Lease Term under the Interim Lease) at a zero
rate of interest, repayable over the remaining term of the
Lease, as provided in Clause 4.2 below.
(ii) Lessee's obligations under Clause 4(i) above shall commence on
the Initial Lease Term Commencement Date whether or not Lessee
has (a) accepted Delivery of the Aircraft hereunder or (b)
received all consents, licenses, certificates and
authorizations required by applicable Law to engage in the
business of regularly scheduled carriage of persons and
property within the United States.
(iii) During the First Lease Extension Term and the Second Lease
Extension Term, if any, and unless otherwise agreed in
writing, Lessee shall pay Basic Rent for each Rent Payment
Period thereof in the amount of USD$ 150,000 in advance on
each Rent Payment Date on which such Rent Payment Period
commences.
(iv) If Lessee shall fail to return the Aircraft to Lessor at the
time and in the condition required by this Lease (whether at
the expiration or any termination of Lessee's right to lease
the Aircraft hereunder or otherwise), then, in addition to any
other right or remedy available to Lessor in respect thereof,
Lessee shall continue to pay Basic Rent, pro-rated on a daily
basis, for each day following the date on
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which such return was required until such time as the Aircraft
is returned to Lessor and is in the condition required by this
Lease. Lessee's obligation under the preceding sentence shall
survive the termination or any expiration of this Lease.
4.2 DEFERRED RENT. The Basic Rent payment schedule set forth in Clause
4.1(i) is based on an average monthly Basic Rent payment of USD$
139,000 due on each Rent Payment Date. Lessor has agreed to defer all
or a portion of the Basic Rent payments due on the first nine Rent
Payment Dates (the first eight Rent Payment Dates hereunder if Lessee
exercises the Extension Option under the Interim Lease) (the "DEFERRED
RENT") of the Initial Lease Term and Lessee has agreed to repay such
Deferred Rent during the remaining 50 Rent Payment Dates of the Initial
Lease Term, as provided in such Basic Rent payment schedule. If this
Agreement shall terminate for any reason after commencement thereof
(including, but not limited to, pursuant to Clause 11 hereof), or if an
Event of Default shall occur, then in addition to all other amounts due
and owing to Lessor hereunder, Lessee shall pay to Lessor an additional
amount equal to the aggregate of all Deferred Rent minus all payments
received by Lessor in respect thereof, in each case, at the time of
such termination or Event of Default. From and following the time of
any such termination or Event of Default, the amount of Basic Rent for
any Rent Payment Period or portion thereof shall be USD$ 139,000 unless
otherwise agreed in writing.
4.3 ADDITIONAL RENT FOR PRE-DELIVERY WORK. Lessee has requested that,
prior to the
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Scheduled Delivery Date, Lessor perform certain work on the Aircraft
relating to (i) the reconfiguration and upgrading of the interior of
the Aircraft (the "INTERIOR RECONFIGURATION") and (ii) the purchase and
installation of a Honeywell dual GPS navigation system (the "GPS
WORK"). So long as no Default shall have occurred and be continuing,
Lessor shall perform the Interior Reconfiguration and the GPS Work in
accordance with the workscope therefor previously agreed upon by Lessor
and Lessee, including the acquisition of the related Parts and the
installation thereof in the Aircraft, and Lessor shall use its
commercially reasonable best efforts to complete the Interior
Reconfiguration and the GPS Work prior to the Scheduled Delivery Date
under the Interim Lease. Lessee shall reimburse Lessor for all costs
attributable to Lessee's requests relating thereto, and not those costs
that are normally part of the workscope of a "D-Check" (including in
such reimbursement, the cost of Parts and labor costs) incurred by
Lessor in connection with the Interior Reconfiguration and the GPS Work
(collectively, the "PRE-DELIVERY COST"). Such reimbursement shall be
paid by Lessee to Lessor as Supplemental Rent hereunder in 60 equal
consecutive monthly installments, each in an amount equal to 2.25% of
the Pre-Delivery Cost, one such installment to be made on each Rent
Payment Date, commencing on the Rent Payment Date that occurs on the
Delivery Date under the Interim Lease and continuing during the 58 or
59 Rent Payment Dates, as the case may be, scheduled to occur under
this Lease; PROVIDED, HOWEVER, that if this Agreement shall terminate
for any reason (including but not limited to a termination pursuant to
CLAUSE 11), or if an Event of Default shall occur, then in addition to
all other amounts due and owing to Lessor hereunder, Lessee shall pay
to Lessor the aggregate Pre-Delivery Cost minus all payments previously
received by
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Lessor from Lessee in respect thereof, in each case, at the time of
such termination or Event of Default. By way of example, if the
Pre-Delivery Cost is $100,000.00, then the amount payable by Lessee in
respect thereof on each of the first 60 consecutive Rent Payment Dates
under this Lease and the Interim Lease would be $2,250 (i.e., $100,000
x 2.25%), including the principal and interest components of such
installment.
The amount of the Pre-Delivery Cost shall be determined by Lessor on
the basis of the invoices relating thereto, without xxxx-up, and Lessor
shall furnish copies of such invoices to Lessee. The Pre-Delivery Cost
and the amount of each monthly installment payable by Lessee hereunder
shall be calculated by Lessor (which calculation shall be conclusive
absent manifest clerical error) and shall be set forth in the Lease
Supplement and Acceptance Certificate executed by Lessee and Lessor on
the Delivery Date.
CLAUSE 5. MAINTENANCE AND OTHER PAYMENTS
5.1 MAINTENANCE RESERVE ACCOUNTS. Six maintenance reserve accounts (each,
a "MAINTENANCE RESERVE ACCOUNT") shall be maintained by Lessor, one in
respect of each of the following maintenance processes:
(i) the Airframe "C-Check" (which expression shall, for this
purpose, include the C-1, C-2 and C-6 Checks and all phases
of the 3C Check, all routine and non- routine man hours, and
all Maintenance Program inspection items contained in such
Checks);
-22-
(ii) the Airframe "D-Check" (which expression shall, for this
purpose, include routine and non-routine man hours, the 9, 10
and 15 year CPCP inspection, and all Maintenance Program
inspection items contained in such Checks; the "D- Check"
reserve shall also include the cost to be incurred for
replacement of the hard time controlled list set forth in
Schedule J.
(iii) the Airframe "mid D-Check" (which expression shall, for this
purpose, include the C-4 and Mid-D Checks, the 2-1/2 year, 4
year and 5 year CPCP inspections and all routine and
non-routine man hours, and all Maintenance Program inspection
items contained in such Checks);
(iv) the Engines (which expression shall, for this purpose, not
extend to any Engine components forming part of nose cowl and
thrust reverser) off-wing overhaul, including Life Limited
Part replacement; provided that, at all times during which the
AVIALL Engine Maintenance and Pooling Contract is in
existence, no maintenance reserve account shall be maintained
by the Lessor in respect of these Engine maintenance
processes, such processes being carried out pursuant to the
AVIALL Engine Maintenance and Pooling Contract;
(v) the APU restoration; provided that, at all times during which
the Revima APU Maintenance and Pooling Contract is in
existence, no maintenance reserve account shall be maintained
by the Lessor in respect of the APU maintenance processes,
-23-
such processes being carried out pursuant to the Revima APU
Maintenance and Pooling Contract; and
(vi) Landing gear overhauls.
The Maintenance Reserve Accounts are to be maintained by
Lessor for its own administrative and bookkeeping convenience and Lessee
acknowledges that it shall have no right, title or interest in such accounts.
5.2 CONSTITUTION OF MAINTENANCE PAYMENTS. The Maintenance Payments with
respect to the items set forth in Clause 5.1 shall be constituted as follows:
(i) an amount equal to USD$ 125 per Airframe Flight Hour, payable
monthly for the purpose of meeting Eligible Claims in respect
of the maintenance processes referred to in Clause 5.1(i)
(Airframe "C-Check");
(ii) an amount equal to USD$ 15,000 per month payable for the
purpose of meeting Eligible Claims in respect of the
maintenance processes referred to in Clause 5.1(ii) (Airframe
"D-Check");
(iii) an amount equal to USD$ 130 per Airframe Flight Hour payable
monthly for the purpose of meeting Eligible Claims in respect
of the maintenance processes referred to in Clause 5.1(iii)
(Airframe "Mid D-Check");
-24-
(iv) an amount equal to USD$ 210 per Flight Hour for each Engine
payable monthly for the purpose of meeting Eligible Claims for
such Engine in respect of the maintenance processes referred
to in Clause 5.1(iv) (Engine overhaul);
(v) an amount equal to USD$ 55 per Airframe Flight Hour payable
for the purposes of meeting Eligible Claims in respect of the
maintenance processes referred to in Clause 5.1 (v) (APU
restoration);
(vi) an amount equal to USD$ 6,250 per month payable for the
purpose of meeting Eligible Claims in respect of the
maintenance processes referred to in Clause 5.1(vi) (landing
gear);
(vii) for so long as the AVIALL Engine Maintenance and Pooling
Contract is in effect with Lessee, an amount equal to USD$ 50
per Flight Hour for each Engine (in addition to the payment
required under clause (iv)) payable monthly for the purpose of
meeting Eligible Claims in respect of the maintenance
processes effected under and pursuant to such contract; and
(viii) for so long as the Revima APU Maintenance and Pooling Contract
is in effect with Lessee, an amount equal to USD$ 55 per
Airframe Flight Hour (in lieu of the payment required under
clause (v)) payable monthly for the purpose of meeting
Eligible Claims in respect of the maintenance processes
effected under
-25-
and pursuant to such agreement.
During the Lease Term, the Maintenance Payments specified in subdivisions (ii)
and (vi) of this Clause 5.2 shall be paid monthly in advance with respect to
each Rent Payment Period on the Rent Payment Date on which such Rent Payment
Period commences. The Maintenance Payments specified in subdivisions (i), (iii),
(iv) and (v) of this Clause 5.2 shall be paid monthly in arrears on the date on
which the monthly report described in Clause 13.2 is due; PROVIDED, HOWEVER,
that the number of Flight Hours upon which each such payment is calculated shall
not in any case be less than 150 unless the Aircraft is grounded solely for the
performance of the maintenance described above.
ING on behalf of Lessor shall keep a record of the amounts deposited
into and withdrawn from the maintenance reserve allocations specified above, but
nothing herein shall require ING to maintain separate bank accounts for all or
any part of any such allocation or account.
5.3 ADJUSTMENT TO MAINTENANCE PAYMENTS. With regard to the Maintenance
Payment set forth in subdivision (iv) of Clause 5.2 with respect to the
Engines, the following will apply: Lessee shall pay to Lessor USD$ 210
per Engine Flight Hour based on an average yearly Ambient Temperature
of equal or below 75 Degrees F and an hours/cycles ratio equal to or
higher than 3:1. Annually on the first and each subsequent anniversary
of the Delivery Date, (i) this average Ambient Temperature will be
reconciled against average monthly temperatures for the preceding
12-month period at the outstation actually utilized by Lessee, by the
method of adding average Ambient
-26-
Temperatures per take-off and dividing by the total number of flights
and (ii) this hours/cycles ratio will be reconciled with the actual
hours and cycles flown during the preceding 12-month period. If the
actual average Ambient Temperature so calculated exceeds 75 Degrees F,
and/or if the actual hours/cycles ratio so calculated is less than 3:1,
such Maintenance Payment shall be recalculated in accordance with Table
1 below, and Lessee shall immediately upon demand pay the difference
between the actual monies paid by Lessee for such period and such
recalculated Maintenance Payment. Lessee shall provide Lessor, on an
annual basis, with its projections of the hours/cycles ratio for the
next succeeding period of twelve months.
Table 1
Hours and Cycles Ratio
========================================================================================================================
Ambient
Temperature less than 125:1 1.26- 1.76- 2.26-
Deg F 1.75:1 2.25:1 2:75:1
========================================================================================================================
less than 75 326 275 244 226
------------------------------------------------------------------------------------------------------------------------
76 - 85 347 288 255 237
------------------------------------------------------------------------------------------------------------------------
85 - 95 353 298 265 244
------------------------------------------------------------------------------------------------------------------------
greater than 96 359 296 269 248
========================================================================================================================
===================================================================================================================================
Ambient
Temperature 2.76- 2.26- 3.76- 4.26- greater than 4.76:1
Deg F 3.25:1 3.75:1 4.25:1 4.75:1 greater than
===================================================================================================================================
less than 75 210 202 193 189 187
-----------------------------------------------------------------------------------------------------------------------------------
76-85 221 212 204 200 197
-----------------------------------------------------------------------------------------------------------------------------------
85-95 229 216 208 204 202
-----------------------------------------------------------------------------------------------------------------------------------
less than 96 233 221 212 206 206
===================================================================================================================================
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5.4 (i) CONDITIONS PRECEDENT TO REIMBURSEMENT FOR ELIGIBLE CLAIMS.
Lessor's obligation to pay or reimburse Lessee for any
Eligible Claims in respect of the maintenance processes
referred to in Clause 5.2 is subject to the satisfaction of
the following conditions precedent:
(a) before any work with respect to such Eligible Claim
is performed, Lessee shall submit in writing to
Lessor the proposed workscope and estimated cost
therefor; should Lessor object to the workscope, cost
or entity, then the parties shall consult as soon as
possible to resolve the issue. If the
parties cannot resolve the issue as to workscope,
then such issue shall be presented to the
Manufacturer or Engine Manufacturer for its decision
as to the correct workscope.
(b) if Lessor agrees that such workscope and cost are
reasonable, Lessor shall so notify Lessee thereof
within 5 Business Days after Lessor's receipt of
Lessee's written submission;
(c) any work performed that is beyond the Maintenance
Program shall be at Lessee's expenses and shall not
be payable out of the reserves;
(d) after Lessor and Lessee agree on the reasonableness
of such workscope and cost, Lessee shall have the
work with respect to such Eligible Claim performed in
accordance therewith; and
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(e) following completion of the work with respect to such
Eligible Claim, Lessee shall present to Lessor all
original work-sheets, invoices, vouchers and/or
receipts with respect thereto and such other evidence
of and information relating to the performance of
such work as Lessor may reasonably request.
(ii) CREDITS AND PAYMENTS FROM RESERVE ACCOUNTS. Effective on the
Delivery Date, Lessor shall credit each Maintenance Reserve
Account with an amount based upon the Flight Hours, months or
cycles, as appropriate, accumulated on the Landing Gear (but
not on the Aircraft, any Engine or APU) during the period from
the date of the last overhaul thereof to the Delivery Date, as
defined in the Interim Lease (as determined from the relevant
logs and records of the prior operators thereof); PROVIDED,
HOWEVER, that the relevant Maintenance Reserve Account shall
be credited for the Flight Hours accumulated on the hard time
controlled items listed on (Annex 1) during the period from
the date of the last overhaul thereof to the Delivery Date (as
defined in the Interim Lease), as specified in such Annex. Any
credit to a Maintenance Reserve Account pursuant to this
CLAUSE (ii) shall be calculated as follows:
Pre-Delivery Usage
Credit equals __________________________________
Actual Time/Cycles Between Overhaul
where:
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"PRE-DELIVERY USAGE" is the Flight Hours,
months or cycles, as appropriate, accumulated during
the period from the date of the last overhaul to the
Delivery Date (as defined in the Interim Lease); and
"ACTUAL TIME/CYCLES BETWEEN OVERHAUL" is the
aggregate number of Flight Hours, months or cycles,
as appropriate, actually accumulated at the time of
overhaul under Lessee's Maintenance Program. The
amount of such credit shall be determined by Lessor
and shall be binding and conclusive, absent manifest
error.
Within 10 Business Days after receipt of the supporting
documentation referred to in Clause 5.4(i)(e) above, Lessor
will pay the amount of such Eligible Claim to the extent of,
and by making a drawdown against, the amount then in the
applicable reserve account. In the event that the amount of
such Eligible Claim exceeds the balance then in the relevant
maintenance reserve account, Lessee shall be responsible for
the payment of such excess.
In connection with Lessee's performance of a "D-Check",
amounts shall be available to Lessee in respect of Eligible
Claims for such "D-Check" from the Maintenance Reserve Account
maintained under clause 5.1(ii) ("D-Check") and clause
5.1(iii) ("Mid D-Check").
-30-
Notwithstanding anything else to the contrary contained in
this Lease, (x) in no event shall Lessor be obligated to pay
any amounts with respect to Eligible Claims (whether out of
the applicable reserve account or otherwise) so long as a
Default shall have occurred and be continuing, (y) the
Maintenance Reserve Payments constitute Supplemental Rent due
from Lessee to Lessor as compensation for wear and tear on the
Aircraft and Lessee shall have no right, claim or interest
therein (except for Lessee's right to reimbursement for
Eligible Claims described above), and (z) any amounts paid or
credited to a maintenance reserve account upon termination of
this Lease for any reason shall remain the property of the
Lessor and, except as provided in the next paragraph, in no
event shall Lessor be obligated to return any such amounts to
Lessee.
If during the four month period prior to the date on which
Lessee is required to re-deliver the Aircraft to Lessor
hereunder (whether on the Expiration Date or earlier
termination), Lessee shall desire or propose to perform a
"D-Check" on the Aircraft in lieu of the "C-Check" required at
re-delivery which "D-Check" is not then required or scheduled
to be performed before such re-delivery date pursuant to
Lessee's Maintenance Program, then Lessee shall notify Lessor
of desire and state in such notice that such "D-Check" is not
so required. Lessor shall have a period of 15 days following
its receipt of such notice to object to such proposal and to
notify Lessee that such "D-Check" is not to be performed, in
which case Lessee shall not perform such "D-Check". If (i)
Lessor shall not
-31-
object to Lessee's proposal to perform such D Check, (ii)
Lessee shall duly complete such "D-Check" as proposed and in
the manner required by Lessee's Maintenance Program and the
applicable manufacturer's maintenance program prior to the
required re-delivery date, and (iii) the amount then available
at the time of the completion of the applicable maintenance
check in the related Maintenance Reserve Account for
"D-Checks" exceeds the cost of such "D- Check" that
constitutes an Eligible Claim (such excess, an "ACCOUNT
EXCESS"), then, so long as no Default shall exist, Lessor
shall remit such Account Excess to Lessee in cash promptly
following Lessee's re-delivery of the Aircraft in compliance
with the terms hereof.
If Lessor shall object to Lessee's performance of such
"D-Check" then, for purposes of determining the Account Excess
(as provided above), the cost of such "D-Check" that
constitutes an "Eligible Claim" shall be the estimated invoice
amount for such "D-Check", which estimate shall be obtained
from Xxx Xxxxxx (or other maintenance facility reasonably
acceptable and agreed upon by Lessor and Lessee).
In addition to the credits described above, if the Delivery
Date under this Lease shall occur, then each Maintenance
Reserve Account described above shall receive a credit in the
amount of any payment received by Lessor in respect of the
same Maintenance Reserve Account under the Interim Lease, and
Lessee hereby authorizes and directs Lessor (or ING, as the
case may be) to retain such
-32-
payments theretofore made by Lessee under the Interim Lease.
(iii) FOREIGN OBJECT DAMAGE GENERATED SHOP VISIT. For the avoidance
of doubt, any work done on an Engine during a foreign object
damage generated shop visit in accordance with the Maintenance
Program for that Engine which is not directly a result of the
foreign object damage incident but otherwise qualifies as an
Eligible Claim shall be considered an Eligible Claim. Work
required in connection with foreign object damage shall be
deemed not to constitute an Eligible Claim.
CLAUSE 6. PAYMENTS
6.1 PAYMENT TO LESSOR. Except as otherwise provided herein, all payments to
be made by Lessee hereunder shall be payable in Dollars in immediately
available funds prior to 1:00 p.m. New York time on the due date to
such account as may be specified by Lessor; provided, however, that
until Lessee has been notified by ING such payments shall be payable
according to the following payment instructions:
Northern Trust International Banking Corporation, New York, USA
ABA #000000000
For credit of: ING Bank, Amsterdam
Account Number: 100628-20230
For further credit of: ING Lease Aircraft B.V.
Account Number: 5007.2188
or to such other account as ING shall specify by written notice to
Lessee.
6.2 WITHHOLDING TAXES. The payment of any Rent and other amounts to be paid
by Lessee hereunder shall be made free and clear of and without
deduction or withholding for or on
-33-
account of any Taxes to the extent provided in Clause 16.2(i) hereof.
6.3 DEFAULT INTEREST. Without prejudice to any other remedies of Lessor,
Lessee hereby agrees and undertakes that in the event that Lessee fails
to make any payment of Rent or any other amount due and payable
hereunder it shall on demand pay to Lessor interest thereon from and
including the due date thereof until the same shall be paid in full
(after as well as before judgment) at the rate of 1.5% per month (or,
if such rate is in excess of the maximum allowable rate permitted by
applicable law, then the maximum rate permitted by applicable law shall
apply) calculated on the basis of the actual number of days elapsed and
a month of 30 days.
6.4 BUSINESS DAY CONVENTION. Whenever any payment hereunder shall become
due on a day which is not a Business Day, the due date thereof shall be
the immediately succeeding Business Day, unless such payment becomes
due hereunder on demand by Lessor, in which event such due date shall
be the immediately following Business Day, and (without prejudice to
Clause 6.3) the amount to be paid on such day shall not be changed
thereby.
6.5 ABSOLUTE OBLIGATION TO MAKE PAYMENTS. Lessee's obligations to pay any
Rent and all other amounts due hereunder shall be absolute and
unconditional and shall not be affected by any circumstances,
including, without limitation:
(i) any set-off, counterclaim, recoupment, defense or other right
which Lessee may have against Lessor or anyone else for any
reason whatsoever;
(ii) any defect in the title (except those caused by the act or
omission of Lessor), airworthiness, condition, design,
operation or fitness for use of, or any damage to or loss or
destruction of, the Aircraft;
(iii) any interruption or cessation in the use or possession of the
Aircraft by Lessee for any reason whatsoever except those
caused by the act or omission of Lessor; or
-34-
(iv) any insolvency, bankruptcy, reorganization or similar
proceedings by or against Lessee.
6.6 APPLICATION OF PAYMENTS. At any time after a Default shall have
occurred and be continuing, all payments made to Lessor under this
Agreement shall be applied first against interest after default on any
Rent or on any other amount then due and payable hereunder, and then
against such Rent and such other amount due and payable hereunder,
unless otherwise specifically provided herein.
CLAUSE 7. CONDITIONS PRECEDENT
7.1 CONDITIONS PRECEDENT TO THE EXECUTION OF THIS AGREEMENT. The
obligations of the parties to the execution of this Agreement are
subject to the fulfillment of those conditions in paragraphs (vi)(a)
and (vii) of Clause 7.2 below to the reasonable satisfaction of Lessor
and those conditions in paragraph (ix) of Clause 7.2 below.
7.2 CONDITIONS PRECEDENT. The obligations of Lessor to the lease of the
Aircraft on the Delivery Date hereunder are subject to the fulfillment
to the satisfaction of Lessor (in the case of paragraphs (i)(a), (ii),
(iii), (iv), (v), (vi), (vii) and (viii)), in each case in its sole
discretion, of the following conditions of such conditions to be met to
its satisfaction); Lessee's obligations to lease the Aircraft hereunder
are subject to the satisfaction of the condition specified in clause
(ix) below:
(i) (a) all representations and warranties by Lessee set
forth herein or in any of the Lease Documents shall
be true and accurate on and as of the Delivery Date
as though made on and as of the Delivery Date; and
(b) [this clause is reserved];
-35-
(ii) no Default shall have occurred and continue to exist on the
Delivery Date;
(iii) receipt of all necessary consents, licenses, registrations,
authorizations or approvals of, and exemptions by, such
governmental or other authorities and third parties as may be
necessary or advisable to authorize the execution, delivery
and performance of this Agreement by Lessee and to permit
payment and remittance of all payments to be made to Lessor,
at such places and in such manner as provided for under this
Agreement;
(iv) no material governmental action or proceeding which will have
a material adverse affect on the current business or financial
condition of Lessee shall be pending nor shall any
governmental action be threatened before any court or
governmental agency of competent jurisdiction, nor shall any
order, judgment or decree have been issued by any court or
governmental agency, to set aside, restrain, enjoin or prevent
the completion and consummation of this Agreement or the
transactions contemplated hereby or thereby;
(v) no Event of Loss shall have occurred in respect of the
Aircraft on or prior to the Delivery Date;
(vi) Lessor shall have received on or before the Delivery Date each
of the following, which shall be in full force and effect on
the Delivery Date:
(a) a certificate substantially in the form of Schedule
C, dated the date hereof (the content of which shall
be true both on the date hereof and on the Delivery
Date) and signed by a duly authorized officer of
Lessee, and having annexed thereto the documents
referred to therein;
(b) a favorable opinion of Lessee's counsel in a form
acceptable to Lessor;
-36-
(c) the Lease Documents, duly executed;
(d) an insurance certificate signed by a firm of
independent aircraft insurance brokers, satisfactory
to Lessor, as to due compliance with the insurance
required pursuant to Clause 10 with respect to the
Aircraft together with a broker's letter of
undertaking as required by Clause 10.12 (iii);
(e) the Lease Supplement and Acceptance Certificate,
duly executed;
(f) evidence of required registrations, import licenses
if applicable, air operator's certificates and all
other licenses, certificates and permits required to
be held by Lessee in relation to, or in connection
with the operation of the Aircraft (including
Lessee's operating certificate issued by the U.S.
Secretary of Transportation under Chapter 447 of
Title 49, U.S. Code) and evidence that the Lease
Agreement has been duly registered with the FAA;
(g) certified copies of all licenses, certificates and
permits required by Lessee to operate as an airline;
(h) the Power of Attorney, executed by Lessee in favor of
ING, pursuant to which Lessee constitutes and
appoints ING as the true and lawful agent and
attorney-in-fact for Lessee for purposes of
exercising and enforcing rights and remedies
available to Lessor or ING upon and following the
occurrence of an Event of Default;
(i) the Maintenance Payments then due; and
(j) the Security Deposit required under Clause 30.
-37-
(vii) Lessee's board of directors shall have authorized the
consummation of the transactions contemplated by the Lease
Documents and such approval shall be evidenced by resolutions
of such board of directors in form and substance reasonably
satisfactory to Lessor, and such resolutions shall
specifically and expressly refer to the Lease Documents, the
Lease Supplement and Acceptance Certificate and the Power of
Attorney;
(viii) Lessor shall have received such other instruments, documents,
evidence, certificates and opinions as to such other matters
as it may reasonably request and all other matters relating to
the leasing of the Aircraft and the consummation of the
transactions contemplated hereby shall be reasonably
satisfactory to Lessor;
(ix) the Delivery Date (as defined in the Interim Lease) shall have
occurred and Lessee shall have accepted the delivery of the
Aircraft under the Interim Lease (including the satisfaction
or waiver by Lessee of the conditions to its obligations
thereunder, as provided therein);
(x) a favorable opinion of Lessor's counsel to the effect that
Lessor has duly executed and delivered the Lease Documents and
any other lease agreement and each such document is legally
valid, binding and enforceable;
(xi) a copy of a currently effective airworthiness certificate for
the Aircraft;
(xii) a copy of the current registration certificate for the
Aircraft; and
(xiii) an opinion, at Lessee's expense, from Xxxxx and Xxxxxxx,
special FAA counsel, to the effect that Lessor is the owner
of record of the Aircraft and the Aircraft is duly registered
in the United States and as to such other matters as may be
reasonably requested by Lessee.
-38-
CLAUSE 8. REPRESENTATIONS AND WARRANTIES
-39-
8.1 (i) WARRANTIES AND DISCLAIMER OF WARRANTIES. NEITHER LESSOR NOR
ING HAS AND SHALL NOT BE DEEMED TO HAVE MADE (WHETHER BY
VIRTUE OF HAVING LEASED THE AIRCRAFT UNDER THIS LEASE, OR
HAVING ACQUIRED THE AIRCRAFT, OR HAVING DONE OR FAILED
TO DO ANY ACT, OR HAVING ACQUIRED OR FAILED TO ACQUIRE
ANY STATUS UNDER OR IN RELATION TO THIS LEASE OR
OTHERWISE), AND EACH OF LESSOR AND ING HEREBY
SPECIFICALLY DISCLAIMS, ANY REPRESENTATION OR WARRANTY,
EXPRESS OR IMPLIED, AS TO THE TITLE (EXCEPT AS PROVIDED IN
CLAUSE 8.4(i)), AIRWORTHINESS, CONDITION, DESIGN, OPERATION,
MERCHANTABILITY, FREEDOM FROM CLAIMS OF INFRINGEMENT
OR THE LIKE, OR FITNESS FOR USE FOR A PARTICULAR PURPOSE OF
THE AIRCRAFT, OR AS TO THE QUALITY OF THE MATERIAL OR
WORKMANSHIP OF THE AIRCRAFT, THE ABSENCE THEREFROM OF
LATENT OR OTHER DEFECTS, WHETHER OR NOT DISCOVERABLE,
OR ANY OTHER REPRESENTATION OR WARRANTY WHATSOEVER,
EXPRESS OR IMPLIED (INCLUDING ANY IMPLIED WARRANTY
ARISING FROM A COURSE OF PERFORMANCE OR DEALING OR
USAGE OF TRADE), WITH RESPECT TO THE AIRCRAFT; AND LESSEE
HEREBY WAIVES, RELEASES, RENOUNCES AND DISCLAIMS
EXPECTATION OF OR RELIANCE UPON ANY SUCH WARRANTY OR
WARRANTIES. NEITHER LESSOR NOR ING SHALL HAVE ANY
RESPONSIBILITY OR LIABILITY TO LESSEE OR ANY OTHER PERSON,
WHETHER ARISING IN CONTRACT OR TORT OUT OF ANY
NEGLIGENCE OR STRICT LIABILITY OF LESSOR OR OTHERWISE, FOR (i)
ANY LIABILITY, LOSS OR DAMAGE CAUSED OR ALLEGED TO BE CAUSED
DIRECTLY OR INDIRECTLY BY THE AIRCRAFT OR ANY ENGINE OR BY ANY
INADEQUACY THEREOF OR DEFICIENCY OR DEFECT THEREIN OR BY ANY
OTHER CIRCUMSTANCE IN CONNECTION THEREWITH, (ii) THE USE,
OPERATION OR
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PERFORMANCE OF THE AIRCRAFT OR ANY RISKS RELATING
THERETO, (iii) ANY INTERRUPTION OF SERVICE, LOSS OF BUSINESS
OR ANTICIPATED PROFITS OR CONSEQUENTIAL DAMAGES OR (iv) THE
DELIVERY, OPERATION, SERVICING, MAINTENANCE, REPAIR,
IMPROVEMENT OR REPLACEMENT OF THE AIRCRAFT. THE WARRANTIES AND
REPRESENTATIONS OF LESSOR SET FORTH IN CLAUSE 8.4 ARE
EXCLUSIVE AND IN LIEU OF ALL OTHER REPRESENTATIONS OR
WARRANTIES WHATSOEVER, EXPRESS OR IMPLIED, AND NEITHER LESSOR
NOR ING SHALL BE DEEMED TO HAVE MADE ANY OTHER WARRANTIES.
(ii) RESPONSIBILITY TO DETERMINE CONDITION OF AIRCRAFT, OBTAINING
BENEFIT OF WARRANTIES. It is the responsibility of Lessee to
inspect the Aircraft and to satisfy itself as to the
condition, quality, suitability and fitness of the Aircraft
for Lessee's purposes before signing and delivering the Lease
Supplement and Acceptance Certificate or accepting delivery of
the Aircraft, and to examine the logs and records and other
documents referred to in Schedule D relating to the Aircraft
on the Delivery Date, and to make arrangements for the
servicing thereof and to obtain any conditions or warranties
which Lessee may require from the manufacturers or suppliers
of the Aircraft and any part thereof.
8.2 REPRESENTATIONS AND WARRANTIES OF LESSEE. Lessee hereby represents
and warrants to Lessor that:
(i) Lessee is a corporation duly organized and validly existing
under the laws of the State of Florida with full power and
authority to execute, deliver, and to perform all of its
obligations under each of the Lease Documents to which it is a
party;
(ii) each of the Lease Documents to which Lessee is a party has
been duly authorized, executed and delivered by Lessee, and
each of the Lease Documents to which it is
-41-
a party, when duly executed and delivered, will constitute its
legally valid and binding obligations enforceable against it
in accordance with their respective terms;
(iii) neither the execution and delivery by Lessee of each of the
Lease Documents to which it is a party nor the performance by
it of any of its obligations thereunder, nor the compliance by
it with the terms and conditions thereof, will violate,
conflict with or result in any breach of any terms, conditions
or provisions of, or constitute a default under, any law,
administrative regulation or court judgment or decree
applicable to it or pursuant to which it was organized or any
agreement or instrument to which it is a party or by which it
or any of its property is bound, or result in the creation or
imposition of any Lien on any of its properties or assets
(other than any Lien arising pursuant to any of the Lease
Documents to which it is a party);
(iv) neither the execution and delivery nor the performance by
Lessee of any of the Lease Documents to which it is a party
requires any consent or approval of, the giving of notice to,
registration with, or taking of any other action in respect of
any governmental authority or agency in the United States or
any other jurisdiction;
(v) Lessee is not a party to any agreement or instrument or
subject to any other legal restriction which individually or
in the aggregate are likely to have a material and adverse
effect on its ability to perform its obligations under any of
the Lease Documents to which it is a party;
(vi) there are no pending or threatened actions or proceedings
before any court, governmental or administrative agency or
arbitral body, which actions or proceedings could, if
adversely determined, have a material and adverse effect on
its financial condition, business or operations or which could
have a material and
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adverse effect on its ability to perform its obligations under
any of the Lease Documents to which it is a party;
(vii) On the Delivery Date, Lessee will be a Certificated Air
Carrier holding all licenses, certificates and authorizations
required by applicable Law to engage in the business of
regularly scheduled carriage of persons and property within
the United States;
(viii) Lessee will furnish to ING a true and complete copy of the
business plan relating to establishment and projections of
Lessee's business operations (the "BUSINESS PLAN"). The
Business Plan was prepared for Lessee on a basis that was
reasonable at the time of such preparation and made in good
faith, and no event or circumstance has occurred or come to
the attention of Lessee which would require significant and
material revisions or supplements to the Business Plan in
order that it fairly and reasonably present, as of the date of
this Agreement, the forecast results of operations or
condition of Lessee.
8.3 COVENANTS OF LESSEE. Lessee covenants and agrees that:
(i) On the Delivery Date, Lessee shall be, and shall remain so
long as it shall be Lessee under this Agreement, duly
qualified to operate the Aircraft under applicable Law;
(ii) Lessee will pay or cause to be paid all taxes, assessments and
governmental charges or levies imposed upon it, or upon its
income or profits, or upon any property belonging to it, prior
to the date on which penalties attached thereto and prior to
the date on which any lawful claim, if not paid, would become
a Lien upon any of the material property of Lessee, provided,
however, that the failure to pay any such taxes shall not be a
default under this subclause (ii) if and for so long as the
amount or application of such tax is being contested in good
faith by
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Lessee by appropriate proceedings;
(iii) Without the prior written consent of Lessor, Lessee shall not
consolidate with, merge with or merge into any other
corporation or convey, transfer or lease substantially all of
its assets as an entirety to any other Person unless, after
giving effect to such transaction, the surviving entity has at
least the same net worth and gross assets as Lessee prior to
such transaction;
(iv) Lessee will notify Lessor in writing prior to any change of
its principal place of business or chief executive office;
(v) Lessee undertakes to maintain in full force and effect all
governmental consents, licenses, authorizations, approvals,
declarations, filing and registrations obtained or effected in
connection with this Agreement and every document or
instrument contemplated hereby and to take all such additional
action as may be proper or advisable in connection hereby or
therewith, including those required to maintain in full force
and effect the perfected interest of Lessor as "owner" of the
Aircraft; Lessee further undertakes to obtain or effect any
new or additional governmental consents, licenses,
authorizations, approvals, declarations, filings or
registrations as may become necessary for the performance of
any of the terms and conditions of this Agreement or any other
document or instrument contemplated hereby;
(vi) Lessee shall furnish to Lessor the following:
(A) As soon as available but in any event within 120 days
after the end of each fiscal year of Lessee, a copy of the
audited consolidated financial statements (including a balance
sheet and statements of earnings, of changes in shareholders'
equity, and of changes in financial position on a cash flow
basis) prepared as of the close of such fiscal year in
accordance with generally accepted accounting principles as in
effect in the United States ("GAAP"), together with the report
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thereon of Lessee's auditor to the effect that (1) the
accounting and reporting policies followed by Lessee are
appropriate and adequate in the circumstances and have been
consistently applied, and (2) the information presented in
such financial statements presents fairly Lessee's financial
position and operating results at the dates and for periods
indicated;
(B) As soon as available but in any event within 60 days after
the end of each fiscal quarter of Lessee, a copy of the
unaudited consolidated financial statements (including a
balance sheet and statements of earnings, of changes in
shareholders' equity, and of changes in financial position on
a cash flow basis) prepared as of the close of such fiscal
quarter, together with a certificate from its chief financial
officer certifying that (a) such financial statements have
been prepared in accordance with GAAP, and give a true and
adequate picture of Lessee's financial position and operating
results at the dates and for the period covered thereby, (b)
no Default and no Event of Default has occurred and is
continuing, and (c) Lessee is not in default under any other
lease agreement, loan agreement, promissory note, capitalized
or financing lease obligation, financial instrument or other
agreement relating to an obligation of Lessee in respect of
money borrowed or owed or payable by Lessee, except for
obligations to pay money that are being contested by Lessee in
good faith and by appropriate proceedings or procedures and
with respect to which adequate reserves have been established
by Lessee (as and if required by GAAP);
(C) Within 30 days after receipt by Lessee of a request by
Lessor, or such shorter period as may be set forth in any
written request by any government entity for information or
documents, Lessee shall furnish in writing to Lessor such
information and documents (or copies thereof certified as
correct by an authorized officer of Lessee) regarding the
Aircraft as may be reasonably requested by Lessor or as may be
required to enable Lessor or any affiliate thereof to file any
report or other document required to be filed by it with any
government entity
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because of its ownership or other interest in the Aircraft,
the Airframe or the Engines; and
(D) From time to time, such other information as Lessor may
reasonably request concerning the location, condition, use and
operation of the Aircraft or the financial condition of
Lessee.
8.4 REPRESENTATIONS AND WARRANTIES OF LESSOR. Lessor hereby represents and
warrants to Lessee that:
(i) on the Delivery Date Lessor shall have good title to the
Aircraft, free and clear of any and all Lessor Liens other
than the Security Agreement and any other Lien arising by
Lessor or ING which will not impair Lessor's right or ability
to deliver the Aircraft to Lessee hereunder or Lessee's use
and enjoyment of the Aircraft as contemplated hereby;
(ii) Lessor is a corporation duly organized and validly existing
and in good standing under the laws of the State of Delaware;
(iii) Lessor has full power and authority to carry on its business
and to execute and deliver, and to perform all of its
obligations under, each of the Lease Documents to which it is
a party;
(iv) each of the Lease Documents to which Lessor is a party has
been duly authorized by all necessary action on the part of
Lessor, and each of the Lease Documents to which it is a
party, when duly executed and delivered, will constitute its
legally valid and binding obligations enforceable in
accordance with their respective terms, and will not violate
any provision of law applicable to Lessor or its articles of
incorporation or by-laws;
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(v) neither the execution and delivery by Lessor of each of the
Lease Documents to which it is a party nor the performance by
it of any of its obligations thereunder, nor the compliance by
it with the terms and conditions thereof, will violate,
conflict with or result in any breach of any terms, conditions
or provisions of, or constitute a default under, any law,
administrative regulation or court judgment or decree
applicable to it or pursuant to which it was organized or any
agreement or instrument to which it is a party or by which it
or any of its property is bound.
8.5 NOTICE OF BREACH OF REPRESENTATION, WARRANTY OR COVENANT. Lessor and
Lessee undertake to give notice to each other of any matter occurring
at any time which constitutes a breach of or is inconsistent with any
of its representations, warranties and covenants in Clause 8.2, 8.3 or
8.4, as the case may be, forthwith upon becoming aware of the same.
8.6 SURVIVAL OF REPRESENTATIONS, ETC. The representations, warranties,
indemnities and agreements of Lessee and Lessor provided for in this
Agreement and Lessee's and Lessor's obligations under any and all
thereof, shall survive the delivery and leasing of the Aircraft and the
expiration or other termination of this Agreement.
CLAUSE 9. LIENS
9.1 LESSEE NOT TO CREATE LIENS. Other than as to an Engine in any situation
set forth in Clause 13.5, Lessee shall not directly or indirectly
create, incur, assume or suffer to exist any Lien on or with respect to
the Aircraft, any Engine or any Part, title thereto or any interest
therein or in this Lease except as to the following:
(i) the respective rights of Lessor as provided herein or in any
of the other Lease Documents;
(ii) Liens for Taxes of any kind (including fees or charges of any
airport or air
-47-
navigation authority) which are either not assessed, or, if
assessed, are not yet due and payable or being contested in
good faith by appropriate proceedings, so long as such
proceedings do not involve any risk of the sale, forfeiture or
loss of the Airframe, any Engine or any interest therein or
the assertion or imposition of any Lien thereon, and, in any
case, for the payment of which adequate reserves has been
provided;
(iii) materialmen's, mechanics', workmen's, repairmen's, employees'
or other like Liens arising in the ordinary course of business
payment for which is not overdue or which have been adequately
bonded, is not in default, or is being contested in good
faith, so long as such proceedings do not involve any risk of
the sale, forfeiture or loss of the Airframe, any Engine or
any interest therein or the assertion or imposition of any
Lien thereon; and
(iv) Lessor Liens which result from Lessor's own acts or from
claims against Lessor not to be paid or indemnified against by
Lessee hereunder.
9.2 LESSEE TO DISCHARGE LIENS. Lessee shall duly and promptly, at its own
cost and expense, pay or cause to be paid all sums required, or take
such action as may be necessary, to discharge duly any such Lien not
excepted in Clause 9.1 if the same shall arise at any time, and shall
at its own cost and expense protect the Aircraft against distress,
execution or seizure and shall, without prejudice to other remedies
available to Lessor hereunder, indemnify Lessor against all losses,
costs, charges, damages and expenses incurred by Lessor as a result of
the failure by Lessee to perform its obligations under Clause 9.1 or
this Clause 9.2.
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CLAUSE 10. INSURANCE
10.1 AVIATION LIABILITY AND PROPERTY DAMAGE INSURANCE. On or before the
Delivery Date and throughout the term of this Agreement, Lessee will
obtain or procure to be obtained and at all times maintain or procure
to be maintained in effect at its own expense public liability
(including, without limitation, third party and passenger liability,
baggage, cargo, mail, Airline General Third Party Legal Liability,
product liability and property damage including war and allied perils
to the fullest extent available) insurance with respect to the Aircraft
which is:
(i) in amounts for a combined single limit which are not less than
the greater of (x) amounts customarily carried by major or
recognized national United States airlines and (y) a combined
single limit of USD$ 500,000,000 for any one
occurrence/aircraft;
(ii) of the type usually carried by air carriers in accordance with
sound international airline practice engaged in the same or
similar business, similarly situated, and owning or operating
similar aircraft and engines and which covers risks of the
kind customarily insured against by such air carriers; and
(iii) maintained in effect with insurers and reinsurers satisfactory
to Lessor.
Any policies of insurance procured in accordance with this Clause 10.1 and any
policies taken out in substitution or replacement for any such policies:
(a) shall name Lessor, ING and their respective officers,
directors, employees, agents and successors
(collectively, the "ADDITIONAL NAMED INSUREDS") as an
Additional Named Insured as their interests may
appear;
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(b) shall provide that in respect of the interests of the
Additional Named Insureds in such policies the
insurance shall not be invalidated by any action or
inaction of Lessee or any other person and shall
insure each Additional Named Insured regardless of
any breach or violation of any warranty, declarations
or conditions contained in such policies by Lessee or
any other person, provided that such Additional Named
Insured has not caused, contributed to or knowingly
condoned such action or inaction;
(c) shall provide that if the insurers cancel such
insurance for any reason whatsoever, or if the same
is allowed to lapse for nonpayment of premium, or
other scope of coverage thereof is changed in any way
adverse to any Additional Named Insured, such
cancellation, lapse or change shall not be effective
as to any Additional Named Insured for 30 calendar
days (but in respect of war and allied perils such
lesser period as may be customarily available) after
delivery by such insurers to such Additional Named
Insured of written notice of such cancellation, lapse
or change;
(d) shall waive any rights of set-off, counterclaim or
other deduction (other than in respect of unpaid
premiums in respect of the Aircraft) against each
Additional Named Insured;
(e) shall waive any right of subrogation against any
Additional Named Insured;
(f) shall be primary without right of contribution from
any other insurance which is carried by the
Additional Named Insureds;
(g) shall expressly provide that all of the provisions
thereof, except the limits of liability, shall
operate in the same manner as if there were in
respect of
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the Aircraft a separate policy covering each insured;
(h) shall have a deductible of no more than $1,250 in
respect of passenger baggage and $10,000 in respect
of cargo with respect to any one claim;
(i) shall be reinsured in the London, U.S. or other
recognized aviation insurance market in a manner
satisfactory to Lessor; and
(j) shall otherwise be reasonably satisfactory to Lessor.
10.2 INSURANCE AGAINST LOSS OF OR DAMAGE TO THE AIRCRAFT. Lessee will at all
times maintain or procure to be maintained in effect, at its own
expense and on an agreed value basis, with insurers reasonably
satisfactory to Lessor, all-risk ground and flight aircraft hull, war
risk, confiscation and hijacking insurance covering the Aircraft
(including the Engines but only to the extent they are installed on the
Airframe) for an amount not less than the Stipulated Loss Value, and
insurance covering all risks of physical loss or damage however
occasioned in respect of Engines, engines, spare parts and equipment
forming part of the Aircraft, but which for the time being are removed
from the Aircraft, for an amount not less than their replacement cost.
Any policies carried in accordance with this Clause 10.2 covering the
Aircraft and any policies taken out in substitution or replacement for
any such policies:
(i) shall be made payable with respect to an Event of Loss
pursuant to a loss payable clause endorsed on the relevant
policies, PROVIDED that:
(a) ING and such others (and in such order) as may be
stipulated by ING shall be the sole loss payees in
the case of an Event of Loss;
(b) ING and such others (and in such order) as may be
stipulated by ING shall
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be the sole loss payees in the case where the amount
payable by the insurers upon any claim other than in
respect of an Event of Loss which is greater than
USD$ 250,000, and such amount shall be applied to
repair of the Aircraft after consultation by the
insurers with Lessor and Lessee; and
(c) Lessee shall be loss payee in the case where the
amount payable by the insurers upon any claim other
than in respect of an Event of Loss is less than USD$
250,000 unless and until Lessor notifies the relevant
insurance broker or the insurers that a Default has
occurred in which event the loss payees shall be
Lessor and such others (and in such order) as may be
stipulated by Lessor, and such amount shall be
applied to repair of the Aircraft after consultation
by the insurers with Lessee and, if Lessor has so
notified such broker or insurers of a Default, the
Lessor;
(ii) shall name the Additional Named Insureds as their interests
may appear;
(iii) shall provide that in respect of the interests of the
Additional Named Insureds in such policies the insurance shall
not be invalidated by any action or inaction of Lessee or any
other person and shall insure the Additional Named Insureds
regardless of any breach or violation of any warranty,
declarations or conditions contained in such policies by
Lessee or any other person, provided that such Additional
Named Insured has not caused, contributed to or knowingly
condoned such action or inaction;
(iv) shall provide that if the insurers cancel such insurance for
any reason whatsoever, or if the same is allowed to lapse for
nonpayment of premium, or the scope of coverage thereof is
changed in any way adverse to any Additional Named Insured,
such cancellation, lapse or change shall not be effective as
to each Additional Named Insured for 30 calendar days (but in
respect of war and allied perils such lesser period as may be
customarily available) after delivery by such insurers to
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such Additional Named Insured of written notice of such
cancellation, lapse or change;
(v) shall waive any rights of set-off, counterclaim or other
deduction (other than in respect of unpaid premiums in respect
of the Aircraft) against each Additional Named Insured;
(vi) shall waive any right of subrogation against any Additional
Named Insured;
(vii) shall be primary without right of contribution from any other
insurance which is carried by the Additional Named Insureds;
(viii) shall have a deductible (including any loss retention or
self-insurance arrangement) of no more than USD$ 250,000 in
respect of any one claim but no deductible in respect of a
claim for an Event of Loss; PROVIDED, HOWEVER, that, until
such time, and for so long thereafter, as Lessee shall operate
10 or more wide body aircraft (including the Aircraft) in its
regularly scheduled flight operations, the deductible
hereinabove described may at Lessee's option be $500,000 in
respect of any one claim (other than in respect of an Event of
Loss);
(ix) shall provide that all payments shall be made in Dollars and
shall not provide for any right of insurers to replace the
insured equipment (the Aircraft) in the event of an Event of
Loss;
(x) shall contain a 50%/50% clause provision in the form of
Lloyd's Form AVS 103, or equivalent language; and
(xi) shall otherwise be reasonably satisfactory to Lessor.
Any war risk, confiscation or hijacking insurance shall include:
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(i) 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;
(ii) confiscation, requisition, detention (including by the country
of registration of the Aircraft in favor of Lessor),
hijacking, strikes, riots, malicious damage and civil
commotion;
(iii) any other risks excluded as per Hi-Jacking and Other Perils
Exclusion Clause (Aviation) - AVN 48B from the All Risk Hull
Insurance described above (other than paragraph (b) of AVN
48B) by any exclusion therein of these and/or similar risks;
and
(iv) such other perils which in accordance with the market practice
from time to time are customarily insured.
10.3 LESSEE TO PURSUE CLAIMS. After an Event of Loss in relation to the
Aircraft shall have occurred, Lessee shall diligently pursue or cause
to be pursued, in concert with Lessor, any and all claims against the
insurers in respect of the insurance (including any required
re-insurance) with respect to the Aircraft, subject to consultation
with Lessor and such other persons as may be stipulated by Lessor.
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10.4 CHANGE IN INSURANCE PRACTICE. In the event that there is a change in
the generally accepted industry-wide practice with regard to the
insurance of aircraft (whether relating to all or any of the types of
insurance required to be effected under the foregoing provisions of
this Clause 10) such that Lessor shall be of the reasonable opinion
that the insurance required pursuant to the provisions of this Clause
10 is insufficient to protect the interests of Lessor, the insurance
requirements set forth in this Clause 10 shall, if specified by Lessor,
be varied so as to include such additional or varied requirements as
may be necessary to ensure that the insurance as so varied shall
provide substantially the same protection to Lessor as it would have
done if such change in the generally accepted industry-wide practice
had not occurred.
10.5 APPLICATION OF PROCEEDS ARISING ON EVENT OF LOSS. As between Lessor and
Lessee it is agreed that all insurance payments or any other sums
received as the result of the occurrence of an Event of Loss with
respect to the Aircraft or the Airframe shall be applied to the benefit
of Lessor and such other persons having an interest in the Aircraft as
may be stipulated by Lessor and any excess shall be applied in
reduction of Lessee's obligation to pay the amounts required to be paid
by Lessee pursuant to Clause 11.1, if not already paid by Lessee, or,
if already paid by Lessee, shall be applied to reimburse Lessee for its
payment of such amount.
10.6 APPLICATION OF PROCEEDS ARISING OTHER THAN ON AN EVENT OF LOSS. The
insurance payments for any property damage loss to the Airframe or any
Engine not constituting an Event of Loss, or to any Part, will be
applied in payment of repairs or for replacement property, but may be
held by Lessor until Lessee furnishes Lessor with reasonably
satisfactory evidence that the repairs or replacement property that
Lessee is required to perform or obtain in accordance with the terms of
Clause 13 have already been paid for or obtained by Lessee. Upon
receipt of such evidence of repair or replacement, Lessor shall
promptly pay or reimburse Lessee for the amount of such insurance
payment received by Lessor with respect to such loss.
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10.7 RETENTION OF PROCEEDS BY LESSOR FOLLOWING DEFAULT. Any amount referred
to in Clause 10.5 or 10.6 which is otherwise payable to Lessee shall
not be paid to Lessee, or, if it has been previously paid to Lessee,
shall be delivered by Lessee to Lessor if at the time of such payment a
Default shall have occurred and be continuing. In either case, all such
amounts shall be held by Lessor as security for the obligations of
Lessee or, at the option of Lessor, applied by Lessor toward payment of
any of Lessee's obligations at the time due hereunder. At such time as
there shall not be continuing any such Default, all such amounts at the
time held by Lessor in excess of the amount, if any, which Lessor has
elected for application as provided above shall be paid to Lessee.
10.8 LESSOR AND LESSEE MAY ADDITIONALLY INSURE. Each of Lessor and Lessee
may carry at its own expense insurance with respect to its own
interests in the Aircraft provided that such insurance does not
adversely affect the coverage required to be maintained hereunder by
Lessee or the cost thereof, or shall have the effect of suspending,
impairing, defeating or invalidating or rendering unenforceable or
reducing, in whole or in part, the coverage of or the proceeds payable
under any insurance required to be provided and maintained by Lessee.
Any insurance payments received from policies maintained by Lessor
shall be retained by Lessor without reducing or otherwise affecting
Lessee's obligations hereunder. Lessor shall have no right to proceeds
of any policies other than those required to be maintained by Lessee
under this Lease.
10.9 COMPLIANCE WITH LEGAL REQUIREMENTS AS TO INSURANCE. Throughout the term
of this Agreement Lessee shall comply with all legal requirements as to
the insurance of the Aircraft which may from time be imposed by the
laws of the United States and of any other jurisdiction to, from or
over which the Aircraft shall be flown insofar as they affect or
concern the operation of the Aircraft.
10.10 LESSOR ENTITLED TO PROVIDE INSURANCES IN DEFAULT BY LESSEE. If the
insurance (including any required re-insurance) required under this
Clause 10 is not kept in full force and
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effect Lessor without prejudice to any other rights it may have on the
occurrence of a Default shall be entitled (but not bound) at any time
while such failure is continuing to provide such insurance and in such
event Lessee shall, upon demand, reimburse Lessor for the cost thereof
together with interest thereon at the rate specified in Clause 6.3 from
the date of any such demand for reimbursement until payment and to
require the Aircraft to remain at an airport or, as the case may be, to
proceed to and remain at an airport designated by Lessor until the
insurance is in full force and effect. Such provision of insurance by
Lessor shall not affect Lessor's right to treat such failure by Lessee
as a Default.
10.11 NEGOTIATIONS FOR RENEWAL. Lessee shall begin final negotiations for the
renewal of each required policy prior to its expiry. Upon expiry of any
required policy, Lessee shall provide Lessor with written confirmation
of completion or renewal of such policy, with certification thereof to
be issued by the relevant insurance broker within seven (7) Business
Days thereafter.
10.12 (i) INFORMATION. In addition to the information provided pursuant
to Clause 10.11 and without prejudice thereto, Lessee shall
furnish to Lessor:
(a) on request, certified copies of all documents
constituting, evidencing or regulating the terms of
any required policy;
(b) on request, evidence of payment by or, at the
direction of Lessee, each sum payable under or in
connection with any required policy; and
(c) on request, such evidence as Lessor may require of
Lessee's compliance with its obligations under this
Clause 10.
(ii) NOTIFICATION OF CLAIM EVENTS. Lessee shall forthwith notify
Lessor of any event (including but not limited to an Event of
Loss) which will or may give rise to a
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claim under any required policy in excess of USD$ 50,000 and
shall not (without the prior written consent of Lessor) settle
or permit the settlement of any claim arising under a required
policy unless it arises under a direct damage policy and is
for less than USD$250,000.
(iii) PROVISION OF INSURANCE BROKER'S UNDERTAKING. Lessee shall
before the Delivery Date, at its own cost and expense, cause
the relevant insurance broker or, if appropriate, the relevant
insurers to issue a written undertaking in favor of Lessor in
form and substance acceptable to Lessor.
10.13 LESSEE NOT TO PREJUDICE INSURANCE. Without prejudice to Clause 13.10,
Lessee shall not:
(i) do or omit to do or permit to be done or left undone anything
whereby any required policy would or might be expected to be
rendered in whole or in part invalid or unenforceable; or
(ii) cause or permit the Aircraft or any part thereof to be
employed in any place or in any manner or for any purpose
inconsistent with the terms of any required policy; or
(iii) create or permit to exist any Lien (save only as may be
created by Lessor or by Lessee in favor of Lessor) over the
insurances taken out in respect of the Aircraft, or its
interests therein.
10.14 CURRENCY. All insurance pursuant to this Agreement will be payable in
Dollars except as may be otherwise agreed by the Lessor; provided,
however, that the insurance as to liability claims will be payable in
the settlement currency agreed in any action relating to such claim.
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CLAUSE 11. EVENT OF LOSS
11.1 EVENT OF LOSS WITH RESPECT TO AIRCRAFT. Upon the occurrence of an Event
of Loss with respect to the Aircraft, Lessee shall forthwith (and, in
any event, within two (2) Business Days after such occurrence) give
Lessor written notice of such Event of Loss and shall pay to Lessor on
the sixtieth (60th) day following the occurrence of such Event of Loss
or, if the insurance or other proceeds have been paid for such Event of
Loss before such 60th day, upon receipt of such proceeds, the
Stipulated Loss Value and all other sums (if any) then due and payable
hereunder by Lessee to Lessor; provided further that during the period
from the occurrence of such an Event of Loss and ending on the date
that Lessee complies with its obligations under this Clause 11.1 the
Lease Term shall continue and, therefore, the Aircraft shall be deemed
to be continued to be leased by Lessor to Lessee hereunder and Lessee
shall continue to pay Rent in accordance with Clause 4.
At such time as Lessor shall have been fully compensated as required
under this Clause 11.1, Lessor shall transfer to Lessee or to Lessee's
designee, on an "as-is, where-is" basis but otherwise without recourse
or warranty except that such title shall be free and clear of all
Lessor Liens, all of such rights, title and interest as Lessor may have
in and to the Aircraft, as well as all of Lessor's right, title and
interest in and to any Engine constituting part of the Aircraft but not
installed thereon at the time of loss, free and clear of Lessor Liens,
and Lessor shall, at Lessee's expense, execute and deliver such bills
of sale and other documents and instruments as Lessee shall reasonably
request to evidence (on the public record or otherwise) such transfer
and the vesting of such right, title and interest in and to the
Aircraft in Lessee. On compliance by Lessor of its obligations under
this Clause 11.1 the Lease Term shall be deemed to terminate and Lessee
shall thereupon no longer be obliged to pay Rent in respect of the
Aircraft pursuant to Clause 4.
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11.2 EVENT OF LOSS WITH RESPECT TO ENGINE. Upon the occurrence (or deemed
occurrence pursuant hereto) of an Event of Loss with respect to an
Engine under circumstances in which there has not occurred an Event of
Loss with respect to the Aircraft or Airframe Lessee shall give or
cause to be given to Lessor written notice promptly after becoming
aware thereof and shall, within thirty (30) days after the occurrence
of such Event of Loss, convey or cause to be conveyed to Lessor or its
designee, as replacement for such Engine, full title, free and clear of
all Liens other than Permitted Liens, an engine of the same or an
improved model and suitable for use on the Aircraft or Airframe, but
having a value and utility at least equal to, and being in as good
operating condition as, including the same or fewer hours or Cycles (or
an equivalent combination of hours and Cycles) accumulated on such
engine, the Engine with respect to which such Event of Loss occurred
(assuming that such Engine was 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, Lessee at its
own expense, will:
(i) furnish Lessor with such bills of sale and other documents and
instruments as Lessor shall reasonably request to evidence (on
the public record or otherwise) the interest of Lessor in such
Replacement Engine;
(ii) execute a supplement to this Lease confirming that such
Replacement Engine is subject to this Lease;
(iii) furnish Lessor with a favorable opinion of Lessee's counsel to
the effect that good and marketable title to such Replacement
Engine has been vested in Lessor; and
(iv) furnish Lessor with a certificate of an aircraft engineer (who
may be an employee of Lessee) certifying that such Replacement
Engine has a value and utility at least equal to, and is in as
good operating condition, including no greater number of hours
or Cycles accumulated on such Engine, as the Engine so
replaced assuming
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such Engine was in the condition and repair required by the
terms hereof immediately prior to the occurrence of such Event
of Loss.
Lessee shall, in addition to other liabilities arising in connection hereunder,
reimburse Lessor for any legal fees and disbursements incurred by Lessor in
analyzing, monitoring and enforcing Lessor's rights and remedies in connection
with such Event of Loss.
For all purposes hereof such Replacement Engine shall, after such transfer, be
deemed part of the property leased hereunder and shall be deemed an Engine as
defined herein.
11.3 TRANSFER OF TITLE TO REPLACED ENGINE TO LESSEE. Upon full compliance by
Lessee with the terms of Clause 11.2, Lessor shall, without further
act, be deemed to have transferred to Lessee or to Lessee's designee,
title to the Engine with respect to which the Event of Loss has
occurred (the "REPLACED ENGINE"), on an "AS IS, WHERE IS" basis but
otherwise without recourse or warranty except that such title shall be
free and clear of Lessor Liens. At Lessee's request and expense, Lessor
shall execute and deliver such bills of sale and other documents and
instruments as Lessee shall reasonably request to evidence (on the
public record or otherwise) such transfer and the vesting of such
right, title and interest in and to such Replaced Engine in Lessee.
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CLAUSE 12. REGISTRATION
12.1 REGISTRATION. Lessee, at its sole cost and expense, shall (i) not take
or permit any action inconsistent with the Aircraft remaining duly
certified as to airworthiness at all times after the Delivery Date in
accordance with the laws of the United States; (ii) not take or permit
any action inconsistent with the continued registration of the Aircraft
at all times after the Delivery Date in the name of the Lessor as sole
owner thereof, (iii) cause this Lease to be duly filed and registered
with the FAA and with all other applicable governmental authorities
that may be necessary or advisable in order to protect and maintain the
rights and interests of Lessor hereunder and in the Aircraft, and (iv)
not register or allow the Aircraft to be registered in any other way or
manner under the laws of any other country. Lessee shall not take or
permit any action which would not maintain in full force and effect all
certifications and registrations referred to in Clauses 12.1(i), (ii)
and (iii) throughout the Lease Term.
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CLAUSE 13. MAINTENANCE, REPORTING, REMOVAL AND REPLACEMENT,
ALTERATIONS, POSSESSION, OPERATION, ETC.
13.1 MAINTENANCE.
(i) GENERAL OBLIGATIONS. During the Lease Term and until the
Aircraft is returned to Lessor in accordance with the terms of
this Agreement, Lessee alone has the obligation, at its sole
expense, to maintain and repair or cause an Independent
Maintenance Contractor to maintain and repair the Airframe,
Engines and all of the Parts in accordance with (a) the
Maintenance Program; (b) the rules and regulations of the FAA;
(c) the requirement to maintain a full certificate of
airworthiness from the FAA for the Aircraft; to maintain the
eligibility of the Aircraft at all times during the Lease Term
and upon return of the Aircraft to Lessor in accordance
herewith for issue of a certificate of airworthiness for
passenger category aircraft issued by the FAA and (d) (if
applicable) in the same manner and with the same care as used
by the Lessee with respect to similar aircraft and engines
operated by the Lessee and without in any way discriminating
against the Aircraft.
(ii) INDEPENDENT MAINTENANCE CONTRACTOR. The obligations of Lessee
to maintain the aircraft contained in this Clause 13.1 shall
be performed by either Lessee or by an Independent Maintenance
Contractor retained at Lessee's sole expense and approved by
the FAA.
(iii) MAINTENANCE PROGRAM. Lessor and Lessee hereby agree that the
Aircraft will be maintained in accordance with an FAA approved
maintenance program.
(iv) SPECIFIC OBLIGATIONS. Without limitation to Clause 13.1(i),
Lessee agrees that its maintenance and repair obligations
hereunder will include (but will not be limited
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to) each of the following specific items:
(a) performance in accordance with the Maintenance
Program of all routine and non-routine maintenance
work, including on-line maintenance on the Aircraft;
(b) incorporation in the Aircraft (including the Engines
and all Parts) of all airworthiness directives of the
FAA issued during the Lease Term and requiring
compliance or terminating action prior to the first
anniversary following the Expiration Date;
(c) without prejudice to Clause 13.1(iv)(b),
incorporation in the Aircraft of all service
bulletins of the Manufacturer, the Engine
manufacturer and other vendors which the Lessee
schedules to adopt during the Lease Term for the rest
of its aircraft fleet. The Lessee agrees not to
discriminate against the Aircraft vis-a-vis the rest
of the Lessee's fleet in service bulletin compliance
or other maintenance matters;
(d) incorporation in the maintenance schedule for the
Aircraft of a full corrosion control program, SSID
and sampling programs, as required by the
Manufacturer and mandated by the FAA; and
(e) proper maintenance of all Aircraft Documentation,
including recording the number of Block Hours, Flight
Hours and Cycles the Aircraft and Engines operate and
all maintenance and repairs performed thereon. Hard
copies of such Aircraft Documentation shall be
maintained in English.
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13.2 REPORTING REQUIREMENTS AND PROVISION OF INFORMATION. Commencing with a
report furnished not later than the 10th Business Day following the end
of the first Monthly Period, Lessee will furnish to Lessor not later
than the 10th Business Day following the end of each Monthly Period a
report in the form attached hereto as Schedule G which will include for
such Monthly Period (i) the hours/cycles operated for the Airframe,
(ii) the hours/cycles operated for each of the Engines (and their
location by airframe), and (iii) on a quarterly basis a list of those
service bulletins, airworthiness directives and engineering
modifications incorporated on the Aircraft during the preceding
quarter.
Furthermore, during the term of this Agreement, Lessee shall also
furnish to Lessor such additional information obtained from records
Lessee customarily maintains concerning the location, condition, use
and operation of the Aircraft as Lessor may reasonably request from
time to time.
13.3 REMOVAL OF ENGINES. If an Engine is removed for testing, service,
repair, maintenance, overhaul work, alterations or modifications, title
to such Engine will at all times remain vested in Lessor.
Lessee will be entitled (but only for reasons of maintenance or repair)
to remove any of the Engines from the Aircraft and install another
engine or engines on the Aircraft, provided that Lessee complies with
each of the following obligations:
(i) Lessee may only install CF6-50C2 engines on the Aircraft;
(ii) the insurance requirements set forth in Clause 10 are in place
in respect of such removed Engine;
(iii) Lessee shall ensure that the identification plates referred to
in Clause 13.11 are not removed from such removed Engine upon
such Engine being detached from
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the Aircraft; and
(iv) title to such removed Engine remains with Lessor free from all
Liens (except Permitted Liens) regardless of the location of
the Engine or its attachment to or detachment from the
Aircraft.
13.4 REPLACEMENT OF PARTS.
(i) LESSEE'S OBLIGATION TO REPLACE PARTS. Lessee, at its own
cost and expense, shall promptly replace or cause to be
replaced by the Independent Maintenance Contractor all Parts
which may from time to time be incorporated or installed in or
attached to the Airframe or any Engine and which 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. In addition, Lessee
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, with respect to any
installed part with respect to which title is not vested in
Lessor at the time of installation (as hereinbelow provided),
Lessee shall, at its own cost and expense, replace such parts
as promptly as possible in the manner contemplated by clauses
(ii) and (iii) below.
(ii) CONDITION OF REPLACEMENT PARTS. All replacement Parts shall
be free and clear of all Liens other than Permitted Liens and
shall be in as good operating condition as, and shall have a
value and utility at least equal to, the Parts replaced
assuming such replaced Parts were in the condition and repair
required to be maintained by the terms hereof.
(iii) TITLE TO REPLACEMENT AND REPLACED PARTS. All Parts at any
time removed from
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the Airframe or any Engine shall remain the property of
Lessor, no matter where located, until such time as such Parts
shall be replaced by parts which are owned by Lessee free and
clear of any Liens and which have been incorporated or
installed in or attached to the Airframe or such Engine and
which meet the requirements for replacement Parts specified
above. Immediately upon any replacement Parts becoming
incorporated or installed in or attached to the Airframe or
such Engine as above provided, without further act:
(a) title to the replaced or removed Parts shall
thereupon vest in Lessee, free and clear of all
Lessor Liens, and shall no longer be deemed Parts
hereunder;
(b) title to such replacement or installed Parts shall
thereupon vest in Lessor; and
(c) such replacement Parts shall become subject to this
Agreement and be deemed part of the Airframe or such
Engine for all purposes hereof to the same extent as
the Parts originally incorporated or installed in or
attached to the Airframe or such Engine.
13.5 REPLACEMENT ENGINES. Lessee shall be entitled (subject to Clause 13.3),
so long as no Default shall have occurred and be continuing, to install
any engine on the Airframe or any part on the Airframe or any Engine by
way of substitution, replacement, renewal or mandatory modification
(notwithstanding that such installation is not in accordance with
Clause 13.3) in circumstances where:
(i) there shall not have been available to Lessee at the time and
in the place that such engine or other part was required to be
installed on the Airframe or, as the case may be, any Engine,
a substitute or replacement engine or part complying with the
requirements of Clause 13.3; and
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(ii) it would have resulted in an unreasonable disruption of the
operation of the Aircraft or the business of Lessee as an
airline or would have grounded the Aircraft if Lessee had
deferred such installation until such time as an engine or
part complying with the requirements of Clause 13.3 became
available for installation in the Aircraft.
In the case of either (i) or (ii) above, as soon as practicable after
installation of the same on the Airframe or, as the case may be, such
Engine, Lessee shall remove any such engine or part not complying with
the requirements of Clause 13.3 and replace or substitute the same with
an engine or part complying with the requirements of Clause 13.3. If,
notwithstanding the foregoing, any replacement engine or part is owned
by Lessor such replacement engine or part and the Engine or the Part
replaced thereby shall be and remain the property of Lessor. Lessee
shall assist Lessor in all reasonable respects to preserve, store,
overhaul or dispose of such replaced Parts, all as may be reasonably
directed by Lessor.
13.6 ALTERATIONS. Lessee, at its own cost and expense:
(i) may make or cause to be made such alterations and
modifications in and additions to the Airframe or any Engine
as Lessee may reasonably deem desirable in the furtherance of
any recommendations from time to time of the Manufacturer and
the engine manufacturer and the standards of the FAA, or to
comply with any law, rule, directive, bulletin, regulation or
order of any governmental entity, and
(ii) may from time to time make such alterations and modifications
in and additions to the Airframe or any Engine as Lessee may
deem desirable in the proper conduct of its business;
provided, however, that no such alteration, modification or
addition shall diminish the value or utility of the Airframe
or such Engine, or impair the condition or airworthiness
thereof, below the value, utility, condition
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and airworthiness thereof immediately prior to such
alteration, modification or addition assuming the Airframe 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 Agreement provided further that no such
alteration, modification, or addition with an estimated cost
in excess of $25,000 shall be made pursuant to this Clause
13.6(ii) without the prior written consent of Lessor.
(iii) Notwithstanding the foregoing, Lessee may, at its sole cost
and expense modify the interior layout of the Aircraft;
provided, however, that such modification has, in the opinion
of the Lessor, no material adverse effect on the value of the
Aircraft.
Except as otherwise provided in this Clause 13.6, title to all Parts
incorporated or installed in or attached or added to the Airframe or
such Engine as the result of such alteration, modification or addition
shall, without further act, vest in Lessor. Upon transfer of title to
Lessor of the installed Parts title to all Parts replaced or removed
from the Airframe or such Engine as the result of such alteration,
modification or addition shall vest in Lessee, free and clear of all
Lessor Liens, and shall no longer be deemed Parts hereunder.
Nothing herein shall permit Lessee to (and Lessee shall not) make any
modification or alteration that shall require the permanent removal of
any Part that is not replaced with a replacement part (with title
vested in Lessor as provided above).
13.7 LIABILITY FOR COST OF ALTERATIONS; AD COST SHARING.
(i) As used in this Clause, the following terms have the
respective meanings set forth below:
"APPLICABLE REMAINING LEASE PERIOD" means the number
of days
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remaining in the Lease Term including Expected
Extension Days.
"AD CALCULATION PERIOD" means with respect to any
airworthiness directive or mandatory service bulletin
with respect to which the cost of compliance is less
than $250,000 the AD Calculation Period will be with
1,825 days. In case the costs of compliance exceed
US$250,000 the AD Calculation Period will be 2,920
days.
"EXPECTED EXTENSION DAYS" means the number of days by
which the Lease can be extended by using the
Extension Options multiplied by a probability factor
of 0.5. This means that during the Lease Term the
Expected Extension Days will be (1,825 days
multiplied by 0.5) 913 days. During the First
Extension Period the Expected Extension Days will be
(913 days multiplied by 0.5) 457 days. During the
Second Extension Period the Expected Extension Days
will be 0.
"THRESHOLD AMOUNT" means US$62,000.
(ii) Lessor shall in no event bear any liability or cost for any
alteration, modification, addition, or for any grounding or
suspension of certification of the Aircraft or for loss of
revenue; PROVIDED, HOWEVER, that if the total cost (including
material and labor) of compliance with any single
airworthiness directive or mandatory service bulletin, which,
in either case, is issued during the Lease Term and requires
terminating action either (i) during the Lease Term or (ii)
during the one-year period immediately following expiration of
the Lease Term (such cost, the "AD COST") exceeds the
Threshold Amount, then (a) Lessee shall furnish Lessor with an
estimate of the work and such costs relating thereto required
to comply therewith, and (b) Lessee and Lessor shall share
such AD Cost in the following manner: Lessee shall bear and
pay the Threshold Amount of such AD Cost. Lessee shall bear
and pay the amount of such AD Cost in excess of the Threshold
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Amount calculated as follows:
(1) Amount of such AD Cost in excess of the
Threshold Amount divided by the lesser of
(x) the AD Calculation Period or (y) the
useful life of the alteration, modification
or addition in question (if specified in the
airworthiness directive or mandatory service
bulletin in question), expressed in days
multiplied by
(2) the Applicable Remaining Lease Period after
the date of completion of work to comply
with such airworthiness directive
or service bulletin;
PROVIDED, HOWEVER, that in no event shall Lessee be required
to pay more than 100% of such excess.
Lessee shall bear and pay the aggregate AD Cost described
above, and, within 15 days following Lessor's receipt from
Lessee of appropriate invoices for the work relating thereto,
Lessor shall reimburse Lessee for Lessor's share of the AD
Cost. Lessee shall give Lessor prior written notice of any
such airworthiness directive or mandatory service bulletin
before commencing any alteration, modification or addition of
or to the Aircraft with respect thereto. Any work that is
performed by Lessee with respect to any such airworthiness
directive or mandatory service bulletin shall be billed at
Lessee's true out-of-pocket cost and without any xxxx-up in
the cost of labor or materials.
13.8 POSSESSION OF AIRCRAFT; SUBLEASE OF AIRCRAFT. Lessee shall not (save as
otherwise expressly provided in this Clause 13.8 or in Clause 13.9
below), without the prior written consent of Lessor, sublease or
otherwise in any manner deliver, transfer or relinquish possession of
the Airframe or any Engine or install any Engine, or permit any Engine
to be installed, on any airframe other than the Airframe. With respect
to any transfer of
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possession pursuant to this Clause 13.8:
(i) Lessee shall remain primarily liable hereunder for the
performance of all of the terms of this Lease to the same
extent as if such transfer had not occurred, and no sublease
or other relinquishment of possession of the Aircraft shall in
any way discharge or diminish any of Lessee's obligations to
Lessor under this Lease or any of Lessor's rights hereunder
and such rights shall continue as if such sublease or transfer
had not occurred;
(ii) The term of any sublease (including, without limitation, any
option of the sublessee to renew or extend the sublease) or
pooling arrangement shall not continue beyond the end of the
Lease Term;
(iii) any sublease permitted by this Clause 13.8 shall in addition
expressly provide that (v) such sublease is subject and
subordinate to all of the terms of this Lease and all rights
of Lessor under this Lease, including without limitation,
Lessor's rights to repossession pursuant to Clause 17 and to
void such sublessee's right to possession upon such
repossession, whether or not any default has occurred or
exists under such sublease, (w) such sublessee consents to the
security assignment by Lessee to Lessor of all of Lessee's
right, title and interest in such sublease for purposes of
securing Lessee's obligations hereunder and such sublessee,
upon receipt of a written notice from Lessor that an Event of
Default has occurred and is continuing, will make all payments
under such sublease to, and, if this Lease has been declared
in default pursuant to Clause 17 hereof, will return the
Aircraft only to, Lessor, or as directed by Lessor, for so
long as such Event of Default shall continue, (x) the
maintenance, operation and insurance provisions of such
sublease shall be substantially the same as the provisions of
this Lease (whether by requiring such obligations to be
performed by such sublessee, by Lessee or by both), (y) the
Aircraft shall not be operated or used other than as provided
in this Lease, (z) the Lessor may void or terminate such
sublease following an Event of
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Default hereunder and (zz) such sublease shall be governed by
New York law;
(iv) prior to the commencement of any sublease, Lessee shall give
Lessor written notice of the proposed sublease of the
Aircraft, which notice shall include the identity of the
sublessee, the term and rental rate of the sublease and a copy
of such sublease;
(v) any such sublease shall expressly prohibit any assignment,
further sublease of the Aircraft and any of the rights under
such sublease; and
(vi) any consent by Lessor to any sublease pursuant to this Clause
13.8 may be revoked by Lessor if the executed sublease
contains terms which have not been expressly approved by
Lessor, and in the event that Lessor's consent is revoked
pursuant to this Clause 13.8(vi), the sublease shall
automatically be terminated.
At least ten days prior to entering into any sublease of the Aircraft
to a sublessee, Lessee shall execute and deliver to Lessor an
assignment of and grant of a security interest in all of Lessee's
right, title and interest in such sublease, which assignment shall be
in form and substance reasonably satisfactory to Lessor. In connection
with such a sublease of the Aircraft, Lessee shall provide to Lessor,
at Lessee's or sublessee's expense and on or before commencement of
such sublease, a legal opinion from counsel to the sublessee in form
and substance reasonably satisfactory to Lessor, as to the due
execution and delivery and enforceability of such sublease and as to
such other matters as Lessor may reasonably request. Any monies
received by Lessor pursuant to the exercise of its rights under the
assignment of any sublease shall be held by Lessor as additional
security for the performance by Lessee of its obligations under this
Lease and, to the extent not applied against amounts due and owing by
Lessee hereunder and the exercise of remedies hereunder, shall be
returned to Lessee at such time as no Event of Default shall be
continuing.
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13.9 DELIVERY OF AIRFRAME OR ENGINES TO MANUFACTURER OR REPAIRER; POOLING
ARRANGEMENTS. Notwithstanding Clause 13.8, so long as no Default shall
have occurred and be continuing, Lessee may, without the prior written
consent of Lessor:
(i) DELIVERY FOR SERVICE OR REPAIR. Deliver possession of the
Airframe or any Engine to the manufacturer thereof for testing
or other similar purposes or to any organization for service,
repair, maintenance or overhaul work on the Airframe, such
Engine or any part thereof or for alterations or modifications
in or additions to the Airframe or such Engine to the extent
required or permitted by the terms of Clause 13.6;
(ii) POOLING OF ENGINES. Subject any Engine to normal interchange
or pooling agreements or arrangements in each case customary
in the airline industry and entered into by Lessee in the
ordinary course of its business with an air carrier approved
by Lessor; provided that if any interest of Lessee or Lessor
in or to any such Engine shall be divested under any such
agreement or arrangement, such divestiture shall be deemed to
be an Event of Loss with respect to such Engine and Lessee
shall comply with Clause 11.2 in respect thereof;
(iii) POOLING OF PARTS. Subject any part removed from the Airframe
or an Engine as provided herein to a normal pooling
arrangement customary in the airline industry entered into in
the ordinary course of Lessee's business with an air carrier
approved by Lessor, provided the part replacing such removed
Part shall be incorporated or installed in or attached to the
Airframe or Engine in accordance with Clause 13.4 as promptly
as possible after the removal of such removed Part. In
addition, any replacement part when incorporated or installed
in or attached to the Airframe or any Engine in accordance
with Clause 13.4 may be owned by an air carrier approved by
Lessor subject to such a normal pooling arrangement, provided
Lessee, at its expense, as promptly thereafter as possible
either (a) causes title to such replacement part to vest in
Lessor in accordance with Clause
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13.4 by Lessee acquiring title thereto for the benefit of, and
transferring such title to, Lessor free and clear of all
Liens, or (b) replaces such replacement part by incorporating
or installing in or attaching to the Airframe or Engine a
further replacement part owned by Lessee free and clear of all
Liens and causing title to such further replacement part to
vest in the Lessor in accordance with Clause 13.4.
No pooling agreement, sublease or other relinquishment of possession of
the Aircraft or any Engine shall in any way discharge or diminish any
of Lessee's obligations to Lessor hereunder.
13.10 OPERATION. In addition to the undertakings set out in Clause 10.13,
Lessee hereby undertakes:
(i) neither to operate nor to use the Aircraft at any time that
the full amount of insurance required by the terms of Clause
10 shall not be in effect;
(ii) not to operate, use, keep or locate nor to permit the
operation, use, keeping or location of the Aircraft or any
part thereof (i) for any purpose, in any manner or in any
place not covered by the insurances required pursuant to
Clause 10, or (ii) in any recognized or threatened area of
hostilities unless fully covered to Lessor's reasonable
satisfaction by war risk insurance; provided, however, that
the Aircraft or any Engine located in an area at the time it
becomes a recognized or threatened area of hostility may be
flown from and through such area to an area outside such area
of recognized or threatened hostility;
(iii) that the Aircraft shall not be maintained, used or operated in
violation of any mandatory law, rule, regulation or order of
any government or governmental authority having jurisdiction
(domestic or foreign), or in violation of any airworthiness
certificate, license or registration relating to the Aircraft
issued by
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any such authority.
13.11 NAMEPLATE. Lessee agrees to affix and maintain in the cockpit of the
Airframe in a prominent place, and on each Engine next to the engine
data plate, a metal nameplate having dimensions of not less than four
and a half inches by three inches bearing the inscription "This
Aircraft/Engine is owned by EAL (DELAWARE) VIII CORP. and leased to PAN
AMERICAN AIRWAYS, INC. AND IS SUBJECT TO A MORTGAGE TO ING LEASE
(NEDERLAND) B.V.-AMSTERDAM, THE NETHERLANDS."
Except as provided above, Lessee shall not allow the name or other
indication of any person, association or corporation to be placed on
the Aircraft or any Engine which name or other indication could be
interpreted as a claim of ownership or other interest therein.
13.12 LESSEE'S LIABILITY AS TO COSTS OF USE AND OPERATION. Save as
otherwise expressly provided herein, Lessee shall pay all costs,
expenses, fees and charges incurred in connection with the use,
operation, maintenance, repair and insurance of the Aircraft or any
Engine, including but not limited to repairs, maintenance, storage,
transport, housing, servicing and all airport and airspace use fees,
taxes and charges.
13.13 ENTITLEMENT TO ENFORCE WARRANTIES. So long as no Default shall have
occurred and be continuing, Lessee shall have the benefit of and shall
be entitled to enforce, either in its own name or in the name of Lessor
(at the cost of Lessee and in respect to which enforcement Lessee
hereby indemnifies Lessor) for the use and benefit of Lessee, any and
all dealer's, manufacturer's or subcontractor's warranties, if any, in
respect of the Aircraft or such Engine, to the extent such warranties
are assignable, and, so far as it is reasonably able, Lessor agrees to
do, execute and deliver such further acts, deeds, matters or things as
may be necessary to enable Lessee to obtain customary warranty services
furnished for the Aircraft or such Engine by such dealer, manufacturer
or subcontractor. Lessee shall at all times promptly and effectively
enforce its and Lessor's rights under any warranty hereinabove
mentioned.
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CLAUSE 14. REGISTRATION OF AIRCRAFT
Lessor shall prior to Delivery of the Aircraft hereunder cause the
Aircraft to be duly registered (if previously registered in a foreign
country) in the name of Lessor with the FAA in accordance with all
applicable laws of the United States.
CLAUSE 15. RETURN OF AIRCRAFT
15.1 REDELIVERY. Except as otherwise provided herein, at the expiration of
the Lease Term or upon the sooner termination of this Agreement, Lessee
shall return the Aircraft to Lessor at the Return Location by
delivering the same to Lessor together with the items identified in the
Technical Data and Manuals List attached hereto as Schedule D, the
Loose Equipment List attached hereto as Schedule E-1 and the Emergency
Equipment List attached hereto as Schedule E-2 at the Return Location.
At the time of return to Lessor, the Aircraft shall be fully equipped
with Engines or (subject to Clause 15.3) other engines owned by Lessee
(and complying with Clause 15.3) properly installed thereon and shall
comply in all respects with the Redelivery Conditions stated in
Schedule F hereto.
Lessee shall bear all costs arising from the transport of the Aircraft
to the Return Location, including the costs of flight crews, fuel,
insurance, landing charges, navigational charges, engine and
maintenance costs.
If Lessee shall fail to return the Aircraft to Lessor at the time and
in the condition required by this Lease (whether at the expiration or
any termination of Lessee's right to lease the Aircraft hereunder or
otherwise), then, in addition to any other right or remedy available to
Lessor in respect thereof, Lessee shall continue to maintain and insure
the Aircraft as provided in this Agreement until such time as the
Aircraft is returned to Lessor and is in the condition required by this
Lease. Lessee's obligation under the preceding sentence shall survive
the termination or any expiration of this Lease.
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15.2 ENGINE CONDITION. In the event any engine not owned by Lessor shall be
delivered with the Airframe, such engine shall be satisfactory to
Lessor, free and clear of Liens, suitable for use on such Airframe and
shall have the value and utility at least equal to, and be in as good
operating condition (including no greater number of Flight Hours or
Cycles accumulated on such engine) as the Engine that should have been
returned, assuming such Engine which should have been returned was in
the condition and repair as required by the terms hereof immediately
prior to such required return. At its own expense and concurrently with
such delivery, Lessee shall furnish Lessor with a xxxx of sale, in form
and substance satisfactory to Lessor, for each such engine and with
evidence of Lessee's title to such engine (including, if requested, an
opinion of Lessee's counsel) and shall take such other action as Lessor
may reasonably request in order that title to such engine shall be duly
and properly vested in Lessor. Upon full compliance with this Clause
15.2 and passage of title to such engine to Lessor, such engine shall
be an Engine for all purposes of this Agreement and Lessor will
transfer to Lessee all right, title and interest that Lessor may have
in an Engine constituting part of the Aircraft so returned but not
installed on such Aircraft at the time of such return, without any
representation, warranty or recourse of any kind whatsoever, express or
implied, except a warranty that such Engine is free and clear of Lessor
Liens; provided, however, that if Lessor requires in its absolute
discretion, Lessee shall redeliver to Lessor any Engine not installed
on the Aircraft at the time of redelivery hereunder notwithstanding any
of the foregoing and in such circumstances Lessee shall not (if it has
not already done so) be required to transfer to Lessor or other
designee of Lessor right, title and interest in and to the engine then
installed on the Airframe which shall remain vested in Lessee and
Lessor shall not be required to transfer any right, title or interest
in or to the Engine not so installed on the Airframe to Lessee as
otherwise required by this Clause 15.2.
15.3 GENERAL CONDITION. The Aircraft when delivered to Lessor shall (without
prejudice to paragraph 2 of Schedule F) be clean by international
commercial airline operating standards, and (save as otherwise provided
in Clause 15.2) shall have installed thereon all
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Engines, equipment, accessories or parts installed thereon at the
commencement of the Lease Term therefor or improvements thereto made in
accordance with the provisions of this Agreement. The Aircraft shall be
in the same condition as when delivered to Lessee under the Interim
Lease, ordinary wear and tear (subject to the obligations set forth in
Clauses 5 and 13 and alterations and modifications properly made and
documented by Lessee as permitted under this Agreement) excepted.
Without prejudice to paragraph 4 of Schedule F, should Lessee be
granted any variances or extensions from the FAA with respect to any
airworthiness directives applicable to Lessee or should the FAA
approved maintenance program for Lessee permit carry-over or deferral
of maintenance items, performance of which, but for such deferral or
carry-over, would have otherwise been required thereby, Lessee shall
perform or cause to be performed, at Lessee's expense (subject to
Clause 13), all such items and airworthiness directives prior to return
of the Aircraft to Lessor. Without prejudice to paragraph 10 of
Schedule F, there shall be no untreated or uncorrected corrosion as
determined by the pre-delivery inspection by Lessor, including
corrosion within the fuel tanks.
Without prejudice to Schedule F, a borescope inspection, engine power
runs and systems functional checks shall be performed at Lessee's
expense immediately prior to return of the Aircraft to Lessor, and
Lessee shall provide evidence satisfactory to Lessor reflecting the
correction of any non-compliance found during such inspection with the
Maintenance Program.
Lessor shall have the right, at least seven days prior to the
expiration date of the Lease Term, to inspect the Aircraft to determine
whether the Aircraft will be in compliance with the requirements for
return at the expiration of the Lease Term. Immediately prior to the
date of re-delivery, Lessor shall be permitted to conduct a walk around
inspection, and a systems ground check. An engine power run shall be
performed by Lessee in accordance with the Maintenance Program. Lessee,
at its expense, shall correct, or cause to be corrected, all defects
exceeding Maintenance Program limitations. Lessor's right of inspection
shall include the right to conduct a separate inspection flight by
Lessor
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utilizing Lessee's flight crew or its designated representative of the
Aircraft of not more than 2 hours duration (the cost of which shall be
borne by Lessee). At all times during such inspection flight Lessee's
flight crew shall be in command of the Aircraft; PROVIDED, HOWEVER,
that Lessor's qualified pilots may operate the controls. If Lessor
determines that repairs are required to cause the Aircraft to comply
with the return requirements provided herein, such repairs shall be
performed at an FAA approved facility in the United States at Lessee's
sole cost and expense. Lessee and Lessor shall use commercially
reasonable efforts to combine such inspection flight with the ferry
flight to a secondary location.
15.4 REMOVAL OF INSIGNIA; TRANSFER OF WARRANTIES, ETC. At the time of such
return, Lessee shall at its own expense (a) remove all names, insignia
and other indications of Lessee from the exterior and interior of the
Aircraft and (b) transfer to Lessor to the extent transferable all
warranties and indemnifications obtained by Lessee with respect to the
Aircraft together with all documents relative thereto which may be
required to effect such transfer.
15.5 FUEL AND OIL. Upon the return of the Aircraft, either at the end of the
Lease Term, pursuant to Clause 17 or pursuant to any other termination
of this Agreement, each fuel tank and oil tank shall contain the same
quantity of fuel or oil as was contained in the fuel and oil tanks when
the Aircraft was delivered to Lessee under the Interim Lease, or, in
the case of differences in any such qualities, an appropriate
adjustment will be made by payment according to the then current market
price of fuel or oil, as the case may be.
15.6 RETURN ACCEPTANCE CERTIFICATE. Upon return of the Aircraft in
accordance with the terms of this Agreement, Lessee will prepare and
execute two (2) Return Acceptance Certificates substantially in the
form of Schedule H and Lessor will countersign and return one such
Return Acceptance Certificate to Lessee.
15.7 INDEMNITIES AND INSURANCE. The insurance and indemnities requirements
set forth in
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Clauses 10 and 16 will apply to Lessor's representatives during return
of the Aircraft, including the ground inspection, inspection flight and
demonstration flight. With respect to the inspection flight and
demonstration flight, Lessee shall assure that Lessor's representatives
will receive the same protection as Lessee on Lessee's Aviation and
Airline General Third Party Liability Insurance.
15.8 AIRPORT AND NAVIGATION CHARGES. Lessee will ensure that at return of
the Aircraft any and all airport, navigation and other charges which
give rise or may if unpaid give rise to any Lien, right of detention,
right of sale or other Lien in relation to the Airframe, Engine or any
Part, whether incurred in respect of the Aircraft or any other aircraft
operated by Lessee, have been paid and discharged in full (whether or
not due) and will at Lessor's request produce evidence thereof
satisfactory to Lessor.
15.9 RECTIFICATION OF RE-DELIVERY CONDITION. To the extent that, at the time
of redelivery, the condition of the Aircraft or records does not comply
with the provisions hereof, Lessee at its own expense shall cause such
rectification to be carried out as soon as possible. In the event that
such rectification extends beyond the end of the Lease Term, the Lease
Term shall, at the option of Lessor, be extended and the provisions of
this Agreement, including the requirement to pay Rent during the period
the Lease Term is so extended (prorated on a daily basis), shall remain
in force until such rectification has been accomplished; provided
however, that Lessor shall have the right, after the date on which the
Lease Term would otherwise have ended but for this Clause 15.9, to take
possession of the Aircraft and demand compensation for costs incurred
by Lessor in connection with such repossession.
15.10 EXPORT AND DE-REGISTRATION OF AIRCRAFT. Lessee will, at Lessor's cost,
(i) assist in obtaining a Certificate of Airworthiness for Export and
all other authorizations and approvals for export of the Aircraft from
the United States to any country designated by Lessor (and Lessee and
Lessor shall, 90 days in advance of the date of any re- delivery, work
together to determine the workscope required therefor), (ii) assist
with de-
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registration of the Aircraft from the records of the FAA, (iii) assist
Lessor or its designee(s) in securing such new registration of the
Aircraft as may be determined by Lessor, which assistance shall
include, without limitation, preparation or provision of documents
necessary or desirable to be obtained from Lessee in connection with
such new registration, and (iv) perform any other acts reasonably
required by Lessor in connection with the foregoing.
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CLAUSE 16. INDEMNIFICATION
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16.1 GENERAL INDEMNITY. Subject only to the limitations described in the
last paragraph of this Clause 16.1, Lessee agrees to indemnify,
reimburse and hold harmless each Indemnitee from and against any and
all claims, damages, losses, liabilities, demands, suits, judgments,
causes of action, legal proceedings, whether civil or criminal,
penalties, fines and other sanctions, and any reasonable attorney's
fees and other reasonable costs and expenses in connection herewith or
therewith, including any of the foregoing arising or imposed with or
without Lessor's fault or negligence (whether passive or active) or
under the doctrine of strict liability (any and all of which are
hereafter referred to as "CLAIMS") which in any way may result from,
pertain to or arise in any manner out of, or are in any manner related
to (i) the Aircraft, this Agreement or any other Lease Document, any
interest herein or any document executed in connection herewith or
therewith, or the breach of any representation, warranty or covenant
made by Lessee hereunder or under any other such document, or (ii) the
condition, manufacture, re-delivery, lease, acceptance, rejection,
possession, return, disposition, maintenance, repair, use or operation
of the Aircraft either in the air or on the ground at any time after
the Delivery Date and before the Redelivery of the Aircraft to Lessor
as and when required hereby, or (iii) any defect in the Aircraft
(whether or not discovered or discoverable by Lessee or Lessor) arising
from the material or any articles used therein or from the design,
testing or use thereof or from any maintenance, service, repair,
overhaul or testing of the Aircraft, whether or not the Aircraft is in
the possession of Lessee, and regardless of where the Aircraft may then
be located, or (iv) any transaction, approval or document contemplated
by this Agreement or any Lease Document or given or entered into in
connection herewith or therewith, (v) any payments required under any
Lease Document, or (vi) otherwise in connection with the transactions
contemplated by the Lease Documents; provided, however, that Lessee
shall be subrogated to all rights and remedies which Lessor may have
against the Manufacturer of the Aircraft and its subcontractors as to
any such Claims, but only to the extent that Lessee satisfies its
indemnification to Lessor with respect to such Claims. Lessee shall not
be required to pay or discharge any Claim brought by a third party so
long as the validity or the amount thereof shall be diligently
contested in good faith and on reasonable grounds by Lessee, at no cost
or
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expense to Lessor.
Lessee hereby waives, and releases each Indemnitee from, any Claims
(whether existing now or hereafter arising) for or on account of or
arising or in any way connected with injury to or death of personnel of
Lessee or loss or damage to property of Lessee or the loss of use of
any property which may result from or arise in any manner out of or in
relation to the ownership, leasing, condition, use or operation of the
Aircraft, either in the air or on the ground, or which may be caused by
any defect in the Aircraft from the material or any article used
therein or from the design or testing thereof, or use thereof, or from
any maintenance, service, repair, overhaul or testing of the Aircraft
regardless of when such defect may be discovered, whether or not the
Aircraft is at the time in the possession of Lessee, and regardless of
the location of the Aircraft at any such time.
The indemnities contained in this Clause 16.1 shall continue in full
force and effect notwithstanding the expiration or other termination of
this Lease and are expressly made for the benefit of and shall be
enforceable by each Indemnitee; provided, however, that Lessee shall
not be obligated to pay any indemnity pursuant to this Clause 16.1 with
respect to any amount to the extent that such amount arises out of or
is measured by acts, failures to act, events or periods of time (or any
combination of the foregoing) that occur after the Aircraft has been
redelivered to Lessor pursuant to Clause 15 hereof (under circumstances
not involving a repossession pursuant to Clause 17.2 hereof) and is no
longer subject to this Agreement and all obligations of Lessee under
this Agreement have been discharged (other than obligations which by
their express terms survive the expiration of the Lease Term) unless
any such act or event shall itself result from or be attributable to an
act or omission of Lessee which occurred prior to the redelivery of the
Aircraft and the discharge of Lessee's obligations under this
Agreement.
Notwithstanding the foregoing provisions of this Clause 16.1, Lessee
shall not be obligated to make any payment by way of indemnity to any
Indemnitee (i) in respect of any Claims to the extent such Claims
result from the willful misconduct or gross
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negligence of any Indemnitee; or (ii) any Claim arising out of the
period before delivery of the Aircraft to Lessee except to the extent
relating to a matter required to be corrected by Lessee hereunder; or
(iii) to the extent such Claims are for Taxes (whether or not Lessee is
required to indemnify against such Taxes pursuant to Clause 16.2)
16.2 TAX INDEMNITY.
(i) WITHHOLDING TAXES. All payments required to be made by Lessee
under this Lease shall be made free and clear of, and without
deduction for or on account of, any present or future Taxes of
any nature whatsoever now or hereafter imposed by any
governmental entity or taxing authority in any jurisdiction.
If any Taxes are required to be withheld or deducted from any
such payments, Lessee shall (i) within the period for payment
permitted by applicable Law pay to the appropriate government
entity or taxing authority the full amount of such Taxes (and
any additional Taxes in respect of the payment required under
clause (ii) hereof) and make such reports and filings in
connection therewith at the time and in the manner required by
applicable Law, and (ii) pay to Lessor an additional amount
which (after deduction of all Taxes of any nature incurred by
reason of the payment or receipt of such additional amount)
will be sufficient to yield to the relevant Indemnitee the
full amount which would have been received by such Indemnitee
had no deduction or withholding been made.
(ii) GENERAL TAX INDEMNITY. In addition, except as set forth in
Clause 16.2(iii), Lessee agrees for the express benefit of
each Indemnitee to pay promptly when due, and to indemnify and
hold harmless such Indemnitee from, all Taxes (whether imposed
upon such Indemnitee, the Aircraft, the Airframe, the Engines
or otherwise), by any government entity or taxing authority in
any jurisdiction or by any international taxing authority,
upon or with respect to, based upon or measured by any of the
following:
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(a) the Aircraft, the Airframe, any Engine or any Part
thereof, or interest therein, this Lease or any of the other
Lease Documents or any interest therein; the importation,
exportation, condition, ownership, delivery, redelivery,
failure to redeliver, acceptance, possession, repossession,
return, use, performance, operation, control, settlement of
any insurance or other claim, leasing, subleasing, financing,
mortgaging, Liens, rental, retirement, abandonment,
preparation, installation, modification, repair, testing,
maintenance, replacement, transportation, storage, location,
condition, registration, re-registration, deregis- tration,
and the sale, transfer of title or other application or
disposition of the Aircraft, the Airframe, any Engine or any
Part thereof or any interest therein; or the rentals, receipts
or earnings arising therefrom (including without limitation
the Rent) and any other amounts paid or payable with respect
thereto;
(b) the Lease or the other Lease Documents; or
(c) otherwise with respect to or in connection with the
transactions contemplated by the Lease and other Lease
Documents.
(iii) EXCEPTIONS TO INDEMNITY. The indemnity provided for in Clause
16.2(ii) does not extend to any of the following Taxes:
(a) Taxes on, based on, or measured by the net income, profit,
capital gain, capital or net worth of any Indemnitee in any
jurisdiction in which such Indemnitee is incorporated or has
its principal place of business or is subject to such Taxes
solely as a result of transactions or activities unrelated to
the transactions contemplated by the Lease Documents (except
that there shall not be excluded any increase in such Taxes
resulting directly from the presence of the Lessee in the
relevant taxing jurisdiction or the presence, registration,
use or operation of the Aircraft in whole or in part in such
jurisdiction);
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(b) Taxes (1) imposed as a result of a voluntary or
involuntary transfer or other disposition of the Aircraft or
this Lease or any other Lease Document or any interest in any
of the foregoing by Lessor or any other Indemnitee other than
a transfer or disposition in connection with an exercise of
remedies following an Event of Default, or (2) to the extent
such Taxes exceed the amount of taxes which would have been
payable had there not been such a transfer or disposition;
(c) Taxes to the extent attributable to events or
circumstances occurring or arising after return of the
Aircraft to Lessor in accordance with this Lease, excluding
any period in which the Lessor is exercising remedies pursuant
to Clause 17.2 hereof; or
(d) Taxes resulting solely as a direct result of any gross
negligence or willful misconduct of the relevant Indemnitee or
any breach by such Indemnitee of its obligations hereunder or
under any other Lease Document or the breach or accuracy of
any representation, covenant, or warranty given by such
Indemnitee herein or therein.
(iv) AFTER-TAX BASIS. The amount which Lessee is required to pay
or indemnify against with respect to any amounts required to
be paid or indemnified against under Clause 16.1 or this
Clause 16.2 shall include an additional amount necessary to
hold the recipient of the payment or indemnity harmless on an
after-tax basis from all Taxes (whether or not such Taxes are
excluded under Clause 16.2(iii)) required to be paid or
credited by such recipient with respect to such payment or
indemnity, so as to restore the recipient on an after-tax
basis to the same position such recipient would have been in
had such amounts not been incurred or payable.
(v) TIMING OF PAYMENT. Any amount due and payable to the relevant
Indemnitee pursuant to Clause 16.2(ii) shall be paid within 10
days after receipt of a written
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demand therefor from such Indemnitee accompanied by a written
statement describing in reasonable detail the basis for such
indemnity and the computation of the amount so payable;
provided, however, that such amount need not be paid by Lessee
prior to the later of (a) five days prior to the date the
applicable Tax is payable to the appropriate government entity
or taxing authority or (b) in the case of amounts which are
being contested by Lessee in good faith or by Lessor pursuant
to Clause 16.2(vi) the date such contest is finally resolved.
(vi) CONTESTS. If written claim is made against an Indemnitee for
Taxes with respect to which Lessee is or may be liable for a
payment or indemnity hereunder, such Indemnitee will promptly
give Lessee notice in writing of such claim; provided,
however, that such Indemnitee's failure to give notice will
not relieve Lessee of its obligations hereunder, except to the
extent the failure to give such notice precludes a contest of
such claim in the manner contemplated herein. So long as (a) a
contest of such Taxes does not involve any danger of the sale,
forfeiture or loss of the Aircraft or any interest therein,
(b) Lessee has provided the relevant Indemnitee with an
opinion of independent tax counsel acceptable to such
Indemnitee that a meritorious basis exists for contesting such
claim, (c) Lessee has made adequate reserves for such Taxes
or, if required by the relevant Indemnitee, an adequate bond
has been posted by Lessee, and (d) Lessee has acknowledged in
writing its obligation to indemnify for such Taxes, then such
Indemnitee at Lessee's written request will in good faith,
with due diligence and at Lessee's sole cost and expense,
contest (or, if permitted by Law, permit Lessee to contest in
the name of such Indemnitee) the validity, applicability or
amount of such Taxes. If such contest is to be initiated by
the payment of, and the claiming of a refund for, any Taxes,
Lessee shall advance to the relevant Indemnitee sufficient
funds (on an interest-free basis) to make such payments and
shall indemnify such Indemnitee for any tax consequences
resulting from such advance of funds. Although the relevant
Indemnitee may consult in good faith with Lessee concerning
the conduct of any contest, such Indemnitee shall control the
conduct of all proceedings
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relating to any such contest which is brought by or on behalf
of such Indemnitee. Any contest initiated hereunder may be
settled or discontinued at any time provided that the relevant
Indemnitee shall have waived any right to indemnification for
the Taxes being contested.
(vii) REFUNDS. Upon receipt by the relevant Indemnitee of a refund
of all or any part of any Taxes (including any deductions or
withholdings referred to in Clause 16.2(i)) which Lessee has
paid, such Indemnitee will pay to Lessee the net amount of
such Taxes refunded, together with any interest receive by
such Indemnitee with respect thereto; provided, however, that
no amount shall be payable to the Lessee hereunder if a
Default or an Event of Default shall have occurred and be
continuing or prior to the time that Lessee shall have paid to
the relevant Indemnitee all amounts then due and owing to such
Tax Indemnitee under this Clause 16.
(viii) COOPERATION IN FILING TAX RETURNS. In case any report or
return is required with respect to any Taxes which are subject
to indemnification by Lessee under this Clause 16.2, Lessee
will either make such report or return in such manner as will
show the respective interests of Lessor and ING in the
Aircraft, and send a copy of such report or return to Lessor,
or will notify the Lessor of such requirement and make such
report or return in such manner as shall be reasonably
satisfactory to the Lessor or ING.
CLAUSE 17. EVENTS OF DEFAULT
17.1 EVENTS OF DEFAULT. Any one or more of the following shall constitute
an Event of Default hereunder:
(i) Lessee shall fail to accept delivery of the Aircraft hereunder
(as contemplated by CLAUSE 2.2(IV) above) on the Expiration
Date (as defined in the Interim Lease), if
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the Delivery Date (as defined in the Interim Lease) shall have
occurred;
(ii) Lessee shall fail to make any payment hereunder of any Rent
or Supplemental Rent within five Business (5) Days of its due
date; or
(iii) Lessee shall fail to carry and maintain insurance as required
under the provisions of Clause 10 of this Agreement; or
(iv) Lessee shall (A) create Liens or fail to discharge Liens as
set forth in Clause 9 of this Agreement, or (B) fail or return
the Aircraft upon the Expiration Date or any earlier
termination of this Lease; or
(v) Lessee shall fail to perform or observe in any material
respect any other obligation, covenant, undertaking, condition
or agreement to be performed or observed by it under any of
the Lease Documents (including, without limitation, the
Adjustment Agreement, the Spare Parts Lease and the First
Refusal Purchase Agreement) and such failure continues without
remedy for a period of thirty (30) days from the earlier to
occur of the date of Lessor's written notice thereof or the
date on which Lessee otherwise first has knowledge thereof; or
(vi) any material representation or warranty made by Lessee in any
of the Lease Documents or in any document or certificate
furnished by Lessee in connection therewith or pursuant
thereto shall at any time prove to have been false at the time
made and such condition shall continue unremedied for a period
of thirty (30) days from the earlier to occur of the date of
Lessor's written notice thereof or the date on which Lessee
otherwise first has knowledge thereof; or
(vii) Lessee shall consent to the appointment of a receiver, trustee
or liquidator of itself or a substantial part of its assets,
or Lessee shall admit in writing its inability to pay its
debts generally as they come due or makes a general assignment
for the
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benefit of creditors; or
(viii) Lessee shall file a voluntary petition in bankruptcy or a
voluntary petition seeking reorganization or relief from
creditors in a proceeding under any bankruptcy laws (as now or
hereafter in effect) or an answer admitting the material
allegations of a petition filed against Lessee in any such
proceedings, or Lessee shall by voluntary petition, answer, or
consent seek relief under the provisions of any bankruptcy or
other similar law providing for the reorganization or
winding-up of corporations, or provides for an agreement,
composition, extension or adjustment with its creditors; or
(ix) an order, judgment or decree is entered by any court, with or
without the consent of Lessee, appointing a receiver, trustee
or liquidator for Lessee of all or any substantial part of its
property, or all or any substantial part of the property if
Lessee is sequestered, and any such order, judgment or decree
of appointment or sequestration remains in effect,
undismissed, unstayed or unvacated for a period of sixty (60)
days after the date of entry thereof; or
(x) a petition (other than a petition which Lessee demonstrates
to the reasonable satisfaction of Lessor has been presented or
filed on any vexatious or frivolous grounds provided such
petition is discharged within fourteen days of such
presentation or filing) against Lessee in a proceeding under
any bankruptcy, insolvency or other similar laws (as now or
hereafter in effect) shall be filed, or if, under the
provisions of any law providing for reorganization or
winding-up of corporations which may apply to Lessee any court
of competent jurisdiction shall assume jurisdiction, custody
or control of Lessee; or
(xi) a final judgment or judgments for the payment of money not
covered by insurance in excess of $250,000 shall be rendered
against Lessee and the same shall remain undischarged for a
period of ninety (90) days during which execution thereof
shall
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not be effectively stayed by agreement of the parties
involved, stayed by court order or adequately bonded; or
(xii) attachments or other Liens shall be issued or entered against
substantially all of the property of Lessee and shall remain
undischarged or unbonded for sixty (60) days except for
security interests created in connection with monies borrowed
or obligations agreed to by Lessee in the ordinary course of
its business; or
(xiii) failure by Lessee to perform any term, condition or covenant
of any bond, note, debenture, loan agreement, indenture,
guaranty, trust agreement, mortgage or other instrument or
agreement in any material respect in connection with the
borrowing of money or the obtaining of advances or credit to
which the Borrower or any Subsidiary is a party or by which it
is bound, or by which any of its properties or assets may be
affected (a "DEBT INSTRUMENT"), so that, as a result of any
such failure to perform (regardless of the satisfaction of any
requirement for the giving of appropriate notice thereof or
the lapse of time), the indebtedness included therein or
secured or covered thereby may be declared due and payable
prior to the date on which such indebtedness would otherwise
become due and payable; or any indebtedness included in any
Debt Instrument or secured or covered thereby is not paid when
due, provided, however, that the failure to pay any such
indebtedness shall not be an Event of Default under this
subclause (xi) if and for so long as such indebtedness is
contested in good faith by Lessee by appropriate proceedings;
or
(xiv) Lessee shall default in the payment or performance of any
obligation under any loan agreement, conditional sale
agreement or lease agreement relating to the use, operation or
financing of any aircraft in Lessee's fleet, and such default
shall entitle the lender, mortgagee, seller or lessor
thereunder to exercise remedies in respect thereof and such
lender, mortgagee, seller or lessor has commenced the exercise
of remedies or declared such obligation to be in default;
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(xv) Lessee voluntarily suspends all or substantially all of its
airline operations, or Lessee's certificate issued to it by
the U.S. Department of Transportation under the Federal
Aviation Act is suspended, canceled or revoked, or Lessee
shall otherwise at any time cease to be a Certificated Air
Carrier or the franchises, concessions, permits, rights or
privileges required for the conduct of the business and
operations of Lessee shall be revoked, canceled or otherwise
terminated or the free and continued use and exercise thereof
curtailed or prevented, and as a result of any of the
foregoing the predominant business activity of Lessee shall
cease to be that of a commercial airline; or
(xvi) any of the Lease Documents becomes null and void or invalid
or unenforceable, for any reason as a result of any action or
inaction of Lessee; or
(xvii) an "Event of Default" (as defined in any Other Lease, or in
the Spare Parts Lease) shall occur.
17.2 ACTION ON OCCURRENCE OF EVENT OF DEFAULT. Upon the occurrence of any
Event of Default and at any time thereafter so long as the same shall
be continuing, Lessor may, at its option, declare by written notice to
Lessee this Lease Agreement to be in default and at any time
thereafter, so long as any such Event of Default shall not have been
remedied, Lessor may do one or more of the following with respect to
all or any part of the Aircraft as Lessor in its sole discretion shall
elect, to the extent available and permitted by, and subject to
compliance with any mandatory requirements of, applicable law then in
effect; provided, however, that nothing herein shall impair or limit
any right or remedy otherwise available hereunder or at law in
connection with any Event of Default:
(i) terminate Lessee's rights to the use and possession of the
Aircraft hereunder and, upon the written demand of Lessor and
at Lessee's expense, cause Lessee to
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return promptly, and Lessee shall return promptly, all or any
part of the Aircraft as Lessor may so demand, to Lessor, or to
the location directed by Lessor, in the manner and condition
required by, and otherwise in accordance with all the
provisions of, Clause 15 as if such Aircraft was being
returned at the end of the Lease Term (including, without
limitation, the items identified in the Technical Data and
Manuals List attached hereto as Schedule D all fully updated
and supplemented as required hereby), or, at its option and to
the extent permitted by applicable law, enter upon the
premises where all or any part of the Aircraft is located and
take immediate possession of and remove the same by summary
proceedings or otherwise (and, at Lessor's option, store the
same at Lessee's premises until disposal thereof by Lessor);
PROVIDED, HOWEVER, that Lessor shall return to Lessee all
personal property of Lessee which was on board the Aircraft
promptly following the time Lessor re-takes possession of the
Aircraft.
(ii) sell all or any part of the Aircraft at public or private
sale, as Lessor may determine, or otherwise dispose of, hold,
use, operate or lease to others, as Lessor, in its sole
discretion, may determine, all free and clear of any rights of
Lessee, except as hereinafter set forth in this Clause 17;
(iii) effect the immediate cancellation or termination of the U.S.
registration of the Aircraft, and, in connection therewith,
prepare, execute, deliver (in Lessor's own name or in the name
of Lessee pursuant to the power of attorney hereinbelow or
elsewhere set forth) and file with the FAA, any request,
consent or other instrument necessary or advisable in order to
effect such cancellation, termination or de-registration;
(iv) whether or not Lessor shall have exercised, or shall
thereafter at any time exercise, any of its rights under
Clause 17.2(i) or 17.2(ii) above with respect to the Aircraft,
the Airframe or any Engine, Lessor, by written notice to
Lessee specifying a payment date which shall be the Rent
Payment Date not earlier than
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ten days from the date on which such notice is received by
Lessee, may demand that the Lessee pay to Lessor, and Lessee
shall pay Lessor, on the payment date so specified, any unpaid
Basic Rent and Maintenance Payments due on any date prior to
the payment date so specified, and all Deferred Rent;
(v) in the event that Lessor shall have sold the Aircraft,
Airframe or any Engine pursuant to Clause 17.2(ii) above,
Lessor, in lieu of exercising its rights under Clause 17.2(iv)
above with respect to such Aircraft, Airframe or any Engine,
may, if it shall so elect, demand that Lessee pay Lessor, and
Lessee shall pay to Lessor, on the date of such sale, as
liquidated damages for loss of a bargain and not as a penalty,
all Basic Rent (including all Deferred Rent) and Maintenance
Payments with respect to the Aircraft which would have been
payable for the Lease Term if no Event of Default had
occurred;
(vi) liquidate or draw upon the Security Deposit and any other
cash, securities, letter of credit or other right or property
held hereunder or under any Other Lease as collateral for
Lessee's performance hereunder or thereunder, and apply any or
all of the proceeds thereof to the satisfaction of Lessee's
obligations or liabilities hereunder; and/or
(vii) Lessor may rescind or terminate this Lease Agreement as to the
Aircraft, Airframe or any Engine and/or may exercise any other
right or remedy which may be available to it under applicable
law or proceed by appropriate court action to enforce the
terms hereof or to recover damages for breach hereof.
In addition, Lessee shall be liable, except as otherwise provided above and
without duplication of amounts payable hereunder, for any and all unpaid Rent
due hereunder before, after or during the exercise of any of the foregoing
remedies, and for all reasonable and actual legal fees and other costs and
expenses incurred by Lessor in connection with the enforcement hereof, the
return of the Airframe or any Engine in accordance with the terms of Clause 15
or in placing
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such Airframe or Engine in the condition and airworthiness required by such
Clause. Without limiting the foregoing, if an Event of Default occurs, then
Lessee shall, in addition to other liabilities arising in connection therewith,
reimburse Lessor for any legal fees and disbursements incurred by Lessor in
analyzing, monitoring and enforcing Lessor's rights and remedies in connection
with such Event of Default.
Lessee hereby constitutes and appoints each of Lessor and ING as the true and
lawful agent and attorney-in-fact for Lessee (with full power of substitution)
in the name, place and stead of, and at the expense of, Lessee, in connection
with the enforcement of the rights, powers, privileges and remedies provided for
in this Clause or otherwise available to Lessor or ING hereunder, at law or in
equity, in connection with, upon or following the occurrence of an Event of
Default (i) to collect, receive, pay, disburse, enforce and apply, any monies,
collateral, assets or property held or available hereunder or in respect hereof,
or under any other Lease Document or in respect thereof, (ii) to effect any
grant, conveyance, lease or other transfer or application of any collateral,
assets or property, (iii) to effect the cancellation and de- registration of the
Aircraft from the Aircraft Registry of the FAA or any other civil aviation
authority on which the Aircraft may at any time be registered during the Lease
Term; (iv) to export and remove from the United States of America the Aircraft
and all related or installed aircraft engines, parts and equipment and all
related maintenance, repair, overhaul and operating records, logs, books and
other data; (v) to negotiate, complete, execute, deliver, present, file and
record any agreement, demand, request, consent, document or instrument referred
to, contemplated by or otherwise incident to the de-registration, repossession,
removal and export of the Aircraft or the exercise of any other right, power,
privilege or remedy under this Lease or available to either Lessor or ING at law
or in equity; and (vi) to take any other action incidental to, or in furtherance
of, the exercise of any right, power, privilege or remedy available to Lessor or
ING hereunder or at law or in equity; PROVIDED, HOWEVER, that nothing herein
shall relieve Lessee of any obligation to execute, deliver or do, and Lessee
shall execute, deliver and do, any of the foregoing documents or acts at upon
the demand of Lessor or ING to do so.
Except as otherwise expressly provided above, no remedy referred to in this
Clause 17 is
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intended to be exclusive, but each shall be cumulative and in addition to any
other remedy referred to above or otherwise available to Lessor at law or in
equity; and the exercise or beginning of exercise by Lessor of any one or more
of such remedies shall not preclude the simultaneous or later exercise by Lessor
of any or all of such other remedies. No express or implied waiver by Lessor of
any Event of Default shall in any way be, or be construed to be, a waiver of any
future or subsequent Event of Default.
CLAUSE 18. ASSIGNMENT
18.1 BENEFIT OF AGREEMENT. The terms and provisions of this Agreement shall
be binding upon and inure to the benefit of the parties hereto and
their respective successors and permitted assigns.
18.2 ASSIGNMENT BY LESSEE. Lessee shall not, without the prior written
consent of Lessor, assign any of its rights or obligations hereunder.
18.3 ASSIGNMENT BY LESSOR.
(i) Lessor may, at Lessor's sole expense, having given prior
written notice to Lessee, assign all or part of its rights
hereunder without the prior written consent of Lessee;
PROVIDED, HOWEVER, that any such assignment shall not affect
Lessee's rights, powers, obligations, privileges, options and
benefits available to Lessee hereunder and shall not
invalidate the U.S. Registration of the Aircraft.
(ii) Lessee hereby acknowledges and consents to the Security
Agreement and to the creation of the security interest
evidenced thereby. Pursuant to the Security Agreement, ING has
succeeded to, and has the exclusive right to exercise, all
rights, powers, privileges, options and other benefits
available to the Lessor hereunder, including all rights to
make and to give any demands, waivers and agreements under any
such Lease, to make determinations, to give and receive
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notices and other communications, to take such action upon the
occurrence of an Event of Default hereunder, including all
rights to exercise remedies, to assert powers and privileges,
and to make demands in connection herewith. Lessee will
furnish to ING counterparts of all writings of any kind
required to be delivered hereunder by Lessee to Lessor and
until Lessee has been notified by ING that the lien of the
Security Agreement on the Aircraft has been released (x)
Lessee shall make all payments of Basic Rent and Supplemental
Rent, Monthly Maintenance Reserve Payments and the Security
Deposit and all other amounts payable hereunder, to ING as
specified in Clause 6.1 and (y) ING shall be entitled to the
exclusion of the Lessor to succeed to and exercise all of the
rights, remedies, powers and privileges of the Lessor under
this Lease and, in this respect, the Lessee shall not, and
shall not be required to, recognize the exercise of any such
right, remedy, power or privilege by the Lessor, as
applicable. In furtherance thereof, the Lessee and the Lessor
also agree that, with respect to any instructions, directions,
consents, waivers and other communications that the Lessor is
entitled to deliver to the Lessee under this Lease, the Lessee
shall only accept, and shall only act (or refrain from acting)
in accordance with, such instructions, directions, consents,
waivers and other communications that are given by ING until
Lessee has been otherwise notified by ING. Each payment made
by Lessee pursuant to the second preceding sentence shall, to
the extent actually received by ING, be deemed, as between
Lessor and Lessee, to satisfy Lessee's obligations hereunder
to make such payments. This Lease shall be subject and
subordinate to the Security Agreement, but neither Lessor nor
any Person deriving from Lessor shall in the absence of an
Event of Default, take any action contrary to Lessee's rights
under this Lease, including, without limitation, the right to
use and possession of the Aircraft, except in accordance with
the provisions of this Lease. The Lessee also acknowledges
that any obligations which the Lessor shall have under this
Lease shall be non-recourse to the Lessor and that for
satisfaction thereof, Lessee shall look only to Lessor's
interest in the Aircraft and/or ING. To the extent that ING
satisfies any such obligation, such
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amount shall, to the extent permitted by the Security
Agreement and applicable law be added to the amounts secured
by the Security Agreement.
(iii) In the event this Lease is assigned, sold, encumbered or
re-encumbered by Lessor, any assignee, transferee or mortgagee
shall agree as a condition precedent thereto not to disturb or
otherwise interfere with the quiet enjoyment by Lessee of the
Aircraft so long as no Event of Default shall have occurred
and be continuing, and Lessee shall have received confirmation
in writing, reasonably acceptable to Lessee, that such
transferee accepts all responsibilities of Lessor under this
Lease, including but not limited to, confirmation of Lessee's
right to quiet enjoyment of the Aircraft.
CLAUSE 19. FURTHER ASSURANCES
19.1 FURTHER ASSURANCES. Lessee shall cause to be done, executed,
acknowledged and delivered all and every such further acts, conveyances
and assurances as Lessor shall reasonably require for accomplishing the
purposes of each of the Lease Documents to which Lessor or ING is a
party, and shall promptly furnish to Lessor such information as may be
reasonably required by Lessor to enable Lessor timely to file any
reports required to be filed by it with any governmental authority
because of Lessor's ownership of the Aircraft.
19.2 PERFECTION OF LESSOR'S ETC. INTERESTS. Lessee shall, at its own
expense, take such steps as are reasonably requested by Lessor which
are necessary or appropriate to perfect or keep perfected the interests
of Lessor created or intended to be created under this Agreement and
any other document with respect to the Aircraft.
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CLAUSE 20. PROTECTION OF LESSOR'S INTERESTS
If the rights of Lessor and such other persons as Lessor may specify in
the Aircraft shall be in danger, or shall be attacked directly or
indirectly, or if any legal proceedings are instituted against Lessee,
Lessor, or such other persons as Lessor may specify with respect
thereto, Lessee shall promptly give written notice thereof (to the
extent known to it) to Lessor so that all steps deemed by Lessor to be
necessary or appropriate for the defense and protection of each of
their respective rights in the Aircraft can be taken. All reasonable
costs in connection with the foregoing will be borne by Lessor or any
such other person (as the case may be), unless the foregoing results
from the act or omission of Lessee or from a breach of the terms of
this Agreement by Lessee in which event such costs shall be borne by
Lessee.
CLAUSE 21. COSTS AND EXPENSES
21.1 PREPARATION AND NEGOTIATION OF LEASE DOCUMENTS. Except as otherwise
provided herein, each of Lessor and Lessee will be responsible for its
own costs and expenses incurred in connection with the preparation,
negotiation and execution of each of the Lease Documents, including
without limitation, the fees, expenses and disbursements of legal
counsel to such party.
21.2 ENFORCEMENT AND PRESERVATION OF RIGHTS. Lessee agrees to pay within 30
days of Lessor's first written demand all of the costs and expenses
incurred by Lessor or on its behalf incidental to the enforcement,
protection or preservation of any right or claim of Lessor under each
of the Lease Documents to which it is a party.
21.3 NON-DELIVERY DUE TO EVENT OF LOSS. In the event the Aircraft shall
not have been delivered on the Delivery Date by reason of its loss or
destruction, Lessor's commitment to lease the Aircraft hereunder shall
automatically terminate on and as of the date of such loss or
destruction.
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CLAUSE 22. INSPECTION
Lessee shall arrange that, at all reasonable times during the Lease
Term, Lessor or ING or, in either case, its authorized representatives
may, during the normal business hours of Lessee inspect the Aircraft or
any part thereof and the logs, books and other records maintained
Lessee relative thereto; provided, however, that no such inspection
shall interfere with Lessee's quiet, peaceful use and enjoyment
thereof.
In addition, Lessee shall give Lessor not less than five days' prior
notice of the performance of any "C-Check" or "D-Check" of the Airframe
so that Lessor can arrange to have a representative present during such
checks.
Notwithstanding the foregoing, Lessor shall have no duty to make any
such inspection, and Lessor shall not incur any liability, obligation
or other detriment by reason of not making any such inspection.
CLAUSE 23. NOTICES AND LANGUAGE
23.1 NOTICES. All notices, requests, demands or other communications to or
upon any party hereto shall be made in writing in English and shall be
deemed to have been duly given or made:
(a) if delivered by hand, at the time of delivery to a
duly authorized person;
(b) if made by letter, seven (7) days after having been
deposited in the mail, registered airmail postage
prepaid;
(c) if given by telex, when sent with confirmed
answerback (if received during the business hours of
the recipient, otherwise by 9:30 a.m. on the
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next Business Day);
(d) if given by facsimile, when transmitted and receipt
of same has been confirmed by telephone or facsimile
machine printed confirmation;
(e) if given by international courier, two (2) Business
Days after having been sent.
Such notices, requests, demands or other communications shall be
dispatched to or given at:
(i) If to Lessee:
Pan American Airways, Inc.
Address: 0000 X.X. 00xx Xxxxxx
Xxxxx, Xxxxxxx 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
(ii) If to Lessor:
EAL (Delaware) VIII Corp.
0000 Xxxxx Xxxxxx Xxxxxx
X.X. Xxx 0000
Xxxxxxxxxx, Xxxxxxxx 00000
with a copy to:
ING Lease (Nederland) B.V.
Address:
Xxxxxxxxxxxx 00
X.X. Xxx 0000
0000 XX Xxxxxxxxx-Xxxxxxxx,
Xxx Xxxxxxxxxxx
Telephone: x00-00-000-0000
Facsimile: x00-00-000-0000
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with a copy of all notices relating to delivery, maintenance or return
delivery matters with respect to the Aircraft to:
Xx. Xxxxxx X. Xxxxxxx
000 X.X. 000xx Xxxxxx
Xxxxxxxx Xxxxx, Xxxxxxx 00000
Telephone: 000-000-0000
Facsimile: 954-450-7070
or such other addresses or number as Lessor or Lessee may specify in
writing to the other.
CLAUSE 24. LESSOR'S RIGHTS TO PERFORM FOR LESSEE
If Lessee fails to perform any of its obligations contained herein,
Lessor may perform or discharge such obligation, and the amount of the
reasonable expenses of Lessor incurred in connection with such
performance of or compliance shall be payable to Lessor by Lessee upon
demand.
CLAUSE 25. APPLICABLE LAW AND JURISDICTION
25.1 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, EXCEPT THAT CLAUSE
30 (SECURITY DEPOSIT) SHALL BE GOVERNED AND CONSTRUED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF FLORIDA.
25.2 SUBMISSION TO JURISDICTION. Lessee irrevocably consents that any legal
action or proceeding against it under, arising out of or in any manner
in connection herewith or any other Lease Document may be brought in
any court of the State of New York or in the United States District
Court for the Southern District of New York. Lessee, by the execution
and delivery of this Lease, expressly and irrevocably assents and
submits to the
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personal jurisdiction of any of such courts in any such action or
proceeding. Lessee further irrevocably consents to the service of any
complaint, summons, notice or other process relating to any such action
or proceeding by delivery thereof to it by hand or by registered or
certified mail, return receipt requested, in the manner provided for in
Clause 23 hereof. Lessee hereby expressly and irrevocably waives any
claim or defense in any such action or proceeding based on any alleged
lack of personal jurisdiction, improper venue or FORUM NON CONVENIENS
or any similar basis. Nothing in this Paragraph shall affect or impair
in any manner or to any extent the right of Lessor or ING to commence
legal proceedings or otherwise proceed against the Lessee in any
jurisdiction or to serve process in any manner permitted by law. LESSEE
HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY AND ALL RIGHTS TO A
JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF
THIS AGREEMENT. THIS WAIVER IS IRREVOCABLE, AND THIS WAIVER SHALL APPLY
TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO
THIS AGREEMENT. In the event of litigation, this Agreement may be filed
as a written consent to a trial by the court.
Lessee hereby irrevocably designates, appoints and empowers CT
Corporation, the present address of which is 0000 Xxxxxxxx, Xxx Xxxx,
Xxx Xxxx 00000, as its authorized agent to receive, for and on behalf
of Lessee and its property, service of process, when and as any legal
actions or proceedings may be brought in the courts of the United
States of America for the Southern District of New York, and such
service of process shall be deemed completed upon the date of delivery
thereof to such agent, whether or not such agent gives notice thereof
to Lessee, or upon the earliest of any other date permitted by
applicable law. A copy of such process served on the agent so
designated above will be forwarded promptly by Lessor to Lessee, at its
address referred to in Clause 23, but the failure to receive such copy
shall not affect in any way the service of process on such agent as
agent. Lessee agrees that it will, at all times during the Lease Term,
continuously maintain an agent to receive service of process on behalf
of
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itself and its properties with respect to this Agreement, and in the
event that, for any reason, the agent named above or its successor
shall no longer serve as agent of Lessee, to receive service of process
in the State of New York on its behalf, it shall promptly appoint a
successor so to serve and shall advise Lessor, thereof. Nothing herein,
however, shall limit the right of the parties to serve process in any
other manner permitted by applicable law.
CLAUSE 26. ALTERATIONS TO AGREEMENT
26.1 ENTIRE AGREEMENT. This Agreement, together with the Consulting
Agreement, and the other Lease Documents, contains the entire agreement
between the parties as of the date hereof and supersedes any previous
understanding, commitment, agreement or representation whatsoever, oral
or written.
26.2 VARIATION ONLY IN WRITING. This Agreement shall not be varied except by
an instrument in writing of even date herewith or subsequent hereto
executed by both parties by their respective duly authorized
representatives.
26.3 ENGLISH LANGUAGE. In the event that this Agreement is translated into
any language other than English, the English version of this Agreement
shall be controlling.
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CLAUSE 27. CURRENCY INDEMNITY
All amounts to be paid hereunder to Lessor or Lessee shall be paid in
Dollars, in immediately available funds. Lessee acknowledges that the
specification of Dollars in this transaction is of the essence and that
Dollars shall be the currency of account in any and all events. The
obligations of Lessee or Lessor hereunder, to Lessor or Lessee,
respectively, shall not be discharged by an amount paid in another
currency, whether pursuant to a judgment or otherwise, to the extent
that the amount so paid on prompt conversion to Dollars under normal
banking procedures does not yield the amount of Dollars owing to
Lessor. In the event that any payment by Lessee or Lessor,
respectively, whether pursuant to judgment or otherwise to Lessor or
Lessee, respectively, upon conversion does not yield such amount of
Dollars, Lessor or Lessee, as the case may be, shall have a separate
cause of action against Lessee or Lessor, as the case may be, for the
additional amount necessary to yield the amount of Dollars due and
owing to Lessor or Lessee, as the case may be.
CLAUSE 28. QUIET ENJOYMENT OF AIRCRAFT
Lessor hereby covenants that, so long as no Default and no Event of
Default shall have occurred and so long as this Agreement shall not
have been otherwise breached by Lessee, Lessor shall not disturb or
interfere with Lessee's quiet and peaceful use and enjoyment of the
Aircraft and all revenues, profits and income related thereto in
accordance with the terms hereof without interference by Lessor or by
any person claiming by or through Lessor.
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CLAUSE 29. SEVERABILITY
Should any one or more provisions of this Agreement be determined to be
illegal or unenforceable by a court of any jurisdiction, such
provisions shall, as to such jurisdiction, be ineffective to the extent
of such illegality or enforceability, without invalidating the
remaining provisions hereof; provided, however, that validity or
enforceability of such provisions in any other jurisdiction shall not
be affected. Lessee agrees, as to any such jurisdiction, to replace any
provision of this Agreement which is so determined to be illegal or
unenforceable by a valid provision which has as nearly as possible the
same effect.
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CLAUSE 30. SECURITY DEPOSIT
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Lessee shall provide Lessor with a security deposit in the aggregate
amount of USD$ 150,000 (the "SECURITY DEPOSIT") to be paid as set forth
herein as security for the timely and faithful performance by Lessee of
all of Lessee's obligations under this Lease. Prior to the execution of
this Agreement, Lessee shall have provided to Lessor a good faith cash
deposit in the amount of USD$ 50,000. On or prior to the Delivery Date
(as defined in the Interim Lease), Lessee shall provide to Lessor an
additional cash deposit of USD$ 100,000; PROVIDED, HOWEVER, that Lessee
shall satisfy the requirement to deposit such $150,000 required hereby
by the delivery thereof to Lessor at or prior to the Delivery Date (as
defined in the Interim Lease), and Lessee hereby authorizes and directs
Lessor to retain such amount after the Expiration Date of the Lease
Term (as defined in the Interim Lease) as the Security Deposit under
this Lease Agreement. Lessee hereby creates and grants to Lessor and to
ING a lien on and security interest in all monies, securities,
accounts, and investments from time to time comprising the Security
Deposit, as security for the full and timely payment and performance of
its obligations hereunder and under the other Lease Documents and the
Other Leases. Lessee agrees to execute and file with the appropriate
governmental entities any and all documents necessary or reasonably
requested by Lessor to evidence and perfect such security assignment in
favor of Lessor. If Lessee fails to pay Rent hereunder when due or to
pay any other sums due or to perform any of the other terms and
provisions of this Lease, any other Lease Document or any Other Lease,
or is otherwise in default hereunder or thereunder, in addition to all
other rights Lessor or ING shall have hereunder or under applicable
law, Lessor or ING may use, apply or retain all of any portion of the
Security Deposit in partial payment for sums due to Lessor or ING by
Lessee, to compensate Lessor or ING for any sums it may in its
discretion advance as a result of a default by Lessee or to apply
toward losses or expenses Lessor or ING may suffer or incur as a result
of Lessee's default hereunder or otherwise in satisfaction of Lessee's
obligations. If Lessor or ING uses or applies all of any portion of
such Security Deposit, such application shall not be deemed a cure of
any Defaults, and Lessee shall within five (5) days after written
demand therefor provide ING with an additional cash deposit in an
amount sufficient to restore the Security Deposit to USD$ 150,000 and
otherwise issued on such terms as are
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approved by Lessor and failure of Lessee to do so shall be a material
breach of this Lease by Lessee. Provided no Default shall have
occurred, such Security Deposit, less only those costs directly
incurred by Lessor in connection with the termination of the Lease or
return of the Aircraft, which cost by the terms hereof are the
obligation of Lessee or for the account of Lessee, shall be terminated
and released by Lessor upon Lessee's return of the Aircraft at the end
of the Lease Term in compliance with Clause 15 hereof. Lessee shall not
be entitled to any interest earned on any Security Deposit.
CLAUSE 31. MISCELLANEOUS
31.1 RECORDATION AND FILING. Forthwith upon the execution and delivery of
this Lease and each Lease Supplement from time to time required by the
terms hereof and upon the execution and delivery of any amendment or
other supplement to this Lease, Lessee will cause this Lease and such
Lease Supplement and Acceptance Certificate or amendment or other
supplement to be duly filed and recorded, and maintained of record, in
accordance with the applicable laws of the government of registry of
the Aircraft. In addition, Lessee will promptly and duly execute and
deliver to Lessor such further documents and take such further action
as Lessor may from time to time reasonably request in order more
effectively to carry out the intent and purpose of this Lease and to
establish and protect the rights and remedies created or intended to be
created in favor of Lessor hereunder, including, without limitation, if
requested by Lessor, at the expense of Lessee to the extent resulting
from Lessee's act or omission, the execution and delivery of
supplements or amendments hereto, each in recordable form, and all
financing statements and continuation statements, and all similar
notices required by applicable law at all times to be kept recorded and
filed in such manner and such places as the Lessor may reasonably
request.
31.2 NO BROKERS. Each of Lessor and Lessee represents that it has not
retained any broker or finder in connection with the transactions
contemplated by the Lease Documents.
-111-
31.3 AGREEMENTS RELATING TO SECTION 1110.
(i) Lessee represents and warrants that, on the Delivery Date,
Lessee will be an "air carrier" within the meaning of the
Federal Aviation Act, operating under valid and subsisting
certificates issued by the U.S. Secretary of Transportation
under Chapter 447, Title 49, U.S. Code, and that Lessee is and
on the Delivery Date will be a "citizen of the United States"
as defined in Section 40102(15) of the Federal Aviation Act.
Lessee represents that, on the Delivery Date, it will be, and
covenants that thereafter it shall maintain its status at all
times as, a Certificated Air Carrier, including, without
limitation, maintaining its status as holder of a valid and
subsisting certificate, issued under Chapter 447, Title 49, of
the U.S. Code, within the purview of, and entitling Lessor to
the benefits and protection of, Section 1110.
(ii) The parties agree that Lessor and ING shall at all times be
entitled to the benefits and protections of Section 1110, and
Lessee shall take such actions and effect such filings as may
be necessary to enable Lessor and ING to continue to be
entitled to such benefits and protections at all times from
the Delivery Date until such time as the Aircraft is returned
to Lessor or ING in compliance with the return conditions
herein and this Lease is terminated.
(iii) It is expressly agreed that the title of Lessor to, and the
interest of Lessor and ING in, the Aircraft, and any right of
Lessor and/or ING to take possession of the Aircraft in
compliance with the provisions of this Lease, shall not be
affected by Sections 362 and 363 of the federal Bankruptcy
Code.
(iv) Lessee acknowledges that this Clause is of fundamental
importance to the transactions contemplated hereby and that
neither Lessor nor ING would have entered into this Lease but
for the rights intended to be conveyed to Lessor and ING by
this Clause and the protection and benefits of Section 1110.
-112-
31.4 EXECUTION AND COUNTERPARTS. This Agreement may be executed by the
parties hereto in separate counterparts which, taken together, shall
constitute one and the same instrument. This Agreement shall be deemed
executed and delivered by Lessee and Lessor when the signature page
hereof is executed and delivered by facsimile by each party to the
other party or to its counsel or delivered by hand; PROVIDED that if
delivered by facsimile, each party shall within two Business Days,
deliver an originally executed copy hereof by courier.
[THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK.]
-113-
IN WITNESS WHEREOF the duly authorized representatives of the parties hereto
have executed this Agreement as of the date and year first above written.
PAN AMERICAN AIRWAYS, INC.,
LESSEE
By
Name:
Title:
EAL (DELAWARE) VIII CORP.,
LESSOR
By
Name:
Title:
This original counterpart has been received by Lessor.
September 26, 1996
EAL (DELAWARE) VIII CORP.
By:
Name:
Title:
SCHEDULE A
ADDITIONAL DELIVERY CONDITIONS
THE AIRCRAFT SHALL BE DELIVERED BY LESSOR TO LESSEE ON THE DELIVERY
DATE "AS IS," AND "WHERE IS" AS PROVIDED IN THIS LEASE, IT BEING THE AGREEMENT
OF THE PARTIES THAT, SO LONG AS LESSEE ACCEPTS DELIVERY OF THE AIRCRAFT ON THE
DELIVERY DATE (as defined in and pursuant to the Interim Lease), THE AIRCRAFT
SHALL BE DEEMED TO HAVE MET THE REQUIRED DELIVERY CONDITIONS; NOTWITHSTANDING
ANY OTHER PROVISION OF ANY AGREEMENT OR DOCUMENT, IF THE DELIVERY DATE (as
defined in the Interim Lease) SHALL OCCUR, THEN LESSEE SHALL THEREUPON BECOME
IRREVOCABLY OBLIGATED TO ACCEPT DELIVERY OF THE AIRCRAFT UNDER THIS AGREEMENT.
SCHEDULE B
FORM OF LEASE SUPPLEMENT AND ACCEPTANCE CERTIFICATE
LEASE SUPPLEMENT AND ACCEPTANCE CERTIFICATE, dated August , 1996,
between EAL (DELAWARE) VIII CORP., a Delaware corporation ("LESSOR"), and PAN
AMERICAN AIRWAYS, INC., a Florida corporation ("LESSEE").
R E C I T A L S:
A. Lessor and Lessee have entered into that certain Lease Agreement
dated as of August 26, 1996 (the "LEASE AGREEMENT") (the defined terms therein
being hereinafter used with the same meaning), relating to the lease of one
Airbus A300B4-203 aircraft described below.
B. The Lease Agreement provides for the execution and delivery by
Lessee of a Lease Supplement and Acceptance Certificate, substantially in the
form hereof, as a condition to Lessor's obligation to deliver the Aircraft.
NOW, THEREFORE, in consideration of the premises and other good and
sufficient consideration, Lessor and Lessee hereby agree as follows:
1. Lessor hereby delivers and leases to Lessee under the Lease
Agreement, and Lessee hereby accepts and leases from Lessor under the Lease
Agreement, the following described airframe, engines and equipment:
AIRFRAME
One Airbus Model A300B4-203 airframe consisting of the following:
One airframe bearing FAA Registration Xxxx N862PA and Manufacturer's
Serial Number 211;
ENGINES
Two General Electric Model CF6-50C2 aircraft engines bearing
Manufacturer's Serial Numbers _______ and _______ (each having 750 or
more rated takeoff horsepower or the equivalent thereof);
together in each case with all parts, accessories, components, modules,
appliances and other items of equipment installed on or attached to the
above-described airframe and engines (such airframe, engines, parts,
accessories, components, modules, appliances and other items of equipment are
referred to collectively herein as the "AIRCRAFT").
2. The Delivery Date of the Aircraft is the date of this Lease
Supplement and Acceptance Certificate, as set forth in the opening paragraph
hereof.
3. Lessee hereby confirms to Lessor that:
(a) Lessee has on the date hereof received from Lessor possession of
the Aircraft and all Technical Data and Manuals relating thereto specified in
SCHEDULE D to the Lease Agreement and all Loose Equipment specified in SCHEDULE
E-1 to the Lease Agreement and all Emergency Equipment specified in SCHEDULE E-2
to the Lease Agreement.
(b) The Aircraft conforms with the description and is in the condition
and equipped as required at Delivery by the Lease Agreement. The execution and
delivery of this Lease Supplement and Acceptance Certificate by Lessee
constitute presumptively conclusive evidence that the Lessee has accepted the
Aircraft for the purposes of the Lease, that as between Lessor and Lessee, the
Aircraft is satisfactory in all respects, and that the Aircraft complies with
the requirements of the Lease, except for those discrepancies, if any, described
in a written instrument signed by a representative of Lessee and by a
representative of Lessor on the date of this Lease Supplement and Acceptance
Certificate.
(c) The Aircraft is in all technical respects acceptable to and
accepted by the undersigned on behalf of Lessee without further inspection
and/or acceptance flights and the Aircraft is hereby unconditionally accepted by
Lessee for lease under the Lease Agreement.
(d) All representations and warranties of Lessee set forth in the Lease
Agreement or any of the other Lease Documents are true and complete on the date
hereof to the same extent and with the same effect as if made again on and as of
the date hereof. Lessee has complied with and performed all of the agreements
and obligations of Lessee that are required to be complied
B-2
with and performed on or prior to the date hereof. Without limiting the
generality of the foregoing, Lessee has effected the insurance and re-insurance
policies required by the Lease Agreement.
(e) No Default and no Event of Default has occurred and is continuing
under the Lease Agreement.
(f) All necessary consents, licenses, authorizations or approvals of,
and exemptions by, such governmental or other authorities as may be necessary or
advisable to authorize the execution, delivery and performance of the Lease
Agreement by Lessee and to permit payment and remittance of all payments to be
made to Lessor in such currency or currencies, at such time, at such places and
in such manner as provided for under the Lease Agreement have been obtained and
are in full force and effect.
(g) No material adverse change has occurred with respect to Lessee or
its financial condition, business, affairs, operations or prospects since the
date of the most recent audited financial information of Lessee delivered to
Lessor.
6. The aggregate Pre-Delivery Cost referred to in Clause 4.3 of the
Lease is US$____________, and the amount of each monthly installment payable by
Lessee to Lessor pursuant to such Clause in reimbursement therefore is
US$______________.
IN WITNESS WHEREOF, the duly authorized representatives of the parties
hereto have executed this Lease Supplement and Acceptance Certificate as of the
day and year first above written.
EAL (DELAWARE) VIII CORP., Lessor
By ___________________________________
Name: _______________________________
Title: ______________________________
PAN AMERICAN AIRWAYS, INC.,
Lessee
By __________________________________
Name: ______________________________
Title: _____________________________
B-3
SCHEDULE C
LESSEE'S CORPORATE CERTIFICATE
In connection with the Lease Agreement, dated as of August 26,
1996 (the "LEASE AGREEMENT"), between EAL (DELAWARE) VIII CORP. ("LESSOR") and
PAN AMERICAN AIRWAYS, INC. ("LESSEE"), the undersigned hereby certifies to
Lessor, its successors and assigns, as follows:
(a) Attached hereto as ANNEX 1 is a true, complete and correct
copy of the charter documents and the current by-laws of Lessee, each as amended
to and in effect on the date hereof.
(b) Attached hereto as ANNEX 2 is a true, complete and correct
copy of all resolutions of the board of directors of Lessee, pursuant to which
each officer executing a Lease Document on behalf of Lessee is authorized to
enter into the transactions contemplated by the Lease to execute the Lease
Agreement and other documents contemplated by the Lease Agreement, including the
Lease Supplement and Acceptance Certificate and the Power of Attorney; such
resolutions were duly adopted by such board of directors at a meeting at which a
quorum was present and acted throughout; and such resolutions are unamended and
remain in full force and effect.
IN WITNESS WHEREOF, this Certificate has been duly executed as
of the day and year first above written by an officer of Lessee, thereunto duly
authorized.
PAN AMERICAN AIRWAYS, INC., Lessee
By ____________________________
Name: ________________________
Title: Corporate Secretary
SCHEDULE D
TECHNICAL DATA AND MANUALS LIST
If the Delivery Date (as defined in the Interim Lease) shall have occurred, then
the Lessor shall be deemed to have delivered to Lessee the manuals and Aircraft
(including Engine) records and historical documents set forth below for all
purposes of this Lease.
1. AIRCRAFT DOCUMENTS
1.1 C of A for Export delivered by manufacturer/country
of origin
1.2 Current C of A
1.3 Certificate of DeRegistration (previous and current)
1.4 Weight and Balance manual
1.5 Manufacturers delivery inventory of readiness log.
1.6 Letter detailing that aircraft was maintained
according to an approved maintenance program
1.7 Certificate of Sanitation (if applicable)
2. ENGINE STATUS AND TECHNICAL RECORDS
2.1 Engines last overhaul/Shop reports
2.2 Engines LLP records (traceability to birth or to
Continental or acceptable to the FAA)
2.3 Engines AD & SD status
2.4 Engines components list
2.5 Engine logbooks or acceptable records
2.6 Engines last month trend monitoring sheets (if
available)
3. AUXILIARY POWER UNIT STATUS AND TECHNICAL RECORDS
3.1 APU last overhaul/Shop report
3.2 APU LLP records (traceability to birth or to
Continental)
3.3 APU components list
3.4 APU AD & SB status
3.5 APU logbook or acceptable records
4. LANDING GEAR STATUS AND TECHNICAL RECORDS
4.1 Landing gear last overhaul report
4.2 Landing Gear Components records
4.3 Landing gear records (traceability to birth or to
Continental)
4.4 Landing gear to have data plates affixed
5. AIRCRAFT ENGINEERING DATA AND TECHNICAL RECORDS DOCUMENTS
5.1 Approved interior configuration drawing
5.2 List and copy of Supplemental Type Certifications
(STC)
5.3 Airworthiness Directives (AD) current and repetitive
Inspection list
5.4 Airworthiness Directives (AD) compliance sheets and
alternate means of compliance sheets
5.5 Rotables, Components current inventory list (DUJX)
5.6 Maintenance Program status report of routine
inspections (DUJX)
5.7 List of major repairs and alterations; with repair
certifications data acceptable to the FAA
5.8 Time Controlled Components list (HT) with last
accomplishment data, including serviceable tags
5.9 List Components change during operation, Serviceable
TAG's
5.10 Certificate of Conformity for interior with FAR
121.317 AC-198 (with Burn test)
5.11 Copy of Maintenance and Inspection Manual (Procedure)
5.12 Last Hydraulic System Oil analysis report
5.13 Aircraft Reliability Program (engines, airframe and
components) if available
5.14 "C" & "D" checks worksheets, tally lists and 337
Forms
5.15 Emergency Equipment Drawing and location drawings
5.16 Corrosion Prevention and Control Program (CPCP)
status
D-2
5.17 Aging Aircraft Program (SSI) status
5.18 Fleet Leader Program (Sampling) status
5.19 Letter of QA inspector detailing procedures of
computerized records syst.
5.20 Letter of QA inspector that all "RECORDS" data are
within accomplished
5.21 Letter detailing any major INCIDENTS/ACCIDENTS with
certification data
5.22 Flight Recorder calibration sheet (if applicable)
5.23 Last calibration check Altimeters, Airspeed incl.
and ATC Transponder test
5.24 Status of (SB's, EA, EO) as provided by previous
operator information must include method of
compliance, date of accomplishment and signature
of person accomplishing work
5.25 Worksheets for last check accomplished
5.26 Last year's Log Book pages
5.27 Avionics equipment list
6. WEIGHT AND BALANCE DATA
6.1 Last Weight and Balance report
6.2 Weight and Balance current status and current
equipment listing
7. PLANNING DATA
7.1 Maintenance Program work cards, related documents
and forms
7.2 Maintenance Inspection Specifications (Maintenance
Program)
7.3 Copy of Repair station Procedure manual
7.4 Copy of Repair station Inspection Manual if work
being done by outside agency
7.5 Corrosion Prevention and Control Program (CPCP)
7.6 Aging Aircraft Program (SSID)
7.7 Sampling Program
7.8 Fleet Leader Program (FLP)
D-3
8. GENERAL INFORMATION
8.1 Dents and Patches List
8.2 Cross-reference from Continental part nos. to
Manufacturer's part nos. (Lessor's best efforts to
deliver).
9. AIRCRAFT MANUALS
9.1 FAA Approved Aircraft Flight Manual (AFM)
9.2 Quick Reference Handbook
9.3 Minimum Equipment List (MMEL) Manufacturer
9.4 Weight & Balance Control and Loading Manual
9.5 Fueling Manual
9.6 Illustrated Parts Catalog (IPC) EAL microfilm (as provided
from previous operator)
9.7 Aircraft Maintenance Manual (AMM) microfilm (as provided from
previous operator)
9.8 Aircraft Wiring Manual (AWM) microfilm (as provided from
previous operator)
9.9 Aircraft Schematics Manual (ASM) microfilm (as provided from
previous operator)
9.10 Aircraft Wiring List (AWL) microfilm number (as provided
from previous operator)
9.11 Structural Repair Manual (SRM) microfilm (as provided from
previous operator)
9.12 Powerplant Illustration Parts Catalog (IPC) microfilm (as
provided from previous operator)
9.13 Powerplant Maintenance Manual (MM) microfilm (as provided from
operator)
9.14 Powerplant Standard Practices microfilm (as provided
from previous operator)
9.15 CAL S/A Figure Drawings
9.16 Typical Repair Manual
9.17 Component Maintenance & Overhaul Manual
9.18 NDT Manual
9.19 Tool & Equipment Manual
9.20 Interior Furnishings (Continental tapes)
9.21 Temporary Revisions for microfilms
9.22 Fault Isolation Manual/FRM (FIM)
9.23 R.T.O.L.W. Charts A300B4
D-4
9.24 Electrical load analysis manual (if available to Lessor with
reasonable efforts)
D-5
SCHEDULE E-1
LOOSE EQUIPMENT LIST
QTY
Ovens 19
Oven Inserts 114
Oven Racks 19
M/S Trolleys 3
Ice Drawers 3
Soda Drawers 3
Plastic Drawer (Yellow, Blue)
Food Containers 22
Waste Containers 5
LD3 Containers 20
SCHEDULE E-2 - EMERGENCY EQUIPMENT LIST
==================================================================================================================
QTY LOCATION
------------------------------------------------------------------------------------------------------------------
COCKPIT
------------------------------------------------------------------------------------------------------------------
First Aid Kit 1 Cockpit
------------------------------------------------------------------------------------------------------------------
Fire Axe 1 F/E Station
------------------------------------------------------------------------------------------------------------------
Smoke Goggles 5 Crew Seats
------------------------------------------------------------------------------------------------------------------
Fire Extinguisher (Kidde 1211) 1 Cockpit
------------------------------------------------------------------------------------------------------------------
Life Jackets 5 Crew Seats
------------------------------------------------------------------------------------------------------------------
Smokehood 1 Cockpit
------------------------------------------------------------------------------------------------------------------
Portable 02 Bottle & Full Face Mask 1 Cockpit
------------------------------------------------------------------------------------------------------------------
Landing Gear Pins 3 Cockpit
------------------------------------------------------------------------------------------------------------------
AVIONIC COMPARTMENT
------------------------------------------------------------------------------------------------------------------
Fire Extinguisher (Kidde 1211) 1 Avionic Comp.
------------------------------------------------------------------------------------------------------------------
CABIN
------------------------------------------------------------------------------------------------------------------
First Aid Kits 2 First Bin LH/RH
------------------------------------------------------------------------------------------------------------------
First Aid Kits 2 Last Bin LH/RH
------------------------------------------------------------------------------------------------------------------
Emergency Automatic Radio Beacons 2 First/Last Bin RH
------------------------------------------------------------------------------------------------------------------
Hand Megaphones 2 First/Last Bin RH
------------------------------------------------------------------------------------------------------------------
Fire Extinguishers (Kidde 1211) 4 1L, 2L, 3L, 4L
------------------------------------------------------------------------------------------------------------------
Fire Extinguishers H20 3 1R, 2R, 4R
------------------------------------------------------------------------------------------------------------------
Smokehoods (PBE) 4 1L, 2L, 3L, 4L
------------------------------------------------------------------------------------------------------------------
Portable 02 Bottles and Masks 9 Att. 1L, 1R, 2L, 2R, 3L,
4L, 4R
------------------------------------------------------------------------------------------------------------------
P.S.U.'s Tools 6 Att. 4R
------------------------------------------------------------------------------------------------------------------
Seatbelts Extension Pouch 1 First Bin LH
------------------------------------------------------------------------------------------------------------------
Emergency Portable Flashlights 9 Att. 1L, 1R, 2L, 2R, 3L,
3R, 4L, 4R
------------------------------------------------------------------------------------------------------------------
Safety Strap Flags 8 1L, 1R, 2L, 2R, 3L, 3R,
4L, 4R
------------------------------------------------------------------------------------------------------------------
Safety Pins 8 1L, 1R, 2L, 2R, 3L, 3R,
4L, 4R
------------------------------------------------------------------------------------------------------------------
Cockpit Door Key 1 Galley 1
------------------------------------------------------------------------------------------------------------------
Seatbelts Pax 254 Each seat
------------------------------------------------------------------------------------------------------------------
Life Jackets Crew 9 Crew Seats
------------------------------------------------------------------------------------------------------------------
Life Jackets Pax 254 Each Seat
------------------------------------------------------------------------------------------------------------------
Life Jackets Spare (Adults) 24 Fwd Bin, 3R, Aft Bins
------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------
==================================================================================================================
E-2
SCHEDULE F
REDELIVERY CONDITION
The condition of the Aircraft on redelivery shall be as
follows:
1. The Aircraft shall be in good operating condition by
international commercial airline standards (normal wear and
tear excepted), airworthy and with all systems fully
operational, including category 3 operating equipment
(certification not required).
2. The Aircraft shall be stripped and painted white, shall have
all names, insignias and other indications of Lessee removed
from the interior and exterior and shall be clean by
international commercial operating standards.
3. The Aircraft shall be zero time out of its C-Check.
4. The Aircraft, its associated records, manuals and documents
shall be eligible immediately to receive a current, valid FAA
Certificate of Airworthiness for FAR Part 121 operations, as
such Part 121 relates to the Aircraft. The Airframe, Engines
and installed components shall be in compliance with all
FAR's, airworthiness directives and engine manufacturers
mandatory service bulletins. The Aircraft shall have all
deferred maintenance items, pilot logbooks, XXX/CDL and other
such deferred items rectified on a terminating action basis,
unless otherwise agreed between Lessor and Lessee.
5. All required time controlled and life limited components
including (but not limited to) Landing Gear checks, overhauls,
inspections, actions and hard time components shall be cleared
for one C-Check cycle (which is anticipated to be one year or
3,325 hours or 1,000 cycles) unless (i) a specific check,
overhaul, inspection, component or action does have a life
which is anticipated to be shorter than one C-Check cycle or
(ii) otherwise agreed between Lessor and Lessee.
6. The Aircraft shall be equipped with two General Electric
CF6-50C2 engines with short nozzle thrust reversers in a
condition suitable for operation within the manufacturer's
maintenance manual limits. The Engines have been maintained to
an AVIALL build standard pursuant to the AVIALL Engine
Maintenance and Pooling Contract or an equivalent standard to
be agreed upon by Lessor and Lessee.
7. Each Engine shall have completed a hot and cold section
borescope inspection of the Engines in accordance with the
Maintenance Manual. Each such borescope shall be conducted
after completion of an MPA (maximum power assurance) run
observed by a Lessor representative.
8. Each Engine shall be within the AVIALL specified limits (or
equivalent limits
agreed upon by Lessor and Lessee) without waiver or exemption
and no Engine shall be "under watch" or have any overservice
limit extensions.
9. The APU has been maintained by in accordance with the Revima
APU Maintenance and Pooling Contract and shall be delivered
within the parameters set forth in such Contract or shall have
been maintained to an equivalent standard to be agreed upon by
Lessor and Lessee.
10. The Aircraft shall have been maintained on an FAA approved
maintenance and corrosion program. A hard copy of the program
shall be provided to Lessor and a method shall be provided to
trace all tasks and functions of the maintenance program to
its corresponding work cards. Maintenance and corrosion
control program documents, including work cards, shall be in
English unless otherwise accepted by Lessee; or
ING and Lessor shall be entitled to use (and to make available
to subsequent lessees) the Pan Am Maintenance Program for the
Aircraft, and Lessee shall cooperate with ING and Lessor in
connection therewith, subject, however, to the execution by
such lessee of an appropriate indemnity in favor of Lessor and
Lessee for the use of such Maintenance Program and actions and
omissions by such lessee.
11. The Aircraft shall be free of hydraulic, pneumatic, water,
fuel and waste system leaks in accordance with the
manufacturers maintenance manual. This is to be demonstrated
by filling the tanks and reservoirs to capacity as per the
then-current procedure under the manufacturer's manual and
performance of a functional and leak check of all related
systems. All repairs will be per the manufacturer's
maintenance manual.
12. All floor, cargo and compartment panels shall be in good
condition by airline standards (normal wear and tear
excepted). All repairs to floor, cargo, ceiling and sidewalls
shall be in accordance with the manufacturer's maintenance
procedures, and will be permanent repairs reworked to "C
Check" standards.
13. All cargo compartments and the currently installed associated
cargo loading systems shall be clean and in good operating
condition by airline standards. All repairs will be permanent
and in accordance with manufacturer's standards, reworked to
"C-Check" standards.
14. Tires and brakes shall be in good condition.
15. The Aircraft interior configuration shall be 24/230 (total
254) with 6 lavatories and galleys X-0, X-0, X-0, G-4 and G-5
installed. The Aircraft interior shall be as follows and in
good condition to "C Check" standards:
(a) All lavatories shall be in good operating condition.
The trim and decor finish shall be in good condition.
F-2
(b) All carpeting shall be in good condition.
(c) Sidewalls, vertical surfaces, ceilings, bins, floor
boards, window shades, tray tables, PSU's, PCU's and aiming of
reading lights shall be inspected and reworked as necessary.
Door liners and slide raft packs shall be in good condition.
(d) All seat bottom cushions shall be freshly cleaned and seat
back cushions shall be in very good condition.
(e) All seat covers shall be freshly cleaned. Documentation
certifying the retained flammability and fire blocking
characteristics shall be provided.
16. The galleys and the associated inserts shall be in acceptable
cosmetic condition and shall have a certificate of sanitary
construction issued by the U.S. Public Health Department.
17. The cockpit shall be "touched up" in accordance with standard
international airline practices.
18. All FAR required interior and exterior markings and placards
shall be current, in place and legible. All placards shall be
FAA approved.
19. Fuselage shall be free of major dents, corrosion and abrasions
or any loose, pulled or missing rivets. External patches shall
be of a type consistent with the structural repair manual.
Each repair shall have proper documentation or structural
repair manual reference and/or FAA approved engineering repair
drawings as applicable.
20. All doors including cargo doors and service doors shall be
free moving, correctly rigged and fitted with serviceable
seals in accordance with the Maintenance Manual and acceptable
to the FAA.
21. All leading edges shall be serviceable and clean in accordance
with the Manufacturer's Maintenance Manual. Any repairs to the
leading edges shall be in accordance with the Manufacturer's
Maintenance Manual and Structural Repair Manual or acceptable
to the FAA.
22. All control surfaces shall be clean by airline standards and
free of delamination in accordance with the Manufacturer's
Maintenance Manual and Structural Repair Manual or acceptable
to the FAA.
23. All unpainted cowlings and fairings shall be clean by airline
standards and tightly fitted in accordance with the
Maintenance Manual limits and acceptable to the FAA.
24. All fuel tanks shall be free of contaminants.
F-3
25. Engine cowls will be brightened aluminum rather than white
paint.
26. One full set of loose equipment shall be delivered with the
Aircraft, including LD3 containers delivered at a place agreed
upon as specified in Schedule E-1.
27. A Honeywell dual global positioning system will be installed
on the Aircraft.
28. Standard emergency equipment including smoke detectors and
escape slide rafts shall be installed.
29. Lessee shall provide all technical documents relating to the
Aircraft as listed in Schedule D and received by Lessee at
Delivery including copies of all engineering orders, complete
records of AD and Service Bulletin compliance and up-to-date
copies of manufacturers manuals (including supplements)
relating to the Airframe, Engines, interior configurations,
components and APU, all in compliance with FAA regulations.
All airframe, engine and component records shall be as
required by FAR Part 121.380 and shall be provided with the
Aircraft.
30. The Aircraft shall be free from all Liens (except for Lessor
Liens). In the event any engine not owned by Lessor shall be
delivered with the Airframe, such engine shall be satisfactory
to Lessor, free and clear of Liens, suitable for use on such
Airframe and shall have the value and utility at least equal
to, and be in as good operating condition (including no
greater number of Flight Hours or Cycles accumulated on such
engine) as the Engine that should have been returned, assuming
such Engine which should have been returned was in the
condition and repair as required by the terms of the Lease
immediately prior to such required return.
31. The Aircraft shall have installed all optional no charge
vendors' and manufacturers' service bulletin kits theretofore
received by Lessee for the Aircraft and to the extent received
but not installed, such kits shall be furnished free of charge
to Lessor at redelivery.
32. The Aircraft (other than the Engines and the APU subject to
the AVIALL Engine Maintenance and Pooling Agreement and the
Revima APU Maintenance and Pooling Contract, respectively) (or
other equivalent standard agreed upon by Lessor and Lessee)
shall have been maintained until redelivery in accordance with
the Lessee's approved Maintenance Program and treated at a
standard equal to all other aircraft (if any) in Lessee's
fleet.
33. The Engines and APU shall be serviced with Mobil Jet 2 oil;
the gears shall be serviced with Hy-Jet IV, unless otherwise
specified by Lessor reasonably in advance of re-delivery.
34. The Aircraft will have a current weight and balance report
in form acceptable to the FAA.
F-4
SCHEDULE G
FORM OF MONTHLY STATUS REPORT
From:
A/C Type: Registration: Month of _______ 19__
S/N:
AIRCRAFT TOTAL TIME SINCE NEW ________________________
TOTAL CYCLES SINCE NEW ________________________
HOURS FLOWN DURING MONTH ________________________
CYCLES/LANDING DURING MONTH ________________________
TIME REMAINING TO D CHECK ________________________
TIME REMAINING UNTIL MID-D CHECK ________________________
TIME REMAINING TO C-CHECK ________________________
TYPE: NO. ONE ENGINE POSITION NO. 2 ENGINE POSITION
SERIAL NUMBER
PRESENT LOCATION
TOTAL TIME SINCE NEW HRS: MIN: HRS: MIN:
TOTAL CYCLES SINCE NEW
HOURS FLOWN DURING MON HRS: MIN: HRS: MIN:
CYCLES DURING MONTH
NOTE: AN ENGINE IS REMOVED OR INSTALLED ON
ANOTHER AIRCRAFT IT MUST BE REPORTED
MONTHLY ON THIS FORM.
SCHEDULE H
FORM OF RETURN ACCEPTANCE CERTIFICATE
Date____________, 199
1. PAN AMERICAN AIRWAYS, INC., Lessee, and EAL (DELAWARE)
VIII CORP., Lessor, have entered into that certain Lease
Agreement dated as of [ ], 1996 (the "Lease Agreement").
Words used herein with capital letters and not otherwise
defined will have the meanings set forth in the Lease
Agreement.
2. Lessor has this day of , 199 (Time: ) at
received from Lessee possession of:
(a) One (1) Airbus A300B4-203 aircraft,
bearing Manufacturer's Serial Number
____, together with two (2) General
Electric CF6-50C2 engines bearing
Manufacturer's Serial Numbers [ ]
and [ ], all Parts attached
thereto and thereon in an airworthy
condition; and
(b) All Aircraft Documentation, including
the usual and customary manuals,
logbooks, flight records and historical
information regarding the Aircraft,
Engines and Parts, as specified in
Schedule D to the Lease Agreement.
3. Lessee represents that the Airframe, Engines and Parts
have the following hours/Cycles:
(a) Airframe:
Total hours __________ Total
Landings ______ _____ hours/_____
Cycles since last "D-Check" _____
hours/_____Cycles since last "Mid-D
Check" _____ hours/_____Cycles since
last "C-Check" _____ hours/_____Cycles
since last "A-Check"
(b) Engines:
SERIAL TOTAL TOTAL HOURS/CYCLES
POSITION NO HOURS SINCE LAST SHOP VISIT
(c) APU: MSN _____
Total hours _________ Total Cycles __________
(d) Landing Gears:
HOURS/CYCLES SINCE LAST
SERIAL TOTAL HOURS/CYCLES OVERHAUL
POSITION NO HOURS/CYCLES TO NEXT SCHEDULED REMOVAL
Nose
Right Main
Left Main
(e) Status of components or Parts with time/Cycle and calendar
limits:
(f) Fuel on board at return: pounds ( gallons)
4. Physical possession of the above specified Airframe, Engines, Parts
and documentation relating thereto are hereby accepted by Lessor as
being in compliance with the Redelivery Conditions specified in
Schedule F to the Lease; provided, however, that such acceptance by
Lessor is based upon certain statements of Lessee, including
information contained in the manuals and log books relating to the
Aircraft maintained by Lessee or its agents, and by this acceptance
Lessor does not waive any right or remedy it may have if such
information is later discovered to have been inaccurate or
incomplete.
5. This Return Acceptance Certificate is executed and delivered by the
parties at [location].
H-2
IN WITNESS WHEREOF, the parties hereto have caused this Return
Acceptance Certificate to be executed on behalf of Lessor as of the day and year
first above written.
EAL (DELAWARE) VIII CORP., LESSOR
By:
Name:
Title:
PAN AMERICAN AIRWAYS, INC.,
LESSEE
By:
Name:
Title:
H-3
SCHEDULE I
POWER OF ATTORNEY
The undersigned, PAN AMERICAN AIRWAYS, INC., a corporation
with an office located at 0000 XX 00xx Xxxxxx, Xxxxx, Xxxxxxx 00000 (together
with its successors and assigns, the "GRANTOR"), by this instrument, DOES HEREBY
CONSTITUTE AND APPOINT ING LEASE (NEDERLAND) B.V., a corporation existing under
the laws of the Kingdom of the Netherlands, with its principal office at
Xxxxxxxxxxxx 00, 0000 XX Xxxxxxxxx-Xxxxxxxx, 0000 XX Amsterdam, The Netherlands,
together with its successors and assigns (the "GRANTEE"), as the true and lawful
agent and attorney-in-fact for Grantor, with full power of substitution, to do
any of the following in connection with the following described aircraft and
related property and assets (herein collectively called the "AIRCRAFT"):
The Airbus Industrie model A300B4-200 aircraft bearing manufacturer's
serial number 211 and the two General Electric model CF6-50C2
aircraft engines bearing manufacturer's serial numbers _______ and
_____, together with all parts, components, accessories, equipment
related thereto, and all additions thereto and replacements thereof,
and all operating, maintenance, repair and overhaul manuals, logs,
records and data;
all pursuant to the Lease Agreement, dated as of August 26, 1996 (as
supplemented, amended or otherwise in effect from time to time, the "LEASE"),
between Grantee, as lessee, and EAL (Delaware) VIII Corp., as lessor ("LESSOR"):
(i) to collect, receive, pay, disburse, enforce and apply, any monies,
collateral, assets or property held or available hereunder or in respect hereof,
or under any other Lease Document or in respect thereof, (ii) to effect any
grant, conveyance, lease or other transfer or application of any collateral,
assets or property, (iii) to effect the cancellation and de-registration of the
Aircraft from the Aircraft Registry of the United States Federal Aviation
Administration or any other civil aviation authority on which the Aircraft may
at any time be registered during the Lease Term; (iv) to export and remove from
the United States of America the Aircraft and all related or installed aircraft
engines, parts and equipment and all related maintenance, repair, overhaul and
operating records, logs, books and other data; (v) to negotiate, complete,
execute, deliver, present, file and record any agreement, demand, request,
consent, document or instrument referred to, contemplated by or otherwise
incident to the de-registration, repossession, removal and export of the
Aircraft or the exercise of any other right, power, privilege or remedy under
the Lease or available to any Grantee at law or in equity; and (vi) to take any
other action incidental to, or in furtherance of, the exercise of any right,
power, privilege or remedy available to Lessor or ING hereunder or at law or in
equity.
Each Grantee, acting either alone or with the other Grantee,
is hereby authorized and empowered to take and to perform all actions that it
reasonably deems necessary or appropriate
This Power of Attorney is coupled with an interest and is not
revocable by the Grantor for any reason or under any circumstance whatsoever,
and shall not expire until the payment, performance and satisfaction in full of
all of Grantor's obligations and liabilities under the Lease, which payment,
performance and satisfaction may be evidenced only by the written instrument
signed by the Grantees acknowledging such payment, performance and satisfaction.
This Power of Attorney shall be governed and construed in
accordance with the laws of the State of New York, United States of America.
IN WITNESS WHEREOF, this Power of Attorney has been duly
executed by or on behalf of Grantor this _____ day of _______________, 1996.
PAN AMERICAN AIRWAYS, INC.
By:
Name:
Title:
I-2
SCHEDULE J
CERTAIN HARD TIME CONTROLLED ITEMS
CONTENTS
CLAUSE NUMBER PAGE NUMBER
CLAUSE 1. DEFINITIONS AND INTERPRETATION....................................................... 2
CLAUSE 2. AGREEMENT TO LEASE................................................................... 16
2.1 AGREEMENT TO LEASE................................................................... 16
2.2 (i) DELIVERY...................................................................... 16
(ii) [This clause is reserved.].................................................... 16
(iii) [This clause is reserved.].................................................... 16
(iv) ACCEPTANCE OF DELIVERY........................................................ 16
(v) EXCLUSION OF LIABILITY........................................................ 17
(vi) CASUALTY TO THE AIRCRAFT PRECEDING DELIVERY................................... 17
CLAUSE 3. LEASE TERM........................................................................... 17
3.1 LEASE TERM. ......................................................................... 17
3.2 LEASE EXTENSION OPTION............................................................... 17
CLAUSE 4. BASIC RENT........................................................................... 18
4.1 BASIC RENT........................................................................... 18
4.2 DEFERRED RENT........................................................................ 20
4.3 ADDITIONAL RENT FOR PRE-DELIVERY WORK................................................ 21
CLAUSE 5. MAINTENANCE AND OTHER PAYMENTS....................................................... 23
5.1 MAINTENANCE RESERVE ACCOUNTS......................................................... 23
5.2 CONSTITUTION OF MAINTENANCE PAYMENTS................................................. 25
5.3 ADJUSTMENT TO MAINTENANCE PAYMENTS................................................... 27
5.4 (i) CONDITIONS PRECEDENT TO REIMBURSEMENT FOR ELIGIBLE CLAIMS..................... 29
(ii) CREDITS AND PAYMENTS FROM RESERVE ACCOUNTS.................................... 30
(iii) FOREIGN OBJECT DAMAGE GENERATED SHOP VISIT.................................... 34
CLAUSE 6. PAYMENTS............................................................................. 34
6.1 PAYMENT TO LESSOR.................................................................... 34
6.2 WITHHOLDING TAXES.................................................................... 35
6.3 DEFAULT INTEREST..................................................................... 35
6.4 BUSINESS DAY CONVENTION.............................................................. 35
6.5 ABSOLUTE OBLIGATION TO MAKE PAYMENTS................................................. 35
6.6 APPLICATION OF PAYMENTS.............................................................. 36
CLAUSE 7. CONDITIONS PRECEDENT................................................................. 36
7.1 CONDITIONS PRECEDENT TO THE EXECUTION OF THIS AGREEMENT.............................. 36
7.2 CONDITIONS PRECEDENT................................................................. 36
CLAUSE 8. REPRESENTATIONS AND WARRANTIES....................................................... 40
8.1 (i) WARRANTIES AND DISCLAIMER OF WARRANTIES....................................... 40
(ii) RESPONSIBILITY TO DETERMINE CONDITION OF AIRCRAFT, OBTAINING
i
BENEFIT OF WARRANTIES......................................................... 41
8.2 REPRESENTATIONS AND WARRANTIES OF LESSEE............................................. 42
8.3 COVENANTS OF LESSEE.................................................................. 44
8.4 REPRESENTATIONS AND WARRANTIES OF LESSOR............................................. 47
8.5 NOTICE OF BREACH OF REPRESENTATION, WARRANTY OR COVENANT............................. 48
8.6 SURVIVAL OF REPRESENTATIONS, ETC..................................................... 48
CLAUSE 9. LIENS................................................................................ 48
9.1 LESSEE NOT TO CREATE LIENS........................................................... 48
9.2 LESSEE TO DISCHARGE LIENS............................................................ 49
CLAUSE 10. INSURANCE............................................................................ 49
10.1 AVIATION LIABILITY AND PROPERTY DAMAGE INSURANCE..................................... 49
10.2 INSURANCE AGAINST LOSS OF OR DAMAGE TO THE AIRCRAFT.................................. 52
10.3 LESSEE TO PURSUE CLAIMS.............................................................. 55
10.4 CHANGE IN INSURANCE PRACTICE......................................................... 55
10.5 APPLICATION OF PROCEEDS ARISING ON EVENT OF LOSS..................................... 56
10.6 APPLICATION OF PROCEEDS ARISING OTHER THAN ON AN EVENT OF LOSS....................... 56
10.7 RETENTION OF PROCEEDS BY LESSOR FOLLOWING DEFAULT.................................... 56
10.8 LESSOR AND LESSEE MAY ADDITIONALLY INSURE............................................ 57
10.9 COMPLIANCE WITH LEGAL REQUIREMENTS AS TO INSURANCE................................... 57
10.10 LESSOR ENTITLED TO PROVIDE INSURANCES IN DEFAULT BY LESSEE........................... 57
10.11 NEGOTIATIONS FOR RENEWAL............................................................. 58
10.12 (i) INFORMATION................................................................... 58
(ii) NOTIFICATION OF CLAIM EVENTS.................................................. 58
(iii) PROVISION OF INSURANCE BROKER'S UNDERTAKING................................... 59
10.13 LESSEE NOT TO PREJUDICE INSURANCE.................................................... 59
10.14 CURRENCY............................................................................. 59
CLAUSE 11. EVENT OF LOSS.............................................................................. 59
11.1 EVENT OF LOSS WITH RESPECT TO AIRCRAFT............................................... 59
11.2 EVENT OF LOSS WITH RESPECT TO ENGINE................................................. 60
11.3 TRANSFER OF TITLE TO REPLACED ENGINE TO LESSEE....................................... 62
CLAUSE 12. REGISTRATION............................................................................... 62
12.1 REGISTRATION......................................................................... 62
CLAUSE 13. MAINTENANCE, REPORTING, REMOVAL AND REPLACEMENT,
ALTERATIONS, POSSESSION, OPERATION, ETC..................................................... 63
13.1 MAINTENANCE.......................................................................... 63
(i) GENERAL OBLIGATIONS........................................................... 63
(ii) INDEPENDENT MAINTENANCE CONTRACTOR............................................ 63
(iii) MAINTENANCE PROGRAM........................................................... 63
(iv) SPECIFIC OBLIGATIONS.......................................................... 64
13.2 REPORTING REQUIREMENTS AND PROVISION OF INFORMATION.................................. 65
ii
13.3 REMOVAL OF ENGINES................................................................... 65
13.4 REPLACEMENT OF PARTS................................................................. 66
(i) LESSEE'S OBLIGATION TO REPLACE PARTS.......................................... 66
(ii) CONDITION OF REPLACEMENT PARTS................................................ 66
(iii) TITLE TO REPLACEMENT AND REPLACED PARTS....................................... 67
13.5 REPLACEMENT ENGINES.................................................................. 67
13.6 ALTERATIONS.......................................................................... 68
13.7 LIABILITY FOR COST OF ALTERATIONS; AD COST SHARING................................... 70
13.8 POSSESSION OF AIRCRAFT; SUBLEASE OF AIRCRAFT......................................... 72
13.9 DELIVERY OF AIRFRAME OR ENGINES TO MANUFACTURER OR REPAIRER;
POOLING ARRANGEMENTS................................................................. 74
(i) DELIVERY FOR SERVICE OR REPAIR................................................ 74
(ii) POOLING OF ENGINES............................................................ 74
(iii) POOLING OF PARTS.............................................................. 75
13.10 OPERATION............................................................................ 75
13.11 NAMEPLATE............................................................................ 76
13.12 LESSEE'S LIABILITY AS TO COSTS OF USE AND OPERATION.................................. 76
13.13 ENTITLEMENT TO ENFORCE WARRANTIES.................................................... 77
CLAUSE 14. REGISTRATION OF AIRCRAFT............................................................. 77
CLAUSE 15. RETURN OF AIRCRAFT......................................................................... 77
15.1 REDELIVERY........................................................................... 77
15.2 ENGINE CONDITION..................................................................... 78
15.3 GENERAL CONDITION.................................................................... 79
15.4 REMOVAL OF INSIGNIA; TRANSFER OF WARRANTIES, ETC..................................... 81
15.5 FUEL AND OIL......................................................................... 81
15.6 RETURN ACCEPTANCE CERTIFICATE........................................................ 81
15.7 INDEMNITIES AND INSURANCE............................................................ 81
15.8 AIRPORT AND NAVIGATION CHARGES....................................................... 81
15.9 RECTIFICATION OF RE-DELIVERY CONDITION............................................... 82
15.10 EXPORT AND DE-REGISTRATION OF AIRCRAFT............................................... 82
CLAUSE 16. INDEMNIFICATION............................................................................ 83
16.1 GENERAL INDEMNITY.................................................................... 83
16.2 TAX INDEMNITY........................................................................ 85
(i) WITHHOLDING TAXES............................................................. 85
(ii) GENERAL TAX INDEMNITY......................................................... 85
(iii) EXCEPTIONS TO INDEMNITY....................................................... 86
(iv) AFTER-TAX BASIS............................................................... 87
(v) TIMING OF PAYMENT............................................................. 88
(vi) CONTESTS...................................................................... 88
(vii) REFUNDS....................................................................... 89
(viii) COOPERATION IN FILING TAX RETURNS............................................ 89
iii
CLAUSE 17. EVENTS OF DEFAULT.......................................................................... 90
17.1 EVENTS OF DEFAULT.................................................................... 90
17.2 ACTION ON OCCURRENCE OF EVENT OF DEFAULT............................................. 93
CLAUSE 18. ASSIGNMENT................................................................................. 97
18.1 BENEFIT OF AGREEMENT................................................................. 97
18.2 ASSIGNMENT BY LESSEE................................................................. 97
18.3 ASSIGNMENT BY LESSOR................................................................. 98
CLAUSE 19. FURTHER ASSURANCES.........................................................................100
19.1 FURTHER ASSURANCES...................................................................100
19.2 PERFECTION OF LESSOR'S ETC. INTERESTS................................................100
CLAUSE 20. PROTECTION OF LESSOR'S INTERESTS...........................................................100
CLAUSE 21. COSTS AND EXPENSES.........................................................................101
21.1 PREPARATION AND NEGOTIATION OF LEASE DOCUMENTS.......................................101
21.2 ENFORCEMENT AND PRESERVATION OF RIGHTS...............................................101
21.3 NON-DELIVERY DUE TO EVENT OF LOSS....................................................101
CLAUSE 22. INSPECTION.................................................................................101
CLAUSE 23. NOTICES AND LANGUAGE.......................................................................102
23.1 NOTICES..............................................................................102
CLAUSE 24. LESSOR'S RIGHTS TO PERFORM FOR LESSEE......................................................104
CLAUSE 25. APPLICABLE LAW AND JURISDICTION............................................................104
25.1 GOVERNING LAW........................................................................104
25.2 SUBMISSION TO JURISDICTION...........................................................104
CLAUSE 26. ALTERATIONS TO AGREEMENT...................................................................106
26.1 ENTIRE AGREEMENT.....................................................................106
26.2 VARIATION ONLY IN WRITING............................................................106
26.3 ENGLISH LANGUAGE.....................................................................106
CLAUSE 27. CURRENCY INDEMNITY.........................................................................106
CLAUSE 28. QUIET ENJOYMENT OF AIRCRAFT................................................................107
CLAUSE 29. SEVERABILITY...............................................................................107
CLAUSE 30. SECURITY DEPOSIT...........................................................................107
CLAUSE 31. MISCELLANEOUS..............................................................................109
iv
31.1 RECORDATION AND FILING...............................................................109
31.2 NO BROKERS...........................................................................109
31.3 AGREEMENTS RELATING TO SECTION 1110..................................................109
31.4 EXECUTION AND COUNTERPARTS...........................................................110
SCHEDULES
A. ADDITIONAL DELIVERY CONDITIONS
B. FORM OF LEASE SUPPLEMENT AND ACCEPTANCE CERTIFICATE
C. FORM OF LESSEE'S CORPORATE CERTIFICATE
D. TECHNICAL DATA AND MANUALS LIST
E-1 LOOSE EQUIPMENT LIST
E-2 EMERGENCY EQUIPMENT LIST
F. REDELIVERY CONDITION
G. FORM OF MONTHLY STATUS REPORT
H. FORM OF RETURN ACCEPTANCE CERTIFICATE
I. FORM OF POWER OF ATTORNEY
J. CERTAIN HARD TIME CONTROLLED ITEMS
K. CONSULTING SERVICES AGREEMENT
L. RIGHT OF FIRST REFUSAL PURCHASE AGREEMENT
v
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CONSULTING SERVICES AGREEMENT
----------------------------------
This CONSULTING SERVICES AGREEMENT, dated as of February 20,
1996 (this "AGREEMENT"), between ING Aviation Lease B.V., a corporation formed
and existing under the laws of The Kingdom of the Netherlands ("ING"), and Pan
American Airways, Inc., a corporation formed and existing under the
laws of the State of Florida ("PAN AM").
R E C I T A L S :
A. ING Lease (Nederland) B.V. ("ING LEASE"), an affiliate of
ING, and Pan Am are parties to the Letter of Agreement, dated February 5, 1996
(the "LOI"), pursuant to which the parties have set forth their understanding of
the principal terms by which ING Lease will (subject to the conditions therein
and to the execution and delivery of definitive lease and other agreements
contemplated thereby) lease or cause to be leased to Pan Am three Airbus
Industrie model A300B4-200 aircraft (the "AIRCRAFT"), pursuant to one or more
aircraft lease agreements and such other agreements as may be required to
reflect such terms and conditions (herein called the "TRANSACTION DOCUMENTS");
and
B. In connection with the transactions contemplated by the
LOI, Pan Am has requested that ING provide certain consulting services to Pan
Am, as hereinafter set forth, on the terms and conditions set forth below.
NOW, THEREFORE, for good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the undersigned hereby
agree as follows:
Section 1. CONSULTING SERVICES.
(a) Subject to the terms and conditions hereinafter set forth,
ING shall make available to Pan Am during the Term (as defined below), the
services of one or more persons designated from time to time by ING (herein
referred to individually as the "CONSULTANT") on a non-exclusive basis for
purposes of rendering the services (the "CONSULTING SERVICES") described on
attached ANNEX 1. ING hereby designates Xx. Xxxx Xxxxxxxxxx as the Consultant
under this Agreement, effective from the date hereof until such time as this
Agreement expires or is terminated or ING designates another individual as
Consultant or the Consultant's employment or consulting relationship with ING
expires or is terminated.
(b) Promptly following a request from Pan Am to provide
Consulting Services, ING shall use its commercially reasonable efforts to cause
the Consultant to provide such services at the times or within the periods
specified by Pan Am; PROVIDED, HOWEVER, that Pan Am acknowledges that the
Consulting Services are to be provided by the Consultant on a non-exclusive
basis and the Consultant may not be immediately available under all
circumstances, at the specific times, or for the specific periods requested;
PROVIDED FURTHER, HOWEVER, that ING will use reasonable efforts to advise Pan Am
of any anticipated delay in the performance of requested Consulting Services.
Section 2. COSTS AND EXPENSES.
(a) As reimbursement by Pan Am to ING for the out-of-pocket
costs and expenses incurred by any Consultant in connection with the performance
by such Consultant or ING in connection with any Consulting Services that are
rendered by such Consultant, Pan Am shall pay ING the fixed sum of US$200 per
day up to US$1,000 per week for each day full time during which the Consultant
renders Consulting Services. Such reimbursement shall be made by Pan Am within
30 days following its receipt of an invoice therefor from ING.
(b) ING shall be responsible for, and shall indemnify Pan Am
for, the payment and provision of any Consultant's salary, benefits and other
compensation. Pan Am shall effect any such reimbursement to ING hereunder by
payment to ING in immediately available U.S. dollar funds within 15 days after
receipt by Pan Am of an invoice therefor from ING setting forth in reasonable
detail the costs and expenses for which reimbursement is sought.
Section 3. NATURE OF RELATIONSHIP;
INDEMNIFICATION.
(a) ING shall provide the Consulting Services hereunder as an
independent contractor, and nothing herein shall constitute a partnership,
agency or affiliation between ING and Pan Am. Any Consultant shall be an
employee of, or consultant retained by, ING or an affiliate thereof, and no
Consultant shall be a representative of Pan Am, nor shall he hold himself out or
be held out by Pan Am as an employee, agent or representative of Pan Am for any
purpose.
(b) Neither ING nor any Consultant makes any
-2-
representation, warranty or guarantee (express or implied) with respect to any
Consulting Services rendered hereunder, the performance thereof or the efficacy
of any Consulting Services. Pan Am is and shall remain solely responsible for
assessing the Consulting Services (including any advice rendered as part
thereof) and to determine whether to use information or follow advice furnished
by the Consultant hereunder, and neither ING nor any Consultant shall have any
liability for special, incidental or consequential damages arising form the
Consulting Services.
(c) Pan Am shall indemnify, hold harmless, protect and defend,
each of ING, its officers, directors, employees, representatives and affiliates,
including any Consultant (each an "INDEMNITEE"), for, from and against, any and
all losses, claims, suits, demands, damages, costs and expenses (including
attorneys' fees and expenses) of any kind or nature whatsoever, relating to,
arising out of, or caused by, the Consulting Services and any course of action
taken or omitted to be taken by Pan Am or any affiliate thereof on the basis
thereof or in reliance thereon or in connection therewith.
Section 4. CONFIDENTIALITY. Each of ING and Pan Am recognizes
that either party hereto (the "DISCLOSING PARTY") may from time to time provide
the other party (the "RECEIVING PARTY") with documents or information that
relate to the business, affairs or operations of the Disclosing Party, some of
which may contain information that is confidential in nature ("CONFIDENTIAL
INFORMATION"). The Disclosing Party shall use commercially reasonable efforts to
label any such information "CONFIDENTIAL" in a conspicuous manner. Each party
agrees that it will maintain as strictly confidential and (except with the
consent or at the request of the Disclosing Party) will not, directly or
indirectly, disclose, use or exploit such Confidential Information for any
purpose other than the good faith performance of its duties and responsibilities
under this Agreement and the other agreements to which ING (or any affiliate or
trustee thereof) and Pan Am may become party, including, in the case of ING,
monitoring the performance by Pan Am of its agreements under any Transaction
Documents and enforcing the rights of ING in connection therewith. No Receiving
Party will distribute copies of any Confidential Information to any person, firm
or entity other than the Receiving Party's personnel, auditors, accountants and
counsel who have a need to know such information. The term "Confidential
Information" shall not include information that is (i) in the public domain
through no fault of the Receiving Party, (ii) already known to the Receiving
Party, as evidenced by written documentation supporting such prior knowledge,
(iii) disclosed to the Receiving Party by a third party that is not under a duty
of confidentiality to the Disclosing Party, or (iv) disclosed in an action,
proceeding
-3-
or lawsuit between the parties.
Section 5. TERM AND CANCELLATION.
(a) The term of this Agreement (the "TERM") shall commence on
February 20, 1996 and shall expire on the earlier to occur of (1) August 20,
1996, (2) the expiration or any termination of any Lease Agreement relating to
the lease of any Aircraft or the termination of the applicable lease term
thereunder, and (3) the termination or cessation at any time of the employment
or consulting relationship between ING and the Consultant designated by ING at
such time, subject to earlier termination, as hereinbelow set forth.
(b) ING may terminate this Agreement and its obligations
hereunder at any time by giving notice to Pan Am of such termination.
(c) Pan Am may terminate this Agreement by giving notice to
ING of such termination.
(d) Neither the expiration nor any termination of this
Agreement shall terminate, relieve or diminish Pan Am's obligations under
SECTIONS 3 and 4, which obligations shall survive any such expiration or
termination. ING's obligations under SECTION 4 shall survive the expiration or
any termination hereof.
Section 6. REPRESENTATIONS AND WARRANTIES. Each
of the parties to this Agreement represents and warrants to
the other party hereto that:
(a) It is duly organized, validly existing and in good
standing under the laws of the jurisdiction of its formation (as indicated in
the first paragraph of this Agreement), and has the power and authority to carry
on its business and to enter into and perform its obligations under this
Agreement.
(b) This Agreement has been duly authorized by all necessary
corporate action on the part of such party and does not require any approval of
shareholders of such party (or if such approval is required, such approval has
been obtained). This Agreement has been duly executed and delivered by it and
constitutes the valid and legally binding obligation of such party, enforceable
against it in accordance with its terms, except as such enforceability may be
limited by bankruptcy, insolvency or similar laws affecting the rights of
creditors generally or by general principles of equity.
Section 7. NOTICES. All notices and other
-4-
communications provided for in, or effected under, this Agreement shall be in
writing and shall be delivered and effective as follows: (a) delivered by hand
(effective at delivery); (b) mailed, first class postage prepaid, return receipt
requested (effective on the third business day after deposit in the mail); (c)
sent by overnight courier (effective on the business day following the business
day on which it is delivered to a recognized courier service); or (d) sent by
facsimile transmission and confirmed by hand- delivered, mailed or overnight
courier copy (effective when sent by facsimile transmission and confirmed by the
sender's facsimile machine printout). Any such notice or other communication
shall be addressed as follows:
(a) if to ING, addressed as follows:
ING Aviation Lease B.V.
Xxxxxxxxxxxx 00
0000 XX Xxxxxxxxx-Xxxxxxxx
X.X. Xxx 0000
0000 XX Xxxxxxxxx
Xxx Xxxxxxxxxxx
Attention: Managing Director-Operating Lease
Telephone: 000-00-00-0000-000
Facsimile: 011-31-20-6525-704
(b) if to Pan Am, addressed as follows:
Pan American Airways, Inc.
0000 X.X. 00xx Xxxxxx
Xxxxx, Xxxxxxx 00000
Attention: President & CEO
Telephone: 000-000-0000
Facsimile: 000-000-0000
or, in either case, at such other address as the party to receive such
communication may hereafter designate by notice given as provided herein to the
other party.
Section 8. MISCELLANEOUS.
(a) Nothing herein shall constitute a commitment by ING or ING
Lease to consummate any transaction or to enter into any Transaction Document,
except on such terms and conditions as are acceptable to it, consistent with the
LOI.
(b) This Agreement may be executed in any number of
counterparts, each of which shall be an original, but all of which together
shall constitute one instrument.
(c) All covenants and agreements in this
-5-
Agreement by or on behalf of the respective parties hereto shall bind and inure
to the benefit of their respective successors and permitted assigns.
(d) Nothing in this Agreement, either express or implied, is
intended to confer upon any person or entity (other than the parties hereto and
their respective successors and permitted assigns) any benefits, rights or
remedies, except that any Indemnitee is an intended third party beneficiary of
the agreements of Pan Am herein and may enforce the same directly against Pan
Am.
(e) THIS AGREEMENT SHALL BE GOVERNED AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO CONTRACTS MADE
AND TO BE PERFORMED WITHIN SUCH STATE.
(f) No party hereto may assign this Agreement or its rights or
obligations hereunder to any other person without the prior written consent of
the other parties hereto, except that ING may assign its rights hereunder to one
or more affiliates of ING or to any Indemnitee.
(g) The terms of this Agreement may be waived, modified,
altered or amended only by an instrument in writing and signed by a duly
authorized representative of each party hereto.
(h) The waiver of any breach or violation of any term or
provision hereof shall not constitute a waiver of any subsequent breach or
violation of the same or any other term or provision.
(i) This Agreement embodies the entire agreement and
understanding among the parties hereto with respect to the subject matter
hereof, and supersedes all prior agreements, letters of intent and
understandings relating to the subject matter hereof.
(j) The subdivision headings in this Agreement have been
inserted for the convenience of reference only and shall not limit or otherwise
affect the meaning, interpretation or construction of any provision hereof.
-6-
IN WITNESS WHEREOF, the undersigned have executed and
delivered this Agreement as of the date first above written.
ING AVIATION LEASE B.V.
By: _______________________
Name: _____________________
Title: ____________________
By: _______________________
Name: _____________________
Title: ____________________
PAN AMERICAN AIRWAYS, INC.
By: _______________________
Name: _____________________
Title: ____________________
-7-
ANNEX 1
CONSULTING SERVICES
Advice relating to Pan Am's efforts to obtain any permits and
approvals from the United States Department of Transportation (the "DOT") and
the United States Federal Aviation Administration (the "FAA") that are necessary
to enable Pan Am to engage in the business of a U.S. air carrier in the
regularly scheduled transportation of persons and property, including advice
relating to airline operations and the approval and implementation of the ING
Lease maintenance program for the Aircraft, all in the context of seeking and
obtaining such permits and approvals.
SCHEDULE L
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RIGHT OF FIRST REFUSAL PURCHASE AGREEMENT RELATING TO
AIRBUS MODEL A300B4-200 AIRCRAFT MSN 211
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This RIGHT OF FIRST REFUSAL AGREEMENT, dated as of April 15,
1996 (this "AGREEMENT"), among ING Lease Aircraft B.V., a corporation formed and
existing under the laws of The Kingdom of the Netherlands ("ING"), EAL
(Delaware) VIII Corp., a corporation formed and existing under the laws of the
State of Delaware ("EAL") and Pan American Airways, Inc., a corporation formed
and existing under the laws of the State of Florida ("PAN AM").
R E C I T A L S :
A. Contemporaneously with the execution and delivery of this
Agreement, Pan Am, as lessee, and EAL, as lessor, are executing and delivering a
Lease Agreement (such agreement, as amended, restated or otherwise in effect
from time to time with respect to the aircraft, the "LEASE") relating to the
lease by EAL to Pan Am of the Airbus Industrie Model A300B4-200 Aircraft bearing
the manufacturer's serial number described above (as more particularly described
in the Lease, the "AIRCRAFT"); and
B. In connection with the transactions contemplated by the
Lease, EAL, ING and Pan Am desire to set forth herein certain additional
agreements with respect to the Lease, as hereinafter provided.
NOW, THEREFORE, for good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the undersigned hereby
agree as follows (capitalized terms not defined herein shall have the meanings
set forth in the Lease):
Section 1. RIGHT OF FIRST REFUSAL, RELATING TO A SALE OF THE
AIRCRAFT.
(a) So long as no Event of Default shall have occurred and be
continuing, Seller agrees that it shall not, at any time during the Lease Term
(including any Extension Lease Term with respect to which Pan Am has exercised
the Extension Option in accordance with the Lease) Sell the Aircraft to any
person without notifying Pan Am of such proposed Sale and giving Pan Am the
opportunity to purchase the Aircraft pursuant to the terms of such proposed
Sale, as provided below. If during the Lease Term, Seller shall receive and be
willing to accept and consummate a bona fide offer from a third party to
purchase the Aircraft in a Sale
transaction, including the acceptance by any prospective purchaser of a
solicitation by Seller for such offer (herein called an "OFFER"), Seller shall
deliver written notice to Pan Am in which Seller shall set forth in reasonable
detail the terms and conditions of such Offer ("SELLER'S OFFER NOTICE"),
whereupon Pan Am shall have the right (as used in this SECTION 1, the "RIGHT OF
FIRST REFUSAL"), exercisable as provided below, to purchase the Aircraft upon
the same terms and conditions as set forth in the Seller's Offer Notice. To
exercise the Right of First Refusal, Pan Am shall, prior to the 15th day
following its receipt of Seller's Offer Notice, deliver written notice to ING
and EAL (the "EXERCISE NOTICE") stating that Pan Am has elected to purchase the
Aircraft upon the same terms and conditions (including without limitation the
terms therein, if any, relating to purchase price, closing date, security
deposits, down payments, residual value sharing), as are set forth in Seller's
Offer Notice; PROVIDED, HOWEVER, that if ING and EAL shall not have received the
Exercise Notice corresponding to any Seller's Offer Notice before such 15th day,
then Seller may consummate the Sale transaction described in such Seller's Offer
Notice and Pan Am's rights with respect thereto shall terminate. Upon receipt by
ING or EAL of any Exercise Notice, Pan Am shall become unconditionally and
irrevocably obligated to purchase the Aircraft pursuant to the terms and
conditions set forth in the related Seller's Offer Notice.
(b) Seller shall not be required to notify Pan Am of any Offer
or Sale from and after the occurrence of an Event of Default, and the Right of
First Refusal shall terminate automatically upon the occurrence of any Event of
Default.
(c) As used herein, the following terms have the respective
meanings specified below:
"AFFILIATE" means, with respect to any specified person, any
other person controlling, controlled by, or under common control with such
specified person.
"SELLER" means ING or EAL, as the case may be, or both ING and
EAL, in any case, in the context of a Sale or proposed Sale of the Aircraft.
"SALE" means (1) the sale of the Aircraft in a transaction in
which all right, title and interest of Seller thereto is transferred to a person
that is not an Affiliate of ING or EAL or a trustee for ING or EAL or an
Affiliate of either thereof, and (2) the assignment or transfer of the entire
beneficial interest in the Aircraft to a person that is not an Affiliate of ING
or EAL or a trustee for ING or EAL or an Affiliate of either thereof, whether or
not any such Sale includes the transfer of all right, title and
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interest in the Aircraft or is in the form of a conditional sale of the Aircraft
or is in the form of a financing lease in which the parties thereto do not treat
such lease as a lease for Federal income tax purposes; PROVIDED, HOWEVER, that,
notwithstanding the foregoing, the following transactions shall not constitute a
"Sale" for purposes hereof or for purposes of Pan Am's Right of First Refusal:
(a) any assignment or other transfer by ING of its rights or interests in the
Aircraft, or in or under the Security Agreement, the Lease or any other document
relating thereto or in or to the Aircraft at any time prior to the foreclosure
by ING of title to the Aircraft shall not constitute a "Sale", (b) any
assignment or other transfer by ING of any right or interest in or under the
Lease or any other document relating thereto, so long as such assignment or
transfer is not effected in connection with the assignment or transfer of legal
title or the beneficial interest in the Aircraft, (c) any assignment or transfer
of any interest to any Affiliate of either ING or EAL, (d) any assignment or
transfer of any interest to a trustee acting as trustee for the benefit of ING
or EAL or any Affiliate of either thereto, (e) any sale, merger, consolidation,
liquidation, winding up or other restructuring of EAL, or the transfer of any
capital stock or securities thereof and (f) any assignment or other transfer of
EAL's or ING's interest in a transaction in which EAL or ING (or an Affiliate
thereof or trustee therefor) retains an interest therein or any other
restructuring, re-financing or re- booking of EAL's or ING's interest in the
Aircraft, and (g) any assignment or transfer of EAL's interest in the Aircraft
or in or under the Lease to ING or any Affiliate thereof or any trustee for ING
or any Affiliate thereof.
"SELL" means to sell, convey or transfer the
Aircraft in a Sale transaction.
(d) If Pan Am shall fail to accept the Offer by written
notice, as provided above, then Seller shall be free to consummate the Sale
transaction described in the Offer, but only on the terms contained in the Offer
as presented to Pan Am. If Pan Am is notified of a Sale transaction that is not
consummated, then Seller shall remain obligated hereunder to notify Pan Am of
subsequent Offers in the same manner as provided above, whether or not Pan Am
has rejected or failed to respond to any notice of any prior Offer.
Section 2. PROCEDURE UPON PURCHASE.
In any Sale transaction in which Pan Am has exercised the
Right of First Refusal, Seller shall effect the transfer to Pan Am of such
interest in the Aircraft as is contemplated by the Offer, without recourse,
representation or warranty of any kind, except that such interest is free and
clear of any Lien created by or through
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Seller.
Section 3. MISCELLANEOUS.
(a) This Agreement shall constitute a Lease Document, as
defined in the Lease, for all purposes thereof, including for purposes of CLAUSE
6 (payments) and CLAUSE 25 (jurisdiction). Breach by Lessee of its obligations
hereunder shall constitute an Event of Default (as defined in the Lease).
Notices, requests, demands and other communications contemplated by or made
pursuant to this Agreement shall be made and be effective in the manner
prescribed in the Lease.
(b) This Agreement may be executed in any number of
counterparts, each of which shall be an original, but all of which together
shall constitute one instrument.
(c) The provisions of this Agreement shall benefit and bind
ING, EAL, Pan Am and their respective successors and permitted assigns;
PROVIDED, HOWEVER, that Pan Am may not assign or delegate any of its rights or
obligations hereunder without the prior written consent of EAL and ING.
(d) THIS AGREEMENT SHALL BE GOVERNED AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO CONTRACTS MADE
AND TO BE PERFORMED WITHIN SUCH STATE.
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IN WITNESS WHEREOF, the undersigned have executed and
delivered this Agreement as of the date first above written.
ING AVIATION LEASE B.V.
By: _______________________
Name: _____________________
Title: ____________________
By: _______________________
Name: _____________________
Title: ____________________
EAL (DELAWARE) VIII CORP.
By: _______________________
Name: _____________________
Title: ____________________
PAN AMERICAN AIRWAYS, INC.
By: _______________________
Name: _____________________
Title: ____________________
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