AIRCRAFT LEASE AGREEMENT
This lease agreement ("Agreement") is entered into as of the 1st day of
October, 1996 (Effective Date), by and between CP Transportation, Inc.
("Lessor") and Sequent Computer Systems, Inc. ("Lessee").
RECITALS
WHEREAS, Lessor and Lessee desire that Lessee lease a certain 1970
Gulfstream American G-1159, N183SC, Serial No. 091 equipped with two (2)
Royal Royce Model Spey MK511-8 engines Serial No.'s 8633 and 8644
("Aircraft"), pursuant to the terms of this Agreement;
NOW, THEREFORE, the parties agree as follows:
1. TERM AND TERMINATION
The term of this Agreement shall be three (3) years. This Agreement
shall also terminate upon any sale or transfer of ownership of the
Aircraft by Lessor. Any such sale or transfer of ownership shall be
upon mutual agreement of the parties.
2. LEASE OF AIRCRAFT
Lessor hereby leases the Aircraft to Lessee on an exclusive basis,
however Lessor may use the Aircraft at such times as are agreeable to
Lessee. Lessor agrees to pay for any operating costs associated with
Lessor's use of the Aircraft, including pilot fees, fuel and incidental
fees and shall also pay a fee of $650 per flight hour for any
unallocated tax, insurance and maintenance reserve.
Lessee may sublease the Aircraft on such terms as it shall determine,
provided, however, that Lessee shall remain primarily liable to Lessor
upon any such sublease.
3. LESSOR REPRESENTATION
Lessor represents and warrants that is has the requisite authority to
act as Lessor of the Aircraft and to enter into this Agreement. Lessor
further warrants that the Aircraft is currently registered,
certificated and airworthy under and in accordance with requirements of
the Federal Aviation Administration (FAA) and has been maintained in
accordance with the FAA Regulations found in 14 FAR, Part 91.
4. AIRCRAFT MAINTENANCE
During the term of this Agreement, Lessee agrees, at its cost, to keep
the Aircraft in good and efficient working order, condition and repair,
to maintain the Aircraft in compliance with the manufacturer's
recommended service and maintenance specifications and with the
requirements of FAR Part 91, and to keep the Aircraft currently
registered, certificated and airworthy under and in accordance with the
requirements of the FAA.
During the term of this Agreement Lessee agrees to pay $175.00 per
flight hour flown into an interest bearing Engine Restoration Reserve
(ERR). Payment into the ERR shall be made monthly on the first day of
the month following the calendar month in which the hours are accrued.
The ERR is to be used to defray any costs associated with engine mid-
life inspections, engine overhauls, and thrust reverser overhauls. In
the event that the ERR is insufficient to cover any said costs incurred
during the term of this Agreement, Lessee agrees to pay the deficit.
Upon termination of this lease any residual associated with such ERR
shall pass to Lessor.
5. AIRCRAFT CHARGES
As rental for Lessee's use of the Aircraft, Lessee agrees to pay Lessor
as follows:
(a) $50,000 per month due and payable on the 1st day of each month
commencing November 1996.
(b) Incidental expenses including, but not limited to, landing charges,
airport fees and customs charges incurred during the Lessee's
operation of the Aircraft when charged to Lessor and not paid
directly by Lessee.
(c) Any and all property taxes assessed with respect to the Aircraft.
This is an irrevocable lease, and any present or future law to the
contrary notwithstanding, Lessee's obligation to pay Lessor or its
assigns all amounts due hereunder is absolutely unconditional and this
Lease shall not terminate by operation of law or otherwise, except as
set forth in Paragraph 1, nor shall Lessee be entitled to any
abatement, reduction, setoff, counterclaim, defense or deduction with
respect to any of the aircraft charges described herein, or any other
amounts payable by the Lessee hereunder, nor shall any obligations of
Lessee hereunder be affected for any reason whatsoever, no matter how,
when, or against whom asserted, arising or claimed; provided, however,
that Lessee may institute an independent action or claim against Lessor
(but not against any collateral assignee of Lessor) for any alleged
breach hereof. No collateral assignee of Lessor shall be liable to
perform any covenant of Lessor. The provisions of this paragraph are
made expressly for the benefit of Lessor and any assignee of Lessor.
This Agreement is subject and subordinate to the rights of Pitney Xxxxx
Credit Corporation under that certain Security Agreement by and between
Pitney Xxxxx Credit Corporation as Secured Party and CP Transportation,
Inc. as Debtor dated as of October 31, 1996.
6. INSURANCE
(a) During the term of this Agreement Lessee shall, at Lessee's
expense, maintain hull insurance on the Aircraft for the value
stated in Subparagraph (c), below, including all-risk ground and
flight insurance, seizure and confiscation insurance plus breach
of warranty insurance and comprehensive liability coverage which
shall name Lessor, Pitney Xxxxx Credit Corporation, and any pilot
operating the Aircraft on behalf of Lessor as an additional
insured, including Lessor's use of the Aircraft, in an amount of
not less than $100,000,000 without right of subrogation against
Lessor. Certificates of the insurance will be furnished to the
Lessor upon request. The policy shall require the carrier to
provide to the insured, and Lessee, in turn, shall provide to
Lessor, not less than thirty (30) days written notice prior to any
cancellation or reduction in coverage.
(b) The Aircraft shall at all times be in the care, custody and
control of Lessor or Lessee.
(c) Lessor states the maximum replacement value of the Aircraft for
hull coverage purposes is $4,400,000. Hull insurance furnished as
provided in this Paragraph 6 shall be for the Aircraft's
replacement value at time of loss. Lessor agrees to make no
further claim against Lessee in excess of the maximum of
replacement value for loss or damage to the Aircraft arising out
of any occurrence. Lessor will bear any insurance deductible
applicable to any loss.
7. INDEMNIFICATION
Lessee shall indemnify Lessor, including any of its assignees and
creditors and specifically including Pitney Xxxxx Credit Corporation
(collectively, the "Indemnitees") and shall hold such Indemnitees
harmless from and against all loss, liability, damages, costs and
expense (including, without limitation, attorneys' fees) incurred or
suffered by such Indemnitees as a result of or arising out of any and
all claims and demands relating in any way to Lessee's possession or
use of the Aircraft; provided that such indemnification shall not cover
any such loss, liability, damages, costs or expense attributable to
possession or use of the Aircraft by Lessor or any failure by it to
perform any of its obligations under this Agreement.
8. EVENTS OF DEFAULT; ACCELERATION
A very important element of this Agreement is that Lessee make all its
payments promptly as agreed upon. Also essential is that the Aircraft
continue to be in good condition and adequate security for the
indebtedness. The following are events of default under this Agreement
which will allow Lessor to take such action under this Section and
under Section 9 as it deems necessary:
(a) any of Lessee's obligations to Lessor under any agreement with
Lessor is not paid on or before the tenth day following the date
when the same becomes due and payable;
(b) Lessee breaches any warranty or provision hereof, or of any note
or of any instrument or agreement delivered by Lessee to Lessor
and such breach continues for a period in excess of thirty (30)
days after Lessor shall have given Lessee written notice of
default with respect thereto;
(c) Lessee breaches any policy of insurance covering the Aircraft;
or if any such policy be canceled;
(d) Lessee becomes insolent or ceases to do business as a going
concern;
(e) it is determined that Lessee has given Lessor materially mis-
leading information regarding its financial condition and such
information shall not be made good within thirty (30) days after
written notice thereof to Lessee;
(f) any of the Aircraft is lost, secreted, misused, destroyed,
encumbered, seized, confiscated or disposed of in violation of
the terms hereof;
(g) a petition in bankruptcy or reorganization be filed by or against
Lessee or Lessee admits in writing its inability to pay its debts
as they mature;
(h) property of Lessee be attached unless the attachment doesn't
result in the threatened or actual foreclosure of the property
and, further, that the attachment is either bonded or released
within thirty (30) days of such attachment or a receiver be
appointed for Lessee;
(i) whenever Lessor in good faith believes the Aircraft is insecure;
If Lessee shall be in default hereunder, the indebtedness herein
described and all other debts then owing by Lessee to Lessor under this
or any other present or future agreement shall, if Lessor shall so
elect, become immediately due and payable. This acceleration of all
indebtedness, if elected by Lessor, shall be subject to all applicable
laws, including laws as to rebates and refunds of unearned charges.
9. LESSOR'S REMEDIES AFTER DEFAULT; CONSENT TO ENTER PREMISES
Lessor may require Lessee to return the Aircraft to Lessor at a place
to be designated by Lessor which is reasonably convenient to both
parties. If permitted by law, the Sheriff of any county in which the
Aircraft is located may, on request of Lessor and the delivery to the
Sheriff of a copy hereof, take possession of the Aircraft. Expenses of
retaking and the like shall include reasonable attorneys' fees and
other legal expenses.
10. WAIVER OF DEFAULTS; AGREEMENT INCLUSIVE
Lessor may in its sole discretion waive a default, or cure, at Lessee's
expense, a default. Any such waiver in a particular instance or of a
particular default shall not be a waiver of other defaults or the same
kind of default at another time. No modification or change in this
Agreement or any related note, instrument or agreement shall bind
Lessor unless in writing signed by Lessor. No oral agreement shall be
binding.
11. NOTICES
All notices hereunder shall be sent to the following addresses, via
U.S. First Class mail:
If to Lessor: CP Transportation, Inc.
0000 X.X. Xxxxxxxx Xxxxxxxxx
Xxxxxxxx, XX 00000
If to Lessee: Sequent Computer Systems, Inc.
Attn: Xxxx Xxxxxxx
00000 XX Xxxx Xxxxxxx
Xxxxxxxxx, XX 00000
If to Assignee: Pitney Xxxxx Credit Corporation
0000 Xxx Xxxxx Xxxxxxx, Xxxxx 000
Xxxx Xxxxx, XX 00000
12. GOVERNING LAW AND ATTORNEYS FEES
This Agreement shall be governed by the laws of the state of Oregon.
Should a dispute arise with respect to any portion of this Agreement,
the prevailing party shall be entitled to its reasonable attorneys fees
and costs in any litigation.
13. TRUTH IN LEASING CLAUSE
LESSOR AND LESSEE UNDERSTAND THAT THE AIRCRAFT HAS BEEN MAINTAINED AND
INSPECTED DURING THE PERIOD PRECEDING THE EXECUTION OF THIS AGREEMENT,
COMMENCING UPON THE EFFECTIVENESS OF THE REGISTRATION OF THE AIRCRAFT
WITH THE FAA, UNDER FEDERAL AVIATION REGULATIONS PART 91. LESSEE
CERTIFIES THAT THE AIRCRAFT WILL BE MAINTAINED AND INSPECTED WITH THE
APPLICABLE MAINTENANCE AND INSPECTION REQUIREMENTS OF THE FEDERAL
AVIATION REGULATIONS PART 91. AT ALL TIMES DURING THE TERM OF THIS
AGREEMENT, LESSOR AND LESSEE UNDERSTAND THAT LESSEE IS THE PARTY
RESPONSIBLE FOR THE OPERATIONAL CONTROL OF THE AIRCRAFT DURING THE
PERIODS IN WHICH LESSEE HAS POSSESSION OF THE AIRCRAFT UNDER THIS
AGREEMENT. LESSEE CERTIFIES THAT IT UNDERSTANDS ITS RESPONSIBILITIES
FOR COMPLIANCE WITH APPLICABLE FEDERAL AVIATION REGULATIONS. LESSEE'S
CORRECT NAME AND ADDRESS APPEAR IN SECTION 11 ABOVE. AN EXPLANATION OF
FACTORS BEARING ON THE OPERATIONAL CONTROL AND PERTINENT FEDERAL
AVIATION REGULATIONS CAN BE OBTAINED FROM THE NEAREST FAA FLIGHT
STANDARDS DISTRICT OFFICE.
IN WITNESS WHEREOF, the parties have executed this Agreement as follows:
Lessor: CP TRANSPORTATION, INC. Lessee: SEQUENT COMPUTER SYSTEMS, INC.
By:____________________________ By:________________________________
Title: President Title: Vice President Finance and CFO
Date: October 1, 1996 Date: October 1, 1996
