Back to top

AIRCRAFT LEASE AGREEMENT

Aircraft Lease Agreement

AIRCRAFT LEASE AGREEMENT | Document Parties: CENTENE CORP | AVN AIR, LLC, | MHS CONSULTING CORPORATION, You are currently viewing:
This Aircraft Lease Agreement involves

CENTENE CORP | AVN AIR, LLC, | MHS CONSULTING CORPORATION,

. RealDealDocs™ contains millions of easily searchable legal documents and clauses from top law firms. Search for free - click here.
Title: AIRCRAFT LEASE AGREEMENT
Governing Law: New York     Date: 2/25/2004
Industry: Insurance (Accident and Health)     Sector: Financial

50 of the Top 250 law firms use our Products every day

 

<PAGE>

 

                                                                   EXHIBIT 10.31

 

                                                                   *AIRC1998*

 

                            AIRCRAFT LEASE AGREEMENT

                     dated as of ______________("Agreement")

 

This Agreement (together with all supplements, annexes, exhibits and schedules

hereto hereinafter referred to as the "LEASE") is between AVN AIR, LLC, with an

office at 44 OLD RIDGEBURY ROAD, DANBURY, CONNECTICUT 06810 (together with its

successors and assigns, if any "LESSOR") and MHS CONSULTING CORPORATION, a

corporation organized and existing under the laws of the State of Wisconsin with

its mailing address and chief place of business at 7711 CARONDELET AVENUE, SUITE

800, ST. LOUIS, MO 63105 (hereinafter called "LESSEE").

 

1.        LEASING:

 

         (a)Subject to the terms and conditions set forth below, Lessor agrees

to lease to Lessee, and Lessee agrees to lease from Lessor, the aircraft,

including the airframe, engines, and all appurtenant equipment (together

hereinafter the "AIRCRAFT") described in Annex A.

 

         (b)Lessor shall purchase the Aircraft from the manufacturer or supplier

thereof ("SUPPLIER") and lease it to Lessee if on or before the Last Delivery

Date (specified in Annex B) Lessor receives each of the following documents in

form and substance reasonably satisfactory to Lessor: (i) a copy of this Lease

executed by Lessee, (ii) unless Lessor shall have delivered its purchase order

for the Aircraft or received a bill of sale for the Aircraft in the name of

Lessor (and in form and substance satisfactory to Lessor), the Purchase

Document(s) Assignment and Consent in the form of Annex C, with copies of the

purchase order or other purchase documents attached thereto; (iii) copies of

insurance policies or such other evidence of insurance which complies with the

requirements of Section 10, (iv) evidence that the Aircraft has been duly

certified as to type and airworthiness by the Federal Aviation Administration

("FAA"); (v) evidence that Insured Aircraft Title Service, or such other escrow

agent reasonable acceptable to Lessor, has received in escrow the executed bill

of sale and AC Form 8050-1 Aircraft Registration Form (except for the pink copy

which shall be available to be placed on the Aircraft upon acceptance thereof),

and an executed duplicate of this Lease all in proper form for filing with the

FAA; (vi) a copy of a resolution of Lessee's board of directors authorizing this

Lease in the form of Annex D; (vii) a completed inspection and/or survey with

respect to the Aircraft in accordance with the requirements set forth in the

Certificate of Acceptance; and (viii) such other documents as Lessor may

reasonably request. Lessor's obligation to lease the Aircraft hereunder is

further conditioned upon (1) the cost to Lessor of the acquisition of the

Aircraft not exceeding the Capitalized Lessor's Cost stated on Annex A; (2) upon

delivery of the Aircraft, Lessee's execution and delivery to Lessor of a

Certificate of Acceptance in the form of Annex E; and (3) successful filing of

all necessary documents with the FAA.

 

         (c)Lessor hereby appoints Lessee its agent for inspection and

acceptance of the Aircraft from the Supplier. Once the Certificate of Acceptance

has been signed, and the Commencement Date has occurred, the Aircraft shall be

deemed to have been delivered to, and accepted by, Lessee for lease hereunder,

 

 

<PAGE>

 

2.        TERM, RENT AND PAYMENT:

 

         (a) The rent ("RENT") payable under this Lease and Lessee's right to

use the Aircraft shall commence on the date Insured Aircraft Title Service files

with the FAA the executed bill of sale and Aircraft Registration Form and Lessee

executes the Certificate of Acceptance ("COMMENCEMENT DATE"). The term ("TERM")

of this Lease shall commence on the Commencement Date and shall continue, unless

earlier terminated pursuant to the provisions of this Lease, until and including

the Expiration Date stated in Annex B. If any Term is extended or renewed, the

word "Term" shall be deemed to refer to all extended or renewal Terms, and all

provisions of this Lease shall apply during any such extension or renewal Terms,

except as may be otherwise specifically provided in writing.

 

         (b) Rent shall be paid to Lessor by Lessee at its address stated above,

except as otherwise directed by Lessor. Rent payments shall be in the amount,

payable at such intervals and due in accordance with the provisions of Annex B.

(Each payment of Rent is hereinafter referred to as a "RENT PAYMENT".) If one or

more Advance Rent is payable, such Advance Rent shall be (i) set forth on Annex

B and due in accordance with the provisions of Annex B, and (ii) when received

by Lessor, applied to the first Basic Term for Rent Payment as set forth on

Annex B and the balance, if any, to the final Rent Payment(s), in inverse order

of maturity. In no event shall any Advance Rent or any other Rent Payment be

refunded to Lessee. If Rent is hot paid within ten (10) days of its due date,

Lessee agrees to pay a late charge of four cents ($.04) per dollar on, and in

addition to, the amount of such Rent but not exceeding the lawful maximum, if

any.

 

3.        RENT ADJUSTMENT:

 

         Intentionally left blank

 

4.        TAXES AND FEES: (a) If permitted by law, Lessee shall report and pay

promptly all taxes, fees and assessments due, imposed, assessed or levied

against the Aircraft (or purchase, ownership, delivery, leasing, possession, use

or operation thereof), this Agreement (or any rents or receipts hereunder),

Lessor or Lessee, by any domestic or foreign governmental entity or taxing

authority during or related to the term of this Agreement, including, without

limitation, all license and registration fees, and all sales, use, personal

property, excise, gross receipts, stamp, value added, custom duties, landing

fees, airport charges, navigation service charges, route navigation charges or

other taxes, imposts, duties and charges, together with any penalties, fines or

interest thereon (collectively "TAXES"). Notwithstanding the foregoing, Lessee

shall have no liability for Taxes imposed by any domestic or foreign

governmental entity or political subdivision thereof which are on or measured by

the net income, capital, net worth or franchise of Lessor or similar conduct of

business taxes, except as provided in Section 14(c) hereof. Lessee shall (i)

reimburse Lessor upon receipt of written request for reimbursement for any Taxes

charged to or assessed against Lessor, (ii) on request of Lessor, submit to

Lessor written evidence of Lessee's payment of Taxes, (iii) on all tax reports

or returns show Lessor as the owner of the Aircraft, and (iv) send a copy to

Lessor of any tax reports or returns showing Lessor as the owner.

Notwithstanding anything in this Lease to the contrary, Lessee shall have no

liability with respect to: Taxes imposed as a result of the transfer or other

disposition of the Aircraft by Lessor to anyone other than Lessee; Lessor's

gross negligence or willful misconduct; any act or omission of Lessor in breach

of this Lease; Lessor's failure to avail itself of any applicable exemption

 

                                     - 2 -

 

<PAGE>

 

reasonably and timely requested by Lessee (and provided that Lessee has provided

Lessor with such information that Lessor needs in order to assert such

exemption); or Lessor's failure to file any return or report in a timely or

proper manner.

 

         (b) To the extent any taxing jurisdiction makes a claim with respect to

any Tax for which the Lessee would be liable under this Section 4, Lessee may

contest in its own name such claim only so long as there is no continuing Event

of Default by Lessee under the Lease and taking such action does not subject the

Aircraft to attachment, foreclosure, or repossession by the taxing authority. In

any event, if Lessee wishes to contest the tax, then at such time during such

contest that the tax is required to be paid, Lessee shall agree to indemnify

Lessor for all sums Lessor may be obligated to pay in the event that Lessee does

not prevail in such contest.

 

         (c) To the extent it is not possible for Lessee to contest the tax in

its own name, Lessee may request Lessor to contest such claim and Lessor shall

be obligated to contest said claim, provided that (1) in the opinion of

independent tax counsel selected by Lessor and approved by Lessee the basis in

law and fact makes it more probably than not that the Lessee will prevail, (2)

Lessee shall have agreed to pay Lessor on demand all out of pocket costs and

expenses (including the fees and disbursements of independent tax counsel)

incurred by Lessor in connection with taking such action, (3) Lessee shall have

agreed to indemnify Lessor for all sums Lessor may be obligated to pay in the

event that Lessor does not prevail in such contest, and (4) Lessor shall have no

obligation to appeal any adverse ruling with respect to the tax contest.

 

         (d) Notwithstanding anything to the contrary contained herein, if at

any time during the tax contest the Aircraft becomes subject to attachment,

foreclosure or repossession by the taxing authority due to non-payment of the

tax and associated charges for which Lessee is responsible hereunder, Lessee

shall promptly pay such tax and charges.

 

5.        REPORTS: Lessee will provide Lessor with the following in writing

within the time periods specified: (a) notice of any tax or other lien which

attaches to the Aircraft (other than a Permitted Lien as defined in Section

8(a)), within ten (10) days after Lessee becomes aware of the lien and the full

particulars of the lien forthwith upon request of Lessor, (b) complete

consolidated financial statements for the group of companies of which Lessee is

a member, certified by a recognized firm of certified public accountants,

promptly after the filing of such financial statements with the Securities and

Exchange Commission for each fiscal year of Lessee; (c) notice to Lessor of the

Aircraft's location, and the location of all information, logs, documents and

records relating to the Aircraft and its use, maintenance and/or condition,

immediately upon request; (d) notice to Lessor of the relocation of the

Aircraft's primary hangar location, prior to any relocation; (e) notice of loss

or damage to the Aircraft which would cost more than ten percent (10%) of the

original Capitalized Lessor's Cost to repair or replace, within fifteen (15)

days of such loss or damage; (f) notice of any accident involving the Aircraft

causing personal injury or property damage, within fifteen (15) days of such

accident; (g) copies of the insurance policies or other evidence of insurance

required by the terms hereof, promptly upon request by Lessor; (h) copies of all

information, logs, documents and records relating to the Aircraft and its use,

maintenance and/or condition, within fifteen (15) days of such request; (i)

beginning on the first anniversary of the Commencement Date of this Lease and on

each anniversary date thereafter, a certificate of the authorized officer of

Lessee stating that such officer has reviewed the

 

                                       - 3 -

 

<PAGE>

 

activities of Lessee and that, to the best of such officer's knowledge, there

exists no Event of Default or event which with notice or lapse of time (or both)

would become an Event of Default; (j) such information as may be reasonably

required to enable Lessor to file any reports required by any governmental

authority as a result of Lessor's ownership of the Aircraft, promptly upon

request of Lessor; (k) copies of any manufacturer's maintenance service program

contract for the airframe or engines, promptly upon request by Lessor; (1)

evidence of Lessee's compliance with applicable FAA airworthiness directives and

of compliance with other maintenance provisions of Section 7 hereof, promptly

upon request of Lessor; and (m) notice of any change in Lessee's state of

incorporation or organization, within thirty (30) days of such change and (n)

such other reports or information as Lessor may reasonably request.

 

6.        DELIVERY, REGISTRATION, USE AND OPERATION:

 

         (a) Physical possession of the Aircraft shall be delivered directly

from the Supplier to Lessee unless the Aircraft is being leased pursuant to a

sale leaseback transaction in which case Lessee acknowledges that it is in

possession of the Aircraft as of the Lease Commencement Date.

 

         (b) Lessee shall not take any action, or omit to take any action for

which Lessee has a duty to act, which would cause the Aircraft not to be

registered in the name of Lessor under the Title 49, Subtitle VII of the United

States Code, as amended (the "FAA ACT"), and shall not register the Aircraft

under the laws of any other country.

 

         (c) The possession, use and operation of the Aircraft shall be at the

sole risk and expense of Lessee. Lessee acknowledges that it accepts full

"operational control" of the Aircraft (as defined in the Federal Aviation

Regulations ("FAR")), Lessee agrees that the Aircraft will be used and operated;

(i) in compliance with any and all statutes, laws, ordinances, regulations and

standards or directives issued by any governmental agency applicable to the use

or operation thereof; (ii) in compliance with any airworthiness certificate,

license or registration relating to the Aircraft issued by any agency; (iii) in

compliance with all safety and security directives of the FAA and similar

government regulations relating to aircraft security; and (iv) in a manner that

does not modify or impair any existing warranties on the Aircraft or any part

thereof. Lessee will operate the Aircraft predominantly in the conduct of its

business and will not use or operate, or permit the Aircraft to be used or

operated, (aa) in violation of any United States export control law, (bb) in a

manner wherein the predominant use during any consecutive twelve month period

would be for a purpose other than transportation for Lessee, or in a manner, for

any time period, such that Lessor or a third party shall be deemed to have

"operational control" of the Aircraft except as otherwise permitted under this

Lease, or (cc) for the carriage of persons or property for hire except as

permitted under subsections 91.501(b)(3), (4), (5), (6) (but excluding therefrom

a "joint ownership agreement"), (7), (8) and (9) of the FAR and section 91.321

of the FAR or otherwise permitted under this Lease or the transport of mail or

contraband. The Aircraft will, at all times be operated by duly qualified pilots

holding at least a valid commercial pilot certificate and instrument rating and

any other certificate, rating, type rating or endorsement appropriate to the

Aircraft, purpose of flight, condition of flight or as otherwise required by the

FAR. The Aircraft's pilots shall be employed and/or paid and contracted for by

Lessee or by a third party retained by Lessee to provide pilot services with

respect to the Aircraft, shall meet all applicable recency of flight

requirements and shall meet the requirements established and specified by the

insurance policies required under this Lease and the FAA. The primary hangar

location of the Aircraft shall be as

 

                                     - 4 -

 

<PAGE>

 

stated in Annex B, Lessee shall not relocate the primary hangar location to a

hangar location outside the United States. Provided that Lessor and its

representatives comply with all security directives of the FAA and similar

governmental and airport regulations relating to aircraft and airport security,

Lessor may, at its expense, examine and inspect the Aircraft, wherever located,

on the ground, after giving Lessee reasonable prior notice.

 

         (d) (i) AT ALL TIMES DURING THE TERM OF THE LEASE, LESSEE AGREES NOT TO

OPERATE OR LOCATE THE AIRCRAFT, OR ALLOW THE AIRCRAFT TO BE OPERATED OR LOCATED,

IN OR OVER (1) ANY AREA OF HOSTILITIES; OR (2) ANY GEOGRAPHIC AREA WHICH IS NOT

COVERED BY THE INSURANCE POLICIES REQUIRED BY THIS LEASE; OR (3) ANY COUNTRY OR

JURISDICTION FOR WHICH EXPORTS OR TRANSACTIONS ARE SUBJECT TO SPECIFIC

RESTRICTIONS UNDER ANY UNITED STATES EXPORT OR OTHER LAW, OR UNITED NATIONS

SECURITY COUNCIL DIRECTIVE, INCLUDING WITHOUT LIMITATION, THE TRADING WITH THE

ENEMY ACT, 50 U.S.C. APP. SECTIONS 1 ET SEQ., THE INTERNATIONAL EMERGENCY

ECONOMIC POWERS ACT, 50 U.S.C. APP. SECTIONS 1701 ET SEQ., AND THE EXPORT

ADMINISTRATION ACT, 50 U.S.C. APP. SECTIONS 2401 ET SEQ., IF IN SO DOING LESSEE

WOULD VIOLATE, OR PERMIT THE VIOLATION OF, SUCH LAWS OR DIRECTIVES. LESSEE ALSO

AGREES TO PROHIBIT ANY NATIONAL OF SUCH RESTRICTED NATIONS FROM OPERATING THE

AIRCRAFT.

 

                  (ii) Lessee represents and warrants that it does not on this

         date hold a contract or other obligation to operate the Aircraft in any

         of the following countries; Cuba, Iraq, Iran, Libya, Myanmar, North

         Korea, and Sudan.

 

         (e) The engines set forth on Annex A shall be used only on the airframe

described in Annex A and shall only be removed for maintenance in accordance

with the provisions of this Lease.

 

         (f) Lessor shall not disturb Lessee's quiet enjoyment of the Aircraft

during the Term of this Lease unless an Event of Default has occurred and is

continuing under this Lease.

 

         (g) During the Term of this Lease, Lessee expressly assumes sole and

exclusive responsibility for the determination and implementation of all

security measures and systems required by law or regulation having jurisdiction

over the Lessee or the Aircraft and otherwise as a reasonably prudent lessee of

an aircraft would so do, for the proper protection of the Aircraft (whether on

the ground or in flight) against theft, vandalism, hijacking, destruction,

bombing, terrorism or similar acts directly or indirectly affecting the

Aircraft, any part thereof, or any persons who (whether or not on board the

Aircraft) may sustain any injury or damage as a result of any such acts. Lessee

expressly acknowledges that during the Term of this Lease, Lessee's

implementation of such security measures and systems is a material obligation of

Lessee under this Lease, and that Lessor shall have absolutely no responsibility

therefor. Upon request by Lessor from time to time, and subject to Lessee's

obligation first to comply with all applicable laws and regulations, Lessee

shall provide Lessor with such evidence as is reasonably requested by Lessor

regarding Lessee's compliance with its obligations under this section. However,

in no event shall Lessor have any right, duty or obligation to monitor, review

or assess any security measures maintained by Lessee or Lessee's compliance with

the provisions of this Section. Any review by Lessor of such evidence as is

provided pursuant to Lessor's request hereunder shall be at Lessor's expense and

for Lessor's informational.

 

                                     - 5 -

 

<PAGE>

 

purposes only, and there shall be no inference or implication therefrom that

Lessor has reviewed or approved the adequacy or sufficiency of such

recommendations or of the actual security measures or systems employed by

Lessee. Without limiting the generality of the foregoing, it is expressly

understood and acknowledged that Lessee, being in "operational control" of the

Aircraft, is uniquely in a position to identify and implement those security

measures necessary to comply with this section and that in doing so, Lessee has

not relied upon, and shall not rely upon, any statement, act, or omission of

Lessor.

 

7.        MAINTENANCE:

 

         (a) Lessee agrees that the Aircraft will be maintained in compliance

with any and all statutes, laws, ordinances, regulations and standards or

directives issued by any governmental agency applicable to the maintenance

thereof, in compliance with any airworthiness certificate, license or

registration relating to the Aircraft issued by any agency and in a manner that

does not modify or impair any existing warranties on the Aircraft or any part

thereof.

 

         (b) Lessee shall maintain, inspect, service, repair, overhaul and test

the Aircraft (including each engine) in accordance with (i) all applicable

maintenance manuals published by the manufacturer, including any subsequent

amendments or supplements to such manuals issued by the manufacturer from time

to time, (ii) all mandatory or otherwise required "SERVICE BULLETINS" issued,

supplied, or available by or through the manufacturer and/or the manufacturer of

any engine or part with respect to the Aircraft, (iii) all airworthiness

directives applicable to the Aircraft issued by the FAA or similar regulatory

agency having jurisdictional authority, and, to the extent reasonably possible,

causing compliance to such directives to be completed through corrective

modification in lieu of operating manual restrictions, and (iv) all maintenance

requirements set forth in Annex G hereto. Lessee shall maintain all records,

logs and other materials required by the FAA or by the manufacturer for

enforcement of any warranties. All maintenance procedures required hereby shall

be undertaken and completed in accordance with the manufacturer's recommended

procedures, and by properly trained, licensed, and certificated maintenance

sources and maintenance personnel, so as to keep the Aircraft and each engine in

as good operating condition as when delivered to Lessee hereunder, ordinary wear

and tear excepted, and so as to keep the Aircraft in such operating condition as

may be necessary to enable the airworthiness certification of such Aircraft to

be maintained in good standing at all times.

 

         (c) Lessee agrees, at its own cost and expense, to (i) cause the

Aircraft and each engine thereon to be kept numbered with the identification and

serial number therefor as specified in Annex A; (ii) prominently display on the

Aircraft that registration number, and only that registration number, specified

in Annex A except the Aircraft's registration number may be changed with

Lessor's consent which shall not be unreasonably withheld, delayed or

conditioned; and (iii) notify Lessor in writing thirty (30) days prior to making

any change in the configuration (other than changes in configuration mandated by

the FAA), appearance and coloring of the Aircraft from that in effect at the

time the Aircraft is accepted by Lessee hereunder, and in the event of such

change or modification of configuration, coloring or appearance, to restore the

Aircraft to the configuration, coloring or appearance in effect on the

Commencement Date upon request of Lessor at the expiration or earlier

termination of this Lease (unless such change or modification of configuration,

coloring or appearance is or has been approved in writing by Lessor which

approval shall not be unreasonably withheld, delayed or conditioned) or, at

Lessor's option to pay to Lessor an amount

 

                                     - 6 -

 

<PAGE>

 

equal to the reasonable cost of such restoration. Lessee will not place the

Aircraft in operation or exercise any control or dominion over the same until

such Aircraft markings have been placed thereon. Lessee will replace promptly

any such Aircraft marking which may be removed, defaced or destroyed.

 

         (d) Lessee shall be entitled from time to time during the Term of this

Lease to acquire and install on the Aircraft at Lessee's expense, any additional

accessory, device or equipment as Lessee may desire (each such accessory, device

or equipment, an "ADDITION"), but only so long as such Addition (i) is ancillary

to the Aircraft; (ii) is not required to render the Aircraft complete for its

intended use by Lessee; (iii) does not alter or impair the originally intended

function or use of the Aircraft; and (iv) can be readily removed without causing

material damage. Title to each Addition which is not removed by Lessee prior to

the return of the Aircraft to Lessor shall vest in Lessor upon such return.

Lessee shall repair all damage to the Aircraft resulting from the installation

or removal of any Addition so as to restore the Aircraft to its condition prior

to installation, ordinary wear and tear excepted.

 

         (e) Any alteration or modification with respect to the Aircraft that

may at any time during the Term of this Lease be required to comply with any

applicable law or any governmental rule or regulation (each an "ALTERATION")

shall be made at the expense of Lessee. Any repair made by Lessee of or upon the

Aircraft or replacement parts, including any replacement engine installed

thereon in the course of repairing or maintaining the Aircraft (but excluding

any "loaner" engine temporarily installed on the Aircraft while an engine has

been removed for repair), or any Alteration, shall be deemed an accession, and

title thereto shall be immediately vested in Lessor without cost or expense to

Lessor.

 

         (f) Except as permitted under this Section 7, Lessee will not modify

the Aircraft or affix or remove any accessory to the Aircraft leased hereunder.

 

         (g) If the Aircraft is to be operated at any time under Part 135 of the

FAR with the prior written consent of Lessor, then the Aircraft shall be

maintained and operated in accordance with the applicable Part 135 standards.

 

8.        LIENS, SUBLEASE AND ASSIGNMENT:

 

         (a) LESSEE SHALL NOT SELL, TRANSFER, ASSIGN OR ENCUMBER THE AIRCRAFT,

ANY ENGINE OR ANY PART THEREOF, LESSOR'S TITLE OR ITS RIGHTS UNDER THIS LEASE.

LESSEE SHALL NOT, EXCEPT AS EXPRESSLY PERMITTED UNDER THIS LEASE OR WITH THE

PRIOR WRITTEN CONSENT OF LESSOR, SUBLET, CHARTER OR PART WITH POSSESSION OF THE

AIRCRAFT OR ANY ENGINE OR PART THEREOF. Lessee shall not permit any engine to be

used on any other Aircraft. Lessee shall keep the Aircraft each engine and any

part thereof free and clear of all liens and encumbrances other than those which

result from (i) the respective rights of Lessor and Lessee as herein provided;

(ii) liens arising from the acts or omissions of Lessor; (iii) liens for taxes

not yet due; and (iv) inchoate materialmen's, mechanics', workmen's,

repairmen's, employees' or other like liens arising in the ordinary course of

business for sums not yet delinquent or being contested in good faith (and for

the payment of which adequate assurances in Lessor's reasonable judgment have

been provided Lessor)(each, a "PERMITTED LIEN").

 

                                     - 7 -

 

<PAGE>

 

         (b) Lessor and any assignee of Lessor may assign this Lease, or any

part hereof and/or the Aircraft subject hereto provided that (a) such assignment

shall in no way impair Lessee's right and interests in the Aircraft and this

Lease, (b) such assignment shall not increase any indemnity or other obligation

of Lessee hereunder, and Lessee shall have no greater obligations hereunder

whether by an increase in the amount of any indemnity payable hereunder or

otherwise and (c) Lessor shall reimburse Lessee for all costs and expenses it

incurs in connection with such assignment. Lessee hereby waives and agrees not

to assert against any such assignee, or assignee's assigns, any defense,

set-off, recoupment claim or counterclaim which Lessee has or may at any time

have against Lessor for any reason whatsoever.

 

9.        LOSS, DAMAGE AND STIPULATED LOSS VALUE: Lessee hereby assumes and shall

bear the entire risk of any loss, theft, confiscation, expropriation,

requisition, damage to, or destruction of, the Aircraft, any engine or part

thereof from any cause whatsoever. If for any reason the Aircraft, or any engine

thereto becomes worn out, lost, stolen, confiscated, expropriated,

requisitioned, destroyed, irreparably damaged, or unusable ("CASUALTY

OCCURRENCES") Lessee shall promptly and fully notify Lessor in writing. If, in

the reasonable opinion of Lessor, a Casualty Occurrence has occurred which

affects only the engine(s) of the Aircraft, then Lessee, at its own cost and

expense subject to Lessor paying over to Lessee (provided no Event of Default

has occurred and is continuing), any insurance proceeds received by Lessor as a

result of claims for damages, loss, destruction, confiscation, expropriation or

war risk, shall replace such engine(s) within a reasonable period of time after

such loss with an engine(s) reasonably acceptable to Lessor and shall cause

title to such engine(s) to be transferred to Lessor for lease to Lessee under

this Lease. Upon transfer of title to Lessor of such engine(s), such engine(s)

shall be subject to the terms and conditions of this Lease, and Lessee shall

execute whatever documents or filings Lessor reasonably deems necessary and

appropriate in connection with the substitution of such replacement engine(s)

for the original engine(s). Provided such engine has been so replaced and

provided no Event of Default has occurred and is continuing, Lessee shall, as

between Lessee and Lessor only, be entitled to recover possession of the salvage

of the original engine(s) and Lessor will transfer to or at the direction of

Lessee all of Lessor's right, title and interest in any such original engine(s)

free and clear of any lien or encumbrance arising through Lessor and Lessee will

be subrogated to all claims of Lessor against third parties (other than Lessor's

insurer under policies independently maintained at its own cost and expense) in

connection with the Casualty Occurrence provided that the value of the

replacement engine is equal to or greater than the fair market value of the

salvaged engine measured after the time of the Casualty Occurrence. If, in the

reasonable opinion of Lessor, a Casualty Occurrence has occurred with respect to

the Aircraft in its entirety, on the Rent Payment Date next succeeding a

Casualty Occurrence (the "Payment Date"), Lessee shall pay Lessor the sum of (i)

the Stipulated Loss Value as set forth in Annex F calculated as of the Rent

Payment Date immediately preceding such Casualty Occurrence; and (ii) all Rent

and other amounts which are due under this Lease as of the Payment Date minus

any insurance proceeds actually received in goods funds by Lessor as a result of

claims for damages, loss, destruction, confiscation, expropriation or war risk.

Upon payment of all sums due hereunder and compliance by Lessee with all of its

other Lease termination obligations, as provided herein, the Term of this Lease

as to the Aircraft shall terminate, and then, as between Lessee and Lessor only,

Lessee shall be entitled to recover possession of the salvage thereof, Lessor

will transfer to or at the direction of Lessee all of Lessor's right, title and

interest in the Aircraft and any engine constituting part of the Aircraft

whether or not installed on the Aircraft when the Casualty Occurrence occurred,

free and clear of any lien or encumbrance arising through Lessor (provided the

Stipulated Loss Value actually received by Lessor for the Aircraft is equal to

or greater than the Fair Market

 

                                     - 8 -

 

<PAGE>

 

Value (as defined in section 19 herein) of such salvaged Aircraft), and Lessee

will be subrogated to all claims of Lessor against third parties (other than

Lessor's insurer under policies independently maintained at its own cost and

expense) in connection with the Casualty Occurrence.

 

10.       INSURANCE: Lessee shall secure and maintain in effect at its own

expense throughout the Term of the Lease (i) liability insurance covering public

liability and property, cargo, and sudden accidental pollution coverage (as

provided is such policies) in amounts not less than fifty million (50,000,000)

United States dollars for any single occurrence, (ii) all-risk aircraft hull and

engine insurance (including, without limitation, with respect to engine or part

thereof while removed from the aircraft and foreign object damage insurance) in

an amount which is not less than the then Stipulated Loss Value (but the minimum

amount of such insurance for engines and parts removed from the Aircraft shall

be the replacement cost of such engines and parts, to the extent available); and

(iii) confiscation, expropriation and war risk, hijacking and allied perils

insurance (which insurance shall include coverage against acts of terrorism and

similar criminal acts) in an amount which is (x) for physical damage, not less

than the then Stipulated Loss Value and (y) for liability coverage, not less

than fifty million (50,000,000) United States dollars for any single occurrence.

All insurance shall: (1) name Lessor as owner of the Aircraft and as loss payee,

as its interest may appear, and additional insured (without responsibility for

premiums), (2) provide that any cancellation or substantial change in coverage

shall not be effective as to the Lessor for thirty (30) days (except (i) in the

case of war risk insurance, (a) seven days or such shorter period as may be

reasonably available and (b) without any notice upon (x) the outbreak of war

between any two of: France, the People's Republic of China, the Russian

Federation the United Kingdom or the United States of America, or (y) the

hostile detonation of any weapon of war employing atomic or nuclear fission

and/or fusion or other like reaction or radioactive force; or (z) the

requisitioning of the Aircraft by a governmental authority or agency; and (ii)

ten days with respect to cancellation for failure to pay a premium) after

receipt by Lessor of written notice from such insurer(s) of such cancellation or

change, (3) insure Lessor's interest regardless of any breach of warranty or

other act or omission by Lessee (in circumstances where Lessee has a duty to

act), or violation by Lessee of any warranties, declarations or conditions in

such policies (excluding, if so excluded from such insurance policies,

conversion or embezzlement), (4) include a severability of interest clause

providing that such policy shall operate in the same manner as if there were a

separate policy covering each insured (except as to the limits of liability),

(5) waive any right of set-off against Lessee or Lessor, and any rights of

subrogation against Lessor, (6) be primary and not be subject to any offset by

any other insurance carried by Lessor or Lessee, (7) consist of such other

insurance as Lessor shall reasonably require in accordance with industry

standards, and (8) be with company(ies) reasonably satisfactory to Lessor.

Lessee hereby appoints Lessor as Lessee's attorney-in-fact to make proof of loss

and claim for and to receive payment of and to execute or endorse all documents,

checks or drafts in connection with all policies of insurance in respect of the

Aircraft. Lessor shall not act as Lessee's attorney-in-fact unless there has

occurred and is continuing an Event of Default by Lessee. Any reasonable expense

of Lessor in adjusting or collecting insurance proceeds as Lessee's

attorney-in-fact shall be borne by Lessee. Upon the occurrence and continuation

of an Event of Default hereunder, Lessor may, at its option, apply proceeds of

insurance, in whole or in part, to (A) repair the Aircraft, or repair or replace

any part thereof, or (B) satisfy any obligation of Lessee to Lessor under this

Lease, and any balance remaining shall be paid to Lessee.

 

Notwithstanding the foregoing if any of the events described in item 2(i)(b)(x),

(y) or (z) of the second sentence of the above paragraph occur (each of the

foregoing being hereinafter referred to as a "GROUNDING

 

                                     - 9 -

 

<PAGE>

 

EVENT"), the Aircraft shall, unless Lessee is otherwise so directed in writing

by Lessor, be immediately grounded and the Lessee shall, to the extent the above

described insurances do not already cover such risks, at its own expense, obtain

ground insurance until such time as the above Grounding Event is remedied or the

obligations to Lessor hereunder are paid in full. In addition, upon the

occurrence of such a Grounding Event, Lessor shall have the right to impose such

other restrictions on the use and operation of the Aircraft as Lessor deems

prudent, in its sole and complete discretion.

 

11.       RETURN OF AIRCRAFT:

 

         (a) On the date of expiration or termination of this Lease other than

by reason or a Casualty Occurrence (the "RETURN DATE"), Lessee shall return the

Aircraft to Lessor, at a location Lessor shall direct that shall be within the

continental United States no greater than 1,500 miles from the primary hangar

location of the Aircraft at the expiration or termination of this Lease. Lessee

shall also return all logs, loose equipment, manuals and data associated with

the Aircraft, including without limitation, inspection, modification and

overhaul records required to be maintained with respect to the Aircraft under

this Lease or under the applicable rules and regulations of the FAA or under the

manufacturer's recommended maintenance program, along with a currently effective

FAA airworthiness certificate. Lessee shall, upon request, assign to Lessor its

rights under any manufacturer's maintenance service contract or extended

warranty for the Aircraft, any engine or part thereof. All costs and expenses

for return of the Aircraft and delivery of the aforementioned logs, manuals and

data shall be borne by Lessee. The Aircraft shall be returned in the condition

in which the Aircraft is required to be maintained pursuant to Section 7, but

with all logos or other identifying marks of Lessee removed. Additionally,

Lessee shall ensure that the Aircraft complies with all requirements and

conditions set forth on Annex G hereto.

 

         (b) Lessor may arrange for the inspection of the Aircraft on the Return

Date to determine if the Aircraft has been maintained and returned in accordance

with the provisions of this Lease. Lessor shall be responsible for the cost of

such inspection. If the results of such inspection indicate that the Aircraft,

any engine thereto or part thereof, has not been maintained or returned in

accordance with the provisions of this Lease, Lessee shall pay to Lessor within

fifteen (15) days of demand, as liquidated damages, the estimated cost

("ESTIMATED COST") of servicing or repairing the Aircraft, engine or part. The

Estimated Cost shall be determined by Lessor and Lessee each obtaining one quote

for such service or repair work and taking the average of the two quotes.

 

         (c) If Lessee fails to return the Aircraft on the Return Date, Lessor

shall be entitled to damages equal to the higher of (i) Rent for the Aircraft,

pro-rated on a per diem basis, for each day the Aircraft is retained beyond the

Return Date; or (ii) the daily fair market rental for the Aircraft at the Return

Date. Such damages for retention of the Aircraft shall not be interpreted as an

extension or reinstatement of the Term.

 

         (d) All of Lessor's rights contained in this Section shall survive the

expiration or other termination of this Lease.

 

                                     - 10 -

 

<PAGE>

 

12.       EVENTS OF DEFAULT AND REMEDIES:

 

         (a) The term "Event of Default", wherever used herein, shall mean any

of the following events under this Lease: (i) Lessee breaches its obligation to

pay Rent or any other sum when due and fails to cure the breach within ten (10)

days; or (ii) Lessee breaches any of its insurance obligations under Section 10;

or (iii) Lessee breaches any of its other obligations and fails to cure that

breach within thirty (30) days after written notice from Lessor to Lessee; or

(iv) any representation or warranty made by Lessee in this Lease shall prove to

have been false or misleading in any material respect when any such

representation or warranty was made or given (or, if a continuing

representation, at any material time); or (v) Lessee or any guarantor or other

obligor for any of the obligations hereunder (collectively "GUARANTOR") becomes

insolvent or ceases to do business as a going concern; or (vi) a petition is

filed by or against Lessee or any Guarantor under any bankruptcy, insolvency or

similar laws and in the event of an involuntary petition, the petition is not

dismissed within ninety (90) days of the filing date; or (viii) Lessee breaches

or is in default under any other agreement by and between Lessor and Lessee for

the lease of property or the financing of equipment.

 

         (b) Upon the occurrence of any Event of Default and so long as the same

shall be continuing, Lessor may, at its option, at any time thereafter, exercise

one or more of the following remedies, as Lessor in its sole discretion shall

lawfully elect: (i) demand that Lessee immediately pay as liquidated damages,

for loss of a bargain and not as a penalty, an amount equal to the Stipulated

Loss Value of the Aircraft, computed as of the Basic Term Rent Date immediately

preceding such demand together with all Rent and other amounts due and payable

for all periods up to and including the Basic Term Rent Date following the date

on which Lessor made its demand for liquidated damages; (ii) demand that Lessee

pay all amounts due for failure to maintain or return the Aircraft as provided

herein and cause Lessee to assign to Lessor (to the extent assignable) Lessee's

rights under any manufacturer's service program contract or any extended

warranty contract in force for the Aircraft; (iii) proceed by appropriate court

action, either at law or in equity, to enforce the performance by Lessee of the

applicable covenants of this Lease or to recover damages for breach hereof; (iv)

by notice in writing terminate this Lease, whereupon all rights of Lessee to use

of the Aircraft or any part thereof shall absolutely cease and terminate, and

Lessee shall immediately return the Aircraft in accordance with Section 11, but

Lessee shall remain liable as provided in Section 11; (v) request Lessee to

return the Aircraft to a designated location in accordance with Section 11 ;

(vi) peacefully enter the premises where the Aircraft may be and take possession

of the Aircraft; (vii) sell or otherwise dispose of the Aircraft at private or

public sale, in bulk or in parcels, with or without notice, and without having

the Aircraft present at the place of sale; (viii) lease or keep idle all or part

of the Aircraft; (ix) use Lessee's premises for storage pending lease or sale or

for holding a sale without liability for rent or costs; (x) collect from Lessee

all costs, charges and expenses, including reasonable legal fees and

disbursements, incurred by Lessor by reason of the occurrence of any Event of

Default or the exercise of Lessor's remedies with respect thereto; and/or (xi)

declare any Event of Default under the terms of this Lease to be a default under

any other agreement between Lessor and Lessee for the lease of property or the

financing of equipment.

 

         (c) Lessor shall have the right to any proceeds of sale, lease or other

disposition of the Aircraft, if any, and shall apply same in the following order

of priorities: (i) to pay all of Lessor's costs, charges and expenses incurred

in enforcing its rights under this Lease or in taking, removing, holding,

repairing, selling, leasing or otherwise disposing of the Aircraft; then, (ii)

to the extent not previously paid by Lessee, to pay Lessor all sums due from

Lessee under this Lease; then (iii) to reimburse to Lessee any sums previously

 

                                      - 11 -

 

<PAGE>

 

paid by Lessee as liquidated damages; and (iv) any surplus shall be retained by

Lessor. Lessee shall pay any deficiency in (i) and (ii) immediately.

 

         (d) The foregoing remedies are cumulative, and any or all thereof may

be exercised instead of or in addition to each other or any remedies at law, in

equity, or under statute. Notwithstanding anything herein to the contrary,

Lessor agrees to mitigate its damages hereunder, as so required under applicable

law. Waiver of any Event of Default shall not be a waiver of any other or

subsequent Event of Default.

 

13.       NET LEASE:

 

         Lessee is unconditionally obligated to pay all rent and other amounts

due for the entire Term of this Lease no matter what happens, even if the

Aircraft is damaged or destroyed, if it is defective or if Lessee no longer can

use it except as provided in section 9 of this Lease. Lessee is not entitled to

reduce or set-off against rent or other amounts due to Lessor or to anyone to

whom Lessor assigns this Lease whether Lessee's claim arises out of this Lease,

any statement by Lessor, Lessor's liability or any Supplier's liability, strict

liability, negligence or otherwise.

 

14.       INDEMNIFICATION:

 

         (a) Lessee hereby agrees to indemnify (on an after tax basis) Lessor

and any other entity which has


SITE SEARCH

AGREEMENTS / CONTRACTS

Document Title:

Entire Document: (optional)

Governing Law:(optional)
 

CLAUSES

Search Contract Clauses >>

Browse Contract Clause Library>>

Close this window