Initial Public Offering (IPO): Pre-Effective Amendment to Registration Statement (General Form) — Form S-1
Filing Table of Contents
Document/Exhibit Description Pages Size
1: S-1/A Pre-Effective Amendment to Registration Statement 12 80K
(General Form)
9: EX-10.10 Material Contract 154 395K
10: EX-10.11 Material Contract 202 469K
11: EX-10.12 Material Contract 205 475K
12: EX-10.13 Material Contract 211 493K
13: EX-10.14 Material Contract 156 401K
14: EX-10.15 Material Contract 106 322K
15: EX-10.16 Material Contract 351 903K
16: EX-10.17 Material Contract 64 184K
17: EX-10.18 Material Contract 74 215K
18: EX-10.19 Material Contract 4 22K
19: EX-10.20 Material Contract 30 74K
20: EX-10.21 Material Contract 26 59K
21: EX-10.22 Material Contract 160 296K
22: EX-10.23 Material Contract 62 218K
23: EX-10.24 Material Contract 47 119K
24: EX-10.25 Material Contract 17 60K
25: EX-10.26 Material Contract 13 53K
26: EX-10.28 Material Contract 169 365K
27: EX-10.29 Material Contract 3 18K
2: EX-10.3 Material Contract 147 348K
28: EX-10.30 Material Contract 3 18K
29: EX-10.38 Material Contract 19 56K
30: EX-10.39 Material Contract 13 34K
3: EX-10.4 Material Contract 190 433K
31: EX-10.40 Material Contract 29 87K
32: EX-10.41 Material Contract 18 74K
33: EX-10.42 Material Contract 74 233K
34: EX-10.48 Agreement Between Rolls-Royce Canada 20 56K
4: EX-10.5 Material Contract 189 433K
5: EX-10.6 Material Contract 186 417K
6: EX-10.7 Material Contract 156 398K
7: EX-10.8 Material Contract 154 397K
8: EX-10.9 Material Contract 154 396K
EXHIBIT 10.8
CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE
CONFIDENTIAL PORTIONS HAVE BEEN REDACTED AND ARE DENOTED BY {***}. THE
CONFIDENTIAL PORTIONS HAVE BEEN SEPARATELY FILED WITH THE SECURITIES AND
EXCHANGE COMMISSION.
F-100 LEASE #116-A
(TAIL # N108ML)
EXECUTION COPY
THE SINGLE EXECUTED ORIGINAL OF THIS LEASE MARKED "ORIGINAL" SHALL BE THE
"ORIGINAL" AND ALL OTHER COUNTERPARTS OF THIS LEASE SHALL BE DUPLICATES AND
MARKED "DUPLICATE" OR "DUPLICATE ORIGINAL". TO THE EXTENT THAT THIS LEASE AND
CERTIFICATE OF ACCEPTANCE RELATED THERETO CONSTITUTES CHATTEL PAPER, AS SUCH
TERM IS DEFINED IN THE UNIFORM COMMERCIAL CODE AS IN EFFECT IN ANY APPLICABLE
JURISDICTION, NO SECURITY INTEREST MAY BE CREATED THROUGH TRANSFER OR POSSESSION
OF ANY COUNTERPART OTHER THAN THE "ORIGINAL".
AIRCRAFT OPERATING LEASE AGREEMENT NO. AOLAF-116-A
Dated as of
July 10, 1995
between
WINGS AIRCRAFT FINANCE, INC.
as
Lessor
and
MIDWAY AIRLINES CORPORATION
as
Lessee
--------------------------------
Leveraged Lease Financing of
One Fokker 100 Aircraft
Manufacturer's Serial No. 11484
U.S. Registration Mark N108ML
================================================================================
INDEX
ARTICLE PAGE
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1. Definitions...........................................................2
2. Agreement to Lease...................................................12
3. Term; Delivery; Acceptance...........................................16
4. Registration and Title...............................................17
5. Possession and Use...................................................19
6. Charges, Method of Payment and Financial Information.................25
7. Maintenance..........................................................27
8. Taxes, Duties and Expenses...........................................32
8A. Special Indemnity....................................................39
9. Liens................................................................57
10. Indemnification......................................................57
11. Insurance............................................................60
12. Assignment and Subletting............................................68
13. Disclaimer, Representations and Warranties .........................71
14. Covenants of Lessee..................................................77
15. Default by Lessee....................................................80
16. Return of Aircraft...................................................86
17. Casualty Occurrences.................................................89
18. Governing Law and Jurisdiction.......................................92
19. Miscellaneous........................................................94
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APPENDICES
A. Description of Aircraft
B. Further Definitions and Values
C. Certificate of Acceptance
D. Charges
E. Operating Condition at Re-Delivery
F. Aircraft Documents
G. FAA Power of Attorney
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AIRCRAFT OPERATING LEASE AGREEMENT NO. AOLAF-116-A
THIS AIRCRAFT OPERATING LEASE AGREEMENT NO. AOLAF-116-A (this
"Lease") is made as of July 10, 1995 between WINGS AIRCRAFT FINANCE, INC., a
company incorporated under the laws of the State of Delaware, having its
principal place of business at 1199 N. Fairfax St., Alexandria, Virginia 22314
and its permitted successors and assigns (herein referred to as "Lessor") and
MIDWAY AIRLINES CORPORATION, a company incorporated under the laws of the State
of Delaware, having its principal place of business at 5713 South Central
Avenue, Chicago, Illinois 60638 and its permitted successors and assigns (herein
referred to as "Lessee").
W I T N E S S E T H:
WHEREAS, Lessee entered into an Aircraft Operating Lease Agreement
No. AOLAF-116 dated November 11, 1993 (the "Original Lease") between First
Security Bank of Utah, National Association, not in its individual capacity, but
solely as owner trustee and lessor ("Original Lessor") and Lessee as lessee with
respect to the Aircraft (as hereinafter defined);
WHEREAS, the Original Lease has been terminated pursuant to the
Termination Agreement dated as of the date hereof (the "Termination Agreement")
among Original Lessor, Lessee and Fokker (as hereinafter defined);
WHEREAS, Lessor has entered into a Lease Agreement (Trust No. 116-A)
dated as of the date hereof (the "Head Lease") with First Security Bank of Utah,
National Association, not in its individual capacity, but solely as owner
trustee pursuant to the Trust Agreement (Trust No. 116-A) dated as of the date
hereof between First Security Bank of Utah, National Association in its
individual capacity and CIBC Inc. as owner participant;
WHEREAS, Lessor has the right to possess, use and lease the
Aircraft;
WHEREAS, Lessee desires to lease the Aircraft from Lessor; and
WHEREAS, Lessor is willing to lease the Aircraft to Lessee upon the
terms and conditions set out herein.
NOW THEREFORE, in consideration of the mutual promises herein
contained, Lessor and Lessee agree as follows:
1. DEFINITIONS
The following terms shall have the following respective meanings for all
purposes of this Lease:
"Air Authority" shall mean the Federal Aviation Administration of
the United States Department of Transportation and any successor.
"Aircraft" shall mean the aircraft identified and described in
Appendix A, including any Engine, Part, or component thereof, and/or
ancillary and loose equipment or devices installed in or on the Aircraft
at the Original Delivery Date (or which having been removed therefrom
remain the property of Lessor pursuant to this Lease) and Aircraft
Documents furnished therewith under this Lease, or any substitutions,
renewals and replacements from time to time made in or on the said
Aircraft in accordance with this Lease, whether or not for the time being
installed on or in the said Aircraft or any other aircraft.
"Aircraft Documents" shall mean the items identified in Appendix F.
"Aircraft Maintenance Agreement" shall mean the Aircraft Maintenance
Agreement between Lessee and American Airlines, Inc., dated as of November
1, 1993, or any subsequent aircraft maintenance agreement between Lessee
and any Authorized Maintenance Performer which, in the reasonable opinion
of Lessor, is in substance substantially similar thereto.
"Airframe" shall mean the Aircraft, excluding the Engines.
"Appraisal Procedure" shall mean the procedure for determining the
FMV of the Aircraft set forth in Paragraph 9 of Appendix D.
"Approved Maintenance Program" shall mean the Maintenance Program in
effect on the Delivery Date with respect to the Aircraft or such other
Maintenance Program as Lessor shall from time to time approve in writing,
such approval not to be unreasonably withheld.
"Authorized Maintenance Performer" shall mean Lessee, American
Airlines, Inc., U.S. Air, Aviall, Rolls Royce Canada or any Air Authority
approved provider.
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"Business Day" shall mean a day (other than a Saturday or Sunday) on
which banks are open for business in New York.
"Casualty Occurrence" shall have the meaning set forth in Article
17.1.
"Certificate of Acceptance" shall mean the Certificate of Acceptance
given in the form of Appendix C.
"Certificated Air Carrier" shall mean any person (except the United
States Government) that is a citizen of the United States of America (as
defined in Section 40102 of Title 49 of the United States Code) holding an
air carrier operating certificate issued by the Secretary of
Transportation pursuant to Chapter 447 of Title 49 of the United States
Code (or any predecessor thereof) for aircraft capable of carrying ten or
more individuals or 6,000 pounds or more cargo, which is also certificated
so as to entitle Lessor, as lessor, to the benefits of Section 1110 of
Title 11 of the United States Code with respect to the Aircraft.
"Credit and Security Agreement" shall mean the Credit and Security
Agreement dated as of October 29, 1993 therein between FAUSA and Lessee.
"Cycle" shall mean one take-off and landing of the Aircraft.
"Default" shall mean an Event of Default or any event which, with
the giving of notice and/or lapse of time and/or the making of any
relevant determination, would constitute an Event of Default.
"Delivery Date" shall mean the date on which the Aircraft is
delivered to and accepted by Lessee for the purposes of this Lease.
"Delivery Location" shall mean the location of the Aircraft set
forth in the Certificate of Acceptance.
"Dollars and $" shall mean the lawful currency of the United States
of America and in respect of all payments to be made under this Lease in
Dollars shall mean funds which are for same day settlement in the New York
Clearing House Interbank Payments System (or such other US Dollar funds as
may at the relevant time be customary for the settlement of international
banking transactions denominated in United States Dollars).
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"Engine" shall mean (i) any engine installed on or furnished with
the Aircraft on the Original Delivery Date, such Engines being identified
as to manufacturer and type in Appendix A and as to serial numbers in the
Certificate of Acceptance executed by Lessee on the Delivery Date and (ii)
any substitute or replacement engine title to which has, or should have,
transferred to and vested in Lessor in accordance with this Lease, in each
case including all modules or Parts from time to time belonging to or
installed in that engine and irrespective of whether or not the same shall
for the time being be installed on the Aircraft or on any other aircraft.
The term "Engine" shall exclude any properly replaced engine title to
which has, or should have, passed to Lessee pursuant to this Lease.
"Equipment Change" shall have the meaning set forth in Article
7.3(a).
"Event of Default" shall mean any of the events specified in Article
15.1.
"Expiry Date" shall mean January 21, 2013.
"Fair Market Rental Value" shall be equal in amount to the value
that would be obtained in an arms'-length transaction between an informed
and willing lessee under no compulsion to lease and an informed and
willing lessor under no compulsion to lease, in accordance with a lease to
a lessee similarly situated with Lessee, for a term equal to the relevant
period and on conditions as herein provided, any such determination (made
for purposes of Article 15.3(b)) to be made on the basis of the then
actual condition of the Aircraft, to be determined pursuant to an
Independent Appraisal and to be the average of the two determinations
obtained thereunder.
"FAUSA" shall mean Fokker Aircraft U.S.A., Inc., a company
incorporated under the laws of the State of Delaware, with its principal
office at Alexandria, Virginia.
"Federal Aviation Act" shall mean Title 49 of the United States Code
as amended from time to time, or any similar legislation of the United
States of America enacted in substitution or replacement therefor.
"First Rent Date" shall mean November 4, 1996.
"Flight Hour" shall mean each hour or part thereof elapsing from the
moment at which the wheels of the Aircraft leave the ground on the take
off of the Aircraft until the
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wheels of the Aircraft touch the ground on the landing of the Aircraft
following such flight.
"FMV" shall have the meaning set forth in Appendix D.
"Fokker" shall mean Fokker Aircraft B.V., a Dutch corporation with
its principal office at Amsterdam-Zuidoost, The Netherlands, together with
its successors.
"Governing Law" shall mean the law of the state of New York.
"Government Entity" shall mean and include (i) any national or state
government, political subdivision thereof, or local jurisdiction therein;
(ii) any board, commission, department, division, organ, instrumentality,
court, or agency of any thereof, however constituted; and (iii) any
association, organization, or institution of which any thereof is a member
or to whose jurisdiction any thereof is subject or in whose activities any
thereof is a participant.
"Head Lease" shall have the meaning set forth in the third "Whereas"
clause of this Lease as the Head Lease may be amended, modified or
supplemented from time to time in accordance with the terms thereof or any
such other lease created over the Aircraft in accordance with the terms
thereof.
"Head Lessor" shall mean First Security Bank of Utah, National
Association, not in its individual capacity, but solely as owner trustee
pursuant to the Trust Agreement (Trust No. 116-A) dated as of the date
hereof between First Security Bank of Utah, National Association in its
individual capacity and CIBC Inc. as Owner Participant, and its successors
and permitted assigns.
"Indemnitees" shall mean Lessor and each of its permitted successors
and assigns and each of their respective shareholders, subsidiaries,
affiliates, directors, officers, agents and employees.
"Indenture" shall mean the Trust Indenture and Security Agreement
(Trust No. 116-A) dated as of July 10, 1995, between Indenture Trustee and
First Security Bank of Utah, National Association, as owner trustee, as it
may be amended, modified or supplemented from time to time, or any such
security agreement created over the Aircraft in accordance with the terms
thereof.
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"Indenture Trustee" shall mean Shawmut Bank Connecticut, National
Association, not in its individual capacity but solely as indenture
trustee pursuant to the Indenture, and its successors and permitted
assigns.
"Independent Appraisal" shall mean a determination of Fair Market
Rental Value of the Aircraft by two independent aircraft appraisers,
selected by Lessor, the costs and expenses of the appraisal to be paid by
Lessee.
"Law" shall mean and include (i) any law, statute, decree,
constitution, regulation, order or any directive of any Government Entity;
(ii) any treaty, pact, compact or other agreement to which any Government
Entity is a signatory or party; (iii) any judicial or administrative
interpretation or application of any thereof; and (iv) any amendment or
revision of any thereof.
"Lessor or Lessee" shall have the meanings respectively ascribed to
them in the first paragraph of this Lease and shall include their
respective assignees or successors.
"Lessor Liens" shall mean:
(a) the Indenture, the Security Assignment, the Head Lease and any
security or leasehold interest whatsoever from time to time
created by or through Lessor, Head Lessor, Owner Participant
or Loan Participant or any of their respective affiliates in
connection with the financing of the Aircraft;
(b) any other security interest or other lien in respect of the
Aircraft or this Lease which results from acts or omissions to
act of or claims against Lessor, Head Lessor, Owner
Participant or Loan Participant or any of their respective
affiliates not related to the transactions contemplated by or
permitted under this Lease;
(c) liens in respect of the Aircraft for Lessor Taxes; and
(d) Lessor's Liens (as such term is defined in the Head Lease).
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"Lessor Taxes" shall mean Taxes:
(a) imposed as a direct result of activities of a Tax Indemnitee
in any jurisdiction imposing a liability unrelated to that Tax
Indemnitee's dealings with Lessee, to the transactions
contemplated by this Lease or the operation of the Aircraft by
Lessee; or
(b) imposed on or measured by net income, profits or gains, or
capital or net worth (excluding, however, in each case, Taxes
that are, or are in the nature of, license, sales, use,
rental, value-added, or property taxes) of a Tax Indemnitee,
by (A) any Governmental Entity by or in which that Tax
Indemnitee would be subject to tax without regard to the
transactions contemplated by this Lease or (B) the Federal
Government of the United States of America (including, without
limitation, any withholding taxes imposed by such government);
or
(c) imposed with respect to any period or event occurring prior to
the date of this Lease or after the Expiry Date or earlier
termination of this Lease in accordance with the terms hereof,
provided that such Tax is unrelated to a Tax Indemnitee's
dealings with Lessee or to the transactions contemplated by
this Lease; or
(d) imposed as a result of any voluntary sale, assignment,
transfer or other disposition by Lessor (including to Head
Lessor) or any other Tax Indemnitee of any interest in the
Aircraft or any part thereof or this Lease unless such
transfer or disposition occurs (1) in connection with a Tax
Indemnitee's pursuing its remedies while an Event of Default
by Lessee is continuing or otherwise resulting from an Event
of Default, or (2) pursuant to Lessee's exercise of any of its
options to purchase the Aircraft (it being understood and
agreed that Lessor and Lessee will cooperate with each other
to minimize any Taxes resulting from any sale pursuant to this
clause (2)).
"Loan Participant" shall mean Kreditanstalt fur Wiederaufbau,
together with its successors and permitted assigns.
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"Maintenance Program" shall mean an Air Authority approved
maintenance program for the Aircraft encompassing scheduled maintenance
(including block maintenance), condition monitored maintenance, and
on-condition maintenance of Airframe, Engines and Parts, including but not
limited to, servicing, testing, preventive maintenance, repairs,
structural, inspections, system checks, overhauls, approved modifications,
service bulletins, engineering orders, airworthiness directives, corrosion
control, inspections and treatments.
"Major Checks" shall mean any 12,000 hours check, 24,000 hours check
or intersupplementary check or segment thereof or any equivalent thereof
with more or less hours, however denominated, to the extent set out in the
Approved Maintenance Program from time to time.
"Manufacturer" shall mean Fokker.
"Note" shall mean the Secured Promissory Note dated as of July 1,
1994, executed and delivered to FAUSA by Lessee and secured by the Credit
and Security Agreement.
"Original Delivery Date" shall mean July 22, 1994.
"Other Aircraft Agreements" shall mean Aircraft Operating Lease
Agreements relating to other Fokker-manufactured aircraft leased to Lessee
by Lessor or a lessor related to, or acting for the benefit of Wings
Aircraft Finance, Inc. or any affiliate thereof, the Credit and Security
Agreement, the Note, the Support Services Agreement, the Termination
Agreement or any other agreement between Lessee and Lessor or any
affiliate of Wings Aircraft Finance, Inc.; provided that, for the purpose
of this definition, the word "affiliate" shall mean any corporation or
other entity that, directly or indirectly, controls, is controlled by, or
is under common control with, Wings Aircraft Finance, Inc.
"Owner Participant" shall mean CIBC Inc., a corporation organized
and existing under the laws of the State of Delaware, together with its
permitted successors and assigns.
"Part" shall mean, whether or not installed on the Aircraft:
(a) any component, furnishing or equipment (other than a complete
Engine) furnished with the Aircraft on the Original Delivery
Date; and
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(b) any other component, furnishing or equipment (other than a
complete Engine) title to which has, or should have, passed to
Lessor pursuant to this Lease
but excludes any such items title to which has, or should have,
passed to (i) Lessee pursuant to this Lease or (ii) any person
pursuant to any agreement relating to the financing of spare parts
for the Aircraft, including, but not limited to, FAUSA pursuant to
the Credit and Security Agreement and the Note.
"Participation Agreement" shall mean that Participation Agreement
(Trust No. 116-A) dated as of July 10, 1995, among Lessor, Owner
Participant, Owner Trustee, Indenture Trustee and Loan Participant, as it
may be amended, modified or supplemented from time to time in accordance
with the terms thereof.
"Permitted Lien" shall mean:
(a) liens of repairers, mechanics, material men, carriers,
hangarkeepers, employees or other similar liens arising in the
ordinary course of business by statute or by operation of law
in respect of obligations which are either not overdue or are
being contested in good faith by appropriate proceedings;
(b) any lien for Taxes of any kind either not assessed or, if
assessed, not yet due and payable or being contested in good
faith by appropriate proceedings; and
(c) any lien arising out of a judgment against Lessee with respect
to which at the time an appeal is being prosecuted in good
faith and with respect to which there shall have been secured
a stay of execution pending such appeal,
provided that in the case of these subclauses (a), (b) and (c):
(i) adequate reserves for the payment of such obligations
have been provided by Lessee;
(ii) such proceedings, or the continued existence of such
lien, do not give rise to any likelihood of the sale,
forfeiture or other
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loss of the Aircraft or any Engine or any Part or any
interest therein; and
(iii) any such lien does not arise as a result of any default
on the part of Lessee in respect of its obligations
under this Lease;
(d) any Lessor Lien and the lien of this Lease; and
(e) any lien for Lessor Taxes.
"Redelivery Location" shall mean Schiphol Airport, The Netherlands.
"Rent Date" shall mean the First Rent Date and the numerically
corresponding date of each and every subsequent month during the Term, or
(if there is no corresponding date in any month), the last day of such
month.
"Rental Period" shall mean the period from and including any Rent
Date to and including the day preceding the next Rent Date.
"Replacement Engine" shall have the meaning set forth in Article
5.1.2(a)(i).
"Security Assignment" shall mean the Assignment of Sublease (Trust
No. 116-A) dated as of July 10, 1995 between Lessor, as assignor, and Head
Lessor, as assignee.
"Security Interest" shall mean any mortgage, charge, pledge, lien,
assignment, hypothecation, right of set-off or any agreement or
arrangement having the effect of creating a security interest.
"State of Incorporation" shall mean the State of Delaware.
"State of Registration" shall mean United States of America.
"Supplemental Rent" shall mean Agreed Value and any other amount
which by the terms of this Lease is payable by Lessee to Lessor other than
Rent and the Reserve Rate.
"Support Services Agreement" shall mean the Aircraft Support
Services and Product Assurances Agreement No. ASSAF-110 dated October 1,
1993 between FAUSA and Lessee.
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"Taxes" shall mean any and all present and future sales, use,
property, customs, value-added, turnover, stamp, interest equalization,
income, gross or net receipts, franchise, excise, net worth, capital or
other taxes, fees, withholdings, imposts, duties, levies, or other charges
of any nature, together with any penalties, fines, or interest thereon,
imposed, levied, or assessed by, or otherwise payable to, any Governmental
Entity and "Tax" shall be construed accordingly.
"Tax Indemnitee" shall mean each of Lessor and each of its permitted
successors and assigns and each shareholder, subsidiary and affiliate of
each of the foregoing.
"Term" shall bear the meaning ascribed to it in Article 3.4.
"Termination Agreement" shall mean the Lease Termination Agreement
(AOLAF- ) dated as of July 10, 1995 between Fokker, Lessee and the Owner
Trustee named therein, as it may be amended, modified or supplemented from
time to time, in accordance with its terms.
1.2 The terms:
Agreed Value,
Deposit,
Rent,
Reserve Rate, and
Transaction Expenses
shall have the meanings and values set forth in Appendix B.
1.3 References in this Lease to:
(a) Articles or Appendices are, unless otherwise specified,
references to Articles of, and Appendices to, this Lease and
references to this Lease include its Appendices;
(b) any statute or other legislative provision shall be read to
include any statutory or legislative modification or
re-enactment thereof, or any substitution therefor;
(c) the Aircraft include any Part of the Aircraft, and, where the
context so admits, any of the Aircraft Documents and
references to any part of the Aircraft include any part of any
Engine;
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(d) the word "person" or "persons" or to words importing persons
include, without limitation, individuals, firms, partnerships,
joint ventures, trusts, Government Entities, organizations,
associations, corporations, government agencies, committees,
departments, authorities and other bodies, corporate or
incorporate, whether having distinct legal personality or not,
or any member of any of the same;
(e) words importing the plural include the singular and vice
versa;
(f) any agreement or instrument include such agreement or
instrument as it may from time to time be amended or
supplemented; and
(g) headings in this Lease are for ease of reference only.
2. AGREEMENT TO LEASE
2.1 Lessor will lease the Aircraft to Lessee and Lessee will take the
Aircraft on lease from Lessor in "As Is" condition in accordance
with the terms and conditions of this Lease.
2.2 Lessor's obligation to deliver the Aircraft on the Delivery Date to
Lessee shall be subject to:
(i) the receipt by Lessor from Lessee on or prior to the Delivery
Date of the following, all of which shall be in the English
language and be satisfactory in form and substance to Lessor:
(a) [intentionally omitted];
(b) copies of Lessee's certificate of incorporation and/or
memorandum and articles of association and/or by-laws
and/or other constitutional documents, certified to be
true and up to date copies by a duly authorized officer
of Lessee;
(c) copies of resolutions of Lessee's board of directors
authorizing Lessee to enter into and perform this Lease
and the transactions contemplated hereby, certified to
be true and
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in full force and effect by a duly authorized officer of
Lessee;
(d) evidence that each approval, license and consent which
may be required in relation to, or in connection with
the performance by Lessee of any of its obligations
hereunder has been granted by or obtained from the
applicable Government Entity in the State of
Registration;
(e) [intentionally omitted];
(f) evidence of appointment of Lessee's agent for service of
process in the State of New York;
(g) [intentionally omitted];
(h) [intentionally omitted];
(i) a power of attorney in the form of Appendix G
authorizing Lessor to take action at the Air Authority
and a certified resolution authorizing same;
(j) such other documents as Lessor may reasonably request;
(ii) the receipt by Lessor from Lessee on or before the Delivery
Date of:
(a) an opinion satisfactory in form and substance to Lessor
of counsel to Lessee, addressed to Lessor, Head Lessor,
Indenture Trustee, Owner Participant and Loan
Participant;
(b) [intentionally omitted];
(c) a certificate of insurance, a broker's letter of
undertaking and other evidence satisfactory to Lessor
that Lessee is taking the required steps to ensure due
compliance with the provisions of this Lease as to
Insurances with effect on and after the Delivery Date;
(d) evidence that the representations and warranties of
Lessee set forth in Article 13.4 are true and correct;
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(iii) receipt by Lessor of a certificate of an officer of Lessee
certifying that the Aircraft Maintenance Agreement is in full
force and effect with respect to the Aircraft;
(iv) receipt by Lessor of the executed Consent to the Security
Assignment (Trust No. 116-A) in the form attached to the
Security Assignment as Exhibit A thereto;
(v) evidence (including satisfactory opinions of Crowe & Dunlevy,
special Air Authority aviation counsel, as to Air Authority
registration and recordation matters) that on the Delivery
Date the Aircraft has been validly registered under the laws
of the State of Registration and that all filings,
registrations, recordings and other actions have been or will
be undertaken which are necessary or advisable to ensure the
validity, effectiveness and enforceability of this Lease and
the Head Lease and to protect the property rights of Lessor
and Head Lessor in the Aircraft or any Part and the Security
Interest of Indenture Trustee therein;
(vi) Lessor being satisfied that no default shall have occurred
under any Other Aircraft Agreement or any other agreement
between Fokker or FAUSA and Lessee;
(vii) this Lease and the Termination Agreement shall have been duly
executed and delivered by Lessee and shall be in full force
and effect, and an executed counterpart of each shall have
been delivered to Lessor; and
(viii) the Assignment of Support Services Agreement (Trust No.
116-A) dated as of July 10, 1995 between Lessee and Head
Lessor shall have been duly executed and delivered by Lessee
and shall be in full force and effect, and an executed
counterpart of each shall have been delivered to Lessor.
2.3 The conditions specified in Article 2.2 are inserted for the sole
benefit of Lessor and may be waived or deferred in whole or in part
and with or without conditions by Lessor. If any of the said
conditions are outstanding on the Delivery Date and Lessor (in its
absolute discretion) nonetheless agrees to deliver the
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Aircraft to Lessee, Lessee shall ensure that such outstanding
conditions are fulfilled within fifteen (15) days after the Delivery
Date and Lessor shall be entitled to treat the failure of Lessee to
perform such outstanding conditions as an Event of Default.
2.4 The obligation of Lessee to accept delivery of the Aircraft from
Lessor is subject to the satisfaction of the following conditions
precedent on or before the Delivery Date:
(i) this Lease and the Termination Agreement shall have been
duly authorized, executed and delivered by Lessor and shall be in
full force and effect, and an executed counterpart shall have been
delivered to Lessee;
(ii) Lessee shall have received the following:
a. an incumbency certificate of Lessor as to the
persons authorized to execute and deliver this
Lease, including the signatures of such persons;
and
b. such other documents and evidence with respect to
Lessor as Lessee may reasonably request in order
to establish the taking of all corporate
proceedings in connection with such transactions
and compliance with the conditions set forth
herein;
(iii) on the Delivery Date, the representations and warranties
of Lessor contained in Article 13.6 shall be true and accurate as
though made on and as of such date;
(iv) Lessee shall have received the favorable opinion,
addressed to it and reasonably satisfactory in form and substance to
it, from Crowe & Dunlevy, special Air Authority aviation counsel;
(v) the Aircraft shall meet the delivery conditions specified
in Article 3.6;
(vi) Lessee shall have received the favorable opinion,
addressed to it and reasonably satisfactory in form and substance to
it, from Haight, Gardner, Poor & Havens, special counsel to Lessor
and Fokker;
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(vii) Lessee shall have received certified execution copies of
a. the Tax Indemnity Agreement (Trust No. 116-A)
dated as of July 10, 1995 between Lessor and Owner
Participant;
b. Sections 7(b) and 7A and the definition of
"Lessor's Lien" in the Participation Agreement
(Trust No. 116-A) among Lessor, Head Lessor, Owner
Participant and the other parties thereto; and
c. Section 7(c)(x) and the provisions relating
thereto in the Lease Agreement dated as of July
10, 1995 (Trust No. 116-A) between Lessor and Head
Lessor; and
d. Lessee shall have received letters of quiet
enjoyment from Head Lessor and Indenture Trustee
in form and substance satisfactory to it.
3. TERM; DELIVERY; ACCEPTANCE
3.1.1 Lessor shall deliver and Lessee shall accept the Aircraft and the
delivery thereof on the Delivery Date.
3.1.2 [Intentionally omitted].
3.2 [Intentionally omitted].
3.3.1 [Intentionally omitted].
3.3.2 [Intentionally omitted].
3.4 The term of the lease shall commence on the Delivery Date and shall
continue until the Expiry Date unless earlier terminated or extended
as herein provided (such period being herein referred to as the
"Term").
3.5 The Aircraft shall be delivered to and accepted by Lessee at the
Delivery Location or such other location as is mutually acceptable
to the parties.
Acceptance by Lessee of the Aircraft by execution and delivery of
the Certificate of Acceptance shall be
-16-
deemed to be evidence that Lessor has performed all its obligations
under this Article 3.5.
3.6 [Intentionally omitted].
3.7 Lessee shall indemnify and hold harmless the Indemnitees from and
against any and all liabilities, damages, losses (including costs
and expenses incident thereto) arising by reason of death of or
injury to any such observer or any employee of Lessee, arising out
of, or in any way connected with the inspection of the Aircraft upon
redelivery of the Aircraft.
3.8 Lessee shall indicate and confirm its acceptance of the Aircraft by
the execution and delivery to Lessor of the Certificate of
Acceptance.
4. REGISTRATION AND TITLE
4.1 It shall be the responsibility of Lessee, at its expense, to
cooperate with Lessor and Head Lessor. to effect and maintain
registration of the Aircraft in the name of Head Lessor under the
Laws of the State of Registration during the Term, such registration
to reflect the interests of Lessor, Head Lessor and Indenture
Trustee, and to obtain and maintain all licenses, permits and
approvals, including, without limitation, a certificate of
airworthiness from the Air Authority, as may be requisite in
connection with operation of the Aircraft under this Lease.
4.2 Lessee shall at its own expense and responsibility cause this Lease
to be kept, filed and recorded at all times during the Term, in such
office or offices for the registration of the Aircraft in the State
of Registration and in such other offices (in the United States but
not in any jurisdiction outside of the United States unless directly
required due to Lessee's operation) as may be necessary, to protect
Lessor's, Head Lessor's and Indenture Trustee's rights hereunder and
under the Head Lease and the Indenture in any state in which the
Aircraft may operate including the State of Registration of the
Aircraft and the State of Incorporation or as Lessor may reasonably
request to protect and preserve Lessor's, Head Lessor's and
Indenture Trustee's rights hereunder and under the Head Lease and
the Indenture and shall on request furnish to Lessor an opinion of
counsel or other evidence satisfactory to Lessor of such filing and
recording.
-17-
4.3 Title to and ownership of the Aircraft shall at all times remain in
Head Lessor, and Lessee shall have no right, title or interest in or
to the Aircraft or any part thereof except as expressly provided by
this Lease. Lessee shall identify and specify the interest of Head
Lessor and Indenture Trustee and shall affix or keep affixed (i) in
a reasonably prominent position on the flight-deck of the Aircraft
and on each Engine a metal name plate (having dimensions of not less
than 10 cm x 7 cm) bearing the inscription (in fireproof and legible
characters) stating:
"NOTICE OF OWNERSHIP
THIS AIRCRAFT/ENGINE IS OWNED BY FIRST SECURITY BANK OF UTAH, NATIONAL
ASSOCIATION, NOT IN ITS INDIVIDUAL CAPACITY BUT SOLELY AS OWNER TRUSTEE
AND HEAD LESSOR AND IS SUBJECT TO A FIRST PRIORITY MORTGAGE IN FAVOR OF
SHAWMUT BANK CONNECTICUT, NATIONAL ASSOCIATION"
The proper completion of the metal name plate shall be advised by
Lessor at its earliest convenience. Lessee shall not remove or
deface evidence of ownership of the Aircraft and shall not do or
permit to be done or omitted any act or thing which would jeopardize
the rights of Lessor, Head Lessor or Indenture Trustee in the
Aircraft. Lessee will on all occasions when the ownership of the
Aircraft or any Part is relevant make clear to third parties that
title to the same is held by Head Lessor.
4.4 Lessee acknowledges that the Aircraft is owned by Head Lessor and is
subject to the Indenture, which is a first priority Security
Interest, and that Lessor's interest in this Lease is subject to the
Security Assignment in favor of Head Lessor. Lessee undertakes to
Lessor (both for itself and as agent for each of Head Lessor and
Indenture Trustee) at Lessee's expense (except for the expense of
assignments pursuant to Article 12) to, from time to time, cooperate
with Lessor or Head Lessor to, cause this Lease, the Indenture, the
Security Assignment and such other documents as may be necessary or
advisable to give effect to the transactions contemplated hereby or
thereby, to be kept, recorded or filed in such office or offices in
the State of Incorporation and in the State of Registration as may
be necessary or advisable to protect and perfect the interests of
Lessor, Head Lessor and Indenture Trustee in the Aircraft, this
Lease, the Head Lease, the Indenture and the Security
-18-
Assignment, and to do, from time to time, all other things which
Indenture Trustee, Head Lessor and/or Lessor may reasonably require
in order to protect and perfect their rights.
4.5 Lessor agrees that during the Term it shall not permit the
registration of the Aircraft to be changed to any registration other
than under the Laws of the State of Registration except as may be
required in connection with the sublease of the Aircraft by Lessee
pursuant to Article 12.1.
5. POSSESSION AND USE
5.1 Lessee shall not transfer possession of the Aircraft, the Engines or
any Part to any person or any legal entity or remove any Engine or
Part from the Airframe other than in accordance with the provisions
of this Article 5 or of Article 12.1; provided, however, that so
long as no Default shall have occurred and be continuing, Lessee
may, without the prior written consent of Lessor deliver possession
of the Aircraft, the Engines or Parts to the manufacturer thereof
for testing or other similar purposes, or to an Authorized
Maintenance Performer for service, repair, maintenance or overhaul
work on the Aircraft, the Engines or Parts, or for alterations,
modifications, or additions thereto, to the extent required or
permitted by the terms of Article 7.3.
5.1.1 Lessee will ensure that no Engine or Part installed on the Aircraft
is at any time removed from the Aircraft other than:
(a) if replaced as expressly permitted by this Lease; or
(b) if the removal is of an Obsolete Part (as defined in Article
7.3(b)) and is in accordance with the Approved Maintenance
Program; or
(c) (i) during the course of maintaining, servicing, repairing,
overhauling or testing that Engine or Part or the
Aircraft, as the case may be; or
(ii) as part of a normal engine or part rotation program; or
-19-
(iii) for the purpose of making such modification to the
Engine or Part, or the Aircraft, as the case may be, as
are permitted under this Lease,
and then in each case only if it is reinstalled or replaced by an
engine or part complying with Article 5.1.2(a) as soon as
practicable (or in the case of Article 5.1.1(c)(ii) in the ordinary
course of such program) and in any event no later than the Expiry
Date except, in the case of Obsolete Parts, as provided in Article
7.3(b).
5.1.2 (a) Lessee will ensure that, except as permitted by this Lease, no
engine or part is installed on the Aircraft unless:
(i) in the case of an engine, it is an engine of the same
make and model as, or an improved or advanced version of
the Engine it replaces, which is in similar or better
operating condition, and in the case only of a Casualty
Occurrence, has substantially similar hours available
until the next scheduled checks, inspections, overhauls
and shop visits and has the same or greater value and
utility as the replaced Engine (assuming the Engine
being replaced was of a value and utility and in at
least the condition and repair required by the terms of
this Lease) and shall be suitable for use on the
Airframe and compatible with each other Engine or engine
then on the Aircraft (a "Replacement Engine"). At
Lessee's election, Lessee may cause an Engine to be
replaced under this Lease with a Replacement Engine by
compliance with the provisions of Article 17.3 with
regard thereto;
(ii) in the case of a part, it is in as good operating
condition, is of similar or a more advanced make and
model and is of the same interchangeable modification
status as the replaced Part;
(iii) in the case of any part, it has become and remains the
property of Head Lessor free from Security Interests and
on installation on the Aircraft will, without further
act, be
-20-
subject to this Lease, the Head Lease and the Indenture;
and
(iv) in each case, Lessee has full details as to its source
and maintenance records.
(b) Provided no Default has occurred and is continuing, Lessee
shall be entitled to install any engine or part on the
Aircraft by way of replacement notwithstanding Article
5.1.2(a) if:
(i) there is not available to Lessee at the time and in the
place that engine or part is required to be installed on
the Aircraft, a replacement engine or, as the case may
be, part complying with the requirements of Article
5.1.2(a); and
(ii) it would result in an unreasonable disruption of the
operation of the Aircraft and/or the business of Lessee
to ground the Aircraft until an engine or part, as the
case may be, complying with Article 5.1.2(a) becomes
available for installation on the Aircraft; and
(iii) as soon as reasonably practicable after installation of
the same on the Aircraft, Lessee removes any such engine
or part and replaces it with the Engine or Part replaced
by it or by an engine or part, as the case may be,
complying with Article 5.1.2(a).
5.1.3 Lessee will:
(a) ensure that any Engine or Part which is not installed on the
Aircraft (or any other aircraft as permitted by this Lease)
is, except as expressly permitted by this Lease, properly and
safely stored, and kept free from Security Interests;
(b) from time to time on request, notify Lessor in writing as to
the location of any Engine and on request shall use its
reasonable efforts to procure that any person to whom
possession of an Engine is given acknowledges in writing to
Lessor, in terms satisfactory to Lessor, that it will respect
the interests of Head Lessor as owner, Indenture Trustee as
mortgagee and Lessor as
-21-
lessor of the Engine and will not seek to exercise any rights
whatsoever in relation to it;
(c) (notwithstanding the foregoing provisions of this Article
5.1.3), be permitted, if no Default has occurred and is
continuing, to install any Engine or Part on an aircraft, or
in the case of a Part, on an engine:
(i) owned and operated by Lessee free from Security
Interests; or
(ii) leased or hired to Lessee pursuant to a lease or
conditional sale agreement on a long-term basis and on
terms whereby Lessee has full operational control of
that aircraft or engine; or
(iii) acquired by Lessee and/or financed or refinanced, and
operated by Lessee, on terms that ownership of that
aircraft or engine, as the case may be, pursuant to a
lease or conditional sale agreement, or a Security
Interest therein, is vested in or held by any other
person;
provided that in the case of (ii) and (iii):
(1) the terms of any such lease, conditional sale agreement or
Security Interest will not have the effect of prejudicing the
interests of Indenture Trustee as mortgagee or Head Lessor as
owner or Lessor as lessor of that Engine or Part; and
(2) the lessor under such lease, the seller under such conditional
sale agreement or the holder of such Security Interest, as the
case may be, has confirmed and acknowledged in writing to
Lessor, in form and substance satisfactory to Lessor, or has
otherwise agreed in writing, that it will respect the
interests of Head Lessor as owner, Indenture Trustee as
mortgagee and Lessor as lessor (without regard to whether such
writing identifies Head Lessor, Indenture Trustee and Lessor
by name) of that Engine or Part and that it will not seek to
exercise any rights whatsoever in relation thereto; and, to
the extent such an acknowledgment has been given, Lessor
hereby agrees, for the benefit of the lessor, the seller, or
secured party, as the case may be, of any engine or part
-22-
(other than an Engine or a Part) leased to Lessee or owned by
Lessee subject to a conditional sale or other security
agreement, that Lessor will not acquire or claim, as against
such lessor, seller or secured party, any right, title or
interest in any engine or engines owned by the lessor under
such lease or subject to a security interest in favor of the
seller or secured party under such conditional sale or other
security agreement as the result of such engine or engines
being installed on the Airframe at any time while such engine
or engines are subject to such lease or conditional sale or
other security agreement.
5.1.4 Lessee will not enter into nor permit any pooling agreement or
arrangement in respect of an Engine or Part without the prior
written consent of Lessor, which shall not be unreasonably withheld.
5.2 Lessee shall use the Aircraft solely in commercial or other
operations for which Lessee is duly authorized by the Laws of the
State of Registration and/or any jurisdiction to whose Laws Lessee's
operation of the Aircraft is subject and shall not use or permit the
Aircraft to be used for any purpose for which the Aircraft is not
designed or reasonably suitable.
Lessee shall not use the Aircraft for the carriage of (i) whole
animals living or dead except in the cargo compartments according to
the United States Department of Transportation ("DOT") (or for
international flights, International Civil Aviation Organization
("ICAO")) regulations, and except domestic pet animals carried in a
suitable container to prevent the escape of any liquid and to ensure
the welfare of the animal; (ii) acids, toxic chemicals, other
corrosive materials, explosives, nuclear fuels, wastes, or any
nuclear assemblies or components, except as permitted for passenger
aircraft under the "Restriction of Goods" schedule issued by the DOT
(or for international flights, ICAO) from time to time and provided
that all the requirements for packaging or otherwise contained
therein are fulfilled; or (iii) any other goods, materials or items
of cargo which could reasonably be expected to cause damage to the
Aircraft and which would not be adequately covered by the insurance
required by or obtained pursuant to Article 11.
5.3 Lessee shall not permit the Aircraft to be maintained, used, or
operated in violation of any Law of any
-23-
Government Entity having jurisdiction, or contrary to any
manufacturer's operating manuals and instructions, or in violation
of any airworthiness certificate, license or registration relating
to the Aircraft issued by any such Government Entity, unless the
validity thereof is being contested by Lessee in good faith and by
appropriate proceedings (but only so long as such proceedings do not
(i) involve any risk of the sale, forfeiture or loss of any interest
therein, (ii) otherwise adversely affect Lessor, Head Lessor,
Indenture Trustee, Owner Participant or Loan Participant or (iii)
involve any risk of criminal liability or any unindemnified material
risk of civil liability to Lessor, the Indenture Trustee, Owner
Participant or Loan Participant) provided, that Lessee shall give
prior written notice to Lessor of any such contest and provide
Lessor with any information Lessor may reasonably request with
respect to such contest. In the event that such Laws require
alteration of the Aircraft during the Term of this Lease, Lessee
shall conform therewith at its own expense and shall maintain the
same in proper condition for operation under such Laws. Lessee
agrees not to operate the Aircraft or to permit or suffer the
Aircraft to be operated (i) contrary to applicable Law, and/or (ii)
within or into any geographic area unless the Aircraft is covered by
insurance as required by the provisions of Article 11 or insurance
or an indemnity in lieu of such insurance from the United States
government against the risks and in the amounts required by Article
11 covering such area, and/or (iii) contrary to the terms of such
insurance as required by the provisions of Article 11.
5.4 Throughout the Term and until re-delivery of the Aircraft to Lessor
in accordance with the provisions of this Lease, the Aircraft and
every part thereof shall be in every respect at the sole risk of
Lessee, who shall bear all risks of loss, theft, damage or
destruction to the Aircraft from any cause whatsoever. Lessor shall
not be liable for any liability, claim, loss, damage or expense of
any kind or nature caused directly or indirectly by the Aircraft or
any part thereof by any inadequacy thereof for any purpose or any
deficiency or defect therein, by the use or performance thereof, by
any repairs or servicing thereto or any delay in providing or
failure to provide any thereof, by any interruption or loss of
service or use thereof, or by any loss of business or other
consequential damage or any damage whatsoever and
-24-
howsoever caused prior to re-delivery of the Aircraft to Lessor.
5.5 Lessee shall ensure that such crew and engineers as are employed by
it in connection with the operation and maintenance of the Aircraft
shall have such qualifications and hold such licenses as are
required by the Air Authority and by all applicable Laws and
regulations.
5.6 Lessee shall use, operate and maintain the Aircraft in at least as
good a manner and with at least as much care as used by Lessee with
respect to aircraft of the same type owned, leased or operated by
Lessee, and Lessee shall not discriminate against the Aircraft (as
compared to other aircraft of the same type owned, leased or
operated by Lessee) in the use, operation or maintenance of the
Aircraft, other than withdrawal of the Aircraft from use and
operation for return in accordance with this Lease.
6. CHARGES, METHOD OF PAYMENT AND FINANCIAL INFORMATION
6.1 Lessee shall punctually pay to Lessor, when due, the Rent and
Supplemental Rent expressed to be payable by Lessee to Lessor
hereunder including the monies specified and calculated in
accordance with the provisions of Appendix D at the time and in the
manner therein specified, and shall punctually and duly observe and
perform Lessee's obligations under the said Appendix D which forms
an integral part of this Lease. The time stipulated in this Lease
for all payments payable by Lessee to Lessor and for the performance
of Lessee's other obligations under this Lease shall be of the
essence of this Lease.
6.2 Lessee shall not be entitled to any abatement, compensation,
reduction or set-off against any installment of Rent or Supplemental
Rent, including but not limited to, abatements, compensations,
reductions or set offs, by reason of any past, present or future
claims of Lessee against Lessor or any other person under this Lease
or otherwise.
6.3 Lessee's obligation to pay Rent and make other payments in
accordance with this Lease, until Lessee shall have redelivered the
Aircraft to Lessor in accordance with Article 16 and shall have
complied with its other obligations hereunder, shall be absolute and
-25-
unconditional irrespective of any contingency whatsoever including
(but not limited to) (i) any right of set-off, counterclaim,
recoupment, defence or other right which either party may have
against the other, (ii) any unavailability of the Aircraft for any
reason, including, but not limited to, any defect in the
airworthiness, merchantability, fitness for any purpose, condition,
design, or operation of any kind or nature of the Aircraft, or the
ineligibility of the Aircraft for any particular use or trade, or
for registration or documentation under the laws of any relevant
jurisdiction, or (save as herein provided) any Casualty Occurrence
in respect of or any damage to the Aircraft, (iii) any insolvency,
bankruptcy, reorganization, arrangement, readjustment of debt,
dissolution, liquidation or similar proceedings by or against Lessor
or Lessee, (iv) any invalidity or unenforceability or lack of due
authorization of, or other defect in this Lease, (v) any failure of
Lessee to obtain any required license, certificate, authorization or
other approval of any Government Entity having jurisdiction over the
operation by Lessee of the Aircraft or the operation by Lessee in
any airport and (vi) any other cause which, but for this provision,
would or might have the effect of terminating, frustrating or in any
way affecting any obligation of Lessee hereunder, it being the
declared intention of the parties that the provisions of this
Article and the obligations of Lessee to pay the Rent and
Supplemental Rent provided for by this Lease shall survive any
frustration and that, save as expressly provided in this Lease, no
monies payable hereunder by Lessee to Lessor shall in any event or
circumstance be repayable to Lessee. Nothing in this Article 6.3
shall preclude Lessee from exercising its right to pursue a claim
for damages or specific performance or other judicial remedy against
Lessor and/or any Indemnitees.
6.4 Lessee agrees to furnish Lessor during the Term:
(i) [intentionally omitted];
(ii) upon Lessor requesting the same a quarterly unaudited balance
sheet of Lessee prepared by it as of the close of the most
recent previous financial quarter, together with the related
profit and loss statement for such period;
(iii) within ninety (90) days after the close of each financial year
of Lessee, an audited balance sheet
-26-
and profit and loss statement as of the close of such
financial year;
(iv) from time to time such other non-confidential information as
Lessor may reasonably request; and
(v) copies of all notices sent by Lessee (A) to its shareholders
or creditors as a group in their respective capacities as such
relating to major business or financial developments of
Lessee, or (B) to the Securities Exchange Commission in
connection with or following a public offering of the equity
shares of Lessee.
7. MAINTENANCE
7.1 Lessee, during the Term, at its own cost and expense shall:
(a) service, repair, maintain, overhaul, test, or cause the same
to be done to the Aircraft in accordance with the Approved
Maintenance Program so as to keep the Aircraft in as good
operating condition as when delivered to Lessee on the
Original Delivery Date, ordinary wear and tear excepted, and
such operating condition as may be necessary to enable the
airworthiness certificate of the Aircraft to be maintained in
good standing at all times under applicable Law; and Lessee
shall at all times maintain current certificates of
airworthiness and Air Authority required records of
maintenance in respect of the Aircraft and produce copies
thereof to Lessor upon request, except in each case if Fokker
100 aircraft with similar engines are grounded by the Air
Authority;
(b) maintain in the English language all Aircraft Documents,
records, logs, and other materials required by applicable Laws
and best airline practice to be maintained in respect of the
Aircraft including engine trend monitoring data;
(c) perform, or cause to be performed, all airworthiness
directives and mandatory notes and mandatory bulletins
affecting the Aircraft having a compliance date during the
Term and issued by (a) the Air Authority and/or (b) Fokker or
any other manufacturer of any part of the Aircraft
-27-
(except that, in the event of a conflict, those required by
the Air Authority shall prevail);
(d) maintain the Aircraft in conformity with Air Authority
Regulations and such other rules and regulations of the Air
Authority as may from time to time be applicable to passenger
category airline aircraft;
(e) provide Lessor by telex or fax message or by personal delivery
to a technical representative of Manufacturer, if any, with a
monthly summation (which may utilize Air Authority forms) of
Flight Hours and Cycles accumulated on the Airframe and
Engines, and, commencing upon the month following the date
(and so long as) Lessee is required to pay the Reserve Rate
hereunder, Auxiliary Power Unit ("A.P.U.") and Landing Gear
and details of all modifications and material component
changes within ten (10) days after the end of each month.
Such maintenance shall be performed by Lessee or by the Authorized
Maintenance Performer pursuant to the Aircraft Maintenance Agreement
or by any other Authorized Maintenance Performer, for the purposes
of this Lease.
7.2 Except as otherwise provided herein, Lessee, at its own cost and
expense, shall promptly replace all Engines or Parts which may from
time to time become worn out, lost, stolen, destroyed, seized,
confiscated, damaged beyond repair, or unserviceable with an engine
or part meeting the requirements of Article 5.1.2(a).
7.3 (a) Save as expressly herein provided the Aircraft shall not be
modified, altered, converted or added to (each such action in
relation to the Aircraft being herein referred to as an
"Equipment Change"), provided that Lessee may, at its own
expense, make such Equipment Changes to the Aircraft as Lessee
may deem desirable in the proper conduct of its business,
provided that no such Equipment Change diminishes the value,
utility, condition or airworthiness of the Aircraft below the
value, utility, condition and airworthiness thereof
immediately prior to such Equipment Change, assuming the
Aircraft was then in the condition required to be maintained
by the provisions of this Lease.
-28-
(b) Title to all Parts incorporated or installed in or attached or
added to the Aircraft as the result of such Equipment Change
shall, without further act, vest in Head Lessor free and clear
of all liens, charges and encumbrances. Lessee shall at its
own expense take all such steps and execute, and procure the
execution of, all such instruments as Lessor may require and
which are necessary to ensure that title to any such
replacement Part as aforesaid passes to Head Lessor according
to the Governing Law and the lex situs, provided, however,
that so long as a Default shall not have occurred and be
continuing, at any time during the Term, Lessee may remove any
such Part if (A) (i) such Part is in addition to, and not in
replacement of or in substitution for, any Part originally
incorporated or installed in or attached to the Aircraft at
the time of the Original Delivery Date, (ii) such Part is not
required to be incorporated or installed in or attached or
added to the Aircraft pursuant to the provisions of Article
7.1 and (iii) such Part can be removed from the Aircraft
without diminishing or impairing the value, utility,
airworthiness, condition or remaining useful life which the
Aircraft would have had at such time, had such Equipment
Change not occurred; or (B) such Part is deemed by Lessee to
be obsolete or no longer suitable or appropriate for use in
the Airframe or Engines (an "Obsolete Part") and its removal
shall not materially decrease the value or adversely affect
the utility or remaining useful life of the Airframe or
Engine, or impair the condition or airworthiness thereof below
the value, utility or remaining useful life, condition or
airworthiness thereof immediately prior to such removal
(assuming the Aircraft was then in the condition required to
be maintained by the terms of the Lease), except that the
value (but not the utility, remaining useful life, condition
or airworthiness) of the Airframe or the Engines may be
reduced, to the extent resulting from the removal of Obsolete
Parts, if the aggregate original cost of all Obsolete Parts
removed from such Aircraft and not replaced shall not exceed
$350,000.
(c) Upon the removal by Lessee of any such Part as above provided,
title thereto shall, without further act, vest in Lessee and
such Part shall no
-29-
longer be deemed a part of the Aircraft. Any Part not removed
by Lessee as above provided prior to the return of the
Aircraft to Lessor hereunder shall remain the property of Head
Lessor (save as the parties may otherwise agree in writing)
provided that Lessor may require Lessee, prior to the end of
the Term, to remove any Parts incorporated or installed in the
Aircraft as a result of an Equipment Change and to restore the
Aircraft to its condition prior to an Equipment Change.
7.4.1 Upon submission by Lessee to Lessor of invoices or receipts
reasonably satisfactory to Lessor evidencing the performance in
accordance with the provisions of this Agreement by or at the
direction of Lessee of:
(a) with respect to the Airframe, the accomplishment of those
items of maintenance characterized as scheduled airframe heavy
maintenance as defined in the Approved Maintenance Program for
12,000 hours and 24,000 hours inspections or any equivalent
thereof with more or less hours ("Airframe Maintenance"), or
(b) with respect to any Engine or the replacement thereof, the
performance of all scheduled shop visit engine maintenance and
repair, other than (i) repairs arising as a result of foreign
object damage or operational mishandling and/or (ii)
maintenance and repair of QEC (Quick Engine Change) kits
("Engine Maintenance"), or
(c) with respect to any nose or main landing gear ("Landing
Gear"), the performance of all scheduled shop visit nose and
main landing gear maintenance and repair, other than repairs
arising as a result of foreign object damage or operational
mishandling ("Landing Gear Maintenance"), or
(d) with respect to the A.P.U., the performance of all off
Aircraft shop A.P.U. maintenance and repair, other than
repairs arising as a result of foreign object damage or
operational mishandling ("A.P.U. Maintenance"),
Lessor shall, subject to Article 3.5 of Appendix D and provided that
a Default shall not have occurred and be continuing, release to
Lessee, from the relevant Maintenance Fund as defined in paragraph
3.2 of
-30-
Appendix D, a sum equal to the aggregate amount evidenced by such
invoices or receipts for such relevant maintenance, to the extent
there are sufficient sums in the relevant Maintenance Fund at the
date of the start of the relevant maintenance. Lessee agrees to use
its reasonable efforts to ensure that the relevant invoices or
receipts are received by Lessor as promptly as possible after
completion of the relevant maintenance. All sums remaining in any
Maintenance Fund at the expiration or other termination of this
Agreement shall be retained by Lessor, except (i) upon payment in
full of Agreed Value and any other amounts due to Lessor or
otherwise hereunder after a Casualty Occurrence pursuant to Article
17.2(b), in which case all sums remaining in any Maintenance Fund
shall be paid to Lessee and (ii) under the circumstances and to the
extent described in Paragraphs 3.6 and 9 of Appendix D. For the
avoidance of doubt, Lessor shall not refuse to release monies from
the Maintenance Fund on the ground that maintenance was required due
to operational mishandling, provided that Lessee can demonstrate
that Lessee complied with the original equipment manufacturer's
written instructions.
7.4.2 Lessor shall be entitled to delay the release or payment of funds
from any Maintenance Fund (to the extent related to any disputed
amounts) to Lessee provided for by this Article 7 until such time as
it shall in its opinion be in a position to determine (which Lessor
agrees to use reasonable efforts to do as promptly as possible) the
amount to be released or paid, but in any event release all
undisputed amounts from the relevant Maintenance Fund (but where
insufficient funds are in such maintenance Fund the lesser pro rata
portion of such funds which corresponds to the undisputed amount)
upon request unless a Default shall have occurred and be continuing.
7.5.1 During the Term, Lessee shall furnish to Lessor such information
concerning the location, condition, use and operation of the
Aircraft as Lessor may reasonably request. The right of Lessor, or
its designated representatives, to inspect the Aircraft during any
Major Checks performed by or on behalf of Lessee during the Term,
shall be absolute and Lessee shall inform Lessor by providing thirty
(30) days' written notice as to time and location of all Major
Checks. During such Major Checks, Lessee agrees to provide
sufficient manpower to allow Lessor, or its authorized
representatives (at Lessor's cost and expense), to
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inspect any area of the Aircraft which Lessor requests to inspect
and which would normally be required during such a Major Check,
provided that such inspection is to be made only at the time that
Lessee opens up such area in accordance with the Approved
Maintenance Program.
Lessee also shall permit any persons designated by Lessor to visit
and inspect the Aircraft, its condition, use and operation, and the
records maintained in connection therewith.
7.5.2 Lessor shall have the right at any time on reasonable notice to
inspect or survey the Aircraft or any part thereof, or instruct a
duly authorized surveyor to carry out a survey on its behalf, to
ascertain the condition of the Aircraft or any part thereof and
satisfy itself that the Aircraft is being properly repaired and
maintained in accordance with the terms of this Lease. The cost of
any such inspection or survey shall be borne by Lessor unless an
Event of Default has occurred and is continuing.
7.5.3 Lessor shall have no duty to make any such inspection as is referred
to in Article 7.5.1 and 7.5.2 and shall not incur any liability or
obligation by reason of not making any such inspection. Except in
connection with any Event of Default hereunder no exercise of any
inspection right under Articles 7.5.1, 7.5.2 or any other provision
of this Lease shall interfere with the normal operation or
maintenance of the Aircraft or the business of Lessee and shall be
conducted during normal maintenance business hours. In connection
with any such inspection, Lessee shall allow Lessor or any persons
designated by Lessor to copy, at Lessor's cost and expense, any
Aircraft Documents or other records relating to maintenance and
operation of the Aircraft. Lessee shall not be liable for the use of
any such Aircraft Documents or other records by Lessor or any other
person or entity which use is unrelated to Lessee's compliance with
the terms of this Lease.
8. TAXES, DUTIES AND EXPENSES
8.1 Lessee agrees promptly to pay and indemnify and hold Lessor harmless
against all Taxes (other than Lessor Taxes) levied or imposed
against or upon or otherwise payable by any Tax Indemnitee or Lessee
and relating to or attributable to Lessee, this Lease, the Aircraft
and/or the importation, exportation, registration,
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ownership, leasing, sub-leasing, delivery, possession, use,
operation, reregistration, repair, maintenance, overhaul,
replacement, improvement, modification, alteration, transportation,
landing, storage, presence or re-delivery of or addition to, the
Aircraft or any Engine or any Part thereof or any rent, receipts,
insurance proceeds or income arising therefrom, or any sum payable
by Lessee to a Tax Indemnitee under this Lease or any other
transactions or activities contemplated by this Lease, provided,
however, that Lessee shall have no indemnity liability under this
Article 8.1 or under Article 8A.1(c) to Lessor for any of the
following Taxes:
(a) any Tax imposed on or payable by Lessor with respect to any
sale, assignment, transfer or other disposition by Lessor of
any interest in the Aircraft or any part thereof or this
Lease, other than any such sale, assignment, transfer or other
disposition (i) that is pursuant to an exercise of remedies
after the occurrence and during the continuance of an Event of
Default or (ii) that is a result of a Casualty Occurrence or
(iii) that is a result of the exercise by Lessee of any of its
options to purchase the Aircraft or (iv) that occurs as a
result of any substitution, replacement or pooling of the
Aircraft, any Engine or any Part by a Lessee Related Person;
(b) any Tax to the extent imposed on Lessor as a result of a
failure of Lessor to comply with any certification,
information, documentation, reporting or other similar
procedure that is required by law (including any applicable
statute, income tax convention, regulation or ruling) as a
condition precedent to the allowance of any reduction in the
rate of such Tax or any exemption or other relief from such
Tax; provided that (i) Lessor is otherwise eligible for such
relief or exemption from such Tax, (ii) Lessor's compliance
with such requirement would not create a material risk of
adverse tax consequences to Lessor for which it is not
indemnified to its reasonable satisfaction and (iii) in the
case of a Tax other than United States Federal income tax or
income tax withholding Lessee shall have notified such Lessor
of such requirement by timely written notice;
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(c) any Tax to the extent resulting from one or more transactions
or activities of Lessor in the jurisdiction imposing the Tax
if those transactions or activities are unrelated to the
transactions described in this Lease or the Other Aircraft
Agreements;
(d) any Tax imposed on or payable by or required to be withheld
from any payment to any assignee or other transferee of any
interest of Lessor in the Aircraft or this Lease (or imposed
on or payable by or required to be withheld from any payment
to any subsequent assignee or other transferee) to the extent
that the amount of such Tax exceeds the amount of such Tax
that would have been imposed on or payable by or required to
be withheld from any payment to Lessor (determined at the time
of transfer) and would have been indemnified by Lessee
pursuant to this Article 8 or Article 8A.1(c) (determined at
the time of transfer); provided that the exclusion described
in this clause (d) shall not apply to any assignee or other
transferee that is a corporation incorporated under the law of
a state of the United States or a partnership each partner of
which is such a corporation, or (provided that Lessor gives
Lessee prior written notice of such transfer) to any assignee
or other transferee that acquires its interest as a result of
the exercise of remedies after the occurrence and during the
continuance of an Event of Default;
(e) any Tax to the extent arising out of or caused by, or to the
extent such Tax would not have been incurred but for, (i) any
act or omission of Lessor if such act or omission is not
permitted by this Lease or the Other Aircraft Agreements or
(ii) the willful misconduct or gross negligence of Lessor or
(iii) the inaccuracy or breach of any representation,
warranty, covenant or agreement by Lessor in this Lease except
to the extent that such act, omission, inaccurate
representation or breach is attributable to an act, omission,
inaccurate representation or breach by Lessee;
(f) any Tax to the extent resulting from any amendment to any Head
Lease Operative Document to which Lessee is not a party unless
(i) Lessee shall have given its prior written consent to such
amendment or (ii) such amendment consists of a change in the
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"Basic Rent" schedule of the Head Lease resulting from a
suspension or reduction of Lessee's payments of Rent under
this Lease that continues for a period of more than 60 days,
or (iii) such amendment is required by applicable Law relating
to the Aircraft or any part thereof or relating to Lessee;
(g) any Tax imposed on or payable by Lessor to the extent
indemnified pursuant to Article 8A hereof;
(h) any Tax imposed on or payable by Lessor to the extent arising
out of or caused by, or to the extent such Tax would not have
been incurred but for, the existence of any Lessor's Lien;
(i) half of any sales tax payable in connection with the purchase
of the Aircraft by Lessee pursuant to Lessee's exercise of a
purchase option described in Paragraph 9 of Appendix D of this
Lease (it being understood and agreed that each of Lessee and
Lessor shall pay half of any sales tax payable with respect to
Lessee's purchase of the Aircraft pursuant to Lessee's
exercise of such a purchase option); or
(j) half of any sales or use tax payable in connection with the
transfers of the Aircraft and the lease and sublease of the
Aircraft on the Delivery Date (it being understood and agreed
that each of Lessee and Lessor shall pay half of any sales or
use tax payable with respect to such sales, lease and sublease
of the Aircraft on the Delivery Date).
If Lessee is required by any applicable Law or regulation to deliver
or furnish any report or return in connection with any such Taxes
(other than Lessor Taxes), Lessee shall complete the same in a
manner reasonably satisfactory to the relevant Tax Indemnitee and in
particular no such report or return shall contain any statement that
is inconsistent with Head Lessor's being the owner of the Aircraft,
and Lessee shall supply a copy of such report or return to the
relevant Tax Indemnitee promptly upon receipt of a request therefor
from such Tax Indemnitee.
All payments by Lessee hereunder to Lessor shall be free of
withholdings of any nature whatsoever (and at the time Lessee is
required to make any payment upon
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which any withholding is required, Lessee shall pay an additional
amount such that the net amount actually received by Lessor will,
after such withholding, equal the full amount of the payment then
due) and shall be free of expense for collection or other charges.
If Lessee shall have paid any additional amount pursuant to the
first sentence of this paragraph with respect to Taxes not subject
to indemnification pursuant to the provisions of this Section 8.1,
Lessor shall reimburse Lessee within 10 Business Days of written
demand therefor for the amount of such Taxes so paid by Lessee. For
the purpose of this Article 8 and Article 8A, the term "Lessor"
shall include each group of corporations (and each member thereof
that is a corporation organized under the laws of the United States
or any state thereof) that includes Lessor and for which
consolidated, combined, unitary or other group tax returns are
filed.
8.2 Except as otherwise specifically provided herein, Lessee shall pay
to Lessor on or after Delivery Date (unless otherwise agreed to be
financed by Lessor) upon demand:
(a) all reasonable expenses paid to third parties (including
reasonable legal, printing and out-of-pocket expenses)
incurred or payable by Lessor, FAUSA and Fokker related to any
amendment to or extension of, or the granting of any waiver or
consent under, this Lease in each case requested or caused by
Lessee;
(b) the Transaction Expenses;
(c) all reasonable expenses paid to third parties (including
reasonable legal fees and disbursements but excluding surveyor
costs) payable or incurred by Lessor in connection with the
enforcement of or preservation of any rights of Lessor under
this Lease or otherwise in respect of moneys owing under this
Lease by Lessee or in respect of any breach by Lessee of any
representation, warranty, covenant or undertaking herein
contained; and
(d) the ongoing annual fees and reasonable out-of-pocket expenses
(other than those incurred in connection with any of the
events described in Articles 12.3(c) or 12.3(d) and those
incurred pursuant to a change in such trustees which was
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not requested by Lessee) related to the Head Lease of Owner
Trustee and Indenture Trustee.
8.3 Lessee shall pay all stamp, documentary, registration or other like
duties or taxes (including any such duties or taxes payable by a Tax
Indemnitee but excluding all Lessor Taxes) imposed on or in
connection with this Lease and shall indemnify each Tax Indemnitee
against any liability arising by reason of any delay or omission by
Lessee to pay such duties or taxes.
8.4 If and to the extent that any sum (the "indemnity sum") constituting
(directly or indirectly) an indemnity to one or more Tax Indemnitees
paid by Lessee to any person other than that Tax Indemnitee shall be
treated as taxable in the hands of the relevant Tax Indemnitee,
Lessee shall pay to the relevant Tax Indemnitee such sum as (after
taking into account any taxation suffered by the relevant Tax
Indemnitee on the indemnity sum) shall reimburse the relevant Tax
Indemnitee for the net amount of any Taxes suffered by them in
respect of the indemnity sum (after taking into account any current
tax savings or other benefits to the relevant Tax Indemnitee
resulting from the payment or accrual of the indemnified expense).
8.5 If and to the extent that any sums payable to a Tax Indemnitee by
Lessee under this Lease by way of indemnity are insufficient, by
reason of any Taxes payable in respect of those sums, for that Tax
Indemnitee to discharge the corresponding liability to the relevant
third party (including any taxation authority), or to reimburse that
Tax Indemnitee for the cost incurred by it to a third party
(including any taxation authority), Lessee will pay to that Tax
Indemnitee such sum as will after the tax liability has been fully
satisfied leave that Tax Indemnitee with the same net amount (after
taking into account any current tax savings or other benefits to the
that Tax Indemnitee resulting from the payment or accrual of the
indemnified expense) as it would have been entitled to receive in
the absence of that liability. For the purpose of computing the
amount of an indemnity payment pursuant to this Article 8.5 and the
amount of any payment to Lessee under Article 8, it shall be assumed
that the relevant Tax Indemnitee is subject to tax on the amount of
each indemnity it receives or accrues under this Lease and can use
any tax savings to offset Taxes at the highest marginal statutory
rates of tax applicable to that Tax Indemnitee (as certified to
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Lessee by an officer of that Tax Indemnitee) at the time such
indemnity or tax savings is received or accrued.
8.6 If, as a result of any indemnity paid by Lessee or any event giving
rise to an indemnity obligation of Lessee, a Tax Indemnitee at any
time realizes any tax savings, refunds or other reductions in taxes
not previously taken into account in computing the amount of an
indemnity, that Tax Indemnitee shall promptly pay to Lessee the
amount of such Tax savings, refunds or other reductions in Taxes;
provided, however, that no Tax Indemnitee will be required to make
any payment to Lessee pursuant to this Article 8.6 so long as a
Default shall be continuing or if Lessee shall not have theretofore
made all payments due to all Tax Indemnitees under this Lease, or to
the extent that the amount of such payment would exceed the amount
of all prior payments by Lessee to the relevant Tax Indemnitee
pursuant to this Article 8 less the amount of all prior payments by
the relevant Tax Indemnitee to Lessee pursuant to this Article 8.6.
The relevant Tax Indemnitee shall estimate the amount of such Tax
savings, refunds and other reductions in Taxes and shall use
reasonable efforts to take such actions in filing its tax returns
and in dealing with taxing authorities to seek and claim each such
Tax savings, refund and other reduction in Taxes, but shall not be
obligated to take any such action that it determines in its sole
discretion to involve the imposition or risk of any material
unindemnified cost or expense, and in no event will any person have
any right to inspect the books, records, tax returns or other
documents of any Tax Indemnitee, and the positions to be taken by
any Tax Indemnitee on or with respect to its tax returns and in any
tax proceedings shall be within its sole control.
8.7 Lessee's, and each Tax Indemnitee's obligations under this Article 8
shall continue in full force and effect, notwithstanding the
expiration or earlier termination of the Term hereunder.
8.8 If Lessee disputes the payment or imposition of any Taxes payable by
a Tax Indemnitee for which Lessee is responsible under this Lease,
that Tax Indemnitee will take such action as Lessee may reasonably
request at Lessee's expense to contest that payment or imposition
but that Tax Indemnitee will not be obliged to take any such action:
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(a) which that Tax Indemnitee considers in good faith may result
in the imposition of any material liability, cost, or expense
for which that Tax Indemnitee is not indemnified to its
reasonable satisfaction; or
(b) which that Tax Indemnitee considers not to have a reasonable
prospect of success, unless Lessee delivers to that Tax
Indemnitee a written opinion of independent tax counsel
selected by Lessee and reasonably acceptable to Lessor to the
effect that there is a Reasonable Basis for taking such
action; or
(c) for which Lessee has not made adequate provision to the
reasonable satisfaction of that Tax Indemnitee in respect of
the liability, cost or expense concerned.
8.9 If Lessor determines that any Indemnified Tax is required to be
withheld from any amount payable or creditable to or for the account
of any holder of a Loan Certificate, Lessor shall give prompt
written notice thereof to Lessee and if requested by Lessee by
written notice given within 10 Business Days after Lessee's receipt
of Lessor's written notice, Lessor shall exercise its rights under
Section 7A(b)(xi) of the Participation Agreement in the manner
requested by Lessee, provided that Lessor shall not be required to
take any action pursuant to this Article 8.9 that might reasonably
be expected to involve Lessor in any unlawful activity or might
reasonably be expected to subject Lessor or any Affiliate of Lessor
to any expense deemed material by Lessor unless Lessor is
indemnified therefor to its reasonable satisfaction.
8A. SPECIAL INDEMNITY
8A.1 Indemnity.
(a) Inclusions. Except to the extent provided in Article 8A.2(a),
if Lessor is required by any tax authority to include in its
income for income tax purposes, or Lessor receives an opinion
of Lessor's tax counsel that Lessor does not have a Reasonable
Basis to exclude from its income for income tax purposes, any
amount relating to the Aircraft or any part thereof or the
Lease or any of the transactions, activities or payments
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described in or contemplated by the Lease, other than (i)
Rent, (ii) Reserve Rate, (iii) Supplemental Rent, (iv) any
proceeds derived from a sale of the Aircraft resulting from
the exercise by Lessee of a purchase option pursuant to
Paragraph 9 of Appendix D of this Lease, (v) any payment
calculated by reference to Agreed Value, (vi) any amount
specifically identified in the Lease as interest, (vii) any
payment calculated on an After-Tax Basis, (viii) any payment
pursuant to the terms of the Operating Lease Operative
Documents, (ix) any other amount to the extent offset by
deductions that would not have been currently available but
for the event which gave rise to the amount included in
Lessor's income and that are of the same character as such
income inclusion and are allowed in the same taxable year of
Lessor in which such amounts are included in Lessor's income,
or the Deposit described in Appendix D of this Lease or any
interest thereon (herein called an "Inclusion"), Lessee shall
pay to Lessor an amount which, on an After-Tax Basis, shall be
equal to the amount of additional taxes on or measured by
gross or net income (plus any and all fines, penalties,
additions to tax and interest calculated by reference thereto)
payable by Lessor as a result of such Inclusion.
(b) Pass-through of Tax Indemnity Agreement indemnities. Except to
the extent provided in Article 8A.2(b), if Lessor is required
to pay to Owner Participant any amount (herein called a "TIA
Liability") pursuant to the Tax Indemnity Agreement (Trust No.
116-A) dated as of July 10, 1995 between Lessor and Owner
Participant, Lessee shall pay to Lessor an amount which, on an
After-Tax Basis, shall be equal to that TIA Liability.
(c) Pass-through of Participation Agreement general tax indemnity
liability. Except to the extent provided in Article 8A.2(c),
if Lessor is required to pay any amount pursuant to Section 7A
of the Participation Agreement (herein called a "Head Lease
General Tax Indemnity Liability") and if the Tax that is the
subject of such Head Lease General Tax Indemnity Liability is
a Specified Tax, Lessee shall pay to Lessor an amount which,
on an After-Tax Basis, shall be equal to that Head Lease
General Tax Indemnity.
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(d) Minimum indemnity. The amount of any indemnity payable by
Lessee to Lessor pursuant to this Article 8A shall in all
events be an amount sufficient to restore Lessor to the
position Lessor would be in if the Inclusion or TIA Liability
or Head Lease General Tax Indemnity Liability that gave rise
to Lessee's liability under this Article 8A had not occurred.
8A.2 Exceptions.
(a) Exceptions to indemnity for Inclusions. Lessee shall not be
required to indemnify Lessor pursuant to Article 8A.1(a) for
Taxes to the extent arising from any of the following
Inclusions:
(i) any Inclusion caused by an event that occurs after the
expiration or earlier termination of this Lease, the
payment by Lessee of all Rent and other amounts due
pursuant to the Operating Lease Operative Documents, and
(if required by the terms of this Lease) the return of
the Aircraft to Lessor in accordance with the terms of
this Lease, provided that the exclusion set forth in
this Article 8A.2(a)(i) shall not apply to any Inclusion
to the extent such Inclusion is a result of one or more
events occurring or circumstances existing prior to or
concurrently with the expiration or earlier termination
of this Lease or to any payment or amount payable by
Lessee pursuant to this Lease or any other Operating
Lease Operative Document, or
(ii) any Inclusion that would not have occurred but for a
sale, assignment, transfer or other disposition by
Lessor of any interest in the Aircraft or this Lease,
either voluntarily or by reason of bankruptcy or similar
proceedings for the relief of debtors in which Lessor is
the debtor, unless in either case such disposition
occurs in connection with or as a result of (A) an Event
of Default, (B) a Casualty Occurrence, (C) any
substitution, replacement or pooling of the Aircraft or
any part thereof, (D) any maintenance, repair,
improvement, modification or alteration of, or addition
to, the Aircraft or any part thereof, or
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unless in either case such disposition is required by
applicable Law, or
(iii) any Inclusion that would not have occurred but for (A)
the refinancing of the Loan Certificates or (B) the
gross negligence or willful misconduct of Lessor, or
(iv) any Inclusion that would not have occurred but for the
timing of the recognition of income under Section 467 of
the Code unless such Inclusion would not have occurred
but for (A) any payment of Rent on a date prior to the
date on which such payment is scheduled to be due, (B)
any payment by Lessee of any expenses of any Tax
Indemnitee, or (C) the acquisition by Lessee or another
Lessee Related Person of any interest in the Loan
Certificates or any other evidence of indebtedness
issued by the Head Lessor to refund or refinance the
Loan Certificates in accordance with the Head Lease
Operative Documents, or
(v) any Inclusion that would not have occurred but for any
change in or addition to the Internal Revenue Code of
1986, any other statute relating to Federal income
taxes, any treaty, any regulation, revenue ruling,
revenue procedure or other administrative
interpretation, or any executive order that is enacted,
promulgated or issued after the Delivery Date, provided
that the exclusion in this clause (v) shall not apply to
any Inclusion resulting from (A) any alteration,
improvement, modification, pooling, repair, addition,
replacement or substitution of or to the Aircraft or any
part thereof, (B) any payment by Lessee of any expenses
of any Tax Indemnitee, or (C) the acquisition by Lessee
or another Lessee Related Person of any interest in the
Loan Certificates or any other evidence of indebtedness
issued by the Head Lessor to refund or refinance the
Loan Certificates in accordance with the Head Lease
Operative Documents, or
(vi) any Inclusion that would not have occurred but for an
event or occurrence as a result of which Lessee is
required to pay and shall
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have paid in full an amount calculated by reference to
Agreed Value.
(b) Exceptions to indemnity for TIA Liability. Lessee shall not be
required to indemnify Lessor pursuant to Article 8A.1(b) for
any TIA Liability that is not a result of an Operating Lease
Indemnification Event or that would not have been incurred but
for any of the following:
(i) the gross negligence or willful misconduct of Lessor, or
(ii) Lessor claiming deductions for depreciation of the
Aircraft for Federal, state or local income tax
purposes, or
(iii) Lessor (or any Affiliate of Lessor) claiming to be the
owner of the Aircraft for U.S. tax purposes, or
(iv) Lessor (or any Affiliate of Lessor) claiming deductions
for interest on the Loan Certificates for Federal, state
or local income tax purposes, or
(v) Lessor acquiring any interest in the Loan Certificates,
or
(vi) Lessor supplying to the Appraiser inaccurate information
unless such information was obtained from Lessee, or
(vii) the timing of the recognition of income under Section
467 of the Code unless such Inclusion would not have
occurred but for (A) any payment of Rent on a date prior
to the date on which such payment is scheduled to be
due, (B) any payment by Lessee of any expenses of any
Tax Indemnitee, or (C) the acquisition by Lessee or
another Lessee Related Person of any interest in the
Loan Certificates or any other evidence of indebtedness
issued by the Head Lessor to refund or refinance the
Loan Certificates in accordance with the Head Lease
Operative Documents, or
(viii) the failure of the Head Lease to be a "true lease" for
Federal income tax purposes or the failure of Owner
Participant to be the owner
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of the Aircraft (including any such failure resulting
from the existence of any of Lessee's rights under the
Operating Lease Operative Documents), unless such
failure is caused by an Operating Lease Indemnification
Event, or
(ix) any change in or addition to the Code, any other statute
relating to Federal income taxes, any treaty, any
regulation, revenue ruling, revenue procedure or other
administrative interpretation, or any executive order
that is enacted, promulgated or issued after the
Delivery Date, provided, however, that the exclusion in
this clause (ix) shall not apply to any Inclusion
resulting from (A) any alteration, modification,
pooling, repair, addition, replacement or substitution
of or to the Aircraft or any Engine, (B) any payment by
Lessee of any expenses of any Tax Indemnitee, or (C) the
acquisition by Lessee or another Lessee Related Person
of any interest in the Loan Certificates or any other
evidence of indebtedness issued by the Head Lessor to
refund or refinance the Loan Certificates in accordance
with the Head Lease Operative Documents, or
(x) Owner Participant's having an adjusted basis with
respect to the Aircraft that is less than Lessor's Cost
except to the extent resulting from an Operating Lease
Indemnification Event, or
(xi) any event or occurrence as a result of which Lessee is
required to pay and shall have paid in full an amount
calculated by reference to Agreed Value;
(xii) any inaccuracy in the Appraisal unless caused by the
inaccuracy of Lessee's representation in Article 8A.10,
or
(xiii) any disposition of Lessor's interest in the Aircraft or
the Operating Lease Operative Documents either
voluntarily or by reason of Lessor's bankruptcy or
similar proceedings for the protection of debtors in
which Lessor is a debtor, provided that the exclusion in
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this clause (xiii) shall not apply to (A) a disposition
pursuant to the exercise of remedies after the
occurrence and during the continuance of an Event of
Default, (B) a disposition resulting from a Casualty
Occurrence or (C) a disposition resulting from a
substitution, replacement or pooling of the Aircraft,
any Engine or any part of either thereof by Lessee or
any other Lessee Related Person.
(xiv) any amendment or modification of any of the Head Lease
Operative Documents approved by Lessor and to which
Lessee has not consented in writing unless (A) Lessee
shall have given its prior written consent to such
amendment or (B) such amendment consists of a change in
the "Basic Rent" schedule of the Head Lease resulting
from a suspension or reduction of Lessee's payments of
Rent under this Lease that continues for a period of
more than 60 days, or (C) such amendment is required by
applicable Law relating to the Aircraft or any part
thereof or relating to Lessee;
(xv) the treatment of the Aircraft as "tax-exempt use
property" by reason of Lessor's status as a "tax-exempt
entity" within the meaning of Section 168(h) of the
Code;
(xvi) any failure of the Aircraft to be registered with the
United States Federal Aviation Administration or any
successor thereto by reason of the status or citizenship
of Lessor;
(xvii) any breach of Lessor's obligations relating to the
Lessee's contest rights pursuant to Article 8A.6 hereof
to the extent such failure legally precludes Lessee from
contesting, or causing a contest of, an indemnified
claim;
(xviii) the reporting by the Owner Participant of an Inclusion
on any of its Federal income tax returns, unless Lessee
has received a copy of the opinion of independent tax
counsel described in Section 3.1 of the Tax Indemnity
Agreement with respect to such Inclusion;
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(xix) the inaccuracy of the representation in Section 2(f) of
the Tax Indemnity Agreement;
(xx) the refinancing of the Loan Certificates other than a
refinancing requested by Lessee; or
(xxi) the existence of the Assignment of Termination Agreement
dated as of July 10, 1995 from Fokker Aircraft B.V. to
Kreditanstalt fur Wiederaufbau.
(c) Exceptions to indemnity for Head Lease general tax indemnity
liability. Lessee shall not be required to indemnify Lessor
pursuant to Article 8A.1(c) for any Head Lease General Tax
Indemnity Liability that would not have been incurred but for
any of the following:
(i) an event that occurs after the expiration or earlier
termination of this Lease, the payment by Lessee of all
Rent and other amounts due pursuant to this Lease and
the other Operating Lease Operative Documents and (if
required by the terms of this Lease) the return of the
Aircraft to Lessor in accordance with the terms of this
Lease, provided that the exclusion set forth in this
Article 8A.2(c)(i) shall not apply to any Head Lease
General Tax Indemnity Liability to the extent such Head
Lease General Tax Indemnity Liability is a result of one
or more events occurring or circumstances existing prior
to or concurrently with the expiration or earlier
termination of this Lease or to any payment or amount
payable by Lessee pursuant to this Lease or any other
Operating Lease Operative Document, or
(ii) a sale, assignment, transfer or other disposition by
Lessor of any interest in this Lease either voluntarily
or by reason of bankruptcy or similar proceedings for
the relief of debtors in which Lessor is the debtor,
unless in either case such disposition occurs in
connection with or as a result of an Event of Default, a
Casualty Occurrence, a substitution, replacement or
pooling of the Aircraft or any part thereof, the
exercise by Lessee of any option to
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terminate the Lease or to purchase the Aircraft or any
act or omission of Lessee, or unless in either case such
disposition is required by Applicable Law, or
(iii) the gross negligence or willful misconduct of Lessor, or
8A.3 Time of Payment by Lessee.
Any payment due under this Article 8A to Lessor shall be paid by
Lessee within 15 Business Days after receipt of a written demand
therefor from Lessor, provided that Lessee shall not be required to
make any such payment before the date that is two Business Days
prior to the date on which Lessor's related income tax payment, TIA
Liability or Head Lease General Tax Indemnity payment is due. If
Lessor is required to pay an indemnity pursuant to the Tax Indemnity
Agreement, Lessor agrees to elect, pursuant to Section 3.3 of the
Tax Indemnity Agreement, the form of indemnity payment requested by
Lessee in writing provided that Lessor receives Lessee's written
request at least two Business Days before the last day for making
such election.
8A.4 Tax Savings; Contest.
The provisions of Articles 8.6 (relating to tax savings) and 8.8
(relating to contesting Taxes) of this Lease shall apply, mutatis
mutandis, to the indemnity for Inclusions described in Article
8A.1(a) hereof.
8A.5 Payments From Head Lease Tax Indemnitees.
If any Head Lease Tax Indemnitee shall pay any amount to Lessor
pursuant to Section 7A(b), 7A(e), 7A(g) or 7A(h) of the
Participation Agreement or pursuant to Section 3.2 or 4 of the Tax
Indemnity Agreement, for which Lessee has previously paid an
indemnity to Lessor pursuant to Article 8A.1 hereof, Lessor shall
pay such amount to Lessee within 15 Business Days after Lessor
receives such amount.
8A.6 Contest.
If Lessor receives a written claim for an indemnity pursuant to
Section 7A of the Participation Agreement or pursuant to the Tax
Indemnity Agreement for which Lessee would be required to pay Lessor
an indemnity
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pursuant to this Article 8A, Lessor shall promptly notify Lessee
thereof in writing. If requested by Lessee by written notice
received by Lessor at least four Business Days before the latest
date on which Lessor may request or initiate a contest pursuant to
Section 7A(g) of the Participation Agreement or Section 4 of the Tax
Indemnity Agreement, Lessor shall exercise its rights under Section
7A(g) of the Participation Agreement or under Section 4 of the Tax
Indemnity Agreement, as the case may be, in the manner requested by
Lessee, provided that in no event shall Lessor be required to
initiate or continue (or required to request any other Person to
initiate or continue) a contest of any such claim unless:
(a) no Major Default or Event of Default shall have occurred and
be continuing unless Lessee shall have provided security
reasonably satisfactory to Lessor securing Lessee's
performance of its obligations under this Article 8A;
(b) Lessee shall have agreed to pay on an After-Tax Basis all
reasonable costs and expenses that Lessor incurs in connection
with contesting such claim and all amounts that Lessor is
required to pay from time to time pursuant to Section
7A(g)(iv)(B) of the Participation Agreement or Section 4(d) of
the Tax Indemnity Agreement, as the case may be;
(c) the action to be taken will not result in a material danger of
sale, forfeiture or loss of the Aircraft or any part thereof
or any interest therein or the creation of a Lien (other than
a Permitted Lien) on the Aircraft, the Trust Estate or the
Trust Indenture Estate unless Lessee shall have adequately
bonded or otherwise made provision to protect the interests of
Lessor and the Owner Participant in a manner reasonably
satisfactory to Lessor and the Owner Participant;
(d) if such contest shall require payment of the Tax claimed,
Lessee shall have advanced on an interest-free basis the
amount thereof (including any interest, penalties and
additions to tax with respect thereto) for the period during
which such contest is continuing and shall have agreed to
indemnify such Lessor and (in the case of a contest pursuant
to Section 4 of the Tax Indemnity Agreement) the Owner
Participant or (in the case
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of a contest pursuant to Section 7A of the Participation
Agreement) each Head Lease Tax Indemnitee for any adverse tax
consequences of such interest-free loan;
(e) Lessee shall have acknowledged its obligation to indemnify
Lessor should the contested claim prove to be correct except
to the extent that the Final Determination demonstrates that
Lessee would not be so obligated absent such acknowledgment;
(f) in the case of a Tax Indemnitee Controlled Contest pursuant to
Section 7A(g) of the Participation Agreement or any contest
pursuant to Section 4 of the Tax Indemnity Agreement, Lessor
and the relevant Head Lease Tax Indemnitee shall have
received, at Lessee's expense, a written opinion of
independent tax counsel selected by Lessee and reasonably
acceptable to Lessor and such Head Lease Tax Indemnitee to the
effect that there is a Reasonable Basis for such contest;
(g) in the case of a Tax Indemnitee Controlled Contest pursuant to
Section 7A of the Participation Agreement, the amount of the
indemnity that would be payable by Lessor pursuant to Section
7A if such claim is not contested or if a contest of such
claim is unsuccessful (plus the aggregate amount of the
indemnities that would be payable by Lessor pursuant to
Section 7A if all related claims that have been or could be
raised with respect to any other period are not contested)
would exceed $10,000; and
(h) in the case of a contest pursuant to Section 4 of the Tax
Indemnity Agreement, the amount of the indemnity that would be
payable by Lessor pursuant to the Tax Indemnity Agreement if
such claim is not contested or if a contest of such claim is
unsuccessful (plus the aggregate amount of the indemnities
that would be payable by Lessor pursuant to the Tax Indemnity
Agreement if all related claims that have been or could be
raised with respect to any other period are not contested)
would exceed $50,000.
8A.7 Verification
If requested by Lessee in writing within ten Business Days after
receipt of a Lessor demand for an indemnity,
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Lessor shall exercise its rights under Section 7A(j) of the
Participation Agreement or under Section 3.8 of the Tax Indemnity
Agreement, as the case may be, provided that Lessee shall have
agreed to pay, and shall be paying currently, on an After-Tax Basis
any and all amounts payable by Lessor under Section 7A(j) of the
Participation Agreement or under Section 3.8 of the Tax Indemnity
Agreement, as the case may be.
8A.8 Documents and Other Information
(a) Lessee shall provide or cause to be provided to Lessor, upon
request, all documents and other information that Lessor is
required to provide to any Head Lease Tax Indemnitee pursuant
to the Head Lease Operative Documents and that is within the
control of any Lessee Related Person.
(b) Lessee shall prepare or cause to be prepared, and shall timely
file or cause to be timely filed, all returns, reports,
statements and other documents that Lessor is required to
prepare and/or file pursuant to Section 7A(i) of the
Participation Agreement; provided that Lessor shall have
furnished or caused to be furnished to Lessee any information
that is reasonably requested by Lessee, that is not within the
control of a Lessee Related Person, that is within the control
of Lessor or of a Head Lease Tax Indemnitee and that is
reasonably necessary to enable Lessee to prepare and file such
report, return or statement.
(c) Lessee shall timely pay or cause to be timely paid directly to
the appropriate taxing authority all amounts that Lessor is
required to. pay directly to such taxing authority pursuant to
Section 7A(f) of the Participation Agreement to the extent
that Lessee is liable for such amount pursuant to this Article
8.
8A.9 Certain Definitions
As used in this Lease:
(a) "Affiliate" means, with respect to any Person, any other
Person (other than an individual) directly or indirectly
controlling, controlled by, or under direct or indirect common
control with such Person; or if such Person is a partnership,
any general partner of such Person or Person
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controlling such general partner. A Person shall be deemed to
control another Person if such Person possesses, directly or
indirectly, the power to direct or cause the direction of the
management and policies of such other Person, whether through
the ownership of voting securities, by contract or otherwise.
(b) "After-Tax Basis" has the meaning explained as follows: If
Lessee is required to pay a specified amount on an After-Tax
Basis to or for the benefit of any Person, the Lessee must pay
the sum of (i) the specified amount plus (ii) the net amount
of all Taxes (taking into account any current deduction or
other income tax benefit actually realized by such Person
resulting from the payment or accrual of the cost, expense or
tax for which the specified amount is payable) required to be
paid by such Person with respect to the receipt or accrual of
the specified amount and the additional amounts described in
this clause (ii) (calculated by assuming, in the case of any
payment to or for the benefit of the Owner Participant or any
related tax indemnitee, that such Person is subject to United
States Federal income tax at the highest marginal statutory
rate imposed on corporations for the relevant period, and is
subject to United States state and local income taxes and
foreign income taxes at the actual rates applicable to such
Person for the relevant period, with respect to the receipt or
accrual of such amount by such Person. If Lessee shall have
paid or reimbursed any Person pursuant to the Operating Lease
Operative Documents for any expense on an After-Tax Basis (an
"After-Tax Basis Payment") and such Person (or a member of a
group of corporations that includes such Person and for which
consolidated, combined or unitary tax returns are filed) shall
actually realize any tax savings attributable to such expense,
such Person shall pay to Lessee an amount equal to the sum of
(x) the amount of such tax savings plus (y) the amount of any
further tax savings realized by such Person (or by a member of
such group of corporations) as a result of such payment,
provided that the amount paid to Lessee pursuant to this
sentence shall not exceed the amount of Lessee's underlying
After-Tax Basis Payment, and provided further that if any such
tax savings are subsequently disallowed or reduced, such lost
tax
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savings shall be deemed to be a Tax for which Lessee is
required to indemnify Lessor pursuant to Article 8, without
regard to any exclusion of Lessor Taxes.
(c) "Appraisal" means the opinion provided by BK Associates
concerning the Aircraft pursuant to the Participation
Agreement.
(d) "Code" means the Internal Revenue Code of 1986, as amended.
(e) "Final Determination" means (A) a decision, judgment, decree
or other order by any court of competent jurisdiction, which
decision, judgment, decree or other order has become final and
unappealable (or, if appealable to the U.S. Supreme Court, the
relevant Tax Indemnitee has not consented to such appeal), (B)
a closing agreement or any other binding settlement agreement
entered into with the consent of Lessee in connection with an
administrative or judicial proceeding which is not subject to
further appeal, or (C) the expiration of the time for
instituting a claim for refund, or if such claim for refund is
filed, the expiration of the time for instituting suit with
respect thereto.
(f) "Head Lease Operative Documents" means each of the
Participation Agreement, the Lease, each Lease Supplement, the
Tax Indemnity Agreement, the Support Services Agreement, the
Support Services Agreement Assignment, the Indenture, each
Indenture Supplement, the Trust Agreement, the Initial
Sublease, each other Qualified Sublease, the Sublease
Certificate of Acceptance, the Sublease Assignment, the
Consent to Assignment, the Consent and Agreement, the Loan
Certificates outstanding at the time of reference, the
Guaranties, the FAA Bill of Sale, the Warranty Bill of Sale,
the DASA Confirmation, the Fokker Confirmation and the
Assumption Agreement (as each of the foregoing is defined in
Schedule Z to the Participation Agreement), each as amended,
modified or supplemented from time to time in accordance with
its terms.
(g) "Head Lease Tax Indemnitee" means any of the following: (i)
the Owner Participant, the Head Lessor (in its individual
capacity and as Owner
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Trustee), the Trust Estate, the Indenture Trustee (in its
individual capacity and as the Indenture Trustee), the Loan
Participant, the Trust Indenture Estate (as each of the
foregoing is defined in Schedule Z to the Participation
Agreement), (ii) each successor or permitted assignee of each
entity described in subdivision (i) above, (iii) each
Affiliate of each entity described in subdivisions (i) and
(ii) above, and (iv) each director, officer, employee and
agent (in their respective representative capacities) of each
entity described in subdivisions (i), (ii) and (iii) above;
(h) "Lessee Related Person" means any of the following: Lessee,
any sublessee or sub-sublessee of Lessee, any other Person
(other than a Lessor Related Person) in possession or use of
the Aircraft or any part thereof through Lessee, and any
Affiliate, successor or assign of any of the foregoing.
(i) "Lessor Related Person" means any of the following: Lessor,
each successor or permitted assignee of Lessor and each
Affiliate of each of the foregoing.
(j) "Loan Certificates" means the loan certificates issued
pursuant to the Indenture.
(k) "Major Default" means a Default described in Article 15.1(a),
15.1(f) or 15.1(h) of this Lease.
(1) "Operating Lease Indemnification Event" means any of the
following:
(i) any act or omission of Lessee or any other Lessee
Related Person other than a Required Act or Omission or
a Permitted Act,
(ii) any breach or inaccuracy of any representation, warranty
or covenant of Lessee in this Lease or in the Lease
Termination Agreement dated as of July 10, 1995 among
Fokker Aircraft B.V., Lessee and First Security Bank of
Utah, National Association, as owner trustee,
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(iii) any destruction, theft, confiscation or requisition of
title to the Aircraft or any part thereof,
(iv) any warranty or similar payment received or receivable
by Lessee or another Lessee Related Person with respect
to the Aircraft, any Engine or any part thereof and not
paid or payable to, and retained by Owner Participant,
Owner Trustee or Lessor,
(v) any alteration, modification, improvement, addition,
repair, maintenance, replacement, substitution or
pooling of or to the Aircraft, any Engine or any part of
any thereof by Lessee or any other Lessee Related
Person.
(m) "Operating Lease Operative Documents" means this Lease and (to
the extent relating to the Aircraft) the Credit and Security
Agreement, the Note, the Support Services Agreement, the
Termination Agreement and each other agreement between Lessee
and Lessor (or any affiliate of Lessor) relating to the lease
of the Aircraft by Lessor (or any affiliate of Lessor) to
Lessee, each as amended, modified or supplemented from time to
time in accordance with its terms.
(n) "Permitted Act" means the execution and delivery of the
Operating Lease Operative Documents and any act that is
expressly permitted by Paragraph 9 of Appendix D of this
Lease.
(o) "Person" means any individual, corporation, partnership, joint
venture, association, joint-stock company, trust,
unincorporated organization or Government Entity.
(p) "Reasonable Basis" for a position exists if tax counsel may
properly advise reporting such a position on a tax return in
accordance with Formal Opinion 85-352 issued by the Standing
Committee on Ethics and Professional Responsibility of the
American Bar Association.
(q) "Required Act or Omission" means any act or omission that is
expressly required by any of the Operating Lease Operative
Documents.
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(r) "Specified Tax" means any Tax imposed on, payable by or
asserted against any Head Lease Tax Indemnitee arising from,
as a result of, with respect to or in connection with any of
the following or any combination of the following:
(i) any act or omission of Lessee or any other Lessee
Related Person or any failure of Lessee or any other
Lessee Person to act when required to act,
(ii) any breach or inaccuracy of any representation, warranty
or covenant of Lessee in the Lease or the Lease
Termination Agreement,
(iii) any loss, damage, destruction, casualty, forfeiture,
theft, governmental taking, confiscation, requisition,
seizure or condemnation of the Aircraft or any part
thereof,
(iv) any alteration, modification, improvement, addition,
repair, maintenance, testing, servicing, replacement,
substitution or pooling of or to the Aircraft, any
Engine or any part of any thereof by Lessee or any other
Lessee Related Person,
(v) the location, use, insuring, possession, leasing,
subleasing, sub-subleasing, storage, operation, basing
or presence of the Aircraft or any part thereof by
Lessor under this Lease or by Lessee or any other Lessee
Related Person,
(vi) the situs of organization, any place of business or any
activity or transaction of Lessee or any other Lessee
Related Person in the jurisdiction imposing the tax,
(vii) any amount paid or payable pursuant to the Loan
Certificates or the Indenture to the extent such Tax
would not have been imposed but for a change after the
Delivery Date in the income tax convention between the
United States and Germany as in effect on the Delivery
Date,
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(viii) any amount paid or payable pursuant to the Head Lease
(to the extent resulting from the location or use of the
Aircraft or any part thereof) or this Lease,
(ix) the return, redelivery, importation or exportation
resulting from the use of the Aircraft by Lessee or any
other Lessee Related Person, abandonment or other
disposition of the Aircraft or any part thereof by
Lessee or any other Lessee Related Person,
(x) the enforcement of rights under the Head Lease Operative
Documents or the Operating Lease Operative Documents, in
each case after the occurrence and during the
continuance of an Event of Default under this Lease,
(xi) the occurrence of an Event of Default or a Casualty
Occurrence,
(xii) the imposition of any Lien (other than a Lessor Lien) on
the Aircraft or any part thereof,
(xiii) the existence, presence, execution, delivery, filing,
recording, amendment or enforcement of the Operating
Lease Operative Documents,
(xiv) any other transaction by, activity of, or event or
occurrence with respect to Lessee or any other Lessee
Related Person pursuant to this Lease.
8A.10. Representation and Warranty of Lessee
Lessee hereby represents and warrants that (a) all airworthiness
directives affecting the Aircraft have been complied with; (b) no
accident involving the Aircraft, or other damage to the Aircraft,
has occurred that would affect the market value of the Aircraft; and
(c) the Aircraft has been maintained in accordance with a
maintenance program approved by the U.S. Federal Aviation
Administration and in accordance with accepted industry standards.
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9. LIENS
9.1 Lessee, during the Term, shall not create or suffer to exist any
lien, attachment, mortgage or other encumbrance upon or against the
Aircraft, or any of its rights under this Lease, other than
Permitted Liens. If at any time a lien, attachment, mortgage, or
other encumbrance except as permitted above shall be created or
suffered to exist by Lessee, or be levied upon the Aircraft or any
of its rights under this Lease, Lessee shall forthwith notify Lessor
and cause the same forthwith to be discharged by bond or otherwise.
In the event Lessee shall fail to discharge any such lien,
attachment, mortgage or other encumbrance, Lessor, Head Lessor or
Indenture Trustee shall be entitled (but not bound) to discharge the
same, in which event Lessee shall pay to Lessor, on demand, the
amount paid by Lessor and/or Head Lessor and/or Indenture Trustee,
together with Lessor's and/or Head Lessor's and/or Indenture
Trustee's losses, costs and expenses, including reasonable legal
fees and expenses.
10. INDEMNIFICATION
10.1 LESSEE SHALL RELEASE AND DEFEND, HOLD HARMLESS AND INDEMNIFY ANY
AND/OR ALL OF THE INDEMNITEES, FROM AND AGAINST ANY AND ALL CLAIMS,
PROCEEDINGS, SUITS, JUDGEMENTS, COSTS, EXPENSES, PENALTIES, FINES
AND LIABILITIES, DIRECT AND CONSEQUENTIAL DAMAGES AND LOSSES,
INCLUDING WITHOUT LIMITATION COSTS AND EXPENSES INCIDENTAL THERETO,
OF WHATSOEVER KIND AND NATURE, AND INCLUDING REASONABLE LEGAL FEES
AND EXPENSES BUT EXCLUDING ANY TAXES, INDEMNITY FOR WHICH IS
ENCOMPASSED SOLELY IN ARTICLE 4.1 AND ARTICLE 8 AND ARTICLE 8A (EACH
A "CLAIM") ATTRIBUTABLE TO LESSEE'S ACTS OR OMISSIONS TO ACT (WHERE
LESSEE IS SO OBLIGATED) OCCURRING DURING THE TERM, WHICH MAY BE
SUFFERED BY, ASSERTED AGAINST, CHARGED TO OR RECOVERABLE FROM,
DIRECTLY OR INDIRECTLY, ANY AND/OR ALL OF THE INDEMNITEES:
(A) RELATING TO, ARISING OUT OF OR IN ANY WAY CONNECTED WITH THE
POSSESSION, DELIVERY, PERFORMANCE, MANAGEMENT, CONTROL,
MAINTENANCE, CONDITION, SERVICE, REPAIR, OVERHAUL, LEASING,
USE, OPERATION OR RETURN OF THE AIRCRAFT, ANY ENGINE OR ANY
PART, OR THE PERFORMANCE OR NON-PERFORMANCE OF ANY AND/OR ALL
OF THE INDEMNITEES OF SERVICES OR DELIVERY OF ANY THINGS IN
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CONNECTION WITH THE AIRCRAFT DURING THE TERM, OR OTHERWISE IN
CONNECTION WITH THIS LEASE, WHETHER OR NOT ARISING IN TORT OR
OCCASIONED IN WHOLE OR IN PART BY THE FAULT OR NEGLIGENCE OF
ANY AND/OR ALL OF THE INDEMNITEES; OR
(B) AS A CONSEQUENCE OF ANY DESIGN, ARTICLE OR MATERIAL IN THE
AIRCRAFT, ANY ENGINE OR ANY PART OR ITS OPERATION OR USE
CONSTITUTING AN INFRINGEMENT OF PATENT (TO THE EXTENT AND
SCOPE AND SUBJECT TO THE LIMITATIONS SET FORTH IN PART C OF
EXHIBIT G OF THE SUPPORT SERVICES AGREEMENT), COPYRIGHT,
TRADEMARK, DESIGN OR OTHER PROPRIETARY RIGHT OR A BREACH BY
LESSEE OF ANY OBLIGATION OF CONFIDENTIALITY OWED TO ANY
PERSON; OR
(C) PURSUANT TO SECTION 7(b) (EXCLUDING SUBCLAUSE (iv) THEREOF) OF
THE PARTICIPATION AGREEMENT;
EXCLUDING, HOWEVER, FROM THE FOREGOING ANY SUCH CLAIM TO THE
EXTENT THAT SUCH CLAIM RESULTS FROM A LESSOR LIEN OR THE GROSS
NEGLIGENCE OR WILLFUL MISCONDUCT OF SUCH INDEMNITEE OR FROM
ANY MISREPRESENTATION BY SUCH INDEMNITEE CONTAINED IN THIS
LEASE OR ANY BREACH BY SUCH INDEMNITEE OF ANY COVENANT SET
FORTH IN THIS LEASE.
10.2 The indemnities contained in this Article 10 shall continue in full
force and effect notwithstanding the expiration or other termination
of this Lease or of the letting of the Aircraft hereunder.
10.3 The indemnities contained in this Article 10 are given to Lessor for
itself and as agent and trustee on behalf of the other Indemnitees.
10.4 Notwithstanding anything to the contrary contained herein, Lessee
does not release and does not agree to defend, hold harmless or
indemnify under this Lease (and without limiting any obligations or
indemnities contained in any other agreement with Lessee) Fokker or
any other Indemnitee in its capacity as manufacturer or seller of
the Aircraft from or against (i) claims of third parties made
directly against Fokker or such Indemnitee, based on its product
liability or its status as manufacturer or Seller, or (ii) claims
made against Fokker or such Indemnitee based on the warranties or
indemnities contained in the Product Assurance Document which is
Exhibit G of the Support
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Services Agreement, or (iii) the matters described in Article
10.1(B).
10.5 If any Indemnitee has knowledge of the occurrence of any Claim,
liability or other matter for which it is or may be entitled to be
indemnified hereunder, it shall give prompt written notice thereof
to Lessee. Each Indemnitee shall cooperate in good faith with Lessee
and supply such information as may reasonably be requested by Lessee
to enable Lessee to investigate, defend or contest any Claim,
liability or other matter for which Lessee may be required to
indemnify an Indemnitee hereunder. In the event that Lessee pays any
amount to an Indemnitee pursuant to this Article 10, Lessee shall be
subrogated to all rights of the Indemnitee in respect of the Claim,
liability or other matter indemnified against giving rise to such
payment. Lessee or its insurers shall have the right, unless an
Event of Default shall have occurred and be continuing and such
matter is not covered by insurance, to investigate or (provided that
Lessee or its insurers shall agree not to dispute liability
hereunder or under any insurance policies pursuant to which coverage
is sought and provided that Lessee shall have consulted with Lessor
prior thereto), defend or compromise any Claim, and Lessor shall
cooperate with Lessee with respect thereto.
10.6 With respect to any Claims that Lessee is required to indemnify an
Indemnitee against pursuant to Article 10.1(c), the Indemnitee
agrees to give such further assurance or agreements and to cooperate
with Lessee to permit Lessee to pursue any and all contest rights
that such Indemnitee may have under the Participation Agreement and
agrees that if the assignment to Lessee of the Indemnitee's contest
rights under the Participation Agreement is not permitted under the
Participation Agreement, the Indemnitee will exercise its contest
rights with respect to such Claim pursuant to instructions from
Lessee, at Lessee's cost and expense, provided, however, that Lessee
shall have indemnified Lessor, to Lessor's satisfaction, against all
material liabilities of Lessor in connection with such contest not
otherwise indemnified in Article 10.1 and such contest could not in
the good faith opinion of the Indemnitee entail any material risk of
criminal liability; provided, however that Lessor shall not be
required to permit Lessee to exercise such contest rights so long as
there is continuing an Event of Default hereunder.
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In the event that Lessee shall have paid an indemnity to or on
behalf of an Indemnitee pursuant to this Article 10.6, then within
ten days of the receipt by an Indemnitee from any person with
respect to which such Indemnitee has an indemnification obligation
under the Participation Agreement of any payment constituting a
refund with respect to the indemnity, such Indemnitee shall pay to
Lessee an amount that, on a net after tax basis, shall be equal to
such payment (but in no event more than such payment together with
interest received by such Indemnitee thereon).
11. INSURANCE
11.1 On or before the Delivery Date of the Aircraft and throughout the
Term, Lessee shall carry and maintain in full force and effect, at
its own cost and expense, in such forms, on such conditions and with
such insurers and, if requested, reinsurers and through such
insurance and, if requested, reinsurance brokers as are satisfactory
to Lessor, the following insurances with respect to the Aircraft,
Engines and Parts (herein referred to as "the Insurances"):
(a) All Risks Aircraft Hull insurance of the type usually insured
against by commercial airlines engaged in the same or similar
business and owning or operating similar aircraft (including
Engines and Parts while not installed on the Aircraft and
including Extended Coverage Endorsement (Aircraft Hull) AVN51
or equivalent on the Agreed Value. The insurance may be
subject to a deductible in respect of losses other than total
loss, arranged total loss or constructive total loss of not
more than $100,000.00 (Dollars One Hundred Thousand) for each
accident subject, however, that (i) such deductible may be
adjusted during the ten (10) year period from the Original
Delivery Date only with the consent of Lessor (such consent
not to be unreasonably withheld) and (ii) thereafter may be
adjusted to such deductible amount as is customary for
commercial airlines engaged in the same or similar business in
the United States and operating similar aircraft (but not
necessarily Fokker-manufactured) and having a similar claims
history and credit standing.
(b) If operated outside the United States and Canada, Aircraft
Hull War and Allied Perils insurance
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covering the risks excluded from the All Risks Aircraft Hull
insurance specified in paragraph (a) above by the terms of the
War, Hi-Jacking and Other Perils Exclusion Clause AVN.48B
except paragraph (b) thereof and shall include cover in
respect of confiscation, nationalization, seizure, restraint,
detention, appropriation for title or use by or under the
order of any Government Entity of the State of Registration.
(c) Comprehensive Airline Liability insurance (including without
limitation aircraft Third Party Liability, Passenger and Crew
Liability (including Baggage and Personal Effects)), Cargo
Liability, Mail Liability, Personal Injury Liability,
Contractual Liability, Hangar Keeper's Liability, Aircraft
Products Liability and General Third Party Liability of the
types usually insured against by commercial airlines engaged
in the same or similar business and owning or operating
similar aircraft (but not necessarily Fokker-manufactured) in
an amount of not less than $500,000,000.00 (Dollars Five
Hundred Million) Combined Single Limit any one occurrence each
Aircraft but limited in respect of Personal Injury to the
equivalent of $25,000,000.00 (Dollars Twenty Five Million) any
one offence and in the aggregate.
Such insurance shall include cover in respect of the risks
excluded by War, Hi-Jacking and Other Perils Exclusion Clause
AVN.48B except paragraph (b) thereof.
This insurance may be subject to deductibles in respect of
passengers baggage and personal effects of not more than
$1,250.00 (Dollars One Thousand Two Hundred Fifty) any one
claim and in respect of cargo and mail of not more than
$5,000.00 (Dollars Five Thousand) any one claim subject,
however to adjustment of such deductible amount as is
customary in the aviation insurance market for commercial
airlines engaged in the same or similar business in the United
States and operating similar aircraft and having a similar
claims history and credit standing. Such deductibles shall not
apply to claims arising from accidents to the carrying
aircraft.
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(d) All Risks insurance on Engines and Parts while any such items
are not installed on the Aircraft and in respect of which
cover is not provided under the All Risks Aircraft Hull
insurance and/or Aircraft Hull War and Allied Perils insurance
(respectively specified in paragraphs (a) and (b) above) of
the type usually insured against by commercial airlines
engaged in the same or similar business and owning or
operating similar aircraft for not less than full replacement
value. If Engines and Parts are located outside the United
States and Canada, such insurance shall include War and Allied
Perils to the extent that such insurance is customarily
available in the international insurance market for this type
of insurance.
This insurance may be subject to a deductible of not more than
$10,000.00 (Dollars Ten Thousand), subject, however, to
adjustment of such deductible amount as is customary in the
aviation insurance market for commercial airlines engaged in
the same or similar business in the United States and
operating similar (but not necessarily Fokker-manufactured)
aircraft and having a similar claims history and credit
standing.
The Lessor will accept a United States government indemnity in lieu
of the foregoing or otherwise required under this Article 11.
Lessor's current requirements as at the date of this Lease as to the
Insurances are as specified in this Article. Lessor reserves the
right to amend, and will cooperate with Lessee reasonably to amend,
the insurance requirements of this Article 11 to reflect changes in
insurance practice subject, however to such amendments being
customary for and applicable to airlines engaged in the same or
similar business in the United States and similar aircraft and
having a similar claims history and credit standing.
If required by the first paragraph of Article 11.1, Lessee shall
procure that the insurers effect reinsurances in the same form and
conditions through such reinsurance brokers and with such reinsurers
and for such proportions as are satisfactory to Lessor.
11.2 All Insurances to be carried in accordance with Article 11.1 above
shall:
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(a) in respect of All Risks Aircraft Hull insurance, Aircraft Hull
War and Allied Perils insurance and All Risks insurance on
Engines and Parts:
(i) name Lessor, Head Lessor in its individual capacity and
as owner of the Aircraft, the Indenture Trustee in its
individual and its trust capacity, Owner Participant and
Loan Participant, and each of their respective
affiliates, successors and assigns, along with the
respective directors, officers and employees of each of
the foregoing (collectively, the "Additional Assureds");
(ii) provide that all claims in respect of the Aircraft,
Engines and Parts shall be payable to Indenture Trustee
for so long as the lien of the Indenture is in effect,
and thereafter to Head Lessor for so long as the Head
Lease is in effect, and thereafter to Lessor or as it
may direct, such payee to be named Loss Payee; provided,
that partial loss amounts shall be paid by the insurers
directly to repairers of the Aircraft, Engines or Parts
or to Lessee solely as reimbursement for repairs for
which Lessee has paid unless the insurers have been
given notice that a Default has occurred; and
(iii) if applicable, provide in respect of Hull All Risks and
Hull War and Allied Perils for a 50/50 Claims Settlement
Clause in the form of AVS.103;
(b) in respect of Comprehensive Airline Liability insurance:
(i) name the Additional Assureds as additional assureds; and
(ii) provide that the insurance shall operate in all respects
as if a separate policy had been issued covering each
party insured thereunder, but this provision shall not
operate to include any claim howsoever arising in
respect of loss or damage to the Aircraft, Engines and
Parts insured under the All Risks Hull, Hull War and
Allied Perils or All Risks insurance of the assured.
Notwithstanding the foregoing the total
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liability of insurers in respect of any and all assureds
shall not exceed the limits of liability stated in the
policy;
(c) in respect of all Insurances:
(i) be effective worldwide except for territories approved
in writing by Lessor;
(ii) provide that insurers waive all rights of subrogation
against the Additional Assureds;
(iii) provide that in the event that the Insurances are
cancelled (including cancellation for non-payment of
premium) or are materially changed such cancellation or
change shall not be effective as to the interests of the
Additional Assureds until thirty (30) days (but seven
(7) days or such lesser period as is customarily
available in accordance with policy conditions in
respect of war and allied perils) after confirmed
receipt by the Additional Assureds of written notice by
insurers of such cancellation or change;
(iv) provide that in respect of the interests of the
Additional Assureds, the Insurances shall not be
invalidated by any act, neglect, omission,
misrepresentation or non-disclosure on the part of
Lessee or any other party other than the Additional
Assured seeking to make a claim thereunder, and shall
insure each Additional Assured regardless of any breach
or violation of any warranties, declarations or
conditions contained in such policies by Lessee or any
other party other than the Additional Assured seeking to
make a claim thereunder;
(v) provide that the Additional Assureds shall have no
responsibility for premium and insurers shall waive any
right of set-off or counterclaim against the Additional
Assureds except in respect of outstanding premium in
respect of the Aircraft, Engines and Parts subject of a
claim;
(vi) not provide for any deductible or self insurance other
than the deductibles allowed under the terms of Article
11.1 above;
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(vii) be primary without right of contribution from any other
insurance carried by Lessor, Lessee or any other person;
and
(viii) be denominated in Dollars.
11.3 If required by the first paragraph of Article 11.1, the re-insurance
policies shall:
(a) provide that cover shall be identical to the cover provided by
the original insurances and be subject to the same terms and
conditions as the original insurances;
(b) provide that so far as the respective interests of the
Additional Assureds are concerned the reinsurance shall not be
invalidated by any act, neglect, omission, misrepresentation
or non-disclosure on the part of the reinsured party;
(c) confirm the insurers' agreement to the provision of paragraph
(d) below;
(d) include a "cut-through" clause in the following terms or in
such other terms as may be satisfactory to Lessor:
"In respect of All Risks Aircraft Hull insurance, Aircraft
Hull War Risk and Allied Perils insurance as described in
Article 11.1(a) and (b) above and All Risks insurance on any
Engine and Parts as described in Article 11.1(d) above, the
reinsurers and the reassured hereby agree that in the event of
any claim arising under the relevant reinsurances the
reinsurers shall in lieu of payment to the reassured, its
successors in interest and assigns pay to the Loss Payee
specified in the primary insurances all sums payable under or
in connection with such reinsurances by virtue of any
reinsured loss of, or damage to, the Aircraft, Engines and
Parts, without any deduction or deductions whatsoever, other
than any outstanding premium in respect of the Aircraft,
Engines or Parts the subject of the claim, it being understood
and agreed that any such payment by the reinsurers shall fully
discharge and release the reinsurers from any and all further
liability in connection therewith.
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In respect of Comprehensive Airline Liability insurance as
described in Article 11.1(c) above, the reinsurers and
reassured hereby agree that in the event of any claim arising
under the relevant reinsurances, the reinsurers shall in lieu
of payment to the reassured, its successors in interest and
assigns pay to the person or party who has sustained the
relevant loss (or as reimbursement of any payment made by any
Additional Assureds) all sums payable under such reinsurances
by virtue of such reinsured loss, without any deduction or
deductions whatsoever, it being understood and agreed that any
such payment by the reinsurers shall fully discharge and
release the reinsurers from any and all further liability in
connection therewith"; and
(e) provide that the reinsurers and reassured agree that in the
event that the reassured, its successors in interest and
assigns shall at any time be or become insolvent or suspend
business or file a petition in bankruptcy or be adjudicated
insolvent or bankrupt or admit in writing its inability to pay
its debts as they become due, or make a general assignment for
the benefit of creditors or that a receiver or liquidator or
assignee or trustee or state commissioner of insurance be
appointed in respect of the reassured its successors in
interest or assigns or any substantial part of its property
for the purpose of liquidation on account of insolvency, then
the reinsurers, in lieu of payment to the reassured, its
successors in interest or assigns, shall pay upon demand that
portion of any loss due to the party entitled thereto under
the terms of the original insurance for which such reinsurers
would under the terms of the reinsurance be liable to pay the
reassured, its successors in interest or assigns, less any
amounts already paid, it being understood and agreed that any
such direct payment by reinsurers shall fully discharge and
release the reinsurers from any and all further liability for
such payment made.
11.4 Prior to the Delivery Date and thereafter during the Term, at least
five (5) Business Days prior to the renewal date of any Insurance
required or maintained by Lessee under Article 11.1 but in no event
less than once in each 12 month period, Lessee shall furnish or
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cause to be furnished to Lessor by the insurer or insurance broker
and the reinsurance broker
1) a certificate of insurance describing in detail the insurance
then carried and maintained, and certifying that such
insurance complies with the terms of this Lease, including:
(i) confirmation that the insurance/reinsurance has been
placed with the insurers/reinsurers required (giving the
name of such insurers/reinsurers), the insured/reinsured
amount and the period of the policy and
(ii) confirmation that all premiums due to
insurers/reinsurers have been paid,
and
2) a letter of undertaking from Lessee's brokers and, if
required, from the reinsurance brokers.
Such certificate(s) of insurance and letter(s) of undertaking
shall be substantially in the form as delivered on the
Delivery Date.
In the event that Lessee shall fail to effect, maintain or cause to
be effected or maintained, insurance as required by this Article 11,
Lessor, Head Lessor or Indenture Trustee may at its option, but
without any obligation to do so, and without prejudice to Lessor's,
Head Lessor's and Indenture Trustee's other rights or remedies
hereunder, maintain such insurance or provide such or a similar
insurance, and, in such event, Lessee shall, upon demand, promptly
reimburse to Lessor, Head Lessor or Indenture Trustee the cost
thereof, including interest thereon at the rate referred to in
Paragraph 6 of Appendix D.
11.5 In the event of any damage to the Aircraft, Engines or Parts during
the Term not constituting a Casualty Occurrence, Lessee shall
repair, or cause the same to be repaired by an Authorized
Maintenance Performer at its sole cost and expense. Lessor and
Lessee agree that all insurance proceeds payable in connection with
any such damage shall be payable as provided in Section 11.2(a)(ii).
Any excess remaining shall, unless a Default shall have occurred and
be continuing, be paid over to Lessee.
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11.6 Lessee may carry insurance with respect to its interest in the
Aircraft in excess of the Agreed Value, provided that such insurance
coverage shall not prejudice the ability of Head Lessor or Lessor to
obtain insurance of their respective interests in the Aircraft.
11.7 [Intentionally omitted].
12. ASSIGNMENT AND SUBLETTING
12.1 Lessee shall not assign any of its rights or obligations or delegate
any of its duties under this Lease and, except as permitted by
Article 5.1 above or Paragraph 10 of Appendix D, Lessee shall not
sublet or otherwise part with possession of the Aircraft or any Part
thereof unless previously approved by Lessor in writing (such
consent not to be unreasonably withheld).
12.2 This Lease, the Aircraft and Lessor's interest in each thereof is
freely assignable and alienable by Lessor upon written notice to
Lessee in accordance with Article 12.3, provided, however, that so
long as the Aircraft shall be leased to Lessee under this Lease,
Lessor will not sell, assign, convey or otherwise transfer
absolutely (and not for security) any of its right, title, or
interest in and to this Lease or the Aircraft to any person unless
Lessor and the proposed transferee (the "Transferee") have complied
with the following conditions:
(i) Lessor shall give Lessee written notice of such
transfer at least 10 Business Days before the date of such
transfer, specifying the name and address of the proposed
Transferee;
(ii) the Transferee shall not be an airline or a
commercial air carrier or person controlling, controlled by or
under common control with an airline or a commercial air
carrier which is in direct competition with Lessee in the
United States;
(iii) the Transferee shall qualify as a "citizen of the
United States" within the meaning of Section 40102(a)(15) of
the Federal Aviation Act by a Voting Trust Agreement or
otherwise; and
(iv) on the transfer date Lessor and the Transferee
shall enter into an agreement or
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agreements in which the Transferee confirms that it shall be
deemed a party to this Lease and agrees to be bound by all the
terms of, and to undertake all of the obligations of, Lessor
contained in this Lease, and shall deliver a certificate of
quiet enjoyment to Lessee in form and substance reasonably
acceptable to it and Lessee shall receive an opinion of
counsel to the Transferee stating, with the customary
assumptions and exceptions, that such agreement or agreements
has been duly authorized, executed and delivered and
constitute the legal, valid and binding obligations of the
Transferee enforceable in accordance with their terms and that
the entry into such agreement(s) does not violate any laws or
agreements applicable to such Transferee.
The agreements, covenants, obligations and liabilities contained
herein, including but not limited to all obligations to pay Rent and
indemnify Lessor, are made for the benefit of Lessor and its
respective successors and assigns, notwithstanding the possibility
that any such person was not originally a party to this Lease or
may, at the time any enforcement is sought, no longer be a party to
this Lease. Lessee shall comply, at Lessor's cost and expenses, with
all reasonable requests of Lessor, its successors and assigns
respecting the assignment and Lessee's acknowledgement of the
assignee as Lessor. Notwithstanding anything contained in this
paragraph to the contrary, no assignment of Lessor's interest in
this Lease or the Aircraft shall alter the terms of this Lease in so
far as the costs to Lessee of the performance of its obligations to
pay Rent, Reserve Rate and Deposits hereunder and, except as
otherwise expressly provided in this Lease, the rights and
liabilities of Lessee under this Lease are concerned. Lessee's
rights under this Lease shall not be subject or subordinate to the
Head Lease, the Security Assignment or the Indenture. The rights of
Head Lessor and Indenture Trustee under the Head Lease, the Security
Assignment and the Indenture, as the case may be, shall be subject
to Lessee's rights under Section 13.7 of this Lease.
12.3 It is acknowledged and agreed that:
(a) As at the date of the Certificate of Acceptance, ownership of
the Aircraft has been transferred to Head Lessor, Head Lessor
has leased the Aircraft to Lessor under the Head Lease and,
subject to the
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terms of the Head Lease, Lessor has subleased the Aircraft to
Lessee under this Lease.
(b) Lessor has assigned all of its right, title and interest in
and to this Lease to Head Lessor and Head Lessor has assigned
all its right, title and interest in and to this Lease and
granted a Security Interest in the Aircraft to Indenture
Trustee.
(c) Lessor may from time to time require to amend, modify or
replace the security arrangements in respect of the financing
or refinancing of the Aircraft and Lessee agrees to cooperate
with Lessor in connection therewith at the cost and expense of
Lessor and, in particular (but without limiting the generality
of the foregoing), to change the plates provided for in
Article 4.3 and to execute and deliver such other or further
acknowledgments of assignment or other documents and to do
such other things as Lessor may reasonably require to be
executed and delivered;
(d) Upon any financing or refinancing of the Aircraft as
contemplated by this Article 12.3 or otherwise at the cost and
expense of Lessor, Lessee will promptly and duly execute and
deliver to Lessor and such persons as Lessor shall designate,
such other documents and assurances and take such further
action as may from time to time be reasonably requested in
order more effectively to carry out the intent and purpose of
this Lease, the Head Lease, the Indenture, the Security
Assignment and any other documents relating to such financing
or refinancing;
(e) [Intentionally omitted]; and
(f) Lessee shall not be liable to any Transferee for any payment
of Taxes or other amounts pursuant to this Lease or otherwise
be subject to any liabilities in excess of the amount that
would have been payable to, or beyond the scope of the
liabilities to, as the case may be, Lessor originally party
hereto, if that party had remained as Lessor.
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13. DISCLAIMER, REPRESENTATIONS AND WARRANTIES
13.1 NEITHER LESSOR, NOR HEAD LESSOR, NOR OWNER PARTICIPANT NOR INDENTURE
TRUSTEE NOR LOAN PARTICIPANT IS A MANUFACTURER OF THE AIRCRAFT OR
OTHER AIRCRAFT OR A DEALER IN SIMILAR AIRCRAFT AND HAS NOT INSPECTED
THE AIRCRAFT PRIOR TO DELIVERY TO AND ACCEPTANCE BY LESSEE. LESSEE
(I) ACKNOWLEDGES AND AGREES THAT THE AIRCRAFT IS BEING DELIVERED BY
LESSOR TO LESSEE "AS IS" AND "WHERE IS" AND THAT NO CONDITION,
WARRANTY OR REPRESENTATION OF ANY KIND WHATSOEVER HAS BEEN OR IS
GIVEN BY OR IS TO BE IMPLIED ON THE PART OF LESSOR OR ON THE PART OF
HEAD LESSOR OR OWNER PARTICIPANT OR INDENTURE TRUSTEE OR LOAN
PARTICIPANT IN RELATION TO THE AIRCRAFT, AND (II) HEREBY WAIVES AS
BETWEEN ITSELF AND LESSOR OR ON THE PART OF HEAD LESSOR OR OWNER
PARTICIPANT OR INDENTURE TRUSTEE OR LOAN PARTICIPANT ALL ITS RIGHTS,
EXPRESS OR IMPLIED (WHETHER STATUTORY OR OTHERWISE), TO MAKE CLAIMS
IN RESPECT OF THE AIRCRAFT RELATING TO THE TITLE, AIRWORTHINESS,
VALUE, CONDITION, DESIGN, OPERATION, CONFORMITY TO SAMPLES OR
MODELS, COMPLIANCE WITH SPECIFICATIONS, MERCHANTABILITY OR FITNESS
OR SUITABILITY FOR USE FOR A PARTICULAR PURPOSE OF THE AIRCRAFT OR
ANY PART THEREOF, QUALITY OF THE MATERIAL OR WORKMANSHIP, ABSENCE OF
LATENT OR OTHER DEFECTS, WHETHER OR NOT DISCOVERABLE, ABSENCE OF ANY
INFRINGEMENT OF ANY PATENT, TRADEMARK OR COPYRIGHT, ABSENCE OF ANY
OBLIGATION, LIABILITY, RIGHT, CLAIM OR REMEDY IN TORT, BASED ON
STRICT LIABILITY OR NEGLIGENCE, ACTUAL OR IMPUTED, AND LESSEE HEREBY
WAIVES ANY OTHER REPRESENTATION OR WARRANTY WHATSOEVER, EXPRESS OR
IMPLIED, WITH RESPECT TO THE AIRCRAFT, IT BEING UNDERSTOOD THAT ALL
SUCH RISKS, AS BETWEEN LESSEE AND LESSOR OR ON THE PART OF HEAD
LESSOR OR OWNER PARTICIPANT OR INDENTURE TRUSTEE OR LOAN
PARTICIPANT, ARE TO BE BORNE BY LESSEE.
Nothing in this Lease shall afford Lessor or any Indemnitee any
wider or greater exclusion of liability for death or bodily injury
than would be permitted by the Governing Law.
This paragraph shall not be modified except by a written agreement
signed on behalf of Lessor and Lessee by their respective duly
authorized representatives.
13.2 Lessor and Lessee agree that this Article 13 has been the subject of
discussion and negotiation and is fully understood by the parties,
and that the amount of the Rent and other mutual agreements of the
parties set
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forth in this Lease were arrived at in consideration of the
provisions of this Article 13 specifically including the waiver by
Lessee set forth in Article 13.1.
13.3.1 So long as no Event of Default has occurred and is continuing Lessor
agrees to assign or otherwise make available to Lessee for the
duration of the Term such rights as Lessor may have under any
warranty, express or implied, with respect to the Aircraft made by
the Manufacturer of the Aircraft, any subcontractor or supplier
thereof, or any other seller thereof, to the extent that the same
may be assigned or otherwise made available to Lessee and without
warranty by Lessor as to enforceability of any of the rights so
assigned.
To the extent that the same may not be assigned or otherwise made
available to Lessee, Lessor agrees to exert its reasonable efforts,
at Lessee's expense, to enforce such rights as Lessor may have with
respect thereto for the benefit of Lessee; provided however, that
upon an Event of Default all such rights shall immediately revert to
Lessor including all claims thereunder, whether or not perfected,
unless such Event of Default has forthwith been remedied by Lessee.
13.3.2 [Intentionally omitted].
13.4 Lessee represents and warrants that:
(a) Lessee is a corporation organized and existing in good
standing, in accordance with the Laws of the State of
Incorporation, and has the corporate power and authority to
carry on its business as presently conducted and to perform
its obligations under this Lease, is a Certificated Air
Carrier and is the holder of all necessary licenses issued by
all Government Entities having jurisdiction to authorize or
permit Lessee to engage in air transportation and to perform
and comply with its obligations hereunder;
(b) This Lease has been duly authorized by all necessary corporate
action on the part of Lessee, and neither the execution and
delivery nor the consummation of the transactions contemplated
hereby nor compliance by Lessee with the provisions of this
Lease will contravene any Law applicable to Lessee or result
in any breach of, or constitute any default under, or result
in the
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creation of any lien, charge or encumbrance upon any property
of Lessee under, any indenture, mortgage, chattel mortgage,
deed of trust, conditional sales contract, bank loan or credit
agreement, corporate charter, by-law, or other agreement or
instrument to which Lessee is a party or by which Lessee or
its properties or assets may be bound or affected;
(c) The execution and delivery by Lessee of this Lease, and all of
the transactions by Lessee contemplated hereby, have received,
and Lessee has complied with, every necessary consent,
approval, order, or authorization of, or registration with, or
the giving of prior notice to, any Government Entity having
jurisdiction with respect to the execution and delivery of
this Lease or the validity and enforceability of this Lease or
the satisfaction of all monetary and other obligations
hereunder;
(d) This Lease has been duly entered into and delivered by Lessee
and constitutes the valid, legal and binding obligations of
Lessee, enforceable in accordance with their terms subject to
principles of equity, laws relating to bankruptcy, insolvency
or liquidation or any other laws or legal procedures generally
affecting the enforcement of creditor's rights or the rights
of contracting parties;
(e) It is not necessary or advisable under the Laws of the State
of Registration in order to ensure the validity, effectiveness
and enforceability of this Lease, the Head Lease, the
Indenture or the Security Assignment or to protect the
property rights of Lessor, Head Lessor, or Indenture Trustee
in the Aircraft and under the Head Lease, the Indenture and
the Security Assignment that this Lease, the Head Lease, the
Indenture, the Security Assignment or any other instrument
relating thereto be filed, registered or recorded or that any
other action be taken under the Laws of the States of Illinois
or North Carolina and the State of Registration to perfect the
property rights of Lessor, Head Lessor and Indenture Trustee
in the Aircraft other than the filing of all such instruments
with the Air Authority, the filing of UCC-1 financing
statements in relevant jurisdictions and possession of an
original
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version of this Lease, if deemed to be chattel paper, and the
Indenture and Security Assignment will have priority in all
respects over the claims of all creditors of Lessee in or
against the Aircraft;
(f) Under the Laws of the State of Incorporation and the State of
Registration Lessee will not be required to make any deduction
or withholding from any payment it may make under this Lease.
There is no withholding or other tax to be deducted from any
payment to be made by Lessee under this Lease;
(g) There are no suits or legal proceedings (including any
administrative proceeding) pending or threatened before any
court or administrative agency against Lessee which, if
adversely determined, would have a material adverse effect
upon its financial condition or business or its ability to
perform its obligations hereunder;
(h) [Intentionally omitted];
(i) There has been no material adverse change in the financial
position of Lessee or the consolidated financial position of
Lessee and its subsidiaries from that set forth in the
financial statements last furnished pursuant to Article 6.4
and neither Lessee nor any of its subsidiaries have any
significant liabilities (contingent or otherwise) which are
not disclosed by, or reserved against in such financial
statements;
(j) The chief executive office (as such term is used in Sections
9-103 and 9-401 of the Uniform Commercial Code) of Lessee is
located at Chicago, Illinois, and, commencing August 21, 1995,
shall be located in Durham, North Carolina and Lessee agrees
to give at least 30 days' prior notice to Lessor of any
relocation of said chief executive office or place where such
records are kept and of any change in its name.
13.5 The representations and warranties in Article 13.4 (other than in
clauses (f), (g) and (i)) shall be deemed to be repeated by Lessee
on and as of each Rent Date as if made with reference to the facts
and circumstances existing on each such date.
13.6 Lessor represents, warrants and covenants that:
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(a) Lessor is a corporation organized and existing in good
standing, in accordance with the Laws of the State of Delaware
and has the corporate power and authority to carry on its
business as presently conducted and to perform its obligations
under this Lease;
(b) This Lease has been duly authorized by all necessary corporate
action on the part of Lessor, has been duly entered into and
delivered by Lessor and constitutes the valid, legal and
binding obligations of Lessor, enforceable in accordance with
their respective terms subject to principles of equity, laws
relating to bankruptcy, insolvency or liquidation or any other
laws or legal procedures generally affecting the enforcement
of creditor's rights or the rights of contracting parties;
(c) Neither the execution and delivery nor the consummation of the
transactions contemplated hereby nor compliance by Lessor with
the provisions of this Lease will result in any breach of, or
constitute any default under, any indenture or any corporate
charter, by-law, or other agreement or instrument to which
Lessor is a party or by which Lessor or its properties or
assets may be bound; and
(d) Except for the registration of the Aircraft, neither the
execution and delivery nor the consummation of the
transactions contemplated hereby nor compliance by Lessor with
the provisions of this Lease requires the consent or approval
of, the giving of notice to, or the registration with, or the
taking of any other action in respect of any Government
Entity.
13.7 Lessor undertakes that, so long as no Event of Default shall have
occurred and be continuing, Lessor will not interfere with the
peaceful and quiet use and enjoyment of the Aircraft by Lessee in
accordance with the terms of this Lease. Lessor shall procure from
Head Lessor and Indenture Trustee a letter confirming that neither
Head Lessor nor Indenture Trustee shall take or cause to be taken
any action interfering with Lessee's quiet enjoyment and use and
possession of the Aircraft, provided, that no Event of Default shall
have occurred and be continuing. Lessee hereby agrees that if an
event of default under the Head Lease shall have
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occurred and be continuing, Lessee shall, at the reasonable cost and
expense of Lessee, enter into a lease with Head Lessor, such lease
to be upon terms and conditions substantially similar to those of
this Lease, and such lease shall be assigned to Indenture Trustee
under the Indenture with such changes as appropriate to reflect the
change in relationship between Lessee and the parties to the
Participation Agreement (other than the Lessor) resulting from the
Lessor no longer being interposed between the Lessee and such
parties.
13.8 On the Delivery Date, Head Lessor shall have received full legal and
beneficial title to the Aircraft from Lessor, Lessor shall have the
right to sublease the Aircraft hereunder and the Aircraft shall be
free of Lessor's Lien except for the lien of the Indenture, the
Security Assignment and the Head Lease, and Lessor covenants that
Lessor shall not create, incur, assume or suffer to exist any
Lessor's Lien (except the Indenture, the Security Assignment and the
Head Lease) on the Aircraft or any part thereof and agrees at its
own cost and expense, promptly to take such action as may be
necessary duly to discharge any such Lessor's Lien provided,
however, without limiting Lessor's liability under Article 13.7,
that Lessor may in good faith by appropriate proceedings contest
claims or charges resulting in any such Lessor's Lien as long as
such contest does not involve any material danger of the sale,
forfeiture or loss (or loss of use) of the Aircraft or any interest
therein and will indemnify and hold harmless Lessee against any and
all Claims, of whatever kind and nature, incurred by or asserted
against Lessee as a consequence of any such Lessor's Lien.
13.9 Lessor will not enter into any waiver, amendment or other
modification of the Tax Indemnity Agreement, Sections 7A or 7(b)(i),
(ii) or (iii) of the Participation Agreement or the Head Lease
definitions used therein that would increase Lessee's liabilities or
decrease its rights hereunder without Lessee's consent. Promptly
upon the execution and delivery of any amendment, modification,
supplement or waiver to the Tax Indemnity Agreement or Sections 7(b)
or 7A of the Head Lease, Lessor shall deliver true and accurate
copies thereof to Lessee. Lessor shall immediately notify Lessee of
the existence of any "Event of Default" or "Default" under the Head
Lease (that does not result from an Event of Default or Default
under
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this Lease) and shall promptly notify Lessee when the Head Lease is
no longer in effect.
14. COVENANTS OF LESSEE
14.1 Lessee hereby covenants with Lessor that from the Delivery Date and
during the Term and until redelivery of the Aircraft to Lessor in
accordance with Article 16 it will:
(a) remain in and continue to operate as a Certificated Air
Carrier holding a valid certificate of convenience and
necessity issued pursuant to the Federal Aviation Act and,
except as permitted in Section 14.1(p) hereof, preserve its
corporate existence;
(b) comply with all Laws and regulations for the time being in
force in the State of Incorporation, the State of Registration
and in any country to, from, in or over which the Aircraft is
flown, the failure with which to comply is likely to have a
material adverse effect on Lessee, provided, however, that
such failure shall have no adverse effect on the Aircraft or
the interests of Lessor, Head Lessor or Indenture Trustee
therein or the Insurance required to be maintained pursuant to
Article 11;
(c) (i) at its own expense from time to time do and perform such
other and further acts and execute and deliver any and all
further instruments as may be required by Law (in the United
States but not in any jurisdiction outside the United States
unless directly required due to Lessee's operation), and (ii)
at Lessor's expense (insofar as not covered in Article 8.2(a))
from time to time do and perform such other and further acts
and execute and deliver any and all further instruments as may
be reasonably requested by Lessor to establish, maintain and
protect the respective rights and remedies of Lessor, Head
Lessor and Indenture Trustee and to carry out and give effect
to the intents and purposes of this Lease and the Head Lease;
(d) notify Lessor immediately of any Default;
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(e) obtain and maintain all necessary government and other
certificates, consents, licenses, permits and authorizations
and take all action which may be necessary for the continued
due performance of Lessee's obligations under this Lease and
for the use and operation of the Aircraft;
(f) not do or permit to be done any act or thing which might
impair the respective interests of Lessor, Head Lessor and
Indenture Trustee in the Aircraft, or the registration of the
Aircraft;
(g) notify Lessor as soon as practicable after becoming aware of
any loss, theft, damage or destruction of or to the Aircraft
or any part thereof if the potential cost of repair or
replacement is likely to exceed $250,000.00 (Dollars Two
Hundred Fifty Thousand);
(h) not do anything which is likely to subject the Aircraft or any
part thereof to penalty, forfeiture, seizure, arrest,
impounding, detention, confiscation, taking in execution or
appropriation or destruction, nor abandon the Aircraft or any
part thereof;
(i) not represent or hold out Lessor, Head Lessor or Indenture
Trustee as carrying goods or passengers on the Aircraft or as
being in any way connected or associated with any operation or
carriage (whether for hire or reward or gratuitously) which
Lessee may undertake;
(j) not pledge the credit of Lessor, Head Lessor or Indenture
Trustee for any maintenance, overhauls, replacements, repairs
or modifications to the Aircraft;
(k) keep Lessor and the insurers, as referred to in Article 11,
informed as to current serial numbers of the Engines and any
engine installed on the Aircraft in accordance with the
provisions of this Lease, and the location of any Engine for
the time being not installed on the Aircraft; and shall notify
such insurers of any renewal, replacement or substitution, or
the location of any Engine not installed on the Aircraft;
(l) discharge all fees, charges and expenses payable to any third
party in relation to the use or
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operation of the Aircraft or any premises where the Aircraft
is situated;
(m) in the event of any forfeiture, impounding or detention of the
Aircraft or any part thereof not constituting a Casualty
Occurrence, use all reasonable endeavors to procure the
immediate release therefrom of the same;
(n) keep accurate, complete and current records of all flights
made by the Aircraft. Such records shall be kept in such
manner as the Air Authority may from time to time require and
in accordance with the Approved Maintenance Program. Lessee
shall permit Lessor or any person designated by Lessor to
examine such records upon giving reasonable notice not
involving delay to the Aircraft and subject to the terms of
Article 7.5.3, at the expense of Lessor or such person, to
copy such records;
(o) on request, provide Lessor with evidence satisfactory to
Lessor that all Taxes and charges incurred by Lessee with
respect to the Aircraft, including without limitation any
payments due to any relevant air traffic control authorities
and airport authorities, have been paid and discharged in full
or duly provided for;
(p) not consolidate with, or merge into, any other corporation,
convey, transfer or lease substantially all of its assets as
an entirety to any person without the prior written consent of
Lessor (such consent not to be unreasonably withheld) and the
execution and delivery to Lessor of such agreements,
certificates and legal opinions as Lessor may request with
respect thereto; and
(q) provide to Lessor immediate written notice of any termination
or expiration of the Aircraft Maintenance Agreement, and a
copy of any subsequent Aircraft Maintenance Agreement entered
into by Lessee.
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15. DEFAULT BY LESSEE
15.1 Each of the following events shall constitute an "Event of Default":
(a) if default shall be made by Lessee in the making of payment of
any Rent, Reserve Rate, Agreed Value, and/or of any other
Supplemental Rent, within 5 Business Days after the date when
due and payable under this Lease; or
(b) (i) if default shall be made by Lessee at any time in the
procurement or maintenance of any insurance coverage
prescribed herein or (ii) any insurance which may be
maintained by Lessor, Head Lessor or Indenture Trustee under
Article 11.4 is cancelled or terminated or notice of
cancellation is given; or
(c) if default shall be made by Lessee in the observance or
performance of any of the other obligations of Lessee
contained in this Lease and, if such default is in the opinion
of Lessor capable of remedy, such default shall continue for a
period of fifteen (15) Business Days after notice from Lessor
to Lessee specifying the default and requiring that the same
be remedied; or
(d) if any representation or warranty made (or deemed to be
repeated) by Lessee in or pursuant to this Lease or in any
document or certificate or statement referred to in or
delivered under this Lease is or proves to have been incorrect
in any material respect when made or deemed to be repeated and
such incorrectness, if capable of being cured, shall continue
for fifteen (15) Business Days after written notice from
Lessor specifying such incorrectness; or
(e) if any borrowed money having an outstanding principal amount
in excess of $4,000,000.00 (Dollars Four Million) of Lessee or
any of its subsidiaries is not paid when due, or by reason of
breach or default under the terms of any instrument evidencing
or guaranteeing the same on the part of Lessee or any of its
subsidiaries any borrowed money having an outstanding
principal amount in excess of $4,000,000.00 (Dollars Four
Million) of Lessee or any of its subsidiaries
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becomes due or capable of being declared due prior to the date
when it would otherwise have become due, or the security for
any such borrowed money or any guarantee in respect thereof
becomes enforceable; or
(f) if an encumbrancer takes possession or a receiver,
administrator, administrative receiver, trustee, liquidator or
similar officer is appointed of the whole or any substantial
part of the assets, rights or revenues of Lessee or any of its
subsidiaries or a distress, execution, sequestration or other
process is levied or enforced upon or sued out against all or
a substantial part of the assets, rights or revenues of Lessee
or any of its subsidiaries and is not discharged within
fourteen days, or Lessee applies for or consents to the
appointment of a receiver, administrator, administrative
receiver, trustee, liquidator or similar officer for it or for
all or any part of its assets, rights or revenues; or
(g) if Lessee or any of its subsidiaries suspends payment of its
debts, or is unable or admits its inability to pay its debts
as they fall due, or shall be adjudicated or found, or
becomes, bankrupt or insolvent, or proposes or enters into any
composition or other arrangement for the benefit of its
creditors generally, or Lessee or any of its subsidiaries
shall, by voluntary petition, answer or consent, seek relief
under the provisions of any bankruptcy, insolvency or other
similar law providing for the reorganization, liquidation,
administration, dissolution or winding-up of corporations, or
providing for an agreement, composition, extension or
adjustment with its creditors; or
(h) if a petition against Lessee in a proceeding under applicable
bankruptcy or other insolvency laws shall be filed and shall
not be withdrawn or dismissed within 30 days thereafter, or if
any order shall be made by any competent court or resolution
passed by Lessee or any of its subsidiaries or their
respective board of management or supervisory board, whichever
is competent to pass such resolution for the winding-up or
dissolution of Lessee or any of its subsidiaries or for the
appointment of a liquidator, trustee or conservator, save for
winding-up or
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dissolution for the purposes of amalgamation or reorganization
(not involving or arising out of insolvency) the terms of
which shall have received the prior written approval of
Lessor; or
(i) if Lessee or any of its subsidiaries disposes of all or a
material part of its assets, whether by one or a series of
transactions, related or not, other than for the purpose of a
reconstruction or amalgamation the terms of which have
received the previous consent in writing of Lessor; or
(j) if any action shall be taken by Lessee which shall impair the
rights, title or ownership of Lessor or Head Lessor or the
Security Interest of Indenture Trustee, in the Aircraft or
this Lease, or this Lease is or becomes wholly or partly
invalid, ineffective or unenforceable by reason of any act or
omission of Lessee; or
(k) if any consent, authorization, license, certificate or
approval of or registration with or declaration to any
Government Entity in connection with this Lease including,
without limitation:
(i) Lessee's air carrier operating certificate issued
pursuant to Chapter 447 of the Federal Aviation Act; or
(ii) required by Lessee or as a condition precedent required
by Lessor pursuant to Article 2.3 to authorize, or in
connection with, the execution, delivery, validity,
enforceability or admissibility in evidence of this
Lease or the performance by Lessee of its obligations
under this Lease; or
(iii) the registration of the Aircraft; or
(iv) any airline license or air transport license;
is changed such that it materially impairs the ability of
Lessee to perform its obligations hereunder, or is withheld,
or is revoked, suspended, cancelled, withdrawn, terminated or
not renewed, or otherwise ceases to be in full force; or
(m) if any circumstances analogous to any of the circumstances
described in paragraphs (f), (g) or
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(h) above arise under the Law of any applicable jurisdiction;
(n) for so long as Wings Aircraft Finance, Inc. or any other
affiliate or subsidiary of Fokker is the Lessor hereunder or
retains the entire beneficial interest in the ownership of the
Aircraft, if an event of default (however defined) occurs
under any Other Aircraft Agreement which event permits
acceleration or termination;
(o) [intentionally omitted],
(p) [intentionally omitted]; or
(q) [intentionally omitted].
15.2 If one or more Events of Default shall have occurred and be
continuing, at Lessor's option and subject to any mandatory
requirement of Law:
(a) For Lessee's account Lessor may do anything that may
reasonably be required to cure any Event of Default and
recover from Lessee all costs including legal expenses
incurred in so doing, and/or
(b) Lessor may accept such Event of Default as a repudiation of
this Lease and terminate the lease of the Aircraft to Lessee
hereunder by:
(i) serving notice of such termination on Lessee specifying
the occurrence giving rise to such Event of Default or
Events of Default, provided that such notice shall be
deemed to have been served without the necessity of
actual service upon the occurrence of any Event of
Default described in paragraph (f), (g), (h) or (m) of
Article 15.1.
Thereafter (if the Term shall have commenced) Lessee
shall redeliver possession of the Aircraft to Lessor at
the Redelivery Location (or such other location as
Lessor may require); or
(ii) at Lessor's election, taking possession of the Aircraft
for which purpose Lessor by its servants or agents may
enter upon Lessee's premises where the Aircraft may be
located,
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or cause the same to be redelivered to Lessor at the
Redelivery Location (or such other location as Lessor
may require Lessee to assemble and deliver the Aircraft
to Lessor, and Lessor shall be entitled to act as
attorney for Lessee in causing such redelivery and shall
have all the powers and authorizations legally necessary
for taking such action. In the event of exercise by
Lessor of its powers under this sub-paragraph (ii) such
termination shall be deemed to take effect on such
taking of possession by Lessor or such redelivery of the
Aircraft to Lessor at the said airport; and/or
(c) Lessor may proceed by appropriate court action or actions to
enforce performance of Article 15.2(b) or to recover damages
for the breach thereof; and/or
(d) all rights of Lessee hereunder shall, in the event the Term
shall be terminated pursuant to Article 15.2(b) henceforth
absolutely cease and terminate but without prejudice to
Lessee's obligations under this Lease all of which shall
continue in full force and effect except for obligations to
pay Rent and Reserve Rate after the Aircraft is returned to
Lessor, and is in the condition required by Article 16; and
Lessee shall cooperate in taking all steps necessary to effect
deregistration of the Aircraft in the State of Registration
and Lessor shall be entitled to sell or otherwise deal with
the Aircraft as if this Lease had never been made. Without
prejudice to the foregoing, Lessee hereby appoints Lessor as
its attorney to do any act or thing required in connection
with such deregistration of the Aircraft.
15.3 If an Event of Default occurs, Lessor shall have the right to demand
that:
(a) Lessee pay all amounts which may be then due and unpaid
hereunder, and
(b) at Lessor's option whether or not Lessor shall have exercised,
or shall thereafter at any time exercise, any of its rights
under Article 15.2, by thirty (30) days written notice to
Lessee from Lessor specifying a payment date, Lessee pay
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Lessor, and Lessee shall pay Lessor, on the payment date
specified in such notice, as liquidated damages for loss of
bargain and not as a penalty (in lieu of the Rent due for the
Aircraft covered by such notice for the period commencing
after the date specified for payment in such notice), any
unpaid Rent for the Aircraft (prorated in the case of Rent on
a daily basis) to and including the payment date specified in
such notice, plus the amount, if any, by which the aggregate
Rent for the Aircraft for the remainder of the Term for the
Aircraft, discounted periodically (equal to installment
frequency) to present worth at the interest rate of six and a
half percent (6.5%) per annum, exceeds the Fair Market Rental
Value of the Aircraft for the remainder of the Term, after
discounting such Fair Market Rental Value periodically (equal
to installment frequency) to present worth as of the payment
date specified in such notice at the interest rate of six and
a half percent (6.5%) per annum.
Lessee shall fully indemnify Lessor on its own behalf and on behalf
of Head Lessor and Indenture Trustee on demand and on an After-Tax
Basis against any loss (including loss of profit), damage, expense
(including without limitation attorneys' fees), cost or liability
which Lessor, Head Lessor or Indenture Trustee may sustain or incur
as a consequence of the occurrence of any Event of Default and/or
termination of the letting of the Aircraft pursuant to this Lease,
including but not limited to (i) any loss of profit suffered by
Lessor and/or Head Lessor because of Lessor's inability to place the
Aircraft on lease with another lessee on terms as favorable to
Lessor as the terms of this Lease or because whatever use, if any,
to which Lessor is able to put the Aircraft upon its return to
Lessor, or the funds arising upon a sale or other disposal thereof,
is not as profitable to Lessor as letting the Aircraft in accordance
with the terms of this Lease would have been to the extent the
foregoing loss of profit shall not be recovered under Article
15.3(b), (ii) any amount of interest, fees or other sums whatsoever
paid or payable on account of funds borrowed in order to carry any
unpaid amount, (iii) any loss, premium, penalty or expense which may
be incurred repaying funds raised to finance the Aircraft or in
unwinding any swap, forward interest rate agreement or other
financial instrument relating in whole to
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Lessor's financing of the Aircraft and/or the Aircraft under the
Other Aircraft Agreements, and (iv) any loss, cost, expense or
liability sustained or incurred by Lessor owing to Lessee's failure
to re-deliver the Aircraft in the condition required by this Lease.
15.4 No remedy referred to in this Article 15 is exclusive, but each
remedy shall be cumulative and in addition to any other remedy
referred to herein or otherwise available to Lessor. The exercise by
Lessor of any of its remedies hereunder shall not preclude or estop
the exercise or beginning of exercise by Lessor of any or more of
such other remedies.
No express or implied waiver by Lessor of any Event of Default, or
failure or delay of Lessor in exercising any right hereunder shall
operate as waiver thereof unless an express waiver is executed and
delivered to Lessee.
15.5 Prior to the Delivery Date Lessee shall deliver to Lessor a duly
authorized consent, undated and in form and substance acceptable to
Lessor, addressed to the Federal Aviation Administration consenting
to the release of this Lease in connection with the termination of
this Lease pursuant to the terms hereof and, if so requested by
Lessor, the deregistration of the Aircraft from the register of
civil aviation in the State of Registration.
16. RETURN OF AIRCRAFT
16.1 On the Expiry Date or upon earlier termination of the Term (unless a
Casualty Occurrence shall have occurred with respect to the
Aircraft), Lessee shall, at its own expense, redeliver the Aircraft
to Lessor at the Redelivery Location or such other airport as is
mutually acceptable to the parties, in a condition complying with
the provisions of Appendix E, free and clear of all liens and
encumbrances (including Permitted Liens other than Lessor Liens) and
upon request of Lessor cooperate in causing the Aircraft to be
removed from the register of civil aviation in the State of
Registration and Lessee shall return the Aircraft to Lessor together
with the Aircraft Documents supplied pursuant to this Lease when the
Aircraft was delivered to Lessee on the Original Delivery Date as
the same may be modified, supplemented or amended during the Term.
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16.2 Immediately prior to such redelivery of the Aircraft, Lessee, at its
own expense, shall make the Aircraft, Aircraft Documents and other
records available to Lessor for inspection ("Final Inspection") in
order to verify that the condition of the Aircraft complies with the
provisions of this Lease. Such inspection shall not unreasonably
interfere with the operation of the Aircraft. The period will be
long enough for the Final Inspection to permit the conduct by Lessor
of the following:
(a) Inspection of the Aircraft Documents;
(b) Inspection of the Aircraft structure and Parts;
(c) Inspection of the Engines and A.P.U., including without
limitation, a borescope inspection or any other equivalent
inspection method supported by Rolls Royce, inspection of the
compressor and turbine area, and, if reasonably requested
based on evidence that it is required, the Engine and A.P.U.
condition runs confirming release of each Engine and A.P.U for
its remaining operational life;
(d) A one-hour to two-hour test flight with Lessor's
representatives on board as observers and, if any non
compliance is found, a subsequent test flight to check
compliance after rectification.
16.3 To the extent that, upon such Final Inspection, the condition of the
Aircraft and Aircraft Documents does not comply with the provisions
of this Lease, Lessee, at its own expense, shall cause such
non-compliance to be promptly rectified and to the extent such
rectification extends beyond the Expiry Date, the Term shall, at
Lessor's sole option, be deemed to be automatically extended and the
provisions of this Lease shall remain in full force and effect until
such rectification has been accomplished. During such extension of
the Term Lessee shall be liable to pay Rent at a daily pro rata rate
equal to the Rent payable during the last Rental Period of the Term.
16.4 Upon redelivery Lessee shall provide to Lessor all necessary
assistance to enable Lessor to obtain any required documents in
relation to the export of the Aircraft from the State of
Registration, and if different, from the State of Incorporation
(including a valid and subsisting export license for the Aircraft),
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and shall reassign to Lessor, at the expense of Lessee, the benefit
of any indemnity or warranty which has been assigned to Lessee
pursuant to Article 13.3 above to the extent such indemnity or
warranty is assignable.
16.5 Prior to the Expiry Date or upon any earlier termination of the Term
and upon Lessor's request, Lessee will provide Lessor or its agent
reasonable access to and Lessor may make and retain copies of the
Approved Maintenance Program and the Aircraft Documents in order to
facilitate the Aircraft's integration into any subsequent operator's
fleet.
Lessor agrees that it will not disclose the contents of the Approved
Maintenance Program to any person or entity except to the extent
necessary to monitor Lessee's compliance with this Lease and/or to
bridge the maintenance program for the Aircraft from the Approved
Maintenance Program to another program.
16.6 Upon redelivery of the Aircraft to Lessor, an adjustment shall be
made in respect of fuel on board on the Original Delivery Date and
on redelivery at the price then prevailing at the Redelivery
Location.
16.7 If Lessor shall request that Lessee paint the Aircraft any other
basic color as contemplated by Section 1(h) of Appendix E, Lessor
agrees that it shall bear the cost and expense of the difference
between white paint and such other basic color.
16.8 Upon written request of Lessor given to Lessee not later than thirty
(30) days prior to the Expiry Date or termination of the Lease,
Lessee, at the Expiry Date or upon termination of the Lease, will
provide, or will cause to be provided, up to thirty (30) days'
storage of the Aircraft at Lessee's premises, at Lessor's cost and
expense. Lessee shall cause the Aircraft to be delivered to such
designated location at Lessor's cost and expense. During such period
of storage, Lessee will arrange for insurance and maintenance at
Lessor's cost and expense. Lessee shall allow Lessor or any person
designated by Lessor, including the authorized representatives of
any prospective purchaser or user of the Aircraft, to inspect the
same at all reasonable times.
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17. CASUALTY OCCURRENCES
17.1 In this Lease "Casualty Occurrence" shall mean any of the following
events with respect to the Aircraft, the Airframe or an Engine:
(a) the actual, agreed, constructive, arranged or compromised
total loss or destruction of the Aircraft, the Airframe or an
Engine, or damage to the Aircraft, Airframe or Engine
rendering repair impracticable or uneconomical, or the
Aircraft, Airframe or Engine being rendered permanently unfit
for normal use;
(b) requisition of title or other compulsory acquisition,
requisition, capture, seizure, deprivation, confiscation or
detention for any reason of the Aircraft, the Airframe or an
Engine by any Government Entity of the State of Registration
or by any other government or other competent authority,
whether de jure or de facto, but excluding requisition for use
or hire not involving requisition of title by any Governmental
Entity for a temporary period ending on the date ninety (90)
days (or the Expiry Date if the requisition for use or hire is
by the United States) after such requisition, or the Expiry
Date, whichever first occurs;
(c) the hijacking, theft, disappearance, condemnation,
confiscation or seizure of the Aircraft, the Airframe or an
Engine other than in the circumstances referred to in (b)
above which deprives Lessee of the use thereof for more than
ninety (90) consecutive days.
17.2 (a) In the event of a Casualty Occurrence with respect to the
Aircraft or Airframe prior to the Delivery Date, this Lease
shall immediately terminate with respect to such Aircraft and
neither party shall have any further obligation or liability
hereunder, save that Lessor shall return to Lessee the Deposit
or such part thereof as Lessor shall have received from Lessee
and Lessee shall remain liable to reimburse Lessor for any
amounts specified in Article 8.2(a).
(b) In the event of a Casualty Occurrence with respect to the
Aircraft or Airframe after delivery to Lessee hereunder,
Lessee shall pay the Agreed
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Value to Lessor on or prior to the earlier of (i) 45 days
after the Casualty Occurrence and (ii) the Business Day after
the date of receipt of the insurance proceeds in respect of
the Casualty Occurrence and, provided all other amounts which
are then due and payable by Lessee under this Lease have been
paid in full to Lessor, Lessee's obligation hereunder for
payment of Rent shall cease as from the date on which Lessor
receives payment in full of the Agreed Value. Rent paid in
advance for any days which occur after such Agreed Value is
paid shall be repaid to Lessee on a pro rata basis for each
day beyond such date of payment of Agreed Value. Any insurance
proceeds in excess of Agreed Value obtained by Lessee pursuant
to Article 11 for its own account, remaining after payment of
the foregoing amounts shall, unless an Event of Default under
Section 14(n) shall have occurred and be continuing, be paid
over to Lessee.
(c) Subject to the rights of any insurers and reinsurers or other
third party, upon irrevocable payment in full to Lessor of the
Agreed Value and all other amounts which may be or become
payable to Lessor under this Lease, Lessor will cause, title
to the Aircraft to be conveyed from Head Lessor to it, without
recourse or warranty (except as to title and Lessor's Liens)
and without further act, Lessor will convey title to Lessee.
Lessor will or will cause Head Lessor to transfer to Lessee
all of Head Lessor's rights to any Engines and Parts not
installed when the Casualty Occurrence occurred, all on an
as-is where-is basis, and will at Lessee's expense, execute
and deliver or cause to be executed and delivered such bills
of sale and other documents and instruments as Lessee may
reasonably request to evidence (on the public record or
otherwise) the transfer and the vesting of Lessor's rights in
such Engines and Parts in Lessee, free and clear of all rights
of Lessor and Lessor Liens.
17.3 Upon the Casualty Occurrence with respect to any Engine not
involving a Casualty Occurrence of the Aircraft, Lessee shall give
Lessor prompt written notice thereof and Lessee shall replace such
Engine as soon as reasonably possible, but in no event later than
ninety (90) days after such Casualty Occurrence, with a replacement
Engine in accordance with Article 5.1.2(a).
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Such replacement shall be deemed an "Engine" as defined herein.
Lessee agrees to take such action as Lessor may reasonably request
in order that any such replacement engine shall be duly and properly
titled in Head Lessor, leased hereunder and subject to the Security
Interest of the Indenture to the same extent as the Engine replaced
thereby. In such case or in the case of the installation of a
Replacement Engine in accordance with 5.1.2(a), the following
conditions shall be satisfied at no cost or expense to Lessor and
Lessor agrees to cooperate with Lessee to the extent necessary to
enable it to satisfy such conditions in a timely manner:
(i) the following documents shall be duly authorized,
executed and delivered by the respective party or parties
thereto and shall be in full force and effect, and an executed
counterpart of each shall be delivered to Lessor:
(A) a full warranty bill of sale in favor of Head
Lessor, in form and substance reasonably satisfactory to
Lessor, with respect to the Replacement Engine;
(B) a supplement to this Lease, in form and substance
reasonably satisfactory to Lessor, covering the
Replacement Engine (and releasing such replaced Engine
from this Lease) which shall have been duly filed (or a
short form thereof) for recordation with the Aviation
Authority;
(C) a certificate from a duly qualified independent
engineer, which engineer shall be reasonably
satisfactory to Lessor, confirming the operating
condition, value and utility of the Replacement Engine
satisfies the terms of Article 5.1.2(a)(i)
(D) evidence of compliance with the insurance provisions
of Article 11 with respect to such Replacement Engine as
Lessor may reasonably request; and
(E) an opinion of counsel (and such other evidence of
title as Lessor may reasonably request) to the effect
that, such conveyance, is effective to transfer to Head
Lessor title to such Replacement Engine and that it will
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be leased hereunder to the same extent as the Engine
replaced thereby.
Lessor will cause title to the Engine being replaced to be
transferred to Lessee or its designee without recourse or warranty
(except as to title and the absence of Lessor's Liens). Lessee's
obligation to pay the Rent hereunder shall continue in full force
and effect, but Lessee shall be entitled to be reimbursed by Lessor
the amount of insurance or condemnation proceeds, if any, received
by Lessor with respect to such replaced Engine.
17.4 In the event of requisition for hire of the Aircraft or any part
thereof not constituting a Casualty Occurrence, then, subject to the
proviso herein contained, the Rent and other charges payable under
this Lease shall not be suspended or abated either in whole or in
part, and Lessee shall not be released from any of its other
obligations (as to payment, indemnity or otherwise) hereunder (other
than operational obligations with which Lessee is unable to comply
solely by virtue of such confiscation or requisition). If Lessee
shall duly comply with all its obligations under this Lease, Lessee
shall during the Term be entitled to any hire paid by the
requisitioning or confiscating authority and Lessee shall, as soon
as practicable after the end of any requisition or confiscation,
cause the Aircraft to be put into the condition required by this
Lease. Lessor shall be entitled to all compensation payable by the
requisitioning or confiscating authority in respect of any change in
the structure, state or condition of the Aircraft arising during the
period of requisition or confiscation, and Lessor shall apply such
compensation in reimbursing Lessee for the cost of complying with
its obligations as aforesaid, but if any Default has occurred and is
continuing, Lessor shall be entitled to apply such compensation in
or towards settlement of any amounts owing by Lessee under this
Lease PROVIDED ALWAYS that if following such requisition or
confiscation the Aircraft is treated as an agreed, constructive,
arranged or compromised total loss by the insurers, then the
provisions of Article 17.1 shall apply with effect from the date on
which the insurer so determines.
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18. GOVERNING LAW AND JURISDICTION
18.1 This Lease and further agreements resulting herefrom shall be
governed by and construed in accordance with the internal Laws of
the State of New York and without regard to any conflict of law
rules. This Lease is being delivered in the State of New York.
18.2 Lessor and Lessee hereby irrevocably agree to submit to the
non-exclusive jurisdiction of, and to waive any objection to the
laying of venue in, the County of New York and that any suit, action
or proceedings (collectively, "Proceedings") may be brought by
Lessor in any court of the State of New York or any U.S. Federal
court located in New York County, New York.
18.3 Nothing contained in this Article 18 shall limit the right of either
party to this Lease to take Proceedings against the other in any
other court of competent jurisdiction, nor shall the taking of
Proceedings in one or more jurisdictions preclude the taking of
Proceedings in any other jurisdiction, whether concurrently or not.
18.4 Promptly after service of any process Lessor or Lessee shall
despatch a copy thereof to Lessee or Lessor, as the case may be, by
registered mail, postage prepaid but failure of Lessee or Lessor, as
the case may be, to receive such copy shall not invalidate the
service of such process.
18.5 To the extent that the parties may in any jurisdiction claim for
their or their assets immunity from suit, execution, attachment
(whether in aid of execution, before judgment or otherwise) or other
legal process and to the extent that in any such jurisdiction there
may be attributed to themselves or their assets such immunity
(whether or not claimed) the parties hereby irrevocably agree not to
claim and hereby irrevocably waive any immunity to the fullest
extent permitted by the laws of such jurisdiction with the intent,
inter alia, that the foregoing waiver shall have effect for the
purposes of the Foreign Sovereign Immunities Act of 1976 of the
United States of America.
18.6 Lessee and Lessor shall each at all times maintain an agent for
service of process in the New York, New York. For Lessee, such agent
shall be Paul, Hastings, Janofsky & Walker, Attn: John Howitt, 399
Park Avenue, New York, New York 10022-4697. For Lessor, such agent
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shall be Haight, Gardner, Poor & Havens, Attn: Bonny L.Y. Kwoh, 195
Broadway, New York, NY 10007. Any writ, judgment or other notice of
legal process shall be sufficiently served on Lessee or Lessor if
delivered to such agent at its address for the time being. Each of
Lessee and Lessor undertakes that if it shall revoke the authority
of its above agent or if for any reason any such agent no longer
serves as agent to receive service of process, Lessee or Lessor, as
the case may be, shall promptly appoint another such agent and
advise Lessor or Lessee, as the case may be, thereof.
19. MISCELLANEOUS
19.1 The rights of each of Lessor and Lessee under this Lease are
cumulative, may be exercised as often as it considers appropriate
and are in addition to its rights under general law. The rights of
Lessor against Lessee or in relation to the Aircraft (whether
arising under this Lease or the general law) shall not, as against
or in favor of Lessor, be capable of being waived or varied
otherwise than by an express waiver or variation in writing; and in
particular any failure to exercise or delay in exercising any of
such rights shall not operate as a waiver or variation of any other
such right; and defective or partial exercise of any such rights
shall not preclude any other or further exercise of that or any
other such right; and no act or course of conduct or negotiation on
Lessor's part or on Lessor's behalf shall in any way preclude Lessor
from exercising any such right or constitute a suspension or any
variation of any such right.
19.2 Save where expressly provided in this Lease, any certificate or
determination by Lessor as to any rate of interest or as to any
other amount payable under this Lease shall, in the absence of
manifest error, be conclusive and binding on Lessee.
19.3 If any sum paid or recovered in respect of the liabilities of Lessee
under this Lease is less than the amount then due, Lessor may apply
such sum to rental, interest, fees or any other amount due under
this Lease in such proportions and order and generally in such
manner as Lessor shall determine.
19.4 The terms and conditions of this Lease shall not be varied otherwise
than by an instrument in writing executed by or on behalf of Lessor
and Lessee.
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19.5 If any of the provisions of this Lease becomes invalid, illegal or
unenforceable in any respect under any law, the validity, legality
and enforceability of the remaining provisions shall not in any way
be affected or impaired.
19.6 Every notice, request, demand or other communication under this
Lease shall:
(a) be in English;
(b) be in writing and made by mail or by fax or telex transmission
or by reputable courier service;
(c) be deemed to have been received, subject as otherwise provided
in this Lease, in the case of a telex transmission, at the
time of dispatch with confirmed answerback of the addressee
appearing at the beginning and the end of the communication,
in the case of a fax transmission, at the time safe receipt is
confirmed by the addressee provided that if the date of
dispatch is not a business day in the country of the addressee
any telex or fax transmission shall be deemed to have been
received at the opening of business on the next such business
day, in the case of a letter five days after being deposited
in the mail first class postage prepaid and in the case of a
courier three days after being sent; and
(d) be sent:
(1) to Lessee at:
Prior to August 21, 1995:
Midway Airlines Corporation
5713 South Central Avenue
Chicago, Illinois 60638
Fax: (312) 838-2069
Attention: President
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Following August 21, 1995:
300 West Morgan St.
Durham, North Carolina 27702
Attention: President
Fax: (919) 956-7314
(2) to Lessor at:
Wings Aircraft Finance, Inc.
1199 N. Fairfax Street
Suite 500
Alexandria, VA 22314
Fax: (703) 683-2233
Attention: Secretary
or to such other address or telex or fax number as is notified by
either party to the other party to this Lease.
19.7 This Lease may be executed in any number of counterparts and all of
such counterparts taken together shall be deemed to constitute one
and the same instrument.
19.8 This Lease is the sole and entire agreement between Lessor and
Lessee in relation to the leasing of the Aircraft, and supersedes
all previous agreements in relation to such leasing. Each of Lessee
and Lessor represents for itself that no broker has been retained by
it in connection with this Lease.
19.9 This Lease is intended by the parties to be a lease between Lessor
and Lessee. Any waivers, consents, or deferrals of the payment of
Rent and Reserve Rate are not intended to be an agreement by Lessor
to make any capital contribution to the business of Lessee or to
share in or have liability for any of Lessee's losses, profits,
liabilities or obligations. Nothing contained in this Lease or
performed by Lessor in connection herewith and any other agreement
between Lessor and Lessee whether now existing or entered into in
the future shall make Lessor a partner or a joint venturer of Lessee
and shall not for any purpose be construed as a joint-venture
between the parties hereto.
19.10 [Intentionally omitted].
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19.11 Section 1110: Lessee acknowledges that Lessor would not have entered
into this Lease unless it had available to it the benefits of a
lessor under Section 1110 of Title 11 of the United States Code.
Lessee and Lessor hereby state that this Lease is intended to be a
true lease for U.S. Internal Revenue Code purposes. Lessee covenants
and agrees with Lessor that to better ensure the availability of
such benefits, Lessee shall support any motion, petition or
application filed by Lessor with any bankruptcy court having
jurisdiction over Lessee, whereby Lessor seeks recovery of
possession of the Aircraft under said Section 1110 and shall not in
any way oppose such action by Lessor unless Lessee shall have
complied with the requirements of said Section 1110 to be fulfilled
in order to entitle Lessee to continued use and possession of the
Aircraft hereunder. In the event said Section 1110 is amended, or if
it is repealed and another statute is enacted in lieu thereof,
Lessor and Lessee agree to amend this Lease and take such other
action not inconsistent with this Lease as Lessor reasonably deems
necessary so as to afford to Lessor the rights and benefits as such
amended or substituted statute confers upon owners and lessors of
aircraft similarly situated to Lessor.
19.12 [Intentionally omitted].
19.13 As between Lessor and Lessee, if Lessee fails to make any payment of
Rent or Reserve Rate required to be made by it hereunder or fails to
perform or comply with any of its agreements contained herein,
Lessor may itself make such payment or perform or comply with such
agreement, and the amount of such payment and the amount of the
reasonable and properly documented expenses of Lessor 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 interest rate defined in Appendix D, Paragraph 6,
shall be deemed Supplemental Rent, payable by Lessee upon demand.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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APPENDIX A
DESCRIPTION OF AIRCRAFT
Engine
Manufacturer Model Serial No. Engines Serial No.
------------ ----- ---------- ------- ----------
Fokker F28 11484 Two Rolls
MK0100 Royce Tay 17690
MK 650-15 17691
FAA Registration No.
N108ML
IN WITNESS whereof the parties have executed this Lease the day and
year first herein written.
SIGNED on behalf of SIGNED on behalf of
WINGS AIRCRAFT FINANCE, INC. MIDWAY AIRLINES CORPORATION
By: /s/ Dennis de Jong By: /s/ Brian Olds
-------------------------------- --------------------------------
Name: Dennis de Jong Name: BRIAN OLDS
Title: Authorized Representative Title: Executive Vice President
APPENDIX B
FURTHER DEFINITIONS AND VALUES
AGREED VALUE : Shall mean, during any year, the amount set
forth opposite such year in Annex 1 to this
Appendix B, which amounts may be adjusted
from time to time to reflect adjustments of
the Stipulated Loss Values (as defined in
the Head Lease) in accordance with the Head
Lease.
DEPOSIT : {***} and the Additional Deposit
described in Appendix D, if applicable.
RENT : {***} per month, as such amount may be
increased pursuant to Paragraphs 2.2 and
2.3 of Appendix D.
RESERVE RATE : (a) {***} for the months one up to and
including twelve of the Term;
(b) {***} for the months thirteen up to
and including the Expiry Date.
TRANSACTION
EXPENSES : {***} which, notwithstanding any other
provision in this Lease shall not be paid in
cash but shall be amortized pursuant to
Section 2.3 of Appendix D.
Annex 1 to Appendix B
{***} (5 pages omitted)
APPENDIX C
CERTIFICATE OF ACCEPTANCE
This Certificate of Acceptance is delivered, on and as of the date set forth
below, by Midway Airlines Corporation (herein referred to as "Lessee") to Wings
Aircraft Finance, Inc., (herein referred to as "Lessor") pursuant to that
Aircraft Operating Lease Agreement No. AOLAF-116-A dated as of July 10, 1995
between Lessor and Lessee (herein referred to as the "Lease"):
1. Details of Acceptance
Lessee hereby indicates and confirms to Lessor, its successors and
assigns, that Lessee has at ______ o'clock on this ______ day of ______
199_ at ________________________ accepted the following, in accordance
with the provisions of the Lease:
(a) Fokker 100 airframe, Manufacturer's serial Number 11484
(b) Rolls Royce Tay Mk 650-15 Engines (each of which engines has 750 or
more rated takeoff horsepower).
Engine Number Manufacturer's S/N
1. 17690
2. 17691
2. Confirmation of Undertakings
The terms used in this Certificate shall have the meanings given to such
terms in the Lease.
Lessee confirms that today being the Delivery Date as defined in the
Lease:
(i) the Aircraft is duly accepted by Lessee in accordance with and
subject to the provisions of the Lease and the execution and
delivery of this Certificate constitutes the acceptance of the
Aircraft by Lessee for all purposes of the Lease.
DELIVERY BY LESSEE TO LESSOR OF THIS CERTIFICATE OF ACCEPTANCE SHALL
CONSTITUTE CONCLUSIVE PROOF AS BETWEEN LESSOR AND LESSEE THAT ON THE
DELIVERY DATE LESSEE'S TECHNICAL EXPERTS EXAMINED AND INVESTIGATED
THE
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AIRCRAFT AND EVERY PART THEREOF AND THAT THE AIRCRAFT AND EVERY PART
THEREOF ARE AIRWORTHY AND IN GOOD WORKING ORDER AND REPAIR, WITHOUT
DEFECT WHETHER OR NOT DISCOVERABLE AS AT THE DELIVERY DATE AND IN
EVERY WAY SATISFACTORY TO LESSEE;
(ii) Lessee is obliged to pay to Lessor the amount provided for in the
Lease with respect to the Aircraft;
(iii) the Aircraft is insured in accordance with the Lease;
(iv) the representations and warranties contained in Article 13 of the
Lease remain, and if made at the date of this Certificate of
Acceptance, would be, true and correct in all respects;
(v) there have been affixed to the Aircraft and the Engines the fire
resistant notices required by Article 4.3 of the Lease;
(vi) Lessee has no right of set-off, deduction, withholding or
counterclaim against Lessor whatsoever; and
(vii) no Default is subsisting.
IN WITNESS WHEREOF, Lessee has caused this Certificate of Acceptance to be
executed in its name, by its duly authorized officer(s) or representative(s),
pursuant to due corporate authority, all as of the date written in Paragraph 1
above.
MIDWAY AIRLINES CORPORATION
By: _______________________
Title: _________________________
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APPENDIX D
CHARGES
1. Deposit
Lessee has paid to Lessor {***} as a Deposit for the Aircraft on or
prior to the date hereof.
Lessee shall pay the balance of the Deposit to Lessor in consecutive
monthly installments of {***} each, beginning on August 4, 1995,
and on each corresponding day of the month subsequent thereto until
the full Deposit amount as set forth in Appendix B has been paid.
Lessor acknowledges that Lessee has paid the Additional Deposit (as
defined in the Termination Agreement) to Fokker pursuant to the
Termination Agreement and that upon the terms set forth therein, such
Additional Deposit shall be transferred by Fokker to Lessor to be held as
a part of the Deposits under the Lease. Lessor agrees that upon such
transfer, such Additional Deposit shall constitute a part of the Deposits,
the disposition of which shall be subject to the terms and conditions of
the Lease in respect of the Deposits except as expressly set forth in this
Appendix D. The Deposit shall be held by Lessor during the Term as
security for the full and punctual performance of all of Lessee's
obligations to Lessor under this Lease. Lessor may, but shall not be
obliged to, apply the Deposit in whole or in part for the payment of any
Rent, Reserve Rate, indemnities, attorneys' fees and other expenses,
insurance and other casualty payments and any other amount owing from time
to time by Lessee hereunder or, to the extent provided in Article 15.1(n),
under any Other Aircraft Agreement, or for the payment of any loss or
damage suffered by Lessor as a result of any Event of Default or to
perform any of Lessee's obligations under this Lease or otherwise remedy
any other Event of Default, including, without limitation, in the
redelivery condition for the Aircraft without prejudice to any other
remedy of Lessor. In any such event Lessee shall on demand restore the
Deposit to the full amount provided for herein by payment to Lessor of an
amount in cash equal to the amount applied or utilized. Lessee shall not
attempt to subject the Deposit to any other lien, security interest,
charge or other encumbrance or assign any interest therein to any other
person and, to the extent of its interest therein, if any, Lessee hereby
grants to Lessor a security interest in the Deposit and assigns and
transfers
to Lessor any and all of Lessee's right, title and interest therein, if
any, as security as provided above, and Lessor shall be entitled to the
remedy of offset against and application of the Deposit, without any
notice to or demand against Lessee, all of which are hereby waived. Should
any Event of Default hereunder occur, the Deposit shall automatically be
applied to any sum due to Lessor or as a prepayment of any sum to become
payable to Lessor, unless Lessor thereafter elects otherwise by notice to
Lessee.
Any remaining Deposit shall be repaid by Lessor to Lessee ten (10) days
following the Expiry Date or other date after redelivery of the Aircraft
in full compliance with all the requirements of Section 16 and otherwise
in accordance with this Lease or upon payment of the Agreed Value and all
other amounts owed under this Lease, so long as no Event of Default under
Section 15.1(n) shall have occurred and be continuing. In the event there
is a dispute as to whether Lessee is entitled to a return of any portion
of the Deposit, Lessor shall so return the undisputed amount of the
Deposit. Upon a repayment of such Deposit or portion thereof, Lessor's
security interest in such Deposit or portion thereof being repaid shall be
deemed released.
Lessor's obligations in respect of the return of the Deposit shall be
those of debtor of Lessee, not of a trustee or other fiduciary.
The Deposit (other than the Additional Deposit) shall bear interest on the
amounts then held at a rate of interest per annum yielding $10,500.00
(Dollars Ten Thousand Five Hundred) per year payable annually commencing
on the first anniversary of the Original Delivery Date, and on each
anniversary thereafter unless the Deposit and interest thereon shall have
been applied pursuant to this Lease. Any reference to the Deposit in this
Lease shall include the interest accumulated thereon and not paid to
Lessee.
The Additional Deposit shall include the interest to be accrued under the
Termination Agreement for the period prior to, and shall bear interest on
the amount thereof from, the date such Additional Deposit is transferred
to Lessor to such date as the Additional Deposit may be returned to Lessee
under the Lease at a rate of per annum equal to LIBOR for the applicable
six month period as determined from time to time. For purposes of this
Agreement, six month LIBOR shall have the definition given thereto in
Paragraph 6 of this Appendix D. Such interest shall accrue and subject to
the terms of this Paragraph 1, be paid to Lessee upon the repayment to
Lessee of the Additional Deposit pursuant to
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the third clause of this Paragraph 1 or the next following clause. Any
reference to the Additional Deposit in this Agreement shall include the
interest accumulated thereon and not paid to Lessee.
Notwithstanding the terms of the third clause of this Paragraph 1,
provided that no Default as set forth in Article 15.1(a), (b), (f), (g),
(h) or (m) and is continuing, any remaining Additional Deposit shall be
repaid by Lessor to Lessee on the fourth anniversary of the Original
Delivery Date.
2. Rent
2.1 Rent shall be due and payable on each Rent Date. If such date
is not a Business Day then Rent shall be due and payable on
the last Business Day preceding such date.
2.2 The monthly Rent shall also be adjusted upward by an amount
equal to $875.00 (Dollars Eight Hundred Seventy Five) per
month which shall be payable to Lessor by check annually
commencing on the first anniversary of the Original Delivery
Date, and on each anniversary thereafter. Lessee may elect to
authorize Lessor in writing to set-off amounts payable
pursuant to this Article 2.2 against interest on the Deposit
which is payable by Lessor pursuant to Paragraph 1 of this
Appendix D whether or not an Event of Default shall have
occurred and be continuing, and whether or not Lessor
exercises its right to terminate this Lease after such Event
of Default.
2.3 The monthly Rent shall also be adjusted upward by an amount
(the "Transaction Expense Amount") of $907.00 (Dollars Nine
Hundred Seven) per month which shall be payable on each Rent
Date. If Lessee exercises the right to purchase the Aircraft
on the Option Exercise Date (as defined in Paragraph 9 of this
Appendix D), an amount (the "Additional Amount") in Dollars
shall be due and payable on the Option Exercise Date, such
Additional Amount to be equal to the present value as at the
Option Exercise Date (discounted at the interest rate of six
and a half percent (6.5%) per annum) of all unpaid Transaction
Expense Amounts that would have been payable during the period
from the Option Exercise Date to the Expiry Date
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had Lessee not exercised the right to purchase the Aircraft.
3. Reserve Rate
3.1 Lessee shall be relieved of its obligation to pay the Reserve
Rate at any time that the Aircraft Maintenance Agreement is in
effect with respect to the Aircraft. At any time that the
Aircraft Maintenance Agreement is not in effect, then Lessee
shall, in addition to installments of Rent, pay to Lessor the
Reserve Rate as follows:
(a) by way of an Airframe maintenance accrual, the sum of
{***} for the months one up to and including twelve of
the Term and {***} for the months thirteen up to and
including the Expiry Date for each Flight Hour the
Aircraft is operated during the Term ("Airframe
Maintenance Accrual"), and
(b) by way of an Engine maintenance accrual, in respect of
each Engine the sum of {***} for the months one up to
and including twelve of the Term, and {***} for the
months thirteen up to and including the Expiry Date
for each Flight Hour operated by each Engine during
the Term ("Engine Maintenance Accrual"), and
(c) by way of a landing gear maintenance accrual, the sum of
{***} for the months one up to and including twelve of
the Term, and {***} for the months thirteen up to and
including the Expiry Date for each Cycle operated by
the landing gear during the Term ("Landing Gear
Maintenance Accrual"), and
(d) by way of an A.P.U. maintenance accrual, the sum of
{***} for the months one up to and including twelve
of the Term, and {***} for the months thirteen up to
and including the Expiry Date for each Flight Hour
operated by the A.P.U. during the Term ("A.P.U.
Maintenance Accrual").
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The Airframe, Engine, Landing Gear and A.P.U. Maintenance
Accruals accruing in any Rental Period shall be paid by Lessee
to Lessor not later than ten (10) days after the end of the
calendar month in which such Rental Period shall end.
Concurrently with the payment thereof, Lessee shall report to
Lessor (in accordance with Article 7.1(e)) the number of
Flight Hours and Cycles accumulated in respect of the period
for which payment is being made.
The Reserve Rate will be subject to adjustment every twelve
(12) months during the Term by reference for 65% to the
Employment and Earnings Index for U.S.A. labor cost average
hourly earnings of production (Aircraft Equipment) SIC 3728,
table C-2 and for 35% to the Producer Price Index for U.S.A.
material cost commodity groupings (Machinery and Equipment)
Code 11</TAB> 6. In addition the Engine Maintenance Accrual
will be subject to adjustment every twelve (12) months during
the Term having regard to the Engine Manufacturer
recommendations, industry experience and any change in the
operational environment of the Aircraft.
Any Reserve Rate shall, if requested by either Lessor or
(unless an Event of Default shall have occurred and be
continuing) Lessee, be adjusted to take into account any
changes in the maintenance intervals upon which Reserve Rates
are based.
3.2 Maintenance Accruals as defined in paragraph 3.1 above and
received by Lessor shall respectively be credited to funds
(collectively "Maintenance Funds") to be known as the
"Airframe Maintenance Fund", the "Engine Maintenance Fund",
the "Landing Gear Maintenance Fund" and the "A.P.U.
Maintenance Fund" which funds shall reduce as monies are
released to Lessee therefrom in accordance with Article 7.4.1.
3.3 [Intentionally deleted].
3.4 The Reserve Rates shall accrue interest at the applicable six
(6) months US Dollar LIBOR rate (as defined in Paragraph 6 of
this Appendix D) minus point twenty five percent (.25%) per
annum, which interest shall be added to the relevant
Maintenance Fund.
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3.5 If Lessee would otherwise be required to pay the Reserve Rate
hereunder and if Lessee has improved its retained accumulated
net earnings (as determined in accordance with generally
accepted United States accounting principles consistently
applied) by an amount exceeding $9,000,000 (Dollars Nine
Million) from the level of such earnings as at February 28,
1995, then Lessee's obligation to continue to pay Reserve
Rates hereunder shall be stayed, provided, however, that in
connection with the release of monies to Lessee from the
Maintenance Fund pursuant to Article 7.4.1, prior to the
release of monies, if Lessee cannot provide Lessor with
evidence, reasonably satisfactory to Lessor, that Lessee
continues to have such level of retained earnings, Lessee's
obligation to pay Reserve Rates shall recommence pursuant to
the terms hereof and no monies shall be released from the
Maintenance Fund until such time as it shall have been
restored to the level at which it would have been had this
paragraph not been in effect.
Lessee hereby represents that its retained accumulated net
earnings (as determined in accordance with generally accepted
United States accounting principles consistently applied) as
at February 28, 1995 was negative (-) $15,270,000, subject to
final year-end audit adjustment.
If Lessee would otherwise be required to pay Reserve Rate
hereunder, Lessee may, at its election, pay to Lessor the
amount which is necessary to cause monies standing in the
Maintenance Fund to equal $1,500,000.00 (Dollars One Million
Five Hundred Thousand) and thereafter Lessee shall have no
further obligation to make Reserve Rate payments hereunder,
provided, however, that thereafter no funds shall be released
to Lessee from the Maintenance Fund pursuant to Article 7.4.1.
It is understood, for the avoidance of doubt, that the
foregoing terms of this Article 3.5 shall not affect Lessee's
or Lessor's obligations under Article 3.6 of this Appendix D.
3.6 On the Expiry Date, if there is any Excess (as defined below)
in any Maintenance Fund, such Excess shall, unless a Default
shall have occurred and be continuing (in which case only
after
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termination, return of the Aircraft and payment of all amounts
due following exercise of remedies under Article 15), be paid
to Lessee, and on such date, if there is any Shortfall (as
defined below), Lessee shall pay such Shortfall to Lessor.
"Excess" in any Maintenance Fund on the Expiry Date shall mean
any positive difference obtained by subtracting (x) from (y)
for the Airframe, Engines, Landing Gears or A.P.U., as the
case may be; (x) shall mean the product of (I) the then market
cost from an independent Authorized Maintenance Performer in
the United States mutually agreed upon by Lessor and Lessee
and corrected for the experience of all United States based
operators of Fokker 100 aircraft for the relevant item:
with respect to the Aircraft, to perform a scheduled
airframe heavy maintenance as defined in the Maintenance
Program for 12,000 hours and 24,000 hours inspections or
any equivalent thereof with more or less hours
("Airframe Maintenance"), or
with respect to any Engine, to perform a scheduled shop
visit engine maintenance and repair, other than (i)
repairs arising as a result of foreign object damage or
operations mishandling and/or (ii) maintenance and
repair of QEC (Quick Engine Change) kits ("Engine
Maintenance"), or
with respect to any nose or main landing gear to perform
a schedule shop visit nose and main landing gear
maintenance and repair, other than repairs arising as a
result of foreign object damage or operational
mishandling ("Landing Gear Maintenance"), or
with respect to Auxiliary Power Unit ("A.P.U.") to
perform an off Aircraft shop A.P.U. maintenance and
repair, other than repairs arising as a result of
foreign object damage or operational mishandling
("A.P.U. Maintenance"), and
(II) a fraction of which (a) the numerator shall be the
difference between the actual number of hours or cycles (as to
landing gear), as the case
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may be, of operation remaining on the Airframe, Engine,
Landing Gear or A.P.U., as the case may be, to the next such
Airframe Maintenance, Engine Maintenance, Landing Gear
Maintenance or A.P.U. Maintenance, as the case may be, and the
total number of hours or cycles, as the case may be, of
operation allowable between such Maintenance and (b) the
denominator shall be the total number of hours or cycles, as
the case may be, of operation allowable between such
Maintenance.
(y) shall mean the actual dollar amount remaining in the
respective Maintenance Fund.
"Shortfall" in any Maintenance Fund on the Expiry Date shall
mean any negative difference obtained by subtracting (x) above
from (y) above, it being understood that Lessee shall not be
relieved from its obligation to pay the Shortfall
notwithstanding the waiver by Lessor at any time during the
Term of Lessee's obligation to pay the Reserve Rate.
4. Payments
All payments due hereunder shall be effected by Lessee to Lessor by
transfer to Lessor's account at Chemical Bank, New York, New York, Account
No. 400-056-011, Ref. Aircraft MSN 11450, AOLAF-116-A, in Dollars and in
immediately available funds, and all such payments shall be initiated
adequately in advance of the due dates to ensure that Lessor receives
credit for the full amount of such payment on the due dates. All such
payments shall be made in full without any deduction or withholding
(whether in respect of set-off, counterclaim, duties, taxes, charges or
otherwise howsoever) unless Lessee is prohibited by Law from doing so, in
which event Lessee shall (a) ensure that the deduction or withholding does
not exceed the minimum amount legally required; (b) and if the withholding
is a Tax for which Lessee is required to indemnify Lessor pursuant to
Article 8 of this Lease or is a wire transfer charge or other charge for
which Lessee is responsible under this Lease, forthwith pay to Lessor on
an After-Tax Basis such additional amount as shall result in the net
amount received by Lessor being equal to the amount which would have been
received by Lessor had such a deduction or withholding not been made; (c)
pay to the relevant taxation or other authorities within the period for
payment permitted by applicable Law the full amount of the deduction or
withholding with respect to any tax; and (d) upon request in writing from
Lessor to Lessee
-8-
furnish to Lessor, within the period for payment permitted by applicable
Law, an official receipt of the relevant taxation or other authorities
involved for all amounts deducted or withheld as aforesaid.
5. Currencies
If under any applicable Law, whether as a result of judgment against
Lessee or the liquidation of Lessee or for any other reason, any payment
under or in connection with this Lease is made or recovered in a currency
other than United States Dollars then, to the extent that the payment
(when converted to United States Dollars at the rate of exchange on the
date of payment or, in the case of the liquidation, the latest date for
the determination of liability permitted by the applicable Law) falls
short of the amount unpaid under this Lease, Lessee shall, as a separate
and independent obligation, fully indemnify Lessor against the amount of
the short fall; for the purposes of this paragraph, "rate of exchange"
means the rate at which Lessor is able on the relevant date to purchase
United States Dollars in London with that other currency.
6. Default Interest
If any amount payable pursuant to this Lease is not paid by Lessee on the
due date, Lessee shall pay to Lessor interest (after as well as before
judgment) on such amount, at the rate of LIBOR, which shall equal the
arithmetic mean expressed as a number (i.e., 40 per cent is 40 and not
0.4) of the rates of interest per cent per annum (rounded if not already
such a multiple, to the nearest whole multiple of 1/16th of one per cent)
at which, at or about 11.00 a.m. (London time) on the day two Business
Days before the Default, deposits in Dollars are offered for the duration
of six months on the REUTERS "LIBO" page (or such other page as may
replace it from time to time) ("LIBOR") plus four per cent (4%) per annum
from the due date to the date of payment in full by Lessee to Lessor, but
in the event such rate shall be in excess of the highest rate permitted by
applicable Law, then it shall mean the highest rate allowed by applicable
Law. All amounts of interest payable hereunder shall be calculated on the
basis of the actual number of days elapsed and a 360 day year.
-9-
7. Set-off
At any time after a Default shall have occurred and be continuing, Lessor
shall be entitled to set-off or withhold from any amount due and payable
to Lessee under this Lease or, to the extent provided in Article 15.1(n),
any Other Aircraft Agreement, in or towards the satisfaction of any
amounts from time to time due and payable by Lessee under this Lease or,
to the extent provided in Article 15.1(n), any Other Aircraft Agreement or
any liability or obligation of Lessee under this Lease or, to the extent
provided in Article 15.1(n), any Other Aircraft Agreement, and shall be
entitled to do so notwithstanding that any such amount or amounts may not
be expressed in the same currency.
8. Time at which payments are due
Supplemental Rent shall be due and payable on demand unless otherwise
expressly stated herein.
9. Purchase Option
Lessor grants to Lessee the right to purchase and to take delivery of the
Aircraft (a) on January 2, 2010 (the "Option Exercise Date") for a price
equal to the greater of the FMV of the Aircraft on such date (as
determined by the Appraisal Procedure described in this Paragraph) and
{***}; or (b) on the Expiry Date for a price equal to the greater of the
FMV of the Aircraft on the Expiry Date (as determined by the appraisal
procedure described in this paragraph) and $13,500,000.00 (Dollars
Thirteen Million Five Hundred Thousand). If Lessee elects to exercise its
right to purchase the Aircraft, provided no Event of Default shall have
occurred and be continuing, Lessee shall do so by giving to Lessor
written notice of such election, which election shall be irrevocable, at
least two hundred seventy (270) days prior to the Option Exercise Date or
Expiry Date, as the case may be. On the Option Exercise Date or the
Expiry Date, as the case may be, if Lessee has given notice pursuant to
the preceding sentence, Lessee shall pay, in addition to the amount set
forth in clause (a) or (b) above as appropriate, all Rent (if any) due
and owing on such date and any other amounts due and owing by Lessee
under this Lease, including, but not limited to, any Additional Amount
pursuant to Paragraph 2.3 of this Appendix D and, upon receipt of all
of the foregoing amounts then due and owing, Lessor shall pay to
Lessee any Rent paid in advance for the period after such date, the
Deposits and any remaining Maintenance Funds and shall transfer, or cause
-10-
to be transferred, title without recourse or warranty (except as to the
absence of Lessor's Liens) to the Aircraft to Lessee or its designee.
Lessor and Lessee shall also share equally all costs associated with the
exercise of Lessee's right to purchase the Aircraft. The FMV of the
Aircraft on the Option Exercise Date and (so long as the Head Lease shall
not be in effect) on the Expiry Date shall be established by mutual
agreement between Lessor and Lessee and if no agreement can be reached as
to the FMV of the Aircraft, a determination of such value by a qualified
aircraft appraiser mutually satisfactory to Lessor and Lessee no later
than forty-five days prior to the date relevant to such determination. If
Lessor and Lessee are unable to select such an appraiser by the fifteenth
day prior to the date relevant to such determination, then such value of
the Aircraft shall be determined as follows: two qualified aircraft
appraisers, one chosen by Lessor and one by Lessee, shall mutually agree
thereupon, but if either party shall fail to choose an appraiser within
fifteen days after notice from the other party of the selection of its
appraiser, then the appraisal by such appointed appraiser shall be the
value applicable to the Aircraft. If the two appraisers cannot agree
within fifteen days after both shall have been appointed, then a third
appraiser shall be selected by the two appraisers or, failing agreement as
to such third appraiser within ten days after both shall have been
appointed, by the American Arbitration Association. The third appraiser
shall select the appraisal which such appraiser believes to be closest to
the FMV of the Aircraft and such amount shall be the FMV. The decision of
the third appraiser shall be given within ten days of its appointment. The
foregoing procedures in respect of obtaining the FMV of the Aircraft by
one or more appraisers shall be herein called the "Appraisal Procedure".
The FMV of the Aircraft (so long as the Head Lease shall be in effect) on
the Expiry Date shall be established by the appraisal procedure set forth
in the Head Lease, whereby if the FMV of the Aircraft is not established
by mutual agreement between the Head Lessor and Lessor, the FMV of the
Aircraft will be a determination obtained in accordance with the Appraisal
Procedure with Head Lessor and Lessor participating therein at the
direction of Lessee in lieu of Lessor. Lessor hereby agrees that in
connection with such Appraisal Procedure, Lessee may choose any qualified
aircraft appraisers to be appointed and may otherwise participate in the
Appraisal Procedure and the determination of the FMV of the Aircraft. The
FMV shall be equal in amount to the value that would be obtained in an
arm's-length transaction between an informed and willing buyer-user under
no compulsion to buy, and an informed and willing seller, under no
compulsion to sell,
-11-
evaluating the Aircraft based on the assumption that it is in the
condition required to be maintained for operating service by the terms of
the Lease. All costs and expenses of the Appraisal Procedure shall be
shared equally by Lessor and Lessee. Subject to Paragraph 7 of this
Appendix D, any amounts remaining in the Maintenance Funds shall be paid
to Lessee concurrently with its payment of the purchase price of the
Aircraft pursuant to this Paragraph 9. Lessor represents and warrants to
Lessee that Lessor has the right under the Head Lease to grant the
foregoing options to Lessee and to cause title to the Aircraft to be
transferred to Lessee upon exercise thereof as provided above and the
Appraisal Procedure is the same as the "Appraisal Procedure" in the Head
Lease and that Lessor will not amend such "Appraisal Procedure" in the
Head Lease without Lessee's prior written consent (such consent not to be
unreasonably withheld).
10. Wet Leasing and Subleasing
So long as no Event of Default shall have occurred and be continuing,
without the prior written consent of Lessor, Lessee may wet lease the
Aircraft including the Engines (the term "wet lease" meaning an agreement
whereby Lessee or Sublessee at all times retains operational control of
the cockpit and the Aircraft), provided, that Lessee's obligations under
this Lease shall continue in full force and effect during the period of
such wet lease and none of the Aircraft nor the Airframe nor any Engine
will be used "predominantly outside the United States" within the meaning
of Section 168(g) of the Code (as Code is defined in Article 8A) during
the period from the Delivery Date to the last day of the year in which the
seventh anniversary of the Delivery Date occurs.
So long as no Event of Default shall have occurred and be continuing, if
Wings Aircraft Finance, Inc. or any other affiliate or subsidiary of
Fokker is not either (x) the Lessor under the Lease or (y) holder of the
entire beneficial interest in the ownership of the Aircraft, Lessee may
sublease the Aircraft including the Engines, provided, that the following
conditions are met, in form and substance satisfactory to the then Lessor
under the Lease:
(a) Lessee (x) shall have a credit rating of "BB" as determined by
Standard & Poors Corporation or "Ba2" as determined by Moody's
Investors Service or an equivalent rating as determined by a
nationally recognized rating agency reasonably acceptable to Lessor
(or equivalent private rating), or if the
-12-
proposed sublessee meets such a credit rating standard and the
sublease is assigned to Lessor and (y) shall be a person that is a
citizen of the United States of America as defined in Section
40102(a)(15) of Title 49 of the United States Code (or any similar
legislation of the United States of America enacted in substitution
or replacement therefor) holding an air carrier operating
certificate issued by the Secretary of Transportation pursuant to
Chapter 447 of Title 49 of the United States Code (or any
predecessor or successor legislation therefor) for aircraft capable
of carrying ten or more individuals or 6,000 pounds or more cargo
which is also certificated so as to entitle Lessor to the benefits
of Section 1110 of Title 11 of the United States Code with respect
to the Aircraft;
(b) the proposed sublessee is not subject to a proceeding or final order
under applicable bankruptcy, insolvency or reorganization laws on
the date the proposed sublease is entered into;
(c) the proposed sublessee is a person (x) (except the United States
government) that is a citizen of the United States of America as
defined in Section 40102(a)(15) of Title 49 of the United States
Code (or any similar legislation of the United States of America
enacted in substitution or replacement therefor) holding an air
carrier operating certificate issued by the Secretary of
Transportation pursuant to Chapter 447 of Title 49 of the United
States Code (or any predecessor or successor legislation therefor)
for aircraft capable of carrying ten or more individuals or 6,000
pounds or more cargo which is also certificated so as to entitle
Lessor to the benefits of Section 1110 of Title 11 of the United
States Code with respect to the Aircraft; or (y) which holds a duly
issued air carrier operating certificate issued by the jurisdiction
of its domicile and principal place of business;
(d) the proposed sublessee is an air carrier domiciled and principally
located in any of the United States, Canada, a member state of the
European Union, Switzerland, Norway or Japan or other country
reasonably acceptable to Lessor, provided, that (x) the United
States and The Netherlands maintain diplomatic relations with such
country on the date of such determination and (y) there are no
economic sanctions imposed against such country by the government of
the United States or the United Nations or the European
-13-
Union such that persons in the United States or member states of
such organizations are prohibited or strongly discouraged from doing
business in or with such country and (x) such country is not engaged
in armed conflict with the armed forces of the United States or a
member of the European Union;
(e) such proposed sublease shall not (w) be for a term, including any
renewal options thereunder that extends beyond the Expiry Date, (x)
provide a sublessee with a purchase option for the Aircraft, (y)
permit any sub-subleasing of the Aircraft by the proposed sublessee,
and (z) permit a proposed sublessee the rights of quiet enjoyment in
the Aircraft; and
(f) such proposed sublease shall (x) contain a waiver of sovereign
immunity by the proposed sublessee, (y) be on terms and conditions
which are not inconsistent with the rights of Lessee under the Lease
and (z) be expressly subject and subordinate to all of the terms of
the Lease, the Head Lease and the Indenture.
For such sublease, Lessor, shall receive, in form and substance reasonably
satisfactory to Lessor,
(a) a certificate of insurance signed by an insurance broker to the
effect that the Aircraft shall be, upon such sublease, insured in
accordance with the requirements of the Lease;
(b) evidence that all filings, registrations and applications and the
receipt of all consents, necessary or advisable in connection with
the sublease of the Aircraft, the recognition of Lessor's rights in
the Aircraft, the recognition of Head Lessor's title in the
Aircraft, and the continued status of the Indenture as a first
priority Lien on the Aircraft have been made or given;
(c) assurances that such sublease will not result in the imposition of,
or increase in the amount of, any Taxes, expense, claim, loss or
damage for which Lessee is not required to indemnify Lessor pursuant
to the Lease; and
(d) assurances of the payment by Lessee or the sublessee of all related
costs and expenses (including, without limitation, the reasonable
costs and disbursements of counsel to Lessor relating to such
sublease.
-14-
Prior to the delivery of the Aircraft under the sublease, Lessor, shall
have received, in form and substance reasonably satisfactory to Lessor,
opinions of counsel to Lessee or the sublessee with respect to the
jurisdiction in which such sublessee is domiciled and principally located,
to the effect that
(a) the terms (including the governing law, service of process and
submission to jurisdiction provisions thereof) of the Lease, the
Head Lease and the Indenture are legal, valid, binding and
enforceable under the laws of such jurisdiction (subject to
customary, exceptions as to enforceability and the effectiveness of
certain remedial provisions which exceptions do not affect the
practical realization of benefits intended to be provided by such
documents);
(b) it is not necessary for Lessor, Indenture Trustee or any Participant
to qualify to do business in such jurisdiction solely as a result of
such sublease;
(c) the courts of such jurisdiction would give effect to Lessor's
leasehold interest in the Aircraft, Head Lessor's title to the
Aircraft and insofar as the laws of such jurisdiction are concerned
Head Lessor will continue to be recognized as the owner of the
Aircraft;
(d) the lien of the Indenture will continue to be a first priority, duly
perfected lien on the Aircraft after giving effect to such sublease;
(e) the courts of such jurisdiction would provide at least substantially
equivalent protection to Lessor, Head Lessor, the Owner Participant,
the Loan Participant and Indenture Trustee as provided under United
States and applicable state law in respect of the transactions
contemplated by such sublease, including, without limitation, the
remedies provided under the Indenture, the Head Lease, the Lease and
the sublease (subject to customary exceptions as to enforceability
and the effectiveness of certain remedial provisions which do not
affect the practical realization of benefits intended to be provided
by such documents);
(f) any import permit necessary to take the Aircraft into such country
has been obtained;
(g) there is no tort liability of the owner, lessor or mortgagee of an
aircraft not in possession thereof
-15-
under the laws of such jurisdiction more onerous than under the laws
of the United States;
(h) all filings, registrations and declarations that are necessary or
advisable in connection with such sublease have been duly made and
are effective;
(i) the courts of such jurisdiction would give effect to the waiver of
sovereign immunity given by the sublessee;
(j) the courts of such jurisdiction would give effect to the sublease
being subject and subordinate to the Lease, the Head Lease and the
Indenture; and
(k) that there exist no possessory rights in favor of the sublessee
which upon Lessee's bankruptcy or other default under the Lease
would prevent the return of the Aircraft in accordance with the
terms of the Lease or inhibit Lessor's rights therein.
If, in connection with a sublease, the proposed sublessee requests that
the registration of the Aircraft be changed from that of the State of
Registration, such change of registration shall be subject to the prior
written consent of Lessor.
11. Excess Insurance
For so long as the Agreed Value exceeds {***}, Lessor shall reimburse
Lessee for Lessee's incremental cost of the premium relating to All
Risks Aircraft Hull insurance, or, if applicable, Aircraft Hull War
and Allied Perils insurance with respect to the amount of such excess.
At any time that the Agreed Value is less than {***} and the Agreed Value
is or was changed to reflect adjustments in the Stipulated Loss Values
(as defined in the Head Lease) due to the issuance of loan certificates
pursuant to the Indenture, Lessor shall reimburse Lessee for Lessee's
incremental cost of the premium relating to All Risk Hull insurance or,
if applicable, Aircraft Hull War and Allied Perils insurance, attributable
to such change in the Agreed Value.
12. Maximum Takeoff Weight
Lessee agrees that, upon the written request of Lessor, Lessee will
undertake as soon as reasonably practicable and
-16-
within its normal maintenance schedule to perform or to supervise the
performance by outside contractors approved by Lessor of such alterations
to the Aircraft as are necessary to permit the Aircraft to be operated at
a maximum takeoff weight ("MTOW") of 101,000 pounds, with the Manufacturer
to be responsible for obtaining Air Authority certification of operation
as MTOW 101,000 pounds.
13. Supplement to Article 8A.5
If any Head Lease Tax Indemnitee shall pay any amount to Lessor pursuant
to Section 7A(n) of the Participation Agreement for which Lessee has
previously paid an indemnity to Lessor pursuant to Article 8A.1 hereof,
Lessor shall pay such amount to Lessee within 15 Business Days after
Lessor receives such amount.
14. Supplement to Article 8A.9(r)
Article 8A.9(r) (relating to the definition of "Specified Tax") shall be
modified by inserting at the end of clause (i) the phrase "under this
Lease or under applicable Law" and by changing the words "Closing Date" to
"Delivery Date" in clause (vii).
-17-
APPENDIX E
OPERATING CONDITION AT REDELIVERY
Upon redelivery of the Aircraft to Lessor, the Aircraft shall, subject to
ordinary wear and tear generally:
1. General Condition
(a) Be clean by airline standards;
(b) Have installed the Engines, and other equipment, Parts and
accessories and loose equipment as would remain installed in such
Aircraft, and shall be in a condition suitable for operation in
commercial service;
(c) Have in existence a valid Certificate of Airworthiness with respect
to the Aircraft issued by the Air Authority of the State of
Registration with a validity of at least nine (9) months after the
date of redelivery of the Aircraft to Lessor;
(d) Comply with the manufacturer's original specifications therefor, set
forth in Annex 1 to this Appendix E;
(e) Have undergone, immediately prior to redelivery, a 3000 check or any
subsequent higher inspection, if due within 3000 hrs, in accordance
with the Approved Maintenance Program, shall be free of any waivers,
and all deferred maintenance, if any, shall have been accomplished;
each engine and A.P.U. shall have had an inspection in accordance
with Article 16 confirming release for its remaining operational
life;
(f) All outstanding airworthiness directives and mandatory orders
affecting such model of Aircraft issued by the Air Authority which
require compliance during the Term shall have been accomplished;
(g) Have installed all applicable vendors' and manufacturers' service
bulletin kits theretofore received by Lessee free of charge that are
appropriate for the Aircraft and to the extent not installed, such
kits shall be furnished free of charge to Lessor;
(h) Stripped of all Lessee's paint scheme and repainted through an
Authorized Maintenance Performer with Manufacturer approved paints
in white or any other basic color requested by Lessor; and
(i) Have been inspected and treated with respect to corrosion as defined
in the Approved Maintenance Program.
2. Airframe and major components
The Airframe and major components shall have not less than the following
hours/cycles/months expected life remaining to the next Major Check and/or
overhaul:
-Airframe : 3000 hours and 12 months to next Major
Check;
-Engine : half life on average to next Engine
shop visit but in no event less than
3000 hours;
-Main Landing Gear : 3000 cycles to next overhaul;
-Nose Landing Gear : 3000 cycles to next overhaul;
*The records as to remaining engine life shall be certified by Lessee in
writing to Lessor upon redelivery of the Aircraft to Lessor.
3. Components
(a) Each life-limited Part shall have not less than 3000 (Three
Thousand) flight hours or cycles of the total approved life
remaining to the scheduled replacement, in accordance with the
Approved Maintenance Program;
(b) Each hard-time controlled component shall have not less than 3000
(Three Thousand) Flight Hours or 3000 (Three Thousand) Cycles or 12
(twelve) months whatever is applicable, remaining to the next
scheduled overhaul/inspection, in accordance with the Approved
Maintenance Program;
(c) "On-condition" and "Condition Monitored" components shall be
serviceable;
(d) The A.P.U. shall be serviceable.
4. Fuselage, Windows and Doors
(a) Fuselage shall be free of major dents and abrasions, scab patches
and loose or pulled or missing rivets;
(b) Windows shall be free of delamination, blemishes, crazing and shall
be properly sealed;
-2-
(c) Doors shall be free moving, correctly rigged and be fitted with
serviceable seals.
5. Wings and Empennage
(a) All leading edges shall be free from damage;
(b) All unpainted cowlings, fairings and other surfaces shall be
polished;
(c) Wings shall be free of fuel leaks.
6. Interior
(a) Ceilings, sidewalls and bulkhead panels shall be clean and free of
cracks and stains;
(b) All carpets and seat covers shall be in good condition, clean and
stain free and meet Air Authority fire resistance regulations;
(c) All seats shall be serviceable, in good condition and repainted as
necessary;
(d) All signs and decals shall be clean and legible;
(e) All emergency equipment having a calendar life shall have a minimum
of one year or one hundred per cent of its total approved life,
whichever is less, remaining.
7. Cockpit
(a) All decals shall be clean, secure and legible;
(b) All fairing panels shall be free of stains and cracks, shall be
clean, secure and repainted as necessary;
(c) Floor coverings shall be clean and effectively sealed;
(d) Seat covers shall be in good condition, clean and shall conform to
Air Authority fire resistance regulations;
(e) Seats shall be fully serviceable and shall be repainted as
necessary.
8. Cargo Compartments
(a) All panels shall be in good condition;
(b) All nets shall be in good condition.
-3-
9. Landing Gear and Wheel Wells
(a) Shall be clean, free of leaks and repaired as necessary;
(b) All decals shall be clean, secure and legible.
10. Corrosion
(a) Entire fuselage shall be substantially free from corrosion and shall
be adequately treated and an approved corrosion prevention program
shall be in operation;
(b) Fuel tanks shall be free from contamination and corrosion and a tank
treatment program shall be in operation.
-4-
APPENDIX F
AIRCRAFT DOCUMENTS
FOKKER 100 AIRCRAFT
Aircraft Documents shall include the documents referred to in Table I ("Aircraft
Documentation"), Section (D), Exhibit (D) of the Support Services Agreement No.
ASSAF-110 between FAUSA and Lessee.
Aircraft Documents shall also include all logs, certificates and data, and
inspection, modification and overhaul records, relating to the Aircraft and
required to be maintained by the Air Authority and/or by the Approved
Maintenance Program.
Upon Expiry Date or upon earlier termination of the Lease all Aircraft Documents
shall be redelivered by Lessee to Lessor complete and fully updated
simultaneously with the redelivery of the Aircraft.
APPENDIX G
FAA POWER OF ATTORNEY
This POWER OF ATTORNEY in favor of WINGS AIRCRAFT FINANCE, INC.
("Lessor") dated _____________, 199_ from MIDWAY AIRLINES CORPORATION
("Lessee").
RECITALS:
A. Lessor and Lessee have entered into an Aircraft Operating Lease
Agreement No. AOLAF-116-A dated as of ____________, 1995 (the "Lease
Agreement") with respect to the Fokker 100 aircraft, serial no.
11484, U.S. registration no. N108ML (the "Aircraft").
B. Capitalized terms used herein and not otherwise defined shall have
the respective meanings ascribed to such terms in the Lease
Agreement.
NOW, THEREFORE, for good and valuable consideration, the adequacy of
which is hereby acknowledged, it is hereby agreed as follows:
Lessee hereby irrevocably constitutes and appoints Lessor, with full
power of substitution, for and in the name and on behalf of Lessee, as the act
and deed or otherwise of Lessee:
to execute, sign, deliver, authorize and file such instruments
legally necessary for any and all actions necessary to take
possession and effect redelivery of the Aircraft, Engines or Parts
upon termination of the Lease Agreement due to an Event of Default;
to execute, sign, deliver and file all such instruments requested by
Lessor that may be required to deregister the Aircraft from the FAA,
or to terminate the Lease for the Aircraft that is recorded at the
FAA, or that may be deemed proper in or in connection with all or
any of the purposes aforesaid, and to appoint substitutes or agents
to take any such action on its behalf; provided, however, that such
power shall not be exercisable by or on behalf of Lessor until an
Event of Default shall have occurred and is continuing.
Lessee hereby ratifies and confirms and agrees to ratify and confirm
any direction, authorization and instruction of Lessor taken pursuant to this
Power of Attorney.
This Power of Attorney shall expire on the date one year following
the Expiry Date, or earlier upon termination of the Lease.
IN WITNESS WHEREOF, Lessee has duly caused this Power of Attorney to
be executed on the date first set forth above.
MIDWAY AIRLINES CORPORATION
By: _________________________
Name:
Title:
[CERTIFIED RESOLUTIONS OF LESSEE AUTHORIZING THIS
POWER OF ATTORNEY TO BE ATTACHED]
-2-
THE SINGLE EXECUTED ORIGINAL OF THIS AMENDMENT MARKED "ORIGINAL" SHALL BE THE
"ORIGINAL" AND ALL OTHER COUNTERPARTS OF THIS AMENDMENT SHALL BE DUPLICATES AND
MARKED "DUPLICATE" OR "DUPLICATE ORIGINAL". TO THE EXTENT THAT THIS AMENDMENT
AND THE LEASE RELATED THERETO CONSTITUTE CHATTEL PAPER, AS SUCH TERM IS DEFINED
IN THE UNIFORM COMMERCIAL CODE AS IN EFFECT IN ANY APPLICABLE JURISDICTION, NO
SECURITY INTEREST MAY BE CREATED THROUGH TRANSFER OR POSSESSION OF ANY
COUNTERPART OTHER THAN THE "ORIGINAL".
AMENDMENT NO. 1
dated as of February , 1996
to
AIRCRAFT OPERATING LEASE AGREEMENT NO. AOLAF-116-A
dated as of July 10, 1995
between
WINGS AIRCRAFT FINANCE, INC.
as
Lessor
and
MIDWAY AIRLINES CORPORATION
as
Lessee
---------------------------------------
One Fokker 100 Aircraft
Manufacturer's Serial No. 11484
U.S. Registration Mark N108ML
AMENDMENT NO. 1 dated as of February , 1996 to Aircraft Operating
Lease Agreement No. AOLAF-116-A between WINGS AIRCRAFT FINANCE, INC., a Delaware
corporation ("Lessor") and MIDWAY AIRLINES CORPORATION, a Delaware corporation
("Lessee").
WHEREAS
A. Lessee and Lessor are parties to that certain Aircraft Operating
Lease Agreement No. AOLAF-116-A dated as of July 10, 1995 relating to One Fokker
F28 MK 0100 Aircraft described therein which Lease was recorded with the Federal
Aviation Administration (the "Lease"). Capitalized terms used herein and not
otherwise defined herein shall have the meanings ascribed to them in the Lease.
B. Lessee is in default under the Lease by reason of its failure to
make certain Deposit payments and Termination Payments (as defined in the
Termination Agreement) in December 1995 and January 1996.
C. Lessee and Lessor desire to amend the Lease as hereinafter set
forth and to agree to certain other terms as set forth herein.
NOW, THEREFORE, for valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto hereby agree as
follows:
1. Amendment.
1.1 Article 7 of the Lease is hereby amended by adding a new Article
7.6 thereto as follows:
"7.6 Without in any way limiting the rights contained elsewhere in
the Lease, Lessor shall have the right to have observers (who
may or may not be employees of Lessor) on site at Lessee's
premises (provided such observers do not unreasonably
interfere with Lessee's business or operations) and provided
the recipients of any financial and operational information of
Lessee (which recipients may include employees or other
representatives of Lessor or any of its affiliates, agents,
attorneys or accountants of Lessor or its affiliates) keep
strictly confidential any such information, Lessor shall have
the right to inspect and review any internal financial and
operational information of Lessee as Lessor may reasonably
request (provided such request is made to Lessee's controller,
or to a vice president, senior vice president or the president
of Lessee) including, without limitation, cash flow
statements, financial books and records, and any other records
relating to the
operation of Lessee's fleet. Lessee covenants that it will
fully cooperate with Lessor regarding any inspection of
Lessee's fleet and records pursuant to this Lease."
1.2 Article 15.1(n) of the Lease is hereby amended by deleting it in
its entirety and replacing it with the following:
"(n) if an event of default (however defined) occurs under (i) any of the
Other Aircraft Agreements, (ii) any other lease agreements between
Lessee and a lessor for the benefit, directly or indirectly, of
debis AirFinance B.V. or Daimler-Benz Aerospace A.G. relating to
other aircraft ("DASA Aircraft Agreements"), or (iii) any Aircraft
Maintenance Agreement entered into by Lessee in lieu of Reserve Rate
payments, which event permits acceleration or termination;"
1.3 Article 15.1(o) of the Lease is hereby amended by deleting it in
its entirety and replacing it with the following:
"(o) if Lessee's financial performance deviates in any material adverse
way (as determined by Lessor in its sole but reasonable discretion)
from the projections set forth in Lessee's business plan for
calendar year 1996 (attached hereto as Exhibit A), taken as a whole,
and such deviation is not the result of a natural disaster which
effectively makes it impossible for Lessee to meet such
projections;"
1.4 Article 15.1(p) of the Lease is hereby amended by deleting it in
its entirety and replacing it with the following:
"(p) if, prior to the satisfaction of Lessee's obligations to pay
Deferred Deposit Payments or Deferred Rent (as defined in Section 2
of the Amendment No. 1 to this Lease) Lessee shall make (i) any
payment of principal or interest on any amounts owed by Lessee to
Zell/Chilmark Fund, L.P. ("Zell") or any affiliate of Zell, (ii) any
redemption of, or any dividend or distribution with respect to, any
shares of Lessee owned by Zell or any affiliate of Zell, (iii) any
prepayment of principal or interest with respect to any other
subordinated debt owed by Lessee or (iv) any redemption of, or any
dividend or other distribution with respect to, any other shares of
Lessee; or"
1.5 Article 15.1(q) of the Lease is hereby amended by deleting it in
its entirety and replacing it with the following:
- 2 -
"(q) if Lessee shall fail to make any of the payments which it is
required to make pursuant to Section 2 of Amendment No. 1 to this
Lease."
1.6 Article 15.2(b)(i) of the Lease is hereby amended by adding
"(a), (n), (q)" following the word "paragraph" and by adding to such Article the
following additional clause:
"provided, however, that such automatic termination shall not apply with
respect to defaults of the type referred to in Articles 15.1(a) or (n) of
the Lease prior to the date of Amendment No. 1 to this Lease or for
payment defaults for Rent Dates occurring in February or March 1996, for
so long as Lessee makes the payments specified in Section 2 of Amendment
No. 1 to this Lease;"
it being understood that the effect of this amendment is to include payment
defaults, cross-defaults with Other Aircraft Agreements and DASA Aircraft
Agreements, and failure to make any of the payments specified in Section 2 of
Amendment No. 1 to this Lease as events giving rise to automatic termination of
the Lease, as amended, without the necessity of any service of notice thereof
upon Lessee.
1.7 Article 16 of the Lease is hereby amended by adding a new
Article 16.9 as follows:
"16.9 Notwithstanding anything to the contrary contained in this
Lease, Lessee covenants that, upon earlier termination of the
Lease pursuant to Article 15, Lessee will not interpose any
defense to, or otherwise oppose, any action commenced by
Lessor to regain possession of the Aircraft and Lessee shall
join in any application by Lessor seeking to regain possession
of the Aircraft if so required by Lessor. This covenant shall
apply whether or not Lessee is or shall subsequently become a
debtor in a case under Title 11 of the United States Code and
in such event Lessee covenants that it will not oppose and
will join in any application by Lessor seeking to regain
possession of the Aircraft."
2. Forbearance.
Execution of this Amendment shall serve as Lessor's agreement to
forbear from exercising its remedies under Article 15 of the Lease with respect
to Lessee's failure to make (i) installment payments of the Deposit due under
Appendix D to the Lease and Termination Payments (as defined in the Termination
- 3 -
Agreement) due in December 1995 and January 1996 and (ii) installment payments
of the Deposit and Termination Payments due on February 4 and March 4, 1996, for
so long, and only so long, as Lessee otherwise complies with all of the terms of
the Lease, as amended hereby, and the Termination Agreement, as amended, and
pays Lessor the following:
(a) all amounts payable as set forth in Amendment No. 1 to the
Termination Agreement dated as of the date of this Amendment;
(b) The amounts set forth in Exhibit A to this Amendment
("Deferred Deposit Payments") on April 4, 1996 and for the
next succeeding forty eight (48) Rent Dates on which Rent is
due; and
(c) The amounts set forth in Exhibit B to this Amendment
("Deferred Rent") on August 4, 1997 and for the next
succeeding Rent Dates on which Rent is due as set forth in
such Exhibit B.
Lessee may satisfy its obligations to pay the Deferred Deposit Payments and the
Deferred Rent at any time by paying the portion of all such amounts which
constitutes principal, together with the portion of such amounts which
constitutes interest accrued and unpaid as of the date of payment all as
reflected on Exhibits A or B to this Amendment. Each such Deferred Deposit
Payment and Deferred Rent payment on and after the dates set forth in clauses
(b) and (c) above, as the case may be, (i) shall constitute a portion of Deposit
and Rent, as the case may be, (ii) shall be made together with such installment
of Deposit and/or Rent as shall be otherwise due on each such Rent Date as
provided in Exhibit D of the Lease and (iii) shall be made in accordance with
the terms and conditions of the Lease.
Execution of this Amendment shall not constitute a waiver of the
Deposit payment defaults or of any other Events of Default which may have
occurred and be continuing or which may occur in the future. Lessor's agreement
to forbear shall terminate automatically if Lessee fails to make any payments
specified in this Section 2 or if any Event of Default occurs or has occurred
and is continuing (other than with respect to an Event of Default to which this
forbearance agreement set forth in this Section 2 applies). For so long, and
only so long as Lessor's agreement to forbear has not terminated (i) Lessee
shall be entitled to exercise its rights and privileges under Articles 5.1.2(b),
5.1.3, 7.4.1 and 13.3.1 of the Lease and (ii) Lessor shall be deemed to have
elected not to apply the Deposit to sums due or to be come due to Lessor
pursuant to Section 1 of Appendix D of the Lease, notwithstanding the occurrence
and continuation
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of a Default or Event of Default under the Lease.
3. Governing Law.
This Amendment shall be governed by and construed in accordance with
the internal laws of the State of New York and without regard to any conflict of
law rules. This Amendment is being delivered in the State of New York. The terms
and conditions of Article 16 of the Lease are incorporated herein by reference
as applicable to this Amendment.
4. Miscellaneous.
Except as specifically amended or supplemented by this Amendment,
the Lease is hereby ratified, approved, confirmed and continued in all respects
and all provisions of the Lease shall remain in full force and effect. This
Amendment may be executed in any number of counterparts and all of such
counterparts taken together shall be deemed and constitute one and the same
instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to
be duly executed by their respective officers thereunto duly authorized as of
the day and year first above written.
WINGS AIRCRAFT FINANCE, INC.
By:
-------------------------------
Title:
MIDWAY AIRLINES CORPORATION
By: /s/ Jonathan S. Waller
-------------------------------
Title: JONATHAN S. WALLER
SENIOR VICE PRESIDENT
GENERAL COUNSEL
- 5 -
of a Default or Event of Default under the Lease.
3. Governing Law.
This Amendment shall be governed by and construed in accordance with
the internal laws of the State of New York and without regard to any conflict of
law rules. This Amendment is being delivered in the State of New York. The terms
and conditions of Article 18 of the Lease are incorporated herein by reference
as applicable to this Amendment.
4. Miscellaneous.
Except as specifically amended or supplemented by this Amendment,
the Lease is hereby ratified, approved, confirmed and continued in all respects
and all provisions of the Lease shall remain in full force and effect. This
Amendment may be executed in any number of counterparts and all of such
counterparts taken together shall be deemed and constitute one and the same
instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to
be duly executed by their respective officers thereunto duly authorized as of
the day and year first above written.
WINGS AIRCRAFT FINANCE, INC.
By: /s/ E.A. Wagner
-------------------------------
Title: E.A. WAGNER, PRESIDENT
MIDWAY AIRLINES CORPORATION
By:
-------------------------------
Title:
- 5 -
Summary of
Exhibits A B
{***} (5 pages omitted)
116-A
AMENDMENT NO. 2
dated as of January 31, 1997
to
AIRCRAFT OPERATING LEASE AGREEMENT
NO. 116-A
dated as of July 10, 1995
between
WINGS AIRCRAFT FINANCE, INC., as
Lessor
and
MIDWAY AIRLINES CORPORATION, as
Lessee
Aircraft: Fokker 100
Serial No./RN: 11484/N108ML
THIS AMENDMENT NO. 2 dated as of January 31, 1997 (this
"Amendment"), is between WINGS AIRCRAFT FINANCE, INC., a company incorporated
under the laws of the State of Delaware, having its principal place of business
at 119 N. Fairfax Street, Alexandria, Virginia 22314 ("Lessor") and MIDWAY
AIRLINES CORPORATION, a company incorporated under the laws of the State of
Delaware, having its principal place of business at 300 West Morgan Street,
Durham, North Carolina 27701 ("Lessee");
WHEREAS, Lessor and Lessee are parties to that certain Aircraft
Operating Lease Agreement No. AOLAF-116-A, dated as of July 10, 1995 (as amended
from time to time, the "Lease". Capitalized terms used herein and not otherwise
defined herein shall have the meanings ascribed to them in the Lease);
WHEREAS, Lessor and Lessee entered into Amendment No. 1 to the Lease
dated as of February, 1996 ("Amendment No. 1");
WHEREAS, Lessor and Lessee entered into a Deferral Agreement dated
as of October 25, 1996 ("Deferral Agreement"), which provided for the deferral
of certain payments due under the Lease, and amended the Lease in certain other
respects;
WHEREAS, Lessor and Lessee entered into an Amendment to Deferral
Agreements dated as of December 30, 1996, which modified the Deferral Agreement
in certain respects (the "Amendment to Deferral Agreements");
WHEREAS, Lessee has entered into an Agreement and Plan of Merger
dated as of January 17, 1997 (as amended, the "Merger Agreement") with GoodAero,
Inc., a Delaware corporation ("GoodAero") and Zell/Chilmark Fund, L.P., a
Delaware limited partnership, whereby it is proposed that GoodAero will be
merged into Lessee to effect a recapitalization of Lessee (the "Merger"),
subject to certain conditions precedent having been satisfied; and
WHEREAS, Lessor and Lessee desire to amend the Lease to become
effective upon the consummation of the Merger and to enter into further
agreements as hereinafter set forth.
NOW, THEREFORE, for valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto hereby agree as
follows:
1. Amendment of Lease. The Lease is hereby amended as follows:
(a) Section 1 of the Lease is amended by eliminating the
period at the end of the definition of "Expiry Date" and by inserting in lieu
thereof the following clause:
"or such earlier date as may be specified by Lessor pursuant
to notice given in accordance with, and subject to the terms
of Section 16.10 hereof."
(b) Section 1 of the Lease is further amended by deleting the
period at the end of the definition of "Other Aircraft Agreements" and by
inserting the following in lieu thereof: "or any successor or assign thereof."
(c) Section 6.4 of the Lease is amended as follows: (a) by
deleting subsection (i) thereof in its entirety and by inserting in lieu thereof
the following: "(i) any financial reports or projections supplied to the
majority shareholder of Lessee"; and (b) by deleting the words "upon Lessor
requesting the same" from subsection (ii) thereof.
(d) Section 11.1(a) of the Lease is amended by deleting the
period at the end thereof and by inserting the following clause:
provided, however, that the deductible may be $500,000
(Dollars Five Hundred Thousand) for each accident, but only if
Lessee procures and maintains in favor of debis AirFinance
B.V. ("Beneficiary") for the benefit of the Beneficiary and/or
the Lessor under each of the Leases identified on Schedule
16.10 hereof (as those terms are defined therein) an
irrevocable letter of credit (the "Letter of Credit") in the
face amount of $800,000 (Dollars Eight Hundred Thousand)
issued by Wachovia Bank or another banking institution
reasonably acceptable to Beneficiary and in a form reasonably
acceptable to Beneficiary containing the terms set forth in
Schedule 11.1(a).1 of this Lease; provided, however, that
Lessee may reduce the amount of the Letter of Credit to
$400,000 in any year where Lessee's audited financial
statements for the prior year show that Lessee had net income
(as determined in accordance with generally accepted
accounting principles ("Net Income")) greater than the amount
for such prior year identified as "Net Income (1)" on Schedule
11.l(a).2, but less than the amount for such prior year
identified as "Net Income (2)" on Schedule 11.1(a).2; and
Lessee shall not be required to maintain the Letter of Credit
in any year where Lessee's audited financial statements for
the prior year show that Lessee had Net Income for such prior
year greater than the amount for such prior year identified as
"Net Income (2)" on Schedule 11.1(a).2; and provided, further,
that notwithstanding any reduction or cancellation of the
Letter of Credit in accordance with the terms hereof, Lessee
shall be required to restore the Letter of Credit in any year
where Lessee's audited financial statements for the
immediately preceding year show that Lessee's Net Income was
less than the threshold set by Schedule 11.1(a).2 for such
prior year for reduction of the Letter of Credit or in any
year in which audited financials for Lessee for the
immediately preceding year have not been certified on or
before April 15 of that year. For purposes of determining the
amount required for the Letter of Credit in any year,
reductions, if any, shall not be permitted until 30 days after
receipt by Beneficiary of the audited financial statements of
Lessee for the prior year and, in the event that the Letter of
Credit is to be reinstated or
-2-
increased in any year as aforedescribed, such Letter of Credit
shall be required on or before April 15 of such year. Any
failure by Lessee to comply with the provisions of this
Section 11.1(a) shall be an Event of Default under Section
15.1(b) of the Lease.
(e) Intentionally Omitted.
(f) Section 14.1(p) is amended by deleting the same in its
entirety and by inserting in lieu thereof the following:
"not become the surviving corporation of a merger with any
other entity, or itself consolidate with, or merge into, any
other corporation, or convey, transfer or lease substantially
all of its assets as entirety to any person, without the prior
written consent of Lessor (such consent not to be unreasonably
withheld) and the execution and delivery to Lessor of such
agreements, certificates and legal opinions as Lessor may
reasonably request with respect thereto;"
(g) Intentionally Omitted.
(h) Intentionally Omitted.
(i) Section 15.1(e) of the Lease is deleted in its entirety and the
following is inserted in lieu thereof:
"if (i) if Lessee or any of its subsidiaries is in default
under any lease, hire-purchase, conditional sale or credit
sale agreement for equipment having a casualty value in excess
of {***} and such default is not cured or waived within
the applicable grace period or five (5) Business Days
(whichever is greater); (ii) (regardless of the amount of
money involved), any event occurs which with or without notice
or lapse of time or both would constitute a default under any
agreement between Lessee and, or promissory note executed by
Lessee in favor of, (a) {***}; (b) Zell/Chilmark Fund, L.P.;
(c) {***}; (e) any affiliate of any of the foregoing; unless
such default or event of default is cured or waived within
the applicable grace period or five (5) Business Days
(whichever is greater); or (iii) any indebtedness owed by
Lessee or any of its subsidiaries in an amount in excess of
{***} is not paid when due or becomes due or capable of being
declared due prior to the date when it would otherwise become
due; provided, however, the failure of Lessee to pay amounts
approximating {***}
-3-
{***}, shall not be deemed a Default or an Event of Default
hereunder."
(j) Section 15.1(n) is modified by inserting the following after the
words "Daimler-Benz Aerospace A.G.": "or any affiliate, successor or assign of
either of them."
(k) Sections 15.1(o), (p) and (q) are deleted in their entirety and
the following new Sections 15.1(o) and (p) are inserted in lieu thereof:
"(o) if, an Event of Default shall occur under and as defined
in that certain Promissory Note dated as of January 31, 1997
from the Lessee to debis AirFinance B.V. or under, and as
defined in that certain Promissory Note dated as of January
31, 1997 from the Lessee to DASA Aircraft Finance XVI, B.V.
(each, a "Note" and collectively, the "Notes");
(p) if, prior to satisfaction of Lessee's obligations pursuant
to the Notes, Lessee shall make (i) any payment of principal
or interest on any debt owed by Lessee to Zell/Chilmark Fund,
L.P. or to any holder of equity in Lessee representing the
right to vote twenty percent (20%) or more of the stock in
Lessee on any matter presented for vote to the shareholders of
Lessee (an "Insider") or any affiliate of an Insider; or (ii)
any redemption of, or any dividend or distribution with
respect to, any shares of Lessee owned by an Insider or any
affiliate thereof."
(l) Section 15.2 is amended by deleting clause (i) of paragraph (b)
thereof in its entirety and inserting the following new clause (i) in lieu
thereof:
"(i) serving notice of such termination on Lessee specifying
the occurrence giving rise to such Event of Default or Events
of Default, provided that such notice shall be deemed to have
been served without the necessity of actual service and this
Lease shall terminate automatically without the necessity of
any service of notice thereof upon Lessee upon the occurrence
of any Event of Default described in paragraphs (a), (f), (g),
(h), (n) or (o) of Section 15.1 of this Lease; provided,
however, that actual service of notice of such termination on
Lessee shall be required where an Event of Default described
in paragraph (n) of Section 15.1 of the Lease has occurred
solely by reason of occurrence of an event of default under an
Other Aircraft Agreement or under a DASA Aircraft Agreement,
which event of default does not, under the terms of such Other
Aircraft Agreement or DASA Aircraft Agreement, result in
automatic termination of such Other Aircraft Agreement or such
DASA Aircraft Agreement."
-4-
(m) Article 16 of the Lease is amended by adding a new Section 16.10
as follows:
"(a) Notwithstanding anything to the contrary contained in
this Lease, Lessor may terminate this Lease by giving not less
than six (6) months' prior written notice of the termination
date to Lessee provided that in no event may Lessor choose a
termination date earlier than September 15, 1998 ("Lessor's
Termination Option") and the termination date specified in
such notice shall become the Expiry Date; provided, however,
that (subject to the following sentence) Lessor shall not be
entitled to exercise Lessor's Termination Option with respect
to this Lease where the same would result in the termination
of four (4) or more of the aircraft operating lease agreements
identified in Schedule 16.10 to the Lease in any twelve (12)
month period, taking into account the scheduled or actual
Expiry Date of each such aircraft operating lease agreement.
Nothing herein shall be construed to limit the Lessor's rights
upon the occurrence of any Default or Event of Default or upon
the termination of this Lease as a result thereof or upon the
expiration of any Lease in the absence of the exercise of
Lessor's Termination Option.
(b) Lessee shall in no event be liable for any costs,
expenses, liabilities, losses, damages or amounts incurred by
Lessor or Head Lessor which arise solely from the Lessor
exercising Lessor's Termination Option hereunder such as the
loss of any tax benefit, or fees or penalties arising from the
breakage of any contract or agreement. Except as expressly
provided in subsection (c) below, Lessor shall in no event be
liable for any costs, expenses, liabilities, losses, damages
or amounts incurred by Lessee as a result of Lessor exercising
Lessor's Termination Option in accordance with this Section
16.10.
(c) Notwithstanding the terms of clause (b) above, if Lessor
exercises Lessor's Termination Option hereunder in accordance
with this Section 16.10, then Lessee shall be responsible for
performing all of its obligations under and in accordance with
the terms of this Article 16, subject to the following:
(i) the Lessor shall pay or cause to be paid to Lessee
for Lessee's application against the "C Check" completed
pursuant to Appendix E, Item 1(e), an amount equal to the
lesser of (x) $100,000, or (y) an amount equal to the product
of the full cost of the "C Check" completed by Lessee pursuant
to Appendix E, Item 1(e) on the Aircraft multiplied by a
fraction, the numerator of which is the number of hours
(including fractions of an hour) remaining on the Aircraft
until Lessee's next scheduled "C Check" for the Aircraft
-5-
(assuming Lessor had not exercised Lessor's Termination Option
hereunder) and the denominator of which is 3000; and
(ii) for purposes of Section 7.4.1(b) and (c), any shop
visit required to meet the conditions of Appendix E shall be
deemed a "scheduled" shop visit."
(n) Section 18.6 of the Lease is amended by deleting the firm
of "Haight, Gardner, Poor & Havens, Attn: Bonny L.Y. Kwoh, 195
Broadway, New York, NY 10007" as agent for Lessor and by
inserting in lieu thereof the new agent for Lessor as follows:
"Hertzog, Calamari & Gleason, Attn: Carla Craig, 100 Park
Avenue, New York, New York 10017".
(o) Appendix B to the Lease is hereby amended as follows:
(i) The amount set forth as the "DEPOSIT" is deleted in
its entirety and the amount set forth on Schedule B.1 hereto
is substituted therefor.
(ii) The Amount set forth as "RENT" is deleted in its
entirety and the amount of {***} is substituted therefor.
(p) Appendix D to the Lease is hereby amended by deleting
Sections 2.2 and 2.3 in their entirety and by deleting the
first and second paragraphs of Section 1 in their entirety and
inserting the following in lieu thereof:
"1. Deposit. Lessee has paid to Lessor the amount set
forth on Schedule B.1 as a Deposit for the Aircraft on or
prior to January 31, 1997."
(q) Schedule 16.10 attached to this Amendment is hereby
attached to the Lease as Schedule 16.10 thereto and is
incorporated therein.
2. Waiver of Default. Lessor agrees that any Default or Event of
Default under Sections 15.1(a), 15.1(e), 15.1(g) or 15.1(o) of the Lease (prior
to the amendment of any such Sections hereunder) which occurred prior to the
date of this Amendment is hereby deemed to have been cured by Lessee and Lessor
waives any rights or remedies it may have had with respect to the occurrence of
any such Default or Event of Default.
-6-
3. Representations, Warranties and Covenants
The following shall be, as applicable, representations, warranties
or covenants of Lessee pursuant to Articles 13 and 14 of the Lease:
(a) Representations
(i) This Amendment and the Notes have been duly entered into
and delivered by Lessee, and each constitutes a valid, legal and binding
obligation of Lessee enforceable against Lessee in accordance with its terms.
(ii) As of the date of this Amendment, Lessee has entered,
or will contemporaneously herewith enter, into an agreement with {***} having
terms which are substantially in accordance with the terms set forth under
the heading {***} in Exhibit 6.02(k) to the Agreement and Plan of Merger
dated as of January 17, 1997 by and among GoodAero, Inc., James H. Goodnight,
John P. Sall, Midway Airlines Corporation and Zell/Chilmark Fund, L.P., as
amended, except to the extent otherwise specifically set forth in the letter
dated as of February 10, 1997, from Lessee to Lessor.
(b) Covenants
Lessee covenants that it will not make any prepayment in
respect of the Promissory Note dated February 7, 1997 in the amount of
{***} to provide for terms more favorable to the payee thereof (including,
without limitation, any increase in the interest rate or acceleration of
payment).
4. Reconciliation
Lessee acknowledges that the principal amount of the DASA Note
(which is the sum of all deferred payments as of February 10, 1997 under the
leases and lease termination agreements relating to the Fokker-100 aircraft
leased by Lessee having manufacturers' serial numbers 11450, 11484, 1185 and
11486), and the amount of the Deposit, have each been determined based solely
upon information supplied by Lessee. Lessee agrees that, in the event that
Lessor obtains access to information which in Lessor's opinion indicates that
the amount of the DASA Note or the amount of the Deposit is incorrect (the
"Information"), Lessee will, at Lessor's request, work in good faith with Lessor
to reconcile any discrepancy, provided that Lessor provides the Information to
Lessee. Upon the reconciliation of such discrepancy and the cancellation of the
existing DASA Note, Lessee will execute in favor of DASA, a new, replacement
DASA Note issued by Lessee in the reconciled amount and Lessor and Lessee will
execute an amendment to this Lease setting forth the reconciled amount of the
Deposit. The failure of Lessor and Lessee to reach final agreement upon a
reconciled amount of the DASA Note and/or the amount of the Deposit shall in no
event constitute a Default or an Event of Default by Lessee under the Lease and
Lessor's sole and exclusive remedy for Lessee's breach of its obligations
hereunder shall be the right to pursue money damages against Lessee, which right
to pursue such money damages is hereby acknowledged by Lessee.
-7-
5. Deferral Agreement. Lessor and Lessee agree that the Deferral
Agreement and the Amendment to Deferral Agreements are hereby declared null and
void and shall have no further force or effect with respect to the Lease.
6. Merger. Lessor hereby consents to the Merger.
7. Governing Law. This Amendment shall be governed by and construed
in accordance with the internal laws of the State of New York and without regard
to any conflict of law rules. This Amendment is being delivered in the State of
New York.
8. Miscellaneous. Except as specifically amended or supplemented by
this Amendment, the Lease is hereby ratified, approved, confirmed and continued
in all respects and all provisions of the Lease as heretofore amended shall
remain in full force and effect. The parties hereto acknowledge and confirm that
the Lease is intended to be a true lease and not a financing arrangement. This
Amendment may be executed in any number of counterparts, and all of such
counterparts taken together shall be deemed and constitute one and the same
instrument.
-8-
IN WITNESS WHEREOF, the parties hereto have executed this Amendment
on the day and year first above-written.
WINGS AIRCRAFT FINANCE, INC.
By: /s/ [ILLEGIBLE]
-----------------------------
Name:
---------------------------
Title: PRESIDENT
--------------------------
MIDWAY AIRLINES CORPORATION
By: /s/ J.S. Waller
-----------------------------
Name:
---------------------------
Title:
--------------------------
Schedule 11.1(a).1
The Letter of Credit shall contain the following terms:
The Beneficiary shall be entitled to draw amounts under the Letter of Credit
upon notice to the issuing bank signed by Beneficiary stating that amounts are
due under one or more of the following, and that such amounts remain unpaid:
Promissory Note dated as of January 31, 1997 executed by Midway
Airlines Corporation in favor of debis AirFinance B.V.
Promissory Note dated as of January 31, 1997 executed by Midway
Airlines Corporation in favor of Daimler-Benz Aerospace A.G.
Aircraft Operating Lease Agreement No. 111 between Midway Airlines
Corporation, as Lessee, and First Security Bank, N.A. (formerly
known as First Security Bank of Utah, N.A.), as Lessor
Aircraft Operating Lease Agreement No. 112 between Midway Airlines
Corporation, as Lessee, and First Security Bank, N.A. (formerly
known as First Security Bank of Utah, N.A.), as Lessor
Aircraft Operating Lease Agreement No. 113 between Midway Airlines
Corporation, as Lessee, and First Security Bank, N.A. (formerly
known as First Security Bank of Utah, N.A.), as Lessor
Aircraft Operating Lease Agreement No. 114 between Midway Airlines
Corporation, as Lessee, and First Security Bank, N.A. (formerly
known as First Security Bank of Utah, N.A.), as Lessor
Aircraft Operating Lease Agreement No. 135 between Midway Airlines
Corporation, as Lessee, and First Security Bank, N.A. (formerly
known as First Security Bank of Utah, N.A.), as Lessor
Aircraft Operating Lease Agreement No. 136 between Midway Airlines
Corporation, as Lessee, and First Security Bank, N.A. (formerly
known as First Security Bank of Utah, N.A.), as Lessor
Aircraft Operating Lease Agreement No. 524 between Midway Airlines
Corporation, as Lessee, and First Security Bank, N.A. (formerly
known as First Security Bank of Utah, N.A.), as Lessor
Aircraft Operating Lease Agreement No. 525 between Midway Airlines
Corporation, as Lessee, and First Security Bank, N.A. (formerly
known as First Security Bank of Utah, N.A.), as Lessor
Aircraft Operating Lease Agreement No. 115-A between Midway Airlines
Corporation, as Lessee, and Wings Aircraft Finance, Inc., as Lessor
Aircraft Operating Lease Agreement No. 116-A between Midway Airlines
Corporation, as Lessee, and Wings Aircraft Finance, Inc., as Lessor
Aircraft Operating Lease Agreement No. 117-A between Midway Airlines
Corporation, as Lessee, and Wings Aircraft Finance, Inc., as Lessor
Aircraft Operating Lease Agreement No. 118-A between Midway Airlines
Corporation, as Lessee, and Wings Aircraft Finance, Inc., as Lessor
Schedule 11.1(a).2
Midway Airlines
Net Income Thresholds for Reduction in Amount of Letter of Credit Pursuant to
Section 11.1(a)
US$ millions
Year 1997 1998 1999 2000 2001
Net Income(2) 12.0 18.0 25.2 32.8 41.0
Net Income(1) 8.0 12.0 16.8 21.8 27.3
Year 2002 2003 2004 2005 2006
Net Income(2) 49.1 57.7 67.8 67.8 67.8
Net Income(1) 32.8 38.5 45.2 45.2 45.2
Year 2007 2008 2009 2010 2011
Net Income(2) 67.8 67.8 67.8 67.8 67.8
Net Income(1) 45.2 45.2 45.2 45.2 45.2
Year 2012 2013 2014
Net Income(2) 67.8 67.8 67.8
Net Income(1) 45.2 45.2 45.2
Amount of
Letter of Credit
$800,000 If actual Net Income is less than or equal to Net Income(1)
$400,000 If actual Net Income is greater than Net Income(1) but less
than or equal to Net Income(2)
0 If actual Net Income is greater than Net Income(2)
Schedule 16.10
1. Aircraft Operating Lease Agreement No. 111, dated as of November 11, 1993,
between First Security Bank, N.A. and Midway Airlines Corporation.
2. Aircraft Operating Lease Agreement No. 112, dated as of November 11, 1993,
between First Security Bank, N.A. and Midway Airlines Corporation.
3. Aircraft Operating Lease Agreement No. 113, dated as of November 11, 1993,
between First Security Bank, N.A. and Midway Airlines Corporation.
4. Aircraft Operating Lease Agreement No. 114, dated as of November 11,
1993, between First Security Bank, N.A. and Midway Airlines Corporation.
5. Aircraft Operating Lease Agreement No. AOLAF-115-A, dated as of July 10,
1995, between Wings Aircraft Finance, Inc. and Midway Airlines
Corporation.
6. Aircraft Operating Lease Agreement No. AOLAF-116-A, dated as of July 10,
1995, between Wings Aircraft Finance, Inc. and Midway Airlines
Corporation.
7. Aircraft Operating Lease Agreement No. AOLAF-117-A, dated as of July 10,
1995, between Wings Aircraft Finance, Inc. and Midway Airlines
Corporation.
8. Aircraft Operating Lease Agreement No. AOLAF-118-A, dated as of July 10,
1995, between Wings Aircraft Finance, Inc. and Midway Airlines
Corporation.
9. Aircraft Operating Lease Agreement No. 135, dated as of July 20, 1995,
between First Security Bank, N.A. and Midway Airlines Corporation.
10. Aircraft Operating Lease Agreement No. 136, dated as of December 15, 1995,
between First Security Bank, N.A. and Midway Airlines Corporation.
11. Aircraft Operating Lease Agreement No. 524, dated as of August 1, 1995,
between First Security Bank, N.A. and Midway Airlines Corporation.
12. Aircraft Operating Lease Agreement No. 525, dated as of October 15, 1995,
between First Security Bank, N.A. and Midway Airlines Corporation.
Schedule B.1
Security Deposits Paid by Midway
Aircraft AOLAF Deposit
MSN No. Paid
-------- ----- -------
11321 525 {***}
11323 524 {***}
11329 135 {***}
11330 136 {***}
11444 111 {***}
11445 112 {***}
11475 113 {***}
11477 114 {***}
11450 115 {***}
11484 116 {***}
11485 117 {***}
11486 118 {***}
Dates Referenced Herein and Documents Incorporated by Reference
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