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| CONFIDENTIAL: ANNEXES B, C AND D AND SCHEDULES 1, 2, 3 AND 4 |
| OF THIS LEASE AGREEMENT ARE SUBJECT TO RESTRICTIONS ON |
| DISSEMINATION SET FORTH IN SECTION 8 OF THE PARTICIPATION |
| AGREEMENT (AS DEFINED HEREIN) |
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LEASE AGREEMENT ___
Dated as of September 25, 1997
Between
FIRST SECURITY BANK, NATIONAL ASSOCIATION,
Not in its Individual Capacity,
except as expressly provided herein,
but solely as Owner Trustee,
Lessor
and
CONTINENTAL AIRLINES, INC.,
Lessee
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One Embraer Model EMB-145 Aircraft
Bearing United States Registration No. N_____ and
Bearing Manufacturer's Serial No. 145.___ with two
Xxxxxxx AE3007A Engines
Bearing Engine Manufacturer's Serial Nos. _______ and _______
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The right, title and interest of Lessor in and to, among other things, this
Lease Agreement has been assigned to and is subject to a security interest in
favor of Wilmington Trust Company, a Delaware banking corporation, as Mortgagee,
under the Trust Indenture and Mortgage ___, dated as of September 25, 1997, for
the benefit of the holders of the Equipment Notes referred to in such Trust
Indenture, all to the extent provided in such Trust Indenture. This Lease
Agreement has been executed in multiple counterparts; to the extent, if any,
that this Lease Agreement constitutes chattel paper (as defined in the Uniform
Commercial Code as in effect in any applicable jurisdiction), no security
interest in Lessor's right, title and interest in and to this Lease Agreement
may be perfected through the delivery or possession of any counterpart of this
Lease Agreement other than the counterpart of this Lease Agreement that contains
the original receipt executed by Wilmington Trust Company, as Mortgagee.
CONTENTS
SECTION 1. DEFINITIONS AND CONSTRUCTION............................. 1
SECTION 2. DELIVERY AND ACCEPTANCE.................................. 1
2.1 Delivery and Lease of Aircraft........................... 1
2.2 Acceptance by Lessee..................................... 2
SECTION 3. TERM AND RENT............................................ 2
3.1 Term..................................................... 2
3.2 Rent..................................................... 2
3.3 Payments................................................. 4
SECTION 4. DISCLAIMER; CERTAIN AGREEMENTS OF LESSOR;
SECTION 1110 MATTERS..................................... 5
4.1 Disclaimer............................................... 5
4.2 Certain Agreements of Lessor............................. 6
4.3 Quiet Enjoyment.......................................... 6
4.4 Investment of Funds Held as Security..................... 6
4.5 Title Transfers by Lessor................................ 7
4.6 Lessor's Interest in Certain Engines..................... 8
4.7 Section 1110 of Bankruptcy Code.......................... 8
SECTION 5. RETURN OF AIRCRAFT....................................... 8
5.1 Compliance with Annex B.................................. 8
5.2 Storage and Related Matters.............................. 9
5.3 Return of Other Engines.................................. 9
SECTION 6. LIENS.................................................... 9
SECTION 7. REGISTRATION, OPERATION, POSSESSION,
SUBLEASING AND RECORDS................................... 10
7.1 Registration and Operation............................... 10
7.2 Possession............................................... 12
7.3 Certain Limitations on Subleasing or
Other Relinquishment of Possession....................... 16
SECTION 8. MAINTENANCE; REPLACEMENT AND POOLING OF
PARTS; ALTERATIONS, MODIFICATIONS AND
ADDITIONS; OTHER LESSEE COVENANTS........................ 17
8.1 Maintenance; Replacement and Pooling of
Parts; Alterations, Modifications and
Additions................................................ 17
8.2 Information, Certificates, Notices and
Reports.................................................. 17
SECTION 9. VOLUNTARY TERMINATION UPON OBSOLESCENCE.................. 19
9.1 Right of Termination..................................... 19
9.2 Election by Lessor to Sell............................... 20
9.3 Retention of Aircraft by Lessor.......................... 22
SECTION 10. LOSS, DESTRUCTION, REQUISITION, ETC...................... 23
10.1 Event of Loss With Respect to Aircraft................... 23
10.2 Event of Loss With Respect to an Engine.................. 25
10.3 Conditions to any Replacement of Engine.................. 25
10.4 Conveyance to Lessee..................................... 27
10.5 Application of Payments.................................. 27
10.6 Requisition of Aircraft for Use.......................... 28
10.7 Requisition of an Engine for Use......................... 28
10.8 Application of Payments.................................. 29
10.9 Application of Payments During Existence
of a Lease Event of Default.............................. 29
SECTION 11. INSURANCE................................................ 30
11.1 Lessee's Obligation to Insure............................ 30
11.2 Insurance for Own Account................................ 30
11.3 Indemnification by Government in Lieu of
Insurance................................................ 30
11.4 Application of Insurance Proceeds........................ 30
11.5 Application of Payments During Existence
of Default............................................... 31
SECTION 12. INSPECTION............................................... 31
SECTION 13. ASSIGNMENT; MERGER; SUCCESSOR OWNER
TRUSTEE.................................................. 32
13.1 In General............................................... 32
13.2 Merger of Lessee......................................... 33
13.3 Assignment Security for Lessor's Obligations............. 34
13.4 Successor Owner Trustee.................................. 34
SECTION 14. LEASE EVENTS OF DEFAULT.................................. 34
14.1 Payments................................................. 35
14.2 Insurance................................................ 35
14.3 Other Covenants.......................................... 35
14.4 Representations and Warranties........................... 36
14.5 Bankruptcy and Insolvency................................ 36
SECTION 15. REMEDIES AND WAIVERS..................................... 37
15.1 Remedies................................................. 37
15.2 Limitations Under CRAF................................... 40
15.3 Right to Perform for Lessee.............................. 40
15.4 Determination of Fair Market Sales Value................. 41
15.5 Remedies Cumulative...................................... 41
SECTION 16. LESSEE'S OBLIGATIONS; NO SETOFF,
COUNTERCLAIM, ETC....................................... 41
SECTION 17. RENEWAL AND PURCHASE OPTIONS............................. 42
17.1 Notices Generally........................................ 42
17.2 Renewal Options.......................................... 43
17.3 Purchase Option.......................................... 44
17.4 Appraisals............................................... 45
SECTION 18. MISCELLANEOUS............................................ 46
18.1 Amendments............................................... 46
18.2 Severability............................................. 47
18.3 Third-Party Beneficiary.................................. 47
18.4 Reproduction of Documents................................ 47
18.5 Counterparts............................................. 48
18.6 Notices.................................................. 48
18.7 GOVERNING LAW; SUBMISSION TO JURISDICTION; VENUE......... 48
18.8 No Waiver................................................ 49
18.9 Entire Agreement......................................... 50
ANNEXES, EXHIBITS AND SCHEDULES
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ANNEX A Definitions
ANNEX B Return Conditions
ANNEX C Maintenance
ANNEX D Insurance
EXHIBIT A Form of Lease Supplement
EXHIBIT B Form of Return Acceptance Supplement
SCHEDULE 1 Certain Terms
SCHEDULE 2 Basic Rent
SCHEDULE 3 Stipulated Loss Value Schedule
SCHEDULE 4 Termination Value Schedule
SCHEDULE 5 Permitted Countries
SCHEDULE 6 Placards
LEASE AGREEMENT ___
LEASE AGREEMENT ___, dated as of September 25, 1997 (this "Agreement"
or "Lease"), between (a) FIRST SECURITY BANK, NATIONAL ASSOCIATION, a national
banking association, not in its individual capacity, except as expressly
provided herein, but solely as Owner Trustee (this and all other capitalized
terms used but not defined herein shall have the respective meanings ascribed
thereto in Section 1 below) ("Lessor" or "Owner Trustee"), and (b) CONTINENTAL
AIRLINES, INC., a Delaware corporation ("Lessee").
RECITALS
A. Lessor and Lessee are parties to the Participation Agreement,
pursuant to which, among other things, Lessor and Lessee have agreed to enter
into this Agreement.
B. Pursuant to the Trust Agreement, Owner Participant has authorized
Lessor to enter into this Agreement.
NOW, THEREFORE, for and in consideration of the premises and the
mutual agreements contained herein and for other good and valuable
consideration, the sufficiency and receipt of which are hereby acknowledged, the
parties hereto agree as follows:
SECTION 1. DEFINITIONS AND CONSTRUCTION
Capitalized terms used but not defined herein shall have the
respective meanings set forth or incorporated by reference, and shall be
construed and interpreted in the manner described, in Annex A.
SECTION 2. DELIVERY AND ACCEPTANCE
2.1 DELIVERY AND LEASE OF AIRCRAFT
Lessor hereby agrees (subject to the satisfaction or waiver of the
conditions set forth in Section 5 of the Participation Agreement) to lease to
Lessee for the Term and Lessee hereby agrees (subject to the satisfaction or
waiver of the conditions set forth in Section 5 of the Participation Agreement)
to lease from Lessor for the Term, the Aircraft, commencing immediately upon
acquisition of the Aircraft by Lessor pursuant to the Participation Agreement.
2.2 ACCEPTANCE BY LESSEE
By executing and delivering Lease Supplement No. 1, Lessee confirms to
Lessor that Lessee has duly and irrevocably accepted delivery of the Aircraft
for all purposes of this Agreement.
SECTION 3. TERM AND RENT
3.1 TERM
The Aircraft shall be leased hereunder for the Term, unless this
Agreement or the leasing of the Aircraft is earlier terminated in accordance
with any provision of this Agreement. Lessee shall have the option to renew the
leasing of the Aircraft hereunder pursuant to, and subject to the terms and
conditions of, Section 17, for the Renewal Lease Term.
3.2 RENT
3.2.1 BASIC RENT
(a) During the Base Lease Term, Lessee shall pay to Lessor, on each
Payment Date, Basic Rent in the amount specified in Schedule 2 for such Payment
Date, which shall be allocated to the Payment Period commencing on such Payment
Date.
(b) Notwithstanding anything to the contrary in any Operative
Agreement, the amount of the payment of Basic Rent due and payable on each
Payment Date shall be at least sufficient to pay in full, as of such Payment
Date (assuming timely payment of the Equipment Notes prior to such Date), the
aggregate principal amount of scheduled installments due on the Equipment Notes
outstanding on such Payment Date, together with the accrued and unpaid interest
thereon, due on such Payment Date in respect of the Equipment Notes; provided,
however, that no installment of Basic Rent shall be increased to the extent such
increase would be based upon (i) any attachment or diversion of Basic Rent on
account of Lessor Liens attributable to Lessor or Owner Participant, (ii) any
modification of the payment terms of the Equipment Notes, or (iii) the
acceleration of any Equipment Note or Equipment Notes due solely to the
occurrence of an Indenture Event of Default that does not constitute a Lease
Event of Default.
3.2.2 SUPPLEMENTAL RENT
Lessee shall pay to Lessor, or to whomever shall be entitled thereto,
any and all Supplemental Rent when and as the same shall become due and owing.
Lessee will also pay to Lessor, or to whomever shall be entitled thereto as
Supplemental Rent, to the extent permitted by applicable law, interest at the
Payment Due Rate on any part of any amount of Rent (including, without
limitation, Supplemental Rent) not paid by 12:30 p.m., New York time, on the
date when due (so long as, in the case of any person not a party to the
Participation Agreement, Lessee had received timely notice of the account to
which such payment was required to be made), for the period from and including
the date on which the same was due to, but excluding, the date of payment in
full.
3.2.3 ADJUSTMENTS TO STIPULATED LOSS VALUES AND TERMINATION VALUES
(a) In the event that Lessee is required to indemnify the Owner
Participant under the Tax Indemnity Agreement, the Stipulated Loss Value
percentages set forth in Schedule 3 and the Termination Value percentages set
forth in Schedule 4 shall be recalculated (upwards or downwards) by Owner
Participant, using the same methods and assumptions (except to the extent such
assumptions shall be varied to take into account the Loss or Foreign Tax Credit
Loss (as each such term is defined in the Tax Indemnity Agreement) that is the
subject of such indemnification and any prior or contemporaneous Loss or Foreign
Tax Credit Loss) used to calculate the Stipulated Loss Value percentages and the
Termination Value percentages on the Closing Date, in order to maintain the
Owner Participant's Net Economic Return.
(b) All adjustments pursuant to Section 3.2.3(a) shall be made as
promptly as practicable after either Owner Participant or Lessee gives notice to
the other that an event has occurred that requires an adjustment. Owner
Participant and Lessee shall give prompt notice to the other of any event
requiring an adjustment. Any recalculation of the percentages of Stipulated Loss
Value and Termination Value shall be prepared by Owner Participant, subject to
verification at the request of Lessee in accordance with this Section 3.2.3(b),
on the basis of the same methodology and assumptions used by Owner Participant
in determining the percentages of Stipulated Loss Value and Termination Value as
of the Closing Date, except as such assumptions have been modified to reflect
the events giving rise to adjustments hereunder. Promptly after an adjustment is
made hereunder, Owner Participant shall deliver to Lessee a description of such
adjustment, setting forth in reasonable detail the calculation thereof. All
adjustments required pursuant to Section 3.2.3(a) shall be set forth in a Lease
Supplement or in an amendment to this Lease, and, promptly after execution
thereof by Lessor and Lessee, Lessee shall give a copy thereof to Mortgagee.
(c) If Lessee believes that any calculations by Owner Participant
pursuant to Section 3.2.3(b) are in error, and if, after consultation, Lessee
and Owner Participant are unable to agree on an adjustment, then a nationally
recognized firm of accountants selected by Lessee and reasonably satisfactory to
Owner Participant shall verify such calculations. Owner Participant will make
available to such firm, but not, in any circumstances, to Lessee or any
representative of Lessee, the methodology and assumptions referred to in Section
3.2.3(b) and any modifications thereto made to reflect the events giving rise to
adjustments hereunder (subject to the execution by such firm of a
confidentiality agreement, reasonably acceptable to Owner Participant,
prohibiting disclosure of such methodology and assumptions to any third party).
The determination by such firm of accountants shall be final. Lessee will pay
the reasonable costs and expenses of such further verification by such
accountants, provided that if it results in a decrease in the present value
(discounted at the Debt Rate) of any Stipulated Loss Value or Termination Value
by ten or more basis points from such Stipulated Loss Value or Termination Value
as recalculated by the Owner Participant, then the Owner Participant will pay
such costs and expenses.
3.3 PAYMENTS
(a) Payments of Rent by Lessee shall be paid by wire transfer of
immediately available Dollars, not later than 12:30 p.m., New York time, on the
date when due, to the account of Lessor specified in Schedule 1 to the
Participation Agreement or to such other account in the United States as
directed by Lessor to Lessee in writing at least 10 Business Days prior to the
date such payment of Rent is due or, in the case of any payment of Supplemental
Rent expressly payable to a person other than Lessor, to the person that shall
be entitled thereto to such account in the United States as such person may
specify from time to time to Lessee at least 10 Business Days prior to the date
such payment of Rent is due.
(b) Except as otherwise expressly provided herein, whenever any
payment of Rent shall be due on a day that is not a Business Day, such payment
shall be made on the next day that is a Business Day, and, if such payment is
made on such next Business Day, no interest shall accrue on the amount of such
payment during such extension.
(c) So long as Lessee has not received written notice from the
Mortgagee that the Trust Indenture has been discharged, and notwithstanding
Section 3.3(a), Lessor hereby irrevocably directs, and Lessee agrees, that all
payments of Rent and all other amounts payable by Lessee hereunder, other than
Excluded Payments, shall be paid directly to Mortgagee on behalf of Lessor by
wire transfer of immediately available Dollars to the account of Mortgagee
specified in Schedule 1 to the Participation Agreement, or to such other account
in the United States as Mortgagee may specify by written notice to Lessor and
Lessee at least 10 Business Days prior to the date such payment of Rent is due.
(d) Excluded Payments shall be paid by wire transfer of immediately
available Dollars to the account of the person specified in the Participation
Agreement or, if not so specified, to such account in the United States as may
be specified by such person by written notice to Lessor and Lessee from time to
time at least 10 Business Days prior to the date such payment is required to be
made.
(e) All computations of interest under this Agreement shall be made on
the basis of a year of 360 days comprised of twelve 30-day months.
SECTION 4. DISCLAIMER; CERTAIN AGREEMENTS OF LESSOR; SECTION 1110 MATTERS
4.1 DISCLAIMER
LESSOR LEASES AND LESSEE TAKES THE AIRCRAFT "AS-IS, WHERE-IS." LESSEE
ACKNOWLEDGES AND AGREES THAT AS BETWEEN LESSEE AND EACH OF LESSOR, MORTGAGEE,
OWNER PARTICIPANT PARENT AND ANY PARTICIPANT (i) LESSEE HAS SELECTED THE
AIRCRAFT AND MANUFACTURER THEREOF AND (ii) NONE OF LESSOR, MORTGAGEE, OWNER
PARTICIPANT PARENT AND ANY PARTICIPANT MAKES, HAS MADE OR SHALL BE DEEMED TO
HAVE MADE, AND EACH WILL BE DEEMED TO HAVE EXPRESSLY DISCLAIMED, ANY
REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, AS TO:
(v) THE AIRWORTHINESS, VALUE, CONDITION, DESIGN, OPERATION, ANY
IMPLIED WARRANTY OF MERCHANTABILITY OR FITNESS FOR USE OR FOR ANY
PARTICULAR PURPOSE OF THE AIRFRAME, ANY ENGINE OR ANY PART THEREOF;
(w) THE QUALITY OF THE MATERIAL OR WORKMANSHIP WITH RESPECT TO THE
AIRFRAME, ANY ENGINE OR ANY PART THEREOF;
(x) THE ABSENCE OF LATENT OR ANY OTHER DEFECT IN THE AIRFRAME, ANY
ENGINE OR ANY PART THEREOF, WHETHER OR NOT DISCOVERABLE;
(y) THE ABSENCE OF ANY INFRINGEMENT OF ANY PATENT, TRADEMARK OR
COPYRIGHT OR THE LIKE; OR
(z) THE ABSENCE OF OBLIGATIONS BASED ON STRICT LIABILITY IN TORT, OR
ANY OTHER REPRESENTATION OR WARRANTY WHATSOEVER, EXPRESS OR IMPLIED, WITH
RESPECT TO THE AIRFRAME, ANY ENGINE OR ANY PART THEREOF.
4.2 CERTAIN AGREEMENTS OF LESSOR
Unless a Lease Event of Default shall have occurred and be continuing,
Lessor agrees to make available to Lessee such rights as Lessor may have under
any warranty with respect to the Aircraft made, or made available, by Airframe
Manufacturer or any of its subcontractors or suppliers, as the case may be,
pursuant to and in accordance with the terms of the Purchase Agreement
Assignment.
4.3 QUIET ENJOYMENT
So long as no Lease Event of Default shall have occurred and be
continuing, Lessor shall not interfere with Lessee's rights hereunder to
continued possession, use and operation of, and quiet enjoyment of, the Aircraft
during the Term. The foregoing, however, shall not be construed or deemed to
modify or condition in any respect the obligations of the Lessee pursuant to
Section 16, which obligations are absolute and unconditional.
4.4 INVESTMENT OF FUNDS HELD AS SECURITY
4.4.1 INVESTMENT
Any moneys required to be paid to or retained by Lessor that are
required to be paid to Lessee or applied as provided herein shall, until paid to
Lessee as provided herein or applied as provided herein, be invested by Lessor
from time to time as directed in writing by Lessee (or, if Lessee fails to so
direct, by or as directed by Lessor in its sole discretion) and at the expense
and risk of Lessee in Cash Equivalents so long as such Cash Equivalents
specified by Lessee or Lessor, as the case may be, can be acquired by Lessor
using its best efforts; provided, that so long as the Lien of the Trust
Indenture shall not have been discharged, such moneys shall be invested and held
by Mortgagee, as assignee of Lessor, in accordance with this Lease and upon
discharge of such Lien, Mortgagee shall pay any such money held by it to Lessor
to be held and invested in accordance with this Section.
4.4.2 PAYMENT OF GAIN OR LOSS
Any net gain (including interest received) realized as the result of
investments pursuant to Section 4.4.1 (net of any fees, commissions and other
reasonable expenses, if any, incurred in connection with such investment) shall
be held and applied in the same manner as the principal amount is to be held and
applied hereunder. Lessee will promptly pay to Lessor, on demand, the amount of
any loss realized as the result of any such investment (together with any fees,
commissions and other reasonable expenses, if any, incurred in connection with
such investment), such amount so paid to be held and applied by Lessor as
contemplated in Section 4.4.1 above.
4.4.3 LIMITATION OF LIABILITY
All investments under this Section 4.4 shall be at the expense and
risk of Lessee, and Lessor and Mortgagee shall not be liable for any loss
resulting from any investment made under this Section 4.4 other than by reason
of its willful misconduct or gross negligence. Any such investment may be sold
(without regard to its maturity) by Lessor without instructions whenever such
sale is necessary to make a distribution required by this Lease.
4.5 TITLE TRANSFERS BY LESSOR
If Lessor shall be required to transfer title to the Aircraft,
Airframe or any Engine to Lessee or any other person pursuant to this Lease,
then (a) Lessor shall (1) transfer to Lessee or such other person, as the case
may be, all of Lessor's right, title and interest in and to the Aircraft,
Airframe or such Engine, as the case may be, free and clear of all Lessor Liens
but otherwise on an "as-is", "where is" basis, (2) so long as the Lien of the
Trust Indenture has not been discharged, comply with the Trust Indenture
relating to the release of the Aircraft, Airframe or such Engine, (3) assign to
Lessee or such other person, as the case may be, if and to the extent permitted
under the Purchase Agreement, all warranties of Airframe Manufacturer with
respect to the Aircraft, Airframe or such Engine, and (4) assign to Lessee or
such other person, as the case may be, if and to the extent permitted, all
claims, if any, for damage to the Aircraft, Airframe or such Engine, in each
case free of Lessor Liens, and without recourse or warranty of any kind
whatsoever (except as to the transfer described in clause (1) above and as to
the absence of such Lessor Liens, as aforesaid), and (b) Lessor shall promptly
deliver to Lessee or such other person, as the case may be, a xxxx of sale and
agreements of assignment, evidencing such transfer and assignment, and such
other instruments of transfer, all in form and substance reasonably satisfactory
to Lessee (or such other person, as the case may be), as Lessee (or such other
person, as the case may be) may reasonably request.
4.6 LESSOR'S INTEREST IN CERTAIN ENGINES
Lessor hereby agrees for the benefit of each lessor, conditional
seller, indenture trustee or secured party of any engine leased to, or purchased
by, Lessee or any Permitted Sublessee subject to a lease, conditional sale,
trust indenture or other security agreement that Lessor, its successors and
assigns will not acquire or claim, as against such lessor, conditional seller,
indenture trustee or secured party, any right, title or interest in any engine
as the result of such engine being installed on the Airframe at any time while
such engine is subject to such lease, conditional sale, trust indenture or other
security agreement and owned by such lessor or conditional seller or subject to
a trust indenture or security interest in favor of such indenture trustee or
secured party.
4.7 SECTION 1110 OF BANKRUPTCY CODE
It is the intention of each of Lessee and Lessor that Lessor (and
Mortgagee as assignee of Lessor under the Trust Indenture) shall be entitled to
the benefits of Section 1110 with respect to the right to take possession of the
Aircraft, Airframe, Engines and Parts as provided in this Lease.
SECTION 5. RETURN OF AIRCRAFT
5.1 COMPLIANCE WITH ANNEX B
Lessee shall comply with each of the provisions of Annex B hereto,
which provisions are hereby incorporated by this reference as if set forth in
full herein.
5.2 STORAGE AND RELATED MATTERS
If Lessor gives written notice to Lessee not less than 60 days nor
more than 120 days prior to the end of the Term requesting storage of the
Aircraft upon its return hereunder, Lessee will provide Lessor, or cause Lessor
to be provided, with outdoor parking facilities for the Aircraft for a period up
to 30 days, commencing on the date of such return, and upon request of Lessor to
Lessee made at least 10 days prior to the end of such initial 30 day period, for
an additional 120 day period commencing upon expiration of such initial period,
at such storage facility in the 48 contiguous states of the United States on
Lessee's route system for Similar Aircraft as Lessor may select as the site for
such return of the Aircraft. Such storage shall be at Lessor's risk, and Lessor
shall pay all applicable storage fees, except that Lessee shall pay the parking
fees for the initial 30 day storage period; PROVIDED that Lessee's obligation to
provide parking shall be subject to Lessor entering into an agreement prior to
the commencement of the storage period with the storage facility providing,
among other things, that Lessor shall bear all maintenance charges and other
costs (other than parking fees for the initial 30 day period) incurred.
5.3 RETURN OF OTHER ENGINES
In the event that any Engine owned by Lessor shall not be installed on
the Airframe at the time of return hereunder, Lessee shall be required to return
the Airframe hereunder with a Replacement Engine meeting the requirements of,
and in accordance with, Section 10 hereof and Annex B hereto. Thereupon, Lessor
will transfer to Lessee the Engine constituting part of such Aircraft but not
installed on such Airframe at the time of the return of the Airframe.
SECTION 6. LIENS
Lessee shall not, directly or indirectly, create, incur, assume or
suffer to exist any Lien on or with respect to the Aircraft, the Airframe, any
Engine or any Part, title to any of the foregoing or any interest of Lessee
therein, or the Lessee's rights in and to this Lease or any Permitted Sublease,
except (a) the respective rights of Lessor, Mortgagee, the Participants or
Lessee under the Operative Agreements, or of any Permitted Sublessee under any
Permitted Sublease; (b) Lessor Liens with respect to any Participant, Lessor or
Mortgagee; (c) the rights of others under agreements or arrangements to the
extent permitted by the terms of Sections 7.2 and 7.3; (d) Liens for Taxes of
Lessee (and its U.S. federal tax law consolidated group), or Liens for Taxes of
any Tax Indemnitee (and its U.S. federal tax law consolidated group) for which
Lessee is obligated to indemnify such Tax Indemnitee under any of the Lessee
Operative Agreements, in any such case either not yet due or being contested in
good faith by appropriate proceedings so long as such Liens and such proceedings
do not involve any material danger of the sale, forfeiture or loss of the
Aircraft, the Airframe, any Engine or any Part thereof; (e) materialmen's,
mechanics', workers', repairers', employees' or other like Liens arising in the
ordinary course of business for amounts the payment of which is either not yet
delinquent for more than 35 days or is being contested in good faith by
appropriate proceedings, so long as such Liens and such proceedings do not
involve any material danger of the sale, forfeiture or loss of the Aircraft, the
Airframe, any Engine or any Part thereof; and (f) Liens arising out of any
judgment or award against Lessee (or against any Permitted Sublessee), so long
as such judgment shall, within 30 days after the entry thereof, have been
discharged or vacated, or execution thereof stayed pending appeal or shall have
been discharged, vacated or reversed within 30 days after the expiration of such
stay, and so long as during any such 30-day period there is not, or any such
judgment or award does not involve, any material risk of the sale, forfeiture or
loss of the Aircraft, the Airframe or any Engine. Lessee shall promptly (and in
any case, by the end of the Term), at its own expense, take (or cause to be
taken) such action as may be necessary to duly discharge (by bonding or
otherwise) any Lien not excepted above if the same shall at any time arise in
respect of the Aircraft, the Airframe, any Engine or any Part during the Term.
SECTION 7. REGISTRATION, OPERATION, POSSESSION, SUBLEASING AND RECORDS
7.1 REGISTRATION AND OPERATION
7.1.1 REGISTRATION AND RECORDATION
Subject to the compliance by Lessor and Owner Participant with their
respective obligations under Section 13 of the Participation Agreement, Lessee
shall cause the Aircraft to be, and at all times during the Term to remain, duly
registered with the FAA under the Act or with such other country of registry as
shall be permitted under Section 7.1.2 below, in the name of Lessor as owner and
lessor (except to the extent that such registration under the Act cannot be
effected with the FAA because of Lessor's or Owner Participant's failure to
comply with the citizenship requirements for registration of the Aircraft under
the Act). Lessor shall execute and all such documents as Lessee (or any
Permitted Sublessee) may reasonably request for the purpose of effecting and
continuing such registration. Unless Mortgagee has given Lessee notice that the
Trust Indenture has been discharged, Lessee shall also cause the Trust Indenture
to be duly recorded and at all times maintained of record as a first-priority
perfected mortgage (subject to Permitted Liens) on the Aircraft, the Airframe
and each of the Engines (except to the extent that such perfection or priority
cannot be maintained as a result of the failure by Lessor or Mortgagee to
execute and deliver any necessary documents).
7.1.2 REREGISTRATION
So long as no Lease Event of Default shall have occurred and be
continuing, Lessee may, by written notice to Lessor, request to change the
country of registration of the Aircraft. Any such change in registration shall
be effected only in compliance with, and subject to all of the conditions set
forth in, Section 7.6.11 of the Participation Agreement.
7.1.3 MARKINGS
If permitted by Applicable Law, on or reasonably promptly after the
Closing, Lessee will cause to be affixed to, and maintained in, the cockpit of
the Airframe and on each Engine, in each case, in a clearly visible location (it
being understood that the location of such placards, as identified to the Owner
Participant prior to the Closing, shall be deemed to be in compliance with this
requirement), a placard of a reasonable size and shape bearing the legend, in
English, set forth in Schedule 6. Such placards may be removed temporarily, if
necessary, in the course of maintenance of the Airframe or Engines. If any such
placard is damaged or becomes illegible, Lessee shall promptly replace it with a
placard complying with the requirements of this Section 7.1.3.
7.1.4 COMPLIANCE WITH LAWS
Lessee shall not, and shall not allow any other person to, operate,
use, maintain, service, repair or overhaul the Aircraft (a) in violation of any
Law binding on or applicable to the Aircraft, the Airframe or any Engine, or (b)
in violation of any airworthiness certificate, license or registration of any
Government Entity relating to Lessee or the Aircraft, the Airframe or any
Engine, except (1) immaterial or non-recurring violations with respect to which
corrective measures are taken promptly by Lessee or a Permitted Sublessee, as
the case may be, upon discovery thereof, and (2) to the extent Lessee or any
Permitted Sublessee is contesting the validity or application of any such Law or
requirement relating to any such certificate, license or registration in good
faith in any reasonable manner that does not involve a material danger of the
sale, forfeiture or loss of the Aircraft, the Airframe, or any Engine, any risk
of criminal liability or a greater than de minimis risk of material civil
penalties being imposed against Lessor, Mortgagee or any Participant or impair
the Lien of the Trust Indenture.
7.1.5 OPERATION
Lessee agrees not to operate, use or locate the Aircraft, the Airframe
or any Engine, or allow the Aircraft, the Airframe or any Engine to be operated,
used or located (a) in any area excluded from coverage by any insurance required
by the terms of Section 11, except in the case of a requisition by the U.S.
Government where Lessee obtains an indemnity in lieu of such insurance from the
U.S. Government, or insurance from the U.S. Government, covering such area, in
accordance with Section 11.3 or (b) in any recognized area of hostilities unless
fully covered in accordance with Annex D by war-risk insurance as required by
the terms of Section 11 (including, without limitation, Section 11.3), unless in
any case referred to in this Section 7.1.5 the Aircraft is only temporarily
operated, used or located in such area as a result of an emergency, equipment
malfunction, navigational error, hijacking, weather condition or other similar
unforeseen circumstances, so long as Lessee diligently and in good faith
proceeds to remove the Aircraft from such area.
7.2 POSSESSION
Lessee will not, without the prior written consent of Lessor and Owner
Participant (which consent shall not be unreasonably withheld), sublease or
otherwise in any manner deliver, transfer or relinquish possession of the
Aircraft, the Airframe or any Engine or install any Engine, or permit any Engine
to be installed, on any airframe other than the Airframe; PROVIDED, HOWEVER,
subject to the provisions of Section 7.3, Lessee may, without such prior written
consent:
7.2.1 INTERCHANGE AND POOLING
Subject or permit any Permitted Sublessee to subject any Engine to
normal interchange agreements or pooling agreements or arrangements, in each
case customary in the commercial airline industry and entered into by Lessee or
such Permitted Sublessee, as the case may be, in the ordinary course of
business; PROVIDED, HOWEVER, that if Lessor's title to any such Engine is
divested under any such agreement or arrangement, then such Engine shall be
deemed to have suffered an Event of Loss as of the date of such divestiture,
with the effect that Lessee shall be required to replace such Engine with a
Replacement Engine meeting the requirements of, and in accordance with, Section
10.
7.2.2 TESTING AND SERVICE
Deliver or permit any Permitted Sublessee to deliver possession of the
Aircraft, Airframe, any Engine or any Part (i) to the manufacturer thereof or to
any third-party maintenance provider, for testing, service, repair, maintenance
or overhaul work on the Aircraft, Airframe, any Engine or any Part, or, to the
extent required or permitted by the terms of Annex C, for alterations or
modifications in or additions to the Aircraft, Airframe or any Engine or (ii) to
any Person for the purpose of transport to a Person referred to in the preceding
clause (i).
7.2.3 TRANSFER TO U.S. GOVERNMENT
Transfer or permit any Permitted Sublessee to transfer possession of
the Aircraft, Airframe or any Engine to the U.S. Government, in which event
Lessee shall promptly notify Lessor and Mortgagee in writing of any such
transfer of possession and, in the case of any transfer pursuant to CRAF, in
such notification shall identify by name, address and telephone numbers the
Contracting Office Representative or Representatives for the Military Airlift
Command of the United States Air Force to whom notices must be given and to whom
requests or claims must be made to the extent applicable under CRAF.
7.2.4 INSTALLATION OF ENGINES ON OWNED AIRCRAFT
Install or permit any Permitted Sublessee to install an Engine on an
airframe owned by Lessee or such Permitted Sublessee, as the case may be, free
and clear of all Liens, except (a) Permitted Liens and those that do not apply
to the Engines and (b) the rights of third parties under normal interchange or
pooling agreements and arrangements of the type that would be permitted under
Section 7.2.1.
7.2.5 INSTALLATION OF ENGINES ON OTHER AIRFRAMES
Install or permit any Permitted Sublessee to install an Engine on an
airframe leased to Lessee or such Permitted Sublessee, or purchased by Lessee or
such Permitted Sublessee subject to a mortgage, security agreement, conditional
sale or other secured financing arrangement, but only if (a) such airframe is
free and clear of all Liens, except (i) the rights of the parties to such lease,
or any such secured financing arrangement, covering such airframe and (ii) Liens
of the type permitted by clauses (a) and (b) of Section 7.2.4 and (b) Lessee or
Permitted Sublessee, as the case may be, shall have received from the lessor,
mortgagee, secured party or conditional seller, in respect of such airframe, a
written agreement (which may be a copy of the lease, mortgage, security
agreement, conditional sale or other agreement covering such airframe), whereby
such Person agrees that it will not acquire or claim any right, title or
interest in, or Lien on, such Engine by reason of such Engine being installed on
such airframe at any time while such Engine is subject to this Lease or is owned
by Lessor.
7.2.6 INSTALLATIONS OF ENGINES ON FINANCED AIRCRAFT
So long as no Payment Default, Bankruptcy Default or Lease Event of
Default shall have occurred and be continuing, install or permit any Permitted
Sublessee to install an Engine on an airframe owned by Lessee or such Permitted
Sublessee, leased to Lessee or such Permitted Sublessee, or purchased by Lessee
or such Permitted Sublessee subject to a conditional sale or other security
agreement under circumstances where neither Section 7.2.4 or 7.2.5 is
applicable; PROVIDED, HOWEVER, that any such installation shall be deemed an
Event of Loss with respect to such Engine, and Lessee shall comply with Section
10.2 hereof in respect thereof.
7.2.7 SUBLEASING
With respect to the Aircraft, Airframe or any Engine, so long as no
Payment Default, Bankruptcy Default or Lease Event of Default has occurred and
is continuing, enter into a sublease with any Permitted Air Carrier, but only
if:
(a) Lessee shall provide written notice to Lessor of Lessee's intent
to enter into a Permitted Sublease (except if the Permitted Sublessee is
Express), such notice in the event of a sublease to a U.S. Air Carrier to be
given promptly after entering into any such sublease or, in the case of a
sublease to any other Permitted Air Carrier, 20 days in advance of entering into
such sublease;
(b) At the time that Lessee enters into such Permitted Sublease, such
Permitted Sublessee shall not be subject to any bankruptcy, insolvency,
liquidation, reorganization, dissolution or similar proceeding, shall not be
seeking any reorganization or any readjustment of its debts and shall not be,
shall not have substantially all of its property, in the possession of any
liquidator, trustee, receiver or similar person and, if such Permitted Sublessee
is a Permitted Foreign Air Carrier, the United States then maintains normal
diplomatic relations with the country in which such Permitted Sublessee has its
principal executive offices;
(c) Any such Permitted Sublease (i) shall include provisions for the
maintenance, operation, possession, inspection and insurance of the Aircraft
that are the same in all material respects as the applicable provisions of this
Lease, (ii) shall provide that, except if any subsidiary of Lessee is the
Permitted Sublessee, such Permitted Sublessee may not further sublease or
transfer its interests (except transfers of the type permitted in Sections 7.2.1
through 7.2.6, inclusive) in the Aircraft, Airframe or Engines, (iii) shall not
extend beyond the end of the Term and (iv) shall be expressly subject and
subordinate to all the terms of this Agreement and to the rights, powers and
remedies of Lessor hereunder;
(d) In connection with a sublease to a Permitted Foreign Air Carrier,
Lessee shall have furnished Lessor an opinion of counsel, reasonably
satisfactory to Lessor, in the country of domicile of such Permitted Foreign Air
Carrier, that (i) the terms of such sublease are the legal, valid and binding
obligations of the parties thereto enforceable under the laws of such
jurisdiction, (ii) it is not necessary for Owner Participant, Lessor or
Mortgagee to register or qualify to do business in such jurisdiction, if not
already so registered or qualified, as a result, in whole or in part, of the
proposed sublease, (iii) Lessor's title to, and Mortgagee's Lien in respect of,
the Aircraft, Airframe and Engines will be recognized in such jurisdiction, (iv)
the Laws of such jurisdiction of domicile require fair compensation by the
government of such jurisdiction, payable in a currency freely convertible into
Dollars, for the loss of title to the Aircraft, Airframe or Engines in the event
of the requisition by such government of such title (unless Lessee shall provide
insurance in the amounts required with respect to hull insurance under Section
11 covering the requisition of title to the Aircraft, Airframe or Engines by the
government of such jurisdiction so long as the Aircraft, Airframe or Engines are
subject to such sublease), (v) the agreement of such Permitted Air Carrier that
its rights under the sublease are subject and subordinate to all the terms of
this Lease is enforceable against such Permitted Air Carrier under applicable
law, and (vi) there is no tort liability of the owner or Lessor of an aircraft
not in possession thereof under the laws of such country (it being agreed that,
in the event such latter opinion cannot be given in a form satisfactory to the
Owner Participant, such opinion shall be waived if insurance reasonably
satisfactory to the Owner Participant is provided to cover such risk);
(e) No such sublease shall be made to a "tax exempt entity" as defined
in Section 168(h)(2) of the Code (including any Permitted Foreign Air Carrier)
prior to the close of the Tax Attribute Period, unless Lessee prepays on a
lump-sum basis any liability due under the Tax Indemnity Agreement as a result
of such sublease based upon the assumption that such sublease were to continue
for the remainder of the term of such sublease, PROVIDED, that notwithstanding
the foregoing, such sublease may be made without requiring such prepayment
during the taxable year in which the seventh anniversary of the Closing Date
occurs so long as the Aircraft is not "used predominantly outside the United
States" within the meaning of Section 168(g) of the Code during such taxable
year;
(f) Lessee shall furnish to Lessor and Mortgagee evidence reasonably
satisfactory to Lessor that the insurance required by Section 11 remains in
effect;
(g) All necessary documents shall have been duly filed, registered or
recorded in such public offices as may be required fully to preserve the title
of Lessor, and the first priority security interest (subject to Permitted Liens)
of Mortgagee, in the Aircraft, Airframe and Engines;
(h) Except for the initial sublease to Express, Lessee shall reimburse
Lessor for all of its reasonable out-of-pocket fees and expenses, including,
without limitation, reasonable fees and disbursements of counsel, incurred by
Lessor in connection with any such sublease; and
(i) For all purposes of this Section 7.2.7, the term "sublease" shall
be deemed to include interchange agreements with respect to the Aircraft or
Airframe.
7.3 CERTAIN LIMITATIONS ON SUBLEASING OR OTHER RELINQUISHMENT OF POSSESSION
Notwithstanding anything to the contrary in Section 7.2:
(a) The rights of any person that receives possession of the Aircraft
in accordance with Section 7.2 shall be subject and subordinate to all the terms
of this Lease, and to Lessor's rights, powers and remedies hereunder, including,
without limitation (i) Lessor's right to repossess the Aircraft pursuant to
Section 15, (ii) Lessor's right to terminate and avoid such sublease, delivery,
transfer or relinquishment of possession upon the occurrence of a Lease Event of
Default and (iii) the right to require such person to forthwith deliver the
Aircraft, the Airframe and Engines subject to such transfer upon the occurrence
of a Lease Event of Default;
(b) Lessee shall remain primarily liable hereunder for the performance
of all the terms of this Lease to the same extent as if such transfer had not
occurred, and no transfer of possession of the Aircraft, the Airframe, any
Engine or any Part shall in any way discharge or diminish any of Lessee's
obligations to Lessor hereunder or under any Operative Agreement;
(c) Lessee shall ensure that no sublease, delivery, transfer or
relinquishment permitted under Section 7.2 shall affect the United States
registration of the Aircraft, unless also made in accordance with the provisions
of Section 7.1.2.
(d) Any event that constitutes or would, with the passage of time,
constitute an Event of Loss under paragraph (c), (d), or (e) of the definition
of such term (as set forth in Annex A) shall not be deemed to violate the
provisions of Section 7.2; and
(e) Any Wet Lease shall not constitute a delivery, transfer or
relinquishment of possession for purposes of Section 7.2 and shall not be
prohibited by the terms hereof.
SECTION 8. MAINTENANCE; REPLACEMENT AND POOLING OF PARTS; ALTERATIONS,
MODIFICATIONS AND ADDITIONS; OTHER LESSEE COVENANTS
8.1 MAINTENANCE; REPLACEMENT AND POOLING OF PARTS; ALTERATIONS,
MODIFICATIONS AND ADDITIONS
At all times during the Term, Lessee shall comply with, or cause to be
complied with, each of the provisions of Annex C, which provisions are hereby
incorporated by this reference as if set forth in full herein.
8.2 INFORMATION, CERTIFICATES, NOTICES AND REPORTS
8.2.1 FINANCIAL INFORMATION
Lessee will furnish to Lessor:
(a) Within 90 days after the end of each of the first three fiscal
quarters in each fiscal year of Lessee, a consolidated balance sheet of Lessee
as of the end of such quarter and related statements of income and cash flows
for the period commencing at the end of the previous fiscal year and ending with
the end of such quarter, setting forth in each case in comparative form the
corresponding figures for the corresponding period in the preceding fiscal year,
prepared in accordance with GAAP; PROVIDED THAT so long as Lessee is subject to
the reporting requirements of the Securities Exchange Act of 1934, a copy of
Lessee's report on Form 10-Q for such fiscal quarter (excluding exhibits) will
satisfy this paragraph (a).
(b) Within 120 days after the end of each fiscal year of Lessee, a
consolidated balance sheet of Lessee as of the end of such fiscal year and
related statements of income and cash flows of Lessee for such fiscal year, in
comparative form with the preceding fiscal year, prepared in accordance with
GAAP, together with a report of Lessee's independent certified public
accountants with respect to their audit of such financial statements; PROVIDED
THAT so long as Lessee is subject to the reporting requirements of the
Securities Exchange Act of 1934, a copy of Lessee's report on Form 10-K for such
fiscal year (excluding exhibits) will satisfy this paragraph (b).
8.2.2 ANNUAL CERTIFICATE
Within 120 days after the close of each fiscal year of Lessee, Lessee
shall deliver to Lessor and Mortgagee an Officer's Certificate of Lessee to the
effect that such officer is familiar with or has reviewed or caused to be
reviewed the relevant terms of this Lease and the other Lessee Operative
Agreements and that such officer does not have knowledge of the existence as at
the date of such certificate of any Lease Default or Lease Event of Default.
8.2.3 INFORMATION FOR FILINGS
Lessee shall promptly furnish to Owner Participant or Lessor such
information (other than with respect to the citizenship of Owner Participant and
Lessor) within Lessee's or any Permitted Sublessee's possession, or reasonably
available to or obtainable by Lessee or such Permitted Sublessee, as may be
required to enable Lessor timely to file any reports required to be filed by it
as lessor under the Lease or to enable Owner Participant to timely file any
reports required to be filed by it, as the beneficiary of the Trust Estate, in
either case, with any Government Entity because of, or in connection with, the
interest of Owner Participant or Lessor in the Aircraft, Airframe or Engines,
this Lease or any other part of the Trust Estate; provided, however, that with
respect to any such information which Lessee reasonably deems commercially
sensitive or confidential, Owner Participant or Lessor, as the case may be,
shall afford Lessee a reasonable opportunity to seek from any such Government
Entity a waiver of the obligation of Owner Participant or Lessor to file any
such information, or shall consent to the filing of such information directly by
Lessee in lieu of filing by Owner Participant or Lessor, and if any such waiver
or consent is evidenced to the reasonable satisfaction of Owner Participant or
Lessor, as the case may be, then Lessee shall not be required to furnish such
information to Owner Participant or Lessor.
SECTION 9. VOLUNTARY TERMINATION UPON OBSOLESCENCE
9.1 RIGHT OF TERMINATION
(a) Unless a Lease Event of Default, Payment Default or Bankruptcy
Default shall have occurred and be continuing, Lessee shall have the right at
its option to terminate this Lease during the Base Lease Term, effective only on
a Termination Date occurring after the end of the Tax Attribute Period, if:
(i) Lessee makes a good faith determination that the Aircraft
either has become economically obsolete or is surplus to Lessee's
requirements and the Chief Financial Officer or Treasurer of Lessee so
certifies in writing to Lessor; and
(ii) written notice of Lessee's exercise of its option to
terminate this Agreement shall be given to Lessor not less than 90 days
prior to the proposed Termination Date specified in such notice.
(b) Lessor shall notify Lessee and Mortgagee of Lessor's intention to
sell or retain the Aircraft, as provided in this Section 9, no later than 45
days after Lessee gives Lessor written notice pursuant to Section 9.1(a)(ii).
Any failure by Lessor to give such notice of its election shall be deemed to be
an election to sell the Aircraft, as provided in this Section 9.
(c) Any termination pursuant to this Section 9 shall become effective
on the date of the sale, if any, pursuant to Section 9.2 or upon the date of
termination and payment by Lessee and Lessor in accordance with Section 9.3 if
Lessor elects to retain the Aircraft.
9.2 ELECTION BY LESSOR TO SELL
9.2.1 BIDS; CLOSING OF SALE
Unless Lessor has given Lessee notice of Lessor's election to retain
the Aircraft, Lessee, as agent for Lessor, shall, until the date ten Business
Days prior to the proposed Termination Date, use commercially reasonable efforts
to obtain bids for a cash purchase of the Aircraft and Lessor may, if it desires
to do so, also seek to obtain such bids. In the event Lessee receives any bid,
Lessee shall promptly, and in any event at least ten Business Days prior to the
proposed date of sale, certify to Lessor in writing the amount and terms of such
bid, the proposed date of such sale and the name and address of the person (who
shall not be Lessee or any Affiliate of Lessee or any person with whom Lessee or
any such Affiliate has an arrangement for the future use of the Aircraft by
Lessee or any such Affiliate) submitting such bid. In the event Lessor receives
any bid on or prior to the date ten Business Days prior to the proposed
Termination Date, Lessor shall, at least ten Business Days prior to the proposed
date of sale, certify to Lessee in writing the amount and terms of such bid, the
proposed date of such sale and the name and address of the person submitting
such bid.
9.2.2 CLOSING OF SALE
(a) On the proposed Termination Date (i) Lessee shall deliver the
Airframe and Engines or engines constituting part of the Aircraft to the bidder,
if any, which shall have submitted the highest cash bid (net of applicable
brokerage commissions) on or before the date ten Business Days prior to such
Termination Date, in the same manner as if delivery were made to Lessor pursuant
to Section 5 and Annex B and in full compliance with the terms thereof, and
shall duly transfer to Lessor title to any such engines not owned by Lessor, all
in accordance with the terms of Section 5 and Annex B, and (ii) Lessor shall
simultaneously therewith transfer the Airframe and Engines or engines to such
bidder, in the manner described in Section 4.5, against cash paid to Lessor in
the amount of such highest bid (net of applicable brokerage commissions and all
reasonable out-of-pocket fees and expenses incurred by Lessor, Mortgagee and
Owner Participant in connection with such sale and the related termination of
this Lease (collectively, the "Expenses of Sale") and in the manner and in funds
of the type specified in Section 3.3.
(b) All proceeds of any sale described in Section 9.2.2(a), net of
Expenses of Sale, shall be paid to and retained by Lessor and, on such
Termination Date, and as a condition precedent to such sale and the delivery of
the Aircraft and Engines or engines to such bidder, Lessee shall pay to Lessor,
in the manner and in funds of the type specified in Section 3.3:
(i) all unpaid Basic Rent due at any time prior to such
Termination Date; plus
(ii) an amount equal to the excess, if any, of the Termination
Value for the Aircraft, computed as of such Termination Date, over the
proceeds of such sale, net of Expenses of Sale; plus
(iii) as provided in Section 3.2.2, interest on the amounts
specified in the foregoing clause (i) at the Payment Due Rate from and
including the date on which any such amount was due to the date of payment
of such amount in full.
As a further condition precedent to such sale and delivery, Lessee
shall pay all Supplemental Rent due by Lessee to Lessor, Mortgagee or the
Participants under this Lease (including, without limitation, (A) Supplemental
Rent in respect of Make-Whole Amount, if any, payable pursuant to Section
2.10(b) of the Trust Indenture in connection with a prepayment of the Equipment
Notes upon such sale, (B) all interest charges provided for hereunder or under
any other Lessee Operative Agreement with respect to the late payment of any
amounts so payable, (C) the Expenses of Sale).
(c) Upon and subject to any such sale and receipt of proceeds by
Lessor, and full and final payment of all amounts described in Section 9.2.2(b),
and compliance by Lessee with all the other provisions of this Section 9.2,
(i) Lessor will transfer to Lessee, in accordance with Section
4.5, any Engines constituting part of the Aircraft but which were not then
installed on the Airframe and sold therewith; and
(ii) the obligation of Lessee to pay Basic Rent, on or after the
Payment Date with reference to which Termination Value is computed, shall
cease, and the Term for the Aircraft shall end effective as of the date of
such sale.
(d) A sale of the Aircraft pursuant to this Section 9.2.2 shall take
place only on a Termination Date. Subject to Section 9.3, if no sale shall have
occurred on or as of the proposed Termination Date, this Agreement shall
continue in full force and effect, and all of Lessee's obligations shall
continue, including, without limitation, its obligation to pay Rent, in each
case, as if the notice under Section 9.1 shall not have been given and, subject
to Section 9.2.3(b), Lessee may give another notice pursuant to Section 9.1.
9.2.3 WITHDRAWAL OF NOTICE OF TERMINATION
(a) Lessee may withdraw any notice given pursuant to Section 9.1 at
any time on or before the date 20 days prior to the proposed Termination Date,
whereupon this Agreement shall continue in full force and effect and all of
Lessee's obligations shall continue, including, without limitation, its
obligation to pay Rent, in each case, as if the notice under Section 9.1 shall
not have been given and Lessee may give another notice pursuant to Section 9.1;
PROVIDED that Lessee shall not be entitled to give more than three notices
pursuant to Section 9.1.
(b) Lessee shall pay all reasonable out-of-pocket fees and expenses of
Lessor, Mortgagee and Owner Participant in connection with any notice of
termination withdrawn by Lessee or in connection with any notice of termination
pursuant to which a sale of the Aircraft fails to occur.
9.3 RETENTION OF AIRCRAFT BY LESSOR
(a) If Lessor shall elect to retain the Aircraft in accordance with
Section 9.1, on the proposed Termination Date:
(i) Lessor shall pay, or cause to be paid, in the manner and in
funds of the type specified in Section 3.3, to the Mortgagee an amount
sufficient to prepay all outstanding Equipment Notes pursuant to Section
2.10(b) of the Trust Indenture;
(ii) subject to receipt by Mortgagee of the funds described in
paragraph (i) above, Lessee shall deliver the Airframe and Engines or
engines constituting part of the Aircraft to Lessor pursuant to Section 5
and Annex B and in full compliance with the terms thereof, and shall duly
transfer to Lessor title to any such engines not owned by Lessor, all in
accordance with the terms of Section 5 and Annex B;
(iii) Lessee shall pay to Lessor, in the manner and in funds of
the type specified in Section 3.3:
(1) all unpaid Basic Rent due at any time prior to such
Termination Date; plus
(2) as provided in Section 3.2.2, interest on the amounts
specified in the foregoing clause (1) at the Payment
Due Rate from and including the date on which any such
amount was due to the date of payment of such amount
in full; and
(iv) Lessee shall also pay all Supplemental Rent due and payable
by Lessee to Lessor, Mortgagee or the Participants under this Lease
(including without limitation (A) Supplemental Rent in respect of
Make-Whole Amount, if any, payable pursuant to Section 2.10(b) of the Trust
Indenture in connection with a prepayment of the Equipment Notes, (B) all
interest charges provided for hereunder or under any other Lessee Operative
Agreement with respect to the late payment of any amounts so payable, and
(C) the reasonable out-of-pocket fees and expenses incurred by Lessor and
Owner Participant in connection with such termination and sale).
(b) Upon full and final payment to Lessor, Mortgagee and the
Participants of the amounts described in Section 9.3(a), and compliance by
Lessee with all the other applicable provisions of this Section 9.3,
(i) Lessor will transfer to Lessee, in accordance with Section
4.5, any Engines constituting part of the Aircraft but which were not then
installed on the Airframe and sold therewith; and
(ii) The obligation of Lessee to pay Basic Rent otherwise due on
or after the Termination Date shall cease, and the Term for the Aircraft
shall end effective as of such Termination Date.
SECTION 10. LOSS, DESTRUCTION, REQUISITION, ETC.
10.1 EVENT OF LOSS WITH RESPECT TO AIRCRAFT
10.1.1 NOTICE
Upon the occurrence of an Event of Loss with respect to the Airframe,
and any Engine or Engines installed thereon at the time of such Event of Loss,
Lessee shall promptly (and in any event within 10 Business Days after such
occurrence) give Lessor and Mortgagee written notice of such Event of Loss. For
purposes of Section 10.1, an Event of Loss with respect to the Airframe shall be
deemed to constitute an Event of Loss with respect to the Aircraft.
10.1.2 PAYMENT OF LOSS AND TERMINATION OF LEASE
(a) If an Event of Loss with respect to the Aircraft occurs, then
Lessee shall pay, in the manner and in funds of the type specified in Section
3.3, the following amounts:
(i) on the Stipulated Loss Value Date next following the earlier
of (x) the 120th day following the date of the occurrence of such Event of
Loss, and (y) the twentieth day following the receipt of insurance proceeds
with respect to such occurrence, Lessee shall pay to Lessor:
(1) all unpaid Basic Rent or Renewal Rent, as the case may
be, due at any time prior to such Stipulated Loss
Value Date; plus
(2) the Stipulated Loss Value of the Aircraft computed as
of such Stipulated Loss Value Date; plus
(3) as provided in Section 3.2.2, interest on the amount
specified in the foregoing clause (1) at the Payment
Due Rate from and including the date on which any such
amount was due to the date of payment of such amount
in full;
PROVIDED, that if such Stipulated Loss Value Date is a Payment Date, Lessee
shall not be obligated to pay the Basic Rent or Renewal Rent otherwise
required to be paid on such date.
(ii) on or before the date required for payment of the amounts
specified in paragraph (i) above, Lessee shall also pay to Lessor,
Mortgagee and the Participants all other amounts due and payable by Lessee
to Lessor, Mortgagee and the Participants under this Lease, the
Participation Agreement or any other Lessee Operative Agreement.
(b) Upon payment in full of all amounts described in the foregoing
paragraph (a),(i) the obligation of Lessee to pay Basic Rent or Renewal Rent
hereunder with respect to the Aircraft shall terminate, (ii) the Term for the
Aircraft shall end and (iii) Lessor will transfer the Aircraft to Lessee, as-is
and where-is, and subject to any insurer's salvage rights, but otherwise in the
manner described in Section 4.5.
10.2 EVENT OF LOSS WITH RESPECT TO AN ENGINE
10.2.1 NOTICE
Upon the occurrence of an Event of Loss with respect to an Engine
under circumstances in which an Event of Loss with respect to the Airframe has
not occurred, Lessee shall promptly (and in any event within 10 Business Days
after such occurrence) give Lessor written notice of such Event of Loss.
10.2.2 REPLACEMENT OF ENGINE
Lessee shall, promptly and in any event within 90 days after the
occurrence of such Event of Loss, convey or cause to be conveyed to Lessor, in
compliance with Section 10.3 and as replacement for the Engine with respect to
which any Event of Loss occurred, title to a Replacement Engine free and clear
of all Liens other than Permitted Liens. Such Replacement Engine shall be an
engine manufactured by Engine Manufacturer that is the same model as the Engine
to be replaced thereby, or an improved model, and that is suitable for
installation and use on the Airframe, and that has a value, utility and
remaining useful life (without regard to hours and cycles remaining until
overhaul) at least equal to the Engine to be replaced thereby (assuming that
such Engine had been maintained in accordance with the Lease).
10.2.3 ENGINE EXCHANGE
Unless a Payment Default, Bankruptcy Default or Lease Event of Default
shall have occurred and be continuing, upon not less than five (5) Business
Days' prior written notice to Lessor, Lessee may replace any Engine leased
hereunder with another engine (the "Exchanged Engine") meeting the requirements
of Section 10.2.2. Such Exchanged Engine shall be deemed to be a "Replacement
Engine" and Lessor and Lessee shall comply with the provisions of Section 10.3
with regard to the Exchanged Engine and the Engine so replaced.
10.3 CONDITIONS TO ANY REPLACEMENT OF ENGINE
10.3.1 DOCUMENTS
Prior to or at the time of conveyance of title to any Replacement
Engine to Lessor, Lessee shall take each of the following actions:
(a) furnish Lessor with a full warranty xxxx of sale duly conveying to
Lessor such Replacement Engine in form and substance reasonably satisfactory to
Lessor;
(b) cause (i) 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 filed for recordation with the FAA pursuant to
the Act, (ii) a Trust Indenture Supplement, subjecting such Replacement Engine
to the Trust Indenture, to be delivered to Lessor for execution and, upon
execution, to be filed for recordation with the FAA pursuant to the Act and
(iii) such Financing Statements and other filings, as Lessor or Mortgagee may
reasonably request, duly executed by Lessee and, to the extent applicable,
Lessor and Mortgagee (and Lessor and Mortgagee shall execute and deliver the
same), to be filed in such locations as any such party may reasonably request;
(c) furnish such evidence of compliance with the insurance provisions
of Section 11 with respect to such Replacement Engine as Lessor may reasonably
request;
(d) furnish an opinion or opinions of Lessee's counsel (which may be
Lessee's legal department) reasonably satisfactory to Lessor and addressed to
Lessor and Mortgagee to the effect that such full warranty xxxx of sale
constitutes an effective instrument for the conveyance of title to such
Replacement Engine;
(e) furnish an opinion of Lessee's aviation law counsel reasonably
satisfactory to Lessor and addressed to Lessor and Mortgagee as to the due
filing for recordation of each Lease Supplement and Trust Indenture Supplement
with respect to such Replacement Engine under the Act; and
(f) furnish a certificate of a qualified aircraft engineer (who may be
an employee of Lessee) certifying that such Replacement Engine complies with the
value, utility and remaining useful life requirements set forth in Section
10.2.2.
Lessor and Lessee understand and agree that if at the time of any
replacement of any Engine, as contemplated in this Section 10, the Airframe was
registered in a jurisdiction other than the United States, then the requirements
set forth above in this Section 10.3.1 relating to compliance with the
requirements of the Act or the FAA, shall be deemed to refer to the comparable
applicable Law of, and the Aviation Authority of, such other jurisdiction.
10.3.2 OTHER OBLIGATIONS
(a) Lessor shall, in all events, be entitled to the benefits of
Section 1110 with respect to any Replacement Engine and Lessee and Lessor shall
cooperate and take such action as the other may reasonably request so as to
ensure that Lessor shall be entitled to such benefits.
(b) No Event of Loss with respect to an Engine shall result in, or
otherwise allow or permit, any reduction, deferral, discharge or other change in
the timing or amount of any Rent payable by Lessee hereunder, and Lessee shall
pay all such Rent and other amounts as though such Event of Loss had not
occurred.
10.4 CONVEYANCE TO LESSEE
Upon compliance by Lessee with the applicable terms of Sections 10.2
and 10.3.1, Lessor will transfer to Lessee the Engine with respect to which such
Event of Loss occurred, in accordance with Section 4.5.
10.5 APPLICATION OF PAYMENTS
Any amounts, other than insurance proceeds in respect of damage or
loss not constituting an Event of Loss (the application of which is provided for
in Section 11), received at any time by Lessor, Lessee or any Permitted
Sublessee from any Government Entity or any other Person in respect of any Event
of Loss will be applied as follows:
10.5.1 LOSS OF ENGINE
If such amounts are received with respect to an Engine (other than an
Engine installed on the Airframe at the time such Airframe suffers an Event of
Loss), upon compliance by Lessee with the applicable terms of Section 10.2.2
with respect to the Event of Loss for which such amounts are received, such
amounts shall be paid over to, or retained by, Lessee.
10.5.2 PAYMENT OF LOSS
If such amounts are received, in whole or in part, with respect to the
Airframe, such amounts shall be applied as follows:
(a) FIRST, if the sum described in Section 10.1.2 has not then been
paid in full by Lessee, such amounts shall be paid to Lessor (or to Mortgagee so
long as Mortgagee has not given notice to Lessee that the Trust Indenture has
been duly discharged, except with respect to Excluded Payments) to the extent
necessary to pay in full such sum;
(b) SECOND, the remainder, if any, shall be paid to Lessee.
10.6 REQUISITION OF AIRCRAFT FOR USE
If any Government Entity shall requisition for use the Airframe and
the Engines or engines installed thereon, and if the same does not constitute an
Event of Loss, Lessee shall promptly notify Lessor and Mortgagee of such
requisition and all of Lessee's obligations under this Agreement shall continue
to the same extent as if such requisition had not occurred; PROVIDED, HOWEVER,
that if the Airframe and Engines or engines installed thereon are not returned
to Lessor by Lessee at the end of the Term, unless Lessor shall have elected,
upon notice given not less than 30 days nor more than 120 days before the end of
the Term, not to treat such event as constituting an Event of Loss with respect
to the Aircraft, Lessee shall be obligated to pay the Stipulated Loss Value and
all other amounts payable pursuant to Section 10.1.2 with respect to the
Aircraft. If Lessor shall have elected not to treat such event as an Event of
Loss, Lessee shall be obligated to return the Airframe and Engines or engines to
Lessor pursuant to, and in all other respects to comply with the provisions of,
Section 5 promptly upon their return by such Government Entity, and Lessee shall
pay to Lessor upon such return an amount equal to the average daily Basic Rent
payable by Lessee during the Term for each day after the end of the Term to but
excluding the day of such return, up to a maximum of 30 days.
10.7 REQUISITION OF AN ENGINE FOR USE
If any Government Entity shall requisition for use any Engine but not
the Airframe, Lessee will replace such Engine by complying with the applicable
terms of Sections 10.2 and 10.3 to the same extent as if an Event of Loss had
occurred with respect to such Engine, and any payments received by Lessor or
Lessee from such Government Entity with respect to such requisition shall be
paid or retained in accordance with Section 10.5.1.
10.8 APPLICATION OF PAYMENTS
All payments received by Lessor or Lessee, or any Permitted Sublessee,
from any Government Entity for the use of the Airframe and Engines or engines
installed thereon during the Term shall be paid over to, or retained by, Lessee
and all payments received by Lessor or Lessee from any Government Entity for the
use of the Airframe and Engines or engines installed thereon after the Term
shall be paid over to, or retained by, Lessor; provided that, if such
requisition constitutes an Event of Loss, then all such payments shall be paid
over to Lessor (or to Mortgagee so long as Mortgagee has not given notice to
Lessee that the Trust Indenture has been duly discharged), and held as provided
in Section 10.5.
10.9 APPLICATION OF PAYMENTS DURING EXISTENCE OF A LEASE EVENT OF DEFAULT
Any amount described in this Section 10 that is payable or creditable
to, or retainable by, Lessee shall not be paid or credited to, or retained by,
Lessee if at the time such payment, credit or retention would otherwise occur a
Payment Default or Bankruptcy Default shall have occurred and be continuing, but
shall instead be held by or paid over to Lessor (or to Mortgagee so long as
Mortgagee has not given notice to Lessee that the Trust Indenture has been duly
discharged) as security for the obligations of Lessee under this Lease and the
other Lessee Operative Agreements and shall be invested pursuant to Section 4.4
hereof unless and until Lessor shall have demanded liquidated damages pursuant
to Section 15.1.3 or 15.1.4 and such amount is applied, at the option of Lessor,
or upon the written request of Lessee to Lessor, from time to time during the
continuance of a Lease Event of Default, to Lessee's obligations under this
Lease as and when due, it being understood that any such application shall be
made to such obligations of Lessee as Lessor may determine in its sole
discretion. At such time as there shall not be continuing any Payment Default or
Bankruptcy Default, such amount shall be paid to Lessee to the extent not
previously applied in accordance with this Section 10.9.
SECTION 11. INSURANCE
11.1 LESSEE'S OBLIGATION TO INSURE
Lessee shall comply with, or cause to be complied with, each of the
provisions of Annex D, which provisions are hereby incorporated by this
reference as if set forth in full herein.
11.2 INSURANCE FOR OWN ACCOUNT
Nothing in Section 11 shall limit or prohibit (a) Lessee from
maintaining the policies of insurance required under Annex D with higher limits
than those specified in Annex D, or (b) Lessor, Equity Guarantor, Mortgagee or
Owner Participant from obtaining insurance for its own account (and any proceeds
payable under such separate insurance shall be payable as provided in the policy
relating thereto); PROVIDED, HOWEVER, that no insurance may be obtained or
maintained that would limit or otherwise adversely affect the coverage of any
insurance required to be obtained or maintained by Lessee pursuant to this
Section 11 and Annex D.
11.3 INDEMNIFICATION BY GOVERNMENT IN LIEU OF INSURANCE
Lessor agrees to accept, in lieu of insurance against any risk with
respect to the Aircraft described in Annex D, indemnification from, or insurance
provided by, the U.S. Government, or upon the written consent of Lessor, other
Government Entity, against such risk in an amount that, when added to the amount
of insurance (including permitted self-insurance), if any, against such risk
that Lessee (or any Permitted Sublessee) may continue to maintain, in accordance
with this Section 11, during the period of such requisition or transfer, shall
be at least equal to the amount of insurance against such risk otherwise
required by this Section 11.
11.4 APPLICATION OF INSURANCE PROCEEDS
As between Lessor and Lessee, all insurance proceeds received as a
result of the occurrence of an Event of Loss with respect to the Aircraft or any
Engine under policies required to be maintained by Lessee pursuant to this
Section 11 will be applied in accordance with Section 10.5. All proceeds of
insurance required to be maintained by Lessee, in accordance with Section 11 and
Section B of Annex D, in respect of any property damage or loss not constituting
an Event of Loss with respect to the Aircraft, Airframe or any Engine will be
applied in payment (or to reimburse Lessee) for repairs or for replacement
property, and any balance remaining after such repairs or replacement with
respect to such damage or loss shall be paid over to, or retained by, Lessee.
11.5 APPLICATION OF PAYMENTS DURING EXISTENCE OF DEFAULT
Any amount described in this Section 11 that is payable or creditable
to, or retainable by, Lessee shall not be paid or credited to, or retained by,
Lessee if at the time such payment, credit or retention would otherwise occur a
Lease Event of Default shall have occurred and be continuing, but shall instead
be held by or paid over to Lessor (or to Mortgagee so long as Mortgagee has not
given notice to Lessee that the Trust Indenture has been duly discharged) as
security for the obligations of Lessee under this Lease and shall be invested
pursuant to Section 4.4 hereof unless and until Lessor shall have demanded
liquidated damages pursuant to Section 15.1.3 or 15.1.4 and such amount is
applied, at the option of Lessor, or upon the written request of Lessee to
Lessor, from time to time during the continuance of a Lease Event of Default, to
Lessee's obligations under this Lease and the other Lessee Operative Agreements
as and when due, it being understood that any such application shall be made to
such obligations of Lessee as Lessor may determine in its sole discretion. At
such time as there shall not be continuing any Lease Event of Default, such
amount shall be paid to Lessee to the extent not previously applied in
accordance with this Section 11.5.
SECTION 12. INSPECTION
(a) Lessor, Mortgagee or their respective authorized representatives
(the "Inspecting Parties") may, upon reasonable notice to Lessee, inspect the
Aircraft, Airframe and Engines (including, without limitation, the Aircraft
Documents) and Lessee shall cooperate, and shall cause any Permitted Sublessee
to cooperate, with the Inspecting Parties in connection with any such inspection
(including, without limitation, permitting any such Inspecting Party to make
copies of such Aircraft Documents not reasonably deemed confidential by Lessee
or such Permitted Sublessee).
(b) Except during the continuance of any Lease Event of Default while
the Section 1110 Period shall not be in effect, any inspection of the Aircraft
hereunder shall be limited to a visual, walk-around inspection and shall not
include the opening of any panels, bays or other components of the Aircraft,
Airframe or Engines. Any inspection permitted hereunder, including any
inspection conducted during the continuance of a Lease Event of Default, shall
be conducted in a manner which does not interfere with Lessee's or a Permitted
Sublessee's operation, use and maintenance of such Aircraft, which determination
of interference shall be made by Lessee in its reasonable sole discretion.
(c) With respect to such rights of inspection, neither Lessor nor
Mortgagee shall have any duty or liability to make, or any duty or liability by
reason of not making, any such visit, inspection or survey.
(d) Each Inspecting Party shall bear its own expenses in connection
with any such inspection (including the cost of any copies made in accordance
with Section 12(a)); PROVIDED, that if a Lease Event of Default shall have
occurred and be continuing, Lessee shall bear all such reasonable expenses,
except, in the case of a Chapter 11 reorganization, during the Section 1110
Period.
(e) If requested by Lessor, Lessee shall promptly advise, or shall
cause any Permitted Sublessee to advise, Lessor of the date upon which the
Aircraft, Airframe or any Engine undergoes its next scheduled maintenance visit
or next major check, and with respect to any Engine, the next off-the-wing
maintenance, and shall advise Lessor of the name and location of the relevant
maintenance performer. Lessor shall have the opportunity to attend such
scheduled maintenance visit or major check, subject to the other provisions of
this Section 12.
SECTION 13. ASSIGNMENT; MERGER; SUCCESSOR OWNER TRUSTEE
13.1 IN GENERAL
This Lease and the other Lessee Operative Agreements shall be binding
upon and inure to the benefit of Lessor and Lessee and their respective
successors and permitted assigns. Except as otherwise expressly permitted by the
terms of the Lease or any other Lessee Operative Agreement, Lessee will not,
without the prior written consent of Lessor and Mortgagee, assign any of its
rights under this Lease. Except as otherwise provided herein (including, without
limitation, under the provisions of Section 15 hereof), Lessor and Mortgagee may
not assign or convey any of its right, title and interest in and to this Lease
or the Aircraft without the prior written consent of Lessee, such consent not to
be unreasonably withheld.
13.2 MERGER OF LESSEE
13.2.1 IN GENERAL
Lessee shall not consolidate with or merge into any other person under
circumstances in which Lessee is not the surviving corporation, or convey,
transfer or lease in one or more transactions all or substantially all of its
assets to any other person, unless:
(a) such person is organized, existing and in good standing under the
Laws of the United States, any State of the United States or the District
Columbia and, upon consummation of such transaction, such person will be a U.S.
Air Carrier;
(b) such person executes and delivers to Lessor and Mortgagee a duly
authorized, legal, valid, binding and enforceable agreement, reasonably
satisfactory in form and substance to Lessor, containing an effective assumption
by such person of the due and punctual performance and observance of each
covenant, agreement and condition in the Lessee Operative Agreements to be
performed or observed by Lessee;
(c) such person makes such filings and recordings with the FAA
pursuant to the Act as shall be necessary to evidence such consolidation or
merger; and
(d) immediately after giving effect to such consolidation or merger no
Lease Event of Default shall have occurred and be continuing.
13.2.2 EFFECT OF MERGER
Upon any such consolidation or merger of Lessee with or into, or the
conveyance, transfer or lease by Lessee of all or substantially all of its
assets to, any Person in accordance with this Section 13.2, such Person will
succeed to, and be substituted for, and may exercise every right and power of,
Lessee under the Lessee Operative Agreements with the same effect as if such
person had been named as "Lessee" therein. No such consolidation or merger, or
conveyance, transfer or lease, shall have the effect of releasing Lessee or such
Person from any of the obligations, liabilities, covenants or undertakings of
Lessee under the Lease.
13.3 ASSIGNMENT SECURITY FOR LESSOR'S OBLIGATIONS
In order to secure the indebtedness evidenced by the Equipment Notes,
Lessor has agreed in the Trust Indenture, among other things, to assign to
Mortgagee this Lease and to mortgage the Aircraft, Airframe and Engines in favor
of Mortgagee, subject to the reservations and conditions therein set forth.
Lessee hereby accepts and consents to the assignment of all Lessor's right,
title and interest in and to this Lease pursuant to the terms of the Trust
Indenture. In accordance with Section 3.3(c), Lessee agrees to pay directly to
Mortgagee (or, after receipt by Lessee of notice from Mortgagee of the discharge
of the Trust Indenture, to Lessor), all amounts of Rent (other than Excluded
Payments) due or to become due hereunder and assigned to Mortgagee and Lessee
agrees that Mortgagee's right to such payments hereunder shall be absolute and
unconditional and shall not be affected by any circumstance, including, without
limitation, the circumstances set forth in Section 16 hereof. Notwithstanding
the foregoing assignment of this Lease, the obligations of Lessee to Lessor to
perform the terms and conditions of this Lease shall remain in full force and
effect.
13.4 SUCCESSOR OWNER TRUSTEE
Lessee agrees that in the case of the appointment of any successor
Owner Trustee pursuant to the terms of the Participation Agreement and the Trust
Agreement, such successor Owner Trustee shall, upon written notice by such
successor Owner Trustee to Lessee, succeed to all the rights, powers and title
of Lessor hereunder and shall be deemed to be Lessor and the owner of the
Aircraft and the other assets of the Trust Estate for all purposes hereof
without the necessity of any consent or approval by Lessee and without in any
way altering the terms of this Lease or Lessee's obligations hereunder. An
appointment and designation of a successor Owner Trustee shall not exhaust the
right to appoint and designate further successor or additional Owner Trustees
pursuant to the Participation Agreement and the Trust Agreement, and such right
may be exercised repeatedly as long as this Lease shall be in effect.
SECTION 14. LEASE EVENTS OF DEFAULT
The occurrence of any one or more of the following circumstances,
conditions, acts or events, for any reason whatsoever and whether any such
circumstance, condition, act or 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, order, rule or regulation of any Government Entity, shall
constitute a Lease Event of Default so long as it shall not have been remedied:
14.1 PAYMENTS
Lessee shall fail to pay any amount of Basic Rent, Renewal Rent,
Stipulated Loss Value or Termination Value within five (5) Business Days after
the same shall have become due; or Lessee shall fail to pay any Supplemental
Rent (other than Stipulated Loss Value or Termination Value) when due and such
failure shall continue for a period in excess of ten (10) Business Days from and
after the date of any written notice to Lessee from Lessor, Mortgagee or Owner
Participant of the failure to make such payment when due; provided that any such
failure to pay any Excluded Payment shall not constitute a Lease Event of
Default until written notice is given by the Owner Participant to Lessee and
Mortgagee that such failure constitutes a Lease Event of Default and such
failure shall have continued for a period in excess of ten (10) Business Days
after such notice.
14.2 INSURANCE
Lessee shall fail to carry and maintain, or cause to be carried and
maintained, insurance on and in respect of the Aircraft, Airframe and Engines in
accordance with the provisions of Section 11.
14.3 OTHER COVENANTS
Lessee shall fail to observe or perform (or caused to be observed and
performed) in any material respect any other covenant, agreement or obligation
set forth herein or in any other Lessee Operative Agreement (other than the
covenants, agreements and obligations set forth in the Tax Indemnity Agreement),
and such failure shall continue unremedied for a period of 30 days from and
after the date of written notice thereof to Lessee from Lessor, Owner
Participant or Mortgagee, unless such failure is capable of being corrected and
Lessee shall be diligently proceeding to correct such failure, in which case
there shall be no Lease Event of Default unless and until such failure shall
continue unremedied for a period of 90 days after receipt of such notice.
14.4 REPRESENTATIONS AND WARRANTIES
Any representation or warranty made by Lessee herein, in the
Participation Agreement or in any other Lessee Operative Agreement (other than
the representations and warranties of Lessee in the Tax Indemnity Agreement) (a)
shall prove to have been untrue or inaccurate in any material respect as of the
date made, (b) such untrue or inaccurate representation or warranty is material
at the time in question, (c) and the same shall remain uncured (to the extent of
the adverse impact of such incorrectness on the interest of the Participants or
Lessor) for a period in excess of 30 days from and after the date of written
notice thereof from Lessor, Owner Participant or Mortgagee to Lessee (except
that this clause (c) shall be inapplicable in the case of Section 6.1.7 of the
Participation Agreement).
14.5 BANKRUPTCY AND INSOLVENCY
(a) Lessee shall consent to the appointment of or the taking of
possession by a receiver, trustee or liquidator of itself or of substantially
all of its property, or Lessee shall admit in writing its inability to pay its
debts generally as they come due, or does not 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, liquidation or other relief in a case under
any bankruptcy Laws or other insolvency Laws (as in effect at such time), or
Lessee shall seek relief by voluntary petition, answer or consent, under the
provisions of any other bankruptcy or other similar Law providing for the
reorganization or winding-up of corporations (as in effect at such time) or
Lessee's board of directors shall adopt a resolution authorizing any of the
foregoing; or
(b) an order, judgment or decree shall be entered by any court of
competent jurisdiction appointing, without the consent of Lessee, a receiver,
trustee or liquidator of Lessee or of substantially all of its property, or
substantially all of the property of Lessee shall be sequestered, and any such
order, judgment or decree of appointment or sequestration shall remain in force
undismissed, unstayed and unvacated for a period of 90 days after the date of
entry thereof; or
(c) a petition against Lessee in a case under any bankruptcy Laws or
other insolvency Laws (as in effect at such time) is filed and not withdrawn or
dismissed within 90 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 assumes jurisdiction, custody or
control of Lessee or of substantially all of its property and such jurisdiction,
custody or control remains in force unrelinquished, unstayed and unterminated
for a period of 90 days.
SECTION 15. REMEDIES AND WAIVERS
15.1 REMEDIES
If any Lease Event of Default shall occur and be continuing, Lessor
may, at its option and at any time and from time to time, exercise any one or
more of the following remedies as Lessor in its sole discretion shall elect:
15.1.1 RETURN AND REPOSSESSION
Lessor may cause Lessee, upon giving written notice to Lessee, to
return promptly, and Lessee shall return promptly, the Airframe and 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 or Engine were being returned at the end of the Base Lease
Term or any Renewal Lease Term or Lessor, at its option, may enter upon the
premises where the Airframe or any Engine, or any Part thereof, are located and
take immediate possession of and remove the same 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, and Lessee expressly waives any right it may
have to a hearing prior to repossession of the Aircraft.
15.1.2 SALE AND USE
Lessor may sell the Airframe and/or any Engine at public or private
sale, at such times and places, and to such Persons (including Lessor, Mortgagee
or any Participant), as Lessor may determine; or Lessor may otherwise dispose
of, hold, use, operate, lease to others or keep idle the Airframe and/or any
Engine, as Lessor, in its sole discretion, may determine, all free and clear of
any rights of Lessee and without any duty to account to Lessee with respect to
such action or inaction or for any proceeds with respect thereto, except as
hereinafter set forth in this Section 15, and except to the extent that such
proceeds would constitute, under applicable Law, a mitigation of Lessor's
damages suffered or incurred as a result of the subject Lease Event of Default.
Lessor shall give Lessee at least 15 days prior written notice of the date fixed
for any public sale of the Airframe and/or any Engine or of the date on or after
which will occur the execution of any contract providing for any private sale.
15.1.3 CERTAIN LIQUIDATED DAMAGES
Whether or not Lessor shall have exercised, or shall thereafter at any
time exercise, any of its rights under Section 15.1.1 or 15.1.2 with respect to
the Airframe and/or any Engine, or any Part thereof, Lessor, by written notice
to Lessee specifying a payment date (which shall be the Stipulated Loss Value
Date next occurring not less than 10 days after the date of such notice), may
demand Lessee to pay to Lessor, and Lessee shall pay to Lessor, on the payment
date so specified and in the manner and in funds of the type specified in
Section 3.3, as liquidated damages for loss of a bargain and not as a penalty
(in lieu of the Basic Rent or Renewal Rent, as the case may be, for the Aircraft
in respect of all periods commencing on or after the date specified for payment
in such notice), the following amounts:
(a) all unpaid Basic Rent or Renewal Rent, as the case may be, due at
any time prior to the Stipulated Loss Value Date specified in such notice; plus
(b) an amount equal to the excess, if any, of the Stipulated Loss
Value for the Aircraft, computed as of the Stipulated Loss Value Date specified
in such notice, over the Fair Market Sales Value of the Aircraft, as of the
Stipulated Loss Value Date specified in such notice; plus
(c) interest on the amounts specified in the foregoing clause (a) at
the Payment Due Rate from and including the date on which any such amount was
due to the date of payment of such amount; plus
(d) interest on the amount specified in the foregoing clause (b) at
the Payment Due Rate from and including the Stipulated Loss Value Date specified
in such notice to the date of payment of such amount.
15.1.4 LIQUIDATED DAMAGES UPON SALE
If Lessor, pursuant to Section 15.1.2 or applicable Law, shall have
sold the Aircraft, Lessor, in lieu of exercising its rights under Section 15.1.3
with respect to the Aircraft, may, if Lessor shall so elect, upon giving written
notice to Lessee, demand Lessee to pay Lessor, and Lessee shall pay to Lessor,
on the date of such sale and in the manner and in funds of the type specified in
Section 3.3, as liquidated damages for loss of a bargain and not as a penalty
(in lieu of the Basic Rent or Renewal Rent, as the case may be, for the Aircraft
in respect of all periods commencing on or after the date of such sale), the
following amounts:
(a) all unpaid Basic Rent or Renewal Rent, as the case may be, due at
any time prior to the Stipulated Loss Value Date on or immediately preceding the
date of such sale; plus
(b) an amount equal to the excess, if any, of (i) the Stipulated Loss
Value of the Aircraft, computed as of the Stipulated Loss Value Date used in the
foregoing clause (a) for the computation of unpaid Rent, over (ii) the proceeds
of such sale, minus all reasonable costs of Lessor in connection with the sale;
plus
(c) if the date of such sale is not a Stipulated Loss Value Date, an
amount equal to interest on the outstanding principal amount of the Equipment
Notes at the rate per annum borne thereby from and including the Stipulated Loss
Value Date used in the foregoing clause (a) for the computation of unpaid Rent
to the date of such sale; plus
(d) interest on the amounts specified in the foregoing clause (a) at
the Payment Due Rate from and including the date on which any such amount was
due to the date of payment of such amount; plus
(e) interest on the sum of the amounts specified in the foregoing
clause (b) at the Payment Due Rate from and including the date of such sale to
the date of payment of such amounts.
15.1.5 RESCISSION
Lessor may (i) at its option, rescind or terminate this Lease as to
the Aircraft, Airframe or any Engine, or any Part thereof, or (ii) exercise any
other right or remedy that may be available to it under applicable Law or
proceed by appropriate court action to enforce the terms hereof or to recover
damages for the breach hereof, including without limitation Lessee's agreement
to lease the Aircraft for the Term and to pay Rent.
15.1.6 OTHER REMEDIES
In addition to the foregoing remedies (but without duplication of
amounts otherwise paid under this Section 15), Lessee shall be liable for any
and all unpaid Rent due hereunder before, during or after (except as otherwise
provided herein) the exercise of any of the foregoing remedies and for all
reasonable attorneys' fees and other costs and expenses of Lessor, including,
without limitation, interest on overdue Rent at the rate as herein provided,
incurred by reason of the occurrence of any Lease Event of Default or the
exercise of Lessor's remedies with respect thereto, including all reasonable
costs and expenses of Lessor incurred in connection with the return of the
Airframe or any Engine, in accordance with the terms of Section 5 or in placing
the Airframe or any Engine, in the condition and airworthiness required by
Section 5.
15.2 LIMITATIONS UNDER CRAF
Notwithstanding the provisions of Section 15.1, during any period that
the Aircraft, Airframe or any Engine is subject to CRAF in accordance with the
provisions of Section 7.2.3 and in the possession of the U.S. Government, Lessor
shall not, as a result of any Lease Event of Default, exercise its remedies
hereunder in such manner as to limit Lessee's control under this Lease (or any
Permitted Sublessee's control under any Permitted Sublease) of the Aircraft,
Airframe or such Engine, unless at least 30 days' (or such other period as may
then be applicable under CRAF) written notice of default hereunder shall have
been given by Lessor or Mortgagee by registered or certified mail to Lessee (and
any Permitted Sublessee) with a copy to the Contracting Officer Representative
or Representatives for the Military Airlift Command of the United States Air
Force to whom notices must be given under the contract governing Lessee's (or
any Permitted Sublessee's) participation in CRAF with respect to the Aircraft,
Airframe or any Engine.
15.3 RIGHT TO PERFORM FOR LESSEE
If Lessee (i) fails to make any payment of Rent required to be made by
it hereunder or (ii) fails to perform or comply with any of its agreements
contained herein and such failure continues for a period of thirty days after
written notice thereof is given by Lessor, Mortgagee or Owner Participant to
Lessee, Lessor may (but shall not be obligated to) make such payment or perform
or comply with such agreement, and the amount of such payment and the amount of
the expenses of Lessor or Mortgagee incurred in connection with such payment or
the performance of or compliance with such agreement, as the case may be,
together with interest thereon at the Payment Due Rate, shall be deemed
Supplemental Rent, payable by Lessee upon demand by Lessor or Mortgagee,
whichever is entitled thereto. No such payment, performance or compliance shall
be deemed to cure any Lease Default or Lease Event of Default or otherwise
relieve Lessee of its obligations with respect thereto.
15.4 DETERMINATION OF FAIR MARKET SALES VALUE
For the purpose of this Section 15, the "Fair Market Sales Value" of
the Aircraft shall be determined on an "as is, where is" basis and shall take
into account customary brokerage and other out-of-pocket fees and expenses which
typically would be incurred in connection with a sale of the Aircraft. Any such
determination shall be made by an Appraiser selected by Lessor and the costs and
expenses associated therewith shall be borne by Lessee, unless Lessor does not
obtain possession of the Aircraft, Airframe and Engines pursuant to this Section
15, in which case an Appraiser shall not be appointed and Fair Market Sales
Value for purposes of this Section 15 shall be zero.
15.5 REMEDIES CUMULATIVE
Nothing contained in this Lease shall be construed to limit in any way
any right, power, remedy or privilege of Lessor hereunder or under any other
Operative Agreement or now or hereafter existing at law or in equity. Each and
every right, power, remedy and privilege hereby given to, or retained by, Lessor
in this Lease shall be in addition to and not in limitation of every other
right, power, remedy and privilege given under the Operative Agreements or now
or hereafter existing at law or in equity. Each and every right, power, remedy
and privilege of Lessor under this Lease and any other Operative Agreement may
be exercised from time to time or simultaneously and as often and in such order
as may be deemed expedient by Lessor. All such rights, powers, remedies and
privileges shall be cumulative and not mutually exclusive, and the exercise of
one shall not be deemed a waiver of the right to exercise any other. Lessee
hereby waives to the extent permitted by applicable Law any right which it may
have to require Lessor to choose or elect remedies.
SECTION 16. LESSEE'S OBLIGATIONS; NO SETOFF, COUNTERCLAIM, ETC.
(a) Lessee's obligation to pay Rent hereunder shall be absolute and
unconditional, and shall not be affected by any event or circumstance,
including, without limitation: (i) any setoff, counterclaim, recoupment, defense
or other right that Lessee may have against Lessor, Mortgagee, any Participant,
any Note Holder, or any other Person for any reason whatsoever; (ii) any defect
in the title, airworthiness, condition, design, operation or fitness for use of,
or any damage to or loss or destruction of, the Aircraft, Airframe or any
Engine, or any interruption or cessation in the use or possession thereof by
Lessee for any reason whatsoever; (iii) any insolvency, bankruptcy,
reorganization or similar proceedings by or against Lessee or any other Person;
or (iv) any other circumstance, happening or event whatsoever, whether or not
similar to any of the foregoing.
(b) If for any reason whatsoever this Lease shall be terminated in
whole or in part by operation of law or otherwise except as specifically
provided herein, Lessee nonetheless agrees to pay an amount equal to each Rent
payment at the time such payment would have become due and payable in accordance
with the terms hereof had this Agreement not been terminated in whole or in
part. Lessee hereby waives, to the extent permitted by applicable law, any and
all rights that it may now have or that at any time hereafter may be conferred
upon it, by statute or otherwise, to terminate, cancel, quit or surrender this
Agreement, except in accordance with the express terms hereof.
(c) Nothing set forth in this Section 16 shall be construed to
prohibit Lessee from separately pursuing any claim that it may have from time to
time against Lessor or any other Person with respect to any matter (other than
the absolute and unconditional nature of Lessee's obligations hereunder to pay
Rent, and other than the matters specified in paragraphs (a) and (b) above).
Without limiting the foregoing, nothing in this Section 16 shall be construed as
a waiver by Lessee, or otherwise limit Lessee in pursuing any claim by Lessee,
of any breach by Lessor, Owner Participant or any other Person of any covenant
or obligation contained in any Operative Agreement.
SECTION 17. RENEWAL AND PURCHASE OPTIONS
17.1 NOTICES GENERALLY
(a) At least 225 days but not more than 375 days prior to the
Scheduled Expiration Date or, if a Renewal Lease Term is then in effect, prior
to the Scheduled Renewal Term Expiration Date of such Renewal Lease Term, Lessee
may provide notice to Lessor that Lessee may exercise either the option to
extend the leasing of the Aircraft for a Renewal Lease Term pursuant to Section
17.2 or the option to purchase the Aircraft on the Scheduled Expiration Date or
Scheduled Renewal Term Expiration Date of such Renewal Lease Term, as the case
may be, pursuant to Section 17.3 (a "Preliminary Notice").
(b) If any such Preliminary Notice is given by Lessee, then Lessee may
provide a further notice specifying which option it intends to elect, with
respect to the relevant period, pursuant to Section 17.2.1 or 17.3.1, as the
case may be.
17.2 RENEWAL OPTIONS
17.2.1 RENEWAL NOTICE
(a) If Lessee has given a Preliminary Notice, as specified in Section
17.1, and subject to the terms and conditions of this Section 17.2, Lessee may
exercise its option to extend the leasing of the Aircraft hereunder on two
occasions, in each case until the next Scheduled Renewal Term Expiration Date,
on the same terms, provisions and conditions (except as contemplated by this
Section 17) set forth herein and in the other Lessee Operative Agreements with
respect to the Base Lease Term, by delivery of a notice (a "Renewal Notice") to
Lessor not less than 180 days but not more than 375 days prior to (i) if the
Base Lease Term is then in effect, the Scheduled Expiration Date, or (ii) if a
Renewal Lease Term is then in effect, the Scheduled Renewal Term Expiration Date
for such Renewal Lease Term.
(b) Notwithstanding anything to the contrary in this Agreement or any
other Operative Agreement:
(i) No Preliminary Notice or Renewal Notice shall be binding on
Lessor or oblige Lessor to extend the leasing of the Aircraft hereunder for
a Renewal Lease Term if any Payment Default, Bankruptcy Default or Lease
Event of Default shall have occurred and be continuing on and as of the
date that such Renewal Lease Term would otherwise commence.
(ii) Any Renewal Notice shall be revocable by Lessee until 10
Business Days after the Renewal Rent is determined in accordance with
Sections 17.2.2 and unless revoked by written notice by Lessee to Lessor
shall thereafter become irrevocable and shall constitute an unconditional
obligation of Lessee to extend the leasing of the Aircraft hereunder for
the Renewal Lease Term to which such Renewal Notice relates.
(iii) Lessee shall not be entitled to give any Renewal Notice if
it has (x) not delivered a Preliminary Notice or (y) delivered a Purchase
Notice to Lessor.
17.2.2 RENEWAL RENT
(a) During the Renewal Lease Term, Lessee shall pay to Lessor on each
Payment Date, in the manner and in the funds of the type specified in Section
3.3, Renewal Rent in advance.
(b) The Renewal Rent payable by Lessee on each Payment Date during any
Renewal Lease Term shall be the Fair Market Rental Value of the Aircraft for
such Renewal Lease Term. Any such Fair Market Rental Value shall be determined
not more than 10 Business Days after Lessee gives a Preliminary Notice by mutual
agreement of Lessor and Lessee or, if they shall be unable to agree, by an
appraisal in accordance with Section 17.4.
17.2.3 STIPULATED LOSS AND TERMINATION VALUES
(a) For any Renewal Lease Term, Stipulated Loss Value Dates and
Termination Value dates shall be extended throughout such Renewal Lease Term on
the same days and for the same months as during the Base Lease Term.
(b) Stipulated Loss Value and Termination Value amounts that are
payable during any such Renewal Lease Term shall be determined at the same time
that the Renewal Rent for such Renewal Lease Term is determined under Section
17.2.2. Stipulated Loss Values and Termination Values for any such Renewal Lease
Term shall, commencing on the first day of such Renewal Lease Term, be equal to
the Fair Market Sales Value of the Aircraft, computed as of the first day of
such Renewal Lease Term, and shall decline ratably on a monthly basis to the
Fair Market Sales Value of the Aircraft as of the last day of such Renewal Lease
Term.
(c) Any Fair Market Sales Value of the Aircraft, for purposes of
calculating Stipulated Loss Value and Termination Value amounts applicable
during any such Renewal Lease Term, shall be determined by mutual agreement of
Lessor and Lessee or, if they shall be unable to agree, by an appraisal in
accordance with Section 17.4.
17.3 PURCHASE OPTION
17.3.1 PURCHASE NOTICE
(a) Subject to Section 17.1 and the terms and conditions of this
Section 17.3, Lessee may elect to purchase the Aircraft, on any Purchase Date,
at a purchase price equal to the lesser of (i) 61.35% of Lessor's Cost and (ii)
the Fair Market Sales Value of the Aircraft computed as of the Purchase Date.
(b) Lessee may exercise such option to purchase the Aircraft, by
delivery of a notice (a "Purchase Notice") to Lessor not less than 180 and not
more than 375 days prior to the Purchase Date specified in such Purchase Notice.
(c) Notwithstanding anything to the contrary in this Agreement or any
other Operative Agreement:
(i) Any Purchase Notice (whether delivered or deemed to have been
delivered) shall be revocable until 10 Business Days after the
determination of the Fair Market Sales Value in accordance with Section
17.3.2 and unless revoked by written notice by Lessee to Lessor shall
thereafter become irrevocable and shall constitute an unconditional
obligation of Lessee to purchase the Aircraft under this Section 17.3.
(ii) No Preliminary Notice or Purchase Notice shall be binding on
Lessor or oblige Lessor to sell the Aircraft hereunder if any Payment
Default, Bankruptcy Default or Lease Event of Default shall have occurred
and be continuing on and as of such Purchase Date.
(iii) Lessee shall not be entitled to give any Purchase Notice in
respect of any Purchase Date if it has (x) not delivered a Preliminary
Notice or (y) delivered a Renewal Notice for a Renewal Lease Term that
would commence immediately following such Purchase Date.
17.3.2 DETERMINATION OF FAIR MARKET SALES VALUE
The Fair Market Sales Value of the Aircraft shall be determined not
more than 10 Business Days after Lessee gives a Preliminary Notice by mutual
agreement of Lessor and Lessee or, if they shall be unable to agree, by an
appraisal in accordance with Section 17.4.
17.3.3 TITLE
Upon full and final payment by Lessee of (a) the applicable purchase
price of the Aircraft, (b) all unpaid Rent due and payable through and including
the Purchase Date and (c) all other amounts due and payable by Lessee under this
Agreement, Lessor will transfer to Lessee title to the Aircraft in accordance
with Section 4.5.
17.4 APPRAISALS
Whenever Fair Market Rental Value or Fair Market Sales Value of the
Aircraft is required to be determined by an appraisal under this Section 17,
Lessee and Lessor shall appoint a mutually satisfactory Appraiser to conduct
such appraisal. If Lessee and Lessor fail to agree upon a satisfactory Appraiser
then each shall promptly appoint a separate Appraiser and such Appraisers shall
jointly determine such amount. If either Lessee or Lessor fails to so appoint an
Appraiser, the determination of the single Appraiser appointed shall be final.
If two Appraisers are appointed and within 7 days after the appointment of the
latter of such two Appraisers, they cannot agree upon such amount, such two
Appraisers shall, within 8 days after such latter appointment, appoint a third
Appraiser and such amount shall be determined by such three Appraisers, who
shall make their separate appraisals within 7 days following the appointment of
the third Appraiser, and any determination so made shall be conclusive and
binding upon Lessor and Lessee. If no such third Appraiser is appointed within
such 8-day period, either Lessor or Lessee may apply to the American Arbitration
Association to make such appointment, and both parties shall be bound by such
appointment. The foregoing appraisal procedure shall in any event be completed
no less than 190 days before the end of the Base Lease Term or the current
Renewal Lease Term, as the case may be. If three Appraisers are appointed and
the difference between the determination which is farther from the middle
determination and the middle determination is more than 125% of the difference
between the middle determination and the third determination, then such farther
determination shall be excluded, the remaining two determinations shall be
averaged and such average shall be final and binding upon Lessor and Lessee.
Otherwise, the average of all three determinations shall be final and binding
upon Lessor and Lessee. The fees and expenses of all such Appraisers and such
appraisal procedure shall be borne equally by Lessee and Lessor, PROVIDED that
if Lessee elects not to renew this Lease or purchase the Aircraft following the
conclusion of such appraisal, Lessee shall pay all expenses of such appraisal.
SECTION 18. MISCELLANEOUS
18.1 AMENDMENTS
No provision of this Agreement may be amended, supplemented, waived,
modified, discharged, terminated or otherwise varied orally, but only by an
instrument in writing that specifically identifies the provision of this
Agreement that it purports to amend, supplement, waive, modify, discharge,
terminate or otherwise vary and is signed by Lessor and Lessee with the written
consent of the Mortgagee if required by the Trust Indenture. Each such
amendment, supplement, waiver, modification, discharge, termination or variance
shall be effective only in the specific instance and for the specific purpose
for which it is given. No provision of this Agreement shall be varied or
contradicted by oral communication, course of dealing or performance or other
manner not set forth in an agreement, document or instrument in writing and
signed by Lessor and Lessee.
18.2 SEVERABILITY
If any provision hereof shall be held invalid, illegal or
unenforceable in any respect in any jurisdiction, then, to the extent permitted
by Law (a) all other provisions hereof shall remain in full force and effect in
such jurisdiction and (b) such invalidity, illegality or unenforceability shall
not affect the validity, legality or enforceability of such provision in any
other jurisdiction. If, however, any Law pursuant to which such provisions are
held invalid, illegal or unenforceable may be waived, such Law is hereby waived
by the parties hereto to the full extent permitted, to the end that this
Agreement shall be deemed to be a valid and binding agreement in all respects,
enforceable in accordance with its terms.
18.3 THIRD-PARTY BENEFICIARY
This Agreement is not intended to, and shall not, provide any person
not a party hereto (other than Mortgagee, the Participants and the Persons
referred to in Section 4.6, with respect to matters expressly for their benefit
in this Lease) with any rights of any nature whatsoever against either of the
parties hereto, and no person not a party hereto (other than Mortgagee, the
Participants and the Persons referred to in Section 4.6, with respect to matters
expressly for their benefit in this Lease) shall have any right, power or
privilege in respect of, or have any benefit or interest arising out of, this
Agreement.
18.4 REPRODUCTION OF DOCUMENTS
This Agreement, all annexes, schedules and exhibits hereto and all
agreements, instruments and documents relating hereto, including, without
limitation (a) consents, waivers and modifications that may hereafter be
executed and (b) financial statements, certificates and other information
previously or hereafter furnished to any party hereto, may be reproduced by such
party by any photographic, photostatic, microfilm, micro-card, miniature
photographic or other similar process, and such party may destroy any original
documents so reproduced. Any such reproduction shall be admissible in evidence
as the original itself in any judicial or administrative proceeding (whether or
not the original is in existence and whether or not such reproduction was made
by such party in the regular course of business) and any enlargement, facsimile
or further reproduction of such reproduction likewise is admissible in evidence.
18.5 COUNTERPARTS
This Agreement and any amendments, waivers, consents or supplements
hereto may be executed in any number of counterparts (or upon separate signature
pages bound together into one or more counterparts), each of which when so
executed shall be deemed to be an original, and all of which counterparts, taken
together, shall constitute one and the same instrument.
18.6 NOTICES
Unless otherwise expressly permitted by the terms hereof, all notices,
requests, demands, authorizations, directions, consents, waivers and other
communications required or permitted to be made, given, furnished or filed
hereunder shall be in writing (it being understood that the specification of a
writing in certain instances and not in others does not imply an intention that
a writing is not required as to the latter), shall refer specifically to this
Agreement and shall be personally delivered, sent by facsimile or
telecommunication transmission (which in either case provides written
confirmation to the sender of its delivery), sent by registered mail or
certified mail, return receipt requested, postage prepaid, or sent by overnight
courier service, in each case to the respective address or facsimile number set
forth for such party in Schedule 1 to the Participation Agreement, or to such
other address or number as either party hereto may hereafter specify by notice
to the other party hereto. Each such notice, request, demand, authorization,
direction, consent, waiver or other communication shall be effective when
received or, if made, given, furnished or filed (a) by facsimile or
telecommunication transmission, when confirmed, or (b) by registered or
certified mail, three Business Days after being deposited, properly addressed,
with the U.S. Postal Service.
18.7 GOVERNING LAW; SUBMISSION TO JURISDICTION; VENUE
(A) THIS AGREEMENT SHALL IN ALL RESPECTS BE GOVERNED BY THE LAWS OF
THE STATE OF NEW YORK, INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND
PERFORMANCE. THIS AGREEMENT IS BEING DELIVERED IN THE STATE OF NEW YORK.
(B) EACH PARTY HERETO HEREBY IRREVOCABLY AGREES, ACCEPTS AND SUBMITS
ITSELF TO THE NON-EXCLUSIVE JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK
IN THE CITY AND COUNTY OF NEW YORK AND OF THE UNITED STATES FOR THE SOUTHERN
DISTRICT OF NEW YORK, IN CONNECTION WITH ANY LEGAL ACTION, SUIT OR PROCEEDING
WITH RESPECT TO ANY MATTER RELATING TO OR ARISING OUT OF OR IN CONNECTION WITH
THIS AGREEMENT.
(C) EACH PARTY HERETO HEREBY IRREVOCABLY CONSENTS AND AGREES TO THE
SERVICE OF ANY AND ALL LEGAL PROCESS, SUMMONS, NOTICES AND DOCUMENTS OF ANY OF
THE AFOREMENTIONED COURTS IN ANY SUCH SUIT, ACTION OR PROCEEDING MAY BE MADE BY
MAILING COPIES THEREOF BY REGISTERED OR CERTIFIED MAIL, POSTAGE PREPAID, AT THE
ADDRESS SET FORTH PURSUANT TO SECTION 18.7. EACH PARTY HERETO HEREBY AGREES THAT
SERVICE UPON IT, OR ANY OF ITS AGENTS, IN EACH CASE IN ACCORDANCE WITH THIS
SECTION 18.8(C), SHALL CONSTITUTE VALID AND EFFECTIVE PERSONAL SERVICE UPON SUCH
PARTY, AND EACH PARTY HERETO HEREBY AGREES THAT THE FAILURE OF ANY OF ITS AGENTS
TO GIVE ANY NOTICE OF SUCH SERVICE TO ANY SUCH PARTY SHALL NOT IMPAIR OR AFFECT
IN ANY WAY THE VALIDITY OF SUCH SERVICE ON SUCH PARTY OR ANY JUDGMENT RENDERED
IN ANY ACTION OR PROCEEDING BASED THEREON.
(D) EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES, TO THE EXTENT
PERMITTED BY APPLICABLE LAW, AND AGREES NOT TO ASSERT, BY WAY OF MOTION, AS A
DEFENSE, OR OTHERWISE, IN ANY LEGAL ACTION OR PROCEEDING BROUGHT HEREUNDER IN
ANY OF THE ABOVE-NAMED COURTS, THAT SUCH ACTION OR PROCEEDING IS BROUGHT IN AN
INCONVENIENT FORUM, THAT VENUE FOR THE ACTION OR PROCEEDING IS IMPROPER OR THAT
THIS AGREEMENT OR ANY OTHER OPERATIVE AGREEMENT MAY NOT BE ENFORCED IN OR BY
SUCH COURTS.
(E) EACH PARTY HERETO HEREBY WAIVES ITS RESPECTIVE RIGHTS TO A JURY
TRIAL OF ANY CLAIM OR CAUSE OF ACTION IN ANY COURT IN ANY JURISDICTION BASED
UPON OR ARISING OUT OF OR RELATING TO THIS AGREEMENT.
18.8 NO WAIVER
No failure on the part of Lessor to exercise, and no delay by Lessor
in exercising, any of its rights, powers, remedies or privileges under this
Agreement or provided at Law, in equity or otherwise shall impair, prejudice or
constitute a wavier of any such right, power, remedy or privilege or be
construed as a waiver of any breach hereof or default hereunder or as an
acquiescence therein, nor shall any single or partial exercise of any such
right, power, remedy or privilege preclude any other or further exercise thereof
by Lessor or the exercise of any other right, power, remedy or privilege by
Lessor. No notice to or demand on Lessee in any case shall, unless otherwise
required under this Agreement, entitle Lessee to any other or further notice or
demand in similar or other circumstances or constitute a waiver of the rights of
Lessor to any other further action in any circumstances without notice or
demand.
18.9 ENTIRE AGREEMENT
This Agreement, together with the other Operative Agreements, on and
as of the date hereof constitutes the entire agreement of the parties hereto
with respect to the subject matter hereof, and all prior or contemporaneous
understandings or agreements, whether written or oral, between the parties
hereto with respect to such subject matter are hereby superseded in their
entireties.
[This space intentionally left blank.]
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.
FIRST SECURITY BANK, NATIONAL
ASSOCIATION, as Lessor, not in its
individual capacity, except as expressly
provided herein, but solely as Owner
Trustee under the Trust Agreement
By:_____________________________________
Name:
Title:
CONTINENTAL AIRLINES, INC., as Lessee
By:_____________________________________
Name:
Title:
Receipt of this original counterpart of the foregoing Lease Agreement
is hereby acknowledged on this ___ day of _____________, _____.
WILMINGTON TRUST COMPANY, as Mortgagee
By:_____________________________________
Name:
Title:
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.
FIRST SECURITY BANK, NATIONAL
ASSOCIATION, as Lessor, not in its
individual capacity, except as expressly
provided herein, but solely as Owner
Trustee under the Trust Agreement
By:_____________________________________
Name:
Title:
CONTINENTAL AIRLINES, INC., as Lessee
By:_____________________________________
Name:
Title:
ANNEX A
DEFINITIONS
GENERAL PROVISIONS
(a) In each Operative Agreement, unless otherwise expressly provided,
a reference to:
(i) each of "Lessee," "Lessor," "Loan Participant," "Owner
Trustee," "Owner Participant," "Mortgagee," "Note Holder" or any other
person includes, without prejudice to the provisions of any Operative
Agreement, any successor in interest to it and any permitted transferee,
permitted purchaser or permitted assignee of it;
(ii) words importing the plural include the singular and words
importing the singular include the plural;
(iii) any agreement, instrument or document, or any annex,
schedule or exhibit thereto, or any other part thereof, includes, without
prejudice to the provisions of any Operative Agreement, that agreement,
instrument or document, or annex, schedule or exhibit, or part,
respectively, as amended, modified or supplemented from time to time in
accordance with its terms and in accordance with the Operative Agreements,
and any agreement, instrument or document entered into in substitution or
replacement therefor;
(iv) any provision of any Law includes any such provision as
amended, modified, supplemented, substituted, reissued or reenacted prior
to the Closing Date, and thereafter from time to time;
(v) the words "Agreement," "this Agreement," "hereby," "herein,"
"hereto," "hereof" and "hereunder" and words of similar import when used in
any Operative Agreement refer to such Operative Agreement as a whole and
not to any particular provision of such Operative Agreement;
(vi) the words "including," "including, without limitation,"
"including, but not limited to," and terms or phrases of similar import
when used in any Operative Agreement, with respect to any matter or thing,
mean including, without limitation, such matter or thing; and
(vii) a "Section," an "Exhibit," an "Annex" or a "Schedule" in
any Operative Agreement, or in any annex thereto, is a reference to a
section of, or an exhibit, an annex or a schedule to, such Operative
Agreement or such annex, respectively.
(b) Each exhibit, annex and schedule to each Operative Agreement is
incorporated in, and shall be deemed to be a part of, such Operative Agreement.
(c) Unless otherwise defined or specified in any Operative Agreement,
all accounting terms therein shall be construed and all accounting
determinations thereunder shall be made in accordance with GAAP.
(d) Headings used in any Operative Agreement are for convenience only
and shall not in any way affect the construction of, or be taken into
consideration in interpreting, such Operative Agreement.
(e) For purposes of each Operative Agreement, the occurrence and
continuance of a Lease Default or Lease Event of Default referred to in Section
14.5 shall not be deemed to prohibit the Lessee from taking any action or
exercising any right that is conditioned on no Lease Event of Default,
Bankruptcy Default or Lease Default having occurred and be continuing if a
Section 1110 Event shall have occurred and is then continuing.
DEFINED TERMS
"ACT" means part A of subtitle VII of title 49, United States Code.
"ACTUAL KNOWLEDGE" means (a) as it applies to Owner Trustee or
Mortgagee, as the case may be, actual knowledge of a responsible officer in the
Corporate Trust Department or the Corporate Trust Office, respectively, and (b)
as it applies to Owner Participant, Lessee, Existing Lessor, Existing Mortgagee
and Airframe Manufacturer, actual knowledge of a Vice President or more senior
officer of Owner Participant or Lessee, respectively, or any other officer of
Owner Participant or Lessee, respectively, having responsibility for the
transactions contemplated by the Operative Agreements; PROVIDED that each of
Lessee, Owner Participant, Owner Trustee, Mortgagee, Existing Lessor, Existing
Mortgagee and Airframe Manufacturer shall be deemed to have "Actual Knowledge"
of any matter as to which it has received notice from Lessee, Owner Participant,
any Note Holder, Owner Trustee or Mortgagee, such notice having been given
pursuant to Section 15.7 of the Participation Agreement.
"ADDITIONAL INSURED" is defined in Section D of Annex D to the Lease.
"AFFILIATE" means, with respect to any person, any other person
directly or indirectly controlling, controlled by or under common control with
such person. For purposes of this definition, "control" means the power,
directly or indirectly, to direct or cause the direction of the management and
policies of such person, whether through the ownership of voting securities or
by contract or otherwise and "controlling," "controlled by" and "under common
control with" have correlative meanings.
"AIRCRAFT" means, collectively, the Airframe and Engines.
"AIRCRAFT XXXX OF SALE" means the full warranty xxxx of sale covering
the Aircraft delivered by Existing Lessor to Owner Trustee on the Closing Date.
"AIRCRAFT DOCUMENTS" means all technical data, manuals and log books,
and all inspection, modification and overhaul records and other service, repair,
maintenance and technical records that are required by the FAA (or the relevant
Aviation Authority) to be maintained with respect to the Aircraft, Airframe,
Engines or Parts; and such term shall include all additions, renewals, revisions
and replacements of any such materials from time to time made, or required to be
made, by the FAA (or other Aviation Authority) regulations, and in each case in
whatever form and by whatever means or medium (including, without limitation,
microfiche, microfilm, paper or computer disk) such materials may be maintained
or retained by or on behalf of Lessee (PROVIDED, that all such materials shall
be maintained in the English language).
"AIRFRAME" means (a) the aircraft (excluding Engines or engines from
time to time installed thereon) manufactured by Airframe Manufacturer and
identified by Airframe Manufacturer's model number, United States registration
number and Airframe Manufacturer's serial number set forth in Lease Supplement
No. 1 and (b) any and all Parts incorporated or installed in or attached or
appurtenant to such airframe, and any and all Parts removed from such airframe,
unless title to such Parts shall not be vested in Lessor in accordance with
Section 8.1 and Annex C of the Lease.
"AIRFRAME MANUFACTURER" means Embraer-Empresa Brasileira de
Aeronautica S.A., a Brazilian corporation.
"AIRFRAME MANUFACTURER AGREEMENTS" means, collectively, the
Participation Agreement, the Purchase Agreement and the Consent and Agreement.
"AMORTIZATION AMOUNT" means, with respect to any Equipment Note, as of
any Payment Date, the amount determined by multiplying the percentage set forth
opposite such Date on the Amortization Schedule by the Original Amount of such
Equipment Note.
"AMORTIZATION SCHEDULE" means, with respect to each Equipment Note,
the amortization schedule for such Equipment Note delivered pursuant to Section
2.02 of the Trust Indenture.
"APPRAISAL" is defined in Section 5.1.2(xv) of the Participation
Agreement.
"APPRAISER" means a firm of internationally recognized, independent
aircraft appraisers.
"AVERAGE LIFE DATE" for any Equipment Note shall be the date which
follows the time of determination by a period equal to the Remaining Weighted
Average Life of such Equipment Note. "Remaining Weighted Average Life" on a
given date with respect to any Equipment Note shall be the number of days equal
to the quotient obtained by dividing (a) the sum of each of the products
obtained by multiplying (i) the amount of each then remaining scheduled payment
of principal of such Equipment Note by (ii) the number of days from and
including such determination date to but excluding the date on which such
payment of principal is scheduled to be made, by (b) the then outstanding
principal amount of such Equipment Note.
"AVIATION AUTHORITY" means the FAA or, if the Aircraft is permitted to
be, and is, registered with any other Government Entity under and in accordance
with Section 7.1.2 of the Lease, such other Government Entity.
"BANKRUPTCY CODE" means the United States Bankruptcy Code, 11 U.S.C.
ss. 101 ET SEQ.
"BANKRUPTCY DEFAULT" means a Lease Event of Default under Section 14.5
of the Lease.
"BASE LEASE TERM" means the period beginning on and including the
Closing Date and ending on the Scheduled Expiration Date, or such earlier date
on which the Term terminates in accordance with the provisions of the Lease.
"BASIC PASS THROUGH TRUST AGREEMENT" means the Pass Through Trust
Agreement, dated the Issuance Date, between Lessee and Pass Through Trustee, as
such agreement may be supplemented, amended or modified, but does not include
any Trust Supplement.
"BASIC RENT" means the rent payable for the Aircraft pursuant to
Section 3.2.1 of the Lease.
"BENEFICIAL OWNER" when used in relation to an Equipment Note means a
Person that, by reason of direct ownership, contract, share ownership or
otherwise, has the right to receive or participate in receiving, directly or
indirectly, payments of principal, interest or Make-Whole Amount in respect of
such Equipment Note; provided that a Person shall not be deemed to be a
Beneficial Owner of an Equipment Note solely because another Person in which
such a Person owns common stock or other equity securities is a registered
holder or Beneficial Owner of such Equipment Note unless such Person is an
Affiliate of such other Person.
"BILLS OF SALE" means the FAA Xxxx of Sale and the Aircraft Xxxx of
Sale.
"BUSINESS DAY" means any day other than a Saturday, Sunday or other
day on which commercial banks are authorized or required by law to close in New
York, New York, Houston, Texas, Wilmington, Delaware, or Salt Lake City, Utah.
"CASH EQUIVALENTS" means the following securities (which shall mature
within 90 days of the date of purchase thereof): (a) direct obligations of the
U.S. Government; (b) obligations fully guaranteed by the U.S. Government; (c)
certificates of deposit issued by, or bankers' acceptances of, or time deposits
or a deposit account with, Owner Trustee, Mortgagee or any bank, trust company
or national banking association incorporated or doing business under the laws of
the United States or any state thereof having a combined capital and surplus and
retained earnings of at least $500,000,000 and having a rate of "C" or better
from the Thomson BankWatch Service; or (d) commercial paper of any issuer doing
business under the laws of the United States or one of the states thereof and in
each case having a rating assigned to such commercial paper by Standard & Poor's
Rating Services or Xxxxx'x Investors Service, Inc. equal to A1 or higher.
"CITIZEN OF THE UNITED STATES" is defined in Section 40102(a)(15) of
the Act and in the FAA Regulations.
"CHANGE IN TAX LAW" means any change or proposed change in the Code or
the regulations promulgated thereunder or any change in the interpretation of
the Code or such regulations in a decision by the United States Supreme Court,
the United States Tax Court, the United States Claims Court or any of the United
States Courts of Appeal or District Courts, or any issuance of an Internal
Revenue Ruling, Revenue Procedure or administrative pronouncement by the
Internal Revenue Service or the Department of the Treasury.
"CLOSING" means the occurrence of the following concurrent events: (i)
sale of the Aircraft to the Owner Trustee and the filing of the FAA Xxxx of Sale
with the FAA in connection therewith; (ii) payment of Lessor's Cost by Owner
Trustee to Existing Lessor; (iii) lease of the Aircraft by Owner Trustee to
Lessee pursuant to the Lease; and (iv) completion of the other events
contemplated by the Participation Agreement to occur at the Closing.
"CLOSING DATE" means the Business Day specified in Lease Supplement
No. 1 as the Closing Date, which shall be the date on which the Closing occurs.
"CODE" means the Internal Revenue Code of 1986, as amended; PROVIDED,
that when used in relation to a Plan, "Code" shall mean the Internal Revenue
Code of 1986 and any regulations and rulings issued thereunder, all as amended
and in effect from time to time.
"COMMITMENT" means, for any Participant, the amount of its
participation in the payment of Lessor's Cost.
"COMMITMENT TERMINATION DATE" is defined in Schedule 3 to the
Participation Agreement.
"CONSENT AND AGREEMENT" means the Manufacturer Consent and Agreement
___, dated as of even date with the Participation Agreement, of Airframe
Manufacturer.
"CONTINUOUS STAY PERIOD" is defined in Section 4.04(a) of the Trust
Indenture.
"CORPORATE TRUST DEPARTMENT" or "TRUST OFFICE" means the principal
corporate trust office of Owner Trustee located from time to time at Owner
Trustee's address for notices under the Participation Agreement or such other
office at which Owner Trustee's corporate trust business shall be administered
which Owner Trustee shall have specified by notice in writing to Lessee,
Mortgagee and each Note Holder.
"CORPORATE TRUST OFFICE" means the principal office of Mortgagee
located at Mortgagee's address for notices under the Participation Agreement or
such other office at which Mortgagee's corporate trust business shall be
administered which Mortgagee shall have specified by notice in writing to
Lessee, Owner Trustee and each Note Holder.
"CRAF" means the Civil Reserve Air Fleet Program established pursuant
to 10 X.X.X.xx. 9511-13 or any similar substitute program.
"DEBT" means any liability for borrowed money, or any liability for
the payment of money in connection with any letter of credit transaction or any
other liabilities evidenced or to be evidenced by bonds, debentures, notes or
other similar instruments.
"DEBT RATE" means, with respect to (i) any Series, the rate per annum
specified for such Series under the heading "Interest Rate" in Schedule I to the
Trust Indenture and (ii) any other purpose, with respect to any period, the
weighted average interest rate per annum during such period borne by the
outstanding Equipment Notes, excluding any interest payable at the Payment Due
Rate.
"DEFAULT" means any event or condition that with the giving of notice
or the lapse of time or both would become an Event of Default.
"DELAYED CLOSING DATE" means a delayed Closing Date notified to
Lessee, Existing Lessor, each Participant, Owner Trustee and Mortgagee by
Existing Mortgagee pursuant to Section 4.3 of the Participation Agreement, which
delayed Closing Date shall be a Business Day not later than the Commitment
Termination Date.
"DELIVERY DATE" means the date on which the Aircraft was leased to
Lessee by Corcim, Inc., as lessor, under the Existing Lease.
"DOLLARS," "UNITED STATES DOLLARS" or "$" means the lawful currency of
the United States.
"DOT" means the Department of Transportation of the United States or
any Government Entity succeeding to the functions of such Department of
Transportation.
"ENFORCEMENT DATE" is defined in Section 4.03 of the Trust Indenture.
"ENGINE" means (a) each of the engines manufactured by Engine
Manufacturer and identified by Engine Manufacturer's model number and Engine
Manufacturer's serial number set forth in Lease Supplement No. 1 and originally
installed on the Airframe on delivery thereof pursuant to the Lease, and any
Replacement Engine, in any case whether or not from time to time installed on
such Airframe or installed on any other airframe or aircraft, and (b) any and
all Parts incorporated or installed in or attached or appurtenant to such
engine, and any and all Parts removed from such engine, unless title to such
Parts shall not be vested in Lessor in accordance with Section 8.1 and Annex C
of the Lease. Upon substitution of a Replacement Engine under and in accordance
with the Lease, such Replacement Engine shall become subject to the Lease and
shall be an "Engine" for all purposes of the Lease and the other Operative
Agreements and thereupon the Engine for which the substitution is made shall no
longer be subject to the Lease, and such replaced Engine shall cease to be an
"Engine."
"ENGINE MANUFACTURER" means Xxxxxxx Engine Company, Inc., a Delaware
corporation.
"EQUIPMENT NOTE REGISTER" is defined in Section 2.07 of the Trust
Indenture.
"EQUIPMENT NOTES" means and includes any equipment notes issued under
the Trust Indenture in the form specified in Section 2.01 thereof (as such form
may be varied pursuant to the terms of the Trust Indenture) and any Equipment
Note issued under the Trust Indenture in exchange for or replacement of any
Equipment Note.
"EQUITY ADVISOR" has the meaning provided in Schedule 3 to the
Participation Agreement.
"EQUITY GUARANTOR" means Rolls-Royce plc, a corporation organized
under the laws of England.
"EQUITY GUARANTY" means the Equity Guaranty ___ issued by the Equity
Guarantor dated of even date with the Participation Agreement, including the
side letter dated of even date with the Participation Agreement between the
Equity Guarantor and the Owner Participant.
"ERISA" means the Employee Retirement Income Security Act of 1974 and
any regulations and rulings issued thereunder all as amended and in effect from
time to time.
"EVENT OF DEFAULT" is defined in Section 4.02 of the Trust Indenture.
"EVENT OF LOSS" means, with respect to the Aircraft, Airframe or any
Engine, any of the following circumstances, conditions or events with respect to
such property, for any reason whatsoever:
(a) the destruction of such property, damage to such property beyond
economic repair or rendition of such property permanently unfit
for normal use by Lessee;
(b) the actual or constructive total loss of such property or any
damage to such property, or requisition of title or use of such
property, which results in an insurance settlement with respect
to such property on the basis of a total loss or constructive or
compromised total loss;
(c) any theft, hijacking or disappearance of such property for a
period of 180 consecutive days or more or, if earlier, the end of
the Term;
(d) any seizure, condemnation, confiscation, taking or requisition
(including loss of title) of such property by any Government or
purported Government Entity (other than a requisition of use by
the U.S. Government) for a period exceeding 180 consecutive days
or, if earlier, at the end of the Term;
(e) any seizure, condemnation, confiscation, taking or requisition of
use of such property by the U.S. Government that continues until
the last day of the Term, PROVIDED that no such Event of Loss
shall exist if Lessor shall have elected not to treat such event
as an Event of Loss pursuant to Section 10.6 of the Lease; and
(f) as a result of any law, rule, regulation, order or other action
by the Aviation Authority or by any Government Entity of the
government of registry of the Aircraft or by any Government
Entity otherwise having jurisdiction over the operation or use of
the Aircraft, the use of such property in the normal course of
Lessee's business of passenger air transportation is prohibited
for a period of 180 consecutive days, unless Lessee, prior to the
expiration of such 180 day period, shall have undertaken and
shall be diligently carrying forward such steps as may be
necessary or desirable to permit the normal use of such property
by Lessee, but in any event if such use shall have been
prohibited for a period of 720 days, provided that no Event of
Loss shall be deemed to have occurred if such prohibition has
been applicable to Lessee's (or a Permitted Sublessee's) entire
U.S. fleet of such property and Lessee (or a Permitted
Sublessee), prior to the expiration of such 720-day period, shall
have conformed at least one unit of such property in its fleet to
the requirements of any such law, rule, regulation, order or
other action and commenced regular commercial use of the same in
such jurisdiction and shall be diligently carrying forward, in a
manner which does not discriminate against such property in so
conforming such property, steps which are necessary or desirable
to permit the normal use of such property by Lessee, but in any
event if such use shall have been prohibited for a period of
three years or such use shall be prohibited at the expiration of
the Term.
"EXCLUDED PAYMENTS" means (i) indemnity payments paid or payable by
Lessee to or in respect of Owner Participant, or Owner Trustee in its individual
capacity, their respective Affiliates, successors and permitted assigns and
their directors, officers, employees, servants and agents pursuant to Section 9
of the Participation Agreement or any corresponding payments under the Lease,
(ii) proceeds of public liability insurance paid or payable as a result of
insurance claims made, or losses suffered, by Owner Trustee in its individual
capacity or by Owner Participant, that are payable directly to Owner Trustee in
its individual capacity, or Owner Participant, respectively, for their own
account, (iii) proceeds of insurance maintained with respect to the Aircraft by
Owner Participant or any Affiliate thereof for its or their own account or
benefit (whether directly or through Owner Trustee) and permitted under Section
11.2 of the Lease, (iv) all payments required to be made under the Tax Indemnity
Agreement by Lessee whether or not denominated as Supplemental Rent, (v) all
payments of guaranty fees pursuant to Section 7.6.14 of the Participation
Agreement, (vi) any amount payable to the Owner Participant by any transferee as
the purchase price of the Owner Participant's interest in the Trust Estate,
(vii) all rights of the Owner Participant or the Owner Trustee in and to the
Equity Guaranty and any amounts payable thereunder, (viii) any interest that
pursuant to the Operative Agreements may from time to time accrue in respect of
any of the amounts described in clauses (i) through (vii) above, (ix) proceeds
of any right to enforce the payment of any amount described in clauses (i)
through (viii) above (PROVIDED, that the rights referred to in this clause (ix)
shall not be deemed to include the exercise of any remedies provided for in the
Lease other than the right to xxx for specific performance of any covenant to
make such payment or to xxx for damages in respect of the breach of any such
covenant) and (x) any right to exercise any election or option or make any
decision or determination, or to give or receive any notice, consent, waiver or
approval, or to take any other action in respect of, but in each case, only to
the extent relating to, any Excluded Payments.
"EXISTING LEASE" has the meaning provided in Schedule 3 to the
Participation Agreement.
"EXISTING LESSOR" means Corcim, Inc., a Delaware corporation.
"EXISTING LESSOR AGREEMENTS" means the Participation Agreement, the
Purchase Agreement Assignment, the Bills of Sale and the Termination Agreement
with respect to the Existing Lease.
"EXISTING MORTGAGE" has the meaning provided in Schedule 3 to the
Participation Agreement.
"EXISTING MORTGAGEE" means Rolls-Royce plc, a corporation organized
under the laws of England.
"EXISTING MORTGAGEE AGREEMENTS" means the Participation Agreement, the
Equity Guaranty and the Termination Agreement with respect to the Existing
Mortgage.
"EXISTING PARTICIPATION AGREEMENT" has the meaning provided in
Schedule 3 to the Participation Agreement.
"EXISTING SUBLEASE" means the Aircraft Sublease Agreement, dated the
date of the Existing Participation Agreement, between Lessee and Express
relating to the Aircraft.
"EXPENSE LIMIT" has the meaning provided in Schedule 3 to the
Participation Agreement.
"EXPENSES" means any and all liabilities, obligations, losses,
damages, settlements, penalties, claims, actions, suits, costs, expenses and
disbursements (including, without limitation, reasonable fees and disbursements
of legal counsel, accountants, appraisers, inspectors or other professionals,
and costs of investigation).
"EXPRESS" means Continental Express, Inc., a wholly owned subsidiary
of Lessee.
"EXPRESS SUBLEASE" means the Permitted Sublease, dated as of the date
of the Participation Agreement, between Lessee and Express relating to the
Aircraft.
"FAA" means the Federal Aviation Administration of the United States
or any Government Entity succeeding to the functions of such Federal Aviation
Administration.
"FAA XXXX OF SALE" means a xxxx of sale for the Aircraft on AC Form
8050-2 (or such other form as may be approved by the FAA) delivered to Owner
Trustee on the Closing Date by Existing Lessor.
"FAA FILED DOCUMENTS" means the Lease, Lease Supplement No. 1, the
Express Sublease, the Trust Indenture, the Trust Agreement, the Trust Indenture
Supplement, the FAA Xxxx of Sale, an application for registration of the
Aircraft with the FAA in the name of Owner Trustee and the Termination
Agreements.
"FAA REGULATIONS" means the Federal Aviation Regulations issued or
promulgated pursuant to the Act from time to time.
"FAIR MARKET RENTAL VALUE" means the fair market rental value in
Dollars for the Aircraft that would apply in an arm's-length transaction between
an informed and willing lessee under no compulsion to lease, and an informed and
willing lessor under no compulsion to lease, the Aircraft, for the applicable
Renewal Lease Term, assuming that (a) the Aircraft has been maintained in
accordance with, and is in the condition required by, the Lease, (b) payments of
rent would be made quarterly, and (c) the Aircraft would be leased during any
such Renewal Term on the same terms and conditions as are set forth in the Lease
with respect to the Base Lease Term.
"FAIR MARKET SALES VALUE" means the fair market sales value in Dollars
for the Aircraft that would apply in an arm's-length transaction between an
informed and willing buyer under no compulsion to buy, and an informed and
willing seller under no compulsion to sell, the Aircraft, in a transaction that
would close on or about the relevant time of determination, assuming (except as
otherwise provided in Section 15.4 of the Lease) that (a) the Aircraft has been
maintained in accordance with, and is in the condition required by, the Lease
and (b) the Aircraft would be delivered to such informed and willing buyer in
the return condition required by the Lease.
"FINANCING STATEMENTS" means, collectively, (a) UCC-1 financing
statements (i) covering the Trust Indenture Estate, by Owner Trustee, as debtor,
showing Mortgagee as secured party, for filing in Utah and each other
jurisdiction that, in the opinion of Mortgagee, is necessary to perfect its Lien
on the Trust Indenture Estate and (ii) covering the Lease and the Aircraft, as a
precautionary matter, by Lessee, as lessee, showing Owner Trustee as lessor and
Mortgagee as assignee of Owner Trustee, for filing in Texas and each other
jurisdiction that, in the opinion of Owner Trustee and Mortgagee, is reasonably
desirable and (b) UCC-3 financing statements (i) evidencing the termination of
the Existing Lease and the Existing Sublease, for filing in Texas and each other
jurisdiction that, in the opinion of Owner Trustee and Mortgagee, is reasonably
desirable and (ii) evidencing the release of the Aircraft, Aircraft Documents
and other collateral from the Lien of the Existing Mortgage for filing in
Delaware and each other jurisdiction that, in the opinion of Owner Trustee and
Mortgagee, is reasonably desirable.
"FIRST SECURITY" means First Security Bank, National Association, a
national banking association, not in its capacity as Owner Trustee under the
Trust Agreement, but in its individual capacity.
"GAAP" means generally accepted accounting principles as set forth in
the statements of financial accounting standards issued by the Financial
Accounting Standards Board of the American Institute of Certified Public
Accountants, as such principles may at any time or from time to time be varied
by any applicable financial accounting rules or regulations issued by the SEC
and, with respect to any person, shall mean such principles applied on a basis
consistent with prior periods except as may be disclosed in such person's
financial statements.
"GOVERNMENT ENTITY" means (a) any federal, state, provincial or
similar government, and any body, board, department, commission, court,
tribunal, authority, agency or other instrumentality of any such government or
otherwise exercising any executive, legislative, judicial, administrative or
regulatory functions of such government or (b) any other government entity
having jurisdiction over any matter contemplated by the Operative Agreements or
relating to the observance or performance of the obligations of any of the
parties to the Operative Agreements.
"INDEMNITEE" means (i) First Security and Owner Trustee, (ii) WTC and
Mortgagee, (iii) each separate or additional trustee appointed pursuant to the
Trust Agreement or the Trust Indenture, (iv) each Participant, (v) Owner
Participant Parent, (vi) the Trust Estate and the Trust Indenture Estate, (vii)
the Subordination Agent, (viii) the Liquidity Providers, (ix) the Pass Through
Trustees, (x) each Affiliate of the persons described in clauses (i) through
(v), inclusive, (xi) each Affiliate of the persons described in clauses (vi),
(vii), (viii) and (ix), (xii) the respective directors, officers, employees,
agents and servants of each of the persons described in clauses (i) through (v)
inclusive and in clause (x), (xiii) the respective directors, officers,
employees, agents and servants of each of the persons described in clauses
(vii), (viii), (ix) and (xi), (xiv) the successors and permitted assigns of the
persons described in clauses (i) through (v), inclusive, and in clauses (x) and
(xii), and (xv) the successors and permitted assigns of the persons described in
clauses (vii), (viii), (ix), (xi) and (xiii); PROVIDED THAT the persons
described in clauses (vii), (viii), (ix), (xi), (xiii) and (xv) are Indemnitees
only for purposes of Section 9.1 of the Participation Agreement. If any
Indemnitee is Airframe Manufacturer or Engine Manufacturer or any subcontractor
or supplier of either thereof, such Person shall be an Indemnitee only in its
capacity as Owner Participant, Loan Participant or Note Holder.
"INDENTURE AGREEMENTS" means the Participation Agreement, the Lease,
the Purchase Agreement, the Purchase Agreement Assignment, the Consent and
Agreement, the Bills of Sale and any other contract, agreement or instrument
from time to time assigned or pledged under the Trust Indenture.
"INDENTURE DEFAULT" means any condition, circumstance, act or event
that, with the giving of notice, the lapse of time or both, would constitute an
Indenture Event of Default.
"INDENTURE EVENT OF DEFAULT" means any one or more of the conditions,
circumstances, acts or events set forth in Section 4.02 of the Trust Indenture.
"INDENTURE INDEMNITEE" means (i) WTC and the Mortgagee, (ii) each
separate or additional trustee appointed pursuant to the Trust Indenture, (iii)
the Subordination Agent, (iv) each Liquidity Provider, (v) each Pass Through
Trustee and (vi) each of the respective directors, officers, employees, agents
and servants of each of the persons described in clauses (i) through (v)
inclusive above.
"INTERCREDITOR AGREEMENT" means that certain Intercreditor Agreement
among the Pass Through Trustees, the Liquidity Providers and the Subordination
Agent, dated as of the Issuance Date, PROVIDED that, for purposes of any
obligation of Lessee, no amendment, modification or supplement to, or
substitution or replacement of, such Intercreditor Agreement shall be effective
unless consented to by Lessee.
"IRS" means the Internal Revenue Service of the United States or any
Government Entity succeeding to the functions of such Internal Revenue Service.
"ISSUANCE DATE" means September 25, 1997.
"LAW" means (a) any constitution, treaty, statute, law, decree,
regulation, order, rule or directive of any Government Entity, and (b) any
judicial or administrative interpretation or application of, or decision under,
any of the foregoing.
"LEASE" or "LEASE AGREEMENT" means the Lease Agreement ___, dated as
of even date with the Participation Agreement, between Owner Trustee and Lessee.
"LEASE DEFAULT" means any condition, circumstance, act or event that,
with the giving of notice, the lapse of time or both, would constitute a Lease
Event of Default.
"LEASE EVENT OF DEFAULT" means any one or more of the conditions,
circumstances, acts or events set forth in Section 14 of the Lease.
"LEASE SUPPLEMENT" means a supplement to the Lease, in the form of
Exhibit A to the Lease.
"LEASE SUPPLEMENT NO. 1" means the initial Lease Supplement, dated the
Closing Date.
"LESSEE" means Continental Airlines, Inc., a Delaware corporation.
"LESSEE OPERATIVE AGREEMENTS" means the Participation Agreement, the
Lease, Lease Supplement No. 1, the Express Sublease, the Termination Agreement
with respect to the Existing Sublease and the Tax Indemnity Agreement.
"LESSEE PERSON" means Lessee, any sublessee, assignee, successor or
other user or person in possession of the Aircraft, Airframe or an Engine with
or without color of right, or any Affiliate of any of the foregoing (excluding
any Tax Indemnitee or any related Tax Indemnitee with respect thereto, or any
person using or claiming any rights with respect to the Aircraft, Airframe or an
Engine directly by or through any of the persons in this parenthetical, but not
excluding any Person claiming directly or indirectly through or under the
Lease).
"LESSOR" means Owner Trustee in its capacity as lessor under the
Lease.
"LESSOR LIEN" means, with respect to any person and in respect of any
property (including, without limitation, the Trust Estate, the Trust Indenture
Estate, the Aircraft, Airframe, Engines, Parts or Aircraft Documents) or any
payments, any Lien on such property or payments which (a) arises from claims
against such person (if such person is a trustee, whether in its individual
capacity or in its capacity as a trustee) not related to any of the transactions
contemplated by the Operative Agreements, (b) results from acts or omissions of
such person (if such person is a trustee, whether in its individual capacity or
in its capacity as a trustee) in violation of such person's obligations under
any of the terms of the Operative Agreements, or not related to the transactions
contemplated by the Operative Agreements, (c) is imposed as a result of Taxes
against such person (if such person is a trustee, whether in its individual
capacity or in its capacity as a trustee) or any of its Affiliates not required
to be indemnified by Lessee under the Participation Agreement, or (d) claims
against such person arising out of any transfer by such person of its interest
in the Aircraft, the Trust Estate or the Operative Agreements, other than a
Transfer permitted by the terms of the Operative Agreements or pursuant to the
exercise of remedies set forth in Section 15 of the Lease.
"LESSOR RENT" means, with respect to any Payment Date, the amount set
forth in Schedule 4 to the Participation Agreement with respect to such Payment
Date.
"LESSOR'S COST" means the amount paid by Owner Trustee to Existing
Lessor to purchase the Aircraft pursuant to the Participation Agreement, and is
designated by Dollar amount in Schedule 3 to the Participation Agreement.
"LETTER AGREEMENT" means the Letter Agreement, dated the date of the
Participation Agreement, between Lessee and Owner Participant, which includes a
statement that it is the Letter Agreement for purposes of this Annex A.
"LIEN" means any mortgage, pledge, lien, charge, claim, encumbrance,
lease or security interest affecting the title to or any interest in property.
"LIQUIDITY FACILITIES" means the three Revolving Credit Agreements
(consisting of a separate Revolving Credit Agreement with the Liquidity Provider
with respect to each Pass Through Trust) between the Subordination Agent, as
borrower, and a Liquidity Provider, each dated as of the Issuance Date, PROVIDED
that, for purposes of any obligation of Lessee, no amendment, modification or
supplement to, or substitution or replacement of, any such Liquidity Facility
shall be effective unless consented to by Lessee.
"LIQUIDITY PROVIDER" means ABN AMRO Bank N.V., Chicago Branch, as a
Class A Liquidity Provider, Class B Liquidity Provider and Class C Liquidity
Provider (as such terms are defined in the Intercreditor Agreement) under the
respective Liquidity Facilities, or any successor thereto.
"LOAN PARTICIPANTS" mean, until the Closing shall have been
consummated, the Pass Through Trustees, and after the Closing shall have been
consummated, each Note Holder.
"LOSS PAYMENT DATE" means the date on which payment is due pursuant to
Section 10.1.2(a)(i) of the Lease.
"MAINTENANCE PROGRAM" is defined in Annex C to the Lease.
"MAJORITY IN INTEREST OF NOTE HOLDERS" means as of a particular date
of determination, the holders of a majority in aggregate unpaid Original Amount
of all Equipment Notes outstanding as of such date (excluding any Equipment
Notes held by Owner Trustee, Lessee, or Owner Participant or any Affiliate of
any such party or any interests of Owner Trustee or Owner Participant therein by
reason of subrogation pursuant to Section 4.03 of the Trust Indenture (unless
all Equipment Notes then outstanding shall be held by Owner Trustee, Lessee,
Owner Participant or any Affiliate of any thereof)); PROVIDED that for the
purposes of directing any action or casting any vote or giving any consent,
waiver or instruction hereunder any Note Holder of an Equipment Note or
Equipment Notes may allocate, in such Note Holder's sole discretion, any
fractional portion of the principal amount of such Equipment Note or Equipment
Notes in favor of or in opposition to any such action, vote, consent, waiver or
instruction.
"MAKE-WHOLE AMOUNT" means, with respect to any Equipment Note, an
amount (as determined by an independent investment banker of national standing)
equal to the excess, if any, of (a) the present value of the remaining scheduled
payments of principal and interest to maturity of such Equipment Note computed
by discounting such payments on a quarterly basis on each Payment Date (assuming
a 360-day year of twelve 30-day months) using a discount rate equal to the
Treasury Yield over (b) the outstanding principal amount of such Equipment Note
plus accrued interest to the date of determination. For purposes of determining
the Make-Whole Amount, "Treasury Yield" means, at the date of determination with
respect to any Equipment Note, the interest rate (expressed as a quarterly
equivalent and as a decimal and, in the case of United States Treasury bills,
converted to a bond equivalent yield) determined to be the per annum rate equal
to the semi-annual yield to maturity for United States Treasury securities
maturing on the Average Life Date of such Equipment Note and trading in the
public securities markets either as determined by interpolation between the most
recent weekly average yield to maturity for two series of United States Treasury
securities, trading in the public securities markets, (A) one maturing as close
as possible to, but earlier than, the Average Life Date of such Equipment Note
and (B) the other maturing as close as possible to, but later than, the Average
Life Date of such Equipment Note, in each case as published in the most recent
H.15(519) or, if a weekly average yield to maturity for United States Treasury
securities maturing on the Average Life Date of such Equipment Note is reported
on the most recent H.15(519), such weekly average yield to maturity as published
in such H.15(519) "H.15(519)" means the weekly statistical release designated as
such, or any successor publication, published by the Board of Governors of the
Federal Reserve System. The date of determination of a Make-Whole Amount shall
be the third Business Day prior to the applicable payment or redemption date and
the "most recent H.15(519)" means the H.15(519) published prior to the close of
business on the third Business Day prior to the applicable payment or redemption
date.
"MATERIAL ADVERSE CHANGE" means, with respect to any person, any
event, condition or circumstance that materially and adversely affects such
person's business or consolidated financial condition, or its ability to observe
or perform its obligations, liabilities and agreements under the Operative
Agreements.
"MORTGAGED PROPERTY" is defined in Section 3.03 of the Trust
Indenture.
"MORTGAGEE" means Wilmington Trust Company, a Delaware banking
corporation, not in its individual capacity but solely as loan trustee under the
Trust Indenture.
"MORTGAGEE AGREEMENTS" means, collectively, the Participation
Agreement and the Trust Indenture.
"MORTGAGEE EVENT" means (i) in the event of a reorganization
proceeding involving the Lessee under Chapter 11 of the Bankruptcy Code, (A) the
trustee in such proceeding or the Lessee not assuming or agreeing to perform its
obligations under the Lease, as contemplated under Section 1110, during the
60-day period under Section 1110(a)(1)(A) of the Bankruptcy Code (or such longer
period as may apply under Section 1110(b) of the Bankruptcy Code) or (B) at any
time after agreeing to perform or assume such obligations, such trustee or the
Lessee ceasing to perform or assuming such obligations with the result that the
Continuous Stay Period comes to an end or (ii) either the Equipment Notes shall
have become due and payable pursuant to Section 4.04(b) of the Trust Indenture
or Mortgagee has taken action or notified Owner Trustee that it intends to take
action to foreclose the Lien of the Trust Indenture or otherwise commence the
exercise of any significant remedy in accordance with Section 4.04(a) of the
Trust Indenture.
"NET ECONOMIC RETURN" means the Owner Participant's net after-tax
yield utilizing the multiple investment sinking fund method of analysis and
aggregate net after-tax cash flow, computed on the basis of the same methodology
and assumptions as were utilized by the initial Owner Participant in determining
Lessor Rent, Stipulated Loss Value percentages and Termination Value
percentages, as of the Closing Date.
"NET WORTH" means, for any person, the excess of its total assets over
its total liabilities in accordance with GAAP.
"NON-U.S. PERSON" means any Person other than a United States person,
as defined in Section 7701(a)(30) of the Code.
"NOTE HOLDER" means at any time each registered holder of one or more
Equipment Notes.
"OFFICER'S CERTIFICATE" means, in respect of any party to the
Participation Agreement, a certificate signed by the Chairman, the President,
any Vice President (including those with varying ranks such as Executive,
Senior, Assistant or Staff Vice President), the Treasurer or the Secretary of
such party.
"OPERATIVE AGREEMENTS" means, collectively, the Participation
Agreement, the Trust Agreement, the Purchase Agreement Assignment, the Consent
and Agreement, the Lease, Lease Supplement No. 1, the Trust Indenture, the
initial Trust Indenture Supplement, the Bills of Sale, the Tax Indemnity
Agreement, the Owner Participant Guaranty, the Equipment Notes, the Letter
Agreement and the Termination Agreements.
"OPERATIVE INDENTURES" means each of the indentures under which notes
have been issued and purchased by the Pass Through Trustees.
"OP JURISDICTION" is defined in Schedule 3 to the Participation
Agreement.
"ORIGINAL AMOUNT," with respect to an Equipment Note, means the stated
original principal amount of such Equipment Note and, with respect to all
Equipment Notes, means the aggregate stated original principal amounts of all
Equipment Notes.
"OWNER PARTICIPANT" means the person executing the Participation
Agreement as "Owner Participant" or, if a second person becomes an "Owner
Participant" pursuant to Section 10.1.1 of the Participation Agreement, both of
such persons; PROVIDED that if an Owner Participant Transfers 100% of its
interest to a successor Owner Participant, such transferring Owner Participant
shall thereafter no longer be considered an "Owner Participant."
"OWNER PARTICIPANT AGREEMENTS" means, collectively, the Participation
Agreement, the Tax Indemnity Agreement and the Trust Agreement.
"OWNER PARTICIPANT GUARANTY" means the Guaranty by Corporate Affiliate
of Owner Participant dated the Delivery Date from Owner Participant Parent to
the beneficiaries named therein.
"OWNER PARTICIPANT PARENT" means the person executing the Owner
Participant Guaranty.
"OWNER PARTICIPANT'S PERCENTAGE" means the percentage of Lessor's Cost
allocated to the Owner Participant in Schedule 2 to the Participation Agreement.
"OWNER TRUSTEE" means First Security Bank, National Association, a
national banking association, not in its individual capacity, except as
expressly provided in any Operative Agreement, but solely as Owner Trustee under
the Trust Agreement.
"OWNER TRUSTEE AGREEMENTS" means, collectively, the Participation
Agreement, the Lease, Lease Supplement No. 1, the Trust Agreement, the Trust
Indenture, the initial Trust Indenture Supplement, the Equipment Notes and the
Purchase Agreement Assignment.
"PARTICIPANTS" means, collectively, Owner Participant and each Loan
Participant and "Participant" means Owner Participant or a Loan Participant,
individually.
"PARTICIPATION AGREEMENT" means the Participation Agreement ___ dated
as of September 25, 1997 among Lessee, Owner Participant, Owner Trustee, the
Pass Through Trustees, Subordination Agent, Mortgagee, the Existing Lessor, the
Existing Mortgagee and Airframe Manufacturer.
"PARTS" means all appliances, parts, components, avionics, landing
gear, instruments, appurtenances, accessories, furnishings, seats and other
equipment of whatever nature (other than (a) Engines or engines, and (b) any
items leased by Lessee from a third party other than Lessor)), that may from
time to time be installed or incorporated in or attached or appurtenant to the
Airframe or any Engine.
"PASS THROUGH AGREEMENTS" means the Pass Through Trust Agreements, the
Intercreditor Agreement, the Liquidity Facilities and the Fee Letter (as defined
in the Intercreditor Agreement), provided, that no amendment, modification or
supplement to, or substitution or replacement of, any such Fee Letter shall be
effective for purposes of any obligation of Lessee, unless consented to by
Lessee.
"PASS THROUGH CERTIFICATES" means the pass through certificates issued
by the Pass Through Trusts (and any other pass through certificates for which
such pass through certificates may be exchanged).
"PASS THROUGH TRUST" means each of the three separate pass through
trusts created under the Pass Through Trust Agreements.
"PASS THROUGH TRUST AGREEMENT" means each of the three separate Trust
Supplements, together in each case with the Basic Pass Through Trust Agreement,
each dated as of the Issuance Date, by and between the Lessee and Pass Through
Trustee.
"PASS THROUGH TRUSTEE" means Wilmington Trust Company, a Delaware
banking corporation, in its capacity as trustee under each Pass Through Trust
Agreement.
"PASS THROUGH TRUSTEE AGREEMENTS" means the Participation Agreement,
the Pass Through Trust Agreements, and the Intercreditor Agreement.
"PAYMENT DATE" means the Closing Date and each March 24, June 24,
September 24 and December 24 during the Term, commencing with the first such
date to occur after the Closing Date.
"PAYMENT DEFAULT" means the failure by Lessee to pay any amount of
Basic Rent, Renewal Rent, Stipulated Loss Value or Termination Value when due.
"PAYMENT DUE RATE" is defined in Schedule 1 to the Lease.
"PAYMENT PERIOD" means each of the consecutive quarterly periods
during the Term ending on a Payment Date, the first such period commencing on
and including the Closing Date.
"PERMITTED AIR CARRIER" means (i) any Permitted Foreign Air Carrier,
(ii) any person approved in writing by Lessor or (iii) any U.S. Air Carrier.
"PERMITTED COUNTRY" means any country listed on Schedule 5 to the
Lease.
"PERMITTED FOREIGN AIR CARRIER" means any air carrier with its
principal executive offices in any Permitted Country and which is authorized to
conduct commercial airline operations and to operate jet aircraft similar to the
Aircraft under the applicable Laws of such Permitted Country.
"PERMITTED GOVERNMENT ENTITY" means (i) the U.S. Government or (ii)
any Government Entity if the Aircraft is then registered under the laws of the
country of such Government Entity.
"PERMITTED INSTITUTION" means any bank, trust company, insurance
company, financial institution or corporation (other than, without Lessee's
consent, a commercial air carrier, a commercial aircraft operator, a freight
forwarder or Affiliate of any of the foregoing), in each case with a combined
capital and surplus or net worth of at least $25,000,000.
"PERMITTED LIEN" means any Lien described in clauses (a) through (f),
inclusive, of Section 6 of the Lease.
"PERMITTED SUBLEASE" means a sublease permitted under Section 7.2.7 of
the Lease.
"PERMITTED SUBLESSEE" means the sublessee under a Permitted Sublease.
"PERSONS" or "PERSONS" means individuals, firms, partnerships, joint
ventures, trusts, trustees, Government Entities, organizations, associations,
corporations, government agencies, committees, departments, authorities and
other bodies, corporate or incorporate, whether having distinct legal status or
not, or any member of any of the same.
"PLAN" means any employee benefit plan within the meaning of Section
3(3) of ERISA, or any plan within the meaning of Section 4975(e)(1) of the Code.
"PRELIMINARY NOTICE" is defined in Section 17.1 of the Lease.
"PREMIUM TERMINATION DATE" means August 22, 2008 in the case of the
Series A Equipment Notes, April 30, 2004 in the case of the Series B Equipment
Notes and February 16, 2002 in the case of the Series C Equipment Notes.
"PTT PERCENTAGE" means, with respect to each Pass Through Trustee, the
percentage of Lessor's Cost allocated to such Pass Through Trustee in Schedule 2
to the Participation Agreement.
"PURCHASE AGREEMENT" means the Purchase Agreement GPJ-003/96 between
Airframe Manufacturer and Express (including all exhibits thereto, together with
all letter agreements entered into that by their terms constitute part of such
Purchase Agreement), to the extent assigned pursuant to the Purchase Agreement
Assignment.
"PURCHASE AGREEMENT ASSIGNMENT" means the Purchase Agreement
Assignment ___, dated as of even date with the Participation Agreement, between
Existing Lessor and Owner Trustee.
"PURCHASE DATE" means the last Business Day of the Base Lease Term or
any Renewal Lease Term, as specified in any Purchase Notice.
"PURCHASE NOTICE" is defined in Section 17.3.1 of the Lease.
"QIB" is defined in Section 2.08 of the Trust Indenture.
"RENEWAL LEASE TERM" means each two year term for which the Lease is
extended by Lessee, if any, pursuant to the first or second such extensions in
accordance with Section 17 of the Lease.
"RENEWAL NOTICE" is defined in Section 17.2.1 of the Lease.
"RENEWAL RENT" for the Aircraft means the rent payable therefor in
respect of a Renewal Lease Term determined pursuant to Section 17.2.2 of the
Lease.
"RENT" means, collectively, Basic Rent, Renewal Rent and Supplemental
Rent.
"REPLACEMENT ENGINE" means an engine substituted for an Engine
pursuant to the Lease.
"RETURN ACCEPTANCE SUPPLEMENT" means a Return Acceptance Supplement,
dated as of the date the Aircraft is returned to Lessor pursuant to Section 5 of
the Lease, by Lessor and Lessee substantially in the form of Exhibit B to the
Lease.
"SCHEDULED CLOSING DATE" means the expected Closing Date notified to
Lessee, Existing Lessor, each Participant, Owner Trustee and Mortgagee by
Existing Mortgagee pursuant to Section 4.1 of the Participation Agreement, which
expected Closing Date shall be a Business Day not later than the Commitment
Termination Date.
"SCHEDULED EXPIRATION DATE" is defined in Schedule 1 to the Lease.
"SCHEDULED RENEWAL TERM EXPIRATION DATE" means, in the case of the
first Renewal Lease Term, the second anniversary of the Scheduled Expiration
Date, and in the case of the second Renewal Lease Term, the fourth anniversary
of the Scheduled Expiration Date.
"SEC" means the Securities and Exchange Commission of the United
States, or any Government Entity succeeding to the functions of such Securities
and Exchange Commission.
"SECTION 1110" means 11 U.S.C. ss. 1110 of the Bankruptcy Code or any
successor or analogous section of the federal bankruptcy Law in effect from time
to time.
"SECTION 1110 EVENT" means the institution of reorganization
proceedings with respect to Lessee under Chapter 11 of the Bankruptcy Code and
the trustee or debtor-in-possession in such proceedings (i) having agreed to
perform its obligations under the Lease with the approval of the applicable
court and thereafter having continued to perform such obligations in accordance
with Section 1110 or (ii) having assumed the Lease with the approval of the
relevant court and thereafter having continued to perform its obligations under
the Lease.
"SECTION 1110 PERIOD" means the continuous period of 60 days, or such
other period as may be specified in Section 1110(a)(1)(A) of the U.S. Bankruptcy
Code, plus an additional period, if any, resulting from the trustee or
debtor-in-possession in such proceeding assuming, or agreeing to perform its
obligations under, the Lease with the approval of the applicable court.
"SECURED OBLIGATIONS" is defined in Section 2.06 of the Trust
Indenture.
"SECURITIES ACT" means the Securities Act of 1933, as amended.
"SECURITY" means a "security" as defined in Section 2(1) of the
Securities Act.
"SENIOR HOLDER" is defined in Section 2.14(c) of the Trust Indenture.
"SERIES" means any of Series A, Series B or Series C.
"SERIES A" or "SERIES A EQUIPMENT NOTES" means Equipment Notes issued
under the Trust Indenture and designated as "Series A" thereunder, in the
Original Amount and maturities and bearing interest as specified in Schedule I
to the Trust Indenture under the heading "Series A."
"SERIES B" or "SERIES B EQUIPMENT NOTES" means Equipment Notes issued
under the Trust Indenture and designated as "Series B" thereunder, in the
Original Amount and maturities and bearing interest as specified in Schedule I
to the Trust Indenture under the heading "Series B."
"SERIES C" or "SERIES C EQUIPMENT NOTES" means Equipment Notes issued
under the Trust Indenture and designated as "Series C" thereunder, in the
Original Amount and maturities and bearing interest as specified in Schedule I
to the Trust Indenture under the heading "Series C."
"SIMILAR AIRCRAFT" is defined in Schedule 1 to the Lease.
"SLV RATE" is defined in Schedule 1 to the Lease.
"STIPULATED LOSS VALUE" means, with respect to the Aircraft, (a)
during the Base Lease Term, the amount determined by multiplying (i) the
percentage set forth in Schedule 3 to the Lease (as adjusted from time to time
in accordance with Section 3.2.3 of the Lease) opposite the Stipulated Loss
Value Date by (ii) Lessor's Cost and (b) during any Renewal Term, the amount
determined pursuant to Section 17.2.3 of the Lease. Notwithstanding anything to
the contrary in any Operative Agreement, Stipulated Loss Value shall always be
sufficient to pay in full, as of the date of payment thereof (assuming timely
payment of the Equipment Notes prior to such date), the aggregate unpaid
principal amount of all Equipment Notes outstanding as of such date, together
with accrued and unpaid interest on all such Equipment Notes as of such date.
"STIPULATED LOSS VALUE DATE" means, for any month, the day in such
month specified in Schedule 3 to the Lease or, if such day is not a Business
Day, the immediately succeeding Business Day.
"SUBORDINATION AGENT" means Wilmington Trust Company, as subordination
agent under the Intercreditor Agreement.
"SUBORDINATION AGENT AGREEMENTS" means the Participation Agreement,
the Liquidity Facilities and the Intercreditor Agreement.
"SUPPLEMENTAL RENT" means, without duplication (a) all amounts,
liabilities, indemnities and obligations (other than Basic Rent or Renewal Rent
but including Make-Whole Amount, if any) that Lessee assumes or becomes
obligated to or agrees to pay under any Lessee Operative Agreement to or on
behalf of Lessor or any other person, including, without limitation, payments of
Stipulated Loss Value, Termination Value and payments of indemnities under
Section 9 of the Participation Agreement, (b) any amount payable by Owner
Trustee pursuant to Section 2.15 of the Trust Indenture, to the extent not paid
when due by the Existing Mortgagee pursuant to the Fee Letter (as defined in the
Intercreditor Agreement), PROVIDED that, in calculating any such amount that is
determined based on interest payable on any "Advance" pursuant to any Liquidity
Facility, the interest rate utilized in determining the amount payable by Lessee
hereunder shall be 0.4% per annum less than the interest rate applicable thereto
pursuant to the terms of such Liquidity Facility, and PROVIDED, FURTHER, that
Lessee shall have no obligation to pay any commitment fee payable under any
Liquidity Facility to extent calculated at a rate of 0.4% per annum or less, (c)
Lessee's pro rata share of all compensation and reimbursement of expenses,
disbursements and advances payable by Lessee under the Pass Through Trust
Agreements, and (d) Lessee's pro rata share of all compensation and
reimbursement of expenses and disbursements payable to the Subordination Agent
under the Intercreditor Agreement except with respect to any income or franchise
taxes incurred by the Subordination Agent in connection with the transactions
contemplated by the Intercreditor Agreement. As used herein, "Lessee's pro rata
share" means as of any time a fraction, the numerator of which is the principal
balance then outstanding of Equipment Notes and the denominator of which is the
aggregate principal balance then outstanding of all "Equipment Notes" (as such
term is defined in each of the Operative Indentures).
"TAX ATTRIBUTE PERIOD" is defined in Section 1(e) of the Tax Indemnity
Agreement.
"TAX INDEMNITEE" means (a) First Security and Owner Trustee, (b) WTC
and Mortgagee, (c) each separate or additional trustee appointed pursuant to the
Trust Agreement or the Trust Indenture, (d) each Participant, (e) the Trust
Estate and the Trust Indenture Estate and (f) the respective successors,
assigns, agents and servants of the foregoing. For purposes of this definition,
the term "Owner Participant" shall include any member of an affiliated group
(within the meaning of Section 1504 of the Code) of which Owner Participant is,
or may become, a member if consolidated, joint or combined returns are filed for
such affiliated group for federal, state or local income tax purposes.
"TAX INDEMNITY AGREEMENT" means the Tax Indemnity Agreement, dated as
of even date with the Participation Agreement, between Lessee and Owner
Participant.
"TAXES" means all license, recording, documentary, registration and
other similar fees and all taxes, levies, imposts, duties, charges, assessments
or withholdings of any nature whatsoever imposed by any Taxing Authority,
together with any penalties, additions to tax, fines or interest thereon or
additions thereto.
"TAXING AUTHORITY" means any federal, state or local government or
other taxing authority in the United States, any foreign government or any
political subdivision or taxing authority thereof, any international taxing
authority or any territory or possession of the United States or any taxing
authority thereof.
"TERM" means the term, commencing on the Closing Date, for which the
Aircraft is leased pursuant to Section 3 of the Lease, and shall include the
Base Lease Term and, if applicable, any Renewal Lease Term; PROVIDED that if at
the scheduled end of the Term the Aircraft or Airframe is being used, or was
within six (6) months prior thereto being used, by the U.S. Government pursuant
to CRAF, the Term shall be deemed extended for the period necessary to
accommodate usage of the Aircraft or Airframe pursuant to CRAF plus six months
thereafter, and Lessee shall be obligated to pay Basic Rent with respect to any
such period of extension at a rate equal to the Basic Rent paid during the Base
Lease Term or the applicable Renewal Lease Term, whichever shall have ended
immediately prior to such extension.
"TERMINATION AGREEMENTS" means, collectively, the termination
agreement with respect to the Existing Lease, the termination agreement with
respect to the Existing Sublease and the release from the Lien of the Existing
Mortgage, in each case delivered pursuant to Section 5.1.2(xiii) of the
Participation Agreement.
"TERMINATION DATE" means any Payment Date occurring after the end of
the Tax Attribute Period on which the Lease shall terminate in accordance with
Section 9 of the Lease.
"TERMINATION VALUE" means, with respect to the Aircraft, the amount
determined by multiplying (a) the percentage set forth in Schedule 4 to the
Lease (as adjusted from time to time in accordance with Section 3.2.3 of the
Lease) opposite the applicable Payment Date by (b) Lessor's Cost.
Notwithstanding anything to the contrary in any Operative Agreement, Termination
Value shall always be sufficient to pay in full, as of the date of payment
thereof (assuming timely payment of the Equipment Notes prior to such date), the
aggregate unpaid principal amount of all Equipment Notes outstanding as of such
date, together with accrued and unpaid interest on all such Equipment Notes as
of such date.
"THRESHOLD AMOUNT" is defined in Schedule 1 to the Lease.
"TRANSACTIONS" means the transactions contemplated by the
Participation Agreement and the other Operative Agreements to occur on the
Closing Date.
"TRANSACTION EXPENSES" means (a) all costs and expenses incurred by
Existing Mortgagee, Owner Participant, the Pass Through Trustees, the
Subordination Agent, Owner Trustee and Mortgagee in connection with the
preparation, execution and delivery of the Operative Agreements and, in the case
of the Owner Participant and the Equity Guaranty (including, without limitation,
the reasonable fees and expenses of counsel for such parties), (b) all costs and
expenses for the recording or filing of any documents, certificates or
instruments in accordance with any Operative Agreement, including, without
limitation, the FAA Filed Documents and the Financing Statements, (c) one ninth
of (i) the underwriting fees and expenses attributable to the offering and sale
of the Pass Through Certificates and (ii) all costs and expenses incurred by
Existing Mortgagee, the Pass Through Trustees, the Subordination Agent, Owner
Trustee and Mortgagee in connection with the preparation, execution and delivery
of the Pass Through Agreements and the Equity Guaranty (including, without
limitation, the reasonable fees and expenses of counsel for such parties), (d)
the equity placement fee and expenses of Equity Advisor attributable to the
Aircraft, (e) the reasonable fees and disbursements of special counsel in
Oklahoma City, Oklahoma, in connection with the Closing, (f) all initial and
ongoing fees, disbursements and expenses of Owner Trustee and Mortgagee, and (g)
the fees and expenses of the Appraiser contemplated by Section 5.1.2(xv) of the
Participation Agreement.
"TRANSFER" means the transfer, sale, assignment or other conveyance of
all or any interest in any property, right or interest.
"TRANSFEREE" means a person to which any Owner Participant, Owner
Trustee or any Loan Participant or Note Holder purports or intends to Transfer
any or all of its right, title or interest in the Trust Estate or in its
Equipment Note and the Trust Indenture Estate, respectively, as described in
Section 10.1.1(a), 10.1.2 or 10.1.3 (but excluding participants in any
participation referred to in Section 10.1.3), respectively, of the Participation
Agreement.
"TRUST" means the trust created by the Trust Agreement.
"TRUST AGREEMENT" means the Trust Agreement ___, dated as of even date
with the Participation Agreement, between Owner Participant and Owner Trustee.
"TRUST ESTATE" means all estate, right, title and interest of Owner
Trustee in and to the Aircraft, the Lease, any Lease Supplement and the Purchase
Agreement including, without limitation, all amounts of Basic Rent and
Supplemental Rent including, without limitation, insurance proceeds (other than
insurance proceeds payable to or for the benefit of Owner Participant, Note
Holders or WTC) and requisition, indemnity or other payments of any kind for of
with respect to the Aircraft (except amounts owing to Owner Participant, Note
Holders or WTC, or to any of their respective directors, officers, employees,
servants and agents, pursuant to Section 10 of the Participation Agreement).
Notwithstanding the foregoing, "Trust Estate" shall not include any Excluded
Payment.
"TRUST INDENTURE" means the Trust Indenture and Mortgage ___, dated as
of even date with the Participation Agreement, between Owner Trustee and
Mortgagee.
"TRUST INDENTURE ESTATE" is defined in the "Granting Clause" of the
Trust Indenture.
"TRUST INDENTURE SUPPLEMENT" means a Trust Indenture and Mortgage ___
Supplement, substantially in the form of Exhibit A to the Trust Indenture, with
appropriate modifications to reflect the purpose for which it is being used.
"TRUST SUPPLEMENT" means an agreement supplemental to the Basic Pass
Through Trust Agreement pursuant to which (i) a separate trust is created for
the benefit of the holders of the Pass Through Certificates of a series, (ii)
the issuance of the Pass Through Certificates of such series representing
fractional undivided interests in such trust is authorized and (iii) the terms
of the Pass Through Certificates of such series are established.
"UCC" means the Uniform Commercial Code as in effect in any applicable
jurisdiction.
"UNITED STATES" or "U.S." means the United States of America;
PROVIDED, that for geographic purposes, "United States" means, in aggregate, the
50 states and the District of Columbia of the United States of America.
"U.S. AIR CARRIER" means any United States air carrier that is a
Citizen of the United States holding an air carrier operating certificate issued
by the Secretary of Transportation pursuant to chapter 447 of title 49 of the
United States Code for aircraft capable of carrying 10 or more individuals or
6000 pounds or more of cargo, and as to which there is in force an air carrier
operating certificate issued pursuant to Part 121 of the FAA Regulations, or
which may operate as an air carrier by certification or otherwise under any
successor or substitute provisions therefor or in the absence thereof.
"U.S. PERSON" means any Person described in Section 7701(a)(30) of the
Code.
"U.S. GOVERNMENT" means the federal government of the United States,
or any instrumentality or agency thereof the obligations of which are guaranteed
by the full faith and credit of the federal government of the United States.
"WEIGHTED AVERAGE LIFE TO MATURITY" means, with respect to any
specified Debt, at the time of the determination thereof the number of years
obtained by dividing the then Remaining Dollar-years of such Debt by the then
outstanding principal amount of such Debt. The term "Remaining Dollar-years"
shall mean the amount obtained by (1) multiplying the amount of each
then-remaining principal payment on such Debt by the number of years (calculated
at the nearest one-twelfth) that will elapse between the date of determination
of the Weighted Average Life to Maturity of such Debt and the date of that
required payment and (2) totaling all the products obtained in clause (1) above.
"WET LEASE" means any arrangement whereby Lessee or a Permitted
Sublessee agrees to furnish the Aircraft, Airframe or any Engine to a third
party pursuant to which the Aircraft, Airframe or Engine shall at all times be
in the operational control of Lessee or a Permitted Sublessee, provided that
Lessee's obligations under this Lease shall continue in full force and effect
notwithstanding any such arrangement.
"WTC" means Wilmington Trust Company, a Delaware banking corporation,
not in its capacity as Mortgagee under the Trust Indenture, but in its
individual capacity.
[ANNEXES B, C AND D HAVE BEEN OMITTED FROM THIS DOCUMENT AS
CONTAINING CONFIDENTIAL FINANCIAL INFORMATION]
EXHIBIT A - LEASE SUPPLEMENT
LEASE AGREEMENT ___
LEASE SUPPLEMENT NO.__
LEASE SUPPLEMENT No. __, dated ________, 199_, between FIRST SECURITY
BANK, NATIONAL ASSOCIATION, a national banking association, not in its
individual capacity, but solely as Owner Trustee under the Trust Agreement ___,
dated as of September 25, 1997, with the Owner Participant named therein (such
Owner Trustee, in its capacity as such Owner Trustee being herein called
"Lessor"), and CONTINENTAL AIRLINES, INC., a Delaware corporation, as Lessee
("Lessee").
Lessor and Lessee have heretofore entered into that certain Lease
Agreement ___, dated as of September 25, 1997, relating to one Embraer Model
EMB-145 aircraft (herein called the "Lease" and the defined terms therein being
hereinafter used with the same meanings). The Lease provides for the execution
and delivery of this Lease Supplement for the purpose of leasing the Airframe
and Engines under the Lease as and when delivered by Lessor to Lessee in
accordance with the terms thereof.
The Lease relates to the Airframe and Engines described below, and a
counterpart of the Lease to which this Lease Supplement is attached and of which
this Lease Supplement is a part, is being filed for recordation on the date
hereof with the Federal Aviation Administration as one document.
NOW, THEREFORE, in consideration of the premises and other good and
sufficient consideration, Lessor and Lessee hereby agree as follows:
1. Lessee has been duly authorized by Lessor to accept, and does
hereby irrevocably accept on behalf of Lessor delivery of the Aircraft from
Airframe Manufacturer under, and for all purposes of, the Aircraft Xxxx of Sale,
the Participation Agreement and the Purchase Agreement Assignment.
2. Lessor hereby delivers and leases to Lessee under the Lease and
Lessee hereby accepts and leases from Lessor under the Lease the following
described Embraer EMB-145 aircraft (the "Aircraft"), which Aircraft as of the
date hereof consists of the following components:
(i) Airframe: U.S. Registration No. ___________; manufacturer's
serial no. ___________; and
(ii) Engines: two (2) Xxxxxxx AE3007A engines bearing,
respectively, manufacturer's serial nos. ___________ and ____________(each
of which engines has 750 or more rated takeoff horsepower or the equivalent
of such horsepower).
3. The Closing Date for the Aircraft is the date of this Lease
Supplement set forth in the opening paragraph hereof.
4. Lessee hereby confirms to Lessor that Lessee has duly and
irrevocably accepted the Aircraft under and for all purposes hereof, of the
Lease and of the other Lessee Operative Agreements.
5. All of the terms and provisions of this Lease Supplement are hereby
incorporated by reference in the Lease to the same extent as if fully set forth
therein.
6. This Lease Supplement may be executed by the parties hereto in
separate counterparts, each of which when so executed and delivered shall be an
original, but all such counterparts shall together constitute but one and the
same instrument.
7. To the extent, if any, that this Lease Supplement constitutes
chattel paper (as such term is defined in the Uniform Commercial Code as in
effect in any applicable jurisdiction), no security interest in this Lease
Supplement may be created through the transfer or possession of any counterpart
other than the original executed counterpart, which shall be identified as the
counterpart containing the receipt therefor executed by the Mortgagee on the
signature page thereof.
[This space intentionally left blank.]
IN WITNESS WHEREOF, Lessor and Lessee have each caused this Lease
Supplement to be duly executed as of the day and year first above written.
FIRST SECURITY BANK, NATIONAL
ASSOCIATION, as Lessor, not in its
individual capacity, except as expressly
provided herein, but solely as Owner
Trustee under the Trust Agreement
By:_____________________________________
Name:
Title:
CONTINENTAL AIRLINES, INC., as Lessee
By:_____________________________________
Name:
Title:
IN WITNESS WHEREOF, Lessor and Lessee have each caused this Lease
Supplement to be duly executed as of the day and year first above written.
FIRST SECURITY BANK, NATIONAL
ASSOCIATION, as Lessor, not in its
individual capacity, except as expressly
provided herein, but solely as Owner
Trustee under the Trust Agreement
By:_____________________________________
Name:
Title:
CONTINENTAL AIRLINES, INC., as Lessee
By:_____________________________________
Name:
Title:
Receipt of this original counterpart of the foregoing Lease Supplement
is hereby acknowledged on this ____ day of _________, __________.
WILMINGTON TRUST COMPANY, as Mortgagee
By:_____________________________________
Name:
Title:
EXHIBIT B - LEASE SUPPLEMENT
LEASE AGREEMENT ___
RETURN ACCEPTANCE SUPPLEMENT
RETURN ACCEPTANCE SUPPLEMENT dated ________, between FIRST SECURITY
BANK, NATIONAL ASSOCIATION, a national banking association, not in its
individual capacity, but solely as Owner Trustee under the Trust Agreement ___,
dated as of September 25, 1997, with the Owner Participant named therein (such
Owner Trustee, in its capacity as such Owner Trustee being herein called
"Lessor"), and CONTINENTAL AIRLINES, INC., a Delaware corporation, as Lessee
("Lessee").
Lessor and Lessee have heretofore entered into that certain Lease
Agreement ___, dated as of September 25, 1997, relating to one Embraer Model
EMB-145 aircraft (herein called the "Lease" and the defined terms therein being
hereinafter used with the same meanings). The Lease relates to the Airframe and
Engines described below.
NOW, THEREFORE, in consideration of the premises and other good and
sufficient consideration, Lessor and Lessee hereby agree as follows:
1. This Return Acceptance Supplement is executed by Lessor and Lessee
to confirm that on the date hereof the following described Airframe and Engines
were returned by Lessor to Lessee:
(i) Airframe: U.S. Registration No. ______________;
manufacturer's serial no. __________________; and
(ii) Engines: two (2) Xxxxxxx AE3007A engines bearing,
respectively, manufacturer's serial nos. ____________________________ and
_________________________.
2. This Return Acceptance Supplement is intended to be delivered in
_____________________.
3. Lessor and Lessee agree that the return of the Aircraft is in
compliance with Section 5 and Annex B of the Lease, except as set forth below:
4. Lessor and Lessee agree that the Lease is terminated, except for
the provisions thereof that expressly survive termination.
IN WITNESS WHEREOF, Lessor and Lessee have each caused this Return
Acceptance Supplement to be duly executed as of the day and year first above
written.
FIRST SECURITY BANK, NATIONAL
ASSOCIATION, as Lessor, not in its
individual capacity, except as expressly
provided herein, but solely as Owner
Trustee under the Trust Agreement
By:_____________________________________
Name:
Title:
CONTINENTAL AIRLINES, INC., as Lessee
By:_____________________________________
Name:
Title:
SCHEDULE 4 - TERMINATION VALUE
LEASE AGREEMENT ___
[SCHEDULES 1-4 HAVE BEEN OMITTED FROM THIS DOCUMENT AS
CONTAINING CONFIDENTIAL FINANCIAL INFORMATION]
SCHEDULE 5 - PERMITTED COUNTRIES
LEASE AGREEMENT ___
PERMITTED COUNTRIES
Argentina Malta
Australia Mexico
Austria Morocco
Bahamas Netherlands
Belgium New Zealand
Brazil Norway
Canada Paraguay
Chile People's Republic of China
Denmark Philippines
Ecuador Portugal
Egypt Republic of China (Taiwan)
Finland Singapore
France South Africa
Germany South Korea
Greece Spain
Hungary Sweden
Iceland Switzerland
India Thailand
Indonesia Tobago
Ireland Trinidad
Italy United Kingdom
Japan Uruguay
Luxembourg Venezuela
Malaysia
ANNEX D - INSURANCE
LEASE AGREEMENT ___
PLACARDS
Leased from
First Security Bank, National Association,
not in its individual capacity but solely as
Owner Trustee, Owner and Lessor
and
Mortgaged to
Wilmington Trust Company,
not in its individual capacity but solely as Mortgagee
