AIRCRAFT
LEASE AGREEMENT
Dated as of December 12, 1997
Between
AMERICAN AIRLINES, INC., as
Lessor
and
HAWAIIAN AIRLINES, INC., as
Lessee
One (1) DC10-10 Aircraft
Registration No. N162AA
SERIAL Number 46943
with Three GE CF6-6K Engines
This Lease Agreement has been executed in several counterparts. To the extent,
if any, that this Lease Agreement constitutes chattel paper (as such term is
defined in the Uniform Commercial Code as in effect in any applicable
jurisdiction) no security interest in this Lease Agreement may be created
through the transfer or possession of any counterpart other than the original.
The counterpart to be deemed the original shall be the counterpart that is
designated on the signature pages thereof as the original counterpart and no
security interest in this Lease Agreement may be created through the transfer of
any counterpart other than such original counterpart. This is not the original
counterpart.
TABLE OF CONTENTS
Page No.
Section 1. Definitions . . . . . . . . . . . . . . . . . . . . . . . . .1
Section 2. DELIVERY AND ACCEPTANCE . . . . . . . . . . . . . . . . . . 13
(a) Time and Place. . . . . . . . . . . . . . . . . . . . . . . 13
(b) Delivery Date . . . . . . . . . . . . . . . . . . . . . . . 13
Section 3. Term and Rent . . . . . . . . . . . . . . . . . . . . . . . 13
(a) Term. . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
(b) Basic Rent. . . . . . . . . . . . . . . . . . . . . . . . . 13
(c) Supplemental Rent . . . . . . . . . . . . . . . . . . . . . 14
(d) Prohibition Against Setoff, Etc.. . . . . . . . . . . . . . 14
(e) Payment to Lessor . . . . . . . . . . . . . . . . . . . . . 15
Section 4. Disclaimer; Warranties Relating to the Aircraft; Certain
Agreements of Lessee, Representations of Lessee . . . . . 15
(a) Disclaimer. . . . . . . . . . . . . . . . . . . . . . . . . 15
(b) Quiet Enjoyment . . . . . . . . . . . . . . . . . . . . . . 16
(c) Waiver of Warranties. . . . . . . . . . . . . . . . . . . . 16
(d) Lessee's Representations and Warranties . . . . . . . . . . 16
(e) Lessor's Representations and Warranties . . . . . . . . . . 18
Section 5. Return of Airframe and Engines. . . . . . . . . . . . . . . 20
(a) Return of Airframe and Serviced Engines . . . . . . . . . . 20
(b) Return of Other Engines . . . . . . . . . . . . . . . . . . 21
Section 6. LIENS . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Section 7. Registration, Maintenance and Operation; Possession;
Insignia. . . . . . . . . . . . . . . . . . . . . . . . . 21
(a) Registration, Maintenance and Operation . . . . . . . . . . 21
(b) Additional Maintenance Provisions . . . . . . . . . . . . . 22
(c) Territorial Restrictions on Use of Aircraft . . . . . . . . 23
(d) Obligations Absolute. . . . . . . . . . . . . . . . . . . . 23
(e) Possession. . . . . . . . . . . . . . . . . . . . . . . . . 23
(f) Registration and Insignia . . . . . . . . . . . . . . . . . 23
(g) Replacement of Parts. . . . . . . . . . . . . . . . . . . . 24
(h) Alterations, Modifications and Additions. . . . . . . . . . 24
(i) Manuals and Technical Records . . . . . . . . . . . . . . . 25
(j) Maintenance and Usage . . . . . . . . . . . . . . . . . . . 25
Section 8. Loss, Destruction, Requisition, Etc.. . . . . . . . . . . . 26
(a) Event of Loss to the Aircraft . . . . . . . . . . . . . . . 26
(b) Event of Loss to a Serviced Engine. . . . . . . . . . . . . 26
(c) Application of Payments for Requisition of Title. . . . . . 29
(d) Requisition of Use of the Airframe. . . . . . . . . . . . . 30
(e) Investment of Proceeds Pending Replacement. . . . . . . . . 30
(f) Application of Payments During Default. . . . . . . . . . . 30
Section 9. Insurance . . . . . . . . . . . . . . . . . . . . . . . . . 31
(a) Liability Insurance . . . . . . . . . . . . . . . . . . . . 31
i
(b) All Risk Hull Insurance . . . . . . . . . . . . . . . . . . 32
(c) War-Risk Insurance. . . . . . . . . . . . . . . . . . . . . 33
(d) Application of Proceeds . . . . . . . . . . . . . . . . . . 33
(e) Reports, Etc. . . . . . . . . . . . . . . . . . . . . . . . 33
(f) Additional Insurance. . . . . . . . . . . . . . . . . . . . 34
(g) Notice from Lessee; No Modification . . . . . . . . . . . . 34
(h) Reinsurance . . . . . . . . . . . . . . . . . . . . . . . . 34
(i) Insurance of Lessor . . . . . . . . . . . . . . . . . . . . 34
(j) Insurance Relating to Allocated Parts . . . . . . . . . . . 34
Section 10. Inspection; Financial Information. . . . . . . . . . . . . 35
(a) Inspection. . . . . . . . . . . . . . . . . . . . . . . . . 35
(b) Financial Information . . . . . . . . . . . . . . . . . . . 35
Section 11. Lessee's Covenants . . . . . . . . . . . . . . . . . . . . 37
(a) Merger. . . . . . . . . . . . . . . . . . . . . . . . . . . 37
(b) Certificated Air Carrier. . . . . . . . . . . . . . . . . . 37
Section 12. FAA Recordation and Further Assurances . . . . . . . . . . 37
(a) FAA Recordation . . . . . . . . . . . . . . . . . . . . . . 37
(b) Further Assurances. . . . . . . . . . . . . . . . . . . . . 38
Section 13A. Lessee Events of Default. . . . . . . . . . . . . . . . . 38
Section 13B. Lessor Events of Default. . . . . . . . . . . . . . . . . 39
Section 14A. Lessor Remedies . . . . . . . . . . . . . . . . . . . . . 40
Section 14B. Lessee Remedies . . . . . . . . . . . . . . . . . . . . . 42
(a) Remedies. . . . . . . . . . . . . . . . . . . . . . . . . . 42
(b) Limitation on Damages . . . . . . . . . . . . . . . . . . . 43
(c) No Implied Waiver . . . . . . . . . . . . . . . . . . . . . 43
Section 15. Indemnification. . . . . . . . . . . . . . . . . . . . . . 43
(a) General . . . . . . . . . . . . . . . . . . . . . . . . . . 43
(b) Indemnification for Negligent Acts. . . . . . . . . . . . . 45
(c) Defense of Claims; Settlement . . . . . . . . . . . . . . . 45
(d) Indemnification by Lessor . . . . . . . . . . . . . . . . . 46
(e) Survival. . . . . . . . . . . . . . . . . . . . . . . . . . 46
Section 16. General Tax Indemnity. . . . . . . . . . . . . . . . . . . 46
(a) Tax Indemnity . . . . . . . . . . . . . . . . . . . . . . . 46
(b) Exclusions from General Tax Indemnity . . . . . . . . . . . 47
(c) Calculation of General Tax Indemnity Payments . . . . . . . 49
(d) Payment of General Tax Indemnity. . . . . . . . . . . . . . 50
(e) Verification of Calculations. . . . . . . . . . . . . . . . 50
(f) Reports . . . . . . . . . . . . . . . . . . . . . . . . . . 51
(g) General Tax Indemnity Contest Provisions. . . . . . . . . . 51
(h) Compromise or Settlement. . . . . . . . . . . . . . . . . . 53
(i) Refunds . . . . . . . . . . . . . . . . . . . . . . . . . . 53
(j) Failure to Contest. . . . . . . . . . . . . . . . . . . . . 53
(k) Interest. . . . . . . . . . . . . . . . . . . . . . . . . . 54
(l) Effect of Other Indemnities . . . . . . . . . . . . . . . . 54
Section 17. Miscellaneous. . . . . . . . . . . . . . . . . . . . . . . 54
ii
(a) Construction; Governing Law . . . . . . . . . . . . . . . . 54
(b) Notices . . . . . . . . . . . . . . . . . . . . . . . . . . 56
(c) Lessor's Right to Perform . . . . . . . . . . . . . . . . . 57
(d) Confidentiality . . . . . . . . . . . . . . . . . . . . . . 57
(e) Counterparts. . . . . . . . . . . . . . . . . . . . . . . . 59
(f) Grant of Security Interest by Lessor. . . . . . . . . . . . 59
(g) Survival. . . . . . . . . . . . . . . . . . . . . . . . . . 59
(h) Assignment. . . . . . . . . . . . . . . . . . . . . . . . . 60
(i) Transaction Expenses. . . . . . . . . . . . . . . . . . . . 60
(j) Entirety. . . . . . . . . . . . . . . . . . . . . . . . . . 60
(k) Force Majeure . . . . . . . . . . . . . . . . . . . . . . . 60
(l) Independent Contractor; No Agency . . . . . . . . . . . . . 61
(m) Certain Consents and Waivers of Lessee. . . . . . . . . . . 61
(n) Offset. . . . . . . . . . . . . . . . . . . . . . . . . . . 63
Section 18. True Lease . . . . . . . . . . . . . . . . . . . . . . . . 63
(a) Intent of the Parties . . . . . . . . . . . . . . . . . . . 63
Section 19. Enforceability in Jurisdictions. . . . . . . . . . . . . . 63
Section 20. No Third-Party Beneficiaries . . . . . . . . . . . . . . . 63
Section 21. Maintenance Obligations. . . . . . . . . . . . . . . . . . 64
Section 22. Amendment of Long-Term Lease Agreement . . . . . . . . . . 64
Section 23. Substitution . . . . . . . . . . . . . . . . . . . . . . . 64
iii
Schedule I - Basic Rent
Exhibit A - Lease Supplement No. 1
Exhibit B - Stipulated Loss Value Schedule
Exhibit C - Conditions Precedent to Delivery
Exhibit D - Delivery and Return Conditions
Exhibit E - Supplemental Rent for Maintenance
Schedule 4(d)(i)
Schedule 4(d)(iv)
Schedule 4(d)(v)
Schedule 4(d)(vi)
Schedule 4(d)(vii)
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AIRCRAFT LEASE AGREEMENT
This AIRCRAFT LEASE AGREEMENT, dated as of December 12, 1997, between
AMERICAN AIRLINES, INC., a Delaware corporation, with its principal place of
business at Dallas/Fort Worth International Airport, Texas 75261-9616, and its
successors and assigns ("Lessor"), and HAWAIIAN AIRLINES, INC., a Hawaii
corporation with its principal place of business at 0000 Xxxxxxx Xxxxxx, Xxxxx
X000, Xxxxxxxx, Xxxxxx 00000 ("Lessee").
WHEREAS, Lessee desires to lease from Lessor, and Lessor is willing to
lease to Lessee, the Aircraft (as defined below) upon the terms and conditions
set forth herein; and
WHEREAS, Lessor is certificated under FAA Regulations Part 121 to inspect,
maintain, repair and overhaul the Aircraft with GE CF6-6K Engines; and
WHEREAS, Lessee has requested that Lessor perform certain repair,
maintenance and overhaul services with respect to the Aircraft, other than the
Lessee Assumed Services (as defined below), at a fixed cost per flight hour; and
WHEREAS, Lessee has further requested that Lessor perform certain
additional repair, modification, maintenance and overhaul services on a
time-and-materials basis; and
WHEREAS, Lessor desires to perform such maintenance services for Lessee;
NOW, THEREFORE, in consideration of the mutual covenants herein set forth
and for other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, Lessor and Lessee hereby agree as follows:
Section 1. DEFINITIONS. Unless the context otherwise requires, the
following terms shall have the following meanings for all purposes of this Lease
Agreement and shall be equally applicable to both the singular and the plural
forms of the terms herein defined:
"AADVANTAGE AGREEMENT" means the AAdvantage-Registered Trademark-
Participating Agreement, dated as of September 12, 1994 between Lessee and
Lessor, and all other agreements, instruments, certificates and documents
related thereto or executed or delivered in connection therewith, all as from
time to time amended, supplemented or modified.
"AA STATION" means HNL, LAS, LAX, SEA, SFO or TUL.
"ACARS" means the Aircraft Communications and Reporting System currently
installed on the Aircraft.
"ADS" means Airworthiness Directives issued by the FAA.
"AD EFFECTIVE DATE" shall have the meaning assigned to such term in
Section 4(s) of Exhibit E.
"ADDITIONAL INSURED" shall have the meaning specified in Section 9 hereof.
"ADDITIONAL SERVICES" means the engineering, inspection, maintenance,
repair and overhaul services that are necessary or appropriate (i) to correct
damage (including replacement at Lessee's expense if Lessor reasonably
determines that the damage (other than ordinary wear and tear) is beyond
economic repair) to the Serviced Aircraft, any Serviced Engines and/or any
Rotable Parts (including Serviced Parts removed during the delivery of
Maintenance Services other than Additional Services) that resulted from (a)
improper use, improper repairs by Persons other than Lessor or its
subcontractors, neglect (other than by Lessor or its subcontractors), or any
cause other than ordinary wear and tear or (b) Foreign Object Damage, (ii) to
complete modifications to the Serviced Aircraft and any Serviced Engines
requested by Lessee to customize the Serviced Aircraft in any manner that
deviates from Lessor's standard configuration (subject to the provisions of
Section 4(q) of Exhibit E which require Lessee to procure and provide certain
Serviced Parts prior to their installation on the Serviced Aircraft), (iii) to
complete modifications (including those modifications mandated by the FAA) to
the Serviced Aircraft the costs of which exceed $1,000 per Serviced Aircraft, or
(iv) to complete any inspections mandated by the FAA that are not included in
Lessor's existing maintenance program and are not related to aging aircraft and
corrosion prevention issues, but excluding Field Trip Maintenance Services, and
On-Call Maintenance Services.
"AFFILIATE" of any Person means any other Person directly or indirectly
controlling, controlled by or under common control with such Person. For
purposes of this definition, "CONTROL" when used with respect to any specified
Person means the power to direct or cause the direction of the management and
policies of such Person, directly or indirectly, whether through the ownership
of voting securities, by contract or otherwise, and the terms "CONTROLLING" and
"CONTROLLED" have meanings correlative to the foregoing.
"AIRCRAFT" means the Airframe delivered and leased hereunder, together with
the three Engines initially leased hereunder with the Airframe (or any Engine
substituted for any such Engine hereunder), whether or not any of such initial
or substituted Engines may from time to time be installed on the Airframe or may
be installed on any other airframe or on any other aircraft.
"AIRFRAME" means (i) the XxXxxxxxx Xxxxxxx XX00-00 aircraft (except engines
or Serviced Engines from time to time installed thereon) bearing the U.S.
Registration Number N162AA and Manufacturer's Serial Number 46943 and (ii) any
and all Parts so long as the same shall be incorporated or installed in or
attached to the Airframe or so long as title thereto shall remain vested in
Lessor.
"ALLOCATED PARTS" shall have the meaning assigned to such term in
the Long-Term Lease Agreement.
"ALLOCATED SPARE ENGINE" shall have the meaning assigned to such term in
Section 4(n) of Exhibit F of the Long-Term Lease Agreement.
"AMERICAN AGREEMENTS" mean the Lease Agreement, the Long Term Agreements,
the Ancillary Agreements, 125 Lease, 160 Lease, 161 Lease and the 171 Lease.
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"AMRCG" means AMR Training & Consulting Group, Inc., a Delaware
corporation, and its successors and assigns.
"AMR LEASING" means AMR Aircraft Sales & Leasing Company, a Delaware
corporation, and its successors and assigns.
"ANCILLARY AGREEMENTS" means that certain Manuals Supplement, Amended and
Restated Training Document and FOS Implementation Document, each dated as of
March 31, 1994, and entered into by and between Lessor and Lessee.
"A.O.G." means aircraft on the ground.
"APPLICABLE LAW" means all applicable laws of any Governmental Authority,
including securities laws, tax laws, tariff and trade laws, ordinances,
judgments, decrees, injunctions, writs and orders or like actions of any court,
arbitrator, judicial or quasi-judicial tribunal, governmental agency or
authority in any country and rules, regulations, orders, interpretations,
licenses and permits of any federal, state, county, municipal, regional or other
United States or foreign governmental body, instrumentality, agency or
authority.
"APU" means auxiliary power unit.
"BANKRUPTCY CODE" means Title 11 of the United States Code (11 U.S.C.
Section 101 Et SEQ.), as amended from time to time and any successor statute.
"BASE MAINTENANCE SERVICES" means the inspection, engineering,
maintenance, repair and overhaul services of the Serviced Aircraft, any Serviced
Engines and any Serviced Parts that are ordinarily performed at a Maintenance
Base as part of the scheduled maintenance of the Serviced Aircraft, any Serviced
Engines or any Serviced Parts to repair ordinary wear and tear including,
without limitation, all aircraft heavy maintenance checks and phase checks, but
excluding (i) the inspection, maintenance, repair and overhaul of Parts
described in Section 4(q) of Exhibit E and (ii) Additional Services, Field Trip
Maintenance Services, Line Maintenance Services and On-Call Maintenance
Services.
"BASIC RENT" means the rent payable for the Aircraft pursuant to
Section 3(b), as the same may be adjusted pursuant to Section 16.
"BASIC RENT PAYMENT DATE" means the dates for payment of Basic Rent
described in Schedule I attached hereto.
"BUSINESS DAY" means any day other than a Saturday, Sunday or other day on
which commercial banking institutions in New York City, New York, Fort Worth,
Texas or Honolulu, Hawaii are authorized or required by law, regulation or
executive order to be closed.
"CHANGE IN CONTROL" means the acquisition by any Person or 13D Group (other
than Airline Investors Partnership, L.P. or its Affiliates) of beneficial
ownership (within the meaning of Rule 13d-3 of the Exchange Act) of Voting
Securities after which such Person or Group owns Voting Securities representing
30% or more of the outstanding Voting Securities.
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"CLAIMS" means actual or threatened claims, demands and suits.
"CODE" means the Internal Revenue Code of 1986, as amended from time to
time, and analogous provisions of any successor statute.
"CONFIDENTIAL INFORMATION" shall have the meaning assigned to such term in
Section 17(d).
"CONFIDENTIALITY AGREEMENT" means that certain Confidentiality Agreement
dated November 8, 1993, between AMRCG and Lessee.
"CYCLE" means, with respect to the Serviced Aircraft, one takeoff of such
Serviced Aircraft and the next subsequent landing of such Serviced Aircraft.
"DEFAULT" means any event which with the passage of time or the giving of
notice or both would become a Lessee Event of Default.
"DEFECT" shall have the meaning assigned to such term in Section 5(a) of
Exhibit E.
"DEFERRED PURCHASE CERTIFICATE" has the meaning set forth in the Indenture.
"DELIVERY DATE" means the date on which the Aircraft is delivered by Lessor
to, and accepted by, Lessee.
"DISCOUNT RATE" means the Prime Rate.
"DOT" means the United States Department of Transportation, or any Person,
governmental department, bureau, commission, or agency succeeding to the
functions of such department.
"ENGINE" means (i) each of the three General Electric Model CF6-6K engines
listed by manufacturer's serial numbers in Lease Supplement No. 1, whether or
not from time to time installed on the Airframe or installed on any other
airframe or on any other aircraft and (ii) any Replacement Engine which may from
time to time be substituted pursuant to Section 8 for an 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 shall remain vested in Lessor in accordance with the terms of
Section 8 after removal from such Engine. Except as otherwise set forth herein,
at such time as a Replacement Engine shall be so substituted, such replaced
Engine shall cease to be an Engine hereunder. The term "Engines" means, as of
any date of determination, all Engines then leased hereunder.
"EVENT OF LOSS" with respect to any Item of Equipment means any of the
following events with respect to such Item of Equipment: (i) loss of such Item
of Equipment or the use thereof due to theft, disappearance, destruction, damage
beyond repair or rendition of such Item of Equipment permanently unfit for
normal use for any reason whatsoever; (ii) any damage to such Item of Equipment
which results in an insurance settlement with respect to such Item of Equipment
on the basis of a total loss whether actual, constructive or arranged; (iii) the
condemnation, confiscation or seizure of, or requisition of title to such Item
of Equipment; (iv) the requisition of use of such Item of Equipment (other than
requisition for use by the Government); (v) the requisition of use of such Item
of Equipment by the Government for any period ending after the expiration of the
Term unless
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Lessor elects, upon 30 days' prior notice, not to treat such requisition as
an Event of Loss at the end of the Term; (vi) as a result of any rule,
regulation, order or other action by the FAA, DOT or other governmental body
of the United States having jurisdiction, the use of such Item of Equipment
in the normal course of air transportation of persons shall have been
prohibited for a period of six consecutive months, unless Lessee, 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 the normal use of such property by Lessee or, in any event, if such
use shall have been prohibited for a period of twelve consecutive months or
if such use is prohibited at the end of the Term, unless at the end of the
Term such use has then been prohibited for less than six consecutive months,
then an Event of Loss shall not be deemed to have occurred hereunder until
the expiration of six consecutive months during which the use of the Item of
Equipment has been so prohibited, but only so long as Lessee continues to pay
Basic Rent to the Lessor on the first day of each month, at the rate set
forth in Schedule I attached hereto and Supplemental Rent pursuant to Exhibit
E hereto, and agrees to and does comply with all other provisions hereof; or
(vii) the operation or location of the Item of Equipment, while under
requisition for use by the Government, in any area excluded from coverage by
any insurance policy in effect with respect to the Item of Equipment required
by the terms of Section 9, if Lessee shall not have obtained indemnity in
lieu thereof from the Government, acceptable to Lessor; PROVIDED that if such
property shall be returned to Lessee in such a condition that Lessee can
within 30 days following the return thereof cause the Item of Equipment to
comply with the maintenance conditions set forth in Section 7 hereof, then
such event shall, at the option of Lessee, not constitute an Event of Loss.
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. In the
case of clauses (i), (ii), (iii) and (iv), the date of an Event of Loss shall
be the date of destruction, damage, requisition, loss, etc. to any Item of
Equipment. In the cases of clauses (v), (vi) and (vii), the date of an Event
of Loss shall be respectively (A) such 180th day or last day of the
applicable Term as the case may be, and (B) the last day of such six month
period or twelve month period, as the case may be and (C) the first day of
such operation or location.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended.
"EXPENDABLE PARTS" means (i) Serviced Parts used in the repair and overhaul
of the Serviced Airframe, any Serviced Engines and other Rotable Parts that are
assumed to have no potential for reuse and miscellaneous materials and supplies
consumed during the repair and overhaul process, and (ii) Serviced Parts that
have some potential for repair but that are customarily assumed to be expended.
"EXPENSES" means liabilities, obligations, losses, damages, penalties,
claims (including claims involving liability in tort, strict liability or
otherwise), actions, suits, judgments, costs, expenses and disbursements
(including legal fees and expenses and costs of investigation) of any kind and
nature whatsoever without any limitation as to amount, together with interest
thereon at the Stipulated Interest Rate from the date incurred until reimbursed
hereunder.
"FAA" means the United States Federal Aviation Administration, or any
person, governmental department, bureau, commission or agency succeeding to the
functions of such Administration.
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"FEDERAL AVIATION ACT" or "ACT" means the Federal Aviation Act of 1958, as
amended.
"FIELD TRIP MAINTENANCE SERVICES" means, with respect to the Serviced
Aircraft, any Serviced Engine or any Serviced Part that experiences a mechanical
malfunction, the inspection, maintenance and repair of such malfunction at any
location where Lessor does not have on-site the necessary number of mechanics
trained to work on the particular malfunction experienced by the Serviced
Aircraft, any Serviced Engine or any Serviced Part.
"FLIGHT HOUR" means the amount of time (expressed in hours and rounded
upward to the nearest one-tenth (1/10th) of an hour) during the flight of a
Serviced Aircraft between "wheels off" on takeoff and "wheels on" on landing.
"FOREIGN OBJECT DAMAGE" means damage to a Serviced Engine or any component
thereof caused by any object or material ingested into the Serviced Engine that
results in the breakage or destruction of a Serviced Engine component or a
notch, non-stress related crack, cut, indentation or other depression to the
surface of a Serviced Engine component in each case beyond specification limits
of the Lessor's maintenance program, but excluding the gradual erosion or
smoothing of any Serviced Engine component caused by numerous Flight Hours of
operation.
"GOVERNMENT" means the government of the United States of America, and any
instrumentality or agency thereof.
"GOVERNMENTAL AUTHORITY" means any governmental department, court, bureau,
commission, agency or any other entity, whether of the United States (including
any state or subdivision thereof) or any other country (including any political
subdivision thereof), having jurisdiction over this Lease, the transactions
contemplated hereby, or any document related hereto or thereto or delivered in
connection herewith or therewith, the Serviced Aircraft or the parties hereto.
"HNL" means Honolulu International Airport in Honolulu, Hawaii.
"IATA" means International Air Transport Association.
"INDEMNIFIED PARTY" shall have the meaning assigned to such term in
Section 15.
"INTERIM AIRCRAFT LEASE AGREEMENTS" means the Interim Aircraft Lease
Agreements each dated as of December 30, 1993, May 20, 1994, August 10, 1994 or
August 31, 1994 between AMR Leasing and Lessee, as the same may be amended,
modified or supplemented from time to time.
"INTERIM AIRCRAFT MAINTENANCE AGREEMENT" means the Interim Aircraft
Maintenance Agreement dated as of December 30, 1993 between Lessor and Lessee,
as the same may be amended, modified or supplemented from time to time.
"INTERIM DEFINITIVE AGREEMENTS" means the Interim Aircraft Lease
Agreements, the Interim AAdvantage Participating Carrier Agreement dated as of
December 30, 1993 between Lessee and Lessor, the Interim Aircraft Maintenance
Agreement, the Interim Multihost Agreement dated as of December 30, 1993 between
Lessee and SABRE, the Interim Flight Operating System Agreement dated as of
December 30, 1993 between Lessee and SABRE, the Interim Equipment Master
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Equipment Lease Agreement dated as of December 30, 1993 between Lessee and
SABRE, the Guaranty Agreement dated as of December 10, 1993 executed by HAL,
Inc. and West Maui Airport, Inc. in favor of Lessor, AMRCG, AMR Leasing and
SABRE and the Security Agreement dated as of December 10, 1993 between Lessee,
HAL, Inc. and West Maui Airport, Inc. as debtors and Lessor, AMRCG, AMR Leasing
and SABRE as secured parties, and all other agreements, instruments,
certificates or documents related thereto or executed or delivered in connection
therewith, as amended or modified from time to time.
"INITIAL INDUCTION DATE" means the date that the first DC10-10 Aircraft
leased by Lessee from Lessor is delivered to TUL for its next regularly
scheduled "C" Check, which date is currently expected to be May 11, 1998.
"IN-USE AIRCRAFT" means the Airframe delivered and leased hereunder,
together with the three Serviced Engines or engines installed from time to time
thereon.
"ISSUER INSOLVENCY" shall have the meaning assigned thereto in Section 13A
hereof.
"ITEM OF EQUIPMENT" or "ITEM" means the Airframe or each of the Serviced
Engines, and for purposes of the definition of "Event of Loss" as used in
Section 8(b)(3) hereof, shall mean each Engine.
"LAS" means XxXxxxxx International Airport in Las Vegas, Nevada.
"LAX" means Los Angeles International Airport in Los Angeles, California.
"LEASE AGREEMENT", "THIS LEASE AGREEMENT", "THIS LEASE", "THIS AGREEMENT",
"HEREIN", "HEREUNDER", "HEREBY" or other like words mean this Lease Agreement as
originally executed or as modified, amended or supplemented pursuant to the
applicable provisions hereof, including, without limitation, supplementation
hereof by one or more Lease Supplements entered into pursuant to the applicable
provisions hereof.
"LEASE SUPPLEMENT" means Lease Supplement No. 1, substantially in the form
of Exhibit A hereto to be entered into between Lessor and Lessee for the purpose
of leasing the Aircraft under and pursuant to the terms of this Lease, or any
amendment hereto or to any other Lease Supplement entered into subsequent to the
Delivery Date.
"LEASE TERM" means the period from the Delivery Date of the Aircraft until
September 11, 2001, unless earlier terminated in accordance with the provisions
of this Lease.
"LESSEE ASSUMED SERVICES" means those maintenance services set forth on
ATTACHMENT C to Exhibit E to be performed by Lessee at HNL during the Lease Term
and any other maintenance services that the parties mutually agree pursuant to
Section 1 of Exhibit E that Lessee will assume and perform.
"LESSEE EVENT OF DEFAULT" shall have the meaning specified in Section 13A
hereof.
"LESSOR EVENT OF DEFAULT" shall have the meaning specified in Section 13B
hereof.
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"LESSOR WARRANTY" shall have the meaning assigned to such term in
Section 5(a) of Exhibit E.
"LESSOR'S LIENS" means any Lien arising as a result of (i) Claims against
or affecting Lessor, not related to the transactions contemplated by this Lease;
(ii) acts or omissions of Lessor, not related to the transactions contemplated
by this Lease, or not permitted under this Lease; (iii) Taxes or Claims imposed
against Lessor which are not indemnified against by Lessee pursuant hereto; or
(iv) Claims against Lessor arising out of the voluntary or involuntary transfer
by Lessor (without the consent of Lessee) of any of its interests in the
Airframe, any Serviced Engine or any Engine, including, without limitation, by
means of granting a security interest therein, other than a transfer of the
Aircraft pursuant to Section 8 or 14A hereof.
"LIABILITIES" means Claims, liabilities, losses, judgments, damages, fines,
penalties and costs, fees and expenses of any nature incident thereto
(including, without limitation, reasonable attorneys' fees and expenses and
costs of investigation and litigation), whether arising in tort, contract or
otherwise.
"LIEN" means any mortgage, pledge, lien, charge, encumbrance, lease,
exercise of rights, security interest or Claim.
"LINE MAINTENANCE SERVICES" means all customary line maintenance services
to the Serviced Aircraft, any Serviced Engine or any Serviced Part, including
scheduled inspections and servicing of the Serviced Aircraft and related
repairs, but excluding (i) Additional Services, Base Maintenance Services, Field
Trip Maintenance Services and On-Call Maintenance Services and (ii) Lessee
Assumed Services.
"LONG-TERM AGREEMENTS" means the Long-Term Lease Agreement, the 125 Lease
Agreement, the 160 Lease Agreement, the 161 Lease Agreement, the 171 Lease
Agreement, the AAdvantage Participating Carrier Agreement dated as of September
12, 1994 between Lessee and Lessor, the Multihost Agreement dated as of
September 12, 1994 between Lessee and SABRE, the Flight Operating System
Agreement dated as of September 12, 1994 between Lessee and SABRE, the Equipment
Master Lease Agreement dated as of September 12, 1994 between Lessee and SABRE,
and all other agreements, instruments, certificates and documents related
thereto or executed or delivered in connection therewith, all as amended or
modified from time to time.
"LONG-TERM LEASE AGREEMENT" means the Aircraft Lease Agreement dated as of
September 12, 1994 between Lessor and Lessee, as amended, supplemented, modified
and renewed from time to time.
"LOSS PAYMENT DATE" shall have the meaning set forth in Section 8(a)
hereof.
"MAGSA RATES" means the hourly rates applicable to participants in the
Mutual Assistance Ground Service Agreement among Lessor and other participating
IATA carriers as amended from time to time, or any comparable replacement
agreement.
"MAINTENANCE BASE" shall have the meaning assigned to such term in
Section 2(a)(i) of Exhibit E.
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"MAINTENANCE SERVICES" means Additional Services, Base Maintenance
Services, Field Trip Maintenance Services, Line Maintenance Services and On-Call
Maintenance Services but excluding Lessee Assumed Services.
"MAINTENANCE SERVICES TERMINATION DATE" shall have the meaning set forth in
Section 1 to Exhibit E hereto.
"MANUAL" means the Standard Practice Manual mutually prepared by Lessor and
Lessee for administration of this Agreement, a true and correct copy of which
has been provided to Lessor and Lessee, together with any amendments made
thereto from time to time by a party hereto with the consent of the other party
hereto (which consent shall not be unreasonably withheld).
"MANUFACTURER" means, collectively, the respective manufacturers of the
Airframe, each Engine and each Serviced Engine.
"MONTHLY MINIMUM MAINTENANCE AMOUNT" shall have the meaning set forth in
Section 3(f)(i) of Exhibit E hereto.
"NTF" means, with respect to the Serviced Aircraft, any Serviced Engine or
any Serviced Part upon which an inspection has been performed to determine the
existence of a suspected malfunction, that the results of such inspection
indicated there was "no trouble found."
"ON-CALL FIELD STATIONS" means (i) LAS, LAX, SEA and SFO and any other
station requested by Lessee and agreed to in writing by Lessor, and in each
case, at which, pursuant to Section 1 of Exhibit E, Lessee has elected to
perform, and is performing, Line Maintenance Services at such location and
(ii) HNL.
"ON-CALL MAINTENANCE SERVICES" means, with respect to the Serviced
Aircraft, any Serviced Engine or any Serviced Part that experiences a mechanical
malfunction, the inspection, maintenance and repair of such malfunction at the
request of Lessee at any of the On-Call Field Stations but excluding Field Trip
Maintenance Services.
"160 LEASE" or "160 LEASE AGREEMENT" means the Aircraft Lease Agreement,
dated as of January 3, 1997 between Lessee and Lessor, and all other agreements,
instruments, certificates and documents related thereto or executed or delivered
in connection therewith, all as from time to time amended, supplemented or
modified.
"161 LEASE" or "161 LEASE AGREEMENT" means the Aircraft Lease Agreement,
dated as of December 30, 1995 between Lessee and Lessor, and all other
agreements, instruments, certificates and documents related thereto or executed
or delivered in connection therewith, all as from time to time amended,
supplemented or modified.
"171 LEASE" or "171 Lease Agreement" means the Aircraft Lease Agreement,
dated as of May 15, 1995 between Lessee and Lessor, and all other agreements,
instruments, certificates and documents related thereto or executed or delivered
in connection therewith, all as from time to time amended, supplemented or
modified.
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"125 LEASE" or "125 Lease Agreement" means the Aircraft Lease Agreement,
dated as of May 9, 1997 between Lessee and Lessor, and all other agreements,
instruments, certificates and documents related thereto or executed or delivered
in connection therewith, all as from time to time amended, supplemented or
modified.
"OUTSIDE SERVICES" shall have the meaning assigned to such term in
Section 4(f) of Exhibit E.
"PARTS" means (i) any and all appliances, parts, instruments,
appurtenances, accessories, furnishings, seats and other equipment of whatever
nature (other than complete engines or Serviced Engines), which may from time to
time be incorporated or installed in or attached to the Airframe or any Serviced
Engine, or having been so installed in or attached, are later removed therefrom,
so long as title thereto remains vested in Lessor, and (ii) all Allocated Parts
(other than the Allocated Spare Engine).
"PERMITTED LIENS" means Liens referred to in clauses (i) through (vii) of
Section 6.
"PERSON" means any individual, corporation, partnership, joint venture,
association, joint-stock company, trust, unincorporated organization or other
form of entity or any government or any agency or political subdivision thereof.
"PHASED-OUT PARTS" means Serviced Parts of a type formerly utilized during
the Lease Term by Lessor but discontinued with respect to Lessor's fleet of
DC10-10 Aircraft that Lessee has properly elected without contravening Section 4
of Exhibit E to continue to utilize on the Serviced Aircraft.
"POOLING AGREEMENT" means the Pooling Agreement dated the date hereof
between Lessor and Lessee, as amended, supplemented and modified from time to
time.
"PRIME RATE" means the per annum rate announced by The Chase Manhattan
Bank, N.A. from time to time as its prime rate in New York, New York.
"RENT" means Basic Rent and Supplemental Rent, collectively.
"REPLACEMENT ENGINE" means a GE CF6-6K engine (or an engine of the same or
another manufacturer of a comparable or an improved model and suitable for
installation and use on the Airframe) which shall have been leased hereunder
pursuant to Section 8, together with all Parts relating to such engine.
"RETURN AIRCRAFT" means upon the return of the Aircraft to Lessor hereunder
pursuant to Section 5, 8, or 14A hereof, the Airframe constituting part of the
Aircraft and the engines or Serviced Engines attached thereto.
"ROTABLE PARTS" means Serviced Parts that customarily have a potential for
reuse through inspection, repair, overhaul or calibration.
"SABRE" means SABRE Decision Technologies, a division of The SABRE Group,
Inc. (formerly known as AMR Information Services, Inc.).
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"SEA" means the Seattle/Tacoma International Airport in Seattle,
Washington.
"SERVICED AIRCRAFT" means the Aircraft.
"SERVICED AIRFRAME" means (i) the Serviced Aircraft (except Serviced
Engines) and (ii) any and all Serviced Parts (except Serviced Parts that
comprise a Serviced Engine) so long as the same shall be incorporated or
installed in, or attached to, such Serviced Aircraft.
"SERVICED ENGINES" means (i) each Engine, so long as Lessee has not
delivered possession of any such Engine to Lessor pursuant to the Pooling
Agreement; (ii) each of the GE CF6-6K engines delivered to Lessee by Lessor
pursuant to the Pooling Agreement so long as such engines have not been
redelivered by Lessee to Lessor under the Pooling Agreement, PROVIDED THAT, for
the purposes of Exhibit E attached hereto, an engine delivered by Lessee to
Lessor thereunder shall remain a Serviced Engine until all Maintenance Services
have been completed thereon; and (iii) the Allocated Spare Engine; and (iv) for
purposes of Exhibit E only, GE CF6-6K engines in transit between Lessor and
Lessee pursuant to Sections 3(d), 3(i) and 4(d)(iii) of Exhibit E.
"SERVICED PART" means any Serviced Aircraft component, including any APU,
landing gear, part, equipment, accessory, instrument, avionics or system and
miscellaneous materials and supplies consumed during operation or inspection,
maintenance, repair and overhaul services.
"SFO" means the San Francisco International Airport in San Francisco,
California.
"STIPULATED INTEREST RATE" means the rate of ten percent (10%) per annum.
"STIPULATED LOSS VALUE" payable with respect to an Event of Loss for the
Airframe and its Serviced Engines shall mean, as of any date of determination,
the amounts set forth in Exhibit B hereto.
"SUPPLEMENTAL RENT" means all amounts, liabilities and obligations (other
than Basic Rent) which Lessee assumes or agrees to pay hereunder to Lessor or
others, including, without limitation, all Monthly Supplemental Rent Payments
and all other amounts, liabilities and obligations of Lessee to Lessor set
forth in Exhibit E attached hereto.
"TAXES" means any and all fees (including license, documentation and
registration fees), taxes (including income, gross receipts, preferences, sales,
use, turnover, value added, property (tangible and intangible), excise and stamp
taxes), licenses, levies, imposts, duties, charges, surcharges, assessments or
withholdings of any nature whatsoever, together with any and all penalties,
fines, additions to tax and interest thereon in each case imposed by a Taxing
Authority.
"TAXING AUTHORITY" means any Federal, state or local government or other
taxing authority in the United States or any political subdivision or territory
or possession thereof, any international authority and any taxing authority of
any other government or political subdivision or territory or possession
thereof.
"TERM" means the period for which the Aircraft is leased pursuant to
Section 3(a) hereof and Section 3 of the Lease Supplement.
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"13D GROUP" means any partnership, limited partnership, syndicate or other
"group" ( as such term is used in Section 13(d)(3) of the Exchange Act).
"TUL" means Tulsa International Airport in Tulsa, Oklahoma.
"TURN TIME" means, with respect to any particular Maintenance Services, the
period of time ordinarily required by Lessor, exerting its reasonable efforts,
to complete such Maintenance Services in accordance with its customary practices
and procedures or such specified period of time agreed to in writing by Lessor
and Lessee for the performance of any particular Maintenance Services.
"VOTING SECURITIES" means any securities of Lessee entitled to vote
generally in the election of directors, or securities convertible into or
exercisable or exchangeable for such securities.
"WARRANTY CLAIM" means a written notice delivered to Lessor by Lessee of a
Defect in Maintenance Services performed by Lessor, which Defect is claimed to
be within the scope of the warranty provided by Lessor in Section 5(a) of
Exhibit E, such notice specifying in detail the nature of the Defect.
"WARRANTY PERIOD" means, with respect to the Serviced Aircraft, any
Serviced Engine or any Serviced Part upon which Maintenance Services were
performed, that period of time commencing upon redelivery to Lessee of such
Serviced Aircraft, Serviced Engine or Serviced Part after performance of
Maintenance Services thereon and expiring on the first to occur of the
following: (i) the expiration of one hundred twenty (120) days after redelivery
of such Serviced Aircraft, Serviced Engine or Serviced Part to Lessee, or
(ii) the completion of four hundred (400) Flight Hours of operation of such
Serviced Aircraft, Serviced Engine or Serviced Part after redelivery to Lessee.
"WEEKLY SUPPLEMENTAL RENT PAYMENT" shall have the meaning assigned to such
term in Section 3(f) of Exhibit E.
"WEEKLY SUPPLEMENTAL RENT PAYMENT DATE" shall have the meaning assigned to
such term in Section 3(f) of Exhibit E.
RULES OF INTERPRETATION. The following rules of interpretation apply to
this Lease Agreement:
(1) "or" is not exclusive and "include" and "including" are not limiting;
(2) "hereby", "herein", "hereof", "hereunder", "this Lease", "this
Agreement", "Lease Agreement", or other like words refer to this
Aircraft Lease Agreement;
(3) a reference to any agreement or other contract includes permitted
supplements and amendments;
(4) a reference to a law includes any amendment or modification to such
law and any rules or regulations issued thereunder or any law enacted
in substitution or replacement therefor;
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(5) a reference to a Person includes its permitted successors and assigns;
(6) a reference herein to an Article, Section, Exhibit or Schedule is to
the relevant Article, Section, Exhibit or Schedule of this Lease
Agreement;
(7) any right may be exercised at any time and from time to time;
(8) all obligations are continuing obligations;
(9) time shall be of the essence in the performance of all payment
obligations;
(10) the heading of the Articles, Sections, Exhibits, Schedules and
subsections are for the convenience of reference only and shall not
affect the meaning of this Lease Agreement; and
(11) no term or provision herein may be changed, waived, discharged or
terminated orally, but only by written instrument signed by the party
against which the enforcement of the change, waiver, discharge or
termination is sought.
Section 2. DELIVERY AND ACCEPTANCE.
(a) TIME AND PLACE. Lessor hereby agrees (subject to satisfaction of the
conditions set forth in Exhibit C attached hereto) to lease to Lessee hereunder
and Lessee hereby agrees to lease from Lessor hereunder, on the Delivery Date,
the Aircraft, as evidenced by the execution by Lessor and Lessee of Lease
Supplement No. 1 hereunder. Delivery of the Aircraft by Lessor and acceptance
thereof by Lessee shall occur at Lessor's option at LAX or TUL, or such other
location agreed on by Lessor and Lessee.
(b) DELIVERY DATE. The Delivery Date for the Aircraft shall occur on or
about the third week of December, 1997.
Lessor shall deliver the In-Use Aircraft in the condition set forth in Exhibit D
attached hereto, provided that such delivery and fulfillment of delivery
conditions shall, subject to the execution and delivery of Lease Supplement
No. 1 (and satisfaction of the conditions set forth in Exhibit C attached
hereto), be deemed to have been met. Lessor shall use its reasonable efforts to
deliver the In-Use Aircraft on the Delivery Date, but if Lessor is unable to
deliver the In-Use Aircraft on the Delivery Date, it shall deliver the In-Use
Aircraft to Lessee as soon thereafter as possible without any penalty, charge or
damages for late delivery.
Section 3. TERM AND RENT.
(a) TERM. Except as otherwise provided herein (including, without
limitation, pursuant to the definition of Event of Loss), the Term for the
Aircraft shall commence on the Delivery Date and end on September 11, 2001.
Notwithstanding the foregoing, Lessor shall have the right to terminate this
Lease by written notice to Lessee upon the occurrence of a Change in Control and
the relevant Term for each Aircraft shall end on the date specified in such
notice.
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(b) BASIC RENT. Lessee hereby agrees to pay Lessor Basic Rent for the
Aircraft throughout the Term, in advance in the amounts set forth in Schedule I,
on each Basic Rent Payment Date, commencing on the Delivery Date.
(c) SUPPLEMENTAL RENT. Lessee also agrees to pay to Lessor, or to
whosoever shall be entitled thereto, any and all Supplemental Rent promptly as
the same shall become due and owing, including on each Monthly Supplemental Rent
Payment Date (as defined in Exhibit E attached hereto) (or on demand if no due
date is specified), and in the event of any failure on the part of Lessee to pay
any Supplemental Rent, Lessor shall have all rights, powers and remedies
provided for herein or by law or in equity or otherwise in the case of
nonpayment of Basic Rent. In addition, Lessee shall pay, on demand, as
Supplemental Rent, to the extent permitted by applicable law, an amount equal to
interest at the Stipulated Interest Rate on any part of any installment of Basic
Rent not paid when due for any period for which the same shall be overdue and on
any payment of Supplemental Rent not paid when due or demanded, as the case may
be, for the period until the same shall be paid. The expiration or other
termination of Lessee's obligations to pay Basic Rent hereunder shall not limit
or modify the obligations of Lessee with respect to Supplemental Rent. All
Supplemental Rent to be paid pursuant to this Section 3(c) shall be payable in
the type of funds and in the manner set forth in Section 3(e).
(d) PROHIBITION AGAINST SETOFF, ETC. Except as set forth in Section
4(c)(i)(D) of Exhibit E attached hereto, this Lease is a net lease and Lessee's
obligation to pay Rent hereunder shall be absolute and unconditional and shall
not be affected by any circumstance including (i) any claim which Lessee may
have against Lessor or anyone else for any reason whatsoever (whether in
connection with the transactions contemplated hereby or any other transactions),
including any breach by Lessor or any of its Affiliates, of any of its
warranties, agreements or covenants contained herein or in any of the Long-Term
Agreements or any of the documents related hereto or thereto or performance, or
nonperformance by Lessor of any of its duties or obligations to Lessee set forth
in Exhibit E attached hereto, (ii) any defect in the title, registration,
airworthiness, condition, design, operation, or fitness for use of, or any
damage to or loss or destruction of, the Airframe, any Serviced Engine or any
Engine, or any interruption or cessation in or including any such interruption,
cessation or prohibition of the use or possession thereof by Lessee for any
reason whatsoever, resulting from the act of any Governmental Authority; and
(iii) any other circumstance, happening or event whatsoever, whether or not
foreseen or similar to the foregoing; PROVIDED that Lessee's obligations to pay
Basic Rent and Supplemental Rent shall cease with respect to the Aircraft,
except with respect to Rent accrued at such time upon (i) redelivery of the
Aircraft by Lessee to Lessor in accordance with the provisions of Sections 5
hereof; and/or (ii) repossession of the Aircraft by Lessor pursuant to Section
14A hereof, but subject to Lessee's payments of sums specified under said
Section 14A; and/or (iii) with respect to any Item of Equipment, payment by or
on behalf of Lessee to Lessor in full of the Stipulated Loss Value and other
sums specified in Section 8 hereof to be paid by Lessee pursuant to an Event of
Loss with respect to such Item of Equipment. Lessee hereby waives, and hereby
agrees to waive at any future time at the request of Lessor, to the extent now
or then 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, cancel, quit or surrender this Lease except in accordance with the
express terms hereof. Each payment of Rent made by Lessee to Lessor shall be
final as to Lessor and Lessee. Lessee shall not
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seek to recover all or any part of any such payment of Rent from Lessor for
any reason whatsoever except manifest error. The parties agree that nothing
contained in this Section 3(d) shall affect or limit any right of Lessee to
collect damages for the breach of any covenant or representation by Lessor
hereunder, including Section 4 hereto or Exhibit E hereto or by any Affiliate
of Lessor under any Long-Term Agreement. Lessee shall pay all costs and
expenses of every character, whether seen or unforeseen, ordinary or
extraordinary or structural or nonstructural, in connection with the
delivery, use, operation, maintenance, return, and repair and reconstruction
of the Airframe and each Serviced Engine by Lessee, including the costs and
expenses particularly set forth in this Lease, except as may be otherwise
expressly set forth in the other documents related hereto.
(e) PAYMENT TO LESSOR. All Rent shall be paid by Lessee to Lessor by wire
transfer of immediately available funds in U. S. Dollars, to such account as
Lessor shall designate to Lessee in writing. Such funds shall be available to
Lessor not later than 3:00 p.m., New York City time on the date of payment.
Whenever any payment of Rent is due on a day other than a Business Day, such
payment shall be made on the next preceding Business Day. All Rent to be paid
by Lessee hereunder shall be paid in full without any deduction or withholding
with respect to Taxes of any nature imposed by any Taxing Authority unless
Lessee is prohibited by Applicable Law from doing so, in which event Lessee
shall comply with Section 16 below.
Section 4. DISCLAIMER; WARRANTIES RELATING TO THE AIRCRAFT; CERTAIN
AGREEMENTS OF LESSEE, REPRESENTATIONS OF LESSEE.
(a) DISCLAIMER. LESSOR LEASES AND LESSEE TAKES THE AIRCRAFT "AS-IS,
WHERE-IS", AND LESSOR DOES NOT MAKE NOR SHALL BE DEEMED TO HAVE MADE, AND
EXPRESSLY DISCLAIMS, ANY REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, AS TO
THE TITLE, AIRWORTHINESS, CONDITION, VALUE, DESIGN, OPERATION, MERCHANTABILITY
OR FITNESS FOR USE OR FOR ANY PARTICULAR PURPOSE OF ANY ITEM OF EQUIPMENT OR
ENGINE OR AS TO THE ABSENCE OF LATENT OR OTHER DEFECTS, WHETHER OR NOT
DISCOVERABLE, AS TO THE INFRINGEMENT OF ANY PATENT, TRADEMARK OR COPYRIGHT, AS
TO THE ABSENCE OF OBLIGATIONS BASED ON STRICT LIABILITY IN TORT, OR AS TO THE
QUALITY OF THE MATERIAL OR WORKMANSHIP IN ANY ITEM OF EQUIPMENT OR ENGINE OR ANY
OTHER EXPRESS OR IMPLIED REPRESENTATION OR WARRANTY WHATSOEVER WITH RESPECT
THERETO, except for the representations of Lessor set forth in Section 4(e)
below, and that Lessor represents that (i) it has good title to the Aircraft
free of Lessor's Liens and the lawful right to lease the Aircraft to Lessee in
accordance with the terms hereof, (ii) Lessor has the lawful right to lease the
Airframe to Lessee in accordance with the terms hereof, and (iii) that Lessor is
a citizen of the United States of America as defined in Section 40102(a)(15)
(former 101(16)) of the Act. LESSOR SHALL NOT HAVE ANY RESPONSIBILITY OR
LIABILITY TO LESSEE OR ANY OTHER PERSON WITH RESPECT TO (I) ANY LIABILITY, LOSS
OR DAMAGE CAUSED OR ALLEGED TO BE CAUSED DIRECTLY OR INDIRECTLY BY ANY ITEM OF
EQUIPMENT OR ENGINE OR BY ANY INADEQUACY THEREOF OR DEFICIENCY OR DEFECT THEREIN
OR BY ANY OTHER CIRCUMSTANCES IN CONNECTION THEREWITH; (II) THE USE, OPERATION
OR PERFORMANCE OF ANY ITEM OF EQUIPMENT OR ENGINE OR ANY RISKS RELATING THERETO;
(III) ANY
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INTERRUPTION OF SERVICE, LOSS OF BUSINESS OR ANTICIPATED PROFITS OR
SPECIAL, PUNITIVE OR CONSEQUENTIAL DAMAGES; OR (IV) THE DELIVERY HEREUNDER,
OPERATION, SERVICING, MAINTENANCE, REPAIR OR IMPROVEMENT OF ANY ITEM OF
EQUIPMENT EXCEPT AS EXPRESSLY PROVIDED IN THE PROVISIONS OF EXHIBIT E HERETO
RELATING TO THE SERVICING, MAINTENANCE, REPAIR OR IMPROVEMENT OF ANY SERVICED
ENGINE OR SERVICED AIRCRAFT; PROVIDED THAT NOTHING CONTAINED IN THIS SECTION
4(a) SHALL IN ANY WAY LIMIT THE RIGHTS OF LESSEE AGAINST ANY AFFILIATE OF LESSOR
UNDER ANY LONG-TERM AGREEMENT.
(b) QUIET ENJOYMENT. Notwithstanding any other term or provision of this
Agreement, Lessor covenants that, so long as no Lessee Event of Default shall
have occurred and be continuing, it shall not take any action contrary to
Lessee's rights under this Lease, or otherwise through its own actions or
inactions in any way interfere with the quiet enjoyment of the use and
possession of the Aircraft, the Airframe or any Serviced Engines by Lessee;
PROVIDED that no performance or failure by Lessor to perform its obligations
under Exhibit E hereto shall be deemed a breach of this Section 4(b).
(c) WAIVER OF WARRANTIES. LESSEE HEREBY WAIVES, RELEASES AND RENOUNCES
THE BENEFIT OF ANY AND ALL CONDITIONS, WARRANTIES OR REPRESENTATIONS ON THE PART
OF LESSOR WHICH ARE EXPRESSED OR WOULD OR MIGHT BE IMPLIED IN THIS AGREEMENT
WHETHER BY LAW OR OTHERWISE AND RELATING IN ANY WAY TO THE STATE, CONDITION OR
AIRWORTHINESS OF AN ITEM OF EQUIPMENT OR ENGINE. LESSEE ACKNOWLEDGES THAT THE
PROVISIONS OF SECTIONS 4(a) AND 4(b) HAVE BEEN THE SUBJECT OF FULL DISCUSSION
AND NEGOTIATION BETWEEN LESSEE AND LESSOR AND THAT THE BASIC RENT AND ALL OTHER
AGREEMENTS OF LESSEE AND LESSOR CONTAINED IN THIS AGREEMENT WERE ARRIVED AT IN
CONSIDERATION OF THE PROVISIONS OF SECTIONS 4(a) AND 4(b) SPECIFICALLY INCLUDING
THE DISCLAIMER BY LESSOR SET FORTH IN SECTION 4(a) AND THE WAIVER, RELEASE AND
RENUNCIATION BY LESSEE SET FORTH IN THIS SECTION 4(c).
(d) LESSEE'S REPRESENTATIONS AND WARRANTIES. To induce Lessor to enter
into this Lease Agreement, and any documents contemplated hereby, Lessee makes
the following representations and warranties, each of which shall survive the
execution and delivery of this Lease Agreement and the Delivery Date:
(i) Lessee is a corporation duly incorporated under the laws of the
Territory of Hawaii and is validly existing in good standing under the laws
of the State of Hawaii and has its chief executive office in Honolulu,
Hawaii. Except as set forth on Schedule 4(d)(i) hereto Lessee has all
requisite corporate power and authority to carry on its business as now
conducted, and to execute, deliver and perform its obligations under this
Lease and each Lease Supplement. Lessee is a duly certificated "air
carrier" under Section 41102 (former Section 401) and Section 44705 (former
Section 604) of the Federal Aviation Act and possesses all necessary
licenses or permits required by any Governmental Authority having
jurisdiction over Lessee or the Aircraft to permit Lessee to engage in air
transportation and
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to perform and comply with its obligations under this Lease, and is duly
qualified to do business as a foreign corporation, and is in good standing,
in each jurisdiction in which its failure to so qualify would adversely
and materially affect it or its ability to carry out its obligations under
this Lease;
(ii) this Lease has been duly authorized by all necessary corporate
action on the part of Lessee, does not require any approval of stockholders
of Lessee (or if such approval is required, such approval has been
obtained), and the execution and delivery hereof, and/or the consummation
of the transactions contemplated hereby, and/or compliance by Lessee with
any of the terms and provisions hereof, do not contravene any provisions of
the Articles of Incorporation or By-laws of Lessee, or result in any breach
of, or constitute any default under, or result in the creation of any Lien
upon any assets or property of Lessee under, any (A) indenture, mortgage,
lease, chattel mortgage, deed of trust, conditional sales contract, bank
loan, credit agreement or other material agreement or instrument to which
Lessee is a party or by which Lessee or its properties may be bound or
affected other than the Lien under
this Lease and Permitted Liens, or (B) Applicable Law;
(iii) the execution and delivery by Lessee of this Lease, and the
performance by Lessee of any of the transactions contemplated hereby do not
require the consent or approval of, or registration with, or the giving or
prior notice to any Person, including any federal, state or foreign
governmental authority or entity having appropriate jurisdiction, except
(A) any such consent, approval, notice registration, notice or action that
has been obtained or as would not affect the validity, enforceability or
binding nature of this Lease, and (B) routine reporting requirements of the
Securities and Exchange Commission, the FAA, the DOT or other Governmental
Authorities after the Delivery Date;
(iv) this Lease has been duly executed and delivered by Lessee, and
this Lease, together with Lease Supplement No. 1 when executed and
delivered by Lessee, will constitute legal, valid and binding obligations
of Lessee, fully enforceable, except as set forth on Schedule 4(d)(iv), in
accordance with their respective terms;
(v) except as set forth on Schedule 4(d)(v), there are no pending or,
to the knowledge of Lessee, threatened investigations, suits or proceedings
against it or affecting it or its properties or operations, that, if
determined adversely, would materially adversely affect it, the
consummation of the transactions described in, or the performance of its
obligations under, this Lease Agreement or affect the right, title or
interest of Lessor in the Aircraft;
(vi) except as set forth on Schedule 4(d)(vi), Lessee is not in
violation of, or in default under, any law, ordinance, order, regulation or
authorization of any Governmental Authority or any permit or certificate
issued or granted by any Governmental Authority, that could have a material
adverse effect on the business or condition (financial or otherwise) of
Lessee;
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(vii) except as set forth in Schedule 4(d)(vii), Lessee is not in
default, and no condition exists that with notice or lapse of time or both
would constitute a default, under any mortgage, deed of trust, indenture,
or other instrument or agreement to which it is a party, or by which it or
any of its properties or assets may be bound, that would have a material
adverse effect on any of the actions described in, or on its ability to
perform its obligations under, this Lease, and it is not in breach of any
Applicable Law that would have a material adverse effect on it, or any of
the actions described in, or on its ability to perform its obligations
under, this Lease;
(viii) except for the filing for recordation of this Lease, and
Lease Supplement No. 1, and the placing on the Aircraft and on each Engine
of the plates containing the legends referred to in Section 7(f) hereof, no
further filing or recording of this Lease or of any other document
(including any financing statement under Article 9 of the Uniform
Commercial Code) and no further action is necessary or advisable, under the
laws of the United States of America or the State of Hawaii, in order to
fully protect and establish Lessor's title to, and interest in, the
Aircraft and the Engines as against Lessee or any third parties;
(ix) the financial and written information furnished by Lessee in
connection with this Agreement, and the transactions contemplated hereby
does not contain any untrue statement of a material fact or omit to state a
material fact;
(x) No Default or Lessee Event of Default has occurred and is
continuing hereunder;
(xi) Lessee has assets in excess of $5,000,000.00 according to its
most recent financial statement prepared in accordance with generally
accepted accounting principles and is not a "consumer" as that term is
defined in Section 17.45 of the Texas Deceptive Trade Practices-Consumer
Protection Act;
(xii) Lessee is not a consumer as defined by Hawaii Revised Statutes
Section 480-1 (1992 Supp.), and therefore has no right to bring an action
or pursue damages based upon unfair or deceptive acts or practices under
that Section;
(xiii) Lessee is an air carrier under 14 C.F.R. Part 121; and
(xiv) Lessor shall be entitled to the benefits of Section 1110 of the
Bankruptcy Code with respect to its rights of repossession of the Aircraft,
any Engines, any appliances or spare parts, each as defined in such Section
1110 of the Bankruptcy Code, pursuant to Section 14A hereof.
(e) LESSOR'S REPRESENTATIONS AND WARRANTIES. To induce Lessee to enter
into this Lease Agreement, Lessor makes the following representations and
warranties each of which shall survive the execution and delivery of this Lease
Agreement and the Delivery Date:
(i) the execution and delivery by Lessor of this Agreement have been
duly authorized by all necessary corporate action on the part of Lessor, do
not require any
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approval of stockholders of Lessor (or if such approval is required,
such approval has been obtained), and the execution and delivery hereof,
and/or the consummation by Lessor of the transactions contemplated
hereby, and/or compliance by Lessor with any of the terms and provisions
hereof, do not contravene any provisions of the Certificate of
Incorporation or By-laws of Lessor, or result in any breach of, or
constitute any default under, or result in the creation of any Lien upon
any assets or property of Lessor under, any (A) indenture, mortgage,
lease, chattel mortgage, deed of trust, conditional sales contract, bank
loan, credit agreement or other material agreement or instrument to
which Lessor is a party or by which Lessor or its properties may be
bound or materially affected, which breach or default would have a
material adverse effect on its ability to perform the transactions
contemplated by this Agreement, or (B) any Applicable Law binding on
Lessor, which breach or default would have a material adverse effect on
its ability to perform the transactions contemplated by this Agreement;
(ii) the execution and delivery by Lessor of this Agreement and the
performance by Lessor of its obligations under this Agreement do not
require the consent or approval of, or registration with, or the giving of
prior notice to, any Person including any federal, state or foreign
Governmental Authority or entity having appropriate jurisdiction, except
(A) any such consent, approval, notice registration, notice or action that
has been obtained or as would not affect the validity, enforceability or
binding nature of this Agreement, and (B) routine reporting requirements of
the Securities and Exchange Commission, the FAA, the DOT or other
Governmental Authorities after the Effective Date;
(iii) this Agreement has been duly executed and delivered by Lessor
and, assuming due authorization, execution and delivery by Lessee,
constitutes the legal, valid and binding obligation of Lessor, fully
enforceable against Lessor in accordance with its terms;
(iv) Lessor is not in default, and no condition exists that with
notice or lapse of time or both would constitute a default, under any
material mortgage, deed of trust, indenture, or other instrument or
agreement to which it is a party, or by which it or any of its properties
or assets may be bound, that would have a material adverse effect on its
ability to perform its obligations under this Agreement;
(v) there are no pending or, to the knowledge of Lessor, threatened
investigations, suits or proceedings against it or affecting it or its
properties or operations, that, if determined adversely, would materially
adversely affect the consummation by Lessor of the transactions described
in, or the performance of its obligations under, this Agreement;
(vi) Lessor is not in violation of, or in default under, any
Applicable Law, of any Governmental Authority or any permit or certificate
issued or granted by any Governmental Authority, that would have a material
adverse effect on its ability to perform its obligations under this
Agreement;
(vii) Lessor is certificated under 14 C.F.R. Part 121 to perform
Maintenance Services; and
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(viii) Lessor has the right to transfer possession and use of the
Serviced Engines to Lessee.
Section 5. RETURN OF AIRFRAME AND ENGINES.
(a) RETURN OF AIRFRAME AND SERVICED ENGINES. Upon the termination of this
Lease at the end of the Term or pursuant to Sections 8 or 14A hereof, Lessee
shall return the Return Aircraft by delivering the same, at its own expense, to
Tulsa, Oklahoma (TUL), Marana, Arizona (MZJ), Amarillo, Texas (AMA), Dallas/Fort
Worth International Airport (DFW), or Los Angeles International Airport (LAX) at
Lessor's sole option. Upon the expiration of the Term or pursuant to Sections 8
or 14A, as the case may be, Lessee shall make the redelivered Return Aircraft
available for inspection by Lessor and its representatives and designees. At
the time of the return of the Return Aircraft:
(i) the Return Aircraft shall be in compliance with the Return
Conditions as set forth in Exhibit D;
(ii) the Return Aircraft shall be in compliance with Lessee's
FAA-approved maintenance program;
(iii) each Item of Equipment and Engine shall be free and clear of all
Liens (except Lessor's Liens);
(iv) the Return Aircraft shall be in the same passenger configuration
as when delivered to Lessee, and each Item of Equipment shall be in as good
an operating condition as when delivered to the Lessee on the Delivery
Date, ordinary wear and tear excepted;
(v) Upon the return of the Airframe, either at the end of the Term,
pursuant to Section 8 hereof or pursuant to Section 14A, (i) Lessee shall
have no obligation with respect to the amount of fuel or oil contained in
the Airframe and all fuel or oil remaining on board the Airframe shall be
the property of Lessor without charge and (ii) Lessee shall deliver or
cause to be delivered to Lessor all logs, manuals and data, and inspection,
modification and overhaul records required to be maintained with respect
thereto under applicable rules and regulations of the FAA;
(vi) Subject to the availability of storage space, upon the
termination of the Lease as to the Aircraft, upon request of Lessor, Lessee
shall provide Lessor with storage facilities for such Return Aircraft for a
period not exceeding ninety (90) days in accordance with the applicable
manufacturer's recommendations for storage and FAA regulations and shall
arrange for insurance and maintenance (performance of such maintenance
subject to the availability of Lessee's employees) for such Return
Aircraft during such storage period. The Lessor shall pay Lessee's direct
costs for such storage, maintenance and insurance without xxxx-up; and
(vii) Any Serviced Engines returned by Lessee on any Return Aircraft
are deemed to be Engines for the purpose of compliance with Return
Conditions.
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So long as Lessor is maintaining the Aircraft pursuant to Exhibit E
attached hereto, the Return Conditions set forth in Exhibit D (other than
Sections 2F(a) and (b), 2k, 2M(2), (4) and (5) and 2P thereof and the obligation
to return all documents required for return set forth in Exhibit D and the
obligation to return the Aircraft clean) shall be deemed to be satisfied with
respect to the Aircraft.
(b) RETURN OF OTHER ENGINES. In the event that any engine that is not a
Serviced Engine shall be installed on the Airframe returned, such engine shall
be an engine suitable to be a Replacement Engine hereunder. Upon return of the
Aircraft, Lessee shall duly convey to Lessor good title to any such engine, free
and clear of all Liens and, upon such conveyance, Lessee will furnish Lessor
with a full warranty xxxx of sale, in form and substance reasonably satisfactory
to it, with respect to such engine and take such other action as may be
reasonably requested in order that title to such engine may be duly and properly
vested in Lessor to the same extent as the Engine replaced thereby. Upon
conveyance of good title to such engine to Lessor, and upon full compliance by
Lessee with its obligations hereunder, at Lessee's expenses, Lessor will
transfer to Lessee all rights, title and interest originally conveyed to Lessor
in an Engine constituting part of the Aircraft but not installed on the Airframe
at the time of the return of the Airframe "as-is, where-is", free and clear of
any Lessor's Liens but otherwise without recourse or warranty, express or
implied to Lessee.
Section 6. LIENS. Lessee shall not directly or indirectly create,
incur, assume or suffer to exist any Lien on or with respect to the Airframe or
any Engine or any Serviced Engine or any Parts, title thereto or any interest
therein or in this Lease except (i) the respective rights of Lessor and Lessee
as herein provided, (ii) the rights of others under agreements or arrangements
to the extent expressly permitted by the terms of Sections 7(e) and 7(h),
(iii) Lessor's Liens, (iv) Liens for Taxes either not yet due or being contested
in good faith (and the payment of which has been bonded to the satisfaction of
Lessor) by appropriate proceedings so long as such proceedings do not involve
any danger of the sale, forfeiture or loss of the Airframe or any Engine or any
Serviced Engine or interest therein, (v) materialmen's, mechanics', workmen's,
repairmen's, employees' or other like liens arising in the ordinary course of
business for amounts the payment of which is either not yet delinquent or is
being contested in good faith (and the payment of which has been bonded to the
satisfaction of Lessor) by appropriate proceedings so long as such proceedings
do not involve any danger of the sale, forfeiture or loss of the Airframe or any
Engine or any Serviced Engine or interest therein, (vi) liens arising out of
judgments or awards against Lessee with respect to which at the time an appeal
or proceeding for review is being prosecuted in good faith and with respect to
which there shall have been secured a stay of execution pending such appeal or
proceeding for review, and (vii) the Pooling Agreement. Lessee shall promptly,
at its own expense, take such action as may be necessary duly to discharge (by
bonding or otherwise) any such Lien not excepted above if the same shall arise
at any time.
Section 7. REGISTRATION, MAINTENANCE AND OPERATION; POSSESSION; INSIGNIA.
(a) REGISTRATION, MAINTENANCE AND OPERATION. Lessee, at its own cost and
expense, shall:
(i) maintain, service, repair, overhaul and test or cause to be
maintained, serviced, repaired, overhauled and tested each Item of
Equipment in accordance with
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Lessee's FAA approved maintenance program, so as to keep each Item of
Equipment (A) in at least as good an operating condition as when
delivered, ordinary wear and tear excepted, and within the acceptable
limits of performance provided in the Manufacturer's manuals, (B) in
conformity with any Manufacturer's operating manual, instructions and
service bulletins and all mandatory service bulletins and such other
non-mandatory Manufacturer's service bulletins reasonably requested by
Lessor and by the Manufacturer, (C) in conformity with all AD's that are
required to be performed with respect to any Item of Equipment during
the Lease Term, (D) in conformity with the requirements of any other
Governmental Authority having jurisdiction over the Item of Equipment,
(E) in such condition that the Airframe and each Serviced Engine will
comply with the FAA type certificate (as in effect from time to time)
issued to the Manufacturer of the Airframe or such Serviced Engine and
in compliance with a maintenance program approved by the FAA so long as
such maintenance program conforms to the maintenance program (as in
effect from time to time) established by the applicable FAA-approved
maintenance review board report for airframes and engines of the same
type, and (F) in such condition as may be necessary to enable the
airworthiness certification of the In-Use Aircraft to be maintained in
good standing at all times (and, in the case of any Engine when it is
not installed on the Airframe, so as to keep such Engine serviceable at
all times except when such Engine is awaiting overhaul, maintenance,
repair, inspection or servicing in the normal course of Lessee's
FAA-approved or compatible maintenance program) under the rules and
regulations of the FAA. All maintenance on the Airframe and Serviced
Engines shall be performed by Lessee in accordance with the standards
set forth above. Lessee shall promptly notify Lessor of any material
change in the maintenance program in respect of the In-Use Aircraft from
that in effect on the Delivery Date;
(ii) not permit the Airframe, any Serviced Engine, or any Part to be
maintained, serviced, repaired, overhauled, tested, used or operated in
violation of any Applicable Law of any Governmental Authority having
jurisdiction or in violation of any airworthiness certificate, license or
registration relating to the Airframe, any Serviced Engine or any Part
issued by any such Governmental Authority. In the event that any such
Applicable Law requires alteration of the Airframe, any Serviced Engine, or
any Part, Lessee will conform thereto or obtain conformance therewith at no
expense to Lessor and will maintain the Airframe, such Serviced Engine or
such Part in proper operating condition under such Applicable Laws;
(iii) maintain or cause to be maintained all records, logs and other
materials required by the FAA or other applicable Governmental Authority to
be maintained in respect of the In-Use Aircraft; and
(iv) promptly furnish to Lessor such information as may be required to
enable Lessor to file any reports required to be filed by Lessor with any
Governmental Authority because of Lessor's ownership of the Aircraft.
(b) ADDITIONAL MAINTENANCE PROVISIONS. Lessee covenants and agrees that
it shall use, operate, maintain, service, repair, overhaul and test or cause to
be used, operated, maintained, serviced, repaired, overhauled and tested, the
Airframe, each Serviced Engine and any Part in at
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least as good manner and with at least as much care as used by Lessee with
respect to other airframes, engines and parts of the same type or utility
owned, leased or operated by Lessee and that it will not discriminate against
the Airframe, any Serviced Engine or any Part (as compared to other
airframes, engines or parts of the same type or utility owned, leased or
operated by Lessee) in the use, operation, maintenance, service, repair,
overhaul or testing of the Airframe, each Serviced Engine or any Part.
(c) TERRITORIAL RESTRICTIONS ON USE OF AIRCRAFT. Lessee agrees not to
operate or locate any Item of Equipment, or suffer such Item to be operated,
(A) unless such Item is covered by insurance as required by the provisions of
Section 9, (B) contrary to the terms of the insurance required by the provisions
of Section 9 of this Lease, (C) in any war zone or recognized or threatened area
of hostilities unless covered to Lessor's satisfaction by war risk insurance,
(D) to or from any airport which is at such time the subject of a prohibition
order of any Governmental Authority of the United States or of any international
authority or treaty organization of which the United States is a member, or
(E) to or from any airport that the aircraft leased by Lessee from Lessor
pursuant to the Long-Term Lease are not operated to or from.
(d) OBLIGATIONS ABSOLUTE. Nothing herein, including Exhibit E hereto,
shall be deemed to affect Lessee's obligations pursuant to this Section 7 or to
impose on Lessor the obligation to pay for or be responsible for the payment of
any maintenance, repair or overhaul. It is understood and agreed that Lessee
shall be responsible for all of its obligations under this Section 7 hereof,
regardless of the performance or non-performance by Lessor of its obligations
described in Exhibit E hereto; PROVIDED that nothing contained in this Lease
shall prohibit Lessee from maintaining a separate action against Lessor for any
default by Lessor of its obligations described on Exhibit E attached hereto. So
long as Lessor is required to maintain the Aircraft pursuant to Exhibit E
hereto, the maintenance requirements of this Section 7 shall be deemed to have
been satisfied to the extent such maintenance has been provided by Lessor
pursuant to Exhibit E hereto.
(e) POSSESSION. Except for the delivery of the Airframe or any Serviced
Engine to Lessor pursuant to Exhibit E hereto or delivery of any Serviced
Engines pursuant to the Pooling Agreement, Lessee shall not sublease or
otherwise in any manner deliver, transfer or relinquish possession of the
Airframe, and shall not, without the prior written consent of Lessor, sublease
or otherwise in any manner deliver, transfer or relinquish possession of any
Serviced Engine or install any Serviced Engine, or permit any Serviced Engine to
be installed, on any airframe other than the Airframe.
(f) REGISTRATION AND INSIGNIA. Lessee shall maintain in the cockpit of
the Airframe adjacent to the airworthiness certificate therein the metal
nameplate bearing the Lessor's name, as owner and lessor. Lessee shall affix as
promptly as practicable after the Delivery Date and thereafter to maintain on
each Engine a metal nameplate bearing the inscription "AMERICAN AIRLINES, INC.,
OWNER AND LESSOR". Lessee may place its customary colors and insignia on the
Airframe or Engines so long as no polished portion of the In-Use Aircraft is
painted. The placement of and colors or insignia on the In-Use Aircraft shall
be performed by Lessor. Provided that Lessor shall (i) remain a citizen of the
United States of America as defined in Section 40102(a)(15) (former 101(16)) of
the Act and (ii) cooperate with the Lessee, Lessee shall maintain continued
registration of the Airframe in Lessor's name under the Act. Except as set
forth in
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Section 7(h) below, no additional modifications may be made to the Aircraft
or any Serviced Engines without the prior written consent of Lessor.
(g) REPLACEMENT OF PARTS. Subject to the provisions of Exhibit E hereof,
Lessee at its own cost and expense, shall promptly replace (or cause to be
replaced) all Parts which may from time to time be incorporated or installed in
or attached to the Airframe or any Serviced Engine and which may from time to
time become worn out, lost, stolen, destroyed, seized, confiscated, damaged
beyond repair or permanently rendered unfit for use for any reason whatsoever,
except as otherwise provided in Section 8. In addition, Lessee may, at its own
cost and expense, remove or cause to be removed in the ordinary course of
maintenance, service, repair, overhaul or testing, any Parts, whether or not
worn out, lost, stolen, destroyed, seized, confiscated, damages beyond repair or
permanently rendered unfit for use; PROVIDED that Lessee, except as otherwise
provided in Section 8, will, at its own cost and expense, replace such Parts as
promptly as possible. All replacement Parts shall be free and clear of all
Liens (except for Permitted Liens), and shall be in as good operating condition
as, and shall have a value and utility at least equal to, the Parts replaced,
assuming such replaced Parts were in the condition and repair required to be
maintained by the terms hereof. All Parts at any time removed from the Airframe
or any Serviced Engine shall remain the property of Lessor, no matter where
located. Immediately upon any replacement Part becoming incorporated or
installed in or attached to the Airframe or any Serviced Engine as above
provided, without further act, (i) title to the replacement Part shall thereupon
vest in Lessor free and clear of all Liens (except for Permitted Liens); and
(iii) such replacement Part shall become subject to this Lease and be deemed
part of the Airframe or such Serviced Engine for all purposes to the same extent
as the Parts originally incorporated or installed in or attached to the Airframe
or such Serviced Engine. Any Parts replaced or supplied by Lessor pursuant to
Exhibit E attached hereto shall be deemed to satisfy the conditions of this
Section.
(h) ALTERATIONS, MODIFICATIONS AND ADDITIONS. Subject to the provisions
of Section 7(a) hereof, and, in addition, so long as Lessor is maintaining the
Aircraft pursuant to Exhibit E attached hereto, in compliance with Exhibit E
attached hereto, Lessee, at its own expense, will make (or cause to be made)
such alterations and modifications in and additions to the Airframe and the
Serviced Engines as may be required from time to time to meet the standards of
the FAA or other Governmental Authority having jurisdiction. In addition and
subject to the terms of Exhibit E hereto, Lessee, at its own expense, may from
time to time make (or cause to be made) such alterations and modifications in
and additions to the Airframe or any Serviced Engine as Lessee may deem
desirable in the proper conduct of its business, including, without limitation,
removal of Parts which Lessee deems obsolete or no longer suitable or
appropriate for use in the Airframe or any Serviced Engine, PROVIDED that (i) no
such alteration, modification, addition or removal shall diminish the fair
market value, utility or remaining useful life of the Airframe or such Serviced
Engine, or impair the condition or airworthiness thereof below the value,
utility, condition and airworthiness thereof immediately prior to such
alteration, modification, addition or removal assuming the Airframe or such
Serviced Engine was then of the value and utility and in the condition and
airworthiness required to be maintained by the terms of this Lease; and (ii) no
structural modification shall be made without the prior written consent of
Lessor. Title to all Parts incorporated or installed in or attached or added
to the Airframe or any Serviced Engine as the result of such alteration,
modification or addition shall, without further act, vest in Lessor.
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Notwithstanding the foregoing sentence of this Section 7(h), so long as no
Default or Lessee Event of Default shall have occurred and be continuing, Lessee
may, at any time during the Term, remove any Part, PROVIDED that (i) such Part
is in addition to, and not in replacement of or substitution for, (x) any Part
originally incorporated or installed in or attached to the Airframe or any
Serviced Engine at the time of delivery thereof hereunder, or (y) any Part in
replacement of or substitution for any such Part, (ii) such Part is not required
to be incorporated or installed in or attached or added to the Airframe or any
Serviced Engine pursuant to the terms of this Section 7(h), and (iii) such Part
can be removed from the Airframe or such Serviced Engine without causing
material damage to the Airframe or such Serviced Engine and without diminishing
or impairing the value, utility, condition or airworthiness required to be
maintained by the terms of this Lease which the Airframe or such Serviced Engine
would have had at such time had such alteration, modification or addition not
occurred. Upon the removal by Lessee of any Part as provided in the immediately
preceding sentence, title thereto shall, without further act, vest in Lessee and
such Part shall no longer be deemed part of the Airframe or such Serviced Engine
from which it was removed. Any Part not removed by Lessee as provided in such
sentence prior to the return of the Airframe or such Serviced Engine to Lessor
hereunder shall remain the property of Lessor.
(i) MANUALS AND TECHNICAL RECORDS.
Lessee undertakes that:
(1) Throughout the Lease Term, Lessee shall keep, or cause to be
kept, accurate, complete and current records of all flights made
by the Aircraft and each Serviced Engine and of all maintenance
and repairs carried out to the Airframe and each Serviced Engine
and shall allow the Lessor or its agents to examine and make
reasonable copies of the records at any reasonable time upon
giving reasonable notice to Lessee.
(2) The records so kept shall conform with Lessee's approved
maintenance program.
(3) The records so kept shall be part of the manuals and technical
records and shall be the property of Lessor and that at the end
of the relevant Lease Term or upon the repossession or redelivery
of the Aircraft, Lessee shall deliver the relevant records to the
Lessor, provided that Lessee shall be entitled to take and retain
copies thereof.
(4) The Lessee shall provide to the Lessor or its authorized
representative each month a status report containing engine and
airframe utilization in hours and cycles, and other information
which Lessor may reasonably request.
(5) All original records shall be maintained in their original paper
form and shall be the property of the Lessor upon lease
termination.
(j) MAINTENANCE AND USAGE. Except as otherwise expressly provided herein,
throughout the Lease Term, Lessor and Lessee each agrees to perform its
obligations, duties and liabilities set forth in Exhibit E attached hereto.
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Section 8. LOSS, DESTRUCTION, REQUISITION, ETC.
(a) EVENT OF LOSS TO THE AIRCRAFT. Upon the occurrence of an Event of
Loss with respect to the In-Use Aircraft Lessee shall (i) forthwith (and in any
event within five days after such occurrence) give to Lessor written notice of
such Event of Loss and (ii) comply with Section 8(a)(1):
(1) PAYMENT OF STIPULATED LOSS VALUE AND RENT. On or before
the Business Day before the earlier of (i) the 60th day following the
date of the occurrence of such Event of Loss with respect to the
In-Use Aircraft; or (ii) five days following the receipt of insurance
proceeds with respect to such occurrence (the "LOSS PAYMENT DATE"),
Lessee shall pay to Lessor, in the manner and in funds of the type
specified in Section 3(e), an amount equal to the sum of (i) the
Stipulated Loss Value for the In-Use Aircraft calculated as of the
Basic Rent Payment Date next following the Event of Loss (or if the
date of such Event of Loss is a Basic Rent Payment Date, as of such
Basic Rent Payment Date (the "Loss Computation Date")) less any
payment of Basic Rent paid by Lessee after the date of such Event of
Loss and on or prior to the Loss Payment Date, (ii) any installment of
Basic Rent due and owing prior to the Loss Payment Date, (iii) all
Supplemental Rent then due and owing for the Aircraft on the Loss
Payment Date, and (iv) interest on the amounts described in clause (i)
and (ii) hereof from the Loss Computation Date to the Loss Payment
Date at the Prime Rate.
(2) TERMINATION UPON PAYMENT OF STIPULATED LOSS VALUE. Upon
payment in full of the amounts required pursuant to Section 8(a)(1),
(i) Lessee's obligation to pay Basic Rent hereunder with respect to
the Aircraft for any period commencing after the Loss Payment Date
shall terminate (but Lessee shall remain liable for all payments of
Rent, including Basic Rent and Supplemental Rent, including, without
limitation, the Supplemental Rent pursuant to Exhibit E hereto, for
the Aircraft, due through and including the date of such payment),
(ii) the Term for the Aircraft shall end, and (iii) Lessor shall
(subject to the rights of any insurer) transfer to Lessee all of
Lessor's right, title and interest in the Airframe and the Serviced
Engines, if any, which were subject to the Event of Loss "as-is,
where-as", free and clear of Lessor's Liens, but otherwise without
recourse or warranty, express or implied.
(b) EVENT OF LOSS TO A SERVICED ENGINE.
(1) EVENT OF LOSS. Upon the occurrence of an Event of Loss with
respect to a Serviced Engine not then installed on the Airframe, or
upon the occurrence of an Event of Loss with respect to a Serviced
Engine installed on the Airframe but not involving an Event of Loss
with respect to the Airframe, Lessee shall give Lessor prompt written
notice thereof and shall: (i) within sixty (60) days after the
occurrence of such Event of Loss, convey or cause to be conveyed to
Lessor, as replacement for the Serviced Engine with respect to which
such Event of Loss occurred, title to a replacement Serviced Engine
free and clear of Liens (other than Permitted Liens) or (ii) if
mutually agreed between Lessor and Lessee, Lessee shall in lieu of
replacing
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such Serviced Engine pursuant to this Section 8(b)(1), pay or cause to
be paid to Lessor hereunder, within ten (10) days after such agreement,
the Stipulated Loss Value for such Serviced Engine, computed as of the
Basic Rent Payment Date next following the date of such Event of Loss.
(2) CONDITIONS, LESSEE'S OBLIGATIONS. Lessee's right to replace
contemplated by Section 8(b)(1) shall be subject to the fulfillment,
in addition to the requirements contained in Section 9(b), of the
conditions precedent set forth below:
(i) No Default or Lessee Event of Default shall be
continuing on the replacement date;
(ii) Lessee will promptly (all writings referred to below to
be reasonably satisfactory in form and substance to Lessor):
(a) furnish Lessor a xxxx of sale duly conveying to
Lessor such replacement Serviced Engine, together with such
evidence of title as Lessor may reasonably request;
(b) if the replaced Serviced Engine is an Engine
hereunder, cause a Lease Supplement, subjecting such
Replacement Engine to this Lease, duly executed by Lessee,
to be delivered to Lessor for execution and, upon such
execution, to be duly filed for recordation with the FAA;
(c) furnish Lessor with such evidence of compliance
with the insurance provisions of Section 9 with respect to
such replacement Serviced Engine as Lessor may reasonably
request;
(d) furnish Lessor with a certificate or certification
of a qualified aircraft engineer reasonably satisfactory to
Lessor certifying that such replacement Serviced Engine has
a value, utility and remaining useful life at least equal to
the Serviced Engine so replaced (assuming such Serviced
Engine was in the condition and repair required by the terms
hereof immediately prior to the occurrence of such Event of
Loss), PROVIDED that in addition to such certificate or
certification, Lessor shall have the right to inspect such
replacement Serviced Engine and shall be reasonably
satisfied that it has a value, utility and remaining useful
life at least equal to the Serviced Engine so replaced
(assuming such Serviced Engine was in the condition and
repair required by the terms hereof immediately prior to the
occurrence of such Event of Loss); and
(e) On or before such replacement date, Lessee shall
(i) furnish Lessor with an opinion of independent counsel
reasonably satisfactory to Lessor, that Lessor will suffer
no adverse tax consequences as a result of such replacement
or (ii) have agreed to
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pay to Lessor as an indemnity such amount or amounts as may be
necessary to hold harmless, on an after-tax basis, Lessor
against any and all adverse tax consequences as may result
from such replacement and shall have provided to Lessor
satisfactory assurances regarding Lessee's ability to pay such
indemnity; and
(f) take such other actions and furnish such other
certificates and documents as Lessor may reasonably request
in order that such replacement Serviced Engine be duly and
properly titled in Lessor and leased hereunder to the same
extent as the Serviced Engine replaced thereby.
(3) EVENT OF LOSS TO AN ENGINE, NOT A SERVICED ENGINE. Upon the
occurrence of an Event of Loss to an Engine which is not a Serviced
Engine, Lessor shall give Lessee prompt written notice thereof and
shall within sixty (60) days after the occurrence of such Event of
Loss, lease hereunder to Lessee a Replacement Engine with respect to
such Engine to which such Event of Loss occurred, free and clear of
Liens (other than Permitted Liens). Lessor shall furnish Lessee with
a certificate or certification of a qualified aircraft engineer
reasonably satisfactory to Lessee certifying that such Replacement
Engine has a value, utility and remaining useful life at least equal
to the Engine so replaced, PROVIDED that in addition to such
certificate or certification, Lessee shall have the right to inspect
such Replacement Engine and shall be reasonably satisfied that it has
a value, utility and remaining useful life at least equal to the
Engine so replaced (assuming such Engine was in the condition and
repair required by the terms hereof immediately prior to the
occurrence of such Event of Loss).
(4) CONDITIONS, LESSOR'S OBLIGATIONS. Lessor's obligation to
replace contemplated by Section 8(b)(3) shall be subject to the
fulfillment of the conditions precedent that Lessee and Lessor will
promptly:
(i) cause a Lease Supplement, subjecting such Replacement
Engine to this Lease, duly executed by Lessee and Lessor, to be
delivered to Lessor for execution and, upon such execution, to be
duly filed for recordation with the FAA; and
(ii) take such other actions and furnish such other
certificates and documents as Lessor may reasonably request in
order that such Replacement Engine be duly and properly titled in
Lessor and leased hereunder to the same extent as the Engine
replaced thereby;
PROVIDED that Lessor shall have no obligation to deliver possession of
a Replacement Engine to Lessee so long as a Default or Lessee Event of
Default has occurred and is continuing hereunder.
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(5) RECORDATION AND OPINIONS. Promptly after the recordation of
the Lease Supplement covering any such Replacement Engine pursuant to
the Federal Aviation Act (or in case the Aircraft was at the time of
the Event of Loss subject to registration under the laws of a country
other than the United States, pursuant to the laws of such country),
Lessee shall cause to be delivered to Lessor an opinion of counsel
reasonably satisfactory to Lessor as to the due recordation of such
Lease Supplement pursuant to the Act (or such other laws).
(6) CONVEYANCE; REPLACEMENT ENGINE. Upon compliance by Lessee
with the terms of this Section 8(b), Lessor will (subject to the
rights of any insurer) transfer (other than in the case of the
replacement of an Engine which was not upon the occurrence of the
Event of Loss, a Serviced Engine) to Lessee all of Lessor's right,
title and interest as of the delivery date of such replacement
Serviced Engine in the replaced Serviced Engine, "as-is, where-is",
free and clear of Lessor's Liens but otherwise without recourse or
warranty, express, implied or otherwise.
(7) NO REDUCTION OF BASIC RENT. No Event of Loss with respect
to a Serviced Engine or an Engine under the circumstance contemplated
by this Section 8(b) shall result in any reduction of Basic Rent.
Upon the payment by Lessee to Lessor of the Stipulated Loss Value of
any Serviced Engine, Lessor, shall provide Lessee with a replacement
Serviced Engine.
(8) If Lessor furnishes the replacement Serviced Engine, then
the conditions set forth in Sections 8(b)(2)(ii)(a) and (d) shall be
deemed to be fulfilled.
(c) APPLICATION OF PAYMENTS FOR REQUISITION OF TITLE. Any payments (other
than insurance proceeds the application of which is provided for in Section 9)
received at any time by Lessor, Lessee or from any Governmental Authority or
other Person with respect to any Event of Loss, other than a requisition for
use by the Government not constituting an Event of Loss, will be applied as
follows:
(1) REPLACEMENT OF SERVICED ENGINE. If such payments are
received as a result of an Event of Loss to a Serviced Engine under
circumstances contemplated by Section 8(b), and the Serviced Engine is
replaced, so much of such payments remaining after reimbursement of
Lessor for reasonable costs and expenses, if any, theretofore incurred
by Lessor related to such replacement shall be paid over to, or
retained by, Lessee, provided that Lessee shall have fully performed,
or concurrently therewith will perform, the terms of Section 8(b) with
respect to the Event of Loss for which such payments are made.
(2) LOSS OF AIRFRAME. If such payments are received as a result
of an Event of Loss to the Airframe or the Airframe or Serviced
Engines then installed thereon, so much of such payments as shall not
exceed the amounts payable pursuant to 8(a)(1) shall be applied to pay
such amounts (or reimburse Lessee for its payment of such amounts),
and the balance, if any, of such payment remaining thereafter shall,
first, to the extent of the value of Lessee's interest in such
payment, be paid
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over to Lessee, and, second, the remainder, if any, shall be retained by
Lessor. For purposes of this clause (2), the value of Lessee's interest
in a payment shall be the amount of the Basic Rent due in regard to the
leasing of the Aircraft for the remainder of the applicable Term.
(d) REQUISITION OF USE OF THE AIRFRAME. In the event of the requisition
for use of the Airframe or any Serviced Engines installed on the Airframe during
the Term not constituting an Event of Loss including without limitation,
pursuant to CRAF, Lessee shall promptly notify Lessor of such requisition and
all of Lessee's obligations under this Lease shall continue to the same extent
as if such requisition had not occurred, except to the extent that any failure
or delay in Lessee's performance or observance of such obligations (other than
obligations for the payment of Rent) is caused by such requisition. Unless
Lessor elects to treat such requisition as an Event of Loss, Lessee shall be
obligated to return the Airframe and such Serviced Engines to Lessor pursuant
to, and in all other respects in compliance with the provisions of, Section 5
promptly at the later of the end of the Term or, if Lessor consents, the date of
such return by any such Governmental Authority. All payments received by Lessor
or Lessee from any Governmental Authority for the use of the Airframe and
Serviced Engines during the Term (so long as no Lessee Event of Default shall
have occurred and be continuing) shall be paid over to, or retained by, Lessee;
and all payments received by Lessor or Lessee from the Government for the use of
the Airframe and such Serviced Engines after the Term (or so long as a default
or a Lessee Event of Default shall have occurred and be continuing) shall be
paid over to, or retained by, Lessor, unless such requisition for use by any
Governmental Authority is treated as an Event of Loss in which case all such
payments shall be applied in accordance with Section 8(c)(2).
(e) INVESTMENT OF PROCEEDS PENDING REPLACEMENT. If an Event of Loss shall
occur with respect to a Serviced Engine and the provisions of Section 8(b)
apply, or Lessor receives any insurance proceeds pending completion of repairs
by Lessee to the Airframe or a Serviced Engine, Lessor shall, if requested by
Lessee and if no Lessee Event of Default shall have occurred and be continuing,
use its reasonable efforts to invest, at the request, direction and risk of
Lessee, any payments received theretofore or thereafter with respect to the
Airframe or such Serviced Engine from any insurer under insurance required to be
maintained hereunder or from Lessee or from any Governmental Authority or other
person with respect to the applicable Event of Loss or otherwise. Any such
investments shall be in obligations of the United States or obligations
guaranteed as to principal and interest by the Government or certificates of
deposit issued in the United States by a commercial bank or banks each having a
combined capital, surplus, and undivided profits of at least $250,000,000, in
each case having a stated maturity not later than one year from the date of the
acquisition thereof by Lessor. Lessee will pay to Lessor on demand the amount
of any loss incurred in connection with any such investment. All profits and
losses on such investments and any taxes in respect thereof shall be for the
account of Lessee. In order to make the payments to Lessee provided for in
Section 8 or 9 hereof, Lessor is authorized to sell any obligations purchased as
aforesaid; and Lessor shall not be required to make such payments to Lessee
until Lessor shall have had a reasonable time to sell such obligations and to
obtain the sale proceeds therefrom.
(f) APPLICATION OF PAYMENTS DURING DEFAULT. Any amount for requisition of
title or requisition of use of any Item of Equipment referred to in this
Section 8 which is payable to or
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retainable by Lessee shall not be paid to or retained by Lessee if at the
time of such payment or retention a Default or a Lessee Event of Default
shall have occurred and be continuing, but shall be held by or paid to Lessor
and applied against the obligations of Lessee under this Lease, and at such
time as there shall not be continuing any such Default or Lessee Event of
Default, such amount shall be paid to Lessee to the extent not previously
applied in accordance with this sentence.
Section 9. INSURANCE.
(a) LIABILITY INSURANCE. During the Lease Term and during the next
three years thereafter, Lessee shall maintain (or cause to be maintained) at
no expense to Lessor the following insurance, on a worldwide basis with no
territorial restrictions, except as may be specifically consented to from
time to time by Lessor, such consent not to be unreasonably withheld, with
insurers of recognized responsibility approved by Lessor through nationally
recognized aviation insurance brokers: comprehensive aviation liability
insurance (including third party legal liability, public liability, passenger
legal liability, personal injury liability, passenger's baggage and personal
effects (checked and unchecked) liability, cargo legal liability, mail legal
liability, premises liability, products/completed operations, hangarkeepers
(ground and in-flight) liability and war risks liability (Lloyd's of London
Clause AV.52 or its equivalent), insurance of the indemnification obligations
set forth in Section 15 hereof, and property damage liability insurance with
respect to the In-Use Aircraft in an amount not less than that carried by
Lessee on similar equipment owned or leased by Lessee, PROVIDED that such
liability insurance shall in no event be less than $500,000,000 for any one
accident, or series of accidents arising out of any one event. Lessee shall
not self-insure with respect to any public liability coverage with the
exception of baggage, cargo and mail liabilities. Any policies of insurance
carried in accordance with this Section 9(a) and any policies taken out in
substitution or replacement for any of such policies shall: (1) name Lessor
and its Affiliates and directors, officers, employees, servants and agents as
an additional insured (each such Person an "ADDITIONAL INSURED"), as their
respective interests may appear; (2) provide that in respect of the interest
of each Additional Insured in such policies, the insurance shall not be
invalidated by any action or inaction of Lessee or any other insured, and
shall insure each Additional Insured regardless of any breach or violation of
any warranty, declaration or condition contained in such policies by Lessee;
(3) provide that if the insurers cancel such insurance for any reason
whatever, or if there is any substantial change in policy terms and
conditions or coverage, such cancellation, lapse or change shall not be
effective as to any Additional Insured until thirty days (seven days, or such
other period as may from time to time be customarily obtainable in the
industry, in the case of war risk and allied perils coverage) after receipt
by such Additional Insured of written notice from such insurers of such
cancellation, lapse or change; and (4) provide that no Additional Insured
shall have any obligation or liability for premiums, commissions, assessments
or calls in connection with such insurance. Each liability policy shall (i)
be primary without right of contribution from any other insurance which is
carried by any Additional Insured, (ii) expressly provide that all of the
provisions thereof, except the limits of liability, shall operate in the same
manner as if there were a separate policy covering any Additional Insured,
and (iii) waive any right of the insurers to any subrogation, set-off or
counterclaim or any other deduction, whether by attachment or otherwise, in
respect of any liability of any Additional Insured or Lessee to the extent of
any moneys due to such Additional Insureds. In the case of the requisition
for use of the In-Use Aircraft or any Serviced Engine by the Government, a
valid agreement by the Government to indemnify Lessee in a manner
satisfactory to
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Lessor against any of the risks which Lessee is required hereunder to insure
against in an amount at least equal to the amount of insurance required to be
maintained for the Aircraft under this Section 9 from time to time shall, to
the extent such indemnity from the Government complies with the requirements
set forth in Section 7(g) hereof, be considered adequate insurance to the
extent of the risks and in the amounts that are the subject of any such
agreement to indemnify.
(b) ALL RISK HULL INSURANCE. During the relevant Term, Lessee shall
maintain (or cause to be maintained) at no expense to Lessor the following
insurance, on a worldwide basis with no territorial restrictions with
insurers of recognized responsibility (A) all-risks (ground, taxing, flight
and ingestion) hull insurance covering the In-Use Aircraft; and (B) all risks
(including transit) Aviation Spare Parts (including Engine and Equipment)
Insurance and (C) at all times that any In-Use Aircraft or any Serviced
Engine is not covered by the insurance described in Section 9(c), coverage
against the perils of (i) strikes, riots, civil commotions or labor
disturbances, (ii) any vandalism, malicious act or act of sabotage, and (iii)
hijacking, or any unlawful seizure or wrongful exercise of control of the
In-Use Aircraft or crew in flight made by any person or persons on board the
In-Use Aircraft without the consent of the insured other than hijacking
committed by persons engaged in a program of irregular warfare for terrorist
purposes, in each case to the extent insured by the standard "buy-back"
provisions to the Airline War Exclusion Clause (AV48B) or its equivalent.
Such insurance shall be for an Agreed Value basis which shall be in an amount
not less than the Stipulated Loss Value. With the consent of Lessor, which
will not be unreasonably withheld, Lessee may self-insure only by way of
standard market deductibles, the risks required to be insured against
pursuant to the preceding two sentences in such amounts as are acceptable to
Lessor in its sole discretion. Any policies carried in accordance with this
Section 9(b) covering the In-Use Aircraft and any policies taken out in
substitution or replacement for any such policies shall (1) name Lessor as
loss payee as its interests may appear; (2) provide that the entire amount of
any loss shall be paid to Lessor or its order; (3) provide that if such
insurance is canceled for any reason whatsoever, or any substantial change is
made in policy terms, conditions or coverage, or the same is allowed to lapse
for non-payment of premium, such cancellation, change or lapse shall not be
effective as to Lessor until thirty days (seven days or such other period as
may from time to time be customarily obtainable in the industry, in the case
of war risk and allied perils coverage), after receipt by Lessor of written
notice from such insurers of such cancellation or lapse or change in policy
terms, conditions or coverage; (4) provide that losses shall be adjusted with
Lessor; (5) provide that in respect of Lessor, such insurance shall not be
invalidated by any action or inaction of Lessee or any other insured and
shall insure such parties regardless of any breach contained in such policies
by Lessee or any other insured; (6) be primary without right of contribution
from any other insurance which is carried by Lessor with respect to its
interest in the In-Use Aircraft; (7) waive any right of subrogation of the
insurers against Lessor; (8) waive any right of the insurers to set-off or
counterclaim or any other deduction, whether by attachment or otherwise, in
respect of any liability of Lessor or Lessee to the extent of any moneys due
to Lessor; and (9) provide that Lessor shall have no obligation or liability
for premiums, commissions, assessments or calls in connection with such
insurance. If the insurance required to be carried pursuant to Sections 9(b)
and 9(c) is effected under separate policies, the insurers shall agree that
if a disagreement arises as to whether a claim is covered by the all-risk
insurance or the war-risk insurance, the insurers will settle such claims on
the basis of a 50-50 claim funding arrangement. In the case of the
requisition for use of the In-Use Aircraft or any Serviced Engine by the
Government, a valid agreement by the Government,
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satisfactory to Lessor, to indemnify Lessee against any of the risks which
Lessee is required hereunder to insure against in an amount at least equal to
the amount of insurance required to be maintained for the In-Use Aircraft
under this Section 9 from time to time shall, to the extent such indemnity
from the Government complies with the requirements set forth in Section 7(g)
hereof, be considered adequate insurance to the extent of the risks and in
the amounts that are the subject of any such agreement to indemnify.
(c) WAR-RISK INSURANCE. During the Lease Term, Lessee shall maintain (or
cause to be maintained), at no expense to Lessor War-Risk and Allied Perils
Aviation Hull (including Spare Parts, Engines and Equipment) Insurance on an
Agreed Value basis, which shall be not less than the Stipulated Loss Value.
Such policy shall (i) insure against those perils excluded under Lessee's All
Risks Hull and Spares policy(ies) by virtue of Lloyd's of London Exclusion
Clause AVN.48B ("War, Hijacking and Other Perils Exclusion Clause") or its
equivalent (other than paragraph (b) thereof relating to nuclear perils), (ii)
provide for payment in U.S. Dollars, (iii) contain a 50/50 clause in accordance
with Lloyd's of London Aviation Clause AVS.103 or its equivalent, (iv) be
endorsed to include coverage for confiscation, requisition, nationalization,
seizure, restraint, detention, appropriation, requisition of title or for use by
any Governmental Authority (except for the government of registry) of the In-Use
Aircraft, (v) provide coverage on a worldwide basis (subject only to such
geographical limits as may be imposed by the hull, war and allied perils
insurance) and (vi) be endorsed to include provisions identical to those
contained in clauses (1), (2), (3), (4), (5), (6), (7), (8), and (9) of Section
9(b).
(d) APPLICATION OF PROCEEDS. Provided no Lessee Event of Default shall
have occurred and be continuing, all insurance payments received under policies
required to be maintained by Lessee pursuant to Section 9 as the result of the
occurrence of an Event of Loss shall be applied in accordance with Section
8(c)(1) or Section 8(c)(2). Insurance payments relating to any property damage
or loss to the In-Use Aircraft or any Serviced Engine not constituting an Event
of Loss with respect thereto will be applied in payment for repairs or for
replacement property in accordance with the terms of Section 8(c) hereof, if not
already paid for by Lessee, and any balance remaining after compliance with such
Sections with respect to such loss shall be paid to Lessee. Any amount
representing proceeds of insurance required to be maintained by Lessee hereunder
which is payable to or retainable by Lessee shall not be paid to or retained by
Lessee if at the time of such payment a Default or a Lessee Event of Default
shall have occurred and be continuing, but shall be held by or paid to Lessor as
security for the obligations of Lessee under this Lease and such amount (to the
extent not previously applied against such obligations) shall be paid to Lessee
at such time as there no longer exists any Default or Lessee Event of Default.
(e) REPORTS, ETC. On or before the Delivery Date (except, with respect to
the insurance required by Section 9(j), prior to the date hereof), and no less
than five (5) Business Days prior to the expiration of any insurance required
pursuant to this Section 9, Lessee shall furnish to Lessor (i) appropriate
certification by each insurer or its authorized signatories and (ii) a report
signed by a firm of independent insurance brokers, then retained by Lessee,
attaching certificates evidencing the insurance and reinsurance then carried and
maintained with respect to the In-Use Aircraft and Allocated Parts and stating
that in the opinion of such firm the insurance then carried and maintained with
respect to the In-Use Aircraft and Serviced Engines or Parts complies with the
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terms hereof. Lessee will cause such firm to advise Lessor in writing promptly
of any material default in the payment of any premium and of any other act or
omission on the part of Lessee of which they have knowledge which might
invalidate or render unenforceable, in whole or in part, any insurance on the
In-Use Aircraft or any Serviced Engine or Parts. Lessee also shall cause such
firm to advise Lessor in writing at least thirty (30) days (seven (7) days, or
such other period as may from time to time be customarily obtainable in the
industry, in the case of war risk and allied perils coverage), prior to the
expiration or termination of any insurance policy carried or maintained with
respect to the In-Use Aircraft or any Serviced Engine any Parts pursuant to
this Section 9.
(f) ADDITIONAL INSURANCE. Lessee at its option and at its sole cost and
expense may obtain insurance with respect to its interest in the In-Use
Aircraft, PROVIDED that such insurance does not prevent Lessee from obtaining
the insurance required by this Section 9; and PROVIDED FURTHER, that such
additional insurance does not prevent Lessor from obtaining insurance for its
own account with respect to the In-Use Aircraft in excess of Stipulated Loss
Value. No such insurance shall be subject to this Section 9. Lessor may carry
for its own account at its sole cost and expense insurance with respect to its
interest in the In-Use Aircraft but in no event shall such insurance prevent
Lessee from carrying insurance required by this Section 9 or adversely affect
the cost thereof.
(g) NOTICE FROM LESSEE; NO MODIFICATION. Lessee shall forthwith notify
Lessor of any event which may give rise to a claim under the insurance required
pursuant to this Section 9.
(h) REINSURANCE. In the event of any reinsurance of the risks set forth
in Section 9(b) the following clause shall be incorporated into such reinsurance
policies:
"Reinsurers hereby agree that notwithstanding the insolvency,
liquidation, bankruptcy, dissolution of or similar proceedings
affecting Insurers in respect of a total loss or other claim whereas
provided by the Lease such claim will be paid to the person or persons
named as loss payee under the primary insurance and that Reinsurers
shall in lieu of payment to the Insured, its successors in interest
and assigns, pay to the person named as loss payee under the primary
insurance that portion of any loss due for which the reinsurers would
otherwise be liable to pay the Insurers (subject to proof of loss),
it being understood and agreed that any such payment by the Reinsurers
shall (to the extent of such payment) fully discharge and release the
Reinsurers from any and all further liability in connection therewith,
subject to such clause not contravening any law of the government of
registration."
(i) INSURANCE OF LESSOR. Lessor agrees to maintain throughout the Lease
Term Hangarkeeper's Legal Liability Insurance that, in accordance with the terms
and conditions of the policy, covers the Serviced Aircraft during periods in
which the Serviced Aircraft is within custody and control of Lessor for an
amount not less than the Stipulated Loss Value.
(j) INSURANCE RELATING TO ALLOCATED PARTS. During the Term, Lessee shall
maintain (or cause to be maintained) at no expense to Lessor the following
insurance with respect to the Allocated Parts with insurers of recognized
responsibility satisfactory to Lessor: (A) All Risks Property Insurance and
(B) coverage against the perils of (i) strikes, riots, civil commotions or labor
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disturbances or (ii) vandalism, malicious acts or acts of sabotage. Such
insurance shall be for an aggregate amount of no less than $1,600,000. With the
written consent of Lessor, Lessee may self-insure, only by way of deductibles,
the risks required to be insured against pursuant to the preceding two sentences
in such amounts as are acceptable to Lessor in its sole discretion. Any
policies carried in accordance with this Section 9(j) covering the Allocated
Parts and any policies taken out in substitution or replacement for any such
policies shall (1) name Lessor as sole loss payee; (2) provide that the entire
amount of any loss shall be paid to Lessor or its order; (3) provide that if
such insurance is canceled for any reason whatsoever, or any substantial adverse
change is made in policy terms, conditions or coverage, or the same is allowed
to lapse for non-payment of premium, such cancellation, change or lapse shall
not be effective as to Lessor until thirty (30) days after receipt by Lessor of
written notice from such insurers of such cancellation or lapse or change in
policy terms, conditions or coverage; (4) provide that losses shall be adjusted
with Lessor; (5) provide that in respect of Lessor, such insurance shall not be
invalidated by any action or inaction of Lessee or any other insured and shall
insure such parties regardless of any breach contained in such policies by
Lessee or any other insured; (6) waive any right of subrogation of the insurers
against Lessor; (7) waive any right of the insurers to set-off or counterclaim
or any other deduction, whether by attachment or otherwise, in respect of any
liability of Lessor or Lessee to the extent of any moneys due to Lessor; and (8)
provide that Lessor shall not have any obligation or liability for premiums,
commissions, assessments or calls in connection with such insurance. Lessee
shall bear the risk of loss to the extent of any deficiency in any effective
insurance coverage with respect to loss or damage to all or any portion of the
Allocated Parts.
Section 10. INSPECTION; FINANCIAL INFORMATION.
(a) INSPECTION. During the Lease Term, Lessee shall furnish to Lessor
such information concerning the location, condition, use and operation of the
In-Use Aircraft as such party may reasonably request. Lessee shall permit
any person designated in writing by Lessor, at such Lessor's expense, to
visit and inspect (at any reasonable time, provided that such inspection
shall not unreasonably interfere in any material respect with Lessee's
business operations or operation or maintenance of the In-Use Aircraft) the
In-Use Aircraft and the records maintained in connection therewith and, at
such designating party's expense, to make copies of such records as such
party may reasonably designate. Lessor shall not have any duty to make any
such inspection and shall not incur any liability or obligation by reason of
making or not making any such inspection. Any such inspection of the In-Use
Aircraft shall be a visual, walk-around inspection which may include going on
board the In-Use Aircraft and shall not include opening any panels, bays, or
the like, PROVIDED that any such designee of Lessor shall be entitled to be
present during any maintenance check of the In-Use Aircraft at which any
panels, bays or the like may be opened and shall have the right to inspect
such items during such maintenance check. Upon written request from Lessor,
Lessee shall provide such requesting party with the anticipated dates of any
scheduled major maintenance checks (including any "C", heavy "C" or "D"
check) occurring within the six-month period following such request.
(b) FINANCIAL INFORMATION. Lessee also agrees to furnish to Lessor during
the Lease Term:
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(1) as soon as possible and in any event within ten (10) days
after the occurrence of a Default or Lessee Event of Default, a
certificate of Lessee, signed by a vice president of Lessee, setting
forth in detail the nature of such Default or Lessee Event of Default
and the action which the Lessee proposes to take with respect thereto;
(2) from time to time, such information as Lessor may reasonably
request with respect to the operations of Lessee in order to determine
whether the covenants, terms and provisions of this Lease have been
complied with by Lessee;
(3) such information as may be required to enable Lessor to file
any reports required to be filed with any Governmental Authority
because of Lessor's ownership of the Items of Equipment;
(4) as soon as available, quarterly and year-end unaudited
Reports of Financial and Operating Statistics for Large Certified Air
Carriers (U.S. Department of Transportation Form 41 Schedule A);
(5) as soon as available, and in any event within sixty (60)
days after the end of each of the first three fiscal quarters, an
unaudited balance sheet of the Lessee and its consolidated
subsidiaries, as of the end of such quarter and related unaudited
statements of income and retained earnings of the Lessee and its
consolidated subsidiaries, setting forth in each case in comparative
form the corresponding figures for the corresponding period of the
preceding fiscal year;
(6) as soon as available, and in any event within 120 days after
the end of each fiscal year of Lessee, a financial report for the
Lessee for such year, including therein a balance sheet of Lessee as
of the end of such fiscal year and related statements of income and
retained earnings and changes in financial position of the Lessee for
such fiscal year, setting forth in each case in comparative form
corresponding figures for the preceding fiscal year, all in reasonable
detail and as certified by the Lessee's public accountants, including
their certificate and accompanying comments;
(7) promptly upon their becoming available, one copy of each
financial statement, report, notice or proxy statement sent by Lessee
to stockholders generally and of each regular or periodic report,
registration statement or prospectus filed by Lessee with any
securities exchange or the Securities and Exchange Commission or any
successor agency, and of any order issued by any Governmental
Authority in any proceeding in which Lessee is a party; and
(8) from time to time, such statistical information concerning
the In-Use Aircraft as Lessor may reasonably request to enable Lessor
to evaluate, calculate and/or report any Taxes.
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Section 11. LESSEE'S COVENANTS.
(a) MERGER. Lessee shall not consolidate with or merge into any other
corporation, or convey, transfer or lease all or substantially all of its assets
to any Person, unless (i) the corporation formed by such consolidation or into
which Lessee is merged or the Person who acquires by conveyance, transfer or
lease all or substantially all of the assets of Lessee (the "Successor"): (A)
remains entitled to the benefits of Section 1110 of the Bankruptcy Code with
respect to this Lease; and (B) shall execute and deliver to Lessor an agreement
containing an assumption by such Successor of the due and punctual performance
and observance of each covenant and condition of this Lease Agreement to be
performed or observed by Lessee; (ii) immediately after giving effect to such
transaction, no Default or Lessee Event of Default shall have occurred and be
continuing hereunder; (iii) Lessee shall have delivered to Lessor, an officer's
certificate and an opinion of independent counsel, each stating that such
consolidation, merger, conveyance, transfer or lease and the assumption
agreement described in clause (i) above comply with this Section 11(a) and that
all conditions precedent herein provided for relating to such transaction have
been complied with (except that such opinion need not cover the matters referred
to in clause (ii) above and may rely, as to factual matters, on an officer's
certificate of Lessee) and, in the case of such opinion, that such assumption
agreement has been duly authorized, executed and delivered by the Successor,
constitutes its legal, valid and binding obligation and is enforceable against
such Successor in accordance with its terms, that Lessor shall continue to be
entitled to the benefits and protections set forth in Section 1110 of the
Bankruptcy Code; and (iv) Lessor shall not suffer any adverse tax consequences
as a result of such consolidation, merger or transfer which is not indemnified
by Lessee in accordance with the terms hereof or against which Lessor is
otherwise indemnified in form and substance reasonably satisfactory to Lessor.
Upon any consolidation or merger, or any conveyance, transfer or lease of
all or substantially all of the assets of Lessee as an entirety in accordance
with this Section 11(a), the Successor shall succeed to, be substituted for, and
may exercise every right and power of, and shall assume every obligation and
liability of, Lessee under this Lease Agreement with the same effect as if the
Successor had been named as Lessee herein and therein. No such consolidation or
merger or conveyance, transfer or lease of all or substantially all of the
assets of Lessee shall have the effect of releasing Lessee or any Successor
which shall theretofore have become such in the manner prescribed in this
Section 11(a) from its liability hereunder. Nothing contained herein shall
permit any lease, sublease or other arrangement for the use, operation or
possession of the In-Use Aircraft or Engines except in compliance with the
applicable provisions of this Lease.
(b) CERTIFICATED AIR CARRIER. Lessee will continue to be a certificated
air carrier authorized to engage in scheduled air transportation under the
Federal Aviation Act.
Section 12. FAA RECORDATION AND FURTHER ASSURANCES.
(a) FAA RECORDATION. Lessee shall cause this Lease, all Lease Supplements
and any and all additional instruments which shall be executed pursuant to the
terms hereof so far as permitted by Applicable Laws or regulations, to be duly
kept, filed and recorded, and maintained of record, in accordance with the
applicable law of the government of registry of the Aircraft, which shall be in
the office of the FAA. The cost of all such action shall be borne by Lessor.
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(b) FURTHER ASSURANCES. Each party hereto shall, at its expense, promptly
and duly execute and deliver to the other party such further documents and
promptly take such further action not inconsistent with the terms hereof as the
other party may from time to time reasonably request in order more effectively
to carry out the intent and purpose of this Lease or to perfect and protect the
rights and, with respect to Lessor, remedies created or intended to be created
hereunder.
Section 13A. LESSEE EVENTS OF DEFAULT. The following events shall
constitute Lessee Events of Default (each a "Lessee 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 Governmental
Authority) and each such Lessee Event of Default shall be deemed to exist and
continue so long as, but only as long as, it shall not have been remedied or
waived by Lessor in writing:
(a) Lessee shall fail to make any payment of Basic Rent or Supplemental
Rent due pursuant to Exhibit E hereto, as and when due or shall fail to make any
other payment of Supplemental Rent within five (5) Business Days after delivery
to Lessee of notice from Lessor that the amount shall have become due hereunder;
or
(b) Lessee shall fail to procure, carry and maintain any insurance
required by Section 9 hereof; PROVIDED that in the case of insurance with
respect to which cancellation, change or lapse for nonpayment of premium shall
not be effective as to Lessor for 30 days (five days in the case of any war risk
and allied perils coverage, or if shorter, such other period as may be customary
in the industry for such notice of cancellation) after receipt of notice by
Lessor of such cancellation, change or lapse, no such failure to carry and
maintain insurance shall constitute a Lessee Event of Default hereunder until
the earlier of (i) the date such insurance is no longer in effect as to Lessor,
or (ii) the date such failure shall have continued unremedied for a period of 20
days (five days in the case of any war risk and allied perils coverage, or if
shorter, such other period as may be customary in the industry for such notice
of cancellation) after receipt by Lessor of the notice of cancellation, change
or lapse; or
(c) Lessee shall fail to perform or observe, breach or be in default under
Sections 5, 7(c), 10(c), or 11 hereof; or
(d) Lessee shall fail to perform or observe, breach or be in default under
any other covenant, condition or agreement to be performed or observed by it
hereunder and such failure shall continue unremedied for a period of thirty (30)
Business Days after written notice thereof by Lessor; or
(e) any material representation or warranty made by Lessee herein or in
any document or certificate furnished by Lessee in connection herewith or
pursuant hereto shall prove to have been incorrect in any material respect when
made; or
(f) Lessee shall fail to pay any sums which are or become due and owing
under any Interim Aircraft Lease Agreement, the Interim Aircraft Maintenance
Agreement, the Long-Term Lease Agreement, the July Lease Agreement or the
November Lease Agreement or shall fail to perform under any indemnification
obligations contained in any Interim Aircraft Lease Agreement,
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the Long-Term Lease Agreement, the 160 Lease Agreement, the 161 Lease
Agreement, the 125 Lease Agreement, the 171 Lease Agreement or the Interim
Aircraft Maintenance Agreement; or
(g) Reserved; or
(h) all or substantially all of Lessee's airline operations are suspended
for more than two days; or
(i) Lessee shall consent to the appointment of a custodian, receiver,
trustee or liquidator (or other similar official) of itself or of a substantial
part of its property, or Lessee shall be unable to pay its debts generally as
they become due, or shall make a general assignment for the benefit of
creditors, or Lessee shall file a voluntary petition in bankruptcy or a
voluntary petition or an answer seeking reorganization in a proceeding under any
bankruptcy law (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 shall seek relief as debtor
under the provisions of any other present or future bankruptcy or other similar
law providing for the reorganization or winding-up of corporations, or providing
for an agreement, composition, extension or adjustment with its creditors or
Lessee shall take any corporate action to authorize any of the foregoing; or
(j) a petition against Lessee in a proceeding under any bankruptcy or
other insolvency law (as now or hereafter in effect) shall be filed, and any
decree or order adjudging Lessee a bankrupt or insolvent in such proceeding
shall remain in force undismissed and unstayed for a period of sixty (60) days
after such adjudication or, in case the approval of such petition by a court of
competent jurisdiction is required, the petition as filed or amended shall be
approved by such a court as properly filed and such approval shall not be
withdrawn and the proceeding shall not be dismissed within sixty (60) days
thereafter, or if, under the provisions of any law providing for reorganization
or winding-up of corporations which may apply to Lessee, any court of competent
jurisdiction shall enter an order or decree assuming custody or control of
Lessee or of any substantial part of its property and such custody or control
remains in force unrelinquished, unstayed and unterminated for a period of
thirty (30) days; or
(k) obligations of Lessee for the payment of borrowed money shall not be
paid when the same become due after the expiration of any applicable grace
period, if the effect of such default is to cause obligations in excess of
$20,000,000 to be accelerated or otherwise declared to be due and unpaid prior
to their stated maturity.
Section 13B. LESSOR EVENTS OF DEFAULT. The following events shall
constitute Lessor Events of Default (each a "Lessor 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 Governmental
Authority) and each such Lessor Event of Default shall be deemed to exist and
continue so long as, but only as long as, it shall not have been remedied, or
waived by Lessee in writing:
(a) Lessor shall fail to procure, carry and maintain any insurance
required by Section 9(i) to be carried and maintained by Lessor;
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(b) Lessor shall fail to perform or observe, breach or be in default
under any other covenant, condition or agreement to be performed or
observed by Lessor hereunder and such failure shall continue unremedied for
a period of thirty (30) Business Days after written notice thereof by the
Lessee; PROVIDED the existence of any Defect shall not constitute a Lessor
Event of Default so long as Lessor promptly commences and diligently
complies with its warranty obligations under Section 5 of Exhibit E;
(c) Any material representation or warranty made by Lessor herein or
in any document or certificate furnished by Lessor in connection herewith
or pursuant hereto shall prove to have been incorrect in any material
respect when made;
(d) Lessor shall consent to the appointment of a custodian, receiver,
trustee or liquidator (or other similar official) of itself or of a
substantial part of its property, or Lessor shall be unable to pay its
debts generally as they become due, or shall make a general assignment for
the benefit of creditors, or Lessor shall file a voluntary petition in
bankruptcy or a voluntary petition or an answer seeking reorganization in a
proceeding under any bankruptcy law (as now or hereafter in effect) or an
answer admitting the material allegations of a petition filed against
Lessor in any such proceeding, or such party by voluntary petition, answer
or consent shall seek relief as debtor under the provisions of any other
present or future bankruptcy or other similar law providing for the
reorganization or winding-up of corporations, or providing for an
agreement, composition, extension or adjustment with its creditors or
Lessor shall take any corporate action to authorize any of the foregoing;
or
(e) A petition against Lessor in a proceeding under any bankruptcy or
other insolvency law (as now or hereafter in effect) shall be filed, and
any decree or order adjudging Lessor a bankrupt or insolvent in such
proceeding shall remain in force undismissed and unstayed for a period of
sixty (60) days after such adjudication or, in case the approval of such
petition by a court of competent jurisdiction is required, the petition as
filed or amended shall be approved by such a court as properly filed and
such approval shall not be withdrawn and the proceeding shall not be
dismissed within sixty (60) days thereafter, or if, under the provisions of
any law providing for reorganization or winding-up of corporations which
may apply to Lessor, any court of competent jurisdiction shall enter an
order or decree assuming custody or control of such party or of any
substantial part of its property and such custody or control remains in
full force unrelinquished, unstayed and unterminated for a period of thirty
(30) days.
Section 14A. LESSOR REMEDIES. Upon the occurrence of any Lessee Event of
Default and at any time thereafter so long as the same shall be continuing,
Lessor may, at its option, declare this Lease to be in default by a written
notice to Lessee and Lessor may concurrently therewith or at any time
thereafter, as part of the same or a separate written notice, declare this Lease
to be terminated, and immediately proceed to do any one or more of the following
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; PROVIDED that upon the occurrence of any Lessee Event of Default
described in Section 13A(i) or (j) above, this Lease Agreement shall
automatically be in default, and Lessor may elect to do any of the following,
without prior notice to Lessee:
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(a) Lessor may terminate this Lease;
(b) Lessor may cause Lessee, upon the written demand of Lessor and at
Lessee's expense, to return promptly, and Lessee shall return promptly the
In-Use Aircraft and any Serviced Engines, as Lessor may so demand to Lessor
or its order in the manner and condition required by, and otherwise in
accordance with all the provisions of, Section 5, as if the Airframe and
Engines were being returned at the end of the Term, or Lessor, at its
option, may enter upon the premises where the Airframe or Engine is located
and take immediate possession of and remove the same (together with any
engine or any part which is not an Engine but which is installed on an
Airframe, subject to all of the rights of any owner, lessor, lienor or
secured party of such engine or the Airframe; it being agreed that such
engine or airframe, as the case may be, shall be held for the account of
any such owner, lessor, lienor or secured party, or, if such engine is
owned by Lessee, may, at the option of Lessor, be exchanged with Lessee for
an Engine in accordance with the provisions of Section 8(b)) without the
necessity for first instituting proceedings, or by summary proceedings or
otherwise, all without liability accruing to Lessor for or by reason of
such entry or taking of possession, whether for the restoration of damage
to property caused by such taking or otherwise;
(c) Lessor may proceed by appropriate court action or actions, either
at law or in equity, to enforce performance by Lessee of the applicable
covenants of this Lease and to recover damages for the breach thereof;
(d) Lessor, to the extent permitted by applicable law, may with or
without taking possession thereof, sell any Airframe or Engine at public or
private sale, as Lessor may determine, or otherwise dispose of, hold, use,
operate, lease to others or keep idle all or the Airframe or Engine as
Lessor, in its sole discretion, may determine, all free and clear of any
rights of Lessee except as hereinafter set forth in this Section 14A and
without any duty to account to Lessee with respect to such action or
inaction or for any proceeds with respect thereto;
(e) whether or not Lessor shall have exercised, or shall thereafter
at any time exercise, any of its rights specified above with respect to all
or the Airframe or Engine, Lessor, by written notice to Lessee specifying a
payment ten days from such written notice, may demand that the Lessee pay
to Lessor, and Lessee shall pay to Lessor, on the payment date specified in
such notice, as liquidated damages for loss of a bargain and not as a
penalty (in lieu of the Basic Rent for the Aircraft due for periods
commencing on or after the date specified for payment in such notice), any
unpaid Basic Rent for the Aircraft due for periods prior to the payment
date specified in such notice plus an amount equal to the excess, if any,
of the present worth of the aggregate unpaid Basic Rent due under this
Lease for the Airframe or Engine, discounted quarterly at the Discount
Rate, over the fair market rental value therefor, discounted in like
manner;
(f) in the event Lessor, pursuant to paragraph (d) above, shall have
sold all or any Airframe or Engine, Lessor, in lieu of exercising its
rights under paragraph (e) above with respect to the Airframe or such
Engine or part thereof, may, if it shall so elect, demand
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that Lessee pay to Lessor, and Lessee shall pay to Lessor, on the date of
such sale as liquidated damages for loss of a bargain and not as a penalty
(in lieu of the installments of Basic Rent for the Aircraft due after the
Basic Rent Payment Date preceding such date of sale) any unpaid Basic Rent
with respect to the Aircraft due prior to such date PLUS the amount of any
deficiency between the net proceeds of such sale (after deduction of all
reasonable costs of sale) and the Stipulated Loss Value of the Aircraft,
computed as of the Basic Rent Payment Date on or immediately succeeding the
date of such sale together with interest, if any, on the amount of such
deficiency, at the Stipulated Interest Rate, from the date of such sale to
the date of actual payment of such amount;
(g) [Intentionally Left Blank]
(h) Lessor may rescind this Lease as to any or all Airframe and any
or all Engines, or may exercise any other right or remedy which may be
available to it under applicable law;
(i) Lessee shall be liable for any and all unpaid Rent and for all
legal fees and other costs and expenses incurred by reason of the
occurrence of any Lessee Event of Default or the exercise of Lessor's
remedies with respect thereto, including all costs or expenses incurred in
connection with the return of any Item of Equipment in accordance with the
terms of Section 5 hereof or in placing such Item of Equipment in the
condition and with airworthiness certificates as required by Section 5; and
(j) No remedy referred to in this Section 14A is intended to be
exclusive, but each shall be cumulative and in addition to any other remedy
referred to above or otherwise available to Lessor or its Affiliates at law
or in equity, and the exercise by Lessor of any one or more of such
remedies shall not preclude the simultaneous or later exercise by Lessor of
any or all of such other remedies under either this Lease or any other
agreement between Lessor or its Affiliates and Lessee. No express or
implied waiver by Lessor of any Lessee Event of Default shall in any way
be, or be construed to be a waiver of any future or further Lessee Event of
Default. To the extent permitted by Applicable Law, Lessee hereby waives
any and all rights to notice and to a judicial hearing with respect to the
repossession of any Item of Equipment by Lessor upon the occurrence of a
Lessee Event of Default.
Section 14B. LESSEE REMEDIES.
(a) REMEDIES. Upon the occurrence of a Lessor Event of Default and at any
time thereafter so long as the same shall be continuing, Lessee may, at its
option, declare a default by a written notice to Lessor; PROVIDED that Lessee's
remedies shall in all respects be limited as set forth in Section 5(b) and 5(g)
of Exhibit E and this Section 14B. At any time after delivery of such written
notice to Lessor, so long as Lessor shall not have remedied all outstanding
Lessor Events of Default Lessee may proceed pursuant to Section 6 of Exhibit E
to enforce performance by Lessor of its covenants and obligations under Exhibit
E to this Agreement and to recover damages for the breach thereof, but only to
the extent permitted under Section 14B(b) and Section 5(b) and 5(g) of Exhibit
E. Subject to Section 5(b) and 5(g) of Exhibit E and Section 14B(b), Lessor
shall be liable for any and all unpaid amounts due from it hereunder and for all
legal fees and other costs and
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expenses incurred by reason of the occurrence of any Lessor Event of Default
or the exercise of Lessee's remedies with respect thereto.
(b) LIMITATION ON DAMAGES. WITHOUT LIMITING THE PROVISIONS OF SECTION 4
OF THIS AGREEMENT AND NOTWITHSTANDING ANYTHING CONTAINED HEREIN TO THE CONTRARY,
LESSOR SHALL HAVE NO OBLIGATION OR LIABILITY WHETHER ARISING IN CONTRACT
(INCLUDING WARRANTY), TORT (INCLUDING ACTIVE, PASSIVE OR IMPUTED NEGLIGENCE OR
GROSS NEGLIGENCE) OR STRICT LIABILITY OR OTHERWISE FOR LOSS OF USE, REVENUE OR
PROFIT OR FOR ANY OTHER SPECIAL, INDIRECT, INCIDENTAL OR CONSEQUENTIAL DAMAGES
WITH RESPECT TO ANY BREACH OF THIS AGREEMENT OR THE PROCEDURES SET FORTH IN THE
MANUAL (OR ANY MANUAL REFERENCED THEREIN) OR ANY NONCONFORMANCE OR DEFECT IN ANY
SERVICE OR WORKMANSHIP OR ANY SERVICED PART OR OTHER MATERIAL, COMPONENT,
ACCESSORY, EQUIPMENT OR PRODUCT PROVIDED OR DELIVERED PURSUANT TO THIS
AGREEMENT. FURTHERMORE, LESSOR'S LIABILITY FOR DAMAGES, IF ANY, ARISING AS A
RESULT OF ANY BREACH OF, OR DEFAULT BY LESSOR UNDER, THIS AGREEMENT (INCLUDING
ANY BREACH OF WARRANTY) SHALL IN NO EVENT EXCEED LESSEE'S DIRECT, ACTUAL AND
REASONABLE DAMAGES (AFTER TAKING INTO ACCOUNT AMOUNTS THAT WOULD HAVE BEEN PAID
TO LESSOR AS SUPPLEMENTAL RENT BUT FOR SUCH BREACH OR DEFAULT) SUFFERED BY
LESSEE TO OBTAIN SUBSTITUTE COMPARABLE MAINTENANCE SERVICES FOR THE AIRCRAFT FOR
THE REMAINDER OF THE LEASE TERM AFTER THE DATE OF SUCH BREACH OR DEFAULT.
(c) NO IMPLIED WAIVER. No express or implied waiver by Lessee of any
Lessor Event of Default shall in any way be, or be construed to be a waiver of
any future or further Lessor Event of Default.
Section 15. INDEMNIFICATION.
(a) GENERAL. LESSEE DOES HEREBY ASSUME LIABILITY FOR, AND DOES HEREBY
INDEMNIFY, DEFEND, PROTECT AND HOLD HARMLESS LESSOR AND ANY AFFILIATE OF LESSOR
AND THEIR RESPECTIVE SUCCESSORS, PERMITTED ASSIGNS, SHAREHOLDERS, DIRECTORS,
OFFICERS, EMPLOYEES, AGENTS AND SERVANTS (EACH THEREOF, WITH ITS RESPECTIVE
AFFILIATES, SUCCESSORS, PERMITTED ASSIGNS, AGENTS AND SERVANTS REFERRED TO
HEREIN AS AN "INDEMNIFIED PARTY") FROM AND AGAINST, AND ON WRITTEN DEMAND TO
PAY, OR TO REIMBURSE EACH INDEMNIFIED PARTY FOR THE PAYMENT OF, AS THE CASE MAY
BE, ANY AND ALL EXPENSES OR LIABILITIES IMPOSED ON, CHARGED TO, RECOVERED FROM,
INCURRED BY OR ASSERTED AGAINST ANY INDEMNIFIED PARTY AS A RESULT OF ANY CLAIM
BY A PERSON (OTHER THAN LESSEE UNDER SECTION 5(a) OF EXHIBIT E AND 14B HEREOF)
RELATING TO OR ARISING OUT OF, OR IN ANY WAY CONNECTED WITH THIS AGREEMENT, THE
INTERIM AIRCRAFT LEASE AGREEMENTS, THE INTERIM AIRCRAFT MAINTENANCE AGREEMENT,
THE POOLING AGREEMENT, THE MANUAL (OR ANY OTHER LESSOR MANUAL REFERENCED
THEREIN) OR ANY MAINTENANCE SERVICES, OUTSIDE SERVICES, SERVICED ENGINES OR
SERVICED PARTS PROVIDED HEREUNDER, OR ANY FAILURE BY
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LESSEE OR LESSOR TO PERFORM HEREUNDER, INCLUDING CLAIMS FOR INJURY TO OR
DEATH OF PERSONS (INCLUDING ANY EMPLOYEES OR AGENTS OF LESSEE WHO ENTER
LESSOR'S PREMISES PURSUANT TO SECTION 4(g) OF EXHIBIT E AND ALL INVITEES,
GUESTS, PASSENGERS, SHIPPERS, EMPLOYEES AND AGENTS OF LESSEE), AND DAMAGE TO
OR DESTRUCTION OF PROPERTY (INCLUDING PROPERTY OF LESSEE AND OF ITS INVITEES,
GUESTS, PASSENGERS, EMPLOYEES AND AGENTS AND PROPERTY OF EACH INDEMNIFIED
PARTY). THE FOREGOING INDEMNITY OBLIGATIONS SHALL INCLUDE THE OBLIGATION OF
LESSEE TO INDEMNIFY EACH INDEMNIFIED PARTY FROM AND AGAINST, AND ON WRITTEN
DEMAND TO PAY, OR TO REIMBURSE EACH INDEMNIFIED PARTY FOR THE PAYMENT OF, AS
THE CASE MAY BE, ANY AND ALL EXPENSES IMPOSED ON, INCURRED BY OR ASSERTED
AGAINST ANY INDEMNIFIED PARTY RELATING TO OR ARISING OUT OF (i) ANY ACTION OR
INACTION OF LESSEE; (ii) THE MANUFACTURE OF THE AIRFRAME AND SERVICED ENGINES
(INCLUDING LATENT OR OTHER DEFECTS, WHETHER OR NOT DISCOVERABLE, AND PATENT,
TRADEMARK OR COPYRIGHT INFRINGEMENT); (iii) THE OWNERSHIP OF THE AIRCRAFT
AND, EXCEPT AS PROVIDED IN SECTION 15(d) BELOW, SERVICED ENGINES, DURING THE
TERM OF THIS LEASE; (iv) THE DELIVERY, NONDELIVERY, REDELIVERY, LEASE,
REGISTRATION, ASSIGNMENT, TRANSFER, POSSESSION, USE, OPERATION, CONDITION,
SALE OR RETURN OR OTHER DISPOSITION OF THE AIRFRAME AND SERVICED ENGINES AND
PARTS BY LESSEE (INCLUDING INJURY, DEATH OR PROPERTY DAMAGE SUFFERED BY
PASSENGERS, SHIPPERS OR OTHERS), AND ENVIRONMENTAL CONTROL, NOISE AND
POLLUTION REGULATIONS; (v) THE CONDITION UPON RETURN OF THE AIRFRAME AND
SERVICED ENGINES AND PARTS, TO THE EXTENT SUCH CONDITION DOES NOT COMPLY WITH
SECTION 5 HEREOF OR (vi) (WITHOUT LIMITING ANY OF THE FOREGOING) ANY BREACH
BY LESSEE OF, NONCOMPLIANCE BY LESSEE WITH, OR MISREPRESENTATION BY LESSEE
MADE OR DEEMED MADE IN, UNDER OR IN CONNECTION WITH, THIS LEASE OR ANY OTHER
DOCUMENT REQUIRED TO BE DELIVERED PURSUANT HERETO, OR ANY WARRANTY,
CERTIFICATE OR AGREEMENT MADE OR DELIVERED IN, UNDER OR IN CONNECTION
HEREWITH OR THEREWITH. THE FOREGOING INDEMNITY OBLIGATIONS OF LESSEE SHALL
NOT INCLUDE THE OBLIGATION TO INDEMNIFY (i) EMPLOYEES OF LESSOR AND ITS
AFFILIATES WHO SUFFER A CLAIM RESULTING FROM THE ACTS (INCLUDING FAILURE TO
ACT) OF AN EMPLOYEE OF LESSOR AND ITS AFFILIATES OR OF ANY SUBCONTRACTOR TO
LESSOR AND ITS AFFILIATES OR (ii) SUBCONTRACTORS TO LESSOR AND ITS AFFILIATES
WHO SUFFER A CLAIM RESULTING FROM THE ACTS (INCLUDING FAILURE TO ACT) OF AN
EMPLOYEE OF LESSOR AND ITS AFFILIATES OR OF ANY SUBCONTRACTOR TO LESSOR AND
ITS AFFILIATES. LESSEE ALSO SHALL NOT BE REQUIRED TO INDEMNIFY ANY
INDEMNIFIED PARTY FOR (i) LIABILITIES RESULTING FROM ACTS (INCLUDING FAILURE
TO ACT) OF GROSS NEGLIGENCE OR WILLFUL MISCONDUCT OF SUCH INDEMNIFIED PARTY,
(ii) DAMAGE TO OR DESTRUCTION OF PROPERTY OF AN INDEMNIFIED PARTY, WHILE
WITHIN SUCH INDEMNIFIED PARTY'S SOLE CARE, CUSTODY AND CONTROL, TO THE EXTENT
RESULTING FROM THE ACTS (INCLUDING FAILURE TO ACT) OF AN EMPLOYEE OF LESSOR
AND ITS AFFILIATES OR OF ANY SUBCONTRACTOR TO
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LESSOR AND ITS AFFILIATES, (iii) ACTS, OMISSIONS OR EVENTS THAT OCCUR AFTER
FULL AND FINAL COMPLIANCE BY LESSEE WITH THE TERMS OF THIS LEASE OR AFTER AN
AIRCRAFT, ANY SERVICED ENGINE OR AN ENGINE WHICH IS NOT A SERVICED ENGINE OR
PART HAS BEEN RETURNED TO LESSOR PURSUANT TO THE TERMS HEREOF, OR THE POOLING
AGREEMENT AS SUCH ACTS, OMISSIONS OR EVENTS RELATE TO SUCH RETURNED AIRCRAFT,
ANY SERVICED ENGINE, OR AN ENGINE WHICH IS NOT A SERVICED ENGINE OR PART
AFTER ITS RETURN; OR (iv) ANY TAX EXCEPT TO THE EXTENT AND AS SET FORTH IN
SECTION 16 HEREOF AND SECTION 3(h) OF EXHIBIT E.
(b) INDEMNIFICATION FOR NEGLIGENT ACTS. WITHOUT LIMITING SECTION 15(a),
LESSOR AND LESSEE EXPRESSLY INTEND THAT LESSEE SHALL HOLD HARMLESS, DEFEND AND
INDEMNIFY EACH INDEMNIFIED PARTY AGAINST CLAIMS (OTHER THAN CLAIMS THAT ARE
EXPRESSLY EXCEPTED IN SECTION 15(a)) THAT ARISE AS A RESULT OF THE NEGLIGENCE
(WHETHER ACTIVE, PASSIVE OR IMPUTED) OF LESSOR OR ANY OTHER INDEMNIFIED PARTY
AND AS A RESULT OF THE JOINT OR CONCURRENT NEGLIGENCE (WHETHER ACTIVE, PASSIVE
OR IMPUTED) OF LESSOR, ANY OTHER INDEMNIFIED PARTY AND LESSEE.
(c) DEFENSE OF CLAIMS; SETTLEMENT. IF ANY INDEMNIFIED PARTY SHALL HAVE
KNOWLEDGE OF ANY CLAIM OR LIABILITY REQUIRED TO BE INDEMNIFIED AGAINST UNDER
THIS SECTION 15, SUCH INDEMNIFIED PARTY SHALL GIVE REASONABLY PROMPT WRITTEN
NOTICE THEREOF TO LESSEE AFTER BECOMING AWARE OF SUCH CLAIM, BUT THE FAILURE OF
SUCH INDEMNIFIED PARTY SO TO NOTIFY LESSEE SHALL NOT RELIEVE LESSEE FROM ANY
LIABILITY THAT IT WOULD OTHERWISE HAVE TO SUCH INDEMNIFIED PARTY HEREUNDER
EXCEPT TO THE EXTENT, AND ONLY TO THE EXTENT, THAT LESSEE DEMONSTRATES THAT THE
DEFENSE OF SUCH CLAIM OR LIABILITY IS PREJUDICED THEREBY. LESSEE AND LESSEE'S
INSURERS SHALL HAVE THE RIGHT, AT THEIR SOLE COST AND EXPENSE, TO INVESTIGATE,
DEFEND OR, EXCEPT AS LIMITED HEREINAFTER, COMPROMISE ANY CLAIM FOR WHICH
INDEMNIFICATION IS SOUGHT UNDER THIS SECTION 15 UPON ACKNOWLEDGMENT BY LESSEE OR
SUCH INSURER OF ITS LIABILITIES TO EACH INDEMNIFIED PARTY IN RESPECT THEREOF.
LESSEE SHALL ASSUME ALL RESPONSIBILITY FOR ANY CLAIM COVERED BY THE FOREGOING
INDEMNITY, AND THE INDEMNIFIED PARTY SHALL PROVIDE REASONABLE ASSISTANCE AND
COOPERATION DURING THE DEFENSE OR SETTLEMENT OF THE CLAIM. EXCEPT AS LIMITED
HEREAFTER, LESSEE SHALL HAVE COMPLETE CONTROL OF THE DEFENSE OR SETTLEMENT OF
SUCH CLAIM OR COMPROMISE THEREOF; PROVIDED THAT COUNSEL SELECTED BY LESSEE SHALL
BE REASONABLY ACCEPTABLE TO THE INDEMNIFIED PARTY. NO COMPROMISE OR SETTLEMENT
OF ANY CLAIM MAY BE EFFECTED BY LESSEE WITHOUT THE INDEMNIFIED PARTY'S CONSENT,
WHICH CONSENT SHALL NOT BE UNREASONABLY WITHHELD; PROVIDED, NO CONSENT SHALL BE
REQUIRED IF (i) THERE IS NO FINDING OR ADMISSION OF ANY VIOLATION OF ANY LAW BY
THE INDEMNIFIED PARTY OR ANY VIOLATION OF THE RIGHTS OF ANY PERSON BY THE
INDEMNIFIED PARTY, (ii) THERE IS NO EFFECT ON ANY CLAIM
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THAT MAY BE MADE BY THE INDEMNIFIED PARTY, AND (iii) THE RELIEF PROVIDED IS
THE SOLE RESPONSIBILITY OF LESSEE. EACH INDEMNIFIED PARTY SHALL HAVE THE
RIGHT, BUT NOT THE DUTY, AT ITS OWN EXPENSE, TO PARTICIPATE IN THE DEFENSE
AND/OR SETTLEMENT OF ANY CLAIM WITH COUNSEL OF ITS OWN CHOOSING WITHOUT
RELIEVING LESSEE OF ANY OBLIGATIONS HEREUNDER. LESSEE AND ITS COUNSEL SHALL
COOPERATE WITH THE INDEMNIFIED PARTY'S COUNSEL AND SHALL SUPPLY THE
INDEMNIFIED PARTY WITH SUCH INFORMATION REASONABLY REQUESTED BY THE
INDEMNIFIED PARTY AS IS NECESSARY OR ADVISABLE FOR THE INDEMNIFIED PARTY TO
PARTICIPATE IN ANY PROCEEDING TO THE EXTENT PERMITTED BY THIS SECTION 15, BUT
CONTROL OF THE MATTER SHALL REMAIN WITH LESSEE.
ANY PAYMENT OR INDEMNITY PURSUANT TO THIS SECTION 15 SHALL INCLUDE THE
AMOUNT, IF ANY, NECESSARY TO HOLD THE INDEMNIFIED PARTY HARMLESS ON AN AFTER-TAX
BASIS (TAKING INTO ACCOUNT ANY CURRENT TAX BENEFITS TO WHICH ANY SUCH
INDEMNIFIED PARTY IS ENTITLED) AS A RESULT OF THE MATTER INDEMNIFIED AGAINST
UNDER THIS SECTION 15 FROM ALL TAXES REQUIRED TO BE WITHHELD BY LESSEE OR PAID
BY SUCH INDEMNIFIED PARTY AS A RESULT OF SUCH PAYMENT OR INDEMNITY UNDER THE
LAWS OF ANY FEDERAL, STATE OR LOCAL GOVERNMENT OR TAXING AUTHORITY IN THE UNITED
STATES OR ANY TERRITORY, COMMONWEALTH OR POSSESSION OF THE UNITED STATES OR BY
ANY FOREIGN GOVERNMENT OR ANY POLITICAL SUBDIVISION OR TAXING AUTHORITY THEREOF.
(d) INDEMNIFICATION BY LESSOR. IF A PERSON WHICH HAS A LIEN ON ANY
SERVICED ENGINE TAKES POSSESSION OF OR INTERFERES WITH LESSEE'S QUIET ENJOYMENT
OR USE OF A SERVICED ENGINE, LESSOR SHALL INDEMNIFY AND HOLD HARMLESS LESSEE
FROM ANY AND ALL COSTS, LIABILITIES AND DAMAGES INCURRED BY LESSEE RELATING TO
OR ARISING THEREFROM.
(e) SURVIVAL. THE RIGHTS AND OBLIGATIONS OF THE PARTIES UNDER THIS
SECTION 15 SHALL SURVIVE ANY TRANSFER OF TITLE OR POSSESSION OF THE SERVICED
AIRCRAFT, ANY SERVICED ENGINE OR ANY SERVICED PART, ANY TERMINATION OR
EXPIRATION OF THIS AGREEMENT OR ANY IMPOSSIBILITY OF PERFORMANCE OF THIS
AGREEMENT OR FRUSTRATION OF PURPOSE OF THIS AGREEMENT.
Section 16. GENERAL TAX INDEMNITY.
(a) TAX INDEMNITY. (i) Except as provided in Section 16(b), Lessee agrees
that each payment of Rent and any other amounts payable to Lessor (with any
affiliate of Lessor and their respective successors, permitted assigns,
shareholders, directors, officers, employees, agents and servants referred to
herein as a "TAX INDEMNIFIED PARTY") by Lessee under this Lease shall be paid in
full without any deduction or withholding with respect to Taxes of any nature
whatsoever imposed by the United States or any other Taxing Authority unless
Lessee is prohibited by Applicable Law from doing so, in which event Lessee
shall (a) ensure that the deduction or withholding does not
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exceed the minimum amount legally required; (b) immediately pay to Lessor or
any other Person entitled to receive such payment an additional amount (as
Supplemental Rent) in such amount, net of any Taxes thereon, and at such
time as shall result in the net amount actually received by Lessor or such
other Person being, after all deductions or withholdings, equal to the full
amount which would have been received by Lessor or such other Person had such
deduction or withholding not been made and shall be free of expense to the
Lessor or such other Person for collection or other charges; (c) pay to the
relevant Taxing Authority within the period for payment permitted by
Applicable Law the full amount of all deductions or withholdings; and (d)
upon the request of Lessor or such other Person furnish to Lessor or such
other Person, as the case may be, within the period for payment permitted by
Applicable Law, an official receipt of the relevant Taxing Authority for all
amounts deducted or withheld as aforesaid; and
(ii) Except as provided in Section 16(b) hereof, Lessee shall pay,
protect, save, and on written demand shall indemnify and hold harmless on an
after-tax basis each Tax Indemnified Party from and against any and all Taxes
imposed against any Tax Indemnified Party, Lessee or the Serviced Aircraft by
any Taxing Authority in connection with or relating to (A) the construction,
financing, refinancing, purchase, acquisition, acceptance, rejection, delivery,
nondelivery, transport, ownership, registration, reregistration, assembly,
possession, repossession, operation, location, use, condition, maintenance,
repair, sale, return, abandonment, preparation, installation, storage,
redelivery, manufacture, leasing, subleasing, modification, rebuilding,
importation, reimportation, transfer of title, transfer of registration,
exportation, reexportation or other application or disposition of, or the
imposition of any Lien (or the incurrence of any liability to refund or pay over
any amount as the result of any Lien) on, the Serviced Aircraft, the Serviced
Airframe, and any Serviced Engine or any Serviced Part or interest therein,
(B) payments of Basic Rent or Supplemental Rent or the receipts or earnings
arising therefrom or received with respect to the Serviced Aircraft, the
Serviced Airframe, any Serviced Engine or any Serviced Part or interest therein,
(C) the Serviced Aircraft, any Serviced Airframe, any Serviced Engine or any
Serviced Part or interest therein, (D) otherwise with respect to or in
connection with the transactions contemplated by this Lease, and (E) any
out-of-pocket penalties, late payment fees, interest, costs and expenses
fairly attributed to any of the foregoing incurred by any Tax Indemnified
Party.
(b) EXCLUSIONS FROM GENERAL TAX INDEMNITY. The provisions of
subsection 16(a) shall not apply to a Tax Indemnified Party in the case of:
(i) Taxes that are imposed on or measured by the net income, excess
profits, receipts (other than any excise or gross receipts tax imposed by
the State of Hawaii), franchises, capital or conduct of business of such
Tax Indemnified Party, other than any such taxes which are imposed in lieu
of any sales, use or value added taxes;
(ii) any other Taxes based on, or measured by, the net income of such
Tax Indemnified Party (other than (x) Taxes which are, or are in the nature
of, sales, use or rental taxes or (y) Taxes imposed by any Taxing Authority
(other than a taxing authority for the jurisdiction in which such Tax
Indemnified Party is doing business) as a result of a nexus between the
jurisdiction of the Taxing Authority and any Item of Equipment or any Part
or any part or the activities in the jurisdiction of the Taxing Authority
of Lessee, any sublessee
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or any other user of the Aircraft (other than such Tax Indemnified Party or
any Affiliate thereof) or any Affiliate of any of the foregoing);
(iii) Taxes that are imposed as a result of (y) any voluntary
sale, assignment, transfer or other disposition by such Tax Indemnified
Party of any interest of such Tax Indemnified Party in the Aircraft, the
Airframe, any Serviced Engine, any Part, or any interest therein, unless
such sale, assignment, transfer or disposition results from (1) action
taken by or on behalf of such Tax Indemnified Party as provided in or
permitted by this Lease in connection with or by reason of any Lessee Event
of Default that has occurred and is continuing or any exercise by the
Lessor of any of its remedies in connection with any such Lessee Event of
Default as provided in or permitted by the Lease, or (2) any replacement or
substitution by the Lessee of any Engine or any Part; or (z) any
involuntary transfer of any of the foregoing interests in connection with
any bankruptcy or other proceeding for the relief of debtors in which such
Tax Indemnified Party is the debtor or any foreclosure by a creditor of
such Tax Indemnified Party;
(iv) Taxes in the nature of penalties, additions to tax, interest or
fines resulting directly from the negligence of the Tax Indemnified Party
in connection with the preparation or filing of any tax return unless such
Tax Indemnified Party files any tax return in a manner requested by Lessee,
required to be filed by such Tax Indemnified Party without regard to the
transactions contemplated by this Lease, the payment of any taxes shown
thereon or the conduct of any proceeding in respect thereof, except to the
extent attributable to the failure of Lessee to perform its obligations or
to otherwise perform its duties and responsibilities pursuant to this
Lease, including, without limitation, the obligation to make payments
hereunder;
(v) so long as no Lessee Default or Event of Default shall be
continuing, Taxes imposed with respect to any period after (i) the
expiration of the Term and the return of the Aircraft to the Lessor in
accordance with Section 5 of this Lease or (ii) the earlier discharge in
full of Lessee's obligation to pay the Stipulated Loss Value and all other
amounts due under this Lease; provided, however, that this exception shall
not apply to Taxes (x) relating to events occurring or matters arising upon
or prior to such expiration and return or discharge, or (y) imposed on or
with respect to any payments due after such expiration and return or
discharge until after such payments have been made;
(vi) Taxes to the extent of the excess of such Taxes over the amount
of such Taxes which would have been imposed and indemnified against had
there not been a sale, assignment, transfer or other disposition (whether
voluntary or, if resulting from bankruptcy, foreclosure (other than
foreclosure resulting from a Lessee Event of Default) or similar
proceedings in which such Tax Indemnified Party is the debtor, involuntary)
by a Tax Indemnified Party of any interest of such Tax Indemnified Party in
the Aircraft, the Airframe, any Serviced Engine, or any Part, unless such
transfer results from action taken by or on behalf of such Tax Indemnified
Party after a Lessee Event of Default has occurred and while it is
continuing or any exercise by the Lessor of any of its remedies in
connection with any such Lessee Event of Default;
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(vii) Taxes arising out of or caused by any willful misconduct or
gross negligence of such Tax Indemnified Party;
(viii) with respect to any Tax Indemnified Party, any Tax that
results solely from such Tax Indemnified Party or a related Tax Indemnified
Party engaging in transactions other than those contemplated by this Lease
or any Long-Term Agreement, or those in which such Tax Indemnified Party is
currently engaged;
(ix) sales tax incurred by Lessor in connection with the maintenance
of the Serviced Aircraft pursuant to Attachment A to Exhibit E hereto,
other than any such tax, whether in the form of a sales tax, gross receipts
tax or other functional equivalent of a sales tax imposed by the State of
Hawaii;
(x) any Tax to the extent such Tax would not have been imposed if a
Tax Indemnified Party or a related Tax Indemnified Party had not engaged in
activities in the jurisdiction imposing such Tax which activities are
unrelated to the transactions contemplated by the this Lease or the other
Long Term Agreements, but only to the extent such Tax would not have been
payable in the absence of such unrelated activities; or
(xi) any failure of a Tax Indemnified Party to comply with (I)
certification, information, documentation, reporting or other similar
requirements concerning the nationality, residence, identity or connection
with the jurisdiction imposing such Tax, if such compliance is required by
statute or by regulation of the jurisdiction imposing such Tax as a
precondition to relief or exemption from such Tax; or (II) any other
certification, information, documentation, reporting or other similar
requirements under the Tax laws or regulations of the jurisdiction imposing
such Tax that would establish entitlement to otherwise applicable relief or
exemption from such Tax; provided, however, that the exclusion set forth in
this subsection 16(a)(x) shall not apply if (v) such failure to comply was
due to a failure of the Lessee to provide such Tax Indemnified Party with
the information required to be supplied by the Lessee in order for such Tax
Indemnified Party to comply with such requirement or due to a failure of
the Lessee to notify such Tax Indemnified Party of such requirement and
such Tax Indemnified Party was not otherwise aware of such requirement; or
(w) such failure to comply was done upon the advice, concurrence and/or
direction or with the knowledge of the Lessee.
(c) CALCULATION OF GENERAL TAX INDEMNITY PAYMENTS.
(i) Lessee agrees that, with respect to any payment or indemnity to a
Tax Indemnified Party under Section 16 hereof, the Lessee's indemnity
obligations shall include the payment of an amount necessary to hold such
Tax Indemnified Party harmless on an after-tax basis from all Taxes
required to be paid by such Tax Indemnified Party with respect to such
payment or indemnity (including any payments made pursuant to this
subsection 16(c) under the laws of any Taxing Authority.
(ii) If any Tax Indemnified Party shall realize a current tax benefit
as a result of any Taxes paid or indemnified against by the Lessee under
this Section 16 (except to the
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extent previously taken into account in computing the indemnity paid with
respect to such Taxes), such Tax Indemnified Party shall, so long as no
Lessee Event of Default shall have occurred and be continuing and no
payment is due and owing by Lessee under this Lease or any Long-Term
Agreement, pay to the Lessee an amount which, after subtraction of any
further tax savings such Tax Indemnified Party realizes as a result of
the payment thereof, is equal to the amount of such current tax benefit,
but only after the Lessee shall have made all payments then due and owing
to such Tax Indemnified Party pursuant to this Lease and the Long-Term
Agreements; PROVIDED that any subsequent loss of any tax benefit paid
to the Lessee hereunder shall be treated as a Tax subject to
indemnification in accordance with subsection 16(a) (without regard to any
exclusions set forth in subsection 16(b) or the provisions of
subsection 16(g); and PROVIDED FURTHER, that such Tax Indemnified Party
shall not be obligated to make any payment pursuant to this
subsection 16(c) to the extent that the amount of such payment would exceed
(x) the amount of all prior payments by Lessee to such Tax Indemnified
Party pursuant to this subsection 16(c), less (y) the amount of all prior
payments by such Tax Indemnified Party to Lessee hereunder. Each such Tax
Indemnified Party shall in good faith use reasonable efforts in filing its
tax returns and in dealing with taxing authorities to seek and claim any
such tax benefit.
(d) PAYMENT OF GENERAL TAX INDEMNITY. Unless otherwise requested by a Tax
Indemnified Party, or unless the Tax is being contested in accordance with the
provisions of subsections 16(g) hereof, the Lessee shall pay when due any Tax
for which it is liable pursuant to this Section 16 directly to the appropriate
Taxing Authority, or, upon written demand, shall reimburse a Tax Indemnified
Party for the payment of any such Tax made by such Tax Indemnified Party.
Within 30 days after the date of each payment by the Lessee of any Tax referred
to in the preceding sentence, the Lessee shall upon request furnish such Tax
Indemnified Party the original or a copy of the receipt for the Lessee's payment
of such Tax or such other evidence of payment of such Tax as is reasonably
acceptable to such Tax Indemnified Party. The Lessee shall also cause to be
furnished, promptly upon request, such data as such Tax Indemnified Party
reasonably may require that are within the reasonable control or possession of
Lessee and are not otherwise reasonably obtainable by such Tax Indemnified Party
to enable such Tax Indemnified Party to comply with the requirements of any
Taxing Authority in respect of any Tax referred to in subsection 16(a) hereof.
(e) VERIFICATION OF CALCULATIONS. At the request of Lessee, the accuracy
of any calculation of the amount or amounts payable to a Taxing Authority or a
Tax Indemnified Party pursuant to this Section 16 shall be verified by
independent public accountants selected by such Tax Indemnified Party and
reasonably satisfactory to Lessee, and such verification shall be binding on
both the Tax Indemnified Party and Lessee. In order, and to the extent
necessary, to enable such independent accountants to verify such amounts, such
Tax Indemnified Party shall provide to such independent accountants (for their
confidential use and not to be disclosed to Lessee or any other person) all
information reasonably necessary for such verification. Such verification shall
be at the expense of Lessee.
(f) REPORTS. If any report, return or statement is required to be filed
with respect to any Tax which is subject to indemnification under this
Section 16, the Lessee shall timely file the same,
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except for any such report, return or statement which a Tax Indemnified Party
has notified the Lessee that it intends to file. The Lessee shall either
file such report, return or statement so as to show the ownership of the
Aircraft in the Lessor and send a copy of such report, return or statement to
such Tax Indemnified Party or, where the Lessee is not so permitted to file
in the name of such Tax Indemnified Party, shall notify such Tax Indemnified
Party of such requirements and cooperate reasonably with such Tax Indemnified
Party with respect thereto.
(g) GENERAL TAX INDEMNITY CONTEST PROVISIONS.
(i) NOTICE. If a Tax Indemnified Party receives a written notice
regarding the imposition of a Tax, or if at the conclusion of any audit by
any Taxing Authority there is a proposed adjustment regarding any Tax which
if agreed to by such Tax Indemnified Party would result in the imposition
of a Tax for which such Tax Indemnified Party would seek indemnification
from the Lessee in an amount equal to or in excess of $25,000 pursuant to
this Section 16, such Tax Indemnified Party shall within the lesser of:
(A) 30 days after receipt of such written notice by a responsible officer
of such Tax Indemnified Party or promptly after the conclusion of such
audit; or (B) not less than ten (10) days prior to the expiration of the
statutory period to respond, so notify the Lessee in writing; provided,
however, that the failure so to notify the Lessee shall not diminish the
Lessee's obligations hereunder, except in the event that Lessee's rights to
contest such tax shall have been precluded by such failure, and after such
contest, Lessor would not have been liable for such taxes and except for
any interest or penalties related to any late or missed payment dates.
(ii) CONTEST PROVISIONS. If requested by the Lessee in writing, a Tax
Indemnified Party shall in good faith contest in the name of such Tax
Indemnified Party or, if requested by the Lessee and if such contest does
not in such Tax Indemnified Party's reasonable discretion involve or
potentially involve taxes imposed on such Tax Indemnified Party that are
not indemnified against hereunder, to contest in the name of the Lessee (or
permit the Lessee, if requested by the Lessee, to contest in the name of
the Lessee or the Tax Indemnified Party) the validity, applicability and
amount of the imposition of any Tax or any proposed adjustment that would
give rise to the proposed imposition of any Tax by (a) resisting payment
thereof, if such Tax Indemnified Party in its sole and reasonable
discretion shall determine such course of action to be appropriate, (b) not
paying the same except under protest, if protest is necessary and proper,
or (c) if payment shall be made, using reasonable efforts to obtain a
refund thereof in appropriate administrative and judicial proceedings;
provided, however, that (u) such Tax Indemnified Party shall not be
required to contest such imposition or proposed adjustment if the aggregate
amount of an indemnity on an after-tax basis, would be less than $25,000,
(v) no Lessee Event of Default has occurred and is continuing, (w) such Tax
Indemnified Party has been provided with an opinion of independent tax
counsel selected by such Tax Indemnified Party and reasonably acceptable to
the Lessee (the cost of which shall be borne by the Lessee) to the effect
that a reasonable basis in law or in fact exists that such Tax Indemnified
Party will prevail in such contest, (x) such Tax Indemnified Party, at its
sole option, may at any time forego any and all administrative appeals,
proceedings, hearings and conferences with any Taxing Authority and, in
lieu thereof, continue to contest the claim in any permissible judicial
forum selected
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by such Tax Indemnified Party, (y) Lessee shall have agreed
to pay such Tax Indemnified Party (or, in the case of item (iii) below,
lend to such Tax Indemnified Party on an interest-free basis (and in such
case pay any additional amount as shall be required to hold such Tax
Indemnified Party harmless on a net after-tax basis from any adverse tax
consequences attributable to the loan), on demand, all reasonable
out-of-pocket costs and expenses which such Tax Indemnified Party incurs in
connection with and reasonably allocable to contesting such imposition or
adjustment, including, without limitation, (i) all legal, accountants' and
investigatory fees and disbursements, (ii) the amount of any interest,
penalties or additions to tax (to the date such payment is made) payable as
a result of contesting such adjustment, and (iii) if such contest is to be
initiated by the payment of, and the claiming of a refund for, the amount
of such imposition or adjustment, funds sufficient to make such payment of,
and the claiming of a refund for, the amount of such imposition or
adjustment, funds sufficient to make such payment (and in the event such
contest is finally determined adversely, the amount of such loan shall be
applied against the Lessee's obligation to indemnify such Tax Indemnified
Party for the Tax which was the subject of such contest), and (z) such
proceedings do not involve any risk (other than a remote risk) of the sale,
forfeiture or loss of the Aircraft, the Airframe, any Serviced Engine or
any Part or interest therein or, if there is such a risk, Lessee has
provided to such Tax Indemnified Party a bond in form and substance
reasonably satisfactory to such Tax Indemnified Party in an amount
sufficient to protect such Tax Indemnified Party from any detriment that
would be suffered by the Lessor as a result of such sale, forfeiture, or
loss or has otherwise protected such Tax Indemnified Party in a manner
acceptable to such Tax Indemnified Party and there is no risk or the
imposition of criminal penalties. Such Tax Indemnified Party will consult
with Lessee regarding any contest and will consider in good faith any
suggestions made by Lessee with respect to the most favorable forum for,
and the conduct of, such contest; provided, however, that, unless such Tax
Indemnified Party elects to permit Lessee to conduct such contest, such
contest shall be controlled by such Tax Indemnified Party and conducted by
independent counse selected by such Tax Indemnified Party or by "in-house"
counsel of such Tax Indemnified Party and reasonably acceptable to Lessee.
In the event that such Tax Indemnified Party elects to permit the Lessee to
conduct such contest, the independent counsel selected by the Lessee to
conduct such contest shall be reasonably satisfactory to such Tax
Indemnified Party. If requested by the Lessee in writing, such Tax
Indemnified Party will appeal (or, if desired by such Tax Indemnified
Party, permit the Lessee to appeal) any adverse judicial determination,
provided that, as a condition to the commencement of the appeal of such
adverse judicial determination, (a) such Tax Indemnified Party shall
receive, at the Lessee's expense, an opinion of independent counsel,
selected by such Tax Indemnified Party and reasonably satisfactory to
Lessee, to the effect that a more likely than not probability of success
exists for such appeal and (b) Lessee shall have acknowledged its liability
to such Indemnified Party for an indemnity payment as a result of such tax
claim if such Tax Indemnified Party shall not prevail in the contest;
provided, however, that such Tax Indemnified Party shall not be required to
appeal any adverse judicial determination to the United States Supreme
Court.
Notwithstanding anything contained in this subsection 16(g) to the
contrary, no Tax Indemnified Party shall be required to contest any claim if the
subject matter thereof shall be of a
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continuing nature and shall have previously been decided pursuant to the
contest provisions of this subsection 16(g) (including a contest pursuant to
the contest provisions hereof in which the Tax Indemnified Party may be
required to contest such a claim if there shall have been a change in the law
(including, without limitation, amendments to statutes or regulations,
administrative ruling and court decisions)) or Lessee shall have provided new
facts after such claim shall have been so previously decided, and such Tax
Indemnified Party shall have received an opinion of independent tax counsel
selected by such Tax Indemnified Party and approved by the Lessee (the cost
of which shall be borne by the Lessee) to the effect that, as a result of
such change or new facts, it is more likely than not that the position which
such Tax Indemnified Party or the Lessee, as the case may be, had asserted in
such previous contest, would prevail; PROVIDED that the provisions of this
paragraph shall not require an Tax Indemnified Party to file an amended tax
return or refund claim for any prior taxable period.
(h) COMPROMISE OR SETTLEMENT. A Tax Indemnified Party shall have the
right to settle or compromise a contest if such Tax Indemnified Party has
provided Lessee a reasonable opportunity to review a copy of that portion of
the settlement or compromise proposal which relates to the Tax for which such
Tax Indemnified Party is seeking indemnification hereunder, PROVIDED that, if
(i) such Tax Indemnified Party fails to provide the Lessee such a reasonable
opportunity to review such portion of such proposal or (ii) after such
reasonable opportunity to review such proposal the Lessee in writing reasonably
withholds its consent to all or part of such settlement or compromise proposal,
the Lessee shall not be obligated to indemnify such Tax Indemnified Party
hereunder to the extent of the amount attributable to the Tax to which such
settlement or compromise relates as to which the Lessee has reasonably withheld
its consent. If such Tax Indemnified Party effects a settlement or compromise
of such contest without giving notice to the Lessee or, notwithstanding that the
Lessee has reasonably withheld its consent thereto, such Tax Indemnified Party
shall repay to the Lessee such amounts theretofore advanced by the Lessee
pursuant to clause (y)(iii) of subsection 16(g)(i) hereof as relate to such
claim, to the extent the Lessee has reasonably withheld its consent to the
settlement or compromise thereof.
(i) REFUNDS. If any Tax Indemnified Party shall obtain a refund of all or
any part of any Taxes that the Lessee shall have paid for such Tax Indemnified
Party or for which the Lessee shall have reimbursed such Tax Indemnified Party,
such Tax Indemnified Party shall, so long as no Default or Lessee Event of
Default shall have occurred and be continuing and no payment is due and owing by
the Lessee under this Agreement or any Long-Term Agreement, pay to the Lessee an
amount which is equal to the sum of the amount of such refund, plus any interest
received attributable thereto net of any net taxes payable by such Tax
Indemnified Party with respect to the receipt or accrual of such interest and
the payment thereof to the Lessee, but only after the Lessee shall have made all
payments then due and owing to such Tax Indemnified Party pursuant to this
Section 16; PROVIDED, HOWEVER, that any subsequent loss of any refund paid to
the Lessee hereunder shall be treated as a Tax subject to indemnification in
accordance with this Section 16 (without regard to any exclusions set forth in
subsection 16(b) or the provisions of subsection 16(g).
(j) FAILURE TO CONTEST. Notwithstanding anything to the contrary
contained in this subsection 16(g), a Tax Indemnified Party may at any time
decline to take any further action with respect to a proposed adjustment or the
imposition of a Tax; PROVIDED that if the Lessee has properly
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requested such action pursuant to, and is otherwise entitled to require any
action to be taken by a Tax Indemnified Party pursuant to the provisions of
subsection 16(g), and such Tax Indemnified Party has failed to contest, or
permit the Lessee to contest, such proposed adjustment or the imposition of
such Tax, such Tax Indemnified Party shall be deemed to have waived its right
to any Indemnity payment that would otherwise be payable by the Lessee
pursuant to this Section 16 in respect of such adjustment or the imposition
of such Tax. In such event, such Tax Indemnified Party shall reimburse the
Lessee for all amounts previously advanced by the Lessee to such Tax
Indemnified Party with respect to such proposed adjustment pursuant to clause
(y)(iii) of subsection 16(g) hereof. If an Tax Indemnified Party fails to
contest or to permit a contest hereunder, such Tax Indemnified Party will not
be required to pay over the Lessee any amount representing tax benefits
described in subsection 16(c)(B) hereof which result from the payment of
Taxes as to which such Tax Indemnified Party has been deemed to have waived
its right to any indemnity payment hereunder.
(k) INTEREST. To the extent permitted by applicable law, interest at the
Stipulated Interest Rate shall be paid, on demand, on any amount not paid when
due, pursuant to Section 16 until the same shall be paid. Such interest shall
be paid in the same manner as the unpaid amount in respect of which such
interest is due.
(l) EFFECT OF OTHER INDEMNITIES. The Lessee's obligations under the
indemnities provided for in this Agreement and the Long-Term Agreements shall be
those of a primary obligor whether or not the Person indemnified shall also be
indemnified with respect to the same matter under the terms of this Agreement,
any Lease or any Long-Term Agreement or any other document or instrument, and
the Person seeking indemnification from the Lessee pursuant to any provisions of
this Agreement may proceed directly against the Lessee without first seeking to
enforce any other right of indemnification.
Section 17. MISCELLANEOUS
(a) CONSTRUCTION; GOVERNING LAW. 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 Applicable Law, the parties hereby waive any provision of law which renders
any provisions 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 written instrument signed by the party against which the enforcement
of the change, waiver, discharge or termination is sought; and, in compliance
with Section 2A-208(b) of the Texas Business and Commerce Code requiring a
separate signature of this provision, Lessee has signed in the space provided
below. Any consent or approval specified herein of a party hereto may be
withheld entirely in such party's discretion unless it is herein expressly
provided that such consent may not be unreasonably withheld.
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No waiver of a breach of any provision of this Lease Agreement by either
party shall constitute a waiver of any subsequent breach of the same or any
other provision hereof, and no waiver shall be effective unless in writing.
HAWAIIAN AIRLINES, INC.
By:
------------------------------------------
Xxxxxxxx X. Xxxxx,
Vice President-Finance, Treasurer
and Assistant Corporate Secretary
By:
-----------------------------------------
Xxx X. Xxxxx,
Vice President, General Counsel
and Corporate Secretary
The captions in this Lease are for convenience of reference only and shall not
define or limit any of the terms or provisions hereof. THIS LEASE SHALL IN ALL
RESPECTS BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE
OF TEXAS (EXCLUDING THE CONFLICT OF LAW PROVISIONS THERETO), INCLUDING ALL
MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE.
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(b) NOTICES. All notices, offers, acceptances, approvals, waivers,
requests, demands and other communications hereunder or under any instrument,
certificate or other instrument delivered in connection with the transactions
described herein shall be in writing, shall be addressed as provided below and
shall be considered as properly given (a) if delivered in person, (b) if sent by
overnight delivery service (including, without limitation, Federal Express, UPS,
Xxxxx, Purolator, DHL, Air Borne, and other similar overnight delivery
services), (c) if sent by telecopier (upon receipt by the sender thereof of
evidence that a clean transmission of such telecopy was made to the recipient
thereof) and, in such case, dispatching a copy of such notice by the methods
described in clause (a) or (b) above. All notices shall be effective upon
delivery; PROVIDED that if any notice is tendered to an addressee, such notice
shall be effective upon tender. For the purposes of notice the addresses of the
parties shall be as set forth below; PROVIDED that any party shall have the
right to change its address for notice hereunder to any other location by giving
thirty (30) days' notice to the other parties in the manner set forth
hereinabove. The initial addresses of the parties hereto are as follows:
If to Lessor: American Airlines, Inc.
0000 Xxxx Xxxxxx Xxxxxxxxx
XX 5566
Xxxx Xxxxx, Xxxxx 00000
Attention: Vice President Corporate Development and Treasurer
Telecopier: (000) 000-0000
Telephone: (000) 000-0000; and
American Airlines, Inc.
Maintenance & Engineering Center
0000 X. Xxxxx Xxxx
Xxxxx, Xxxxxxxx 00000
Attention: Senior Vice President,
Maintenance and Engineering
Telecopier: (000) 000-0000
Telephone: (000) 000-0000
WITH COPIES TO: American Airlines, Inc.
0000 Xxxx Xxxxxx Xxxxxxxxx
XX 5675
Ft. Xxxxx, Xxxxx 00000
Attention: Corporate Secretary
Telecopier: (000) 000-0000
Telephone: (000) 000-0000; and
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Xxxxxx and Xxxxx, L.L.P.
000 Xxxx Xxxxxx
0000 XxxxxxxXxxx Xxxxx
Xxxxxx, Xxxxx 00000-0000
Attention: Xxxxxx X. Xxxxxx
Telecopier:(000 000-0000
Telephone: (000) 000-0000
IF TO LESSEE: Hawaiian Airlines, Inc.
0000 Xxxxxxx Xxxxxx
Xxxxx X000
Xxxxxxxx, Xxxxxx 00000
Attention: Vice President-Finance
Telecopier: (000) 000-0000
Telephone: (000) 000-0000
WITH COPIES TO: Hawaiian Airlines, Inc.
0000 Xxxxxxx Xxxxxx
Xxxxx X000
Xxxxxxxx, Xxxxxx 00000
Attention: Vice President-General Counsel
Telecopier: (000) 000-0000
Telephone: (000) 000-0000
(c) LESSOR'S RIGHT TO PERFORM. If Lessee fails to perform any of its
obligations hereunder, Lessor may (but shall not be obligated to) discharge such
obligation, and the amount of the expenses of Lessor incurred in connection with
such discharge shall be deemed Supplemental Rent, payable by Lessee upon demand
together with interest thereon at the Stipulated Interest Rate to but excluding
the date of payment. Lessor shall use its best efforts to give Lessee prior
notice of Lessor's intention to discharge any such obligation.
(d) CONFIDENTIALITY.
(i) CONFIDENTIAL INFORMATION. For purposes of this Agreement,
confidential information shall mean any and all (i) trade secrets,
(ii) confidential or other proprietary information of a party or its
Affiliates concerning past, present or future research, development,
business activities or affairs, finances, properties, methods of operation,
processes and systems, (iii) customer lists, and (iv) other customer
information, whether oral, written or contained in any magnetic, electronic
or other media; PROVIDED that in order for a party's information to be
considered confidential hereunder such information, if non-oral, must be
marked by such party as confidential; and PROVIDED FURTHER that oral
information must be specified as confidential at the time of disclosure
(collectively, "Confidential Information"). Notwithstanding the foregoing,
the parties expressly acknowledge and agree that the terms and conditions
of this Agreement set forth in Exhibit E of this Agreement constitute
Confidential Information. The party which receives
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Confidential Information from the other party agrees to maintain such
information in secrecy at all times, using the same degree of care with
respect to such Confidential Information as it uses in protecting its own
proprietary information, trade secrets and similar items; PROVIDED that
Confidential Information may be used in an action by one party to this
Agreement against the other if subject to the conditions set forth in (ii)
below. Information of either party which would otherwise be considered
Confidential Information shall not be considered Confidential Information
if such information is in the public domain, or is placed in the public
domain through no violation of this Agreement, or is lawfully obtained from
another source free of restriction.
(ii) USE OF CONFIDENTIAL INFORMATION. Except to the extent expressly
permitted in Section 4(l) of Exhibit E, neither party shall sell, transfer,
publish, disclose, display or otherwise make available the Confidential
Information of the other party to any third party (and third parties shall
be deemed also to include Affiliates of the party so restricted which are
not parents or subsidiaries), except as may be required by Applicable Law
in which case the party from whom disclosure is sought shall promptly
notify the other party. To the extent that the other party objects to
disclosure of such Confidential Information, the party from which
disclosure is sought shall (i) use reasonable and lawful efforts to resist
making any disclosure of such Confidential Information, (ii) use reasonable
and lawful efforts to limit the amount of such Confidential Information to
be disclosed, and (iii) use all reasonable efforts to obtain a protective
order or other appropriate relief to minimize the further dissemination of
any Confidential Information to be disclosed. In addition, neither party
shall disclose the Confidential Information of the other party to any
employee or agent except on a need-to-know basis. Each party shall use
reasonable efforts to inform all such employees and agents that the
Confidential Information of the other party is subject to this
non-disclosure obligation. Furthermore, neither party shall use the
Confidential Information of the other party for any purpose other than as
expressly provided in this Agreement.
(iii) TERMINATION. Upon termination of this Agreement for any
cause or reason, each party shall, within ninety (90) days of such
termination, either deliver to the other party or destroy all of such other
party's Confidential Information (including all copies thereof other than
copies of this Agreement) at the option of the other party then in its
possession and shall purge any copies thereof encoded or stored on magnetic
or other electronic media or processors; PROVIDED that neither Lessee nor
Lessor shall be required to purge or destroy any Confidential Information
that is reasonably necessary in connection with the resolution of any
disputes which may have arisen pursuant to the terms of this Agreement.
(iv) NO ADEQUATE REMEDY. Each party acknowledges and agrees that the
other party will have no adequate remedy at law if there is a breach or
threatened breach of this Section 17(d) and, accordingly, that the other
party shall be entitled to an injunction against such breach. Nothing
herein shall be construed as a waiver of any other legal or equitable
remedies that may be available to either party if the other party breaches
this Section 17(d).
(v) SURVIVAL. The restrictions of this Section 17(d) shall survive
for a period of eight (8) years after the termination or expiration of this
Agreement.
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(vi) AFFILIATES. The Affiliates of Lessor and Lessee shall comply in
all respects with the restrictions of this Section 17(d) and Lessor and
Lessee, respectively, shall in all respects be responsible for their
compliance.
(vii) OTHER CONFIDENTIALITY AGREEMENTS. The provisions of this
Section 17(d) are in addition to, and shall not be deemed to affect the
terms and provisions of, the Confidentiality Agreement. To the extent the
terms hereof may be deemed to be inconsistent with the terms of the
Confidentiality Agreement or such Confidentiality Agreement shall be
silent, this Agreement shall control with respect to this Agreement and any
Confidential Information relating hereto. Upon the written consent of
Lessor, which consent shall not be unreasonably withheld, Lessee may
provide this Agreement to third party lenders or investors of Lessee;
PROVIDED that the party receiving this Agreement shall, prior to obtaining
it, enter into a confidentiality agreement with Lessee for the benefit of
Lessor in substantially the form of this Section 17(d).
(e) COUNTERPARTS. This Lease and the Lease Supplement No. 1 may be
executed in several counterparts, each of which shall be deemed an original, and
all such counterparts shall constitute one and the same instrument. To the
extent 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 counterpart marked as the "Original" and containing
the receipt therefor executed by the applicable secured party on the signature
page thereof.
(f) GRANT OF SECURITY INTEREST BY LESSOR. In compliance with the terms of
this Section, Lessor may grant a security interest in this Lease as collateral
for a loan provided Lessor notifies Lessee at least ten (10) Business Days
before granting such security interest. The rights of Lessee under this Lease
shall be superior in all respects to the rights of any such lender and Lessor
shall require any such lender to agree in writing in form and substance
reasonably satisfactory to Lessee that such lender's rights in and to the
Aircraft and under the Lease shall be subject and subordinate to the terms of
this Lease to receive all such performance from Lessor as may from time to time
be required by the terms hereof. Lessee agrees to reasonably cooperate with
Lessor in connection with Lessor's efforts to grant such security interest and
to provide, at Lessor's cost and expense, such documents and certificates in
connection therewith as Lessor may reasonably request, PROVIDED, that anything
in this Section 17(f) to the contrary notwithstanding, the consummation of any
such loan shall not increase the actual or potential responsibilities or
liabilities of the Lessee or deprive Lessee of any of its rights or privileges
under the Long-Term Agreements.
(g) SURVIVAL. Except as otherwise expressly set forth herein or in the
Long-Term Agreements, the representations, warranties and covenants set forth in
this Agreement, and the obligations hereunder, shall survive any transfer of
title or possession of the Serviced Aircraft, any Serviced Engines or any
Serviced Part, any termination or expiration of this Agreement or any
impossibility of performance of this Agreement or frustration of purpose of this
Agreement.
(h) ASSIGNMENT. SUBJECT TO THE TERMS HEREOF, THIS AGREEMENT SHALL BIND
AND BENEFIT LESSOR, LESSEE, AND THEIR RESPECTIVE SUCCESSORS AND PERMITTED
ASSIGNS. LESSOR MAY ASSIGN ANY OR ALL OF ITS RIGHTS AND/OR
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DELEGATE ANY OR ALL OF ITS OBLIGATIONS HEREUNDER TO ANY AFFILIATE OF LESSOR;
PROVIDED THAT LESSOR SHALL NOT ASSIGN ANY OR ALL OF ITS RIGHTS AND/OR
DELEGATE ANY OR ALL OF ITS OBLIGATIONS UNDER EXHIBIT E OR ANY RELATED
PROVISIONS OF THIS AGREEMENT TO ANY AFFILIATE THAT IS NOT CERTIFICATED BY THE
FAA TO PERFORM MAINTENANCE SERVICES. SUBJECT TO THE PROVISIONS OF SECTION
4(f) OF EXHIBIT E, LESSOR MAY SUBCONTRACT CERTAIN SPECIFIC TYPES OF
MAINTENANCE SERVICES CONSTITUTING LESS THAN ALL OR SUBSTANTIALLY ALL OF THE
MAINTENANCE SERVICES TO BE PERFORMED HEREUNDER, AND, IN CONNECTION THEREWITH,
ASSIGN CERTAIN OF ITS RIGHTS AND DELEGATE CERTAIN OF ITS OBLIGATIONS UNDER
EXHIBIT E AND ANY RELATED PROVISIONS OF THIS AGREEMENT. NOTWITHSTANDING
ANYTHING CONTAINED HEREIN TO THE CONTRARY, LESSOR MAY ASSIGN ALL OR
SUBSTANTIALLY ALL OF ITS RIGHTS AND/OR DELEGATE ALL OR SUBSTANTIALLY ALL OF
ITS OBLIGATIONS UNDER EXHIBIT E AND ANY RELATED PROVISIONS OF THIS AGREEMENT
TO ANY PERSON CERTIFICATED BY THE FAA TO PERFORM MAINTENANCE SERVICES SUBJECT
ONLY TO SECTION 3(f)(ii)(C) OF EXHIBIT E. LESSEE MAY NOT (EITHER VOLUNTARILY
OR INVOLUNTARILY) ASSIGN ANY OF ITS RIGHTS OR DELEGATE ANY OF ITS OBLIGATIONS
HEREUNDER.
(i) TRANSACTION EXPENSES. Lessee agrees to pay the reasonable
out-of-pocket costs and expenses incurred by Lessor in connection with the
preparation, execution and delivery of any amendments, modifications or
waivers requested by Lessee or resulting from any requests of Lessee under
this Agreement. Except as specifically set forth herein, each of Lessor and
Lessee shall be responsible for their own legal and out-of-pocket expenses
arising from the transactions contemplated herein.
(j) ENTIRETY. This Lease Agreement, the Lease Supplements, the
Confidentiality Agreement and the Letter of Credit embody the entire agreement
between the parties hereto and thereto concerning the subject hereof and thereof
and such agreements terminate and supersede all prior or contemporaneous
agreements, discussions, undertakings, and understandings, whether written or
oral, express or implied, between the parties hereto and thereto concerning the
subject hereof and thereof.
(k) FORCE MAJEURE. Lessor shall not be liable to Lessee for a failure or
delay in the performance of any obligation or agreement contained herein, if
such failure or delay arises from any cause beyond Lessor's reasonable control,
including any act, omission, or breach of this Lease Agreement by Lessee, acts
of God, action or regulation of any Governmental Authority, fire, the elements,
flood, earthquakes, explosions, accidents, mechanical or electrical failures,
acts of the public enemy, war, civil disturbance, rebellion, insurrection, work
stoppage, strikes (including any mechanic, flight attendant or pilot strike),
labor dispute or difference with workers, regardless of whether or not Lessor
(or its Affiliate) is capable of settling such labor problem, or any other
cause, whether similar or dissimilar, beyond Lessor's reasonable control;
PROVIDED, HOWEVER, that, notwithstanding the foregoing, with respect to
Maintenance Services and related obligations as provided in Exhibit E hereto,
the provisions of Section 4(c)(i) of Exhibit E shall apply.
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(l) INDEPENDENT CONTRACTOR; NO AGENCY.
Nothing in this Agreement is intended or shall be construed to create or
establish any agency, partnership, or joint venture or fiduciary relationship
between the parties and neither Lessee nor any of its Affiliates has any
authority to act for or to incur any obligations on behalf of or in the name of
Lessor or any of its Affiliates and neither Lessor nor any of its Affiliates has
any authority to act for or to incur any obligations on behalf of or in the name
of Lessee or any of its Affiliates by virtue of this Agreement. The parties
hereto acknowledge and agree that nothing contained herein creates any fiduciary
duties between the parties or their respective Affiliates.
(m) CERTAIN CONSENTS AND WAIVERS OF LESSEE.
(i) JURISDICTION. Except as set forth in Section 6 of Exhibit E
hereto,
(a) Each party hereto hereby irrevocably submits to the
exclusive jurisdiction of: (i) the United States District Court for the
Northern District of Texas, and of the courts of the State of Texas in
Tarrant County, and (ii) to the United States District Court for the
District of Hawaii (other than the Court), and of the courts of the State
of Hawaii in Honolulu County, for the purposes of any suit, action or other
proceeding arising out of this Lease Agreement or the subject matter hereof
brought by any other party, and (iii) any federal, state or foreign court
of competent jurisdiction where the In-Use Aircraft may be located from
time to time for the purpose of Lessor exercising any rights and remedies
under this Lease Agreement, including, without limitation, repossession of
the In-Use Aircraft. Lessor and Lessee each agrees that neither of them
will bring any suit, action or other proceeding arising out of this Lease
Agreement, the subject matter herein, or any of the transactions described
herein, in any jurisdiction other than the jurisdictions described above.
(b) To the extent permitted by applicable law, each party hereby
waives and agrees not to assert, by way of motion, as a defense or
otherwise, in any such suit, action or proceeding, any claim (i) that it is
not personally subject to the jurisdiction of the above-named courts, (ii)
that the suit, action or proceeding is brought in an inconvenient forum,
(iii) that it is immune from any legal process with respect to itself or
its property, (iv) that the venue of the suit, action or proceeding is
improper, or (v) that this Lease Agreement or the subject matter hereof may
not be enforced in or by such courts;
(c) Lessee agrees to designate CT Corporation in Texas as its
agent for service of process in Texas, and Lessor agrees to designate CT
Corporation in Hawaii as its agent for service of process in Hawaii.
Lessor and Lessee each agrees that submission to jurisdiction and
designation of an agent for service of process set forth above is made
solely for the express benefit of the other party and is effective solely
for purposes of this Lease Agreement;
(d) Final judgment against a party in any suit in any court of
competent jurisdiction shall be conclusive, and may be enforced in other
jurisdictions, to the extent permitted by Applicable Law, by suit on the
judgment, a certified and true copy of which, to
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the extent permitted by Applicable Law, shall be conclusive evidence of the
fact and the amount of any indebtedness or liability of the party therein
described; and
(e) To the extent that any party or any of its property is or
becomes entitled at any time to any immunity on the grounds of sovereignty
or otherwise, from any legal action, suit or proceeding, from setoff or
counterclaim, from the jurisdiction of any competent court, from service of
process, from attachment prior to judgment, from attachment in aid of
execution, or from jurisdiction, that party for itself and its property
does hereby irrevocably and unconditionally waive, and agrees not to plead
or claim any such immunity with respect to its obligations, liabilities or
any other matter arising hereof. Such agreement shall be irrevocable and
not subject to withdrawal in any and all jurisdictions including under the
Foreign Sovereign Immunities Act of 1976 of the United States of America.
(ii) WAIVER OF JURY TRIAL. LESSEE AND LESSOR IRREVOCABLY WAIVE TRIAL
BY JURY IN ANY ACTION OR PROCEEDING WITH RESPECT TO THIS LEASE AGREEMENT OR ANY
MATTER RELATED HERETO.
(iii) OTHER WAIVERS. LESSEE AGREES AND ACKNOWLEDGES THAT UPON THE
OCCURRENCE OF AN EVENT OF DEFAULT UNDER THIS LEASE AGREEMENT, LESSOR SHALL
SUFFER IRREPARABLE HARM FOR WHICH MONEY DAMAGES WILL NOT BE ADEQUATE OR CANNOT
BE READILY ASCERTAINED. IN FURTHERANCE THEREOF, LESSEE AGREES THAT IT WILL TAKE
NO ACTION TO HINDER, DELAY OR INTERFERE WITH ANY ACTIONS TAKEN BY LESSOR IN
CONNECTION WITH THE REPOSSESSION OF THE IN-USE AIRCRAFT. SPECIFICALLY, LESSEE
WILL NOT TAKE ANY ACTION WHICH WOULD REQUIRE THE LESSOR TO BREACH THE PEACE IN
CONNECTION WITH REPOSSESSION OF THE IN-USE AIRCRAFT. LESSEE CONSENTS TO THE
ISSUANCE OF ANY ORDER OF ANY COURT OF COMPETENT JURISDICTION ENABLING LESSOR TO
REPOSSESS THE IN-USE AIRCRAFT, FOLLOWING THE OCCURRENCE OF ANY EVENT OF DEFAULT,
WITHOUT THE NECESSITY OF LESSOR POSTING OR ISSUING ANY BOND. IN ADDITION,
LESSEE AGREES THAT UPON THE OCCURRENCE OF ANY EVENT OF DEFAULT DESCRIBED IN
SECTIONS 13A(I) OR (J) OF THE LEASE AGREEMENT, LESSEE SHALL NOT TAKE ADVANTAGE
OF ANY PERIODS SPECIFIED IN SECTIONS 365 OR 1110 OF THE BANKRUPTCY CODE DURING
WHICH IT MIGHT RETAIN POSSESSION OF THE IN-USE AIRCRAFT OR THE PROVISIONS OF THE
AUTOMATIC STAY SET FORTH IN SECTION 362 OF THE BANKRUPTCY CODE, AND, WITHOUT
LIMITING OTHER REMEDIES AVAILABLE TO LESSOR, SHALL EITHER IMMEDIATELY UPON THE
FILING OF ANY BANKRUPTCY PETITION TURN OVER THE IN-SERVICE AIRCRAFT TO LESSOR OR
PAY ALL AMOUNTS THEN DUE AND OWING HEREUNDER AND THEREAFTER ACCRUING UNDER THIS
LEASE AGREEMENT. IN THE EVENT THAT AN ORDER IS ISSUED GIVING LESSOR POSSESSION
OF ANY IN-USE AIRCRAFT, LESSEE HEREBY WAIVES ANY RIGHT IT MAY HAVE TO RETURN OF
POSSESSION OF SUCH AIRCRAFT, AND COVENANTS THAT IT WILL NOT SEEK ANY ORDER
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PERMITTING IT TO RETAIN OR REPOSSESS SUCH AIRCRAFT, BY POSTING A BOND OR
OTHERWISE. IN THE EVENT THAT ANY COURT DECLINES TO ISSUE AN ORDER PERMITTING
LESSOR TO REPOSSESS ANY IN-USE AIRCRAFT UNLESS LESSOR POSTS OR ISSUES A BOND, OR
LESSOR ELECTS NOT TO REQUEST THAT THE REQUIREMENT FOR SUCH A BOND BE WAIVED,
LESSEE HEREBY AGREES THAT (IF LESSOR SO ELECTS) THE AMOUNT OF SUCH BOND SHALL
NOT BE REQUIRED TO EXCEED ONE YEAR'S BASIC RENT FOR SUCH AIRCRAFT.
(n) OFFSET. Until all Deferred Basic Rent is paid under the Long-Term
Lease Agreement (provided that on the date all Deferred Basic Rent is paid
thereunder, all other Rent then due and payable thereunder and hereunder has
also been paid; such date being the "Setoff Release Date") Lessor, AMRCG, SABRE
and AMS shall each have the right to setoff and recoup any sums payable to
Lessee against any sums payable by Lessee to Lessor, AMRCG, SABRE or AMS
pursuant to this Lease Agreement, the other Long-Term Agreements or otherwise.
Until the Setoff Release Date Lessor shall also have the right to setoff and
recoup any amounts payable by Lessee to Lessor, AMRCG, SABRE or AMS pursuant to
this Lease Agreement, or the other Long-Term Agreements by drawing upon any
letter of credit or withdrawing any portion or all of the Deposit (which may
constitute all or a portion of the Letter of Credit). Nothing set forth in this
Subsection 17(n) or Subsection 17(n) of the Long-Term Lease Agreement, the July
Lease Agreement or the November Lease Agreement shall otherwise limit Lessor's
right to draw upon or withdraw from the Letter of Credit to the extent otherwise
set forth herein or in any Long-Term Agreement.
Section 18. TRUE LEASE
(a) INTENT OF THE PARTIES. It is the intent of the parties to this lease
that it will be a true lease and not a "finance lease" as defined in Section
168(f) of the Internal Revenue Code of 1954, as amended and in effect prior to
the Tax Reform Act of 1986 (P.L. 99-154) or a "conditional sale" as defined in
49 U.S.C. Section 40102(a)(18) (former 1301) and that the Lessor shall at all
times be considered to be the owner of the Aircraft which is the subject of this
Lease for the purposes of 49 U.S.C. Section 44103 (former 1401) and for all
Federal, state, city and local income taxes or for franchise taxes measured by
net income and that this Lease conveys to the Lessee no right, title or interest
in the Aircraft except as a lessee.
Section 19. ENFORCEABILITY IN JURISDICTIONS. 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.
Section 20. NO THIRD-PARTY BENEFICIARIES. Except for rights and
benefits conferred on certain of Lessor's Affiliates as set forth in this Lease
Agreement, all rights, remedies, and obligations of the parties hereunder shall
accrue or apply solely to the parties hereto or their permitted successors or
assigns and there is no intent to benefit any third parties.
Section 21. MAINTENANCE OBLIGATIONS. Lessee and Lessor agree that
notwithstanding the provisions of the Long-Term Lease Agreement, including
Exhibit F thereto, which by its terms
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relates to the provision of maintenance services by Lessor of all DC10-10
aircraft leased by Lessor to Lessee, the terms of this Lease Agreement shall
govern the maintenance of the Aircraft. The Long-Term Lease Agreement,
including Exhibit F thereto shall continue in full force and effect as to all
other Serviced Aircraft (as defined in the Long-Term Lease Agreement) other
than the aircraft which are subject to the 160 Lease Agreement, the 161 Lease
Agreement, the 125 Lease Agreement and the 171 Lease Agreement which shall
remain subject to the maintenance provisions set forth in Exhibit E of the
the 160 Lease Agreement, the 161 Lease Agreement, the 125 Lease Agreement and
the 171 Lease Agreement, respectively.
Section 22. AMENDMENT OF LONG-TERM LEASE AGREEMENT. Lessor and Lessee
agree that the occurrence of any Lessee Event of Default hereunder shall
constitute a "Lessee Event of Default" under the Long-Term Lease Agreement, the
160 Lease Agreement, the 161 Lease Agreement, the 125 Lease Agreement and the
171 Lease Agreement.
Section 23. SUBSTITUTION. During the Term, Lessor shall have the right
to substitute from time to time, on 90 days prior written notice to Lessee, a
comparable XxXxxxxxx Xxxxxxx XX00-00 aircraft (the "SUBSTITUTE AIRCRAFT") for
the Aircraft (the "REPLACED AIRCRAFT") then subject to this Lease. The
Substitute Aircraft shall be delivered to Lessee, at Lessor's expense, at LAX,
or such other location agreed on by Lessor and Lessee, on the date specified in
Lessor's notice to Lessee. Lessor agrees that any Substitute Aircraft shall be
in the same seat configuration and in the same or better interior condition as
the Replaced Aircraft, and in the event that Lessee is not required to purchase
Maintenance Services from Lessor pursuant to the terms of Exhibit E hereto, any
Substitute Aircraft shall be in at least substantially the same condition (other
than with respect to maximum take-off weight), and with at least the same number
of Flight Hours remaning to the next scheduled "C Check", as the Replaced
Aircraft. Lessee agrees, at Lessor's expense, to execute and deliver all
documents (including Lease Supplements hereto, or at Lessor's request, a
replasement Lease Agreement in the form hereof) and take such other measures
requested by Lessor and necessary to accomplish such substitution.
[Next following page is the signature page.]
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IN WITNESS WHEREOF, Lessor and Lessee have each caused this Lease Agreement
to be duly executed as of the day and year first above written.
Lessor:
AMERICAN AIRLINES, INC.
By:
-------------------------------------------
Xxxxxxx X. Xxxxxxx
Vice President - Corporate
Development and Treasurer
Lessee:
HAWAIIAN AIRLINES, INC.
By:
-------------------------------------------
Xxxxxxxx X. Xxxxx,
Vice President-Finance, Treasurer
and Assistant Corporate Secretary
By:
-------------------------------------------
Xxx X. Xxxxx,
Vice President, General Counsel
and Corporate Secretary
NA971200.061
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SCHEDULE I
This Schedule I has been intentionally omitted for recording purposes, as
the parties deem the information contained therein to be confidential financial
information.
EXHIBIT A TO LEASE AGREEMENT
LEASE SUPPLEMENT NO. 1
THIS LEASE SUPPLEMENT NO. 1, dated , 1997, between AMERICAN
AIRLINES, INC., a Delaware corporation ("Lessor"), and HAWAIIAN AIRLINES, INC.,
a Hawaii corporation ("Lessee").
W I T N E S S E T H:
WHEREAS, Lessor and Lessee have heretofore entered into the Aircraft Lease
Agreement dated as of December 12, 1997 (the "Lease Agreement", defined terms
used herein are as therein defined), which provides in Section 2 for the
execution of a Lease Supplement substantially in the form hereof for the purpose
of leasing the Aircraft under the Lease Agreement on its Delivery Date in
accordance with the terms hereof; and
WHEREAS, the Lease Agreement relates to the airframe and engines described
below, and a counterpart of the Lease Agreement is attached to and made a part
of this Lease Supplement, 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
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, and pursuant to Section 2 of the Lease Agreement, the Lessor and
Lessee hereby agree as follows:
1. Lessor hereby delivers and leases to Lessee, and Lessee hereby accepts
and leases from Lessor, under the Lease Agreement as hereby supplemented, the
XxXxxxxxx Xxxxxxx XX00-00 aircraft (the "Aircraft") which consists of the
following components (which may or may not be attached to each other at the
moment of acceptance hereunder):
(i) airframe: U.S. registration number N162AA; manufacturer's serial no.
46943; and
(ii) three General Electric CF6-6K engines bearing manufacturer's
serial nos. 451284, 451183 and 451169 (each of which engines has 750 or
more rated takeoff horsepower or the equivalent of such horsepower).
2. The Term for the Aircraft commences on the date of this Lease
Supplement.
3. The Term shall commence on the date hereof and shall end on
September 11, 2001, unless earlier terminated in accordance with the provisions
of the Lease Agreement.
4. Lessee hereby confirms its agreement to pay to Lessor Basic Rent for
the Aircraft throughout the Term in accordance with Section 3 of the Lease
Agreement and to pay Supplemental Rent pursuant to Exhibit E attached to the
Lease.
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5. All of the provisions of the Lease Agreement are hereby incorporated
by reference in this Lease Supplement on and as of the date of this Lease
Supplement to the same extent as if fully set forth herein.
6. This Lease Supplement is being delivered in the State of Texas and
shall in all respects be governed by, and construed in accordance with, the laws
of the State of Texas, including all matters of construction, validity and
performance.
7. This Lease Supplement may be executed in several counterparts, each
fully-executed counterparts all of which shall be deemed an original, and all
such counterparts shall constitute one and the same instrument. To the extent
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 through the transfer
or possession of any counterpart other than the counterpart marked as the
"Original".
IN WITNESS WHEREOF, Lessor and Lessee have caused this Lease
Supplement to be duly executed and delivered as of the date and year first above
written.
AMERICAN AIRLINES, INC.
By:
---------------------------------------
Xxxxxxx X. Xxxxxxx
Vice President - Corporate
Development and Treasurer
HAWAIIAN AIRLINES, INC.
By:
---------------------------------------
Xxxxxxxx X. Xxxxx,
Vice President-Finance, Treasurer
and Assistant Corporate Secretary
By:
---------------------------------------
Xxx X. Xxxxx,
Vice President, General Counsel
and Corporate Secretary
-2-
EXHIBIT B
This Exhibit B has been intentionally omitted for recording purposes, as
the parties deem the information contained therein to be confidential financial
information.
X-0
X-0
EXHIBIT C
CONDITIONS PRECEDENT TO DELIVERY
1. The Aircraft shall have been tendered for delivery to Lessee in the
condition required by the Lease at LAX or such other location as Lessor and
Lessee may have agreed to in writing.
2. On the Delivery Date, the representations and warranties of Lessor set
forth in the Lease Agreement shall be true and accurate as if made on such
date.
3. This Lease and Lease Supplement No. 1 shall have been executed and
delivered to Lessor for filing for information with the FAA in Oklahoma
City, Oklahoma.
4. The receipt by Lessor from Lessee not later than two (2) days prior to the
Delivery Date of the following, dated as of such Delivery Date, all of
which shall be satisfactory in form and substance to Lessor:
(a) copies of the articles of incorporation and by-laws of Lessee,
certified to be true and up to date copies by a duly authorized
officer thereof;
(b) copies of resolutions of the board of directors of Lessee authorizing
Lessee to enter into and perform the Lease Agreement and the
transactions contemplated hereby, certified to be true and up to date
copies by a duly authorized officer of Lessee;
(c) a closing certificate and an incumbency certificate of a duly
authorized officers of Lessee setting out the names and signatures of
the person or persons authorized to sign the Lease Agreement;
(d) Opinion of in-house counsel to Lessee in form and substance reasonably
satisfactory to Lessor, and the opinion of independent counsel
confirming the applicability of the protections of Section 1110 of the
Bankruptcy Code to the Lease Agreement;
(e) certificate acceptable in form and substance to Lessor evidencing the
insurance required by Section 9 of the Lease Agreement;
(f) receipt by Lessor of the first installment of Basic Rent pursuant to
Section 3 of the Lease Agreement and Supplemental Rent pursuant to
Exhibit E to the Lease Agreement and payment of all amounts then due
under any Long-Term Agreement; and
(g) Execution and delivery by Lessee of any financing statements required
by Lessor.
5. Execution by Lessee of the Lease Termination relating to this Lease
Agreement.
6. The Final Order (as defined in the Long-Term Lease Agreement) confirming
the Plan shall be and remain in full force and effect.
D-1
7. The Long-Term Agreements are in full force and effect.
8. No Default or Lessee Event of Default shall have occurred and be continuing
and no "Event of Default" or "Termination Event" shall have occurred and be
continuing under the Interim Definitive Agreements or Long-Term Agreements;
PROVIDED HOWEVER, that the effectiveness of this Lease Agreement shall not
be deemed to be a waiver by either party to this Lease Agreement or any of
the Interim Definitive Agreements of any claims (whether or not disclosed)
such party may have against the other party under the Interim Definitive
Agreements or the Long Term Agreements.
D-2
EXHIBIT D
TO LEASE AGREEMENT
DELIVERY AND RETURN CONDITIONS
The following conditions shall apply to the In-Use Aircraft upon delivery of the
In-Use Aircraft by Lessor to Lessee and upon return of Return Aircraft to the
Lessor by the Lessee pursuant to this Agreement.
CONDITION OF IN-USE AIRCRAFT UPON DELIVERY AND
RETURN AIRCRAFT UPON RETURN
Lessor and Lessee agree that Lessor shall deliver the In-Use Aircraft to Lessee
AS-IS, WHERE-IS; and Lessee shall return the Return Aircraft to the Lessor in
compliance with all of the following provisions:
1. Inspection of "on-condition" and "condition monitored" components will have
been accomplished when due and all such items shall be serviceable.
2. It is the intent of the parties that the condition of the In-Use Aircraft
at the time of delivery of the Return Aircraft at the termination of the Lease
shall be to conform to that of the standards of international air
transportation, with the interior and exterior in good repair and appearance,
without significant corrosion, or structural maintenance work deferred, and with
all Airworthiness Directives in full compliance. It is further the intent of
the Lease that the Return Aircraft and its Serviced Engines will be readily
transferable to the registration of another carrier without having to undergo
significant repairs, refurbishment or modification being required on the Return
Aircraft. At the time of such return, the Return Aircraft shall comply with the
following conditions:
A. Upon return to Lessor, the Return Aircraft shall comply with
Lessee's FAA-approved maintenance program.
B. All deferred maintenance items and all deficiencies or
discrepancies which by their nature are outside Lessee's
maintenance manual limits for unrestricted operation found prior
to or during the return inspection or final inspection or
demonstration delivery flight(s) shall be corrected by repair in
accordance with the approved Lessee's maintenance manual.
C. The fuel, hydraulic, pneumatic, water and waste system leaks on
the Return Aircraft shall be within the limits allowable pursuant
to Lessee's maintenance manual. This is to be demonstrated by
filling all tanks and reservoirs to capacity and performance of a
functional and leak check of all related systems. The cost of
such checks shall be borne by the Lessee.
D-1
D. The Return Aircraft on return by Lessee and all parts installed
shall have all necessary FAA approved service tags or equivalent
Lessee documents approved by the Lessee's maintenance program.
E. Engines
a. Engine borescope inspections of compressor, burner and
turbine sections of each installed engine shall be conducted
in accordance with Lessor's engine borescope inspection
cards #4930-1, 4930-2 and 4930-3 [for inspections] (or any
such replacement card therefor). Each card shall have
attached thereto findings and comments along with visual
records (photographic or video data). Inspected engines
shall meet the requirements of manufacturer's maintenance
manual. Borescope inspection findings that result in
inspection intervals being reduced to less than 400 hours
will be corrected by engine replacement and/or repair prior
to the return of the Return Aircraft by Lessee.
Borescope inspections shall have been completed by
Lessor/Lessee or its authorized representative, at Lessee's
expense. In the event the APU fails to meet the pneumatic
or electrical load requirements, the APU shall be changed.
b. Each installed engine will be subject to completion of a
power assurance run and review of engine trend analysis with
all engine parameters being within limits in accordance with
the appropriate manufacturer's engine manual. Engine ground
runs for the Return Aircraft shall be conducted in
accordance with Lessor's engine ground run-up card number
DR71-95-18 (or any such replacement card therefor). Engine
Exhaust Gas Temperature ("EGT") shall not exceed a maximum
of 925 DEG. C during ground runs to max power. In the event
EGT exceeds 925 DEG. C and adjustments cannot be accomplished
with the engine installed within eight working hours to
reduce EGT below 925 DEG. C at max power, the engine
installed shall be rejected and a Replacement Engine
installed.
c. No installed engine shall be on "watch" and each such engine
shall comply with the operations specification of Lessee
without waiver or exceptions.
In the event Lessor is no longer maintaining the In-Use Aircraft,
the expense of complying with this paragraph E shall be at
Lessee's sole expense. In the event Lessor is maintaining the
In-Use Aircraft pursuant to Exhibit E hereto, the cost of any
repairs or replacements required by this Paragraph E shall be
borne by the parties in accordance with the other terms of
Exhibit E as if such
D-2
repairs and replacements were made in the
normal course of the term of the Lease Agreement, except to the
extent specifically set forth in this Exhibit E.
F. The Return Aircraft on return by Lessee shall have a then current
weight and balance report in the final delivery configuration as
required by the FARs provided to Lessor and/or Lessee.
G. All required placards per Lessor's/Lessee's maintenance and
operations specifications must be current, in place and legible.
(In English)
H. Fuselage
(1) Dents, corrosion and abrasions, or any loose, pulled or
missing rivets shall be within the limits of Lessee's
maintenance manual. External patches shall be of a type
consistent with industry standards and approved by Lessee's
maintenance manual. Each repair will have proper
documentation of structural repair manual reference and/or
engineering repair drawings or documentation as applicable.
(2) Windows shall be serviceable in accordance with Lessee's
maintenance manual. Visibility through windows will meet
standard industry standards.
(3) Doors shall be free moving, correctly rigged and be fitted
with serviceable seals, in accordance with Lessee's
maintenance manual limits.
(4) Exterior logos will be removed pursuant to Exhibit E hereto,
by stripping or sanding off the present logo, and repainting
to blend with existing exterior paint in accordance with
standard industry practices.
(5) Unpainted metal surfaces shall be clean and buffed.
I. Wings and Empennage
(1) All leading edges shall be serviceable in accordance with
Lessee's maintenance manual. Any repairs to leading edges
shall be in accordance with Lessee's maintenance manuals.
(2) All control surfaces shall be clean by airline standards and
free of delamination in accordance with Lessee's maintenance
manual.
(3) All unpainted cowlings and fairings shall be buffed and
clean by airline standards and tightly fitted in accordance
with Lessee's maintenance manual limits.
(4) Fuel leaks in the wings shall be within the limits allowed
by Lessee's FAA-approved maintenance program. Temporary
fuel leak repairs
D-3
will be within the limits allowed, by Lessee's FAA-approved
maintenance program, and permanent repairs may be deferred
until the next C check.
(5) Fuel tanks shall be free from contaminates, as evidenced by
sumping the tanks externally.
J. Interior
(1) The Return Aircraft shall be delivered with Lessee's carpet,
flooring, drapes, tapestries and hard decor as last operated
in revenue service by Lessee, all of which items may be
subsequently used by Lessor in its sole discretion. Upon
return, all logos and markings of Lessee shall be tastefully
removed, where reasonable. Except as otherwise
provided herein, Lessor may retain other severable items
that do not add to the value of the Return Aircraft and that
are not required to be installed in the Aircraft by the FAA.
Lessee shall deliver the Return Aircraft with Lessor's seat
covers.
(2) Ceilings, sidewalls and bulkhead panels shall be clean and
free of major cracks and stains by normal airline standards.
(3) All carpets and seat covers shall be in good condition,
normal wear and tear excepted, clean and stain-free by
normal standards and shall meet current FAA fire resistance
regulations.
(4) All seats shall be serviceable in accordance with
maintenance manual limits in good condition, normal wear and
tear excepted and repainted as reasonably required.
(5) All signs and decals shall be clean and legible by normal
lessee standards.
(6) Floor panels shall be in good condition free of soft spots
and delamination. If field repairs are installed, permanent
repairs may be deferred to the next C Check.
(7) The aircraft interior shall be thoroughly cleaned to the
standards acceptable for passenger revenue flights.
K. Cockpit
(1) All placard and decals shall be clean, secure and legible.
(In English)
(2) All fairing panels shall be free of major stains and major
cracks and shall be clean.
D-4
(3) Floor coverings shall be clean and effectively sealed as
required by Lessee's maintenance program.
(4) Seat covers shall be in good condition, free of major tears
and major stains, normal wear and tear excepted, and shall
conform to existing fire resistance regulations.
(5) Seats shall be fully serviceable, in good condition, normal
wear and tear excepted, and repainted as reasonably
required.
L. Cargo Compartments
(1) All panels shall be in serviceable condition, normal wear
and tear excepted. All repairs to floor, ceilings or side
walls shall be in accordance with Lessee's maintenance
manuals. If field repairs are installed, permanent repairs
may be deferred to the next C Check.
(2) No cargo containers shall be delivered or returned.
(3) All cargo loading functions will be tested under load
conditions by utilizing one fully loaded cargo container.
(4) One ship set of onboard ovens/coffee makers shall be
included.
M. Landing Gear and Wheel Xxxxx
(1) Shall be clean, free from leaks and in good repair, normal
wear and tear excepted.
(2) All decals shall be clean, secure and legible. (In English)
(3) Brakes will be in good condition. No brake will have less
than one half (1/2) inch of wear remaining on wear
indicator.
N. No structural repairs including corrosion, skin replacement, crack
propagation or SSI programs shall be overdue on the Return Aircraft at
time of redelivery, or be in a deferred status.
O. The Return Aircraft shall be made available on or before the
anticipated date of return by Lessee for an operation test flight, at
Lessee's expense, not to exceed one hour, which test flight shall be
conducted by Lessee using Lessee's standard flight test procedures.
Up to five persons designated by Lessor may participate in such flight
as observers. The Lessor shall identify to the Lessee in writing any
claim of discrepancy between the required condition of the Return
Aircraft at return of the Return Aircraft to the Lessor and the Return
Aircraft's actual condition.
In the event Lessor is no longer maintaining the Return Aircraft, the
expense of correcting any discrepancy shall be at Lessee's sole
expense. In the event Lessor is
D-5
maintaining the Return Aircraft pursuant to Exhibit E hereto, the
cost of correcting any discrepancy required by this paragraph O(2)
shall be borne by the parties in accordance with the other terms of
Exhibit E as is such actions were taken in the course of the term
of the Lease Agreement.
P. The Return Aircraft shall be in compliance with Stage III Noise
Regulations.
Q. Any FAA mandated corrosion control program will be current as
specified by the manufacturer's corrosion control document or approved
Lessee's corrosion control program.
R. The Return Aircraft shall be in compliance with all mandatory
environmental, noise, air pollution and other standards prescribed by
the respective regulatory authorities.
Lessor shall not furnish any sets of cargo containers, catering modules,
catering carts and catering inserts to Lessee hereunder.
RETURN INSPECTION AND ACCEPTANCE FLIGHT GROUND INSPECTION
The Return Aircraft shall be made available to Lessor on or before
return of the Return Aircraft, for ground inspection at either Tulsa, Oklahoma
Airport or another Airport satisfactory to Lessor on or before the due date for
return in order that Lessor may reasonably satisfy itself that the Return
Aircraft is in the condition required under this Agreement. The manuals and
technical records shall be made available to Lessor for inspection during such
period prior to return thereof as Lessor reasonably requires. Such inspection
shall be conducted in coordination with Lessee's and Lessor's respective
personnel and Lessor shall be allowed reasonable access to the Return Aircraft
to verify compliance with the conditions set forth in this Agreement. Lessor
shall immediately state orally and confirm in writing within four (4) hours of
the relevant inspection to Lessee each claim of discrepancy. To facilitate such
inspection Lessee will provide reasonable office accommodation at or near the
inspection site (equipped with a telephone and having access to a photocopier,
telecopier and word processing facilities) provided, however, that Lessor shall
indemnify Lessee for all out-of-pocket costs so incurred by Lessor.
D-7
DOCUMENTS REQUIRED FOR RETURN
Listed below are the documents or Lessee equivalent that will be required upon
delivery of the In-Use Aircraft by Lessor and the return of the Return Aircraft
by Lessee. All documents must be valid at time of return and shall incorporate
the most recent revisions issued by the documents controlling regulatory agency:
1. Standard Airworthiness Certificate
2. Certificate of Sanitary Construction
3. A copy of Maintenance Check Manual
4. Airworthiness Directive Compliance Status including Repetitive and Method
of Compliance
5. Status of Time Controlled and Life Limited Parts; Status of Time Controlled
and Life Limited Parts; Status of Airframe, Engines, Auxiliary Power Unit
and Land Gear
6. Report covering any Major Accidents or Repairs on the Aircraft with
Supporting Documentation
7. A review of the Aircraft Log Books
8 FAR Compliance Status including Method of Compliance
9. Alteration/Repair/Modification Records
10. Service Bulletin Status List
11. AOL/Service Letter Status List
12. Supplemental type Certificates issued for Aircraft and Equipment as held by
operator
13. List of Open Items
14. Weight and Balance Records
D-8
The following manuals or Lessee equivalents will be furnished in hard copy or
reproducible film or in the then current form in which it is used by Lessee.
Unless otherwise indicated, one copy per In-Use Aircraft of each of the
following manuals or equivalents will be provided to Lessee. Additional copies
will be or have been provided pursuant to that certain Manuals Supplement
between Lessor and Lessee, the Interim Aircraft Lease Agreements, the Interim
Aircraft Maintenance Agreement or pursuant to the provisions hereof and all
copies of each of the following shall be returned. All manuals will be valid at
time of return and shall include the most recent revisions issued by the
documents controlling regulatory agency.
1. FAA Approved Flight Manual
2. Flight Crew Operational Manual
3. Performance Manual
4. Airframe Maintenance Manual
5. Airframe Illustrated Parts Catalog
6. Airframe Structures Repair Manual
7. Wiring Diagram Manual
8. Engine Maintenance Manual
9. Engine Illustrated Parts Manual
10. Weight and Balance Records
11. Minimum Equipment List
12. Part Number Conversation List - Operator to Manufacturer P/N
13. Red Book for each microfilm library
NOTE: All documents and manuals must be in English
D-9
RETURN OF OTHER ENGINES. In the event that any engine not owned or leased by
Lessor shall be installed on the Return Airframe, such engine shall be an engine
suitable to be a Replacement Engine hereunder. Upon return of the Return
Aircraft, Lessee shall duly convey to Lessor good title to any such engine, free
and clear of all Liens (other than any Lessor's Liens) and, upon such
conveyance, Lessee will furnish Lessor with a full warranty xxxx of sale, in
form and substance reasonably satisfactory to it, with respect to such engine
and take such other action as may be reasonably requested in order that title to
such engine may be duly and properly vested in Lessor to the same extent as the
Engine replaced thereby. Upon conveyance by Lessee of good title to such engine
to Lessor, and upon full compliance by Lessee with its obligations hereunder, at
Lessee's expenses, Lessor will transfer to Lessee all rights, title and interest
originally conveyed to Lessor in an Engine constituting part of the Aircraft but
not installed on the Return Airframe at the time of the return of the Return
Airframe "as-is, where-is", free and clear of Lessor's Liens but otherwise
without recourse or warranty, express or implied to Lessee.
D-10
SCHEDULE 4(d)(i)
Refer to letter dated December 15, 1995 from Lessee to Lessor.
S4-1
SCHEDULE 4(d)(iv)
Refer to letter dated December 15, 1995 from Lessee to Lessor.
S4-2
SCHEDULE 4(d)(v)
Refer to letter dated December 15, 1995 from Lessee to Lessor.
S4-3
SCHEDULE 4(d)(vi)
Refer to letter dated December 15, 1995 from Lessee to Lessor.
S4-4
SCHEDULE 4(d)(vii)
Refer to letter dated December 15, 1995 from Lessee to Lessor.
S4-5
EXHIBIT E
This Exhibit E has been intentionally omitted for recording purposes, as
the parties deem the information contained therein to be confidential financial
information.
E-1
