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Exhibit 4.36
MASTER AIRCRAFT LEASE AGREEMENT
(Steelcase Trust No. 2000-1)
Dated as of May 26, 2000
among
FIRST SECURITY BANK, NATIONAL ASSOCIATION
not in its individual capacity except
as expressly provided herein, but
solely as Certificate Trustee under Steelcase Trust No. 2000-1,
as Lessor,
and
STEELCASE INC.,
as Lessee
CERTAIN OF THE RIGHT, TITLE AND INTEREST OF LESSOR IN AND TO THIS LEASE AND THE
RENT DUE AND TO BECOME DUE HEREUNDER (EXCLUDING THE EXCLUDED AMOUNTS) HAVE BEEN
ASSIGNED AS COLLATERAL SECURITY TO, AND ARE SUBJECT TO A SECURITY INTEREST
GRANTED BY LESSOR, AS DEBTOR, IN FAVOR OF, FIRST SECURITY TRUST COMPANY OF
NEVADA, AS ADMINISTRATIVE AGENT FOR THE BENEFIT OF THE LENDERS AND CERTIFICATE
HOLDERS, AS SECURED PARTY. INFORMATION CONCERNING SUCH SECURITY INTEREST MAY BE
OBTAINED FROM FIRST SECURITY TRUST COMPANY OF NEVADA, AS ADMINISTRATIVE AGENT,
AT ITS ADDRESS SET FORTH IN THE PARTICIPATION AGREEMENT. SEE SECTION 25.2 OF
THIS LEASE FOR INFORMATION CONCERNING THE RIGHTS OF THE HOLDERS OF THE VARIOUS
COUNTERPARTS HEREOF INCLUDING WITHOUT LIMITATION THE ORIGINAL CHATTEL PAPER COPY
HEREOF.
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TABLE OF CONTENTS
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SECTION 1. Definitions....................................................................................... 1
SECTION 2. Acceptance and Leasing of Aircraft................................................................ 1
SECTION 3. Lease Term and Rent............................................................................... 1
3.1 Lease Term........................................................................................ 1
3.2 Basic Rent........................................................................................ 2
3.3 Supplemental Rent................................................................................. 2
3.4 Manner of Payments................................................................................ 2
SECTION 4. Finance Lease..................................................................................... 3
4.1 Finance Lease..................................................................................... 3
SECTION 5. Disclaimer of Warranties; Quiet Enjoyment......................................................... 4
SECTION 6. Delivery of Aircraft; Condition of Aircraft; Delivery to Lessor................................... 5
6.1 Delivery of Aircraft.............................................................................. 5
6.2 General Condition of Aircraft and Airframes....................................................... 5
6.3 Return of other Engines with Airframe............................................................. 7
6.4 Manuals and Service Bulletin Kits................................................................. 7
6.5 Sale Inspection; Storage.......................................................................... 8
6.6 Injunctive Relief................................................................................. 8
SECTION 7. Liens............................................................................................. 8
SECTION 8. Maintenance; Registration; Subleasing; Operation; Insignia........................................ 9
8.1 Maintenance; Registration; Subleasing............................................................. 9
8.2 Operation......................................................................................... 10
8.3 Insignia.......................................................................................... 11
SECTION 9. Replacement of Parts; Alterations, Modifications and Additions.................................... 11
9.1 Replacement of Parts.............................................................................. 11
9.2 Title to Replaced and Replacement Parts........................................................... 12
9.3 Alterations, Modifications, and Additions......................................................... 12
SECTION 10. Loss, Destruction, Requisition, Etc............................................................... 13
10.1 Risk of Loss, Damage or Destruction............................................................... 13
10.2 Payment of Lease Balance.......................................................................... 13
10.3 Replacement Airframe.............................................................................. 14
10.4 Event of Loss with respect to a Related Engine.................................................... 16
10.5 Application of Other Payments Upon Event of Loss.................................................. 17
10.6 Application of Payments Not Relating to an Event of Loss.......................................... 18
10.7 Requisition for Use............................................................................... 18
10.8 Application of Payments During Existence of Significant Defaults and Lease Events of Default...... 18
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SECTION 11. Insurance......................................................................................... 19
11.1 Bodily injury liability and property damage liability insurance................................... 19
11.2 Insurance against loss or damage to an Aircraft................................................... 19
11.3 Reports, Etc...................................................................................... 20
11.4 Self-Insurance.................................................................................... 20
11.5 Additional Insurance by Lessor and Lessee......................................................... 20
11.6 Indemnification by government in lieu of insurance................................................ 21
11.7 Terms of insurance policies....................................................................... 21
SECTION 12. Inspection........................................................................................ 22
SECTION 13. Events of Default................................................................................. 22
SECTION 14. Remedies.......................................................................................... 23
14.1 Remedies.......................................................................................... 23
SECTION 15. Further Assurances; Expenses...................................................................... 25
15.1 Further Assurances................................................................................ 25
15.2 Expenses.......................................................................................... 25
SECTION 16. Lessor's Right to Perform......................................................................... 25
SECTION 17. Assignment by Lessor.............................................................................. 25
SECTION 18. Net Lease, Etc.................................................................................... 26
SECTION 19. Notices........................................................................................... 27
SECTION 20. Assignment, Sublease or Transfer.................................................................. 27
SECTION 21. Early Termination Options; Obligation to Purchase; Substitution................................... 27
21.1 Early Termination Options......................................................................... 27
21.2 Required Purchase................................................................................. 29
21.3 Replacement of Aircraft........................................................................... 29
SECTION 22. End of Term Options; Early Purchase Options....................................................... 30
22.1 End of Term Options............................................................................... 30
22.2 Election of Options............................................................................... 30
22.3 Renewal Options................................................................................... 31
SECTION 23. Sale Option....................................................................................... 31
23.1 Sale Option Procedures............................................................................ 31
23.2 Sale.............................................................................................. 32
23.3 Application of Sale Proceeds and Recourse Payments in Connection with the Sale Option............. 33
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SECTION 24. Limitation of Lessor's Liability.................................................................. 33
SECTION 25. Miscellaneous..................................................................................... 34
25.1 Governing Law; Waiver of Jury Trial; Severability................................................. 34
25.2 Execution in Counterparts......................................................................... 35
25.3 Amendments and Waivers............................................................................ 35
25.4 Business Days..................................................................................... 35
25.5 Directly or Indirectly............................................................................ 35
25.6 Uniform Commercial Code........................................................................... 35
25.7 TRUTH IN LEASING.................................................................................. 36
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EXHIBIT A Lease Supplement
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MASTER AIRCRAFT LEASE AGREEMENT
(Steelcase Trust No. 2000-1)
THIS MASTER AIRCRAFT LEASE AGREEMENT (Steelcase Trust No. 2000-1) is
dated as of May 26, 2000 (as amended, modified, supplemented, restated and/or
replaced from time to time, the "Lease") among FIRST SECURITY BANK, NATIONAL
ASSOCIATION, a national banking association, not in its individual capacity
except as expressly provided herein, but solely as Certificate Trustee under
Steelcase Trust No. 2000-1 (together with its successors and assigns permitted
hereunder, the "Lessor") and STEELCASE INC., a Michigan corporation (together
with its successors and assigns permitted hereunder, "Lessee").
W I T N E S S E T H :
SECTION 1. DEFINITIONS.
Unless the context otherwise requires, all capitalized terms used
herein without definition shall have the respective meanings set forth in
Appendix A of that certain Participation Agreement (Steelcase Trust No. 2000-1)
dated as of the date hereof (the "Participation Agreement"), among the Lessor
(in its individual and trust capacities), Steelcase Inc., as Lessee, First
Security Trust Company of Nevada, in its individual capacity and as
Administrative Agent, Hatteras Funding Corporation, as CP Lender, the persons
named on Schedule I thereto as Certificate Holders, the persons named on
Schedule II thereto as Facility Lenders and Bank of America, National
Association as Administrator, for all purposes of this Lease. The General
Provisions of Appendix A of the Participation Agreement are hereby incorporated
by reference herein.
SECTION 2. ACCEPTANCE AND LEASING OF AIRCRAFT.
Subject to the satisfaction of the conditions set forth in Section 4 of
the Participation Agreement, Lessor agrees to accept delivery of and
simultaneously lease to Lessee hereunder, and Lessee agrees to lease from
Lessor, hereunder, on each Delivery Date the Aircraft delivered on such date as
evidenced by the execution by Lessor and Lessee of a Lease Supplement
(substantially in the form of Exhibit A hereto) covering such Aircraft. Lessor
hereby authorizes Lessee or an authorized representative of Lessee to act on
behalf of Lessor to accept delivery of each Aircraft, all in accordance with
Section 2.3(c) of the Participation Agreement. Lessee hereby agrees that
acceptance of delivery of any Aircraft by it or its authorized representative on
behalf of Lessor shall, without further act, irrevocably constitute acceptance
by Lessee of such Aircraft for all purposes of this Lease.
SECTION 3. LEASE TERM AND RENT.
3.1 LEASE TERM.
The base term of this Lease (the "Base Term") for any Aircraft shall
commence on the Base Term Commencement Date for such Aircraft and, subject to
earlier termination pursuant to
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Sections 10, 14 or 21 shall expire on the Base Term Expiration Date for such
Aircraft. Subject and pursuant to Section 22.1, the Lessee may elect to extend
the Lease of any or all Aircraft in each case for up to two (2) successive
additional one-year terms beyond the respective Base Term for such Aircraft
(each a "Renewal Term"). With respect to any Aircraft, the Base Term together
with any Renewal Term actually entered into shall be referred to herein as the
"Lease Term" for such Aircraft.
3.2 BASIC RENT.
Lessee hereby agrees to pay Basic Rent to Lessor for each Aircraft in
consecutive installments payable in arrears on each Payment Date throughout the
Lease Term of such Aircraft.
3.3 SUPPLEMENTAL RENT.
Lessee hereby agrees to pay to Lessor, or to such other Person to which
such payment shall be required to be paid hereunder or in accordance with the
other Operative Documents, in any case without duplication of amounts paid by
Lessee under any other Operative Document, any and all Supplemental Rent owing
pursuant to any Operative Document, on the date due and owing, or where no due
date is specified, upon written demand by the Person entitled thereto, and in
the event of any failure on the part of Lessee to pay any Supplemental Rent,
Lessor (or such other Person, as the case may be) shall have all rights, powers
and remedies provided for herein or by applicable law or equity or otherwise as
in the case of nonpayment of Basic Rent. In clarification of the foregoing and
not in limitation of Lessee's general obligation to pay all amounts of
Supplemental Rent due and owing by it from time to time, Lessee hereby agrees to
pay as Supplemental Rent (a) on demand, to the extent permitted by Applicable
Laws and Regulations, an amount equal to interest at the applicable Overdue Rate
on (i) any part of any installment of Basic Rent not paid when due for any
period for which the same shall be overdue and (ii) any payment of Supplemental
Rent not paid when due for the period from such due date until the same shall be
paid, (b) an amount equal to the applicable Break Funding Amount, if any,
payable by the Certificate Trustee under the Loan Agreement or the Trust
Agreement, (c) all fees, costs and expenses which are indicated to be paid by
the Certificate Trustee under the Operative Documents and (d) the indemnities
and obligations assumed by the Lessee in Section 7 of the Participation
Agreement.
3.4 MANNER OF PAYMENTS.
All Rent (excluding Excluded Amounts) shall be paid by Lessee to the
Administrative Agent at the Administrative Agent's Payment Office or at such
other account or location in the United States as may be specified by the
Administrative Agent by not less than five (5) Business Days written notice from
time to time hereafter. All Rent and other amounts payable hereunder from time
to time shall be paid by Lessee in funds consisting of lawful currency of the
United States, which shall be immediately available to the recipient not later
than 11:00 A.M. (Eastern time) on the date of such payment. Subsequent to the
discharge of the Loan Agreement pursuant to its terms, and receipt by Lessee of
written notification thereof from the Administrative Agent, all Rent payable to
the Administrative Agent pursuant to the first sentence of this Section 3.4
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shall be paid to Lessor (or its designee) to an account or location in the
United States as may be specified by such Person by not less than five (5)
Business Days written notice from time to time hereafter. Excluded Amounts shall
be paid by Lessee or such other Person to the Person to whom payable at such
Person's Payment Office specified in Schedule III to the Participation Agreement
or at such other account or location in the United States as may be specified by
such Person by not less than five (5) Business Days written notice from time to
time hereafter.
SECTION 4. FINANCE LEASE.
4.1 FINANCE LEASE.
(a) Finance Lease. Lessor and Lessee intend this Lease to
constitute a finance lease and not a true lease. Lessor and Lessee further
intend and agree that, for the purpose of securing the Lessee's obligations
hereunder, (i) this Lease shall be deemed to be a security agreement and
financing statement within the meaning of Article 9 of the Uniform Commercial
Code with respect to each of the Aircraft and all proceeds (including without
limitation insurance proceeds thereof) of the conversion, voluntary or
involuntary, of the foregoing into cash, investments, securities or other
property, whether in the form of cash, investments, securities or other
property, (ii) Lessee hereby grants to Lessor, a Lien on all of Lessee's right,
title and interest in and to the Aircraft and all proceeds (including without
limitation insurance proceeds thereof) of the conversion, voluntary or
involuntary, of the foregoing into cash, investments, securities or other
property, whether in the form of cash, investments, securities or other property
and (iii) notifications to Persons holding such property, and acknowledgments,
receipts or confirmations from financial intermediaries, bankers or agents (as
applicable) of Lessee shall be deemed to have been given for the purpose of
perfecting such Lien under applicable law. Lessor and Lessee shall promptly take
such reasonable actions as may be necessary or advisable in either party's
reasonable opinion (including without limitation the filing of this Lease and
the various Lease Supplements) to ensure that the Lien on the items referenced
above will be deemed to be a perfected Lien of first priority (subject to
Permitted Liens) under Applicable Law and Regulations and will be maintained as
such throughout the Lease Term of each Aircraft; provided, however, that Lessee
agrees to pay all costs associated with such perfection. In addition to and
without limiting the foregoing, the Lessor and Lessee hereby acknowledge, and
agree, to the provisions of Section 2.5 of the Participation Agreement.
(b) Power of Attorney. Subject to the provisions hereof, Lessee
does hereby constitute Lessor the true and lawful attorney of Lessee,
irrevocably, coupled with an interest and with full power of substitution, and
with full power (in the name of Lessee or otherwise) during the occurrence and
continuation of a Lease Event of Default after written notice to Lessee thereof
to ask for, require, demand, and receive, any and all monies and claims for
monies (in each case including insurance and requisition proceeds except as
herein otherwise provided) due and to become due under or arising out of any
agreement assigned or pledged under clause (a) above, and all other property now
or hereafter pledged herein, to endorse any checks or other instruments or
orders in connection therewith and to file any claims or to take any action or
to institute any proceedings which Lessor or the Administrative Agent may deem
to be necessary or advisable to exercise its remedies hereunder. Without
limiting the provisions of the foregoing, during the continuance of any Lease
Event of Default and after written notice to the Lessee
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thereof but subject to the terms hereof, Lessor shall have the right under such
power of attorney to sue for, compound and give acquittance for, to accept any
offer of any purchaser to purchase any Aircraft as provided herein and upon such
purchase to execute and deliver in the name of and on behalf of the Lessee an
appropriate bill of sale and other instruments of transfer relating to such
Aircraft, when purchased by such purchaser, and to perform all other necessary
or appropriate acts with respect to any such purchase, and in its discretion to
file any claim or take any other action or proceedings, either in its own name
or in the name of the Lessee or otherwise, which Lessor or the Administrative
Agent may reasonably deem necessary or appropriate to protect and preserve the
right, title and interest of Lessor and the Administrative Agent in and to the
Aircraft and such rents and other sums and the security intended to be afforded
hereby; provided, no action of Lessor pursuant to this paragraph shall increase
the obligations or liabilities of Lessee to any Person beyond those obligations
and liabilities specifically set forth in this Lease and the other Operative
Documents.
SECTION 5. DISCLAIMER OF WARRANTIES; QUIET ENJOYMENT.
LESSEE ACKNOWLEDGES AND AGREES THAT, AS BETWEEN LESSEE AND LESSOR, (A)
EACH AIRCRAFT IS OF A SIZE, DESIGN, CAPACITY AND MANUFACTURE SELECTED BY AND
ACCEPTABLE TO LESSEE, (B) LESSEE IS SATISFIED THAT EACH AIRCRAFT IS SUITABLE FOR
ITS PURPOSES, (C) NEITHER LESSOR, ANY PARTICIPANT, ANY CERTIFICATE HOLDER NOR
THE ADMINISTRATIVE AGENT IS A MANUFACTURER OR A DEALER IN PROPERTY SIMILAR TO
SUCH AIRCRAFT, (D) EACH AIRCRAFT IS LEASED HEREUNDER SUBJECT TO ALL APPLICABLE
LAWS NOW IN EFFECT OR HEREAFTER ADOPTED, (E) LESSOR LEASES AND LESSEE TAKES EACH
AIRCRAFT "AS-IS", "WHERE-IS" AND "WITH ALL FAULTS", IN WHATEVER CONDITION IT MAY
BE, AND LESSEE ACKNOWLEDGES THAT NEITHER LESSOR, AS LESSOR OR IN ITS INDIVIDUAL
CAPACITY, ANY PARTICIPANT, ANY CERTIFICATE HOLDER NOR THE ADMINISTRATIVE AGENT
MAKES NOR SHALL BE DEEMED TO HAVE MADE, AND EACH EXPRESSLY DISCLAIMS, ANY AND
ALL WARRANTIES OR REPRESENTATIONS, EITHER EXPRESS OR IMPLIED, AS TO THE VALUE,
CONDITION, FITNESS FOR ANY PARTICULAR PURPOSE, DESIGN, OPERATION,
MERCHANTABILITY THEREOF OR AS TO THE TITLE OF ANY SUCH AIRCRAFT, THE QUALITY OF
THE MATERIAL OR WORKMANSHIP THEREOF OR CONFORMITY THEREOF TO SPECIFICATIONS,
FREEDOM FROM PATENT, COPYRIGHT OR TRADEMARK INFRINGEMENT, THE ABSENCE OF ANY
LATENT OR OTHER DEFECT, WHETHER OR NOT DISCOVERABLE, OR AS TO THE ABSENCE OF ANY
OBLIGATIONS BASED ON STRICT LIABILITY IN TORT OR ANY OTHER EXPRESS OR IMPLIED
REPRESENTATION OR WARRANTY WHATSOEVER WITH RESPECT THERETO AND (F) LESSEE HEREBY
WAIVES ANY CLAIM (INCLUDING WITHOUT LIMITATION INCIDENTAL OR CONSEQUENTIAL
DAMAGE) OR EXPENSE CAUSED BY ANY AIRCRAFT OR BY LESSEE'S LOSS OF USE THEREOF FOR
ANY REASON WHATSOEVER; WITHOUT LIMITING THE GENERALITY OF THE FOREGOING, LESSOR
SHALL NOT BE LIABLE OR RESPONSIBLE FOR ANY DEFECTS, EITHER PATENT OR LATENT
(WHETHER OR NOT DISCOVERABLE BY LESSEE), IN ANY AIRCRAFT, OR FOR ANY DIRECT OR
INDIRECT DAMAGE TO PERSONS OR
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PROPERTY RESULTING THEREFROM, OR FOR LESSEE'S LOSS OF USE OF ANY AIRCRAFT OR FOR
ANY INTERRUPTION IN LESSEE'S BUSINESS CAUSED BY LESSEE'S INABILITY TO USE ANY
AIRCRAFT FOR ANY REASON WHATSOEVER, except that (i) Lessor and the Trust Company
represent and warrant that on each Delivery Date, Lessor shall have received the
title to the Aircraft delivered on such date conveyed to Lessor by the
applicable Seller and each such Aircraft will be free of Certificate Trustee
Liens attributable to Lessor or to the Trust Company, and (ii) each of Lessor
and the Trust Company hereby covenants that it will not, through its own actions
or inactions, interfere in the quiet enjoyment, use, operation or possession of
any Aircraft by Lessee unless a Lease Event of Default shall have occurred and
be continuing. Lessor hereby appoints and constitutes Lessee as its agent during
the Lease Term to assert and enforce, from time to time, in the name and for the
account of Lessor and Lessee, as their interests may appear, but in all cases at
the sole cost and expense of the Lessee, whatever claims and rights that Lessor
may have against the manufacturers, suppliers, or any prior owners or lessees of
the Aircraft and Lessee hereby accepts such appointment; provided, however, that
if at any time a Lease Event of Default or Significant Default shall have
occurred and be continuing, at Lessor's option, such agency shall terminate, and
Lessor may assert and enforce, at Lessee's sole cost and expense, such claims
and rights. Lessee's delivery of a Lease Supplement shall be conclusive evidence
as between Lessee and Lessor that any Aircraft described therein is in all the
foregoing respects satisfactory to Lessee.
SECTION 6. DELIVERY OF AIRCRAFT; CONDITION OF AIRCRAFT; DELIVERY TO LESSOR.
6.1 DELIVERY OF AIRCRAFT.
On the Expiration Date in respect of any Aircraft and assuming Lessee
has not purchased such Aircraft in accordance with the terms of this Lease,
Lessee will deliver possession of such Aircraft to the Person that is purchasing
such Aircraft (or the Lessor, as applicable) in the condition required by this
Section 6 at facilities suitable for storage of such Aircraft at a location
designated by such Person (or the Lessor, as applicable) in the continental
United States (a "Return Location"). All costs and expenses for delivery of such
Aircraft shall be borne by the Lessee. In addition, Lessee shall upon request of
the purchaser (or the Lessor, as applicable) of any Aircraft, assign any and all
of Lessee's title to such Aircraft and all of Lessee's rights under any
manufacturer's or supplier's warranties with respect to such Aircraft to such
Person.
6.2 GENERAL CONDITION OF AIRCRAFT AND AIRFRAMES.
(a) Registration and General Condition. With respect to any
Aircraft, at the time of such delivery such Aircraft will be registered under
the laws of the United States of America. In addition, at the time of delivery
pursuant to this Section 6.1, each Aircraft shall satisfy each of the following
requirements, as applicable, and any other applicable requirements of the
Operative Documents:
(i) Such Aircraft shall be certified as an airworthy
aircraft by the Federal Aviation Administration and shall be equipped
so as to be eligible for operations, in each case, under Part 91 of the
Federal Aviation Regulations;
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(ii) Such Aircraft shall be free and clear of all Liens
(other than Certificate Trustee Liens);
(iii) Such Aircraft shall be in as good an operating
condition as when delivered to Lessee hereunder (ordinary wear and tear
excepted) and in compliance with the Maintenance Program for such
Aircraft;
(iv) Such Aircraft shall be clean with all systems and
components operable;
(v) Such Aircraft shall have all of Lessee's and any
sublessee's exterior markings removed or painted over with the areas
thereof refinished to match adjacent areas;
(vi) Any appliance, part, instrument, appurtenance,
accessory, furnishing or other equipment leased by the Lessee from a
third party (other than Lessor) and incorporated in such Aircraft shall
be removed prior to the date of such return without any damage to such
Aircraft and without diminishing or impairing the value, utility,
remaining useful life or condition which such Aircraft would have had
at such time had such equipment not been installed, and Lessee shall
make all repairs which are required as a result of such removal; and
(vii) Such Aircraft shall have installed thereon all
Related Engines and, unless removed and not replaced as permitted under
the terms of this Lease, all Parts installed thereon on the Delivery
Date or replacements therefor made in accordance with the terms of this
Lease.
(b) Other Conditions. Upon delivery of an Aircraft at the
expiration or early termination of the Lease with respect to such Aircraft, such
Aircraft shall be in the condition required by Section 8 hereof and satisfy the
following requirements:
(i) The Related Airframe will have completed the next
scheduled heaviest maintenance inspection within 25 hours of return;
(ii) All airworthiness directives will be terminated, and
all service bulletins complied with, in each case applicable to the
Related Airframe, any Related Engine and any Part thereof or the
related records;
(iii) All aspects of the applicable corrosion control
program will be complete to date;
(iv) All landing gear will have been overhauled within
three months prior to return;
(v) All hard time components will have been overhauled or
refurbished within 25 hours of return; and
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(vi) The Related Engines shall not have been used more
than 25 hours or cycles since a complete overhaul or refurbishment.
6.3 RETURN OF OTHER ENGINES WITH AIRFRAME.
(a) Replacement Engine. In the event that any engine which is not
a Related Engine shall be delivered with an Airframe, such engine shall be the
same make and model as the Related Engine (or an improved model engine
manufactured by Engine Manufacturer) or an engine of another manufacturer, in
each case suitable for installation and use on such Airframe and fully
compatible with the other Related Engine(s) or engine(s) installed on such
Airframe having an economic value, residual value, utility and remaining useful
life at least equal to, and be in as good operating condition and repair as, the
Related Engine so replaced (assuming such Related Engine had an economic value,
residual value, utility, and remaining useful life as maintained in accordance
with the terms of the Lease). At the time of such replacement, such engine shall
be airworthy and at the time such Airframe is delivered shall fully comply with
all the requirements of this Lease which are applicable to Related Engines.
(b) Conveyance of Title. Upon delivery of an Aircraft pursuant to
Section 6.1, the Lessee shall duly convey to the Person purchasing such Aircraft
(or the Lessor, as applicable), good title to any such replacement engine, free
and clear of Liens other than Certificate Trustee Liens; and upon such
conveyance and as a condition thereto, Lessee will (a) furnish, or cause to be
furnished, to the Person purchasing such Aircraft (or the Lessor, as
applicable), a full warranty bill of sale as to title with respect to any such
replacement engine, in form and substance reasonably satisfactory to the Person
purchasing such Aircraft (or the Lessor, as applicable), together with an
opinion of counsel to the effect that such bill of sale has been duly authorized
and delivered and is enforceable in accordance with its terms (subject to
customary exceptions), and (b) take such other action as the Person purchasing
such Aircraft (or the Lessor, as applicable), may reasonably request in order
that title to such replacement engine may be duly and properly vested in the
Person purchasing such Aircraft (or the Lessor, as applicable) to the same
extent as the Related Engine replaced thereby. Upon compliance by the Lessee
with the foregoing, Lessor will, so long as no Lease Event of Default or Lease
Default has occurred and is continuing, transfer to Lessee or its designee all
of Lessor's right, title and interest in and to any Related Engine which is not
installed on the Airframe to which it relates at the time of the delivery of
such Airframe by a bill of sale "as is", "where is", without recourse or
warranty (except for a warranty as to the absence of Certificate Trustee Liens).
6.4 MANUALS AND SERVICE BULLETIN KITS.
(a) Manuals. When delivering each Aircraft to the Person
purchasing the same (or the Lessor, as applicable) Lessee shall deliver or cause
to be delivered to such Person) (i) all logs, manuals, data, and inspection,
maintenance, modification, and overhaul records (a) received by Lessee from the
Manufacturer of such Aircraft and (b) required to be maintained for such
Aircraft under the applicable rules and regulations of the FAA, (ii) all other
maintenance service, inspection and overhaul records maintained and retained by
Lessee for such Aircraft which are reasonably necessary to transition such
Aircraft to a new operator, updated through the date of return and (iii) all
current and historical records delivered with such Aircraft by the
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Manufacturer and Engine Manufacturer, and records acquired or prepared by Lessee
or any sublessee during the Lease Term therefor, including time logs showing
Related Engine hours and cycles on any given date, documents, manuals (revised
up to and including the most current revisions issued by the manufacturer and
accurately reflecting the status of such Aircraft or Related Engine), data, and
overhaul records, log books, original engine delivery documents, serviceable
parts tags (including teardown reports for time-controlled Parts that have been
overhauled), FAA forms, modification records, inspection records, and all other
documentation pertaining to each Related Engine and Part and/or any other engine
then installed thereon. All records shall be in English or have official English
translations (which may be by microfilm or microfiche, as permitted), and any
records discrepancies shall be corrected, and any missing records shall be
reconstructed, by Lessee on or prior to the return of such Aircraft.
(b) Service Bulletin Kits. All service bulletin kits received by
or on behalf of Lessee from Manufacturer, Engine Manufacturer or vendors for the
respective Aircraft and not incorporated therein shall be returned at no charge
to Lessor as cargo on board such Aircraft at the time of its return.
6.5 SALE INSPECTION; STORAGE.
(a) Sale Inspection. Prior to the end of the Lease Term with
respect to any Aircraft, the Person that is purchasing such Aircraft (or Lessor,
as applicable) shall have the right to inspect (at the sole cost and expense of
the Lessee) any such Aircraft that are to be delivered pursuant to this Section
6 to ensure that such Aircraft is in compliance with the conditions set forth
herein. Such inspections shall be in accordance with the provisions of Section
12 hereof.
(b) Storage. Lessee will, if requested by the Person purchasing
any Aircraft (or the Lessor, as applicable) in writing, at Lessee's sole cost
and expense arrange parking facilities for such Aircraft at the Return Location
for a period of ninety (90) days from the Expiration Date of such Aircraft (or
such longer period as shall be necessary for Lessor to sell or re-lease such
Aircraft in the event of a return pursuant to Section 14 hereof). During such
period the Lessee (i) will insure, maintain and keep such Aircraft in good order
and repair in accordance with the provisions of the Operative Documents, and
(ii) upon prior notice during business hours will permit the Person purchasing
such Aircraft (or the Lessor, as applicable) or a designee thereof, including
without limitation the authorized representative or representatives of any
prospective purchaser, lessee or user of such Aircraft, to inspect the same.
6.6 INJUNCTIVE RELIEF.
The provisions of this Section 6 are of the essence of this Lease, and
upon application to any court of equity having jurisdiction, Lessor shall be
entitled to a decree against Lessee requiring specific performance of the
covenants of Lessee set forth in this Section 6.
SECTION 7. LIENS.
Lessee will not directly or indirectly create, incur, assume, permit or
suffer to exist any Lien on or with respect to any Airframe, Related Engine, or
Part or Lessee's leasehold interest
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therein under this Lease, except Permitted Liens, and Lessee shall promptly, at
its sole cost and expense, take such action or cause such action to be taken as
may be necessary to duly discharge to the reasonable satisfaction of Lessor and
the Administrative Agent (by bonding or otherwise) any such Lien not excepted
above, whether now existing or arising at any time after the date of this Lease.
SECTION 8. MAINTENANCE; REGISTRATION; SUBLEASING; OPERATION; INSIGNIA.
8.1 MAINTENANCE; REGISTRATION; SUBLEASING.
(a) Maintenance and Registration Lessee agrees not to maintain,
repair, overhaul, use or operate any Aircraft, any Related Engine or any Part in
violation of any Applicable Laws and Regulations of any Authority having
jurisdiction (domestic or foreign) over Lessee or such Aircraft, or in violation
of any airworthiness certificate, license or registration relating to such
Aircraft issued by any such Authority. If such Applicable Laws and Regulations
require alteration of the Airframe, any Related Engine or any Part of such
Aircraft, Lessee will conform thereto or obtain conformance therewith at no
expense to Lessor and will maintain the same in proper operating condition under
such Applicable Laws and Regulations. Lessee also agrees not to fly any
Aircraft, or suffer any Aircraft to be flown or any Related Engine to be located
(i) in any area excluded from coverage by any insurance required by Section 11,
(ii) in any country with which the United States does not maintain diplomatic
relations, or (iii) in any area of actual or threatened armed hostilities unless
fully covered to Lessor's reasonable satisfaction by war risk insurance or
unless such Aircraft is operated or used under contract with the United States
under which contract the United States assumes liability and provides indemnity
in an amount not less than the amount of insurance and providing coverage,
supported by the full faith and credit of the United States, as full and
complete as otherwise required by Section 11 for any damage, loss, destruction
or failure to return possession thereof at the end of the term of such contract
and for injury to Persons and damage to property of others. Each Aircraft shall
at all times be and remain registered in accordance with the laws of the United
States.
(b) Subleasing. Lessee shall not sublease, or otherwise in any
manner deliver, relinquish or transfer possession of the Aircraft or any Related
Engine or any Part thereof or any part of Lessee's rights hereunder to any
Person without the prior written consent of Lessor; provided, however that, if
no Significant Default or Lease Event of Default exists, Lessee may, without the
prior written consent of Lessor, (i) deliver possession of any Aircraft or any
Related Engine to the manufacturer thereof for testing or other similar purposes
or to any organization for service, repair, maintenance or overhaul work or for
alterations or modifications of or additions to such Aircraft or Related
Engines, to the extent required or permitted by this Lease, (ii) subject any
Related Engine or any Part to normal pooling or similar arrangements provided,
in the case of a Related Engine, that such arrangements do not result in the
transfer of title to the Related Engine, (iii) transfer possession of any
Related Engine or Part to any Person for the purpose of shipment (in the
ordinary course of business) not otherwise permitted hereby; and (iv) sublease
any Aircraft to wholly owned Subsidiaries of the Lessee and to any other Person
(x) headquartered in the United States, Canada, Great Britain, France or Germany
and (y) with its senior long-term unsecured debt rated at least BBB- by S&P and
Baa3 by Moody's at the time such sublease is entered into.
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The rights of any transferee who receives possession by reason of a
transfer permitted by this Section 8.1(b) shall be subject and subordinate to,
and any sublease shall be made expressly subject to, all the terms of this
Lease, and to Lessor's rights, powers, and remedies hereunder and thereunder,
including, without limitation, the right to repossession pursuant to Section
14.1 hereof and to void such sublease upon repossession. Notwithstanding any
language contained herein to the contrary, (i) the respective Aircraft shall all
times remain registered with the FAA under the laws of the United States, and
(ii) Lessee shall remain primarily liable hereunder for the performance of all
the terms of this Lease to the same extent as if such sublease or transfer had
not occurred. Lessee shall deliver to Lessor, within five Business Days after
execution of any sublease, a written representation that such sublease is in
compliance with the provisions of this Section 8.1(b). No sublease, transfer, or
other relinquishment of possession of any Aircraft shall in any way discharge or
diminish any of Lessee's obligations to Lessor hereunder.
8.2 OPERATION.
During the Lease Term of any Aircraft, Lessee, at its own cost and
expense, shall:
(i) service, repair, maintain, test and overhaul such
Aircraft so as to keep such Aircraft in good operating condition and,
ordinary wear and tear excepted, in the same condition as when
delivered to Lessee hereunder, and so as to comply with each of the
following standards:
(A) to establish and keep such Aircraft in
compliance with (1) Lessee's FAA-approved maintenance program,
which shall include a corrosion control program (the
"Maintenance Program"), that is, with respect to the Related
Airframe, either a phased maintenance program (a "Phased
Maintenance Program") or a periodic medium and heavy
block-hour interval overhaul program (a "Block-Time
Maintenance Program") and that provides for all FAA required
inspection, servicing, overhaul and replacement of all
components thereof; (2) all applicable airworthiness
directives issued by the FAA; and (3) all manufacturer's
mandatory service bulletins;
(B) to keep such Aircraft in such condition as
may be necessary to enable the airworthiness certification of
such Aircraft to be maintained in good standing at all times
under the Federal Aviation Act; and
(C) to keep the Aircraft maintained, serviced,
repaired, tested or overhauled in at least the same manner and
with the same care as used by Lessee with similar aircraft
owned or leased by Lessee and maintained under the Maintenance
Program;
(ii) not install replacement components with excessive
wear or exchange components on or of such Aircraft for other aircraft
components in Lessee's possession for use on aircraft that will remain
in Lessee's possession after such return in order to reduce or avoid
future maintenance requirements; and
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(iii) maintain in the English language all records, logs
and other materials required by the FAA, and any other Authority having
jurisdiction over such Aircraft or Lessee, to be maintained in respect
of such Aircraft, so as to enable operation of such Aircraft under the
laws of the United States, which records logs and materials will
conform to good commercial practice for records regarding all
maintenance carried out with respect to the Aircraft.
8.3 INSIGNIA.
Lessee shall for each Aircraft and Related Engine leased by it, on or
prior to the Delivery Date therefor (or, with respect to the Aircraft delivered
on the Closing Date, within ninety (90) days of such Closing Date), affix
placards bearing the inscription "This [aircraft] [engine] is owned by First
Security Bank, National Association, not in its individual capacity, but solely
as Certificate Trustee, and subject to a security interest in favor of First
Security Trust Company of Nevada, as Administrative Agent" and assure such
placards remain on each Airframe and Related Engine; provided that so long as no
Lease Event of Default or Significant Default shall have occurred and be
continuing, any Aircraft may be placarded identifying the interests of the
Lessee in addition thereto.
Except as otherwise specified pursuant to the preceding paragraph
Lessee will not allow the name of any Person other than the Lessor, the
Administrative Agent, or their respective successors or assigns, to be placed on
any Airframe or Related Engine as a designation that might be interpreted as a
claim of ownership or of any security interest therein, provided that Lessee may
cause or permit an Airframe or Related Engine to be lettered, painted or marked
in an appropriate manner for convenience of identification of the interest of
Lessee (including without limitation the customary colors and insignia of the
Lessee).
SECTION 9. REPLACEMENT OF PARTS; ALTERATIONS, MODIFICATIONS AND ADDITIONS.
9.1 REPLACEMENT OF PARTS.
Lessee shall promptly replace, or cause to be replaced, all Parts which
may from time to time become worn out, lost, stolen, destroyed, seized,
confiscated, damaged beyond repair, or permanently rendered unfit for use for
any reason whatsoever, except as otherwise provided in Section 9.3. In addition,
in the ordinary course of maintenance, service, repair, overhaul, or testing,
Lessee may remove a Part, whether or not worn out, lost, stolen, destroyed,
seized, confiscated, damaged beyond repair, or permanently rendered unfit for
use provided that, except as otherwise provided in Section 9.3, Lessee shall
promptly replace such Part. All replacement Parts shall be free and clear of all
Liens, except Permitted Liens, and shall have an economic value, residual value,
utility and remaining useful life at least equal to the original Parts replaced,
assuming such original replaced Parts were in the condition and repair required
to be maintained by the terms hereof.
Notwithstanding the requirements of Section 9.3 or this Section 9.1,
but without limiting the provisions of Section 6, as the case may be, Lessee may
on a non-discriminatory basis install
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or permit the installation of an engine or part on a Related Airframe or a part
on a Related Airframe or a Related Engine by way of substitution or replacement
if:
(i) there shall not have been available to Lessee at the
time and in the place that such engine or part was required to be
installed on such Related Airframe or Related Engine, a replacement
engine or replacement part complying with the requirements of Section
8.1 or this Section 9.1, as the case may be; and
(ii) it would have resulted in a disruption of the
operation of the Aircraft to have grounded such Aircraft and/or to have
permitted the Related Engine or the relevant Part to continue to be
unserviceable or unrepaired until such time as another engine or part
complying with the requirements of Section 8.1, Section 9.3 or this
Section 9.1, as the case may be, became available for installation on
such Related Airframe or Related Engine; and
(iii) such engine or part (A) is suitable for installation
and use on the Related Airframe or Related Engine, and (B) is
operationally compatible with the Related Airframe or Related Engines;
and
(iv) as soon as practicable, but in any event within the
earlier of sixty (60) days or the end of the Lease Term after
installation of the same on such Related Airframe or Related Engine,
Lessee shall cause any such engine or part not complying with the
requirements of Section 8.1, Section 9.3 or this Section 9.1, as the
case may be, to be removed and replaced or substituted by a part
complying with the requirements of Section 8.1, Section 9.3 or this
Section 9.1, as the case may be.
9.2 TITLE TO REPLACED AND REPLACEMENT PARTS.
All Parts removed from any Aircraft shall remain the property of
Lessor, and subject to this Lease and the Lien of the Security Agreement, no
matter where located, until such time as such Parts shall be replaced by Parts
which have been incorporated in such Aircraft and which meet the requirements
for replacement Parts specified above. Immediately upon any replacement Part's
becoming incorporated in an Aircraft as above provided, without further act (i)
title to the replaced Part shall vest in Lessee, free and clear of all rights of
Lessor and the other Financing Parties; (ii) such replaced Part shall no longer
be deemed a Part hereunder; (iii) title to the replacement Part shall thereupon
vest in Lessor (subject to no Lien other than Permitted Liens), and (iv) such
replacement Part shall become subject to this Lease and be deemed to be a Part
hereunder and subject to the Lien of the Security Agreement to the same extent
as the Parts originally incorporated in such Aircraft.
9.3 ALTERATIONS, MODIFICATIONS, AND ADDITIONS.
Lessee will make (or cause to be made) such alterations, modifications
and additions to each Aircraft as may be required during the Lease Term of such
Aircraft to comply with the applicable standards of the FAA or any other
Applicable Laws and Regulations ("Required Alterations"). In addition, Lessee
may from time to time make such alterations and
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modifications in and additions to an Aircraft as Lessee may deem desirable in
the proper conduct of its business, including removal of Parts which Lessee
deems to be obsolete or no longer suitable or appropriate for use on such
Aircraft; provided that no such alteration, modification, removal or addition
impairs the condition or airworthiness of such Aircraft, or diminishes the
economic value, residual value, utility and remaining useful life of such
Aircraft assuming such Aircraft was then in the condition required to be
maintained by the terms of this Lease ("Improvements"). All parts incorporated
or installed in or attached or added to any Aircraft as the result of such
alteration, modification or addition (except those parts which Lessee has leased
from others and Parts which may be removed by Lessee pursuant to the next
sentence) (the "Additional Part" or "Additional Parts") shall, without further
act, become the property of Lessor and subject to the Lien of the Security
Agreement. Notwithstanding the foregoing, Lessee may, at any time during the
Lease Term of any Aircraft, so long as no Lease Event of Default shall have
occurred and be continuing, remove any Additional Part, provided that such
Additional Part (i) is in addition to, and not in replacement of or substitution
for, any Part originally incorporated or installed in or attached to such
Aircraft at the time of delivery thereof hereunder or any Part in replacement of
or substitution for any such Part, (ii) is not required to be incorporated or
installed in or attached or added to such Aircraft pursuant to the terms of
Section 8 hereof or the first sentence of this Section 9.3, and (iii) can be
removed from such Aircraft without impairing the airworthiness of such Aircraft
or diminishing the economic value, residual values utility and remaining useful
life of such Aircraft which such Aircraft would have had at such time had such
alteration, modification or addition not occurred. Upon the removal thereof as
provided above, such Additional Part shall no longer be deemed the property of
Lessor, subject to the Lien of the Security Agreement or part of the Aircraft
from which it was removed. Any Additional Part not removed as above provided
prior to the delivery of an Aircraft to Lessor or any other Person under the
terms of Section 6.1 of this Lease shall remain the property of Lessor or such
other Person.
SECTION 10. LOSS, DESTRUCTION, REQUISITION, ETC.
10.1 RISK OF LOSS, DAMAGE OR DESTRUCTION.
Lessee hereby assumes all risk of loss, damage, theft, taking,
destruction, confiscation, requisition or commandeering, partial or complete, of
or to any Aircraft, however caused or occasioned, such risk to be borne by
Lessee with respect
