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EXHIBIT 4.17
THE RIGHTS OF LESSOR UNDER THIS AMENDED AND RESTATED AIRCRAFT LEASE AGREEMENT
[GPA 1989 BN-11] AND IN THE AIRCRAFT COVERED HEREBY WILL BE OR HAVE BEEN
ASSIGNED TO, AND ARE OR WILL BE SUBJECT TO A SECURITY INTEREST IN FAVOR OF, THE
CHASE MANHATTAN BANK, FORMERLY KNOWN AS CHEMICAL BANK, SUCCESSOR BY MERGER TO
MANUFACTURERS HANOVER TRUST COMPANY, AS INDENTURE TRUSTEE UNDER AN AMENDED AND
RESTATED TRUST INDENTURE AND SECURITY AGREEMENT [GPA 1989 BN-11] DATED AS OF
JUNE __, 1997. AS PROVIDED IN SECTION 21(e) HEREOF, TO THE EXTENT, IF ANY,
THAT THIS AMENDED AND RESTATED AIRCRAFT 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 AMENDED AND RESTATED
AIRCRAFT LEASE AGREEMENT MAY BE CREATED THROUGH THE TRANSFER OF POSSESSION OF
ANY COUNTERPART OTHER THAN THE ORIGINAL COUNTERPART, WHICH SHALL BE IDENTIFIED
AS THE COUNTERPART CONTAINING THE RECEIPT THEREFOR EXECUTED BY THE CHASE
MANHATTAN BANK, AS INDENTURE TRUSTEE, ON THE SIGNATURE PAGE THEREOF.
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AMENDED AND RESTATED AIRCRAFT LEASE AGREEMENT
[GPA 1989 BN-11]
Dated as of December 19, 1989
Amended and Restated as of June __, 1997
between
WILMINGTON TRUST COMPANY,
not in its individual capacity except
as otherwise expressly provided herein,
but solely as Owner Trustee under a
Trust Agreement [GPA 1989 BN-11] dated
as of December 19, 1989, as amended
Lessor
and
AMERICA WEST AIRLINES, INC.
Lessee
One Airbus A320-231 Aircraft
Manufacturer's Serial Xx. 00
X.X. Xxxxxxxxxxxx Xx. X000XX
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TABLE OF CONTENTS
Page
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Section 1. Definitions. . . . . . . . . . . . . . . . . . . . . . . . . . 1
Section 2. Agreement to Lease . . . . . . . . . . . . . . . . . . . . . . 21
Section 3. Delivery and Acceptance; Term . . . . . . . . . . . . . . . . 21
(a) Time of Delivery . . . . . . . . . . . . . . . . . . . . 21
(b) [Intentionally Left Blank] . . . . . . . . . . . . . . . 21
(c) Acceptance of Aircraft . . . . . . . . . . . . . . . . . 22
(d) Term of Lease . . . . . . . . . . . . . . . . . . . . . 22
Section 4. Rent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
(a) Rent . . . . . . . . . . . . . . . . . . . . . . . . . . 22
(b) Minimum Payments . . . . . . . . . . . . . . . . . . . . 22
(c) Date, Place and Method of Payment . . . . . . . . . . . . 23
(d) Prohibition Against Setoff, Counterclaim, Etc. . . . . . 24
Section 5. Representations, Warranties and Covenants . . . . . . . . . . . 25
(a) Warranties and Disclaimer of Warranties . . . . . . . . . 25
(b) Representations and Warranties of Lessor . . . . . . . . 27
(c) No Amendments to Financing Documents . . . . . . . . . . 27
(d) Suppliers' Warranties . . . . . . . . . . . . . . . . . . 27
Section 6. Possession and Use . . . . . . . . . . . . . . . . . . . . . . 28
(a) Possession . . . . . . . . . . . . . . . . . . . . . . . 28
(b) Reciprocal Recognition of Rights . . . . . . . . . . . . 35
(c) Lawful Insured Operations . . . . . . . . . . . . . . . . 35
(d) Maintenance . . . . . . . . . . . . . . . . . . . . . . . 37
(e) Registration and Insignia . . . . . . . . . . . . . . . . 38
Section 7. Inspection. . . . . . . . . . . . . . . . . . . . . . . . . . . 39
Section 8. Additional Covenants of Lessee . . . . . . . . . . . . . . . . 40
(a) Financial Information . . . . . . . . . . . . . . . . . . 40
(b) Maintenance of Corporate Existence . . . . . . . . . . . 41
(c) Maintenance of Status . . . . . . . . . . . . . . . . . . 42
(d) Payment of Taxes . . . . . . . . . . . . . . . . . . . . 42
(e) Consolidation, Merger, Etc. . . . . . . . . . . . . . . . 42
(f) Information . . . . . . . . . . . . . . . . . . . . . . . 43
(g) Place of Business . . . . . . . . . . . . . . . . . . . . 44
(h) Certain Limitations on Use . . . . . . . . . . . . . . . 44
(i) Section 1110 . . . . . . . . . . . . . . . . . . . . . . 45
(j) Permits and Licenses . . . . . . . . . . . . . . . . . . 45
(k) Security Opinion; Annual Certificate . . . . . . . . . . 45
(l) Letter of Credit . . . . . . . . . . . . . . . . . . . . 47
Section 9. Replacement of Parts; Alterations, Modifications and Additions 49
(a) Replacement of Parts . . . . . . . . . . . . . . . . . . 49
(b) Alterations, Modifications and Additions . . . . . . . . 50
(c) Pooling . . . . . . . . . . . . . . . . . . . . . . . . . 52
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Page
Section 10. General Tax Indemnification . . . . . . . . . . . . . . . 53
(a) Indemnity . . . . . . . . . . . . . . . . . . . . . . . . 53
(b) Exclusions . . . . . . . . . . . . . . . . . . . . . . . 56
(c) Covered Income Tax . . . . . . . . . . . . . . . . . . . 59
(d) Reports and Returns . . . . . . . . . . . . . . . . . . . 60
(e) After-Tax Basis . . . . . . . . . . . . . . . . . . . . . 61
(f) Tax Benefit . . . . . . . . . . . . . . . . . . . . . . . 61
(g) Payment . . . . . . . . . . . . . . . . . . . . . . . . . 62
(h) Contest . . . . . . . . . . . . . . . . . . . . . . . . . 62
(i) Refund . . . . . . . . . . . . . . . . . . . . . . . . . 64
(j) Diligence . . . . . . . . . . . . . . . . . . . . . . . . 64
(k) Affiliated Group . . . . . . . . . . . . . . . . . . . . 64
(l) Survival . . . . . . . . . . . . . . . . . . . . . . . . 64
Section 11. Loss, Damage and Requisition . . . . . . . . . . . . . . 64
(a) Event of Loss with Respect to the Airframe . . . . . . . 65
(b) Event of Loss with Respect to an Engine . . . . . . . . . 67
(c) Conveyance of Replacement Airframe . . . . . . . . . . . 68
(d) Application of Proceeds and Payments . . . . . . . . . . 71
(e) Requisition for Use by Government with Respect to
the Aircraft . . . . . . . . . . . . . . . . . . . . . . 71
(f) Application in Default . . . . . . . . . . . . . . . . . 72
Section 12. Insurance . . . . . . . . . . . . . . . . . . . . . . . . 72
(a) Public Liability and Property Damage Insurance. . . . . 72
(b) Insurance Against Loss or Damage . . . . . . . . . . . . 74
(c) Application of Insurance Proceeds for an Event of
Loss . . . . . . . . . . . . . . . . . . . . . . . . . . 77
(d) Application of Insurance Proceeds for Other than
an Event of Loss . . . . . . . . . . . . . . . . . . . . 78
(e) Application in Default . . . . . . . . . . . . . . . . . 78
(f) Certificates . . . . . . . . . . . . . . . . . . . . . . 79
(g) Reinsurance . . . . . . . . . . . . . . . . . . . . . . . 79
(h) Storage . . . . . . . . . . . . . . . . . . . . . . . . . 80
(i) Amounts Held . . . . . . . . . . . . . . . . . . . . . . 80
(j) After the Term . . . . . . . . . . . . . . . . . . . . . 80
(k) Governmental Indemnity . . . . . . . . . . . . . . . . . 81
Section 13. General Indemnity . . . . . . . . . . . . . . . . . . . . 81
Section 14. Liens . . . . . . . . . . . . . . . . . . . . . . . . . . 86
Section 15. Protection of Title and Further Assurances . . . . . . . 87
Section 16. Return of Aircraft and Records . . . . . . . . . . . . . 89
(a) Return . . . . . . . . . . . . . . . . . . . . . . . . . 89
(b) Status Upon Return . . . . . . . . . . . . . . . . . . . 89
(c) Engines . . . . . . . . . . . . . . . . . . . . . . . . . 90
(d) Records and Documents . . . . . . . . . . . . . . . . . . 91
(e) Condition of Aircraft . . . . . . . . . . . . . . . . . . 92
(f) Final Inspection . . . . . . . . . . . . . . . . . . . . 92
(g) Aircraft Records and Documents . . . . . . . . . . . . . 93
(h) Corrections and Subsequent Corrections . . . . . . . . . 93
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Page
(i) Functional Flight Check . . . . . . . . . . . . . . . . . 94
(j) Export Certificate of Airworthiness . . . . . . . . . . . 94
(k) Service Bulletin and Modification Kits . . . . . . . . . 94
(l) Storage Upon Return . . . . . . . . . . . . . . . . . . . 95
(m) Resale/Release Cooperation . . . . . . . . . . . . . . . 95
Section 17. Events of Default . . . . . . . . . . . . . . . . . . . . 95
Section 18. Remedies . . . . . . . . . . . . . . . . . . . . . . . . 97
Section 19. Security for Obligations . . . . . . . . . . . . . . . . 103
Section 20. Renewal Option . . . . . . . . . . . . . . . . . . . . . 104
Section 21. Miscellaneous . . . . . . . . . . . . . . . . . . . . . . 105
(a) Severability, Amendment, and Construction . . . . . . . . 105
(b) GOVERNING LAW . . . . . . . . . . . . . . . . . . . . . . 106
(c) Notices . . . . . . . . . . . . . . . . . . . . . . . . . 106
(d) Lessor's Right to Perform for Lessee . . . . . . . . . . 106
(e) Counterparts . . . . . . . . . . . . . . . . . . . . . . 107
(f) Quiet Enjoyment . . . . . . . . . . . . . . . . . . . . . 107
(g) Brokers . . . . . . . . . . . . . . . . . . . . . . . . . 107
(h) Investment of Funds . . . . . . . . . . . . . . . . . . . 107
(i) Entire Agreement; Amendment . . . . . . . . . . . . . . . 108
(j) Expenses . . . . . . . . . . . . . . . . . . . . . . . . 108
(k) Federal Bankruptcy Code . . . . . . . . . . . . . . . . . 108
(l) U.S. Registration Number . . . . . . . . . . . . . . . . 109
(m) Submission to Jurisdiction; Service of Process;
Waiver of Forum Non Conveniens; Waiver of Jury
Trial . . . . . . . . . . . . . . . . . . . . . . . . . . 109
(n) Limitation on Recourse . . . . . . . . . . . . . . . . . 110
(o) Successor Trustee. . . . . . . . . . . . . . . . . . . . 111
(p) Article 2-A of the UCC. . . . . . . . . . . . . . . . . . 111
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ANNEXES
Annex I - Description of Original Head Lease
EXHIBITS
Exhibit A - Stipulated Loss Values
Exhibit B - Aircraft Records and Documents
Exhibit C - Definitions and Values
Exhibit D-1 - Lease Supplement No. 3
Exhibit D-2 - Letter of Credit
Exhibit E - Return Condition Requirements
Exhibit F-1 - Foreign Air Carriers
Exhibit F-2 - Permitted Foreign Sublessee Domiciles
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AMENDED AND RESTATED AIRCRAFT LEASE AGREEMENT
THIS AMENDED AND RESTATED AIRCRAFT LEASE AGREEMENT dated as of December 19,
1989 and amended and restated as of June ___, 1997 is entered into between
WILMINGTON TRUST COMPANY, not in its individual capacity except as otherwise
expressly provided herein, but solely as Owner Trustee under a Trust Agreement
[GPA 1989 BN-11] dated as of December 19, 1989, as amended, and with its
principal place of business at Xxxxxx Xxxxxx Xxxxx, Xxxxxxxxxx, Xxxxxxxx 00000
(together with its successors and permitted assigns, "Lessor"), and AMERICA
WEST AIRLINES, INC., a Delaware corporation, with its chief executive office at
0000 Xxxx Xxx Xxxxxx Xxxxxxxxx, Xxxxxxx, Xxxxxxx 00000 (together with its
successors and permitted assigns, "Lessee").
W I T N E S S E T H:
WHEREAS, Lessor and Lessee desire to amend and, solely for the
convenience of the parties, restate in its entirety the Original Head Lease (as
hereinafter defined) as of the Restatement Date (as hereinafter defined) as
hereinafter set forth;
NOW, THEREFORE, in consideration of the mutual promises herein
contained, Lessor and Lessee agree as follows:
Section 1. Definitions.
The following terms shall have the following respective meanings for
all purposes of this Lease (including the Recitals) and shall be equally
applicable to both the singular and the plural forms of the terms defined
herein:
As used herein, the terms "Assigned Sublease", "Equipment Notes",
"Excepted Payments", "Indenture Supplement", "Note Holder", "Pass Through
Trust", "Pass Through Trust Agreement", "Pass Through Trustee", "Past Due
Rate", "Principal Amount", "Refinancing Transaction", "Refunding Agreement",
"Restatement Date", "Sublease Assignment", "Trust Company" and "Trust Indenture
Estate" shall have the meanings specified in the Indenture; the terms
"Intercreditor Agreement", "Liquidity Facility", "Liquidity Provider" and
"Subordination Agent" shall have the meanings specified in the Intercreditor
Agreement (as defined in the Pass Through Trust Agreement); and the terms "OP
Guarantee", "Lease Amendment No. 1" and "SLV Letter Agreement" shall have the
meanings specified in the Refunding Agreement.
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"Affiliate" shall mean, with respect to any specified Person, any
other Person which, directly or indirectly, owns or controls, is controlled by
or is under common control with such specified Person. Control will be deemed
to exist based on (i) ownership of 25% or more of the voting securities of a
Person or (ii) the power to direct or elect or cause the direction or election
of the management and policies of a Person whether by contract or otherwise.
"Airbus Industrie" shall mean Airbus Industrie G.I.E., a groupement
d'interet economique formed under the laws of the French Republic, and its
successors and assigns.
"Aircraft" shall mean the Airframe leased hereunder and described in
Lease Supplement No. 1 (or any airframe from time to time substituted for such
Airframe pursuant to Section 11(a)(i) hereof) together with the (i) two IAE
Model V2500 Engines described in Lease Supplement No. 1 (or any Engine
substituted therefor hereunder) with respect to such Airframe, whether or not
any such initial or substituted Engines may from time to time no longer be
installed on the Airframe or may be installed on any other airframe, (ii) Parts
or components thereof, (iii) spare parts or ancillary equipment or devices
furnished therewith under this Lease (including any separate equipment
described on one or more Lease Supplements hereto), (iv) the Aircraft Records
and Documents and all other logs, manuals and records with respect to such
Aircraft, and (v) all substitutions, replacements and renewals of any and all
thereof.
"Aircraft Records and Documents" shall mean the items identified in
Exhibit B hereto, all of which shall be maintained in the English language.
"Airframe" shall mean (a) the Airbus Industrie model A320-231 aircraft
(except Engines or engines from time to time installed thereon) described in
Lease Supplement No. 1 and leased by Lessor to Lessee hereunder, and any such
model aircraft (except Engines or engines from time to time installed thereon)
which may from time to time be substituted for such aircraft (except Engines or
engines from time to time installed thereon) pursuant to Section 11(a)(i); and
(b) any and all Parts so long as the same shall be incorporated or installed on
or attached to the Airframe, or so long as title thereto shall remain vested in
Lessor in accordance with the terms of Section 9 hereof after removal from the
Airframe; provided, however, that at such time as an aircraft (except Engines
or engines from time to time
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installed thereon) shall be deemed part of the property leased hereunder in
substitution for the Airframe pursuant to the applicable provisions hereof and
the replacement Airframe shall have been subjected to the Lien of the Indenture
(if the Lien of the Indenture has not been discharged), the replaced Airframe
shall cease to be the Airframe hereunder.
"Appraisal Procedure" shall mean the following procedure for
determining the "fair market sales value" or "fair market rental value" of the
Aircraft, Airframe, an Engine or a Part. Except as provided in Section 18,
"fair market sales value" or "fair market rental value" shall mean the value
that would be obtained in an arm's-length transaction between an informed and
willing seller or lessor, as the case may be, and an informed and willing buyer
or lessee, as the case may be, both under no compulsion to sell and purchase or
to lease (and other than a lessee in possession or a used equipment scrap
dealer), as the case may be, as such value is determined by an appraisal which
assumes: (i) that such Aircraft, such Airframe, such Engine or such Part is
unencumbered by this Lease (or any sublease) or any of the other Operative
Documents or any of the Financing Documents and the terms thereof; (ii) that
such Aircraft, Airframe, Engine or Part has been maintained in all respects in
accordance with the terms of this Lease (whether or not in fact in such
condition), (iii) that such Aircraft, Airframe, Engine or Part meets the return
conditions specified in Section 16 and Exhibit E (whether or not in fact
meeting such conditions) and (iv) that Lessee has removed the Removable Parts
entitled to be removed under Section 9(b) (it being agreed that no such removal
is permitted in connection with an appraisal pursuant to Section 18) and
replaced any part which was removed from the Aircraft as a result of such
Removable Part being installed; provided, however, that costs of removal from
the location of current use and costs of sale shall not be a consideration in
determining such value except in connection with any determination of "fair
market sales value" or "fair market rental value" pursuant to Section 18; and
provided, further, that any determination of "fair market sales value" or "fair
market rental value" pursuant to Section 18 shall be on an "as is, where is"
basis in its actual condition and location subject to this Lease and any
sublease and any and all Liens thereon (other than a Lessor's Lien or Lenders'
Lien). Lessor and Lessee shall, except for any appraisal pursuant to Section
18 in which case only Lessor shall select such appraiser (which appraiser does
not have to be acceptable to Lessee), select an independent
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nationally-recognized aircraft appraiser, mutually acceptable to each of them,
who shall make the determination as to the "fair market sales value" or "fair
market rental value" of such Aircraft, Airframe, Engine or Part for which such
appraisal is to be conducted. If Lessor and Lessee fail to agree upon a
mutually acceptable appraiser within ten (10) days, then each of Lessor and
Lessee shall select an appraiser and such determination shall be made by such
appraisers (if either party shall fail to appoint an appraiser within ten (10)
days after notice from the other party of the selection of its appraiser, then
the appraisal made by the other party's appraiser shall be determinative). If
the two appraisers chosen pursuant to the preceding sentence fail to agree upon
a determination of the "fair market sales value" or "fair market rental value"
of such Aircraft, Airframe, Engine or Part within twenty (20) days after their
appointment, then such appraisers shall mutually choose a third appraiser
within ten (10) days thereafter, provided that if such appraisers fail to
mutually choose a third appraiser within said 10-day period, such appointment
shall be made by the American Arbitration Association (or any successor) in New
York, New York, and the three appraisers so chosen shall each make such
determination. The appraisal determined by each of the three appraisers chosen
pursuant to the preceding sentence shall be averaged and the appraisal furthest
from the average of the three appraisals shall be disregarded. The appraisal
determined by each of the two remaining appraisers shall be averaged and such
average shall be the appraised "fair market sales value" or "fair market rental
value" of such Aircraft, Airframe, Engine or Part. Lessee shall bear all the
fees and expenses of the Appraisal Procedure.
"Approved Broker" shall mean any reputable insurance broker of
recognized responsibility and standing experienced in aircraft insurance.
"Approved Insurers" shall mean any reputable and creditworthy
insurance company of recognized responsibility and standing experienced in
aircraft insurance.
"Basic Rent" for the Aircraft shall mean the Basic Rent specified in
Exhibit C and payable throughout the Basic Term for the Aircraft pursuant to
Section 4(a)(i).
"Basic Rent Payment Date" shall mean each day determined in accordance
with Exhibit C upon which a payment of Basic Rent becomes payable. If a Basic
Rent Payment Date shall fall on a day which is not a Business Day, any payment
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due on such Basic Rent Payment Date shall be made on the next succeeding
Business Day.
"Basic Term" shall mean the period specified in Lease Supplement No.
3.
"Business Day" shall mean any day other than a Saturday, Sunday or
other day on which banking institutions in New York, New York or Hartford,
Connecticut are authorized or required by Law to be closed.
"Buyer Furnished Equipment" shall mean the equipment which was to be
furnished by Xxxxxxx, Inc. or, if applicable, Original Head Lessee and
installed on the Aircraft pursuant to Clause 18 of the Purchase Agreement, and
any similar equipment furnished to Lessee.
"Certificated Air Carrier" shall mean any corporation (except the
United States Government) domiciled in the United States of America and holding
a Certificate of Convenience and Necessity issued under Section 41102(a) of the
Federal Aviation Act by the Department of Transportation or any predecessor or
successor agency thereto, or, in the event such Certificates shall no longer be
issued, any corporation (except the United States Government) domiciled in the
United States of America and legally engaged in the business of transporting
for hire passengers or cargo by air predominantly to, from or between points
within the United States of America, and, in either event, operating commercial
jet aircraft, which also is a citizen of the United States (as defined in
Section 40102 of the Federal Aviation Act) holding an air carrier operating
certificate issued by the Secretary of Transportation pursuant to chapter 447
of the Federal Aviation Act for aircraft capable of carrying 10 or more
individuals or 6,000 pounds or more of cargo so as to fall within the purview
of 11 U.S.C. Section 1110 or any analogous statute.
"Civil Reserve Air Fleet Program" shall mean the Civil Reserve Air
Fleet Program administered by the United States Government and authorized under
10 U.S.C. Section 9511, et seq., as amended, or any substantially similar or
substitute program of the United States Government.
"Claims" shall have the meaning specified in Section 13.
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"Code" shall mean the Internal Revenue Code of 1986, as amended and
the rules and regulations promulgated thereunder.
"Commonly Controlled Person" shall mean an entity, whether or not
incorporated, which is under common control with Lessee within the meaning of
Section 414(b) or (c) of the Code.
"Consent and Guaranty" shall mean the Amended and Restated Consent and
Guaranty of Airbus Industrie, dated as of May 1, 1985, as amended and restated
as of December 30, 1988, in the form attached to the Purchase Agreement.
"Default" shall mean an event or condition which would constitute an
Event of Default with the lapse of time or the giving of notice or both.
"Delivery Date" shall mean December 29, 1989, being the date the
Aircraft was delivered to and accepted by the Original Head Lessee as Lessee
hereunder for all purposes of this Lease.
"$" and "dollars" shall mean the lawful currency of the United States
of America.
"Engine" shall mean (i) each of the two IAE Model V2500 engines listed
by manufacturer's serial number in Lease Supplement No. 1 and initially
installed on the Airframe covered by such Lease Supplement, whether or not from
time to time thereafter no longer installed on the Airframe or installed on any
other aircraft or airframe, and (ii) any replacement engine which may from time
to time be substituted, pursuant to Section 6(a), 11(a), 11(b) or 16(c), for
any Engine leased hereunder; together in each case with any and all Parts
incorporated or installed in or attached thereto or any and all Parts removed
therefrom so long as title thereto after removal from such Engine shall remain
vested in Lessor in accordance with the terms of Section 9 hereof. Except as
otherwise set forth herein, at such time as a replacement engine shall be so
substituted and leased hereunder and the replacement engine shall have been
subjected to the Lien of the Indenture (if the Lien of the Indenture has not
been discharged), such replaced Engine shall cease to be an Engine hereunder.
The term "Engines" means, as of any date of determination, both Engines then
leased hereunder.
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"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended, as from time to time in effect.
"Event of Default" shall have the meaning specified in any one or more
clauses in Section 17.
"Event of Loss" shall mean any of the following events with respect to
the Aircraft, Airframe or either Engine: (a) loss of such property or the use
thereof due to theft or disappearance for a period in excess of sixty (60)
consecutive days, but in no event later than the last day of the Term; (b)
destruction or damage of such property that renders repair uneconomic or such
property permanently unfit for normal use by Lessee (or, if a Permitted
Sublease is in effect, the Permitted Sublessee) for any reason whatsoever; (c)
any loss or disappearance of or damage to or destruction of such property which
results in an insurance settlement with respect to such property on the basis
of an actual or a constructive total loss; (d) the condemnation, confiscation,
appropriation, seizure or requisition of title to any such property by any
Governmental Entity which results in the loss of title by Lessor for ten (10)
days or more but excluding requisition for use or hire which does not involve
requisition of title; (e) the condemnation, confiscation, appropriation,
seizure or requisition of the use of any such property by any Governmental
Entity (other than a requisition for use by the federal government of the
United States or any instrumentality or agency thereof bearing the full faith
and credit of the United States of America), which in any such case shall have
resulted in the loss of possession thereof by Lessee for a period in excess of
the earlier of ninety (90) consecutive days or the last day of the Term (or for
such shorter period ending on the date which is the next Business Day after the
date of receipt of an insurance settlement with respect to such property on the
basis of a total loss); (f) the requisition for use of such property by the
federal government of the United States or any agency or instrumentality
thereof bearing the full faith and credit of the United States of America,
which purports to or does continue beyond the Term; (g) as a result of any law,
rule, regulation, order or other action by the FAA, the Department of
Transportation or any other Governmental Entity having jurisdiction, the use of
such Aircraft, Airframe or Engine in the normal course of Lessee's (or, if a
Permitted Sublease is in effect, the Permitted Sublessee's) business of air
transportation of passengers shall have been prohibited for a period of six (6)
consecutive months, unless Lessee (or the Permitted Sublessee),
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prior to the expiration of such six-month period, shall have undertaken and
shall be diligently carrying forward all steps which are necessary or desirable
to permit such normal use of such item of equipment by Lessee (or the Permitted
Sublessee), or, in any event, if such normal use shall have been so prohibited
by any such Governmental Entity for a period of twelve (12) consecutive months
or is continuing on the last day of the Term; or (h) as otherwise provided
herein. An Event of Loss with respect to the Aircraft shall be deemed to have
occurred if an Event of Loss occurs with respect to the Airframe which is a
part of such Aircraft. An Event of Loss with respect to an Engine shall not,
absent an Event of Loss with respect to the Airframe, be deemed an Event of
Loss with respect to the Airframe.
"Excluded Property" shall have the meaning set forth in Section 9(b)
hereto.
"Expiration Date" shall mean the date specified in Lease Supplement
No. 3, on which date the Basic Term of this Lease shall expire.
"FAA" shall mean the Federal Aviation Administration of the United
States Department of Transportation or any successor agency.
"FAA Bills of Sale" shall mean, collectively, (i) the Xxxx of Sale for
the Aircraft on AC Form 8050-2, dated the Delivery Date, from Manufacturer's
Subsidiary to the Original Head Lessee, and (ii) the Xxxx of Sale for the
Aircraft on AC Form 8050-2, dated the Delivery Date, from the Original Head
Lessee to Lessor.
"Federal Aviation Act" shall mean the sections of Title 49 of the
United States Code relating to aviation, as amended and in effect from time to
time, or any similar legislation of the United States of America enacted in
substitution or replacement thereof.
"Financials" shall mean Lessee's most recent fiscal year-end audited
consolidated balance sheet and statements of income and cash flow for the
period then ending, copies of which for the fiscal year ended December 31,
1996, have been provided to Lessor prior to the date hereof.
"Financing Documents" shall mean the Lease Agreement, each Lease
Supplement, the Lease Amendment No. 1, the Trust Agreement, each Trust
Supplement, the Indenture,
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each Indenture Supplement, the Refunding Agreement, the Equipment Notes issued
under the Indenture, the Intercreditor Agreement, each Liquidity Facility, each
Pass Through Trust Agreement and each supplement thereto and any certificate
delivered or entered into in accordance with the foregoing, as amended,
supplemented or otherwise modified.
"Foreign Air Carrier" shall mean any air carrier listed in Exhibit
F-1, as amended, supplemented or otherwise modified from time to time, whose
principal place of business and legal domicile at the time of entering into the
applicable sublease is located in a country listed on Exhibit F-2, as amended,
supplemented or otherwise modified from time to time, and not prohibited by the
terms of the insurance then in effect, with which the United States has
diplomatic or, such as in the case of Taiwan, similar relations, in each case
which is obligated under the applicable sublease to perform all maintenance
required by applicable foreign governmental standards made mandatory to the
Aircraft by such jurisdiction and, to the extent not inconsistent therewith,
all FAA-airworthiness directives and other requirements made mandatory to the
Aircraft by the FAA.
"GAAP" shall mean United States generally accepted accounting
principles and practices consistently applied as in effect from time to time,
which shall include the official interpretations thereof by the Financial
Accounting Standards Board. All accounting terms not otherwise defined herein
shall have the meanings assigned to such terms in accordance with GAAP.
"Governmental Entity" shall mean and include (i) any national
government, political subdivision thereof, or local jurisdiction therein; (ii)
any board, commission, department, division, organ, instrumentality, court, or
agency of any thereof, however constituted; and (iii) any association,
organization, or institution of which any entity described in (i) or (ii) above
is a member or to whose jurisdiction any such entity is subject or in whose
activities any such entity is a participant but only to the extent that any
entity described in clause (i), (ii) or (iii) has jurisdiction over Lessor,
Lessee, Indenture Trustee, Note Holders, any sublessee, the Aircraft or its
operations.
"Head Lessor's Lien" shall mean a "Lessor's Lien" under and as defined
in the Original Head Lease.
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"IAE" shall mean IAE International Aero Engines AG, a company
organized and existing under the laws of Switzerland.
"Indemnitee" shall mean Lessor (in its individual capacity and as
trustee under the Trust Agreement), the Trust Estate, Owner Participant, the
general partners (and not the limited partners, if any) of Owner Participant,
the Trust Indenture Estate, Indenture Trustee (in its individual capacity and
as trustee under the Indenture), each Pass Through Trust, each Pass Through
Trustee (in its individual capacity and as trustee under the Pass Through
Trusts), the Subordination Agent and each Liquidity Provider, and their
respective successors and permitted assigns, and any combination thereof and
their respective officers, directors, agents, servants, employees,
subsidiaries, Affiliates and shareholders.
"Indenture" shall mean the First Amended and Restated Trust Indenture
and Security Agreement [GPA 1989 BN-11] dated as of June ___, 1997, as the same
may be further amended, supplemented or modified from time to time, between
Indenture Trustee and Lessor. The term "Indenture" shall also include the
Indenture Supplements entered into pursuant to the terms of the Indenture.
"Indenture Trustee" shall mean the bank or trust company serving as
Indenture Trustee under the Indenture, and its successors and assigns.
"Interest Rate" shall mean (i) with respect to the portion of any
payment of Rent that may be required by the Indenture to be paid to the holders
of any outstanding Equipment Notes issued thereunder, a per annum rate of
interest equal to the Past Due Rate applicable thereto under and as defined in
the Indenture computed on the basis of a 360-day year and twelve 30-day months
and (ii) with respect to any other amount, a per annum rate of interest equal
to the sum of the rate of interest publicly announced by Citibank, N.A., at its
principal office in New York City, as its prime or similar base rate from time
to time in effect from the date the amount becomes due to the date it is paid
in full, plus 2%, computed on the basis of a year of 365 or 366 days, as the
case may be, and actual number of days elapsed.
"Law" shall mean and include (i) any statute, rule, decree,
constitution, regulation, order, judgment or other directive of any
Governmental Entity; (ii) any treaty,
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pact, compact or other agreement to which any Governmental Entity is a
signatory or party; (iii) any judicial or administrative interpretations of the
application of any Law described in (i) or (ii) above; and (iv) except where
expressly excluded herein, any amendment or revision of any Law described in
(i), (ii), or (iii) above.
"Lease Agreement," "this Lease Agreement," "this Lease," "this
Agreement," "herein," "hereunder," "hereby," "hereof" or other like words shall
mean this Lease as originally executed and as amended, supplemented or
otherwise modified from time to time, including, without limitation, by one or
more Lease Supplements, as a whole and not to any particular Section or other
subdivision, and any reference to a "Section" or an "Exhibit" shall refer to a
Section or an Exhibit of this Lease, as so amended, supplemented or modified,
unless expressly provided to the contrary.
"Lease Identification" shall have the meaning set forth in Section
6(e) hereto.
"Lease Supplement" shall mean Lease Supplement No. 1, Lease Supplement
No. 2 and Lease Supplement No. 3 and each subsequent Lease Supplement entered
into hereunder.
"Lease Supplement No. 1" shall mean Lease Supplement [GPA 1989 BN-11]
No. 1 dated the Delivery Date between Lessor and Original Head Lessee, as
Lessee.
"Lease Supplement No. 2" shall mean Lease Supplement [GPA 1989 BN-11]
No. 2 dated January 5, 1995, between Lessor and Original Head Lessee, as
Lessee.
"Lease Supplement No. 3" shall mean Lease Supplement [GPA 1989 BN-11]
No. 3, substantially in the form of Exhibit D-1 hereto, entered into between
Lessor and Lessee on the Restatement Date for the purpose of confirming the
leasing of the Aircraft hereunder.
"Lenders' Lien" shall mean any Lien or disposition of title
attributable to Indenture Trustee in its individual capacity (and not as
Indenture Trustee) on or in respect of (as the case may be) the Aircraft or any
other portion of the Trust Estate or the Trust Indenture Estate arising as a
result of (i) Claims against Indenture Trustee in its individual capacity (and
not as Indenture Trustee) not related to its interest in the Aircraft or the
administration of the Trust Estate or the Trust Indenture
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Estate pursuant to the Indenture, whether under Section 9-207(2)(e) of the
Uniform Commercial Code or otherwise, (ii) acts or omissions of Indenture
Trustee in its individual capacity (and not as Indenture Trustee) not
contemplated hereunder or under the other Operative Documents, or acts or
omissions of Indenture Trustee in its individual capacity (and not as Indenture
Trustee) which are in violation of any of the Operative Documents, or (iii)
Taxes imposed on or Claims against Indenture Trustee in its individual capacity
(and not as Indenture Trustee) which are excluded from indemnification by
Lessee, or (iv) Claims against Indenture Trustee in its individual capacity
(and not as Indenture Trustee) arising out of the voluntary or involuntary
transfer by Indenture Trustee in its individual capacity (and not as Indenture
Trustee) of all or any portion of its interest in the Aircraft, the Airframe,
any Engine, the Trust Estate, the Trust Indenture Estate or the Operative
Documents (except a Claim resulting from the exercise of remedies under and in
accordance with the Indenture or for a transfer provided for in the Operative
Documents).
"Lessee" shall have the meaning set forth in the Recitals hereto.
"Lessor" shall have the meaning set forth in the Recitals hereto.
"Lessor's Lien" shall mean any Lien or disposition of title affecting
the Aircraft, the Airframe, any Engine or any Part arising as a result of (i)
any claim against Lessor, Owner Participant, any partner of the Owner
Participant, Trust Company or any of their Affiliates not related to the
transactions contemplated by this Lease or the other Operative Documents, the
Financing Documents or the Purchase Documents; (ii) any affirmative act of
Lessor, Owner Participant, any partner of the Owner Participant, Trust Company
or any of their Affiliates not expressly contemplated by this Lease or the
other Operative Documents, the Financing Documents or the Purchase Documents or
not permitted without consent (which consent has not been granted) by any party
hereto or thereto or that is in violation of any term of this Lease or the
other Operative Documents, the Financing Documents or the Purchase Documents;
(iii) Taxes imposed against the Trust Estate, Trust Company, Lessor, Owner
Participant, any partner of the Owner Participant or any of their Affiliates or
the consolidated group of taxpayers of which any of them is a member which are
not to be indemnified against by Lessee under the Operative Documents, the
Purchase Documents
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or the Financing Documents or by Original Head Lessee under the Original Head
Lease Tax Indemnification Agreement; (iv) claims against the Trust Estate,
Trust Company, Owner Participant, any partner of the Owner Participant or
Lessor or any of their Affiliates arising out of the transfer of all or any
part of their respective interest in the Aircraft, the Airframe, either Engine,
the Trust Estate, the Operative Documents or the Financing Documents other than
any transfers or dispositions pursuant to Sections 2, 6, 9, 11, 16, 18, 19 or
20 (except Liens resulting from a transfer not permitted by such Section) of
this Lease or pursuant to Section 10 of the Refunding Agreement; provided,
however, that there shall be excluded from this definition and Lessor shall not
be required to remove any Lien which would otherwise constitute a Lessor's
Lien, if it is being diligently contested in good faith so long as neither such
proceedings nor Lien involves a material danger of the sale, forfeiture or loss
of the Aircraft or adversely affects Lessee's rights under Section 21(f); and
provided, further, that Lessor's Liens shall not include the Lien of the
Indenture or Lenders' Liens.
"Lien" shall mean any mortgage, chattel mortgage, pledge, lien,
charge, encumbrance, lease, exercise of rights, security interest, lease in the
nature of a security interest, statutory right in rem, or claim of any kind,
including any thereof arising under any conditional sale agreement, equipment
trust agreement or title retention agreement.
"Lien of the Indenture" shall mean the Lien created by the Indenture
on the Trust Indenture Estate.
"Maintenance Program" shall mean (i) the America West Maintenance
Program approved by the FAA for America West Airbus model A320-231 aircraft in
effect on the date hereof or as modified with the approval of the FAA without
affecting, or any other FAA approved maintenance program which does not affect,
the return condition standards set forth in Section 16 and Exhibit E or (ii) if
the Aircraft is subject to a Permitted Sublease to a Foreign Air Carrier, any
other maintenance program for the Aircraft which is approved by the aviation
authority of the country of registry and complies with the requirements
applicable to maintenance of the Aircraft contained in the definition of
Foreign Air Carrier. The Maintenance Program shall encompass scheduled
maintenance, condition monitored maintenance, and on-condition maintenance of
the Airframe, Engines, and components of the Aircraft, including, but not
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limited to, servicing, testing, preventive maintenance, repairs, structural
inspections, structure life improvements, system checks, overhauls, approved
modifications, service bulletins, engineering orders, airworthiness directives,
and corrosion control inspections and treatments. All modifications and
supplements to the Maintenance Program shall be provided to Lessor upon its
reasonable request and Lessor shall be given reasonable access to the
Maintenance Program upon its request.
"Manufacturer" shall mean, collectively, Manufacturer's Subsidiary,
IAE, Airbus Industrie or, as the case may be, any one or more thereof as may be
applicable in any given circumstance, together in each case with any
subcontractor or supplier thereof.
"Manufacturer's Subsidiary" shall mean AVSA, S.A.R.L., a French
societe a responsabilite limitee, which as of the date hereof is owned by
Airbus Industrie.
"Maximum Foreign Use Percentage" shall have the meaning specified in
Exhibit C.
"Mortgage Convention" shall mean the Convention for the International
Recognition of Rights in Aircraft, signed (ad referendum) at Geneva,
Switzerland, on June 19, 1948, and amended from time to time, but excluding the
terms of any adhesion thereto or ratification thereof containing reservations
to which the United States of America does not accede.
"Net Worth" shall mean, with respect to any Person, such Person's
stockholders' equity minus any intangible assets.
"Operative Documents" shall mean this Lease, each Lease Supplement,
any sublease, the Tax Indemnification Agreement, the Financing Documents, the
SLV Letter Agreement, and any certificate delivered or entered into pursuant to
the foregoing, as amended, supplemented or otherwise modified.
"Original Head Lease" shall mean this Aircraft Lease Agreement [GPA
1989 BN-11], with respect to the Aircraft, dated as of December 19, 1989,
between Lessor, as lessor, and the Original Head Lessee, as lessee, as amended,
supplemented or otherwise modified and as in effect immediately prior to the
Restatement Date, as more particularly described in Annex I attached hereto.
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"Original Head Lease Tax Indemnification Agreement" shall mean the
Head Lease Tax Indemnification Agreement [GPA 1989 BN-11], dated as of December
19, 1989, and amended and restated as of the Restatement Date, between the
Original Head Lessee and Owner Participant, as amended, supplemented or
otherwise modified from time to time.
"Original Head Lessee" shall mean GPA Leasing USA Sub I, Inc., a
Connecticut corporation.
"Original Sublease" shall mean the Initial Sublease (as defined in the
Original Head Lease) as in effect immediately prior to the Restatement Date.
"Other Leases" shall mean the Amended and Restated Aircraft Lease
Agreement [GPA 1989 BN-7] amended and restated as of the Restatement Date
between Wilmington Trust Company as Owner Trustee, Lessor, and America West
Airlines, Inc. as Lessee, the Amended and Restated Aircraft Lease Agreement
[GPA 1989 BN-8] amended and restated as of the Restatement Date between
Wilmington Trust Company as Owner Trustee, Lessor, and America West Airlines,
Inc. as Lessee and the Amended and Restated Aircraft Lease Agreement [GPA 1989
BN-9] amended and restated as of the Restatement Date between Wilmington Trust
Company as Owner Trustee, Lessor, and America West Airlines, Inc. as Lessee,
each as amended, supplemented or otherwise modified from time to time.
"Other Letters of Credit" shall mean any and all letters of credit
pursuant to Section 8(l) of the Other Leases.
"Owner Participant" shall mean ______________, as Owner Participant
under the Trust Agreement, and its successors and permitted assigns.
"Owner Trustee" shall mean Wilmington Trust Company, as Owner Trustee
under the Trust Agreement, and its successors and assigns.
"Parent" shall mean GPA Group plc, a public limited company organized
and existing under the laws of Ireland.
"Partial Assignment" shall mean the A320 Partial Assignment,
Assumption, Release and Amendment Agreement, dated as of December 30, 1988,
among Parent, Xxxxxxx, Inc., and Manufacturer's Subsidiary, as amended,
supplemented or otherwise modified.
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"Participation Agreement" shall mean the Participation Agreement [GPA
1989 BN-11], dated as of December 19, 1989, among Original Head Lessee, Parent,
Owner Participant, Owner Trustee, Indenture Trustee and the "Lender" named
therein, as amended, supplemented or otherwise modified from time to time and
as in effect immediately prior to the Restatement Date.
"Parts" shall mean all appliances, components, parts, instruments,
appurtenances, accessories, furnishings and other equipment of whatever nature
(excluding complete Engines or engines), including Buyer Furnished Equipment,
which may now or from time to time be incorporated or installed in or attached
to or were provided by the Manufacturer with the Airframe or any Engine or so
long as title thereto shall remain vested in Lessor in accordance with the
terms of Section 9 hereof after removal from such Airframe or Engine. Except
as otherwise set forth herein, at such time as a replacement part shall be
substituted for a Part in accordance with Section 9 hereof, the Part so
replaced shall cease to be a Part hereunder.
"Payment Location" shall have the meaning set forth in Exhibit C, as
the same may be changed from time to time by Lessor as provided in Section
4(c).
"Permitted Lien" shall mean any Lien referred to in clauses (i)
through (vii) of the first sentence of Section 14 hereof.
"Permitted Sublease" shall have the meaning specified in Section
6(a)(iii)(1).
"Permitted Sublessee" shall mean a Certificated Air Carrier or, after
the Restricted Use Period, (a) any Foreign Air Carrier, (b) the United States
Government or an agency or instrumentality thereof which bears the full faith
and credit of the United States of America or (c) any other Person approved in
writing by the Owner Participant and the Indenture Trustee.
"Person" shall mean and include any individual person, corporation,
partnership, firm, joint stock company, joint venture, trust, estate,
unincorporated organization, association, Governmental Entity, or organization
or association of which any of the above is a member or a participant.
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"Purchase Agreement" shall mean the Amended and Restated Airbus
A310/A320 Purchase Agreement, dated as of May 1, 1985, as amended and restated
as of December 30, 1988 (insofar as the same relates to Model A320 Aircraft),
between Manufacturer's Subsidiary and Xxxxxxx, Inc., including the Consent and
Guaranty, together with Letter Agreements, Exhibits and Appendices thereto, as
partially assigned to Parent pursuant to the Partial Assignment, to which
Airbus Industrie, as guarantor, has consented, and as the same may from time to
time be further amended, supplemented or otherwise modified to the extent
permitted by the terms thereof.
"Purchase Documents" shall mean the Purchase Agreement, the Partial
Assignment and any other agreement, document or certificate delivered or
entered into pursuant to the foregoing, as amended, supplemented or otherwise
modified.
"Removable Part" shall have the meaning set forth in Section 9(b).
"Renewal Rent" shall mean the rent payable pursuant to Section 20.
"Renewal Rent Payment Date" shall mean each day determined in
accordance with Exhibit C upon which a payment of Renewal Rent becomes payable.
If a Renewal Rent Payment Date shall fall on a day which is not a Business Day,
any payment due on such Renewal Rent Payment Date shall be made on the next
succeeding Business Day.
"Renewal Term" shall mean the period described in Section 20 following
the end of the Basic Term if Lessee shall have exercised its renewal option in
accordance with Section 20.
"Rent" shall mean Basic Rent or Renewal Rent, as the case may be, and
Supplemental Rent, collectively.
"Replacement Airframe" and "Replacement Engine" shall have the
meanings specified in accordance with their description in Section 11.
"Replacement Period" shall have the meaning specified in Section 11.
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"Responsible Officer" shall mean, with respect to Lessee, any of the
Chief Executive Officer, Chief Financial Officer, Chief Operating Officer or
Controller.
"Restricted Use Period" shall have the meaning specified in Exhibit C.
"Return Occasion" shall mean the event that occurs when possession of
the Aircraft is to be returned from Lessee to Lessor at the end of the Term of
this Lease or upon Lessor taking possession pursuant to Section 18 or for any
other reason.
"Specified Investments" shall mean (i) direct obligations of the
United States Government, the obligations of which bear the full faith and
credit of the United States; (ii) obligations fully guaranteed by the United
States; (iii) certificates of deposit issued by any commercial bank
incorporated under the laws of the United States or one of the States thereof
(but not exceeding $10,000,000 in principal amount or deposits at any given
time for any one bank) having a combined capital surplus and undivided income
of at least $750,000,000 and having a rating of "B" or better from Xxxxxxxx
BankWatch, Inc.; (iv) repurchase agreements (but not exceeding $10,000,000 in
principal amount or deposits at any given time for any one bank) with any
financial institution having combined capital surplus and undivided income of
at least $750,000,000 and fully collateralized by an obligation of the type
described in clauses (i) through (iii) as collateral pursuant to which an
entity referred to in clause (iii) above or another financial institution
having a net worth of at least $750,000,000 and having a rating of "B" or
better from Xxxxxxxx BankWatch, Inc. is obligated to repurchase any such
obligation not later than ninety (90) days after the purchase of any such
obligation; and (v) money market funds which invest solely in obligations
described in clause (i) or (ii); provided that if all of the above investments
are unavailable, the entire amounts to be invested may be used to purchase
Federal funds from an entity described in clause (iii) above; and provided
further that no investment shall be eligible as a "Specified Investment" unless
the final maturity or date of return of such investment is on or before the
date which is ninety (90) days from the date of purchase thereof.
"Stipulated Loss Value" shall mean as of the applicable date during
the Basic Term the amount set forth on Exhibit A hereto and, thereafter, the
amount described in
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Section 20 (it being understood and agreed that the amounts set forth in
Exhibit A take into account fully the amount and application of each
installment of Basic Rent or Renewal Rent on each Stipulated Loss Value Date
[(other than a Stipulated Loss Value Date that is a Basic Rent Payment Date or
Renewal Rent Payment Date) so that no additional credit of such Basic Rent or
Renewal Rent is to be made in respect thereof except as expressly provided
herein on a Basic Rent Payment Date or a Renewal Rent Payment Date)]. In the
event that it is necessary to determine a separate Stipulated Loss Value for
the Airframe or an Engine, such Stipulated Loss Value shall be based on the
ratio that the original cost to Lessor of the Airframe or such Engine bears to
Lessor's Cost (as set forth in the Original Head Lease) for the Aircraft.
"Stipulated Loss Value Date" shall mean each monthly date listed, or
with respect to any Renewal Term determined as set forth, on Exhibit A hereto.
"Supplemental Rent" shall mean any and all amounts, liabilities and
obligations other than Basic Rent and Renewal Rent which Lessee assumes or
agrees to pay to Lessor or any other Indemnitee hereunder or under any other
Operative Document, including, without limitation, (i) any payment of
Stipulated Loss Value and any payment provided for in Section 11 or 18; (ii)
any payment of indemnity required by Section 10 or 13 hereof; (iii) any payment
of an amount equal to average daily Basic Rent or Renewal Rent in connection
with an extension of the Term of this Lease as a result of (a) an incipient
Event of Loss and the operation of Section 11 hereof or (b) the need to correct
any failure of the Aircraft to satisfy the requirements of Section 16 and
Exhibit E hereof; (iv) [Intentionally Left Blank]; (v) an amount equal to any
payment due to the Owner Trustee in respect of fees or expenses as provided in
Section 21(j) hereof; (vi) an amount equal to any payment due to the Indenture
Trustee in respect of fees or expenses as provided in the Indenture and/or
Section 21(j) hereof; (vii) the Pro Rata Share of any payment due to any Pass
Through Trustee in respect of fees or expenses pursuant to the Pass Through
Trust Agreement; (viii) the Pro Rata Share of any payment due to the
Subordination Agent in respect of fees, compensation, costs or expenses
pursuant to the Intercreditor Agreement; (ix) an amount equal to the amount
specified in clause (b) of the fourth paragraph of Section 2.02 of the
Indenture; and (x) to the extent permitted by applicable Law, interest at the
Interest Rate calculated: (1) on any part of any installment of Basic Rent or
Renewal Rent, or average daily Basic Rent referred to in clause
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(iii) of this definition of "Supplemental Rent", as the case may be, not paid
on the due date thereof for the period for which the same shall be overdue and
(2) on any Supplemental Rent not paid when due hereunder from and including the
due date until the same shall be paid. As used herein, "Pro Rata Share" means
as of any date of determination a fraction the numerator of which is the
aggregate Principal Amount then outstanding of the Equipment Notes issued under
the Indenture and the denominator of which is the aggregate principal balance
then outstanding of all "equipment notes" issued under the Indentures (as
defined in the Intercreditor Agreement).
"Tax Indemnification Agreement" shall mean the Amended and Restated
Sublease Tax Indemnification Agreement [GPA 1989 BN-11], dated as of September
21, 1990, and as amended and restated as of the Restatement Date, between
Original Head Lessee and Lessee, as the same may be amended, supplemented or
otherwise modified from time to time.
"Taxes" shall have the meaning specified in Section 10(a).
"Taxing Authority" shall have the meaning specified in Section 10(a).
"Term" shall mean, collectively, the Basic Term specified in Lease
Supplement No. 3 and, if Lessee extends the Term in accordance with Section 20,
the Renewal Term, in either case as extended or deemed extended as a result of
the occurrence of an event described in clause (iii) to the definition of
"Supplemental Rent" in this Lease, for which the Aircraft is leased hereunder
pursuant to Section 2.
"Trust Agreement" shall mean the Trust Agreement [GPA 1989 BN-11]
dated as of December 19, 1989 as amended by Trust Supplement No. 1 and as
further amended by Trust Supplement No. 2 between Lessor, in its individual
capacity, and Owner Participant, as beneficiary, as the same may be amended,
supplemented or otherwise modified from time to time. The term "Trust
Agreement" shall also include each Trust Supplement.
"Trust Estate" shall have the meaning specified in the Trust
Agreement.
"Trust Supplement" shall mean Trust Supplement No. 1 and Trust
Supplement No. 2 and each subsequent Trust
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Supplement entered into thereunder and any further supplement to the Trust
Agreement.
"Trust Supplement No. 1" shall mean Trust Agreement Supplement [GPA
1989 BN-11] No. 1 dated the Delivery Date between Lessor and Owner Participant
for the purpose of bringing the Aircraft and the Original Head Lease into the
Trust Estate.
"Trust Supplement No. 2" shall mean Trust Agreement Supplement [GPA
1989 BN-11] No. 2 dated the Restatement Date between Lessor and Owner
Participant conforming the references in the Trust Agreement to this Agreement.
"United States Government" shall mean the federal government of the
United States of America and any board, commission, department, division,
organ, instrumentality, court or agency thereof.
"Wet Lease" shall mean any arrangement whereby Lessee agrees to
furnish the Aircraft or the Airframe and Engine or engines installed thereon at
that time to a third party pursuant to which such Aircraft or the Airframe and
Engine or engines (i) shall be operated solely by regular employees of Lessee
possessing all current certificates and licenses required under the Federal
Aviation Act (it is understood that cabin attendants need not be regular
employees of Lessee) and Lessee otherwise maintains operational control and
possession thereof, and (ii) shall be maintained by Lessee in accordance with
its normal maintenance practices and this Lease, and otherwise the insurance
required hereunder shall be maintained and the Aircraft shall be used and
operated in accordance with this Lease.
Section 2. Agreement to Lease. Lessor hereby agrees to lease the
Aircraft to Lessee, and Lessee hereby agrees to lease the Aircraft from Lessor,
on the terms and subject to the conditions set forth in this Lease.
Section 3. Delivery and Acceptance; Term.
(a) Time of Delivery. The Aircraft was delivered to Lessee, and
Lessee accepted delivery of the Aircraft, on December 29, 1989.
(b) [Intentionally Left Blank]
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(c) Acceptance of Aircraft. The Aircraft leased hereunder was
delivered to Lessee "AS IS," "WHERE IS" and SUBJECT TO EACH AND EVERY
DISCLAIMER OF WARRANTY AND REPRESENTATION AS SET FORTH IN SECTIONS 5(a) AND (b)
HEREOF.
Lessee hereby agrees that it has accepted the Aircraft for all
purposes of this Lease and Lessee's acceptance of the Aircraft was conclusive
evidence that, as between Lessor and Lessee, the Aircraft was in all respects
satisfactory to Lessee and was in compliance with this Lease.
(d) Term of Lease. The Basic Term of this Lease shall commence on the
Delivery Date and shall continue until the Expiration Date; provided, however,
that the Term of this Lease may be earlier terminated pursuant to the
provisions hereof.
Section 4. Rent.
(a) Rent. Lessee covenants and agrees to pay the following as Rent
hereunder:
(i) Basic Rent. The Basic Rent, as set forth in Exhibit C
throughout the Basic Term hereof, in consecutive installments, in arrears as
set forth on Schedule I attached to Exhibit C, due and payable on each Basic
Rent Payment Date to the Lessor; and
(ii) Supplemental Rent. Any and all Supplemental Rent, which
shall be due and payable ten (10) Business Days after demand unless otherwise
specifically provided, except for Supplemental Rent constituting interest on
overdue amounts, which shall be due and payable on demand. In the event of any
failure on the part of Lessee to pay any Supplemental Rent when due, Lessor
shall have all rights, powers and remedies provided for herein or by law or
equity or otherwise in the case of nonpayment of Basic Rent or Renewal Rent.
Lessee's obligation to pay Supplemental Rent which is due and owing pursuant to
the terms hereof shall survive the expiration or termination of Lessee's
obligation to pay Basic Rent or Renewal Rent hereunder.
(b) Minimum Payments. Notwithstanding any provision in this Lease or
in any other Operative Document to the contrary, under all circumstances and in
any event, (i) the Stipulated Loss Value, together with the payment of
Supplemental Rent and all other Rent then due hereunder, as of any time and as
of the date of any payment thereof shall
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(both before and after giving effect to any reductions therefrom) be in an
amount at least sufficient to pay in full as of such time or date the aggregate
unpaid principal amount of the Equipment Notes then outstanding and all accrued
and unpaid interest (assuming interest has been timely paid) thereon, and (ii)
Basic Rent payable on any Basic Rent Payment Date shall at least equal the
aggregate amount of principal and interest due and payable on the Equipment
Notes on such Basic Rent Payment Date. It is agreed, however, that no
installment of Basic Rent or Stipulated Loss Value shall be increased or
adjusted by reason of (A) any attachment or diversion of Rent on account of any
Lessor's Lien or Lenders' Lien, (B) any modification of the terms of the
Equipment Notes or the other Financing Documents made without the prior written
consent of Lessee or (C) the acceleration of any Equipment Note due to the
occurrence of any "Indenture Event of Default" (as defined in the Indenture)
which does not constitute an Event of Default hereunder. It is further agreed
that nothing in this Lease or any other Operative Document shall be deemed to
constitute a guaranty of the value, utility or useful life of the Aircraft or a
guaranty in respect of interest, principal or any other amounts payable in
respect of or under the Equipment Notes.
(c) Date, Place and Method of Payment. If any date on which a payment
of Rent becomes due and payable is not a Business Day, the Rent otherwise due
on such date shall be due and payable on the next succeeding Business Day. All
Basic Rent, Renewal Rent and Supplemental Rent payable under this Lease shall
be paid by wire transfer in immediately available currency of the United States
of America, no later than 12:00 p.m. (noon), New York City time, on the date
payable hereunder, and, so long as the Lien of the Indenture shall not have
been discharged, to or as directed by Indenture Trustee in accordance with the
payment instructions set forth in Exhibit C hereto or at such other address in
the City of New York or Hartford, Connecticut as Indenture Trustee may direct
by thirty (30) days prior written notice to Lessee, except for all Excepted
Payments. All Excepted Payments, and, upon discharge of the Lien of the
Indenture, all payments of Rent thereafter made hereunder, shall be paid in
such immediately available funds no later than 12:00 p.m. (noon), New York City
time, on the date payable hereunder, to Lessor or to Owner Participant, as
appropriate, in accordance with the payment instructions set forth in Exhibit C
or at such other address as Lessor may direct by thirty (30) days prior written
notice to Lessee.
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(d) Prohibition Against Setoff, Counterclaim, Etc. This Lease is a
net lease. Lessee's obligations to pay all Rent and to perform all other
obligations hereunder are absolute and unconditional and shall not be affected
or reduced by any circumstances, including, without limitation, (i) any setoff,
counterclaim, recoupment, defense, or other right which Lessee may have against
Lessor, Original Head Lessee, Owner Participant, Indenture Trustee, any Note
Holder, any Manufacturer, any Person providing services with respect to the
Aircraft, or any other Person, for any reason whatsoever (whether in connection
with the transactions contemplated hereby or otherwise), including, without
limitation, any breach by Lessor of its representations, warranties or
covenants contained herein or in the other Operative Documents; (ii) any defect
in the title, airworthiness, eligibility for registration under the Federal
Aviation Act, condition, design, operation, or fitness for use of, or any
damage to or loss or destruction of, the Aircraft (subject to the provisions of
Section 11(a)(ii) hereof), any interruption or cessation in the use of or
possession thereof by or availability to Lessee for any reason whatsoever,
whether arising out of or related to an act or omission of Lessee, Lessor,
Original Head Lessee, Owner Participant, Indenture Trustee, any Note Holder,
any Manufacturer, any Person providing services with respect to the Aircraft or
any other Person; (iii) any Liens with respect to the Aircraft; (iv) the
invalidity or unenforceability or lack of due authorization or other infirmity
of this Lease or any sublease or any absence of right, power or authority of
Lessor, Original Head Lessee, Lessee or Indenture Trustee to enter into this
Lease or the Indenture, as the case may be; (v) any insolvency, bankruptcy,
reorganization, or similar proceedings by or against Lessor, Original Head
Lessee, Lessee, any sublessee, Indenture Trustee or any Note Holder; (vi) any
Taxes; or (vii) any other circumstance or happening of any nature whatsoever,
whether or not similar to any of the foregoing; it being the expressed
intention of Lessor and Lessee that all Rent payable hereunder shall be payable
in all events, unless the obligation to pay the same shall be terminated
pursuant to the express provisions of this Agreement.
Except as expressly set forth elsewhere in this Agreement, Lessee
hereby waives, to the extent permitted by applicable Law, any and all rights
which it may now have or which at any time hereafter may be conferred upon it,
by statute or otherwise, to terminate, xxxxx, cancel, quit, reduce, defer,
suspend or surrender this Lease or the Aircraft or any obligation imposed upon
Lessee hereunder or
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under the other Operative Documents (including, without limitation, payment of
Rent), except in accordance with the terms hereof.
Each payment of Rent made by Lessee shall be final. Lessee will not
seek to recover all or any part of any payment of Rent for any reason
whatsoever except manifest error.
If for any reason whatsoever this Lease shall be terminated in whole
or in part by operation of Law, except as specifically provided herein, Lessee
waives all rights (if any) to any diminution in its Rent obligations hereunder
and nonetheless agrees to pay to Indenture Trustee or Lessor as provided in
Section 4(c) hereof an amount equal to each Basic Rent or Renewal Rent, as the
case may be, payment and any Supplemental Rent payment at the time such
payments would have become due and payable in accordance with the terms hereof
had this Lease not been terminated in whole or in part, and so long as such
payments are made and all other terms and conditions hereof are complied with
by Lessee, Lessor and Lessee will deem this Lease to remain in full force and
effect.
The foregoing shall not, however, be construed as a waiver of Lessee's
other rights to seek damages, specific performance, other remedies at law or
equity or any combination thereof, as against the Original Head Lessee, Lessor,
Indenture Trustee or any other Person having an interest herein through the
Original Head Lessee, Lessor, Indenture Trustee or any other Person as shall be
liable therefor, on account of any failure of the Original Head Lessee, Lessor,
Indenture Trustee or any other such Person to perform its express obligations
under this Lease and the other Operative Documents, or to enforce any judgment
obtained therefor.
Section 5. Representations, Warranties and Covenants.
(a) Warranties and Disclaimer of Warranties. THE AIRCRAFT WAS
DELIVERED AND IS BEING LEASED BY LESSOR TO LESSEE "AS IS" AND "WHERE IS".
LESSEE EXPRESSLY AGREES THAT IT TOOK THE AIRCRAFT ON SUCH BASIS. LESSOR HAS
NOT AND SHALL NOT BE DEEMED TO HAVE MADE, BY VIRTUE OF HAVING LEASED THE
AIRCRAFT UNDER THIS LEASE OR BY HAVING ACQUIRED THE AIRCRAFT OR DONE OR FAILED
TO DO ANY ACT OR ACQUIRED OR FAILED TO ACQUIRE ANY STATUS UNDER OR IN RELATION
TO THIS LEASE, AND NEITHER LESSOR NOR OWNER PARTICIPANT HAS MADE,
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AND LESSOR FOR ITSELF AND OWNER PARTICIPANT, HEREBY SPECIFICALLY DISCLAIMS, ANY
GUARANTY, REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, AS TO THE TITLE
(EXCEPT AS HEREINBELOW PROVIDED), AIRWORTHINESS, VALUE, CONDITION, DESIGN,
OPERATION, MERCHANTABILITY, OR FITNESS FOR USE FOR A PARTICULAR OR ANY 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, THE ABSENCE OF ANY INFRINGEMENT OF ANY PATENT, TRADEMARK OR
COPYRIGHT OR AS TO ANY OTHER GUARANTY, REPRESENTATION OR WARRANTY WHATSOEVER,
EXPRESS OR IMPLIED, WITH RESPECT TO THE AIRCRAFT, INCLUDING WITHOUT LIMITATION
ANY LIABILITY IN TORT, OBLIGATION OR LIABILITY ARISING FROM NEGLIGENCE, STRICT
LIABILITY, ANY IMPLIED WARRANTY ARISING FROM COURSE OF PERFORMANCE OR DEALING
OR USAGE OR TRADE, OR LOSS OR INTERRUPTION OF USE, PROFIT, OR BUSINESS, OR
OTHER CONSEQUENTIAL DAMAGES; AND LESSEE HEREBY WAIVES, RELEASES, RENOUNCES AND
DISCLAIMS EXPECTATION OF OR RELIANCE UPON ANY SUCH GUARANTY, REPRESENTATION OR
WARRANTIES. NEITHER LESSOR NOR ANY OTHER INDEMNITEE SHALL HAVE ANY
RESPONSIBILITY OR LIABILITY TO LESSEE OR ANY OTHER PERSON, REGARDLESS OF ANY
NEGLIGENCE (OTHER THAN ITS OWN GROSS NEGLIGENCE OR WILLFUL MISCONDUCT WHICH IS
NOT ATTRIBUTABLE TO ITS INTEREST IN THE AIRCRAFT) OF LESSOR OR ANY OTHER
INDEMNITEE, AND LESSEE HEREBY WAIVES, RELEASES, RENOUNCES AND DISCLAIMS ANY
RIGHTS OR REMEDIES, WITH RESPECT TO (i) ANY LIABILITY, LOSS OR DAMAGE CAUSED OR
ALLEGED TO BE CAUSED DIRECTLY OR INDIRECTLY BY THE AIRCRAFT OR BY ANY
INADEQUACY THEREOF OR DEFICIENCY OR DEFECT THEREIN OR BY ANY OTHER CIRCUMSTANCE
IN CONNECTION THEREWITH, (ii) THE USE, OPERATION OR PERFORMANCE OF THE AIRCRAFT
OR ANY RISKS RELATING THERETO, (iii) ANY INTERRUPTION OF SERVICE, LOSS OF
BUSINESS OR ANTICIPATED PROFITS OR DIRECT, INCIDENTAL OR CONSEQUENTIAL DAMAGES
OR (iv) THE DELIVERY, OPERATION, SERVICING, MAINTENANCE, REPAIR, IMPROVEMENT OR
REPLACEMENT OF THE AIRCRAFT. THE WARRANTIES AND REPRESENTATIONS SET FORTH IN
THIS SECTION 5(a) ARE EXCLUSIVE AND IN LIEU OF ALL OTHER REPRESENTATIONS OR
WARRANTIES WHATSOEVER WITH RESPECT TO THE AIRCRAFT, EXPRESS OR IMPLIED, AND
LESSOR SHALL NOT BE DEEMED TO HAVE MADE ANY OTHER IMPLIED WARRANTIES, OR
GUARANTEES, INCLUDING BUT NOT LIMITED TO ANY IMPLIED WARRANTY OF
MERCHANTABILITY, ANY IMPLIED WARRANTY ARISING FROM COURSE OF PERFORMANCE,
COURSE OF DEALING OR USAGE OF TRADE, OR ANY IMPLIED WARRANTY OF FITNESS FOR A
PARTICULAR OR ANY USE, EXCEPT THAT: (A) Lessor represents and warrants that
(x) on the Delivery Date Lessor had, and on the Restatement Date Lessor has,
the right to lease the Aircraft hereunder and (y) on the Delivery Date the
Aircraft was free of Head Lessor's Liens and on the Restatement Date the
Aircraft is free of Lessor's
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Liens and Head Lessor's Liens and (B) Lessor covenants that it shall not
create, incur, assume or suffer to exist any Lessor's Lien on the Aircraft.
(b) Representations and Warranties of Lessor. Lessor hereby
represents and warrants, as of the Restatement Date that its representations
and warranties set forth in Section 9(b) of the Refunding Agreement were true
when made and continue to be true and correct.
(c) No Amendments to Financing Documents. Lessor covenants and agrees
that Lessor will not, without the prior written consent of Lessee, amend,
modify, supplement or waive any provision of any Financing Document in such a
way as to materially increase Lessee's obligations hereunder or materially
reduce Lessee's rights hereunder.
The representations, warranties and covenants of Lessor under Sections
5(a) and 5(b) and this Section 5(c) shall survive the execution and delivery of
this Lease and the delivery of the Aircraft and the Restatement Date.
(d) Suppliers' Warranties. So long as a Default or an Event of
Default has not occurred and is continuing and provided that the Aircraft
continues to be maintained, modified and repaired as required hereunder, Lessor
hereby assigns or, if by their terms not assignable, agrees otherwise to make
available to Lessee the right to exercise in Lessee's name such rights as
Lessor may have or may subsequently obtain (but without representation or
warranty by or recourse to Lessor) with respect to any product warranty,
service life policy, trademark, patent or copyright infringement indemnity, or
airframe or propulsion system performance guaranty, of Airbus Industrie, the
Manufacturer's Subsidiary, IAE or any subcontractor or vendor with respect
thereto under the Purchase Agreement (except those which were given directly to
Parent, the Original Head Lessee or any of their Affiliates and are not
directly related to the operator's use of the Aircraft), to the extent that the
same may be assigned or otherwise made available to Lessee, and Lessor agrees
to exert its reasonable efforts, at Lessee's expense and upon its request, to
enforce such rights as Lessor may have with respect thereto for the benefit of
Lessee; provided, however, that upon and during the continuance of a Default or
an Event of Default, such assignment or other rights which are otherwise made
available to Lessee shall immediately and automatically without further action
be deemed cancelled and, to the extent of any remaining
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interest held by Lessee, deemed reassigned to Lessor and all such rights shall
revert to Lessor automatically including all claims thereunder whether or not
perfected and all amounts payable shall be paid to and held by Lessor. In no
event, however, shall Lessee have any right to amend, supplement or otherwise
modify the Purchase Agreement (by change order or otherwise). In connection
with the foregoing, Lessee agrees to be bound by and comply with all applicable
terms, conditions and limitations of the provisions of the Purchase Agreement.
Section 6. Possession and Use.
(a) Possession.
(i) Lease, Assignment and Transfer. LESSEE WILL NOT ASSIGN THIS
LEASE OR ANY RIGHTS OR OBLIGATIONS HEREUNDER OR INTEREST HEREIN (EXCEPT AS
PROVIDED IN SECTION 8(e) BELOW) OR SUBLEASE, WET LEASE OR OTHERWISE IN ANY
MANNER TRANSFER, DELIVER OR RELINQUISH POSSESSION OR USE OF THE AIRCRAFT,
AIRFRAME OR ANY ENGINE OR INSTALL ANY ENGINE OR PERMIT ANY ENGINE TO BE
INSTALLED ON ANY AIRFRAME OTHER THAN THE AIRFRAME; provided, that, so long as
no Event of Default or Default shall have occurred and be continuing or would
result therefrom and so long as the action to be taken shall not adversely
affect Lessor's title to or other interest in, or the Lien of the Indenture on,
the Aircraft, the Airframe or either of the Engines or this Lease or the
insurance required to be maintained hereunder and Lessee is otherwise in full
compliance with Section 12, and so long as all necessary approvals of the FAA
and any other Governmental Entity having jurisdiction have been obtained, then
Lessee, without the prior written consent of Lessor, may, only to the extent
provided below and subject to the limitations of Sections 6(a)(ii) and
6(a)(iii) below:
(1) subject any Engine to a normal interchange, maintenance, servicing
or pooling agreement or similar arrangement with a Permitted Sublessee, in
each case customary in the airline industry of which Lessee is a part and
entered into in the ordinary course of its business; provided that no
transfer of the registration of any Engine shall be effected in connection
therewith; and provided, further, that (A) no such agreement or arrangement
contemplates, results in or requires the transfer of title to any Engine,
and (B) if Lessor's title to any Engine shall be divested under any such
agreement or arrangement, such divestiture shall be deemed to be an Event
of Loss with respect to
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such Engine and not an Event of Default and Lessee shall comply with
Section 11(b) hereof in respect thereof;
(2) deliver possession of the Aircraft, the Airframe or any Engine to
the manufacturer thereof, or in accordance with the Maintenance Program to
an FAA certified repair station, for testing, service, storage, repair,
maintenance, inspection or overhaul work on such Aircraft, Airframe or
Engine or any part thereof or for alterations or modifications in or
additions to such Aircraft, Airframe or Engine to the extent required or
permitted by the terms of Section 9 hereof;
(3) transfer possession of the Aircraft or the Airframe to the United
States of America or any instrumentality or agency thereof pursuant to a
sublease;
(4) (i) subject the Airframe to the Civil Reserve Air Fleet Program
and transfer possession of the Airframe or any Engine to the United States
Government pursuant to the Civil Reserve Air Fleet Program, so long as
Lessee shall promptly notify Lessor upon transferring possession of the
Airframe or any Engine to the United States Government pursuant to the
Civil Reserve Air Fleet Program and provide Lessor with the name and
address of the Contracting Office Representative for the Military Airlift
Command of the United States Air Force to whom notices must be given; or
(ii) subject the Airframe to (A) a service contract with the United
States Government, a copy of which shall be provided to Lessor, providing
for possession to be held by the United States Government for a period not
extending beyond the end of the Term, or (B) a requisition for use by the
United States Government not constituting an Event of Loss;
(5) install an Engine on an airframe (other than the Airframe) owned
by Lessee free and clear of all Liens except (A) Permitted Liens and Liens
which apply only to engines (other than the Engines), appliances, parts,
instruments, appurtenances, accessories, furnishings and other equipment
(other than Parts) installed on such airframe (but not to the airframe as
an entirety) and (B) the rights of participants under
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normal interchange agreements which are customary in the airline industry
and do not contemplate, permit, result in or require the transfer of title
to the airframe or engines installed thereon;
(6) install an Engine on an airframe leased to Lessee or owned by
Lessee subject to a conditional sale or other security agreement; provided
that: (A) such airframe is free and clear of all Liens except the rights
of the parties to the lease or conditional sale or other security agreement
covering such airframe and except Liens of the type permitted by clauses
(A) and (B) of Section 6(a)(i)(5) and the Lien of any mortgage which
provides that each Engine leased to Lessee hereby shall not become subject
to the Lien thereof or to any rights of any party thereunder other than
Lessee (with respect to Lessee's rights expressly granted hereunder),
notwithstanding the installation of such Engine on any airframe subject to
the Lien of such mortgage, unless and until Lessee shall become the owner
of such Engine and Lessor shall have no further interest therein, all
pursuant to the express terms of this Lease; and (B) there shall be in
effect a written agreement of the lessor or secured party of such airframe
(which may be contained in the lease or conditional sale or other security
agreement covering such airframe) substantially similar in effect to the
agreement of Lessor in Section 6(b) below whereby such lessor or secured
party effectively and expressly agrees that neither it nor its successors
or assigns will acquire or claim any right, title or interest in any
Engine by reason of such Engine being installed on such airframe at any
time while such Engine is subject to this Lease or is owned by Lessor, and
a copy of such agreement shall be provided to Lessor upon written request;
(7) install an Engine on an airframe owned by Lessee, leased to Lessee
or purchased by Lessee subject to a conditional sale or other security
agreement under circumstances where neither Section 6(a)(i)(5) or Section
6(a)(i)(6) is applicable; provided that such installation shall be deemed
an Event of Loss with respect to such Engine and Lessee shall comply with
Section 11(b) hereof in respect thereof, Lessor not intending hereby to
waive any right or interest it may have to or in such Engine under
applicable Law until compliance by Lessee with such Section 11(b);
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(8) enter into a Wet Lease for the Aircraft or the Airframe and
engines installed thereon in the ordinary course of Lessee's business for a
period not extending beyond the Term; provided that if Lessee shall enter
into any Wet Lease for a period of more than six months (including renewal
options) Lessee shall provide to Lessor written notice of such Wet Lease
(such notice to be given at least ten (10) Business Days prior to entering
into such Wet Lease); or
(9) sublease the Aircraft or the Airframe to any Permitted Sublessee
on the terms and conditions set forth in Section 6(a)(iii) below.
(ii) Certain Limitations on Transfers. With respect to any
transfer pursuant to Section 6(a)(i):
(1) the rights of any transferee that receives possession by reason of
a transfer permitted by Section 6(a) hereof (other than the transfer of an
Engine which is deemed to have been an Event of Loss) and any Wet Lease
shall be expressly subject and subordinate to all the terms of this Lease
and the Lien of the Indenture (if it has not been discharged);
(2) Lessee's obligations hereunder and under the other Operative
Documents shall continue in full force and effect and 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
provision of this Lease shall be deemed a waiver of the Lessor's rights
hereunder or under the other Operative Documents nor discharge or diminish
any of Lessee's obligations hereunder or under the other Operative
Documents;
(3) During the Restricted Use Period, no Wet Lease, Permitted Sublease
or other relinquishment of possession of the Aircraft, the Airframe or any
Engine pursuant to the terms of this Section 6(a) shall be permitted if
such Wet Lease, Permitted Sublease or other relinquishment of possession
would cause the Aircraft, the Airframe or such Engine to be "tax-exempt use
property" within the meaning of Section 168(h) of the Code or cease to be
"Section 38 property" within the meaning of Section 48(a) of the Code (as
determined after the application of Section 47(a)(7) of the Code);
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(4) The term of any transfer, Wet Lease, Permitted Sublease or other
relinquishment of possession shall not extend beyond the Basic Term or the
Renewal Term (if Lessee shall have exercised its option to renew this Lease
in accordance with the terms hereof);
(5) No transfer, Wet Lease, Permitted Sublease or other relinquishment
of possession of the Aircraft, the Airframe or any Engine shall in any way
discharge or diminish any of Lessee's obligations to Lessor or any other
Person hereunder for which obligations Lessee shall remain primarily
liable;
(6) The sublessee under any Permitted Sublease, in its consent
thereto, shall confirm that from and after the occurrence and continuance
of an Event of Default and, unless an Event of Default specified in Section
17(e), (f) or (g) of this Lease has occurred and is continuing, this Lease
being deemed or declared in default, Lessor (and, so long as the Lien of
the Indenture shall not have been discharged, Indenture Trustee) shall be
entitled to enforce directly and in its own name all representations,
warranties, indemnities, covenants and agreements under the applicable
Permitted Sublease; and
(7) Each Permitted Sublease shall (A) provide that (I) the Aircraft or
Airframe may not be operated or used other than as provided in this Lease
and shall be maintained and operated as required hereunder, (II) Lessor may
avoid or terminate such sublease following an Event of Default hereunder
and (III) to the extent not accomplished by an assignment of the Permitted
Sublease, upon the occurrence of an Event of Default hereunder, Lessee's
rights under such Permitted Sublease shall automatically be deemed assigned
to Lessor; and (B) be a "net lease" in accordance with industry practice
and shall be comparable to, or more restrictive than, this Lease and under
such Permitted Sublease (except a sublease to the United States Government
or a Foreign Air Carrier after the Restricted Use Period), Lessee as lessor
under such Permitted Sublease, must be entitled to the same benefits under
11 U.S.C. Section 1110 as Lessor is entitled hereunder and such Permitted
Sublease shall contain provisions regarding such Section 1110 which are
substantially the same as the related provisions of this Lease. In
addition, from and after the occurrence and continuance
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of an Event of Default, all rent and other amounts payable by the Permitted
Sublessee under such Permitted Sublease shall be paid directly to Indenture
Trustee and, upon discharge of the Lien of the Indenture, to Lessor.
(iii) Permitted Subleases. With respect to any sublease pursuant
to Sections 6(a)(i)(3) or (4) (to the extent permitted by Law) or Section
6(a)(i)(9) above:
(1) Lessee may sublease the Aircraft or the Airframe to a Permitted
Sublessee (each of which shall constitute a "Permitted Sublease") if (A) in
any such case, the Permitted Sublessee under such sublease is not subject
to a proceeding or final order under applicable bankruptcy, insolvency or
reorganization laws on the date such sublease is entered into, (B) in the
event that the Permitted Sublessee under such sublease is a Foreign Air
Carrier (other than a Foreign Air Carrier principally based in Taiwan), the
United States maintains diplomatic relations with the country in which such
proposed Permitted Sublessee is principally based at the time such sublease
is entered into (or, in the case of a sublease to a proposed Permitted
Sublessee principally based in Taiwan, maintains diplomatic relations at
least as good as those in effect on the Restatement Date) and (C) in the
event that the Permitted Sublessee under such sublease is a Foreign Air
Carrier, Lessor and the Indenture Trustee shall have received an opinion of
counsel to Lessee, in form and substance reasonably satisfactory to Owner
Participant and the Indenture Trustee, to the effect that (I) the terms of
the proposed sublease will be legal, valid, binding and (subject to
customary exceptions in foreign opinions generally) enforceable against the
proposed Permitted Sublessee in the country in which the Permitted
Sublessee is principally based, (II) there exist no possessory rights in
favor of the Permitted Sublessee under such sublease under the laws of such
Permitted Sublessee's country of domicile that would, upon bankruptcy or
insolvency of or other default by Lessee, prevent the return or
repossession of the Aircraft in accordance with the terms of this Lease,
(III) (unless Lessee shall have agreed or is required to provide insurance
covering the risk of requisition of use of the Aircraft by the government
of the country of such Permitted Sublessee's country of domicile) the laws
of such Permitted Sublessee's country of domicile require fair compensation
by the
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government of such jurisdiction payable in currency freely convertible into
dollars for the loss of use of the Aircraft in the event of the requisition
by such government of such use, (IV) the Permitted Sublessee is either not
entitled to sovereign immunity, or has effectively waived such sovereign
immunity, with respect to its rights and obligations under the proposed
sublease; (V) the laws of such Permitted Sublessee's country of domicile
would give recognition to Lessor's title to the Aircraft, to the registry
of the Aircraft in the name of the Lessor (or Lessee, as "lessee", or the
proposed Permitted Sublessee, as "sublessee", as appropriate) and to the
Lien of the Indenture; (VI) it is not necessary under the laws of such
Permitted Sublessee's country of domicile, solely as a consequence of such
subleasing and without giving effect to any other activity of Owner
Participant, Owner Trustee or Indenture Trustee or any Affiliate thereof,
as the case may be, for the Owner Trustee, the Owner Participant or the
Indenture Trustee to qualify to do business in such jurisdiction; and (VII)
if the Owner Participant so requests, (x) under the laws of such Permitted
Sublessee's country of domicile there is no tort liability of the owner of
an aircraft not in possession thereof (it being agreed that in the event
this opinion cannot be given in a form reasonably satisfactory to Owner
Participant, such opinion shall be waived if insurance reasonably
satisfactory to Owner Participant is provided to cover such risk), and (y)
such other matters as the Owner Participant reasonably requests, provided,
however, that no sublease shall extend beyond the expiration of the Basic
Term or any Renewal Term then in effect.
Any Permitted Sublease shall expressly provide that the rights of any
Permitted Sublessee shall be expressly subject and subordinate to all the terms
of this Lease and to the Lien of the Indenture (if it has not been discharged),
including, without limitation, the covenants contained in Sections 6(c), 6(d)
and 6(e) hereof and Lessor's rights to repossession pursuant to Section 18
hereof and to avoid or terminate such Permitted Sublease upon such
repossession, and Lessee shall remain primarily liable hereunder for the
performance of all of the terms of this Lease to the same extent as if such
Permitted Sublease had not occurred. No Permitted Sublease shall in any way
discharge or diminish any of Lessee's obligations to Lessor hereunder or under
the other Operative Documents or constitute a waiver of Lessor's rights or
remedies hereunder
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or under the other Operative Documents, and such rights shall continue as if
such Permitted Sublease had not occurred. Any Permitted Sublease shall
expressly prohibit any further sub-sublease or assignment or any other similar
transfer of the Aircraft, Airframe or any Engine or rights thereto by the
Permitted Sublessee. Lessee shall provide to the Owner Participant and the
Indenture Trustee (i) written notice of any Permitted Sublease hereunder (such
notice to be given not later than ten Business Days prior to entering into any
Permitted Sublease with any proposed Permitted Sublessee), and (ii) a copy of
each Permitted Sublease together with an assignment, as security for Lessee's
obligations hereunder, of such Permitted Sublease, and if Lessor or the
Indenture Trustee so requests, a consent thereto from such Permitted Sublessee,
in form and substance reasonably satisfactory to Lessor and the Indenture
Trustee, within ten (10) Business Days following the effective date of such
Permitted Sublease.
(b) Reciprocal Recognition of Rights. In the event the lessor or
secured party of any airframe leased to Lessee (or a Permitted Sublessee) or
owned by Lessee (or a Permitted Sublessee) is subject to a conditional sale or
other security agreement in accordance with Section 6(a)(i)(6) hereof, and the
lease or conditional sale or other security agreement covering such airframe
also covers an engine or engines owned by the lessor under such lease or
subject to a security interest in favor of the secured party under such
conditional sale or other security agreement, Lessor hereby agrees for the
benefit of such lessor or secured party that Lessor will not acquire or claim,
as against such lessor or secured party, any right, title or interest in any
such engine as the result of such engine being installed on the Airframe at any
time while such engine is subject to such lease or conditional sale or other
security agreement and owned by such lessor or subject to a security interest
in favor of such secured party. Lessor also hereby agrees for the benefit of
the mortgagee under any mortgage complying with Section 6(a)(i)(6) hereof,
relating to installation of an Engine on an airframe leased to Lessee (or a
Permitted Sublessee), that Lessor will not acquire or claim, as against such
mortgagee, any right, title or interest in any engine subject to the lien of
such mortgage as the result of such engine being installed on the Airframe at
any time while such engine is subject to the lien of such mortgage.
(c) Lawful Insured Operations. Lessee will not permit the Aircraft,
the Airframe or any Engine to be
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serviced, repaired, maintained, used or operated in violation of any Law of any
Governmental Entity having jurisdiction, or contrary to the Manufacturers'
operating manuals or instructions, or in violation of any airworthiness
certificate or limitation, license or registration issued by any such authority
or any manufacturer's specifications, service bulletins or other requirements,
including, without limitation, any manufacturer's requirements as may be
applicable to keep in full force and effect each material warranty, product or
performance guaranty, service life policy or the like, in each case, to the
extent made mandatory for Part 121 operators similarly situated to Lessee or
the Permitted Sublessee if the Aircraft is registered with the FAA, or the
applicable laws of any other jurisdiction in which the Aircraft may then be
registered in accordance with Section 11 of the Refunding Agreement, unless the
validity thereof is being contested in good faith and by appropriate
proceedings, but only so long as such proceedings do not involve any danger of
sale, forfeiture or loss of the Aircraft or impair the interest of Lessor
therein or impair the validity or priority of the Lien of the Indenture or
result in a risk of criminal liability of Lessor, Owner Participant or
Indenture Trustee and are not inconsistent with any insurance required to be
maintained by Lessee hereunder. In the event that such Law or other
requirement requires alteration of the Aircraft during the Basic Term or the
then-current Renewal Term, Lessee shall comply therewith at its sole expense
and shall maintain the same in proper condition for operation under such Laws
and other requirements. Lessee shall not operate in any manner or locate in
any place the Aircraft, or suffer or permit the Aircraft to be operated by a
Permitted Sublessee or otherwise in any manner or located by a Permitted
Sublessee or otherwise in any place (i) unless the Aircraft is covered by
insurance or United States Government indemnity as required by the provisions
hereof or (ii) contrary to the terms of such insurance or United States
Government indemnity or (iii) which prohibits the operation or location therein
of Aircraft owned by a United States citizen. Lessee also agrees not to
operate or locate the Aircraft or suffer or permit the Aircraft to be operated
or located in any area excluded from coverage by any insurance policy issued
pursuant to the requirements of this Lease or in any war zone unless insured or
indemnified by the United States of America therefor, except in the case of
operation pursuant to a sublease or contract with, or as a result of a
requisition (not constituting an Event of Loss) by, the United States of
America, and then only if Lessee has obtained insurance or an indemnity (in
lieu of such
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insurance) from the United States of America covering such risks, in the
amounts and otherwise as required by this Lease.
(d) Maintenance. Lessee, at its own cost and expense, shall: (i)
perform or cause to be performed all service, repair, maintenance, overhaul,
inspections, alterations, modifications, and testing (A) in accordance with
good airline industry practice and in such manner to provide complete data and
documentation necessary to substantiate certification, (B) as may be necessary
and required under, and in compliance with, applicable Law, including, without
limitation, FAA rules, regulations and other requirements, any other applicable
rules, regulations and requirements by any other applicable Governmental
Entity, the Maintenance Program, airworthiness directives having a compliance
date during the Term, and the service bulletins and other requirements of any
manufacturer, including, without limitation, such requirements as may be
applicable to keep in full force and effect any and all material warranties,
product and performance guaranties, service life policies, indemnities or the
like, (C) except during any period that a Permitted Sublease is in effect, in
the same manner and with the same care, including regard for the status and
technical condition of the Aircraft, as shall be the case with respect to
similar aircraft and engines owned by Lessee without discrimination and as if
Lessee owned the Aircraft and was going to use the Aircraft in continued
regular customer service after the expiration of the Term, and consistent with
good industry practice, and during any period in which a Permitted Sublease is
in effect, in the same manner and with the same care, including regard for the
status and technical condition of the Aircraft, as shall be the case with
respect to similar aircraft and engines owned by such Permitted Sublessee
without discrimination and as if the Permitted Sublessee owned the Aircraft and
was going to use the Aircraft in continued regular customer service after the
expiration of the Permitted Sublease, and consistent with good industry
practice, provided, however, that in all circumstances the Aircraft shall be
maintained by Lessee (or any Permitted Sublessee) in accordance with
maintenance standards required by, or substantially equivalent to those
required by the central civil aviation authority of the country of registry,
and, to the extent not inconsistent therewith, the FAA and (D) so as to keep
the Aircraft in as good a condition as when delivered to Lessee, ordinary wear
and tear excepted, and in good operating condition; (ii) keep the Aircraft or
cause the Aircraft to be kept in such condition as is
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necessary to enable the airworthiness certification of such Aircraft to be
maintained in good standing at all times under the Federal Aviation Act and any
other applicable law, or the applicable laws of any other jurisdiction in which
the Aircraft may be registered in accordance with Section 11 of the Refunding
Agreement (provided that if any grounding is fleetwide in nature and so long as
Lessee or a Permitted Sublessee is contesting in good faith such grounding,
Lessee shall not be deemed in violation of this maintenance covenant); and
(iii) maintain in English all records, logs and other materials required by,
and in a manner acceptable to, the FAA or any other Governmental Entity having
jurisdiction and as provided under the Maintenance Program and Lessee's
recordkeeping policies.
(e) Registration and Insignia. Lessee shall cause the Aircraft at all
times, at its expense, to be duly registered during the Restricted Use Period
and, subject to Section 11 of the Refunding Agreement, thereafter under the
Federal Aviation Act in the name of Lessor or any successor or assignee, so
long as (i) while the Aircraft is registered under the Federal Aviation Act,
each of the Lessor or its successors or assigns is a "citizen of the United
States" as defined in Section 40102(a)(15) of the Federal Aviation Act and (ii)
the applicable parties to the Refunding Agreement cooperate with Lessee with
respect thereto as reasonably requested by Lessee. Lessee shall not register
the Aircraft or permit the Aircraft to be registered under any Laws other than
the Federal Aviation Act at any time except as provided in Section 11 of the
Refunding Agreement and shall cause the Indenture to be duly recorded and
maintained of record as a duly perfected mortgage on the Aircraft and this
Lease at all times. At any time after the Restricted Use Period, Lessor, upon
compliance with all of the terms of Section 11 of the Refunding Agreement,
shall, at the request and sole expense of Lessee, cooperate with Lessee to take
all actions reasonably required to change the registration of the Aircraft to
another country.
Lessee agrees at its expense to place such appropriate insignia,
plates and other identification ("Lease Identification") in the cockpit of the
Aircraft and on each Engine showing title thereto and the Lien of the Indenture
as designated by Lessor and as Lessor may from time to time reasonably request.
Unless otherwise requested, upon delivery of the Aircraft, Lessee shall fasten
or cause to be fastened in the cockpit of the Airframe in a location reasonably
adjacent to and not less prominent than the airworthiness certificate for the
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Aircraft, and on each Engine (if not prohibited by applicable Law), a Lease
Identification in the form set forth in Exhibit C hereto or with any other
appropriate information in any other form subsequently designated by Lessor to
Lessee. Except as provided herein, Lessee will not allow the name of any
Person to be placed on the Aircraft or either Engine as a designation that
would be reasonably interpreted as a claim of ownership or Lien; provided,
however, that Lessee may cause the Airframe and Engines to have placed thereon
the customary colors and insignia of Lessee or any Permitted Sublessee under a
Permitted Sublease.
Section 7. Inspection.
During the Term of this Lease, Lessee shall furnish to Lessor, Owner
Participant and Indenture Trustee such information concerning the location,
condition, use and operation of the Aircraft as Lessor, Owner Participant or
Indenture Trustee may reasonably request. Lessee shall permit, or cause any
sublessee to permit, any person designated by Lessor, Owner Participant or
Indenture Trustee on reasonable prior notice at reasonable times to visit,
inspect and survey the Aircraft (including, without limitation, a visual "walk
around" inspection which may include going on board the Aircraft, and
inspecting the Aircraft during maintenance checks when panels and bays are open
and subject to view), its condition, use, and operation, and the records
maintained in connection therewith, and to visit and inspect the properties and
to discuss the affairs, finances and accounts of Lessee with the principal
officers of Lessee, provided, that so long as no Default or Event of Default
has occurred hereunder inspections shall be endeavored to be performed during
regularly scheduled maintenance checks of the Aircraft. Each such inspection
or survey shall be conducted so as to not unreasonably interfere with the
business of Lessee or the maintenance or operation of the Aircraft. Upon
Lessor's, Owner Participant's or Indenture Trustee's request, Lessee will
notify such Person of the next scheduled maintenance check for the Airframe or
any Engine. Lessor, Owner Participant and Indenture Trustee shall have no duty
to make any such inspection and shall not incur any liability or obligation by
reason of not making any such inspection. Lessor's, Owner Participant's or
Indenture Trustee's failure to object to any condition or procedure observed or
observable in the course of an inspection hereunder shall not be deemed to
waive or modify any of the
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terms of this Lease with respect to such condition or procedure.
Section 8. Additional Covenants of Lessee.
Lessee covenants and agrees that:
(a) Financial Information. Lessee agrees to furnish Lessor, until the
expiration or other termination of the Term of this Lease, the following:
(i) within sixty (60) days following the end of each quarter of
Lessee's fiscal year, except the last such quarter of such year, commencing
after the Restatement Date, a copy of Lessee's Quarterly Report on Form 10-Q as
filed with the Securities and Exchange Commission or, if Lessee no longer files
such report, an unaudited consolidated balance sheet of Lessee and its
consolidated subsidiaries prepared by it as of the close of the period ended,
together with the related statements of income and cash flows for such period,
and in each case certified by a Responsible Officer of Lessee as having been
prepared in accordance with GAAP and as fairly presenting the financial
condition and results of operations and changes in financial position for such
period then ended in accordance with such principles and practices (subject to
normal year-end audit adjustments);
(ii) within one hundred five (105) days after the close of each
fiscal year of Lessee, a copy of Lessee's Annual Report on Form 10-K as filed
with the Securities and Exchange Commission or, if Lessee no longer files such
reports, an audited consolidated balance sheet, income statement, and cash flow
statement of Lessee and its consolidated subsidiaries, as of the close of such
fiscal year, and in each case as certified by independent public accountants,
including their certificate and accompanying comments, as having been prepared
in accordance with GAAP and as fairly presenting the financial condition and
results of operations and changes in financial position for such period then
ended in accordance with such principles and practices, without qualification
as to the scope of the audit or non-conformity with GAAP;
(iii) promptly upon their becoming available, copies of all
reports on Form 8-K filed by Lessee under the Securities Exchange Act of 1934,
as amended, and each other statement, report or circular (other than the
exhibits thereto and any registration statements on Form S-8 or its
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equivalent) generally distributed to creditors or shareholders;
(iv) prior to the expiration date of each policy of insurance
required to be maintained hereunder, a certificate signed by the Approved
Broker of Lessee as to the due compliance with the insurance provisions of
Section 12 hereof with respect to the Aircraft, together with certificates of
insurance evidencing such insurance and the opinion provided for in Section
12(f);
(v) together with each set of financial statements referred to in
clauses (i) and (ii), a certificate signed by a Responsible Officer of Lessee,
to the effect that such officer has reviewed the relevant terms of this Lease
and has made, or caused to be made under his or her supervision, a review of
the transactions and condition of Lessee during the accounting period covered
by such financial statements, and that such review has not disclosed the
existence during such accounting period, nor does such officer have any
knowledge of the existence, as at the date of such certificate, of any
condition or event which constitutes a Default or an Event of Default, or, if
such condition or event which constitutes a Default or an Event of Default
existed or exists, specifying the nature and period of existence thereof and
what action Lessee has taken or is taking or proposes to take with respect
thereto or any event classified as an accident by the National Transportation
Safety Board, or if such event has occurred, information about such event;
(vi) as soon as practicable after becoming aware thereof, notice
of damage or destruction to the Aircraft, either Engine or any Part with a
repair or replacement cost (including labor charges) in excess of $1,000,000;
(vii) immediately after Lessee knows or should know of the
occurrence thereof, notice of a Default; and
(viii) from time to time such other information as Lessor may
reasonably request.
(b) Maintenance of Corporate Existence. Except as provided in Section
8(e) below, during the term of this Lease, Lessee will preserve and maintain
its corporate existence and its rights, privileges, licenses and franchises
material to Lessee's ability to perform its obligations hereunder in each
applicable jurisdiction.
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(c) Maintenance of Status. Lessee is, and shall remain so long as it
shall be the Lessee under this Lease, a "citizen of the United States" as
defined in Section 40102(a)(15) of the Federal Aviation Act, and Lessee is and
shall maintain its status at all times as a Certificated Air Carrier,
including, without limitation, its status so as to fall within the purview of
11 U.S.C. Section 1110 or any analogous statute.
(d) Payment of Taxes. Lessee will pay or cause to be paid all Taxes
imposed upon it, or upon its income or profits, or upon any property belonging
to it, on or prior to the due date thereof, including any extensions which have
been duly obtained or granted; provided, however, that Lessee shall not be
required to pay any such Taxes, the payment of which is being diligently
contested in good faith and by appropriate proceedings with appropriate
reserves so long as there is no material possibility that either failure to pay
such Taxes or such contest may result in any loss, sale, confiscation,
forfeiture or seizure of the Aircraft, the Airframe or either Engine or any
criminal liability on the part of Lessor, Indenture Trustee or any Note Holder.
(e) Consolidation, Merger, Etc. Lessee shall not liquidate or
dissolve; and Lessee shall not consolidate with or merge into or with any other
corporation or other Person, and Lessee shall not convey, transfer, lease or
otherwise dispose of all or substantially all of its property and other assets
(in one or a series of transactions) to any corporation or other Person,
unless:
(i) the Person formed by or surviving such consolidation or merger
or the Person which acquires by conveyance, transfer, lease or other
disposition all or substantially all of such property and other assets or stock
(the "Successor Entity"): (A) shall be a corporation organized and existing
under the Laws of the United States of America or any State thereof or the
District of Columbia; (B) immediately after giving effect to such transaction,
shall be Lessee or shall have acquired or succeeded to all or substantially all
of such property and other assets (including, without limitation, all or
substantially all of Lessee's property and other assets) as an entirety and,
unless the Owner Participant otherwise agrees, shall have a Net Worth of not
less than Lessee's Net Worth immediately prior to such transaction; (C) shall
be a "citizen of the United States" of America as defined in Section
40102(a)(15) of the Federal Aviation Act and a Certificated Air Carrier; and
(D) shall execute and deliver to Lessor and Indenture
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Trustee such recordations and filings with any Governmental Entity and such
other documents as Lessor determines shall be reasonably necessary or advisable
(including, without limitation, to preserve and protect the interests of the
Lessor and the priority of the Lien of the Indenture (if it has not been
discharged)) to evidence, or in connection with, such consolidation, merger,
sale, lease, transfer or other disposition and an agreement, in form and
substance reasonably satisfactory to Lessor, which is a legal, valid, binding
and enforceable assumption by such Successor Entity of the due and punctual
performance and observance of each covenant and condition of this Lease and the
other Operative Documents to which Lessee is a party and agreement to be bound
thereby, and an officer's certificate to such effect, and to the effect that
the other requirements of this paragraph have been satisfied, and a legal
opinion from counsel to such effect and otherwise in such form and substance
reasonably satisfactory to Lessor; and
(ii) prior to and immediately after giving effect to such
transaction, no Default or Event of Default shall have occurred and be
continuing.
No such permitted disposition to a Successor Entity shall relieve or release
Lessee of or from any obligations hereunder or under the other Operative
Documents.
(f) Information. Within 60 days after the end of each calendar year
and within 60 days of a request by Lessor or Owner Participant, or such shorter
period as may be set forth in any written request by the Internal Revenue
Service for information or documents, Lessee shall furnish in writing to Lessor
or Owner Participant such information and documents (or copies thereof)
regarding the Aircraft as may be reasonably requested by Lessor or Owner
Participant or the Internal Revenue Service in order to permit Lessor to file
its Federal and state income tax returns (or to permit the filing of the
Federal and state income tax returns of any affiliated group of corporations
filing a consolidated return of which Lessor is a member), or to maintain or
defend any claims related thereto and promptly, after reasonable notice,
furnish to Lessor or Owner Participant
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such information as may be reasonably requested by Lessor or Owner Participant
or the applicable Governmental Entity as may be required to enable Lessor or
Owner Participant to file any reports required to be filed by it with any
Governmental Entity because of its ownership or other interest in the Aircraft,
the Airframe or the Engines.
(g) Place of Business. At all times while this Lease is in effect,
Lessee will not, without thirty (30) days prior written notice to Lessor and
Indenture Trustee (so long as the Lien of the Indenture shall not have been
discharged), change its chief executive office (as such term is defined under
Article 9 of the Uniform Commercial Code as adopted in Arizona) or location of
its books and records, from 0000 Xxxx Xxx Xxxxxx Xxxxxxxxx, Xxxxxxx, Xxxxxxx
00000, or such subsequent location of which Lessee shall have so notified
Lessor and, if applicable, Indenture Trustee.
(h) Certain Limitations on Use. Lessee shall use the Aircraft,
Airframe or Engines only in commercial passenger operations and related cargo
operations. Unless Owner Participant otherwise agrees, during the Restricted
Use Period, Lessee shall not use the Aircraft, Airframe or Engines or permit
the Aircraft, Airframe or Engines to be used "predominantly outside the United
States" within the meaning of Section 48(a)(2) of the Code, or in such manner
that the percentage of the income, deduction or credit attributable to the
Aircraft, Airframe or Engines for federal income tax purposes during any
taxable year of the Lessor considered to be from foreign sources exceeds the
Maximum Foreign Use Percentage. Unless the Owner Participant otherwise agrees,
prior to permitting the Aircraft to be operated in any member state of the
European Union or other European country, Lessee shall deliver to Lessor (i) a
representation and warranty to the effect that Lessee (or any Permitted
Sublessee) has no knowledge of any dispute with Eurocontrol or other relevant
air traffic control authority over delinquent charges payable by it and (ii) a
letter from Lessee (or any Permitted Sublessee) addressed to Eurocontrol or
other relevant air traffic control authority pursuant to which Lessee (or such
Permitted Sublessee) authorizes the addressee to issue to Lessor, upon Lessor's
request from time to time, a statement of account of all sums due by Lessee (or
such Permitted Sublessee) to the authority in respect of all aircraft
(including, without limitation,the Aircraft) operated by Lessee (or such
Permitted Sublessee).
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(i) Section 1110. Lessee acknowledges that Lessor would not have
entered into this amended and restated Lease unless it had available to it the
benefits of a lessor under Section 1110 of Title 11 of the United States Code.
Lessee covenants and agrees with Lessor that to better ensure the availability
of such benefits, Lessee shall support any motion, petition or application
filed by Lessor with any bankruptcy court having jurisdiction over Lessee,
whereby Lessor seeks recovery of possession of the Aircraft under said Section
1110 and shall not in any way oppose such action by Lessor unless Lessee shall
have complied with the requirements of said Section 1110 to be fulfilled in
order to entitle Lessee to continued use and possession of the Aircraft
hereunder. The acknowledgement, covenant and agreement contained in this
Section 8(i) shall continue in full force and effect and survive the expiration
or other termination of this Lease and are expressly made for the benefit of
and shall be enforceable by the Lessor, the Owner Participant and, if the Lien
of the Indenture has not been discharged, the Indenture Trustee.
(j) Permits and Licenses. Lessee shall make or obtain, and maintain
in full force and effect, each and every consent, license, approval, notice,
registration, filing or other action with any Governmental Entity (i) necessary
or advisable in connection with the operation or use of the Aircraft, the
Airframe, any Engine or Part or the execution, delivery or performance of this
Lease or the enforcement thereof against Lessee or (ii) necessary in connection
with the execution, delivery or performance of the Operative Documents (other
than the Lease) to which Lessee is a party or the enforcement thereof against
Lessee.
(k) Security Opinion; Annual Certificate. (i) During such times that
the Aircraft is registered under the Federal Aviation Act, Lessee shall furnish
to Lessor and to Indenture Trustee:
(1) (X) prior to the expiration of the time period covered by the
opinion of counsel rendered on the Restatement Date, any opinion
of counsel rendered pursuant to Section 11(C) of the Refunding
Agreement, and any opinion of counsel rendered pursuant to this
Section 8(k)(i) and (Y) upon any change in Law that would render
the opinion of counsel rendered on the Restatement Date or such
immediately preceding opinion of counsel inaccurate, an opinion of
counsel with respect to Lessee and
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the FAA reasonably satisfactory to each addressee of such opinion
(which counsel may be internal legal counsel of Lessee and FAA
counsel) stating, in the opinion of such counsel, that such action
has been taken with respect to the recording, filing, re-recording
and refiling of (i) the appropriate Operative Documents and any
supplements and amendments thereto and (ii) such other appropriate
documents, as is necessary to maintain the perfection of Lessor's
title to and/or interest in and Indenture Trustee's security
interest in the Aircraft and the Operative Documents for such
period of time as reflects the then-current applicable Law,
reciting the details of such actions; or
(2) at any time that an opinion is not required pursuant to Section
8(k)(i)(1), annually, a certificate reasonably satisfactory to
each recipient thereof signed by a Responsible Officer of Lessee
certifying that no such action is necessary to maintain the
perfection of such title and/or interest and security interest.
(ii) During such times that the Aircraft is registered under any Laws
other than the Federal Aviation Act, Lessee shall furnish to Lessor and to
Indenture Trustee annually (but in any case, (X) prior to the expiration of the
time period covered by any opinion of counsel rendered pursuant to Section
11(C) of the Refunding Agreement and any opinion of counsel rendered pursuant
to this Section 8(k)(ii) and (Y) promptly upon any change in Law that would
render such immediately preceding opinion of counsel inaccurate), an opinion of
counsel reasonably satisfactory to each addressee of such opinion stating, in
the opinion of such counsel, that such action has been taken with respect to
the recording, filing, re-recording and refiling of (i) the appropriate
Operative Documents and any supplements and amendments thereto and (ii) such
other appropriate documents, as is necessary to maintain the perfection of
Lessor's title to and/or interest in and Indenture Trustee's security interest
in the Aircraft and the Operative Documents for such period of time as reflects
the then-current applicable Law, reciting the details of such actions.
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(l) Letter of Credit. As security for the obligations to Lessor,
Lessee shall provide to Lessor, as named beneficiary thereof, one or more
irrevocable standby letters of credit, in form and substance acceptable to
Lessor in its sole and absolute discretion (the "Letter of Credit"), including,
without limitation, as to renewal provisions, with a face amount available for
drawdown at all times equal to the amount set forth on Exhibit C (the "Face
Amount"), which Letter of Credit shall:
(i) provide that the full amount thereof shall be available for
drawdown thereunder and payable in New York, New York, on demand at any time,
if a Default under Section 17(e), (f) or (g) or an Event of Default has
occurred, which amount may be applied, retained or utilized as provided in the
penultimate paragraph of this Section 8(l);
(ii) be maintained in full force and effect at all times until
ninety-one (91) days after the Expiration Date with a commercial bank
acceptable to Lessor, in its sole and absolute discretion, having a long-term
unsecured debt rating of "A" or better by Standard & Poor's Rating Group (if
the issuing bank's credit rating is lower than such rating, Lessee shall
replace such Letter of Credit issuer within five Business Days of any such
reduction in rating with a commercial bank meeting such rating requirement),
provided, that the Letter of Credit set forth in Exhibit D-2 issued by The
Industrial Bank of Japan, Limited, will be acceptable to Lessor for so long as
The Industrial Bank of Japan, Limited maintains a long term unsecured debt
rating at least equal to its rating on the date hereof;
(iii) be expressly designated as transferrable and assignable; and
(iv) permit partial drawings. If the Letter of Credit is still
in effect at the end of the Term, or the Lessor is holding proceeds of the
Letter of Credit that were retained and not applied as provided herein, then
Lessor shall return the Letter of Credit to Lessee or terminate it, and/or
return any retained and unapplied proceeds, ninety-one (91) days following the
date of such expiration or other termination of this Lease so long as no
Default or Event of Default has occurred or is continuing hereunder or under
any Other Lease, upon payment in full of all amounts then due and owing to
Owner Trustee and Owner Participant under the Operative Documents.
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If an Event of Default has occurred or is continuing under this Lease
or an Event of Default has occurred or is continuing under any Other Lease (as
therein defined), in addition to any other rights and remedies Lessor may have
hereunder, under any Other Lease, any sublease and any and all other remedies
available at Law (including, without limitation, the Uniform Commercial Code as
adopted in New York) or equity and upon exercising its rights under the Letter
of Credit and any Other Letters of Credit, Lessor shall be entitled, in each
case as it may elect in its sole and absolute discretion, to (i) hold any
amounts drawn under the Letter of Credit or Other Letters of Credit as security
for Lessee's obligations under this Lease or the Other Leases, (ii) retain any
amounts drawn under the Letter of Credit or Other Letters of Credit for its own
account and apply (including, without limitation, by way of set off against)
such drawn amounts as it may elect (it being understood that amounts not so
applied will be held as security for Lessee's obligations under this Lease and
the Other Leases) to remedy any breach by Lessee of this Lease or any other
Operative Documents or Other Leases or (iii) recompense Lessor, Owner
Participant or any of their respective Affiliates for any loss, damage, cost or
expense or other Claim due or owing hereunder or under the Other Leases;
provided, however, that in the case of any drawing in respect of any claim for
the payment of Rent, Lessee's right to apply the same to such claim shall be
limited to amounts which would (absent such Event of Default) be distributable
under the Indenture at the time such payment is made to Lessor, Owner
Participant or any of their respective Affiliates (and shall not include any
amounts distributable to Indenture Trustee in its individual capacity or to the
Note Holders); provided further, however, that neither the amount so applied at
any one time nor the aggregate amount so applied at different times shall
reduce the amount of any installment or payment of Rent (whether upon the
termination of the Lease or otherwise) payable by Lessee to an amount
insufficient to pay in full the amounts required to be paid on account of the
principal of and any interest on the Equipment Notes or otherwise owing to a
Note Holder. Lessee shall not be entitled to any refund or credit with respect
to any amounts so applied. Any amount retained shall be considered the
property of Lessor and Lessor may commingle such amount with its general funds
and Lessee, further, hereby absolutely and irrevocably disclaims, to the
maximum extent permitted by applicable Law, any interest therein. Lessee shall
not be entitled to any interest or other earnings on such retained amount and
such amount shall not be refundable.
On application of all or any portion of the amounts drawn under the
Letter of Credit or any Other
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Letters of Credit in accordance with this Section 8(l) or the Other Leases,
Lessee shall on demand reinstate the amount of the Letter of Credit or Other
Letters of Credit, as the case may be, to its or their full Face Amount or
provide to Lessor one or more additional Letters of Credit meeting the
requirements of this Section 8(l), so that the Letter of Credit and each of the
Other Letters of Credit at all times equals the original Face Amount provided
for herein. During such times as Lessor shall elect to hold all or part of the
proceeds of the Letter of Credit or Other Letters of Credit as security for
Lessee's obligations to Lessor under the Lease and the Other Leases, Lessee
shall not be obligated to reinstate the amount of the Letter of Credit or
Letters of Credit, as the case may be, in respect of the proceeds so held.
Section 9. Replacement of Parts; Alterations, Modifications and
Additions.
(a) Replacement of Parts. Lessee, at its own cost and expense, will
promptly replace, or cause to be replaced, all Parts 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, in the ordinary course of maintenance, service, repair, overhaul
or testing, Lessee (or, if a Permitted Sublease is in effect, a Permitted
Sublessee) may at its own cost and expense remove any Parts, whether or not
worn out, lost, stolen, destroyed, seized, confiscated, damaged beyond repair
or permanently rendered unfit for use, provided that Lessee (or, if a Permitted
Sublease is in effect, a Permitted Sublessee) shall replace at its own cost and
expense such Parts as promptly as possible. All replacement Parts shall be
free and clear of all Liens (except for pooling arrangements to the extent
permitted by paragraph (c) of this Section and Permitted Liens), be in at least
the equivalent or better modification status and service bulletin
accomplishment status, be fully interchangeable as to form, fit and function
and shall be in as good operating condition as, and have a value, remaining
useful life and utility at least equal to, the Parts replaced (assuming such
replaced parts were in the condition and repair in which they were required to
be maintained by the terms hereof).
All Parts which are at any time removed from the Aircraft shall remain
the property of Lessor, subject to the Lien of the Indenture if it has not been
discharged, and subject to this Lease no matter where located until such time
as such Parts shall be replaced by parts which have been incorporated or
installed in or attached to the Aircraft and which meet the requirements for
replacement
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Parts specified above. Immediately upon any replacement Part becoming
incorporated or installed in or attached to the Aircraft as above provided, or
as provided in Section 9(c), without further act, (i) title to the removed Part
shall thereupon vest in Lessee free and clear of all rights of Lessor,
Indenture Trustee, Owner Participant and Note Holders and shall no longer be
deemed a Part hereunder, (ii) title to such replacement Part shall thereupon
vest in Lessor and become subject to the Lien of the Indenture if it has not
been discharged, and (iii) such replacement Part shall become subject to the
Lien of the Indenture (if it has not been discharged) and this Lease and be
deemed a Part for all purposes hereof to the same extent as the Part which it
has replaced.
(b) Alterations, Modifications and Additions. Lessee, at its own cost
and expense, shall make or cause to be made such alterations and modifications
in and additions to the Airframe and each Engine to the extent made mandatory
for Lessee (or a sublessee) in respect of the Aircraft, Engines or Parts from
time to time to meet the applicable standards of the FAA or under any Law of
any Governmental Entity having jurisdiction or issued by the manufacturer of
the Airframe, Engines or Parts. In addition, so long as no Default or Event of
Default has occurred and is continuing, Lessee (or, if a Permitted Sublease is
in effect, a Permitted Sublessee), at its own expense, may from time to time
make such alterations and modifications in and additions to the Airframe and
either Engine as Lessee (or, if a Permitted Sublease is in effect, a Permitted
Sublessee) may deem desirable in the proper conduct of its business, provided,
no such alteration, modification or addition diminishes the value, remaining
useful life or utility, or impairs the condition or airworthiness, of the
Airframe, either Engine or any Part below that immediately prior to such
alteration, modification or addition assuming that the Airframe, Engines and
Parts were then of the value, utility and remaining useful life and in the
condition and airworthiness required by the terms of this Lease. Except as
otherwise provided herein, title to all Parts incorporated or installed in or
attached or added to the Aircraft as the result of such alteration,
modification or addition, shall immediately vest in Lessor and become subject
to the Lien of the Indenture (if it has not been discharged) and this Lease,
without the necessity for any further act of transfer, document or notice.
Notwithstanding the foregoing sentence of this Section 9(b), Lessor agrees that
so long as no Default or Event of Default shall have occurred and be continuing
Lessee (or, if a Permitted Sublease is in effect, a Permitted Sublessee) may,
at such time during the Term for the Aircraft, remove any Part of such
Aircraft, provided, that (i) such Part is in
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addition to, and not in replacement or substitution for, any Part originally
incorporated or installed in or attached to, or delivered with, the Aircraft on
the Delivery Date or any Part in replacement of, or substitution for, any such
originally incorporated, installed, attached or delivered Part, (ii) such Part
is not required to be incorporated or installed in or attached or added to the
Aircraft pursuant to the terms of Section 6 or this Section 9 or to maintain
the insurance required by Section 12 and (iii) such Part can be removed from
the Aircraft without causing any material damage thereto and without
diminishing or impairing the value, utility, remaining useful life, condition
or airworthiness which the Aircraft would have had at such time had such
alteration, modification or addition not occurred. Upon the removal by Lessee
of any such Part as provided in the preceding sentence, title thereto shall,
without further act, vest in Lessee (or, if a Permitted Sublease is in effect,
a Permitted Sublessee) and such Part shall no longer be deemed part of the
Aircraft (such a part is herein called a "Removable Part"). Any Part not
removed by Lessee as above provided prior to the return of the Aircraft to
Lessor hereunder, whether pursuant to Section 16, Section 18 or otherwise,
shall remain the property of Lessor.
If any Removable Part is (i) owned by any third party and leased to
Lessee (or, if a Permitted Sublease is in effect, a Permitted Sublessee), (ii)
sold to Lessee (or, if a Permitted Sublease is in effect, a Permitted
Sublessee) subject to a conditional sale contract or other security interest or
(iii) leased to Lessee (or, if a Permitted Sublease is in effect, a Permitted
Sublessee) pursuant to a lease which is subject to a security interest in favor
of any third party, then Lessor will not acquire or claim, as against such
lessor, conditional vendor or secured party, any right, title or interest in
any such Removable Part as the result of such Removable Part being installed on
the Aircraft; provided, however, that (A) Lessor's inability to so acquire or
claim is subject to the express condition that such lessor, conditional vendor,
or secured party shall have agreed in writing (which agreement may be contained
in the lease, conditional sale agreement or security agreement) not to acquire
or claim, as against Lessor, any right, title or interest in the Aircraft, or
any Part other than its interest in such Removable Part by reason of such
Removable Part being installed thereon, and (B) any Removable Part not removed
by Lessee upon the termination or expiration of this Lease, at such time, shall
become the property of Lessor and be subject to this Lease, and provided,
further, that (1) if removal of any such Part shall affect the operation of the
Aircraft in any way whatsoever, Lessee shall replace such Part with an owned
Part of the same value, utility and remaining useful life and (2) Lessee shall
repair any
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unsightly area of the Aircraft as a result of such removal and make all other
repairs which are advisable and result from such removal.
In the event Lessee (or, if a Permitted Sublease is in effect, a
Permitted Sublessee) replaces a Part which is not required to be replaced under
Section 9(a) or 9(b) hereof, Lessee (or, if a Permitted Sublease is in effect,
a Permitted Sublessee) may remove the replacement Part so long as it reinstalls
the original Part and such original Part is free and clear of all Liens, other
than Permitted Liens, is in at least the same modification status and service
bulletin accomplishment status, is fully interchangeable as to form, fit and
function, has been overhauled, repaired and inspected by an agency acceptable
to the FAA or other Governmental Entity having jurisdiction, and is in as good
operating condition as, and has a utility, remaining useful life and a value at
least equal to that of such Part when it was removed from the Aircraft.
Notwithstanding any other provision hereof, and without limiting the
foregoing, Lessee (or, if a Permitted Sublease is in effect, Permitted
Sublessee) may install in the Aircraft audio visual, entertainment or
telephonic equipment (including seats with such equipment installed therein)
(any or all of which are hereafter referred to as "Excluded Property") in the
ordinary course of business, and Lessor shall not claim or acquire title
thereto and the rights of the owners thereof therein shall not constitute a
default hereunder; provided that (i) any such Excluded Property shall be
removed prior to the date of a Return Occasion without causing any damage to
the Aircraft and without diminishing or impairing the value, utility, remaining
useful life or condition which the Aircraft would have had at such time had
such Excluded Property not been installed, (ii) any equipment or seats which
such Excluded Property replaces shall be properly stored with the interests of
Lessor and, if the Lien of the Indenture is in effect, the Indenture Trustee,
duly noted thereon and acknowledged by any applicable bailee or warehouse, and
properly reinstalled on the Aircraft prior to the date of a Return Occasion,
and (iii) Lessee (or such Permitted Sublessee) shall make all repairs which are
required as a result of such removal and/or reinstallation.
In no event shall Lessor bear any liability or cost for any
alteration, modification, or addition, or for any grounding or suspension of
certification of the Aircraft, or for any loss of revenue arising therefrom.
(c) Pooling. Any Part removed from the Airframe or either Engine as
provided in Section 9(a) may so long as
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no Default or Event of Default shall have occurred and be continuing or would
result therefrom be subjected by Lessee (or, if a Permitted Sublease is in
effect, a Permitted Sublessee) to a normal pooling arrangement customary in the
airline industry of which Lessee (or, if a Permitted Sublease is in effect, a
Permitted Sublessee) is a part entered into in the ordinary course of Lessee's
or such Permitted Sublessee's business, provided the Part replacing such
removed Part shall be incorporated or installed in or attached to the Aircraft
in accordance with Section 9(a) as promptly as possible, and in any event
within sixty (60) days, 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 Section 9(a) may be owned by another
Person subject to such a normal pooling agreement; provided, however, that
Lessee (or, if a Permitted Sublease is in effect, a Permitted Sublessee), at
its own expense, as promptly thereafter as possible, and in any event within
sixty (60) days, either (i) causes title to such replacement Part to vest with
Lessor in accordance with Section 9(a) (and to be subjected to the Lien of the
Indenture if it has not been discharged) by Lessee (or, if a Permitted Sublease
is in effect, a Permitted Sublessee) acquiring title thereto for the benefit of
and transferring title to Lessor free and clear of all Liens except Permitted
Liens, whereupon such replacement Part shall become subject to this Lease and
the Lien of the Indenture (if in effect) without the necessity for any further
act, document or notice, or (ii) replaces such replacement Part by
incorporating or installing in or attaching to the Aircraft a further
replacement Part owned by Lessee (or, if a Permitted Sublease is in effect, a
Permitted Sublessee) free and clear of all Liens other than Permitted Liens and
by causing title to such further replacement Part to vest in Lessor as above
provided and to be subjected to the Lien of the Indenture if it has not been
discharged, whereupon such replacement Part shall become subject to this Lease
and the Lien of the Indenture (if in effect) without the necessity for any
further act, document or notice.
Section 10. General Tax Indemnification.
(a) Indemnity. Lessee agrees that each payment of Basic Rent
hereunder shall be free and clear of, and without deduction for, any and all
withholdings on account of Taxes of any nature whatsoever, whether or not an
exclusion pursuant to Section 10(b) applies, except as required by law. If any
such deduction or withholding of Taxes is required with respect to such
payments of Basic Rent, Lessee shall pay an additional amount of Basic Rent
such that the net amount actually received by Lessor, after
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such deduction or withholding, will be equal to all such amounts that would be
received by Lessor if no such deduction or withholding had been required, but
only to the extent necessary to ensure that the holders of the outstanding
Equipment Notes receive such amount as may be required by the Indenture. If
Lessee pays any amount to Lessor (or to any taxing authority for the account of
Lessor) as a result of the application of the preceding sentence with respect
to any withholding Tax which is an excluded tax in respect of Lessor pursuant
to Section 10(b), then Lessor (or, in the case of Taxes imposed on the Owner
Trustee, the Owner Participant to the extent such Tax would give rise to a
Lessor's Lien for which the Owner Participant would be liable) shall reimburse
Lessee for such withholding Tax within 30 days of written notice accompanied by
evidence of payment for such withholding Taxes (exclusive of interest,
penalties and additions to Tax) paid by Lessee provided that in any
circumstance in which the Lessor is required to reimburse the Lessee for any
such withholding Taxes and the Lessee has not received such reimbursement from
Lessor or the Owner Participant, then to the extent of such shortfall and so
long as no Lease Event of Default has occurred and is continuing, Lessee shall
be entitled to obtain reimbursement from Lessor by reducing the succeeding
payments of Rent payable to Lessor (other than any portion of Rent that may be
required by the Indenture to be paid to the holders of any outstanding
Equipment Notes issued thereunder) until the aggregate amount of reduction is
equal to the sum of the amount of such shortfall and interest on that amount at
the Interest Rate from the date reimbursement is required to be made until the
date of such reduction in Rent. Except as provided in Section 10(b), and
taking into account any payments received by Lessor pursuant to the second
sentence of this Section 10(a), Lessee agrees to pay, and to indemnify and hold
each Indemnitee harmless from, any and all taxes (including, without
limitation, sales, personal property, transfer, fuel, leasing, use,
registration, occupational, license, value added, excess profits, excise, gross
receipts, franchise, stamp, income and minimum taxes), levies, withholdings,
assessments or other taxes, duties or charges of any nature, together with any
fines, penalties, charges or interest thereon (collectively, "Taxes"),
howsoever levied or imposed, whether levied or imposed upon or with respect to
or asserted against any Indemnitee, Lessee, the Aircraft, the Airframe, any
Engine or any Part thereof or interest therein, or otherwise, with respect to
any period beginning, or events or circumstances occurring, on or after the
Restatement Date, by any Federal, state or local government or taxing authority
in the United States of America or by any foreign government or any taxing
authority or governmental subdivision of a foreign country or of a
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territory or possession of the United States (each such governmental
subdivision or taxing authority referred to as a "Taxing Authority"):
(i) upon or with respect to, based upon or measured by (A) the
Aircraft, the Airframe, any Engine or any Part thereof, or interest
therein, (B) the manufacture, purchase, ownership, delivery, leasing,
acceptance, rejection, assigning, possession, use, operation, location,
settlement of any insurance claim, sale, mortgaging, pledging, financing,
subleasing, rental, retirement, abandonment, registration, preparation,
installation, modification, repair, maintenance, replacement,
transportation, storage, transfer of title, return or other disposition of
the Aircraft, the Airframe, any Engine or any Part thereof or interest
therein; (C) the rentals, receipts, income or earnings arising therefrom
(including without limitation the Rent) or (D) interest, principal and
other amounts paid or payable with respect to the Equipment Notes, or
(ii) upon or with respect to the Operative Documents (including the
Equipment Notes), any interest in any thereof, or any future amendment,
supplement, waiver or consent thereto requested by Lessee with respect to
any thereof, or the execution, delivery, or performance of any thereof, or
the acquisition or subsequent transfer thereof or the issuance of the
Equipment Notes or any other document executed and delivered in connection
with the consummation or confirmation of the transactions contemplated by
the Operative Documents or any Indemnitee's interest in any of the
foregoing, or the execution, amendment, supplement, issuance, reissuance,
refinancing or delivery of any of the foregoing, or
(iii) the Trust Indenture Estate or the property, or the income or
other proceeds received with respect to the property, held by the Indenture
Trustee under the Indenture, or
(iv) the payment of the principal of, or interest or premium on, or
other amounts payable with respect to the Equipment Notes, whether as
originally issued or pursuant to any refinancing, modification or
reissuance or any other obligation evidencing any new loan, or
(v) otherwise with respect to or in connection with the transactions
contemplated by the Operative Documents.
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(b) Exclusions. The following Taxes shall not be subject to
indemnification under subsection (a) of this Section 10:
(i) In the case of any Indemnitee, any Taxes imposed on, based on, or
measured by, the gross or net income, receipts, capital, or net worth,
franchises, excess profits or conduct of business of such Indemnitee
(including minimum taxes, withholding taxes and taxes on or measured by any
item of tax preference) imposed by the Federal government of the United
States of America (other than Taxes included in the calculation of an
after-tax payment, Covered Income Taxes described in subsection (c) of this
Section 10, or Taxes in the nature of sales or use Taxes, license Taxes or
property Taxes),
(ii) In the case of any Indemnitee, Taxes imposed on, based on, or
measured by the income, receipts, capital, or net worth, franchises, excess
profits or conduct of business of such Indemnitee (including minimum taxes,
withholding taxes and taxes on or measured by any items of tax preference),
imposed by any state, local or foreign government or taxing authority
(other than Taxes included in the calculation of an after-tax payment,
Taxes in the nature of sales Taxes, use Taxes, license Taxes or property
Taxes, and Covered Income Taxes described in subsection (c) of this Section
10),
(iii) In the case of any Indemnitee, Taxes which are the direct
result of gross negligence or willful misconduct of such Indemnitee,
(iv) In the case of any Indemnitee, any Taxes imposed as a result
of a voluntary or involuntary bankruptcy of such Indemnitee (other than, in
the case of Owner Trustee, as a result of the occurrence of an Event of
Default) or any sale, transfer of title, transfer or other disposition by
such Indemnitee or a related Indemnitee (for such purpose, Owner Trustee,
Owner Participant and the general partners of Owner Participant are related
Indemnitees with respect to each other) of the Aircraft, the Airframe, any
Engine or any Part thereof or interest therein, or any interest in the Rent
or part thereof or any interest in the Operative Documents or part thereof,
unless such sale, transfer or disposition occurs in connection with (y) an
Event of Default and the exercise by any Indemnitee of its remedies under
the Lease or the Indenture, as the case may be, and (z) the substitution,
pooling or interchange of the Aircraft, the Airframe, any Engine or any
Part pursuant to the
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terms of the Lease; provided, however, that in all cases Owner Participant
and Owner Trustee shall consider in good faith such request as Lessee shall
make concerning the appropriate jurisdiction in which such sale, transfer
or disposition shall be made,
(v) In the case of any Indemnitee, Taxes imposed as a result of a
transferee of such Indemnitee of any interest in the Aircraft, the
Airframe, any Engine or any Part or any interest in the Operative Documents
being a foreign entity or not having its principal office in the United
States other than a disposition attributable to the exercise of default
remedies under the Lease, or in the case of a default caused by the acts or
omissions of Lessee, any sublessee, assignee, or successor of Lessee or
person in possession of the Aircraft, default remedies under the Indenture,
(vi) Any interest, penalties, fines and additions to tax imposed on
an Indemnitee (other than Taxes that are due and payable with a return when
properly filed) resulting from such Indemnitee's failure to file returns
that are timely and proper, provided such failure was not attributable to
such Indemnitee contesting any claim in accordance with this Section 10 or
to a failure by Lessee to satisfy its obligations related to such return,
(vii) In the case of an Indemnitee other than the Indenture Trustee
or the Trust Indenture Estate, Taxes which arise out of or are caused by
(i) any breach of an obligation required by the Operative Documents or
material misrepresentation of such Indemnitee, or (ii) a failure by such
Indemnitee to fulfill its contest obligations, provided such failure
adversely affects such Indemnitee's ability to contest, and, in the case of
the Indenture Trustee or the Trust Indenture Estate, Taxes imposed as a
result of a breach of such Indemnitee's representations, warranties or
covenants contained in Section 9(a), 12, or 16 of the Refunding Agreement
in any material respect, or from a failure by such Indemnitee to fulfill
its contest obligations,
(viii) So long as no Event of Default shall have occurred and be
continuing, Taxes attributable to the Aircraft related to acts or events
occurring after the later of the termination of the Lease and the
redelivery of the Aircraft,
(ix) In the case of each Pass-Through Trust, each Pass-Through
Trustee (in its individual capacity and as trustee under the Pass-Through
Trusts), the
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Subordination Agent and each Liquidity Provider, United States withholding
taxes imposed as a result of the place of organization or other status of a
holder of an interest in a Pass-Through Trust,
(x) In the case of the Indenture Trustee, each Pass-Through Trust,
each Pass-Through Trustee (in its individual capacity), the Subordination
Agent and each Liquidity Provider, Taxes imposed with respect to the
Equipment Notes as a result of activities of such Indemnitee unrelated to
the transactions contemplated by the Operative Documents, and
(xi) In the case of a general partner of the Owner Participant, any
Taxes to the extent such Taxes when added to the Taxes of the same type
imposed on Owner Participant and all other general partners and which are
subject to indemnification, exceed the Taxes that would have been imposed
on Owner Participant alone had Owner Participant been a U.S. corporation
(it being understood that in the case of multiple general partners, the
Taxes subject to this exclusion shall be apportioned pro-rata in accordance
with each general partner's interest in the partnership.
For purposes of the exclusions provided in this Section (b), reference
to "such Indemnitee" shall mean, in the case of Owner Participant, Owner
Participant or any partner of Owner Participant, and, in the case of each
general partner of Owner Participant, Owner Participant or any other partner or
partners of Owner Participant.
Notwithstanding anything to the contrary contained in this Section 10
(other than Section 10(b)(xi)), the provisions of this Section 10(b) shall not
apply to, and Lessee shall hold each Indemnitee harmless against, and indemnify
each Indemnitee on an after-tax basis (as provided under Section 10(e)) for,
any Taxes imposed by any Taxing Authority, with respect to any period
beginning, or events or circumstances occurring, on or after the Restatement
Date in connection with or relating to the transactions undertaken pursuant to
the Foreign Financing documents (and any other documents or agreements relating
thereto unless such documents or agreements are or relate solely to Operative
Documents other than the Foreign Financing Documents) including, without
limitation, Taxes based on or measured by gross or net income or receipts,
sales Taxes, value-added Taxes and any Taxes required to be withheld and paid
over to the United States Federal government pursuant to Subtitle A of the 1986
Code or any successor provisions with respect to any amounts paid or deemed to
be paid to the Foreign Lessor by any Indemnitee pursuant to the Foreign
Financing documents, but excluding any net income taxes payable to the United
States Federal government or any state or local Taxing Authority as a
consequence of a determination that the Lease is not a true lease for Federal
income tax purposes by reason of the terms and conditions of the Operative
Documents or the exercise of any rights specifically granted thereunder.
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(c) Covered Income Tax. For purposes of subsection (b)(i) and (b)(ii)
of this Section 10, a Covered Income Tax means
(i) in the case of any Indemnitee other than the Indenture Trustee or
the Trust Indenture Estate, any Tax based on or measured by gross or net
income, receipts, capital or net worth, franchises, excess profits or
conduct of business (other than taxes which are in the nature of sales or
use taxes, license taxes or property taxes) imposed on an Indemnitee by any
state or local Taxing Authority in whose jurisdiction such Indemnitee did
not otherwise have sufficient business activities or business presence to
be subject to tax solely as a result of (x) the operation of the Aircraft
in such jurisdiction or (y) the transactions contemplated by the Operative
Documents, to the extent such taxes are directly attributable to such
operation of the Aircraft or to such transactions. For purposes of
determining whether or not the Indemnitee engaged in business, maintained
an office or other place of business or was otherwise located in the
jurisdiction of a Taxing Authority, Indemnitee shall be defined as
including all entities with which such Indemnitee is combined, integrated
or consolidated in such Taxing Authority's jurisdiction;
(ii) in the case of any Indemnitee other than the Indenture Trustee
or the Trust Indenture Estate, any Tax based on or measured by gross or net
income, receipts, capital or net worth, franchises, excess profits or
conduct of business (other than taxes which are in the nature of sales or
use taxes, license taxes, or property taxes) imposed on such Indemnitee by
any foreign jurisdiction (i) which are imposed as a result of Lessee's or
sublessee's activities in such foreign jurisdiction in connection with the
transactions contemplated by the Operative Documents or (ii) which are
withholding taxes on Basic Rent to the extent such withholding taxes would
otherwise result in Basic Rent payments being insufficient to cover
principal and interest payments on the Equipment Notes;
(iii) in the case of the Indenture Trustee or the Trust Indenture
Estate any Tax based on or measured by gross or net income, receipts,
capital or net worth, franchises, excess profits or conduct of business
(including minimum taxes, withholding taxes, and taxes on or measured by
any item of tax preference) imposed on such Indemnitee by a Taxing
Authority in or of any foreign jurisdiction or a territory or possession of
the United States, other than any such Tax which would
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not have been imposed in the absence of such Indemnitee's (including for
purposes of this definition, all entities with which such Indemnitee is
combined, integrated, or consolidated in such Taxing Authority's
jurisdiction) engaging in business, maintaining an office or other place of
business or otherwise being located in such jurisdiction other than merely
by reason of such Indemnitee's participation in the transactions
contemplated by the Operative Documents; and
(iv) in the case of the Indenture Trustee or the Trust Indenture
Estate, a tax imposed by any Taxing Authority other than the Federal
government of the United States of America based on, or measured by gross
income or receipts (including minimum taxes, withholding taxes, and taxes
on or measured by any item of tax preference), to the extent such Tax is
attributable to the operation or registration of the Aircraft in such
jurisdiction or to the transactions contemplated by the Operative Documents
or is the result of the activities of Lessee, sublessee, or any Affiliate
of either thereof in such jurisdiction, including residence.
(d) Reports and Returns. In case any report or return is required to
be made by Lessee with respect to any Taxes which are subject to
indemnification by Lessee under this Section 10, Lessee will either make such
report or return in such manner as will show the ownership of the Aircraft in
Owner Trustee or the interest of Owner Participant or its permitted assigns and
send a copy of such report or return to Owner Trustee and Owner Participant or
will notify Owner Trustee or Owner Participant of such requirement and make
such report or return in such manner as shall be reasonably satisfactory to
Owner Participant or Owner Trustee. If actual notice is given by any taxing
authority to an Indemnitee that a report or return is required to be filed with
respect to any such Taxes, the Indemnitee shall promptly notify Lessee of such
required report or return and Lessee shall either file such report or return in
the manner prescribed in the preceding sentence, or shall use its best efforts
to cause such report or return to be filed by the appropriate entity. Each
Indemnitee agrees to respond to any reasonable request of Lessee for
information not within Lessee's control and within the control of and
reasonably available to such Indemnitee with respect to the filing of any such
report or return, but Lessee agrees to pay any reasonable costs, fees,
disbursements or other charges of independent counsel or independent
accountants incurred in connection with such request.
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(e) After-Tax Basis. Lessee further agrees that, with respect to any
payment or indemnity under this Section 10 and under Section 13 hereof, such
payment or indemnity shall include the net amount necessary to hold the
recipient of the payment or indemnity harmless on an after-tax basis from all
Taxes required to be paid or credited by such recipient with respect to such
payment or indemnity under the laws of any Taxing Authority (as determined, in
the case of the Owner Participant, on a hypothetical basis based on the
assumption that Owner Participant is subject to the highest federal corporate
income tax rate applicable in the year of payment and the State Rate (as
defined below). For this purpose, "State Rate" shall mean the actual state and
local tax rate imposed upon the Owner Participant, taking into account all
available allocations, apportionments, credits and deductions, such information
to be provided by the certification of a Responsible Officer of Owner
Participant (the "Certification"). At the request of the Lessee and at the
Lessee's expense, the accuracy of such information shall be verified by the
firm of certified public accountants regularly employed by the Owner
Participant, or any other national firm of independent certified public
accountants selected by Owner Participant and reasonably acceptable to Lessee.
The Certification as verified as described in the preceding sentence (if
requested by Lessee) shall be conclusive and binding on all parties. In no
event shall Owner Participant be required to make available or disclose any tax
returns or related information to any parties other than the certified public
accountants verifying the Certification.
(f) Tax Benefit. If, by reason of any payment made to or for the
account of an Indemnitee by Lessee pursuant to this Section 10 or Section 13
hereof, such Indemnitee subsequently actually realizes a tax deduction or
credit (including foreign tax credit and any reduction in Taxes) not previously
taken into account in computing the amount of such payment, such Indemnitee
shall promptly pay to Lessee, but only if there shall then be no Event of
Default and if Lessee shall have made all payments then due and owing to such
Indemnitee under the Operative Documents, an amount equal to the sum of (A) the
actual reduction in Taxes, if any, realized by such Indemnitee which is
attributable to such deduction or credit and (B) the reduction calculated on
the same basis as the Gross-Up in Taxes realized by such Indemnitee as a result
of any payment made by such Indemnitee pursuant to this sentence; provided,
however, that such Indemnitee shall not be obligated to make any payment
pursuant to this Section 10 or Section 13 hereof to the extent that the amount
calculated pursuant to (A) above would exceed (x) the amount of all prior
payments by Lessee to such Indemnitee, pursuant to this Section 10 or
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Section 13 hereof, net of any amount paid in respect of Taxes required to be
paid by such Indemnitee in respect of the receipt or accrual of such amounts
received by such Indemnitee from Lessee, less (y) the portion of all prior
payments computed pursuant to (A) above by such Indemnitee to Lessee hereunder.
(g) Payment. If a claim is made against any Indemnitee for any Taxes
which may be subject to indemnification by Lessee hereunder and if such
Indemnitee has notice thereof, such Indemnitee shall promptly notify Lessee;
provided that the failure to provide such notice shall not release Lessee from
any of its obligations hereunder except to the extent Lessee's right to contest
such claim is precluded thereby. Any amount payable as an indemnity to any
Indemnitee or any amount payable to Lessee pursuant to this Section 10 is to be
paid to such party directly, in immediately available funds, within thirty (30)
days after receipt of a written demand therefor from such Indemnitee or Lessee,
as the case may be, except in the case of a payment to an Indemnitee to the
extent that such Taxes are being contested in good faith pursuant to this
Section 10, in which event the payment of such indemnity shall be made by the
due date for the payment of any Taxes that are the subject of such contest
taking into account all extensions of the due date that are available as a
result of the contest. In the event an Indemnitee makes a tax payment with
respect to any such Taxes (other than with funds advanced to such Indemnitee on
an interest-free basis by Lessee pursuant to this Section 10), Lessee shall
reimburse the amount of such payment and also shall pay to the Indemnitee
interest on the amount of such payment by such Indemnitee at the Interest Rate
from the date of any such payment by such Indemnitee to the date of such
reimbursement by Lessee to the Indemnitee hereunder. In the event an amount is
payable to Lessee under this Section 10 or Section 13, the Indemnitee owing
such amount shall pay interest on such amount at the Interest Rate from the
date of receipt by such Indemnitee of any amount giving rise to such obligation
to pay Lessee until the date of payment to Lessee.
(h) Contest. In the event that an Indemnitee receives a written
notice of a claim which, if sustained, would require the payment of an
indemnity by Lessee pursuant to this Section 10, such Indemnitee shall promptly
notify Lessee of such claim and, if requested by Lessee, shall in good faith
contest or shall permit Lessee, if desired by Lessee and, in the case of a
contest involving Owner Participant, permitted by Owner Participant, and such
contest may be conducted in whole or in part separately in the name of Lessee
without involving Taxes of such Indemnitee not indemnified hereunder, to
contest in the name
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of Lessee and/or the Indemnitee, the validity, applicability or amount of such
Taxes by (x) resisting payment thereof if practicable, (y) not paying the same
except under protest, if protest is necessary and proper, and (z) if payments
be made, using reasonable efforts to obtain a refund thereof in appropriate
administrative and judicial proceedings; provided, however, that the Indemnitee
shall not be required to undertake or allow in its name or on its behalf any
contest unless the following conditions are satisfied:
(i) no Event of Default has occurred and is continuing,
(ii) a threshold amount of $75,000 for any individual claim and
$150,000 for recurring claims is at issue,
(iii) Lessee shall have (a) furnished Indemnitee with a written
opinion of tax counsel selected by Indemnitee and reasonably acceptable to
Lessee to the effect that a reasonable basis (as defined in ABA Opinion 85-
352) exists for the initial administrative or judicial contest and that the
Indemnitee is more likely than not to prevail in any appeal of a trial
court decision, and (b) agreed to pay Indemnitee for all reasonable costs
and expenses which Indemnitee may incur in contesting such claim,
(iv) there is no substantial risk of forfeiture of the Aircraft,
(v) if such contest is to be initiated by the payment of, and the
claiming of a refund for, such Taxes, Lessee shall advance or cause to be
advanced to such Indemnitee (if such Indemnitee is the Indenture Trustee or
the Trust Indenture Estate) sufficient funds (on an interest-free basis) to
make such payments and shall have agreed to indemnify such Indemnitee
against any adverse tax consequences of such advance,
(vi) no claim shall be appealed to the U.S. Supreme Court, and
(vii) Lessee shall have admitted its liability to indemnify Owner
Participant should a proposed adjustment prove to be correct, provided that
such admission may be conditioned on a binding judicial or administrative
adjudication of Lessee's responsibility to indemnify Owner Participant, and
provided further that in no event will such adjudication cause Lessee to
delay in fulfilling its contest obligations.
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(i) Refund. If any Indemnitee shall obtain a refund of all or any
part of any Taxes paid by Lessee or from an advance by Lessee, such Indemnitee
shall pay Lessee the amount of such refund together with any interest paid
thereon attributable to the Taxes paid or advanced by Lessee less the amount of
any Taxes payable by such Indemnitee in respect of the receipt of such refund
and interest after giving credit to Lessee for any savings by such Indemnitee
in respect to any such Taxes by reason of deductions, credits, allocations or
allowances in respect of the payment of any such Taxes; provided that such
amount shall not be payable before such time as Lessee shall have made all
payments or indemnities then due to the Lessor and the Indemnitee under the
Lease and all other Operative Documents, and provided further that no amount
shall be payable during any period in which an Event of Default under the Lease
has occurred and is continuing unremedied unless this Lease has terminated and
Lessee has paid all amounts due the Lessor thereunder.
(j) Diligence. Lessee shall not be deemed to be in default under any
of the above indemnification provisions of this Section 10 so long as Lessee or
the Indemnitee shall diligently prosecute such contest in accordance with the
provisions of this Section 10. Notwithstanding the foregoing, if a claim is
made against any Indemnitee for any Taxes which, if successful, would result in
the imposition of Taxes under circumstances which would require Lessee to
indemnify such Indemnitee, the Indemnitee shall be released from its
responsibility to contest such claim, or part thereof, if it agrees in writing
not to seek indemnification from Lessee in respect of the claim, or such part
thereof to be contested. In the event an Indemnitee fails to contest, or
refuses to permit Lessee to contest, a claim or part thereof which the
Indemnitee has the obligation to contest or to permit Lessee to contest under
this Section 10, then Lessee shall not be obligated to indemnify the Indemnitee
for such claim or such part thereof.
(k) Affiliated Group. In the event that the Indemnitee is a member of
an affiliated group (within the meaning of Section 1504(a) of the Code) which
files a consolidated Federal income tax return, the term "Indemnitee" shall
mean and include such affiliated group.
(l) Survival. The provisions of this Section 10 shall survive the
expiration or termination of any of the Operative Documents.
Section 11. Loss, Damage and Requisition.
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(a) Event of Loss with Respect to the Airframe. Subject to the other
provisions of this Section 11, upon an Event of Loss with respect to the
Airframe or the Airframe and any Engines then installed thereon, Lessee shall
forthwith (and, in any event, within five (5) Business Days after such
occurrence) give Lessor written notice of such occurrence and within thirty
(30) days after such occurrence give Lessor written notice of its election,
subject to the terms hereof and of the Indenture, to perform one of the
following two options (it being agreed that if Lessee shall not have given
Lessor notice of such election within thirty (30) days after such occurrence,
Lessee shall be deemed to have elected to perform the option set forth in the
following clause (ii)), provided, that Lessee shall not have the right to
select the option set forth in clause (i) if a Default or an Event of Default
shall have occurred and be continuing at the time of such election or at the
time of replacement:
(i) Within one hundred twenty (120) days (the "Replacement
Period") after the date of the Event of Loss (but in no event later than the
last day of the Term) Lessee shall convey, or cause to be conveyed to Lessor as
provided in Section 11(c) hereof, to be subjected to the Lien of the Indenture
if it has not been discharged, and to be leased by Lessee hereunder in
replacement of the Airframe and such Engines then installed thereon, title to a
replacement Airframe (together with the same number of replacement Engines as
the Engines), such replacement Airframe and Engines (A) to be free and clear of
all Liens (it being understood that, upon such conveyance, such replacement
Airframe and replacement Engines may be subject to Permitted Liens), (B) to
have a value, utility and remaining useful life, determined in accordance with
the Appraisal Procedure as provided in Section 11(c) hereof, at least equal to,
and to be in at least as good operating condition as, the Airframe and the
Engines, if any, so replaced (assuming the Airframe and the Engines were
maintained in accordance with the requirements of this Agreement, whether or
not they are in fact so maintained), and (C) to be a like Airbus A320-231 model
aircraft with equivalent or better modification status delivered by the
Manufacturer not earlier than June 30, 1988 and, in the case of Engines, in
compliance with Section 11(b); provided that if Lessee shall not perform its
obligation to effect such replacement under this clause by the end of the
Replacement Period, Lessee shall then be deemed to have elected to comply, and
shall comply, with the provisions of clause (ii) of this Section 11(a);
provided, further, that the payment specified therein shall be deemed to have
become due and payable on the Stipulated Loss Value Date occurring on or
immediately preceding the last day of the Replacement
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Period. Upon compliance with the foregoing, Lessor will, subject to the rights
of any insurers, transfer to Lessee, "AS IS, WHERE IS," without recourse,
representation or warranty (except a warranty that such Airframe and Engines
are free and clear of Lessor's Liens and Head Lessor Liens), all of Lessor's
right, title and interest, if any, in and to the Airframe and the Engines
suffering the Event of Loss as well as all of Lessor's right, title and
interest in and to any Engine constituting part of the Aircraft and replaced as
provided above but not installed thereon at the time of the Event of Loss. For
all purposes hereof, a replacement Airframe shall be deemed part of the
property leased hereunder and shall be deemed the "Airframe" as defined herein.
No Event of Loss resulting in replacement of the Airframe or Engines under this
Section 11(a)(i) shall result in any reduction of Rent.
(ii) On a Stipulated Loss Value Date on or before one hundred
twenty (120) days after the date of the Event of Loss (or, if earlier, with
respect to insurance proceeds, on the date on which insurance proceeds with
respect to the Event of Loss are received by the loss payee) Lessee shall pay
to Lessor in immediately available funds the sum of (A) the Stipulated Loss
Value of the Aircraft as shown on Exhibit A for such Stipulated Loss Value
Date, plus all Basic Rent or Renewal Rent, as the case may be, payable on each
Basic Rent Payment Date or Renewal Rent Payment Date, respectively, prior to
the date of payment of such Stipulated Loss Value which has not been paid when
due, [plus, if such Stipulated Loss Value Date is also a Basic Rent Payment
Date or a Renewal Rent Payment Date, the amount of Basic Rent or Renewal Rent,
as the case may be, payable by Lessee on such Stipulated Loss Value Date, or,
if such Stipulated Loss Value Date occurs after the last day of the Term,] plus
an amount equal to the average daily Basic Rent or Renewal Rent, as the case
may be, in effect on the last day of the Term, for each day from and including
the last day of the Term to and excluding such Stipulated Loss Value Date, and
(B) all Supplemental Rent payable, whereupon (1) the obligation of Lessee to
pay Basic Rent or Renewal Rent, as the case may be, hereunder with respect to
the Aircraft for any period commencing after the date on which such Stipulated
Loss Value is paid shall terminate; provided that Lessee shall remain liable
for, and shall pay on or before the date the Stipulated Loss Value and
Supplemental Rent are paid, all payments of Basic Rent or Renewal Rent, as the
case may be, for the Aircraft due on or before the date of such payment of
Stipulated Loss Value and Supplemental Rent, (2) the Term shall terminate with
respect to such Aircraft, and (3) Lessor will, subject to the rights of any
insurers, transfer to Lessee, "AS IS, WHERE IS," without recourse,
representation or warranty (except a warranty that such
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Airframe and Engines are free and clear of Lessor's Liens), all of Lessor's
right, title and interest, if any, in and to the Airframe and Engines suffering
the Event of Loss, as well as all of Lessor's right, title and interest, if
any, in and to any Engine constituting part of the Aircraft but not installed
thereon at the time of the Event of Loss.
(b) Event of Loss with Respect to an Engine. Upon an Event of Loss
with respect to an Engine only, Lessee shall give Lessor prompt written notice
thereof and shall, at its own cost and expense, within sixty (60) days after
such occurrence convey or cause to be conveyed to Lessor as replacement for the
Engine suffering an Event of Loss, title to another IAE Model V2500 engine of
like model and equivalent or better modification status or, at Lessee's option,
an IAE engine of an improved model, in each such case which has a value,
remaining useful life and utility determined in accordance with the Appraisal
Procedure at least equal to such Engine and is suitable for installation and
use on the Airframe without diminishing the value, remaining useful life or
utility of such Airframe, free of all Liens (it being understood that, upon
such conveyance, such replacement Engine may be subject to Permitted Liens) and
being in as good operating condition as (including no greater number of cycles
or hours than) the Engine being replaced assuming the Engine being replaced was
serviceable and otherwise in the condition and repair required by the terms
hereof immediately prior to the Event of Loss. Prior to or at the time of any
such conveyance, Lessee, at its own cost and expense, will (i) furnish Lessor
with a full warranty xxxx of sale, in form and substance reasonably
satisfactory to Owner Participant and Indenture Trustee, as applicable, with
respect to such replacement Engine; (ii) cause supplements, in form and
substance reasonably satisfactory to Owner Participant and Indenture Trustee
(if the Lien of the Indenture has not been discharged), subjecting such
replacement Engine to this Lease, the Indenture (if then in effect) and the
Trust Agreement (if in effect), to be duly executed by Lessee, if applicable,
and duly filed for recordation pursuant to the Federal Aviation Act; (iii)
furnish Lessor and Indenture Trustee (if the Lien of the Indenture has not been
discharged) with such evidence of title to such Replacement Engine and of
compliance with the insurance provisions of Section 12 hereof with respect to
such Replacement Engine as Owner Participant or Indenture Trustee (if the Lien
of the Indenture has not been discharged) may reasonably request; (iv) furnish
Owner Participant and Indenture Trustee (if the Lien of the Indenture has not
been discharged) with an opinion of Lessee's counsel addressed to such parties
and to Lessor to the effect that title to such Replacement Engine has been duly
conveyed to Lessor free and clear of all Liens (except
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Permitted Liens), and is duly leased hereunder and subject to the Lien of the
Indenture (if it has not been discharged), the instruments subjecting such
Replacement Engine to the Lien of the Indenture and the Lease, and subjecting
to any relevant Assigned Sublease and Sublease Agreement, as the case may be,
have been duly filed for recordation pursuant to the Federal Aviation Act or
any other law then applicable to the registration of the Aircraft, and no
further action, filing or recording of any document is necessary in order to
establish and perfect, in the United States and, if the Aircraft is registered
outside the United States, in the jurisdiction of registration, the legal title
to such Replacement Engine and the Lien of the Indenture on such Replacement
Engine; (v) furnish a certificate signed by a Responsible Officer of Lessee
certifying that, upon consummation of such replacement, no Default or Event of
Default will exist hereunder; (vi) furnish such documents and evidence with
respect to Lessee, Owner Participant or Indenture Trustee (if the Lien of the
Indenture has not been discharged), as such parties or their respective counsel
may reasonably request in order to establish the consummation of the
transactions contemplated by this Section 11(b), the taking of all corporate
proceedings in connection therewith and compliance with the conditions set
forth in this Section 11(b), in each case in form and substance satisfactory to
such party; (vii) furnish such Uniform Commercial Code financing statements
covering the Replacement Engine as may be requested by Lessor or Indenture
Trustee (if the Lien of the Indentures has not been discharged); (viii) furnish
Owner Participant with an opinion of tax counsel mutually satisfactory to Owner
Participant and Lessee and which opinion is reasonably satisfactory to Owner
Participant to the effect that such replacement will have no adverse tax
consequences to Lessor and Owner Participant; (ix) furnish the appraisal
referred to above; and (x) furnish Owner Trustee and Indenture Trustee with the
opinion of counsel to Lessee specified in Section 5.06(a)(5)(i) of the
Indenture. Upon full compliance by Lessee with the terms of this Section
11(b), Lessor will, subject to the rights of any insurers, transfer to Lessee,
"AS IS, WHERE IS" without recourse, representation or warranty (except a
warranty that such Engine is free and clear of Lessor's Liens), all of Lessor's
right, title and interest, if any, in the Engine which suffered the Event of
Loss. For all purposes hereof, each such Replacement Engine shall be deemed an
"Engine" as defined herein and shall be deemed part of the same Aircraft as was
the Engine replaced thereof. No Event of Loss covered by this Section 11(b)
shall result in any reduction in Rent.
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(c) Conveyance of Replacement Airframe. Prior to or at the time of
any conveyance of a replacement Airframe pursuant to Section 11(a) above,
Lessee, at its own cost and expense, will furnish Lessor with the following
documents which shall have been duly authorized, executed and delivered by the
respective parties thereto and shall be in full force and effect on said date:
(i) a full warranty xxxx of sale, in form and substance satisfactory to Owner
Participant and Indenture Trustee (if the Lien of the Indenture has not been
discharged), and an AC Form 8050-2 Xxxx of Sale (or such other form of xxxx of
sale as may be approved by the FAA on said date), executed by the owner
thereof, in favor of Lessor and cause supplements, reasonably satisfactory to
Owner Participant and Indenture Trustee (if the Lien of the Indenture has not
been discharged), to this Lease, the Indenture (if then in effect) and the
Trust Agreement (if then in effect), with respect to such replacement Airframe
and to be duly filed for recordation pursuant to the Federal Aviation Act or
other applicable Governmental Entity; (ii) the certificate specified in Section
12(f) hereof demonstrating compliance with the insurance requirements of
Section 12 with respect to the replacement Airframe and Engines; (iii) an
opinion (addressed to Indenture Trustee, Lessor, and Owner Participant) of
Lessee's counsel (and such other evidence of title as Owner Participant or
Indenture Trustee (if the Lien of the Indenture has not been discharged) may
reasonably request) to the effect that, upon such conveyance, Lessor will
acquire good title to such replacement Airframe free and clear of all Liens (it
being understood that, upon such conveyance, such replacement Airframe may be
subject to Permitted Liens), that such replacement Airframe will be leased
hereunder to the same extent as the Airframe replaced thereby and will be
subject to the Lien of the Indenture (if it has not been discharged), the
instruments subjecting such Replacement Airframe and Replacement Engine to the
Lien of the Indenture and the Lease, and subjecting to any relevant Assigned
Sublease and Sublease Assignment, as the case may be, have been duly filed for
recordation pursuant to the Federal Aviation Act or any other law then
applicable to the registration of the Aircraft, and no further action, filing
or recording of any document is necessary in order to establish and perfect, in
the United States and, if the Aircraft is registered outside the United States,
in the jurisdiction of registration, the legal title to such Replacement
Airframe and Replacement Engine and the Lien of the Indenture on such
Replacement Airframe and Replacement Engine, and that Lessor, and Indenture
Trustee as assignee of Lessor, is entitled to the benefits of Section 1110 of
Title 11 of the United States Code with respect to such replacement airframe
and engines to the same extent as with respect to the Airframe and Engines then
installed thereon
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prior to such replacement; (iv) a certificate signed by a Responsible Officer
of Lessee certifying that, upon consummation of such replacement, no Default or
Event of Default will exist hereunder; (v) such documents and evidence with
respect to Lessee, Owner Participant or Indenture Trustee (if the Lien of the
Indenture has not been discharged), as such parties or their respective counsel
may reasonably request in order to establish the consummation of the
transactions contemplated by this Section 11(c), the taking of all corporate
proceedings in connection therewith and compliance with the conditions set
forth in this Section 11(c), in each case in form and substance satisfactory to
each such party, including evidence that the Aircraft of which the replacement
Airframe is a part has been duly certificated by the FAA as to type and
airworthiness in accordance with the terms of this Lease and application for
registration of such replacement Airframe in the name of Lessor has been duly
made with the FAA or other applicable Governmental Entity and Lessee has
temporary or permanent authority to operate the replacement Airframe; (vi)
furnish such Uniform Commercial Code financing statements covering the
replacement Airframe as may be reasonably requested by Lessor or Indenture
Trustee; (vii) furnish Owner Participant with an opinion of tax counsel
mutually satisfactory to Owner Participant and Lessee and which opinion is
reasonably satisfactory to Owner Participant to the effect that such
replacement will have no adverse tax consequences to Lessor and Owner
Participant; (viii) an appraisal prepared in accordance with the Appraisal
Procedure which confirms that the replacement Airframe and any replacement
Engine has a value, utility and remaining useful life at least equal to that of
the Airframe and Engines which suffered the Event of Loss assuming that the
same were maintained in accordance with the requirements of this Lease whether
or not they are in fact so maintained; and (ix) furnish Owner Trustee and
Indenture Trustee with the opinion of counsel to Lessee specified in Section
5.06(a)(5)(i) of the Indenture. Upon full compliance by Lessee with the terms
of this Section 11(c), Lessor will, subject to the rights of any insurers,
transfer to Lessee "AS IS, WHERE IS," without recourse, representation or
warranty (except a warranty that such Airframe is free and clear of Lessor's
Liens and Head Lessor Liens), all of Lessor's right, title and interest in and
to the Aircraft which suffered the Event of Loss. No Event of Loss with
respect to the Aircraft under the circumstances contemplated by the terms of
this Section 11(c) shall result in any reduction in Rent.
For all purposes of this Lease, each such replacement Aircraft
(together with any Engines constituting part of the Aircraft being replaced as
to which an Event of Loss has not occurred) shall be deemed part of the
property
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leased hereunder and shall be deemed the "Aircraft" as defined herein.
(d) Application of Proceeds and Payments. Any payments received at
any time by Lessor or by Lessee from any insurer (including a Governmental
Entity providing an indemnity in lieu thereof) with respect to an Event of Loss
shall be applied in the manner specified in Sections 12(c) and (e) hereof.
Subject to Section 11(f) below, any payments (other than insurance or such
indemnity proceeds) received at any time by Lessor or Lessee from any
Governmental Entity or other Person with respect to an Event of Loss will be
applied as follows (after reimbursement of Lessor, Indenture Trustee and Owner
Participant for their reasonable out-of-pocket costs and expenses):
(i) unless clause (ii) below is applicable, so much of such
payments as shall not exceed the Stipulated Loss Value and other payments
required to be paid by Lessee pursuant to Section 11(a)(ii) of this Lease shall
be paid to Lessor in reduction of Lessee's obligation to pay such Stipulated
Loss Value and other payments, if not already paid by Lessee, or, if already
paid by Lessee, shall (unless a Default or an Event of Default shall have
occurred and be continuing) be applied by Lessor to reimburse Lessee for its
payment of such Stipulated Loss Value and other payments and the balance, if
any, of such payment remaining thereafter shall be paid over to, or retained
by, Lessor; or
(ii) if such payments are received as a result of an Event of
Loss with respect to the Airframe or an Engine which is being replaced pursuant
to Section 11(a)(i) or Section 11(b) hereof, all such payments shall be paid
over to, or retained by, Lessee if Lessee shall have fully performed or,
concurrently therewith fully performs, the terms of Sections 11(a)(i) and (c)
or Section 11(b) hereof, as the case may be, and of Section 15 hereof with
respect to the Event of Loss for which such payments are made and if no Default
or Event of Default shall have occurred and be continuing.
(e) Requisition for Use by Government with Respect to the Aircraft.
Subject to Section 11(f) below, in the event of the requisition for use by a
Governmental Entity of the Aircraft, the Airframe or an Engine (other than a
requisition constituting an Event of Loss), Lessee shall promptly notify Lessor
and Indenture Trustee (if the Lien of the Indenture has not been discharged)
thereof and all of Lessee's obligations under this Lease with respect to such
Airframe or Engine shall continue to the same extent as if such requisition had
not occurred. All payments received by Lessor or Lessee from the Governmental
Entity for the use
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of such Airframe or Engine during the Term shall be paid over to, or retained
by, Lessee if no Default or Event of Default shall have occurred and be
continuing; and all other payments received by Lessor or Lessee from the
Governmental Entity shall be paid over to, or retained by, Lessor. If the
Airframe and such Engines or engines are not returned by the end of the Term,
an Event of Loss shall be deemed to have occurred on the last day of the Term
and, on the last day of the Term, Lessee shall either pay to Lessor the amount
provided herein for an Event of Loss to the Airframe and such Engines or
engines on such date or provide a replacement Aircraft and Engine on such date
in the condition provided for in Section 16 and Exhibit E. In the event of the
requisition for use by the Governmental Entity of any Engine without the
requisition for use of the Airframe, Lessee will replace such Engine hereunder
by complying with the terms of Section 11(b) to the same extent as if an Event
of Loss had occurred with respect to such Engine, and thereafter any payments
received by Lessor or Lessee from the Governmental Entity with respect to such
requisition shall be paid over to, or retained by, Lessee.
(f) Application in Default. Any amount referred to in clause (i) or
(ii) of Section 11(d) or Section 11(e) which is otherwise payable to Lessee
shall not be paid to Lessee, or, if it has been previously paid to or retained
by Lessee, shall be paid by Lessee to Lessor, if at the time of such payment or
retention a Default or an Event of Default shall have occurred and be
continuing. In such case, all such amounts shall be paid to and held by
Indenture Trustee so long as the Lien of the Indenture shall not have been
discharged and thereafter by Lessor as security for the obligations of Lessee,
or, at the option of Lessor or the Indenture Trustee, as the case may be,
applied by Lessor or the Indenture Trustee, as the case may be, toward payment
of any of Lessee's obligations at the time due hereunder, as Lessor or the
Indenture Trustee, as the case may be, may elect, including, without
limitation, by reason of this Lease being declared or deemed in default. At
such time as there shall not be continuing any such Event of Default or
Default, all such amounts at the time held by Lessor or Indenture Trustee in
excess of the amount, if any, which Lessor or Indenture Trustee has elected for
application as provided above, shall be paid to Lessee.
Section 12. Insurance.
(a) Public Liability and Property Damage Insurance. Lessee will carry
and maintain in effect, or cause to be carried and maintained in effect, at its
own cost and expense, with Approved Insurers, comprehensive aircraft and
general public liability insurance (including,
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without limitation, contractual liability, liability war risk and passenger
legal liability products, completed operation liability covering maintenance of
aircraft, but excluding manufacturer's product liability insurance), and
property damage insurance with respect to the Aircraft, in an amount not less
than three hundred fifty million dollars ($350,000,000), combined single limit,
per occurrence or such higher amount, and of such type and terms, as are
customarily carried by prudent Certificated Air Carriers, similarly situated to
Lessee, operating aircraft of similar size and engines and as hereinafter
provided. Each and any policy of insurance carried in accordance with this
Section 12(a), and each and any policy obtained in substitution or replacement
for any of such policies, (i) shall designate Lessor (in both its individual
and trustee capacity), Owner Participant, the general partners of Owner
Participant, Indenture Trustee (in both its individual and trustee capacity)
and the other Indemnitees and their respective permitted assigns, as additional
insureds as their interests may appear (but without imposing upon any such
Person any obligation imposed upon the insured, including, without limitation,
the liability to pay any premiums for any such policies), (ii) shall expressly
provide that, in respect of the interests of Lessor, Owner Participant, the
general partners of Owner Participant, Indenture Trustee and the other
Indemnitees and their respective permitted assigns, in such policies, the
insurance shall not be invalidated as to an insured or additional insured by
any act or omission of Lessee or any other insured or additional insured and
shall insure Lessor, Owner Participant, the general partners of Owner
Participant, Indenture Trustee and the other Indemnitees and their respective
permitted assigns, regardless as to any insured or additional insured of any
breach or violation by Lessee or any other insured or additional insured of any
warranty, declaration or condition contained in such policies, (iii) shall
provide that if such insurance is cancelled for any reason whatsoever, or is
changed in any adverse way with respect to the interests of Lessor, Owner
Participant, the general partners of Owner Participant, Indenture Trustee and
the other Indemnitees or if such insurance is allowed to lapse for non-payment
of premium, such cancellation, change or lapse shall not be effective as to
Lessor, Owner Participant, the general partners of Owner Participant, Indenture
Trustee and the other Indemnitees, and their respective permitted assigns,
until thirty (30) days, in each instance (seven (7) days or such lesser period
of time as is the insurance industry standard for war/allied perils coverage),
after notice to Lessor, Owner Participant, the general partners of Owner
Participant and Indenture Trustee from such insurer or insurers, of such
prospective cancellation, change or lapse, (iv) shall include coverage for any
country in or over which
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the Aircraft is located or operated, and (v) shall provide that, as against
Lessor, Owner Participant, the general partners of Owner Participant, Indenture
Trustee and the other Indemnitees, and their respective permitted assigns, each
insurer shall waive any rights of set-off, counterclaim or any other deduction,
whether by attachment or otherwise, and waives any rights it may have to be
subrogated to any right of any insured against Lessor, Owner Participant, the
general partners of Owner Participant, Indenture Trustee, or the other
Indemnitees, or their respective permitted assigns, with respect to the
Aircraft. Each liability policy shall be primary without right of contribution
from any other insurance which may be carried by Lessor, Owner Participant, the
general partners of Owner Participant, Indenture Trustee or the other
Indemnitees, or their respective permitted assigns, and shall expressly provide
that all of the provisions thereof shall operate in the same manner as if there
were a separate policy covering each insured, provided, that such policies
shall not operate to increase the insurer's limit of liability. Lessee shall
cause its insurers to agree that the indemnity and hold harmless provisions of
Section 13 are insured as a contractual assumption of liability by Lessee's
insurers, subject to the terms, coverage, conditions, limitations and
exclusions of the policy of insurance. Without limiting the foregoing, the
type and amount of the insurance carried by Lessee hereunder shall be no less
in amount and no less comprehensive or favorable to Lessor, Owner Participant,
the general partners of Owner Participant, Indenture Trustee and the other
Indemnitees than that carried by Lessee with respect to other A320-231 aircraft
or similar-size aircraft owned or leased by Lessee.
(b) Insurance Against Loss or Damage. Lessee, at its own expense,
will maintain in effect, or cause to be carried and maintained in effect, with
Approved Insurers "all-risk" ground and flight aircraft hull insurance (which
shall include, but not be limited to, hijacking, a disappearance clause and
coverage against strikes, riots, commotions or labor disturbances, air piracy,
malicious acts or acts of sabotage and unlawful seizure or wrongful exercise of
control of the Aircraft in flight by a person on board such Aircraft acting
without the consent of Lessee) covering the Aircraft, and "all-risk" coverage
including transit insurance with respect to Engines and Parts while not
installed on such Aircraft or an aircraft, which in each case considering all
policy terms, limitations and exclusions is of the type, terms and amount
customarily maintained by prudent Certificated Air Carriers similarly situated
to Lessee and operating similar size aircraft and engines and as hereinafter
provided. Lessee shall also maintain, or cause to be maintained, war risk and
allied
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perils hull insurance reasonably acceptable to Lessor with Approved Insurers.
In addition, at least ten (10) Business Days (or, in the case of an emergency,
at least two (2) Business Days) prior to permitting the Aircraft, Airframe or
Engines to be operated or located outside of the United States of America,
other than in Canada or Mexico, Lessee shall notify Lessor thereof. If Owner
Participant or Indenture Trustee reasonably requests at any time and if such
insurance is then customarily being obtained by or for Persons leasing or
financing similarly-sized aircraft operating on similar routes to operators
located in the jurisdiction of Lessee's or, if a Permitted Sublease is in
effect, the Permitted Sublessee's jurisdiction of domicile, Lessee shall pay or
reimburse Lessor for political risk, repossession, expropriation, confiscation
and similar insurance as Lessor may arrange or cause to be arranged; provided
that Indenture Trustee shall not be obligated to request such insurance and
shall not be liable for any failure to request such insurance. Anything herein
to the contrary notwithstanding, at all times while the Aircraft is subject to
this Lease, the insurance required by this Section 12(b) shall be for an amount
on an "agreed value" basis not less than the Stipulated Loss Value from time to
time determined for the Aircraft. Without limiting the foregoing, the type and
amount of insurance carried by Lessee hereunder shall be no less comprehensive
or favorable to Lessor, Owner Participant, Indenture Trustee and the other
Indemnitees than that carried by Lessee with respect to similar-size aircraft
owned or leased by Lessee.
Each and any policy of insurance obtained and maintained pursuant to
this Section 12(b), and each and any policy obtained in substitution or
replacement for any such policies, (i) shall designate Lessor as owner of the
Aircraft, shall designate, so long as the Lien of the Indenture has not been
discharged, Indenture Trustee and, thereafter, Lessor, as sole loss payee, as
provided below and shall designate Lessor, Owner Participant, Indenture Trustee
(in both its individual capacity and its trustee capacity) and the other
Indemnitees and their respective permitted assigns as additional insureds, as
their respective interests may appear (but without imposing upon Lessor, Owner
Participant, Indenture Trustee and the other Indemnitees and their respective
permitted assigns, any obligation imposed upon the insured, including, without
limitation, the liability to pay any premiums for any such policies), (ii)
shall expressly provide that, in respect of the interests of such an additional
insured and its permitted assigns, in such policies, the insurance shall not be
invalidated as to an insured by any act or omission of Lessee or any other
additional insured, and shall insure each such additional insured and its
permitted assigns,
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regardless of any breach or violation of any warranty, declaration or condition
contained in such policies by the Lessee or another additional insured, (iii)
shall provide that if such insurance is cancelled for any reason whatsoever, or
is changed in any adverse way with respect to the interests of Lessor, Owner
Participant, Indenture Trustee and to the other Indemnitees and their
respective permitted assigns, or if such insurance is allowed to lapse, such
cancellation, change or lapse shall not be effective as to Lessor, Owner
Participant, Indenture Trustee, the other Indemnitees or their respective
permitted assigns, until thirty (30) days (seven (7) days or such lesser period
of time as is the insurance industry standard for war/allied perils coverage)
after written notice to Lessor, Owner Participant and Indenture Trustee from
such insurer or insurers, as the case may be, of such prospective cancellation,
change or lapse, (iv) shall include coverage for any country in or over which
the Aircraft may at any time be located or operated, (v) shall provide that, as
against Lessor, Owner Participant, Indenture Trustee the other Indemnitees and
their respective permitted assigns, each insurer shall waive any rights of
set-off, counterclaim or any other deduction, whether by attachment or
otherwise, and waives any rights it may have to be subrogated to any right of
any insured against Lessor, Owner Participant, Indenture Trustee and the other
Indemnitees and their respective permitted assigns, with respect to the
Aircraft, (vi) shall provide that in the event of any damage or loss which is
an Event of Loss hereunder and which results in a payment, such payment shall
be payable directly to Indenture Trustee as sole loss payee, so long as the
Lien of the Indenture shall not have been discharged and thereafter to Lessor,
as sole loss payee, and (vii) shall provide that in the event of any damage or
loss which is not an Event of Loss hereunder and which results in a payment,
such payment shall be payable directly to Indenture Trustee, as sole loss payee
for the account of all interests, so long as the Lien of the Indenture shall
not have been discharged and thereafter to Lessor, as sole loss payee for the
account of all interests. The insurance required under this Section 12(b) may
incorporate deductible amounts which shall not exceed one million dollars
($1,000,000).
Each of Lessor, Owner Participant and the general partners of Owner
Participant shall have the right to carry additional and separate excess or
contingent insurance for its own benefit at its own expense, without, however,
thereby limiting Lessee's obligations under this Section 12, and Lessee shall
not carry any such insurance if it would conflict with or adversely affect
other insurance carried by Lessor, Owner Participant or the general partners of
Owner Participant with respect to the Aircraft. Lessee shall have
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the right to carry insurance in excess of the amounts required hereunder and
the proceeds of such excess insurance shall be payable to Lessee, provided,
however, that such insurance does not conflict with or adversely affect the
insurance required hereunder or any excess or contingent insurance carried by
Lessor, Owner Participant or the general partners of Owner Participant. Lessee
shall give Lessor reasonable prior written notice of any insurance to be
carried by Lessee in addition to that required to be carried by Lessee as
provided herein.
In the event that separate policies are maintained to cover "all-risk"
ground and flight aircraft, hull and war risks and allied perils insurance,
Lessee shall include a 50/50 provisional claims settlement clause as contained
in the policies of insurance maintained by Lessee with respect to all other
aircraft in Lessee's fleet, and a copy of the 50/50 provisional claims
settlement clause in effect on the Restatement Date shall be attached to the
insurance certificate issued on the Restatement Date.
(c) Application of Insurance Proceeds for an Event of Loss. It is
agreed that insurance payments which arise from insurance required to be
carried by Lessee pursuant to this Section 12 and received as the result of the
occurrence of an Event of Loss shall be applied as follows (after reimbursement
of Lessor, Owner Participant and Indenture Trustee for their reasonable
out-of-pocket costs and expenses):
(i) unless clause (ii) below is applicable, so much of such
payments as shall not exceed the Stipulated Loss Value and other payments
required to be paid by Lessee pursuant to Section 11(a)(ii) of this Lease shall
be paid to Indenture Trustee so long as the Lien of the Indenture has not been
discharged and thereafter to Lessor in reduction of Lessee's obligation to pay
such Stipulated Loss Value and any other payments if not already paid by
Lessee, or, if already paid by Lessee, shall (unless a Default or an Event of
Default shall have occurred and be continuing) be applied by Indenture Trustee
or Lessor, as the case may be, to reimburse Lessee for its payment of such
Stipulated Loss Value and other payments and the balance, if any, of such
payment remaining thereafter shall be paid over to, or retained by, Lessor; or
(ii) if such payments are received as a result of an Event of
Loss with respect to the Airframe or an Engine which is being replaced pursuant
to Section 11(a)(i) or Section 11(b) hereof, all such payments shall be paid
over by the Indenture Trustee or Lessor, as the case may be, to, or retained
by, Lessee if Lessee shall have
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fully performed or, concurrently therewith fully performs, the terms of Section
11(a)(i) and (c) or Section 11(b) hereof, as the case may be, and of Section 15
hereof with respect to the Event of Loss for which such payments are made and
if no Default or Event of Default shall have occurred and be continuing.
(d) Application of Insurance Proceeds for Other than an Event of Loss.
The insurance payments of any property damage loss to the Airframe or any
Engine not constituting an Event of Loss with respect thereto will be applied
in payment for the actual costs of repairs or for replacement property which
Lessee has incurred in accordance with the terms of Section 9, 11 or 12(c) of
this Lease against such documentation evidencing payment by Lessee as Lessor
may reasonably request to reimburse Lessee for such repairs or replacements
already paid for by Lessee, and any balance remaining after compliance with
such Sections with respect to such loss shall be paid to Lessor. Lessee shall
be entitled to receive from the insurer any insurance proceeds not in excess of
five hundred thousand dollars ($500,000) as soon as such funds are paid and
shall promptly receive such additional insurance proceeds from the loss payee
upon invoices for repair work in progress, replacement parts which are ordered
or for work completed as provided above in this Section 12(d). Any amount
referred to in this Section 12(d) which is payable to Lessee shall not be paid
to Lessee if at the time of such payment any Default or Event of Default shall
have occurred and be continuing, but shall be held by Lessor as security for
the obligations of Lessee under this Lease or applied as provided in Section
12(e).
(e) Application in Default. Any amount referred to in clause (ii) of
Section 12(c) or Section 12(d) which is otherwise payable to Lessee shall not
be paid to Lessee, or if it has been previously paid to or retained by Lessee,
shall be paid by Lessee to Indenture Trustee, so long as the Lien of the
Indenture shall not have been discharged, and thereafter to Lessor, if at the
time of such payment or retention a Default or an Event of Default shall have
occurred and be continuing. In such case, all such amounts shall be paid to
and held by Indenture Trustee, so long as the Lien of the Indenture shall not
have been discharged, and thereafter held by Lessor as security for the
obligations of Lessee, or, at the option of Indenture Trustee or Lessor,
applied by Indenture Trustee or Lessor toward payment of any of Lessee's
obligations at the time due hereunder, including, without limitation, by reason
of this Lease being declared or deemed declared in default, as Indenture
Trustee or Lessor may elect. At such time as there shall not be continuing any
such Event of Default or
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Default, all such amounts at the time held by Indenture Trustee or Lessor in
excess of the amount, if any, which Indenture Trustee or Lessor has elected for
application as provided above, shall be paid to Lessee.
(f) Certificates. On or before the Delivery Date, and thereafter on
any renewal by the Lessee of the insurance required hereby (but in no event
less than once in every twelve (12) month period), Lessee will furnish to
Lessor and Indenture Trustee a certificate executed and delivered by an
Approved Insurer or the Approved Broker, describing in reasonable detail, and
in accordance with customary practice, insurance carried on the Aircraft and
Lessee shall also furnish an opinion or report by the Approved Insurer or the
Approved Broker certifying that the insurance then maintained on the Aircraft
complies with the terms of this Lease. Lessee will cause the Approved Broker
to agree to advise Lessor, Owner Participant and Indenture Trustee in writing
at least thirty (30) days (seven (7) days or such lesser period of time as is
the insurance industry standard for war/allied perils coverage) prior to the
expiration, non-renewal, termination or cancellation for any reason (including,
without limitation, failure to pay premium therefor) or material modification
of any such insurance.
In the event Lessee shall fail to maintain insurance as herein
provided, Lessor, Owner Participant or Indenture Trustee at their respective
options, may provide such insurance and, in such event, Lessee shall, upon
demand, reimburse Lessor, as Supplemental Rent, or any other such other Person
who may have provided such insurance, for the cost thereof.
(g) Reinsurance. Lessee (or if a Permitted Sublease is in effect, the
Permitted Sublessee) may carry primary insurance outside of the aviation
insurance markets in New York, London or Paris if the relevant primary insurer
shall have obtained reinsurance and such reinsurance (i) is on the same terms
as the original insurance and includes the provisions required by this
Agreement; (ii) provides in case of any bankruptcy, insolvency, liquidation,
dissolution or similar proceedings of or affecting the original insurer that
the reinsurers' liability will be to make such payment as would have fallen due
under the relevant policy of reinsurance if the original insurer had
(immediately before such bankruptcy, insolvency, liquidation, dissolution or
similar proceedings) discharged its obligations in full under the original
insurance policies in respect of which the then relevant policy of reinsurance
has been effected; and (iii) contains a "cut-through" clause in the following
form (or otherwise, satisfactory to Owner Participant):
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"The Reinsurers and the Reinsured hereby mutually agree that in the event of
any claim arising under the reinsurances in respect of a total loss or other
claim where as provided by the Amended and Restated Aircraft Lease Agreement
[GPA 1989 BN-11] dated as of June __, 1997 and made between Wilmington Trust
Company, as Owner Trustee, and America West Airlines, Inc. such claim is to be
paid to the person named as sole loss payee under the primary insurances, the
Reinsurers will in lieu of payment to the original insured, its successors in
interest and assigns pay to the person named as sole loss payee under the
primary insurances effected by the original insured that portion of any loss
due for which the Reinsurers would otherwise be liable to pay the original
insurer (subject to proof of loss), it being understood and agreed that any
such payment by the Reinsurers will (to the extent of such payment) fully
discharge and release the Reinsurers from any and all further liability in
connection therewith."
(h) Storage. During any period that the Aircraft is in storage or
otherwise grounded, Lessee may carry or cause to be carried, in lieu of the
insurance required by Sections 12(a) and (b) above, insurance otherwise
conforming with the provisions of said Sections 12(a) and (b) except that the
scope of the risk and the type of insurance, and the amount of the insurance in
the case of the insurance described in Section 12(a) above (but not the amount
of insurance to be carried under Section 12(b) above), shall be the same as
from time to time applicable to similar size passenger aircraft that comprise
Lessee's fleet in similar storage or grounding, and in any event (including,
without limitation, at any time when there shall be in existence a Permitted
Sublease), the same as from time to time customarily carried by
similarly-situated, prudent Certificated Air Carriers for passenger aircraft of
similar size as the Aircraft in similar storage or grounding.
(i) Amounts Held. So long as no Default or Event of Default has
occurred and is continuing, any amount held by Lessor or Indenture Trustee, as
the case may be, until application by Lessor or Indenture Trustee, as the case
may be, pursuant to this Section 12 shall be invested as provided in Section
21(h) hereof.
(j) After the Term. Lessee shall continue to maintain at its expense
the insurance described in Section 12(a) for three years after the expiration
or termination of the Basic Term or Renewal Term, if Lessee has elected to
renew the Lease in accordance with Section 20, covering each Indemnitee as its
interest may appear and specifically insuring the indemnity contained in
Section 13 to the extent of the coverage of such policy.
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(k) Governmental Indemnity. In lieu of certain of the insurance
described in Section 12 above, Lessee may provide a United States governmental
indemnity, to the extent and subject to the terms and conditions specified in
Section 6(c).
Section 13. General Indemnity.
Lessee hereby agrees to indemnify, reimburse, defend and hold harmless
each Indemnitee on a net after-tax basis, as provided in Section 10(e), within
fifteen (15) days after demand from and against any and all claims (whether or
not based on strict liability), damages (whether direct, indirect, incidental,
special or consequential), losses, charges, fees, liabilities, obligations,
demands, suits, judgments, actions and other legal proceedings (whether civil
or criminal), penalties, fines, other sanctions, and any reasonable costs and
expenses in connection herewith, including, without limitation, costs and
expenses set forth in Section 21(j) hereof and reasonable attorney's fees and
expenses of whatever kind or nature (any and all of which are hereafter
referred to as "Claims") imposed on, or asserted by or against, or suffered or
incurred by, any Indemnitee, from (and including) the Restatement Date,
including, without limitation, injury, death or property damage of passengers,
shippers and others, environmental control, noise and pollution regulations,
which in any way may result from, pertain to, or arise in any manner out of, or
are in any manner related to (1) the Operative Documents, the Purchase
Documents or the Financing Documents, or any of the transactions contemplated
thereby; (2) the Aircraft, the Airframe, any Engine or any engine used in
connection with the Airframe or any Part thereof, including, but not limited
to, (A) the importation, exportation, condition, manufacture, design, purchase,
ownership, registration, reregistration, deregistration (other than any
deregistration caused by the failure of the registered owner of the Aircraft to
be a "citizen of the United States" as defined under the Federal Aviation Act
and the regulations thereunder or to file the documentation necessary to
continue FAA registration of the Aircraft), delivery, nondelivery, assignment,
leasing, subleasing, sub-subleasing, acceptance, rejection, possession,
repossession, control, return, financing, Liens (excluding Lessor's Liens, Head
Lessor's Liens and Lenders' Liens, but including the Lien of the Indenture),
use, performance, modification, maintenance, overhaul, operation, pooling,
interchange, repair, testing, sale, return or other disposition or application
of the Aircraft, the Airframe, any Engine, any engine used in connection with
the Airframe or any Part (including, but not limited to, latent and other
defects whether or not discoverable by Lessee or Lessor,
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Claims related to any actual or alleged violation of Law, loss or damage to any
property of passengers, shippers or otherwise or any Claim related to patent,
copyright, trademark or other infringement) either in the air or on the ground,
and including, without limitation, any interest therein of an Indemnitee or
imposition of a Lien thereon (excluding Lessor's Liens, Head Lessor's Liens and
Lenders' Liens but including the Lien of the Indenture), or the rentals,
receipts or earnings therefrom (including, without limitation, the Rent and any
other amounts paid or payable with respect thereto); or (B) any defect in the
Aircraft, the Airframe, any Engine, any engine used in connection with the
Airframe or any Part thereof arising from the material or any article used
therein, whether from the design, testing or use thereof from any maintenance,
service, repair, overhaul or testing of such Aircraft, Airframe, Engine, engine
or Part, or otherwise regardless of when such defect shall be discovered,
whether or not such Aircraft, Airframe, Engine, engine or Part is at the time
in the possession of Lessee, and regardless of where such Aircraft, Airframe,
Engine, engine or Part may then be located; or (3) the breach of any
representation, warranty or covenant made by Lessee hereunder or under any of
the other Operative Documents or any Default or Event of Default; provided,
however, that the indemnity provided for in this Section 13 shall not apply to
any portion of a Claim of an Indemnitee to the extent it results from: (i) the
gross negligence or willful misconduct of such Indemnitee or any of its
directors, officers, employees, servants or agents (except any such gross
negligence or willful misconduct as may be attributed to an Indemnitee due to
its interest in the Aircraft, the Airframe, an Engine, any Operative Document,
any Purchase Document or any Financing Document), (ii) the material breach of
any express representation, warranty or covenant made by such Indemnitee herein
or in any other Operative Document, or the Financing Documents (not resulting
from a breach by Lessee of any of its representations, warranties or covenants
in the Operative Documents or in the Financing Documents), (iii) any Taxes,
whether or not Lessee is required to indemnify such Taxes under Section 10
hereof or the Tax Indemnification Agreement (it being understood that Section
10 hereof and the Tax Indemnification Agreement exclusively provide for
Lessee's liability with respect to Taxes), (iv) any Claim which relates solely
to events which occurred prior to but excluding the Restatement Date (other
than Claims related to the condition, manufacture or design of the Aircraft)
and any Claim concerning payment for or the ownership of Buyer Furnished
Equipment, (v) an underlying act which occurs after the Aircraft has been
returned to Lessor in accordance with the terms hereof and the Term of this
Lease has been terminated or has expired and the return is not
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related to an Event of Default, (vi) as to such Indemnitee, an underlying act
which occurs after a disposition or other transfer (voluntary or involuntary)
by such Indemnitee of all or any part of its interest in the Aircraft, the
Airframe, any Engine, or any Part, or in the Financing Documents, the Purchase
Documents or the Operative Documents, except as contemplated under or pursuant
to the Operative Documents, the Financing Documents or the Purchase Documents
and except as resulting from the exercise of its remedies during the period
while an Event of Default has occurred and is continuing and prior to the time
such Indemnitee has received payment of all amounts owing to it hereunder or
thereunder and except any Claim which is alleged or does relate to the period
prior to such disposition or (vii) the authorization or giving or withholding
of any future amendments, supplements, waivers or consents with respect to any
of the Financing Documents, the Purchase Documents or the Operative Documents,
which amendments, supplements, waivers or consents were not requested by Lessee
or are not required to give effect to the provisions of the Operative
Documents, the Financing Documents or the Purchase Documents (provided,
however, in no event will Lessee be liable for any Claims resulting from,
pertaining to or arising from or related to Lessor's granting or creating a
Lessor's Lien or the granting or creation of a Head Lessor's Lien). Upon full
payment of the indemnities herein, Lessee shall be subrogated to all rights and
remedies which such Indemnitee may have against any third party against whom
such Indemnitee has the right to assert a Claim which arises under any action
described in this Section 13 (except Claims under such Indemnitee's own
insurance policies or under the indemnification provisions of any of the
Financing Documents).
Without limiting Lessee's liability under this Section 13, Lessee
hereby waives and releases any Claim now or hereafter existing against any
Indemnitee, on account of any Claims 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 importation, exportation,
ownership, purchase, registration, reregistration, deregistration (except as to
Owner Participant or Lessor as and to the extent such Indemnitee is responsible
under the Refunding Agreement for Claims related to such deregistration),
delivery, non-delivery, assignment, leasing, subleasing, manufacture,
acceptance, rejection, possession, return, financing, performance,
modification, maintenance, condition, use, operation, pooling, interchange,
repair, testing, sale, return or other disposition of the Aircraft, the
Airframe, any Engine or any
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engine used in connection with the Airframe or any Part thereof, either in the
air or on the ground, or which may be caused by any defect in such Aircraft,
Airframe, Engine, engine or Part 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 such Aircraft, Airframe, Engine,
engine or Part, claims for infringement, loss of or injury to any person, loss
of or damage to any property or environmental damage, regardless of when such
defect may be discovered, whether or not such Aircraft, Airframe, Engine,
engine or Part is at the time in the possession of Lessee, and regardless of
the location of such Aircraft at any such time except to the extent that such
Claim results from (i) the gross negligence or willful misconduct of such
Indemnitee (except any such gross negligence or willful misconduct as may be
attributed to an Indemnitee due to its interest in the Aircraft, the Airframe,
an Engine, any Operative Document, any Purchase Document or any Financing
Document), (ii) the material breach of any of its express representations,
warranties or covenants hereunder, under any other Operative Document or
Financing Document (not resulting from a breach by Lessee of any of its
representations, warranties or covenants in the Operative Documents or in the
Financing Documents), (iii) any Taxes, whether or not Lessee is required to
indemnify such Taxes under Section 10 hereof or the Tax Indemnification
Agreement (it being understood that Section 10 hereof and the Tax
Indemnification Agreement exclusively provide for Lessee's liability with
respect to Taxes), (iv) any Claim which relates solely to events which occurred
prior to but excluding the Restatement Date (other than Claims related to the
condition, manufacture or design of the Aircraft) and any Claim concerning
payment for or the ownership of Buyer Furnished Equipment, (v) an underlying
act which occurs after the Aircraft has been returned to Lessor in accordance
with the terms hereof and the Term of this Lease has been terminated or has
expired and the return is not related to an Event of Default, (vi) an
underlying act which occurs after a disposition or other transfer (voluntary or
involuntary) by such Indemnitee of all or any part of its interest in the
Aircraft, the Airframe, any Engine, or any Part, or in the Financing Documents,
the Purchase Documents or the Operative Documents (except as contemplated under
or pursuant to the Operative Documents, the Financing Documents or the Purchase
Documents and except as resulting from the exercise of its remedies during the
period while an Event of Default has occurred and is continuing and prior to
the time such Indemnitee has received payment of all amounts owing to it
hereunder and except any Claim which is alleged or does relate to the period
prior to such disposition), (vii) the authorization or giving or withholding of
any future amendments,
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supplements, waivers or consents with respect to any of the Financing
Documents, the Purchase Documents or the Operative Documents, which amendments,
supplements, waivers or consents were not requested by Lessee or are not
required to give effect to the provisions of the Operative Documents, the
Financing Documents or the Purchase Documents or (viii) a Lessor's Lien, a Head
Lessor's Lien or a Lenders' Lien attributable to such Indemnitee.
Each Indemnitee shall, at Lessee's sole cost and expense and with
Lessee's cooperation, be entitled to conduct the defense of any Claim against
it; provided, however, that Lessee shall, at the request of any Indemnitee and
so long as no Event of Default has occurred and is continuing, assume and
conduct promptly and diligently, at its sole cost and expense, the defense of
such Indemnitee against any Claim of a third party with counsel reasonably
acceptable to such Indemnitee; and provided, further, however, that Lessee
shall have the right as well as the obligation to assume such defense to the
extent required under the terms of the applicable insurance policies so long as
no Default or Event of Default has occurred and is continuing. In the event
Lessee shall so assume the defense of any Claim, such Indemnitee shall
cooperate with Lessee in defending such Claim, but any expenses incurred by
such Indemnitee in connection therewith shall either be paid by Lessee to such
Indemnitee in advance, or reasonable security shall be provided by Lessee to
such Indemnitee for such payments. Neither Lessee nor an Indemnitee shall
enter into a settlement or other compromise with respect to any Claim which
Lessee or such Indemnitee is defending hereunder in excess of $100,000 without
the prior written consent of the other, which consent shall not be unreasonably
withheld.
Each Indemnitee agrees to give Lessee prompt notice of any Claims by a
third party hereunder following such Indemnitee's actual knowledge of such
Claims by third parties, but the failure of such Indemnitee to give the notice
required by this Section 13 shall not constitute a release by Lessor or such
Indemnitee of, or reduce, any of the obligations or liabilities of Lessee to
such Indemnitee in respect of any such Claim or otherwise affect the
obligations or liabilities of Lessee to any Indemnitee in respect of any such
Claim, except to the extent that Lessee's ability to control the defense
thereof where Lessee has the right to control the defense thereof is materially
prejudiced as a result solely of such failure of such Indemnitee to give such
notice.
An Indemnitee or Lessee shall supply the other with such information
requested by the other as is reasonably
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necessary or advisable for the other to control the defense of a Claim to the
extent permitted by this Section.
Nothing in this Section shall be construed as a guaranty by Lessee of
payments due pursuant to any indebtedness incurred with respect to the purchase
of the Aircraft or of the residual value of the Aircraft.
Notwithstanding anything herein or in any other Operative Document to
the contrary, with respect to any Claim for which any Indemnitee is entitled to
indemnification under more than one provision of this Lease or any other
Operative Document, such Indemnitee shall be entitled to recovery for such
Claim only pursuant to one such provision as it may select in its sole
discretion (and, for the avoidance of doubt, such Indemnitee shall not be
entitled to any double recovery for the same Claim).
The indemnities contained in this Section 13 shall continue in full
force and effect notwithstanding the expiration or other termination of this
Lease or any of the other Operative Documents and are expressly made for the
benefit of and shall be enforceable by each Indemnitee.
Section 14. Liens.
Lessee shall not directly or indirectly create, incur, assume, or
suffer to exist any Lien on or with respect to the Aircraft, the Airframe, any
Engine or any Part thereof, title thereto, or any interest of Lessor therein or
in this Lease, except (i) the respective rights of Lessor, Lessee, Owner
Participant, Indenture Trustee and any other Indemnitee as herein provided or
provided under the other Operative Documents or the Financing Documents; (ii)
Head Lessor's Liens, Lessor's Liens and Lenders' Liens; (iii) Liens for Taxes
either not yet due or being diligently contested in good faith by appropriate
proceedings in accordance with Section 10 and so long as adequate reserves are
maintained with respect to such Liens and only so long as neither such
proceedings nor such Liens involve any material danger of the sale, forfeiture
or loss of any of the Aircraft, the Airframe or any Engine or any Part, or any
interest of Lessor or Indenture Trustee therein or any risk of criminal
liability of Lessor or Indenture Trustee; (iv) inchoate materialmen's,
mechanics', workmen's, repairmen's employees', or other like inchoate Liens
arising in the ordinary course of business for sums not overdue by more than 45
days or being diligently contested in good faith and only so long as neither
such proceedings nor any such Liens involve any material danger of the sale,
forfeiture or loss of any of the Aircraft, the Airframe or any Engine or any
Part, or any interest of Lessor or Indenture Trustee
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therein; (v) the rights of other Persons to the extent expressly permitted by
the provisions of Section 6(a), 9(c) or 19; (vi) Liens arising out of any
judgment or award against Lessee (or any Permitted Sublessee) unless the
judgment or award shall not, within thirty (30) days after the entry thereof,
have been discharged, vacated, reversed, or execution thereof stayed pending
appeal or shall not have been discharged, vacated or reversed within thirty
(30) days after the expiration of such stay and only so long as such Liens
shall not involve any material danger of the sale, forfeiture or loss of any of
the Aircraft, the Airframe or any Engine or any Part, or any interest of Lessor
or Indenture Trustee therein and provided that the execution of such judgment
or award or an attachment relating thereto shall not have occurred within such
thirty (30) day period; and, (vii) any other Lien with respect to which Lessee
(or a Permitted Sublessee) shall have provided a bond adequate in the
reasonable opinion of Indenture Trustee (if the Lien of the Indenture has not
been discharged) and Owner Participant. Lessee shall promptly, at its own
expense, take or cause to be taken such action as may be necessary to duly
discharge any Lien (except for the Liens referred to in clauses (i) through
(vii) of this Section 14) directly or indirectly created, incurred, assumed, or
suffered to exist by Lessee if the same shall arise at any time.
Section 15. Protection of Title and Further Assurances.
Forthwith upon the execution and delivery of this Lease, the
Indenture, the Trust Agreement, Lease Supplement, Indenture Supplement and
Trust Supplement, and any other supplement from time to time required by the
terms hereof, Lessee will cause this Lease, the Indenture, the Trust Agreement,
Lease Supplement, Indenture Supplement, Trust Supplement and such other
supplements to be duly filed and recorded, and maintained of record, in
accordance with the applicable laws of the government of registry of the
Aircraft. If any filing or recording is reasonably necessary to protect the
interests of Lessor or Indenture Trustee, Lessee shall, at its own cost and
expense (except it shall be at Lessor's expense if in connection with a change
in ownership of the Aircraft or any other transfer or assignment by Lessor
other than as contemplated hereunder or under the Financing Documents or in
connection with an Event of Default) and upon request by Lessor, cause any
financing statements and any and all additional instruments and other
documents, so far as permitted by applicable Law, to be kept, filed, and
recorded and to be re-executed, refiled and re-recorded at all times in the
appropriate office pursuant or in relation to any applicable Laws of any
Governmental Entity, to protect and preserve the rights and interests of
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Lessor or Indenture Trustee hereunder, under the Indenture and in the Aircraft,
and Lessee shall furnish to Lessor and Indenture Trustee, evidence, reasonably
satisfactory to Lessor and Indenture Trustee, of each such filing or refiling
and recordation and re-recordation.
Without limiting the foregoing, Lessee shall do or cause to be done,
at Lessee's cost and expense (except it shall be at Lessor's expense if in
connection with a change in ownership of the Aircraft or any other transfer or
assignment by Lessor other than as contemplated hereunder or under the
Financing Documents or in connection with an Event of Default), any and all
acts and things within its control which may be required under the terms of the
Mortgage Convention to protect and preserve the title of Lessor, the Lien of
the Indenture, this Lease, and the interests of Lessor and Indenture Trustee
within the jurisdiction of any signatory which has ratified the Mortgage
Convention in such jurisdiction and in the territories thereof in which Lessee,
any Permitted Sublessee or any wet lessee may operate the Aircraft, as Lessor
may reasonably request. Lessee shall also do or cause to be done, at its own
expense (except it shall be at Lessor's expense if in connection with a change
in the ownership of the Aircraft or any other transfer or assignment by Lessor
other than as contemplated hereunder or under the Financing Documents or in
connection with an Event of Default), any and all acts and things which may be
required under the terms of any other Law involving any jurisdiction in which
Lessee, any Permitted Sublessee or any wet lessee may operate the Aircraft,
which Lessor may reasonably request, to protect and preserve the title of the
Lessor, this Lease, the Indenture and Lessor's and Indenture Trustee's interest
in the Aircraft and under any of the Operative Documents or Financing Documents
within any such jurisdiction.
In addition, at Lessee's expense, Lessee will promptly and duly
execute and deliver to Lessor or Indenture Trustee, as applicable, such further
documents and assurances and take such further actions as Owner Participant or
Indenture Trustee may from time to time reasonably request in order to more
effectively carry out the intent and purpose of this Lease and the other
Operative Documents and the Financing Documents and to protect the rights and
remedies created or intended to be created in favor of Lessor or Indenture
Trustee hereunder and the other Operative Documents and the Financing Documents
including, without limitation, if reasonably requested by Owner Participant or
Indenture Trustee, at the expense of Lessee (except it shall be at Lessor's
expense if in connection with a change in the ownership of the Aircraft or any
other transfer or assignment by Lessor or Indenture Trustee other
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than as contemplated hereunder or under the Financing Documents or in
connection with an Event of Default), the execution and delivery of supplements
or amendments hereto in recordable form, subjecting to this Lease, the
Indenture and the other Financing Documents, any replacement Aircraft or Engine
and the recording or filing of counterparts thereof in accordance with the laws
of any appropriate jurisdiction.
Section 16. Return of Aircraft and Records.
(a) Return. On any Return Occasion, Lessee, at its own expense and
risk, shall return the Aircraft to Lessor (or any Person designated by Lessor)
in at least the condition specified in this Section and Exhibit E hereto at any
Lessee system location in the continental United States selected by Lessor, or
such other location as Lessor and Lessee may agree, fully equipped with all
required Engines, or other engines owned by Lessee (which shall thereupon
become Engines as hereinafter provided) meeting the conditions specified in
this Section and Exhibit E, duly installed thereon by delivering the same to
the Lessor at such location. Lessee shall comply with Section 11(b) and this
Section 16 with respect to any engines installed on the Aircraft returned to
Lessor hereunder and meeting the conditions described herein which were not
originally installed on the Aircraft.
(b) Status Upon Return. Upon any Return Occasion hereunder, the
Aircraft shall be: (i) free and clear of all Liens, except for the Lien of the
Indenture, Head Lessor's Liens, Lessor's Liens and Lenders' Liens, (ii) duly
certified as an airworthy aircraft by the FAA under Part 121 of the regulations
promulgated under the Federal Aviation Act and with a current and valid
Airworthiness Certificate installed on the Aircraft, unless such certificate
shall have been suspended or revoked as a result of the suspension or
revocation of the registration of the Aircraft under the Federal Aviation Act
due to the ineligibility of the Aircraft to be registered in the name of Lessor
under the Federal Aviation Act (whether by means of a voting trust agreement or
otherwise) in which case the Aircraft shall nevertheless meet all conditions
for such certification and for the issuance of such certificate; (iii) in full
airworthy condition for over water and EROPS operation according to the FAA
standards required to allow the Aircraft to be operated under, and in full
compliance with, such Airworthiness Certificate and Part 121 of the regulations
promulgated under the Federal Aviation Act for such operation, such compliance
to be by means of such mechanical repairs or modifications or such inspections
as may be required thereby, but not by operational
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restrictions, by logbook entries or other method of acceptance of such
restrictions; (iv) in full compliance with Lessee's Maintenance Program; (v) to
the extent the owner of the Aircraft is a "citizen of the United States" within
the meaning of Section 40102(a)(15) of the Federal Aviation Act and reasonably
cooperative with Lessee at Lessee's expense with respect to effecting such
registration, duly registered in the name of the Lessor or other then owner of
the Aircraft under the Federal Aviation Act; (vi) in full compliance with the
maintenance and operation provisions of this Lease and all FAA airworthiness
directives, mandatory service bulletins and equivalent requirements which by
their terms require compliance on or before the last day of the Term (without
regard to any deferral, waiver, deviation or exemption granted by the FAA
specifically to Lessee delaying such compliance); (vii) in good and airworthy
operating condition, and in the same condition (including, without limitation,
in a passenger configuration suitable for passenger revenue service) as when
delivered to Lessee hereunder, ordinary wear and tear excepted, with no open or
outstanding deferred maintenance items, scheduled or unscheduled, with all
systems and components fully serviceable and operational and with no placards
restricting operation or use, and (viii) with all remaining warranties,
indemnities, policies and guarantees referred to in Section 5(d) made available
to Lessor in a manner and by documents in form and substance reasonably
satisfactory to Lessor.
(c) Engines. In the event any engine not owned by Lessor shall be
installed on the Aircraft on any Return Occasion, without limiting Lessee's
obligations under the Tax Indemnification Agreement, such engine shall be of
the same model and equivalent modification status as the Engines or, at
Lessee's option, an IAE engine of an improved model suitable for installation
and use on the Airframe without diminishing the value, remaining useful life or
utility of such Airframe, in each such case having a value, remaining useful
life and utility at least equal to (as determined in accordance with the
Appraisal Procedure), and be in an operating condition as good as the Engines,
assuming the Engines were in the condition and repair as required by the terms
hereof immediately prior to such termination and shall conform to the return
condition requirements set forth in this Section 16 and Exhibit E, and Lessee,
at its own expense and concurrently with such delivery, shall cause such engine
to become an Engine by complying with Section 11(b) hereof. Lessee's
obligation to comply with the terms of this Section 16(c) shall be conditioned
on Lessor's transferring to Lessee all of Lessor's right, title and interest in
and to any Engine not installed on the Aircraft at the Return Occasion "AS IS,
WHERE IS," without any
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representation, warranty or recourse of any kind whatsoever, express or
implied, except a warranty that such Engine is free and clear of Lessor's
Liens.
(d) Records and Documents. Upon the return of the Aircraft, Lessee
shall deliver to Lessor (i) all logs, manuals and data, and inspection,
modification, overhaul and other records, related to the Aircraft, including,
without limitation, those required to be maintained with respect thereto under
applicable rules and regulations of the FAA, together with a detailed
description of the Maintenance Program then applied to the Aircraft and shall
provide Lessor and its designees access to the Maintenance Program which is
sufficient for a Person to maintain the Aircraft under an FAA approved
maintenance program after the Term or to transition maintenance to another
program, including, without limitation, another registry, or, in the event an
Event of Default shall have occurred, to continue to maintain the Aircraft
under the Maintenance Program, in each case as Lessor may reasonably request,
and all documentation with respect to the Aircraft set forth on Exhibit B or
otherwise delivered to Lessee at delivery thereof, and (ii) all records
necessary or required by the FAA to certify and place the Aircraft on an FAA or
other country's, as the case may be, approved maintenance program. All of the
foregoing shall, at Lessee's expense, be up-to-date and in the latest revision
status as of the last day of the Term, including, without limitation, all
software and other electronically-held materials which have been supplied by or
on behalf of Manufacturer, Manufacturer's Subsidiary or Original Head Lessee,
which must be updated to the latest revision status as of the last day of the
Term within such software base and all data therein or pertaining thereto shall
be deemed property of Lessor and shall be delivered to Lessor. If hard, i.e.,
non-computerized, copies of English language maintenance records are not
available, then Lessee shall cause the appropriate action to be taken with the
pertinent regulatory agencies to ensure that Lessor and the FAA are provided
with all requested necessary and proper guarantees of methods of compliance,
component overhaul and management, scheduling, quality control, serial number
verification, etc. These records shall be all inclusive to the Aircraft,
Airframe, Engines, components, rotables, and assemblies and, as a minimum,
extend to include all activities associated with each of the last completed
maintenance checks, repairs, scheduled inspections and functional tests, and
overhauls performed under Lessee's Maintenance Program. All components and
assemblies identified with safe life limits shall be identified with their
service histories, accumulated cycles or flight hours as applicable and
remaining service lives on a separate listing. All components and assemblies
which are identified on the
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maintenance records by part numbers and serial numbers other than the
manufacturer's shall be provided with interchange or cross reference listing
necessary to establish complete traceability. All documentation, flight, and
maintenance records as specified by United States Federal Aviation Regulations
91.173, 91.174, and each paragraph of regulation 121.380 which normally
accompany the transfer of an aircraft which has been operating in regulated
commercial air service, shall be delivered to Lessor with the Aircraft. Any
documents or records required to be delivered hereunder shall be in English.
(e) Condition of Aircraft. Upon any Return Occasion, Lessee shall
return such Aircraft to Lessor in such condition that the Aircraft shall also
comply with each and every condition and requirement set forth elsewhere in
this Lease, including Exhibit E hereto.
(f) Final Inspection. Upon any Return Occasion, Lessee shall make the
Aircraft available to Lessor at the location where the "block 'C' Check" (or
equivalent level designated check or checks) required hereunder to be performed
immediately prior to redelivery is to be performed for detailed inspection of
the documents referred to in paragraph (d) above and the Airframe, Engines and
Parts structure and parts, at Lessee's expense (excluding compensation to
representatives of Lessor), in order to verify that the condition of such
Aircraft complies with the requirements set forth above (such inspection being
hereinafter referred to as the "Final Inspection"). The Final Inspection shall
be combined with such "block 'C' Check" (or equivalent level check or checks)
and may include such other items as reasonably requested by Lessor. Lessee
shall give Lessor not less than thirty (30) days prior written notice of the
commencement date of such Final Inspection. The period allowed for the Final
Inspection shall be the same period during which such "block 'C' Check" is
being performed and shall have such duration as to permit the opening of any
areas of the Aircraft which are necessary or advisable to satisfy Lessor as to
compliance with the requirements of this Section 16 and Exhibit E. The Final
Inspection shall commence on the date so noticed which shall be on or before
the expiration of the Term with respect to the Aircraft and shall continue on
consecutive days until all activity required above to be conducted has been
concluded. To the extent that any portion of the Final Inspection extends
beyond the expiration of the Term, unless Lessor has terminated the Lease
pursuant to Section 18(g) hereof, the Term with respect to the Aircraft
undergoing the Final Inspection shall be deemed to have been automatically
extended, and all obligations hereunder continued, on a daily basis until the
Final Inspection shall have been
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concluded and Lessee shall pay Rent during any such extension in an amount
equal to the average daily Basic Rent or Renewal Rent, as the case may be, paid
in respect of the last year of the Basic Term or Renewal Term, as the case may
be (and Stipulated Loss Value during such extension shall equal the Stipulated
Loss Value on the last day of the Basic Term or Renewal Term, as the case may
be); provided, however, that Lessee shall not be required to pay Rent with
respect to the Aircraft during the period of extension to the extent that
Lessor is responsible for the delay in completion of the Final Inspection. All
storage expenses attributable to any Term extension pursuant to the preceding
sentence shall be payable by Lessee, except that Lessee shall not be liable for
any storage expenses which are incurred after the sixtieth (60th) day after the
Term to the extent that storage continues thereafter due to Lessor's delay in
completion of the Final Inspection.
(g) Aircraft Records and Documents. In order to enable Lessor to
prepare for the Final Inspection of the Aircraft pursuant to Subsection 16(f)
above, Lessee agrees to make available to Lessor at a maintenance base of
Lessee with adequate facilities for short-term maintenance, where the Final
Inspection is to occur, not later than ten (10) days prior to the commencement
of such Final Inspection, the Aircraft Records and Documents listed in Exhibit
B hereto, together with such other documentation (including, without
limitation, original airworthiness directive compliance documents and other
work documents) regarding the condition, use, maintenance, or operation as
Lessor may reasonably request or require to substantiate the status of the
Aircraft.
(h) Corrections and Subsequent Corrections. To the extent that the
Aircraft or any Engine fails upon a Return Occasion to conform to any
requirement imposed by this Lease, Lessor may, at its option, (i) continue the
Lease in effect in the manner provided for in Section 16(f) above with regard
to automatic extension until such time as such Aircraft is brought up to the
condition required by this Section 16, including Exhibit E, or (ii) accept the
return of such Aircraft and thereafter have any such nonconformance corrected,
at such time as Lessor may deem appropriate but not to commence later than
ninety (90) days following the return of such Aircraft, at commercial rates
then charged by the Person selected by Lessor to perform such correction.
Lessee's obligations to pay such Supplemental Rent shall survive the Expiration
Date or other termination of this Lease. Nothing set forth in this paragraph
shall constitute a limitation on Lessor's or Owner Participant's ability to
recover from Lessee any damages, expenses or losses pursuant to Sections 13 or
18 hereof
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suffered as a result of Lessee's failure to effect the return of the Aircraft
at the time, in the place and in the condition as specified in this Section 16
and Exhibit E hereto.
(i) Functional Flight Check. Immediately prior to the expiration of
the Term, Lessor will be permitted to conduct a non-commercial functional
flight check flight of no more than two (2) hours duration in accordance with
the Manufacturer's functional flight check procedures at Lessee's expense to
demonstrate the airworthiness of the Aircraft and proper functioning of all
systems and components. A qualified pilot and up to five (5) other
representatives selected by Lessor may take part in such flight to verify
compliance of the Aircraft with the requirements of this Lease, provided, that
Lessor shall be responsible for the charges of such qualified pilot and
representatives. Lessee may combine the functional flight check provided in
this Section 16(i) with the delivery flight specified in Section 16(a) and such
functional flight check shall include the landing. Any discrepancy or
malfunction detected during any functional flight check (including a functional
flight check combined with a delivery flight) shall be corrected, at Lessee's
expense, and prior to the expiration of the Term. To the extent that any
actions to correct any such discrepancy or malfunction extend beyond the Term,
the provisions of the first sentence of Section 16(h) shall apply. All storage
expenses attributable to any Term extension pursuant to the preceding sentence
shall be payable by Lessee.
(j) Export Certificate of Airworthiness. Lessee shall, at Lessee's
expense, take such action as Lessor may reasonably request to assist Lessor in
obtaining any required documents in relation to the export of the Aircraft from
the United States (including, without limitation, a valid and subsisting export
certificate of airworthiness with respect to the Aircraft and export license)
and in relation to the deregistration of the Aircraft.
(k) Service Bulletin and Modification Kits. Lessee shall deliver to
Lessor, at no cost to Lessor, all service bulletin kits furnished without
charge by the manufacturer for installation on the Aircraft which have not been
so installed together with appropriate instructions for installation. In the
event such uninstalled kits were purchased or manufactured by Lessee, then
Lessor shall be advised of such kits by Lessee and have a right of first
refusal to purchase such kits at Lessee's cost for a period of ninety (90) days
after return.
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(l) Storage Upon Return. Upon any Return Occasion, Lessee shall, at
Lessor's request and at Lessee's risk and expense, in addition to other storage
referred to above, arrange for the parking, storage and insurance of the
Aircraft for a period not exceeding sixty (60) days at such reasonable location
as Lessor requests where Lessee has or can arrange for storage. Lessee shall
pay or cause to be paid all costs and expenses for such parking, storage and
insurance.
(m) Resale/Release Cooperation. During the last twelve (12) months of
the Term, with reasonable notice and at reasonable times, Lessee will
cooperate, and cause any Permitted Sublessee to cooperate, in all reasonable
respects, with the efforts of Lessor to sell or lease the Aircraft after the
end of the Term, by permitting prospective purchasers or lessees, except to the
extent prohibited by applicable Law, to inspect the Aircraft and the records
relating thereto to the extent it does not unreasonably interfere with the
operation or maintenance of the Aircraft or the conduct of Lessee's business.
Section 17. Events of Default.
Any one or more of the following occurrences or events shall
constitute an Event of Default (whether any such event shall be voluntary or
involuntary or come about or be effected by operation of Law or pursuant to or
in compliance with any judgment, decree or order of any court or any order,
rule or regulation of any other Governmental Entity):
(a) Lessee shall fail to make (i) any payment of Basic Rent, Renewal
Rent or Stipulated Loss Value to Lessor within three (3) Business Days after
the date on which such payment is due, or (ii) any other payment of
Supplemental Rent due hereunder within ten Business Days after the date on
which such payment is due and Lessee has received written demand therefor by
the party entitled thereto; provided that any failure of Lessee to pay to
Lessor or the Owner Participant when due any Excepted Payments (as defined in
the Indenture) shall not constitute an Event of Default unless Lessor or Owner
Participant delivers notice to Lessee; or
(b) Lessee shall fail to obtain and maintain in full force and effect
any insurance required under the provisions of Section 12 hereof or shall
operate the Aircraft outside of the scope or in violation of the terms of the
insurance or United States Government indemnity coverage required to be
maintained with respect to such Aircraft; or
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(c) Any representation or warranty made by Lessee herein or in the
Refunding Agreement or in any certificate furnished by Lessee in connection
herewith or therewith is or was incorrect at the time made in any material
respect and such incorrectness shall not have been cured within thirty (30)
days after the receipt by Lessee of a written notice from Lessor or the
Indenture Trustee advising Lessee of the existence of such incorrectness; or
(d) Lessee shall fail to perform or observe any covenant, condition,
or agreement to be performed or observed by it pursuant to this Lease or the
Refunding Agreement, and such failure shall continue uncured for thirty (30)
days after written notice thereof is given by Lessor or Indenture Trustee to
Lessee; provided, however, that if Lessee shall have undertaken to cure any
such failure which arises under the first or second sentence of Section 6(c) or
Section 6(d), as such provisions of Section 6 relate to maintenance, service,
repair or overhaul, or Section 9, and notwithstanding the diligence of Lessee
in attempting to cure such failure, such failure is not cured within said
thirty (30) day period but is curable with future due diligence, there shall
exist no Event of Default under this Section 17 so long as Lessee is proceeding
with due diligence to cure such failure and such failure is remedied not later
than one hundred eighty (180) days after receipt by Lessee of such written
notice; or
(e) Lessee consents to the appointment of a custodian, receiver,
trustee or liquidator of itself or all or any material part of Lessee's
property or Lessee's consolidated property, or Lessee admits in writing its
inability to, or is unable to, or does not, pay its debts generally as they
come due, or makes a general assignment for the benefit of creditors, or Lessee
files a voluntary petition in bankruptcy or a voluntary petition seeking
reorganization in a proceeding under any bankruptcy or insolvency Laws (as now
or hereafter in effect), or an answer admitting the material allegations of a
petition filed against Lessee in any such proceeding, or Lessee by voluntary
petition, answer or consent seeks relief under the provisions of any other
bankruptcy, insolvency 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 any corporate action (including,
without limitation, any board of directors or shareholder action) is taken by
Lessee in furtherance of any of the foregoing, whether or not the same is fully
effected or accomplished; or
(f) An order, judgment or decree is entered by any court appointing,
without the consent of Lessee, a
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custodian, receiver, trustee or liquidator of Lessee, or of all or any material
part of Lessee's property, or Lessee's consolidated property, or all or any
material part of Lessee's property or Lessee's consolidated property is
sequestered, and any such order, judgment or decree of appointment or
sequestration remains in effect, undismissed, unstayed or unvacated for a
period of ninety (90) days after the date of entry thereof or at any time an
order for relief is granted; or
(g) An involuntary petition against Lessee in a proceeding under the
Federal bankruptcy laws or other insolvency Laws (as now or hereafter in
effect) is filed and is not withdrawn or dismissed within ninety (90) days
thereafter or at any time an order for relief is granted in such proceeding, 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
assumes jurisdiction over, or custody or control of, Lessee or of all or any
material part of Lessee's property, or Lessee's consolidated property and such
jurisdiction, custody or control remains in effect, unrelinquished, unstayed or
unterminated for a period of ninety (90) days or at any time an order for
relief is granted in such proceeding; or
(h) Lessee's cessation of business as a commercial passenger
Certificated Air Carrier or, except in either case in connection with a labor
dispute, announcement thereof or Lessee's suspension of its business as a
commercial passenger Certificated Air Carrier, or for any reason the
preponderant business activity of Lessee shall cease to be that of a commercial
passenger Certificated Air Carrier; or
(i) Lessee's loss or suspension of its United States air carrier
license or certificate under Part 121 of the Federal Aviation Regulations or
certificate under Section 41102(a) of the Federal Aviation Act.
Section 18. Remedies.
Upon the occurrence of any Event of Default and at any time thereafter
so long as the same shall be continuing, Lessor may, at its option, declare by
written notice to Lessee this Lease to be in default, provided, however, that
this Lease shall be deemed to be declared in default automatically without the
necessity of such written declaration upon the occurrence of any Event of
Default described in paragraph (e), (f) or (g) of Section 17 hereof; and at any
time thereafter, so long as any outstanding Event of Default shall not have
been remedied, Lessor may do one or
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more of the following with respect to all or any part of the Airframe and any
or all of the Engines as Lessor in its sole discretion shall elect, to the
extent permitted by, and subject to compliance with any mandatory requirements
of, applicable Law then in effect:
(a) Demand that Lessee, and Lessee shall upon the written demand of
Lessor and at Lessee's cost and expense, immediately return, and the Lessee
hereby agrees that it shall return promptly all or such part of, the Aircraft
to Lessor in the manner specified in such notice, in which event such return
shall not be delayed for the purposes of complying with the return conditions
specified in Section 16 and Exhibit E hereof (none of which conditions shall be
deemed to affect Lessor's possession of the Aircraft) or delayed for any other
reason; provided, however, that Lessee shall remain and be liable to Lessor for
amounts provided for herein or other damages resulting from the Aircraft or any
Engine not being in the condition required by Section 16 and Exhibit E.
Notwithstanding the foregoing, at Lessor's option, Lessee shall be required
thereafter to take such actions as would be required by the provisions of this
Lease if such Aircraft were being returned at the end of the Term hereof with
respect to such Aircraft. In addition, Lessor or Lessor's agent, at its option
and to the extent permitted by applicable Law, may but shall not be obligated
to enter upon the premises where all or any part of the Aircraft, Airframe
and/or Engines are located to take immediate possession of and, at Lessor's
option, remove the same (and/or any engine which is not an Engine but which is
installed on the Airframe, subject to the rights of the owner, lessor or
secured party thereof) by summary proceedings or otherwise, all without
liability accruing to Lessor or Lessor's agent for or by reason of such entry
or taking of possession or removal whether for the restoration of damage to
property, or otherwise, caused by such entry or taking, except direct damages
to the extent caused by Lessor's gross negligence or willful misconduct.
(b) With or without taking possession thereof, sell or cause to be
sold, the Aircraft, Airframe or Engine or any part thereof, or Lessor's
interest therein, at private or public sale, as Lessor in its sole discretion
may determine, or otherwise dispose of, hold, use, operate, or lease to others,
or keep idle the Aircraft, Airframe or Engine, as Lessor in its sole discretion
may determine, all free and clear of any rights of Lessee or any Permitted
Sublessee and except as hereinafter set forth in this Section 18. Lessor may
be the purchaser at any such sale.
(c) Whether or not Lessor shall have exercised, or shall thereafter at
any time exercise, any of its rights
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under paragraph (a) or paragraph (b) above, Lessor, by written notice to Lessee
specifying a payment date which shall be a Stipulated Loss Value Date, may
demand that Lessee pay to Lessor, and Lessee shall pay to Lessor, on the
Stipulated Loss Value Date specified in such notice, as liquidated damages for
loss of bargain and not as a penalty (in lieu of the Basic Rent or Renewal
Rent, as the case may be, due for the period commencing after the Stipulated
Loss Value Date specified for payment in such notice), any unpaid Rent for the
Aircraft to and including the Stipulated Loss Value Date specified in such
notice, plus whichever of the following amounts as Lessor may specify, in its
sole and absolute discretion, in such notice: (i) an amount equal to the
excess, if any, of the sum of the Stipulated Loss Value for the Aircraft,
Airframe or Engine computed as of the date specified in such notice plus, if
such date is a Basic Rent Payment Date or a Renewal Rent Payment Date, an
amount equal to the Basic Rent or Renewal Rent, as the case may be, due on such
date, over the fair market sale value of the Aircraft, Airframe or Engine as of
the date specified in such notice or (ii) an amount equal to the excess, if
any, of the sum of the Stipulated Loss Value for the Aircraft, Airframe or
Engine computed as of the date specified in such notice plus, if such date is a
Basic Rent Payment Date or a Renewal Rent Payment Date, an amount equal to the
Basic Rent or Renewal Rent, as the case may be, due on such date, over the fair
market rental value of the Aircraft for the remainder of the Term as of the
date specified in such notice.
(d) In the event Lessor, pursuant to paragraph (b) above, shall have
sold the Aircraft, Airframe or Engine or its interest therein, Lessor, in lieu
of exercising its rights under paragraph (c) above, may, if it shall so elect,
demand that Lessee pay Lessor, and Lessee shall pay to Lessor on such demand,
as liquidated damages for loss of bargain and not as a penalty (in lieu of the
Basic Rent or Renewal Rent, as the case may be, due for the period commencing
after the Stipulated Loss Value Date immediately prior to the date such sale
occurs), any unpaid Rent due to and including the date of sale, plus the amount
by which the Stipulated Loss Value of such Aircraft, Airframe or Engine,
computed as of such Stipulated Loss Value Date, exceeds the net proceeds of
such sale (after deducting all costs of such sale).
(e) In lieu of exercising its rights under paragraph (b), (c) or (d)
above, by notice to Lessee, Lessor may require Lessee to pay, on the next
Stipulated Loss Value Date, to Lessor, and Lessee hereby agrees that it will so
pay to Lessor, as liquidated damages for loss of a bargain and not as a penalty
(in lieu of the Basic Rent or Renewal
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Rent, as the case may be, payable in advance for the period on and after the
Stipulated Loss Value Date), any unpaid Basic Rent or Renewal Rent, as the case
may be, for such Aircraft due and unpaid for any period prior to and including,
and any Basic Rent or Renewal Rent payable on, the Stipulated Loss Value Date,
plus, an amount equal to the Stipulated Loss Value for the Aircraft computed as
of such Stipulated Loss Value Date; and upon such payment of liquidated damages
and the payment of all other Rent then due hereunder and the discharge of the
Lien of the Indenture pursuant to Section 10.01 thereof, Lessor shall, at
Lessee's expense, transfer, without recourse or warranty (except as to the
absence of Lessor's Liens and the Lien of the Indenture), all right, title and
interest of Lessor in and to the Aircraft to Lessee or as it may direct and
Lessor shall, at Lessee's expense, execute and deliver such documents
evidencing such transfer and take such further action as Lessee shall
reasonably request.
(f) In the event that Lessor, pursuant to paragraph (b) above, shall
have relet the Aircraft, Airframe or Engine under a long term lease, Lessor, in
lieu of exercising its rights under paragraph (c) above with respect to such
Aircraft, Airframe or Engine, may, if it shall so elect, demand that Lessee pay
Lessor, and Lessee shall pay Lessor on such demand, as liquidated damages for
loss of bargain and not as a penalty (in lieu of the Basic Rent or Renewal
Rent, as the case may be, for such Aircraft due after the time of reletting)
any unpaid Rent for such Aircraft due up to the date of reletting, plus the
amount, if any, by which the aggregate Basic Rent or Renewal Rent, as the case
may be, for such Aircraft which would otherwise have become due over the Basic
Term or Renewal Term, as the case may be, discounted periodically (equal to
installment frequency) to present worth as of the date of reletting at the rate
of 8.50% per annum, exceeds the aggregate basic rental payments to become due
under the reletting from the date of such reletting to the date upon which the
Term for such Aircraft, Airframe or Engine would have expired but for Lessee's
default, discounted periodically (equal to installment frequency) to present
worth as of the date of the reletting at the rate of 8.50% per annum.
(g) Cancel, rescind and/or terminate this Lease by written notice to
Lessee which cancellation, rescission and/or termination shall be effective
upon dispatch, whereupon Lessee's right to possess and use the Aircraft,
Airframe or Engine shall immediately cease, however, Lessee shall be and remain
liable for damages and losses suffered by Lessor and all other amounts payable
by Lessee hereunder.
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(h) Lessor may exercise any other right or remedy which may be
available to it under applicable laws, or may proceed by appropriate court
action or actions, either at law or in equity, to enforce any other remedy or
right Lessor may have hereunder, under the other Operative Documents, at law or
in equity, including, without limitation, proceed by court order to enforce
performance by Lessee of the applicable covenants of this Lease or to recover
damages for the breach thereof.
In addition to the foregoing, Lessee shall be liable (without
duplication of the remedies above and of Lessee's obligations under Section 10
and Section 13 hereof and subject to the exclusions set forth therein) for any
and all unpaid Rent before, during or after the exercise of any of the above
mentioned remedies (including without limitation interest on unpaid amounts
with respect to all amounts not paid when due, including, without limitation,
any amounts payable pursuant to the foregoing provisions of this Section 18),
and, except as specified above, until satisfaction of all of Lessee's
obligations to Lessor hereunder and for all legal fees and other costs and
expenses incurred by any Indemnitee by reason of the occurrence of any Event of
Default or the exercise of an Indemnitee's remedies with respect thereto,
including all costs and expenses incurred in connection with the return of the
Aircraft in accordance with the terms of Section 16 and Exhibit E hereof or in
placing the Aircraft, Airframe or Engine in the condition and with
airworthiness certification as required by such Section and such Exhibit and
costs and expenses related to the Lease, the Refunding Agreement, the
Indenture, the Pass Through Trust Agreements, the Intercreditor Agreement or
each Liquidity Facility. All liquidated damages payable pursuant to the
foregoing shall bear interest, which shall be payable on the date the payment
of such liquidated damages is due at a rate equal to the Interest Rate from and
including the date due to and excluding the date actually paid.
In effecting any repossession, Lessor, its representatives and agents,
to the extent permitted by applicable Law, (i) shall have the right to enter
upon any premises where it reasonably believes the Aircraft, the Airframe, an
Engine or Part to be located, (ii) shall not be liable, in conversion or
otherwise, for the taking of any personal property of Lessee which is in or
attached to the Aircraft, the Airframe, an Engine or Part which is repossessed,
(iii) shall not be liable or responsible, in any manner, for any damage or
injury to any of Lessee's property in repossessing and holding the Aircraft,
the Airframe, an Engine or Part except for direct damages caused by Lessor's
gross negligence or willful misconduct and (iv)
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shall have the right to maintain possession of and dispose of the Aircraft, the
Airframe, an Engine or Part on any premises owned by Lessee or under Lessee's
control.
If requested by Lessor, Lessee shall, at its sole expense, assemble
and make the Aircraft, the Airframe, an Engine or Part available at a place
designated by Lessor in accordance with Section 16 and Exhibit E hereof.
Lessee hereby agrees that, in the event of the return to or repossession by
Lessor of the Aircraft, the Airframe, an Engine or Part, or otherwise upon the
occurrence of an Event of Default, any rights in any warranty (express or
implied), service life policy, infringement indemnity, performance guaranty or
the like heretofore made available to Lessee or otherwise held by Lessee shall
without further act, notice or writing be deemed automatically cancelled and
shall be enforceable solely by and for the benefit of, and assigned to, Lessor.
Lessee shall be liable to Lessor (without duplication) for all expenses,
disbursements, costs and fees incurred in (i) repossessing, storing,
preserving, shipping, maintaining, repairing and refurbishing the Aircraft, the
Airframe, an Engine or Part to the condition required by Section 16 and Exhibit
E hereof and (ii) preparing the Aircraft, the Airframe, an Engine or Part for
sale or lease, advertising the sale or lease of the Aircraft, the Airframe, an
Engine or Part and selling or releasing the Aircraft, the Airframe, an Engine
or Part. Lessor is hereby authorized and instructed, at its option, to make
expenditures which Lessor considers advisable to repair and restore the
Aircraft, the Airframe, an Engine or Part to the condition required by Section
16 and Exhibit E hereof, all at Lessee's sole expense.
For the purpose of this Section 18, the "fair market rental value" or
the "fair market sales value" of the Aircraft, Airframe, an Engine or Part
shall be determined pursuant to the Appraisal Procedure.
At any sale of the Aircraft, the Airframe, an Engine or Part pursuant
to this Section, Owner Participant may bid for and purchase such property and
Lessee agrees that the amounts paid therefor shall be used in the computations
contemplated herein and Lessee shall remain liable for any deficiency.
No remedy referred to in this Section is intended to be exclusive,
but, to the extent permitted by Law, 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, to the extent permitted by Law, the exercise or beginning of
exercise by Lessor of any one or more of such remedies shall not preclude the
simultaneous or later
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exercise by Lessor of any or all of such other remedies. No waiver by Lessor
of any Event of Default shall in any way be, or be construed to be, a waiver of
the same Event of Default in the future or any other prior or future Event of
Default. To the extent permitted by Law, Lessee hereby waives any right it may
have to require Lessor to mitigate damages in connection with the remedies
described in Sections 18(c), (d), (e) or (f) above.
Lessee hereby irrevocably appoints Lessor as Lessee's attorney-in-fact
(which appointment is coupled with an interest) to execute all documents deemed
necessary to release, terminate and void Lessee's interest in the Aircraft
leased hereunder or otherwise to more effectively carry out Lessor's rights and
remedies and to file said documents for recordation with the FAA, under the
Uniform Commercial Code, and with any other appropriate Governmental Entity,
and otherwise act in Lessee's name and place with respect to the Aircraft,
provided that an Event of Default has occurred and is continuing and this Lease
has been declared or deemed to be in default.
The provisions of this Section 18 shall continue in full force and
effect and survive the expiration or other termination of this Lease and are
expressly made for the benefit of and shall be enforceable by Lessor, Owner
Participant and, if the Lien of the Indenture has not been discharged,
Indenture Trustee.
Section 19. Security for Obligations. In order to secure the
Equipment Notes, Lessor has created, by the Indenture, a security interest in
the Trust Indenture Estate, including, without limitation, this Lease and all
Rent and other sums payable hereunder, except as provided in the Indenture and
subject in each case to Liens permitted hereunder. The Indenture provides,
among other things for the assignment by Lessor to Indenture Trustee of its
right, title and interest in, to and under this Lease, to the extent set forth
in the Indenture, for the creation of a first-mortgage lien on and perfected
security interest in all of Lessor's right, title and interest in and to the
Aircraft in favor of Indenture Trustee. Lessee hereby consents to such
assignment and to the creation of such mortgage and security interest and
acknowledges receipt of copies of the Trust Agreement and the Indenture, it
being understood that such consent shall not affect any requirement or the
absence of any requirement for any consent under any other circumstances.
Until the Lien of the Indenture has been discharged, Lessee will furnish to
Indenture Trustee counterparts of all notices and other writings of any kind
required to be delivered hereunder by Lessee to Lessor. Until the Lien of the
Indenture has been
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discharged, (a) Lessee shall make all payments of Rent, Stipulated Loss Value
and all other amounts payable hereunder (other than Excepted Payments) to or as
directed by Indenture Trustee as provided in Sections 4(c) and 4(d), and (b)
Indenture Trustee shall be entitled to exercise the rights of Lessor (but not
Owner Participant) (other than Expected Rights) herein as and to the extent
provided herein or in the Indenture and any express reference to Indenture
Trustee in any Section of this Lease shall not give rise to any implication
that Indenture Trustee may not exercise the rights of Lessor in any other
Section of this Lease as and to the extent provided in the Indenture.
The provisions of this Lease and the Refunding Agreement which require
or permit action by, the payment of monies to, the consent or approval of, the
furnishing of any instrument or information to, or the performance of any other
obligation to, Indenture Trustee, shall not be effective, and the Sections
hereof containing such provisions shall be read as though there were no such
requirements or provisions and all moneys otherwise payable to Indenture
Trustee hereunder shall be paid to Lessor, after Lessee shall have received
from Indenture Trustee notice of discharge of the Lien of the Indenture.
Any payment or performance by Lessee to or as directed by Indenture
Trustee shall constitute payment or performance of such obligation to Lessor by
Lessee under this Lease.
Any payment or performance of an obligation of Lessee under this Lease
by a Permitted Sublessee shall constitute payment or performance of such
obligation by Lessee.
Section 20. Renewal Option. Lessee may renew this Lease as provided
in the following clause (i) and subject to the following clause (ii):
(i) Exercise of Renewal Option. Provided that this Lease has not
been previously terminated and that no Default or Event of Default shall
have occurred and be continuing at the time of the giving of irrevocable
notice hereinafter referred to in this clause (i) or at the time of the
commencement of the Renewal Term, Lessee, at its option, may renew this
Lease for one Renewal Term consisting of a period equal to five years. The
right to renew this Lease for such Renewal Term pursuant to this clause (i)
shall be exercised upon irrevocable notice from Lessee received by Lessor
of Lessee's election to so renew this Lease not less than twelve (12)
months and not more than
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twenty-four (24) months prior to the last day of the Basic Term. The
Renewal Rent for the Renewal Term shall be the "fair market rental value"
of the Aircraft for such Renewal Term (the "renewal fair market rental
value") as determined in accordance with the Appraisal Procedure. For
purposes of this paragraph (i), the Appraisal Procedure shall be initiated
by Lessee no earlier than nine (9) months prior to the end of the Basic
Term. If Lessee shall fail to exercise its option to extend the term of
this Lease for the Renewal Term in accordance with the provisions of this
paragraph, all of Lessee's rights to extend the Term for such Renewal Term
shall expire. Lessee shall pay all reasonable costs and expenses,
including, without limitation, reasonable legal fees and expenses, incurred
by Lessor, Owner Participant and the Indenture Trustee in connection with
the exercise of such option.
(ii) Provisions Applicable During Renewal Term. All provisions
of this Lease, including, without limitation, as to Rent and Stipulated
Loss Value (which shall be, with appropriate adjustments, in no event less
than the greater of 120% of the "fair market sales value" of the Aircraft
as of the first day of the Renewal Term as determined pursuant to the
Appraisal Procedure or the amount set forth on Exhibit A as of the end of
the Basic Term), shall remain in effect and be applicable during such
Renewal Term, except that Lessee shall pay to the Lessor, semi-annually in
arrears as Renewal Rent on each Renewal Rent Payment Date, the amount for
such Renewal Term as determined in accordance with clause (i) of this
Section 20.
Section 21. Miscellaneous.
(a) Severability, Amendment, and Construction. Any provision of this
Lease which is prohibited or unenforceable in any jurisdiction shall, as to
such jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof, and any
such prohibition or unenforceability in any jurisdiction shall not invalidate
or render unenforceable such provision in any other jurisdiction. To the
extent permitted by Law, each of Lessor and Lessee hereby waives any provision
of Law which renders any provision hereof prohibited or unenforceable in any
respect. No term or provision of this Lease may be changed, waived,
discharged, or terminated orally, but only by an instrument in writing
expressed to be a supplement or amendment to, or waiver or termination of this
Lease signed by an officer of the party against which the enforcement of the
change, waiver, discharge, or termination is sought. This Lease
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shall constitute an agreement of lease, and nothing herein shall be construed
as conveying to Lessee any right, title, or interest in the Aircraft or any
Engine or Part except as a lessee only. Without limiting the foregoing, the
parties hereto agree to treat this Agreement as a lease for United States
federal income tax purposes and Lessee will not file a tax return which is
inconsistent with the foregoing and nothing contained herein shall be construed
as an election by Lessor to treat Lessee as having acquired the Aircraft for
the purpose of the investment credit allowed by Section 38 of the 1954 Code or
any similar or successor statute. The headings in this Lease are for
convenience of reference only and shall not define or limit any of the terms or
provisions hereof.
(b) GOVERNING LAW. THIS LEASE HAS BEEN EXECUTED AND DELIVERED IN THE
STATE OF NEW YORK AND SHALL IN ALL RESPECTS BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE INTERNAL SUBSTANTIVE LAWS OF THE STATE OF NEW YORK,
INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY, AND PERFORMANCE WITHOUT REGARD
TO PROVISIONS GOVERNING CONFLICTS OF LAW WHICH MIGHT LEAD TO THE APPLICATION OF
THE LAWS OF ANOTHER JURISDICTION.
(c) Notices. All notices and instructions between Lessor and Lessee
required or permitted under the terms and provisions hereof shall be in writing
and shall be sent to Lessor or Lessee at their respective addresses set forth
in Exhibit C hereto (or such other addresses as the parties may designate from
time to time in writing). All notices, reports or other documents provided to
Lessor or Lessee shall be provided concurrently to Indenture Trustee (until
such time as the Lien of the Indenture is discharged) and to Owner Participant,
at such address as Owner Participant and Indenture Trustee, respectively, may
designate from time to time. All notices and instructions hereunder shall
become effective when received.
(d) Lessor's Right to Perform for Lessee. If Lessee fails to make any
payment of Rent required to be made by it hereunder or fails to perform or
comply with any covenant, agreement, or obligation contained herein, Lessor
shall have the right but not the obligation to make such payment or conform or
comply with such agreement, covenant, or obligation, and the amount of such
payment and the amount of the reasonable expenses of Lessor incurred in
connection with such payment or the performance thereof or compliance
therewith, together with interest thereon at the Interest Rate, shall be
payable by Lessee to Lessor (as Supplemental Rent) upon demand. The taking of
any such action by Lessor pursuant to this Section 21(d) shall not constitute a
waiver or release of any obligation of Lessee under this Lease, nor
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a waiver of any Event of Default which may arise out of Lessee's nonperformance
of such obligation, nor an election or waiver by Lessor or any remedy or right
available to Lessor under or in relation to this Lease.
(e) Counterparts. To the extent, if any, that this Lease constitutes
chattel paper (as such term is defined in the Uniform Commercial Code as in
effect in any applicable jurisdiction), no security interest in this Lease may
be created through the transfer or possession of any counterpart other than the
original counterpart, which shall be identified as the counterpart containing
the receipt therefor executed by or on behalf of Indenture Trustee on the
signature page thereof. Subject to the preceding sentence, this Lease may be
executed in two or more counterparts, each of which shall be deemed an
original, but all of which together shall constitute one and the same
instrument.
(f) Quiet Enjoyment. Lessor covenants that, so long as no Event of
Default shall have occurred and be continuing and this Lease has not been
declared or deemed to be in default, Lessor shall not take or cause to be taken
any action to interfere with the right of Lessee to the possession, use,
operation and quiet enjoyment of and other rights with respect to the Aircraft
hereunder, and all rents, revenues, profits and income therefrom, in accordance
with the terms of this Lease without interference from Lessor or any Person
lawfully claiming by or through it, provided that Lessor and Owner Participant
shall not be liable for any such interference by Indenture Trustee, Pass
Through Trustee, Note Holder or any other Person lawfully claiming by or
through them, and provided further, that the foregoing shall not be deemed to
have modified the obligations of Lessee pursuant to Section 4(d) hereof, which
obligations remain absolute and unconditional.
(g) Brokers. Lessee and Lessor agree that, except as provided in the
Refunding Agreement, there has been no third party as agent involved in this
Lease and each indemnifies the other from liability for fees, commissions, or
other claims made upon the other due to any such claim.
(h) Investment of Funds. Any monies which are held by Lessor or
Indenture Trustee and are payable to Lessee shall, unless a Default or an Event
of Default shall have occurred and be continuing, be invested as provided below
until paid to Lessee or applied by Lessor or Indenture Trustee to the extent
provided herein. Until paid to Lessee or applied as provided herein or in the
Indenture such monies shall be invested by Lessor or Indenture Trustee from
time to time at the expense of Lessee in Specified
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Investments, as directed by Lessee in accordance with the provisions of Section
3.07 of the Indenture if the Lien of the Indenture shall not have been
discharged and thereafter as provided below. There shall be promptly (but not
more frequently than monthly) remitted to Lessee any gain (including interest
received) realized as the result of any such investment (net of any fees,
commissions and other reasonable expenses, if any, incurred in connection with
such investment) unless a Default or an Event of Default shall have occurred
and be continuing. Lessee will promptly pay to Lessor or Indenture Trustee, as
the case may be, and hold Lessor or Indenture Trustee harmless from, on demand,
the amount of any loss realized as the result of any such investment (together
with any Taxes, fees, commission and other reasonable expenses, if any,
incurred in connection with such investment).
(i) Entire Agreement; Amendment. This Lease (including the Exhibits
hereto), any related letter agreements and the other Operative Documents, the
Financing Documents and the Purchase Documents (including the Exhibits thereto)
and all closing documents delivered in connection with any of the foregoing
embody the entire agreement and understanding among the parties hereto with
respect to the subject matter hereof. This Lease may be changed, waived,
discharged, amended, revised or terminated only by an instrument in writing
signed by the party against which enforcement is sought.
(j) Expenses. Without limiting Section 13 or 18, Lessee agrees within
fifteen (15) days after demand to pay or reimburse Lessor for all reasonable
out-of-pocket costs and expenses (including, without limitation, legal and
other professional fees and expenses) incurred or payable by Lessor in
connection with or related to (i) the fees and expenses of Owner Trustee and
Indenture Trustee, (ii) to the extent requested by or relating to acts or
omissions of Lessee or as otherwise provided herein or to give effect to the
provisions hereof, or the other Operative Documents, the Financing Documents or
the Purchase Documents, any future amendments, supplements or other
modifications hereof or thereof, or waivers or consents hereunder or
thereunder, and (iii) any Default or Event of Default or the enforcement of any
of Lessor's rights, remedies or privileges hereunder or at law or in equity,
but not Lessor's legal fees and expenses in connection with the negotiation and
execution of this Lease or the Financing Documents.
(k) Federal Bankruptcy Code. In the event Section 1110 of Title 11 of
the United States Code is amended, or if it is repealed and another statute is
enacted in lieu thereof, Lessor and Lessee agree to amend this Lease
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and take such other action not inconsistent with this Lease as Lessor
reasonably deems necessary so as to afford to Lessor the rights and benefits as
such amended or substituted statute confers upon owners and lessors of aircraft
similarly situated to Lessor.
(l) U.S. Registration Number. At Lessee's request, Lessor shall use
its best efforts to have the Aircraft registered under the United States
Registration Number designated by Lessee.
(m) Submission to Jurisdiction; Service of Process; Waiver of Forum
Non Conveniens; Waiver of Jury Trial. Each of Lessee and Lessor hereby
irrevocably agrees that any suit, action or proceeding related to this Lease or
any of the other Operative Documents to which it is a party or the subject
matter hereof or thereof or any of the transactions contemplated hereby and
thereby may be instituted in, and submits for itself and its property to the
non-exclusive jurisdiction of, (i) the courts of the State of New York in New
York County and (ii) the United States District Court for the Southern District
of New York. Each of Lessee and Lessor represents and warrants that it is not
currently entitled to, and agrees that to the extent that Lessee or Lessor
hereinafter may acquire, any immunity (including, without limitation, sovereign
immunity) from jurisdiction of any court or from any legal process, it hereby,
to the extent permitted by Law, waives such immunity, and agrees not to assert,
by way of motion, as a defense, or otherwise, in any such suit, action or
proceeding, any claim that it is not personally subject to the jurisdiction of
the above- named courts that it is immune from any legal process (whether
through service or notice, attachment prior to judgment, attachment in aid of
execution, execution or otherwise) with respect to itself or its property, that
the suit, action or proceeding is brought in an inconvenient forum, that the
venue of the suit, action or proceeding is improper, or that this Lease or any
of the other Operative Documents or the subject matter hereof or thereof or any
of the transactions contemplated hereby and thereby may not be enforced in or
by such courts. Each of Lessee and Lessor hereby generally consents to service
of process by registered mail, return receipt requested, addressed to it at its
address set forth in Exhibit C, or at such other office of Lessee or Lessor as
from time to time may be designated by Lessee or Lessor (as applicable) in
writing to Lessee or Lessor (as applicable), Owner Participant and Indenture
Trustee. Each of Lessee and Lessor hereby agrees that its submission to
jurisdiction and its designation of service of process by mail set forth above
is made for the express benefit of Lessor, Lessee, Owner Participant, Indenture
Trustee, each Note Holder and
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115
their successors and assigns (as applicable). Final (after all appeals)
judgment (the enforcement of which has not been stayed) against either Lessee
or Lessor obtained in any suit originally brought in the court of the State of
New York in New York County or in the United States District of New York shall
be conclusive, and, to the extent permitted by applicable Law, may be enforced
in other jurisdictions by suit on the judgment, a certified or true copy of
which shall be conclusive evidence of the fact and of the amount of any
indebtedness or liability of Lessee therein described; provided that the
plaintiff at its option may bring suit, or institute other judicial
proceedings, against Lessee or Lessor, as the case may be, or any of their
assets in the courts of any country or place where such Person or such assets
may be found. EACH OF LESSEE AND LESSOR 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 THE OPERATIVE DOCUMENTS OR ANY DEALINGS BETWEEN THEM
RELATING TO THE SUBJECT MATTER OF THE TRANSACTIONS CONTEMPLATED THEREBY OR THE
LESSOR/LESSEE RELATIONSHIP BEING ESTABLISHED, including, without limitation,
contract claims, tort claims, breach of duty claims and other common law and
statutory claims. Lessor and Lessee represent and warrant that each has
reviewed this waiver with its legal counsel, and that each knowingly and
voluntarily waives its jury trial rights following consultation with such legal
counsel. THIS WAIVER IS IRREVOCABLE, AND THIS WAIVER SHALL APPLY TO ANY
SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THE OPERATIVE
DOCUMENTS. In the event of litigation, this Agreement may be filed as a
written consent to a trial by the court.
(n) Limitation on Recourse. The parties hereto agree that all
statements, representations, covenants and agreements made by Lessor (when made
in its capacity as such and not in its individual capacity) contained in this
Agreement, unless expressly otherwise stated, are made and intended only for
the purpose of binding the Trust Estate and establishing the existence of
rights and remedies that can be exercised and enforced against the Trust
Estate. Therefore, no recourse shall be had with respect to anything contained
in this Agreement (except for any express provisions that Lessor is responsible
for in its individual capacity), against Lessor in its individual capacity or
against any institution or person that becomes a successor trustee or co-
trustee or any officer, director, trustee, servant or direct or indirect parent
or controlling Person or Persons of any of them; provided that (i) this Section
21(n) shall not be construed to prohibit any action or proceeding against any
party hereto for its own willful misconduct or grossly negligent conduct for
which it would
-110-
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otherwise be liable and (ii) nothing contained in this Section 21(n) shall be
construed to limit the exercise and enforcement in accordance with the terms of
this Agreement or such other agreements of rights and remedies against the
Trust Estate. The foregoing provisions of this Section 21(n) shall survive the
termination of this Agreement and the other Operative Documents.
(o) Successor Trustee. Lessee agrees that in the case of the
appointment of any successor Owner Trustee pursuant to the terms of the Trust
Agreement, such successor Owner Trustee shall, upon written notice by such
successor Owner Trustee, succeed to all the rights, powers and title of Lessor
hereunder and shall be deemed to be Lessor and the owner of the Aircraft for
all purposes hereof without the necessity of any consent or approval by Lessee
(subject to Section 14(d) of the Refunding Agreement) and without in any way
altering the terms of this Lease or Lessee's obligations hereunder. One such
appointment and designation of a successor Owner Trustee shall not exhaust the
right to appoint and designate further successor Owner Trustees pursuant to the
Trust Agreement, but such right may be exercised repeatedly as long as this
Lease shall be in effect.
(p) Article 2-A of the UCC. The parties hereto agree that the
Original Head Lease, as amended and restated by this Amended and Restated
Aircraft Lease Agreement [GPA 1989 BN-11] (and as otherwise extended, amended,
modified, renewed or supplemented), shall be governed by Article 2-A of the
Uniform Commercial Code of New York.
-111-
117
IN WITNESS WHEREOF, Lessor and Lessee, each pursuant to due authority,
have each caused this Lease to be executed by its duly authorized officer as of
the day and year first above written.
Lessor:
WILMINGTON TRUST COMPANY,
not in its individual capacity, except as otherwise
expressly provided herein, but solely as Owner Trustee
By:
-------------------------------
Title:
Lessee:
AMERICA WEST AIRLINES, INC.
By:
-------------------------------
Title:
-112-
118
ANNEX I
to
Amended and Restated Aircraft Lease Agreement
DESCRIPTION OF ORIGINAL HEAD LEASE
[To be provided by FAA Counsel]
119
EXHIBIT A
to
Amended and Restated Aircraft Lease Agreement
STIPULATED LOSS VALUES
The "Stipulated Loss Value" of the Aircraft leased hereunder during the Term
shall be determined as of the date provided in the Lease and shall be an amount
equal to the amount shown below as of the applicable "Stipulated Loss Value
Date" set forth below.
STIPULATED LOSS VALUES
S/N 81
Stipulated
Loss Value
Date
(1) (2)
____________________
(1) Thereafter, during any (i) Renewal Term or (ii) extension or
deemed extension of the Term of the Lease due to the occurrence of an
event described in clause (iii) to the definition of "Supplemental
Rent" in the Lease, "Stipulated Loss Value Date" shall mean the __th
day of each calendar month.
(2) Thereafter, such amount as determined in accordance with Section
20(ii) of the Lease.
A-1
120
EXHIBIT B
to
Amended and Restated Aircraft Lease Agreement
AIRCRAFT RECORDS AND DOCUMENTS
One original (or, if greater, the number delivered to Lessee)
of each of the following:
A. CERTIFICATES
1. Certificate of Airworthiness (FAA)
2. Lessee to supply Radio License
2a. Certificate of Sanitary Construction
B. AIRCRAFT STATUS RECORDS
3. Log Book (currently on Aircraft)
4. Airframe Maintenance Status (with time-to-go or time
since last)
5. Airworthiness Directive Compliance Report
6. Modification Status report
7. Weighing Report (most recent)
8. Accident and incident report
9. List of Life Limited Components (with time-to-go)
C. AIRCRAFT MAINTENANCE RECORDS (last heavy maintenance visits)
10. Test Flight Reports
11. Job Cards and Work Accomplishment Documents (copies)
12. X-ray pictures (most recent)
D. AIRCRAFT HISTORY RECORDS
13. Log Books
14. Aircraft Maintenance History Cards
B-1
121
15. Mechanical Interruption Summary
E. ENGINE RECORDS (for each engine)
16. Last overhaul and repair documents
17. Airworthiness Directive Compliance Report
18. List of Life Limited Components
19. Modification Status Report
F. APU RECORDS
20. Last Overhaul and Repair Documents
21. Airworthiness Directive Compliance Report
22. List of Life Limited Components
23. Modification Status Report
G. COMPONENT RECORDS
24. Component records maintained in accordance with a
record keeping policy approved by and acceptable to
the FAA to certify the status and maintenance
histories of the components
H. MANUALS
25. Approved Flight Manual
26. Flight Crew Operating Manual
27. Weight and Balance Manual
28. Wiring Diagram Manual
29. Illustrated Parts Catalog
I. MISCELLANEOUS TECHNICAL DOCUMENTS
30. Operations Specification
31. Passenger Cabin Configuration Drawings
J. Any other documents, manuals, reports or related information
delivered with or related to the Aircraft, updated as may be
required to reflect the current aircraft status.
B-2
122
EXHIBIT C
to
Amended and Restated Aircraft Lease Agreement
DEFINITIONS AND VALUES
Basic Rent: During the Basic Term of the Lease, Basic
Rent shall be payable in semi-annual
installments, each of which shall be in an
amount equal to the amount [and in
________], as set forth in Schedule I
hereto.
Basic Rent
Payment Date: Each such date set forth as such on
Schedule I hereto.
Letter of Credit
Face Amount: The amount set forth as such on Schedule I
hereto
Manufacturer: Airbus Industrie
Maximum Foreign
Use Percentage: The Permitted Percentages as defined in the
Tax Indemnification Agreement.
Payment Location: So long as the Lien of the Indenture shall
remain in effect, Fleet National Bank,
Account No. _____ and thereafter (and at
all times with respect to Excepted
Payments), to _____ for the account of
________ Account No. ______.
Renewal Rent: During the Renewal Term of the Lease
Renewal Rent shall be payable in
installments, semi-annually in arrears.
Renewal Rent
Payment Date: The same day and month during each year of
the Renewal Term on which Basic Rent was
due during the Basic Term (the Basic Rent
Payment Dates). If a Renewal Rent Payment
Date shall fall on a day which is not a
Business Day, any payment due on such
Renewal Rent Payment Date shall be made on
the next succeeding Business Day.
Restricted Use
Period: On and after the Delivery Date until and
including the last day of the Owner
Participant's seventh full fiscal year
after the Delivery Date.
C-1
123
Lease
Identification: A fireproof metal plate bearing the
following legend: "Title to this Aircraft
is held by Wilmington Trust Company, not in
its individual capacity but solely as Owner
Trustee, as Lessor, which is the registered
owner thereof on the U.S. FAA Aircraft
Registry, and which has leased this
Aircraft to America West Airlines, Inc., as
Lessee" and, for so long as the Lien of the
Indenture shall not have been discharged,
bearing the following additional legend:
"Mortgaged to The Chase Manhattan Bank as
Indenture Trustee."
Lessee's
Address: America West Airlines, Inc.
0000 Xxxx Xxx Xxxxxx Xxxxxxxxx
Xxxxxxx, Xxxxxxx 00000
Telex: 755089 (Answerback: AMERWEST)
Telecopier: (000) 000-0000
Attention: Senior Vice President -
Legal Affairs
Lessor's
Address: Wilmington Trust Company
Xxxxxx Xxxxxx Xxxxx
Xxxxxxxxxx, XX 00000
Telecopier: (000) 000-0000
Attention: Corporate Trust
Administration
C-2
124
EXHIBIT D-1
to
Amended and Restated Aircraft Lease Agreement
LEASE SUPPLEMENT NO. 3
LEASE SUPPLEMENT [GPA 1989 BN-11] NO. 3, dated June __, 1997,
between WILMINGTON TRUST COMPANY, a Delaware corporation (not in its individual
capacity but solely as Owner Trustee under a Trust Agreement [GPA 1989 BN-11]
dated December 19, 1989, as amended, supplemented, or otherwise modified from
time to time) (together with its successors and assigns, "Lessor"), and AMERICA
WEST AIRLINES, INC., a Delaware corporation (together with its successors,
"Lessee").
Lessor and Lessee have heretofore entered into that certain
Aircraft Lease Agreement [GPA 1989 BN-11] dated as of December 19, 1989, as
Amended and Restated as of June __, 1997 (as further amended, supplemented or
otherwise modified from time to time, herein called the "Lease Agreement", and
the defined terms therein being hereinafter used with the same meaning) and
that certain Lease Supplement [GPA 1989 BN-11] No. 1 dated December 29, 1989
("Lease Supplement No. 1") and that certain Lease Supplement [GPA 1989 BN-11]
No. 2 dated January 5, 1995 ("Lease Supplement No. 2"). The Lease Agreement
provides for the execution and delivery from time to time of a Lease Supplement
substantially in the form hereof for the purpose of leasing the aircraft
described below (or confirming the leasing of the aircraft described below)
under the Lease Agreement as and when delivered by Lessor to Lessee in
accordance with the terms thereof.
The Lease Agreement relates to the aircraft, parts and engines
described below, and a counterpart of the Lease Agreement is attached hereto
and made a part hereof, and this Lease Supplement, together with such
attachment, is being filed for recordation on the date hereof with the FAA as
one document.
NOW, THEREFORE, in consideration of the premises and other
good and sufficient consideration, Lessor and Lessee hereby agree as follows:
1. Lessor hereby confirms that it has leased to Lessee and
Lessee hereby confirms that it has leased from Lessor that certain Airbus Model
A320-231 commercial jet aircraft airframe and two IAE V2500 engines (each of
which Engines has 750 or more rated takeoff horsepower or the equivalent of
such horsepower) described in Schedule 1 hereto (the "Delivered Aircraft").
2. The Delivery Date of the Delivered Aircraft is December
29, 1989.
D-1
125
3. The Basic Term for the Delivered Aircraft shall commence
on the Delivery Date and shall end on the Expiration Date, which shall be July
5, 2013 unless the Lease Agreement is extended or deemed extended or terminated
prior thereto in accordance with the terms thereof.
4. Lessee hereby agrees to and confirms its obligation to pay
Rent (as defined in the Lease Agreement) in the amounts and at the times
provided in the Lease Agreement.
5. Lessee hereby confirms to Lessor that (i) the Delivered
Aircraft and each Engine installed thereon or belonging thereto have been duly
marked in accordance with the terms of Section 6(e) of the Lease Agreement, and
(ii) Lessee has accepted the Delivered Aircraft for all purposes of Lease
Supplement No. 1, as further supplemented by Lease Supplement No. 2, hereof and
of the Lease Agreement, and the Delivered Aircraft is (A) as far as Lessee
reasonably ascertained from the acceptance procedures provided for in the
Purchase Agreement, airworthy, in accordance with specifications, and in good
working order and repair, it being understood that Lessee by this confirmation
is not giving any warranty of any kind with respect to the Aircraft, and (B)
free and clear of all Liens except Permitted Liens.
6. All of the terms and provisions of the Lease Agreement,
including, without limitation, as to governing Law, are hereby incorporated by
reference in this Lease Supplement No. 3 to the same extent as if fully set
forth herein.
7. This Lease Supplement No. 3 may be executed in any number
of counterparts; each of such counterparts, except as provided in Section 21(e)
of the Lease Agreement, shall for all purposes be deemed to be an original, and
all such counterparts shall together constitute but one and the same Lease
Supplement. To the extent, if any, that this Lease Supplement 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
Supplement may be created except by the transfer or possession of the
counterpart containing the printed receipt therefor executed by Indenture
Trustee on the signature page hereof.
D-2
126
IN WITNESS WHEREOF, Lessor and Lessee have each caused this
Lease Supplement No. 3 to be duly executed by its duly authorized officer on
the day and year first above written.
Lessor:
WILMINGTON TRUST COMPANY, not in its
individual capacity, except as
otherwise expressly provided herein,
but solely as Owner Trustee
By:
---------------------------------
Title:
Lessee:
AMERICA WEST AIRLINES, INC.
By:
---------------------------------
Title:
D-3
127
The undersigned acknowledges receipt of this original
counterpart of the foregoing Lease Supplement on this _______ day of June ___,
1997 and consents to the terms hereof.
THE CHASE MANHATTAN BANK, not in its
individual capacity, but solely as
Indenture Trustee
By:
---------------------------------
Title:
X-0
000
XXXXXXXX 1
to
LEASE SUPPLEMENT NO. 3
Airbus Model A320-231
Airframe
U.S. Registration No. Manufacturers Serial No.
N632AW 81
Installed
IAE
Engines
Model No. Serial No.
V2500 V0084
V2500 V0091
X-0
000
XXXXXXX X-0
to
Amended and Restated Aircraft Lease Agreement
LETTER OF CREDIT
D-6
130
EXHIBIT E
to
Amended and Restated Aircraft Lease Agreement
RETURN CONDITION REQUIREMENTS
In addition to the requirements set forth in Section 16 of the
Lease, on any Return Occasion with respect to the Aircraft, Lessee, at its own
cost and expense, shall return the Aircraft in compliance with the following:
(1) The Aircraft shall have at all times theretofore been
maintained and modified in accordance with Sections 6(d) and 9 hereof with the
same care, maintenance status and consideration for the technical condition of
the Aircraft as if such Aircraft were owned and were to have been kept in
continued regular service by Lessee, without discrimination as to any other
similar aircraft owned or leased by Lessee.
(2) The Aircraft shall be clean by good commercial airline
standards as on the Delivery Date with only such modifications to the Aircraft
as are permitted under this Lease.
(3) The Aircraft shall have installed the full complement of
Engines (as used herein the term "Engines" includes engines for which title
will be transferred to Lessor pursuant to Section 16(c)) and other equipment,
parts, components, accessories, and loose equipment subleased hereunder or
substituted therefor, each such item functioning in accordance with its
intended use.
(4) Lessee, at Lessor's request, shall activate any systems
installed on the Aircraft previously deactivated by Lessee and shall assure
each such system is properly functioning for its intended use.
(5) Each Engine shall have just completed a hot and cold
section baroscope and/or radiographic isotope inspection by Lessor (at Lessee's
cost and expense) of the low and high pressure compressors and turbine area,
and shall have just completed engine condition runs, and any discrepancies
detected shall be corrected at Lessee's cost and expense in accordance with the
Manufacturer's maintenance policies and procedures.
(6) Lessee's name, logo, and all other exterior markings shall
have been removed in a good and workmanlike manner from the Aircraft and the
Aircraft shall have been repainted in a good and workmanlike manner in the
livery specified by Lessor.
(7) The Aircraft shall have simultaneously with such return
completed a "block 'C' Check" or the equivalent level designated check or
checks (inclusive of all phases of a
X-0
000
"xxxxx 'C' Check" or equivalent level designated check if the Maintenance
Program is a "phase" program), in accordance with Lessee's Maintenance Program
such that all inspections and airworthiness directives having terminating
actions due within the next "block 'C' Check" or equivalent level designated
check(s), and all other actions as per the Manufacturer's minimum
recommendations in its then current maintenance planning document for such
check or checks, shall have been accomplished immediately prior to redelivery.
(8) Neither the Aircraft nor any Engine shall have any
scheduled or unscheduled open or deferred maintenance items or placards.
(9) No Engine shall be on "Watch" and each Engine shall comply
with Lessee's Maintenance Program without waiver, deviations or exceptions.
(10) Each landing gear assembly shall have no less than 50% of
allowable hours or cycles, whichever is the more limiting factor, under
Lessee's Maintenance Program, remaining until the next scheduled overhaul or
replacement.
(11) Each Engine shall have not less than 5,000 hours or 5,000
cycles, whichever is the more limiting factor, remaining on any hour or cyclic
limited part, and each Engine shall have not more than 5,000 hours or 5,000
cycles, whichever is the more limiting factor, since the last engine compressor
refurbishment, and each Engine shall have not more than 2,500 hours or 2,500
cycles, whichever is the more limiting factor, since its last turbine
restoration, based on Lessee's historical experience of engine on-wing service
life or based on Lessee's hard time engine overhaul limit if in effect. The
Engine hour and cycle limits described herein shall be in accordance with
Lessee's Maintenance Program and the manufacturer's mandatory hour and cyclic
life limits and presumes an hour-to-cycle ratio of two (2.0) hours to one (1)
cycle. If the actual hour-to-cycle ratio is less than 2.0:1, then the cyclic
limit amounts described herein shall be increased proportionately.
(12) Each cycle, time or calendar controlled component in
accordance with Lessee's Maintenance Program or the Manufacturer's mandatory
life limits shall have no less than twelve months or 5,000 hours or 5,000
cycles, whichever is the more limiting factor, remaining until the next
scheduled overhaul or replacement or 100% of the allowable time if less than
twelve months.
(13) The Airframe shall be returned to Lessor with not less
than fifty percent (50%) of the total scheduled period between scheduled Major
Structural Inspections of the most comprehensive type (currently referred to as
an "eight
E-2
132
year" heavy structural inspection" or "8C" inspection under the Manufacturer's
maintenance planning document in effect on the Delivery Date) with respect to
allowable hours, cycles or calendar months, whichever is the more limiting
factor, remaining until the next scheduled Major Structural Inspection of the
most comprehensive type, including, without limitation, the replacement of any
safe-life limited parts, required in accordance with the Lessee's then current
Maintenance Program or the Manufacturer's mandatory life limits and, therefore,
at a minimum, having just completed a "four-year heavy structural inspection"
or "4C" inspection as referred to in the Manufacturer's maintenance planning
document in effect on the Delivery Date.
(14) All software associated with or relating to any on-board
avionic equipment must be delivered to Lessor and be in a condition complying
with the Manufacturer's then recommended standards.
(15) Each oil tank on the Aircraft shall be full and the
fuel tanks shall contain as much fuel as such tanks contained at the time the
Aircraft was accepted by Lessee, or, in the case of insufficient quantities, an
appropriate payment will be made by Lessee at the then current market price of
oil or fuel, as the case may be.
E-3
133
EXHIBIT F-1
to
Amended and Restated Aircraft Lease Agreement
FOREIGN AIR CARRIERS
Aer Lingus
Air Canada
Air France (Compagnie Nationale Air France)
Air New Zealand, Ltd.
All Nippon Airways
Alitalia - Italy's World Airlines
Ansett Airlines of Australia
Australian Airlines
Austrian Airlines (Oesterreichische Luftverkehrs AG)
British Airways
Canadian Airlines International Ltd.
Deutsche Lufthansa Aktiengesellschaft (Lufthansa German Airlines)
Finnair Oy
Iberia
Japan Air Lines, Co., Ltd (JAL)
KLM - Royal Dutch Airlines (Koninklijke Luchtvaart Maatschappij)
Korean Air
Malaysian Airlines
QANTAS
Sabena Belgian World Airlines (Societe Anonyme Belge
D'Exploitation De La Navigation Aerienne)
Scandinavian Airlines Systems (SAS)
Singapore Airlines
Swissair (Swiss Air Transport Company Ltd.)
TAP Air Portugal (Transportes Aeros Portugeses)
Thai Airways International Ltd.
Varig S.A. (Viacao Aerea Rio Grandense S.A.)
(a) Lessor may at any time, by written notice to Lessee, propose
the deletion of particular airlines from the above list of Foreign Air Carriers
(as the same may be amended pursuant to this provision) based upon Lessor's
reasonable judgment. Lessee may at any time, by written notice to Lessor,
propose the addition of particular airlines to such list of Foreign Air
Carriers based upon Lessee's reasonable judgment and which are comparable to
the above airlines.
(b) If Lessee has not objected in writing to the deletion of a
particular airline proposed by Lessor as provided in paragraph (a) of this
Exhibit, or if Lessor has not objected in writing to the addition of a
particular airline proposed by Lessee as provided in paragraph (a), in each
case within 30 days after receipt of notice of such proposal, the list of
Foreign Air Carriers shall be deemed amended without further act to delete or
add such airline. If Lessee or Lessor delivers a timely objection in writing
to a proposal made by the other pursuant to paragraph (a),
F-1
134
each party agrees to consult promptly at the request of the other in a good-
faith effort to resolve the disagreement through negotiation; provided,
however, that an airline which Lessor has proposed to delete shall be deleted
from such list if there will be at least twenty (20) (or such lesser number as
Lessor and Lessee shall reasonably determine, if the number of airlines of a
type similar to the airlines listed above which may be included within the
definition of Foreign Air Carriers is substantially reduced as a result of
consolidation in the airline industry) other airlines remaining on such list
after giving effect to such deletion and any other deletions then proposed by
Lessor.
(c) Notwithstanding any other provision hereof, no addition shall
be made, and an airline shall be deleted from such list if, such airline would
not be permitted to be a lessee under the provisions of the Lease, and no
deletion of an airline from the list of Foreign Air Carriers pursuant to this
Exhibit shall affect any existing sublease or other agreement providing for
transfer of possession of the Aircraft, the Airframe or any Engine or Part
which was permitted under the Lease at the time entered into, or preclude any
subsequent renewal or extension of such sublease or other agreement.
F-1
135
EXHIBIT F-2
to
Amended and Restated Aircraft Lease Agreement
PERMITTED FOREIGN SUBLESSEE DOMICILES
Argentina Malta
Australia Mexico
Austria Morocco
Bahamas Netherlands
Belgium New Zealand
Brazil Norway
Canada Paraguay
Chile People's Republic of China
Denmark Philippines
Egypt Portugal
Finland Republic of China (Taiwan)*
France Singapore
Germany South Africa
Greece South Korea
Hong Kong Spain
Hungary Sweden
Iceland Switzerland
India Thailand
Indonesia Tobago
Ireland Trinidad
Italy United Kingdom
Japan Uruguay
Luxembourg Venezuela
Malaysia
-----------------------
* So long as on the date of entering into the proposed sublease such
country and the United States of America have diplomatic relations at
least as good as those in effect on the Restatement Date.
(a) Lessor may at any time, by written notice to Lessee,
propose the deletion of a particular country from the above list of Permitted
Foreign Sublessee Domiciles (as the same may be amended pursuant to this
provision) based upon Lessor's reasonable judgment. Lessee may at any time, by
written notice to Lessor, propose the addition of particular countries which
are comparable to the above countries to such list of Permitted Foreign
Sublessee Domiciles based upon Lessee's reasonable judgment.
(b) If Lessee has not objected in writing to the deletion
of a particular country proposed by Lessor as provided in paragraph (a) of this
Exhibit, or if Lessor has not objected in writing to the addition of a
particular
F-2
136
country proposed by Lessee as provided in paragraph (a), in each case within 30
days after receipt of notice of such proposal, the list of Permitted Foreign
Sublessee Domiciles shall be deemed amended without further act to delete or
add such country. If Lessee or Lessor delivers a timely objection in writing
to a proposal made by the other pursuant to paragraph (a), each party agrees to
consult promptly at the request of the other in a good-faith effort to resolve
the disagreement through negotiation.
(c) Notwithstanding any other provision hereof, no
deletion of a country from the list of Permitted Foreign Sublessee Domiciles
pursuant to this Exhibit shall affect any existing sublease or other agreement
providing for transfer of possession of the Aircraft, the Airframe or any
Engine or Part which was permitted under the Lease at the time entered into, or
preclude any subsequent renewal or extension of such sublease or other
agreement.
F-2
