Initial Letter of Agreement and Release
CATHAY PACIFIC
LEASING LIMITED
Cathay Pacific Leasing Limited
Newcourt ▇▇▇▇▇▇▇▇
▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇
▇▇▇▇ ▇▇ ▇▇▇, ▇▇▇ ▇▇▇
Telephone: +44 1624
674595
Fax: +44 1624
674592
CompuServe:
100762,3424
E-mail:
▇▇▇▇▇▇@▇▇▇▇▇▇▇▇▇▇.▇▇▇
JRPower's mobile: +44 4624
▇▇▇▇▇▇▇
Fax Cover Sheet
DATE: August 5, 1998 TIME: 3:21PM
TO: ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ FAX: ▇▇▇-▇▇▇-▇▇▇-▇▇▇▇
C.C. ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇ & Master
C.C. ▇▇▇▇▇ ▇▇▇▇▇ FAX: ▇▇-▇▇▇-▇▇▇▇-▇▇▇▇
Cathay Pacific Airways Limited
FROM: ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ FAX: ▇▇-▇▇▇▇-▇▇▇▇▇▇
Number of pages including cover sheet: 22
Baltia Airlines Inc.
The initial Deposit has been received, the ▇▇▇▇ is released to Baltia and
is
considered binding by Cathay.
Kind regards,
(Signature)
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
Director
Directors: P.A. ▇▇▇▇, J.R. Power, R.M.J.▇▇▇▇▇▇▇▇, E.M.C.Cain
R.A.K.▇▇▇▇▇, ▇.▇.Gorlett,▇.▇▇▇▇▇▇▇▇▇▇
Incorporated in the Isle of Man (originally as Dunvant Limited)
Company Registration No: 070990C
Cathay Pacific
Cathay Pacific Airways Limited
▇▇▇▇▇ ▇▇▇▇▇, ▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇
Telex: 82345 CXAIR HX
Telephone: (▇▇▇) ▇▇▇▇ ▇▇▇▇
Fax:(▇▇▇) ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇ ▇, ▇▇▇▇
▇▇▇▇▇▇ Air Lines, Inc.
▇▇-▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇ ▇
▇▇▇▇ ▇▇▇▇
▇▇ ▇▇▇▇▇
For the attention of: Igor Dmitrowsky, Chairman and President
Dear Sirs:
This Letter of Initial Agreement ("▇▇▇▇") sets out, subject to
contract, the general terms and conditions relating to the
leasing by Baltia Air Lines ("BA") from Cathay Pacific Airways
Limited and/or any of Cathay Pacific Leasing Limited and/or a
subsidiary of that company ("Cathay") of one (1) Boeing 747-
267 aircraft and installed engines (the "Aircraft") together
with technical records as set out herein.
The parties agree to negotiate, in good faith, with a view to
agreeing on a definitive lease agreement (the "Lease
Agreement") upon signature of this ▇▇▇▇ and in consideration
of the non-refundable payment by BA to Cathay of USD100,000.
The parties agree to use reasonable endeavours to maintain the
subject matter of this ▇▇▇▇ confidential and to refrain from
announcements or confirmations or other disclosure to third
parties (other than each party's professional advisers), and
that so far as possible the transactions relating to the
Aircraft will only be publicly announced at the time of
delivery of the Aircraft to BA, subject to any disclosure
required by law or required to be made to any competent
authority, or any applicable manufacturers or suppliers or by
the Listing Rules of any Stock Exchange on which a party is
listed.
1. EQUIPMENT
1.1 Aircraft Description
One second-hand Boeing 747-267 passenger aircraft
with present registration ▇▇▇▇ B-HKG (Manufacturers
Serial No.21746.)
(a) Performance
The Aircraft will have the following
performance:
MTOW = 800,000 pounds
MLG = 630,000 pounds
MZFW = 536,500 pounds
OEW (typ) = 388,000 pounds
Fuel Cap = 52,288 US Gals
- 1 -
Registered office: ▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇
[logo] Swire Group
(b) Interior Configuration
Prior to Delivery the interior of the Aircraft
will be changed in accordance with the BA
Modifications set out at Schedule 2 (to be
agreed) at the cost of BA.
(c) Aircraft Systems Equipment
The Aircraft Systems Equipment will be as per
Schedule 3 but subject to any amendments prior
to Delivery to comply with the Delivery
Conditions set out at Schedule 1 and BA's
Modifications set out at Schedule 2.
(d) External Livery
The Aircraft external livery is currently
Cathay standard. The Aircraft will be changed,
rubbed down and painted in BA standard livery
prior to delivery (in accordance with Schedule
1).
1.2 Description of Installed Engines
Four Rolls Royce RB211-524C2 engines per aircraft
rated at 51,500 pounds take off thrust, serial
numbers to be agreed (the "Engines").
2. LEASE AGREEMENT DETAILS
2.1 Lease Term
6 months (the "Initial Period"). Provided Cathay
has notified BA 60 days prior to the expiry of the
Initial Period that the Aircraft is available for
leasing for a further period of 6 months, BA shall
have the option to extend the term of the lease for a
further period of 6 months (the "Extension Period")
upon giving Cathay notice in writing 30 days before
the expiry of the Initial Period. Each party shall
have the right to terminate the term of the lease at
any time during the Extension Period upon giving 90
days notice in writing.
2.2 Initial Deposit
BA shall pay Cathay the non-refundable amount of
USD100,000 (the "Initial Deposit") upon execution of
this ▇▇▇▇. The Initial Deposit will be returned to
BA without interest if Cathay fails to get approval
from its Board of Directors of this ▇▇▇▇.
2.3 Security Deposit
BA shall pay Cathay a security deposit of USD850,000
(the "Security Deposit") upon execution of the Lease.
The Initial Deposit shall be applied toward the
Security Deposit. Provided that BA has performed all
of its obligations under the Lease Agreement, the
Security Deposit will be returned to BA without
interest:
(i) upon redelivery of the Aircraft in the condition
required by the Lease Agreement; and
(ii) if Cathay fails to honour its obligations under
the Lease Agreement and this ▇▇▇▇.
Cathay shall be entitled to apply the Security
Deposit toward any loss or expense that Cathay incurs
as a result of BA failing to perform its obligations
under the Lease Agreement.
2.4 Rental
USD250,000 per month, payable in advance, to be
increased to USD300,000 after 6 months if the term of
the Lease Agreement is extended.
2.5 Payment Obligations Absolute
The obligation to Rent will be absolute and
unconditional and rental payment will be paid
(subject to paragraph 10 below) notwithstanding that
the Aircraft or any Engine may not be available to BA
after they have been delivered for any reason. For
the avoidance of doubt this provision shall not
preclude BA from bringing at law or in equity any
action against Cathay by reason of any failure by
Cathay to comply with its obligations under the Lease
Agreement or otherwise.
2.6 Taxation
The obligation to pay Rent shall not be reduced on
account of any deduction or withholding of tax,
unless such deduction or withholding is required by
law, in which event the relevant payment of Rent
shall be increased so that the net amount received by
Cathay is the same as it would have received, but for
such deduction or withholding. Cathay will use its
reasonable efforts to recover such deduction or
withholding which recoveries will be for the account
of BA.
It is understood that no stamp duty will be payable
in Hong Kong in connection with the Lease Agreement
or the transactions contemplated thereby. BA shall be
responsible for all other taxes, duties, charges,
value added taxes and levies imposed on or in
connection with this ▇▇▇▇ and the Lease Agreement,
whether levied in Hong Kong or outside Hong Kong.
2.7 Country of Aircraft Registration
United States of America
2.8 Agreed Value of Aircraft
USD35,000,000
2.9 Cathay's Bank Account
Funds to be remitted to Marine Midland Bank N.A., ▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇; ▇▇▇▇▇▇▇▇▇, Swift Code:
MRMDU833 for the credit of The Hong Kong and Shanghai
Banking Corporation Limited, New York Branch, Account
No.▇▇▇-▇▇▇▇▇▇-▇▇▇, Account Name: Cathay Pacific
Airways Limited or to such other account nominated by
Cathay.
2.10 Termination Events
The Lease Agreement will contain usual provisions to
be agreed between the parties with respect to default
by BA and the occurrence of a default will cause the
leasing of the Aircraft to be terminated, whereupon
Cathay shall be entitled to repossess the Aircraft.
A full list of Termination Events is set out in
Schedule 5.
2.11 Representatives, Warranties and Covenants
The Lease Agreement will contain such standard
representations, warranties and covenants as may be
agreed between the parties with regard to the
operation, maintenance and insurance of the Aircraft
and the engines and regulatory condition of BA.
2.12 Inspection
Inspections of the Aircraft and Engines will be made
both at delivery and redelivery of the Aircraft for
the purpose of determining the condition of the
Aircraft. Cathay shall have the right to inspect the
Aircraft and Engines at any time when the Aircraft is
not carrying on scheduled operations (with Cathay not
being in any way obliged to do so). BA will pay
reasonable costs incurred by Cathay during one such
inspection in any one calendar year.
2.13 No Warranty
Subject to the Aircraft and Engines meeting the
Delivery condition set out at paragraph 5 and
Schedule 1, the Aircraft will be delivered to BA on
an "as is" "where is" basis. All warranties by
Cathay with regard to the condition of the Aircraft
will be excluded and BA will be required to disclaim
all such warranties whether express or implemented by
law and otherwise.
2.14 Financial and other Reporting
BA will provide monthly reports to Cathay regarding
its operation and maintenance of the Aircraft in such
detail and containing such information as Cathay may
require. In addition BA will provide Cathay with
quarterly financial statements when available.
2.15 Registration
Cathay's title to the Aircraft and Engines will be
registered to the satisfaction of Cathay.
2.16 Reservation of Title
BA will not have title to the Aircraft or Engines and
will not exercise or purport to exercise any
ownership right or privilege in respect of the
Aircraft, except registering the Aircraft on the U.S.
aircraft register. No sale, disposal, charge, lien
or mortgage of the Aircraft or any interest therein
may be made by BA.
Cathay may require the Aircraft and Engines to carry
a nameplate identifying Cathay's title and/or
ownership interest.
2.17 No Operational Interest
Cathay will not have any operational interest in the
Aircraft (other than by virtue of the covenants in
respect thereof given to Cathay by BA in the Lease
Agreement), and BA will not hold out Cathay as having
such interest.
2.18 Indemnity
BA shall keep Cathay fully harmless and indemnified
from all consequences of the operation, and
maintenance of the Aircraft and Engines
notwithstanding that Cathay may at any time provide
or assist in the maintenance of the Aircraft and
Engines.
2.19 Total Loss
On a Total Loss of Aircraft, BA will pay all amounts
due but unpaid under the Lease Agreement up to the
relevant date plus the Agreed Value.
2.20 Insurance
(a) BA will maintain liability and hull insurance of
a type acceptable to Cathay and with a first
class reputable insurance company and/or
underwriter in any major international aviation
insurance market acceptable to Cathay. The
Aircraft and Engines shall be insured for an
amount not less than the amount payable on Total
Loss provided above. In respect of third party
liability, the insurance shall provide cover for
not less than USD1.1 bn per incident. All
insurances shall name Cathay as additional named
assured without liability for premium tthe
extent of Cathay's interests.
(b) Insurance taken out by BA will cover in a manner
acceptable to Cathay risks associated with the
"Millennium Bug/Y2K problem" (relating to the
failure of computer hardware and/or software to
properly recognize any change of year, month,
date or time).
(c) BA shall provide political risk insurance in
favor of Cathay against the Aircraft's being
seized, detained, sequestered, requisitioned,
nationalized, confiscated, forfeited,
compulsorily acquired or destroyed for political
reasons.
(d) BA shall provide repossession insurance in favor
of Cathay to cover all costs and expenses
(including legal costs) of physically
repossessing the Aircraft and placing the
Aircraft in the condition required by the Lease
Agreement.
For the avoidance of doubt, it is recognized that the
Rent instalments mentioned in Paragraph 2.4 to this
▇▇▇▇ will be increased by an amount necessary to
ensure that the cost of such political risk and
repossession insurance is funded by BA.
3. MAINTENANCE
3.1 BA shall pay to Cathay a monthly amount (the
"Maintenance Amount") of USD$1,500 per flight hour
which shall be accumulated in a reserve account (the
"Maintenance Reserve"). The Maintenance Amount shall
be payable in arrears on a monthly basis on the same
dates as payments of Rent are made. BA shall be
entitled to withdraw amounts standing to the credit
of the Maintenance Reserve against presentation to
Cathay of receipts, invoices or other evidences
acceptable to Cathay that the funds are required in
order to pay maintenance costs incurred in relation
to the Aircraft. The Maintenance Reserve, once
having reached it, will at no time be permitted to
fall below USD250,000. Cathay will be permitted to
ask the funds standing to the credit of the
Maintenance Reserve toward satisfaction of BA's other
obligations under the Lease Agreement in respect of
the Aircraft.
3.2 Without cost to Cathay, Cathay will use its
reasonable endeavours to assist BA to successfully
place the Aircraft on the FAA register.
3.3 Cathay grants BA authority to adopt the Cathay
maintenance program provided BA waives any rights
against CX in respect of such adoption of Cathay's
maintenance programme and agrees to indemnify Cathay
for any loss or liability that Cathay may suffer as a
result thereof.
4. DELIVERY
4.1 Scheduled Delivery Date and Location
Not later than January 1999, at either Hong Kong
International Airport, Chek Lap Kok or Xiamen. Exact
date to be determined.
4.2 Delivery Status
The Aircraft will be conditioned by Cathay to its
Delivery Maintenance Status prior to Delivery at the
expense of Cathay as set out in Schedule 1 and below,
and further modified at the expense of BA as set out
in Schedule 2.
(a) Airframe
The airframe will be delivered with the
following minimum times to run to the next:
C Check - 16 months
D Check - 16 months
Gear Change - 16 months (based on 6 yr
economic O/H life)
Flap Carriage - 16 months forecasted life remaining at
BA
change usage
Other Hard - 6 months
Lifed
There will be no outstanding deferred defects
on
the flight deck/cabin logs. Repetitive inspections will be
covered by maintenance schedule amendment by mutual
agreement.
(b) Engines
Each Engine will have a minimum of 12 months
utility remaining before removal, repair or
overhaul.
There will be no outstanding deferred defects
or
repeat inspections outside of AMM limits on the
Engines unless otherwise agreed by BA, such
agreement not to be unreasonably withheld.
5. DOCUMENTATION
Operating manuals for the Aircraft and Engines will be
provided to BA by Cathay on or before Delivery and shall
be returned to Cathay upon acceleration or expiry of the
Lease Agreement. BA shall be responsible for obtaining an
FAA Flight Manual if necessary.
All applicable publications, technical records and other
customary documentation (including without limitation
Cathay's maintenance specification manual, check job cards
and card database, cockpit manual chart and training
manual) will be made available to BA at BA's request. The
Maintenance Manual and IPC applicable to the Aircraft will
be provided to BA and will be maintained by BA for the
duration of the Lease Term. BA will return them to Cathay
on termination or expiry of the Lease Agreement in the
form maintained by Cathay.
6. OPERATION
6.1 The Lease Agreement will provide that BA may not
sublease or enter into any agreement whereby BA parts
with possession of the Aircraft and/or any Engine.
6.2 Cathay will assign to BA all of Cathay's rights
remaining under any warranties or guarantees relating
to the Aircraft, Engines and all other systems and
equipment thereon for the duration of the Lease
Agreement.
7. CHANGES TO THE AIRCRAFT DURING THE LEASE TERM
BA may, and shall, in the case of mandatory requirements,
make changes to the Aircraft interior and systems as a
result of any mandatory requirement of any relevant
airworthiness authority at BA's cost.
Any equipment removed from the Aircraft will be returned
to Cathay and, where such equipment is required to be re-
installed on the Aircraft for redelivery in accordance
with the Return Conditions set out at paragraph 19 below,
Cathay will make available such equipment in the same
condition as when returned to it for retrofit at BA's
cost.
8. RETURN CONDITIONS
8.1 Maintenance
The Aircraft must be capable of being put back on the
HK CAD register and on the Cathay system of
maintenance should it be returned under the Lease
Agreement and thus will require a bridging check at
Cathay's cost. BA will use all reasonable endeavours
to assist Cathay with regard to the above.
8.2 Engine, Engine Module and Component Serial Numbers
In general, the engines, modules and components (by
serial number) fitted at Delivery should also be
fitted should the Aircraft be returned under the
Lease Agreement save the deviation may be made
provided that such replacements engines, modules and
components are in good working condition and are of
similar life, modification standard and utility as
the engines, modules and components replaced.
8.3 Records
Full records will be provided on return of the
Aircraft for all maintenance activity including all
component changes, repair schemes, design deviations,
technical log entries, NRC's, service bulletin
incorporation, in-house modification, AO compliance
etc. All life limited parts will have records back
to birth.
8.4 The Aircraft and Engines shall be in the same
condition as the Delivery maintenance status as set
out at Schedule 1 to this ▇▇▇▇
8.5 Airframe
The airframe will be returned with the following
minimum times to run to the next:
C Check - 16 months per BA's schedule
D Check - 16 months
Gear Change - 16 months forecasted life
remaining at Cathay usage based
on Cathay's current annual
cycle
usage
Flap Carriage - 16 months forecasted life
remaining at Cathay's
Change annual cycle usage
Other Hard Life - 6 months
Parts
There will be no outstanding deferred defects on the
airframe. Respective inspections will be covered by
maintenance schedules amendment.
Cathay and BA will negotiate in good faith to agree a
mechanism, to be documented in the Lease Agreement,
whereby the Aircraft is to be returned to Cathay in
the condition in which it was delivered to BA, but in
such a manner that the costs associated with this
approach are minimised.
8.6 Engines
Each Engine will have a minimum of 12 months utility
remaining before removal, repair or overhaul.
There will be no outstanding deferred defects or
repeat inspections outside of AMM limits on the
engines except as mutually agree.
8.7 Internal
The Aircraft will be returned in Cathay configuration
and will be clean by normal international aviation
standards. If any interior equipment installed by BA
is not required by Cathay on return of the Aircraft,
they will be removed by BA at its cost before
redelivery.
8.8 External
The Aircraft will be returned in standard Cathay
livery (or livery of another airline nominated by
Cathay) following rub-down and painting if requested
by Cathay. The paint shall be of the same
specification as Cathay's paint specification.
8.9 Location
The Aircraft will be redelivered to Cathay in Hong
Kong or to an airport nominated by Cathay.
9. CONDITIONS PRECEDENT
9.1 BA's obligation to lease the Aircraft from Cathay
shall be subject to the conditions set out below:
(a) The Aircraft shall meet the Delivery
Conditions
set out in Schedule 1 (as evidenced where
appropriate by satisfactory performance in any
predelivery inspection/tests or test flights
which relate to delivery conditions) and, if
practicable, BA's Modifications program as set
out in Schedule 2 shall have been completed.
(b) Execution and delivery of an agreed Lease
Agreement (with the requisite approvals of the
board of directors of both parties) no later
than 5 p.m. Hong Kong Time on 14th September
1998 or such later date as may be mutually
agreed between the parties, and completion of
any predelivery obligations agreed between the
parties.
(c) The absence of Total Loss or Event of Loss
(as
will be defined in the Lease Agreement) with
respect to the Aircraft.
9.2 The Aircraft will not be delivered until BA has
satisfied Cathay that all corporate and national
consents, authorizations and permissions have been
obtained to enable BA to take the Aircraft pursuant
to the Lease Agreement and perform its obligations
thereunder. In addition, Cathay must be satisfied as
to all regulatory matters relating to the Aircraft
and engines, its registration, operation, maintenance
and insurance and the regulatory and financial
condition of BA.
10. LOSS OR DAMAGE PRIOR TO DELIVERY
If before delivery there is a Total Loss with respect to
any Aircraft or Engine, Cathay shall promptly notify BA of
such occurrence, whereupon Cathay shall return all
payments BA has made to Cathay related to this lease, and
neither party shall have any further obligation or
liability to the other in respect of such Aircraft or
Engine.
11. DELAY IN DELIVERY
The Lease Agreement shall include customary provisions
relating to the excusable delay (usual force majeure
events) and non excusable delay (including provisions for
compensation in the event of non excusable delay).
12. EXPENSES
BA will upon execution of this ▇▇▇▇ pay all reasonable
legal fees plus disbursements incurred by Cathay in
relation to the preparation, negotiation and execution of
the ▇▇▇▇ and the Lease Agreement up to a maximum of:
(a) HK$175,000 plus disbursements for the Aircraft in
respect of Hong Kong legal counsel;
(b) US$5,000 in respect of U.S. legal counsel.
For the avoidance of doubt BA will be responsible for its
own legal expenses and any expenses associated with
obtaining FAA approvals of the registration, leasing
and/or operation of the Aircraft unless otherwise
specified.
13. OTHER MATTERS
13.1 Usual damage charts, loose equipment and fuel status
to be provided as part of Delivery documentation.
13.2 Immediately prior to Delivery, BA to have a one and a
half hour test flight at Cathay's expense with
Cathay's crew, with BA's pilots/engineers riding as
observers during the test flight.
13.3 At Delivery, it is anticipated that re-registration
will occur immediately after the test flight.
13.4 BA to ensure that FAA is in full concurrence with the
proposed modification process and delivery
arrangements. Cathay to provide reasonable
assistance to BA (at BA's expense) in obtaining
necessary FAA approvals/waivers.
13.5 Cathay to provide all Records/Paperwork and back to
birth records, reports, data, on Delivery where
required for FAA purposes, but otherwise as soon as
possible thereafter to an agreed schedule.
13.6 Listing of publications and documents TBD.
13.7 Legal opinions acceptable to Cathay.
13.8 Cathay shall deliver the Aircraft to BA with three
shipsets of galley equipment and 16 LD3 cargo
containers.
14. BROKERS
Each party shall indemnify the other against any claims
made by any broker for commissions or other amounts
claimed to be due on account of actions by such party, it
being acknowledged by both parties to the transaction that
neither of them has engaged nor employed any broker or
commission agent in this transaction.
15. GOVERNING LAW
This ▇▇▇▇ and each Lease Agreement shall be governed by
English law.
16. PRIOR APPROVALS
The obligations of both parties are subject to approval by
the Board of Cathay and by the Board of BA.
17. Target dates
Both BA and Cathay will use best efforts to reach
agreement on outstanding issues and to finalize
documentation by 5 p.m. Hong Kong time, 14 September 1998.
Failure to finalise and execute documentation by 14th
September 1998 will cause this ▇▇▇▇ to expire and neither
party will have any continuing obligations to the other.
for Cathay Pacific Airways Limited for Baltia Air Lines Inc.
By ...(▇▇▇▇▇▇▇ ▇▇▇▇▇)....... By ..(Igor Dmitrowsky)......
Its: ..(Financial Mgr, Airline Its ...(President).........
Planning)
Date ..(5th August 1998)....... Date ..(August 5, 1998)....
Witness ..(RGI Stock).......... Witness .(▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇).
(Marginal Note: N.B. Not Released until confirmed by ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇)
SCHEDULE 1
Condition at Delivery: Delivery Maintenance Status
The condition of the Aircraft upon Delivery shall be the
following:
1. Cathay shall be entitled to lease the Aircraft and all
equipment and systems thereon to BA such that BA will have
the right to quiet enjoyment of the Aircraft in accordance
with the Lease.
2. The Aircraft shall be on Hong Kong CAD Register and have a
valid Certificate of Airworthiness.
3. The Aircraft will be fresh out of the appropriate 'C' check,
and will be clear for 16 months service on the Cathay
maintenance programme unless stated to the contrary
elsewhere in this Letter of Intent.
4. All other lifed components not referred to elsewhere in this
Letter of Intent (including, without limitation flight
safety equipment) will have not less than 6 months
remaining to the next scheduled removal, repair or overhaul
under the Cathay maintenance programme.
5. The Aircraft shall have all fixed and loose equipment as is
normally installed by Cathay for its passenger operations,
except as may be deleted by BA's Modifications.
6. There shall be no carried forward or current defects
remaining uncleared on the flight deck/cabin logs prior to
Delivery unless otherwise agreed between the parties. Any
permanent repairs that require repeat inspections will be
reviewed prior to Delivery with mutual agreement as to
action to be taken.
7. All Aircraft documents and technical publications shall be
made available to BA.
8. Each Engine and the Auxiliary Power Unit shall be boroscoped
at Cathay's expense and will have no special call outs or
on-watch conditions. Any defects identified during the
boroscope and/or ground test beyond the Manufacturer's
limits shall be rectified at Cathay's expense. BA shall
have the opportunity of participating in and reviewing the
results of such boroscope and/or tests.
9. The Aircraft including without limitation the wings and
horizontal stabiliser will be rubbed down and painted to
BA's standard livery. The paint shall be of the same
specification as BA's paint specification. The interior and
exterior of the Aircraft will be clean by normal
international airline standards.
SCHEDULE 2
BA's Modifications
Cathay's obligation is to Deliver the Aircraft in its Delivery
Maintenance Status as detailed at Schedule 1. Concurrent with
that programme, it is agreed that Cathay (in consultation with
BA) will procure that the Cathay maintenance provider perform
the following work (at BA's cost):
[To be agreed]
Pricing for BA's Modifications package will be defined and costed
out prior to signature of the leases. Details of the work scope
and value will be finalised not later than 30 days prior to
Delivery in respect of each Aircraft input.
The parties will co-operate with a view to maximising resources
and efficiency in dealings with contractors and suppliers.
SCHEDULE 3
Aircraft Systems Equipment
Qty Description Manufacturer/Model No./Part
No.
3 VHF Comm ▇▇▇▇▇▇▇ 618M4
2 HF Comm ▇▇▇▇▇▇▇ 618T/628T
1 ACARS Allied Signal
2 ADF ▇▇▇▇▇▇▇ 51Y-7
3 VHF Nav ▇▇▇▇▇▇▇ 51RV5B
2 DME ▇▇▇▇▇▇▇ 860E5
2 LRRA ▇▇▇▇▇▇▇ 860F4
2 ATC Allied Signal TRA67A
1 TCAS Allied Signal CAS81
1 Marker ▇▇▇▇▇▇▇ 51Z4
1 GPWS Sundstrand ▇▇▇▇ 2
2 Radar Allied Signal RDR1F
1 Satcom ▇▇▇▇▇▇▇ SAT906 6 channel high gain system
with
CMC CMA2102 top mount antenna
3 INS ▇▇▇▇▇▇ ▇▇▇▇▇
▇ ▇▇▇ ▇▇▇▇▇ and ▇▇▇▇▇
1 CVR ▇▇▇▇▇▇▇▇▇ A100-300
1 DFDR Teledyne 2222597-X or
Teledyne 2228766-X or
Lockheed ▇▇▇▇▇▇▇▇▇-XXX
2 Autopilot 2 Channel Fail Passive
1 Autothrottle Bendix "Speed Hold" capability only with
TAT/EPRL Computer
In Flight Entertainment
Matsushita 2000E Interactive system with in-seat video in ALL
seats and the following additional equipment.
One 16 channel MAS RD-AX7094 CD Audio Reproducer
9 Super VHS MAS Video Tape Players
5 Sony overhead video projectors and screens
▇▇▇ ▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇ (▇▇ ▇▇▇▇ ▇)
One 10 inch MAS LCD monitor (in zone A)
Five 7 inch MAS LCD monitors
One MAS CD player/data loader
One Pre Recorded Announcement Reproducer Matsushita RD-AX7351
One Airshow 210 DIU
One GTE Airfone system with 6 wired handsets (via Satcom)
One Avtech Fax Machine
One Sextant Cabin Printer
SCHEDULE 4
Rent
USD250,000 per month from the Delivery Date for a period of 6
months.
USD300,000 per month if the lease term is extended for a
further period of 6 months.
Rent will be adjusted to take into account the insurance
required to be obtained in accordance with Paragraph 2.20(c)
and (d) of this ▇▇▇▇.
SCHEDULE 5
Section 12. Events of Default
A fundamental term and condition of this Agreement is that none
of the following events shall occur during the Term and that
the occurrence of any of the following events shall constitute
an "Event of Default" (whether any such event shall be
voluntary or involuntary or come about or be effected by
operation of Law or pursuant to or in compliance with any
judgment, decree or order of any court or any order, rule or
regulation of any Government Entity):
12.1 Failure to Pay Scheduled Amounts
Purchaser shall have failed to make any periodic or
scheduled payment in accordance with this Lease Agreement
[or any other Operative Document] (including any payment
of the Purchase Price) within three Business Days after
the date the same shall have become due.
12.2 Failure to Pay Demand Amounts
Purchaser shall have failed to make any demand payment in
accordance with this Lease Agreement [or the other
Operative Documents] when the same shall have become due
after demand and such failure shall continue for 10
Business Days.
12.3 Insurance
12.3.1 Purchaser shall failed to carry and maintain, or
cause to be carried and maintained, on or with
respect to the Aircraft, any insurance required to be
maintained in accordance with the provisions of
Clause [ ].
12.3.2 The Aircraft shall be operated at a time in
contravention of any requirements or conditions of
any insurance required under Clause [ ].
12.4 Certain Covenants
Purchaser shall have failed to comply with its obligations
under Clauses [ ].
12.5 Other Covenants
Purchaser shall have failed to comply with, observe or
perform, and shall fail to cause to be complied with,
observed and performed, any of its covenants, agreements
or obligations hereunder [or under any other Operative
Document], and such failure shall continue for 30 days
after the earlier of (1) the date of written notice
thereof to Purchaser or (2) the date Purchaser assuming
exercise of reasonable diligence, should have known of
such failure.
12.6 Representations and Warranties
Any representation or warranty made by Purchaser herein
[or in any other Operative Document] shall have proven to
have been incorrect, inaccurate or untrue in any material
respect as of the time made and (i) such incorrectness,
inaccuracy or untruth shall be material at any relevant
time and (ii) with respect to any incorrectness,
inaccuracy or untruth that is capable of cure, such
incorrectness, inaccuracy or untruth shall have continued
for a period of 30 days after the earlier of (y) the date
of written notice thereof to Purchaser or (z) the date
Purchaser, assuming exercise of reasonable diligence,
should have known of the same.
12.7 Voluntary Bankruptcy, Etc.
Purchaser shall have (1) commenced any proceeding or filed
any petition seeking relief under any applicable
bankruptcy, insolvency, liquidation, administration,
receivership or other similar Law, (2) consented to or
acquiesced in the institution of, or failed to contravene
in a timely and appropriate manner, any such proceeding or
the filing of any such petition, (3) applied for or
consented to the appointment of a receiver, trustee,
custodian, sequestrator or similar official for itself or
for a substantial part of its property or assets, (4)
filed an answer admitting the material allegations of a
petition filed against it in any such proceeding, (5)
proposed or entered into any composition or other
arrangement, or made a general assignment, for the benefit
of creditors or declared a moratorium on the payment of
indebtedness, (6) become insolvent or suspended payments
on, become unable to, admitted in writing its inability to
or failed generally to pay, any material portion of its
debts as they become due, (7) sought its own liquidation,
reorganization, dissolution or winding up or (8) taken any
corporate action (including a petition, proposal or
convening of a meeting by the shareholders or directors of
Purchaser) for the purpose of effecting any of the
foregoing.
12.8 Involuntary Bankruptcy, Etc.
A proceeding shall have been commenced or a petition shall
have been filed, in either case, without the consent or
application of Purchaser, seeking (1) relief in respect of
Purchaser or of a substantial part of its property or
assets under any applicable bankruptcy, insolvency,
liquidation, administration, receivership or similar Law,
(2) the appointment of a receiver, trustee, custodian,
sequestrator or similar official for Purchaser or for a
substantial part of its property or assets or (3) the
liquidation, reorganization, dissolution or winding up of
Purchaser; and such proceeding or petition shall continue
undismissed for 10 days or an order or decree approving or
ordering any of the foregoing shall be issued and shall
not immediately be stayed.
12.9 Illegality
The validity, legality or enforceability of Purchaser's
obligations under this Agreement [or any other Operative
Document] is challenged by Purchaser or any other Person
claiming by or through Purchaser.
12.10 Indebtedness or Lease Default
(1) Purchaser shall have failed to pay any amount in
respect of any Indebtedness, or any interest or premium
thereon, when due (whether by a scheduled maturity,
required prepayment, acceleration, demand or otherwise),
or Purchaser shall fail to perform or to comply with any
other covenant, agreement or condition contained in any
agreement or instrument relating to such Indebtedness, and
such failure to pay, perform or comply shall continue
after the applicable grace period, if any, specified in
the agreement or instrument relating to such Indebtedness,
if, as a result of any such failure, the maturity of such
Indebtedness is capable of being accelerated and if the
aggregate outstanding amount of all such Indebtedness
exceeds, in the aggregate together with any other
Indebtedness in respect of which Purchaser has failed to
make any payment or in respect of which Purchaser has
otherwise failed to perform or comply, US$1,000,000 (or
the equivalent thereof), (2) Purchaser shall breach or
otherwise fail to perform or comply with any
representation, warranty or covenant of any two aircraft
leases and such breaches or failures to perform or comply
shall continue after the applicable grace periods, if any,
specified in such leases, if, as a result of such breaches
or failures, one or more aircraft lessors shall have the
contractual or other legal right to terminate the leasing
of the relevant aircraft or repossess, or order the
redelivery of, such aircraft and the remaining term of
each such lease is greater than six months, or (3) any
"Event of Default" shall occur and be continuing under and
as defined in any Other Conditional Sale Agreement.
12.11 Government Action
Any Government Entity or any Person acting or purporting
to act under governmental authority shall have taken any
action to condemn, seize or appropriate, or to assume
custody or control of, or to levy or ▇▇▇ out upon any
distress or other execution involving, all or a material
part of the property of Purchaser.
12.12 Judgments
One or more judgments are rendered against Purchaser that
either (1) imposes or impose or Purchaser an obligation or
obligations for the payment of money in excess of
US$1,000,000 (or the equivalent thereof) in the aggregate
or (2) grants or grant to any Person equitable relief of
any nature that could, if enforced, be reasonably expected
to have a Material Adverse Effect and, in the case of any
such judgment or judgments, the same shall remain
undischarged for a period of 10 days or more, during which
time execution of such judgment or judgments shall not be
effectively stayed nor adequate bonding fully covering
such judgment or judgments exist.
(RJIS/770893/5)
[RJISSEC/Cathay/770893.5/Dox/D196.04]
