\n PAGE
\n —-
\n <\/p>\nSECTION 1. Definitions…………………………… 1<\/p>\n
SECTION 2. Acceptance and Lease…………………… 17<\/p>\n
SECTION 3. Term and Rent…………………………. 17
\n (a) Interim Term and Basic Term……… 17
\n (b) Basic Rent…………………….. 17
\n (c) Adjustments to Basic Rent,
\n Excess Amount, Stipulated Loss
\n Values, Termination Values,
\n Special Termination Value
\n Percentages and the EBO
\n Percentage…………………….. 17
\n (d) Supplemental Rent………………. 20
\n (e) Payments in General…………….. 20
\n (f) [Intentionally Reserved for
\n Potential Future Use]…………… 21
\n (g) Prepayments of Certain Rent
\n Payments………………………. 21<\/p>\n
SECTION 4. Lessor’s Representations and
\n Warranties…………………………. 22<\/p>\n
SECTION 5. Return of the Aircraft…………………. 23
\n (a) Condition Upon Return…………… 23
\n (b) Return of Other Engines…………. 27
\n (c) Fuel and Manuals……………….. 28
\n (d) Storage Upon Return…………….. 28
\n (e) Purchase of Engine……………… 29
\n (f) Severable Parts………………… 29
\n (g) Special Redelivery Provision…….. 29<\/p>\n
SECTION 6. Liens………………………………… 30<\/p>\n
SECTION 7. Registration, Maintenance and
\n Operation; Possession and
\n Subleases; Insignia…………………. 30
\n (a) (1) Registration and
\n Maintenance…………………… 31
\n (2) Operation…………………. 32
\n (3) Reregistration…………….. 33
\n (4) Operating Certificates……… 33
\n (b) Possession and Subleases………… 33
\n (c) Insignia………………………. 39<\/p>\n
SECTION 8. Replacement and Pooling of Parts;
\nAlterations, Modifications and Additions……………. 40
\n (a) Replacement of Parts……………. 40<\/p>\n
<\/c><\/s><\/caption>\n<\/table>\n
i<\/p>\n
\n
\n (b) Pooling of Parts……………….. 41
\n (c) Alterations, Modifications and
\n Additions……………………… 41<\/p>\nSECTION 9. Early Termination……………………… 43
\n (a) [Intentionally reserved for
\n potential future use]…………… 43
\n (b) Termination for
\n Obsolescence\/Surplus……………. 43
\n (c) Sale of the Aircraft……………. 43
\n (d) Termination as to Engines……….. 46<\/p>\n
SECTION 10. Loss, Destruction, Requisition, etc…….. 46
\n (a) Event of Loss with Respect to
\n the Aircraft…………………… 46
\n (b) Event of Loss with Respect to
\n an Engine……………………… 50
\n (c) Application of Payments from
\n Governmental Authorities for
\n Requisition of Title, etc……….. 52
\n (d) Requisition for Use of the
\n Aircraft by the United States
\n Government or Government of
\n Registry of the Aircraft………… 53
\n (e) Requisition for Use of an
\n Engine by the United States
\n Government or the Government
\n of Registry of the Aircraft……… 54
\n (f) Application of Payments During
\n Existence of Events of
\n Default……………………….. 54<\/p>\n
SECTION 11. Insurance……………………………. 55
\n (a) Public Liability and Property
\n Damage Insurance……………….. 55
\n (b) Insurance Against Loss or
\n Damage to the Aircraft………….. 55
\n (c) Reports, etc…………………… 57
\n (d) Self-Insurance…………………. 59
\n (e) Additional Insurance by Lessor
\n and Lessee…………………….. 59
\n (f) Indemnification by Government
\n in Lieu of Insurance……………. 60
\n (g) Application of Payments During
\n Existence of Default……………. 60
\n (h) Terms of Insurance Policies……… 60<\/p>\n
SECTION 12. Inspection…………………………… 61<\/p>\n
SECTION 13. Assignment…………………………… 63<\/p>\n
SECTION 14. Events of Default…………………….. 63<\/p>\n
<\/c><\/s><\/table>\n
ii<\/p>\n
\n
\nSECTION 15. Remedies…………………………….. 65<\/p>\nSECTION 16. Lessee’s Cooperation Concerning
\n Certain Matters…………………….. 69<\/p>\n
SECTION 17. Notices……………………………… 71<\/p>\n
SECTION 18. Net Lease; No Set-Off, Counterclaim,
\n Etc……………………………….. 72<\/p>\n
SECTION 19. Renewal Options; Purchase Options;
\n Valuation………………………….. 74
\n (a) Renewal Options………………… 74
\n (1) Fixed Renewal Terms…………. 74
\n (2) Fair Market Renewal Term…….. 75
\n (3) Waiver…………………….. 75
\n (4) Conditions Precedent,
\n Payment of Basic Rent……….. 75
\n (5) Termination Value;
\n Stipulated Loss Value……….. 76
\n (b) Purchase Options……………….. 76
\n (c) Valuation……………………… 77<\/p>\n
SECTION 20. Security for Lessor’s Obligation to
\n Certificate Holders…………………. 78<\/p>\n
SECTION 21. Lessor’s Right to Perform for Lessee……. 79<\/p>\n
SECTION 22. Investment of Security Funds;
\n Liability of Lessor Limited………….. 80
\n (a) Investment of Security Funds…….. 80
\n (b) Liability of Lessor Limited……… 81<\/p>\n
SECTION 23. Miscellaneous………………………… 81<\/p>\n
SECTION 24. Successor Trustee…………………….. 81<\/p>\n
SECTION 25. Bankruptcy…………………………… 82
\n<\/c><\/s><\/table>\n
iii<\/p>\n
EXHIBITS<\/p>\n
EXHIBIT A Form of Lease Supplement<\/p>\n
EXHIBIT B Basic Rent and Excess Amount Schedule<\/p>\n
EXHIBIT C Stipulated Loss Value Schedule<\/p>\n
EXHIBIT D Termination Value Schedule<\/p>\n
EXHIBIT E Rent Recalculation and Indemnification Verification<\/p>\n
EXHIBIT F Schedule of Countries Authorized for Domicile of Permitted
\n Sublessees<\/p>\n
EXHIBIT G Schedule of Countries Authorized for Aircraft Registration<\/p>\n
EXHIBIT H Lessor’s Cost, Engine Cost, Commencement Date, Lease Expiry Date,
\n Stipulated Loss Value Date, EBO Date, EBO Percentage, Special
\n Purchase Option Dates and Special Termination Value Percentages<\/p>\n
iv<\/p>\n
LEASE AGREEMENT (1995 777 A)<\/p>\n
This LEASE AGREEMENT (1995 777 A), dated as of May 1, 1995, between
\nSTATE STREET BANK AND TRUST COMPANY, a Massachusetts trust company, not in its
\nindividual capacity, except as expressly provided herein, but solely as Owner
\nTrustee under the Trust Agreement (as defined in Section 1 hereof) (in such
\ncapacity, “Lessor”), and UNITED AIR LINES, INC., a corporation organized and
\nexisting pursuant to the laws of the State of Delaware (“Lessee”).<\/p>\n
WITNESSETH:<\/p>\n
SECTION 1. Definitions. Unless the context otherwise requires, the
\n ———–
\nfollowing terms shall have the following meanings for all purposes of this Lease
\nAgreement and shall be equally applicable to both the singular and the plural
\nforms of the terms herein defined:<\/p>\n
“Acceptable Alternate Engine” means a Pratt & Whitney Model PW4084
\nengine or an engine of the same or another manufacturer of equivalent or greater
\nvalue and utility, and suitable for installation and use on the Airframe;
\nprovided that such engine shall be of the same make, model and manufacturer as
\nthe other engine installed on the Airframe and shall be an engine of a type then
\nbeing utilized by Lessee on other Boeing 777-222 aircraft operated by Lessee and
\nshall have been maintained, serviced, repaired and overhauled in substantially
\nthe same manner as Lessee maintains, services, repairs and overhauls similar
\nengines utilized by Lessee and without in any way discriminating against such
\nengine.<\/p>\n
“Actual Knowledge” means, (i) as it applies to the Owner Trustee or
\nIndenture Trustee, as the case may be, actual knowledge of a responsible officer
\nin the Trust Office, and (ii) as it applies to the Owner Participant, actual
\nknowledge of a Vice President or more senior officer of the Owner Participant or
\nother officer of the Owner Participant in each case having responsibility for
\nthe transactions contemplated by the Operative Documents; provided that each of
\nthe Owner Trustee, the Indenture Trustee and the Owner Participant shall be
\ndeemed to have “Actual Knowledge” of any matter as to which it has been given
\nnotice by any of Lessee, the Owner Participant, any Certificate Holder, the
\nOwner Trustee or the Indenture Trustee, such notice having been given pursuant
\nto and in accordance with Section 13(a) of the Participation Agreement.<\/p>\n
“Additional Insured” means Lessor, in its individual capacity and as
\nowner of the Aircraft, the Indenture Trustee, the<\/p>\n
Owner Participant, Lessee in its capacity as sublessor under any Sublease, and,
\nso long as the Pass Through Trustees are Certificate Holders, each Pass Through
\nTrustee and each of their respective Affiliates, successors and permitted
\nassigns; and the respective directors, officers and employees of each of the
\nforegoing.<\/p>\n
“Affiliate” means a Person (i) which directly or indirectly through
\none or more intermediaries controls, or is controlled by, or is under a common
\ncontrol with, another Person, (ii) which beneficially owns or holds 10% or more
\n(by number of votes) of any class of voting securities of such other Person or
\n(iii) 10% or more (by number of votes) of the voting securities (or in the case
\nof a Person which is not a corporation, 10% or more of the equity interest) of
\nwhich is beneficially owned or held by such other Person or a Subsidiary. The
\nterm “control” means the possession, directly or indirectly, of the power to
\ndirect or cause the direction of the management and policies of a Person,
\nwhether through the ownership of voting securities, by contract or otherwise.<\/p>\n
“Aircraft” means the Airframe together with the two Engines whether or
\nnot such Engines are installed on the Airframe or any other airframe.<\/p>\n
“Airframe” means: (i) The Boeing Company Model 777-222 aircraft
\n(excluding Engines or engines from time to time installed thereon) specified by
\nUnited States Registration Number and Manufacturer’s serial number in the Lease
\nSupplement; (ii) any and all Parts which are from time to time incorporated or
\ninstalled in or attached thereto or which have been removed therefrom, but where
\ntitle to which remains vested in Lessor in accordance herewith; and (iii) any
\nreplacement airframe which may from time to time be substituted pursuant to
\nSection 10(a)(ii) hereof.<\/p>\n
“Bankruptcy Code” means the Bankruptcy Reform Act of 1978, as amended
\nfrom time to time.<\/p>\n
“Base Rate” means the rate of interest announced from time to time by
\nThe First National Bank of Chicago at its principal office in Chicago, Illinois
\nas its “corporate base rate” (or its equivalent successor rate if the corporate
\nbase rate is no longer used).<\/p>\n
“Basic Rent” means, for the Basic Term, the rent payable for the
\nAircraft pursuant to Section 3(b) hereof, as adjusted as provided in Section
\n3(c) and, for a Renewal Term, Basic Rent determined pursuant to Section 19.<\/p>\n
2<\/p>\n
“Basic Term” means the term for which the Aircraft is leased hereunder
\npursuant to Section 3(a) hereof beginning on the Commencement Date and ending on
\nthe Lease Expiry Date or such earlier date as this Lease may be terminated in
\naccordance with the terms hereof.<\/p>\n
“Business Day” means any day other than a Saturday or Sunday or a day
\non which commercial banks are required or authorized to close in the City of
\nChicago, Illinois; New York City, New York; the city and state in which the
\nprincipal place of business of the Owner Trustee is located; and, so long as any
\nLoan Certificate is outstanding, the city and state in which the Indenture
\nTrustee has its principal place of business and the city and state in which the
\nIndenture Trustee receives and disburses funds.<\/p>\n
“Certificate Holder” has the meaning assigned to the term “Holder” in
\nthe Trust Indenture.<\/p>\n
“Certificated Air Carrier” means a Citizen of the United States
\nholding an air carrier operating certificate issued by the Secretary of
\nTransportation pursuant to Chapter 447 of Title 49 of the United States Code,
\nfor aircraft capable of carrying ten or more individuals or 6,000 pounds or more
\nof cargo or that otherwise is certified or registered to the extent required to
\nfall within the purview of 11 U.S.C. Section 1110 or any analogous successor
\nprovision of the Bankruptcy Code.<\/p>\n
“Citizen of the United States” has the meaning given such term in
\nSection 40102(a)(15) of Title 49 of the United States Code.<\/p>\n
“Civil Reserve Air Fleet Program” means the Civil Reserve Air Fleet
\nProgram administered by the United States Government pursuant to Executive Order
\nNo. 11490, as amended, or any substantially similar program.<\/p>\n
“Code” means the Internal Revenue Code of 1986, as amended through the
\nDelivery Date.<\/p>\n
“Commencement Date” means the date specified as such in Exhibit H
\nhereto.<\/p>\n
“Commitments” means the respective commitments of the Pass Through
\nTrustees and the Owner Participant to finance the Owner Trustee’s payment of
\nLessor’s Cost for the Aircraft and “Commitment” means any one of the
\nCommitments.<\/p>\n
“Consent and Agreement” means the Consent and Agreement (1995 777 A),
\ndated as of the date hereof, executed by the<\/p>\n
3<\/p>\n
Manufacturer, as the same may be amended, modified or supplemented from time to
\ntime in accordance with the applicable provisions thereof.<\/p>\n
“Debt Rate” means the weighted average interest rate borne by the Loan
\nCertificates then outstanding.<\/p>\n
“Default” means any event which with the giving of notice or the lapse
\nof time or both would become an Event of Default.<\/p>\n
“Delivery Date” means the date of the initial Lease Supplement for the
\nAircraft, which date shall be the date the Aircraft is leased by Lessor to
\nLessee and accepted by Lessee hereunder.<\/p>\n
“Dollars” and “$” mean the lawful currency of the United States of
\nAmerica.<\/p>\n
“EBO Date” means the date specified as such in Exhibit H hereto.<\/p>\n
“EBO Percentage” means the percentage specified as such in Exhibit H
\nhereto.<\/p>\n
“EBO Price” has the meaning set forth in Section 19(b)(2) hereof.<\/p>\n
“Engine” means (i) each of the two Pratt & Whitney Model PW4084
\nengines listed by manufacturer’s serial numbers in the initial Lease Supplement
\nand installed on the Airframe at the time of the Manufacturer’s delivery to
\nLessee of such Airframe, and whether or not from time to time thereafter
\ninstalled on such Airframe or any other airframe; (ii) any Acceptable Alternate
\nEngine which may from time to time be substituted for any of such two engines
\npursuant to the terms hereof; and (iii) in either case, any and all Parts which
\nare from time to time incorporated or installed in or attached to any such
\nengine and any and all parts removed therefrom so long as title thereto remains
\nvested in Lessor in accordance herewith. The term “Engines” means, as of any
\ndate of determination, all Engines then leased hereunder.<\/p>\n
“Engine Cost” means the amount specified as Engine Cost in Exhibit H
\nhereto.<\/p>\n
“Event of Default” has the meaning specified in Section 14
\nhereof.<\/p>\n
4<\/p>\n
“Event of Loss” with respect to the Aircraft, Airframe or any Engine
\nmeans any of the following events with respect to such property: (i) the loss
\nof such property or of the use thereof due to the destruction of or damage to
\nsuch property which renders repair uneconomic or which renders such property
\npermanently unfit for normal use by Lessee for any reason whatsoever; (ii) any
\ndamage to such property which results in an insurance settlement with respect to
\nsuch property on the basis of a total loss, or a constructive or compromised
\ntotal loss; (iii) the theft or disappearance of such property, or the
\nconfiscation, condemnation, or seizure of, or requisition of title to, or use
\nof, such property by any governmental or purported governmental authority (other
\nthan a requisition for use by the United States Government or any government of
\nregistry of the Aircraft or any agency or instrumentality thereof), which in the
\ncase of any event referred to in this clause (iii) shall have resulted in the
\nloss of title or possession of such property by Lessee for a period in excess of
\n90 consecutive days or, if earlier, until the end of the Term; (iv) as a result
\nof any law, rule, regulation, order or other action by the FAA or other
\ngovernmental body of the government of registry of the Aircraft having
\njurisdiction, use of such property in the normal course of the business of air
\ntransportation shall have been prohibited for a period in excess of 180
\nconsecutive days, unless (A) such grounding is applicable to all Boeing 777-222
\naircraft registered in such country, (B) Lessee, prior to the expiration of such
\n180 day period, shall have undertaken and shall be diligently carrying forward,
\nin a manner that does not discriminate against the Aircraft, all steps which are
\nnecessary or desirable to permit the normal use of such property by Lessee, and
\n(C) Lessee, within one year from the time of grounding shall have conformed at
\nleast one such aircraft in its fleet to the requirements of any such law, rule,
\nregulation, order or other action and commenced regular commercial use of the
\nsame in such jurisdiction, provided that no such grounding shall extend beyond
\nthe expiration of the Term; (v) the requisition for use by the United States
\nGovernment or any government of registry of the Aircraft or any instrumentality
\nor agency thereof, which shall have occurred during the Basic Term (or the
\nInterim Term or any Renewal Term) and shall have, in the case of any government
\nof registry of the Aircraft (other than the United States Government or any
\nagency or instrumentality thereof) or any agency or instrumentality thereof,
\ncontinued for more than two years (or if earlier, until the end of the Term),
\nand in the case of the United States Government or any agency or instrumentality
\nthereof shall have continued for a period that extends beyond the Term and
\nLessor shall not have furnished the written notice specified in Section 10(d)
\nhereof; (vi) the operation of or location of the Aircraft, while under
\nrequisition for use by any government, in any area excluded from coverage by any
\ninsurance policy in effect<\/p>\n
5<\/p>\n
with respect to the Aircraft required by the terms of Section 11, unless in the
\ncase of a requisition by the government of the United States or any agency or
\ninstrumentality thereof, Lessee shall have obtained an indemnity in lieu thereof
\nfrom such government; and (vii) any divestiture of title to an Engine treated as
\nan Event of Loss pursuant to Section 7(b) hereof. An Event of Loss with respect
\nto the Aircraft shall be deemed to have occurred if an Event of Loss occurs with
\nrespect to the Airframe.<\/p>\n
“Excess Amount” for the Commencement Date means the amount determined
\nby multiplying Lessor’s Cost by the percentage specified in Exhibit B hereto
\nopposite the Commencement Date (as such Exhibit B may be adjusted from time to
\ntime as provided in Section 3(c) hereof).<\/p>\n
“Excluded Payments” has the meaning set forth in the Trust Indenture.<\/p>\n
“Expenses” means any and all liabilities, obligations, losses,
\ndamages, penalties, claims (including, but not limited to, negligence, strict or
\nabsolute liability, liability in tort and liabilities arising out of violation
\nof laws or regulatory requirements of any kind), actions, suits, costs, expenses
\nand disbursements (including reasonable legal fees and expenses and, to the
\nextent not required to be paid by the Owner Trustee pursuant to Section 16 of
\nthe Participation Agreement, Transaction Expenses, and all costs and expenses
\nrelating to amendments, supplements, waivers and consents to and under the
\nOperative Documents, any amounts that would be included in Premium, but
\nexcluding internal costs and expenses such as salaries, and overhead of
\nwhatsoever kind and nature).<\/p>\n
“Fair Market Rental Value” means the fair market rental value
\ndetermined as provided in Section 19(c) hereof.<\/p>\n
“Fair Market Sales Value” means the fair market sales value determined
\nas provided in Sections 19(a) and 19(c) hereof.<\/p>\n
“Federal Aviation Act” means the sections of Title 49 of the
\nUnited States Code relating to aviation, as amended.<\/p>\n
“Federal Aviation Administration” and “FAA” mean the United States
\nFederal Aviation Administration and any successor agency or agencies thereto.<\/p>\n
“Indemnitees” means the Owner Participant, the Owner Trustee, in its
\nindividual capacity and as trustee under the Trust Agreement, the Trust Estate,
\nthe Trust Indenture Estate, the Indenture Trustee, in its individual capacity
\nand as trustee<\/p>\n
6<\/p>\n
under the Trust Indenture, each Pass Through Trustee (so long as the Pass
\nThrough Trustees are Certificate Holders), and each of their respective
\nAffiliates, successors, permitted assigns, directors, officers, employees,
\nservants and agents.<\/p>\n
“Indenture Trustee” has the meaning set forth in the Trust Indenture.<\/p>\n
“Indenture Trustee Documents” means the Participation Agreement, the
\nTrust Indenture, each Pass Through Trust Agreement, each Pass Through Trust
\nSupplement, each Loan Certificate and each Pass Through Certificate and any
\nother document executed by the Indenture Trustee or the Pass Through Trustee in
\nconnection with the transactions contemplated by the Operative Documents.<\/p>\n
“Interim Term” means the period commencing on the Delivery Date and
\nending on and including the day immediately preceding the Commencement Date,
\nunless earlier terminated in accordance with the provisions hereof.<\/p>\n
“Lease Agreement”, “this Lease Agreement”, “this Lease”, “this
\nAgreement”, “herein”, “hereof”, “hereunder”, “hereby”, or other like words mean
\nthis Lease Agreement as originally executed or as modified, amended or
\nsupplemented in accordance with the applicable provisions hereof and the terms
\nof the Trust Indenture, including, without limitation, supplementation hereof by
\nany Lease Supplement entered into in accordance with the applicable provisions
\nhereof and the terms of the Trust Indenture.<\/p>\n
“Lease Expiry Date” means the date specified as such in Exhibit H.<\/p>\n
“Lease Period” means each of the consecutive semi-annual periods
\nthroughout the Basic Term and any Renewal Term ending on a Lease Period Date,
\nthe first such period commencing on and including the Commencement Date.<\/p>\n
“Lease Period Date” means April 19, 1996 and each succeeding semi-
\nannual anniversary thereof to and including the last such date in the Term.<\/p>\n
“Lease Supplement” means a Lease Supplement (1995 777 A),
\nsubstantially in the form of Exhibit A hereto, to be entered into between Lessor
\nand Lessee on the Delivery Date for the purpose of leasing the Aircraft under
\nand pursuant to the terms of this Lease Agreement, and any subsequent Lease
\nSupplement entered into in accordance with the terms hereof and the terms of the
\nTrust Indenture.<\/p>\n
7<\/p>\n
“Lessee Documents” means the Participation Agreement, the Lease, any
\nLease Supplement, the Purchase Agreement, the Owner Trustee’s Purchase
\nAgreement, the Owner Trustee’s FAA Bill of Sale, the Owner Trustee’s Bill of
\nSale, the Tax Indemnity Agreement, each Pass Through Trust Agreement, each Pass
\nThrough Trust Agreement Supplement and any other document executed by Lessee in
\nconnection with the transactions contemplated by the Operative Documents.<\/p>\n
“Lessor Liens” means any Lien on, or disposition of title to, the
\nAircraft or the Trust Estate arising as a result of (i) claims against Lessor,
\nState Street Bank and Trust Company, in its individual capacity, or the Owner
\nParticipant not related to the transactions contemplated by the Operative
\nDocuments, (ii) any act or omission of the Owner Participant, Lessor, or State
\nStreet Bank and Trust Company, in its individual capacity, which is not related
\nto the transactions contemplated by the Operative Documents or is in violation
\nof any of the terms of the Operative Documents, (iii) claims against the Owner
\nParticipant, Lessor, or State Street Bank and Trust Company, in its individual
\ncapacity, with respect to Taxes or Expenses against which Lessee is not required
\nto indemnify the Owner Participant, Lessor or State Street Bank and Trust
\nCompany, in its individual capacity or (iv) claims against Lessor or the Owner
\nParticipant arising out of any transfer by Lessor or the Owner Participant of
\nall or any portion of the respective interests of Lessor or the Owner
\nParticipant in the Aircraft, the Trust Estate or the Operative Documents (other
\nthan a transfer of possession of the Aircraft by Lessor pursuant to this
\nAgreement, a transfer pursuant to the Trust Indenture (other than a transfer
\npursuant to Article 8 of the Trust Indenture not attributable to a Lease Event
\nof Default) or a transfer pursuant to Section 7, 8, 9, 10 or 19 hereof, pursuant
\nto Section 17 of the Participation Agreement or pursuant to the exercise of the
\nremedies set forth in Section 15 hereof); provided, however, that any Lien which
\nis attributable solely to State Street Bank and Trust Company or the Owner
\nParticipant and would otherwise constitute a Lessor Lien hereunder shall not
\nconstitute a Lessor Lien hereunder so long as (1) the existence of such Lien
\nposes no material risk of the sale, forfeiture or loss of the Airframe or any
\nEngine or any interest therein, (2) the existence of such Lien does not
\ninterfere in any way with the use or operation of the Aircraft by Lessee (or any
\nSublessee), (3) the existence of such Lien does not affect the priority or
\nperfection of, or otherwise jeopardize, the Lien of the Trust Indenture, (4)
\nState Street Bank and Trust Company or the Owner Participant, as the case may
\nbe, is diligently contesting such Lien by appropriate proceeding and (5) the
\nexistence of such Lien does not result in actual interruption in the payment of
\nRent assigned to the Indenture Trustee for the benefit of the Certificate
\nHolders.<\/p>\n
8<\/p>\n
“Lessor’s Cost” for the Aircraft means the amount specified as
\nLessor’s Cost in Exhibit H hereto; provided, however, Lessor’s Cost shall be
\nreduced by Engine Cost for each Engine for which Lessee has paid Stipulated Loss
\nValue pursuant to the terms of Section 10(b) hereof and has otherwise paid all
\nother amounts due and payable under said Section 10(b).<\/p>\n
“Lien” means any mortgage, pledge, lien, charge, claim, encumbrance,
\nlease or security interest.<\/p>\n
“Loan Certificate” has the meaning assigned to the term “Certificate”
\nin the Trust Indenture.<\/p>\n
“Loss Payment Date” has the meaning set forth in Section 10(a) hereof.<\/p>\n
“Manufacturer” means The Boeing Company, a Delaware corporation, and
\nits subsidiaries, successors and assigns.<\/p>\n
“Manufacturer Documents” means the Purchase Agreement, the Consent and
\nAgreement and any other document executed by the Manufacturer in connection with
\nthe transactions contemplated by the Operative Documents.<\/p>\n
“Net Economic Return” means the Owner Participant’s net after-tax book
\nyield, aggregate after-tax cash flow and, with respect to any adjustments
\nrequired to maintain the Owner Participant’s Net Economic Return, periodic FASB
\n13 earnings plus or minus 5% for any annual period, utilizing the multiple
\ninvestment sinking fund method of analysis, computed on the basis of the same
\nmethodology and assumptions as were utilized by the Owner Participant in
\ndetermining Basic Rent, Stipulated Loss Value percentages, Special Termination
\nValue Percentages, EBO Percentage and Termination Value percentages as of the
\nDelivery Date, as such assumptions may be revised from time to time for events
\nwhich have been the basis for adjustments to Rent pursuant to Section 3(c)
\nhereof, provided that under no circumstances shall there be a reduction in Owner
\nParticipant’s 1995 FASB 13 earnings.<\/p>\n
“Net Present Value of Rents” means the net present value, as of the
\nDelivery Date, of Basic Rent set forth in Exhibit B hereto, discounted at a rate
\nper Lease Period equal to (a) 11% per annum divided by (b) the number of Lease
\nPeriods per year.<\/p>\n
“Operative Documents” means the Lease (including any Lease
\nSupplement); the Participation Agreement; the Tax Indemnity Agreement; the Trust
\nAgreement; any Trust Supplement; the Purchase Agreement; the Owner Trustee’s
\nBill of Sale; the Owner<\/p>\n
9<\/p>\n
Trustee’s FAA Bill of Sale; the Owner Trustee’s Purchase Agreement; an
\nacceptance certificate covering the Aircraft in the form agreed to by the
\nParticipants and Lessee (the “Acceptance Certificate”); the Trust Indenture; the
\nLoan Certificates outstanding at the time of reference; and the Consent and
\nAgreement.<\/p>\n
“Original Amount”, with respect to a Loan Certificate, means at any
\ntime prior to the Commencement Date, the Original Issue Price (as defined in the
\nTrust Indenture) of such Loan Certificate, or, at any time on or after the
\nCommencement Date, the stated original principal amount of such Loan
\nCertificate, and with respect to all Loan Certificates means, at any time prior
\nto the Commencement Date, the aggregate Original Issue Prices for such Loan
\nCertificates or, at any time on or after the Commencement Date, the aggregate
\nstated original principal amounts of such Loan Certificates.<\/p>\n
“Owner Participant” means the Person executing the Participation
\nAgreement as the Owner Participant and any Person to which such Person transfers
\nall or any portion of its right, title and interest in and to the Trust
\nAgreement, the Trust Estate and the Participation Agreement, to the extent
\npermitted thereby.<\/p>\n
“Owner Participant Documents” means the Participation Agreement, the
\nTrust Agreement, the Tax Indemnity Agreement and any other document executed by
\nthe Owner Participant in connection with the transactions contemplated by the
\nOperative Documents.<\/p>\n
“Owner Participant Parent” means ____________________, a Delaware
\ncorporation.<\/p>\n
“Owner Participant Parent Guaranty” means the guaranty, dated the
\nDelivery Date, by the Owner Participant Parent in favor of Lessee, the Pass
\nThrough Trustees, and certain other parties, of certain obligations of the Owner
\nParticipant, as the same may be amended or modified in compliance with the
\nprovisions thereof.<\/p>\n
“Owner Trustee” means the Person executing the Participation Agreement
\nas Owner Trustee and any Person appointed as successor Owner Trustee in each
\ncase not in its individual capacity but solely as Owner Trustee under the Trust
\nAgreement, except as otherwise expressly stated.<\/p>\n
“Owner Trustee Documents” means the Participation Agreement, the Trust
\nAgreement, this Lease, any Lease Supplement, the Owner Trustee’s Purchase
\nAgreement, the Trust Indenture, any Trust Supplement, the Loan Certificates and
\nany other document<\/p>\n
10<\/p>\n
executed by the Owner Trustee in connection with the transactions contemplated
\nby the Operative Documents.<\/p>\n
“Owner Trustee’s Bill of Sale” means a bill of sale for the Aircraft,
\ndated the Delivery Date, executed by Lessee in favor of Lessor in form and
\nsubstance satisfactory to Lessor.<\/p>\n
“Owner Trustee’s FAA Bill of Sale” means a bill of sale for the
\nAircraft on AC Form 8050-2 or such other form as may be approved by the FAA on
\nthe Delivery Date executed by Lessee in favor of Lessor in form and substance
\nsatisfactory to Lessor.<\/p>\n
“Owner Trustee’s Purchase Agreement” means the Owner Trustee’s
\nPurchase Agreement and Assignment (1995 777 A), dated as of the date hereof,
\nbetween Lessee and the Owner Trustee, as the same may be amended, modified or
\nsupplemented from time to time in accordance with the applicable provisions
\nthereof and the terms of the Trust Indenture.<\/p>\n
“Participants” means and includes the Pass Through Trustees and the
\nOwner Participant.<\/p>\n
“Participation Agreement” means that certain Participation Agreement
\n(1995 777 A), dated as of the date hereof, among Lessee, the Indenture Trustee,
\nthe Owner Participant, the Pass Through Trustees and the Owner Trustee, as such
\nParticipation Agreement may be amended or supplemented from time to time
\npursuant to the applicable provisions thereof.<\/p>\n
“Parts” means all appliances, parts, instruments, appurtenances,
\naccessories, furnishings and other equipment of whatever nature other than
\ncomplete Engines or engines, which are from time to time incorporated or
\ninstalled in or attached to an Airframe or any Engine or which have been removed
\ntherefrom, but where title to which remains vested in Lessor in accordance with
\nSection 8 hereof.<\/p>\n
“Pass Through Certificates” has the meaning set forth in the Trust
\nIndenture.<\/p>\n
“Pass Through Trust Agreements” means the Pass Through Trust Agreement
\ndated as of February 1, 1992, as amended and restated as of May 1, 1995, in each
\ncase between the Lessee and State Street Bank and Trust Company of Connecticut,
\nNational Association, as supplemented by each of the two Pass Through Trust
\nSupplements, in each case between the Lessee and the Pass Through Trustee, and
\nas the same may be further modified, amended or supplemented pursuant to the
\napplicable provisions thereof and the Participation Agreement.<\/p>\n
11<\/p>\n
“Pass Through Trustee” shall mean First Security Bank of Utah,
\nNational Association, a national banking association, in its capacity as Trustee
\nunder each Pass Through Trust Agreement, and each other Person which may from
\ntime to time be acting as successor trustee under any such Pass Through Trust
\nAgreement.<\/p>\n
“Pass Through Trust Supplement” means each of the two separate Trust
\nSupplements Nos. 1995-A1 and 1995-A2, in each case dated as of May __, 1995
\nbetween Lessee and the Pass Through Trustee.<\/p>\n
“Past Due Rate” means (i) with respect to the portion of any payment
\nof Rent that may be required by the Trust Indenture to be paid by the Indenture
\nTrustee to any Certificate Holder, the “Past Due Rate” as defined in the Trust
\nIndenture and (ii) with respect to the remaining portion of any payment of Rent
\n(and the entire amount of any payment of Rent after the satisfaction and
\ndischarge of the Trust Indenture), a fluctuating rate per annum equal to 2% over
\nthe Debt Rate.<\/p>\n
“Permitted Lien” means any Lien referred to in clauses (i) through
\n(vi) of Section 6 hereof.<\/p>\n
“Permitted Sublessee” means any air carrier domiciled in a country
\nlisted in Exhibit F hereto as in effect from time to time.<\/p>\n
“Person” means any individual, corporation, partnership, joint
\nventure, association, joint-stock company, trust, unincorporated organization or
\ngovernment or any agency or political subdivision thereof.<\/p>\n
“Premium” has the meaning assigned to the term in Section 6.01(b) of
\nthe Trust Indenture.<\/p>\n
“Prepaid Rent” has the meaning set forth in Section 3(g) hereof.<\/p>\n
“Purchase Agreement” means the agreement between Lessee and the
\nManufacturer relating to the purchase by Lessee of the Aircraft, as originally
\nexecuted or as modified, amended or supplemented in accordance with the terms
\nthereof, but only insofar as the foregoing relates to the Aircraft.<\/p>\n
“Redemption Date” has the meaning set forth in the Trust Indenture.<\/p>\n
“Reimbursement Amount” has the meaning set forth in Section 3(g)
\nhereof.<\/p>\n
12<\/p>\n
“Renewal Term” means the Fair Market Renewal Term or a Fixed Renewal
\nTerm as those terms are defined in Section 19 hereof.<\/p>\n
“Rent” means Basic Rent and Supplemental Rent, collectively.<\/p>\n
“Replacement Airframe” means any airframe substituted for an airframe
\nin accordance with Sections 10(a) of the Lease.<\/p>\n
“Replacement Engine” means any engine substituted for an Engine in
\naccordance with Sections 9(d), 10(a) or 10(b) of the Lease.<\/p>\n
“Restricted Country” has the meaning set forth on Exhibits F and G
\nhereto.<\/p>\n
“Restricted Period” means the period ending on the last open day of
\nthe calendar year in which there occurs the seventh anniversary of the Delivery
\nDate.<\/p>\n
“Special Purchase Option Dates” means each of the dates specified as
\nsuch on Exhibit H hereto.<\/p>\n
“Special Termination Value”, with respect to any Special Purchase
\nOption Date, has the meaning set forth in Section 19(b)(1) hereof.<\/p>\n
“Special Termination Value Percentage” means, with respect to any
\nSpecial Purchase Option Date, the percentage set forth opposite such Date on
\nExhibit H hereto.<\/p>\n
“Stipulated Loss Value” with respect to the Aircraft as of any date
\nthrough and including the last day of the Basic Term, means the amount
\ndetermined by multiplying Lessor’s Cost for the Aircraft by the percentage
\nspecified in Exhibit C hereto opposite the Stipulated Loss Value Date with
\nrespect to which the amount of Stipulated Loss Value is determined (as such
\nExhibit C may be adjusted from time to time as provided in Section 3(c) hereof
\nand in Section 8 of the Tax Indemnity Agreement). “Stipulated Loss Value” with
\nrespect to the Aircraft, as of any date during any Renewal Term, shall be the
\namount determined as provided in Section 19 hereof. To the extent that an event
\ngiving rise to an obligation to pay any Stipulated Loss Value occurs (with
\nrespect to the Airframe or either Engine), and the actual date on which the loss
\nof tax benefits resulting from such event occurs shall be earlier or later than
\nthe date assumed in calculating the United States Federal income tax
\nconsequences reflected in the applicable Stipulated Loss Value, such Stipulated
\nLoss Value shall be appropriately adjusted upwards or downwards to reflect<\/p>\n
13<\/p>\n
the actual date of such loss of tax benefits, but shall be otherwise based on
\nthe original assumptions used in determining such Stipulated Loss Value.<\/p>\n
“Stipulated Loss Value Date” has the meaning specified therefore in
\nExhibit H hereto.<\/p>\n
“Sublease” means any sublease permitted by the terms of Section
\n7(b)(viii) hereof.<\/p>\n
“Sublessee” means any Person for so long, but only so long, as such
\nPerson is in possession of the Airframe and or any Engine pursuant to the terms
\nof a Sublease which is then in effect pursuant to Section 7(b)(viii) hereof.<\/p>\n
“Subsidiary” means, with respect to any Person that is a corporation,
\nany other corporation a majority of the voting securities of which are owned by
\nsuch person, whether directly or indirectly.<\/p>\n
“Supplemental Rent” means all amounts, liabilities and obligations
\n(other than Basic Rent) which Lessee assumes or agrees to pay to Lessor or
\nothers hereunder or under any of the other Operative Documents, including
\npayments of Stipulated Loss Value and Termination Value and amounts calculated
\nby reference thereto, an amount equal to the Premium, if any, payable in
\naccordance with Section 3(d) hereof and indemnity payments. The parties
\nacknowledge that Supplemental Rent is a general category and, accordingly, agree
\nthat any provision of any Operative Document which calls for the payment of
\nSupplemental Rent and also calls for the payment of specific items which are
\nincludable in Supplemental Rent is not to be interpreted as requiring any double
\npayment.<\/p>\n
“Tax Indemnity Agreement” means that certain Tax Indemnity Agreement
\n(1995 777 A), dated as of the date hereof, between the Owner Participant and
\nLessee, as originally executed or as modified, amended or supplemented pursuant
\nto the applicable provisions thereof.<\/p>\n
“Taxes” means any and all fees (including, without limitation,
\nlicense, documentation and registration fees), taxes (including, without
\nlimitation, income, gross receipts, sales, rental, use, turnover, value added,
\nproperty (tangible and intangible), excise and stamp taxes), licenses, levies,
\nimposts, duties, recording charges or fees, charges, assessments, or
\nwithholdings of any nature whatsoever, together with any assessments, penalties,
\nfines, additions to tax and interest thereon (each, individually, a “Tax”).<\/p>\n
14<\/p>\n
“Term” means the Interim Term, Basic Term and, if actually entered
\ninto, any Renewal Term.<\/p>\n
“Termination Date” has the meaning set forth in Section 9(b) hereof.<\/p>\n
“Termination Value” with respect to the Aircraft as of any date
\nthrough and including the last day of the Basic Term means the amount determined
\nby multiplying Lessor’s Cost for the Aircraft by the percentage specified in
\nExhibit D hereto opposite the Termination Date with respect to which the amount
\nof Termination Value is determined (as such Exhibit D may be adjusted from time
\nto time as provided in Section 3(c) hereof and in Section 8 of the Tax Indemnity
\nAgreement). To the extent that an event giving rise to an obligation to pay any
\nTermination Value occurs, and the actual date on which the loss of tax benefits
\nresulting from such event occurs shall be earlier or later than the date assumed
\nin calculating the United States Federal income tax consequences reflected in
\nthe applicable Termination Value, such Termination Value shall be appropriately
\nadjusted upwards or downwards to reflect the actual date of such loss of tax
\nbenefits, but shall be otherwise based on the original assumptions used in
\ndetermining such Termination Value.<\/p>\n
“Transaction Expenses” means (i) the reasonable and actual fees,
\nexpenses and disbursements of (1) Ray, Quinney & Nebeker, special counsel for
\nthe Indenture Trustee and the Pass Through Trustee, (2) Bingham, Dana & Gould,
\ncounsel for the Owner Trustee, (3) Crowe & Dunlevy, P.C., special counsel in
\nOklahoma City, Oklahoma, (4) Shearman & Sterling, special counsel for the
\nunderwriters (to the extent not payable by the underwriters), (5) Vedder, Price,
\nKaufman & Kammholz, special counsel for Lessee, and (6) Dewey Ballantine,
\nspecial counsel for the Owner Participant, (ii) all fees, taxes and other
\ncharges payable in connection with the recording or filing of instruments and
\nfinancing statements, (iii) the initial fee and reasonable and actual
\ndisbursements of the Owner Trustee under the Trust Agreement, (iv) the initial
\nfee and reasonable and actual disbursements of the Indenture Trustee under the
\nTrust Indenture, (v) the fee of BK Associates (or of such other appraiser as
\nshall be selected by the Owner Participant) with respect to the appraisal of the
\nAircraft required on or before the Delivery Date pursuant to Section 4(a) of the
\nParticipation Agreement, (vi) the fees, commissions and expenses of Capstar
\nPartners, Inc., (vii) the reasonable out-of-pocket expenses of the Owner
\nParticipant relating to the transactions contemplated by the Participation
\nAgreement including, without limitation, the expenses related to the
\norganization of the foreign sales corporation, as well as those transactions
\nrelating to the investment by the Owner Participant in the second quarter of
\n1995 in one Boeing 777-222<\/p>\n
15<\/p>\n
aircraft to be operated by the Lessee up to an aggregate of $25,000 (but
\nexcluding from Transaction Expenses airfare charges incurred for travel on an
\nairline other than United Air Lines, unless such travel is necessitated by the
\nforeign sales corporation structure to the extent that United Air Lines does not
\noffer regularly scheduled flights directly from New York to such foreign
\nlocation where negotiations with respect to the transactions will be conducted
\nfor purposes of the foreign sales corporation nature of the transactions) plus
\nairfare charges incurred for travel on United Air Lines, (viii) the placement or
\nunderwriting fees, commissions and expenses, if any, in placing the debt
\ncontemplated by the Participation Agreement and all costs and expenses
\nassociated with the public offering pursuant thereto and the actual expenses of
\neach Pass Through Trustee under its respective Pass Through Trust Agreement and
\n(ix) printing and distribution costs.<\/p>\n
“Trust Agreement” means that certain Trust Agreement (1995 777 A),
\ndated as of the date hereof, between the Owner Participant and State Street Bank
\nand Trust Company, in its individual capacity, as originally executed or as
\nmodified, amended or supplemented in accordance with the applicable provisions
\nthereof and the terms of the Trust Indenture, including, without limitation, any
\nTrust Supplement entered into pursuant to the applicable provisions thereof.<\/p>\n
“Trust Estate” has the meaning set forth in the Trust Agreement.<\/p>\n
“Trust Indenture” means that certain Trust Indenture and Mortgage
\n(1995 777 A), dated as of the date hereof, between Lessor and the Indenture
\nTrustee, as originally executed or as modified, amended or supplemented in
\naccordance with the provisions thereof and the terms of the Participation
\nAgreement, including, without limitation, any Trust Supplement entered into
\npursuant to the applicable provisions thereof.<\/p>\n
“Trust Indenture Estate” has the meaning assigned to the term
\n“Indenture Estate” in the Trust Indenture.<\/p>\n
“Trust Office” has the meaning set forth in the Trust Indenture.<\/p>\n
“Trust Supplement” means a supplement to the Trust Agreement and the
\nTrust Indenture, substantially in the form of Exhibit A to the Trust Agreement.<\/p>\n
“U.S. Air Carrier” means any United States air carrier as to which
\nthere is in force a certificate issued pursuant to Section 44102 of the Federal
\nAviation Act, and as to which there<\/p>\n
16<\/p>\n
is in force an air carrier operating certificate issued pursuant to Part 121 of
\nthe regulations under such Act, or which may operate as an air carrier by
\ncertification or otherwise under any successor or substitute provisions therefor
\nor in the absence thereof.<\/p>\n
“Wet Lease” means any arrangement whereby Lessee agrees to furnish the
\nAirframe and Engines or engines installed thereon to a third party pursuant to
\nwhich such Airframe and Engines or engines (i) shall be operated solely by
\nregular employees of Lessee possessing all current certificates and licenses
\nthat would be required under the Federal Aviation Act (or if the Aircraft is not
\nregistered in the United States, all certificates and licenses required by the
\nlaws of the jurisdiction of registry) for the performance by such employees of
\nsimilar functions within the United States of America (or such jurisdiction of
\nregistry) (it is understood that cabin attendants need not be employees of
\nLessee) and (ii) shall be maintained by Lessee in accordance with its normal
\nmaintenance practices.<\/p>\n
SECTION 2. Acceptance and Lease. Lessor hereby agrees to accept from
\n ——————–
\nthe Lessee the transfer of title to and simultaneously to lease to Lessee
\nhereunder, and Lessee hereby agrees to lease on the Delivery Date from Lessor
\nhereunder, the Aircraft as evidenced by the execution by Lessor and Lessee of a
\nLease Supplement leasing the Aircraft hereunder. Lessee agrees that Lessor will
\nauthorize one or more employees of Lessee, designated by Lessee in writing, as
\nthe authorized representative or representatives of Lessor to accept delivery of
\nthe Aircraft. Lessee hereby agrees that in the event delivery of the Aircraft
\nshall be accepted by an employee or employees of Lessee pursuant to such
\nauthorization by Lessor, such acceptance of delivery by such employee or
\nemployees on behalf of Lessor shall, without further act, irrevocably constitute
\nacceptance by Lessee of the Aircraft for all purposes of this Lease.<\/p>\n
SECTION 3. Term and Rent. (a) Interim Term and Basic Term. The
\n ————- —————————
\nInterim Term shall commence on the Delivery Date and end on and include the day
\nimmediately preceding the Commencement Date unless earlier terminated pursuant
\nto the provisions hereof. The Basic Term shall commence on the Commencement
\nDate and end on the Lease Expiry Date or such earlier date as this Lease may be
\nterminated in accordance with the provisions hereof.<\/p>\n
(b) Basic Rent. Lessee shall pay Basic Rent in Dollars with respect
\n ———-
\nto each Lease Period during the Basic Term on each Lease Period Date during the
\nBasic Term, in the respective amounts for each Lease Period Date determined in
\naccordance with Exhibit B hereto.<\/p>\n
17<\/p>\n
(c) Adjustments to Basic Rent, Excess Amount, Stipulated Loss Values,
\n —————————————————————–
\nTermination Values, Special Termination Value Percentages and the EBO
\n– ———————————————————————
\nPercentage.
\n– ———–<\/p>\n
(i) In the event that (A) Transaction Expenses paid by Lessor are
\n determined to be other than __% of Lessor’s Cost, (B) there shall be an
\n optional redemption or a refinancing or a refunding of the Loan
\n Certificates in accordance with Section 17 of the Participation Agreement,
\n (C) the Delivery Date occurs other than on May 15, 1995, or (D) there is an
\n optimization in accordance with Section 18 of the Participation Agreement;
\n then in each case the Basic Rent and Excess Amount set forth in Exhibit B,
\n the Stipulated Loss Value percentages set forth in Exhibit C, the
\n Termination Value percentages set forth in Exhibit D, and the EBO
\n Percentage and the Special Termination Value Percentages set forth in
\n Exhibit H shall be adjusted (upwards or downwards as the case may be) using
\n the same methods and assumptions (as modified on account of the occurrence
\n of any of the events referred to in clauses (A)-(D)) used to calculate the
\n Basic Rent and Excess Amount, the Stipulated Loss Value percentages, the
\n Termination Value percentages and the EBO Percentage and the Special
\n Termination Value Percentages set forth in Exhibits B, C, D and H,
\n respectively, in each case in compliance with clauses (iv) and (v) of this
\n paragraph (c) and in order to: (1) maintain the Owner Participant’s Net
\n Economic Return and (2) minimize the Net Present Value of Rents to Lessee
\n to the extent possible consistent with clause (1) hereof; provided,
\n ——–
\n however, in no event will the EBO Price be adjusted below the greatest of
\n ——-
\n (i) the Termination Value for the Aircraft as of the EBO Date, (ii) __% of
\n Lessor’s Cost (i.e., the fair market value of the Aircraft as of the EBO
\n Date as the same was determined on the Delivery Date) and (iii) __%
\n multiplied by the present value as of the EBO Date of (x) the remaining
\n Basic Rent plus (y) __% of Lessor’s Cost (i.e., the fair market value of
\n the Aircraft as of the end of the Term as the same was determined on the
\n Delivery Date) (the present value calculation described in this clause
\n (iii) shall utilize a semi-annual discount rate that on a compound basis is
\n equal to ___% per annum).<\/p>\n
(ii) [Intentionally reserved for potential future use.]<\/p>\n
(iii) Any recalculation of Basic Rent and Excess Amount,
\n Stipulated Loss Value percentages, Termination Value percentages, EBO
\n Percentage and Special Termination Value Percentages pursuant to this
\n Section 3(c) (or pursuant to the definition of Stipulated Loss Value or
\n Termination<\/p>\n
18<\/p>\n
Value) shall be determined by the Owner Participant and shall be subject to
\n the verification procedures set forth in Exhibit E hereto. Such
\n recalculated Basic Rent and Excess Amount, Stipulated Loss Value
\n percentages, Termination Value percentages, EBO Percentage and Special
\n Termination Value Percentages shall be set forth in an amendment hereto.<\/p>\n
(iv) Anything contained in the Participation Agreement or this
\n Lease to the contrary notwithstanding, each installment of Basic Rent
\n payable hereunder, whether or not adjusted in accordance with this Section
\n 3(c), together with the amount of Excess Amount and Supplemental Rent, if
\n any, in respect of the date on which such installment is payable, and each
\n payment of Termination Value, Stipulated Loss Value, EBO Price and Special
\n Termination Value whether or not adjusted in accordance with this Section
\n 3(c) or Section 8 of the Tax Indemnity Agreement, and all other amounts
\n (excluding Excluded Payments payable simultaneously by Lessee pursuant to
\n this Lease), in each case, on the date on which such payment is due, shall
\n be in an amount at least sufficient to pay in full, and shall be available
\n to be applied by Lessor in payment on account of, any payments then
\n required to be made on account of the principal amount (and Premium, if
\n any) of and interest on the Loan Certificates then outstanding. It is
\n agreed that no installment of Basic Rent or payment of Excess Amount,
\n Termination Value, Stipulated Loss Value, Special Termination Value or EBO
\n Price, shall be increased or adjusted by reason of (A) any attachment or
\n diversion of Rent on account of (x) Lessor Liens (including for this
\n purpose Liens that would be Lessor Liens but for the proviso to the
\n definition of Lessor Liens) or (y) any other Lien on or against the Trust
\n Estate, any part thereof or the Operative Documents arising as a result of
\n claims against the Indenture Trustee or a Certificate Holder, not related
\n to the transactions contemplated by the Operative Documents, (B) any
\n modification of the payment terms of the Loan Certificates made without the
\n prior written consent of Lessee, or (C) the acceleration of any Loan
\n Certificate due to the occurrence of an “Event of Default” (as defined in
\n the Trust Indenture) which does not constitute an Event of Default
\n hereunder.<\/p>\n
(v) All adjustments to Basic Rent under this Section 3(c) shall
\n be consistent with the requirements of Sections 4.02(5), 4.07(1) and (2)
\n and Section 4.08(1) of Rev. Proc. 75-28 (provided that the requirements of
\n Section 4.08(1) shall apply on a prospective basis), as modified and in
\n effect on the Delivery Date, and shall not cause the Lease to be a
\n “disqualified leaseback or long-term<\/p>\n
19<\/p>\n
agreement” within the meaning of Section 467 of the Code as then in effect
\n and any final, temporary or proposed regulations thereunder or any
\n administrative or judicial interpretation thereof in effect on the date of
\n such adjustment (a “Section 467 Agreement”) (it being understood that any
\n such adjustment shall not be treated as causing the Lease to be a Section
\n 467 Agreement to the extent the Lease would have been a Section 467
\n Agreement if no such adjustment to Basic Rent had occurred).<\/p>\n
(d) Supplemental Rent. Lessee shall pay (or cause to be paid)
\n —————–
\npromptly to Lessor, or to whomsoever shall be entitled thereto, any and all
\nSupplemental Rent constituting Stipulated Loss Value, Termination Value, EBO
\nPrice and Special Termination Values as the same shall become due and owing and
\nall other amounts of Supplemental Rent within five Business Days after demand or
\non such date, or within such other relevant period, as may be provided in any
\nOperative Document, and in the event of any failure on the part of Lessee to pay
\nany Supplemental Rent when due, Lessor shall have all rights, powers and
\nremedies provided for herein or in any other Operative Document or by law or
\nequity or otherwise in the case of nonpayment of Basic Rent. Lessee shall also
\npay on behalf of Lessor as Supplemental Rent an amount equal to any amount
\npayable by Lessor as Premium as and when any such Premium shall be due and
\npayable; provided, however, that Lessee shall have no obligation to pay on
\nbehalf of Lessor any Premium payable under Section 6.01 or 6.02 of the Trust
\nIndenture due to the occurrence of an “Event of Default” (as defined in the
\nTrust Indenture) which does not constitute an Event of Default hereunder.
\nLessee also will pay to Lessor, or on behalf of Lessor to whomsoever shall be
\nentitled thereto, on demand, as Supplemental Rent, to the extent permitted by
\napplicable law, interest at the Past Due Rate with respect to any part of any
\ninstallment of Basic Rent not paid prior to 11:00 a.m., New York City time, on
\nthe date when due for any period for which the same shall be overdue and on any
\npayment of Supplemental Rent not paid prior to 11:00 a.m., New York City time,
\non the date when due for the period until the same shall be paid.<\/p>\n
(e) Payments in General. All payments of Rent other than Excluded
\n ——————-
\nPayments payable to Lessor shall be made directly by Lessee by wire transfer of
\nimmediately available funds prior to 11:00 a.m., New York time, on the date of
\npayment in Dollars, to Lessor at its office at 225 Franklin Street, Boston,
\nMassachusetts 02110, Attention: _________________________ (or such other office
\nof Lessor in the continental United States or such other account as Lessor shall
\ndirect in a notice to Lessee at least 10 Business Days prior to the date such
\npayment of Rent is due); provided, that so long as the Trust Indenture shall not<\/p>\n
20<\/p>\n
have been fully discharged, Lessor hereby directs and Lessee agrees, that all
\nBasic Rent shall be paid directly to the Indenture Trustee at the times and in
\nfunds specified in this Section 3(e) at the offices of the Indenture Trustee at
\nTwo International Place, Boston, MA 02110, Attention: Corporate Trust Department
\n(or such other office of Indenture Trustee in the continental United States or
\nsuch other account as Indenture Trustee shall direct in a notice to Lessee at
\nleast 10 Business Days prior to the date such payment of Basic Rent is due).
\nExcluded Payments shall be paid in Dollars in immediately available funds to the
\nPerson to whom payable at the address of such Person specified in Schedule I of
\nthe Participation Agreement.<\/p>\n
Notwithstanding anything to the contrary contained herein, if any date
\non which a payment of Rent becomes due and payable is not a Business Day then
\nsuch payment shall be made on the next succeeding Business Day and no interest
\nshall accrue on the amount of such payment, if such payment is made on such next
\nsucceeding Business Day.<\/p>\n
(f) [Intentionally Reserved for Potential Future Use].
\n ———————————————–
\n (g) Prepayments of Certain Rent Payments. Lessor agrees to pay, on
\n ————————————
\nbehalf of the Owner Participant, to the Indenture Trustee for the account of the
\nCertificate Holders on the Commencement Date an amount equal to the Excess
\nAmount. To the extent, if any, that there shall not have been received by the
\nIndenture Trustee at the account of the Indenture Trustee referred to in Section
\n3(e) by 11:00 a.m., New York City time, on the Commencement Date from Lessor, an
\namount equal to the Excess Amount payable for such date, Lessee shall advance to
\nLessor, as Prepaid Rent, by paying to the Indenture Trustee on behalf of Lessor
\non the Commencement Date an amount equal to the Excess Amount not so paid (such
\namount being herein called “Prepaid Rent”); provided that Lessee will also pay
\nto the Indenture Trustee, on demand, as Supplemental Rent, to the extent
\npermitted by applicable law, interest at the Debt Rate on any Prepaid Rent not
\npaid when due for any period for which the same shall be overdue. Lessor agrees
\nto reimburse Lessee in the manner and subject to the conditions provided in the
\nfollowing sentence for (x) the Prepaid Rent so paid by Lessee determined as of
\nthe date such payment was made, plus (y) the Supplemental Rent so paid by Lessee
\npursuant to this Section 3(g), plus (z) accrued interest on the unreimbursed
\nportion thereof at a rate per annum equal to the greater of the Base Rate plus
\n2% or the Debt Rate plus 2% from the date such amount is paid by Lessee to but
\nnot including the date of each such reimbursement (such amounts to be reimbursed
\nbeing herein called the “Reimbursement Amount”). So long as no Default or Event
\nof Default has occurred and is<\/p>\n
21<\/p>\n
continuing, Lessee may with written notice to the Owner Participant and
\nIndenture Trustee offset (without duplication) against each succeeding payment
\n(other than as limited by the proviso to this sentence) due from Lessee to
\nLessor in respect of Basic Rent, Stipulated Loss Value, Termination Value or any
\nother amount due hereunder to Lessor, until Lessee has been fully reimbursed for
\nthe Reimbursement Amount; provided, however, that in the case of any payment due
\nfrom Lessee which is distributable under the terms of the Trust Indenture,
\nLessee’s right of offset shall be limited to amounts distributable to Lessor or
\nthe Owner Participant thereunder. No such offset or aggregate combined effect
\nof separate offsets shall reduce the amount of any installment of Basic Rent to
\nan amount insufficient, together with all other amounts payable simultaneously
\nby Lessee, to pay in full the payments then required to be made on account of
\nthe principal amount (and Premium, if any) of and interest on the Loan
\nCertificates then outstanding.<\/p>\n
SECTION 4. Lessor’s Representations and Warranties. LESSOR LEASES
\n —————————————
\nAND LESSEE TAKES THE AIRCRAFT “AS-IS, WHERE-IS.” LESSEE ACKNOWLEDGES AND AGREES
\nTHAT AS BETWEEN LESSOR, ANY PARTICIPANT, THE INDENTURE TRUSTEE, AND LESSEE (A)
\nTHE AIRFRAME AND EACH ENGINE IS OF SIZE, DESIGN, CAPACITY AND MANUFACTURE
\nSELECTED BY AND ACCEPTABLE TO LESSEE, (B) LESSEE IS SATISFIED THAT THE AIRFRAME
\nAND EACH ENGINE IS SUITABLE FOR ITS PURPOSES, (C) NEITHER LESSOR NOR OWNER
\nPARTICIPANT IS A MANUFACTURER OR A DEALER IN PROPERTY OF SUCH KIND, AND (D)
\nNEITHER LESSOR, IN ITS INDIVIDUAL CAPACITY OR AS OWNER TRUSTEE, THE INDENTURE
\nTRUSTEE NOR THE OWNER PARTICIPANT MAKES, HAS MADE OR SHALL BE DEEMED TO HAVE
\nMADE, AND EACH WILL BE DEEMED TO HAVE EXPRESSLY DISCLAIMED, ANY REPRESENTATION
\nOR WARRANTY, EXPRESS OR IMPLIED, AS TO THE TITLE, AIRWORTHINESS, CONDITION,
\nDESIGN, OPERATION, VALUE, MERCHANTABILITY OR FITNESS FOR USE FOR A PARTICULAR
\nPURPOSE OF THE AIRCRAFT OR ANY PART THEREOF, AS TO THE ABSENCE OF LATENT OR
\nOTHER DEFECTS, WHETHER OR NOT DISCOVERABLE, AS TO THE ABSENCE OF ANY
\nINFRINGEMENT OF ANY PATENT, TRADEMARK OR COPYRIGHT, AS TO THE ABSENCE OF
\nOBLIGATIONS BASED ON STRICT LIABILITY IN TORT, OR ANY OTHER REPRESENTATION OR
\nWARRANTY WHATSOEVER, EXPRESS OR IMPLIED, WITH RESPECT TO THE AIRCRAFT OR ANY
\nPART THEREOF, except as set forth in Sections 8(f)(vi) and 8(p)(ii) of the
\nParticipation Agreement as to Lessor Liens and except that State Street Bank and
\nTrust Company, in its individual capacity, (i) represents and warrants that on
\nthe Delivery Date, Lessor shall have received whatever title to the Aircraft was
\nconveyed to it by Lessee, (ii) represents and warrants that on the Delivery Date
\nthe Aircraft shall be free of Lessor Liens (including for this purpose Liens
\nthat would be Lessor Liens but for the proviso to the definition of Lessor
\nLiens) attributable to it in its individual capacity, (iii) covenants that it
\nwill not, through its own actions or inactions, in such capacity, interfere in
\nLessee’s or any<\/p>\n
22<\/p>\n
Sublessee’s quiet enjoyment, use, operation or possession of the Aircraft unless
\nthis Lease shall have been declared in default pursuant to Section 15 hereof,
\n(iv) agrees that it will not directly or indirectly create, incur, assume or
\nsuffer to exist any Lessor Lien attributable to it in its individual capacity on
\nor with respect to the Airframe or any Engine or any portion of the Trust Estate
\nand (v) represents and warrants that it is a Citizen of the United States and
\nagrees that if at any time it shall cease to be a Citizen of the United States,
\nit will promptly resign as Owner Trustee (if and so long as such citizenship is
\nnecessary under the Federal Aviation Act as in effect at such time or, if it is
\nnot necessary, if and so long as the Owner Trustee’s citizenship would have any
\nadverse effect on the Owner Participant, the Certificate Holders or Lessee),
\neffective upon the appointment of a successor Owner Trustee in accordance with
\nthe provisions of the Trust Agreement. None of the provisions of this Section 4
\nor any other provision of this Agreement shall be deemed to amend, modify or
\notherwise affect the representations, warranties or other obligations (express
\nor implied) of the Manufacturer, any subcontractor or supplier of the
\nManufacturer with respect to the Airframe, Engines, or any Parts, or to release
\nthe Manufacturer, or any such subcontractor or supplier from any such
\nrepresentation, warranty or obligation. Unless a Section 14(a), 14(b), 14(f) or
\n14(g) Default or any Event of Default shall have occurred and be continuing,
\nLessor agrees to make available to Lessee such rights as Lessor may have under
\nany warranty with respect to the Aircraft made by the Manufacturer or any of its
\nsubcontractors or suppliers and any other claims against the Manufacturer or any
\nsuch subcontractor or supplier with respect to the Aircraft, all pursuant to and
\nin accordance with the terms of the Owner Trustee’s Purchase Agreement.<\/p>\n
SECTION 5. Return of the Aircraft. (a) Condition Upon Return.
\n ———————- ———————
\nUnless purchased by Lessee pursuant to Section 19(b) hereof, upon the
\ntermination of this Lease at the end of the Basic Term or any Renewal Term or
\npursuant to Section 9(b) or 15 hereof, Lessee will at its expense return the
\nAircraft to Lessor at Lessee’s maintenance base located at San Francisco
\nInternational Airport (or any principal maintenance base established by Lessee
\nin the continental United States subsequent to the date hereof), provided that
\nupon the request of the Lessor given to Lessee at least ten (10) days prior to
\nthe date of such return, Lessee shall return the Airframe to Lessor at a
\nlocation on Lessee’s route system in the continental United States selected by
\nLessor, provided that such location is served on a normal basis by Boeing Model
\n777-222 aircraft operated by Lessee, and Lessor shall reimburse Lessee on a net
\nafter-tax basis for Lessee’s out-of-pocket Expenses (including for this purpose
\nsalary costs for Lessee’s personnel) resulting from Lessee’s<\/p>\n
23<\/p>\n
return of the Aircraft to such alternate return location to the extent such out-
\nof-pocket Expenses exceed the out-of-pocket Expenses (including, for this
\npurpose, salary costs for Lessee’s personnel) Lessee would have incurred in
\nreturning the Aircraft to its principal maintenance base at San Francisco
\nInternational Airport, provided, further, however, that if Lessor shall have
\nmade the request for storage pursuant to Section 5(d) hereof, Lessee shall at
\nits expense return the Aircraft at the site of storage. At the time of such
\nreturn, (A) Lessee will, at its own cost and expense, unless otherwise requested
\nby Lessor to retain the existing registration of the Aircraft, cause the
\nAircraft, if it is not then so registered, to be registered under the laws of
\nthe United States with the FAA in the name of Lessor or its designee, provided
\nthat Lessee shall be relieved of its obligations under this sentence if such
\nregistration is prohibited by reason of the failure of Lessor, the Owner
\nParticipant or Lessor’s designee to be eligible on such date to own an aircraft
\nregistered with the Federal Aviation Administration, and (B) subject to Section
\n5(e) hereof, the Airframe will be fully equipped with the Engines (or Acceptable
\nAlternate Engines) installed thereon. Also, at the time of such return, Lessor
\nshall have good title to such Airframe and Engines or Acceptable Alternate
\nEngines, and such Airframe and Engines or Acceptable Alternate Engines (i) shall
\nbe certified (or, if not then registered under the Federal Aviation Act by
\nreason of the proviso to clause (A) in the preceding sentence or because Lessor
\nhas so requested that the Aircraft not be so registered, shall hold a valid
\ncertificate of airworthiness issued by the country of registry and be eligible
\nfor certification by the FAA) as an airworthy aircraft by the Federal Aviation
\nAdministration, (ii) shall be free and clear of all Liens (other than Lessor
\nLiens (including for this purpose Liens that would be Lessor Liens but for the
\nproviso to the definition of Lessor Liens)) and rights of third parties under
\npooling, interchange, overhaul, repair or other similar agreements or
\narrangements, (iii) shall be in a regular passenger configuration, and in as
\ngood a condition as when delivered by Lessee to Lessor, ordinary wear and tear
\nexcepted and otherwise in the condition required to be maintained under the
\nLease and under Lessee’s FAA-approved maintenance plan (notwithstanding any
\nSublease theretofore in effect) and shall be in compliance with all mandatory
\nenvironmental, noise, air pollution and other standards prescribed by the
\nfederal government of the United States and applicable to the Aircraft
\nincluding, without limitation, standards relating to corrosion and structural
\nintegrity and all other applicable manufacturer’s mandatory service bulletins
\n(except for standards, laws, regulations, directives and bulletins that permit
\ncompliance at a later time and would not, in the normal course of Lessee’s
\nmaintenance plan, be complied with by the date of return without discriminating
\non the basis of the status of the Aircraft as a<\/p>\n
24<\/p>\n
leased aircraft), (iv) in the event that Lessee shall not then be using a
\ncontinuous maintenance program with respect to the Airframe immediately prior to
\nsuch return but instead shall have been using a block overhaul program with
\nrespect to the Airframe, then (A) such block overhaul program shall have been
\napproved by the government of registry of the Aircraft and (B) the Airframe
\nshall have remaining until the next scheduled block overhaul at least 25% of the
\nallowable hours between block overhauls permitted under the block overhaul
\nprogram then used by Lessee, (v) in the event that Lessee during the period of
\noperation of the Aircraft immediately prior to such return shall not have been
\nusing an on-condition maintenance program with respect to the Engines (or
\nAcceptable Alternate Engines), Lessee agrees that the average number of hours or
\ncycles of operation (whichever shall be applicable under the maintenance program
\nthen in use with respect to such Engines (or Acceptable Alternate Engines)) on
\nsuch Engines (or Acceptable Alternate Engines) remaining until the next
\nscheduled engine heavy maintenance shall be at least 25% of the hours or cycles
\n(whichever shall be applicable) between engine heavy maintenance allowed under
\nthe maintenance program then in use with respect to such Engines (or Acceptable
\nAlternate Engines), (vi) shall have all Lessee’s and any Sublessee’s exterior
\nmarking removed or painted over with areas thereof refinished to match adjacent
\nareas, and (vii) shall be in a state of cleanliness suitable under Lessee’s
\nnormal service standards for operation in Lessee’s revenue passenger service and
\nin all such cases the Aircraft shall not have been discriminated against whether
\nby reason of its leased status or otherwise in maintenance, use, operation or in
\nany other manner whatsoever.<\/p>\n
In addition, the following conditions shall be complied with at the
\ntime of the return of the Aircraft: (i) Lessee shall deliver to Lessor any “no
\ncost” modification kits designated for the Aircraft that Lessee has in its
\npossession and that have not been incorporated at the time of the return of the
\nAircraft, (ii) Lessor may purchase from Lessee at Lessee’s cost any service
\nbulletin kits purchased or manufactured by Lessee for the Aircraft (provided
\nthat Lessee shall not be obligated to sell to Lessor any service bulletin kit
\nmanufactured by Lessee to the extent Lessee, in its reasonable judgment,
\nconsiders the same proprietary) and (iii) without limiting the obligations of
\nthe Lessee set forth in the preceding paragraph, in the event the FAA shall
\nissue any directive which requires termination thereof prior to the return date,
\nthen such directive shall be terminated prior to the return date, and if Lessee
\nshall have not been required to terminate such directive in the normal course of
\nits operations without discriminating against the Aircraft by reason of its
\nleased status or otherwise prior to the return of the Aircraft but such
\ndirective must be terminated on or before six<\/p>\n
25<\/p>\n
months following such return, then Lessee shall, at the sole cost and expense of
\nLessor, comply with such directive but only if (x) at least 540 days prior to
\nthe return of the Aircraft Lessee receives from Lessor a written request to
\ncomply with such directive at Lessor’s sole cost and expense (determined on the
\nbasis of what a third party would charge for comparable services) and (y) after
\nreceipt by Lessee of such request, the Aircraft is subject to a maintenance
\ncheck of the type at which such modification is made, in accordance with
\nLessee’s general maintenance program, and Lessee has, or can obtain using
\ncommercial reasonable efforts taking into account the 540 day prior notice
\nreceived by Lessee, the personnel, parts, facilities and other resources
\navailable to accomplish the modification and the modification can be made
\nwithout materially disrupting the operations of Lessee’s maintenance facility or
\nLessee’s operations.<\/p>\n
For purposes of this Section 5(a), any maintenance program used by
\nLessee for airframes (including the Airframe) substantially similar to the
\nmaintenance program described in the excerpts from [“United Air Lines 777
\nMaintenance Program”] furnished to Lessor and the Owner Participant prior to the
\nDelivery Date (a copy of which was attached to the certificate of the Assistant
\nSecretary of the Lessee delivered pursuant to Section 4(a)(vii)(6) of the
\nParticipation Agreement) shall be considered a continuous maintenance program
\n(and not a block maintenance program) and any engine maintenance program used by
\nLessee for engines (including the Engines) substantially similar to the
\nmaintenance program described in “United Air Lines 777 Maintenance Program”
\nshall be considered an on-condition maintenance program.<\/p>\n
In the event that the provisions of the preceding paragraph are
\ninapplicable and upon a return of the Aircraft pursuant to this Section 5,
\nLessee and Lessor cannot agree as to whether Lessee, during the period of
\noperation of the Aircraft immediately prior to such return, shall have been
\nusing a continuous maintenance program or a block overhaul program with respect
\nto the Airframe (including, without limitation, a dispute as to whether Lessee’s
\nprogram is substantially similar to the program described in the excerpts to the
\n[“United Air Lines 777 Maintenance Program”] furnished to Lessor as set forth in
\nthe preceding paragraph), then Lessee and Lessor shall mutually appoint an
\nindependent third party, satisfactory to both Lessee and Lessor, who shall make
\nsuch a determination, which determination shall be conclusive and final. Lessee
\nwill provide, on a confidential basis, such independent third party with the
\nmaintenance program and records applicable to the Aircraft necessary to make
\nsuch determination. The fee of such third party shall be paid equally by Lessor
\nand Lessee.<\/p>\n
26<\/p>\n
If clause (iv) of the first paragraph of this Section 5(a) shall be
\napplicable but the Airframe does not meet the conditions specified in said
\nclause (iv), Lessee shall pay or cause to be paid to Lessor, concurrently with
\nthe return thereof, a Dollar amount computed by multiplying (i) the fair market
\ncost of obtaining an airframe block overhaul of the type referred to in such
\nclause (iv) at a location in the United States that has been approved by the FAA
\nfor such work by (ii) a fraction of which (x) the numerator shall be the excess
\nof 25% of the hours of operation allowable between such block overhauls over the
\nactual number of hours of operation remaining on the Airframe to the next such
\nblock overhaul and (y) the denominator shall be the number of hours of operation
\nallowable between such block overhauls in accordance with such block overhaul
\nprogram.<\/p>\n
If clause (v) of the first paragraph of this Section 5(a) shall be
\napplicable but the Engines (or Acceptable Alternate Engines) do not meet the
\nconditions specified in said clause (v), Lessee shall pay or cause to be paid to
\nLessor, concurrently with the return thereof, a Dollar amount computed by
\nmultiplying (i) the fair market cost of obtaining the scheduled engine heavy
\nmaintenance under the maintenance program then used by Lessee for engines of the
\nsame model as the Engines (or Acceptable Alternate Engines) at a location in the
\nUnited States that has been approved by the FAA for such work by (ii) a fraction
\nwhich (x) the numerator shall be the excess of 25% of the hours or cycles
\n(whichever is applicable) of operation of one Engine between engine heavy
\nmaintenance allowable under the maintenance program then in use with respect to
\nsuch Engines (or Acceptable Alternate Engines) over the actual average number of
\nhours or cycles of operation of such Engines (or Acceptable Alternate Engines)
\nremaining until the next such scheduled engine heavy maintenance and (y) the
\ndenominator shall be the number of hours or cycles allowable between such
\nscheduled engine heavy maintenance.<\/p>\n
During the last six months of the Term (unless Lessee shall have
\nirrevocably elected to purchase the Aircraft or renew this Lease in accordance
\nwith the terms of this Lease), with reasonable notice, Lessee will cooperate,
\nand cause any Sublessee to cooperate, at Lessor’s sole cost, in all reasonable
\nrespects with the efforts of Lessor to sell or lease the Aircraft, including,
\nwithout limitation, permitting prospective purchasers or lessees to inspect the
\nAircraft, any maintenance records relating to the Aircraft then required to be
\nretained by the FAA or by the comparable government agency of the country in
\nwhich the Aircraft is registered, all in accordance with Section 12 hereof,
\nprovided that any such cooperation shall not interfere with the normal operation
\nor maintenance of the Aircraft by, or the business of, Lessee or any Sublessee.<\/p>\n
27<\/p>\n
(b) Return of Other Engines. In the event that an Acceptable
\n ———————–
\nAlternate Engine shall be delivered with the returned Airframe as set forth in
\nparagraph (a) of this Section 5, Lessee, concurrently with such delivery, will,
\nat no cost to Lessor, furnish, or cause to be furnished, to Lessor a full
\nwarranty (as to title) bill of sale with respect to each such Acceptable
\nAlternate Engine, in form and substance reasonably satisfactory to Lessor
\n(together with an opinion of counsel (which may be Lessee’s General Counsel) to
\nthe effect that such full warranty bill of sale has been duly authorized and
\ndelivered and is enforceable in accordance with its terms and that each such
\nAcceptable Alternate Engine is free and clear of all Liens other than Lessor
\nLiens (including for this purpose Liens that would be Lessor Liens but for the
\nproviso to the definition of Lessor Liens)) and will, to the extent applicable,
\ncomply with the provisions of Section 9(d) as if Lessee had irrevocably elected,
\nin accordance with Section 9(d) hereof, to terminate the Lease with respect to
\nthe Engine in replacement for which such Acceptable Alternate Engine is being
\ndelivered and Lessor will provide a bill of sale, at Lessee’s expense,
\nevidencing the transfer, without recourse or warranty (except as to the absence
\nof Lessor Liens (including for this purpose Liens that would be Lessor Liens but
\nfor the proviso to the definition of Lessor Liens)) by Lessor to Lessee or its
\ndesignee of all of Lessor’s right, title and interest in and to any Engine not
\ninstalled on the Airframe at the time of the return of the Airframe.<\/p>\n
(c) Fuel and Manuals. Upon the return of the Airframe upon any
\n —————-
\ntermination of this Lease in accordance with paragraph (a) of this Section 5,
\n(i) Lessee shall invoice Lessor, and Lessor shall pay to Lessee the amount of
\nLessee’s cost for any fuel or oil contained in the fuel or oil tanks on the
\nAirframe, and (ii) Lessee shall deliver or cause to be delivered to Lessor all
\nlogs, manuals and data and inspection, modification and overhaul records in the
\nEnglish language (or an English translation of the same), (A) required to be
\nmaintained with respect to the Airframe, the Engines or any part thereof in
\naccordance with Section 7(a) hereof, (B) created since the Airframe’s or
\nEngine’s or Acceptable Alternate Engine’s (whichever is applicable) last heavy
\nmaintenance visit and (C) required to lawfully operate the Aircraft in the
\nUnited States under a United States Certificate of Airworthiness without
\nperforming additional maintenance.<\/p>\n
(d) Storage Upon Return. If, at any time at least 30 days prior to
\n ——————-
\nthe end of the Basic Term or any Renewal Term or pursuant to Section 9(c) or
\nSection 15, Lessee receives from Lessor a written request for storage of the
\nAircraft upon its return hereunder, Lessee will provide Lessor, or cause Lessor
\nto be provided, with storage facilities for the Aircraft (at<\/p>\n
28<\/p>\n
Lessor’s risk and at Lessor’s cost for insurance, maintenance and Lessee’s
\nreasonable out-of-pocket expenses other than storage fees) for a period not
\nexceeding forty-five (45) days (and upon prior written notice from Lessor to
\nLessee given at least 10 days prior to the end of such 45 day period, at
\nLessor’s risk and at Lessor’s cost for insurance, maintenance and Lessee’s
\nreasonable out-of-pocket expenses including storage fees, for an additional
\nperiod not exceeding 45 days) commencing on the date of such termination, at a
\nlocation in the forty-eight contiguous states of the United States selected by
\nLessee and used as a location for the storage of aircraft. Lessee shall, at
\nLessor’s written request, maintain insurance (if available) for the Aircraft
\nduring such period and shall be reimbursed by Lessor for the premiums thereon.<\/p>\n
(e) Purchase of Engine. In the event that Lessee shall have paid the
\n ——————
\nStipulated Loss Value for any Engine pursuant to Section 10(b) hereof and all
\nother amounts due and owing under said Section 10(b), then, notwithstanding
\nanything contained in this Section 5, Lessee shall, subject to the proviso
\nbelow, be under no obligation to return any engine installed on the Airframe in
\nreplacement for such Engine to Lessor upon the termination of this Lease;
\nprovided, however, that in such event Lessor shall have the right upon
\ntermination of this Lease (unless Lessee shall have exercised any of its options
\nto purchase the Aircraft pursuant to Section 19), at its sole option, to
\npurchase from Lessee an engine or engines suitable for use on the Airframe and
\ncompatible with the other Engine (if any) or the other engine purchased under
\nthis Section 5(e) for such engine’s then Fair Market Sales Value and any such
\nengine shall be installed at no cost to Lessor on the Airframe on the return
\nthereof.<\/p>\n
(f) Severable Parts. At any time after Lessee has advised Lessor that
\n —————
\nit has determined not to renew this Lease or purchase the Aircraft, or the
\nAircraft is otherwise to be returned to Lessor, Lessee shall, at Lessor’s
\nrequest, advise Lessor of the nature and condition of all severable Parts owned
\nby Lessee which have been used by Lessee during the prior six months and which
\nLessee has or intends to remove from the Aircraft as permitted by Section 8
\nhereof. Lessor may, at its option, upon 30 days written notice to Lessee,
\npurchase any or all of such Parts from Lessee upon the expiration of the Term at
\ntheir then fair market value.<\/p>\n
(g) Special Redelivery Provision. Not less than 30 days prior to (A)
\n —————————-
\nthe date of redelivery of the Aircraft by Lessee to Lessor in accordance with
\nthis Section 5, (B) the date of redelivery to Lessor or a purchaser pursuant to
\nSection 9(c) or Section 15 hereof, or (C) a purchase of the Aircraft by Lessee<\/p>\n
29<\/p>\n
pursuant to Section 19(b), Lessor may provide Lessee with a proposal regarding
\nthe arranging of delivery of the Aircraft so as to enable Lessor to realize
\n“foreign trade income” (as defined in Section 923(b) of the Code or any
\nsuccessor provision thereto) from the sale or re-lease of the Aircraft, and
\nLessee shall (i) arrange delivery at Lessor’s cost (unless the delivery site is
\nas provided in Section 5(a) hereof) either inside or outside the United States,
\nas specified in Lessor’s proposal, and (ii) otherwise comply with such proposal
\nto the extent Lessee can do so without incurring any cost, expense or liability
\nnot indemnified against by Lessor in a manner in form and substance reasonably
\nsatisfactory to Lessee.<\/p>\n
SECTION 6. Liens. Lessee will not directly or indirectly create,
\n —–
\nincur, assume or suffer to exist any Lien on or with respect to the Aircraft,
\ntitle thereto or any interest therein or in this Lease, except (i) the
\nrespective rights of Lessor as owner of the Aircraft and Lessee as herein
\nprovided (including any Sublease permitted pursuant to Section 7(b)), the Lien
\nof the Trust Indenture, and any other rights existing pursuant to the Operative
\nDocuments, (ii) Lessor Liens (including for this purpose Liens that would be
\nLessor Liens but for the proviso to the definition of Lessor Liens), (iii) Liens
\nfor Taxes of Lessee (or any Sublessee) either not yet due or being contested in
\ngood faith by appropriate proceeding so long as such proceedings do not involve
\nany material risk of the sale, forfeiture or loss of the Airframe or any Engine
\nor any interest thereon, (iv) materialmen’s, mechanics’, workmen’s, repairmen’s,
\nemployees’ or other like liens arising in the ordinary course of Lessee’s or any
\nSublessee’s business securing obligations that are not overdue for a period of
\nmore than 30 days or are being contested in good faith by appropriate
\nproceedings so long as during such 30 day period there is not, or such
\nproceedings do not involve, any material risk of the sale, forfeiture or loss of
\nthe Airframe or any Engine or any interest therein, (v) Liens arising out of any
\njudgment or award against Lessee (or any Sublessee), unless there exists a
\nmaterial risk of the sale, forfeiture or loss of the Airframe or any Engine or
\nany interest therein or unless the judgment secured shall not, within 45 days
\nafter the entry thereof, have been discharged, vacated, reversed or execution
\nthereof stayed pending appeal or shall not have been discharged, vacated or
\nreversed within 45 days after the expiration of such stay, and (vi) any other
\nLien with respect to which Lessee (or any Sublessee) shall have provided a bond
\nor other security in an amount and under terms reasonably satisfactory to
\nLessor. Lessee will promptly, at its own expense, take (or cause to be taken)
\nsuch actions as may be necessary duly to discharge any such Lien not excepted
\nabove if the same shall arise at any time.<\/p>\n
30<\/p>\n
SECTION 7. Registration, Maintenance and Operation; Possession and
\n ————————————— ————–
\nSubleases; Insignia. (a) (1) Registration and Maintenance. Lessee, at its
\n– ——————- —————————-
\nown cost and expense, shall (or shall cause any Sublessee to): (i) upon
\ndelivery of the Aircraft, cause the Aircraft to be duly registered in the name
\nof Lessor, and, subject to subparagraph (3) of this Section 7(a), to remain duly
\nregistered in the name of Lessor under the Federal Aviation Act (except to the
\nextent that such registration cannot be effected because of Lessor’s or the
\nOwner Participant’s failure to comply with the citizenship requirements for
\nregistration of aircraft under such Act), provided that Lessor and the Owner
\nParticipant shall execute and deliver all such documents as Lessee (or any
\nSublessee) may reasonably request for the purpose of effecting and continuing
\nsuch registration, and Lessee shall cause the Trust Indenture to be duly
\nrecorded and maintained of record as a first mortgage on the Aircraft; (ii)
\nmaintain, service, repair, and overhaul (or cause to be maintained, serviced,
\nrepaired, and overhauled) the Aircraft (and any engine which is not an Engine
\nbut which is installed on the Aircraft) (x) so as (p) at all times to keep the
\nAircraft in as good an operating condition as when delivered by Manufacturer to
\nLessee, ordinary wear and tear excepted, and (q) to keep the Aircraft in such
\ncondition as may be necessary to enable the airworthiness certification for the
\nAircraft to be maintained in good standing at all times (other than during
\ntemporary periods of storage in accordance with applicable regulations) under
\n(I) the Federal Aviation Act, except when all of Lessee’s Boeing Model 777-222
\naircraft (powered by engines of the same type as those with which the Airframe
\nshall be equipped at the time of such grounding) registered in the United States
\nhave been grounded by the FAA unless such grounding was caused by the failure of
\nLessee to maintain, service, repair or overhaul the Aircraft in accordance with
\nthis Lease, or (II) the applicable laws of any other jurisdiction in which the
\nAircraft may then be registered from time to time, except when all of Lessee’s
\nBoeing Model 777-222 aircraft (powered by engines of the same type as those with
\nwhich the Airframe shall be equipped at the time of such grounding) registered
\nin such jurisdiction have been grounded by the aeronautical authority of such
\njurisdiction unless such grounding was caused by the failure of Lessee to
\nmaintain, service, repair or overhaul the Aircraft in accordance with this Lease
\nand (y) in substantially the same manner as Lessee (or any Sublessee) maintains,
\nservices, repairs or overhauls similar aircraft operated by Lessee (or such
\nSublessee) in similar circumstances and without in any way discriminating
\nagainst the Aircraft, whether by reason of its leased status or otherwise,
\nincluding, without limitation, in regard to the termination of airworthiness
\ndirectives; or such other manner as shall have been approved in writing by the
\nOwner Participant; (iii) maintain or cause to be maintained in the English
\nlanguage<\/p>\n
31<\/p>\n
(or with appropriate English translation) all records, logs and other materials
\nrequired to be maintained in respect of the Aircraft by the FAA or the
\napplicable regulatory agency or body of any other jurisdiction in which the
\nAircraft may then be registered (which records, logs and other materials, as
\nbetween Lessor and Lessee and all parties claiming through Lessee, shall be the
\nproperty of Lessor but shall be maintained by Lessee during the Term of this
\nLease and shall become the property of Lessee upon Lessee’s purchase of the
\nAircraft pursuant to the terms of this Lease or upon the occurrence of an Event
\nof Loss and Lessee’s compliance with Section 10); and (iv) promptly furnish or
\ncause to be furnished to Lessor or the Owner Participant such information as may
\nbe reasonably required to enable Lessor or the Owner Participant to file any
\nreports required to be filed by Lessor or the Owner Participant with any
\ngovernmental authority because of Lessor’s ownership of the Aircraft.<\/p>\n
(2) Operation. Lessee will not (or permit any Sublessee to) maintain,
\n ———
\nuse, service, repair, overhaul or operate the Aircraft in violation of any law
\nor any rule, regulation, treaty, order or certificate of any government or
\ngovernmental authority (domestic or foreign) having jurisdiction, or in
\nviolation of any airworthiness certificate, license or registration relating to
\nthe Aircraft issued by any such authority, except that, after Lessee shall have
\nprovided Lessor and, so long as the Lien of the Trust Indenture shall not have
\nbeen released, the Indenture Trustee with a certificate of its President, any
\nVice President, the Treasurer or any Assistant Treasurer stating all relevant
\nfacts pertaining thereto, Lessee or any Sublessee may contest in good faith the
\nvalidity or application of any such law, rule, regulation, order, certificate,
\nlicense, registration or violation in any reasonable manner which does not
\njeopardize the right, title and interest of the Lessor or the Owner Participant
\nin and to the Airframe and\/or the Engines or otherwise materially adversely
\naffect Lessor, the Indenture Trustee or the Owner Participant but only so long
\nas such proceedings do not involve any risk of criminal liability or any
\nunindemnified material risk of civil liability to Lessor or the Owner
\nParticipant for which the Lessee is not then willing to indemnify Lessor or the
\nOwner Participant in a manner reasonably satisfactory to such Person. If the
\nindemnities or insurance specified in Section 11(f), or some combination thereof
\nin amounts equal to amounts required by Section 11(f), have not been obtained,
\nLessee will not operate the Aircraft, or permit any Sublessee to operate the
\nAircraft, in or to any area excluded from coverage by any insurance required to
\nbe maintained by the terms of Section 11, provided, however, that the failure of
\nLessee to comply with the provisions of this sentence shall not give rise to an
\nEvent of Default hereunder where such failure is<\/p>\n
32<\/p>\n
attributable to a hijacking, medical emergency, equipment malfunction, weather
\nconditions, navigational error or other isolated extraordinary event beyond the
\ncontrol of Lessee and Lessee is taking all reasonable steps to remedy such
\nfailure as soon as is reasonably practicable.<\/p>\n
(3) Reregistration. At any time after the Restricted Period, Lessor
\n ————–
\nshall, at the request and sole expense of Lessee, cooperate with Lessee and take
\nall actions required to change the country of registration of the Aircraft in
\ncompliance with and subject to the terms and conditions of Section 8(e) of the
\nParticipation Agreement.<\/p>\n
(4) Operating Certificates. Lessor hereby authorizes Lessee, at
\n ———————-
\nLessee’s sole cost, expense and risk, to act as its agent for the purpose (but
\nonly for the purpose) of obtaining any required replacement operating
\ncertificates from the FAA; provided, however, that in the event that Lessee
\nshall have received from Lessor written notice that an Event of Default shall
\nhave occurred and be continuing, this authority shall not apply for a period
\nfrom the date of receipt of such notice to such time as such Event of Default
\nshall have been cured by Lessee or waived by Lessor. This authority includes
\n(without expanding in any way the nature of the limited authority granted
\npursuant to the first sentence of this Section 7(a)(4)), but is not limited to,
\nobtaining registration certificates, airworthiness certificates, certificates of
\nsanitary construction and ferry permits. In particular, this authority includes
\nthe ability to make use of Exemption No. 5318 issued by the FAA. This authority
\nwill allow duly authorized personnel of Lessee to sign any application forms
\nrequired in the process of obtaining such operating certificates, and this
\nauthority will also allow such personnel, where necessary and appropriate, to
\nsign certificates as the attorney-in-fact for Lessor. Lessee hereby agrees that
\nit will promptly notify Lessor of any action that it has taken in accordance
\nwith this Section 7(a)(4) as agent for the Lessor. Nothing in this Section
\n7(a)(4) shall permit the Lessee to change the country of registry of the
\nAircraft except as provided in Section 7(a)(3) above.<\/p>\n
(b) Possession and Subleases. Lessee will not, without the prior
\n ————————
\nwritten consent of Lessor, sublease or otherwise in any manner deliver, transfer
\nor relinquish possession of the Airframe or any Engine or install or permit any
\nEngine to be installed on any airframe other than the Airframe; provided that,
\nso long as no Section 14(a), (b), (f) or (g) Default or, in the case of
\nparagraph (viii) of this Section 7(b), no Section 14(d) (solely with respect to
\nLessee’s obligations under Section 7(a) or (b)(viii) hereof or Section 8 hereof)
\nDefault, or any Event of Default shall have occurred and be<\/p>\n
33<\/p>\n
continuing at the time of such sublease, delivery, transfer or relinquishment of
\npossession or installation, and so long as the action to be taken shall not
\ndeprive the Indenture Trustee of the Lien of the Trust Indenture on the Airframe
\nor any Engine and Lessee and any Sublessee shall continue to comply with the
\nprovisions of Sections 7(a) and 11, Lessee may, without the prior written
\nconsent of Lessor:<\/p>\n
(i) subject the Airframe and the Engines or engines then
\n installed thereon to normal interchange agreements or any Engine to normal
\n pooling or similar arrangements, in each case customary in the airline
\n industry and entered into by Lessee (or any Sublessee) in the ordinary
\n course of its business and, in the case of the Airframe, (x) with a U.S.
\n Air Carrier not in bankruptcy or a Permitted Sublessee or (y) any other air
\n carrier approved by Lessor; provided, that (A) no such agreement or
\n arrangement contemplates or requires the transfer of title to the Airframe,
\n and (B) if Lessor’s title to any Engine shall be divested under any such
\n agreement or arrangement, Lessee shall be deemed to have irrevocably
\n elected, in accordance with Section 9(d) hereof, to terminate the Lease
\n with respect to such Engine on the Business Day next following the 44th day
\n following such divestiture and Lessee shall (or shall cause any Sublessee
\n to) comply with Section 9(d) hereof in respect thereof;<\/p>\n
(ii) deliver possession of the Airframe or any Engine to the
\n manufacturer thereof or to any other Person for testing, service, repair,
\n maintenance or overhaul work on the Airframe or Engine or any Part of any
\n thereof or for alterations or modifications in or additions to such
\n Airframe or Engine to the extent required or permitted by the terms of
\n Section 8(c) hereof;<\/p>\n
(iii) install an Engine on an airframe owned by Lessee (or any
\n Sublessee) which airframe is free and clear of all Liens, except: (A)
\n Permitted Liens and those which apply only to the engines (other than
\n Engines), appliances, parts, instruments, appurtenances, accessories,
\n furnishings and other equipment (other than Parts) installed on such
\n airframe (but not to the airframe as an entirety), (B) the rights of third
\n parties under interchange agreements which would be permitted under clause
\n (i) above, provided that Lessor’s title to such Engine shall not be
\n divested as a result thereof and (C) mortgage Liens or other security
\n interests, provided, that (as regards this clause (C)), such mortgage Liens
\n or other security interests effectively provide that such Engine shall not
\n become subject to the<\/p>\n
34<\/p>\n
lien of such mortgage or security interest, notwithstanding the
\n installation thereof on such airframe;<\/p>\n
(iv) install an Engine on an airframe leased to Lessee (or any
\n Sublessee) or purchased by Lessee (or any Sublessee) subject to a
\n conditional sale or other security agreement, provided that (x) such
\n airframe is free and clear of all Liens, except: (A) the rights of the
\n parties to the lease or conditional sale or other security agreement
\n covering such airframe, or their assignees, and (B) Liens of the type
\n permitted by subparagraph (iii) of this paragraph (b) and (y) such lease,
\n conditional sale or other security agreement effectively provides that such
\n Engine shall not become subject to the lien of such lease, conditional sale
\n or other security agreement, notwithstanding the installation thereof on
\n such airframe;<\/p>\n
(v) install an Engine on an airframe owned by Lessee (or any
\n Sublessee), leased to Lessee (or any Sublessee) or purchased by Lessee (or
\n any Sublessee) subject to a conditional sale or other security agreement
\n under circumstances where neither subparagraph (iii) nor subparagraph (iv)
\n of this paragraph (b) is applicable, provided that in the event of such
\n installation, Lessee shall be deemed to have irrevocably elected, in
\n accordance with Section 9(d) hereof, to terminate the Lease with respect to
\n such Engine on the Business Day next following the 44th day following such
\n installation and Lessee shall (or shall cause any Sublessee to) comply with
\n Section 9(d) hereof in respect thereof, Lessor not intending hereby to
\n waive any right or interest it may have to or in such Engine under
\n applicable law until compliance by Lessee with such Section 9(d);<\/p>\n
(vi) transfer (or permit any Sublessee to transfer) possession of
\n the Airframe or any Engine to the United States of America or any
\n instrumentality or agency thereof pursuant to the Civil Reserve Air Fleet
\n Program for a period, including all permissible renewal periods (so long as
\n such renewal options have been irrevocably exercised by Lessee), that does
\n not extend beyond the end of the Term so long as Lessee (or any Sublessee)
\n shall promptly notify Lessor (x) upon transferring possession of the
\n Airframe or any Engine to the United States of America or any agency or
\n instrumentality thereof pursuant to the Civil Reserve Air Fleet Program and
\n (y) of the name and the address of the Contracting Office Representative
\n for the Military Airlift Command of the United States Air Force to whom
\n notice must be given pursuant to Section 15 hereof;<\/p>\n
35<\/p>\n
(vii) transfer possession of the Airframe or any Engine to the
\n United States of America or any instrumentality or agency thereof pursuant
\n to a contract, a copy of which shall be provided to Lessor provided that
\n the term of such contract, including all permissible renewal periods (so
\n long as such renewal options have been irrevocably exercised by Lessee),
\n shall not continue beyond the end of the Term; or<\/p>\n
(viii) So long as the Sublessee is not subject to a proceeding or
\n final order under applicable bankruptcy, insolvency or reorganization laws
\n on the date the Sublease is entered into, Lessee may, at any time, enter
\n into a sublease with (1) a U.S. Air Carrier, (2) after the Restricted
\n Period any Permitted Sublessee, provided that in the event such Permitted
\n Sublessee is domiciled in a country listed on Exhibit F hereto and
\n designated therein as a “Restricted Country” such Sublessee shall be deemed
\n a Permitted Sublessee only if its country of domicile at the time of such
\n subleasing imposes and enforces aircraft maintenance standards not
\n materially less stringent than those of the FAA or the central aviation
\n authority of any of Canada, France, Germany, Japan or the United Kingdom,
\n or (3) after the Restricted Period any other Person approved in writing by
\n the Owner Participant, which approval shall not be unreasonably withheld if
\n in regard to this subclause (3) (x) the proposed sublessee’s country of
\n domicile imposes maintenance standards not materially less stringent than
\n those of the FAA or the central aviation authority of any of Canada,
\n France, Japan, Germany, or the United Kingdom and (y) Lessor, Owner
\n Participant and the Indenture Trustee receive an opinion of counsel
\n reasonably acceptable to Lessor, in its individual capacity, and Owner
\n Participant that the terms of the sublease and other Operative Documents
\n will be valid in the country where Sublessee is domiciled; that no
\n Participant is required to register to do business in the Sublessee’s
\n country of domicile; that there is no tort liability for owners not in
\n possession that is more extensive than under United States law or any state
\n law (it being understood that if such opinion cannot be given in a form
\n reasonably satisfactory to the Owner Participant such opinion will be
\n waived if insurance reasonably satisfactory to the Owner Participant and
\n the Lessor, in its individual capacity, is provided at Lessee’s expense to
\n cover such risk); that fair compensation in a currency freely convertible
\n into Dollars is mandated if there is a requisition of use or title of the
\n Aircraft by the country in which the Sublessee is domiciled (it being
\n understood that if such opinion cannot be given in a form reasonably
\n satisfactory to the Owner Participant such opinion will be<\/p>\n
36<\/p>\n
waived if insurance reasonably satisfactory to the Owner Participant, is
\n provided at Lessee’s expense to cover such risk); that there exist no
\n possessory rights in favor of the Sublessee which upon Lessee’s bankruptcy
\n or other Default hereunder (assuming the Sublessee is not then bankrupt)
\n would prevent the return of the Aircraft in accordance with the terms
\n hereof or inhibit the Lessor’s rights therein; and as to such other matters
\n as Lessor, in its individual capacity, and the Owner Participant may
\n reasonably request, provided, however, (A) that no sublease, including all
\n permissible renewal periods, shall extend beyond the Basic Term or any
\n Renewal Term then in effect, unless Lessee shall have irrevocably committed
\n to purchase the Aircraft or renew the Lease in accordance with the terms
\n thereof at the end of the Basic Term or Renewal Term, as the case may be,
\n to a date beyond the latest permissible expiration date of such sublease,
\n (B) that, on the date of such sublease, the United States and the country
\n in which sublessee is domiciled and principally located maintain diplomatic
\n relations, (C) that on or prior to entering into such sublease, Lessee
\n shall provide to the Lessor, the Owner Participant and, so long as the Lien
\n of the Trust Indenture shall not have been released, the Indenture Trustee
\n assurances reasonably satisfactory to Lessor, in its individual capacity,
\n and Owner Participant to the effect that the provisions of Section 11
\n hereof have been complied with after giving effect to such sublease and (D)
\n that, in the case of a sublease to a sublessee described in (3) above, if
\n the country of domicile of the proposed sublessee at the time of such
\n subleasing has not unqualifiedly ratified the Geneva Convention for
\n International Recognition of Rights in Aircraft, the Lessee shall provide
\n Lessor to the Lessor and, so long as the Lien of the Trust Indenture shall
\n not have been released, the Indenture Trustee an opinion of counsel, which
\n counsel and opinion shall be reasonably satisfactory to the Owner
\n Participant, to the effect that the country in which such sublessee has its
\n principal office and domicile would give effect to (i) the title of Lessor
\n in and to the Aircraft, (ii) the registry of the Aircraft in the name of
\n Lessor (or Lessee or Sublessee, as “lessee” or “sublessee” as appropriate)
\n and (iii) the priority and validity of the Lien of the Trust Indenture.<\/p>\n
The rights of any Sublessee or other transferee (other than a
\ntransferee where the transfer is of an Engine which is deemed a termination
\nunder Section 9(d)) shall be subject and subordinate to, all the terms of the
\nLease (and any Sublease shall expressly state that it is so subject and
\nsubordinate), including, without limitation, the covenants contained in Section
\n7(a) hereof, the inspection rights contained in<\/p>\n
37<\/p>\n
Section 12 hereof and Lessor’s (and, so long as the Trust Indenture is in
\neffect, the Indenture Trustee’s (as Lessor’s assignee)) rights to repossess the
\nAircraft and to void any Sublease upon such repossession, and Lessee shall
\nremain primarily liable for the performance of all of the terms of the Lease,
\nand the terms of any such Sublease shall not permit any Sublessee to take any
\naction not permitted to be taken by Lessee in the Lease with respect to the
\nAircraft. No pooling agreement, Sublease or other relinquishment of possession
\nof the Airframe or any Engine shall in any way discharge or diminish any of
\nLessee’s obligations to Lessor under this Lease or constitute a waiver of
\nLessor’s rights or remedies hereunder. Lessor agrees, for the benefit of Lessee
\n(and any Sublessee) and for the benefit of any mortgagee or other holder of a
\nsecurity interest in any engine owned by Lessee (or any Sublessee), any lessor
\nof any engine other than an Engine leased to Lessee (or any Sublessee) and any
\nconditional vendor of any engine other than an Engine purchased by Lessee (or
\nany Sublessee) subject to a conditional sale agreement or any other security
\nagreement, that no interest shall be created under the Lease in any engine so
\nowned, leased or purchased and that neither Lessor nor its successors or assigns
\nwill acquire or claim, as against Lessee (or any Sublessee) or any such
\nmortgagee, lessor or conditional vendor or other holder of a security interest
\nor any successor or assignee of any thereof, any right, title or interest in
\nsuch engine as the result of such engine being installed on the Airframe;
\nprovided, however, that such agreement of Lessor shall not be for the benefit of
\nany lessor or secured party of an airframe leased to Lessee (or any Sublessee)
\nor purchased by Lessee (or any Sublessee) subject to a conditional sale or other
\nsecurity agreement or for the benefit of any mortgagee or any other holder of a
\nsecurity interest in an airframe owned by Lessee (or any Sublessee), on which
\nairframe Lessee (or any Sublessee) then proposes to install an Engine, unless
\nsuch lessor, conditional vendor, other secured party or mortgagee has expressly
\nagreed (which agreement may be contained in such lease, conditional sale or
\nother security agreement or mortgage) that neither it nor its successors or
\nassigns will acquire, as against Lessor, any right title or interest in an
\nEngine as a result of such Engine being installed on such airframe. Lessee
\nshall provide the Owner Participant and the Indenture Trustee (A) written notice
\n(which notice shall be given (i) no later than thirty (30) days prior to
\nentering into any Sublease with a term of more than one (1) year or (ii) at any
\ntime prior to (to the extent that the giving of prior notice is reasonably
\npossible) or promptly after entering into any Sublease with a term of one (1)
\nyear or less) of any Sublease and (B) a copy of any Sublease which has a term of
\nmore than one (1) year.<\/p>\n
38<\/p>\n
Lessee shall assign any Sublease to Lessor as security for its
\nobligations hereunder pursuant to an assignment instrument reasonably
\nsatisfactory to Lessor; provided, however, that any such assignment instrument
\nshall provide that the assignment of the Sublease shall only be effective,
\nwithout any further action, immediately upon the occurrence of a Section 14(a),
\n14(b), 14(f) or 14(g) Default or any Event of Default (and such effectiveness
\nshall terminate upon the curing or waiver of the aforesaid Defaults or Events of
\nDefault). In addition, any Sublease entered into by Lessee shall provide that
\nall payments due under such Sublease shall be paid by the Sublessee to Lessor
\nduring the continuance of a Section 14(a), 14(b), 14(f) or 14(g) Default or an
\nEvent of Default.<\/p>\n
In the event that during the term of a Sublease the Aircraft shall
\nhave been maintained under a block-overhaul program, Lessee shall at its option
\neither (i) cause the Aircraft to be returned to the Lessee by the Sublessee no
\nlater than three months prior to the end of the Term and Lessee shall upon such
\nreturn incorporate the Aircraft into Lessee’s continuous maintenance program for
\naircraft of the same make and model and in active commercial service or (ii)
\nupon return of the Aircraft to Lessor pursuant to Section 5(a), Lessee shall
\ncomply with those return conditions set forth in such Section 5(a) applicable in
\nthe event Lessee had adopted a block-overhaul program.<\/p>\n
Any Wet Lease or similar arrangement under which Lessee maintains
\noperational control of the Aircraft shall not constitute a delivery, transfer or
\nrelinquishment of possession for purposes of this section. Lessor acknowledges
\nthat any consolidation or merger of Lessee or conveyance, transfer or lease of
\nall or substantially all of Lessee’s assets permitted by the Operative Documents
\nshall not be prohibited by this Section.<\/p>\n
No Sublease permitted pursuant to this Section shall permit any
\nfurther sub-subleasing of the Aircraft.<\/p>\n
(c) Insignia. On or prior to the Delivery Date, or as soon thereafter
\n ——–
\nas practicable, Lessee agrees to affix and maintain (or cause to be affixed and
\nmaintained) in the cockpit of the Airframe adjacent to the registration
\ncertificate therein and on each Engine a nameplate bearing the inscription:<\/p>\n
Leased From<\/p>\n
State Street Bank and Trust Company, not in its individual capacity
\n but solely as Owner Trustee, Owner and Lessor<\/p>\n
39<\/p>\n
and, for so long as the Airframe and each Engine shall be subject to the Lien of
\nthe Trust Indenture, bearing the following additional inscription:<\/p>\n
Mortgaged To<\/p>\n
First Security Bank of Utah, National Association, as Indenture
\n Trustee<\/p>\n
(such nameplate to be replaced, if necessary, with a nameplate reflecting the
\nname of any successor Lessor or successor Indenture Trustee, in each case as
\npermitted under the Operative Documents).<\/p>\n
Except as above provided, Lessee will not allow the name of any
\nperson, association or corporation to be placed on the Airframe or on any Engine
\nas a designation that might be interpreted as a claim of ownership; provided,
\nthat nothing herein contained shall prohibit Lessee (or any Sublessee) from
\nplacing its customary colors and insignia on the Airframe or any Engine.<\/p>\n
SECTION 8. Replacement and Pooling of Parts;
\n ———————————
\nAlterations, Modifications and Additions.
\n– —————————————- <\/p>\n
(a) Replacement of Parts. Lessee, at its own cost and expense, will
\n ——————–
\npromptly replace or cause to be replaced all Parts which may from time to time
\nbecome worn out, lost, stolen, destroyed, seized, confiscated, damaged beyond
\nrepair or permanently rendered unfit for use for any reason whatsoever, except
\nas otherwise provided in Section 8(c). All replacement Parts shall be owned by
\nLessee free and clear of all Liens (except Permitted Liens, pooling arrangements
\npermitted by Section 8(b) hereof and replacement Parts temporarily installed on
\nan emergency basis) and shall be in as good operating condition as, and shall
\nhave a value and utility substantially equal to, the Parts replaced assuming
\nsuch replaced Parts were in the condition and repair required to be maintained
\nby the terms hereof. All Parts at any time removed from the Airframe or any
\nEngine shall remain the property of Lessor, no matter where located, until such
\ntime as such Parts shall be replaced by Parts which meet the requirements for
\nreplacement Parts specified above. Immediately upon any replacement Part
\nbecoming incorporated or installed in or attached to the Airframe or any Engine,
\nwithout further act (subject only to Permitted Liens and any pooling arrangement
\npermitted by Section 8(b) hereof and except replacement Parts temporarily
\ninstalled on an emergency basis), (i) title shall vest in and such replacement
\nPart shall become the property of Lessor and shall become subject to this Lease
\nand be deemed a Part for all purposes hereof to the same<\/p>\n
40<\/p>\n
extent as the Parts originally incorporated or installed in or attached to the
\nAirframe or such Engine and (ii) the replaced Part shall no longer be the
\nproperty of Lessor and shall no longer be deemed a Part hereunder.<\/p>\n
(b) Pooling of Parts. Any Part removed from the Airframe or any
\n —————-
\nEngine as provided in Section 8(a) hereof may be subjected by Lessee (or any
\nSublessee) to a pooling arrangement of the type which is permitted by Section
\n7(b)(i) hereof; provided, that the Part replacing such removed Part shall be
\nincorporated or installed in or attached to such Airframe or Engine in
\naccordance with Section 8(a) as promptly as practicable after the removal of
\nsuch removed Part. In addition, any replacement Part when incorporated or
\ninstalled in or attached to the Airframe or an Engine in accordance with such
\nSections may be owned by any third party subject to such a pooling arrangement,
\nprovided, that Lessee (or any Sublessee), at its expense, as promptly thereafter
\nas practicable, and in any event within 90 days, either (i) causes such
\nreplacement Part to become the property of Lessor free and clear of all Liens
\nother than Permitted Liens or (ii) replaces such replacement Part with a further
\nreplacement Part owned by Lessee (or any Sublessee) which shall become the
\nproperty of Lessor, free and clear of all Liens other than Permitted Liens.<\/p>\n
(c) Alterations, Modifications and Additions. Lessee, at its own
\n —————————————-
\nexpense, will make (or cause to be made) such alterations and modifications in
\nand additions to the Airframe and Engines as may be required from time to time
\nto be made during the Term so as to comply with any law, rule, regulation or
\norder of any regulatory agency or body of any jurisdiction in which the Aircraft
\nmay then be registered; provided, however, that, after Lessee shall have
\nprovided Lessor and, so long as the Lien of the Trust Indenture shall not have
\nbeen released, the Indenture Trustee, with a certificate of its President, any
\nVice President, the Treasurer or any Assistant Treasurer stating all relevant
\nfacts pertaining thereto, Lessee or any Sublessee may, in good faith, and by
\nappropriate proceedings contest the validity or application of any such law,
\nrule, regulation or order in any reasonable manner which does not jeopardize the
\nright, title and interest of the Lessor or the Owner Participant in and to the
\nAirframe and\/or the Engines, or otherwise materially adversely affect Lessor,
\nthe Owner Participant or the Indenture Trustee but only so long as such
\nproceedings do not involve any risk of criminal liability or any unindemnified
\nmaterial risk of civil liability to Lessor or the Owner Participant for which
\nthe Lessee is not then willing to indemnify Lessor or the Owner Participant in a
\nmanner reasonably satisfactory to such Person. In addition, Lessee (or any
\nSublessee), at its own expense, may from time to time make such<\/p>\n
41<\/p>\n
alterations and modifications in and additions to the Airframe or any Engine as
\nLessee (or any Sublessee) may deem desirable in the proper conduct of its
\nbusiness, including removal of Parts which Lessee (or any Sublessee) deems to be
\nobsolete or no longer suitable or appropriate for use on the Airframe or such
\nEngine (such parts, “Obsolete Parts”); provided that no such alteration,
\nmodification, removal or addition impairs the condition or airworthiness of the
\nAirframe or such Engine, or decreases the value or the utility (or, in regard to
\nthe Airframe, remaining useful life) of the Airframe or such Engine below the
\nvalue or utility (or, in regard to the Airframe, remaining useful life) thereof
\nimmediately prior to such alteration, modification, removal or addition assuming
\nthe Airframe or such Engine was then in the condition required to be maintained
\nby the terms of this Lease. In addition, the value (but not the utility,
\ncondition, airworthiness or, in the case of the Airframe, remaining economic
\nuseful life) of the Airframe or any Engine may be reduced by the value, if any,
\nof Obsolete Parts which shall have been removed so long as the aggregate
\noriginal cost of all Obsolete Parts which shall have been removed and not
\nreplaced shall not exceed $900,000. All Parts incorporated or installed in or
\nattached or added to the Airframe or an Engine as the result of such alteration,
\nmodification or addition (except those parts which Lessee has leased from others
\nand which may be removed by Lessee pursuant to the next sentence) (the
\n“Additional Parts”) shall, without further act, become the property of, and
\ntitle to such Parts shall vest in, Lessor. Notwithstanding the foregoing
\nsentence, Lessee (or any Sublessee), subject to Lessor’s rights under Section
\n5(f) hereof, may, at its own expense, at any time during the Term, so long as no
\nDefault under Section 14(a), (b), (d) (solely with respect to Lessee’s
\nobligations under Section 7(a) or (b)(viii) or Section 8 hereof), (f) or (g) or
\nan Event of Default shall have occurred and be continuing, remove or suffer to
\nbe removed any Additional Part, provided that such Additional Part (i) is in
\naddition to, and not in replacement of or substitution for, any Part originally
\nincorporated or installed in or attached to such Airframe or any Engine at the
\ntime of delivery thereof hereunder or any Part in replacement of or substitution
\nfor any such Part, (ii) is not required to be incorporated or installed in or
\nattached or added to the Airframe or any Engine pursuant to the terms of Section
\n7 hereof or the first sentence of this paragraph (c) and (iii) can be removed
\nfrom the Airframe or such Engine without impairing the condition or
\nairworthiness or diminishing the value or utility (or, in regard to the
\nAirframe, remaining useful life) of the Airframe or such Engine which the
\nAirframe or such Engine would have had at such time had such alteration,
\nmodification or addition not occurred. Upon the removal thereof as provided
\nabove, such Additional Part shall no longer be deemed the property of Lessor or
\npart of the Airframe or Engine from which it was removed. Any<\/p>\n
42<\/p>\n
Additional Part not removed as above provided prior to the return of the
\nAirframe or Engine to Lessor hereunder shall remain the property of Lessor.<\/p>\n
SECTION 9. Early Termination.
\n —————– <\/p>\n
(a) [Intentionally reserved for potential future use].
\n ————————————————- <\/p>\n
(b) Termination for Obsolescence\/Surplus. So long as no Section
\n ————————————
\n14(a), (b), (d) (solely with respect to Lessee’s obligations under Section 7(a)
\nor (b)(viii) or Section 8 hereof), (f) or (g) Default or any Event of Default
\nshall have occurred and be continuing, Lessee shall have the right to terminate
\nthis Lease on the third Business Day prior to any Lease Period Date occurring on
\nor after the Restricted Period if Lessee shall have made a good faith
\ndetermination, which shall be evidenced by a certificate of any financial
\nofficer of Lessee, who is the Treasurer or more senior officer, that the
\nAircraft is surplus to Lessee’s requirements or economically obsolete to Lessee.<\/p>\n
Lessee shall give to Lessor and Indenture Trustee at least one hundred
\nand eighty (180) days revocable (except as provided below) advance written
\nnotice of Lessee’s intention to so terminate this Lease (any such notice, a
\n“Termination Notice”) specifying (i) the date on which Lessee intends to
\nterminate this Lease in accordance with this Section 9(b) (such specified date,
\na “Termination Date”) and (ii) that Lessee has determined that the Aircraft is
\nsurplus to its requirements or economically obsolete to Lessee. Lessee shall
\nexercise this option by arranging for the sale of the Aircraft pursuant to
\nSection 9(c), provided, however, that Lessee may not withdraw its notice if
\nLessor has elected to retain the Aircraft pursuant to Section 9(c) or if the
\nhighest bid obtained by Lessee pursuant to Section 9(c) is greater than the then
\napplicable Termination Value; provided, further, that if no sale of the Aircraft
\nshall have occurred on or prior to the Termination Date and if Lessor shall not
\nhave elected to retain the Aircraft, Lessee’s Termination Notice shall be deemed
\nwithdrawn. The Termination Notice shall become irrevocable twenty-five (25)
\ndays prior to the Termination Date.<\/p>\n
(c) Sale of the Aircraft. In the event that Lessee shall have
\n ——————–
\nproposed to terminate this Lease under Section 9(b), then during the period
\ncommencing with the date of the Termination Notice until the proposed
\nTermination Date Lessee, as non-exclusive agent for Lessor and at no expense to
\nLessor, shall use reasonable efforts to obtain bids in Dollars for the purchase
\nof the Aircraft and, in the event it receives any bid, Lessee shall, within five
\nBusiness Days after receipt thereof and at least ten Business Days prior to the
\nproposed Termination Date,<\/p>\n
43<\/p>\n
advise Lessor in writing of the amount and terms of such bid, and the name and
\naddress of the party or parties (who shall not be Lessee or any Affiliate of
\nLessee or any person with whom Lessee or any such Affiliate has an arrangement
\nor understanding regarding the future use of the Aircraft by Lessee or any such
\nAffiliate but who may be the Owner Participant, any Affiliate thereof or any
\nperson contacted by the Owner Participant) submitting such bid. After Lessee
\nshall have advised Lessor of all bids received, the Owner Participant, any
\nAffiliate thereof or any Person contacted by the Owner Participant may submit a
\nfurther bid or bids to Lessee not later than five Business Days prior to the
\nTermination Date proposed by Lessee (unless Lessee shall have revoked the
\nTermination Notice specifying such proposed Termination Date). Subject to the
\nnext succeeding sentence, on or before the Termination Date, subject to the
\nrelease of all mortgage and security interests with respect to the Aircraft
\nunder the Trust Indenture: (1) Lessee shall deliver the Aircraft, or cause the
\nAircraft to be delivered to the highest bidder as determined below, in the same
\nmanner and in the same condition and otherwise in accordance with all the terms
\nof this Lease as if delivery were made to Lessor pursuant to Section 5, and
\nLessee shall duly transfer to Lessor title to any engine installed on the
\nAirframe and not owned by Lessor, all in accordance with the terms of Section 5
\n(but subject to the provisions of Section 5(e) hereof), (2) Lessor shall comply
\nwith the terms of the Trust Indenture and shall, without recourse or warranty
\n(except as to the absence of Lessor Liens (including for this purpose Liens that
\nwould be Lessor Liens but for the proviso to the definition of Lessor Liens)),
\nsubject to prior or concurrent payment by Lessee of all amounts due under clause
\n(3) of this sentence, sell the Aircraft for cash in Dollars to the entity, if
\nany, which shall have submitted the highest bona fide bid (evaluated on a net
\n —- —-
\ncash basis) therefor, the total selling price realized at such sale to be
\nretained by Lessor, and (3) Lessee shall simultaneously pay or cause to be paid
\nto Lessor in the manner provided in Section 3(e), (A) if the proceeds of the
\nsale of the Aircraft so sold, net of reasonable out-of-pocket costs and expenses
\nincurred by Lessor and the Owner Participant in connection therewith, including,
\nwithout limitation, applicable sales or transfer taxes and legal fees, are less
\nthan the Termination Value for the Aircraft computed as of the Redemption Date,
\nthe difference in Dollars, (B) all unpaid Basic Rent due on or prior to the
\napplicable Redemption Date (other than Basic Rent payable in advance on the
\nRedemption Date, if any) and all unpaid Supplemental Rent with respect to the
\nAircraft due on or prior to such Redemption Date, and (C) Premium, if any, due
\non the Loan Certificates and upon receiving all such payments referred to in
\nclauses (2) and (3) above Lessor simultaneously will transfer to Lessee, without
\nrecourse or warranty (except as to the absence of Lessor Liens (including for<\/p>\n
44<\/p>\n
this purpose Liens that would be Lessor Liens but for the proviso to the
\ndefinition of Lessor Liens)), all of Lessor’s right, title and interest in and
\nto any Engines constituting part of the Aircraft which were not sold with the
\nAircraft. Notwithstanding the preceding sentence, Lessor may, if Lessee has not
\nalready revoked the Termination Notice, elect to retain title to the Aircraft.
\nIf Lessor so elects, Lessor shall give to Lessee written notice of such election
\nat least ten Business Days prior to the Termination Date accompanied by an
\nirrevocable undertaking by the Owner Participant to make available to Lessor for
\npayment to the Indenture Trustee on the Termination Date the amount required to
\npay in full the unpaid Original Amount of the Loan Certificates outstanding on
\nthe applicable Redemption Date together with all other amounts due on such
\nRedemption Date thereunder less amounts to be paid by Lessee as a result of the
\npayment thereof as set forth in the second following sentence. Upon receipt of
\nnotice of such an election by Lessor and the accompanying undertaking by the
\nOwner Participant, Lessee shall cease its efforts to obtain bids as provided
\nabove and shall reject all bids theretofore or thereafter received. On the
\nTermination Date, Lessor shall (subject to the payment by Lessee of all Rent due
\non or prior to the Redemption Date as set forth below) pay in full the unpaid
\nOriginal Amount of the Loan Certificates outstanding on the Redemption Date,
\nplus interest accrued to, or to accrue thereon to but excluding the applicable
\nRedemption Date, together with all other amounts due thereunder less any amounts
\nto be paid by Lessee as a result of the payment thereof and, provided that the
\nLoan Certificates are paid as aforesaid, Lessee shall deliver the Airframe and
\nEngines or engines to Lessor in accordance with Section 5 and shall pay all
\nBasic Rent due on or prior to the Redemption Date (other than Basic Rent payable
\nin advance on the Redemption Date, if any) and all unpaid Supplemental Rent due
\non or prior to such Redemption Date, and Premium, if any, on the Loan
\nCertificates. If no sale shall have occurred on the Termination Date for any
\nreason (including, without limitation, by reason of Lessee’s revocation of its
\nTermination Notice) or Lessor has not, after making its election referred to
\nabove, made the payment contemplated by the preceding sentence and thereby
\ncaused this Lease to terminate, this Lease shall continue in full force and
\neffect as to the Aircraft, Lessee shall be entitled to keep any deposits or
\nother advances received from the proposed purchaser(s) of the Aircraft (without
\nin any way limiting any other rights or remedies against such proposed
\npurchaser(s) available to Lessor or Lessee), Lessee shall pay the reasonable
\nout-of-pocket costs and expenses, including legal fees, incurred by the Owner
\nParticipant, Indenture Trustee and Lessor (unless such failure to terminate this
\nLease is a consequence of the failure of Lessor or the Owner Participant without
\ndue cause to make, or cause to be made, the payment referred to in the
\nimmediately preceding sentence), if<\/p>\n
45<\/p>\n
any, in connection with preparation for such sale and Lessee may give one or
\nmore additional Termination Notices, provided no more than three such notices
\nmay be given during the Term and only one such notice may be given during any
\n365 day period (not counting, in either case, any Termination Notice for a
\nTermination Date on which this Lease does not terminate as a consequence of the
\nfailure of Lessor or the Owner Participant without due cause to make or cause to
\nbe made the payment referred to in the immediately preceding sentence). In the
\nevent of any such sale or such retention of the Aircraft by Lessor and upon
\ncompliance by Lessee with the provisions of this paragraph, the obligation of
\nLessee to pay Basic Rent or any other amounts hereunder shall cease to accrue.
\nUpon payment of all amounts that may then be due hereunder, this Lease shall
\nterminate. Lessor may, but shall be under no duty to, solicit bids, inquire
\ninto the efforts of Lessee to obtain bids or otherwise take any action in
\nconnection with any such sale other than to transfer (in accordance with the
\nforegoing provisions) to the purchaser named in the highest bid certified by
\nLessee to Lessor all of Lessor’s right, title and interest in the Aircraft,
\nagainst receipt of the payments provided herein.<\/p>\n
(d) Termination as to Engines. Upon compliance with the terms of the
\n ————————-
\nTax Indemnity Agreement, Lessee shall have the right at its option at any time
\nduring the Term, on at least 30 days’ prior written notice, to terminate this
\nLease with respect to any Engine. In such event, and prior to the date of such
\ntermination, Lessee shall replace such Engine hereunder by complying with the
\nterms of Section 10(b) to the same extent as if an Event of Loss had occurred
\nwith respect to such Engine (provided that Lessee shall have no right to pay
\nStipulated Loss Value with respect to such Engine), and Lessor shall transfer
\ntitle to the replaced Engine as provided in Section 5(b). No termination of
\nthis Lease with respect to any Engine as contemplated by this Section 9(d) shall
\nresult in any reduction of Basic Rent.<\/p>\n
SECTION 10. Loss, Destruction, Requisition, etc. (a) Event of Loss
\n ———————————— ————-
\nwith Respect to the Aircraft. Upon the occurrence of an Event of Loss with
\n– —————————-
\nrespect to the Airframe or the Airframe and the Engines and\/or engines then
\ninstalled thereon, Lessee shall (1) forthwith (and in any event, within fifteen
\ndays after such occurrence) give Lessor written notice of such Event of Loss and
\n(2) within 60 days after such occurrence, give Lessor written notice of its
\nelection to perform one of the following options (it being understood that the
\nfailure to give such notice shall be deemed to be an election of the option set
\nforth in clause (i) below):<\/p>\n
46<\/p>\n
(i) Not later than the earlier of (x) the Business Day next
\n succeeding the 100th day following the occurrence of such Event of Loss or
\n (y) the third Business Day following receipt by the loss payee of the
\n insurance proceeds in respect to such Event of Loss (but not earlier than
\n the first Business Day next succeeding the 65th day following the
\n occurrence of such Event of Loss) (the applicable day being the “Loss
\n Payment Date”), Lessee shall, to the extent not paid to Lessor or Indenture
\n Trustee, as the case may be, as insurance proceeds, pay or cause to be paid
\n to Lessor as specified in Section 3(e) hereof, (A) the Stipulated Loss
\n Value of the Aircraft computed as of the Stipulated Loss Value Date
\n occurring on or immediately following the date of such Event of Loss, plus
\n (B) if such Stipulated Loss Value Date is a Lease Period Date, Basic Rent
\n due on such Lease Period Date (excluding Basic Rent payable in advance on
\n such Lease Period Date), plus (C) unpaid Supplemental Rent with respect to
\n the Aircraft due on or prior to the date of payment, plus (D) interest on
\n such Stipulated Loss Value at the Debt Rate from and including such
\n Stipulated Loss Value Date to, but not including, the date of any advance
\n payment in respect of Stipulated Loss Value as provided below, and
\n thereafter on the unpaid balance of such Stipulated Loss Value from and
\n including the date of such advance payment to, but excluding, the date such
\n Stipulated Loss Value is paid in full; provided, however, that if a Lease
\n Period Date shall occur after the Stipulated Loss Value Date with respect
\n to which Stipulated Loss Value is determined but prior to the date of such
\n payment of the sum of the amounts specified in clauses (A), (B), (C) and
\n (D) above or if Basic Rent is payable in advance on the Stipulated Loss
\n Value Date, Lessee shall pay on such Lease Period Date an amount equal to
\n the Basic Rent that would have been due on such Lease Period Date if such
\n Event of Loss had not occurred, which amount shall be credited as an
\n advance against the amounts payable pursuant to clauses (A), (B), (C) and
\n (D) above, or<\/p>\n
(ii) Not later than the Business Day next succeeding the 100th day
\n following the occurrence of such Event of Loss, Lessee shall, provided that
\n no Section 14(a), (b), (f) or (g) Default or any Event of Default shall
\n have occurred and be continuing, substitute an aircraft or an airframe or
\n an airframe and one or more engines, as the case may be in accordance with
\n the terms hereof, provided that if Lessee shall have elected to make a
\n substitution under this clause (ii) and shall fail for any reason to make
\n such substitution in accordance with the terms hereof, Lessee shall make
\n the payments required by clause (i) above as and when due thereunder.<\/p>\n
47<\/p>\n
At such time as Lessor shall have received the sum of the amounts
\nspecified in clauses (A), (B), (C) and (D) of subparagraph (i) above, together
\nwith all other amounts that then may be due hereunder (including, without
\nlimitation, all Basic Rent due on or before the date of such payment (other than
\nBasic Rent payable in advance, if any, on such date)), under the Participation
\nAgreement and under the Tax Indemnity Agreement, (1) the obligation of Lessee to
\npay the installments of Basic Rent, Supplemental Rent, Stipulated Loss Value,
\nTermination Value or any other amount shall cease to accrue, (2) this Lease
\nshall terminate, (3) Lessor will comply with the terms of the Trust Indenture
\nand transfer to or at the direction of Lessee, without recourse or warranty
\n(except as to the absence of Lessor Liens (including for this purpose Liens that
\nwould be Lessor Liens but for the proviso to the definition of Lessor Liens)),
\nall Lessor’s right, title and interest in and to the Airframe and the Engines
\n“as-is, where-is” and furnish to or at the direction of Lessee, at Lessee’s
\nexpense, a bill of sale in form and substance reasonably satisfactory to Lessee
\n(or any Sublessee), evidencing such transfer, and (4) Lessee will be subrogated
\nto all claims of Lessor if any against third parties (other than Lessor’s or the
\nOwner Participant’s insurers under policies independently maintained at its own
\ncost and expense in accordance with Section 11(e) hereof), but only to the
\nextent the same relate to physical damage to or loss of the Airframe and any
\nEngines which were subject to such Event of Loss.<\/p>\n
In the event Lessee shall elect to substitute an aircraft (or an
\nairframe or an airframe and one or more engines, as the case may be) Lessee
\nshall (A) convey or cause to be conveyed to Lessor an aircraft (or an airframe
\nor an airframe and an engine which, together with the Engines or Engine
\nconstituting a part of the Aircraft but not installed thereon at the time of
\nsuch Event of Loss, constitute the Aircraft) free and clear of all Liens (other
\nthan Permitted Liens) and having at least the fair market value, utility and
\nremaining useful life and being in as good an operating condition as, the
\nAircraft subject to such Event of Loss assuming that the Aircraft had been
\nmaintained in accordance with this Lease; provided that any aircraft or airframe
\nso substituted hereunder shall be of the same make and model or improved model
\nas those initially leased hereunder and any engine substituted hereunder shall
\nbe an Acceptable Alternate Engine and (B) prior to or at the time of any such
\nsubstitution, Lessee (or any Sublessee), at its own expense, will (1) furnish
\nLessor with a full warranty bill of sale and a FAA bill of sale, in form and
\nsubstance reasonably satisfactory to the Owner Participant, evidencing such
\ntransfer of title, (2) cause a Lease Supplement and a Trust Supplement to be
\nduly executed by Lessee and filed for recording pursuant to the Federal Aviation
\nAct, or the applicable laws, rules and regulations of any other<\/p>\n
48<\/p>\n
jurisdiction in which the Airframe may then be registered, and cause a financing
\nstatement or statements or other requisite documents of a similar nature
\n(including precautionary filings) to be filed in such place or places as
\nnecessary in order to perfect the security interests therein created by or
\npursuant to the Trust Indenture (and, with regard to precautionary filings, this
\nLease), (3) furnish the Owner Participant with such evidence of Lessor’s title
\nto such replacement aircraft and of compliance with the insurance provisions of
\nSection 11 with respect to such substituted property as Lessor, in its
\nindividual capacity, and the Owner Participant may reasonably request, (4)
\nprovide Owner Participant an opinion of outside tax counsel, which opinion and
\ncounsel shall be satisfactory to Owner Participant, to the effect that such
\nsubstitution will not result in any adverse tax consequences (including under
\nSection 861 of the Code as then in effect) to Lessor and\/or the Owner
\nParticipant (it being understood that if such opinion cannot be given Lessee may
\nindemnify Owner Participant for such adverse tax consequences in lieu of such
\nopinion in a manner satisfactory in form and substance to the Owner
\nParticipant), (5) provide Lessor, Owner Participant and the Indenture Trustee an
\nopinion of counsel, which counsel and opinion shall be reasonably acceptable to
\nLessor, in its individual capacity, and the Owner Participant, to the effect
\nthat Lessor and the Indenture Trustee (as assignee of all right, title and
\ninterest of Lessor under the Lease) shall be entitled to the benefits and
\nprotections of Section 1110 of the Bankruptcy Code with respect to the aircraft
\nsubstituted hereunder, (6) provide an opinion of counsel to Lessor and the
\nIndenture Trustee, which opinion and counsel shall be reasonably acceptable to
\nthe Lessor, in its individual capacity, and the Owner Participant, to the effect
\nthat title to such replacement aircraft has been duly conveyed to Lessor free
\nand clear of all Liens except Permitted Liens and that such replacement aircraft
\nis duly subjected to the Lien of the Trust Indenture and (7) provide Lessor,
\nOwner Participant and Indenture Trustee all the documentation required (or,
\nfollowing the termination of the Trust Indenture, all the documentation that
\nprior to such termination would have been required) to be provided by it
\npursuant to Section 5.01(b) of the Trust Indenture, and Lessor simultaneously
\nwill comply with the terms of the Trust Indenture and transfer to or at the
\ndirection of Lessee, without recourse or warranty (except as to the absence of
\nLessor Liens (including for this purpose Liens that would be Lessor Liens but
\nfor the proviso to the definition of Lessor Liens)), all of Lessor’s right,
\ntitle and interest, if any, in and to the Aircraft or the Airframe and one or
\nmore Engines, as the case may be, “as-is, where-is” with respect to which such
\nEvent of Loss occurred and furnish to or at the direction of Lessee, at Lessee’s
\nexpense, a bill of sale in form and substance reasonably satisfactory to Lessee,
\nevidencing such transfer. Lessee will be subrogated to<\/p>\n
49<\/p>\n
all claims of Lessor, if any, against third parties (other than Lessor’s or the
\nOwner Participant’s insurers under policies independently maintained at their
\nown cost and expense in accordance with Section 11(e) hereof) but only to the
\nextent the same relate to physical damage to or loss of the Airframe and any
\nEngine which were subject to such Event of Loss. For all purposes hereof, the
\nproperty so substituted shall after such transfer be deemed part of the property
\nleased hereunder and shall be deemed an “Aircraft,” “Airframe” and “Engine,” as
\nthe case may be, as defined herein. No Event of Loss with respect to the
\nAirframe or the Airframe and the Engines or engines then installed thereon for
\nwhich substitution has been elected pursuant to Section 10(a)(ii) hereof shall
\nresult in any reduction in Basic Rent.<\/p>\n
(b) Event of Loss with Respect to an Engine. Upon the occurrence of
\n —————————————
\nan Event of Loss with respect to an Engine under circumstances in which there
\nhas not occurred an Event of Loss with respect to the Airframe, Lessee shall
\nforthwith (and in any event, within fifteen days after such occurrence) give
\nLessor written notice thereof and shall, within forty-five (45) days after the
\noccurrence of such Event of Loss, convey or cause to be conveyed to Lessor, as
\nreplacement for the Engine with respect to which such Event of Loss occurred,
\ntitle to an Acceptable Alternate Engine free and clear of all Liens (other than
\nPermitted Liens, which engine may upon its transfer to Lessor become subject to
\nany and all Permitted Liens) and having a value and utility at least equal to,
\nand being in as good an operating condition as and having been maintained in the
\nsame manner as, the Engine subject to such Event of Loss (assuming that such
\nEngine had been maintained in accordance with this Lease); provided, however,
\nupon written notice to Lessee given within 20 days after Lessor has received
\nnotice of such Event of Loss, the Lessor may require Lessee to pay with respect
\nto the Engine subject to such Event of Loss within 45 days after the occurrence
\nof such Event of Loss (provided that in no event shall such payment be required
\nto be made prior to the Commencement Date) an amount equal to (A) Engine Cost
\nmultiplied by the percentage specified in Exhibit C hereto opposite the
\nStipulated Loss Value Date occurring on or immediately following the date of
\nsuch Event of Loss, plus (B) interest on the amount determined pursuant to
\nclause (A) above at the Debt Rate from and including such Stipulated Loss Value
\nDate to, but excluding, the date such amount is paid in full; and provided,
\nfurther, if Lessee pays such Stipulated Loss Value and interest, then, subject
\nto Section 5(e), Lessee shall only be obligated to return the Aircraft to Lessor
\nwith any Engine attached thereto with respect to which Lessee has not paid
\nStipulated Loss Value pursuant to this Section 10(b) at any time that Lessee is
\nrequired to return the Aircraft to Lessor pursuant to the terms hereof; provided<\/p>\n
50<\/p>\n
further, however, that, in lieu of paying such Stipulated Loss Value and
\ninterest, Lessee may replace the Engine in accordance with this Section 10(b) if
\nLessee provides to the Owner Participant either: (x) an opinion of outside tax
\ncounsel, which opinion and counsel shall be satisfactory to the Owner
\nParticipant, to the effect that such substitution will not result in any adverse
\ntax consequences to the Owner Participant, or (y) an indemnity, satisfactory in
\nform and substance to the Owner Participant, for any adverse tax consequences
\nresulting from such substitution. Prior to or at the time of any such
\nconveyance, Lessee, at its own expense, will (i) furnish Lessor with a warranty
\n(as to title) bill of sale, in form and substance reasonably satisfactory to
\nLessor, with respect to such replacement engine, (ii) cause a Lease Supplement
\nand Trust Supplement to be duly executed by Lessee and to be filed for recording
\npursuant to the Federal Aviation Act, or the applicable laws, rules and
\nregulations of any other jurisdiction in which the Airframe may then be
\nregistered, and cause a financing statement or statements or other requisite
\ndocuments of a similar nature (including precautionary filings) to be filed in
\nsuch place or places as necessary in order to perfect the security interests
\ntherein created by or pursuant to the Trust Indenture (and, with regard to
\nprecautionary filings, this Lease), (iii) furnish Lessor with such evidence of
\nLessor’s title to such Acceptable Alternate Engine and of compliance with the
\ninsurance provisions of Section 11 hereof with respect to such replacement
\nengine as Lessor, in its individual capacity, or the Owner Participant may
\nreasonably request, (iv) provide Lessor and the Indenture Trustee an opinion of
\nLessee’s counsel which counsel and opinion shall be reasonably satisfactory to
\nLessor, in its individual capacity, or the Owner Participant to the effect that
\ntitle to such Acceptable Alternate Engine has been duly conveyed to Lessor free
\nand clear of all Liens except Permitted Liens and that such Acceptable Alternate
\nEngine is duly subjected to the Lien of the Trust Indenture, and (v) provide
\nLessor, Owner Participant and Indenture Trustee all the documentation required
\n(or, following the termination of the Trust Indenture, all the documentation
\nthat prior to such termination would have been required) to be provided by it
\npursuant to Section 5.01(b) of the Trust Indenture, and Lessor will comply with
\nthe terms of the Trust Indenture and transfer to or at the direction of Lessee
\nwithout recourse or warranty (except as to absence of Lessor Liens (including
\nfor this purpose Liens that would be Lessor Liens but for the proviso to the
\ndefinition of Lessor Liens)) all of Lessor’s right, title and interest, if any,
\nin and to (1) the Engine with respect to which such Event of Loss occurred and
\nfurnish to or at the direction of Lessee, and at Lessee’s expense, a bill of
\nsale in form and substance reasonably satisfactory to Lessee, evidencing such
\ntransfer and (2) all claims, if any, against third parties (other than Lessor’s
\nor the<\/p>\n
51<\/p>\n
Owner Participant’s insurers under policies independently maintained at their
\nown cost and expense in accordance with Section 11(e) hereof), for damage to or
\nloss of the Engine subject to such Event of Loss, and such Engine shall
\nthereupon cease to be an Engine leased hereunder. For all purposes hereof, each
\nsuch replacement engine shall, after such conveyance, be deemed part of the
\nproperty leased hereunder, and shall be deemed an “Engine.” Except to the
\nextent Lessor’s Cost is reduced pursuant to the definition thereof, no Event of
\nLoss with respect to an Engine under the circumstances contemplated by the terms
\nof this paragraph (b) shall result in any reduction in Basic Rent.<\/p>\n
(c) Application of Payments from Governmental Authorities for
\n ———————————————————
\nRequisition of Title, etc. Any payments (other than insurance proceeds the
\n– ————————–
\napplication of which is provided for in Section 11) received at any time by
\nLessor or by Lessee from any governmental authority or other Person with respect
\nto an Event of Loss, other than a requisition for use by the United States
\nGovernment or other government of registry of the Aircraft or any
\ninstrumentality or agency of any thereof not constituting an Event of Loss, will
\nbe applied as follows:<\/p>\n
(i) if payments are received with respect to the Airframe (or the
\n Airframe and any Engine or engines then installed thereon), (A) unless the
\n same are replaced pursuant to the last paragraph of Section 10(a), after
\n reimbursement of Lessor (as provided in Section 7.01 of the Trust
\n Agreement) and the Owner Participant for reasonable costs and expenses, so
\n much of such payments remaining as shall not exceed the Stipulated Loss
\n Value and the other amounts payable under Section 10(a) hereof required to
\n be paid by Lessee pursuant to Section 10(a), shall be applied in reduction
\n of Lessee’s obligation to pay Stipulated Loss Value and the other amounts
\n payable under Section 10(a) hereof, if not already paid by Lessee, or, if
\n already paid by Lessee, shall be applied to reimburse Lessee for its
\n payment of Stipulated Loss Value and such other amounts, and following the
\n foregoing application, the balance, if any, of such payments shall be
\n distributed between Lessee and Lessor as their respective interests may
\n appear; or (B) if such property is replaced pursuant to the last paragraph
\n of Section 10(a), such payments shall be paid over to or retained by,
\n Lessee; provided, that Lessee shall have fully performed or, concurrently
\n therewith, will fully perform the terms of the last paragraph of Section
\n 10(a) with respect to the Event of Loss for which such payments are made;
\n and<\/p>\n
(ii) if such payments are received with respect to an Engine under
\n circumstances contemplated by Section 10(b) hereof, (A) unless the same is
\n replaced pursuant to the<\/p>\n
52<\/p>\n
terms of Section 10(b), after reimbursement of Lessor (as provided for in
\n Section 7.01 of the Trust Agreement) and the Owner Participant for
\n reasonable costs and expenses, so much of such payments remaining as shall
\n not exceed the amounts payable under Section 10(b) hereof by Lessee, shall
\n be applied in reduction of Lessee’s obligation to pay the same, if not
\n already paid by Lessee, or if already paid by Lessee, shall be applied to
\n reimburse Lessee for its payment of such amounts and following the
\n foregoing application, the balance, if any, shall be paid to Lessee; or (B)
\n if such property is replaced pursuant to Section 10(b), such payments shall
\n be paid over to, or retained by, Lessee, provided that Lessee shall have
\n fully performed, or concurrently therewith will perform, the terms of
\n Section 10(b) with respect to the Event of Loss for which such payments are
\n made.<\/p>\n
(d) Requisition for Use of the Aircraft by the United States
\n ——————————————————–
\nGovernment or Government of Registry of the Aircraft. In the event of the
\n– —————————————————-
\nrequisition for use of the Airframe and the Engines or engines installed on the
\nAirframe during the Term by the United States Government or any other government
\nof registry of the Aircraft or any instrumentality or agency of any thereof,
\nLessee shall promptly notify Lessor of such requisition, and all of Lessee’s
\nobligations under this Lease Agreement with respect to the Aircraft shall
\ncontinue to the same extent as if such requisition had not occurred (unless
\ndeemed prior to the end of the Term an Event of Loss in which case the foregoing
\nprovisions of this Section 10 shall be applicable). If Lessee shall fail to
\nreturn the Aircraft (i) on or before the end of the Term, in the case of a
\nrequisition by the United States government or any agency or instrumentality
\nthereof or (ii) within the earlier of the end of the Term or two years after
\nsuch requisition in the case of a requisition for use by the government of
\nregistry of the Aircraft or any agency or instrumentality thereof (other than
\nthe United States government or any agency or instrumentality thereof), such
\nfailure shall constitute an Event of Loss which shall be deemed to have occurred
\nin the case of clause (i) on the last day of the Term, and in the case of clause
\n(ii), on the earlier of the last day of the Term or the expiration of such two-
\nyear period, provided, however, that Lessor may notify Lessee in writing on or
\nbefore the twentieth day prior to the last day of the Term that, in the event
\nLessee shall fail by reason of such requisition to return the Airframe and such
\nEngines or engines on or before the end of the Term, such failure shall not be
\ndeemed an Event of Loss. Upon the giving of such notice and such failure to
\nreturn by the end of the Term, Lessee shall be relieved of all of its
\nobligations pursuant to the provisions of Section 5 (but not under any other
\nSection), except that if any engine not owned by Lessor shall then be installed
\non the<\/p>\n
53<\/p>\n
Airframe, Lessee will, at no cost to Lessor, furnish, or cause to be furnished,
\nto Lessor a full warranty (as to title) bill of sale with respect to each such
\nengine, in form and substance reasonably satisfactory to Lessor, in its
\nindividual capacity, and the Owner Participant (together with an opinion of
\ncounsel (which may be Lessee’s General Counsel) to the effect that such full
\nwarranty bill of sale has been duly authorized and delivered and is enforceable
\nin accordance with its terms and that such engines are free and clear of Liens
\nother than Lessor Liens (including for this purpose Liens that would be Lessor
\nLiens but for the proviso to the definition of Lessor Liens), against receipt
\nfrom Lessor, at Lessee’s expense, of a bill of sale evidencing the transfer,
\nwithout recourse or warranty (except as to the absence of Lessor Liens
\n(including for this purpose Liens that would be Lessor Liens but for the proviso
\nto the definition of Lessor Liens)), by Lessor to Lessee or its designee of all
\nof Lessor’s right, title and interest in and to any Engine constituting part of
\nthe Aircraft but not then installed on the Airframe. All payments received by
\nLessor or Lessee from such government for the use of such Airframe and Engines
\nor engines during the Term shall be paid over to, or retained by, Lessee (or, if
\ndirected by Lessee, any Sublessee); and all payments received by Lessor or
\nLessee from such government for the use of such Airframe and Engines or engines
\nafter the end of the Term shall be paid over to, or retained by, Lessor unless
\nLessee shall have exercised its purchase option hereunder, or there is a deemed
\nEvent of Loss hereunder, in which case such payments shall be made to Lessee.<\/p>\n
(e) Requisition for Use of an Engine by the United States Government
\n —————————————————————-
\nor the Government of Registry of the Aircraft. In the event of the requisition
\n– ———————————————
\nfor use of an Engine during the Term by the United States Government or any
\nother government of registry of the Aircraft or any agency or instrumentality of
\nany thereof (other than in the circumstances contemplated by subsection (d))
\nwhich shall have continued for more than 180 days or, if earlier, until the end
\nof the Term, Lessee shall replace (or cause any Sublessee to replace) such
\nEngine hereunder and Lessor and Lessee (or Sublessee as the case may be) shall
\ncomply with the terms of Section 10(b) to the same extent as if an Event of Loss
\nhad occurred with respect to such Engine. Upon compliance with Section 10(b)
\nhereof, any payments received by Lessor or Lessee from such government with
\nrespect to such requisition shall be paid over to, or retained by Lessee.<\/p>\n
(f) Application of Payments During Existence of Events of Default.
\n ————————————————————-
\nAny amount referred to in this Section 10 which is payable to or retainable by
\nLessee (or any Sublessee) shall not be paid to or retained by Lessee (or any
\nSublessee) if at the time of such payment or retention a Default or an Event of<\/p>\n
54<\/p>\n
Default shall have occurred and be continuing, but shall be held by or paid over
\nto Lessor as security for the obligations of Lessee (or such Sublessee) under
\nthis Lease and applied against Lessee’s obligations hereunder as and when due.
\nAt such time as there shall not be continuing any such Default or Event of
\nDefault, such amount shall be paid to Lessee to the extent not previously
\napplied in accordance with the preceding sentence.<\/p>\n
SECTION 11. Insurance. (a) Public Liability and Property Damage
\n ——— ————————————
\nInsurance. (1) Except as provided in clause (2) of this Section 11(a), and
\n– ———
\nsubject to self-insurance to the extent permitted by Section 11(d) hereof,
\nLessee will carry or cause to be carried with respect to the Aircraft at its or
\nany Sublessee’s expense (i) comprehensive airline liability (including, without
\nlimitation, passenger, contractual, bodily injury, and property damage
\nliability) insurance (exclusive of manufacturer’s product liability insurance)
\nand (ii) cargo liability insurance, (A) in an amount not less than the greater
\nof (x) the amounts of comprehensive airline liability insurance from time to
\ntime applicable to aircraft owned or leased, and operated by Lessee of the same
\ntype as the Aircraft and (y) $450,000,000 per occurrence, (B) of the type and
\ncovering the same risks as from time to time are applicable to aircraft owned or
\nleased, and operated by Lessee of the same type as the Aircraft, and (C) which
\nis maintained in effect with insurers of recognized reputation and
\nresponsibility; provided, however, that Lessee need not maintain cargo liability
\ninsurance, or may maintain such insurance in an amount less than $450,000,000
\nper occurrence, as long as the amount of cargo liability insurance, if any,
\nmaintained with respect to the Aircraft is the same as the cargo liability
\ninsurance, if any, maintained for other Boeing Model 777-222 aircraft owned or
\nleased, and operated by Lessee.<\/p>\n
(2) During any period that the Airframe or an Engine, as the case may
\nbe, is on the ground and not in operation, Lessee may carry or cause to be
\ncarried as to such non-operating property, in lieu of the insurance required by
\nclause (1) above, and subject to the self-insurance to the extent permitted by
\nSection 11(d) hereof, insurance by insurers of recognized reputation and
\nresponsibility otherwise conforming with the provisions of clause (1) except
\nthat (A) the amounts of coverage shall not be required to exceed the amounts of
\ncomprehensive airline liability insurance from time to time applicable to
\nproperty owned or leased by Lessee of the same type as such non-operating
\nproperty and which is on the ground and not in operation; and (B) the scope of
\nthe risks covered and the type of insurance shall be the same as from time to
\ntime shall be applicable to property owned or leased by Lessee of the same type<\/p>\n
55<\/p>\n
as such non-operating property and which is on the ground and not in operation.<\/p>\n
(b) Insurance Against Loss or Damage to the Aircraft. (1) Except as
\n ————————————————
\nprovided in clause (2) of this Section 11(b), and subject to the provisions of
\nSection 11(d) hereof permitting self-insurance, Lessee shall maintain or cause
\nto be maintained in effect, at its or any Sublessee’s expense, with insurers of
\nrecognized reputation and responsibility, all-risk aircraft hull insurance
\ncovering the Aircraft and fire and extended coverage and all-risk aircraft hull
\ninsurance covering Engines and Parts while temporarily removed from the Aircraft
\nand not replaced by similar components (including, without limitation, aircraft
\nwar risk and governmental confiscation and expropriation (other than by the
\ngovernment of registry of the Aircraft) and hijacking insurance, if and to the
\nextent the same is maintained by Lessee (or any Sublessee) with respect to other
\naircraft owned or leased, and operated by Lessee (or such Sublessee) on the same
\nroutes); provided, that such insurance shall at all times while the Aircraft is
\nsubject to this Lease be for an amount (taking into account self-insurance to
\nthe extent permitted by Section 11(d) hereof) not less than the Stipulated Loss
\nValue for the Aircraft; and provided further, that subject to compliance with
\nSection 11(d) hereof, such all-risk property damage insurance covering Engines
\nand Parts while temporarily removed from the Airframe or an airframe of (in the
\ncase of Parts) an Engine need be obtained only to the extent available at
\nreasonable cost (as reasonably determined by Lessee). In the case of a loss
\nwith respect to an engine (other than an Engine) installed on the Airframe in
\ncircumstances which do not constitute an Event of Loss with respect to the
\nAirframe, Lessor shall promptly remit any payment made to it of any insurance
\nproceeds in respect of such loss to Lessee or any other third party that is
\nentitled to receive such proceeds.<\/p>\n
Except during a period when a Section 14(a), (b), (f) or (g) Default
\nor an Event of Default has occurred and is continuing, all losses will be
\nadjusted by Lessee with the insurers giving due regard to Lessor’s interest. As
\nbetween Lessor and Lessee, it is agreed that all proceeds of insurance
\nmaintained in compliance with the preceding paragraph and received as the result
\nof the occurrence of an Event of Loss will be applied as follows:<\/p>\n
(x) if such payments are received with respect to the Airframe
\n (or the Airframe and the Engines installed thereon), (i) unless such
\n property is replaced pursuant to the last paragraph of Section 10(a)
\n hereof, so much of such payments remaining, after reimbursement of Lessor
\n (as provided in Section 7.01 of the Trust Agreement) and the<\/p>\n
56<\/p>\n
Owner Participant for reasonable costs and expenses, as shall not exceed
\n the Stipulated Loss Value and the other amounts payable under Section 10(a)
\n hereof required to be paid by Lessee pursuant to Section 10(a) hereof shall
\n be applied in reduction of Lessee’s obligation to pay such Stipulated Loss
\n Value and the other amounts payable under Section 10(a) hereof, if not
\n already paid by Lessee, or, if already paid by Lessee, shall be applied to
\n reimburse Lessee for its payment of such Stipulated Loss Value and the
\n other amounts payable under Section 10(a) hereof, and the balance, if any,
\n of such payments remaining thereafter will be paid over to, or retained by,
\n Lessee (or if directed by Lessee, any Sublessee); or (ii) if such property
\n is replaced pursuant to the last paragraph of Section 10(a) hereof, such
\n payments shall be paid over to, or retained by, Lessee (or if directed by
\n Lessee, any Sublessee), provided that Lessee shall have fully performed or,
\n concurrently therewith, will fully perform the terms of the last paragraph
\n of Section 10(a) hereof with respect to the Event of Loss for which such
\n payments are made; and<\/p>\n
(y) if such payments are received with respect to an Engine under
\n the circumstances contemplated by Section 10(b) hereof, so much of such
\n payments remaining after reimbursement of Lessor and the Owner Participant
\n for reasonable costs and expenses shall be paid over to, or retained by,
\n Lessee (or if directed by Lessee, any Sublessee), provided that Lessee
\n shall have fully performed or, concurrently therewith, will fully perform
\n the terms of Section 10(b) hereof with respect to the Event of Loss for
\n which such payments are made.<\/p>\n
(2) During any period that the Aircraft is on the ground and not in
\noperation, Lessee may carry or cause to be carried, in lieu of the insurance
\nrequired by clause (1) above, and subject to the self-insurance to the extent
\npermitted by Section 11(d) hereof, insurance otherwise conforming with the
\nprovisions of said clause (1) except that the scope of the risks and the type of
\ninsurance shall be the same as from time to time applicable to aircraft owned or
\nleased by Lessee of the same type as the Aircraft similarly on the ground and
\nnot in operation, provided that, subject to the self-insurance to the extent
\npermitted by Section 11(d) hereof, Lessee shall maintain insurance against risk
\nof loss or damage to the Aircraft in an amount at least equal to the Stipulated
\nLoss Value of the Aircraft during such period that the Aircraft is on the ground
\nand not in operation.<\/p>\n
(c) Reports, etc. Lessee will furnish, or cause to be furnished, to
\n ————
\nLessor, the Indenture Trustee, the Owner<\/p>\n
57<\/p>\n
Participant and, so long as the Pass Through Trustees are the Certificate
\nHolders, each Pass Through Trustee, on or before the Delivery Date, and each
\nannual anniversary of the Delivery Date during the Term, a report, signed by
\nRollins Hudig Hall of Illinois, Inc. or any other independent firm of insurance
\nbrokers reasonably acceptable to Lessor which brokers may be in the regular
\nemploy of Lessee (the “Insurance Brokers”), describing in reasonable detail the
\nhull and liability insurance (and property insurance for detached engines and
\nparts) then carried and maintained with respect to the Aircraft and stating the
\nopinion of such firm that (a) such insurance complies with the terms hereof and
\n(b) that such insurance together with any self-insurance permitted hereby
\nprovides coverage that are in substantially similar forms, are of such types and
\nhave limits within the range of limits as are customarily carried by U.S.
\ncarriers; provided, however, that the opinion set forth in clause (b) shall not
\nbe required if the Insurance Broker then generally does not provide such an
\nopinion or will provide such an opinion for material additional cost; and
\nprovided further that all information contained in the foregoing report shall
\nnot be made available by Lessor, the Indenture Trustee, the Pass Through
\nTrustees or the Owner Participant to anyone except (A) to prospective and
\npermitted transferees of Lessor’s, the Owner Participant’s, any Pass Through
\nTrustee’s or the Indenture Trustee’s interest or their respective counsel,
\nindependent certified public accountants, independent insurance brokers or other
\nagents, who agree to hold such information confidential, (B) to Lessor’s, Owner
\nParticipant’s, any Pass Through Trustee’s or the Indenture Trustee’s counsel or
\nindependent certified public accountants, independent insurance brokers or other
\nagents who agree to hold such information confidential, (C) as may be required
\nby any statute, court or administrative order or decree or governmental ruling
\nor regulation, or (D) as may be necessary for purposes of protecting the
\ninterest of any such Person or for enforcement of this Lease by Lessor or the
\nIndenture Trustee; provided, however, that any and all disclosures permitted by
\nclauses (C) or (D) above shall be made only to the extent necessary to meet the
\nspecific requirements or needs of the Persons to whom such disclosures are
\nhereby permitted. Lessee will cause such Insurance Broker to agree to advise
\nLessor, the Indenture Trustee, the Owner Participant and, so long as the Pass
\nThrough Trustees are the Certificate Holders, each Pass Through Trustee in
\nwriting of any act or omission on the part of Lessee of which it has knowledge
\nand which might invalidate or render unenforceable, in whole or in part, any
\ninsurance on the Aircraft and to advise such Persons in writing at least 30 days
\n(7 days in the case of war risk and allied perils coverage) prior to the
\ncancellation or material adverse change of any insurance maintained pursuant to
\nthis Section 11, provided that if the notice period specified above is not
\nreasonably obtainable, the<\/p>\n
58<\/p>\n
Insurance Broker shall provide for as long a period of prior notice as shall
\nthen be reasonably obtainable. In addition, Lessee will also cause such
\nInsurance Broker to deliver to Lessor, the Indenture Trustee, the Owner
\nParticipant and, so long as the Pass Through Trustees are the Certificate
\nHolders, each Pass Through Trustee, on or prior to the date of expiration of any
\ninsurance policy referenced in a previously delivered certificate of insurance,
\na new certificate of insurance, substantially in the same form as delivered by
\nLessee to such parties on the Delivery Date except for the changes in the report
\nor the coverage consistent with the terms hereof. In the event that Lessee or
\nany Sublessee shall fail to maintain or cause to be maintained insurance as
\nherein provided, Lessor, the Indenture Trustee or, so long as the Pass Through
\nTrustees are the Certificate Holders, each Pass Through Trustee may at its sole
\noption, but shall be under no duty to, provide such insurance and, in such
\nevent, Lessee shall, upon demand, reimburse Lessor, the Indenture Trustee or
\nsuch Pass Through Trustee, as Supplemental Rent, for the cost thereof to Lessor,
\nsuch Pass Through Trustee or the Indenture Trustee, as the case may be;
\nprovided, however, that no exercise by Lessor, a Pass Through Trustee or the
\nIndenture Trustee, as the case may be, of said option shall affect the
\nprovisions of this Lease, including the provisions that failure by Lessee to
\nmaintain the prescribed insurance shall constitute an Event of Default.<\/p>\n
(d) Self-Insurance. Lessee may self-insure the risks required to be
\n ————–
\ninsured against pursuant to this Section 11 under a program applicable to all
\naircraft (whether owned or leased) in Lessee’s fleet, but in no case shall the
\naggregate amount of such self-insurance in regard to Sections 11(a) and 11(b)
\nhereof exceed for any calendar year, with respect to all of the aircraft
\n(whether owned or leased) in Lessee’s fleet (including, without limitation, the
\nAircraft) the lesser of (A) 50% of the highest replacement value of any single
\naircraft in Lessee’s fleet or (B) 1-1\/2% of the average aggregate insurable
\nvalue (during the preceding calendar year) of all aircraft (including, without
\nlimitation, the Aircraft) on which Lessee carries insurance. In addition to the
\nforegoing right to self-insure, Lessee (and any Sublessee) may self-insure to
\nthe extent of any applicable mandatory minimum per aircraft (or, if applicable,
\nper annum or other period) hull or liability insurance deductible imposed by the
\naircraft hull or liability insurer.<\/p>\n
(e) Additional Insurance by Lessor and Lessee. Lessee (and any
\n —————————————–
\nSublessee) may at its own expense carry insurance with respect to its interest
\nin the Aircraft in amounts in excess of that required to be maintained by this
\nSection 11. The Owner Participant or Lessor may carry for its own account at
\nits sole cost and expense insurance with respect to its interest in the<\/p>\n
59<\/p>\n
Aircraft, provided that such insurance does not prevent Lessee (or any
\nSublessee) from carrying the insurance required or permitted by this Section 11
\nor adversely affect such insurance or materially increase the cost thereof.<\/p>\n
(f) Indemnification by Government in Lieu of Insurance.
\n ————————————————–
\nNotwithstanding any provisions of this Section 11 requiring insurance, Lessor
\nagrees to accept, in lieu of insurance against any risk with respect to the
\nAircraft, indemnification from, or insurance provided by, the United States
\nGovernment or any agency or instrumentality thereof, the obligations of which
\nare supported by the full faith and credit of the federal government of the
\nUnited States, against such risk in an amount which, when added to the amount of
\ninsurance against such risk maintained by Lessee (or any Sublessee) shall be at
\nleast equal to the amount of insurance against such risk otherwise required by
\nthis Section 11 (taking into account self-insurance permitted by Section 11(d)
\nhereof).<\/p>\n
(g) Application of Payments During Existence of Default. Any amount
\n —————————————————
\nreferred to in this Section 11 which is payable to or retainable by Lessee (or
\nany Sublessee) shall not be paid to or retained by Lessee (or any Sublessee) if
\nat the time of such payment or retention a Default or an Event of Default shall
\nhave occurred and be continuing, but shall be held by or paid over to Lessor as
\nsecurity for the obligations of Lessee under this Lease and, if such a Default
\nor an Event of Default shall have occurred and be continuing, applied against
\nLessee’s obligations hereunder as and when due. At such time as there shall not
\nbe continuing any such Default or Event of Default, such amount shall be paid to
\nLessee to the extent not previously applied in accordance with the preceding
\nsentence.<\/p>\n
(h) Terms of Insurance Policies. Any policies carried in accordance
\n —————————
\nwith Sections 11(a) and 11(b) hereof covering the Aircraft, and any policies
\ntaken out in substitution or replacement for any such policies, (A) shall name
\nthe Additional Insureds as additional insureds, or, if appropriate, loss payees,
\nas their respective interests may appear (but without imposing on any such party
\nliability to pay premiums with respect to such insurance), (B) may provide for
\nself-insurance to the extent permitted in Section 11(d) hereof, (C) shall
\nprovide that if the insurers cancel such insurance for any reason whatever, or
\nif the same is allowed to lapse for non-payment of premium or if any material
\nchange is made in the insurance which adversely affects the interest of any
\nAdditional Insured, such lapse, cancellation or change shall not be effective as
\nto any Additional Insured for thirty days (ten days in the case of lapse for
\nnonpayment of premium and seven days in the case of war risk and allied perils
\ncoverage) after receipt by such Additional Insured of written<\/p>\n
60<\/p>\n
notice by such insurers of such lapse, cancellation or change; provided,
\nhowever, that if any notice period specified above is not reasonably obtainable,
\nsuch policies shall provide for as long a period of prior notice as shall then
\nbe reasonably obtainable, (D) shall provide that in respect of the respective
\ninterests of each Additional Insured in such policies the insurance shall not be
\ninvalidated by any action or inaction of Lessee (or any Sublessee) or any other
\nPerson and shall insure the respective interests of the Additional Insureds, as
\nthey appear, regardless of any breach or violation of any warranty, declaration
\nor condition contained in such policies by Lessee (or any Sublessee) or by any
\nother Person, (E) shall be primary without any right of contribution from any
\nother insurance which is carried by any Additional Insured, (F) shall expressly
\nprovide that all of the provisions thereof, except the limits of liability,
\nshall operate in the same manner as if there were a separate policy covering
\neach insured, (G) shall waive any right of the insurers to set-off or
\ncounterclaim or any other deduction, whether by attachment or otherwise, in
\nrespect of any liability of any Additional Insured, and (H) shall provide that
\n(i) in the event of a loss involving the Aircraft, Airframe, or an Engine for
\nwhich proceeds are in excess of $5,000,000 ($2,500,000 if the Aircraft is under
\nsublease), the proceeds in respect of such loss up to the amount of Stipulated
\nLoss Value for the Aircraft shall be payable to Lessor (or, so long as the Trust
\nIndenture shall be in effect, the Indenture Trustee), it being understood and
\nagreed that in the case of any payment to Lessor (or the Indenture Trustee)
\notherwise than in respect of an Event of Loss, Lessor (or the Indenture Trustee)
\nshall, upon receipt of evidence reasonably satisfactory to it that the damages
\ngiving rise to such payment shall have been repaired or that such payment shall
\nthen be required to pay for repairs then being made, pay the amount of such
\npayment, and any interest or income earned thereon in accordance with Section 22
\nhereof, to Lessee or its order, and (ii) the entire amount of any such loss for
\nwhich proceeds are $5,000,000 ($2,500,000 if the Aircraft is under sublease) or
\nless or the amount of any proceeds of any such loss in excess of Stipulated Loss
\nValue for the Aircraft shall be paid to Lessee or its order unless a Default or
\nan Event of Default shall have occurred and be continuing and the insurers have
\nbeen notified thereof by Lessor or the Indenture Trustee.<\/p>\n
SECTION 12. Inspection. At reasonable times, and upon at least 10
\n ———-
\ndays (or one day if a Section 14(a), 14(b), 14(d) (solely with respect to
\nLessee’s obligations under Section 7(a) or (b)(viii) or Section 8 hereof), 14(f)
\nor 14(g) Default or any Event of Default shall have occurred and be continuing)
\nprior written notice, the Owner Participant or the Indenture Trustee, or their
\nrespective authorized representatives, may inspect the Aircraft (provided,
\nhowever, that such inspections by the Owner<\/p>\n
61<\/p>\n
Participant and its authorized representatives or the Indenture Trustee and its
\nauthorized representative shall, in regard to each of the Owner Participant and
\nthe Indenture Trustee, be limited to one inspection of the Aircraft during any
\nconsecutive twelve-month period except during the continuance of a Default or an
\nEvent of Default when such inspection right shall not be so limited) and inspect
\nand make copies of the books and records of Lessee and any Sublessee required to
\nbe maintained by the FAA or the regulatory agency or body of another
\njurisdiction in which the Aircraft is then registered relating to the
\nmaintenance of the Aircraft (at the Owner Participant’s or the Indenture
\nTrustee’s risk and expense (unless a Section 14(a), 14(b), 14(f) or 14(g)
\nDefault or any Event of Default shall have occurred and be continuing in which
\ncase such inspection shall be at Lessee’s expense), as the case may be) and
\nshall keep any information or copies obtained thereby confidential and shall not
\ndisclose the same to any Person, except (A) to Lessor and the Pass Through
\nTrustees and to prospective and permitted transferees of Lessor’s, the Owner
\nParticipant’s, any Pass Through Trustee’s or the Indenture Trustee’s interest
\n(and such prospective and permitted transferee’s counsel, independent insurance
\nadvisors or other agents) who agree to hold such information confidential, (B)
\nto Lessor’s, the Owner Participant’s, any Pass Through Trustee’s or the
\nIndenture Trustee’s counsel, independent insurance advisors or other agents who
\nagree to hold such information confidential, (C) as may be required by any
\nstatute, court or administrative order or decree or governmental ruling or
\nregulation, (D) as may be necessary for purposes of protecting the interest of
\nany such Person or for enforcement of this Lease by Lessor or the Indenture
\nTrustee; provided, however, that any and all disclosures permitted by clauses
\n(C) and (D) above shall be made only to the extent necessary to meet the
\nspecific requirements or needs of Persons for whom such disclosures are hereby
\npermitted. Any such inspection of the Aircraft shall be subject to Lessee’s
\nsafety and security rules applicable at the location of the Aircraft, shall be a
\nvisual, walk-around inspection of the interior and exterior of the Aircraft and
\nshall not include opening any panels, bays or the like without the express
\nconsent of Lessee (except in connection with a heavy maintenance visit when a
\npanel, bay or the like is scheduled or required to be open), which consent
\nLessee may in its sole discretion withhold; provided that no exercise of such
\ninspection right shall interfere with the normal operation or maintenance of the
\nAircraft by, or the business of, Lessee (or any Sublessee). Upon receipt by
\nLessee of a written request from the Owner Participant specifying that the Owner
\nParticipant desires to have an authorized representative observe the last
\nscheduled heavy maintenance visit to be performed on the Aircraft (or
\nsubstantially equivalent successor type of maintenance work) during the Term,
\nLessee shall cooperate with the Owner<\/p>\n
62<\/p>\n
Participant to enable the Owner Participant’s representative to observe such
\nlast scheduled heavy maintenance visit to be performed on the Aircraft during
\nthe Term, including reasonable advance notification to the Owner Participant of
\nthe time and place of such scheduled heavy maintenance visit; provided that the
\nOwner Participant’s authorized representative shall merely observe such
\nscheduled heavy maintenance visit, shall not interfere with or extend in any
\nmanner the normal conduct or duration of the scheduled heavy maintenance visit,
\nand shall not be entitled to direct any of the work performed in connection with
\nsuch scheduled heavy maintenance visit. Neither the Owner Participant nor the
\nIndenture Trustee shall have any duty to make any such inspection nor shall any
\nof them incur any liability or obligations by reason of not making any such
\ninspection.<\/p>\n
SECTION 13. Assignment. Except as otherwise provided in the
\n ———-
\nOperative Documents, Lessee will not, without the prior written consent of
\nLessor, assign any of its rights hereunder. Lessor agrees that it will not
\nassign or convey its right, title and interest in and to this Lease or the
\nAircraft except as provided in the Operative Documents. Subject to the
\nforegoing, the terms and provisions of this Lease shall be binding upon and
\ninure to the benefit of Lessor and Lessee and their respective successors and
\npermitted assigns.<\/p>\n
SECTION 14. Events of Default. Each of the following events shall
\n —————–
\nconstitute an Event of Default (whether any such event shall be voluntary or
\ninvoluntary or come about or be effected by operation of law or pursuant to or
\nin compliance with any judgment, decree or order of any court or any order, rule
\nor regulation of any administrative or governmental body) and each such Event of
\nDefault shall continue so long as, but only as long as, it shall not have been
\nremedied:<\/p>\n
(a) Lessee shall not have made a payment of Basic Rent, Stipulated
\nLoss Value, Termination Value, EBO Price, Special Termination Value or Premium
\nwithin ten (10) days after the same shall have become due; or<\/p>\n
(b) Lessee shall have failed to make a payment of Supplemental Rent
\n(other than Supplemental Rent referred to in paragraph (a) of this Section 14)
\nafter the same shall have become due and such failure shall continue for fifteen
\n(15) days after Lessee’s receipt of written demand therefor by the party
\nentitled thereto (provided that any failure to pay any amount owed by Lessee
\nunder the Tax Indemnity Agreement or any failure of Lessee to pay to Lessor or
\nthe Owner Participant when due any Excluded Payments shall not constitute an
\nEvent of Default unless written notice is given by the Owner Participant to
\nLessee and<\/p>\n
63<\/p>\n
the Indenture Trustee that such failure shall constitute an Event of Default);
\nor<\/p>\n
(c) Lessee shall fail to carry and maintain on or with respect to the
\nAircraft (or cause to be carried and maintained) insurance required to be
\nmaintained in accordance with the provisions of Section 11 hereof; or<\/p>\n
(d) Lessee shall have failed to perform or observe (or caused to be
\nperformed and observed) any other covenant or agreement to be performed or
\nobserved by it under any Operative Document, and such failure shall continue
\nunremedied for a period of thirty days after written notice thereof by Lessor or
\nthe Indenture Trustee; provided, however, that if Lessee shall have undertaken
\nto cure any such failure and, notwithstanding the reasonable diligence of Lessee
\nin attempting to cure such failure, such failure is not cured within said thirty
\nday period but is curable with future due diligence, there shall exist no Event
\nof Default under this Section 14 so long as Lessee is proceeding with due
\ndiligence to cure such failure and such failure is in fact cured within 180
\ndays); or<\/p>\n
(e) any representation or warranty made by Lessee herein or in the
\nParticipation Agreement or any document or certificate furnished by Lessee in
\nconnection herewith or therewith or pursuant hereto or thereto (except the
\nrepresentations and warranties set forth in Section 4 of the Tax Indemnity
\nAgreement) shall prove to have been incorrect in any material respect at the
\ntime made and shall remain material at the time in question; provided, however,
\nsuch incorrectness shall constitute a default hereunder only if such
\nincorrectness shall continue uncured for a period of thirty (30) days after the
\nreceipt by Lessee of a written notice from Lessor or the Indenture Trustee
\nadvising Lessee of the existence of such incorrectness; or<\/p>\n
(f) the commencement of an involuntary case or other proceeding in
\nrespect of Lessee in an involuntary case under the federal bankruptcy laws, as
\nnow or hereafter constituted, or any other applicable federal or state
\nbankruptcy, insolvency or other similar law in the United States or seeking the
\nappointment of a receiver, liquidator, assignee, custodian, trustee,
\nsequestrator (or similar official) of Lessee or for all or substantially all of
\nits property, or seeking the winding-up or liquidation of its affairs and the
\ncontinuation of any such case or other proceeding undismissed or unstayed for a
\nperiod of ninety (90) consecutive days or an order for relief under Chapter 11
\nof the Bankruptcy Code with respect to Lessee as debtor or any other order,
\njudgment or decree shall be entered in any proceeding by any court of competent
\njurisdiction appointing, without the consent<\/p>\n
64<\/p>\n
of Lessee, a receiver, trustee or liquidator of Lessee, or for all or
\nsubstantially all of its property, or sequestering of all or substantially all
\nof the property of Lessee and any such order, judgment or decree or appointment
\nor sequestration shall be final or shall remain in force undismissed, unstayed
\nor unvacated for a period of ninety (90) days after the date of entry thereof;
\nor<\/p>\n
(g) the commencement by Lessee of a voluntary case under the federal
\nbankruptcy laws, as now constituted or hereafter amended, or any other
\napplicable federal or state bankruptcy, insolvency or other similar law in the
\nUnited States, or the consent by Lessee to the appointment of or taking
\npossession by a receiver, liquidator, assignee, trustee, custodian, sequestrator
\n(or other similar official) of Lessee or for all or substantially all of its
\nproperty, or the making by Lessee of any assignment for the benefit of creditors
\nor Lessee shall take any corporate action to authorize any of the foregoing; or<\/p>\n
(h) Lessee shall not be a Certificated Air Carrier;<\/p>\n
provided, however, that, notwithstanding anything to the contrary contained in
\nthis Section 14, any failure of Lessee to perform or observe any covenant,
\ncondition, agreement or any error in a representation or warranty shall not
\nconstitute an Event of Default if such failure or error is caused solely by
\nreason of any event that constitutes an Event of Loss so long as Lessee is
\ncontinuing to comply with all of the terms of Section 10 hereof.<\/p>\n
SECTION 15. Remedies. Upon the occurrence of any Event of Default
\n ——–
\nand at any time thereafter so long as any such Event of Default shall not have
\nbeen remedied, Lessor may, at its option, declare by written notice to Lessee
\nthis Lease Agreement to be in default; and at any time thereafter, so long as
\nsuch Event of Default shall be continuing, Lessor may do one or more of the
\nfollowing with respect to all or any part of the Airframe and any or all of the
\nEngines as Lessor in its sole discretion shall elect, to the extent permitted
\nby, and subject to compliance with any mandatory requirements of, applicable law
\nthen in effect; provided, however, that during any period the Aircraft is
\nsubject to the Civil Reserve Air Fleet Program in accordance with the provisions
\nof Section 7(b) hereof and in the possession of the United States Government or
\nan instrumentality or agency thereof, Lessor shall not, on account of any Event
\nof Default, be entitled to do any of the following in such manner as to limit
\nLessee’s control under this Lease (or any Sublessee’s control under any
\nSublease) of any Airframe or any Engines, unless at least 60 days’ (or such
\nlesser period as may then be applicable under the Military Airlift Command
\nprogram of the<\/p>\n
65<\/p>\n
United States Government) prior written notice of default hereunder shall have
\nbeen given by Lessor by registered or certified mail to Lessee (and any
\nSublessee) with a copy addressed to the Contracting Office Representative for
\nthe Military Airlift Command of the United States Air Force under any contract
\nwith Lessee (or any Sublessee) relating to the Aircraft:<\/p>\n
(a) upon the written demand of Lessor and at Lessee’s expense,
\n cause Lessee to return promptly, and Lessee shall return promptly, the
\n Airframe or any Engine as Lessor may so demand to Lessor or its order in
\n the manner and condition required by, and otherwise in accordance with all
\n the provisions of, Section 5 as if such Airframe or Engine were being
\n returned at the end of the Term, or Lessor, at its option, may enter upon
\n the premises where all or any part of the Airframe or any Engine is located
\n and take immediate possession of and remove the same by summary proceedings
\n or otherwise, (and, at Lessor’s option, store the same at Lessee’s
\n premises until disposal thereof by Lessor), all without liability accruing
\n to Lessor for or by reason of such entry or taking of possession or
\n removing whether for the restoration of damage to property caused by such
\n action or otherwise;<\/p>\n
(b) sell the Aircraft, the Airframe or any Engine at public or
\n private sale, as Lessor may determine, or otherwise dispose of, hold, use,
\n operate, lease to others or keep idle the Aircraft as Lessor, in its sole
\n discretion, may determine, all free and clear of any rights of Lessee,
\n except as hereinafter set forth in this Section 15;<\/p>\n
(c) Lessor may hold, keep idle or lease to others the Aircraft,
\n the Airframe or any Engine or any Part thereof, as Lessor in its sole
\n discretion may determine, free and clear of any rights of Lessee and
\n without any duty to account to Lessee with respect thereto, except that
\n Lessee’s obligation to pay Basic Rent with respect to the Aircraft on Lease
\n Period Dates subsequent to the date upon which Lessee shall have been
\n deprived of use of the Aircraft pursuant to this Section 15 shall be
\n reduced by the net proceeds, if any, received by Lessor from leasing the
\n Aircraft, the Airframe or any Engine to any Person other than Lessee;<\/p>\n
(d) whether or not Lessor shall have exercised, or shall
\n thereafter at any time exercise, any of its rights under paragraph (a), (b)
\n or (c) above with respect to the Aircraft, Lessor, by written notice to
\n Lessee specifying a payment date which shall be the Lease Period Date not
\n earlier than ten days from the date of such notice, may<\/p>\n
66<\/p>\n
demand that Lessee pay to Lessor, and Lessee shall pay Lessor, on the
\n payment date so specified, as liquidated damages for loss of a bargain and
\n not as a penalty (in lieu of the installments of Basic Rent for the
\n Aircraft due for Lease Periods commencing on or after the Commencement Date
\n or the Lease Period Date, as the case may be, specified as the payment date
\n in such notice), any unpaid Basic Rent due on Lease Period Dates on or
\n prior to the payment date so specified plus whichever of the following
\n amounts Lessor, in its sole discretion, shall specify in such notice (with
\n interest thereon at the Past Due Rate from such specified payment date
\n until the date of actual payment of such amount): (i) an amount equal to
\n the excess, if any, of the Stipulated Loss Value for the Aircraft, computed
\n as of the Lease Period Date specified as the payment date in such notice
\n over the aggregate fair market rental value (computed as hereafter in this
\n Section 15 provided) of such Aircraft for the remainder of the Term, after
\n discounting such aggregate fair market rental value to present value as of
\n the Lease Period Date specified as the payment date in such notice at an
\n annual rate equal to the Past Due Rate; or (ii) an amount equal to the
\n excess, if any, of the Stipulated Loss Value for such Aircraft, computed as
\n of the Lease Period Date specified as the payment date in such notice, over
\n the fair market sales value of such Aircraft (computed as hereafter in this
\n Section provided) as of the Lease Period Date specified as the payment date
\n in such notice;<\/p>\n
(e) in the event Lessor pursuant to paragraph (b) above, shall
\n have sold the Aircraft, Lessor, in lieu of exercising its rights under
\n paragraph (d) above with respect to such Aircraft, may, if it shall so
\n elect, demand that Lessee pay Lessor, and Lessee shall pay to Lessor, on
\n the date of such sale, as liquidated damages for loss of a bargain and not
\n as a penalty, any unpaid Basic Rent with respect to the Aircraft due on or
\n prior to such date plus the amount of any deficiency between the net
\n proceeds of such sale (after deduction of all reasonable costs of sale) and
\n the Stipulated Loss Value of such Aircraft, computed as of the Stipulated
\n Loss Value date on or immediately following the date of such sale, together
\n with interest, if any, on the amount of such deficiency, at the Past Due
\n Rate, from the date of such sale to the date of actual payment of such
\n amount; and\/or<\/p>\n
(f) Lessor may rescind or terminate this Lease Agreement, and\/or
\n may exercise any other right or remedy which may be available to it under
\n applicable law or proceed by appropriate court action to enforce the terms
\n hereof or to recover damages for breach hereof.<\/p>\n
67<\/p>\n
For the purposes of paragraph (c) above, the “fair market rental
\nvalue” or the “fair market sales value” of the Aircraft shall be the rental
\nvalue or sales value, as the case may be, which would be obtained in an arm’s-
\nlength transaction between an informed and willing lessee or purchaser, as the
\ncase may be, under no compulsion to lease or purchase, as the case may be, and
\nan informed and willing lessor or seller in possession, as the case may be, in
\neach case based upon the actual condition and location of the Aircraft, which
\nvalue shall be determined by mutual agreement or, in the absence of mutual
\nwritten agreement, pursuant to an appraisal prepared and delivered by a
\nnationally recognized firm of independent aircraft appraisers nominated by
\nLessor, and Lessor shall promptly notify Lessee of such nomination. Any
\nappraisal obtained pursuant to this Section 15 shall take into account then
\nprevailing market conditions for aircraft of the same type as the Aircraft. The
\ncost of such appraisal or appointment shall be borne by Lessee.<\/p>\n
In addition, Lessee shall be liable, except as otherwise provided
\nabove, without duplication of amounts payable hereunder, for any and all unpaid
\nRent due hereunder before, after or during the exercise of any of the foregoing
\nremedies, for the payment of Premium, if any, and for all reasonable and actual
\nlegal fees and other costs and expenses incurred by Lessor, the Indenture
\nTrustee, the Certificate Holders and the Owner Participant in connection with
\nany default or the exercise of remedies hereunder including the return of the
\nAirframe or any Engine in accordance with the terms of Section 5 or in placing
\nsuch Airframe or Engine in the condition and airworthiness required by such
\nSection.<\/p>\n
At any sale of the Aircraft or any part thereof pursuant to this
\nSection 15, Lessor, the Indenture Trustee, a Certificate Holder or the Owner
\nParticipant may bid for and purchase such property. Lessor agrees to give
\nLessee at least 10 days’ written notice of the date fixed for any public sale of
\nany Airframe or Engine or of the date on or after which will occur the execution
\nof any contract providing for any private sale. Except as otherwise expressly
\nprovided above, no remedy referred to in this Section 15 is intended to be
\nexclusive, but each shall be cumulative and in addition to any other remedy
\nreferred to above or otherwise available to Lessor at law or in equity; and the
\nexercise or beginning of exercise by Lessor of any one or more of such remedies
\nshall not preclude the simultaneous or later exercise by Lessor of any or all of
\nsuch other remedies. No waiver by Lessor of any Default or Event of Default
\nshall in any way be, or be construed to be, a waiver of any future or subsequent
\nDefault or Event of Default. To the extent permitted by applicable law, Lessee
\nhereby waives any right now or hereafter conferred by statute or otherwise which
\nmay require<\/p>\n
68<\/p>\n
Lessor to sell, lease, or otherwise use the Aircraft or Parts thereof in
\nmitigation of Lessor’s damages as set forth in this Section 15 or which may
\notherwise limit or modify any of Lessor’s rights and remedies in this Section
\n15.<\/p>\n
SECTION 16. Lessee’s Cooperation Concerning Certain Matters. (a)
\n ———————————————–
\nForthwith upon the execution and delivery of each Lease Supplement and Trust
\nSupplement from time to time required by the terms hereof and upon the execution
\nand delivery of any amendment to this Lease or to the Trust Agreement or Trust
\nIndenture, Lessee at its expense will cause such Lease Supplement, Trust
\nSupplement (and, in the case of the initial Lease Supplement and Trust
\nSupplement, this Lease, the Trust Agreement and the Trust Indenture as well) or
\namendment to be duly filed and recorded, and maintained of record, in accordance
\nwith the applicable laws of the government of registry of the Aircraft. In
\naddition, Lessee at its expense will promptly and duly execute and deliver to
\nLessor such further documents and take such further action as Lessor may from
\ntime to time reasonably request in order more effectively to carry out the
\nintent and purpose of this Lease and to establish and protect the rights and
\nremedies created or intended to be created in favor of Lessor and the Indenture
\nTrustee hereunder, including, without limitation, if requested by Lessor, at the
\nexpense of Lessee, the execution and delivery of supplements or amendments
\nhereto, each in recordable form, subjecting to this Lease and the Trust
\nIndenture, any airframe or engine substituted for the Airframe or any Engine
\npursuant to the terms thereof and the recording or filing of counterparts
\nthereof, in accordance with the laws of such jurisdictions as Lessor may from
\ntime to time reasonably request.<\/p>\n
(b) Lessee will furnish to Lessor, the Indenture Trustee, the Owner
\nParticipant and, so long as the Pass Through Trustees are the Certificate
\nHolders, the Pass Through Trustees:<\/p>\n
(i) Quarterly Statements – As soon as practicable after the end
\n ——————–
\n of the first, second, and third quarterly fiscal periods in each fiscal
\n year of Lessee, and in any event within 60 days thereafter, duplicate
\n copies of:<\/p>\n
(1) a consolidated balance sheet of Lessee as at the end of
\n such quarter setting forth in comparative form the amount for the end
\n of the corresponding period of the preceding fiscal year,<\/p>\n
(2) consolidated statements of income and retained earnings
\n of Lessee for such quarterly period, setting forth in comparative form
\n the amount for the corresponding period of the preceding fiscal year,
\n and<\/p>\n
69<\/p>\n
(3) consolidated statements of cash flow of Lessee for the
\n portion of the fiscal year ending with said quarter, setting forth in
\n comparative form the amount for the corresponding period of the
\n preceding fiscal year;<\/p>\n
(ii) Annual Statements – As soon as practicable after the end of
\n —————–
\n each fiscal year, and in any event within 120 days thereafter, duplicate
\n copies of:<\/p>\n
(1) a consolidated balance sheet of Lessee as at the end of
\n such year, and<\/p>\n
(2) consolidated statements of income and retained earnings
\n and of cash flow of Lessee for such year,<\/p>\n
prepared in accordance with generally accepted accounting principles and
\n setting forth in each case in comparative form the figures for the previous
\n fiscal year and accompanied by an auditor’s report of a firm of independent
\n certified public accountants of recognized national standing (which report
\n may be adverse, qualified or disclaim an opinion);<\/p>\n
(iii) SEC Reports – Promptly upon their becoming available, one
\n ———–
\n copy of each financial statement, report, or proxy statement sent by UAL
\n Corporation to its shareholders generally, and of each regular or periodic
\n report and any prospectus (in the form in which it becomes effective) filed
\n by Lessee or UAL Corporation with the Securities and Exchange Commission or
\n any successor agency; and<\/p>\n
(iv) Notice of Default or Claimed Default -Immediately upon an
\n ————————————
\n officer of Lessee becoming aware of the existence of a Default or an Event
\n of Default (or that Lessor has given notice or taken any other action with
\n respect to an Event of Default or a claimed default under this Lease), a
\n written notice specifying the nature of the Default, Event of Default, or
\n claimed default and any such notice given or action taken by Lessor and
\n what action Lessee is taking or proposes to take with respect thereto.<\/p>\n
(c) Commencing in 1996, on or before April 30 of each year during the
\nTerm, Lessee will deliver to Lessor and the Indenture Trustee a certificate of
\nLessee, signed by the President, a Vice President, the Chief Financial Officer
\nor the principal accounting officer of Lessee to the effect that the signer is
\nfamiliar with or has reviewed the relevant terms of this Lease and the signer
\ndoes not have knowledge of the<\/p>\n
70<\/p>\n
existence, as of the date of such certificate, of any condition or event which
\nconstitutes a Default or an Event of Default.<\/p>\n
SECTION 17. Notices. All notices required under the terms and
\n ——-
\nprovisions hereof shall be in writing (including telex, telecopier or similar
\nwriting) and shall be effective (a) if given by telecopier when transmitted and
\nthe appropriate confirmation received; provided, that any such notice is
\nconfirmed by certified mail, (b) if given by certified mail, three Business Days
\nafter being deposited in the mails, (c) if given by telex, upon receipt by the
\nparty transmitting the telex of such party’s callback code at the end of such
\ntelex (receipt of confirmation in writing not being necessary to the
\neffectiveness of any telex) and (d) if given by other means, when received or
\npersonally delivered, addressed:<\/p>\n
(i) if to Lessee, at P. O. Box 66100, Chicago, Illinois 60666(or,
\n if given by overnight delivery service, 1200 East Algonquin Road, Elk Grove
\n Township, Illinois 60007) Attention: Vice President and Treasurer,
\n telecopier number (708) 952-7117, or to such other address or telecopier
\n number as Lessee shall from time to time designate in writing to Lessor;<\/p>\n
(ii) if to Lessor, at 225 Franklin Street, Boston, Massachusetts
\n 02110 (or, if given by overnight delivery service) Two International Place,
\n Boston, Massachusetts 02110) Attention: _____________________, telecopier
\n number (617) 664-5367 or to such other address or telecopier number as
\n Lessor shall from time to time designate in writing to Lessee;<\/p>\n
(iii) if to the Indenture Trustee, the Owner Participant or any
\n Pass Through Trustee, addressed to the Indenture Trustee, the Owner
\n Participant or such Pass Through Trustee at such address or telecopier
\n number as the Indenture Trustee, the Owner Participant or such Pass Through
\n Trustee shall have furnished by notice to Lessor and to Lessee, and, until
\n an address is so furnished, addressed to the Indenture Trustee, the Owner
\n Participant or such Pass Through Trustee at its address or telecopier
\n number set forth in Schedule I to the Participation Agreement; and<\/p>\n
(iv) If to a Certificate Holder which is not a Pass Through
\n Trustee, addressed to such Certificate Holder at its address stated in the
\n Loan Certificate Register maintained pursuant to the Trust Indenture.<\/p>\n
A copy of each notice to Lessor shall be given by the sender thereof to the
\nOwner Participant.<\/p>\n
71<\/p>\n
SECTION 18. Net Lease; No Set-Off, Counterclaim, Etc.
\n —————————————- <\/p>\n
(a) This Lease is a net lease, and it is intended that the Lessee
\nshall pay all costs and expenses of every character, whether seen or unforeseen,
\nordinary or extraordinary or structural or non-structural, in connection with
\nthe use, operation, maintenance, repair and reconstruction of the Airframe and
\neach Engine by the Lessee, including the costs and expenses particularly set
\nforth in this Lease. Except as set forth in this Section 18(a), the Rent which
\nLessee is obligated to pay shall be paid without the necessity of notice or
\ndemand and without set-off, counterclaim, abatement, suspension, deduction or
\ndefense. If at any time that Lessee is required (a) to make a payment of
\nTermination Value or Fair Market Sales Value pursuant to Section 9 or Stipulated
\nLoss Value pursuant to Section 10, or (b) to pay the purchase price of the
\nAircraft pursuant to Section 19(b), there shall exist a Lessor Lien with respect
\nto the Aircraft (including for this purpose Liens that would be Lessor Liens but
\nfor the proviso to the definition of Lessor Liens) relating to the Owner
\nParticipant (or Lessee shall have previously incurred a charge to discharge such
\na Lessor Lien), then Lessee shall be entitled to deduct from the portion
\nrequired to be paid to the Owner Participant of such payment of Termination
\nValue or Fair Market Sales Value, or such payment of the purchase price, or any
\ncombination thereof, as the case may be, an amount sufficient to so reimburse
\nLessee or to reimburse Lessee for the cost of discharging such Lessor Lien, as
\nthe case may be. Notwithstanding anything contained in this Section 18(a) to
\nthe contrary, any payments of Fair Market Sales Value, Termination Value,
\nStipulated Loss Value, Special Termination Value or EBO Price made to the
\nIndenture Trustee shall be in an amount which, together with any other amounts
\npayable hereunder, is at least sufficient to pay in full, as of the date of
\npayment thereof, the amount of principal of, and any accrued and unpaid interest
\non, the outstanding Loan Certificates, together with Premium, if any, thereon
\nand amounts due the Certificate Holders under the Trust Indenture, if any, and,
\nto such extent, shall not be subject to set-off hereunder.<\/p>\n
(b) Except as otherwise expressly provided, this Lease shall not
\nterminate nor shall the Lessee have any right to terminate this Lease or be
\nentitled to abatement, suspension, deferment or reduction of any Rent which the
\nLessee is obligated to pay hereunder, nor shall the obligations hereunder of the
\nLessee be affected, by reason of (A) any damage to or the destruction or loss of
\nall or any portion of the Airframe or any Engine from whatever cause, (B) the
\nloss or theft of any portion of the Airframe or any Engine, (C) the taking of
\nthe Airframe or any Engine or any portion thereof by condemnation, confiscation,
\nrequisition or otherwise, (D) the prohibition, limitation or<\/p>\n
72<\/p>\n
restriction of the Lessee’s use of all or any part of the Airframe or any
\nEngine, or the interference with such use by any Person, (E) the inadequacy or
\nincorrectness of the description of any portion of the Airframe or any Engine or
\nthe failure of this Lease to demise to the Lessee the Airframe or any Engine or
\nany portion thereof, (F) the Lessee’s acquisition or ownership of all or any
\npart of the Airframe or any Engine otherwise than pursuant to an express
\nprovision of this Lease, (G) any defect in compliance with specifications,
\ncondition, merchantability, design, airworthiness, quality, durability,
\noperation or fitness for use for any purpose of the Airframe or any Engine or
\nany portion thereof, (H) any defect in the title to, or registration of or the
\nexistence of any Liens or rights of others whatsoever with respect to, the
\nAirframe or any Engine or any portion thereof, (I) any insolvency, bankruptcy,
\nreorganization or similar proceedings by or against any Sublessee or any Person
\n(J) any breach, default or misrepresentation by the Lessor, any Participant or
\nthe Indenture Trustee under this Lease or any other Operative Document or any of
\nthe documents referred to herein or therein or (K) any invalidity or
\nunenforceability, in whole or in part, of this Lease or any other Operative
\nDocument or any of the documents referred to herein or therein, or any other
\ninfirmity herein or therein, or any lack of power or authority of any party to
\nthis Lease or any other Operative Document or any such documents to enter into
\nthe same, or (L) any other circumstance, happening or act whatsoever, whether or
\nnot unforeseen or similar to any of the foregoing, it being the intention of the
\nparties hereto that the obligations of the Lessee shall be absolute and
\nunconditional and shall be separate and independent covenants and agreements and
\nshall continue unaffected unless and until this Lease shall have terminated in
\naccordance with its terms upon payment by Lessee of all sums payable by Lessee
\nhereunder and performance by Lessee of all obligations required to be performed
\nby Lessee hereunder.<\/p>\n
The Lessee covenants that it will remain obligated under this Lease in
\naccordance with its terms and will take no action to terminate, rescind or avoid
\nthis lease, notwithstanding the bankruptcy, insolvency, reorganization,
\ncomposition, readjustment, liquidation, dissolution, winding-up or other
\nproceeding affecting the Lessor or the Owner Participant or any assignee of the
\nLessor the Owner Participant or any other action with respect to this Lease
\nwhich may be taken in any such proceeding by any trustee or receiver of the
\nLessor or the Owner Participant or of any assignee of the Lessor or the Owner
\nParticipant or by any court or any of the foregoing actions which may be taken
\nby or against any of the Lessor’s predecessors in interest in the Airframe or
\nany Engine.<\/p>\n
73<\/p>\n
If for any reason whatsoever this Lease shall be terminated in whole
\nor in part by operation of law or otherwise except as specifically provided
\nherein, Lessee nonetheless agrees, without limitation of the other rights and
\nremedies of Lessor hereunder, to pay to Lessor an amount equal to each Rent
\npayment at the time such payment would have become due and payable in accordance
\nwith the terms hereof had this Lease not been terminated in whole or in part.<\/p>\n
Except as expressly provided herein, the Lessee waives all rights now
\nor hereafter conferred by law (x) to quit, terminate, rescind or surrender this
\nLease or the Airframe or any Engine or any part thereof, or (y) to any
\nabatement, suspension, deferment, return or reduction of the Rent.<\/p>\n
SECTION 19. Renewal Options; Purchase Options; Valuation. (a)
\n ——————————————–
\nRenewal Options.
\n– ————— <\/p>\n
(1) Fixed Renewal Terms. Not less than 180 days nor more than
\n ——————-
\n 365 days before the end of the Basic Term or any Fixed Renewal Term, Lessee
\n may, so long as no Section 14(a), (b), (d) (solely with respect to Lessee’s
\n obligations under Section 7(a) or (b)(viii) hereof or Section 8 hereof),
\n (f) or (g) Default or any Event of Default has occurred and is continuing,
\n deliver to Lessor an irrevocable written notice (which at the option of
\n Lessee made at any time prior to 90 days prior to the end of the Basic Term
\n or such Fixed Renewal Term may be deemed a notice to exercise the
\n applicable purchase option in Section 19(b)) electing to renew this Lease
\n for a term or terms having a duration and at a Basic Rent as determined
\n below (each such term being herein referred to as a “Fixed Renewal Term”).
\n At least 180 days, before the end of the Basic Term Lessee shall, as a
\n condition to its exercise of any option set forth in this Section 19(a)(1),
\n notify Lessor of its demand for an appraisal pursuant to the appraisal
\n procedures of Section 19(c) hereof. The appraiser(s) so appointed shall
\n determine the total useful life, the remaining useful life and the future
\n residual value of the Aircraft on the expiration date for a Fixed Renewal
\n Term as may be set by reason of the maximum period therefor in accordance
\n with the constraints set forth in the following two sentences. The
\n duration of each Fixed Renewal Term shall be a period specified by Lessee
\n before the end of the Basic Term (or the preceding Fixed Renewal Term, as
\n the case may be) which is not less than one year and not more than three
\n years (in integral multiples of six months). Notwithstanding the
\n foregoing, the aggregate term of all Fixed Renewal Terms shall not exceed
\n the lesser of (a) three years and (b) the longest period of time (i) which
\n would cause the Term, after giving<\/p>\n
74<\/p>\n
effect to all such Fixed Renewal Terms, to be equal to at least 80% of the
\n then estimated useful life of the Aircraft as determined by the
\n appraiser(s) and (ii) at the expiration of which the residual value of the
\n Aircraft, as estimated by the appraiser(s), would be at least equal to 20%
\n of Lessor’s Cost (without taking into account inflation or deflation during
\n the Term). The annual Basic Rent payable during each Fixed Renewal Term
\n shall be equal to one-half of the average annual Basic Rent payments for
\n the Aircraft over the Basic Term.<\/p>\n
(2) Fair Market Renewal Term. So long as no Section 14(a), (b),
\n ————————
\n (d) (solely with respect to Lessee’s obligations under Section 7(a) or
\n (b)(viii) hereof or Section 8 hereof), (f) or (g) Default or any Event of
\n Default has occurred and is continuing, Lessee shall have the right to
\n renew this Lease for additional periods of at least one year commencing at
\n the end of the Basic Term, any Fixed Renewal Term or any prior Fair Market
\n Renewal Term for a Basic Rent equal to the Fair Market Rental Value of the
\n Aircraft for such period (each such renewal term, a “Fair Market Renewal
\n Term”); provided, however, each Fair Market Renewal Term shall be an
\n integral multiple of six months. Notwithstanding the foregoing, the
\n aggregate term for all Fair Market Renewal Terms shall not exceed three
\n years. Each such option to renew shall be exercised upon delivery by
\n Lessee to Lessor of irrevocable written notice of Lessee’s intent to renew
\n the Lease at least 180 days (but not more than 365 days) prior to the
\n commencement of such Fair Market Renewal Term (which at the option of the
\n Lessee made at any time prior to 90 days prior to the anticipated
\n commencement of such Fair Market Renewal Term may be deemed a notice to
\n exercise the applicable purchase option in Section 19(b)).<\/p>\n
(3) Waiver. If no written notice is delivered by Lessee to
\n ——
\n Lessor pursuant to Section 19(a)(1) or (2) on or before the day specified
\n therefore, Lessee shall be deemed to have waived any right to renew this
\n Lease.<\/p>\n
(4) Conditions Precedent, Payment of Basic Rent. At the end of
\n ——————————————-
\n the Basic Term or any Renewal Term, if Lessee has elected to renew this
\n Lease as aforesaid, and provided that there shall not then have occurred
\n and be continuing a Default or an Event of Default and that all necessary
\n governmental authorizations and approvals shall have been received and that
\n Basic Rent for the Renewal Term has already been determined as above
\n provided, (i) this Lease shall continue in full force and effect during the
\n Renewal Term, and (ii) Basic Rent for such Renewal Term shall be<\/p>\n
75<\/p>\n
payable in semi-annual installments in advance or arrears as was the basis
\n of the Basic Rent being paid immediately prior to such Renewal Term, each
\n such installment being due and payable on each Lease Period Date occurring
\n during the Renewal Term.<\/p>\n
(5) Termination Value; Stipulated Loss Value. The amounts which
\n —————————————-
\n are payable during any Renewal Term in respect of Termination Value as used
\n in Section 15 and Stipulated Loss Value with respect to the Aircraft shall
\n be determined on the basis of the Fair Market Sales Value of the Aircraft
\n as of the commencement of such Renewal Term, amortized on a straight-line
\n basis over such Renewal Term to the projected Fair Market Sales Value of
\n the Aircraft as of the expiration of such Renewal Term, as such Fair Market
\n Sales Value in each case is determined prior to the commencement of such
\n Renewal Term. In determining Fair Market Sales Value for purposes of
\n calculating Stipulated Loss Value and Termination Value for any Renewal
\n Term effect shall be given to the encumbrance on the Aircraft of any Fixed
\n Renewal Term available or in force.<\/p>\n
(b) Purchase Options. Lessee shall have the option, so long as no
\n —————-
\nSection 14(a), (b), (f) or (g) Default or any Event of Default exists on the
\ndate notice of exercise may be given, (i) with respect to subsections (1) and
\n(2) below, upon not more than 365 days and not less than 90 days irrevocable
\nprior written notice to Lessor and (ii) with respect to subsections (3) and (4)
\nbelow, upon not more than 365 days and not less than 180 days irrevocable prior
\nwritten notice to Lessor (which at the option of the Lessee made at any time
\nprior to 90 days prior to the relevant purchase date may be deemed a notice of
\nthe applicable renewal option pursuant to Section 19(a)(1) or 19(a)(2) as the
\nLessee may designate) (each a “Purchase Option Date”), to terminate this Lease
\nand to purchase the Aircraft:<\/p>\n
(1) on any Special Purchase Option Date for a purchase price
\n equal to the greater of (x) the Fair Market Sales Value of the Aircraft on
\n such date or (y) the amount determined by multiplying Lessor’s Cost by the
\n Special Termination Value Percentage with respect to such Date (with
\n respect to any such Date, the “Special Termination Value”);<\/p>\n
(2) on the EBO Date for a purchase price equal to the amount
\n determined by multiplying Lessor’s Cost by the EBO Percentage payable on
\n the EBO Date or as otherwise provided in, and subject to the conditions set
\n forth in, Exhibit H hereto (the “EBO Price”);<\/p>\n
76<\/p>\n
(3) on the last Business Day of the Basic Term for a purchase
\n price equal to the Fair Market Sales Value of the Aircraft on such date;
\n and<\/p>\n
(4) on the last Business Day of any Renewal Term for a purchase
\n price equal to the Fair Market Sales Value of the Aircraft on such date.<\/p>\n
Notwithstanding the foregoing but subject to the provisions of Section 8(r) of
\nthe Participation Agreement, the purchase price on any Purchase Option Date
\nshall be sufficient, together with all other amounts payable simultaneously by
\nLessee, to pay in full the payments then required to be made on account of the
\nprincipal amount (and Premium, if any) of and interest on the Loan Certificates
\nthen outstanding. Upon payment to Lessor in immediately available funds of the
\nfull amount of the purchase price (less the principal amount of the Loan
\nCertificates assumed by the Lessee in accordance with Section 8(r) of the
\nParticipation Agreement) plus all Basic Rent due on or prior to such purchase
\ndate (unless denominated “advance” rental), all Supplemental Rent due on or
\nprior to such purchase date (including amounts equal to Premium, if any) and
\npayment of any other amounts then due hereunder (including all reasonable costs
\nor expenses of Lessor (including any applicable sales or transfer taxes) and the
\nOwner Participant in connection with such purchase), Lessor will transfer to
\nLessee, without recourse or warranty (except as to the absence of Lessor Liens
\n(including for this purpose Liens that would be Lessor Liens but for the proviso
\nto the definition of Lessor Liens)), all of Lessor’s right, title and interest
\nin and to the Aircraft.<\/p>\n
(c) Valuation. At any time not earlier than 365 days prior to the
\n ———
\ndate on which Lessee may purchase an Aircraft pursuant to Section 19(b) hereof
\nor renew this Lease pursuant to Section 19(a) hereof, Lessee may deliver to
\nLessor a revocable notice of its intent to exercise its renewal option or
\npurchase option. For all purposes of this Section 19, including the appraisal
\nreferred to in this Section 19(c), in determining Fair Market Rental Value or
\nFair Market Sales Value, the Aircraft shall be valued (i) as if in the condition
\nand otherwise in compliance with the terms of Section 5 (but subject to Section
\n5(e)) upon a return of the Aircraft in the United States and as if it had been
\nmaintained at all times as required in accordance with Section 7(a)(1) and (2)
\nand Section 8, (ii) on the basis of the value which would obtain in an arm’s-
\nlength transaction between an informed and willing buyer or user or lessee
\n(other than a lessee or an Affiliate of a lessee currently in possession or a
\nused equipment scrap dealer) under no compulsion to buy or lease and an informed
\nand willing seller or lessor unaffiliated with such buyer-user or lessee and
\nunder no compulsion to sell or<\/p>\n
77<\/p>\n
lease, and (iii) in the case of such valuation for determining Fair Market
\nRental Value, assuming such lessee would have substantially the same obligations
\nduring the Fair Market Renewal Term as provided hereunder including without
\nlimitation the obligations of Lessee to carry and maintain the insurance
\nrequired by Section 11 hereof. Upon receipt of such notice Lessor and Lessee
\nshall confer in good faith with a view to reaching agreement on the Fair Market
\nRental Value or Fair Market Sales Value of the Aircraft. If the parties have
\nnot so agreed by 240 days prior to the end of the Basic Term or the Renewal Term
\nin question, then the question shall be determined by an appraisal mutually
\nagreed to by two recognized independent aircraft appraisers, one of which
\nappraisers shall be chosen by Lessor and one by Lessee within five Business Days
\nafter Lessor or Lessee shall have received written notice from the other party
\nof a demand that such an appraisal be made, which notice shall specify the
\nappraiser chosen by the party giving the notice or, if such appraisers cannot
\nagree on the amount of such appraisal within five Business Days after the end of
\nsuch five-day period, each shall render its own appraisal and shall by mutual
\nconsent choose another appraiser within five Business Days after the end of such
\nfive-day period. If, within such five-day period, such two appraisers fail to
\nappoint a third appraiser, then either Lessor or Lessee, on behalf of both, may
\napply to the American Arbitration Association (or any successor organization
\nthereto) in Chicago, Illinois for the appointment of such third appraiser. The
\ndecision of the third appraiser so appointed shall be given within ten Business
\nDays after the appointment of such third appraiser. As soon as the third
\nappraiser has delivered his appraisal, that appraisal shall be compared with the
\nappraisals given by the other two appraisers. If the determination of one
\nappraiser is more disparate from the average of all three determinations than
\neach of the other two determinations, then the determination of such appraiser
\nshall be excluded, the remaining two determinations shall be averaged and such
\naverage shall be final and binding upon the parties hereto; otherwise the
\naverage of all three determinations shall be final and binding upon the parties
\nthereto. Lessee and Lessor shall equally bear all expenses relating to such
\nappraisal procedure (other than an appraisal procedure related to Lessee’s
\npurchase option under Section 19(b)(1), the costs of which Lessee shall in all
\nevents bear), provided, that if such transaction is not consummated (other than
\nas the result of the fault of Lessor) Lessee shall bear all expenses relating to
\nsuch appraisal procedure.<\/p>\n
SECTION 20. Security for Lessor’s Obligation to Certificate Holders.
\n ——————————————————-
\nIn order to secure the indebtedness evidenced by the Loan Certificates, Lessor
\nhas agreed in the Trust Indenture, among other things, to assign to the
\nIndenture Trustee this Lease and to mortgage the Aircraft in favor of the<\/p>\n
78<\/p>\n
Indenture Trustee, subject to the reservations and conditions therein set forth.
\nTo the extent, if any, that this Lease constitutes chattel paper (as such term
\nis defined in the Uniform Commercial Code as in effect in any applicable
\njurisdiction), no security interest in this Lease may be created through the
\ntransfer or possession of any counterpart other than the original counterpart,
\nwhich shall be identified as the counterpart containing the receipt therefor
\nexecuted by the Indenture Trustee as indenture trustee under the Trust Indenture
\non the signature page thereof. Lessee hereby accepts and consents to the
\nassignment of all Lessor’s right, title and interest in and to this Lease
\npursuant to the terms of the Trust Indenture. Lessee agrees to pay directly to
\nthe Indenture Trustee (or, after receipt by Lessee of notice from the Indenture
\nTrustee of the discharge of the Trust Indenture, to Lessor), all amounts of Rent
\n(other than Excluded Payments) due or to become due hereunder and assigned to
\nthe Indenture Trustee and Lessee agrees that the Indenture Trustee’s right to
\nsuch payments hereunder shall be absolute and unconditional and shall not be
\naffected by any circumstance. Notwithstanding the foregoing assignment of this
\nLease, the obligations of Lessor to Lessee to perform the terms and conditions
\nof this Lease shall remain in full force and effect. Lessee further
\nacknowledges that the Trust Indenture provides that so long as the Loan
\nCertificates are outstanding Lessor may not consent to any amendment,
\nmodification or waiver to this Lease without the prior consent of the Indenture
\nTrustee (except as provided in Section 11.06 of the Trust Indenture) and Lessee
\nagrees to provide to the Indenture Trustee a copy of all notices, consents,
\ncertificates or other information provided hereunder to Lessor.<\/p>\n
SECTION 21. Lessor’s Right to Perform for Lessee. If Lessee fails to
\n ————————————
\nmake any payment of Rent required to be made by it hereunder or fails to perform
\nor comply with any of its agreements contained herein, then (but in each case,
\nexcept in the case of failure to pay Rent or in the case of failure to maintain
\ninsurance as required hereunder, no earlier than five Business Days after notice
\nas to the occurrence of such failure, whether or not it shall yet constitute an
\nEvent of Default hereunder) Lessor may itself make such payment or perform or
\ncomply with such agreement but shall not be obligated hereunder to do so, and
\nthe amount of such payment and the amount of the reasonable expenses of Lessor
\nincurred in connection with such payment or the performance of or compliance
\nwith such agreement, as the case may be, together with interest thereon at the
\nPast Due Rate, shall be deemed Supplemental Rent, payable by Lessee upon demand.<\/p>\n
SECTION 22. Investment of Security Funds; Liability of Lessor
\n ————————————————-
\nLimited. (a) Investment of Security Funds. Any moneys
\n —————————- <\/p>\n
79<\/p>\n
held by Lessor as security hereunder for future payments to Lessee shall, until
\npaid to Lessee, be invested by Lessor or, if the Trust Indenture shall not have
\nbeen discharged, by the Indenture Trustee, as the case may be, as Lessee (or in
\nthe event a Default under Section 14(a), (b), (f) or (g) or an Event of Default
\nhas occurred and is continuing, Lessor) may from time to time direct in writing
\n(and in absence of a written direction by Lessee, there shall be no obligation
\nto invest such moneys) in (i) obligations of, or guaranteed by, the United
\nStates Government or agencies thereof, (ii) open market commercial paper of any
\ncorporation incorporated under the laws of the United States of America or any
\nState thereof rated at least P-1 or its equivalent by Moody’s Investors Service,
\nInc. or at least A-1 or its equivalent by Standard & Poor’s Corporation, (iii)
\ncertificates of deposit issued by commercial banks organized under the laws of
\nthe United States or of any political subdivision thereof having a combined
\ncapital and surplus in excess of $200,000,000 which banks or their holding
\ncompanies have a rating of A or its equivalent by Moody’s Investors Service,
\nInc. or Standard & Poor’s Corporation; provided, however, that the aggregate
\namount at any one time so invested in certificates of deposit issued by any one
\nbank shall not exceed 5% of such bank’s capital and surplus, (iv) U.S. dollar
\ndenominated offshore certificates of deposit issued by, or offshore time
\ndeposits with, any commercial bank described in (iii) or any subsidiary thereof
\nand (v) repurchase agreements with any financial institution having combined
\ncapital and surplus of at least $200,000,000 with any of the obligations
\ndescribed in clause (i) through (iv) as collateral. There shall be promptly
\nremitted to Lessee or its order (but no more frequently than monthly) any gain
\n(including interest received) realized as a result of any such investment (net
\nof any fees, taxes, commissions and other expenses, if any, incurred in
\nconnection with such investment) unless a Section 14(a), (b), (d) (solely with
\nrespect to Lessee’s obligations under Section 7(a) or (b)(viii) or Section 8
\nhereof), (f) or (g) Default or an Event of Default shall have occurred and be
\ncontinuing. If a Default under Section 14(a), (b), (d) (solely with respect to
\nLessee’s obligations under Section 7(a) or (b)(viii) or Section 8 hereof), (f)
\nor (g) or an Event of Default shall have occurred and be continuing, Lessor or
\nif the Trust Indenture shall not have been discharged, the Indenture Trustee as
\nassignee of Lessor, shall hold any such gain as security for the obligations of
\nLessee under this Lease and apply it against such obligations as and when due,
\nand once all such Defaults and Events of Default have been remedied any gain not
\nso applied shall be remitted to Lessee. Lessee shall be responsible for any net
\nloss realized as a result of any such investment and shall reimburse Lessor (or
\nthe Indenture Trustee, as the case may be) therefor on demand.<\/p>\n
80<\/p>\n
(b) Liability of Lessor Limited. It is expressly agreed and
\n —————————
\nunderstood that all representations, warranties and undertakings of Lessor
\nhereunder shall be binding upon Lessor only in its capacity as trustee under the
\nTrust Agreement, and the institution acting as Lessor shall not be liable in its
\nindividual capacity for any breach thereof except for its gross negligence or
\nwillful misconduct or for breach of its covenants, representations and
\nwarranties contained herein, to the extent covenanted or made in its individual
\ncapacity.<\/p>\n
SECTION 23. Miscellaneous. Any provision of this Lease which is
\n ————-
\nprohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
\nbe ineffective to the extent of such prohibition or unenforceability without
\ninvalidating the remaining provisions hereof, and any such prohibition or
\nunenforceability in any jurisdiction shall not invalidate or render
\nunenforceable such provision in any other jurisdiction. No term or provision of
\nthis Lease may be changed, waived, discharged or terminated orally, but only by
\nan instrument in writing signed by Lessor, Lessee and any assignee of Lessor’s
\nrights hereunder. This Lease shall constitute an agreement of lease, and
\nnothing contained herein shall be construed as conveying to Lessee any right,
\ntitle or interest in the Aircraft except as a lessee only. The section and
\nparagraph headings in this Lease and the table of contents are for convenience
\nof reference only and shall not modify, define, expand or limit any of the terms
\nor provisions hereof and all references herein to numbered sections, unless
\notherwise indicated, are to sections of this Lease. THIS LEASE HAS BEEN
\nDELIVERED IN THE STATE OF ILLINOIS AND SHALL IN ALL RESPECTS BE GOVERNED BY AND
\nCONSTRUED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF ILLINOIS
\nINCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE. This Lease may
\nbe executed by the parties hereto in separate counterparts, each of which when
\nso executed and delivered shall be an original, but all such counterparts shall
\ntogether constitute but one and the same instrument.<\/p>\n
SECTION 24. Successor Trustee. Lessee agrees that in the case of the
\n —————–
\nappointment of any successor Owner Trustee pursuant to the terms of the Trust
\nAgreement, such successor Owner Trustee shall, upon written notice by such
\nsuccessor Owner Trustee, succeed to all the rights, powers and title of Lessor
\nhereunder and shall be deemed to be Lessor and the owner of the Aircraft for all
\npurposes hereof without in any way altering the terms of this Lease or Lessee’s
\nobligations hereunder. One such appointment and designation of a successor
\nOwner Trustee shall not exhaust the right to appoint and designate further
\nsuccessor Owner Trustees pursuant to the Trust Agreement, but such right may be
\nexecuted repeatedly as long as this Lease shall be in effect.<\/p>\n
81<\/p>\n
SECTION 25. Bankruptcy. Lessee hereby acknowledges that Lessor and
\n ———-
\nthe Indenture Trustee are entitled to the benefits of Section 1110 of the
\nBankruptcy Code with respect to the Aircraft and that this Lease is a “lease”
\nwithin the meaning of said Section 1110, including that it is to be treated as a
\nlease for federal tax purposes. Lessee agrees not to take any position in
\nconnection with any bankruptcy proceedings involving it that is inconsistent
\nwith a lessor’s rights under Section 1110 of the Bankruptcy Code or any
\ncomparable or successor provision affording protection to lessors of aircraft.<\/p>\n
* * *<\/p>\n
82<\/p>\n
IN WITNESS WHEREOF, Lessor and Lessee have each caused this Lease to
\nbe duly executed as of the day and year first above written.<\/p>\n
STATE STREET BANK AND TRUST COMPANY, not in its
\n individual capacity, except as expressly
\n provided in Section 4 hereof, but solely as
\n Owner Trustee,
\n Lessor<\/p>\n
By_________________________________
\n Vice President<\/p>\n
UNITED AIR LINES, INC.,
\n Lessee<\/p>\n
By_________________________________
\n Vice President and Treasurer<\/p>\n
Receipt of this original counterpart of the foregoing Lease is hereby
\nacknowledged on this _____ day of May, 1995.\/1\/<\/p>\n
FIRST SECURITY BANK OF UTAH,
\n NATIONAL ASSOCIATION
\n Indenture Trustee<\/p>\n
By_________________________________
\n Authorized Officer<\/p>\n
\/1\/This language contained in the original counterpart only.<\/p>\n
83<\/p>\n
EXHIBIT A<\/p>\n
LEASE SUPPLEMENT NO. 1 (1995 777 A)
\n ———————————–<\/p>\n
LEASE SUPPLEMENT No. 1 (1995 777 A), dated May __, 1995, between STATE
\nSTREET BANK AND TRUST COMPANY, not in its individual capacity, but solely as
\nOwner Trustee under the Trust Agreement (1995 777 A), dated as of May 1, 1995,
\nbetween such Owner Trustee and the Owner Participant referred to therein (such
\nOwner Trustee, in its capacity as such Owner Trustee being herein called
\n“Lessor”), and UNITED AIR LINES, INC. (“Lessee”).<\/p>\n
Lessor and Lessee have heretofore entered into that certain Lease
\nAgreement (1995 777 A), dated as of May 1, 1995, relating to one Boeing 777-222
\naircraft (herein called the “Lease” and the defined terms therein being
\nhereinafter used with the same meanings). The Lease provides for the execution
\nand delivery from time to time of Lease Supplements for the purpose of leasing
\nthe Airframe and Engines under the Lease as and when delivered by Lessor to
\nLessee in accordance with the terms thereof.<\/p>\n
The Lease relates to the Airframe and Engines described below, and a
\ncounterpart of the Lease is attached hereto, and made a part hereof, and this
\nLease Supplement together with such attachment, is being filed for recordation
\non the date hereof with the Federal Aviation Administration as one document.\/2\/<\/p>\n
The Lease relates to the Airframe and Engines described below, and a
\ncounterpart of the Lease, attached and made a part of Lease Supplement No. 1
\n(1995 777 A) dated May __, 1995, has been recorded by the Federal Aviation
\nAdministration on ___________ __, 1995, as one document and assigned Conveyance
\nNo. __________.\/3\/<\/p>\n
NOW, THEREFORE, in consideration of the premises and other good and
\nsufficient consideration, Lessor and Lessee hereby agree as follows:<\/p>\n
1. Lessor hereby delivers and leases to Lessee under the Lease
\n and Lessee hereby accepts and leases from Lessor under the Lease the
\n following described Boeing Model 777-222 aircraft (the “Aircraft”), which
\n Aircraft as of the date hereof consists of the following components:<\/p>\n
– ———————–
\n\/2\/This language for Lease Supplement No. 1.<\/p>\n
\/3\/This language for other Lease Supplements.<\/p>\n
(i) Airframe: U.S. Registration No. N777UA and
\n manufacturer’s serial no. 26916; and<\/p>\n
(ii) Engines: two (2) Pratt & Whitney Model PW4084 engines
\n bearing, respectively, manufacturer’s serial nos. _______ and _______
\n (each of which engines has 750 or more rated takeoff horsepower or the
\n equivalent of such horsepower).<\/p>\n
2. The Delivery Date of the Aircraft is the date of this Lease
\n Supplement set forth in the opening paragraph hereof. Except as otherwise
\n provided in the Lease, the Term for the Aircraft shall commence on the
\n Delivery Date and end on the Lease Expiry Date.<\/p>\n
3. Lessee hereby confirms its agreement to pay Lessor Basic Rent
\n for the Aircraft throughout the Term therefor in accordance with Section 3
\n of the Lease.<\/p>\n
4. Lessee hereby confirms to Lessor that Lessee has accepted the
\n Aircraft for all purposes hereof and of the Lease as being airworthy, in
\n good working order and repair and without defect or inherent vice in title,
\n condition, design, operation or fitness for use; provided, however, that
\n nothing contained herein or in the Lease shall in any way diminish or
\n otherwise affect any right Lessee or Lessor may have with respect to the
\n Aircraft against The Boeing Company, or any subcontractor or supplier of
\n The Boeing Company, under the Purchase Agreement or otherwise.<\/p>\n
5. All of the terms and provisions of the Lease are hereby
\n incorporated by reference in this Lease Supplement to the same extent as if
\n fully set forth herein.<\/p>\n
6. This Lease Supplement may be executed by the parties hereto
\n in separate counterparts, each of which when so executed and delivered
\n shall be an original, but all such counterparts shall together constitute
\n but one and the same instrument.<\/p>\n
* * *<\/p>\n
A-2<\/p>\n
IN WITNESS WHEREOF, Lessor and Lessee have caused this Lease Supplement to
\nbe duly executed on the day and year first above written.<\/p>\n
STATE STREET BANK AND TRUST COMPANY, not in its
\n individual capacity, but solely as Owner
\n Trustee,
\n Lessor<\/p>\n
By:________________________________
\n Title:_____________________________<\/p>\n
UNITED AIR LINES, INC.,
\n Lessee<\/p>\n
By:________________________________
\n Vice President and Treasurer<\/p>\n
Receipt of this original counterpart of the foregoing Lease Supplement is
\nhereby acknowledged on this _____ day of May, 1995.\/4\/<\/p>\n
FIRST SECURITY BANK OF UTAH, NATIONAL ASSOCIATION
\n Indenture Trustee<\/p>\n
By_________________________________
\n Authorized Officer<\/p>\n
– ———————-
\n\/4\/This language contained in the original counterpart only.<\/p>\n
A-3<\/p>\n
EXHIBIT B<\/p>\n
BASIC RENT AND EXCESS AMOUNT SCHEDULE
\n ————————————-<\/p>\n
\n\n ARREARS RENT ADVANCE RENT EXCESS AMOUNT
\n AS A PERCENTAGE AS A PERCENTAGE AS A PERCENTAGE
\nDATE OF LESSOR’S COST OF LESSOR’S COST OF LESSOR’S COST
\n– —— —————- —————- —————-
\n <\/p>\n<\/c><\/c><\/c><\/s><\/caption>\n<\/table>\n
FOR PURPOSES OF CONFIDENTIALITY, EXHIBIT B TO THE LEASE AGREEMENT IS
\n INTENTIONALLY OMITTED FROM THE COPY OF THE LEASE AGREEMENT ON FILE WITH THE
\n FEDERAL AVIATION ADMINISTRATION.<\/p>\n
EXHIBIT C<\/p>\n
STIPULATED LOSS VALUE SCHEDULE
\n ——————————<\/p>\n
STIPULATED LOSS VALUE
\n DATE (as a percentage of Lessor’s Cost)
\n —- ———————————-<\/p>\n
FOR PURPOSES OF CONFIDENTIALITY, EXHIBIT C TO THE LEASE AGREEMENT IS
\n INTENTIONALLY OMITTED FROM THE COPY OF THE LEASE AGREEMENT ON FILE WITH THE
\n FEDERAL AVIATION ADMINISTRATION.<\/p>\n
EXHIBIT D<\/p>\n
TERMINATION VALUE SCHEDULE
\n ————————–<\/p>\n
TERMINATION VALUE
\n DATE (as a percentage of Lessor’s Cost)
\n —- ———————————-<\/p>\n
FOR PURPOSES OF CONFIDENTIALITY, EXHIBIT D TO THE LEASE AGREEMENT IS
\n INTENTIONALLY OMITTED FROM THE COPY OF THE LEASE AGREEMENT ON FILE WITH THE
\n FEDERAL AVIATION ADMINISTRATION.<\/p>\n
EXHIBIT E<\/p>\n
RENT RECALCULATION AND
\n INDEMNIFICATION VERIFICATION
\n —————————-<\/p>\n
Any recalculation of Basic Rent, Stipulated Loss Value percentages,
\nTermination Value percentages, Special Termination Value percentages and EBO
\nPercentage pursuant to the Lease and any calculation of any payment to the Owner
\nParticipant or Lessee under the Tax Indemnity Agreement or Section 7(b) of the
\nParticipation Agreement shall be determined by the Owner Participant, computed
\non the basis of the same methodology and assumptions used by the Owner
\nParticipant in determining the Basic Rent, Stipulated Loss Value percentages,
\nTermination Value percentages, Special Termination Value percentages and EBO
\nPercentage as of the Delivery Date except as such assumptions have been modified
\npursuant to Section 3 of the Lease; provided, however, Lessee may request (A)
\nCapstar Partners, Inc., or any other financial advisor to Lessee to verify such
\ncalculations but without any requirement that the Owner Participant disclose to
\nsuch advisor such methodology and assumptions and (B) if Lessee believes that
\nsuch calculations by the Owner Participant are in error then a nationally
\nrecognized firm of accountants selected by the Owner Participant and reasonably
\nacceptable to Lessee (which may be the Owner Participant’s independent public
\naccountants) shall be permitted to verify such calculations and the Owner
\nParticipant will make available to such firm (subject to the execution by such
\nfirm of a confidentiality agreement reasonably acceptable to the Owner
\nParticipant) such methodology and assumptions and any changes made therein
\npursuant to Section 3 of the Lease and any other information reasonably
\nnecessary for such verification requested by such firm. In the event of a
\nverification under clause (B) of this Exhibit E the determination by such firm
\nof accountants shall be final. Lessee will pay the reasonable costs and
\nexpenses of the verification under clause (B) of this Exhibit E; provided,
\nhowever, if as a result of such verification process the Basic Rent is adjusted
\nand such adjustment causes the Net Present Value of Rents to decline by 10 or
\nmore basis points or there is a material error in the computation of the
\nStipulated Loss Value percentages, Termination Value percentages, Special
\nTermination Value percentages or EBO Percentage in the Owner Participant’s
\noriginal statement in the Owner Participant’s favor, or indemnity payment is
\nreduced by $10,000 or more, the Owner Participant shall pay the reasonable costs
\nand expenses of such verification process. Such recalculated Basic Rent,
\nStipulated Loss Value percentages, Termination Value percentages, Special
\nTermination Value percentages and EBO Percentage shall be set forth in an
\namendment to the Lease.<\/p>\n
EXHIBIT F<\/p>\n
SCHEDULE OF COUNTRIES AUTHORIZED
\n FOR DOMICILE OF PERMITTED SUBLESSEES
\n ————————————<\/p>\n
Australia Luxembourg <\/p>\n
Austria *Malaysia <\/p>\n
Belgium Netherlands <\/p>\n
*Brazil New Zealand <\/p>\n
Canada Norway <\/p>\n
Denmark *Portugal <\/p>\n
Finland Singapore <\/p>\n
France *South Korea <\/p>\n
Germany *Spain <\/p>\n
*Greece Sweden <\/p>\n
*Iceland Switzerland <\/p>\n
Ireland *Thailand <\/p>\n
Italy United Kingdom <\/p>\n
Japan *Venezuela <\/p>\n
_______________________
\n* Designates “Restricted Country”.<\/p>\n
EXHIBIT G<\/p>\n
SCHEDULE OF COUNTRIES AUTHORIZED
\n FOR AIRCRAFT REGISTRATION
\n ——————————–<\/p>\n
Australia Luxembourg <\/p>\n
Austria *Malaysia <\/p>\n
Belgium Netherlands <\/p>\n
*Brazil New Zealand <\/p>\n
Canada Norway <\/p>\n
Denmark *Portugal <\/p>\n
Finland Singapore <\/p>\n
France *South Korea <\/p>\n
Germany *Spain <\/p>\n
*Greece Sweden <\/p>\n
*Iceland Switzerland <\/p>\n
Ireland *Thailand <\/p>\n
Italy United Kingdom <\/p>\n
Japan *Venezuela <\/p>\n
_______________________
\n* Designates “Restricted Country”.<\/p>\n
EXHIBIT H<\/p>\n
LESSOR’S COST, ENGINE COST, COMMENCEMENT DATE,
\n LEASE EXPIRY DATE, STIPULATED LOSS VALUE DATE,
\n EBO DATE, EBO PERCENTAGE, SPECIAL PURCHASE
\n OPTION DATES AND SPECIAL TERMINATION VALUE PERCENTAGES
\n (EBO Percentage, EBO Installment Percentages and
\n Special Termination Value Percentages expressed
\n as a percentage of Lessor’s Cost)
\n ——————————————————<\/p>\n
Lessor’s Cost: $________<\/p>\n
Engine Cost: $_________<\/p>\n
Commencement Date: October 19, 1995<\/p>\n
Lease Expiry Date: October 19, 2019<\/p>\n
Stipulated Loss Value Date: the 19th day of each
\n calendar month during the
\n Interim Term, the Basic
\n Term and any Renewal Term<\/p>\n
EBO Date: ______, 2012
\n EBO Percentage: ______%\/1\/
\n Special Purchase Special Termination<\/p>\n
– ——————-
\n\/1\/ Alternatively, Lessee may elect to purchase the Aircraft in accordance with
\nSection 19(b)(2) of the Lease by paying the installment amounts on the dates
\ngiven below:<\/p>\n
EBO Installment Percentages
\n EBO Installment (expressed as a percentage
\n Dates of Lessor’s Cost)
\n ————— —————————<\/p>\n
______, 2012 %
\n ______, 2012 %
\n ______, 2012 %
\n ______, 2012 %<\/p>\n
In the event that Lessee shall so elect and, so long as no payment or bankruptcy
\nDefault, or Event of Default, shall be continuing, Lessee shall as of the EBO
\nDate purchase the Aircraft and receive title to the Aircraft and shall be
\ndeemed, as of the EBO Date, to mortgage in favor of Lessor all of its right,
\ntitle and interest, on and after such date, in the Aircraft to secure the loan
\nand punctual payment of all EBO installment amounts payable under this Exhibit
\nH. On the EBO Date, Lessee shall execute and deliver such instruments, in due
\nform for filing or recording, as may be reasonably requested by the Owner
\nParticipant, to grant, confirm and perfect the mortgage and security interest
\ndeemed to be created by this Exhibit H and to confirm Lessee’s obligations to
\nmake the installment payments payable under this Exhibit H.<\/p>\n
Option Dates: Value Percentages:
\n —————- ——————-<\/p>\n
_______________ _____%
\n _______________ _____%
\n _______________ _____%<\/p>\n
EXHIBIT H<\/p>\n
LESSOR’S COST, ENGINE COST, COMMENCEMENT DATE,
\n LEASE EXPIRY DATE, STIPULATED LOSS VALUE DATE,
\n EBO DATE, EBO PERCENTAGE, SPECIAL PURCHASE
\n OPTION DATES AND SPECIAL TERMINATION VALUE PERCENTAGES
\n (EBO Percentage, EBO Installment Percentages and
\n Special Termination Value Percentages expressed
\n as a percentage of Lessor’s Cost)
\n ——————————————————<\/p>\n
FOR PURPOSES OF CONFIDENTIALITY, EXHIBIT H TO THE LEASE AGREEMENT IS
\n INTENTIONALLY OMITTED FROM THE COPY OF THE LEASE AGREEMENT ON FILE WITH THE
\n FEDERAL AVIATION ADMINISTRATION.<\/p>\n
Doc. No. 1.02
\n Aircraft N766UA<\/p>\n
– ——————————————————————————–<\/p>\n
LEASE AGREEMENT
\n (1995 777 B)<\/p>\n
Dated as of May 1, 1995<\/p>\n
Between<\/p>\n
STATE STREET BANK AND TRUST COMPANY,
\n Not in its Individual Capacity,
\n except as expressly
\n provided herein, but solely as
\n Owner Trustee,
\n Lessor<\/p>\n
and<\/p>\n
UNITED AIR LINES, INC.,
\n Lessee
\n —————————-<\/p>\n
United Air Lines, Inc.
\n 1995 777 B Equipment Trust
\n One Boeing 777-222 Aircraft<\/p>\n
—————————-<\/p>\n
– ——————————————————————————–<\/p>\n
As set forth in Section 20 hereof, Lessor has assigned to the Indenture
\nTrustee (as defined herein) certain of its right, title and interest in and to
\nthis Lease. To the extent, if any, that this Lease constitutes chattel paper
\n(as such term is defined in the Uniform Commercial Code as in effect in any
\napplicable jurisdiction) no security interest in this Lease may be created
\nthrough the transfer or possession of any counterpart other than the original
\nexecuted counterpart, which shall be identified as the counterpart containing
\nthe receipt therefor executed by the Indenture Trustee on the signature page
\nthereof.
\n– ——————————————————————————–<\/p>\n
TABLE OF CONTENTS
\n —————–<\/p>\n
\n\n PAGE
\n —-
\n
\nSECTION 1. Definitions…………………………………………… 1<\/p>\nSECTION 2. Acceptance and Lease…………………………………… 17<\/p>\n
SECTION 3. Term and Rent…………………………………………. 17
\n (a) Interim Term and Basic Term……………………… 17
\n (b) Basic Rent…………………………………….. 17
\n (c) Adjustments to Basic Rent, Excess Amount, Stipulated
\n Loss Values, Termination Values, Special Termination
\n Value Percentages and the EBO Percentage………….. 17
\n (d) Supplemental Rent………………………………. 20
\n (e) Payments in General…………………………….. 20
\n (f) [Intentionally Reserved for Potential Future Use]….. 21
\n (g) Prepayments of Certain Rent Payments……………… 21<\/p>\n
SECTION 4. Lessor’s Representations and Warranties………………….. 22<\/p>\n
SECTION 5. Return of the Aircraft…………………………………. 23
\n (a) Condition Upon Return…………………………… 23
\n (b) Return of Other Engines…………………………. 27
\n (c) Fuel and Manuals……………………………….. 28
\n (d) Storage Upon Return…………………………….. 28
\n (e) Purchase of Engine……………………………… 29
\n (f) Severable Parts………………………………… 29
\n (g) Special Redelivery Provision…………………….. 29<\/p>\n
SECTION 6. Liens………………………………………………… 30<\/p>\n
SECTION 7. Registration, Maintenance and Operation; Possession and
\n Subleases; Insignia………………………………….. 30
\n (a) (1) Registration and Maintenance………………… 31
\n (2) Operation…………………………………. 32
\n (3) Reregistration…………………………….. 33
\n (4) Operating Certificates……………………… 33
\n (b) Possession and Subleases………………………… 33
\n (c) Insignia………………………………………. 39<\/p>\n
SECTION 8. Replacement and Pooling of Parts; Alterations, Modifications
\n and Additions……………………………………….. 40
\n (a) Replacement of Parts……………………………. 40<\/p>\n
<\/c><\/c><\/s><\/caption>\n<\/table>\n
i<\/p>\n
\n
\n (b) Pooling of Parts……………………………….. 41
\n (c) Alterations, Modifications and Additions………….. 41<\/p>\nSECTION 9. Early Termination……………………………………… 43
\n (a) [Intentionally reserved for potential future use]….. 43
\n (b) Termination for Obsolescence\/Surplus……………… 43
\n (c) Sale of the Aircraft……………………………. 43
\n (d) Termination as to Engines……………………….. 46<\/p>\n
SECTION 10. Loss, Destruction, Requisition, etc. …………………… 46
\n (a) Event of Loss with Respect to the Aircraft………… 46
\n (b) Event of Loss with Respect to an Engine…………… 50
\n (c) Application of Payments from Governmental Authorities
\n for Requisition of Title, etc. ………………….. 52
\n (d) Requisition for Use of the Aircraft by the United
\n States Government or Government of Registry of the
\n Aircraft………………………………………. 53
\n (e) Requisition for Use of an Engine by the United States
\n Government or the Government of Registry of the
\n Aircraft………………………………………. 54
\n (f) Application of Payments During Existence of Events of
\n Default……………………………………….. 54<\/p>\n
SECTION 11. Insurance……………………………………………. 55
\n (a) Public Liability and Property Damage Insurance…….. 55
\n (b) Insurance Against Loss or Damage to the Aircraft…… 55
\n (c) Reports, etc…………………………………… 57
\n (d) Self-Insurance…………………………………. 59
\n (e) Additional Insurance by Lessor and Lessee…………. 59
\n (f) Indemnification by Government in Lieu of Insurance…. 60
\n (g) Application of Payments During Existence of Default… 60
\n (h) Terms of Insurance Policies……………………… 60<\/p>\n
SECTION 12. Inspection…………………………………………… 61<\/p>\n
SECTION 13. Assignment…………………………………………… 63<\/p>\n
SECTION 14. Events of Default…………………………………….. 63
\n<\/c><\/c><\/s><\/table>\n
ii<\/p>\n
\n
\nSECTION 15. Remedies…………………………………………….. 65<\/p>\nSECTION 16. Lessee’s Cooperation Concerning Certain Matters………….. 69<\/p>\n
SECTION 17. Notices……………………………………………… 71<\/p>\n
SECTION 18. Net Lease; No Set-Off, Counterclaim, Etc………………… 72<\/p>\n
SECTION 19. Renewal Options; Purchase Options; Valuation…………….. 74
\n (a) Renewal Options………………………………… 74
\n (1) Fixed Renewal Terms………………………… 74
\n (2) Fair Market Renewal Term……………………. 75
\n (3) Waiver……………………………………. 75
\n (4) Conditions Precedent, Payment of Basic Rent…… 75
\n (5) Termination Value; Stipulated Loss Value……… 76
\n (b) Purchase Options……………………………….. 76
\n (c) Valuation……………………………………… 77<\/p>\n
SECTION 20. Security for Lessor’s Obligation to Certificate Holders…… 78<\/p>\n
SECTION 21. Lessor’s Right to Perform for Lessee……………………. 79<\/p>\n
SECTION 22. Investment of Security Funds; Liability of Lessor Limited…. 80
\n (a) Investment of Security Funds…………………….. 80
\n (b) Liability of Lessor Limited……………………… 81<\/p>\n
SECTION 23. Miscellaneous………………………………………… 81<\/p>\n
SECTION 24. Successor Trustee…………………………………….. 81<\/p>\n
SECTION 25. Bankruptcy…………………………………………… 82
\n<\/c><\/c><\/s><\/table>\n
iii<\/p>\n
\n\n EXHIBITS<\/p>\n
\nEXHIBIT A Form of Lease Supplement<\/p>\nEXHIBIT B Basic Rent and Excess Amount Schedule<\/p>\n
EXHIBIT C Stipulated Loss Value Schedule<\/p>\n
EXHIBIT D Termination Value Schedule<\/p>\n
EXHIBIT E Rent Recalculation and Indemnification Verification<\/p>\n
EXHIBIT F Schedule of Countries Authorized for Domicile of Permitted
\n Sublessees<\/p>\n
EXHIBIT G Schedule of Countries Authorized for Aircraft Registration<\/p>\n
EXHIBIT H Lessor’s Cost, Engine Cost, Commencement Date, Lease Expiry
\n Date, Stipulated Loss Value Date, EBO Date, EBO Percentage,
\n Special Purchase Option Dates and Special Termination Value
\n Percentages
\n<\/c><\/s><\/caption>\n<\/table>\n
iv<\/p>\n
LEASE AGREEMENT (1995 777 B)<\/p>\n
This LEASE AGREEMENT (1995 777 B), dated as of May 1, 1995, between
\nSTATE STREET BANK AND TRUST COMPANY, a Massachusetts trust company, not in its
\nindividual capacity, except as expressly provided herein, but solely as Owner
\nTrustee under the Trust Agreement (as defined in Section 1 hereof) (in such
\ncapacity, “Lessor”), and UNITED AIR LINES, INC., a corporation organized and
\nexisting pursuant to the laws of the State of Delaware (“Lessee”).<\/p>\n
WITNESSETH:<\/p>\n
SECTION 1. Definitions. Unless the context otherwise requires, the
\nfollowing terms shall have the following meanings for all purposes of this Lease
\nAgreement and shall be equally applicable to both the singular and the plural
\nforms of the terms herein defined:<\/p>\n
“Acceptable Alternate Engine” means a Pratt & Whitney Model PW4084
\nengine or an engine of the same or another manufacturer of equivalent or greater
\nvalue and utility, and suitable for installation and use on the Airframe;
\nprovided that such engine shall be of the same make, model and manufacturer as
\nthe other engine installed on the Airframe and shall be an engine of a type then
\nbeing utilized by Lessee on other Boeing 777-222 aircraft operated by Lessee and
\nshall have been maintained, serviced, repaired and overhauled in substantially
\nthe same manner as Lessee maintains, services, repairs and overhauls similar
\nengines utilized by Lessee and without in any way discriminating against such
\nengine.<\/p>\n
“Actual Knowledge” means, (i) as it applies to the Owner Trustee or
\nIndenture Trustee, as the case may be, actual knowledge of a responsible officer
\nin the Trust Office, and (ii) as it applies to the Owner Participant, actual
\nknowledge of a Vice President or more senior officer of the Owner Participant or
\nother officer of the Owner Participant in each case having responsibility for
\nthe transactions contemplated by the Operative Documents; provided that each of
\nthe Owner Trustee, the Indenture Trustee and the Owner Participant shall be
\ndeemed to have “Actual Knowledge” of any matter as to which it has been given
\nnotice by any of Lessee, the Owner Participant, any Certificate Holder, the
\nOwner Trustee or the Indenture Trustee, such notice having been given pursuant
\nto and in accordance with Section 13(a) of the Participation Agreement.<\/p>\n
“Additional Insured” means Lessor, in its individual capacity and as
\nowner of the Aircraft, the Indenture Trustee, the<\/p>\n
[Lease Agreement (1995 777 B)]<\/p>\n
Owner Participant, Lessee in its capacity as sublessor under any Sublease, and,
\nso long as the Pass Through Trustees are Certificate Holders, each Pass Through
\nTrustee and each of their respective Affiliates, successors and permitted
\nassigns; and the respective directors, officers and employees of each of the
\nforegoing.<\/p>\n
“Affiliate” means a Person (i) which directly or indirectly through
\none or more intermediaries controls, or is controlled by, or is under a common
\ncontrol with, another Person, (ii) which beneficially owns or holds 10% or more
\n(by number of votes) of any class of voting securities of such other Person or
\n(iii) 10% or more (by number of votes) of the voting securities (or in the case
\nof a Person which is not a corporation, 10% or more of the equity interest) of
\nwhich is beneficially owned or held by such other Person or a Subsidiary. The
\nterm “control” means the possession, directly or indirectly, of the power to
\ndirect or cause the direction of the management and policies of a Person,
\nwhether through the ownership of voting securities, by contract or otherwise.<\/p>\n
“Aircraft” means the Airframe together with the two Engines whether or
\nnot such Engines are installed on the Airframe or any other airframe.<\/p>\n
“Airframe” means: (i) The Boeing Company Model 777-222 aircraft
\n(excluding Engines or engines from time to time installed thereon) specified by
\nUnited States Registration Number and Manufacturer’s serial number in the Lease
\nSupplement; (ii) any and all Parts which are from time to time incorporated or
\ninstalled in or attached thereto or which have been removed therefrom, but where
\ntitle to which remains vested in Lessor in accordance herewith; and (iii) any
\nreplacement airframe which may from time to time be substituted pursuant to
\nSection 10(a)(ii) hereof.<\/p>\n
“Bankruptcy Code” means the Bankruptcy Reform Act of 1978, as amended from
\ntime to time.<\/p>\n
“Base Rate” means the rate of interest announced from time to time by
\nThe First National Bank of Chicago at its principal office in Chicago, Illinois
\nas its “corporate base rate” (or its equivalent successor rate if the corporate
\nbase rate is no longer used).<\/p>\n
“Basic Rent” means, for the Basic Term, the rent payable for the
\nAircraft pursuant to Section 3(b) hereof, as adjusted as provided in Section
\n3(c) and, for a Renewal Term, Basic Rent determined pursuant to Section 19.<\/p>\n
2<\/p>\n
[Lease Agreement (1995 777 B)]<\/p>\n
“Basic Term” means the term for which the Aircraft is leased hereunder
\npursuant to Section 3(a) hereof beginning on the Commencement Date and ending on
\nthe Lease Expiry Date or such earlier date as this Lease may be terminated in
\naccordance with the terms hereof.<\/p>\n
“Business Day” means any day other than a Saturday or Sunday or a day
\non which commercial banks are required or authorized to close in the City of
\nChicago, Illinois; New York City, New York; the city and state in which the
\nprincipal place of business of the Owner Trustee is located; and, so long as any
\nLoan Certificate is outstanding, the city and state in which the Indenture
\nTrustee has its principal place of business and the city and state in which the
\nIndenture Trustee receives and disburses funds.<\/p>\n
“Certificate Holder” has the meaning assigned to the term “Holder” in the
\nTrust Indenture.<\/p>\n
“Certificated Air Carrier” means a Citizen of the United States
\nholding an air carrier operating certificate issued by the Secretary of
\nTransportation pursuant to Chapter 447 of Title 49 of the United States Code,
\nfor aircraft capable of carrying ten or more individuals or 6,000 pounds or more
\nof cargo or that otherwise is certified or registered to the extent required to
\nfall within the purview of 11 U.S.C. Section 1110 or any analogous successor
\nprovision of the Bankruptcy Code.<\/p>\n
“Citizen of the United States” has the meaning given such term in
\nSection 40102(a)(15) of Title 49 of the United States Code.<\/p>\n
“Civil Reserve Air Fleet Program” means the Civil Reserve Air Fleet
\nProgram administered by the United States Government pursuant to Executive Order
\nNo. 11490, as amended, or any substantially similar program.<\/p>\n
“Code” means the Internal Revenue Code of 1986, as amended through the
\nDelivery Date.<\/p>\n
“Commencement Date” means the date specified as such in Exhibit H hereto.<\/p>\n
“Commitments” means the respective commitments of the Pass Through
\nTrustees and the Owner Participant to finance the Owner Trustee’s payment of
\nLessor’s Cost for the Aircraft and “Commitment” means any one of the
\nCommitments.<\/p>\n
“Consent and Agreement” means the Consent and Agreement (1995 777 B),
\ndated as of the date hereof, executed by the<\/p>\n
3<\/p>\n
[Lease Agreement (1995 777 B)]<\/p>\n
Manufacturer, as the same may be amended, modified or supplemented from time to
\ntime in accordance with the applicable provisions thereof.<\/p>\n
“Debt Rate” means the weighted average interest rate borne by the Loan
\nCertificates then outstanding.<\/p>\n
“Default” means any event which with the giving of notice or the lapse of
\ntime or both would become an Event of Default.<\/p>\n
“Delivery Date” means the date of the initial Lease Supplement for the
\nAircraft, which date shall be the date the Aircraft is leased by Lessor to
\nLessee and accepted by Lessee hereunder.<\/p>\n
“Dollars” and “$” mean the lawful currency of the United States of America.<\/p>\n
“EBO Date” means the date specified as such in Exhibit H hereto.<\/p>\n
“EBO Percentage” means the percentage specified as such in Exhibit H
\nhereto.<\/p>\n
“EBO Price” has the meaning set forth in Section 19(b)(2) hereof.<\/p>\n
“Engine” means (i) each of the two Pratt & Whitney Model PW4084 engines
\nlisted by manufacturer’s serial numbers in the initial Lease Supplement and
\ninstalled on the Airframe at the time of the Manufacturer’s delivery to Lessee
\nof such Airframe, and whether or not from time to time thereafter installed on
\nsuch Airframe or any other airframe; (ii) any Acceptable Alternate Engine which
\nmay from time to time be substituted for any of such two engines pursuant to the
\nterms hereof; and (iii) in either case, any and all Parts which are from time to
\ntime incorporated or installed in or attached to any such engine and any and all
\nparts removed therefrom so long as title thereto remains vested in Lessor in
\naccordance herewith. The term “Engines” means, as of any date of determination,
\nall Engines then leased hereunder.<\/p>\n
“Engine Cost” means the amount specified as Engine Cost in Exhibit H
\nhereto.<\/p>\n
“Event of Default” has the meaning specified in Section 14 hereof.<\/p>\n
4<\/p>\n
[Lease Agreement (1995 777 B)]<\/p>\n
“Event of Loss” with respect to the Aircraft, Airframe or any Engine means
\nany of the following events with respect to such property: (i) the loss of such
\nproperty or of the use thereof due to the destruction of or damage to such
\nproperty which renders repair uneconomic or which renders such property
\npermanently unfit for normal use by Lessee for any reason whatsoever; (ii) any
\ndamage to such property which results in an insurance settlement with respect to
\nsuch property on the basis of a total loss, or a constructive or compromised
\ntotal loss; (iii) the theft or disappearance of such property, or the
\nconfiscation, condemnation, or seizure of, or requisition of title to, or use
\nof, such property by any governmental or purported governmental authority (other
\nthan a requisition for use by the United States Government or any government of
\nregistry of the Aircraft or any agency or instrumentality thereof), which in the
\ncase of any event referred to in this clause (iii) shall have resulted in the
\nloss of title or possession of such property by Lessee for a period in excess of
\n90 consecutive days or, if earlier, until the end of the Term; (iv) as a result
\nof any law, rule, regulation, order or other action by the FAA or other
\ngovernmental body of the government of registry of the Aircraft having
\njurisdiction, use of such property in the normal course of the business of air
\ntransportation shall have been prohibited for a period in excess of 180
\nconsecutive days, unless (A) such grounding is applicable to all Boeing 777-222
\naircraft registered in such country, (B) Lessee, prior to the expiration of such
\n180 day period, shall have undertaken and shall be diligently carrying forward,
\nin a manner that does not discriminate against the Aircraft, all steps which are
\nnecessary or desirable to permit the normal use of such property by Lessee, and
\n(C) Lessee, within one year from the time of grounding shall have conformed at
\nleast one such aircraft in its fleet to the requirements of any such law, rule,
\nregulation, order or other action and commenced regular commercial use of the
\nsame in such jurisdiction, provided that no such grounding shall extend beyond
\nthe expiration of the Term; (v) the requisition for use by the United States
\nGovernment or any government of registry of the Aircraft or any instrumentality
\nor agency thereof, which shall have occurred during the Basic Term (or the
\nInterim Term or any Renewal Term) and shall have, in the case of any government
\nof registry of the Aircraft (other than the United States Government or any
\nagency or instrumentality thereof) or any agency or instrumentality thereof,
\ncontinued for more than two years (or if earlier, until the end of the Term),
\nand in the case of the United States Government or any agency or instrumentality
\nthereof shall have continued for a period that extends beyond the Term and
\nLessor shall not have furnished the written notice specified in Section 10(d)
\nhereof; (vi) the operation of or location of the Aircraft, while under
\nrequisition for use by any government, in any area excluded from coverage by any
\ninsurance policy in effect<\/p>\n
5<\/p>\n
[Lease Agreement (1995 777 B)]<\/p>\n
with respect to the Aircraft required by the terms of Section 11, unless in the
\ncase of a requisition by the government of the United States or any agency or
\ninstrumentality thereof, Lessee shall have obtained an indemnity in lieu thereof
\nfrom such government; and (vii) any divestiture of title to an Engine treated as
\nan Event of Loss pursuant to Section 7(b) hereof. An Event of Loss with respect
\nto the Aircraft shall be deemed to have occurred if an Event of Loss occurs with
\nrespect to the Airframe.<\/p>\n
“Excess Amount” for the Commencement Date means the amount determined
\nby multiplying Lessor’s Cost by the percentage specified in Exhibit B hereto
\nopposite the Commencement Date (as such Exhibit B may be adjusted from time to
\ntime as provided in Section 3(c) hereof).<\/p>\n
“Excluded Payments” has the meaning set forth in the Trust Indenture.<\/p>\n
“Expenses” means any and all liabilities, obligations, losses, damages,
\npenalties, claims (including, but not limited to, negligence, strict or absolute
\nliability, liability in tort and liabilities arising out of violation of laws or
\nregulatory requirements of any kind), actions, suits, costs, expenses and
\ndisbursements (including reasonable legal fees and expenses and, to the extent
\nnot required to be paid by the Owner Trustee pursuant to Section 16 of the
\nParticipation Agreement, Transaction Expenses, and all costs and expenses
\nrelating to amendments, supplements, waivers and consents to and under the
\nOperative Documents, any amounts that would be included in Premium, but
\nexcluding internal costs and expenses such as salaries, and overhead of
\nwhatsoever kind and nature).<\/p>\n
“Fair Market Rental Value” means the fair market rental value determined as
\nprovided in Section 19(c) hereof.<\/p>\n
“Fair Market Sales Value” means the fair market sales value determined as
\nprovided in Sections 19(a) and 19(c) hereof.<\/p>\n
“Federal Aviation Act” means the sections of Title 49 of the United States
\nCode relating to aviation, as amended.<\/p>\n
“Federal Aviation Administration” and “FAA” mean the United States
\nFederal Aviation Administration and any successor agency or agencies thereto.<\/p>\n
“Indemnitees” means the Owner Participant, the Owner Trustee, in its
\nindividual capacity and as trustee under the Trust Agreement, the Trust Estate,
\nthe Trust Indenture Estate, the Indenture Trustee, in its individual capacity
\nand as trustee<\/p>\n
6<\/p>\n
[Lease Agreement (1995 777 B)]<\/p>\n
under the Trust Indenture, each Pass Through Trustee (so long as the Pass
\nThrough Trustees are Certificate Holders), and each of their respective
\nAffiliates, successors, permitted assigns, directors, officers, employees,
\nservants and agents.<\/p>\n
“Indenture Trustee” has the meaning set forth in the Trust Indenture.<\/p>\n
“Indenture Trustee Documents” means the Participation Agreement, the
\nTrust Indenture, each Pass Through Trust Agreement, each Pass Through Trust
\nSupplement, each Loan Certificate and each Pass Through Certificate and any
\nother document executed by the Indenture Trustee or the Pass Through Trustee in
\nconnection with the transactions contemplated by the Operative Documents.<\/p>\n
“Interim Term” means the period commencing on the Delivery Date and
\nending on and including the day immediately preceding the Commencement Date,
\nunless earlier terminated in accordance with the provisions hereof.<\/p>\n
“Lease Agreement”, “this Lease Agreement”, “this Lease”, “this
\nAgreement”, “herein”, “hereof”, “hereunder”, “hereby”, or other like words mean
\nthis Lease Agreement as originally executed or as modified, amended or
\nsupplemented in accordance with the applicable provisions hereof and the terms
\nof the Trust Indenture, including, without limitation, supplementation hereof by
\nany Lease Supplement entered into in accordance with the applicable provisions
\nhereof and the terms of the Trust Indenture.<\/p>\n
“Lease Expiry Date” means the date specified as such in Exhibit H.<\/p>\n
“Lease Period” means each of the consecutive semi-annual periods
\nthroughout the Basic Term and any Renewal Term ending on a Lease Period Date,
\nthe first such period commencing on and including the Commencement Date.<\/p>\n
“Lease Period Date” means April 19, 1996 and each succeeding semi-
\nannual anniversary thereof to and including the last such date in the Term.<\/p>\n
“Lease Supplement” means a Lease Supplement (1995 777 B), substantially in
\nthe form of Exhibit A hereto, to be entered into between Lessor and Lessee on
\nthe Delivery Date for the purpose of leasing the Aircraft under and pursuant to
\nthe terms of this Lease Agreement, and any subsequent Lease Supplement entered
\ninto in accordance with the terms hereof and the terms of the Trust Indenture.<\/p>\n
7<\/p>\n
[Lease Agreement (1995 777 B)]<\/p>\n
“Lessee Documents” means the Participation Agreement, the Lease, any
\nLease Supplement, the Purchase Agreement, the Owner Trustee’s Purchase
\nAgreement, the Owner Trustee’s FAA Bill of Sale, the Owner Trustee’s Bill of
\nSale, the Tax Indemnity Agreement, each Pass Through Trust Agreement, each Pass
\nThrough Trust Agreement Supplement and any other document executed by Lessee in
\nconnection with the transactions contemplated by the Operative Documents.<\/p>\n
“Lessor Liens” means any Lien on, or disposition of title to, the Aircraft
\nor the Trust Estate arising as a result of (i) claims against Lessor, State
\nStreet Bank and Trust Company, in its individual capacity, or the Owner
\nParticipant not related to the transactions contemplated by the Operative
\nDocuments, (ii) any act or omission of the Owner Participant, Lessor, or State
\nStreet Bank and Trust Company, in its individual capacity, which is not related
\nto the transactions contemplated by the Operative Documents or is in violation
\nof any of the terms of the Operative Documents, (iii) claims against the Owner
\nParticipant, Lessor, or State Street Bank and Trust Company, in its individual
\ncapacity, with respect to Taxes or Expenses against which Lessee is not required
\nto indemnify the Owner Participant, Lessor or State Street Bank and Trust
\nCompany, in its individual capacity or (iv) claims against Lessor or the Owner
\nParticipant arising out of any transfer by Lessor or the Owner Participant of
\nall or any portion of the respective interests of Lessor or the Owner
\nParticipant in the Aircraft, the Trust Estate or the Operative Documents (other
\nthan a transfer of possession of the Aircraft by Lessor pursuant to this
\nAgreement, a transfer pursuant to the Trust Indenture (other than a transfer
\npursuant to Article 8 of the Trust Indenture not attributable to a Lease Event
\nof Default) or a transfer pursuant to Section 7, 8, 9, 10 or 19 hereof, pursuant
\nto Section 17 of the Participation Agreement or pursuant to the exercise of the
\nremedies set forth in Section 15 hereof); provided, however, that any Lien which
\nis attributable solely to State Street Bank and Trust Company or the Owner
\nParticipant and would otherwise constitute a Lessor Lien hereunder shall not
\nconstitute a Lessor Lien hereunder so long as (1) the existence of such Lien
\nposes no material risk of the sale, forfeiture or loss of the Airframe or any
\nEngine or any interest therein, (2) the existence of such Lien does not
\ninterfere in any way with the use or operation of the Aircraft by Lessee (or any
\nSublessee), (3) the existence of such Lien does not affect the priority or
\nperfection of, or otherwise jeopardize, the Lien of the Trust Indenture, (4)
\nState Street Bank and Trust Company or the Owner Participant, as the case may
\nbe, is diligently contesting such Lien by appropriate proceeding and (5) the
\nexistence of such Lien does not result in actual interruption in the payment of
\nRent assigned to the Indenture Trustee for the benefit of the Certificate
\nHolders.<\/p>\n
8<\/p>\n
[Lease Agreement (1995 777 B)]<\/p>\n
“Lessor’s Cost” for the Aircraft means the amount specified as Lessor’s
\nCost in Exhibit H hereto; provided, however, Lessor’s Cost shall be reduced by
\nEngine Cost for each Engine for which Lessee has paid Stipulated Loss Value
\npursuant to the terms of Section 10(b) hereof and has otherwise paid all other
\namounts due and payable under said Section 10(b).<\/p>\n
“Lien” means any mortgage, pledge, lien, charge, claim, encumbrance, lease
\nor security interest.<\/p>\n
“Loan Certificate” has the meaning assigned to the term “Certificate” in
\nthe Trust Indenture.<\/p>\n
“Loss Payment Date” has the meaning set forth in Section 10(a) hereof.<\/p>\n
“Manufacturer” means The Boeing Company, a Delaware corporation, and its
\nsubsidiaries, successors and assigns.<\/p>\n
“Manufacturer Documents” means the Purchase Agreement, the Consent and
\nAgreement and any other document executed by the Manufacturer in connection with
\nthe transactions contemplated by the Operative Documents.<\/p>\n
“Net Economic Return” means the Owner Participant’s net after-tax book
\nyield, aggregate after-tax cash flow and, with respect to any adjustments
\nrequired to maintain the Owner Participant’s Net Economic Return, periodic FASB
\n13 earnings plus or minus 5% for any annual period, utilizing the multiple
\ninvestment sinking fund method of analysis, computed on the basis of the same
\nmethodology and assumptions as were utilized by the Owner Participant in
\ndetermining Basic Rent, Stipulated Loss Value percentages, Special Termination
\nValue Percentages, EBO Percentage and Termination Value percentages as of the
\nDelivery Date, as such assumptions may be revised from time to time for events
\nwhich have been the basis for adjustments to Rent pursuant to Section 3(c)
\nhereof, provided that under no circumstances shall there be a reduction in Owner
\nParticipant’s 1995 FASB 13 earnings.<\/p>\n
“Net Present Value of Rents” means the net present value, as of the
\nDelivery Date, of Basic Rent set forth in Exhibit B hereto, discounted at a rate
\nper Lease Period equal to (a) 11% per annum divided by (b) the number of Lease
\nPeriods per year.<\/p>\n
“Operative Documents” means the Lease (including any Lease Supplement); the
\nParticipation Agreement; the Tax Indemnity Agreement; the Trust Agreement; any
\nTrust Supplement; the Purchase Agreement; the Owner Trustee’s Bill of Sale; the
\nOwner<\/p>\n
9<\/p>\n
[Lease Agreement (1995 777 B)]<\/p>\n
Trustee’s FAA Bill of Sale; the Owner Trustee’s Purchase Agreement; an
\nacceptance certificate covering the Aircraft in the form agreed to by the
\nParticipants and Lessee (the “Acceptance Certificate”); the Trust Indenture; the
\nLoan Certificates outstanding at the time of reference; and the Consent and
\nAgreement.<\/p>\n
“Original Amount”, with respect to a Loan Certificate, means at any
\ntime prior to the Commencement Date, the Original Issue Price (as defined in the
\nTrust Indenture) of such Loan Certificate, or, at any time on or after the
\nCommencement Date, the stated original principal amount of such Loan
\nCertificate, and with respect to all Loan Certificates means, at any time prior
\nto the Commencement Date, the aggregate Original Issue Prices for such Loan
\nCertificates or, at any time on or after the Commencement Date, the aggregate
\nstated original principal amounts of such Loan Certificates.<\/p>\n
“Owner Participant” means the Person executing the Participation
\nAgreement as the Owner Participant and any Person to which such Person transfers
\nall or any portion of its right, title and interest in and to the Trust
\nAgreement, the Trust Estate and the Participation Agreement, to the extent
\npermitted thereby.<\/p>\n
“Owner Participant Documents” means the Participation Agreement, the
\nTrust Agreement, the Tax Indemnity Agreement and any other document executed by
\nthe Owner Participant in connection with the transactions contemplated by the
\nOperative Documents.<\/p>\n
“Owner Participant Parent” means _________________, a Delaware corporation.<\/p>\n
“Owner Participant Parent Guaranty” means the guaranty, dated the
\nDelivery Date, by the Owner Participant Parent in favor of Lessee, the Pass
\nThrough Trustees, and certain other parties, of certain obligations of the Owner
\nParticipant, as the same may be amended or modified in compliance with the
\nprovisions thereof.<\/p>\n
“Owner Trustee” means the Person executing the Participation Agreement
\nas Owner Trustee and any Person appointed as successor Owner Trustee in each
\ncase not in its individual capacity but solely as Owner Trustee under the Trust
\nAgreement, except as otherwise expressly stated.<\/p>\n
“Owner Trustee Documents” means the Participation Agreement, the Trust
\nAgreement, this Lease, any Lease Supplement, the Owner Trustee’s Purchase
\nAgreement, the Trust Indenture, any Trust Supplement, the Loan Certificates and
\nany other document<\/p>\n
10<\/p>\n
[Lease Agreement (1995 777 B)]<\/p>\n
executed by the Owner Trustee in connection with the transactions contemplated
\nby the Operative Documents.<\/p>\n
“Owner Trustee’s Bill of Sale” means a bill of sale for the Aircraft,
\ndated the Delivery Date, executed by Lessee in favor of Lessor in form and
\nsubstance satisfactory to Lessor.<\/p>\n
“Owner Trustee’s FAA Bill of Sale” means a bill of sale for the Aircraft on
\nAC Form 8050-2 or such other form as may be approved by the FAA on the Delivery
\nDate executed by Lessee in favor of Lessor in form and substance satisfactory to
\nLessor.<\/p>\n
“Owner Trustee’s Purchase Agreement” means the Owner Trustee’s
\nPurchase Agreement and Assignment (1995 777 B), dated as of the date hereof,
\nbetween Lessee and the Owner Trustee, as the same may be amended, modified or
\nsupplemented from time to time in accordance with the applicable provisions
\nthereof and the terms of the Trust Indenture.<\/p>\n
“Participants” means and includes the Pass Through Trustees and the Owner
\nParticipant.<\/p>\n
“Participation Agreement” means that certain Participation Agreement
\n(1995 777 B), dated as of the date hereof, among Lessee, the Indenture Trustee,
\nthe Owner Participant, the Pass Through Trustees and the Owner Trustee, as such
\nParticipation Agreement may be amended or supplemented from time to time
\npursuant to the applicable provisions thereof.<\/p>\n
“Parts” means all appliances, parts, instruments, appurtenances,
\naccessories, furnishings and other equipment of whatever nature other than
\ncomplete Engines or engines, which are from time to time incorporated or
\ninstalled in or attached to an Airframe or any Engine or which have been removed
\ntherefrom, but where title to which remains vested in Lessor in accordance with
\nSection 8 hereof.<\/p>\n
“Pass Through Certificates” has the meaning set forth in the Trust
\nIndenture.<\/p>\n
“Pass Through Trust Agreements” means the Pass Through Trust Agreement
\ndated as of February 1, 1992, as amended and restated as of May 1, 1995, in each
\ncase between the Lessee and State Street Bank and Trust Company of Connecticut,
\nNational Association, as supplemented by each of the two Pass Through Trust
\nSupplements, in each case between the Lessee and the Pass Through Trustee, and
\nas the same may be further modified, amended or supplemented pursuant to the
\napplicable provisions thereof and the Participation Agreement.<\/p>\n
11<\/p>\n
[Lease Agreement (1995 777 B)]<\/p>\n
“Pass Through Trustee” shall mean First Security Bank of Utah, National
\nAssociation, a national banking association, in its capacity as Trustee under
\neach Pass Through Trust Agreement, and each other Person which may from time to
\ntime be acting as successor trustee under any such Pass Through Trust Agreement.<\/p>\n
“Pass Through Trust Supplement” means each of the two separate Trust
\nSupplements Nos. 1995-A1 and 1995-A2, in each case dated as of May __, 1995
\nbetween Lessee and the Pass Through Trustee.<\/p>\n
“Past Due Rate” means (i) with respect to the portion of any payment of
\nRent that may be required by the Trust Indenture to be paid by the Indenture
\nTrustee to any Certificate Holder, the “Past Due Rate” as defined in the Trust
\nIndenture and (ii) with respect to the remaining portion of any payment of Rent
\n(and the entire amount of any payment of Rent after the satisfaction and
\ndischarge of the Trust Indenture), a fluctuating rate per annum equal to 2% over
\nthe Debt Rate.<\/p>\n
“Permitted Lien” means any Lien referred to in clauses (i) through (vi) of
\nSection 6 hereof.<\/p>\n
“Permitted Sublessee” means any air carrier domiciled in a country listed
\nin Exhibit F hereto as in effect from time to time.<\/p>\n
“Person” means any individual, corporation, partnership, joint venture,
\nassociation, joint-stock company, trust, unincorporated organization or
\ngovernment or any agency or political subdivision thereof.<\/p>\n
“Premium” has the meaning assigned to the term in Section 6.01(b) of the
\nTrust Indenture.<\/p>\n
“Prepaid Rent” has the meaning set forth in Section 3(g) hereof.<\/p>\n
“Purchase Agreement” means the agreement between Lessee and the
\nManufacturer relating to the purchase by Lessee of the Aircraft, as originally
\nexecuted or as modified, amended or supplemented in accordance with the terms
\nthereof, but only insofar as the foregoing relates to the Aircraft.<\/p>\n
“Redemption Date” has the meaning set forth in the Trust Indenture.<\/p>\n
“Reimbursement Amount” has the meaning set forth in Section 3(g) hereof.<\/p>\n
12<\/p>\n
[Lease Agreement (1995 777 B)]<\/p>\n
“Renewal Term” means the Fair Market Renewal Term or a Fixed Renewal Term
\nas those terms are defined in Section 19 hereof.<\/p>\n
“Rent” means Basic Rent and Supplemental Rent, collectively.<\/p>\n
“Replacement Airframe” means any airframe substituted for an airframe in
\naccordance with Sections 10(a) of the Lease.<\/p>\n
“Replacement Engine” means any engine substituted for an Engine in
\naccordance with Sections 9(d), 10(a) or 10(b) of the Lease.<\/p>\n
“Restricted Country” has the meaning set forth on Exhibits F and G hereto.<\/p>\n
“Restricted Period” means the period ending on the last open day of the
\ncalendar year in which there occurs the seventh anniversary of the Delivery
\nDate.<\/p>\n
“Special Purchase Option Dates” means each of the dates specified as such
\non Exhibit H hereto.<\/p>\n
“Special Termination Value”, with respect to any Special Purchase Option
\nDate, has the meaning set forth in Section 19(b)(1) hereof.<\/p>\n
“Special Termination Value Percentage” means, with respect to any Special
\nPurchase Option Date, the percentage set forth opposite such Date on Exhibit H
\nhereto.<\/p>\n
“Stipulated Loss Value” with respect to the Aircraft as of any date through
\nand including the last day of the Basic Term, means the amount determined by
\nmultiplying Lessor’s Cost for the Aircraft by the percentage specified in
\nExhibit C hereto opposite the Stipulated Loss Value Date with respect to which
\nthe amount of Stipulated Loss Value is determined (as such Exhibit C may be
\nadjusted from time to time as provided in Section 3(c) hereof and in Section 8
\nof the Tax Indemnity Agreement). “Stipulated Loss Value” with respect to the
\nAircraft, as of any date during any Renewal Term, shall be the amount determined
\nas provided in Section 19 hereof. To the extent that an event giving rise to an
\nobligation to pay any Stipulated Loss Value occurs (with respect to the Airframe
\nor either Engine), and the actual date on which the loss of tax benefits
\nresulting from such event occurs shall be earlier or later than the date assumed
\nin calculating the United States Federal income tax consequences reflected in
\nthe applicable Stipulated Loss Value, such Stipulated Loss Value shall be
\nappropriately adjusted upwards or downwards to reflect<\/p>\n
13<\/p>\n
[Lease Agreement (1995 777 B)]<\/p>\n
the actual date of such loss of tax benefits, but shall be otherwise based on
\nthe original assumptions used in determining such Stipulated Loss Value.<\/p>\n
“Stipulated Loss Value Date” has the meaning specified therefore in Exhibit
\nH hereto.<\/p>\n
“Sublease” means any sublease permitted by the terms of Section 7(b)(viii)
\nhereof.<\/p>\n
“Sublessee” means any Person for so long, but only so long, as such Person
\nis in possession of the Airframe and or any Engine pursuant to the terms of a
\nSublease which is then in effect pursuant to Section 7(b)(viii) hereof.<\/p>\n
“Subsidiary” means, with respect to any Person that is a corporation, any
\nother corporation a majority of the voting securities of which are owned by such
\nperson, whether directly or indirectly.<\/p>\n
“Supplemental Rent” means all amounts, liabilities and obligations (other
\nthan Basic Rent) which Lessee assumes or agrees to pay to Lessor or others
\nhereunder or under any of the other Operative Documents, including payments of
\nStipulated Loss Value and Termination Value and amounts calculated by reference
\nthereto, an amount equal to the Premium, if any, payable in accordance with
\nSection 3(d) hereof and indemnity payments. The parties acknowledge that
\nSupplemental Rent is a general category and, accordingly, agree that any
\nprovision of any Operative Document which calls for the payment of Supplemental
\nRent and also calls for the payment of specific items which are includable in
\nSupplemental Rent is not to be interpreted as requiring any double payment.<\/p>\n
“Tax Indemnity Agreement” means that certain Tax Indemnity Agreement (1995
\n777 B), dated as of the date hereof, between the Owner Participant and Lessee,
\nas originally executed or as modified, amended or supplemented pursuant to the
\napplicable provisions thereof.<\/p>\n
“Taxes” means any and all fees (including, without limitation, license,
\ndocumentation and registration fees), taxes (including, without limitation,
\nincome, gross receipts, sales, rental, use, turnover, value added, property
\n(tangible and intangible), excise and stamp taxes), licenses, levies, imposts,
\nduties, recording charges or fees, charges, assessments, or withholdings of any
\nnature whatsoever, together with any assessments, penalties, fines, additions to
\ntax and interest thereon (each, individually, a “Tax”).<\/p>\n
14<\/p>\n
[Lease Agreement (1995 777 B)]<\/p>\n
“Term” means the Interim Term, Basic Term and, if actually entered into,
\nany Renewal Term.<\/p>\n
“Termination Date” has the meaning set forth in Section 9(b) hereof.<\/p>\n
“Termination Value” with respect to the Aircraft as of any date through and
\nincluding the last day of the Basic Term means the amount determined by
\nmultiplying Lessor’s Cost for the Aircraft by the percentage specified in
\nExhibit D hereto opposite the Termination Date with respect to which the amount
\nof Termination Value is determined (as such Exhibit D may be adjusted from time
\nto time as provided in Section 3(c) hereof and in Section 8 of the Tax Indemnity
\nAgreement). To the extent that an event giving rise to an obligation to pay any
\nTermination Value occurs, and the actual date on which the loss of tax benefits
\nresulting from such event occurs shall be earlier or later than the date assumed
\nin calculating the United States Federal income tax consequences reflected in
\nthe applicable Termination Value, such Termination Value shall be appropriately
\nadjusted upwards or downwards to reflect the actual date of such loss of tax
\nbenefits, but shall be otherwise based on the original assumptions used in
\ndetermining such Termination Value.<\/p>\n
“Transaction Expenses” means (i) the reasonable and actual fees, expenses
\nand disbursements of (1) Ray, Quinney & Nebeker, special counsel for the
\nIndenture Trustee and the Pass Through Trustee, (2) Bingham, Dana & Gould,
\ncounsel for the Owner Trustee, (3) Crowe & Dunlevy, P.C., special counsel in
\nOklahoma City, Oklahoma, (4) Shearman & Sterling, special counsel for the
\nunderwriters (to the extent not payable by the underwriters), (5) Vedder, Price,
\nKaufman & Kammholz, special counsel for Lessee, and (6) Dewey Ballantine,
\nspecial counsel for the Owner Participant, (ii) all fees, taxes and other
\ncharges payable in connection with the recording or filing of instruments and
\nfinancing statements, (iii) the initial fee and reasonable and actual
\ndisbursements of the Owner Trustee under the Trust Agreement, (iv) the initial
\nfee and reasonable and actual disbursements of the Indenture Trustee under the
\nTrust Indenture, (v) the fee of BK Associates (or of such other appraiser as
\nshall be selected by the Owner Participant) with respect to the appraisal of the
\nAircraft required on or before the Delivery Date pursuant to Section 4(a) of the
\nParticipation Agreement, (vi) the fees, commissions and expenses of Capstar
\nPartners, Inc., (vii) the reasonable out-of-pocket expenses of the Owner
\nParticipant relating to the transactions contemplated by the Participation
\nAgreement including, without limitation, the expenses related to the
\norganization of the foreign sales corporation, as well as those transactions
\nrelating to the investment by the Owner Participant in the second quarter of
\n1995 in one Boeing 777-222<\/p>\n
15<\/p>\n
[Lease Agreement (1995 777 B)]<\/p>\n
aircraft to be operated by the Lessee up to an aggregate of $25,000 (but
\nexcluding from Transaction Expenses airfare charges incurred for travel on an
\nairline other than United Air Lines, unless such travel is necessitated by the
\nforeign sales corporation structure to the extent that United Air Lines does not
\noffer regularly scheduled flights directly from New York to such foreign
\nlocation where negotiations with respect to the transactions will be conducted
\nfor purposes of the foreign sales corporation nature of the transactions) plus
\nairfare charges incurred for travel on United Air Lines, (viii) the placement or
\nunderwriting fees, commissions and expenses, if any, in placing the debt
\ncontemplated by the Participation Agreement and all costs and expenses
\nassociated with the public offering pursuant thereto and the actual expenses of
\neach Pass Through Trustee under its respective Pass Through Trust Agreement and
\n(ix) printing and distribution costs.<\/p>\n
“Trust Agreement” means that certain Trust Agreement (1995 777 B), dated as
\nof the date hereof, between the Owner Participant and State Street Bank and
\nTrust Company, in its individual capacity, as originally executed or as
\nmodified, amended or supplemented in accordance with the applicable provisions
\nthereof and the terms of the Trust Indenture, including, without limitation, any
\nTrust Supplement entered into pursuant to the applicable provisions thereof.<\/p>\n
“Trust Estate” has the meaning set forth in the Trust Agreement.<\/p>\n
“Trust Indenture” means that certain Trust Indenture and Mortgage (1995 777
\nB), dated as of the date hereof, between Lessor and the Indenture Trustee, as
\noriginally executed or as modified, amended or supplemented in accordance with
\nthe provisions thereof and the terms of the Participation Agreement, including,
\nwithout limitation, any Trust Supplement entered into pursuant to the applicable
\nprovisions thereof.<\/p>\n
“Trust Indenture Estate” has the meaning assigned to the term “Indenture
\nEstate” in the Trust Indenture.<\/p>\n
“Trust Office” has the meaning set forth in the Trust Indenture.<\/p>\n
“Trust Supplement” means a supplement to the Trust Agreement and the Trust
\nIndenture, substantially in the form of Exhibit A to the Trust Agreement.<\/p>\n
“U.S. Air Carrier” means any United States air carrier as to which there is
\nin force a certificate issued pursuant to Section 44102 of the Federal Aviation
\nAct, and as to which there<\/p>\n
16<\/p>\n
[Lease Agreement (1995 777 B)]<\/p>\n
is in force an air carrier operating certificate issued pursuant to Part 121 of
\nthe regulations under such Act, or which may operate as an air carrier by
\ncertification or otherwise under any successor or substitute provisions therefor
\nor in the absence thereof.<\/p>\n
“Wet Lease” means any arrangement whereby Lessee agrees to furnish the
\nAirframe and Engines or engines installed thereon to a third party pursuant to
\nwhich such Airframe and Engines or engines (i) shall be operated solely by
\nregular employees of Lessee possessing all current certificates and licenses
\nthat would be required under the Federal Aviation Act (or if the Aircraft is not
\nregistered in the United States, all certificates and licenses required by the
\nlaws of the jurisdiction of registry) for the performance by such employees of
\nsimilar functions within the United States of America (or such jurisdiction of
\nregistry) (it is understood that cabin attendants need not be employees of
\nLessee) and (ii) shall be maintained by Lessee in accordance with its normal
\nmaintenance practices.<\/p>\n
SECTION 2. Acceptance and Lease. Lessor hereby agrees to accept from
\nthe Lessee the transfer of title to and simultaneously to lease to Lessee
\nhereunder, and Lessee hereby agrees to lease on the Delivery Date from Lessor
\nhereunder, the Aircraft as evidenced by the execution by Lessor and Lessee of a
\nLease Supplement leasing the Aircraft hereunder. Lessee agrees that Lessor will
\nauthorize one or more employees of Lessee, designated by Lessee in writing, as
\nthe authorized representative or representatives of Lessor to accept delivery of
\nthe Aircraft. Lessee hereby agrees that in the event delivery of the Aircraft
\nshall be accepted by an employee or employees of Lessee pursuant to such
\nauthorization by Lessor, such acceptance of delivery by such employee or
\nemployees on behalf of Lessor shall, without further act, irrevocably constitute
\nacceptance by Lessee of the Aircraft for all purposes of this Lease.<\/p>\n
SECTION 3. Term and Rent. (a) Interim Term and Basic Term. The
\nInterim Term shall commence on the Delivery Date and end on and include the day
\nimmediately preceding the Commencement Date unless earlier terminated pursuant
\nto the provisions hereof. The Basic Term shall commence on the Commencement
\nDate and end on the Lease Expiry Date or such earlier date as this Lease may be
\nterminated in accordance with the provisions hereof.<\/p>\n
(b) Basic Rent. Lessee shall pay Basic Rent in Dollars with respect
\nto each Lease Period during the Basic Term on each Lease Period Date during the
\nBasic Term, in the respective amounts for each Lease Period Date determined in
\naccordance with Exhibit B hereto.<\/p>\n
17<\/p>\n
[Lease Agreement (1995 777 B)]<\/p>\n
(c) Adjustments to Basic Rent, Excess Amount, Stipulated Loss Values,
\nTermination Values, Special Termination Value Percentages and the EBO
\nPercentage.<\/p>\n
(i) In the event that (A) Transaction Expenses paid by Lessor are
\n determined to be other than __% of Lessor’s Cost, (B) there shall be an
\n optional redemption or a refinancing or a refunding of the Loan
\n Certificates in accordance with Section 17 of the Participation Agreement,
\n (C) the Delivery Date occurs other than on May 15, 1995, or (D) there is an
\n optimization in accordance with Section 18 of the Participation Agreement;
\n then in each case the Basic Rent and Excess Amount set forth in Exhibit B,
\n the Stipulated Loss Value percentages set forth in Exhibit C, the
\n Termination Value percentages set forth in Exhibit D, and the EBO
\n Percentage and the Special Termination Value Percentages set forth in
\n Exhibit H shall be adjusted (upwards or downwards as the case may be) using
\n the same methods and assumptions (as modified on account of the occurrence
\n of any of the events referred to in clauses (A)-(D)) used to calculate the
\n Basic Rent and Excess Amount, the Stipulated Loss Value percentages, the
\n Termination Value percentages and the EBO Percentage and the Special
\n Termination Value Percentages set forth in Exhibits B, C, D and H,
\n respectively, in each case in compliance with clauses (iv) and (v) of this
\n paragraph (c) and in order to: (1) maintain the Owner Participant’s Net
\n Economic Return and (2) minimize the Net Present Value of Rents to Lessee
\n to the extent possible consistent with clause (1) hereof; provided,
\n however, in no event will the EBO Price be adjusted below the greatest of
\n (i) the Termination Value for the Aircraft as of the EBO Date, (ii) __% of
\n Lessor’s Cost (i.e., the fair market value of the Aircraft as of the EBO
\n Date as the same was determined on the Delivery Date) and (iii) __%
\n multiplied by the present value as of the EBO Date of (x) the remaining
\n Basic Rent plus (y) __% of Lessor’s Cost (i.e., the fair market value of
\n the Aircraft as of the end of the Term as the same was determined on the
\n Delivery Date) (the present value calculation described in this clause
\n (iii) shall utilize a semi-annual discount rate that on a compound basis is
\n equal to ___% per annum).<\/p>\n
(ii) [Intentionally reserved for potential future use.]<\/p>\n
(iii) Any recalculation of Basic Rent and Excess Amount,
\n Stipulated Loss Value percentages, Termination Value percentages, EBO
\n Percentage and Special Termination Value Percentages pursuant to this
\n Section 3(c) (or pursuant to the definition of Stipulated Loss Value or
\n Termination<\/p>\n
18<\/p>\n
[Lease Agreement (1995 777 B)]<\/p>\n
Value) shall be determined by the Owner Participant and shall be subject to
\n the verification procedures set forth in Exhibit E hereto. Such
\n recalculated Basic Rent and Excess Amount, Stipulated Loss Value
\n percentages, Termination Value percentages, EBO Percentage and Special
\n Termination Value Percentages shall be set forth in an amendment hereto.<\/p>\n
(iv) Anything contained in the Participation Agreement or this
\n Lease to the contrary notwithstanding, each installment of Basic Rent
\n payable hereunder, whether or not adjusted in accordance with this Section
\n 3(c), together with the amount of Excess Amount and Supplemental Rent, if
\n any, in respect of the date on which such installment is payable, and each
\n payment of Termination Value, Stipulated Loss Value, EBO Price and Special
\n Termination Value whether or not adjusted in accordance with this Section
\n 3(c) or Section 8 of the Tax Indemnity Agreement, and all other amounts
\n (excluding Excluded Payments payable simultaneously by Lessee pursuant to
\n this Lease), in each case, on the date on which such payment is due, shall
\n be in an amount at least sufficient to pay in full, and shall be available
\n to be applied by Lessor in payment on account of, any payments then
\n required to be made on account of the principal amount (and Premium, if
\n any) of and interest on the Loan Certificates then outstanding. It is
\n agreed that no installment of Basic Rent or payment of Excess Amount,
\n Termination Value, Stipulated Loss Value, Special Termination Value or EBO
\n Price, shall be increased or adjusted by reason of (A) any attachment or
\n diversion of Rent on account of (x) Lessor Liens (including for this
\n purpose Liens that would be Lessor Liens but for the proviso to the
\n definition of Lessor Liens) or (y) any other Lien on or against the Trust
\n Estate, any part thereof or the Operative Documents arising as a result of
\n claims against the Indenture Trustee or a Certificate Holder, not related
\n to the transactions contemplated by the Operative Documents, (B) any
\n modification of the payment terms of the Loan Certificates made without the
\n prior written consent of Lessee, or (C) the acceleration of any Loan
\n Certificate due to the occurrence of an “Event of Default” (as defined in
\n the Trust Indenture) which does not constitute an Event of Default
\n hereunder.<\/p>\n
(v) All adjustments to Basic Rent under this Section 3(c) shall
\n be consistent with the requirements of Sections 4.02(5), 4.07(1) and (2)
\n and Section 4.08(1) of Rev. Proc. 75-28 (provided that the requirements of
\n Section 4.08(1) shall apply on a prospective basis), as modified and in
\n effect on the Delivery Date, and shall not cause the Lease to be a
\n “disqualified leaseback or long-term<\/p>\n
19<\/p>\n
[Lease Agreement (1995 777 B)]<\/p>\n
agreement” within the meaning of Section 467 of the Code as then in effect
\n and any final, temporary or proposed regulations thereunder or any
\n administrative or judicial interpretation thereof in effect on the date of
\n such adjustment (a “Section 467 Agreement”) (it being understood that any
\n such adjustment shall not be treated as causing the Lease to be a Section
\n 467 Agreement to the extent the Lease would have been a Section 467
\n Agreement if no such adjustment to Basic Rent had occurred).<\/p>\n
(d) Supplemental Rent. Lessee shall pay (or cause to be paid) promptly to
\nLessor, or to whomsoever shall be entitled thereto, any and all Supplemental
\nRent constituting Stipulated Loss Value, Termination Value, EBO Price and
\nSpecial Termination Values as the same shall become due and owing and all other
\namounts of Supplemental Rent within five Business Days after demand or on such
\ndate, or within such other relevant period, as may be provided in any Operative
\nDocument, and in the event of any failure on the part of Lessee to pay any
\nSupplemental Rent when due, Lessor shall have all rights, powers and remedies
\nprovided for herein or in any other Operative Document or by law or equity or
\notherwise in the case of nonpayment of Basic Rent. Lessee shall also pay on
\nbehalf of Lessor as Supplemental Rent an amount equal to any amount payable by
\nLessor as Premium as and when any such Premium shall be due and payable;
\nprovided, however, that Lessee shall have no obligation to pay on behalf of
\nLessor any Premium payable under Section 6.01 or 6.02 of the Trust Indenture due
\nto the occurrence of an “Event of Default” (as defined in the Trust Indenture)
\nwhich does not constitute an Event of Default hereunder. Lessee also will pay to
\nLessor, or on behalf of Lessor to whomsoever shall be entitled thereto, on
\ndemand, as Supplemental Rent, to the extent permitted by applicable law,
\ninterest at the Past Due Rate with respect to any part of any installment of
\nBasic Rent not paid prior to 11:00 a.m., New York City time, on the date when
\ndue for any period for which the same shall be overdue and on any payment of
\nSupplemental Rent not paid prior to 11:00 a.m., New York City time, on the date
\nwhen due for the period until the same shall be paid.<\/p>\n
(e) Payments in General. All payments of Rent other than Excluded
\nPayments payable to Lessor shall be made directly by Lessee by wire transfer of
\nimmediately available funds prior to 11:00 a.m., New York time, on the date of
\npayment in Dollars, to Lessor at its office at 225 Franklin Street, Boston,
\nMassachusetts 02110, Attention: _________________________ (or such other office
\nof Lessor in the continental United States or such other account as Lessor shall
\ndirect in a notice to Lessee at least 10 Business Days prior to the date such
\npayment of Rent is due); provided, that so long as the Trust Indenture shall not<\/p>\n
20<\/p>\n
[Lease Agreement (1995 777 B)]<\/p>\n
have been fully discharged, Lessor hereby directs and Lessee agrees, that all
\nBasic Rent shall be paid directly to the Indenture Trustee at the times and in
\nfunds specified in this Section 3(e) at the offices of the Indenture Trustee at
\nTwo International Place, Boston, MA 02110, Attention: Corporate Trust Department
\n(or such other office of Indenture Trustee in the continental United States or
\nsuch other account as Indenture Trustee shall direct in a notice to Lessee at
\nleast 10 Business Days prior to the date such payment of Basic Rent is due).
\nExcluded Payments shall be paid in Dollars in immediately available funds to the
\nPerson to whom payable at the address of such Person specified in Schedule I of
\nthe Participation Agreement.<\/p>\n
Notwithstanding anything to the contrary contained herein, if any date
\non which a payment of Rent becomes due and payable is not a Business Day then
\nsuch payment shall be made on the next succeeding Business Day and no interest
\nshall accrue on the amount of such payment, if such payment is made on such next
\nsucceeding Business Day.<\/p>\n
(f) [Intentionally Reserved for Potential Future Use].
\n ———————————————– <\/p>\n
(g) Prepayments of Certain Rent Payments. Lessor agrees to pay, on
\nbehalf of the Owner Participant, to the Indenture Trustee for the account of the
\nCertificate Holders on the Commencement Date an amount equal to the Excess
\nAmount. To the extent, if any, that there shall not have been received by the
\nIndenture Trustee at the account of the Indenture Trustee referred to in Section
\n3(e) by 11:00 a.m., New York City time, on the Commencement Date from Lessor, an
\namount equal to the Excess Amount payable for such date, Lessee shall advance to
\nLessor, as Prepaid Rent, by paying to the Indenture Trustee on behalf of Lessor
\non the Commencement Date an amount equal to the Excess Amount not so paid (such
\namount being herein called “Prepaid Rent”); provided that Lessee will also pay
\nto the Indenture Trustee, on demand, as Supplemental Rent, to the extent
\npermitted by applicable law, interest at the Debt Rate on any Prepaid Rent not
\npaid when due for any period for which the same shall be overdue. Lessor agrees
\nto reimburse Lessee in the manner and subject to the conditions provided in the
\nfollowing sentence for (x) the Prepaid Rent so paid by Lessee determined as of
\nthe date such payment was made, plus (y) the Supplemental Rent so paid by Lessee
\npursuant to this Section 3(g), plus (z) accrued interest on the unreimbursed
\nportion thereof at a rate per annum equal to the greater of the Base Rate plus
\n2% or the Debt Rate plus 2% from the date such amount is paid by Lessee to but
\nnot including the date of each such reimbursement (such amounts to be reimbursed
\nbeing herein called the “Reimbursement Amount”). So<\/p>\n
21<\/p>\n
[Lease Agreement (1995 777 B)]<\/p>\n
long as no Default or Event of Default has occurred and is continuing, Lessee
\nmay with written notice to the Owner Participant and Indenture Trustee offset
\n(without duplication) against each succeeding payment (other than as limited by
\nthe proviso to this sentence) due from Lessee to Lessor in respect of Basic
\nRent, Stipulated Loss Value, Termination Value or any other amount due hereunder
\nto Lessor, until Lessee has been fully reimbursed for the Reimbursement Amount;
\nprovided, however, that in the case of any payment due from Lessee which is
\ndistributable under the terms of the Trust Indenture, Lessee’s right of offset
\nshall be limited to amounts distributable to Lessor or the Owner Participant
\nthereunder. No such offset or aggregate combined effect of separate offsets
\nshall reduce the amount of any installment of Basic Rent to an amount
\ninsufficient, together with all other amounts payable simultaneously by Lessee,
\nto pay in full the payments then required to be made on account of the principal
\namount (and Premium, if any) of and interest on the Loan Certificates then
\noutstanding.<\/p>\n
SECTION 4. Lessor’s Representations and Warranties. LESSOR LEASES AND
\nLESSEE TAKES THE AIRCRAFT “AS-IS, WHERE-IS.” LESSEE ACKNOWLEDGES AND AGREES THAT
\nAS BETWEEN LESSOR, ANY PARTICIPANT, THE INDENTURE TRUSTEE, AND LESSEE (A) THE
\nAIRFRAME AND EACH ENGINE IS OF SIZE, DESIGN, CAPACITY AND MANUFACTURE SELECTED
\nBY AND ACCEPTABLE TO LESSEE, (B) LESSEE IS SATISFIED THAT THE AIRFRAME AND EACH
\nENGINE IS SUITABLE FOR ITS PURPOSES, (C) NEITHER LESSOR NOR OWNER PARTICIPANT IS
\nA MANUFACTURER OR A DEALER IN PROPERTY OF SUCH KIND, AND (D) NEITHER LESSOR, IN
\nITS INDIVIDUAL CAPACITY OR AS OWNER TRUSTEE, THE INDENTURE TRUSTEE NOR THE OWNER
\nPARTICIPANT MAKES, HAS MADE OR SHALL BE DEEMED TO HAVE MADE, AND EACH WILL BE
\nDEEMED TO HAVE EXPRESSLY DISCLAIMED, ANY REPRESENTATION OR WARRANTY, EXPRESS OR
\nIMPLIED, AS TO THE TITLE, AIRWORTHINESS, CONDITION, DESIGN, OPERATION, VALUE,
\nMERCHANTABILITY OR FITNESS FOR USE FOR A PARTICULAR PURPOSE OF THE AIRCRAFT OR
\nANY PART THEREOF, AS TO THE ABSENCE OF LATENT OR OTHER DEFECTS, WHETHER OR NOT
\nDISCOVERABLE, AS TO THE ABSENCE OF ANY INFRINGEMENT OF ANY PATENT, TRADEMARK OR
\nCOPYRIGHT, AS TO THE ABSENCE OF OBLIGATIONS BASED ON STRICT LIABILITY IN TORT,
\nOR ANY OTHER REPRESENTATION OR WARRANTY WHATSOEVER, EXPRESS OR IMPLIED, WITH
\nRESPECT TO THE AIRCRAFT OR ANY PART THEREOF, except as set forth in Sections
\n8(f)(vi) and 8(p)(ii) of the Participation Agreement as to Lessor Liens and
\nexcept that State Street Bank and Trust Company, in its individual capacity, (i)
\nrepresents and warrants that on the Delivery Date, Lessor shall have received
\nwhatever title to the Aircraft was conveyed to it by Lessee, (ii) represents and
\nwarrants that on the Delivery Date the Aircraft shall be free of Lessor Liens
\n(including for this purpose Liens that would be Lessor Liens but for the proviso
\nto the definition of Lessor Liens) attributable to it in its individual
\ncapacity, (iii) covenants that it will not, through its own actions or<\/p>\n
22<\/p>\n
[Lease Agreement (1995 777 B)]<\/p>\n
inactions, in such capacity, interfere in Lessee’s or any Sublessee’s quiet
\nenjoyment, use, operation or possession of the Aircraft unless this Lease shall
\nhave been declared in default pursuant to Section 15 hereof, (iv) agrees that it
\nwill not directly or indirectly create, incur, assume or suffer to exist any
\nLessor Lien attributable to it in its individual capacity on or with respect to
\nthe Airframe or any Engine or any portion of the Trust Estate and (v) represents
\nand warrants that it is a Citizen of the United States and agrees that if at any
\ntime it shall cease to be a Citizen of the United States, it will promptly
\nresign as Owner Trustee (if and so long as such citizenship is necessary under
\nthe Federal Aviation Act as in effect at such time or, if it is not necessary,
\nif and so long as the Owner Trustee’s citizenship would have any adverse effect
\non the Owner Participant, the Certificate Holders or Lessee), effective upon the
\nappointment of a successor Owner Trustee in accordance with the provisions of
\nthe Trust Agreement. None of the provisions of this Section 4 or any other
\nprovision of this Agreement shall be deemed to amend, modify or otherwise affect
\nthe representations, warranties or other obligations (express or implied) of the
\nManufacturer, any subcontractor or supplier of the Manufacturer with respect to
\nthe Airframe, Engines, or any Parts, or to release the Manufacturer, or any such
\nsubcontractor or supplier from any such representation, warranty or obligation.
\nUnless a Section 14(a), 14(b), 14(f) or 14(g) Default or any Event of Default
\nshall have occurred and be continuing, Lessor agrees to make available to Lessee
\nsuch rights as Lessor may have under any warranty with respect to the Aircraft
\nmade by the Manufacturer or any of its subcontractors or suppliers and any other
\nclaims against the Manufacturer or any such subcontractor or supplier with
\nrespect to the Aircraft, all pursuant to and in accordance with the terms of the
\nOwner Trustee’s Purchase Agreement.<\/p>\n
SECTION 5. Return of the Aircraft. (a) Condition Upon Return. Unless
\npurchased by Lessee pursuant to Section 19(b) hereof, upon the termination of
\nthis Lease at the end of the Basic Term or any Renewal Term or pursuant to
\nSection 9(b) or 15 hereof, Lessee will at its expense return the Aircraft to
\nLessor at Lessee’s maintenance base located at San Francisco International
\nAirport (or any principal maintenance base established by Lessee in the
\ncontinental United States subsequent to the date hereof), provided that upon the
\nrequest of the Lessor given to Lessee at least ten (10) days prior to the date
\nof such return, Lessee shall return the Airframe to Lessor at a location on
\nLessee’s route system in the continental United States selected by Lessor,
\nprovided that such location is served on a normal basis by Boeing Model 777-222
\naircraft operated by Lessee, and Lessor shall reimburse Lessee on a net after-
\ntax basis for Lessee’s out-of-pocket Expenses (including for this purpose<\/p>\n
23<\/p>\n
[Lease Agreement (1995 777 B)]<\/p>\n
salary costs for Lessee’s personnel) resulting from Lessee’s return of the
\nAircraft to such alternate return location to the extent such out-of-pocket
\nExpenses exceed the out-of-pocket Expenses (including, for this purpose, salary
\ncosts for Lessee’s personnel) Lessee would have incurred in returning the
\nAircraft to its principal maintenance base at San Francisco International
\nAirport, provided, further, however, that if Lessor shall have made the request
\nfor storage pursuant to Section 5(d) hereof, Lessee shall at its expense return
\nthe Aircraft at the site of storage. At the time of such return, (A) Lessee
\nwill, at its own cost and expense, unless otherwise requested by Lessor to
\nretain the existing registration of the Aircraft, cause the Aircraft, if it is
\nnot then so registered, to be registered under the laws of the United States
\nwith the FAA in the name of Lessor or its designee, provided that Lessee shall
\nbe relieved of its obligations under this sentence if such registration is
\nprohibited by reason of the failure of Lessor, the Owner Participant or Lessor’s
\ndesignee to be eligible on such date to own an aircraft registered with the
\nFederal Aviation Administration, and (B) subject to Section 5(e) hereof, the
\nAirframe will be fully equipped with the Engines (or Acceptable Alternate
\nEngines) installed thereon. Also, at the time of such return, Lessor shall have
\ngood title to such Airframe and Engines or Acceptable Alternate Engines, and
\nsuch Airframe and Engines or Acceptable Alternate Engines (i) shall be certified
\n(or, if not then registered under the Federal Aviation Act by reason of the
\nproviso to clause (A) in the preceding sentence or because Lessor has so
\nrequested that the Aircraft not be so registered, shall hold a valid certificate
\nof airworthiness issued by the country of registry and be eligible for
\ncertification by the FAA) as an airworthy aircraft by the Federal Aviation
\nAdministration, (ii) shall be free and clear of all Liens (other than Lessor
\nLiens (including for this purpose Liens that would be Lessor Liens but for the
\nproviso to the definition of Lessor Liens)) and rights of third parties under
\npooling, interchange, overhaul, repair or other similar agreements or
\narrangements, (iii) shall be in a regular passenger configuration, and in as
\ngood a condition as when delivered by Lessee to Lessor, ordinary wear and tear
\nexcepted and otherwise in the condition required to be maintained under the
\nLease and under Lessee’s FAA-approved maintenance plan (notwithstanding any
\nSublease theretofore in effect) and shall be in compliance with all mandatory
\nenvironmental, noise, air pollution and other standards prescribed by the
\nfederal government of the United States and applicable to the Aircraft
\nincluding, without limitation, standards relating to corrosion and structural
\nintegrity and all other applicable manufacturer’s mandatory service bulletins
\n(except for standards, laws, regulations, directives and bulletins that permit
\ncompliance at a later time and would not, in the normal course of Lessee’s
\nmaintenance plan, be complied with by the date of return without<\/p>\n
24<\/p>\n
[Lease Agreement (1995 777 B)]<\/p>\n
discriminating on the basis of the status of the Aircraft as a leased aircraft),
\n(iv) in the event that Lessee shall not then be using a continuous maintenance
\nprogram with respect to the Airframe immediately prior to such return but
\ninstead shall have been using a block overhaul program with respect to the
\nAirframe, then (A) such block overhaul program shall have been approved by the
\ngovernment of registry of the Aircraft and (B) the Airframe shall have remaining
\nuntil the next scheduled block overhaul at least 25% of the allowable hours
\nbetween block overhauls permitted under the block overhaul program then used by
\nLessee, (v) in the event that Lessee during the period of operation of the
\nAircraft immediately prior to such return shall not have been using an on-
\ncondition maintenance program with respect to the Engines (or Acceptable
\nAlternate Engines), Lessee agrees that the average number of hours or cycles of
\noperation (whichever shall be applicable under the maintenance program then in
\nuse with respect to such Engines (or Acceptable Alternate Engines)) on such
\nEngines (or Acceptable Alternate Engines) remaining until the next scheduled
\nengine heavy maintenance shall be at least 25% of the hours or cycles (whichever
\nshall be applicable) between engine heavy maintenance allowed under the
\nmaintenance program then in use with respect to such Engines (or Acceptable
\nAlternate Engines), (vi) shall have all Lessee’s and any Sublessee’s exterior
\nmarking removed or painted over with areas thereof refinished to match adjacent
\nareas, and (vii) shall be in a state of cleanliness suitable under Lessee’s
\nnormal service standards for operation in Lessee’s revenue passenger service and
\nin all such cases the Aircraft shall not have been discriminated against whether
\nby reason of its leased status or otherwise in maintenance, use, operation or in
\nany other manner whatsoever.<\/p>\n
In addition, the following conditions shall be complied with at the
\ntime of the return of the Aircraft: (i) Lessee shall deliver to Lessor any “no
\ncost” modification kits designated for the Aircraft that Lessee has in its
\npossession and that have not been incorporated at the time of the return of the
\nAircraft, (ii) Lessor may purchase from Lessee at Lessee’s cost any service
\nbulletin kits purchased or manufactured by Lessee for the Aircraft (provided
\nthat Lessee shall not be obligated to sell to Lessor any service bulletin kit
\nmanufactured by Lessee to the extent Lessee, in its reasonable judgment,
\nconsiders the same proprietary) and (iii) without limiting the obligations of
\nthe Lessee set forth in the preceding paragraph, in the event the FAA shall
\nissue any directive which requires termination thereof prior to the return date,
\nthen such directive shall be terminated prior to the return date, and if Lessee
\nshall have not been required to terminate such directive in the normal course of
\nits operations without discriminating against the Aircraft by reason of its
\nleased status or otherwise prior to the return of the<\/p>\n
25<\/p>\n
[Lease Agreement (1995 777 B)]<\/p>\n
Aircraft but such directive must be terminated on or before six months following
\nsuch return, then Lessee shall, at the sole cost and expense of Lessor, comply
\nwith such directive but only if (x) at least 540 days prior to the return of the
\nAircraft Lessee receives from Lessor a written request to comply with such
\ndirective at Lessor’s sole cost and expense (determined on the basis of what a
\nthird party would charge for comparable services) and (y) after receipt by
\nLessee of such request, the Aircraft is subject to a maintenance check of the
\ntype at which such modification is made, in accordance with Lessee’s general
\nmaintenance program, and Lessee has, or can obtain using commercial reasonable
\nefforts taking into account the 540 day prior notice received by Lessee, the
\npersonnel, parts, facilities and other resources available to accomplish the
\nmodification and the modification can be made without materially disrupting the
\noperations of Lessee’s maintenance facility or Lessee’s operations.<\/p>\n
For purposes of this Section 5(a), any maintenance program used by
\nLessee for airframes (including the Airframe) substantially similar to the
\nmaintenance program described in the excerpts from [“United Air Lines 777
\nMaintenance Program”] furnished to Lessor and the Owner Participant prior to the
\nDelivery Date (a copy of which was attached to the certificate of the Assistant
\nSecretary of the Lessee delivered pursuant to Section 4(a)(vii)(6) of the
\nParticipation Agreement) shall be considered a continuous maintenance program
\n(and not a block maintenance program) and any engine maintenance program used by
\nLessee for engines (including the Engines) substantially similar to the
\nmaintenance program described in “United Air Lines 777 Maintenance Program”
\nshall be considered an on-condition maintenance program.<\/p>\n
In the event that the provisions of the preceding paragraph are
\ninapplicable and upon a return of the Aircraft pursuant to this Section 5,
\nLessee and Lessor cannot agree as to whether Lessee, during the period of
\noperation of the Aircraft immediately prior to such return, shall have been
\nusing a continuous maintenance program or a block overhaul program with respect
\nto the Airframe (including, without limitation, a dispute as to whether Lessee’s
\nprogram is substantially similar to the program described in the excerpts to the
\n[“United Air Lines 777 Maintenance Program”] furnished to Lessor as set forth in
\nthe preceding paragraph), then Lessee and Lessor shall mutually appoint an
\nindependent third party, satisfactory to both Lessee and Lessor, who shall make
\nsuch a determination, which determination shall be conclusive and final. Lessee
\nwill provide, on a confidential basis, such independent third party with the
\nmaintenance program and records applicable to the<\/p>\n
26<\/p>\n
[Lease Agreement (1995 777 B)]<\/p>\n
Aircraft necessary to make such determination. The fee of such third party shall
\nbe paid equally by Lessor and Lessee.<\/p>\n
If clause (iv) of the first paragraph of this Section 5(a) shall be
\napplicable but the Airframe does not meet the conditions specified in said
\nclause (iv), Lessee shall pay or cause to be paid to Lessor, concurrently with
\nthe return thereof, a Dollar amount computed by multiplying (i) the fair market
\ncost of obtaining an airframe block overhaul of the type referred to in such
\nclause (iv) at a location in the United States that has been approved by the FAA
\nfor such work by (ii) a fraction of which (x) the numerator shall be the excess
\nof 25% of the hours of operation allowable between such block overhauls over the
\nactual number of hours of operation remaining on the Airframe to the next such
\nblock overhaul and (y) the denominator shall be the number of hours of operation
\nallowable between such block overhauls in accordance with such block overhaul
\nprogram.<\/p>\n
If clause (v) of the first paragraph of this Section 5(a) shall be
\napplicable but the Engines (or Acceptable Alternate Engines) do not meet the
\nconditions specified in said clause (v), Lessee shall pay or cause to be paid to
\nLessor, concurrently with the return thereof, a Dollar amount computed by
\nmultiplying (i) the fair market cost of obtaining the scheduled engine heavy
\nmaintenance under the maintenance program then used by Lessee for engines of the
\nsame model as the Engines (or Acceptable Alternate Engines) at a location in the
\nUnited States that has been approved by the FAA for such work by (ii) a fraction
\nwhich (x) the numerator shall be the excess of 25% of the hours or cycles
\n(whichever is applicable) of operation of one Engine between engine heavy
\nmaintenance allowable under the maintenance program then in use with respect to
\nsuch Engines (or Acceptable Alternate Engines) over the actual average number of
\nhours or cycles of operation of such Engines (or Acceptable Alternate Engines)
\nremaining until the next such scheduled engine heavy maintenance and (y) the
\ndenominator shall be the number of hours or cycles allowable between such
\nscheduled engine heavy maintenance.<\/p>\n
During the last six months of the Term (unless Lessee shall have
\nirrevocably elected to purchase the Aircraft or renew this Lease in accordance
\nwith the terms of this Lease), with reasonable notice, Lessee will cooperate,
\nand cause any Sublessee to cooperate, at Lessor’s sole cost, in all reasonable
\nrespects with the efforts of Lessor to sell or lease the Aircraft, including,
\nwithout limitation, permitting prospective purchasers or lessees to inspect the
\nAircraft, any maintenance records relating to the Aircraft then required to be
\nretained by the FAA or by the comparable government agency of the country in
\nwhich the Aircraft is registered, all in accordance with Section 12 hereof,
\nprovided that any such cooperation shall not interfere<\/p>\n
27<\/p>\n
[Lease Agreement (1995 777 B)]<\/p>\n
with the normal operation or maintenance of the Aircraft by, or the business of,
\nLessee or any Sublessee.<\/p>\n
(b) Return of Other Engines. In the event that an Acceptable Alternate
\nEngine shall be delivered with the returned Airframe as set forth in paragraph
\n(a) of this Section 5, Lessee, concurrently with such delivery, will, at no cost
\nto Lessor, furnish, or cause to be furnished, to Lessor a full warranty (as to
\ntitle) bill of sale with respect to each such Acceptable Alternate Engine, in
\nform and substance reasonably satisfactory to Lessor (together with an opinion
\nof counsel (which may be Lessee’s General Counsel) to the effect that such full
\nwarranty bill of sale has been duly authorized and delivered and is enforceable
\nin accordance with its terms and that each such Acceptable Alternate Engine is
\nfree and clear of all Liens other than Lessor Liens (including for this purpose
\nLiens that would be Lessor Liens but for the proviso to the definition of Lessor
\nLiens)) and will, to the extent applicable, comply with the provisions of
\nSection 9(d) as if Lessee had irrevocably elected, in accordance with Section
\n9(d) hereof, to terminate the Lease with respect to the Engine in replacement
\nfor which such Acceptable Alternate Engine is being delivered and Lessor will
\nprovide a bill of sale, at Lessee’s expense, evidencing the transfer, without
\nrecourse or warranty (except as to the absence of Lessor Liens (including for
\nthis purpose Liens that would be Lessor Liens but for the proviso to the
\ndefinition of Lessor Liens)) by Lessor to Lessee or its designee of all of
\nLessor’s right, title and interest in and to any Engine not installed on the
\nAirframe at the time of the return of the Airframe.<\/p>\n
(c) Fuel and Manuals. Upon the return of the Airframe upon any
\ntermination of this Lease in accordance with paragraph (a) of this Section 5,
\n(i) Lessee shall invoice Lessor, and Lessor shall pay to Lessee the amount of
\nLessee’s cost for any fuel or oil contained in the fuel or oil tanks on the
\nAirframe, and (ii) Lessee shall deliver or cause to be delivered to Lessor all
\nlogs, manuals and data and inspection, modification and overhaul records in the
\nEnglish language (or an English translation of the same), (A) required to be
\nmaintained with respect to the Airframe, the Engines or any part thereof in
\naccordance with Section 7(a) hereof, (B) created since the Airframe’s or
\nEngine’s or Acceptable Alternate Engine’s (whichever is applicable) last heavy
\nmaintenance visit and (C) required to lawfully operate the Aircraft in the
\nUnited States under a United States Certificate of Airworthiness without
\nperforming additional maintenance.<\/p>\n
(d) Storage Upon Return. If, at any time at least 30 days prior to the
\nend of the Basic Term or any Renewal Term or pursuant to Section 9(c) or Section
\n15, Lessee receives from<\/p>\n
28<\/p>\n
[Lease Agreement (1995 777 B)]<\/p>\n
Lessor a written request for storage of the Aircraft upon its return hereunder,
\nLessee will provide Lessor, or cause Lessor to be provided, with storage
\nfacilities for the Aircraft (at Lessor’s risk and at Lessor’s cost for
\ninsurance, maintenance and Lessee’s reasonable out-of-pocket expenses other than
\nstorage fees) for a period not exceeding forty-five (45) days (and upon prior
\nwritten notice from Lessor to Lessee given at least 10 days prior to the end of
\nsuch 45 day period, at Lessor’s risk and at Lessor’s cost for insurance,
\nmaintenance and Lessee’s reasonable out-of-pocket expenses including storage
\nfees, for an additional period not exceeding 45 days) commencing on the date of
\nsuch termination, at a location in the forty-eight contiguous states of the
\nUnited States selected by Lessee and used as a location for the storage of
\naircraft. Lessee shall, at Lessor’s written request, maintain insurance (if
\navailable) for the Aircraft during such period and shall be reimbursed by Lessor
\nfor the premiums thereon.<\/p>\n
(e) Purchase of Engine. In the event that Lessee shall have paid the
\nStipulated Loss Value for any Engine pursuant to Section 10(b) hereof and all
\nother amounts due and owing under said Section 10(b), then, notwithstanding
\nanything contained in this Section 5, Lessee shall, subject to the proviso
\nbelow, be under no obligation to return any engine installed on the Airframe in
\nreplacement for such Engine to Lessor upon the termination of this Lease;
\nprovided, however, that in such event Lessor shall have the right upon
\ntermination of this Lease (unless Lessee shall have exercised any of its options
\nto purchase the Aircraft pursuant to Section 19), at its sole option, to
\npurchase from Lessee an engine or engines suitable for use on the Airframe and
\ncompatible with the other Engine (if any) or the other engine purchased under
\nthis Section 5(e) for such engine’s then Fair Market Sales Value and any such
\nengine shall be installed at no cost to Lessor on the Airframe on the return
\nthereof.<\/p>\n
(f) Severable Parts. At any time after Lessee has advised Lessor that
\nit has determined not to renew this Lease or purchase the Aircraft, or the
\nAircraft is otherwise to be returned to Lessor, Lessee shall, at Lessor’s
\nrequest, advise Lessor of the nature and condition of all severable Parts owned
\nby Lessee which have been used by Lessee during the prior six months and which
\nLessee has or intends to remove from the Aircraft as permitted by Section 8
\nhereof. Lessor may, at its option, upon 30 days written notice to Lessee,
\npurchase any or all of such Parts from Lessee upon the expiration of the Term at
\ntheir then fair market value.<\/p>\n
(g) Special Redelivery Provision. Not less than 30 days prior to (A)
\nthe date of redelivery of the Aircraft by<\/p>\n
29<\/p>\n
[Lease Agreement (1995 777 B)]<\/p>\n
Lessee to Lessor in accordance with this Section 5, (B) the date of redelivery
\nto Lessor or a purchaser pursuant to Section 9(c) or Section 15 hereof, or (C) a
\npurchase of the Aircraft by Lessee pursuant to Section 19(b), Lessor may provide
\nLessee with a proposal regarding the arranging of delivery of the Aircraft so as
\nto enable Lessor to realize “foreign trade income” (as defined in Section 923(b)
\nof the Code or any successor provision thereto) from the sale or re-lease of the
\nAircraft, and Lessee shall (i) arrange delivery at Lessor’s cost (unless the
\ndelivery site is as provided in Section 5(a) hereof) either inside or outside
\nthe United States, as specified in Lessor’s proposal, and (ii) otherwise comply
\nwith such proposal to the extent Lessee can do so without incurring any cost,
\nexpense or liability not indemnified against by Lessor in a manner in form and
\nsubstance reasonably satisfactory to Lessee.<\/p>\n
SECTION 6. Liens. Lessee will not directly or indirectly create,
\nincur, assume or suffer to exist any Lien on or with respect to the Aircraft,
\ntitle thereto or any interest therein or in this Lease, except (i) the
\nrespective rights of Lessor as owner of the Aircraft and Lessee as herein
\nprovided (including any Sublease permitted pursuant to Section 7(b)), the Lien
\nof the Trust Indenture, and any other rights existing pursuant to the Operative
\nDocuments, (ii) Lessor Liens (including for this purpose Liens that would be
\nLessor Liens but for the proviso to the definition of Lessor Liens), (iii) Liens
\nfor Taxes of Lessee (or any Sublessee) either not yet due or being contested in
\ngood faith by appropriate proceeding so long as such proceedings do not involve
\nany material risk of the sale, forfeiture or loss of the Airframe or any Engine
\nor any interest thereon, (iv) materialmen’s, mechanics’, workmen’s, repairmen’s,
\nemployees’ or other like liens arising in the ordinary course of Lessee’s or any
\nSublessee’s business securing obligations that are not overdue for a period of
\nmore than 30 days or are being contested in good faith by appropriate
\nproceedings so long as during such 30 day period there is not, or such
\nproceedings do not involve, any material risk of the sale, forfeiture or loss of
\nthe Airframe or any Engine or any interest therein, (v) Liens arising out of any
\njudgment or award against Lessee (or any Sublessee), unless there exists a
\nmaterial risk of the sale, forfeiture or loss of the Airframe or any Engine or
\nany interest therein or unless the judgment secured shall not, within 45 days
\nafter the entry thereof, have been discharged, vacated, reversed or execution
\nthereof stayed pending appeal or shall not have been discharged, vacated or
\nreversed within 45 days after the expiration of such stay, and (vi) any other
\nLien with respect to which Lessee (or any Sublessee) shall have provided a bond
\nor other security in an amount and under terms reasonably satisfactory to
\nLessor. Lessee will promptly, at its own expense, take (or cause to be taken)
\nsuch actions as may be<\/p>\n
30<\/p>\n
[Lease Agreement (1995 777 B)]<\/p>\n
necessary duly to discharge any such Lien not excepted above if the same shall
\narise at any time.<\/p>\n
SECTION 7. Registration, Maintenance and Operation; Possession and
\nSubleases; Insignia. (a) (1) Registration and Maintenance. Lessee, at its
\nown cost and expense, shall (or shall cause any Sublessee to): (i) upon
\ndelivery of the Aircraft, cause the Aircraft to be duly registered in the name
\nof Lessor, and, subject to subparagraph (3) of this Section 7(a), to remain duly
\nregistered in the name of Lessor under the Federal Aviation Act (except to the
\nextent that such registration cannot be effected because of Lessor’s or the
\nOwner Participant’s failure to comply with the citizenship requirements for
\nregistration of aircraft under such Act), provided that Lessor and the Owner
\nParticipant shall execute and deliver all such documents as Lessee (or any
\nSublessee) may reasonably request for the purpose of effecting and continuing
\nsuch registration, and Lessee shall cause the Trust Indenture to be duly
\nrecorded and maintained of record as a first mortgage on the Aircraft; (ii)
\nmaintain, service, repair, and overhaul (or cause to be maintained, serviced,
\nrepaired, and overhauled) the Aircraft (and any engine which is not an Engine
\nbut which is installed on the Aircraft) (x) so as (p) at all times to keep the
\nAircraft in as good an operating condition as when delivered by Manufacturer to
\nLessee, ordinary wear and tear excepted, and (q) to keep the Aircraft in such
\ncondition as may be necessary to enable the airworthiness certification for the
\nAircraft to be maintained in good standing at all times (other than during
\ntemporary periods of storage in accordance with applicable regulations) under
\n(I) the Federal Aviation Act, except when all of Lessee’s Boeing Model 777-222
\naircraft (powered by engines of the same type as those with which the Airframe
\nshall be equipped at the time of such grounding) registered in the United States
\nhave been grounded by the FAA unless such grounding was caused by the failure of
\nLessee to maintain, service, repair or overhaul the Aircraft in accordance with
\nthis Lease, or (II) the applicable laws of any other jurisdiction in which the
\nAircraft may then be registered from time to time, except when all of Lessee’s
\nBoeing Model 777-222 aircraft (powered by engines of the same type as those with
\nwhich the Airframe shall be equipped at the time of such grounding) registered
\nin such jurisdiction have been grounded by the aeronautical authority of such
\njurisdiction unless such grounding was caused by the failure of Lessee to
\nmaintain, service, repair or overhaul the Aircraft in accordance with this Lease
\nand (y) in substantially the same manner as Lessee (or any Sublessee) maintains,
\nservices, repairs or overhauls similar aircraft operated by Lessee (or such
\nSublessee) in similar circumstances and without in any way discriminating
\nagainst the Aircraft, whether by reason of its leased status or otherwise,
\nincluding, without limitation, in regard to the<\/p>\n
31<\/p>\n
[Lease Agreement (1995 777 B)]<\/p>\n
termination of airworthiness directives; or such other manner as shall have been
\napproved in writing by the Owner Participant; (iii) maintain or cause to be
\nmaintained in the English language (or with appropriate English translation) all
\nrecords, logs and other materials required to be maintained in respect of the
\nAircraft by the FAA or the applicable regulatory agency or body of any other
\njurisdiction in which the Aircraft may then be registered (which records, logs
\nand other materials, as between Lessor and Lessee and all parties claiming
\nthrough Lessee, shall be the property of Lessor but shall be maintained by
\nLessee during the Term of this Lease and shall become the property of Lessee
\nupon Lessee’s purchase of the Aircraft pursuant to the terms of this Lease or
\nupon the occurrence of an Event of Loss and Lessee’s compliance with Section
\n10); and (iv) promptly furnish or cause to be furnished to Lessor or the Owner
\nParticipant such information as may be reasonably required to enable Lessor or
\nthe Owner Participant to file any reports required to be filed by Lessor or the
\nOwner Participant with any governmental authority because of Lessor’s ownership
\nof the Aircraft.<\/p>\n
(2) Operation. Lessee will not (or permit any Sublessee to) maintain,
\nuse, service, repair, overhaul or operate the Aircraft in violation of any law
\nor any rule, regulation, treaty, order or certificate of any government or
\ngovernmental authority (domestic or foreign) having jurisdiction, or in
\nviolation of any airworthiness certificate, license or registration relating to
\nthe Aircraft issued by any such authority, except that, after Lessee shall have
\nprovided Lessor and, so long as the Lien of the Trust Indenture shall not have
\nbeen released, the Indenture Trustee with a certificate of its President, any
\nVice President, the Treasurer or any Assistant Treasurer stating all relevant
\nfacts pertaining thereto, Lessee or any Sublessee may contest in good faith the
\nvalidity or application of any such law, rule, regulation, order, certificate,
\nlicense, registration or violation in any reasonable manner which does not
\njeopardize the right, title and interest of the Lessor or the Owner Participant
\nin and to the Airframe and\/or the Engines or otherwise materially adversely
\naffect Lessor, the Indenture Trustee or the Owner Participant but only so long
\nas such proceedings do not involve any risk of criminal liability or any
\nunindemnified material risk of civil liability to Lessor or the Owner
\nParticipant for which the Lessee is not then willing to indemnify Lessor or the
\nOwner Participant in a manner reasonably satisfactory to such Person. If the
\nindemnities or insurance specified in Section 11(f), or some combination thereof
\nin amounts equal to amounts required by Section 11(f), have not been obtained,
\nLessee will not operate the Aircraft, or permit any Sublessee to operate the
\nAircraft, in or to any area excluded from coverage by any insurance required to
\nbe maintained by the<\/p>\n
32<\/p>\n
[Lease Agreement (1995 777 B)]<\/p>\n
terms of Section 11, provided, however, that the failure of Lessee to comply
\nwith the provisions of this sentence shall not give rise to an Event of Default
\nhereunder where such failure is attributable to a hijacking, medical emergency,
\nequipment malfunction, weather conditions, navigational error or other isolated
\nextraordinary event beyond the control of Lessee and Lessee is taking all
\nreasonable steps to remedy such failure as soon as is reasonably practicable.<\/p>\n
(3) Reregistration. At any time after the Restricted Period, Lessor
\nshall, at the request and sole expense of Lessee, cooperate with Lessee and take
\nall actions required to change the country of registration of the Aircraft in
\ncompliance with and subject to the terms and conditions of Section 8(e) of the
\nParticipation Agreement.<\/p>\n
(4) Operating Certificates. Lessor hereby authorizes Lessee, at
\nLessee’s sole cost, expense and risk, to act as its agent for the purpose (but
\nonly for the purpose) of obtaining any required replacement operating
\ncertificates from the FAA; provided, however, that in the event that Lessee
\nshall have received from Lessor written notice that an Event of Default shall
\nhave occurred and be continuing, this authority shall not apply for a period
\nfrom the date of receipt of such notice to such time as such Event of Default
\nshall have been cured by Lessee or waived by Lessor. This authority includes
\n(without expanding in any way the nature of the limited authority granted
\npursuant to the first sentence of this Section 7(a)(4)), but is not limited to,
\nobtaining registration certificates, airworthiness certificates, certificates of
\nsanitary construction and ferry permits. In particular, this authority includes
\nthe ability to make use of Exemption No. 5318 issued by the FAA. This authority
\nwill allow duly authorized personnel of Lessee to sign any application forms
\nrequired in the process of obtaining such operating certificates, and this
\nauthority will also allow such personnel, where necessary and appropriate, to
\nsign certificates as the attorney-in-fact for Lessor. Lessee hereby agrees that
\nit will promptly notify Lessor of any action that it has taken in accordance
\nwith this Section 7(a)(4) as agent for the Lessor. Nothing in this Section
\n7(a)(4) shall permit the Lessee to change the country of registry of the
\nAircraft except as provided in Section 7(a)(3) above.<\/p>\n
(b) Possession and Subleases. Lessee will not, without the prior
\nwritten consent of Lessor, sublease or otherwise in any manner deliver, transfer
\nor relinquish possession of the Airframe or any Engine or install or permit any
\nEngine to be installed on any airframe other than the Airframe; provided that,
\nso long as no Section 14(a), (b), (f) or (g) Default or, in the case of
\nparagraph (viii) of this Section 7(b),<\/p>\n
33<\/p>\n
[Lease Agreement (1995 777 B)]<\/p>\n
no Section 14(d) (solely with respect to Lessee’s obligations under Section 7(a)
\nor (b)(viii) hereof or Section 8 hereof) Default, or any Event of Default shall
\nhave occurred and be continuing at the time of such sublease, delivery, transfer
\nor relinquishment of possession or installation, and so long as the action to be
\ntaken shall not deprive the Indenture Trustee of the Lien of the Trust Indenture
\non the Airframe or any Engine and Lessee and any Sublessee shall continue to
\ncomply with the provisions of Sections 7(a) and 11, Lessee may, without the
\nprior written consent of Lessor:<\/p>\n
(i) subject the Airframe and the Engines or engines then
\n installed thereon to normal interchange agreements or any Engine to normal
\n pooling or similar arrangements, in each case customary in the airline
\n industry and entered into by Lessee (or any Sublessee) in the ordinary
\n course of its business and, in the case of the Airframe, (x) with a U.S.
\n Air Carrier not in bankruptcy or a Permitted Sublessee or (y) any other air
\n carrier approved by Lessor; provided, that (A) no such agreement or
\n arrangement contemplates or requires the transfer of title to the Airframe,
\n and (B) if Lessor’s title to any Engine shall be divested under any such
\n agreement or arrangement, Lessee shall be deemed to have irrevocably
\n elected, in accordance with Section 9(d) hereof, to terminate the Lease
\n with respect to such Engine on the Business Day next following the 44th day
\n following such divestiture and Lessee shall (or shall cause any Sublessee
\n to) comply with Section 9(d) hereof in respect thereof;<\/p>\n
(ii) deliver possession of the Airframe or any Engine to the
\n manufacturer thereof or to any other Person for testing, service, repair,
\n maintenance or overhaul work on the Airframe or Engine or any Part of any
\n thereof or for alterations or modifications in or additions to such
\n Airframe or Engine to the extent required or permitted by the terms of
\n Section 8(c) hereof;<\/p>\n
(iii) install an Engine on an airframe owned by Lessee (or any
\n Sublessee) which airframe is free and clear of all Liens, except: (A)
\n Permitted Liens and those which apply only to the engines (other than
\n Engines), appliances, parts, instruments, appurtenances, accessories,
\n furnishings and other equipment (other than Parts) installed on such
\n airframe (but not to the airframe as an entirety), (B) the rights of third
\n parties under interchange agreements which would be permitted under clause
\n (i) above, provided that Lessor’s title to such Engine shall not be
\n divested as a result thereof and (C) mortgage Liens or other security
\n interests, provided, that (as regards this clause (C)), such<\/p>\n
34<\/p>\n
[Lease Agreement (1995 777 B)]<\/p>\n
mortgage Liens or other security interests effectively provide that such
\n Engine shall not become subject to the lien of such mortgage or security
\n interest, notwithstanding the installation thereof on such airframe;<\/p>\n
(iv) install an Engine on an airframe leased to Lessee (or any
\n Sublessee) or purchased by Lessee (or any Sublessee) subject to a
\n conditional sale or other security agreement, provided that (x) such
\n airframe is free and clear of all Liens, except: (A) the rights of the
\n parties to the lease or conditional sale or other security agreement
\n covering such airframe, or their assignees, and (B) Liens of the type
\n permitted by subparagraph (iii) of this paragraph (b) and (y) such lease,
\n conditional sale or other security agreement effectively provides that such
\n Engine shall not become subject to the lien of such lease, conditional sale
\n or other security agreement, notwithstanding the installation thereof on
\n such airframe;<\/p>\n
(v) install an Engine on an airframe owned by Lessee (or any
\n Sublessee), leased to Lessee (or any Sublessee) or purchased by Lessee (or
\n any Sublessee) subject to a conditional sale or other security agreement
\n under circumstances where neither subparagraph (iii) nor subparagraph (iv)
\n of this paragraph (b) is applicable, provided that in the event of such
\n installation, Lessee shall be deemed to have irrevocably elected, in
\n accordance with Section 9(d) hereof, to terminate the Lease with respect to
\n such Engine on the Business Day next following the 44th day following such
\n installation and Lessee shall (or shall cause any Sublessee to) comply with
\n Section 9(d) hereof in respect thereof, Lessor not intending hereby to
\n waive any right or interest it may have to or in such Engine under
\n applicable law until compliance by Lessee with such Section 9(d);<\/p>\n
(vi) transfer (or permit any Sublessee to transfer) possession of
\n the Airframe or any Engine to the United States of America or any
\n instrumentality or agency thereof pursuant to the Civil Reserve Air Fleet
\n Program for a period, including all permissible renewal periods (so long as
\n such renewal options have been irrevocably exercised by Lessee), that does
\n not extend beyond the end of the Term so long as Lessee (or any Sublessee)
\n shall promptly notify Lessor (x) upon transferring possession of the
\n Airframe or any Engine to the United States of America or any agency or
\n instrumentality thereof pursuant to the Civil Reserve Air Fleet Program and
\n (y) of the name and the address of the Contracting Office Representative
\n for the Military Airlift<\/p>\n
35<\/p>\n
[Lease Agreement (1995 777 B)]<\/p>\n
Command of the United States Air Force to whom notice must be given
\n pursuant to Section 15 hereof;<\/p>\n
(vii) transfer possession of the Airframe or any Engine to the
\n United States of America or any instrumentality or agency thereof pursuant
\n to a contract, a copy of which shall be provided to Lessor provided that
\n the term of such contract, including all permissible renewal periods (so
\n long as such renewal options have been irrevocably exercised by Lessee),
\n shall not continue beyond the end of the Term; or<\/p>\n
(viii) So long as the Sublessee is not subject to a proceeding or
\n final order under applicable bankruptcy, insolvency or reorganization laws
\n on the date the Sublease is entered into, Lessee may, at any time, enter
\n into a sublease with (1) a U.S. Air Carrier, (2) after the Restricted
\n Period any Permitted Sublessee, provided that in the event such Permitted
\n Sublessee is domiciled in a country listed on Exhibit F hereto and
\n designated therein as a “Restricted Country” such Sublessee shall be deemed
\n a Permitted Sublessee only if its country of domicile at the time of such
\n subleasing imposes and enforces aircraft maintenance standards not
\n materially less stringent than those of the FAA or the central aviation
\n authority of any of Canada, France, Germany, Japan or the United Kingdom,
\n or (3) after the Restricted Period any other Person approved in writing by
\n the Owner Participant, which approval shall not be unreasonably withheld if
\n in regard to this subclause (3) (x) the proposed sublessee’s country of
\n domicile imposes maintenance standards not materially less stringent than
\n those of the FAA or the central aviation authority of any of Canada,
\n France, Japan, Germany, or the United Kingdom and (y) Lessor, Owner
\n Participant and the Indenture Trustee receive an opinion of counsel
\n reasonably acceptable to Lessor, in its individual capacity, and Owner
\n Participant that the terms of the sublease and other Operative Documents
\n will be valid in the country where Sublessee is domiciled; that no
\n Participant is required to register to do business in the Sublessee’s
\n country of domicile; that there is no tort liability for owners not in
\n possession that is more extensive than under United States law or any state
\n law (it being understood that if such opinion cannot be given in a form
\n reasonably satisfactory to the Owner Participant such opinion will be
\n waived if insurance reasonably satisfactory to the Owner Participant and
\n the Lessor, in its individual capacity, is provided at Lessee’s expense to
\n cover such risk); that fair compensation in a currency freely convertible
\n into Dollars is mandated if there is a requisition of use or title of the
\n Aircraft by the country<\/p>\n
36<\/p>\n
[Lease Agreement (1995 777 B)]<\/p>\n
in which the Sublessee is domiciled (it being understood that if such
\n opinion cannot be given in a form reasonably satisfactory to the Owner
\n Participant such opinion will be waived if insurance reasonably
\n satisfactory to the Owner Participant, is provided at Lessee’s expense to
\n cover such risk); that there exist no possessory rights in favor of the
\n Sublessee which upon Lessee’s bankruptcy or other Default hereunder
\n (assuming the Sublessee is not then bankrupt) would prevent the return of
\n the Aircraft in accordance with the terms hereof or inhibit the Lessor’s
\n rights therein; and as to such other matters as Lessor, in its individual
\n capacity, and the Owner Participant may reasonably request, provided,
\n however, (A) that no sublease, including all permissible renewal periods,
\n shall extend beyond the Basic Term or any Renewal Term then in effect,
\n unless Lessee shall have irrevocably committed to purchase the Aircraft or
\n renew the Lease in accordance with the terms thereof at the end of the
\n Basic Term or Renewal Term, as the case may be, to a date beyond the latest
\n permissible expiration date of such sublease, (B) that, on the date of such
\n sublease, the United States and the country in which sublessee is domiciled
\n and principally located maintain diplomatic relations, (C) that on or prior
\n to entering into such sublease, Lessee shall provide to the Lessor, the
\n Owner Participant and, so long as the Lien of the Trust Indenture shall not
\n have been released, the Indenture Trustee assurances reasonably
\n satisfactory to Lessor, in its individual capacity, and Owner Participant
\n to the effect that the provisions of Section 11 hereof have been complied
\n with after giving effect to such sublease and (D) that, in the case of a
\n sublease to a sublessee described in (3) above, if the country of domicile
\n of the proposed sublessee at the time of such subleasing has not
\n unqualifiedly ratified the Geneva Convention for International Recognition
\n of Rights in Aircraft, the Lessee shall provide Lessor to the Lessor and,
\n so long as the Lien of the Trust Indenture shall not have been released,
\n the Indenture Trustee an opinion of counsel, which counsel and opinion
\n shall be reasonably satisfactory to the Owner Participant, to the effect
\n that the country in which such sublessee has its principal office and
\n domicile would give effect to (i) the title of Lessor in and to the
\n Aircraft, (ii) the registry of the Aircraft in the name of Lessor (or
\n Lessee or Sublessee, as “lessee” or “sublessee” as appropriate) and (iii)
\n the priority and validity of the Lien of the Trust Indenture.<\/p>\n
The rights of any Sublessee or other transferee (other than a
\ntransferee where the transfer is of an Engine which is deemed a termination
\nunder Section 9(d)) shall be subject and subordinate to, all the terms of the
\nLease (and any Sublease<\/p>\n
37<\/p>\n
[Lease Agreement (1995 777 B)]<\/p>\n
shall expressly state that it is so subject and subordinate), including, without
\nlimitation, the covenants contained in Section 7(a) hereof, the inspection
\nrights contained in Section 12 hereof and Lessor’s (and, so long as the Trust
\nIndenture is in effect, the Indenture Trustee’s (as Lessor’s assignee)) rights
\nto repossess the Aircraft and to void any Sublease upon such repossession, and
\nLessee shall remain primarily liable for the performance of all of the terms of
\nthe Lease, and the terms of any such Sublease shall not permit any Sublessee to
\ntake any action not permitted to be taken by Lessee in the Lease with respect to
\nthe Aircraft. No pooling agreement, Sublease or other relinquishment of
\npossession of the Airframe or any Engine shall in any way discharge or diminish
\nany of Lessee’s obligations to Lessor under this Lease or constitute a waiver of
\nLessor’s rights or remedies hereunder. Lessor agrees, for the benefit of Lessee
\n(and any Sublessee) and for the benefit of any mortgagee or other holder of a
\nsecurity interest in any engine owned by Lessee (or any Sublessee), any lessor
\nof any engine other than an Engine leased to Lessee (or any Sublessee) and any
\nconditional vendor of any engine other than an Engine purchased by Lessee (or
\nany Sublessee) subject to a conditional sale agreement or any other security
\nagreement, that no interest shall be created under the Lease in any engine so
\nowned, leased or purchased and that neither Lessor nor its successors or assigns
\nwill acquire or claim, as against Lessee (or any Sublessee) or any such
\nmortgagee, lessor or conditional vendor or other holder of a security interest
\nor any successor or assignee of any thereof, any right, title or interest in
\nsuch engine as the result of such engine being installed on the Airframe;
\nprovided, however, that such agreement of Lessor shall not be for the benefit of
\nany lessor or secured party of an airframe leased to Lessee (or any Sublessee)
\nor purchased by Lessee (or any Sublessee) subject to a conditional sale or other
\nsecurity agreement or for the benefit of any mortgagee or any other holder of a
\nsecurity interest in an airframe owned by Lessee (or any Sublessee), on which
\nairframe Lessee (or any Sublessee) then proposes to install an Engine, unless
\nsuch lessor, conditional vendor, other secured party or mortgagee has expressly
\nagreed (which agreement may be contained in such lease, conditional sale or
\nother security agreement or mortgage) that neither it nor its successors or
\nassigns will acquire, as against Lessor, any right title or interest in an
\nEngine as a result of such Engine being installed on such airframe. Lessee
\nshall provide the Owner Participant and the Indenture Trustee (A) written notice
\n(which notice shall be given (i) no later than thirty (30) days prior to
\nentering into any Sublease with a term of more than one (1) year or (ii) at any
\ntime prior to (to the extent that the giving of prior notice is reasonably
\npossible) or promptly after entering into any Sublease with a term of one (1)
\nyear or less) of any<\/p>\n
38<\/p>\n
[Lease Agreement (1995 777 B)]<\/p>\n
Sublease and (B) a copy of any Sublease which has a term of more than one (1)
\nyear.<\/p>\n
Lessee shall assign any Sublease to Lessor as security for its
\nobligations hereunder pursuant to an assignment instrument reasonably
\nsatisfactory to Lessor; provided, however, that any such assignment instrument
\nshall provide that the assignment of the Sublease shall only be effective,
\nwithout any further action, immediately upon the occurrence of a Section 14(a),
\n14(b), 14(f) or 14(g) Default or any Event of Default (and such effectiveness
\nshall terminate upon the curing or waiver of the aforesaid Defaults or Events of
\nDefault). In addition, any Sublease entered into by Lessee shall provide that
\nall payments due under such Sublease shall be paid by the Sublessee to Lessor
\nduring the continuance of a Section 14(a), 14(b), 14(f) or 14(g) Default or an
\nEvent of Default.<\/p>\n
In the event that during the term of a Sublease the Aircraft shall
\nhave been maintained under a block-overhaul program, Lessee shall at its option
\neither (i) cause the Aircraft to be returned to the Lessee by the Sublessee no
\nlater than three months prior to the end of the Term and Lessee shall upon such
\nreturn incorporate the Aircraft into Lessee’s continuous maintenance program for
\naircraft of the same make and model and in active commercial service or (ii)
\nupon return of the Aircraft to Lessor pursuant to Section 5(a), Lessee shall
\ncomply with those return conditions set forth in such Section 5(a) applicable in
\nthe event Lessee had adopted a block-overhaul program.<\/p>\n
Any Wet Lease or similar arrangement under which Lessee maintains
\noperational control of the Aircraft shall not constitute a delivery, transfer or
\nrelinquishment of possession for purposes of this section. Lessor acknowledges
\nthat any consolidation or merger of Lessee or conveyance, transfer or lease of
\nall or substantially all of Lessee’s assets permitted by the Operative Documents
\nshall not be prohibited by this Section.<\/p>\n
No Sublease permitted pursuant to this Section shall permit any
\nfurther sub-subleasing of the Aircraft.<\/p>\n
(c) Insignia. On or prior to the Delivery Date, or as soon thereafter
\nas practicable, Lessee agrees to affix and maintain (or cause to be affixed and
\nmaintained) in the cockpit of the Airframe adjacent to the registration
\ncertificate therein and on each Engine a nameplate bearing the inscription:<\/p>\n
39<\/p>\n
[Lease Agreement (1995 777 B)]<\/p>\n
Leased From<\/p>\n
State Street Bank and Trust Company, not in its individual capacity
\n but solely as Owner Trustee, Owner and Lessor<\/p>\n
and, for so long as the Airframe and each Engine shall be subject to the Lien of
\nthe Trust Indenture, bearing the following additional inscription:<\/p>\n
Mortgaged To<\/p>\n
First Security Bank of Utah, National Association, as Indenture
\n Trustee<\/p>\n
(such nameplate to be replaced, if necessary, with a nameplate reflecting the
\nname of any successor Lessor or successor Indenture Trustee, in each case as
\npermitted under the Operative Documents).<\/p>\n
Except as above provided, Lessee will not allow the name of any
\nperson, association or corporation to be placed on the Airframe or on any Engine
\nas a designation that might be interpreted as a claim of ownership; provided,
\nthat nothing herein contained shall prohibit Lessee (or any Sublessee) from
\nplacing its customary colors and insignia on the Airframe or any Engine.<\/p>\n
SECTION 8. Replacement and Pooling of Parts; Alterations,
\nModifications and Additions.<\/p>\n
(a) Replacement of Parts. Lessee, at its own cost and expense, will
\npromptly replace or cause to be replaced all Parts which may from time to time
\nbecome worn out, lost, stolen, destroyed, seized, confiscated, damaged beyond
\nrepair or permanently rendered unfit for use for any reason whatsoever, except
\nas otherwise provided in Section 8(c). All replacement Parts shall be owned by
\nLessee free and clear of all Liens (except Permitted Liens, pooling arrangements
\npermitted by Section 8(b) hereof and replacement Parts temporarily installed on
\nan emergency basis) and shall be in as good operating condition as, and shall
\nhave a value and utility substantially equal to, the Parts replaced assuming
\nsuch replaced Parts were in the condition and repair required to be maintained
\nby the terms hereof. All Parts at any time removed from the Airframe or any
\nEngine shall remain the property of Lessor, no matter where located, until such
\ntime as such Parts shall be replaced by Parts which meet the requirements for
\nreplacement Parts specified above. Immediately upon any replacement Part
\nbecoming incorporated or installed in or attached to the Airframe or any <\/p>\n
40<\/p>\n
[Lease Agreement (1995 777 B)]<\/p>\n
Engine, without further act (subject only to Permitted Liens and any pooling
\narrangement permitted by Section 8(b) hereof and except replacement Parts
\ntemporarily installed on an emergency basis), (i) title shall vest in and such
\nreplacement Part shall become the property of Lessor and shall become subject to
\nthis Lease and be deemed a Part for all purposes hereof to the same extent as
\nthe Parts originally incorporated or installed in or attached to the Airframe or
\nsuch Engine and (ii) the replaced Part shall no longer be the property of Lessor
\nand shall no longer be deemed a Part hereunder.<\/p>\n
(b) Pooling of Parts. Any Part removed from the Airframe or any
\nEngine as provided in Section 8(a) hereof may be subjected by Lessee (or any
\nSublessee) to a pooling arrangement of the type which is permitted by Section
\n7(b)(i) hereof; provided, that the Part replacing such removed Part shall be
\nincorporated or installed in or attached to such Airframe or Engine in
\naccordance with Section 8(a) as promptly as practicable after the removal of
\nsuch removed Part. In addition, any replacement Part when incorporated or
\ninstalled in or attached to the Airframe or an Engine in accordance with such
\nSections may be owned by any third party subject to such a pooling arrangement,
\nprovided, that Lessee (or any Sublessee), at its expense, as promptly thereafter
\nas practicable, and in any event within 90 days, either (i) causes such
\nreplacement Part to become the property of Lessor free and clear of all Liens
\nother than Permitted Liens or (ii) replaces such replacement Part with a further
\nreplacement Part owned by Lessee (or any Sublessee) which shall become the
\nproperty of Lessor, free and clear of all Liens other than Permitted Liens.<\/p>\n
(c) Alterations, Modifications and Additions. Lessee, at its own
\nexpense, will make (or cause to be made) such alterations and modifications in
\nand additions to the Airframe and Engines as may be required from time to time
\nto be made during the Term so as to comply with any law, rule, regulation or
\norder of any regulatory agency or body of any jurisdiction in which the Aircraft
\nmay then be registered; provided, however, that, after Lessee shall have
\nprovided Lessor and, so long as the Lien of the Trust Indenture shall not have
\nbeen released, the Indenture Trustee, with a certificate of its President, any
\nVice President, the Treasurer or any Assistant Treasurer stating all relevant
\nfacts pertaining thereto, Lessee or any Sublessee may, in good faith, and by
\nappropriate proceedings contest the validity or application of any such law,
\nrule, regulation or order in any reasonable manner which does not jeopardize the
\nright, title and interest of the Lessor or the Owner Participant in and to the
\nAirframe and\/or the Engines, or otherwise materially adversely affect Lessor,
\nthe Owner Participant or the Indenture Trustee but only so long as such
\nproceedings do not<\/p>\n
41<\/p>\n
[Lease Agreement (1995 777 B)]<\/p>\n
involve any risk of criminal liability or any unindemnified material risk of
\ncivil liability to Lessor or the Owner Participant for which the Lessee is not
\nthen willing to indemnify Lessor or the Owner Participant in a manner reasonably
\nsatisfactory to such Person. In addition, Lessee (or any Sublessee), at its own
\nexpense, may from time to time make such alterations and modifications in and
\nadditions to the Airframe or any Engine as Lessee (or any Sublessee) may deem
\ndesirable in the proper conduct of its business, including removal of Parts
\nwhich Lessee (or any Sublessee) deems to be obsolete or no longer suitable or
\nappropriate for use on the Airframe or such Engine (such parts, “Obsolete
\nParts”); provided that no such alteration, modification, removal or addition
\nimpairs the condition or airworthiness of the Airframe or such Engine, or
\ndecreases the value or the utility (or, in regard to the Airframe, remaining
\nuseful life) of the Airframe or such Engine below the value or utility (or, in
\nregard to the Airframe, remaining useful life) thereof immediately prior to such
\nalteration, modification, removal or addition assuming the Airframe or such
\nEngine was then in the condition required to be maintained by the terms of this
\nLease. In addition, the value (but not the utility, condition, airworthiness
\nor, in the case of the Airframe, remaining economic useful life) of the Airframe
\nor any Engine may be reduced by the value, if any, of Obsolete Parts which shall
\nhave been removed so long as the aggregate original cost of all Obsolete Parts
\nwhich shall have been removed and not replaced shall not exceed $900,000. All
\nParts incorporated or installed in or attached or added to the Airframe or an
\nEngine as the result of such alteration, modification or addition (except those
\nparts which Lessee has leased from others and which may be removed by Lessee
\npursuant to the next sentence) (the “Additional Parts”) shall, without further
\nact, become the property of, and title to such Parts shall vest in, Lessor.
\nNotwithstanding the foregoing sentence, Lessee (or any Sublessee), subject to
\nLessor’s rights under Section 5(f) hereof, may, at its own expense, at any time
\nduring the Term, so long as no Default under Section 14(a), (b), (d) (solely
\nwith respect to Lessee’s obligations under Section 7(a) or (b)(viii) or Section
\n8 hereof), (f) or (g) or an Event of Default shall have occurred and be
\ncontinuing, remove or suffer to be removed any Additional Part, provided that
\nsuch Additional Part (i) is in addition to, and not in replacement of or
\nsubstitution for, any Part originally incorporated or installed in or attached
\nto such Airframe or any Engine at the time of delivery thereof hereunder or any
\nPart in replacement of or substitution for any such Part, (ii) is not required
\nto be incorporated or installed in or attached or added to the Airframe or any
\nEngine pursuant to the terms of Section 7 hereof or the first sentence of this
\nparagraph (c) and (iii) can be removed from the Airframe or such Engine without
\nimpairing the condition or airworthiness or diminishing the value or utility
\n(or, in<\/p>\n
42<\/p>\n
[Lease Agreement (1995 777 B)]<\/p>\n
regard to the Airframe, remaining useful life) of the Airframe or such Engine
\nwhich the Airframe or such Engine would have had at such time had such
\nalteration, modification or addition not occurred. Upon the removal thereof as
\nprovided above, such Additional Part shall no longer be deemed the property of
\nLessor or part of the Airframe or Engine from which it was removed. Any
\nAdditional Part not removed as above provided prior to the return of the
\nAirframe or Engine to Lessor hereunder shall remain the property of Lessor.<\/p>\n
SECTION 9. Early Termination.<\/p>\n
(a) [Intentionally reserved for potential future use].<\/p>\n
(b) Termination for Obsolescence\/Surplus. So long as no Section
\n14(a), (b), (d) (solely with respect to Lessee’s obligations under Section 7(a)
\nor (b)(viii) or Section 8 hereof), (f) or (g) Default or any Event of Default
\nshall have occurred and be continuing, Lessee shall have the right to terminate
\nthis Lease on the third Business Day prior to any Lease Period Date occurring
\non or after the Restricted Period if Lessee shall have made a good faith
\ndetermination, which shall be evidenced by a certificate of any financial
\nofficer of Lessee, who is the Treasurer or more senior officer, that the
\nAircraft is surplus to Lessee’s requirements or economically obsolete to Lessee.<\/p>\n
Lessee shall give to Lessor and Indenture Trustee at least one hundred
\nand eighty (180) days revocable (except as provided below) advance written
\nnotice of Lessee’s intention to so terminate this Lease (any such notice, a
\n“Termination Notice”) specifying (i) the date on which Lessee intends to
\nterminate this Lease in accordance with this Section 9(b) (such specified date,
\na “Termination Date”) and (ii) that Lessee has determined that the Aircraft is
\nsurplus to its requirements or economically obsolete to Lessee. Lessee shall
\nexercise this option by arranging for the sale of the Aircraft pursuant to
\nSection 9(c), provided, however, that Lessee may not withdraw its notice if
\nLessor has elected to retain the Aircraft pursuant to Section 9(c) or if the
\nhighest bid obtained by Lessee pursuant to Section 9(c) is greater than the then
\napplicable Termination Value; provided, further, that if no sale of the Aircraft
\nshall have occurred on or prior to the Termination Date and if Lessor shall not
\nhave elected to retain the Aircraft, Lessee’s Termination Notice shall be deemed
\nwithdrawn. The Termination Notice shall become irrevocable twenty-five (25)
\ndays prior to the Termination Date.<\/p>\n
(c) Sale of the Aircraft. In the event that Lessee shall have
\nproposed to terminate this Lease under Section 9(b),
\nthen during the period commencing with the date of the <\/p>\n
43<\/p>\n
[Lease Agreement (1995 777 B)]<\/p>\n
Termination Notice until the proposed Termination Date Lessee, as non-exclusive
\nagent for Lessor and at no expense to Lessor, shall use reasonable efforts to
\nobtain bids in Dollars for the purchase of the Aircraft and, in the event it
\nreceives any bid, Lessee shall, within five Business Days after receipt thereof
\nand at least ten Business Days prior to the proposed Termination Date, advise
\nLessor in writing of the amount and terms of such bid, and the name and address
\nof the party or parties (who shall not be Lessee or any Affiliate of Lessee or
\nany person with whom Lessee or any such Affiliate has an arrangement or
\nunderstanding regarding the future use of the Aircraft by Lessee or any such
\nAffiliate but who may be the Owner Participant, any Affiliate thereof or any
\nperson contacted by the Owner Participant) submitting such bid. After Lessee
\nshall have advised Lessor of all bids received, the Owner Participant, any
\nAffiliate thereof or any Person contacted by the Owner Participant may submit a
\nfurther bid or bids to Lessee not later than five Business Days prior to the
\nTermination Date proposed by Lessee (unless Lessee shall have revoked the
\nTermination Notice specifying such proposed Termination Date). Subject to the
\nnext succeeding sentence, on or before the Termination Date, subject to the
\nrelease of all mortgage and security interests with respect to the Aircraft
\nunder the Trust Indenture: (1) Lessee shall deliver the Aircraft, or cause the
\nAircraft to be delivered to the highest bidder as determined below, in the same
\nmanner and in the same condition and otherwise in accordance with all the terms
\nof this Lease as if delivery were made to Lessor pursuant to Section 5, and
\nLessee shall duly transfer to Lessor title to any engine installed on the
\nAirframe and not owned by Lessor, all in accordance with the terms of Section 5
\n(but subject to the provisions of Section 5(e) hereof), (2) Lessor shall comply
\nwith the terms of the Trust Indenture and shall, without recourse or warranty
\n(except as to the absence of Lessor Liens (including for this purpose Liens that
\nwould be Lessor Liens but for the proviso to the definition of Lessor Liens)),
\nsubject to prior or concurrent payment by Lessee of all amounts due under clause
\n(3) of this sentence, sell the Aircraft for cash in Dollars to the entity, if
\nany, which shall have submitted the highest bona fide bid (evaluated on a net
\ncash basis) therefor, the total selling price realized at such sale to be
\nretained by Lessor, and (3) Lessee shall simultaneously pay or cause to be paid
\nto Lessor in the manner provided in Section 3(e), (A) if the proceeds of the
\nsale of the Aircraft so sold, net of reasonable out-of-pocket costs and expenses
\nincurred by Lessor and the Owner Participant in connection therewith, including,
\nwithout limitation, applicable sales or transfer taxes and legal fees, are less
\nthan the Termination Value for the Aircraft computed as of the Redemption Date,
\nthe difference in Dollars, (B) all unpaid Basic Rent due on or prior to the
\napplicable Redemption Date (other than Basic Rent payable in advance on the
\nRedemption Date, if<\/p>\n
44<\/p>\n
[Lease Agreement (1995 777 B)]<\/p>\n
any) and all unpaid Supplemental Rent with respect to the Aircraft due on or
\nprior to such Redemption Date, and (C) Premium, if any, due on the Loan
\nCertificates and upon receiving all such payments referred to in clauses (2) and
\n(3) above Lessor simultaneously will transfer to Lessee, without recourse or
\nwarranty (except as to the absence of Lessor Liens (including for this purpose
\nLiens that would be Lessor Liens but for the proviso to the definition of Lessor
\nLiens)), all of Lessor’s right, title and interest in and to any Engines
\nconstituting part of the Aircraft which were not sold with the Aircraft.
\nNotwithstanding the preceding sentence, Lessor may, if Lessee has not already
\nrevoked the Termination Notice, elect to retain title to the Aircraft. If
\nLessor so elects, Lessor shall give to Lessee written notice of such election at
\nleast ten Business Days prior to the Termination Date accompanied by an
\nirrevocable undertaking by the Owner Participant to make available to Lessor for
\npayment to the Indenture Trustee on the Termination Date the amount required to
\npay in full the unpaid Original Amount of the Loan Certificates outstanding on
\nthe applicable Redemption Date together with all other amounts due on such
\nRedemption Date thereunder less amounts to be paid by Lessee as a result of the
\npayment thereof as set forth in the second following sentence. Upon receipt of
\nnotice of such an election by Lessor and the accompanying undertaking by the
\nOwner Participant, Lessee shall cease its efforts to obtain bids as provided
\nabove and shall reject all bids theretofore or thereafter received. On the
\nTermination Date, Lessor shall (subject to the payment by Lessee of all Rent due
\non or prior to the Redemption Date as set forth below) pay in full the unpaid
\nOriginal Amount of the Loan Certificates outstanding on the Redemption Date,
\nplus interest accrued to, or to accrue thereon to but excluding the applicable
\nRedemption Date, together with all other amounts due thereunder less any amounts
\nto be paid by Lessee as a result of the payment thereof and, provided that the
\nLoan Certificates are paid as aforesaid, Lessee shall deliver the Airframe and
\nEngines or engines to Lessor in accordance with Section 5 and shall pay all
\nBasic Rent due on or prior to the Redemption Date (other than Basic Rent payable
\nin advance on the Redemption Date, if any) and all unpaid Supplemental Rent due
\non or prior to such Redemption Date, and Premium, if any, on the Loan
\nCertificates. If no sale shall have occurred on the Termination Date for any
\nreason (including, without limitation, by reason of Lessee’s revocation of its
\nTermination Notice) or Lessor has not, after making its election referred to
\nabove, made the payment contemplated by the preceding sentence and thereby
\ncaused this Lease to terminate, this Lease shall continue in full force and
\neffect as to the Aircraft, Lessee shall be entitled to keep any deposits or
\nother advances received from the proposed purchaser(s) of the Aircraft (without
\nin any way limiting any other rights or remedies against such proposed
\npurchaser(s) available to Lessor or Lessee), Lessee<\/p>\n
45<\/p>\n
[Lease Agreement (1995 777 B)]<\/p>\n
shall pay the reasonable out-of-pocket costs and expenses, including legal fees,
\nincurred by the Owner Participant, Indenture Trustee and Lessor (unless such
\nfailure to terminate this Lease is a consequence of the failure of Lessor or the
\nOwner Participant without due cause to make, or cause to be made, the payment
\nreferred to in the immediately preceding sentence), if any, in connection with
\npreparation for such sale and Lessee may give one or more additional Termination
\nNotices, provided no more than three such notices may be given during the Term
\nand only one such notice may be given during any 365 day period (not counting,
\nin either case, any Termination Notice for a Termination Date on which this
\nLease does not terminate as a consequence of the failure of Lessor or the Owner
\nParticipant without due cause to make or cause to be made the payment referred
\nto in the immediately preceding sentence). In the event of any such sale or
\nsuch retention of the Aircraft by Lessor and upon compliance by Lessee with the
\nprovisions of this paragraph, the obligation of Lessee to pay Basic Rent or any
\nother amounts hereunder shall cease to accrue. Upon payment of all amounts that
\nmay then be due hereunder, this Lease shall terminate. Lessor may, but shall be
\nunder no duty to, solicit bids, inquire into the efforts of Lessee to obtain
\nbids or otherwise take any action in connection with any such sale other than to
\ntransfer (in accordance with the foregoing provisions) to the purchaser named in
\nthe highest bid certified by Lessee to Lessor all of Lessor’s right, title and
\ninterest in the Aircraft, against receipt of the payments provided herein.<\/p>\n
(d) Termination as to Engines. Upon compliance with the terms of the
\nTax Indemnity Agreement, Lessee shall have the right at its option at any time
\nduring the Term, on at least 30 days’ prior written notice, to terminate this
\nLease with respect to any Engine. In such event, and prior to the date of such
\ntermination, Lessee shall replace such Engine hereunder by complying with the
\nterms of Section 10(b) to the same extent as if an Event of Loss had occurred
\nwith respect to such Engine (provided that Lessee shall have no right to pay
\nStipulated Loss Value with respect to such Engine), and Lessor shall transfer
\ntitle to the replaced Engine as provided in Section 5(b). No termination of
\nthis Lease with respect to any Engine as contemplated by this Section 9(d) shall
\nresult in any reduction of Basic Rent.<\/p>\n
SECTION 10. Loss, Destruction, Requisition, etc. (a) Event of Loss
\nwith Respect to the Aircraft. Upon the occurrence of an Event of Loss with
\nrespect to the Airframe or the Airframe and the Engines and\/or engines then
\ninstalled thereon, Lessee shall (1) forthwith (and in any event, within fifteen
\ndays after such occurrence) give Lessor written notice of such Event of Loss and
\n(2) within 60 days after such occurrence,<\/p>\n
46<\/p>\n
[Lease Agreement (1995 777 B)]<\/p>\n
give Lessor written notice of its election to perform one of the following
\noptions (it being understood that the failure to give such notice shall be
\ndeemed to be an election of the option set forth in clause (i) below):<\/p>\n
(i) Not later than the earlier of (x) the Business Day next
\n succeeding the 100th day following the occurrence of such Event of Loss or
\n (y) the third Business Day following receipt by the loss payee of the
\n insurance proceeds in respect to such Event of Loss (but not earlier than
\n the first Business Day next succeeding the 65th day following the
\n occurrence of such Event of Loss) (the applicable day being the “Loss
\n Payment Date”), Lessee shall, to the extent not paid to Lessor or Indenture
\n Trustee, as the case may be, as insurance proceeds, pay or cause to be paid
\n to Lessor as specified in Section 3(e) hereof, (A) the Stipulated Loss
\n Value of the Aircraft computed as of the Stipulated Loss Value Date
\n occurring on or immediately following the date of such Event of Loss, plus
\n (B) if such Stipulated Loss Value Date is a Lease Period Date, Basic Rent
\n due on such Lease Period Date (excluding Basic Rent payable in advance on
\n such Lease Period Date), plus (C) unpaid Supplemental Rent with respect to
\n the Aircraft due on or prior to the date of payment, plus (D) interest on
\n such Stipulated Loss Value at the Debt Rate from and including such
\n Stipulated Loss Value Date to, but not including, the date of any advance
\n payment in respect of Stipulated Loss Value as provided below, and
\n thereafter on the unpaid balance of such Stipulated Loss Value from and
\n including the date of such advance payment to, but excluding, the date such
\n Stipulated Loss Value is paid in full; provided, however, that if a Lease
\n Period Date shall occur after the Stipulated Loss Value Date with respect
\n to which Stipulated Loss Value is determined but prior to the date of such
\n payment of the sum of the amounts specified in clauses (A), (B), (C) and
\n (D) above or if Basic Rent is payable in advance on the Stipulated Loss
\n Value Date, Lessee shall pay on such Lease Period Date an amount equal to
\n the Basic Rent that would have been due on such Lease Period Date if such
\n Event of Loss had not occurred, which amount shall be credited as an
\n advance against the amounts payable pursuant to clauses (A), (B), (C) and
\n (D) above, or<\/p>\n
(ii) Not later than the Business Day next succeeding the 100th day
\n following the occurrence of such Event of Loss, Lessee shall, provided that
\n no Section 14(a), (b), (f) or (g) Default or any Event of Default shall
\n have occurred and be continuing, substitute an aircraft or an airframe or
\n an airframe and one or more engines, as the case
\n may be in accordance with the terms hereof, provided that if <\/p>\n
47<\/p>\n
[Lease Agreement (1995 777 B)]<\/p>\n
Lessee shall have elected to make a substitution under this clause (ii) and
\n shall fail for any reason to make such substitution in accordance with the
\n terms hereof, Lessee shall make the payments required by clause (i) above
\n as and when due thereunder.<\/p>\n
At such time as Lessor shall have received the sum of the amounts
\nspecified in clauses (A), (B), (C) and (D) of subparagraph (i) above, together
\nwith all other amounts that then may be due hereunder (including, without
\nlimitation, all Basic Rent due on or before the date of such payment (other than
\nBasic Rent payable in advance, if any, on such date)), under the Participation
\nAgreement and under the Tax Indemnity Agreement, (1) the obligation of Lessee to
\npay the installments of Basic Rent, Supplemental Rent, Stipulated Loss Value,
\nTermination Value or any other amount shall cease to accrue, (2) this Lease
\nshall terminate, (3) Lessor will comply with the terms of the Trust Indenture
\nand transfer to or at the direction of Lessee, without recourse or warranty
\n(except as to the absence of Lessor Liens (including for this purpose Liens that
\nwould be Lessor Liens but for the proviso to the definition of Lessor Liens)),
\nall Lessor’s right, title and interest in and to the Airframe and the Engines
\n“as-is, where-is” and furnish to or at the direction of Lessee, at Lessee’s
\nexpense, a bill of sale in form and substance reasonably satisfactory to Lessee
\n(or any Sublessee), evidencing such transfer, and (4) Lessee will be subrogated
\nto all claims of Lessor if any against third parties (other than Lessor’s or the
\nOwner Participant’s insurers under policies independently maintained at its own
\ncost and expense in accordance with Section 11(e) hereof), but only to the
\nextent the same relate to physical damage to or loss of the Airframe and any
\nEngines which were subject to such Event of Loss.<\/p>\n
In the event Lessee shall elect to substitute an aircraft (or an
\nairframe or an airframe and one or more engines, as the case may be) Lessee
\nshall (A) convey or cause to be conveyed to Lessor an aircraft (or an airframe
\nor an airframe and an engine which, together with the Engines or Engine
\nconstituting a part of the Aircraft but not installed thereon at the time of
\nsuch Event of Loss, constitute the Aircraft) free and clear of all Liens (other
\nthan Permitted Liens) and having at least the fair market value, utility and
\nremaining useful life and being in as good an operating condition as, the
\nAircraft subject to such Event of Loss assuming that the Aircraft had been
\nmaintained in accordance with this Lease; provided that any aircraft or airframe
\nso substituted hereunder shall be of the same make and model or improved model
\nas those initially leased hereunder and any engine substituted hereunder shall
\nbe an Acceptable Alternate Engine and (B) prior to or at the time of any such
\nsubstitution, Lessee (or any Sublessee), at its own expense, will (1) furnish<\/p>\n
48<\/p>\n
[Lease Agreement (1995 777 B)]<\/p>\n
Lessor with a full warranty bill of sale and a FAA bill of sale, in form and
\nsubstance reasonably satisfactory to the Owner Participant, evidencing such
\ntransfer of title, (2) cause a Lease Supplement and a Trust Supplement to be
\nduly executed by Lessee and filed for recording pursuant to the Federal Aviation
\nAct, or the applicable laws, rules and regulations of any other jurisdiction in
\nwhich the Airframe may then be registered, and cause a financing statement or
\nstatements or other requisite documents of a similar nature (including
\nprecautionary filings) to be filed in such place or places as necessary in order
\nto perfect the security interests therein created by or pursuant to the Trust
\nIndenture (and, with regard to precautionary filings, this Lease), (3) furnish
\nthe Owner Participant with such evidence of Lessor’s title to such replacement
\naircraft and of compliance with the insurance provisions of Section 11 with
\nrespect to such substituted property as Lessor, in its individual capacity, and
\nthe Owner Participant may reasonably request, (4) provide Owner Participant an
\nopinion of outside tax counsel, which opinion and counsel shall be satisfactory
\nto Owner Participant, to the effect that such substitution will not result in
\nany adverse tax consequences (including under Section 861 of the Code as then in
\neffect) to Lessor and\/or the Owner Participant (it being understood that if such
\nopinion cannot be given Lessee may indemnify Owner Participant for such adverse
\ntax consequences in lieu of such opinion in a manner satisfactory in form and
\nsubstance to the Owner Participant), (5) provide Lessor, Owner Participant and
\nthe Indenture Trustee an opinion of counsel, which counsel and opinion shall be
\nreasonably acceptable to Lessor, in its individual capacity, and the Owner
\nParticipant, to the effect that Lessor and the Indenture Trustee (as assignee of
\nall right, title and interest of Lessor under the Lease) shall be entitled to
\nthe benefits and protections of Section 1110 of the Bankruptcy Code with respect
\nto the aircraft substituted hereunder, (6) provide an opinion of counsel to
\nLessor and the Indenture Trustee, which opinion and counsel shall be reasonably
\nacceptable to the Lessor, in its individual capacity, and the Owner Participant,
\nto the effect that title to such replacement aircraft has been duly conveyed to
\nLessor free and clear of all Liens except Permitted Liens and that such
\nreplacement aircraft is duly subjected to the Lien of the Trust Indenture and
\n(7) provide Lessor, Owner Participant and Indenture Trustee all the
\ndocumentation required (or, following the termination of the Trust Indenture,
\nall the documentation that prior to such termination would have been required)
\nto be provided by it pursuant to Section 5.01(b) of the Trust Indenture, and
\nLessor simultaneously will comply with the terms of the Trust Indenture and
\ntransfer to or at the direction of Lessee, without recourse or warranty (except
\nas to the absence of Lessor Liens (including for this purpose Liens that would
\nbe Lessor Liens but for the proviso to the definition of Lessor Liens)), all of
\nLessor’s<\/p>\n
49<\/p>\n
[Lease Agreement (1995 777 B)]<\/p>\n
right, title and interest, if any, in and to the Aircraft or the Airframe and
\none or more Engines, as the case may be, “as-is, where-is” with respect to which
\nsuch Event of Loss occurred and furnish to or at the direction of Lessee, at
\nLessee’s expense, a bill of sale in form and substance reasonably satisfactory
\nto Lessee, evidencing such transfer. Lessee will be subrogated to all claims
\nof Lessor, if any, against third parties (other than Lessor’s or the Owner
\nParticipant’s insurers under policies independently maintained at their own cost
\nand expense in accordance with Section 11(e) hereof) but only to the extent the
\nsame relate to physical damage to or loss of the Airframe and any Engine which
\nwere subject to such Event of Loss. For all purposes hereof, the property so
\nsubstituted shall after such transfer be deemed part of the property leased
\nhereunder and shall be deemed an “Aircraft,” “Airframe” and “Engine,” as the
\ncase may be, as defined herein. No Event of Loss with respect to the Airframe
\nor the Airframe and the Engines or engines then installed thereon for which
\nsubstitution has been elected pursuant to Section 10(a)(ii) hereof shall result
\nin any reduction in Basic Rent.<\/p>\n
(b) Event of Loss with Respect to an Engine. Upon the occurrence of
\nan Event of Loss with respect to an Engine under circumstances in which there
\nhas not occurred an Event of Loss with respect to the Airframe, Lessee shall
\nforthwith (and in any event, within fifteen days after such occurrence) give
\nLessor written notice thereof and shall, within forty-five (45) days after the
\noccurrence of such Event of Loss, convey or cause to be conveyed to Lessor, as
\nreplacement for the Engine with respect to which such Event of Loss occurred,
\ntitle to an Acceptable Alternate Engine free and clear of all Liens (other than
\nPermitted Liens, which engine may upon its transfer to Lessor become subject to
\nany and all Permitted Liens) and having a value and utility at least equal to,
\nand being in as good an operating condition as and having been maintained in the
\nsame manner as, the Engine subject to such Event of Loss (assuming that such
\nEngine had been maintained in accordance with this Lease); provided, however,
\nupon written notice to Lessee given within 20 days after Lessor has received
\nnotice of such Event of Loss, the Lessor may require Lessee to pay with respect
\nto the Engine subject to such Event of Loss within 45 days after the occurrence
\nof such Event of Loss (provided that in no event shall such payment be required
\nto be made prior to the Commencement Date) an amount equal to (A) Engine Cost
\nmultiplied by the percentage specified in Exhibit C hereto opposite the
\nStipulated Loss Value Date occurring on or immediately following the date of
\nsuch Event of Loss, plus (B) interest on the amount determined pursuant to
\nclause (A) above at the Debt Rate from and including such Stipulated Loss Value
\nDate to, but excluding, the date such amount is paid in full; and provided,
\nfurther, if Lessee pays<\/p>\n
50<\/p>\n
[Lease Agreement (1995 777 B)]<\/p>\n
such Stipulated Loss Value and interest, then, subject to Section 5(e), Lessee
\nshall only be obligated to return the Aircraft to Lessor with any Engine
\nattached thereto with respect to which Lessee has not paid Stipulated Loss Value
\npursuant to this Section 10(b) at any time that Lessee is required to return the
\nAircraft to Lessor pursuant to the terms hereof; provided further, however,
\nthat, in lieu of paying such Stipulated Loss Value and interest, Lessee may
\nreplace the Engine in accordance with this Section 10(b) if Lessee provides to
\nthe Owner Participant either: (x) an opinion of outside tax counsel, which
\nopinion and counsel shall be satisfactory to the Owner Participant, to the
\neffect that such substitution will not result in any adverse tax consequences to
\nthe Owner Participant, or (y) an indemnity, satisfactory in form and substance
\nto the Owner Participant, for any adverse tax consequences resulting from such
\nsubstitution. Prior to or at the time of any such conveyance, Lessee, at its
\nown expense, will (i) furnish Lessor with a warranty (as to title) bill of sale,
\nin form and substance reasonably satisfactory to Lessor, with respect to such
\nreplacement engine, (ii) cause a Lease Supplement and Trust Supplement to be
\nduly executed by Lessee and to be filed for recording pursuant to the Federal
\nAviation Act, or the applicable laws, rules and regulations of any other
\njurisdiction in which the Airframe may then be registered, and cause a financing
\nstatement or statements or other requisite documents of a similar nature
\n(including precautionary filings) to be filed in such place or places as
\nnecessary in order to perfect the security interests therein created by or
\npursuant to the Trust Indenture (and, with regard to precautionary filings, this
\nLease), (iii) furnish Lessor with such evidence of Lessor’s title to such
\nAcceptable Alternate Engine and of compliance with the insurance provisions of
\nSection 11 hereof with respect to such replacement engine as Lessor, in its
\nindividual capacity, or the Owner Participant may reasonably request, (iv)
\nprovide Lessor and the Indenture Trustee an opinion of Lessee’s counsel which
\ncounsel and opinion shall be reasonably satisfactory to Lessor, in its
\nindividual capacity, or the Owner Participant to the effect that title to such
\nAcceptable Alternate Engine has been duly conveyed to Lessor free and clear of
\nall Liens except Permitted Liens and that such Acceptable Alternate Engine is
\nduly subjected to the Lien of the Trust Indenture, and (v) provide Lessor, Owner
\nParticipant and Indenture Trustee all the documentation required (or, following
\nthe termination of the Trust Indenture, all the documentation that prior to such
\ntermination would have been required) to be provided by it pursuant to Section
\n5.01(b) of the Trust Indenture, and Lessor will comply with the terms of the
\nTrust Indenture and transfer to or at the direction of Lessee without recourse
\nor warranty (except as to absence of Lessor Liens (including for this purpose
\nLiens that would be Lessor Liens but for the proviso to the definition of Lessor
\nLiens)) all<\/p>\n
51<\/p>\n
[Lease Agreement (1995 777 B)]<\/p>\n
of Lessor’s right, title and interest, if any, in and to (1) the Engine with
\nrespect to which such Event of Loss occurred and furnish to or at the direction
\nof Lessee, and at Lessee’s expense, a bill of sale in form and substance
\nreasonably satisfactory to Lessee, evidencing such transfer and (2) all claims,
\nif any, against third parties (other than Lessor’s or the Owner Participant’s
\ninsurers under policies independently maintained at their own cost and expense
\nin accordance with Section 11(e) hereof), for damage to or loss of the Engine
\nsubject to such Event of Loss, and such Engine shall thereupon cease to be an
\nEngine leased hereunder. For all purposes hereof, each such replacement engine
\nshall, after such conveyance, be deemed part of the property leased hereunder,
\nand shall be deemed an “Engine.” Except to the extent Lessor’s Cost is reduced
\npursuant to the definition thereof, no Event of Loss with respect to an Engine
\nunder the circumstances contemplated by the terms of this paragraph (b) shall
\nresult in any reduction in Basic Rent.<\/p>\n
(c) Application of Payments from Governmental Authorities for
\nRequisition of Title, etc. Any payments (other than insurance proceeds the
\napplication of which is provided for in Section 11) received at any time by
\nLessor or by Lessee from any governmental authority or other Person with respect
\nto an Event of Loss, other than a requisition for use by the United States
\nGovernment or other government of registry of the Aircraft or any
\ninstrumentality or agency of any thereof not constituting an Event of Loss, will
\nbe applied as follows:<\/p>\n
(i) if payments are received with respect to the Airframe (or the
\n Airframe and any Engine or engines then installed thereon), (A) unless the
\n same are replaced pursuant to the last paragraph of Section 10(a), after
\n reimbursement of Lessor (as provided in Section 7.01 of the Trust
\n Agreement) and the Owner Participant for reasonable costs and expenses, so
\n much of such payments remaining as shall not exceed the Stipulated Loss
\n Value and the other amounts payable under Section 10(a) hereof required to
\n be paid by Lessee pursuant to Section 10(a), shall be applied in reduction
\n of Lessee’s obligation to pay Stipulated Loss Value and the other amounts
\n payable under Section 10(a) hereof, if not already paid by Lessee, or, if
\n already paid by Lessee, shall be applied to reimburse Lessee for its
\n payment of Stipulated Loss Value and such other amounts, and following the
\n foregoing application, the balance, if any, of such payments shall be
\n distributed between Lessee and Lessor as their respective interests may
\n appear; or (B) if such property is replaced pursuant to the last paragraph
\n of Section 10(a), such payments shall be paid over to or retained by,
\n Lessee; provided, that Lessee shall have fully
\n performed or, concurrently therewith, will fully perform the <\/p>\n
52<\/p>\n
[Lease Agreement (1995 777 B)]<\/p>\n
terms of the last paragraph of Section 10(a) with respect to the Event of
\n Loss for which such payments are made; and<\/p>\n
(ii) if such payments are received with respect to an Engine under
\n circumstances contemplated by Section 10(b) hereof, (A) unless the same is
\n replaced pursuant to the terms of Section 10(b), after reimbursement of
\n Lessor (as provided for in Section 7.01 of the Trust Agreement) and the
\n Owner Participant for reasonable costs and expenses, so much of such
\n payments remaining as shall not exceed the amounts payable under Section
\n 10(b) hereof by Lessee, shall be applied in reduction of Lessee’s
\n obligation to pay the same, if not already paid by Lessee, or if already
\n paid by Lessee, shall be applied to reimburse Lessee for its payment of
\n such amounts and following the foregoing application, the balance, if any,
\n shall be paid to Lessee; or (B) if such property is replaced pursuant to
\n Section 10(b), such payments shall be paid over to, or retained by, Lessee,
\n provided that Lessee shall have fully performed, or concurrently therewith
\n will perform, the terms of Section 10(b) with respect to the Event of Loss
\n for which such payments are made.<\/p>\n
(d) Requisition for Use of the Aircraft by the United States
\nGovernment or Government of Registry of the Aircraft. In the event of the
\nrequisition for use of the Airframe and the Engines or engines installed on the
\nAirframe during the Term by the United States Government or any other government
\nof registry of the Aircraft or any instrumentality or agency of any thereof,
\nLessee shall promptly notify Lessor of such requisition, and all of Lessee’s
\nobligations under this Lease Agreement with respect to the Aircraft shall
\ncontinue to the same extent as if such requisition had not occurred (unless
\ndeemed prior to the end of the Term an Event of Loss in which case the foregoing
\nprovisions of this Section 10 shall be applicable). If Lessee shall fail to
\nreturn the Aircraft (i) on or before the end of the Term, in the case of a
\nrequisition by the United States government or any agency or instrumentality
\nthereof or (ii) within the earlier of the end of the Term or two years after
\nsuch requisition in the case of a requisition for use by the government of
\nregistry of the Aircraft or any agency or instrumentality thereof (other than
\nthe United States government or any agency or instrumentality thereof), such
\nfailure shall constitute an Event of Loss which shall be deemed to have occurred
\nin the case of clause (i) on the last day of the Term, and in the case of clause
\n(ii), on the earlier of the last day of the Term or the expiration of such two-
\nyear period, provided, however, that Lessor may notify Lessee in writing on or
\nbefore the twentieth day prior to the last day of the Term that, in the event
\nLessee shall fail by reason of such requisition to return the Airframe and such
\nEngines or<\/p>\n
53<\/p>\n
[Lease Agreement (1995 777 B)]<\/p>\n
engines on or before the end of the Term, such failure shall not be deemed an
\nEvent of Loss. Upon the giving of such notice and such failure to return by the
\nend of the Term, Lessee shall be relieved of all of its obligations pursuant to
\nthe provisions of Section 5 (but not under any other Section), except that if
\nany engine not owned by Lessor shall then be installed on the Airframe, Lessee
\nwill, at no cost to Lessor, furnish, or cause to be furnished, to Lessor a full
\nwarranty (as to title) bill of sale with respect to each such engine, in form
\nand substance reasonably satisfactory to Lessor, in its individual capacity, and
\nthe Owner Participant (together with an opinion of counsel (which may be
\nLessee’s General Counsel) to the effect that such full warranty bill of sale has
\nbeen duly authorized and delivered and is enforceable in accordance with its
\nterms and that such engines are free and clear of Liens other than Lessor Liens
\n(including for this purpose Liens that would be Lessor Liens but for the proviso
\nto the definition of Lessor Liens), against receipt from Lessor, at Lessee’s
\nexpense, of a bill of sale evidencing the transfer, without recourse or warranty
\n(except as to the absence of Lessor Liens (including for this purpose Liens that
\nwould be Lessor Liens but for the proviso to the definition of Lessor Liens)),
\nby Lessor to Lessee or its designee of all of Lessor’s right, title and interest
\nin and to any Engine constituting part of the Aircraft but not then installed on
\nthe Airframe. All payments received by Lessor or Lessee from such government for
\nthe use of such Airframe and Engines or engines during the Term shall be paid
\nover to, or retained by, Lessee (or, if directed by Lessee, any Sublessee); and
\nall payments received by Lessor or Lessee from such government for the use of
\nsuch Airframe and Engines or engines after the end of the Term shall be paid
\nover to, or retained by, Lessor unless Lessee shall have exercised its purchase
\noption hereunder, or there is a deemed Event of Loss hereunder, in which case
\nsuch payments shall be made to Lessee.<\/p>\n
(e) Requisition for Use of an Engine by the United States Government
\nor the Government of Registry of the Aircraft. In the event of the requisition
\nfor use of an Engine during the Term by the United States Government or any
\nother government of registry of the Aircraft or any agency or instrumentality of
\nany thereof (other than in the circumstances contemplated by subsection (d))
\nwhich shall have continued for more than 180 days or, if earlier, until the end
\nof the Term, Lessee shall replace (or cause any Sublessee to replace) such
\nEngine hereunder and Lessor and Lessee (or Sublessee as the case may be) shall
\ncomply with the terms of Section 10(b) to the same extent as if an Event of Loss
\nhad occurred with respect to such Engine. Upon compliance with Section 10(b)
\nhereof, any payments received by Lessor or Lessee from such government with
\nrespect to such requisition shall be paid over to, or retained by Lessee.<\/p>\n
54<\/p>\n
[Lease Agreement (1995 777 B)]<\/p>\n
(f) Application of Payments During Existence of Events of Default.
\nAny amount referred to in this Section 10 which is payable to or retainable by
\nLessee (or any Sublessee) shall not be paid to or retained by Lessee (or any
\nSublessee) if at the time of such payment or retention a Default or an Event of
\nDefault shall have occurred and be continuing, but shall be held by or paid over
\nto Lessor as security for the obligations of Lessee (or such Sublessee) under
\nthis Lease and applied against Lessee’s obligations hereunder as and when due.
\nAt such time as there shall not be continuing any such Default or Event of
\nDefault, such amount shall be paid to Lessee to the extent not previously
\napplied in accordance with the preceding sentence.<\/p>\n
SECTION 11. Insurance. (a) Public Liability and Property Damage
\nInsurance. (1) Except as provided in clause (2) of this Section 11(a), and
\nsubject to self-insurance to the extent permitted by Section 11(d) hereof,
\nLessee will carry or cause to be carried with respect to the Aircraft at its or
\nany Sublessee’s expense (i) comprehensive airline liability (including, without
\nlimitation, passenger, contractual, bodily injury, and property damage
\nliability) insurance (exclusive of manufacturer’s product liability insurance)
\nand (ii) cargo liability insurance, (A) in an amount not less than the greater
\nof (x) the amounts of comprehensive airline liability insurance from time to
\ntime applicable to aircraft owned or leased, and operated by Lessee of the same
\ntype as the Aircraft and (y) $450,000,000 per occurrence, (B) of the type and
\ncovering the same risks as from time to time are applicable to aircraft owned or
\nleased, and operated by Lessee of the same type as the Aircraft, and (C) which
\nis maintained in effect with insurers of recognized reputation and
\nresponsibility; provided, however, that Lessee need not maintain cargo liability
\ninsurance, or may maintain such insurance in an amount less than $450,000,000
\nper occurrence, as long as the amount of cargo liability insurance, if any,
\nmaintained with respect to the Aircraft is the same as the cargo liability
\ninsurance, if any, maintained for other Boeing Model 777-222 aircraft owned or
\nleased, and operated by Lessee.<\/p>\n
(2) During any period that the Airframe or an Engine, as the case may
\nbe, is on the ground and not in operation, Lessee may carry or cause to be
\ncarried as to such non-operating property, in lieu of the insurance required by
\nclause (1) above, and subject to the self-insurance to the extent permitted by
\nSection 11(d) hereof, insurance by insurers of recognized reputation and
\nresponsibility otherwise conforming with the provisions of clause (1) except
\nthat (A) the amounts of coverage shall not be required to exceed the amounts of
\ncomprehensive airline liability insurance from time to time applicable to
\nproperty owned or leased by Lessee of the same type as such non-<\/p>\n
55<\/p>\n
[Lease Agreement (1995 777 B)]<\/p>\n
operating property and which is on the ground and not in operation; and (B) the
\nscope of the risks covered and the type of insurance shall be the same as from
\ntime to time shall be applicable to property owned or leased by Lessee of the
\nsame type as such non-operating property and which is on the ground and not in
\noperation.<\/p>\n
(b) Insurance Against Loss or Damage to the Aircraft. (1) Except as
\nprovided in clause (2) of this Section 11(b), and subject to the provisions of
\nSection 11(d) hereof permitting self-insurance, Lessee shall maintain or cause
\nto be maintained in effect, at its or any Sublessee’s expense, with insurers of
\nrecognized reputation and responsibility, all-risk aircraft hull insurance
\ncovering the Aircraft and fire and extended coverage and all-risk aircraft hull
\ninsurance covering Engines and Parts while temporarily removed from the Aircraft
\nand not replaced by similar components (including, without limitation, aircraft
\nwar risk and governmental confiscation and expropriation (other than by the
\ngovernment of registry of the Aircraft) and hijacking insurance, if and to the
\nextent the same is maintained by Lessee (or any Sublessee) with respect to other
\naircraft owned or leased, and operated by Lessee (or such Sublessee) on the same
\nroutes); provided, that such insurance shall at all times while the Aircraft is
\nsubject to this Lease be for an amount (taking into account self-insurance to
\nthe extent permitted by Section 11(d) hereof) not less than the Stipulated Loss
\nValue for the Aircraft; and provided further, that subject to compliance with
\nSection 11(d) hereof, such all-risk property damage insurance covering Engines
\nand Parts while temporarily removed from the Airframe or an airframe of (in the
\ncase of Parts) an Engine need be obtained only to the extent available at
\nreasonable cost (as reasonably determined by Lessee). In the case of a loss
\nwith respect to an engine (other than an Engine) installed on the Airframe in
\ncircumstances which do not constitute an Event of Loss with respect to the
\nAirframe, Lessor shall promptly remit any payment made to it of any insurance
\nproceeds in respect of such loss to Lessee or any other third party that is
\nentitled to receive such proceeds.<\/p>\n
Except during a period when a Section 14(a), (b), (f) or (g) Default
\nor an Event of Default has occurred and is continuing, all losses will be
\nadjusted by Lessee with the insurers giving due regard to Lessor’s interest. As
\nbetween Lessor and Lessee, it is agreed that all proceeds of insurance
\nmaintained in compliance with the preceding paragraph and received as the result
\nof the occurrence of an Event of Loss will be applied as follows:<\/p>\n
(x) if such payments are received with respect to the Airframe (or the
\n Airframe and the Engines installed<\/p>\n
56<\/p>\n
[Lease Agreement (1995 777 B)]<\/p>\n
thereon), (i) unless such property is replaced pursuant to the last
\n paragraph of Section 10(a) hereof, so much of such payments remaining,
\n after reimbursement of Lessor (as provided in Section 7.01 of the Trust
\n Agreement) and the Owner Participant for reasonable costs and expenses, as
\n shall not exceed the Stipulated Loss Value and the other amounts payable
\n under Section 10(a) hereof required to be paid by Lessee pursuant to
\n Section 10(a) hereof shall be applied in reduction of Lessee’s obligation
\n to pay such Stipulated Loss Value and the other amounts payable under
\n Section 10(a) hereof, if not already paid by Lessee, or, if already paid by
\n Lessee, shall be applied to reimburse Lessee for its payment of such
\n Stipulated Loss Value and the other amounts payable under Section 10(a)
\n hereof, and the balance, if any, of such payments remaining thereafter will
\n be paid over to, or retained by, Lessee (or if directed by Lessee, any
\n Sublessee); or (ii) if such property is replaced pursuant to the last
\n paragraph of Section 10(a) hereof, such payments shall be paid over to, or
\n retained by, Lessee (or if directed by Lessee, any Sublessee), provided
\n that Lessee shall have fully performed or, concurrently therewith, will
\n fully perform the terms of the last paragraph of Section 10(a) hereof with
\n respect to the Event of Loss for which such payments are made; and<\/p>\n
(y) if such payments are received with respect to an Engine under
\n the circumstances contemplated by Section 10(b) hereof, so much of such
\n payments remaining after reimbursement of Lessor and the Owner Participant
\n for reasonable costs and expenses shall be paid over to, or retained by,
\n Lessee (or if directed by Lessee, any Sublessee), provided that Lessee
\n shall have fully performed or, concurrently therewith, will fully perform
\n the terms of Section 10(b) hereof with respect to the Event of Loss for
\n which such payments are made.<\/p>\n
(2) During any period that the Aircraft is on the ground and not in
\noperation, Lessee may carry or cause to be carried, in lieu of the insurance
\nrequired by clause (1) above, and subject to the self-insurance to the extent
\npermitted by Section 11(d) hereof, insurance otherwise conforming with the
\nprovisions of said clause (1) except that the scope of the risks and the type of
\ninsurance shall be the same as from time to time applicable to aircraft owned or
\nleased by Lessee of the same type as the Aircraft similarly on the ground and
\nnot in operation, provided that, subject to the self-insurance to the extent
\npermitted by Section 11(d) hereof, Lessee shall maintain insurance against risk
\nof loss or damage to the Aircraft in an amount at least equal to the Stipulated
\nLoss Value of the<\/p>\n
57<\/p>\n
[Lease Agreement (1995 777 B)]<\/p>\n
Aircraft during such period that the Aircraft is on the ground and not in
\noperation.<\/p>\n
(c) Reports, etc. Lessee will furnish, or cause to be furnished, to
\nLessor, the Indenture Trustee, the Owner Participant and, so long as the Pass
\nThrough Trustees are the Certificate Holders, each Pass Through Trustee, on or
\nbefore the Delivery Date, and each annual anniversary of the Delivery Date
\nduring the Term, a report, signed by Rollins Hudig Hall of Illinois, Inc. or any
\nother independent firm of insurance brokers reasonably acceptable to Lessor
\nwhich brokers may be in the regular employ of Lessee (the “Insurance Brokers”),
\ndescribing in reasonable detail the hull and liability insurance (and property
\ninsurance for detached engines and parts) then carried and maintained with
\nrespect to the Aircraft and stating the opinion of such firm that (a) such
\ninsurance complies with the terms hereof and (b) that such insurance together
\nwith any self-insurance permitted hereby provides coverage that are in
\nsubstantially similar forms, are of such types and have limits within the range
\nof limits as are customarily carried by U.S. carriers; provided, however, that
\nthe opinion set forth in clause (b) shall not be required if the Insurance
\nBroker then generally does not provide such an opinion or will provide such an
\nopinion for material additional cost; and provided further that all information
\ncontained in the foregoing report shall not be made available by Lessor, the
\nIndenture Trustee, the Pass Through Trustees or the Owner Participant to anyone
\nexcept (A) to prospective and permitted transferees of Lessor’s, the Owner
\nParticipant’s, any Pass Through Trustee’s or the Indenture Trustee’s interest or
\ntheir respective counsel, independent certified public accountants, independent
\ninsurance brokers or other agents, who agree to hold such information
\nconfidential, (B) to Lessor’s, Owner Participant’s, any Pass Through Trustee’s
\nor the Indenture Trustee’s counsel or independent certified public accountants,
\nindependent insurance brokers or other agents who agree to hold such information
\nconfidential, (C) as may be required by any statute, court or administrative
\norder or decree or governmental ruling or regulation, or (D) as may be necessary
\nfor purposes of protecting the interest of any such Person or for enforcement of
\nthis Lease by Lessor or the Indenture Trustee; provided, however, that any and
\nall disclosures permitted by clauses (C) or (D) above shall be made only to the
\nextent necessary to meet the specific requirements or needs of the Persons to
\nwhom such disclosures are hereby permitted. Lessee will cause such Insurance
\nBroker to agree to advise Lessor, the Indenture Trustee, the Owner Participant
\nand, so long as the Pass Through Trustees are the Certificate Holders, each Pass
\nThrough Trustee in writing of any act or omission on the part of Lessee of which
\nit has knowledge and which might invalidate or render unenforceable, in whole or
\nin part, any insurance on the Aircraft<\/p>\n
58<\/p>\n
[Lease Agreement (1995 777 B)]<\/p>\n
and to advise such Persons in writing at least 30 days (7 days in the case of
\nwar risk and allied perils coverage) prior to the cancellation or material
\nadverse change of any insurance maintained pursuant to this Section 11, provided
\nthat if the notice period specified above is not reasonably obtainable, the
\nInsurance Broker shall provide for as long a period of prior notice as shall
\nthen be reasonably obtainable. In addition, Lessee will also cause such
\nInsurance Broker to deliver to Lessor, the Indenture Trustee, the Owner
\nParticipant and, so long as the Pass Through Trustees are the Certificate
\nHolders, each Pass Through Trustee, on or prior to the date of expiration of any
\ninsurance policy referenced in a previously delivered certificate of insurance,
\na new certificate of insurance, substantially in the same form as delivered by
\nLessee to such parties on the Delivery Date except for the changes in the report
\nor the coverage consistent with the terms hereof. In the event that Lessee or
\nany Sublessee shall fail to maintain or cause to be maintained insurance as
\nherein provided, Lessor, the Indenture Trustee or, so long as the Pass Through
\nTrustees are the Certificate Holders, each Pass Through Trustee may at its sole
\noption, but shall be under no duty to, provide such insurance and, in such
\nevent, Lessee shall, upon demand, reimburse Lessor, the Indenture Trustee or
\nsuch Pass Through Trustee, as Supplemental Rent, for the cost thereof to Lessor,
\nsuch Pass Through Trustee or the Indenture Trustee, as the case may be;
\nprovided, however, that no exercise by Lessor, a Pass Through Trustee or the
\nIndenture Trustee, as the case may be, of said option shall affect the
\nprovisions of this Lease, including the provisions that failure by Lessee to
\nmaintain the prescribed insurance shall constitute an Event of Default.<\/p>\n
(d) Self-Insurance. Lessee may self-insure the risks required to be
\ninsured against pursuant to this Section 11 under a program applicable to all
\naircraft (whether owned or leased) in Lessee’s fleet, but in no case shall the
\naggregate amount of such self-insurance in regard to Sections 11(a) and 11(b)
\nhereof exceed for any calendar year, with respect to all of the aircraft
\n(whether owned or leased) in Lessee’s fleet (including, without limitation, the
\nAircraft) the lesser of (A) 50% of the highest replacement value of any single
\naircraft in Lessee’s fleet or (B) 1-1\/2% of the average aggregate insurable
\nvalue (during the preceding calendar year) of all aircraft (including, without
\nlimitation, the Aircraft) on which Lessee carries insurance. In addition to the
\nforegoing right to self-insure, Lessee (and any Sublessee) may self-insure to
\nthe extent of any applicable mandatory minimum per aircraft (or, if applicable,
\nper annum or other period) hull or liability insurance deductible imposed by the
\naircraft hull or liability insurer.<\/p>\n
59<\/p>\n
[Lease Agreement (1995 777 B)]<\/p>\n
(e) Additional Insurance by Lessor and Lessee. Lessee (and any
\nSublessee) may at its own expense carry insurance with respect to its interest
\nin the Aircraft in amounts in excess of that required to be maintained by this
\nSection 11. The Owner Participant or Lessor may carry for its own account at
\nits sole cost and expense insurance with respect to its interest in the
\nAircraft, provided that such insurance does not prevent Lessee (or any
\nSublessee) from carrying the insurance required or permitted by this Section 11
\nor adversely affect such insurance or materially increase the cost thereof.<\/p>\n
(f) Indemnification by Government in Lieu of Insurance.
\nNotwithstanding any provisions of this Section 11 requiring insurance, Lessor
\nagrees to accept, in lieu of insurance against any risk with respect to the
\nAircraft, indemnification from, or insurance provided by, the United States
\nGovernment or any agency or instrumentality thereof, the obligations of which
\nare supported by the full faith and credit of the federal government of the
\nUnited States, against such risk in an amount which, when added to the amount of
\ninsurance against such risk maintained by Lessee (or any Sublessee) shall be at
\nleast equal to the amount of insurance against such risk otherwise required by
\nthis Section 11 (taking into account self-insurance permitted by Section 11(d)
\nhereof).<\/p>\n
(g) Application of Payments During Existence of Default. Any amount
\nreferred to in this Section 11 which is payable to or retainable by Lessee (or
\nany Sublessee) shall not be paid to or retained by Lessee (or any Sublessee) if
\nat the time of such payment or retention a Default or an Event of Default shall
\nhave occurred and be continuing, but shall be held by or paid over to Lessor as
\nsecurity for the obligations of Lessee under this Lease and, if such a Default
\nor an Event of Default shall have occurred and be continuing, applied against
\nLessee’s obligations hereunder as and when due. At such time as there shall not
\nbe continuing any such Default or Event of Default, such amount shall be paid to
\nLessee to the extent not previously applied in accordance with the preceding
\nsentence.<\/p>\n
(h) Terms of Insurance Policies. Any policies carried in accordance
\nwith Sections 11(a) and 11(b) hereof covering the Aircraft, and any policies
\ntaken out in substitution or replacement for any such policies, (A) shall name
\nthe Additional Insureds as additional insureds, or, if appropriate, loss payees,
\nas their respective interests may appear (but without imposing on any such party
\nliability to pay premiums with respect to such insurance), (B) may provide for
\nself-insurance to the extent permitted in Section 11(d) hereof, (C) shall
\nprovide that if the insurers cancel such insurance for any reason whatever, or
\nif the same is allowed to lapse for non-payment of premium or if any<\/p>\n
60<\/p>\n
[Lease Agreement (1995 777 B)]<\/p>\n
material change is made in the insurance which adversely affects the interest of
\nany Additional Insured, such lapse, cancellation or change shall not be
\neffective as to any Additional Insured for thirty days (ten days in the case of
\nlapse for nonpayment of premium and seven days in the case of war risk and
\nallied perils coverage) after receipt by such Additional Insured of written
\nnotice by such insurers of such lapse, cancellation or change; provided,
\nhowever, that if any notice period specified above is not reasonably obtainable,
\nsuch policies shall provide for as long a period of prior notice as shall then
\nbe reasonably obtainable, (D) shall provide that in respect of the respective
\ninterests of each Additional Insured in such policies the insurance shall not be
\ninvalidated by any action or inaction of Lessee (or any Sublessee) or any other
\nPerson and shall insure the respective interests of the Additional Insureds, as
\nthey appear, regardless of any breach or violation of any warranty, declaration
\nor condition contained in such policies by Lessee (or any Sublessee) or by any
\nother Person, (E) shall be primary without any right of contribution from any
\nother insurance which is carried by any Additional Insured, (F) shall expressly
\nprovide that all of the provisions thereof, except the limits of liability,
\nshall operate in the same manner as if there were a separate policy covering
\neach insured, (G) shall waive any right of the insurers to set-off or
\ncounterclaim or any other deduction, whether by attachment or otherwise, in
\nrespect of any liability of any Additional Insured, and (H) shall provide that
\n(i) in the event of a loss involving the Aircraft, Airframe, or an Engine for
\nwhich proceeds are in excess of $5,000,000 ($2,500,000 if the Aircraft is under
\nsublease), the proceeds in respect of such loss up to the amount of Stipulated
\nLoss Value for the Aircraft shall be payable to Lessor (or, so long as the Trust
\nIndenture shall be in effect, the Indenture Trustee), it being understood and
\nagreed that in the case of any payment to Lessor (or the Indenture Trustee)
\notherwise than in respect of an Event of Loss, Lessor (or the Indenture Trustee)
\nshall, upon receipt of evidence reasonably satisfactory to it that the damages
\ngiving rise to such payment shall have been repaired or that such payment shall
\nthen be required to pay for repairs then being made, pay the amount of such
\npayment, and any interest or income earned thereon in accordance with Section 22
\nhereof, to Lessee or its order, and (ii) the entire amount of any such loss for
\nwhich proceeds are $5,000,000 ($2,500,000 if the Aircraft is under sublease) or
\nless or the amount of any proceeds of any such loss in excess of Stipulated Loss
\nValue for the Aircraft shall be paid to Lessee or its order unless a Default or
\nan Event of Default shall have occurred and be continuing and the insurers have
\nbeen notified thereof by Lessor or the Indenture Trustee.<\/p>\n
SECTION 12. Inspection. At reasonable times, and upon at least 10
\ndays (or one day if a Section 14(a), 14(b), 14(d)<\/p>\n
61<\/p>\n
[Lease Agreement (1995 777 B)]<\/p>\n
(solely with respect to Lessee’s obligations under Section 7(a) or (b)(viii) or
\nSection 8 hereof), 14(f) or 14(g) Default or any Event of Default shall have
\noccurred and be continuing) prior written notice, the Owner Participant or the
\nIndenture Trustee, or their respective authorized representatives, may inspect
\nthe Aircraft (provided, however, that such inspections by the Owner Participant
\nand its authorized representatives or the Indenture Trustee and its authorized
\nrepresentative shall, in regard to each of the Owner Participant and the
\nIndenture Trustee, be limited to one inspection of the Aircraft during any
\nconsecutive twelve-month period except during the continuance of a Default or an
\nEvent of Default when such inspection right shall not be so limited) and inspect
\nand make copies of the books and records of Lessee and any Sublessee required to
\nbe maintained by the FAA or the regulatory agency or body of another
\njurisdiction in which the Aircraft is then registered relating to the
\nmaintenance of the Aircraft (at the Owner Participant’s or the Indenture
\nTrustee’s risk and expense (unless a Section 14(a), 14(b), 14(f) or 14(g)
\nDefault or any Event of Default shall have occurred and be continuing in which
\ncase such inspection shall be at Lessee’s expense), as the case may be) and
\nshall keep any information or copies obtained thereby confidential and shall not
\ndisclose the same to any Person, except (A) to Lessor and the Pass Through
\nTrustees and to prospective and permitted transferees of Lessor’s, the Owner
\nParticipant’s, any Pass Through Trustee’s or the Indenture Trustee’s interest
\n(and such prospective and permitted transferee’s counsel, independent insurance
\nadvisors or other agents) who agree to hold such information confidential, (B)
\nto Lessor’s, the Owner Participant’s, any Pass Through Trustee’s or the
\nIndenture Trustee’s counsel, independent insurance advisors or other agents who
\nagree to hold such information confidential, (C) as may be required by any
\nstatute, court or administrative order or decree or governmental ruling or
\nregulation, (D) as may be necessary for purposes of protecting the interest of
\nany such Person or for enforcement of this Lease by Lessor or the Indenture
\nTrustee; provided, however, that any and all disclosures permitted by clauses
\n(C) and (D) above shall be made only to the extent necessary to meet the
\nspecific requirements or needs of Persons for whom such disclosures are hereby
\npermitted. Any such inspection of the Aircraft shall be subject to Lessee’s
\nsafety and security rules applicable at the location of the Aircraft, shall be a
\nvisual, walk-around inspection of the interior and exterior of the Aircraft and
\nshall not include opening any panels, bays or the like without the express
\nconsent of Lessee (except in connection with a heavy maintenance visit when a
\npanel, bay or the like is scheduled or required to be open), which consent
\nLessee may in its sole discretion withhold; provided that no exercise of such
\ninspection right shall interfere with the normal operation or maintenance of the
\nAircraft by, or the business of, Lessee (or any Sublessee).<\/p>\n
62<\/p>\n
[Lease Agreement (1995 777 B)]<\/p>\n
Upon receipt by Lessee of a written request from the Owner Participant
\nspecifying that the Owner Participant desires to have an authorized
\nrepresentative observe the last scheduled heavy maintenance visit to be
\nperformed on the Aircraft (or substantially equivalent successor type of
\nmaintenance work) during the Term, Lessee shall cooperate with the Owner
\nParticipant to enable the Owner Participant’s representative to observe such
\nlast scheduled heavy maintenance visit to be performed on the Aircraft during
\nthe Term, including reasonable advance notification to the Owner Participant of
\nthe time and place of such scheduled heavy maintenance visit; provided that the
\nOwner Participant’s authorized representative shall merely observe such
\nscheduled heavy maintenance visit, shall not interfere with or extend in any
\nmanner the normal conduct or duration of the scheduled heavy maintenance visit,
\nand shall not be entitled to direct any of the work performed in connection with
\nsuch scheduled heavy maintenance visit. Neither the Owner Participant nor the
\nIndenture Trustee shall have any duty to make any such inspection nor shall any
\nof them incur any liability or obligations by reason of not making any such
\ninspection.<\/p>\n
SECTION 13. Assignment. Except as otherwise provided in the
\nOperative Documents, Lessee will not, without the prior written consent of
\nLessor, assign any of its rights hereunder. Lessor agrees that it will not
\nassign or convey its right, title and interest in and to this Lease or the
\nAircraft except as provided in the Operative Documents. Subject to the
\nforegoing, the terms and provisions of this Lease shall be binding upon and
\ninure to the benefit of Lessor and Lessee and their respective successors and
\npermitted assigns.<\/p>\n
SECTION 14. Events of Default. Each of the following events shall
\nconstitute an Event of Default (whether any such event shall be voluntary or
\ninvoluntary or come about or be effected by operation of law or pursuant to or
\nin compliance with any judgment, decree or order of any court or any order, rule
\nor
\nregulation of any administrative or governmental body) and each such Event of
\nDefault shall continue so long as, but only as long as, it shall not have been
\nremedied:<\/p>\n
(a) Lessee shall not have made a payment of Basic Rent, Stipulated
\nLoss Value, Termination Value, EBO Price, Special Termination Value or Premium
\nwithin ten (10) days after the same shall have become due; or<\/p>\n
(b) Lessee shall have failed to make a payment of Supplemental Rent
\n(other than Supplemental Rent referred to in paragraph (a) of this Section 14)
\nafter the same shall have become due and such failure shall continue for fifteen
\n(15) days after Lessee’s receipt of written demand therefor by the party<\/p>\n
63<\/p>\n
[Lease Agreement (1995 777 B)]<\/p>\n
entitled thereto (provided that any failure to pay any amount owed by Lessee
\nunder the Tax Indemnity Agreement or any failure of Lessee to pay to Lessor or
\nthe Owner Participant when due any Excluded Payments shall not constitute an
\nEvent of Default unless written notice is given by the Owner Participant to
\nLessee and the Indenture Trustee that such failure shall constitute an Event of
\nDefault); or<\/p>\n
(c) Lessee shall fail to carry and maintain on or with respect to the
\nAircraft (or cause to be carried and maintained) insurance required to be
\nmaintained in accordance with the provisions of Section 11 hereof; or<\/p>\n
(d) Lessee shall have failed to perform or observe (or caused to be
\nperformed and observed) any other covenant or agreement to be performed or
\nobserved by it under any Operative Document, and such failure shall continue
\nunremedied for a period of thirty days after written notice thereof by Lessor or
\nthe Indenture Trustee; provided, however, that if Lessee shall have undertaken
\nto cure any such failure and, notwithstanding the reasonable diligence of Lessee
\nin attempting to cure such failure, such failure is not cured within said thirty
\nday period but is curable with future due diligence, there shall exist no Event
\nof Default under this Section 14 so long as Lessee is proceeding with due
\ndiligence to cure such failure and such failure is in fact cured within 180
\ndays); or<\/p>\n
(e) any representation or warranty made by Lessee herein or in the
\nParticipation Agreement or any document or certificate furnished by Lessee in
\nconnection herewith or therewith or pursuant hereto or thereto (except the
\nrepresentations and warranties set forth in Section 4 of the Tax Indemnity
\nAgreement) shall prove to have been incorrect in any material respect at the
\ntime made and shall remain material at the time in question; provided, however,
\nsuch incorrectness shall constitute a default hereunder only if such
\nincorrectness shall continue uncured for a period of thirty (30) days after the
\nreceipt by Lessee of a written notice from Lessor or the Indenture Trustee
\nadvising Lessee of the existence of such incorrectness; or<\/p>\n
(f) the commencement of an involuntary case or other proceeding in
\nrespect of Lessee in an involuntary case under the federal bankruptcy laws, as
\nnow or hereafter constituted, or any other applicable federal or state
\nbankruptcy, insolvency or other similar law in the United States or seeking the
\nappointment of a receiver, liquidator, assignee, custodian, trustee,
\nsequestrator (or similar official) of Lessee or for all or substantially all of
\nits property, or seeking the winding-up or liquidation of its affairs and the
\ncontinuation of any such case or other proceeding<\/p>\n
64<\/p>\n
[Lease Agreement (1995 777 B)]<\/p>\n
undismissed or unstayed for a period of ninety (90) consecutive days or an order
\nfor relief under Chapter 11 of the Bankruptcy Code with respect to Lessee as
\ndebtor or any other order, judgment or decree shall be entered in any proceeding
\nby any court of competent jurisdiction appointing, without the consent of
\nLessee, a receiver, trustee or liquidator of Lessee, or for all or substantially
\nall of its property, or sequestering of all or substantially all of the property
\nof Lessee and any such order, judgment or decree or appointment or sequestration
\nshall be final or shall remain in force undismissed, unstayed or unvacated for a
\nperiod of ninety (90) days after the date of entry thereof; or<\/p>\n
(g) the commencement by Lessee of a voluntary case under the federal
\nbankruptcy laws, as now constituted or hereafter amended, or any other
\napplicable federal or state bankruptcy, insolvency or other similar law in the
\nUnited States, or the consent by Lessee to the appointment of or taking
\npossession by a receiver, liquidator, assignee, trustee, custodian, sequestrator
\n(or other similar official) of Lessee or for all or substantially all of its
\nproperty, or the making by Lessee of any assignment for the benefit of creditors
\nor Lessee shall take any corporate action to authorize any of the foregoing; or<\/p>\n
(h) Lessee shall not be a Certificated Air Carrier;<\/p>\n
provided, however, that, notwithstanding anything to the contrary contained in
\nthis Section 14, any failure of Lessee to perform or observe any covenant,
\ncondition, agreement or any error in a representation or warranty shall not
\nconstitute an Event of Default if such failure or error is caused solely by
\nreason of any event that constitutes an Event of Loss so long as Lessee is
\ncontinuing to comply with all of the terms of Section 10 hereof.<\/p>\n
SECTION 15. Remedies. Upon the occurrence of any Event of Default
\nand at any time thereafter so long as any such Event of Default shall not have
\nbeen remedied, Lessor may, at its option, declare by written notice to Lessee
\nthis Lease Agreement to be in default; and at any time thereafter, so long as
\nsuch Event of Default shall be continuing, Lessor may do one or more of the
\nfollowing with respect to all or any part of the Airframe and any or all of the
\nEngines as Lessor in its sole discretion shall elect, to the extent permitted
\nby, and subject to compliance with any mandatory requirements of, applicable law
\nthen in effect; provided, however, that during any period the Aircraft is
\nsubject to the Civil Reserve Air Fleet Program in accordance with the provisions
\nof Section 7(b) hereof and in the possession of the United States Government or
\nan instrumentality or agency thereof, Lessor shall not, on account of any Event
\nof<\/p>\n
65<\/p>\n
[Lease Agreement (1995 777 B)]<\/p>\n
Default, be entitled to do any of the following in such manner as to limit
\nLessee’s control under this Lease (or any Sublessee’s control under any
\nSublease) of any Airframe or any Engines, unless at least 60 days’ (or such
\nlesser period as may then be applicable under the Military Airlift Command
\nprogram of the United States Government) prior written notice of default
\nhereunder shall have been given by Lessor by registered or certified mail to
\nLessee (and any Sublessee) with a copy addressed to the Contracting Office
\nRepresentative for the Military Airlift Command of the United States Air Force
\nunder any contract with Lessee (or any Sublessee) relating to the Aircraft:<\/p>\n
(a) upon the written demand of Lessor and at Lessee’s expense,
\n cause Lessee to return promptly, and Lessee shall return promptly, the
\n Airframe or any Engine as Lessor may so demand to Lessor or its order in
\n the manner and condition required by, and otherwise in accordance with all
\n the provisions of, Section 5 as if such Airframe or Engine were being
\n returned at the end of the Term, or Lessor, at its option, may enter upon
\n the premises where all or any part of the Airframe or any Engine is located
\n and take immediate possession of and remove the same by summary proceedings
\n or otherwise, (and, at Lessor’s option, store the same at Lessee’s
\n premises until disposal thereof by Lessor), all without liability accruing
\n to Lessor for or by reason of such entry or taking of possession or
\n removing whether for the restoration of damage to property caused by such
\n action or otherwise;<\/p>\n
(b) sell the Aircraft, the Airframe or any Engine at public or
\n private sale, as Lessor may determine, or otherwise dispose of, hold, use,
\n operate, lease to others or keep idle the Aircraft as Lessor, in its sole
\n discretion, may determine, all free and clear of any rights of Lessee,
\n except as hereinafter set forth in this Section 15;<\/p>\n
(c) Lessor may hold, keep idle or lease to others the Aircraft,
\n the Airframe or any Engine or any Part thereof, as Lessor in its sole
\n discretion may determine, free and clear of any rights of Lessee and
\n without any duty to account to Lessee with respect thereto, except that
\n Lessee’s obligation to pay Basic Rent with respect to the Aircraft on Lease
\n Period Dates subsequent to the date upon which Lessee shall have been
\n deprived of use of the Aircraft pursuant to this Section 15 shall be
\n reduced by the net proceeds, if any, received by Lessor from leasing the
\n Aircraft, the Airframe or any Engine to any Person other than Lessee;<\/p>\n
66<\/p>\n
[Lease Agreement (1995 777 B)]<\/p>\n
(d) whether or not Lessor shall have exercised, or shall
\n thereafter at any time exercise, any of its rights under paragraph (a), (b)
\n or (c) above with respect to the Aircraft, Lessor, by written notice to
\n Lessee specifying a payment date which shall be the Lease Period Date not
\n earlier than ten days from the date of such notice, may demand that Lessee
\n pay to Lessor, and Lessee shall pay Lessor, on the payment date so
\n specified, as liquidated damages for loss of a bargain and not as a penalty
\n (in lieu of the installments of Basic Rent for the Aircraft due for Lease
\n Periods commencing on or after the Commencement Date or the Lease Period
\n Date, as the case may be, specified as the payment date in such notice),
\n any unpaid Basic Rent due on Lease Period Dates on or prior to the payment
\n date so specified plus whichever of the following amounts Lessor, in its
\n sole discretion, shall specify in such notice (with interest thereon at the
\n Past Due Rate from such specified payment date until the date of actual
\n payment of such amount): (i) an amount equal to the excess, if any, of the
\n Stipulated Loss Value for the Aircraft, computed as of the Lease Period
\n Date specified as the payment date in such notice over the aggregate fair
\n market rental value (computed as hereafter in this Section 15 provided) of
\n such Aircraft for the remainder of the Term, after discounting such
\n aggregate fair market rental value to present value as of the Lease Period
\n Date specified as the payment date in such notice at an annual rate equal
\n to the Past Due Rate; or (ii) an amount equal to the excess, if any, of the
\n Stipulated Loss Value for such Aircraft, computed as of the Lease Period
\n Date specified as the payment date in such notice, over the fair market
\n sales value of such Aircraft (computed as hereafter in this Section
\n provided) as of the Lease Period Date specified as the payment date in such
\n notice;<\/p>\n
(e) in the event Lessor pursuant to paragraph (b) above, shall
\n have sold the Aircraft, Lessor, in lieu of exercising its rights under
\n paragraph (d) above with respect to such Aircraft, may, if it shall so
\n elect, demand that Lessee pay Lessor, and Lessee shall pay to Lessor, on
\n the date of such sale, as liquidated damages for loss of a bargain and not
\n as a penalty, any unpaid Basic Rent with respect to the Aircraft due on or
\n prior to such date plus the amount of any deficiency between the net
\n proceeds of such sale (after deduction of all reasonable costs of sale) and
\n the Stipulated Loss Value of such Aircraft, computed as of the Stipulated
\n Loss Value date on or immediately following the date of such sale, together
\n with interest, if any, on the amount of such deficiency, at the Past Due
\n Rate, from the date of such sale to the date of actual payment of such
\n amount; and\/or<\/p>\n
67<\/p>\n
[Lease Agreement (1995 777 B)]<\/p>\n
(f) Lessor may rescind or terminate this Lease Agreement, and\/or may
\n exercise any other right or remedy which may be available to it under
\n applicable law or proceed by appropriate court action to enforce the terms
\n hereof or to recover damages for breach hereof.<\/p>\n
For the purposes of paragraph (c) above, the “fair market rental
\nvalue” or the “fair market sales value” of the Aircraft shall be the rental
\nvalue or sales value, as the case may be, which would be obtained in an arm’s-
\nlength transaction between an informed and willing lessee or purchaser, as the
\ncase may be, under no compulsion to lease or purchase, as the case may be, and
\nan informed and willing lessor or seller in possession, as the case may be, in
\neach case based upon the actual condition and location of the Aircraft, which
\nvalue shall be determined by mutual agreement or, in the absence of mutual
\nwritten agreement, pursuant to an appraisal prepared and delivered by a
\nnationally recognized firm of independent aircraft appraisers nominated by
\nLessor, and Lessor shall promptly notify Lessee of such nomination. Any
\nappraisal obtained pursuant to this Section 15 shall take into account then
\nprevailing market conditions for aircraft of the same type as the Aircraft. The
\ncost of such appraisal or appointment shall be borne by Lessee.<\/p>\n
In addition, Lessee shall be liable, except as otherwise provided
\nabove, without duplication of amounts payable hereunder, for any and all unpaid
\nRent due hereunder before, after or during the exercise of any of the foregoing
\nremedies, for the payment of Premium, if any, and for all reasonable and actual
\nlegal fees and other costs and expenses incurred by Lessor, the Indenture
\nTrustee, the Certificate Holders and the Owner Participant in connection with
\nany default or the exercise of remedies hereunder including the return of the
\nAirframe or any Engine in accordance with the terms of Section 5 or in placing
\nsuch Airframe or Engine in the condition and airworthiness required by such
\nSection.<\/p>\n
At any sale of the Aircraft or any part thereof pursuant to this
\nSection 15, Lessor, the Indenture Trustee, a Certificate Holder or the Owner
\nParticipant may bid for and purchase such property. Lessor agrees to give
\nLessee at least 10 days’ written notice of the date fixed for any public sale of
\nany Airframe or Engine or of the date on or after which will occur the execution
\nof any contract providing for any private sale. Except as otherwise expressly
\nprovided above, no remedy referred to in this Section 15 is intended to be
\nexclusive, but each shall be cumulative and in addition to any other remedy
\nreferred to above or otherwise available to Lessor at law or in equity; and the
\nexercise or beginning of exercise by Lessor of any one or more of such remedies
\nshall not preclude the simultaneous or<\/p>\n
68<\/p>\n
[Lease Agreement (1995 777 B)]<\/p>\n
later exercise by Lessor of any or all of such other remedies. No waiver by
\nLessor of any Default or Event of Default shall in any way be, or be construed
\nto be, a waiver of any future or subsequent Default or Event of Default. To the
\nextent permitted by applicable law, Lessee hereby waives any right now or
\nhereafter conferred by statute or otherwise which may require Lessor to sell,
\nlease, or otherwise use the Aircraft or Parts thereof in mitigation of Lessor’s
\ndamages as set forth in this Section 15 or which may otherwise limit or modify
\nany of Lessor’s rights and remedies in this Section 15.<\/p>\n
SECTION 16. Lessee’s Cooperation Concerning Certain Matters. (a)
\nForthwith upon the execution and delivery of each Lease Supplement and Trust
\nSupplement from time to time required by the terms hereof and upon the execution
\nand delivery of any amendment to this Lease or to the Trust Agreement or Trust
\nIndenture, Lessee at its expense will cause such Lease Supplement, Trust
\nSupplement (and, in the case of the initial Lease Supplement and Trust
\nSupplement, this Lease, the Trust Agreement and the Trust Indenture as well) or
\namendment to be duly filed and recorded, and maintained of record, in accordance
\nwith the applicable laws of the government of registry of the Aircraft. In
\naddition, Lessee at its expense will promptly and duly execute and deliver to
\nLessor such further documents and take such further action as Lessor may from
\ntime to time reasonably request in order more effectively to carry out the
\nintent and purpose of this Lease and to establish and protect the rights and
\nremedies created or intended to be created in favor of Lessor and the Indenture
\nTrustee hereunder, including, without limitation, if requested by Lessor, at the
\nexpense of Lessee, the execution and delivery of supplements or amendments
\nhereto, each in recordable form, subjecting to this Lease and the Trust
\nIndenture, any airframe or engine substituted for the Airframe or any Engine
\npursuant to the terms thereof and the recording or filing of counterparts
\nthereof, in accordance with the laws of such jurisdictions as Lessor may from
\ntime to time reasonably request.<\/p>\n
(b) Lessee will furnish to Lessor, the Indenture Trustee, the Owner
\nParticipant and, so long as the Pass Through Trustees are the Certificate
\nHolders, the Pass Through Trustees:<\/p>\n
(i) Quarterly Statements – As soon as practicable after the end
\n of the first, second, and third quarterly fiscal periods in each fiscal
\n year of Lessee, and in any event within 60 days thereafter, duplicate
\n copies of:<\/p>\n
(1) a consolidated balance sheet of Lessee as at the end of
\n such quarter setting forth in<\/p>\n
69<\/p>\n
[Lease Agreement (1995 777 B)]<\/p>\n
comparative form the amount for the end of the corresponding period of
\n the preceding fiscal year,<\/p>\n
(2) consolidated statements of income and retained earnings
\n of Lessee for such quarterly period, setting forth in comparative form
\n the amount for the corresponding period of the preceding fiscal year,
\n and<\/p>\n
(3) consolidated statements of cash flow of Lessee for the
\n portion of the fiscal year ending with said quarter, setting forth in
\n comparative form the amount for the corresponding period of the
\n preceding fiscal year;<\/p>\n
(ii) Annual Statements – As soon as practicable after the end of
\n each fiscal year, and in any event within 120 days thereafter, duplicate
\n copies of:<\/p>\n
(1) a consolidated balance sheet of Lessee as at the end of
\n such year, and<\/p>\n
(2) consolidated statements of income and retained earnings
\n and of cash flow of Lessee for such year,<\/p>\n
prepared in accordance with generally accepted accounting principles and
\n setting forth in each case in comparative form the figures for the previous
\n fiscal year and accompanied by an auditor’s report of a firm of independent
\n certified public accountants of recognized national standing (which report
\n may be adverse, qualified or disclaim an opinion);<\/p>\n
(iii) SEC Reports – Promptly upon their becoming available, one
\n copy of each financial statement, report, or proxy statement sent by UAL
\n Corporation to its shareholders generally, and of each regular or periodic
\n report and any prospectus (in the form in which it becomes effective) filed
\n by Lessee or UAL Corporation with the Securities and Exchange Commission or
\n any successor agency; and<\/p>\n
(iv) Notice of Default or Claimed Default -Immediately upon an
\n officer of Lessee becoming aware of the existence of a Default or an Event
\n of Default (or that Lessor has given notice or taken any other action with
\n respect to an Event of Default or a claimed default under this Lease), a
\n written notice specifying the nature of the Default, Event of Default, or
\n claimed default and any such notice given or action taken by Lessor and
\n what action Lessee is taking or proposes to take with respect thereto.<\/p>\n
70<\/p>\n
[Lease Agreement (1995 777 B)]<\/p>\n
(c) Commencing in 1996, on or before April 30 of each year during the
\nTerm, Lessee will deliver to Lessor and the Indenture Trustee a certificate of
\nLessee, signed by the President, a Vice President, the Chief Financial Officer
\nor the principal accounting officer of Lessee to the effect that the signer is
\nfamiliar with or has reviewed the relevant terms of this Lease and the signer
\ndoes not have knowledge of the existence, as of the date of such certificate, of
\nany condition or event which constitutes a Default or an Event of Default.<\/p>\n
SECTION 17. Notices. All notices required under the terms and
\nprovisions hereof shall be in writing (including telex, telecopier or similar
\nwriting) and shall be effective (a) if given by telecopier when transmitted and
\nthe appropriate confirmation received; provided, that any such notice is
\nconfirmed by certified mail, (b) if given by certified mail, three Business Days
\nafter being deposited in the mails, (c) if given by telex, upon receipt by the
\nparty transmitting the telex of such party’s callback code at the end of such
\ntelex (receipt of confirmation in writing not being necessary to the
\neffectiveness of any telex) and (d) if given by other means, when received or
\npersonally delivered, addressed:<\/p>\n
(i) if to Lessee, at P. O. Box 66100, Chicago, Illinois 60666(or,
\n if given by overnight delivery service, 1200 East Algonquin Road, Elk Grove
\n Township, Illinois 60007) Attention: Vice President and Treasurer,
\n telecopier number (708) 952-7117, or to such other address or telecopier
\n number as Lessee shall from time to time designate in writing to Lessor;<\/p>\n
(ii) if to Lessor, at 225 Franklin Street, Boston, Massachusetts
\n 02110 (or, if given by overnight delivery service) Two International Place,
\n Boston, Massachusetts 02110) Attention: _____________________, telecopier
\n number (617) 664-5367 or to such other address or telecopier number as
\n Lessor shall from time to time designate in writing to Lessee;<\/p>\n
(iii) if to the Indenture Trustee, the Owner Participant or any
\n Pass Through Trustee, addressed to the Indenture Trustee, the Owner
\n Participant or such Pass Through Trustee at such address or telecopier
\n number as the Indenture Trustee, the Owner Participant or such Pass Through
\n Trustee shall have furnished by notice to Lessor and to Lessee, and, until
\n an address is so furnished, addressed to the Indenture Trustee, the Owner
\n Participant or such Pass Through Trustee at its address or telecopier
\n number set forth in Schedule I to the Participation Agreement; and<\/p>\n
71<\/p>\n
[Lease Agreement (1995 777 B)]<\/p>\n
(iv) If to a Certificate Holder which is not a Pass Through
\n Trustee, addressed to such Certificate Holder at its address stated in the
\n Loan Certificate Register maintained pursuant to the Trust Indenture.<\/p>\n
A copy of each notice to Lessor shall be given by the sender thereof to the
\nOwner Participant.<\/p>\n
SECTION 18. Net Lease; No Set-Off, Counterclaim, Etc.<\/p>\n
(a) This Lease is a net lease, and it is intended that the Lessee
\nshall pay all costs and expenses of every character, whether seen or unforeseen,
\nordinary or extraordinary or structural or non-structural, in connection with
\nthe use, operation, maintenance, repair and reconstruction of the Airframe and
\neach Engine by the Lessee, including the costs and expenses particularly set
\nforth in this Lease. Except as set forth in this Section 18(a), the Rent which
\nLessee is obligated to pay shall be paid without the necessity of notice or
\ndemand and without set-off, counterclaim, abatement, suspension, deduction or
\ndefense. If at any time that Lessee is required (a) to make a payment of
\nTermination Value or Fair Market Sales Value pursuant to Section 9 or Stipulated
\nLoss Value pursuant to Section 10, or (b) to pay the purchase price of the
\nAircraft pursuant to Section 19(b), there shall exist a Lessor Lien with respect
\nto the Aircraft (including for this purpose Liens that would be Lessor Liens but
\nfor the proviso to the definition of Lessor Liens) relating to the Owner
\nParticipant (or Lessee shall have previously incurred a charge to discharge such
\na Lessor Lien), then Lessee shall be entitled to deduct from the portion
\nrequired to be paid to the Owner Participant of such payment of Termination
\nValue or Fair Market Sales Value, or such payment of the purchase price, or any
\ncombination thereof, as the case may be, an amount sufficient to so reimburse
\nLessee or to reimburse Lessee for the cost of discharging such Lessor Lien, as
\nthe case may be. Notwithstanding anything contained in this Section 18(a) to
\nthe contrary, any payments of Fair Market Sales Value, Termination Value,
\nStipulated Loss Value, Special Termination Value or EBO Price made to the
\nIndenture Trustee shall be in an amount which, together with any other amounts
\npayable hereunder, is at least sufficient to pay in full, as of the date of
\npayment thereof, the amount of principal of, and any accrued and unpaid interest
\non, the outstanding Loan Certificates, together with Premium, if any, thereon
\nand amounts due the Certificate Holders under the Trust Indenture, if any, and,
\nto such extent, shall not be subject to set-off hereunder.<\/p>\n
(b) Except as otherwise expressly provided, this Lease shall not
\nterminate nor shall the Lessee have any right to terminate this Lease or be
\nentitled to abatement, suspension,<\/p>\n
72<\/p>\n
[Lease Agreement (1995 777 B)]<\/p>\n
deferment or reduction of any Rent which the Lessee is obligated to pay
\nhereunder, nor shall the obligations hereunder of the Lessee be affected, by
\nreason of (A) any damage to or the destruction or loss of all or any portion of
\nthe Airframe or any Engine from whatever cause, (B) the loss or theft of any
\nportion of the Airframe or any Engine, (C) the taking of the Airframe or any
\nEngine or any portion thereof by condemnation, confiscation, requisition or
\notherwise, (D) the prohibition, limitation or restriction of the Lessee’s use of
\nall or any part of the Airframe or any Engine, or the interference with such use
\nby any Person, (E) the inadequacy or incorrectness of the description of any
\nportion of the Airframe or any Engine or the failure of this Lease to demise to
\nthe Lessee the Airframe or any Engine or any portion thereof, (F) the Lessee’s
\nacquisition or ownership of all or any part of the Airframe or any Engine
\notherwise than pursuant to an express provision of this Lease, (G) any defect in
\ncompliance with specifications, condition, merchantability, design,
\nairworthiness, quality, durability, operation or fitness for use for any purpose
\nof the Airframe or any Engine or any portion thereof, (H) any defect in the
\ntitle to, or registration of or the existence of any Liens or rights of others
\nwhatsoever with respect to, the Airframe or any Engine or any portion thereof,
\n(I) any insolvency, bankruptcy, reorganization or similar proceedings by or
\nagainst any Sublessee or any Person (J) any breach, default or misrepresentation
\nby the Lessor, any Participant or the Indenture Trustee under this Lease or any
\nother Operative Document or any of the documents referred to herein or therein
\nor (K) any invalidity or unenforceability, in whole or in part, of this Lease or
\nany other Operative Document or any of the documents referred to herein or
\ntherein, or any other infirmity herein or therein, or any lack of power or
\nauthority of any party to this Lease or any other Operative Document or any such
\ndocuments to enter into the same, or (L) any other circumstance, happening or
\nact whatsoever, whether or not unforeseen or similar to any of the foregoing, it
\nbeing the intention of the parties hereto that the obligations of the Lessee
\nshall be absolute and unconditional and shall be separate and independent
\ncovenants and agreements and shall continue unaffected unless and until this
\nLease shall have terminated in accordance with its terms upon payment by Lessee
\nof all sums payable by Lessee hereunder and performance by Lessee of all
\nobligations required to be performed by Lessee hereunder.<\/p>\n
The Lessee covenants that it will remain obligated under this Lease in
\naccordance with its terms and will take no action to terminate, rescind or avoid
\nthis lease, notwithstanding the bankruptcy, insolvency, reorganization,
\ncomposition, readjustment, liquidation, dissolution, winding-up or other
\nproceeding affecting the Lessor or the Owner Participant or any assignee of the
\nLessor the Owner Participant or any other action<\/p>\n
73<\/p>\n
[Lease Agreement (1995 777 B)]<\/p>\n
with respect to this Lease which may be taken in any such proceeding by any
\ntrustee or receiver of the Lessor or the Owner Participant or of any assignee of
\nthe Lessor or the Owner Participant or by any court or any of the foregoing
\nactions which may be taken by or against any of the Lessor’s predecessors in
\ninterest in the Airframe or any Engine.<\/p>\n
If for any reason whatsoever this Lease shall be terminated in whole
\nor in part by operation of law or otherwise except as specifically provided
\nherein, Lessee nonetheless agrees, without limitation of the other rights and
\nremedies of Lessor hereunder, to pay to Lessor an amount equal to each Rent
\npayment at the time such payment would have become due and payable in accordance
\nwith the terms hereof had this Lease not been terminated in whole or in part.<\/p>\n
Except as expressly provided herein, the Lessee waives all rights now
\nor hereafter conferred by law (x) to quit, terminate, rescind or surrender this
\nLease or the Airframe or any Engine or any part thereof, or (y) to any
\nabatement, suspension, deferment, return or reduction of the Rent.<\/p>\n
SECTION 19. Renewal Options; Purchase Options; Valuation. (a)
\nRenewal Options.<\/p>\n
(1) Fixed Renewal Terms. Not less than 180 days nor more than
\n 365 days before the end of the Basic Term or any Fixed Renewal Term, Lessee
\n may, so long as no Section 14(a), (b), (d) (solely with respect to Lessee’s
\n obligations under Section 7(a) or (b)(viii) hereof or Section 8 hereof),
\n (f) or (g) Default or any Event of Default has occurred and is continuing,
\n deliver to Lessor an irrevocable written notice (which at the option of
\n Lessee made at any time prior to 90 days prior to the end of the Basic Term
\n or such Fixed Renewal Term may be deemed a notice to exercise the
\n applicable purchase option in Section 19(b)) electing to renew this Lease
\n for a term or terms having a duration and at a Basic Rent as determined
\n below (each such term being herein referred to as a “Fixed Renewal Term”).
\n At least 180 days, before the end of the Basic Term Lessee shall, as a
\n condition to its exercise of any option set forth in this Section 19(a)(1),
\n notify Lessor of its demand for an appraisal pursuant to the appraisal
\n procedures of Section 19(c) hereof. The appraiser(s) so appointed shall
\n determine the total useful life, the remaining useful life and the future
\n residual value of the Aircraft on the expiration date for a Fixed Renewal
\n Term as may be set by reason of the maximum period therefor in accordance
\n with the constraints set forth in the following two sentences. The
\n duration of each Fixed Renewal Term shall be a period specified by<\/p>\n
74<\/p>\n
[Lease Agreement (1995 777 B)]<\/p>\n
Lessee before the end of the Basic Term (or the preceding Fixed Renewal
\n Term, as the case may be) which is not less than one year and not more than
\n three years (in integral multiples of six months). Notwithstanding the
\n foregoing, the aggregate term of all Fixed Renewal Terms shall not exceed
\n the lesser of (a) three years and (b) the longest period of time (i) which
\n would cause the Term, after giving effect to all such Fixed Renewal Terms,
\n to be equal to at least 80% of the then estimated useful life of the
\n Aircraft as determined by the appraiser(s) and (ii) at the expiration of
\n which the residual value of the Aircraft, as estimated by the appraiser(s),
\n would be at least equal to 20% of Lessor’s Cost (without taking into
\n account inflation or deflation during the Term). The annual Basic Rent
\n payable during each Fixed Renewal Term shall be equal to one-half of the
\n average annual Basic Rent payments for the Aircraft over the Basic Term.<\/p>\n
(2) Fair Market Renewal Term. So long as no Section 14(a), (b),
\n (d) (solely with respect to Lessee’s obligations under Section 7(a) or
\n (b)(viii) hereof or Section 8 hereof), (f) or (g) Default or any Event of
\n Default has occurred and is continuing, Lessee shall have the right to
\n renew this Lease for additional periods of at least one year commencing at
\n the end of the Basic Term, any Fixed Renewal Term or any prior Fair Market
\n Renewal Term for a Basic Rent equal to the Fair Market Rental Value of the
\n Aircraft for such period (each such renewal term, a “Fair Market Renewal
\n Term”); provided, however, each Fair Market Renewal Term shall be an
\n integral multiple of six months. Notwithstanding the foregoing, the
\n aggregate term for all Fair Market Renewal Terms shall not exceed three
\n years. Each such option to renew shall be exercised upon delivery by
\n Lessee to Lessor of irrevocable written notice of Lessee’s intent to renew
\n the Lease at least 180 days (but not more than 365 days) prior to the
\n commencement of such Fair Market Renewal Term (which at the option of the
\n Lessee made at any time prior to 90 days prior to the anticipated
\n commencement of such Fair Market Renewal Term may be deemed a notice to
\n exercise the applicable purchase option in Section 19(b)).<\/p>\n
(3) Waiver. If no written notice is delivered by Lessee to
\n Lessor pursuant to Section 19(a)(1) or (2) on or before the day specified
\n therefore, Lessee shall be deemed to have waived any right to renew this
\n Lease.<\/p>\n
(4) Conditions Precedent, Payment of Basic Rent. At the end of
\n the Basic Term or any Renewal Term, if Lessee has elected to renew this
\n Lease as aforesaid, and provided<\/p>\n
75<\/p>\n
[Lease Agreement (1995 777 B)]<\/p>\n
that there shall not then have occurred and be continuing a Default or an
\n Event of Default and that all necessary governmental authorizations and
\n approvals shall have been received and that Basic Rent for the Renewal Term
\n has already been determined as above provided, (i) this Lease shall
\n continue in full force and effect during the Renewal Term, and (ii) Basic
\n Rent for such Renewal Term shall be payable in semi-annual installments in
\n advance or arrears as was the basis of the Basic Rent being paid
\n immediately prior to such Renewal Term, each such installment being due and
\n payable on each Lease Period Date occurring during the Renewal Term.<\/p>\n
(5) Termination Value; Stipulated Loss Value. The amounts which
\n are payable during any Renewal Term in respect of Termination Value as used
\n in Section 15 and Stipulated Loss Value with respect to the Aircraft shall
\n be determined on the basis of the Fair Market Sales Value of the Aircraft
\n as of the commencement of such Renewal Term, amortized on a straight-line
\n basis over such Renewal Term to the projected Fair Market Sales Value of
\n the Aircraft as of the expiration of such Renewal Term, as such Fair Market
\n Sales Value in each case is determined prior to the commencement of such
\n Renewal Term. In determining Fair Market Sales Value for purposes of
\n calculating Stipulated Loss Value and Termination Value for any Renewal
\n Term effect shall be given to the encumbrance on the Aircraft of any Fixed
\n Renewal Term available or in force.<\/p>\n
(b) Purchase Options. Lessee shall have the option, so long as no
\nSection 14(a), (b), (f) or (g) Default or any Event of Default exists on the
\ndate notice of exercise may be given, (i) with respect to subsections (1) and
\n(2) below, upon not more than 365 days and not less than 90 days irrevocable
\nprior written notice to Lessor and (ii) with respect to subsections (3) and (4)
\nbelow, upon not more than 365 days and not less than 180 days irrevocable prior
\nwritten notice to Lessor (which at the option of the Lessee made at any time
\nprior to 90 days prior to the relevant purchase date may be deemed a notice of
\nthe applicable renewal option pursuant to Section 19(a)(1) or 19(a)(2) as the
\nLessee may designate) (each a “Purchase Option Date”), to terminate this Lease
\nand to purchase the Aircraft:<\/p>\n
(1) on any Special Purchase Option Date for a purchase price
\n equal to the greater of (x) the Fair Market Sales Value of the Aircraft on
\n such date or (y) the amount determined by multiplying Lessor’s Cost by the
\n Special Termination Value Percentage with respect to such Date (with
\n respect to any such Date, the “Special Termination Value”);<\/p>\n
76<\/p>\n
[Lease Agreement (1995 777 B)]<\/p>\n
(2) on the EBO Date for a purchase price equal to the amount
\n determined by multiplying Lessor’s Cost by the EBO Percentage payable on
\n the EBO Date or as otherwise provided in, and subject to the conditions set
\n forth in, Exhibit H hereto (the “EBO Price”);<\/p>\n
(3) on the last Business Day of the Basic Term for a purchase
\n price equal to the Fair Market Sales Value of the Aircraft on such date;
\n and<\/p>\n
(4) on the last Business Day of any Renewal Term for a purchase
\n price equal to the Fair Market Sales Value of the Aircraft on such date.<\/p>\n
Notwithstanding the foregoing but subject to the provisions of Section 8(r) of
\nthe Participation Agreement, the purchase price on any Purchase Option Date
\nshall be sufficient, together with all other amounts payable simultaneously by
\nLessee, to pay in full the payments then required to be made on account of the
\nprincipal amount (and Premium, if any) of and interest on the Loan Certificates
\nthen outstanding. Upon payment to Lessor in immediately available funds of the
\nfull amount of the purchase price (less the principal amount of the Loan
\nCertificates assumed by the Lessee in accordance with Section 8(r) of the
\nParticipation Agreement) plus all Basic Rent due on or prior to such purchase
\ndate (unless denominated “advance” rental), all Supplemental Rent due on or
\nprior to such purchase date (including amounts equal to Premium, if any) and
\npayment of any other amounts then due hereunder (including all reasonable costs
\nor expenses of Lessor (including any applicable sales or transfer taxes) and the
\nOwner Participant in connection with such purchase), Lessor will transfer to
\nLessee, without recourse or warranty (except as to the absence of Lessor Liens
\n(including for this purpose Liens that would be Lessor Liens but for the proviso
\nto the definition of Lessor Liens)), all of Lessor’s right, title and interest
\nin and to the Aircraft.<\/p>\n
(c) Valuation. At any time not earlier than 365 days prior to the
\ndate on which Lessee may purchase an Aircraft pursuant to Section 19(b) hereof
\nor renew this Lease pursuant to Section 19(a) hereof, Lessee may deliver to
\nLessor a revocable notice of its intent to exercise its renewal option or
\npurchase option. For all purposes of this Section 19, including the appraisal
\nreferred to in this Section 19(c), in determining Fair Market Rental Value or
\nFair Market Sales Value, the Aircraft shall be valued (i) as if in the condition
\nand otherwise in compliance with the terms of Section 5 (but subject to Section
\n5(e)) upon a return of the Aircraft in the United States and as if it had been
\nmaintained at all times as required in accordance with Section 7(a)(1) and (2)
\nand Section 8, (ii) on the basis of<\/p>\n
77<\/p>\n
[Lease Agreement (1995 777 B)]<\/p>\n
the value which would obtain in an arm’s-length transaction between an informed
\nand willing buyer or user or lessee (other than a lessee or an Affiliate of a
\nlessee currently in possession or a used equipment scrap dealer) under no
\ncompulsion to buy or lease and an informed and willing seller or lessor
\nunaffiliated with such buyer-user or lessee and under no compulsion to sell or
\nlease, and (iii) in the case of such valuation for determining Fair Market
\nRental Value, assuming such lessee would have substantially the same obligations
\nduring the Fair Market Renewal Term as provided hereunder including without
\nlimitation the obligations of Lessee to carry and maintain the insurance
\nrequired by Section 11 hereof. Upon receipt of such notice Lessor and Lessee
\nshall confer in good faith with a view to reaching agreement on the Fair Market
\nRental Value or Fair Market Sales Value of the Aircraft. If the parties have
\nnot so agreed by 240 days prior to the end of the Basic Term or the Renewal Term
\nin question, then the question shall be determined by an appraisal mutually
\nagreed to by two recognized independent aircraft appraisers, one of which
\nappraisers shall be chosen by Lessor and one by Lessee within five Business Days
\nafter Lessor or Lessee shall have received written notice from the other party
\nof a demand that such an appraisal be made, which notice shall specify the
\nappraiser chosen by the party giving the notice or, if such appraisers cannot
\nagree on the amount of such appraisal within five Business Days after the end of
\nsuch five-day period, each shall render its own appraisal and shall by mutual
\nconsent choose another appraiser within five Business Days after the end of such
\nfive-day period. If, within such five-day period, such two appraisers fail to
\nappoint a third appraiser, then either Lessor or Lessee, on behalf of both, may
\napply to the American Arbitration Association (or any successor organization
\nthereto) in Chicago, Illinois for the appointment of such third appraiser. The
\ndecision of the third appraiser so appointed shall be given within ten Business
\nDays after the appointment of such third appraiser. As soon as the third
\nappraiser has delivered his appraisal, that appraisal shall be compared with the
\nappraisals given by the other two appraisers. If the determination of one
\nappraiser is more disparate from the average of all three determinations than
\neach of the other two determinations, then the determination of such appraiser
\nshall be excluded, the remaining two determinations shall be averaged and such
\naverage shall be final and binding upon the parties hereto; otherwise the
\naverage of all three determinations shall be final and binding upon the parties
\nthereto. Lessee and Lessor shall equally bear all expenses relating to such
\nappraisal procedure (other than an appraisal procedure related to Lessee’s
\npurchase option under Section 19(b)(1), the costs of which Lessee shall in all
\nevents bear), provided, that if such transaction is not consummated (other than
\nas the result of the fault of Lessor) Lessee shall bear all expenses relating to
\nsuch appraisal procedure.<\/p>\n
78<\/p>\n
[Lease Agreement (1995 777 B)]<\/p>\n
SECTION 20. Security for Lessor’s Obligation to Certificate Holders.
\nIn order to secure the indebtedness evidenced by the Loan Certificates, Lessor
\nhas agreed in the Trust Indenture, among other things, to assign to the
\nIndenture Trustee this Lease and to mortgage the Aircraft in favor of the
\nIndenture Trustee, subject to the reservations and conditions therein set forth.
\nTo the extent, if any, that this Lease constitutes chattel paper (as such term
\nis defined in the Uniform Commercial Code as in effect in any applicable
\njurisdiction), no security interest in this Lease may be created through the
\ntransfer or possession of any counterpart other than the original counterpart,
\nwhich shall be identified as the counterpart containing the receipt therefor
\nexecuted by the Indenture Trustee as indenture trustee under the Trust Indenture
\non the signature page thereof. Lessee hereby accepts and consents to the
\nassignment of all Lessor’s right, title and interest in and to this Lease
\npursuant to the terms of the Trust Indenture. Lessee agrees to pay directly to
\nthe Indenture Trustee (or, after receipt by Lessee of notice from the Indenture
\nTrustee of the discharge of the Trust Indenture, to Lessor), all amounts of Rent
\n(other than Excluded Payments) due or to become due hereunder and assigned to
\nthe Indenture Trustee and Lessee agrees that the Indenture Trustee’s right to
\nsuch payments hereunder shall be absolute and unconditional and shall not be
\naffected by any circumstance. Notwithstanding the foregoing assignment of this
\nLease, the obligations of Lessor to Lessee to perform the terms and conditions
\nof this Lease shall remain in full force and effect. Lessee further
\nacknowledges that the Trust Indenture provides that so long as the Loan
\nCertificates are outstanding Lessor may not consent to any amendment,
\nmodification or waiver to this Lease without the prior consent of the Indenture
\nTrustee (except as provided in Section 11.06 of the Trust Indenture) and Lessee
\nagrees to provide to the Indenture Trustee a copy of all notices, consents,
\ncertificates or other information provided hereunder to Lessor.<\/p>\n
SECTION 21. Lessor’s Right to Perform for Lessee. If Lessee fails to
\nmake any payment of Rent required to be made by it hereunder or fails to perform
\nor comply with any of its agreements contained herein, then (but in each case,
\nexcept in the case of failure to pay Rent or in the case of failure to maintain
\ninsurance as required hereunder, no earlier than five Business Days after notice
\nas to the occurrence of such failure, whether or not it shall yet constitute an
\nEvent of Default hereunder) Lessor may itself make such payment or perform or
\ncomply with such agreement but shall not be obligated hereunder to do so, and
\nthe amount of such payment and the amount of the reasonable expenses of Lessor
\nincurred in connection with such payment or the performance of or compliance
\nwith such agreement, as the case may be, together with interest thereon at the
\nPast<\/p>\n
79<\/p>\n
[Lease Agreement (1995 777 B)]<\/p>\n
Due Rate, shall be deemed Supplemental Rent, payable by Lessee upon demand.<\/p>\n
SECTION 22. Investment of Security Funds; Liability of Lessor
\nLimited. (a) Investment of Security Funds. Any moneys held by Lessor as
\nsecurity hereunder for future payments to Lessee shall, until paid to Lessee, be
\ninvested by Lessor or, if the Trust Indenture shall not have been discharged, by
\nthe Indenture Trustee, as the case may be, as Lessee (or in the event a Default
\nunder Section 14(a), (b), (f) or (g) or an Event of Default has occurred and is
\ncontinuing, Lessor) may from time to time direct in writing (and in absence of a
\nwritten direction by Lessee, there shall be no obligation to invest such moneys)
\nin (i) obligations of, or guaranteed by, the United States Government or
\nagencies thereof, (ii) open market commercial paper of any corporation
\nincorporated under the laws of the United States of America or any State thereof
\nrated at least P-1 or its equivalent by Moody’s Investors Service, Inc. or at
\nleast A-1 or its equivalent by Standard & Poor’s Corporation, (iii) certificates
\nof deposit issued by commercial banks organized under the laws of the United
\nStates or of any political subdivision thereof having a combined capital and
\nsurplus in excess of $200,000,000 which banks or their holding companies have a
\nrating of A or its equivalent by Moody’s Investors Service, Inc. or Standard & Poor’s Corporation; provided, however, that the aggregate amount at any one time
\nso invested in certificates of deposit issued by any one bank shall not exceed
\n5% of such bank’s capital and surplus, (iv) U.S. dollar denominated offshore
\ncertificates of deposit issued by, or offshore time deposits with, any
\ncommercial bank described in (iii) or any subsidiary thereof and (v) repurchase
\nagreements with any financial institution having combined capital and surplus of
\nat least $200,000,000 with any of the obligations described in clause (i)
\nthrough (iv) as collateral. There shall be promptly remitted to Lessee or its
\norder (but no more frequently than monthly) any gain (including interest
\nreceived) realized as a result of any such investment (net of any fees, taxes,
\ncommissions and other expenses, if any, incurred in connection with such
\ninvestment) unless a Section 14(a), (b), (d) (solely with respect to Lessee’s
\nobligations under Section 7(a) or (b)(viii) or Section 8 hereof), (f) or (g)
\nDefault or an Event of Default shall have occurred and be continuing. If a
\nDefault under Section 14(a), (b), (d) (solely with respect to Lessee’s
\nobligations under Section 7(a) or (b)(viii) or Section 8 hereof), (f) or (g) or
\nan Event of Default shall have occurred and be continuing, Lessor or if the
\nTrust Indenture shall not have been discharged, the Indenture Trustee as
\nassignee of Lessor, shall hold any such gain as security for the obligations of
\nLessee under this Lease and apply it against such obligations as and when due,
\nand once all such Defaults and Events of Default have<\/p>\n
80<\/p>\n
[Lease Agreement (1995 777 B)]<\/p>\n
been remedied any gain not so applied shall be remitted to Lessee. Lessee shall
\nbe responsible for any net loss realized as a result of any such investment and
\nshall reimburse Lessor (or the Indenture Trustee, as the case may be) therefor
\non demand.<\/p>\n
(b) Liability of Lessor Limited. It is expressly agreed and
\nunderstood that all representations, warranties and undertakings of Lessor
\nhereunder shall be binding upon Lessor only in its capacity as trustee under the
\nTrust Agreement, and the institution acting as Lessor shall not be liable in its
\nindividual capacity for any breach thereof except for its gross negligence or
\nwillful misconduct or for breach of its covenants, representations and
\nwarranties contained herein, to the extent covenanted or made in its individual
\ncapacity.<\/p>\n
SECTION 23. Miscellaneous. Any provision of this Lease which is
\nprohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
\nbe ineffective to the extent of such prohibition or unenforceability without
\ninvalidating the remaining provisions hereof, and any such prohibition or
\nunenforceability in any jurisdiction shall not invalidate or render
\nunenforceable such provision in any other jurisdiction. No term or provision of
\nthis Lease may be changed, waived, discharged or terminated orally, but only by
\nan instrument in writing signed by Lessor, Lessee and any assignee of Lessor’s
\nrights hereunder. This Lease shall constitute an agreement of lease, and
\nnothing contained herein shall be construed as conveying to Lessee any right,
\ntitle or interest in the Aircraft except as a lessee only. The section and
\nparagraph headings in this Lease and the table of contents are for convenience
\nof reference only and shall not modify, define, expand or limit any of the terms
\nor provisions hereof and all references herein to numbered sections, unless
\notherwise indicated, are to sections of this Lease. THIS LEASE HAS BEEN
\nDELIVERED IN THE STATE OF ILLINOIS AND SHALL IN ALL RESPECTS BE GOVERNED BY AND
\nCONSTRUED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF ILLINOIS
\nINCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE. This Lease may
\nbe executed by the parties hereto in separate counterparts, each of which when
\nso executed and delivered shall be an original, but all such counterparts shall
\ntogether constitute but one and the same instrument.<\/p>\n
SECTION 24. Successor Trustee. Lessee agrees that in the case of the
\nappointment of any successor Owner Trustee pursuant to the terms of the Trust
\nAgreement, such successor Owner Trustee shall, upon written notice by such
\nsuccessor Owner Trustee, succeed to all the rights, powers and title of Lessor
\nhereunder and shall be deemed to be Lessor and the owner of the Aircraft for all
\npurposes hereof without in any way altering the terms of this Lease or Lessee’s
\nobligations hereunder. One such<\/p>\n
81<\/p>\n
[Lease Agreement (1995 777 B)]<\/p>\n
appointment and designation of a successor Owner Trustee shall not exhaust the
\nright to appoint and designate further successor Owner Trustees pursuant to the
\nTrust Agreement, but such right may be executed repeatedly as long as this Lease
\nshall be in effect.<\/p>\n
SECTION 25. Bankruptcy. Lessee hereby acknowledges that Lessor and
\nthe Indenture Trustee are entitled to the benefits of Section 1110 of the
\nBankruptcy Code with respect to the Aircraft and that this Lease is a “lease”
\nwithin the meaning of said Section 1110, including that it is to be treated as a
\nlease for federal tax purposes. Lessee agrees not to take any position in
\nconnection with any bankruptcy proceedings involving it that is inconsistent
\nwith a lessor’s rights under Section 1110 of the Bankruptcy Code or any
\ncomparable or successor provision affording protection to lessors of aircraft.<\/p>\n
* * *<\/p>\n
82<\/p>\n
[Lease Agreement (1995 777 B)]<\/p>\n
IN WITNESS WHEREOF, Lessor and Lessee have each caused this Lease to
\nbe duly executed as of the day and year first above written.<\/p>\n
STATE STREET BANK AND TRUST COMPANY, not in its
\n individual capacity, except as expressly
\n provided in Section 4 hereof, but solely as
\n Owner Trustee,
\n Lessor<\/p>\n
By____________________________________________
\n Vice President<\/p>\n
UNITED AIR LINES, INC.,
\n Lessee<\/p>\n
By____________________________________________
\n Vice President and Treasurer<\/p>\n
Receipt of this original counterpart of the foregoing Lease is hereby
\nacknowledged on this _____ day of May, 1995.\/1\/<\/p>\n
FIRST SECURITY BANK OF UTAH, NATIONAL ASSOCIATION
\n Indenture Trustee<\/p>\n
By____________________________________________
\n Authorized Officer<\/p>\n
– ———————–
\n\/1\/This language contained in the original counterpart only.<\/p>\n
83<\/p>\n
[Lease Agreement (1995 777 B)]<\/p>\n
EXHIBIT A<\/p>\n
LEASE SUPPLEMENT NO. 1 (1995 777 B)
\n ———————————–<\/p>\n
LEASE SUPPLEMENT No. 1 (1995 777 B), dated May __, 1995, between STATE
\nSTREET BANK AND TRUST COMPANY, not in its individual capacity, but solely as
\nOwner Trustee under the Trust Agreement (1995 777 B), dated as of May 1, 1995,
\nbetween such Owner Trustee and the Owner Participant referred to therein (such
\nOwner Trustee, in its capacity as such Owner Trustee being herein called
\n“Lessor”), and UNITED AIR LINES, INC. (“Lessee”).<\/p>\n
Lessor and Lessee have heretofore entered into that certain Lease
\nAgreement (1995 777 B), dated as of May 1, 1995, relating to one Boeing 777-222
\naircraft (herein called the “Lease” and the defined terms therein being
\nhereinafter used with the same meanings). The Lease provides for the execution
\nand delivery from time to time of Lease Supplements for the purpose of leasing
\nthe Airframe and Engines under the Lease as and when delivered by Lessor to
\nLessee in accordance with the terms thereof.<\/p>\n
The Lease relates to the Airframe and Engines described below, and a
\ncounterpart of the Lease is attached hereto, and made a part hereof, and this
\nLease Supplement together with such attachment, is being filed for recordation
\non the date hereof with the Federal Aviation Administration as one document.\/2\/<\/p>\n
The Lease relates to the Airframe and Engines described below, and a
\ncounterpart of the Lease, attached and made a part of Lease Supplement No. 1
\n(1995 777 B) dated May __, 1995, has been recorded by the Federal Aviation
\nAdministration on ___________ __, 1995, as one document and assigned Conveyance
\nNo. __________.\/3\/<\/p>\n
NOW, THEREFORE, in consideration of the premises and other good and
\nsufficient consideration, Lessor and Lessee hereby agree as follows:<\/p>\n
1. Lessor hereby delivers and leases to Lessee under the Lease
\n and Lessee hereby accepts and leases from Lessor under the Lease the
\n following described Boeing Model 777-222 aircraft (the “Aircraft”), which
\n Aircraft as of the date hereof consists of the following components:<\/p>\n
– ———————
\n\/2\/This language for Lease Supplement No. 1.<\/p>\n
\/3\/This language for other Lease Supplements.<\/p>\n
[Lease Agreement (1995 777 B)]<\/p>\n
(i) Airframe: U.S. Registration No. N766UA and
\n manufacturer’s serial no. 26917; and<\/p>\n
(ii) Engines: two (2) Pratt & Whitney Model PW4084 engines
\n bearing, respectively, manufacturer’s serial nos. _______ and _______
\n (each of which engines has 750 or more rated takeoff horsepower or the
\n equivalent of such horsepower).<\/p>\n
2. The Delivery Date of the Aircraft is the date of this Lease
\n Supplement set forth in the opening paragraph hereof. Except as otherwise
\n provided in the Lease, the Term for the Aircraft shall commence on the
\n Delivery Date and end on the Lease Expiry Date.<\/p>\n
3. Lessee hereby confirms its agreement to pay Lessor Basic Rent
\n for the Aircraft throughout the Term therefor in accordance with Section 3
\n of the Lease.<\/p>\n
4. Lessee hereby confirms to Lessor that Lessee has accepted the
\n Aircraft for all purposes hereof and of the Lease as being airworthy, in
\n good working order and repair and without defect or inherent vice in title,
\n condition, design, operation or fitness for use; provided, however, that
\n nothing contained herein or in the Lease shall in any way diminish or
\n otherwise affect any right Lessee or Lessor may have with respect to the
\n Aircraft against The Boeing Company, or any subcontractor or supplier of
\n The Boeing Company, under the Purchase Agreement or otherwise.<\/p>\n
5. All of the terms and provisions of the Lease are hereby
\n incorporated by reference in this Lease Supplement to the same extent as if
\n fully set forth herein.<\/p>\n
6. This Lease Supplement may be executed by the parties hereto
\n in separate counterparts, each of which when so executed and delivered
\n shall be an original, but all such counterparts shall together constitute
\n but one and the same instrument.<\/p>\n
* * *<\/p>\n
[Lease Agreement (1995 777 B)]<\/p>\n
IN WITNESS WHEREOF, Lessor and Lessee have caused this Lease Supplement to
\nbe duly executed on the day and year first above written.<\/p>\n
STATE STREET BANK AND TRUST COMPANY, not in its
\n individual capacity, but solely as Owner
\n Trustee,
\n Lessor<\/p>\n
By:________________________________
\n Title:_____________________________<\/p>\n
UNITED AIR LINES, INC.,
\n Lessee<\/p>\n
By:________________________________
\n Vice President and Treasurer<\/p>\n
Receipt of this original counterpart of the foregoing Lease Supplement is
\nhereby acknowledged on this _____ day of May, 1995.\/4\/<\/p>\n
FIRST SECURITY BANK OF UTAH,
\n NATIONAL ASSOCIATION
\n Indenture Trustee<\/p>\n
By_________________________________
\n Authorized Officer<\/p>\n
– —————————
\n \/4\/This language contained in the original counterpart only.<\/p>\n
[Lease Agreement (1995 777 B)]<\/p>\n
EXHIBIT B<\/p>\n
BASIC RENT AND EXCESS AMOUNT SCHEDULE
\n ————————————-<\/p>\n
ARREARS RENT ADVANCE RENT EXCESS AMOUNT
\n AS A PERCENTAGE AS A PERCENTAGE AS A PERCENTAGE
\nDATE OF LESSOR’S COST OF LESSOR’S COST OF LESSOR’S COST
\n– —— —————- —————- —————-<\/p>\n
FOR PURPOSES OF CONFIDENTIALITY, EXHIBIT B TO THE LEASE AGREEMENT IS
\nINTENTIONALLY OMITTED FROM THE COPY OF THE LEASE AGREEMENT ON FILE WITH THE
\nFEDERAL AVIATION ADMINISTRATION.<\/p>\n
[Lease Agreement (1995 777 B)]<\/p>\n
EXHIBIT C<\/p>\n
STIPULATED LOSS VALUE SCHEDULE
\n ——————————<\/p>\n
STIPULATED LOSS VALUE
\n DATE (as a percentage of Lessor’s Cost)
\n —- ———————————-<\/p>\n
FOR PURPOSES OF CONFIDENTIALITY, EXHIBIT C TO THE LEASE AGREEMENT IS
\nINTENTIONALLY OMITTED FROM THE COPY OF THE LEASE AGREEMENT ON FILE WITH THE
\nFEDERAL AVIATION ADMINISTRATION.<\/p>\n
[Lease Agreement (1995 777 B)]<\/p>\n
EXHIBIT D<\/p>\n
TERMINATION VALUE SCHEDULE
\n ————————–<\/p>\n
TERMINATION VALUE
\n DATE (as a percentage of Lessor’s Cost)
\n —- ———————————-<\/p>\n
FOR PURPOSES OF CONFIDENTIALITY, EXHIBIT D TO THE LEASE AGREEMENT IS
\nINTENTIONALLY OMITTED FROM THE COPY OF THE LEASE AGREEMENT ON FILE WITH THE
\nFEDERAL AVIATION ADMINISTRATION.<\/p>\n
[Lease Agreement (1995 777 B)]<\/p>\n
EXHIBIT E<\/p>\n
RENT RECALCULATION AND
\n INDEMNIFICATION VERIFICATION
\n —————————-<\/p>\n
Any recalculation of Basic Rent, Stipulated Loss Value percentages,
\nTermination Value percentages, Special Termination Value percentages and EBO
\nPercentage pursuant to the Lease and any calculation of any payment to the Owner
\nParticipant or Lessee under the Tax Indemnity Agreement or Section 7(b) of the
\nParticipation Agreement shall be determined by the Owner Participant, computed
\non the basis of the same methodology and assumptions used by the Owner
\nParticipant in determining the Basic Rent, Stipulated Loss Value percentages,
\nTermination Value percentages, Special Termination Value percentages and EBO
\nPercentage as of the Delivery Date except as such assumptions have been modified
\npursuant to Section 3 of the Lease; provided, however, Lessee may request (A)
\nCapstar Partners, Inc., or any other financial advisor to Lessee to verify such
\ncalculations but without any requirement that the Owner Participant disclose to
\nsuch advisor such methodology and assumptions and (B) if Lessee believes that
\nsuch calculations by the Owner Participant are in error then a nationally
\nrecognized firm of accountants selected by the Owner Participant and reasonably
\nacceptable to Lessee (which may be the Owner Participant’s independent public
\naccountants) shall be permitted to verify such calculations and the Owner
\nParticipant will make available to such firm (subject to the execution by such
\nfirm of a confidentiality agreement reasonably acceptable to the Owner
\nParticipant) such methodology and assumptions and any changes made therein
\npursuant to Section 3 of the Lease and any other information reasonably
\nnecessary for such verification requested by such firm. In the event of a
\nverification under clause (B) of this Exhibit E the determination by such firm
\nof accountants shall be final. Lessee will pay the reasonable costs and
\nexpenses of the verification under clause (B) of this Exhibit E; provided,
\nhowever, if as a result of such verification process the Basic Rent is adjusted
\nand such adjustment causes the Net Present Value of Rents to decline by 10 or
\nmore basis points or there is a material error in the computation of the
\nStipulated Loss Value percentages, Termination Value percentages, Special
\nTermination Value percentages or EBO Percentage in the Owner Participant’s
\noriginal statement in the Owner Participant’s favor, or indemnity payment is
\nreduced by $10,000 or more, the Owner Participant shall pay the reasonable costs
\nand expenses of such verification process. Such recalculated Basic Rent,
\nStipulated Loss Value percentages, Termination Value percentages, Special
\nTermination Value percentages and EBO Percentage shall be set forth in an
\namendment to the Lease.<\/p>\n
[Lease Agreement (1995 777 B)]<\/p>\n
EXHIBIT F<\/p>\n
SCHEDULE OF COUNTRIES AUTHORIZED
\n FOR DOMICILE OF PERMITTED SUBLESSEES
\n ————————————<\/p>\n
Australia Luxembourg <\/p>\n
Austria *Malaysia <\/p>\n
Belgium Netherlands <\/p>\n
*Brazil New Zealand <\/p>\n
Canada Norway <\/p>\n
Denmark *Portugal <\/p>\n
Finland Singapore <\/p>\n
France *South Korea <\/p>\n
Germany *Spain <\/p>\n
*Greece Sweden <\/p>\n
*Iceland Switzerland <\/p>\n
Ireland *Thailand <\/p>\n
Italy United Kingdom <\/p>\n
Japan *Venezuela <\/p>\n
_______________________
\n* Designates “Restricted Country”.<\/p>\n
[Lease Agreement (1995 777 B)]<\/p>\n
EXHIBIT G<\/p>\n
SCHEDULE OF COUNTRIES AUTHORIZED
\n FOR AIRCRAFT REGISTRATION
\n ——————————–<\/p>\n
Australia Luxembourg <\/p>\n
Austria *Malaysia <\/p>\n
Belgium Netherlands <\/p>\n
*Brazil New Zealand <\/p>\n
Canada Norway <\/p>\n
Denmark *Portugal <\/p>\n
Finland Singapore <\/p>\n
France *South Korea <\/p>\n
Germany *Spain <\/p>\n
*Greece Sweden <\/p>\n
*Iceland Switzerland <\/p>\n
Ireland *Thailand <\/p>\n
Italy United Kingdom <\/p>\n
Japan *Venezuela <\/p>\n
_______________________
\n* Designates “Restricted Country”.<\/p>\n
[Lease Agreement (1995 777 B)]<\/p>\n
EXHIBIT H<\/p>\n
LESSOR’S COST, ENGINE COST, COMMENCEMENT DATE,
\n LEASE EXPIRY DATE, STIPULATED LOSS VALUE DATE,
\n EBO DATE, EBO PERCENTAGE, SPECIAL PURCHASE
\n OPTION DATES AND SPECIAL TERMINATION VALUE PERCENTAGES
\n (EBO Percentage, EBO Installment Percentages and
\n Special Termination Value Percentages expressed
\n as a percentage of Lessor’s Cost)
\n ——————————————————<\/p>\n
Lessor’s Cost: $________<\/p>\n
Engine Cost: $_________<\/p>\n
Commencement Date: October 19, 1995<\/p>\n
Lease Expiry Date: October 19, 2019<\/p>\n
Stipulated Loss Value Date: the 19th day of each calendar month
\n during the Interim Term, the Basic Term
\n and any Renewal Term<\/p>\n
EBO Date: ______, 2012<\/p>\n
EBO Percentage: _____%\/1\/<\/p>\n
\/1\/ Alternatively, Lessee may elect to purchase the Aircraft in accordance
\nwith Section 19(b)(2) of the Lease by paying the installment amounts on the
\ndates given below:<\/p>\n
EBO Installment Percentages
\n EBO Installment (expressed as a percentage
\n Dates of Lessor’s Cost)
\n ————— —————————<\/p>\n
______, 2012 %
\n ______, 2012 %
\n ______, 2012 %
\n ______, 2012 %<\/p>\n
In the event that Lessee shall so elect and, so long as no payment or bankruptcy
\nDefault, or Event of Default, shall be continuing, Lessee shall as of the EBO
\nDate purchase the Aircraft and receive title to the Aircraft and shall be
\ndeemed, as of the EBO Date, to mortgage in favor of Lessor all of its right,
\ntitle and interest, on and after such date, in the Aircraft to secure the loan
\nand punctual payment of all EBO installment amounts payable under this Exhibit
\nH. On the EBO Date, Lessee shall execute and deliver such instruments, in due
\nform for filing or recording, as may be reasonably requested by the Owner
\nParticipant, to grant, confirm and perfect the mortgage and security interest
\ndeemed to be created by this Exhibit H and to confirm Lessee’s obligations to
\nmake the installment payments payable under this Exhibit H.<\/p>\n
[Lease Agreement (1995 777 B)]<\/p>\n
Special Purchase Special Termination<\/p>\n
Option Dates: Value Percentages:
\n —————- ——————-<\/p>\n
_______________ _____%
\n _______________ _____%
\n _______________ _____%<\/p>\n
[Lease Agreement (1995 777 B)]<\/p>\n
EXHIBIT H<\/p>\n
LESSOR’S COST, ENGINE COST, COMMENCEMENT DATE,
\n LEASE EXPIRY DATE, STIPULATED LOSS VALUE DATE,
\n EBO DATE, EBO PERCENTAGE, SPECIAL PURCHASE
\n OPTION DATES AND SPECIAL TERMINATION VALUE PERCENTAGES
\n (EBO Percentage, EBO Installment Percentages and
\n Special Termination Value Percentages expressed
\n as a percentage of Lessor’s Cost)
\n ——————————————————<\/p>\n
FOR PURPOSES OF CONFIDENTIALITY, EXHIBIT H TO THE LEASE AGREEMENT IS
\n INTENTIONALLY OMITTED FROM THE COPY OF THE LEASE AGREEMENT ON FILE WITH THE
\n FEDERAL AVIATION ADMINISTRATION.<\/p>\n
Doc. No. 1.02
\n Aircraft N189UA<\/p>\n
– ——————————————————————————–<\/p>\n
SECOND AMENDED AND RESTATED LEASE AGREEMENT
\n (1993 747 A)<\/p>\n
Dated as of May 1, 1995<\/p>\n
Between<\/p>\n
STATE STREET BANK AND TRUST COMPANY,
\n Not in its Individual Capacity,
\n except as expressly
\n provided herein, but solely as
\n Owner Trustee,
\n Lessor<\/p>\n
and<\/p>\n
UNITED AIR LINES, INC.,
\n Lessee
\n —————————-<\/p>\n
United Air Lines, Inc.
\n 1993 747 A Equipment Trust
\n One Boeing 747-422 Aircraft<\/p>\n
—————————-<\/p>\n
– ——————————————————————————–<\/p>\n
As set forth in Section 20 hereof, Lessor has assigned to the
\nIndenture Trustee (as defined herein) certain of its right, title and interest
\nin and to this Second Amended and Restated Lease Agreement. To the extent, if
\nany, that this Second Amended and Restated Lease Agreement constitutes chattel
\npaper (as such term is defined in the Uniform Commercial Code as in effect in
\nany applicable jurisdiction) no security interest in this Lease may be created
\nthrough the transfer or possession of any counterpart other than the original
\nexecuted counterpart, which shall be identified as the counterpart containing
\nthe receipt therefor executed by the Indenture Trustee on the signature page
\nthereof.<\/p>\n
– ——————————————————————————–<\/p>\n
TABLE OF CONTENTS
\n —————–<\/p>\n
\n\n PAGE
\n
\nSECTION 1. Definitions……………………………………….. 2<\/p>\nSECTION 2. Acceptance and Lease……………………………….. 20<\/p>\n
SECTION 3. Term and Rent……………………………………… 20
\n (a) Interim Term and Basic Term…………………………… 20
\n (b) Basic Rent………………………………………….. 20
\n (c) Adjustments to Basic Rent, Excess Amount,
\n Stipulated Loss Values, Termination Values,
\n Special Termination Value Percentages and the EBO
\n Percentage………………………………………….. 20
\n (d) Supplemental Rent……………………………………. 23
\n (e) Payments in General………………………………….. 23
\n (f) [Intentionally Reserved for Potential Future Use]……….. 24
\n (g) [Intentionally Reserved for Potential Future Use]……….. 24<\/p>\n
SECTION 4. Lessor’s Representations and Warranties………………. 24<\/p>\n
SECTION 5. Return of the Aircraft……………………………… 25
\n (a) Condition Upon Return………………………………… 25
\n (b) Return of Other Engines………………………………. 30
\n (c) Fuel and Manuals…………………………………….. 30
\n (d) Storage Upon Return………………………………….. 31
\n (e) Purchase of Engine…………………………………… 31
\n (f) Severable Parts……………………………………… 31
\n (g) Special Redelivery Provision………………………….. 32<\/p>\n
SECTION 6. Liens…………………………………………….. 32<\/p>\n
SECTION 7. Registration, Maintenance and Operation;
\n Possession and Subleases; Insignia…………………………. 33
\n (a) (1) Registration and Maintenance……………………… 33
\n (2) Operation………………………………………. 34
\n (3) Reregistration………………………………….. 35
\n (4) Operating Certificates…………………………… 35
\n (b) Possession and Subleases……………………………… 36
\n (c) Insignia……………………………………………. 42<\/p>\n
SECTION 8. Replacement and Pooling of Parts;
\nAlterations, Modifications and Additions………………………… 42
\n (a) Replacement of Parts…………………………………. 42
\n (b) Pooling of Parts…………………………………….. 43
\n (c) Alterations, Modifications and Additions……………….. 43<\/p>\n
SECTION 9. Early Termination………………………………….. 45
\n (a) [Intentionally reserved for potential future use]……….. 45
\n (b) Termination for Obsolescence\/Surplus…………………… 45
\n (c) Sale of the Aircraft…………………………………. 46<\/p>\n
<\/c><\/s><\/caption>\n<\/table>\n
i<\/p>\n
\n\n
\n (d) Termination as to Engines…………………………….. 48<\/p>\nSECTION 10. Loss, Destruction, Requisition, etc………………….. 49
\n (a) Event of Loss with Respect to the Aircraft……………… 49
\n (b) Event of Loss with Respect to an Engine………………… 52
\n (c) Application of Payments from Governmental
\n Authorities for Requisition of Title, etc………………. 54
\n (d) Requisition for Use of the Aircraft by the United
\n States Government or Government of Registry of the
\n Aircraft……………………………………………. 56
\n (e) Requisition for Use of an Engine by the United
\n States Government or the Government of Registry of
\n the Aircraft………………………………………… 57
\n (f) Application of Payments During Existence of Events
\n of Default………………………………………….. 57<\/p>\n
SECTION 11. Insurance…………………………………………. 57
\n (a) Public Liability and Property Damage Insurance………….. 57
\n (b) Insurance Against Loss or Damage to the Aircraft………… 58
\n (c) Reports, etc………………………………………… 60
\n (d) Self-Insurance………………………………………. 62
\n (e) Additional Insurance by Lessor and Lessee………………. 62
\n (f) Indemnification by Government in Lieu of
\n Insurance…………………………………………… 62
\n (g) Application of Payments During Existence of
\n Default…………………………………………….. 63
\n (h) Terms of Insurance Policies…………………………… 63<\/p>\n
SECTION 12. Inspection………………………………………… 64<\/p>\n
SECTION 13. Assignment………………………………………… 66<\/p>\n
SECTION 14. Events of Default………………………………….. 66<\/p>\n
SECTION 15. Remedies………………………………………….. 68<\/p>\n
SECTION 16. Lessee’s Cooperation Concerning Certain
\n Matters…………………………………………………. 72<\/p>\n
SECTION 17. Notices…………………………………………… 74<\/p>\n
SECTION 18. Net Lease; No Set-Off, Counterclaim, Etc. ……………. 75<\/p>\n
SECTION 19. Renewal Options; Purchase Options; Valuation………….. 77
\n (a) Renewal Options……………………………………… 77
\n (1) Fixed Renewal Terms……………………………… 77
\n (2) Fair Market Renewal Term…………………………. 78
\n (3) Waiver…………………………………………. 78
\n (4) Conditions Precedent, Payment of Basic Rent………… 78
\n (5) Termination Value; Stipulated Loss Value…………… 79
\n (b) Purchase Options…………………………………….. 79
\n (c) Valuation…………………………………………… 80<\/p>\n
<\/c><\/s><\/caption>\n<\/table>\n
ii<\/p>\n
\n\n
\nSECTION 20. Security for Lessor’s Obligation to Certificate
\n Holders…………………………………………………. 82<\/p>\nSECTION 21. Lessor’s Right to Perform for Lessee…………………. 82<\/p>\n
SECTION 22. Investment of Security Funds; Liability of
\n Lessor Limited…………………………………………… 83
\n (a) Investment of Security Funds………………………….. 83
\n (b) Liability of Lessor Limited…………………………… 84<\/p>\n
SECTION 23. Miscellaneous……………………………………… 84<\/p>\n
SECTION 24. Successor Trustee………………………………….. 84<\/p>\n
SECTION 25. Bankruptcy………………………………………… 85<\/p>\n
<\/c><\/s><\/caption>\n<\/table>\n
iii<\/p>\n
EXHIBITS<\/p>\n
EXHIBIT A Form of Lease Supplement<\/p>\n
EXHIBIT B Basic Rent and Excess Amount Schedule<\/p>\n
EXHIBIT C Stipulated Loss Value Schedule<\/p>\n
EXHIBIT D Termination Value Schedule<\/p>\n
EXHIBIT E Rent Recalculation and Indemnification Verification<\/p>\n
EXHIBIT F Schedule of Countries Authorized for Domicile of Permitted Sublessees<\/p>\n
EXHIBIT G Schedule of Countries Authorized for Aircraft Registration<\/p>\n
EXHIBIT H Lessor’s Cost, Engine Cost, Commencement Date, Lease Expiry Date,
\n Stipulated Loss Value Date, EBO Date, EBO Percentage, Special Purchase
\n Option Dates and Special Termination Value Percentages<\/p>\n
SECOND AMENDED AND RESTATED LEASE AGREEMENT (1993 747 A)<\/p>\n
This SECOND AMENDED AND RESTATED LEASE AGREEMENT (1993 747 A), dated
\nas of May 1, 1995, between STATE STREET BANK AND TRUST COMPANY, a Massachusetts
\ntrust company, not in its individual capacity, except as expressly provided
\nherein, but solely as Owner Trustee under the Trust Agreement (as defined in
\nSection 1 hereof) (in such capacity, “Lessor”) as successor to Wilmington Trust
\nCompany (“Original Lessor”), and UNITED AIR LINES, INC., a corporation organized
\nand existing pursuant to the laws of the State of Delaware (“Lessee”).<\/p>\n
WITNESSETH:<\/p>\n
WHEREAS, capitalized terms used herein and not otherwise defined shall
\nhave the meaning provided thereto in Section 1 of this Lease;<\/p>\n
WHEREAS, the Original Lease (as defined below) was amended and
\nrestated pursuant to that certain First Amended and Restated Lease Agreement
\n(1993 747 A) dated as of April 1, 1993 (the “Original Restated Lease”) between
\nthe Original Lessor and Lessee and the Original Restated Lease has been amended
\nby (i) that certain First Amendment to First Amended and Restated Lease
\nAgreement (1993 747 A) dated April 19, 1994 (“First Amendment”) between the
\nOriginal Lessor and Lessee, (ii) that certain Second Amendment to First Amended
\nand Restated Lease Agreement (1993 747 A) dated as of July 1, 1994 (“Second
\nAmendment”) between the Original Lessor and Lessee, and (iii) that certain Third
\nAmendment to First Amended and Restated Lease Agreement (1993 747 A) dated July
\n22, 1994 (“Third Amendment”) between the Original Lessor and Lessee (the
\nOriginal Restated Lease as amended by the First Amendment, the Second Amendment
\nand the Third Amendment being herein referred to as the “Restated Lease”);<\/p>\n
WHEREAS, the Original Restated Lease amended and restated that certain
\nLease Agreement (1993 747 A) dated as of April 1, 1993 (the “Original Lease”)
\nbetween Lessee and Original Lessor (as supplemented by Lease Supplement No. 1
\n(1993 747 A) dated April 20, 1993 (“Lease Supplement No. 1”) between Original
\nLessor and Lessee);<\/p>\n
WHEREAS, pursuant to the Original Lease, Lessee has leased from Lessor
\nthe Aircraft, being one (1) Boeing 747-422 aircraft which consists of the
\nfollowing components: (i) Airframe: U.S. Registration No. N189UA, manufacturer’s
\nserial no. 26878 and (ii) Engines: four (4) Pratt & Whitney model PW4056
\naircraft engines bearing, respectively, manufacturer’s serial numbers P727301,
\nP727302, P727303 and P727304;<\/p>\n
[Second Amended and Restated
\n Lease Agreement (1993 747 A)]<\/p>\n
WHEREAS, a counterpart of the Original Lease, to which was attached
\nand made a part thereof a counterpart of Lease Supplement No. 1, was recorded by
\nthe Federal Aviation Administration on April 21, 1993 and assigned Conveyance
\nNo. FF08936;<\/p>\n
WHEREAS, a counterpart of the Original Restated Lease was recorded by
\nthe Federal Aviation Administration on May 6, 1993 and assigned Conveyance No.
\nVV003011; and<\/p>\n
WHEREAS, a counterpart of the First Amendment was recorded by the
\nFederal Aviation Administration on June 15, 1994 and assigned Conveyance No.
\nHK002085;<\/p>\n
WHEREAS, a counterpart of the Second Amendment was recorded by the
\nFederal Aviation Administration on August 10, 1994 and assigned Conveyance No.
\nFF006618;<\/p>\n
WHEREAS, a counterpart of the Third Amendment was recorded by the
\nFederal Aviation Administration on August 10, 1994 and assigned Conveyance No.
\nFF06619; and<\/p>\n
WHEREAS, in connection with the refinancing of the interim debt with
\npermanent debt as contemplated by Section 20 of the Original Participation
\nAgreement, Lessor and Lessee desire to amend and restate the Restated Lease in
\nits entirety and Lessor and Lessee desire and intend that the terms, provisions
\nand agreements herein set forth shall have the same force and effect as though
\noriginally executed and delivered in the place of the Restated Lease.<\/p>\n
SECTION 1. Definitions. Unless the context otherwise requires, the
\nfollowing terms shall have the following meanings for all purposes of this Lease
\nAgreement and shall be equally applicable to both the singular and the plural
\nforms of the terms herein defined:<\/p>\n
“Acceptable Alternate Engine” means a Pratt & Whitney Model PW4056
\nengine or an engine of the same or another manufacturer of equivalent or greater
\nvalue and utility, and suitable for installation and use on the Airframe;
\nprovided that such engine shall be of the same make, model and manufacturer as
\nthe other three engine types installed on the Airframe and shall be an engine of
\na type then being utilized by Lessee on other Boeing 747-422 aircraft operated
\nby Lessee and shall have been maintained, serviced, repaired and overhauled in
\nsubstantially the same manner as Lessee maintains, services, repairs and
\noverhauls similar engines utilized by Lessee and without in any way
\ndiscriminating against such engine.<\/p>\n
2<\/p>\n
[Second Amended and Restated
\n Lease Agreement (1993 747 A)]<\/p>\n
“Actual Knowledge” means, (i) as it applies to the Owner Trustee or
\nIndenture Trustee, as the case may be, actual knowledge of a responsible officer
\nin the Trust Office, and (ii) as it applies to the Owner Participant, actual
\nknowledge of a Vice President or more senior officer of the Owner Participant or
\nother officer of the Owner Participant in each case having responsibility for
\nthe transactions contemplated by the Operative Documents; provided that each of
\nthe Owner Trustee, the Indenture Trustee and the Owner Participant shall be
\ndeemed to have “Actual Knowledge” of any matter as to which it has been given
\nnotice by any of Lessee, the Owner Participant, any Certificate Holder, the
\nOwner Trustee or the Indenture Trustee, such notice having been given pursuant
\nto and in accordance with Section 13(a) of the Participation Agreement.<\/p>\n
“Additional Insured” means Lessor, in its individual capacity and as
\nowner of the Aircraft, the Indenture Trustee, the Owner Participant, Lessee in
\nits capacity as sublessor under any Sublease, and, so long as the Pass Through
\nTrustees are Certificate Holders, each Pass Through Trustee and each of their
\nrespective Affiliates, successors and permitted assigns; and the respective
\ndirectors, officers and employees of each of the foregoing.<\/p>\n
“Affiliate” means a Person (i) which directly or indirectly through
\none or more intermediaries controls, or is controlled by, or is under a common
\ncontrol with, another Person, (ii) which beneficially owns or holds 10% or more
\n(by number of votes) of any class of voting securities of such other Person or
\n(iii) 10% or more (by number of votes) of the voting securities (or in the case
\nof a Person which is not a corporation, 10% or more of the equity interest) of
\nwhich is beneficially owned or held by such other Person or a Subsidiary. The
\nterm “control” means the possession, directly or indirectly, of the power to
\ndirect or cause the direction of the management and policies of a Person,
\nwhether through the ownership of voting securities, by contract or otherwise.<\/p>\n
“Aircraft” means the Airframe together with the four Engines whether
\nor not such Engines are installed on the Airframe or any other airframe.<\/p>\n
“Airframe” means: (i) The Boeing Company Model 747-422 aircraft
\n(excluding Engines or engines from time to time installed thereon) specified by
\nUnited States Registration Number and Manufacturer’s serial number in the Lease
\nSupplement; (ii) any and all Parts which are from time to time incorporated or
\ninstalled in or attached thereto or which have been removed therefrom, but where
\ntitle to which remains vested in Lessor in<\/p>\n
3<\/p>\n
[Second Amended and Restated
\n Lease Agreement (1993 747 A)]<\/p>\n
accordance herewith; and (iii) any replacement airframe which may from time to
\ntime be substituted pursuant to Section 10(a)(ii) hereof.<\/p>\n
“Bankruptcy Code” means the Bankruptcy Reform Act of 1978, as amended
\nfrom time to time.<\/p>\n
“Base Rate” means the rate of interest announced from time to time by
\nThe First National Bank of Chicago at its principal office in Chicago, Illinois
\nas its “corporate base rate” (or its equivalent successor rate if the corporate
\nbase rate is no longer used).<\/p>\n
“Basic Rent” means, for the Basic Term, the rent payable for the
\nAircraft pursuant to Section 3(b) hereof, as adjusted as provided in Section
\n3(c) and, for a Renewal Term, Basic Rent determined pursuant to Section 19.<\/p>\n
“Basic Term” means the term for which the Aircraft is leased hereunder
\npursuant to Section 3(a) hereof beginning on the Commencement Date and ending on
\nthe Lease Expiry Date or such earlier date as this Lease may be terminated in
\naccordance with the terms hereof.<\/p>\n
“Business Day” means any day other than a Saturday or Sunday or a day
\non which commercial banks are required or authorized to close in the City of
\nChicago, Illinois; New York City, New York; the city and state in which the
\nprincipal place of business of the Owner Trustee is located; and, so long as any
\nLoan Certificate is outstanding, the city and state in which the Indenture
\nTrustee has its principal place of business and the city and state in which the
\nIndenture Trustee receives and disburses funds.<\/p>\n
“Certificate Holder” has the meaning assigned to the term “Holder” in
\nthe Trust Indenture.<\/p>\n
“Certificated Air Carrier” means a Citizen of the United States
\nholding an air carrier operating certificate issued by the Secretary of
\nTransportation pursuant to Chapter 447 of Title 49 of the United States Code,
\nfor aircraft capable of carrying ten or more individuals or 6,000 pounds or more
\nof cargo or that otherwise is certified or registered to the extent required to
\nfall within the purview of 11 U.S.C. Section 1110 or any analogous successor
\nprovision of the Bankruptcy Code.<\/p>\n
“Citizen of the United States” has the meaning given such term in
\nSection 40102(a)(15) of Title 49 of the United States Code.<\/p>\n
4<\/p>\n
[Second Amended and Restated
\n Lease Agreement (1993 747 A)]<\/p>\n
“Civil Reserve Air Fleet Program” means the Civil Reserve Air Fleet
\nProgram administered by the United States Government pursuant to Executive Order
\nNo. 11490, as amended, or any substantially similar program.<\/p>\n
“Code” means the Internal Revenue Code of 1986, as amended through the
\nDelivery Date.<\/p>\n
“Commencement Date” means the date specified as such in Exhibit H
\nhereto.<\/p>\n
“Commitments” means the respective commitments of the Original Loan
\nParticipant or of the Owner Participant to finance the Owner Trustee’s payment
\nof Lessor’s Cost for the Aircraft and “Commitment” means any one of the
\nCommitments.<\/p>\n
“Consent and Agreement” means the Consent and Agreement (1993 747 A),
\ndated April 20, 1993, executed by the Manufacturer, as the same may be amended,
\nmodified or supplemented from time to time in accordance with the applicable
\nprovisions thereof.<\/p>\n
“Debt Rate” means the weighted average interest rate borne by the Loan
\nCertificates then outstanding.<\/p>\n
“Default” means any event which with the giving of notice or the lapse
\nof time or both would become an Event of Default.<\/p>\n
“Delivery Date” means April 20, 1993.<\/p>\n
“Dollars” and “$” mean the lawful currency of the United States of
\nAmerica.<\/p>\n
“EBO Date” means the date specified as such in Exhibit H hereto.<\/p>\n
“EBO Percentage” means the percentage specified as such in Exhibit H
\nhereto.<\/p>\n
“EBO Price” has the meaning set forth in Section 19(b)(2) hereof.<\/p>\n
“Engine” means (i) each of the four Pratt & Whitney Model PW4056
\nengines listed by manufacturer’s serial numbers in the initial Lease Supplement
\nand installed on the Airframe at the time of the Manufacturer’s delivery to
\nLessee of such Airframe, and whether or not from time to time thereafter
\ninstalled on such Airframe or any other airframe; (ii) any Acceptable Alternate
\nEngine which may from time to time be substituted for<\/p>\n
5<\/p>\n
[Second Amended and Restated
\n Lease Agreement (1993 747 A)]<\/p>\n
any of such four engines pursuant to the terms hereof; and (iii) in either case,
\nany and all Parts which are from time to time incorporated or installed in or
\nattached to any such engine and any and all parts removed therefrom so long as
\ntitle thereto remains vested in Lessor in accordance herewith. The term
\n“Engines” means, as of any date of determination, all Engines then leased
\nhereunder.<\/p>\n
“Engine Cost” means the amount specified as Engine Cost in Exhibit H
\nhereto.<\/p>\n
“Event of Default” has the meaning specified in Section 14 hereof.<\/p>\n
“Event of Loss” with respect to the Aircraft, Airframe or any Engine
\nmeans any of the following events with respect to such property: (i) the loss
\nof such property or of the use thereof due to the destruction of or damage to
\nsuch property which renders repair uneconomic or which renders such property
\npermanently unfit for normal use by Lessee for any reason whatsoever; (ii) any
\ndamage to such property which results in an insurance settlement with respect to
\nsuch property on the basis of a total loss, or a constructive or compromised
\ntotal loss; (iii) the theft or disappearance of such property, or the
\nconfiscation, condemnation, or seizure of, or requisition of title to, or use
\nof, such property by any governmental or purported governmental authority (other
\nthan a requisition for use by the United States Government or any government of
\nregistry of the Aircraft or any agency or instrumentality thereof), which in the
\ncase of any event referred to in this clause (iii) shall have resulted in the
\nloss of title or possession of such property by Lessee for a period in excess of
\n90 consecutive days or, if earlier, until the end of the Term; (iv) as a result
\nof any law, rule, regulation, order or other action by the FAA or other
\ngovernmental body of the government of registry of the Aircraft having
\njurisdiction, use of such property in the normal course of the business of air
\ntransportation shall have been prohibited for a period in excess of 180
\nconsecutive days, unless (A) such grounding is applicable to all Boeing 747-422
\naircraft registered in such country, (B) Lessee, prior to the expiration of such
\n180 day period, shall have undertaken and shall be diligently carrying forward,
\nin a manner that does not discriminate against the Aircraft, all steps which are
\nnecessary or desirable to permit the normal use of such property by Lessee, and
\n(C) Lessee, within one year from the time of grounding shall have conformed at
\nleast one such aircraft in its fleet to the requirements of any such law, rule,
\nregulation, order or other action and commenced regular commercial use of the
\nsame in such jurisdiction, provided that no such grounding shall extend beyond<\/p>\n
6<\/p>\n
[Second Amended and Restated
\n Lease Agreement (1993 747 A)]<\/p>\n
the expiration of the Term; (v) the requisition for use by the United States
\nGovernment or any government of registry of the Aircraft or any instrumentality
\nor agency thereof, which shall have occurred during the Basic Term (or the
\nInterim Term or any Renewal Term) and shall have, in the case of any government
\nof registry of the Aircraft (other than the United States Government or any
\nagency or instrumentality thereof) or any agency or instrumentality thereof,
\ncontinued for more than two years (or if earlier, until the end of the Term),
\nand in the case of the United States Government or any agency or instrumentality
\nthereof shall have continued for a period that extends beyond the Term and
\nLessor shall not have furnished the written notice specified in Section 10(d)
\nhereof; (vi) the operation of or location of the Aircraft, while under
\nrequisition for use by any government, in any area excluded from coverage by any
\ninsurance policy in effect with respect to the Aircraft required by the terms of
\nSection 11, unless in the case of a requisition by the government of the United
\nStates or any agency or instrumentality thereof, Lessee shall have obtained an
\nindemnity in lieu thereof from such government; and (vii) any divestiture of
\ntitle to an Engine treated as an Event of Loss pursuant to Section 7(b) hereof.
\nAn Event of Loss with respect to the Aircraft shall be deemed to have occurred
\nif an Event of Loss occurs with respect to the Airframe.<\/p>\n
“Excess Amount” for the Commencement Date means the amount determined
\nby multiplying Lessor’s Cost by the percentage specified in Exhibit B hereto
\nopposite the Commencement Date (as such Exhibit B may be adjusted from time to
\ntime as provided in Section 3(c) hereof).<\/p>\n
“Excluded Payments” has the meaning set forth in the Trust Indenture.<\/p>\n
“Expenses” means any and all liabilities, obligations, losses,
\ndamages, penalties, claims (including, but not limited to, negligence, strict or
\nabsolute liability, liability in tort and liabilities arising out of violation
\nof laws or regulatory requirements of any kind), actions, suits, costs, expenses
\nand disbursements (including reasonable legal fees and expenses and, to the
\nextent not required to be paid by the Owner Trustee pursuant to Section 16 of
\nthe Participation Agreement, Transaction Expenses, and all costs and expenses
\nrelating to amendments, supplements, waivers and consents to and under the
\nOperative Documents, any amounts that would be included in Premium, but
\nexcluding internal costs and expenses such as salaries, and overhead of
\nwhatsoever kind and nature).<\/p>\n
7<\/p>\n
[Second Amended and Restated
\n Lease Agreement (1993 747 A)]<\/p>\n
“Fair Market Rental Value” means the fair market rental value
\ndetermined as provided in Section 19(c) hereof.<\/p>\n
“Fair Market Sales Value” means the fair market sales value determined
\nas provided in Sections 19(a) and 19(c) hereof.<\/p>\n
“Federal Aviation Act” means the sections of Title 49 of the United
\nStates Code relating to aviation, as amended.<\/p>\n
“Federal Aviation Administration” and “FAA” mean the United States
\nFederal Aviation Administration and any successor agency or agencies thereto.<\/p>\n
“Indemnitees” means the Owner Participant, the Owner Trustee, in its
\nindividual capacity and as trustee under the Trust Agreement, the Trust Estate,
\nthe Trust Indenture Estate, the Indenture Trustee, in its individual capacity
\nand as trustee under the Trust Indenture, each Pass Through Trustee (so long as
\nthe Pass Through Trustees are Certificate Holders), and each of their respective
\nAffiliates, successors, permitted assigns, directors, officers, employees,
\nservants and agents.<\/p>\n
“Indenture Trustee” has the meaning set forth in the Trust Indenture.<\/p>\n
“Indenture Trustee Documents” means the Participation Agreement, the
\nTrust Indenture, each Pass Through Trust Agreement, each Pass Through Trust
\nSupplement, each Loan Certificate and each Pass Through Certificate and any
\nother document executed by the Indenture Trustee or the Pass Through Trustee in
\nconnection with the transactions contemplated by the Operative Documents.<\/p>\n
“Interim Term” means the period commencing on the Delivery Date and
\nending on and including the day immediately preceding the Commencement Date,
\nunless earlier terminated in accordance with the provisions hereof.<\/p>\n
“Lease Agreement”, “this Lease Agreement”, “this Lease”, “this
\nAgreement”, “herein”, “hereof”, “hereunder”, “hereby”, or other like words mean
\nthis Second Amended and Restated Lease Agreement as originally executed or as
\nmodified, amended or supplemented in accordance with the applicable provisions
\nhereof and the terms of the Trust Indenture, including, without limitation,
\nsupplementation hereof by any Lease Supplement entered into in accordance with
\nthe applicable provisions hereof and the terms of the Trust Indenture.<\/p>\n
8<\/p>\n
[Second Amended and Restated
\n Lease Agreement (1993 747 A)]<\/p>\n
“Lease Expiry Date” means the date specified as such in Exhibit H.<\/p>\n
“Lease Period” means each of the consecutive semi-annual periods
\nthroughout the Basic Term and any Renewal Term ending on a Lease Period Date,
\nthe first such period commencing on and including the Commencement Date.<\/p>\n
“Lease Period Date” means April 19, 1994 and each succeeding semi-
\nannual anniversary thereof to and including the last such date in the Term.<\/p>\n
“Lease Supplement” means Lease Supplement No. 1 and each other Lease
\nSupplement, substantially in the form of Exhibit A hereto, to be entered into
\nbetween Lessor and Lessee on the Delivery Date for the purpose of leasing the
\nAircraft under and pursuant to the terms of this Lease Agreement, and any
\nsubsequent Lease Supplement entered into in accordance with the terms hereof and
\nthe terms of the Trust Indenture.<\/p>\n
“Lessee Documents” means the Participation Agreement, the Lease, any
\nLease Supplement, the Purchase Agreement, the Owner Trustee’s Purchase
\nAgreement, the Owner Trustee’s FAA Bill of Sale, the Owner Trustee’s Bill of
\nSale, the Tax Indemnity Agreement, each Pass Through Trust Agreement, each Pass
\nThrough Trust Agreement Supplement and any other document executed by Lessee in
\nconnection with the transactions contemplated by the Operative Documents.<\/p>\n
“Lessor Liens” means any Lien on, or disposition of title to, the
\nAircraft or the Trust Estate arising as a result of (i) claims against Lessor,
\nState Street Bank and Trust Company, in its individual capacity, or the Owner
\nParticipant not related to the transactions contemplated by the Operative
\nDocuments, (ii) any act or omission of the Owner Participant, Lessor, or State
\nStreet Bank and Trust Company, in its individual capacity, which is not related
\nto the transactions contemplated by the Operative Documents or is in violation
\nof any of the terms of the Operative Documents, (iii) claims against the Owner
\nParticipant, Lessor, or State Street Bank and Trust Company, in its individual
\ncapacity, with respect to Taxes or Expenses against which Lessee is not required
\nto indemnify the Owner Participant, Lessor or State Street Bank and Trust
\nCompany, in its individual capacity or (iv) claims against Lessor or the Owner
\nParticipant arising out of any transfer by Lessor or the Owner Participant of
\nall or any portion of the respective interests of Lessor or the Owner
\nParticipant in the Aircraft, the Trust Estate or the Operative Documents (other
\nthan a transfer of possession of the Aircraft by Lessor pursuant to this
\nAgreement, a transfer pursuant to the Trust Indenture<\/p>\n
9<\/p>\n
[Second Amended and Restated
\n Lease Agreement (1993 747 A)]<\/p>\n
(other than a transfer pursuant to Article 8 of the Trust Indenture not
\nattributable to a Lease Event of Default) or a transfer pursuant to Section 7,
\n8, 9, 10 or 19 hereof, pursuant to Section 17 of the Participation Agreement or
\npursuant to the exercise of the remedies set forth in Section 15 hereof);
\nprovided, however, that any Lien which is attributable solely to State Street
\nBank and Trust Company or the Owner Participant and would otherwise constitute a
\nLessor Lien hereunder shall not constitute a Lessor Lien hereunder so long as
\n(1) the existence of such Lien poses no material risk of the sale, forfeiture or
\nloss of the Airframe or any Engine or any interest therein, (2) the existence of
\nsuch Lien does not interfere in any way with the use or operation of the
\nAircraft by Lessee (or any Sublessee), (3) the existence of such Lien does not
\naffect the priority or perfection of, or otherwise jeopardize, the Lien of the
\nTrust Indenture, (4) State Street Bank and Trust Company or the Owner
\nParticipant, as the case may be, is diligently contesting such Lien by
\nappropriate proceeding and (5) the existence of such Lien does not result in
\nactual interruption in the payment of Rent assigned to the Indenture Trustee for
\nthe benefit of the Certificate Holders.<\/p>\n
“Lessor’s Cost” for the Aircraft means the amount specified as
\nLessor’s Cost in Exhibit H hereto; provided, however, Lessor’s Cost shall be
\nreduced by Engine Cost for each Engine for which Lessee has paid Stipulated Loss
\nValue pursuant to the terms of Section 10(b) hereof and has otherwise paid all
\nother amounts due and payable under said Section 10(b).<\/p>\n
“Lien” means any mortgage, pledge, lien, charge, claim, encumbrance,
\nlease or security interest.<\/p>\n
“Loan Certificate” has the meaning assigned to the term “Certificate”
\nin the Trust Indenture.<\/p>\n
“Loss Payment Date” has the meaning set forth in Section 10(a) hereof.<\/p>\n
“Manufacturer” means The Boeing Company, a Delaware corporation, and
\nits subsidiaries, successors and assigns.<\/p>\n
“Manufacturer Documents” means the Purchase Agreement, the Consent and
\nAgreement and any other document executed by the Manufacturer in connection with
\nthe transactions contemplated by the Operative Documents.<\/p>\n
“Net Economic Return” means the Owner Participant’s net after-tax book
\nyield, aggregate after-tax cash flow and, with respect to any adjustments
\nrequired to maintain the Owner<\/p>\n
10<\/p>\n
[Second Amended and Restated
\n Lease Agreement (1993 747 A)]<\/p>\n
Participant’s Net Economic Return, periodic FASB 13 earnings plus or minus 5%
\nfor any annual period, utilizing the multiple investment sinking fund method of
\nanalysis, computed on the basis of the same methodology and assumptions as were
\nutilized by the Owner Participant in determining Basic Rent, Stipulated Loss
\nValue percentages, Special Termination Value Percentages, EBO Percentage and
\nTermination Value percentages as of the Delivery Date, as such assumptions may
\nbe revised from time to time for events which have been the basis for
\nadjustments to Rent pursuant to Section 3(c) hereof, provided that under no
\ncircumstances shall there be a reduction in Owner Participant’s [1993] FASB 13
\nearnings.<\/p>\n
“Net Present Value of Rents” means the net present value, as of the
\nDelivery Date, of Basic Rent set forth in Exhibit B hereto, discounted at a rate
\nper Lease Period equal to (a) 11% per annum divided by (b) the number of Lease
\nPeriods per year.<\/p>\n
“Operative Documents” means the Lease (including any Lease
\nSupplement); the Participation Agreement; the Tax Indemnity Agreement; the Trust
\nAgreement; any Trust Supplement; the Purchase Agreement; the Owner Trustee’s
\nBill of Sale; the Owner Trustee’s FAA Bill of Sale; the Owner Trustee’s Purchase
\nAgreement; an acceptance certificate covering the Aircraft in the form agreed to
\nby the Participants and Lessee (the “Acceptance Certificate”); the Trust
\nIndenture; the Loan Certificates outstanding at the time of reference; the
\nRedemption and Refinancing Agreement; and the Consent and Agreement.<\/p>\n
“Original Amount”, with respect to a Loan Certificate, means at any
\ntime prior to the Commencement Date, the Original Issue Price (as defined in the
\nTrust Indenture) of such Loan Certificate, or, at any time on or after the
\nCommencement Date, the stated original principal amount of such Loan
\nCertificate, and with respect to all Loan Certificates means, at any time prior
\nto the Commencement Date, the aggregate Original Issue Prices for such Loan
\nCertificates or, at any time on or after the Commencement Date, the aggregate
\nstated original principal amounts of such Loan Certificates.<\/p>\n
“Original Participation Agreement” means that certain Participation
\nAgreement (1993 747 A) dated as of April 1, 1993 among Lessee, the Owner
\nParticipant, Wilmington Trust Company, not in its individual capacity except as
\nexpressly provided therein (the “Original Owner Trustee”), State Street Bank and
\nTrust Company of Connecticut, National Association, as Indenture Trustee (the
\n“Original Indenture Trustee”) and The Chase Manhattan Bank, N.A., as an Original
\nLoan Participant, as amended<\/p>\n
11<\/p>\n
[Second Amended and Restated
\n Lease Agreement (1993 747 A)]<\/p>\n
by (i) that certain First Amendment to Participation Agreement (1993 747 A)
\ndated as of December 1, 1993 among Lessee, the Owner Participant, the Original
\nOwner Trustee, the Original Indenture Trustee and The Chase Manhattan Bank.
\nN.A., Berliner Handels Und Frankfurter Bank and NBD Bank, N.A., as Original Loan
\nParticipants (collectively, the “Original Loan Participants”), as further
\namended by and (ii) that certain Second Amendment to Participation Agreement
\n(1993 747 A) dated as of July 1, 1994 among Lessee, the Owner Participant, the
\nOriginal Owner Trustee, the Original Indenture Trustee and The Mitsubishi Trust
\nand Banking Corporation, New York Branch (the “Successor Original Loan
\nParticipant”).<\/p>\n
“Owner Participant” means the Person executing the Participation
\nAgreement as the Owner Participant and any Person to which such Person transfers
\nall or any portion of its right, title and interest in and to the Trust
\nAgreement, the Trust Estate and the Participation Agreement, to the extent
\npermitted thereby.<\/p>\n
“Owner Participant Documents” means the Participation Agreement, the
\nTrust Agreement, the Tax Indemnity Agreement and any other document executed by
\nthe Owner Participant in connection with the transactions contemplated by the
\nOperative Documents.<\/p>\n
“Owner Trustee” means the Person executing the Participation Agreement
\nas Owner Trustee and any Person appointed as successor Owner Trustee in each
\ncase not in its individual capacity but solely as Owner Trustee under the Trust
\nAgreement, except as otherwise expressly stated.<\/p>\n
“Owner Trustee Documents” means the Participation Agreement, the Trust
\nAgreement, this Lease, any Lease Supplement, the Owner Trustee’s Purchase
\nAgreement, the Trust Indenture, any Trust Supplement, the Loan Certificates and
\nany other document executed by the Owner Trustee in connection with the
\ntransactions contemplated by the Operative Documents.<\/p>\n
“Owner Trustee’s Bill of Sale” means a bill of sale for the Aircraft,
\ndated the Delivery Date, executed by Lessee in favor of Lessor in form and
\nsubstance satisfactory to Lessor.<\/p>\n
“Owner Trustee’s FAA Bill of Sale” means a bill of sale for the
\nAircraft on AC Form 8050-2 or such other form as may be approved by the FAA on
\nthe Delivery Date executed by Lessee in favor of Lessor in form and substance
\nsatisfactory to Lessor.<\/p>\n
12<\/p>\n
[Second Amended and Restated
\n Lease Agreement (1993 747 A)]<\/p>\n
“Owner Trustee’s Purchase Agreement” means the Owner Trustee’s
\nPurchase Agreement and Assignment (1993 747 A), dated as of April 1, 1993,
\nbetween Lessee and the Owner Trustee, as the same may be amended, modified or
\nsupplemented from time to time in accordance with the applicable provisions
\nthereof and the terms of the Trust Indenture.<\/p>\n
“Participants” means and includes the Pass Through Trustees and the
\nOwner Participant.<\/p>\n
“Participation Agreement” means that certain First Amended and
\nRestated Participation Agreement (1993 747 A), dated as of the date hereof,
\namong Lessee, the Indenture Trustee, the Owner Participant, the Pass Through
\nTrustees and the Owner Trustee, as such Participation Agreement may be amended
\nor supplemented from time to time pursuant to the applicable provisions thereof.<\/p>\n
“Parts” means all appliances, parts, instruments, appurtenances,
\naccessories, furnishings and other equipment of whatever nature (other than (i)
\ncomplete Engines or engines and (ii) any appliances, parts, instruments,
\nappurtenances, accessories, furnishings and other equipment of whatever nature
\nwhich Lessee is entitled to use pursuant to a lease, license or similar
\narrangement with a third party (other than Lessor hereunder), in each case not
\nnecessary to the operation or navigation of the Aircraft or to maintain its
\nairworthiness certification), which are from time to time incorporated or
\ninstalled in or attached to an Airframe or any Engine or which have been removed
\ntherefrom, but where title to which remains vested in Lessor in accordance with
\nSection 8 hereof.<\/p>\n
“Pass Through Certificates” has the meaning set forth in the Trust
\nIndenture.<\/p>\n
“Pass Through Trust Agreements” means the Pass Through Trust Agreement
\ndated as of February 1, 1992, as amended and restated as of May 1, 1995, in each
\ncase between the Lessee and State Street Bank and Trust Company of Connecticut,
\nNational Association, as supplemented by each of the two Pass Through Trust
\nSupplements, in each case between the Lessee and the Pass Through Trustee, and
\nas the same may be further modified, amended or supplemented pursuant to the
\napplicable provisions thereof and the Participation Agreement.<\/p>\n
“Pass Through Trustee” shall mean First Security Bank of Utah,
\nNational Association, a national banking association, in its capacity as Trustee
\nunder each Pass Through Trust Agreement,<\/p>\n
13<\/p>\n
[Second Amended and Restated
\n Lease Agreement (1993 747 A)]<\/p>\n
and each other Person which may from time to time be acting as successor trustee
\nunder any such Pass Through Trust Agreement.<\/p>\n
“Pass Through Trust Supplement” means each of the two separate Trust
\nSupplements Nos. 1995-A1 and 1995-A2, in each case dated as of May __, 1995
\nbetween Lessee and the Pass Through Trustee.<\/p>\n
“Past Due Rate” means (i) with respect to the portion of any payment
\nof Rent that may be required by the Trust Indenture to be paid by the Indenture
\nTrustee to any Certificate Holder, the “Past Due Rate” as defined in the Trust
\nIndenture and (ii) with respect to the remaining portion of any payment of Rent
\n(and the entire amount of any payment of Rent after the satisfaction and
\ndischarge of the Trust Indenture), a fluctuating rate per annum equal to 2% over
\nthe Debt Rate.<\/p>\n
“Permitted Lien” means any Lien referred to in clauses (i) through
\n(vi) of Section 6 hereof.<\/p>\n
“Permitted Sublessee” means any air carrier domiciled in a country
\nlisted in Exhibit F hereto as in effect from time to time.<\/p>\n
“Person” means any individual, corporation, partnership, joint
\nventure, association, joint-stock company, trust, unincorporated organization or
\ngovernment or any agency or political subdivision thereof.<\/p>\n
“Premium” has the meaning assigned to the term in Section 6.01(b) of
\nthe Trust Indenture.<\/p>\n
“Prepaid Rent” has the meaning set forth in Section 3(g) hereof.<\/p>\n
“Purchase Agreement” means the agreement between Lessee and the
\nManufacturer relating to the purchase by Lessee of the Aircraft, as originally
\nexecuted or as modified, amended or supplemented in accordance with the terms
\nthereof, but only insofar as the foregoing relates to the Aircraft.<\/p>\n
“Purchase Option Date” has the meaning set forth in Section 19 hereof.<\/p>\n
“Redemption and Refinancing Agreement” means that certain Redemption
\nand Refinancing Agreement (1993 747 A) dated as of May 1, 1995 by and among
\nLessee, the Owner Participant, The Mitsubishi Trust and Banking Corporation, New
\nYork Branch, the Owner Trustee, the Indenture Trustee and each Pass Through<\/p>\n
14<\/p>\n
[Second Amended and Restated
\n Lease Agreement (1993 747 A)]<\/p>\n
Trustee, as the same may be modified, amended or supplemented from time to time
\nin accordance with the applicable provisions thereof.<\/p>\n
“Redemption Date” has the meaning set forth in the Trust Indenture.<\/p>\n
“Reimbursement Amount” has the meaning set forth in Section 3(g)
\nhereof.<\/p>\n
“Renewal Term” means the Fair Market Renewal Term or a Fixed Renewal
\nTerm as those terms are defined in Section 19 hereof.<\/p>\n
“Rent” means Basic Rent and Supplemental Rent, collectively.<\/p>\n
“Replacement Airframe” means any airframe substituted for an airframe
\nin accordance with Sections 10(a) of the Lease.<\/p>\n
“Replacement Engine” means any engine substituted for an Engine in
\naccordance with Sections 9(d), 10(a) or 10(b) of the Lease.<\/p>\n
“Restricted Country” has the meaning set forth on Exhibits F and G
\nhereto.<\/p>\n
“Restricted Period” means the period ending on the last open day of
\nthe calendar year in which there occurs the seventh anniversary of the Delivery
\nDate.<\/p>\n
“Special Purchase Option Dates” means each of the dates specified as
\nsuch on Exhibit H hereto.<\/p>\n
“Special Termination Value”, with respect to any Special Purchase
\nOption Date, has the meaning set forth in Section 19(b)(1) hereof.<\/p>\n
“Special Termination Value Percentage” means, with respect to any
\nSpecial Purchase Option Date, the percentage set forth opposite such Date on
\nExhibit H hereto.<\/p>\n
“Stipulated Loss Value” with respect to the Aircraft as of any date
\nthrough and including the last day of the Basic Term, means the amount
\ndetermined by multiplying Lessor’s Cost for the Aircraft by the percentage
\nspecified in Exhibit C hereto opposite the Stipulated Loss Value Date with
\nrespect to which the amount of Stipulated Loss Value is determined (as such
\nExhibit C may be adjusted from time to time as provided in Section 3(c) hereof
\nand<\/p>\n
15<\/p>\n
[Second Amended and Restated
\n Lease Agreement (1993 747 A)]<\/p>\n
in Section 8 of the Tax Indemnity Agreement). “Stipulated Loss Value” with
\nrespect to the Aircraft, as of any date during any Renewal Term, shall be the
\namount determined as provided in Section 19 hereof. To the extent that an event
\ngiving rise to an obligation to pay any Stipulated Loss Value occurs (with
\nrespect to the Airframe or either Engine), and the actual date on which the loss
\nof tax benefits resulting from such event occurs shall be earlier or later than
\nthe date assumed in calculating the United States Federal income tax
\nconsequences reflected in the applicable Stipulated Loss Value, such Stipulated
\nLoss Value shall be appropriately adjusted upwards or downwards to reflect the
\nactual date of such loss of tax benefits, but shall be otherwise based on the
\noriginal assumptions used in determining such Stipulated Loss Value.<\/p>\n
“Stipulated Loss Value Date” has the meaning specified therefore in
\nExhibit H hereto.<\/p>\n
“Sublease” means any sublease permitted by the terms of Section
\n7(b)(viii) hereof.<\/p>\n
“Sublessee” means any Person for so long, but only so long, as such
\nPerson is in possession of the Airframe and or any Engine pursuant to the terms
\nof a Sublease which is then in effect pursuant to Section 7(b)(viii) hereof.<\/p>\n
“Subsidiary” means, with respect to any Person that is a corporation,
\nany other corporation a majority of the voting securities of which are owned by
\nsuch person, whether directly or indirectly.<\/p>\n
“Supplemental Rent” means all amounts, liabilities and obligations
\n(other than Basic Rent) which Lessee assumes or agrees to pay to Lessor or
\nothers hereunder or under any of the other Operative Documents, including
\npayments of Stipulated Loss Value and Termination Value and amounts calculated
\nby reference thereto, an amount equal to the Premium, if any, payable in
\naccordance with Section 3(d) hereof and indemnity payments. The parties
\nacknowledge that Supplemental Rent is a general category and, accordingly, agree
\nthat any provision of any Operative Document which calls for the payment of
\nSupplemental Rent and also calls for the payment of specific items which are
\nincludable in Supplemental Rent is not to be interpreted as requiring any double
\npayment.<\/p>\n
“Tax Indemnity Agreement” means that certain Tax Indemnity Agreement
\n(1993 747 A), dated as of April 1, 1993, as amended and restated as of May 1,
\n1995, between the Owner Participant and Lessee, as originally executed or as
\nmodified,<\/p>\n
16<\/p>\n
[Second Amended and Restated
\n Lease Agreement (1993 747 A)]<\/p>\n
amended or supplemented pursuant to the applicable provisions thereof.<\/p>\n
“Taxes” means any and all fees (including, without limitation,
\nlicense, documentation and registration fees), taxes (including, without
\nlimitation, income, gross receipts, sales, rental, use, turnover, value added,
\nproperty (tangible and intangible), excise and stamp taxes), licenses, levies,
\nimposts, duties, recording charges or fees, charges, assessments, or
\nwithholdings of any nature whatsoever, together with any assessments, penalties,
\nfines, additions to tax and interest thereon (each, individually, a “Tax”).<\/p>\n
“Term” means the Interim Term, Basic Term and, if actually entered
\ninto, any Renewal Term.<\/p>\n
“Termination Date” has the meaning set forth in Section 9(b) hereof.<\/p>\n
“Termination Value” with respect to the Aircraft as of any date
\nthrough and including the last day of the Basic Term means the amount determined
\nby multiplying Lessor’s Cost for the Aircraft by the percentage specified in
\nExhibit D hereto opposite the Termination Date with respect to which the amount
\nof Termination Value is determined (as such Exhibit D may be adjusted from time
\nto time as provided in Section 3(c) hereof and in Section 8 of the Tax Indemnity
\nAgreement). To the extent that an event giving rise to an obligation to pay any
\nTermination Value occurs, and the actual date on which the loss of tax benefits
\nresulting from such event occurs shall be earlier or later than the date assumed
\nin calculating the United States Federal income tax consequences reflected in
\nthe applicable Termination Value, such Termination Value shall be appropriately
\nadjusted upwards or downwards to reflect the actual date of such loss of tax
\nbenefits, but shall be otherwise based on the original assumptions used in
\ndetermining such Termination Value.<\/p>\n
“Transaction Expenses” means (A) with respect to the closing on the
\nDelivery Date (i) the reasonable and actual fees, expenses and disbursements of
\n(1) Day, Berry & Howard, special counsel for the Original Indenture Trustee, (2)
\nRichards, Layton & Finger, counsel for the Original Owner Trustee, (3) Crowe & Dunlevy, P.C., special counsel in Oklahoma City, Oklahoma, (4) White & Case,
\nspecial counsel for the Original Loan Participant, (5) Vedder, Price, Kaufman & Kammholz, special counsel for Lessee, and (6) Dewey Ballantine, special counsel
\nfor the Owner Participant, (ii) all fees, taxes and other charges payable in
\nconnection with the recording or filing of instruments and financing statements,
\n(iii) the initial fee and reasonable<\/p>\n
17<\/p>\n
[Second Amended and Restated
\n Lease Agreement (1993 747 A)]<\/p>\n
and actual disbursements of the Original Owner Trustee under the Trust
\nAgreement, (iv) the initial fee and reasonable and actual disbursements of the
\nIndenture Trustee under the Trust Indenture, (v) the fee of Aeroeconomics, Inc.
\n(or of such other appraiser as shall be selected by the Owner Participant) with
\nrespect to the appraisal of the Aircraft required on or before the Delivery Date
\npursuant to Section 4(a) of the Participation Agreement, (vi) the fees,
\ncommissions and expenses of Capstar Partners, Inc., (vii) the reasonable out-of-
\npocket expenses of the Original Loan Participant, (viii) the reasonable out-of-
\npocket expenses of the Owner Participant relating to the transactions
\ncontemplated by the Participation Agreement including, without limitation, the
\nexpenses related to the organization of the foreign sales corporation, up to an
\naggregate of $25,000 (but excluding from Transaction Expenses airfare charges
\nincurred for travel on an airline other than United Air Lines, unless such
\ntravel is necessitated by the foreign sales corporation structure to the extent
\nthat United Air Lines does not offer regularly scheduled flights directly from
\nNew York to such foreign location where negotiations with respect to the
\ntransactions will be conducted for purposes of the foreign sales corporation
\nnature of the transactions) plus airfare charges incurred for travel on United
\nAir Lines, and (ix) the initial fees, if any, of the Original Loan Participant
\nand the Succesor Original Loan Participant, and (B) with respect to the
\nsubsequent placement of the permanent debt pursuant to the Redemption and
\nRefinancing Agreement (i) the reasonable and actual fees, expenses and
\ndisbursements of (1) Ray, Quinney & Nebeker, special counsel for the Indenture
\nTrustee and the Pass Through Trustee, (2) Bingham, Dana & Gould, counsel for the
\nOwner Trustee, (3) Crowe & Dunlevy, P.C., special counsel in Oklahoma City,
\nOklahoma, (4) Shearman & Sterling, special counsel for the Underwriters (to the
\nextent not payable by the Underwriters), (5) Vedder, Price, Kaufman & Kammholz,
\nspecial counsel for Lessee, and (6) Dewey Ballantine, special counsel for the
\nOwner Participant, (ii) all fees, taxes and other charges payable in connection
\nwith the recording or filing of instruments and financing statements, (iii) the
\ninitial fee and reasonable and actual disbursements of the Owner Trustee under
\nthe Trust Agreement, (iv) the initial fee and reasonable and actual
\ndisbursements of the Indenture Trustee under the Trust Indenture, (v) the fees,
\ncommissions and expenses of Capstar Partners, Inc., (vi) the reasonable out-of-
\npocket expenses of the Owner Participant relating to the transactions
\ncontemplated by the Redemption and Refinancing Agreement, (vii) the placement or
\nunderwriting fees, commissions and expenses, if any, in placing the permanent
\ndebt pursuant to the Redemption and Refinancing Agreement and all costs and
\nexpenses associated with the public offering pursuant thereto and the actual
\nexpenses of each Pass<\/p>\n
18<\/p>\n
[Second Amended and Restated
\n Lease Agreement (1993 747 A)]<\/p>\n
Through Trustee under its respective Pass Through Trust Agreement and (viii)
\nprinting and distribution costs.<\/p>\n
“Trust Agreement” means that certain First Amended and Restated Trust
\nAgreement (1993 747 A), dated as of the date hereof, between the Owner
\nParticipant and State Street Bank and Trust Company, in its individual capacity,
\nas originally executed or as modified, amended or supplemented in accordance
\nwith the applicable provisions thereof and the terms of the Trust Indenture,
\nincluding, without limitation, any Trust Supplement entered into pursuant to the
\napplicable provisions thereof.<\/p>\n
“Trust Estate” has the meaning set forth in the Trust Agreement.<\/p>\n
“Trust Indenture” means that certain Second Amended and Restated Trust
\nIndenture and Mortgage (1993 747 A), dated as of the date hereof, between Lessor
\nand the Indenture Trustee, as originally executed or as modified, amended or
\nsupplemented in accordance with the provisions thereof and the terms of the
\nParticipation Agreement, including, without limitation, any Trust Supplement
\nentered into pursuant to the applicable provisions thereof.<\/p>\n
“Trust Indenture Estate” has the meaning assigned to the term
\n“Indenture Estate” in the Trust Indenture.<\/p>\n
“Trust Office” has the meaning set forth in the Trust Indenture.<\/p>\n
“Trust Supplement” means a supplement to the Trust Agreement and the
\nTrust Indenture, substantially in the form of Exhibit A to the Trust Agreement.<\/p>\n
“U.S. Air Carrier” means any United States air carrier as to which
\nthere is in force a certificate issued pursuant to Section 401 of the Federal
\nAviation Act, and as to which there is in force an air carrier operating
\ncertificate issued pursuant to Part 121 of the regulations under such Act, or
\nwhich may operate as an air carrier by certification or otherwise under any
\nsuccessor or substitute provisions therefor or in the absence thereof.<\/p>\n
“Underwriters” has the meaning specified therefor in Section ______ of
\nthe Participation Agreement.<\/p>\n
“Wet Lease” means any arrangement whereby Lessee agrees to furnish the
\nAirframe and Engines or engines installed thereon to a third party pursuant to
\nwhich such Airframe and Engines or<\/p>\n
19<\/p>\n
[Second Amended and Restated
\n Lease Agreement (1993 747 A)]<\/p>\n
engines (i) shall be operated solely by regular employees of Lessee possessing
\nall current certificates and licenses that would be required under the Federal
\nAviation Act (or if the Aircraft is not registered in the United States, all
\ncertificates and licenses required by the laws of the jurisdiction of registry)
\nfor the performance by such employees of similar functions within the United
\nStates of America (or such jurisdiction of registry) (it is understood that
\ncabin attendants need not be employees of Lessee) and (ii) shall be maintained
\nby Lessee in accordance with its normal maintenance practices.<\/p>\n
SECTION 2. Acceptance and Lease. Lessor hereby agrees to accept from
\nthe Lessee the transfer of title to and simultaneously to lease to Lessee
\nhereunder, and Lessee hereby agrees to lease on the Delivery Date from Lessor
\nhereunder, the Aircraft as evidenced by the execution by Lessor and Lessee of a
\nLease Supplement leasing the Aircraft hereunder. Lessee agrees that Lessor will
\nauthorize one or more employees of Lessee, designated by Lessee in writing, as
\nthe authorized representative or representatives of Lessor to accept delivery of
\nthe Aircraft. Lessee hereby agrees that in the event delivery of the Aircraft
\nshall be accepted by an employee or employees of Lessee pursuant to such
\nauthorization by Lessor, such acceptance of delivery by such employee or
\nemployees on behalf of Lessor shall, without further act, irrevocably constitute
\nacceptance by Lessee of the Aircraft for all purposes of this Lease.<\/p>\n
SECTION 3. Term and Rent. (a) Interim Term and Basic Term. The
\nInterim Term shall commence on the Delivery Date and end on and include the day
\nimmediately preceding the Commencement Date unless earlier terminated pursuant
\nto the provisions hereof. The Basic Term shall commence on the Commencement
\nDate and end on the Lease Expiry Date or such earlier date as this Lease may be
\nterminated in accordance with the provisions hereof.<\/p>\n
(b) Basic Rent. Lessee shall pay Basic Rent in Dollars with respect
\nto each Lease Period during the Basic Term on each Lease Period Date during the
\nBasic Term, in the respective amounts for each Lease Period Date determined in
\naccordance with Exhibit B hereto.<\/p>\n
(c) Adjustments to Basic Rent, Excess Amount, Stipulated Loss Values,
\nTermination Values, Special Termination Value Percentages and the EBO
\nPercentage.<\/p>\n
(i) In the event that (A) Transaction Expenses paid by Lessor are
\n determined to be other than __% of Lessor’s Cost, (B) there shall be an
\n optional redemption or a refinancing or a refunding of the Loan
\n Certificates in<\/p>\n
20<\/p>\n
[Second Amended and Restated
\n Lease Agreement (1993 747 A)]<\/p>\n
accordance with Section 17 of the Participation Agreement, (C)
\n [Intentionally Omitted], or (D) there is an optimization in accordance with
\n Section 18 of the Participation Agreement; then in each case the Basic Rent
\n and Excess Amount set forth in Exhibit B, the Stipulated Loss Value
\n percentages set forth in Exhibit C, the Termination Value percentages set
\n forth in Exhibit D, and the EBO Percentage and the Special Termination
\n Value Percentages set forth in Exhibit H shall be adjusted (upwards or
\n downwards as the case may be) using the same methods and assumptions (as
\n modified on account of the occurrence of any of the events referred to in
\n clauses (A)-(D)) used to calculate the Basic Rent and Excess Amount, the
\n Stipulated Loss Value percentages, the Termination Value percentages and
\n the EBO Percentage and the Special Termination Value Percentages set forth
\n in Exhibits B, C, D and H, respectively, in each case in compliance with
\n clauses (iv) and (v) of this paragraph (c) and in order to: (1) maintain
\n the Owner Participant’s Net Economic Return and (2) minimize the Net
\n Present Value of Rents to Lessee to the extent possible consistent with
\n clause (1) hereof; provided, however, in no event will the EBO Price be
\n adjusted below the greatest of (i) the Termination Value for the Aircraft
\n as of the EBO Date, (ii) __% of Lessor’s Cost (i.e., the fair market value
\n of the Aircraft as of the EBO Date as the same was determined on the
\n Delivery Date) and (iii) __% multiplied by the present value as of the EBO
\n Date of (x) the remaining Basic Rent plus (y) __% of Lessor’s Cost (i.e.,
\n the fair market value of the Aircraft as of the end of the Term as the same
\n was determined on the Delivery Date) (if the computation described in this
\n clause (iii) was done on the Delivery Date with all the Exhibits hereto on
\n the Delivery Date, such present value would equal the EBO Percentage a the
\n same was determined on the Delivery Date) (the present value calculation
\n described in this clause (iii) shall utilize a semi-annual discount rate
\n that on a compound basis is equal to 13.5% per annum).<\/p>\n
(ii) [Intentionally reserved for potential future use.]<\/p>\n
(iii) Any recalculation of Basic Rent and Excess Amount,
\n Stipulated Loss Value percentages, Termination Value percentages, EBO
\n Percentage and Special Termination Value Percentages pursuant to this
\n Section 3(c) (or pursuant to the definition of Stipulated Loss Value or
\n Termination Value) shall be determined by the Owner Participant and shall
\n be subject to the verification procedures set forth in Exhibit E hereto.
\n Such recalculated Basic Rent and Excess<\/p>\n
21<\/p>\n
[Second Amended and Restated
\n Lease Agreement (1993 747 A)]<\/p>\n
Amount, Stipulated Loss Value percentages, Termination Value percentages,
\n EBO Percentage and Special Termination Value Percentages shall be set forth
\n in an amendment hereto.<\/p>\n
(iv) Anything contained in the Participation Agreement or this
\n Lease to the contrary notwithstanding, each installment of Basic Rent
\n payable hereunder, whether or not adjusted in accordance with this Section
\n 3(c), together with the amount of Excess Amount and Supplemental Rent, if
\n any, in respect of the date on which such installment is payable, and each
\n payment of Termination Value, Stipulated Loss Value, EBO Price and Special
\n Termination Value whether or not adjusted in accordance with this Section
\n 3(c) or Section 8 of the Tax Indemnity Agreement, and all other amounts
\n (excluding Excluded Payments payable simultaneously by Lessee pursuant to
\n this Lease), in each case, on the date on which such payment is due, shall
\n be in an amount at least sufficient to pay in full, and shall be available
\n to be applied by Lessor in payment on account of, any payments then
\n required to be made on account of the principal amount (and Premium, if
\n any) of and interest on the Loan Certificates then outstanding. It is
\n agreed that no installment of Basic Rent or payment of Excess Amount,
\n Termination Value, Stipulated Loss Value, Special Termination Value or EBO
\n Price, shall be increased or adjusted by reason of (A) any attachment or
\n diversion of Rent on account of (x) Lessor Liens (including for this
\n purpose Liens that would be Lessor Liens but for the proviso to the
\n definition of Lessor Liens) or (y) any other Lien on or against the Trust
\n Estate, any part thereof or the Operative Documents arising as a result of
\n claims against the Indenture Trustee or a Certificate Holder, not related
\n to the transactions contemplated by the Operative Documents, (B) any
\n modification of the payment terms of the Loan Certificates made without the
\n prior written consent of Lessee, or (C) the acceleration of any Loan
\n Certificate due to the occurrence of an “Event of Default” (as defined in
\n the Trust Indenture) which does not constitute an Event of Default
\n hereunder.<\/p>\n
(v) All adjustments to Basic Rent under this Section 3(c) shall
\n be consistent with the requirements of Sections 4.02(5), 4.07(1) and (2)
\n and Section 4.08(1) of Rev. Proc. 75-28 (provided that the requirements of
\n Section 4.08(1) shall apply on a prospective basis), as modified and in
\n effect on the Delivery Date, and shall not cause the Lease to be a
\n “disqualified leaseback or long-term agreement” within the meaning of
\n Section 467 of the Code as then in effect and any final, temporary or
\n proposed<\/p>\n
22<\/p>\n
[Second Amended and Restated
\n Lease Agreement (1993 747 A)]<\/p>\n
regulations thereunder or any administrative or judicial interpretation
\n thereof in effect on the date of such adjustment (a “Section 467
\n Agreement”) (it being understood that any such adjustment shall not be
\n treated as causing the Lease to be a Section 467 Agreement to the extent
\n the Lease would have been a Section 467 Agreement if no such adjustment to
\n Basic Rent had occurred).<\/p>\n
(d) Supplemental Rent. Lessee shall pay (or cause to be paid)
\npromptly to Lessor, or to whomsoever shall be entitled thereto, any and all
\nSupplemental Rent constituting Stipulated Loss Value, Termination Value, EBO
\nPrice and Special Termination Values as the same shall become due and owing and
\nall other amounts of Supplemental Rent within five Business Days after demand or
\non such date, or within such other relevant period, as may be provided in any
\nOperative Document, and in the event of any failure on the part of Lessee to pay
\nany Supplemental Rent when due, Lessor shall have all rights, powers and
\nremedies provided for herein or in any other Operative Document or by law or
\nequity or otherwise in the case of nonpayment of Basic Rent. Lessee shall also
\npay on behalf of Lessor as Supplemental Rent an amount equal to any amount
\npayable by Lessor as Premium as and when any such Premium shall be due and
\npayable; provided, however, that Lessee shall have no obligation to pay on
\nbehalf of Lessor any Premium payable under Section 6.01 or 6.02 of the Trust
\nIndenture due to the occurrence of an “Event of Default” (as defined in the
\nTrust Indenture) which does not constitute an Event of Default hereunder.
\nLessee also will pay to Lessor, or on behalf of Lessor to whomsoever shall be
\nentitled thereto, on demand, as Supplemental Rent, to the extent permitted by
\napplicable law, interest at the Past Due Rate with respect to any part of any
\ninstallment of Basic Rent not paid prior to 11:00 a.m., New York City time, on
\nthe date when due for any period for which the same shall be overdue and on any
\npayment of Supplemental Rent not paid prior to 11:00 a.m., New York City time,
\non the date when due for the period until the same shall be paid.<\/p>\n
(e) Payments in General. All payments of Rent other than Excluded
\nPayments payable to Lessor shall be made directly by Lessee by wire transfer of
\nimmediately available funds prior to 11:00 a.m., New York time, on the date of
\npayment in Dollars, to Lessor at its office at 225 Franklin Street, Boston,
\nMassachusetts 02110, Attention: _________________________ (or such other office
\nof Lessor in the continental United States or such other account as Lessor shall
\ndirect in a notice to Lessee at least 10 Business Days prior to the date such
\npayment of Rent is due); provided, that so long as the Trust Indenture shall not
\nhave been fully discharged, Lessor hereby directs and Lessee<\/p>\n
23<\/p>\n
[Second Amended and Restated
\n Lease Agreement (1993 747 A)]<\/p>\n
agrees, that all Basic Rent shall be paid directly to the Indenture Trustee at
\nthe times and in funds specified in this Section 3(e) at the offices of the
\nIndenture Trustee at Two International Place, Boston, MA 02110, Attention:
\nCorporate Trust Department (or such other office of Indenture Trustee in the
\ncontinental United States or such other account as Indenture Trustee shall
\ndirect in a notice to Lessee at least 10 Business Days prior to the date such
\npayment of Basic Rent is due). Excluded Payments shall be paid in Dollars in
\nimmediately available funds to the Person to whom payable at the address of such
\nPerson specified in Schedule I of the Participation Agreement.<\/p>\n
Notwithstanding anything to the contrary contained herein, if any date
\non which a payment of Rent becomes due and payable is not a Business Day then
\nsuch payment shall be made on the next succeeding Business Day and no interest
\nshall accrue on the amount of such payment, if such payment is made on such next
\nsucceeding Business Day.<\/p>\n
(f) [Intentionally Reserved for Potential Future Use].<\/p>\n
(g) [Intentionally Reserved for Potential Future Use].<\/p>\n
SECTION 4. Lessor’s Representations and Warranties. LESSOR LEASES
\nAND LESSEE TAKES THE AIRCRAFT “AS-IS, WHERE-IS.” LESSEE ACKNOWLEDGES AND AGREES
\nTHAT AS BETWEEN LESSOR, ANY PARTICIPANT, THE INDENTURE TRUSTEE, AND LESSEE (A)
\nTHE AIRFRAME AND EACH ENGINE IS OF SIZE, DESIGN, CAPACITY AND MANUFACTURE
\nSELECTED BY AND ACCEPTABLE TO LESSEE, (B) LESSEE IS SATISFIED THAT THE AIRFRAME
\nAND EACH ENGINE IS SUITABLE FOR ITS PURPOSES, (C) NEITHER LESSOR NOR OWNER
\nPARTICIPANT IS A MANUFACTURER OR A DEALER IN PROPERTY OF SUCH KIND, AND (D)
\nNEITHER LESSOR, IN ITS INDIVIDUAL CAPACITY OR AS OWNER TRUSTEE, THE INDENTURE
\nTRUSTEE NOR THE OWNER PARTICIPANT MAKES, HAS MADE OR SHALL BE DEEMED TO HAVE
\nMADE, AND EACH WILL BE DEEMED TO HAVE EXPRESSLY DISCLAIMED, ANY REPRESENTATION
\nOR WARRANTY, EXPRESS OR IMPLIED, AS TO THE TITLE, AIRWORTHINESS, CONDITION,
\nDESIGN, OPERATION, VALUE, MERCHANTABILITY OR FITNESS FOR USE FOR A PARTICULAR
\nPURPOSE OF THE AIRCRAFT OR ANY PART THEREOF, AS TO THE ABSENCE OF LATENT OR
\nOTHER DEFECTS, WHETHER OR NOT DISCOVERABLE, AS TO THE ABSENCE OF ANY
\nINFRINGEMENT OF ANY PATENT, TRADEMARK OR COPYRIGHT, AS TO THE ABSENCE OF
\nOBLIGATIONS BASED ON STRICT LIABILITY IN TORT, OR ANY OTHER REPRESENTATION OR
\nWARRANTY WHATSOEVER, EXPRESS OR IMPLIED, WITH RESPECT TO THE AIRCRAFT OR ANY
\nPART THEREOF, except as set forth in Sections 8(f)(vi) and 8(p)(ii) of the
\nParticipation Agreement as to Lessor Liens and except that State Street Bank and
\nTrust Company, in its individual capacity, (i) represents and warrants that on
\nthe Delivery Date, Lessor shall have received<\/p>\n
24<\/p>\n
[Second Amended and Restated
\n Lease Agreement (1993 747 A)]<\/p>\n
whatever title to the Aircraft was conveyed to it by Lessee, (ii) represents and
\nwarrants that on the Delivery Date the Aircraft shall be free of Lessor Liens
\n(including for this purpose Liens that would be Lessor Liens but for the proviso
\nto the definition of Lessor Liens) attributable to it in its individual
\ncapacity, (iii) covenants that it will not, through its own actions or
\ninactions, in such capacity, interfere in Lessee’s or any Sublessee’s quiet
\nenjoyment, use, operation or possession of the Aircraft unless this Lease shall
\nhave been declared in default pursuant to Section 15 hereof, (iv) agrees that it
\nwill not directly or indirectly create, incur, assume or suffer to exist any
\nLessor Lien attributable to it in its individual capacity on or with respect to
\nthe Airframe or any Engine or any portion of the Trust Estate and (v) represents
\nand warrants that it is a Citizen of the United States and agrees that if at any
\ntime it shall cease to be a Citizen of the United States, it will promptly
\nresign as Owner Trustee (if and so long as such citizenship is necessary under
\nthe Federal Aviation Act as in effect at such time or, if it is not necessary,
\nif and so long as the Owner Trustee’s citizenship would have any adverse effect
\non the Owner Participant, the Certificate Holders or Lessee), effective upon the
\nappointment of a successor Owner Trustee in accordance with the provisions of
\nthe Trust Agreement. None of the provisions of this Section 4 or any other
\nprovision of this Agreement shall be deemed to amend, modify or otherwise affect
\nthe representations, warranties or other obligations (express or implied) of the
\nManufacturer, any subcontractor or supplier of the Manufacturer with respect to
\nthe Airframe, Engines, or any Parts, or to release the Manufacturer, or any such
\nsubcontractor or supplier from any such representation, warranty or obligation.
\nUnless a Section 14(a), 14(b), 14(f) or 14(g) Default or any Event of Default
\nshall have occurred and be continuing, Lessor agrees to make available to Lessee
\nsuch rights as Lessor may have under any warranty with respect to the Aircraft
\nmade by the Manufacturer or any of its subcontractors or suppliers and any other
\nclaims against the Manufacturer or any such subcontractor or supplier with
\nrespect to the Aircraft, all pursuant to and in accordance with the terms of the
\nOwner Trustee’s Purchase Agreement.<\/p>\n
SECTION 5. Return of the Aircraft. (a) Condition Upon Return.
\nUnless purchased by Lessee pursuant to Section 19(b) hereof, upon the
\ntermination of this Lease at the end of the Basic Term or any Renewal Term or
\npursuant to Section 9(b) or 15 hereof, Lessee will at its expense return the
\nAircraft to Lessor at Lessee’s maintenance base located at San Francisco
\nInternational Airport (or any principal maintenance base established by Lessee
\nin the continental United States subsequent to the date hereof), provided that
\nupon the request of the Lessor<\/p>\n
25<\/p>\n
[Second Amended and Restated
\n Lease Agreement (1993 747 A)]<\/p>\n
given to Lessee at least ten (10) days prior to the date of such return, Lessee
\nshall return the Airframe to Lessor at a location on Lessee’s route system in
\nthe continental United States selected by Lessor, provided that such location is
\nserved on a normal basis by Boeing Model 747-422 aircraft operated by Lessee,
\nand Lessor shall reimburse Lessee on a net after-tax basis for Lessee’s out-of-
\npocket Expenses (including for this purpose salary costs for Lessee’s personnel)
\nresulting from Lessee’s return of the Aircraft to such alternate return location
\nto the extent such out-of-pocket Expenses exceed the out-of-pocket Expenses
\n(including, for this purpose, salary costs for Lessee’s personnel) Lessee would
\nhave incurred in returning the Aircraft to its principal maintenance base at San
\nFrancisco International Airport, provided, further, however, that if Lessor
\nshall have made the request for storage pursuant to Section 5(d) hereof, Lessee
\nshall at its expense return the Aircraft at the site of storage. At the time of
\nsuch return, (A) Lessee will, at its own cost and expense, unless otherwise
\nrequested by Lessor to retain the existing registration of the Aircraft, cause
\nthe Aircraft, if it is not then so registered, to be registered under the laws
\nof the United States with the FAA in the name of Lessor or its designee,
\nprovided that Lessee shall be relieved of its obligations under this sentence if
\nsuch registration is prohibited by reason of the failure of Lessor, the Owner
\nParticipant or Lessor’s designee to be eligible on such date to own an aircraft
\nregistered with the Federal Aviation Administration, and (B) subject to Section
\n5(e) hereof, the Airframe will be fully equipped with the Engines (or Acceptable
\nAlternate Engines) installed thereon. Also, at the time of such return, Lessor
\nshall have good title to such Airframe and Engines or Acceptable Alternate
\nEngines, and such Airframe and Engines or Acceptable Alternate Engines (i) shall
\nbe certified (or, if not then registered under the Federal Aviation Act by
\nreason of the proviso to clause (A) in the preceding sentence or because Lessor
\nhas so requested that the Aircraft not be so registered, shall hold a valid
\ncertificate of airworthiness issued by the country of registry and be eligible
\nfor certification by the FAA) as an airworthy aircraft by the Federal Aviation
\nAdministration, (ii) shall be free and clear of all Liens (other than Lessor
\nLiens (including for this purpose Liens that would be Lessor Liens but for the
\nproviso to the definition of Lessor Liens)) and rights of third parties under
\npooling, interchange, overhaul, repair or other similar agreements or
\narrangements, (iii) shall be in a regular passenger configuration, and in as
\ngood a condition as when delivered by Lessee to Lessor, ordinary wear and tear
\nexcepted and otherwise in the condition required to be maintained under the
\nLease and under Lessee’s FAA-approved maintenance plan (notwithstanding any
\nSublease theretofore in effect) and shall be in compliance with all mandatory
\nenvironmental, noise, air<\/p>\n
26<\/p>\n
[Second Amended and Restated
\n Lease Agreement (1993 747 A)]<\/p>\n
pollution and other standards prescribed by the federal government of the United
\nStates and applicable to the Aircraft including, without limitation, standards
\nrelating to corrosion and structural integrity and all other applicable
\nmanufacturer’s mandatory service bulletins (except for standards, laws,
\nregulations, directives and bulletins that permit compliance at a later time and
\nwould not, in the normal course of Lessee’s maintenance plan, be complied with
\nby the date of return without discriminating on the basis of the status of the
\nAircraft as a leased aircraft), (iv) in the event that Lessee shall not then be
\nusing a continuous maintenance program with respect to the Airframe immediately
\nprior to such return but instead shall have been using a block overhaul program
\nwith respect to the Airframe, then (A) such block overhaul program shall have
\nbeen approved by the government of registry of the Aircraft and (B) the Airframe
\nshall have remaining until the next scheduled block overhaul at least 25% of the
\nallowable hours between block overhauls permitted under the block overhaul
\nprogram then used by Lessee, (v) in the event that Lessee during the period of
\noperation of the Aircraft immediately prior to such return shall not have been
\nusing an on-condition maintenance program with respect to the Engines (or
\nAcceptable Alternate Engines), Lessee agrees that the average number of hours or
\ncycles of operation (whichever shall be applicable under the maintenance program
\nthen in use with respect to such Engines (or Acceptable Alternate Engines)) on
\nsuch Engines (or Acceptable Alternate Engines) remaining until the next
\nscheduled engine heavy maintenance shall be at least 25% of the hours or cycles
\n(whichever shall be applicable) between engine heavy maintenance allowed under
\nthe maintenance program then in use with respect to such Engines (or Acceptable
\nAlternate Engines), (vi) shall have all Lessee’s and any Sublessee’s exterior
\nmarking removed or painted over with areas thereof refinished to match adjacent
\nareas, and (vii) shall be in a state of cleanliness suitable under Lessee’s
\nnormal service standards for operation in Lessee’s revenue passenger service and
\nin all such cases the Aircraft shall not have been discriminated against whether
\nby reason of its leased status or otherwise in maintenance, use, operation or in
\nany other manner whatsoever.<\/p>\n
In addition, the following conditions shall be complied with at the
\ntime of the return of the Aircraft: (i) Lessee shall deliver to Lessor any “no
\ncost” modification kits designated for the Aircraft that Lessee has in its
\npossession and that have not been incorporated at the time of the return of the
\nAircraft, (ii) Lessor may purchase from Lessee at Lessee’s cost any service
\nbulletin kits purchased or manufactured by Lessee for the Aircraft (provided
\nthat Lessee shall not be obligated to sell to Lessor any service bulletin kit
\nmanufactured by Lessee to the<\/p>\n
27<\/p>\n
[Second Amended and Restated
\n Lease Agreement (1993 747 A)]<\/p>\n
extent Lessee, in its reasonable judgment, considers the same proprietary) and
\n(iii) without limiting the obligations of the Lessee set forth in the preceding
\nparagraph, in the event the FAA shall issue any directive which requires
\ntermination thereof prior to the return date, then such directive shall be
\nterminated prior to the return date, and if Lessee shall have not been required
\nto terminate such directive in the normal course of its operations without
\ndiscriminating against the Aircraft by reason of its leased status or otherwise
\nprior to the return of the Aircraft but such directive must be terminated on or
\nbefore six months following such return, then Lessee shall, at the sole cost and
\nexpense of Lessor, comply with such directive but only if (x) at least 540 days
\nprior to the return of the Aircraft Lessee receives from Lessor a written
\nrequest to comply with such directive at Lessor’s sole cost and expense
\n(determined on the basis of what a third party would charge for comparable
\nservices) and (y) after receipt by Lessee of such request, the Aircraft is
\nsubject to a maintenance check of the type at which such modification is made,
\nin accordance with Lessee’s general maintenance program, and Lessee has, or can
\nobtain using commercial reasonable efforts taking into account the 540 day prior
\nnotice received by Lessee, the personnel, parts, facilities and other resources
\navailable to accomplish the modification and the modification can be made
\nwithout materially disrupting the operations of Lessee’s maintenance facility or
\nLessee’s operations.<\/p>\n
For purposes of this Section 5(a), any maintenance program used by
\nLessee for airframes (including the Airframe) substantially similar to the
\nmaintenance program described in the excerpts from “United Air Lines 747
\nMaintenance Program” furnished to Lessor and the Owner Participant prior to the
\nDelivery Date (a copy of which was attached to the certificate of the Assistant
\nSecretary of the Lessee delivered pursuant to Section 4(a)(vii)(6) of the
\nOriginal Participation Agreement) shall be considered a continuous maintenance
\nprogram (and not a block maintenance program) and any engine maintenance program
\nused by Lessee for engines (including the Engines) substantially similar to the
\nmaintenance program described in [“United Air Lines 747 Maintenance Program”]
\nshall be considered an on-condition maintenance program.<\/p>\n
In the event that the provisions of the preceding paragraph are
\ninapplicable and upon a return of the Aircraft pursuant to this Section 5,
\nLessee and Lessor cannot agree as to whether Lessee, during the period of
\noperation of the Aircraft immediately prior to such return, shall have been
\nusing a continuous maintenance program or a block overhaul program with respect
\nto the Airframe (including, without limitation, a dispute<\/p>\n
28<\/p>\n
[Second Amended and Restated
\n Lease Agreement (1993 747 A)]<\/p>\n
as to whether Lessee’s program is substantially similar to the program described
\nin the excerpts to the “United Air Lines 747 Maintenance Program” furnished to
\nLessor as set forth in the preceding paragraph), then Lessee and Lessor shall
\nmutually appoint an independent third party, satisfactory to both Lessee and
\nLessor, who shall make such a determination, which determination shall be
\nconclusive and final. Lessee will provide, on a confidential basis, such
\nindependent third party with the maintenance program and records applicable to
\nthe Aircraft necessary to make such determination. The fee of such third party
\nshall be paid equally by Lessor and Lessee.<\/p>\n
If clause (iv) of the first paragraph of this Section 5(a) shall be
\napplicable but the Airframe does not meet the conditions specified in said
\nclause (iv), Lessee shall pay or cause to be paid to Lessor, concurrently with
\nthe return thereof, a Dollar amount computed by multiplying (i) the fair market
\ncost of obtaining an airframe block overhaul of the type referred to in such
\nclause (iv) at a location in the United States that has been approved by the FAA
\nfor such work by (ii) a fraction of which (x) the numerator shall be the excess
\nof 25% of the hours of operation allowable between such block overhauls over the
\nactual number of hours of operation remaining on the Airframe to the next such
\nblock overhaul and (y) the denominator shall be the number of hours of operation
\nallowable between such block overhauls in accordance with such block overhaul
\nprogram.<\/p>\n
If clause (v) of the first paragraph of this Section 5(a) shall be
\napplicable but the Engines (or Acceptable Alternate Engines) do not meet the
\nconditions specified in said clause (v), Lessee shall pay or cause to be paid to
\nLessor, concurrently with the return thereof, a Dollar amount computed by
\nmultiplying (i) the fair market cost of obtaining the scheduled engine heavy
\nmaintenance under the maintenance program then used by Lessee for engines of the
\nsame model as the Engines (or Acceptable Alternate Engines) at a location in the
\nUnited States that has been approved by the FAA for such work by (ii) a fraction
\nwhich (x) the numerator shall be the excess of 25% of the hours or cycles
\n(whichever is applicable) of operation of one Engine between engine heavy
\nmaintenance allowable under the maintenance program then in use with respect to
\nsuch Engines (or Acceptable Alternate Engines) over the actual average number of
\nhours or cycles of operation of such Engines (or Acceptable Alternate Engines)
\nremaining until the next such scheduled engine heavy maintenance and (y) the
\ndenominator shall be the number of hours or cycles allowable between such
\nscheduled engine heavy maintenance.<\/p>\n
During the last six months of the Term (unless Lessee shall have
\nirrevocably elected to purchase the Aircraft or renew<\/p>\n
29<\/p>\n
[Second Amended and Restated
\n Lease Agreement (1993 747 A)]<\/p>\n
this Lease in accordance with the terms of this Lease), with reasonable notice,
\nLessee will cooperate, and cause any Sublessee to cooperate, at Lessor’s sole
\ncost, in all reasonable respects with the efforts of Lessor to sell or lease the
\nAircraft, including, without limitation, permitting prospective purchasers or
\nlessees to inspect the Aircraft, any maintenance records relating to the
\nAircraft then required to be retained by the FAA or by the comparable government
\nagency of the country in which the Aircraft is registered, all in accordance
\nwith Section 12 hereof, provided that any such cooperation shall not interfere
\nwith the normal operation or maintenance of the Aircraft by, or the business of,
\nLessee or any Sublessee.<\/p>\n
(b) Return of Other Engines. In the event that an Acceptable
\nAlternate Engine shall be delivered with the returned Airframe as set forth in
\nparagraph (a) of this Section 5, Lessee, concurrently with such delivery, will,
\nat no cost to Lessor, furnish, or cause to be furnished, to Lessor a full
\nwarranty (as to title) bill of sale with respect to each such Acceptable
\nAlternate Engine, in form and substance reasonably satisfactory to Lessor
\n(together with an opinion of counsel (which may be Lessee’s General Counsel) to
\nthe effect that such full warranty bill of sale has been duly authorized and
\ndelivered and is enforceable in accordance with its terms and that each such
\nAcceptable Alternate Engine is free and clear of all Liens other than Lessor
\nLiens (including for this purpose Liens that would be Lessor Liens but for the
\nproviso to the definition of Lessor Liens)) and will, to the extent applicable,
\ncomply with the provisions of Section 9(d) as if Lessee had irrevocably elected,
\nin accordance with Section 9(d) hereof, to terminate the Lease with respect to
\nthe Engine in replacement for which such Acceptable Alternate Engine is being
\ndelivered and Lessor will provide a bill of sale, at Lessee’s expense,
\nevidencing the transfer, without recourse or warranty (except as to the absence
\nof Lessor Liens (including for this purpose Liens that would be Lessor Liens but
\nfor the proviso to the definition of Lessor Liens)) by Lessor to Lessee or its
\ndesignee of all of Lessor’s right, title and interest in and to any Engine not
\ninstalled on the Airframe at the time of the return of the Airframe.<\/p>\n
(c) Fuel and Manuals. Upon the return of the Airframe upon any
\ntermination of this Lease in accordance with paragraph (a) of this Section 5,
\n(i) Lessee shall invoice Lessor, and Lessor shall pay to Lessee the amount of
\nLessee’s cost for any fuel or oil contained in the fuel or oil tanks on the
\nAirframe, and (ii) Lessee shall deliver or cause to be delivered to Lessor all
\nlogs, manuals and data and inspection, modification and overhaul records in the
\nEnglish language (or an English translation of the same), (A) required to be
\nmaintained with<\/p>\n
30<\/p>\n
[Second Amended and Restated
\n Lease Agreement (1993 747 A)]<\/p>\n
respect to the Airframe, the Engines or any part thereof in accordance with
\nSection 7(a) hereof, (B) created since the Airframe’s or Engine’s or Acceptable
\nAlternate Engine’s (whichever is applicable) last heavy maintenance visit and
\n(C) required to lawfully operate the Aircraft in the United States under a
\nUnited States Certificate of Airworthiness without performing additional
\nmaintenance.<\/p>\n
(d) Storage Upon Return. If, at any time at least 30 days prior to
\nthe end of the Basic Term or any Renewal Term or pursuant to Section 9(c) or
\nSection 15, Lessee receives from Lessor a written request for storage of the
\nAircraft upon its return hereunder, Lessee will provide Lessor, or cause Lessor
\nto be provided, with storage facilities for the Aircraft (at Lessor’s risk and
\nat Lessor’s cost for insurance, maintenance and Lessee’s reasonable out-of-
\npocket expenses other than storage fees) for a period not exceeding forty-five
\n(45) days (and upon prior written notice from Lessor to Lessee given at least 10
\ndays prior to the end of such 45 day period, at Lessor’s risk and at Lessor’s
\ncost for insurance, maintenance and Lessee’s reasonable out-of-pocket expenses
\nincluding storage fees, for an additional period not exceeding 45 days)
\ncommencing on the date of such termination, at a location in the forty-eight
\ncontiguous states of the United States selected by Lessee and used as a location
\nfor the storage of aircraft. Lessee shall, at Lessor’s written request,
\nmaintain insurance (if available) for the Aircraft during such period and shall
\nbe reimbursed by Lessor for the premiums thereon.<\/p>\n
(e) Purchase of Engine. In the event that Lessee shall have paid the
\nStipulated Loss Value for any Engine pursuant to Section 10(b) hereof and all
\nother amounts due and owing under said Section 10(b), then, notwithstanding
\nanything contained in this Section 5, Lessee shall, subject to the proviso
\nbelow, be under no obligation to return any engine installed on the Airframe in
\nreplacement for such Engine to Lessor upon the termination of this Lease;
\nprovided, however, that in such event Lessor shall have the right upon
\ntermination of this Lease (unless Lessee shall have exercised any of its options
\nto purchase the Aircraft pursuant to Section 19), at its sole option, to
\npurchase from Lessee an engine or engines suitable for use on the Airframe and
\ncompatible with the other Engine (if any) or the other engine purchased under
\nthis Section 5(e) for such engine’s then Fair Market Sales Value and any such
\nengine shall be installed at no cost to Lessor on the Airframe on the return
\nthereof.<\/p>\n
(f) Severable Parts. At any time after Lessee has advised Lessor that
\nit has determined not to renew this Lease or<\/p>\n
31<\/p>\n
[Second Amended and Restated
\n Lease Agreement (1993 747 A)]<\/p>\n
purchase the Aircraft, or the Aircraft is otherwise to be returned to Lessor,
\nLessee shall, at Lessor’s request, advise Lessor of the nature and condition of
\nall severable Parts owned by Lessee which have been used by Lessee during the
\nprior six months and which Lessee has or intends to remove from the Aircraft as
\npermitted by Section 8 hereof. Lessor may, at its option, upon 30 days written
\nnotice to Lessee, purchase any or all of such Parts from Lessee upon the
\nexpiration of the Term at their then fair market value.<\/p>\n
(g) Special Redelivery Provision. Not less than 30 days prior to (A)
\nthe date of redelivery of the Aircraft by Lessee to Lessor in accordance with
\nthis Section 5, (B) the date of redelivery to Lessor or a purchaser pursuant to
\nSection 9(c) or Section 15 hereof, or (C) a purchase of the Aircraft by Lessee
\npursuant to Section 19(b), Lessor may provide Lessee with a proposal regarding
\nthe arranging of delivery of the Aircraft so as to enable Lessor to realize
\n“foreign trade income” (as defined in Section 923(b) of the Code or any
\nsuccessor provision thereto) from the sale or re-lease of the Aircraft, and
\nLessee shall (i) arrange delivery at Lessor’s cost (unless the delivery site is
\nas provided in Section 5(a) hereof) either inside or outside the United States,
\nas specified in Lessor’s proposal, and (ii) otherwise comply with such proposal
\nto the extent Lessee can do so without incurring any cost, expense or liability
\nnot indemnified against by Lessor in a manner in form and substance reasonably
\nsatisfactory to Lessee.<\/p>\n
SECTION 6. Liens. Lessee will not directly or indirectly create,
\nincur, assume or suffer to exist any Lien on or with respect to the Aircraft,
\ntitle thereto or any interest therein or in this Lease, except (i) the
\nrespective rights of Lessor as owner of the Aircraft and Lessee as herein
\nprovided (including any Sublease permitted pursuant to Section 7(b)), the Lien
\nof the Trust Indenture, and any other rights existing pursuant to the Operative
\nDocuments, (ii) Lessor Liens (including for this purpose Liens that would be
\nLessor Liens but for the proviso to the definition of Lessor Liens), (iii) Liens
\nfor Taxes of Lessee (or any Sublessee) either not yet due or being contested in
\ngood faith by appropriate proceeding so long as such proceedings do not involve
\nany material risk of the sale, forfeiture or loss of the Airframe or any Engine
\nor any interest thereon, (iv) materialmen’s, mechanics’, workmen’s, repairmen’s,
\nemployees’ or other like liens arising in the ordinary course of Lessee’s or any
\nSublessee’s business securing obligations that are not overdue for a period of
\nmore than 30 days or are being contested in good faith by appropriate
\nproceedings so long as during such 30 day period there is not, or such
\nproceedings do not involve, any material risk of the sale, forfeiture or loss of<\/p>\n
32<\/p>\n
[Second Amended and Restated
\n Lease Agreement (1993 747 A)]<\/p>\n
the Airframe or any Engine or any interest therein, (v) Liens arising out of any
\njudgment or award against Lessee (or any Sublessee), unless there exists a
\nmaterial risk of the sale, forfeiture or loss of the Airframe or any Engine or
\nany interest therein or unless the judgment secured shall not, within 45 days
\nafter the entry thereof, have been discharged, vacated, reversed or execution
\nthereof stayed pending appeal or shall not have been discharged, vacated or
\nreversed within 45 days after the expiration of such stay, and (vi) any other
\nLien with respect to which Lessee (or any Sublessee) shall have provided a bond
\nor other security in an amount and under terms reasonably satisfactory to
\nLessor. Lessee will promptly, at its own expense, take (or cause to be taken)
\nsuch actions as may be necessary duly to discharge any such Lien not excepted
\nabove if the same shall arise at any time.<\/p>\n
SECTION 7. Registration, Maintenance and Operation; Possession and
\nSubleases; Insignia. (a) (1) Registration and Maintenance. Lessee, at its
\nown cost and expense, shall (or shall cause any Sublessee to): (i) upon
\ndelivery of the Aircraft, cause the Aircraft to be duly registered in the name
\nof Lessor, and, subject to subparagraph (3) of this Section 7(a), to remain duly
\nregistered in the name of Lessor under the Federal Aviation Act (except to the
\nextent that such registration cannot be effected because of Lessor’s or the
\nOwner Participant’s failure to comply with the citizenship requirements for
\nregistration of aircraft under such Act), provided that Lessor and the Owner
\nParticipant shall execute and deliver all such documents as Lessee (or any
\nSublessee) may reasonably request for the purpose of effecting and continuing
\nsuch registration, and Lessee shall cause the Trust Indenture to be duly
\nrecorded and maintained of record as a first mortgage on the Aircraft; (ii)
\nmaintain, service, repair, and overhaul (or cause to be maintained, serviced,
\nrepaired, and overhauled) the Aircraft (and any engine which is not an Engine
\nbut which is installed on the Aircraft) (x) so as (p) at all times to keep the
\nAircraft in as good an operating condition as when delivered by Manufacturer to
\nLessee, ordinary wear and tear excepted, and (q) to keep the Aircraft in such
\ncondition as may be necessary to enable the airworthiness certification for the
\nAircraft to be maintained in good standing at all times (other than during
\ntemporary periods of storage in accordance with applicable regulations) under
\n(I) the Federal Aviation Act, except when all of Lessee’s Boeing Model 747-422
\naircraft (powered by engines of the same type as those with which the Airframe
\nshall be equipped at the time of such grounding) registered in the United States
\nhave been grounded by the FAA unless such grounding was caused by the failure of
\nLessee to maintain, service, repair or overhaul the Aircraft in accordance with
\nthis Lease, or (II) the applicable<\/p>\n
33<\/p>\n
[Second Amended and Restated
\n Lease Agreement (1993 747 A)]<\/p>\n
laws of any other jurisdiction in which the Aircraft may then be registered from
\ntime to time, except when all of Lessee’s Boeing Model 747-422 aircraft (powered
\nby engines of the same type as those with which the Airframe shall be equipped
\nat the time of such grounding) registered in such jurisdiction have been
\ngrounded by the aeronautical authority of such jurisdiction unless such
\ngrounding was caused by the failure of Lessee to maintain, service, repair or
\noverhaul the Aircraft in accordance with this Lease and (y) in substantially the
\nsame manner as Lessee (or any Sublessee) maintains, services, repairs or
\noverhauls similar aircraft operated by Lessee (or such Sublessee) in similar
\ncircumstances and without in any way discriminating against the Aircraft,
\nwhether by reason of its leased status or otherwise, including, without
\nlimitation, in regard to the termination of airworthiness directives; or such
\nother manner as shall have been approved in writing by the Owner Participant;
\n(iii) maintain or cause to be maintained in the English language (or with
\nappropriate English translation) all records, logs and other materials required
\nto be maintained in respect of the Aircraft by the FAA or the applicable
\nregulatory agency or body of any other jurisdiction in which the Aircraft may
\nthen be registered (which records, logs and other materials, as between Lessor
\nand Lessee and all parties claiming through Lessee, shall be the property of
\nLessor but shall be maintained by Lessee during the Term of this Lease and shall
\nbecome the property of Lessee upon Lessee’s purchase of the Aircraft pursuant to
\nthe terms of this Lease or upon the occurrence of an Event of Loss and Lessee’s
\ncompliance with Section 10); and (iv) promptly furnish or cause to be furnished
\nto Lessor or the Owner Participant such information as may be reasonably
\nrequired to enable Lessor or the Owner Participant to file any reports required
\nto be filed by Lessor or the Owner Participant with any governmental authority
\nbecause of Lessor’s ownership of the Aircraft.<\/p>\n
(2) Operation. Lessee will not (or permit any Sublessee to) maintain,
\nuse, service, repair, overhaul or operate the Aircraft in violation of any law
\nor any rule, regulation, treaty, order or certificate of any government or
\ngovernmental authority (domestic or foreign) having jurisdiction, or in
\nviolation of any airworthiness certificate, license or registration relating to
\nthe Aircraft issued by any such authority, except that, after Lessee shall have
\nprovided Lessor and, so long as the Lien of the Trust Indenture shall not have
\nbeen released, the Indenture Trustee with a certificate of its President, any
\nVice President, the Treasurer or any Assistant Treasurer stating all relevant
\nfacts pertaining thereto, Lessee or any Sublessee may contest in good faith the
\nvalidity or application of any such law, rule, regulation, order,<\/p>\n
34<\/p>\n
[Second Amended and Restated
\n Lease Agreement (1993 747 A)]<\/p>\n
certificate, license, registration or violation in any reasonable manner which
\ndoes not jeopardize the right, title and interest of the Lessor or the Owner
\nParticipant in and to the Airframe and\/or the Engines or otherwise materially
\nadversely affect Lessor, the Indenture Trustee or the Owner Participant but only
\nso long as such proceedings do not involve any risk of criminal liability or any
\nunindemnified material risk of civil liability to Lessor or the Owner
\nParticipant for which the Lessee is not then willing to indemnify Lessor or the
\nOwner Participant in a manner reasonably satisfactory to such Person. If the
\nindemnities or insurance specified in Section 11(f), or some combination thereof
\nin amounts equal to amounts required by Section 11(f), have not been obtained,
\nLessee will not operate the Aircraft, or permit any Sublessee to operate the
\nAircraft, in or to any area excluded from coverage by any insurance required to
\nbe maintained by the terms of Section 11, provided, however, that the failure of
\nLessee to comply with the provisions of this sentence shall not give rise to an
\nEvent of Default hereunder where such failure is attributable to a hijacking,
\nmedical emergency, equipment malfunction, weather conditions, navigational error
\nor other isolated extraordinary event beyond the control of Lessee and Lessee is
\ntaking all reasonable steps to remedy such failure as soon as is reasonably
\npracticable.<\/p>\n
(3) Reregistration. At any time after the Restricted Period, Lessor
\nshall, at the request and sole expense of Lessee, cooperate with Lessee and take
\nall actions required to change the country of registration of the Aircraft in
\ncompliance with and subject to the terms and conditions of Section 8(e) of the
\nParticipation Agreement.<\/p>\n
(4) Operating Certificates. Lessor hereby authorizes Lessee, at
\nLessee’s sole cost, expense and risk, to act as its agent for the purpose (but
\nonly for the purpose) of obtaining any required replacement operating
\ncertificates from the FAA; provided, however, that in the event that Lessee
\nshall have received from Lessor written notice that an Event of Default shall
\nhave occurred and be continuing, this authority shall not apply for a period
\nfrom the date of receipt of such notice to such time as such Event of Default
\nshall have been cured by Lessee or waived by Lessor. This authority includes
\n(without expanding in any way the nature of the limited authority granted
\npursuant to the first sentence of this Section 7(a)(4)), but is not limited to,
\nobtaining registration certificates, airworthiness certificates, certificates of
\nsanitary construction and ferry permits. In particular, this authority includes
\nthe ability to make use of Exemption No. 5318 issued by the FAA. This authority
\nwill allow duly authorized personnel of Lessee to sign any application forms
\nrequired in the process of obtaining<\/p>\n
35<\/p>\n
[Second Amended and Restated
\n Lease Agreement (1993 747 A)]<\/p>\n
such operating certificates, and this authority will also allow such personnel,
\nwhere necessary and appropriate, to sign certificates as the attorney-in-fact
\nfor Lessor. Lessee hereby agrees that it will promptly notify Lessor of any
\naction that it has taken in accordance with this Section 7(a)(4) as agent for
\nthe Lessor. Nothing in this Section 7(a)(4) shall permit the Lessee to change
\nthe country of registry of the Aircraft except as provided in Section 7(a)(3)
\nabove.<\/p>\n
(b) Possession and Subleases. Lessee will not, without the prior
\nwritten consent of Lessor, sublease or otherwise in any manner deliver, transfer
\nor relinquish possession of the Airframe or any Engine or install or permit any
\nEngine to be installed on any airframe other than the Airframe; provided that,
\nso long as no Section 14(a), (b), (f) or (g) Default or, in the case of
\nparagraph (viii) of this Section 7(b), no Section 14(d) (solely with respect to
\nLessee’s obligations under Section 7(a) or (b)(viii) hereof or Section 8 hereof)
\nDefault, or any Event of Default shall have occurred and be continuing at the
\ntime of such sublease, delivery, transfer or relinquishment of possession or
\ninstallation, and so long as the action to be taken shall not deprive the
\nIndenture Trustee of the Lien of the Trust Indenture on the Airframe or any
\nEngine and Lessee and any Sublessee shall continue to comply with the provisions
\nof Sections 7(a) and 11, Lessee may, without the prior written consent of
\nLessor:<\/p>\n
(i) subject the Airframe and the Engines or engines then
\n installed thereon to normal interchange agreements or any Engine to normal
\n pooling or similar arrangements, in each case customary in the airline
\n industry and entered into by Lessee (or any Sublessee) in the ordinary
\n course of its business and, in the case of the Airframe, (x) with a U.S.
\n Air Carrier not in bankruptcy or a Permitted Sublessee or (y) any other air
\n carrier approved by Lessor; provided, that (A) no such agreement or
\n arrangement contemplates or requires the transfer of title to the Airframe,
\n and (B) if Lessor’s title to any Engine shall be divested under any such
\n agreement or arrangement, Lessee shall be deemed to have irrevocably
\n elected, in accordance with Section 9(d) hereof, to terminate the Lease
\n with respect to such Engine on the Business Day next following the 44th day
\n following such divestiture and Lessee shall (or shall cause any Sublessee
\n to) comply with Section 9(d) hereof in respect thereof;<\/p>\n
(ii) deliver possession of the Airframe or any Engine to the
\n manufacturer thereof or to any other Person for testing, service, repair,
\n maintenance or overhaul work<\/p>\n
36<\/p>\n
[Second Amended and Restated
\n Lease Agreement (1993 747 A)]<\/p>\n
on the Airframe or Engine or any Part of any thereof or for alterations or
\n modifications in or additions to such Airframe or Engine to the extent
\n required or permitted by the terms of Section 8(c) hereof;<\/p>\n
(iii) install an Engine on an airframe owned by Lessee (or any
\n Sublessee) which airframe is free and clear of all Liens, except: (A)
\n Permitted Liens and those which apply only to the engines (other than
\n Engines), appliances, parts, instruments, appurtenances, accessories,
\n furnishings and other equipment (other than Parts) installed on such
\n airframe (but not to the airframe as an entirety), (B) the rights of third
\n parties under interchange agreements which would be permitted under clause
\n (i) above, provided that Lessor’s title to such Engine shall not be
\n divested as a result thereof and (C) mortgage Liens or other security
\n interests, provided, that (as regards this clause (C)), such mortgage Liens
\n or other security interests effectively provide that such Engine shall not
\n become subject to the lien of such mortgage or security interest,
\n notwithstanding the installation thereof on such airframe;<\/p>\n
(iv) install an Engine on an airframe leased to Lessee (or any
\n Sublessee) or purchased by Lessee (or any Sublessee) subject to a
\n conditional sale or other security agreement, provided that (x) such
\n airframe is free and clear of all Liens, except: (A) the rights of the
\n parties to the lease or conditional sale or other security agreement
\n covering such airframe, or their assignees, and (B) Liens of the type
\n permitted by subparagraph (iii) of this paragraph (b) and (y) such lease,
\n conditional sale or other security agreement effectively provides that such
\n Engine shall not become subject to the lien of such lease, conditional sale
\n or other security agreement, notwithstanding the installation thereof on
\n such airframe;<\/p>\n
(v) install an Engine on an airframe owned by Lessee (or any
\n Sublessee), leased to Lessee (or any Sublessee) or purchased by Lessee (or
\n any Sublessee) subject to a conditional sale or other security agreement
\n under circumstances where neither subparagraph (iii) nor subparagraph (iv)
\n of this paragraph (b) is applicable, provided that in the event of such
\n installation, Lessee shall be deemed to have irrevocably elected, in
\n accordance with Section 9(d) hereof, to terminate the Lease with respect to
\n such Engine on the Business Day next following the 44th day following such
\n installation and Lessee shall (or shall cause any Sublessee to) comply with
\n Section 9(d) hereof in respect thereof, Lessor not intending hereby to<\/p>\n
37<\/p>\n
[Second Amended and Restated
\n Lease Agreement (1993 747 A)]<\/p>\n
waive any right or interest it may have to or in such Engine under
\n applicable law until compliance by Lessee with such Section 9(d);<\/p>\n
(vi) transfer (or permit any Sublessee to transfer) possession of
\n the Airframe or any Engine to the United States of America or any
\n instrumentality or agency thereof pursuant to the Civil Reserve Air Fleet
\n Program for a period, including all permissible renewal periods (so long as
\n such renewal options have been irrevocably exercised by Lessee), that does
\n not extend beyond the end of the Term so long as Lessee (or any Sublessee)
\n shall promptly notify Lessor (x) upon transferring possession of the
\n Airframe or any Engine to the United States of America or any agency or
\n instrumentality thereof pursuant to the Civil Reserve Air Fleet Program and
\n (y) of the name and the address of the Contracting Office Representative
\n for the Military Airlift Command of the United States Air Force to whom
\n notice must be given pursuant to Section 15 hereof;<\/p>\n
(vii) transfer possession of the Airframe or any Engine to the
\n United States of America or any instrumentality or agency thereof pursuant
\n to a contract, a copy of which shall be provided to Lessor provided that
\n the term of such contract, including all permissible renewal periods (so
\n long as such renewal options have been irrevocably exercised by Lessee),
\n shall not continue beyond the end of the Term; or<\/p>\n
(viii) So long as the Sublessee is not subject to a proceeding or
\n final order under applicable bankruptcy, insolvency or reorganization laws
\n on the date the Sublease is entered into, Lessee may, at any time, enter
\n into a sublease with (1) a U.S. Air Carrier, (2) after the Restricted
\n Period any Permitted Sublessee, provided that in the event such Permitted
\n Sublessee is domiciled in a country listed on Exhibit F hereto and
\n designated therein as a “Restricted Country” such Sublessee shall be deemed
\n a Permitted Sublessee only if its country of domicile at the time of such
\n subleasing imposes and enforces aircraft maintenance standards not
\n materially less stringent than those of the FAA or the central aviation
\n authority of any of Canada, France, Germany, Japan or the United Kingdom,
\n or (3) after the Restricted Period any other Person approved in writing by
\n the Owner Participant, which approval shall not be unreasonably withheld if
\n in regard to this subclause (3) (x) the proposed sublessee’s country of
\n domicile imposes maintenance standards not materially less stringent than
\n those of the FAA or the central aviation authority of any of<\/p>\n
38<\/p>\n
[Second Amended and Restated
\n Lease Agreement (1993 747 A)]<\/p>\n
Canada, France, Japan, Germany, or the United Kingdom and (y) Lessor, Owner
\n Participant and the Indenture Trustee receive an opinion of counsel
\n reasonably acceptable to Lessor, in its individual capacity, and Owner
\n Participant that the terms of the sublease and other Operative Documents
\n will be valid in the country where Sublessee is domiciled; that no
\n Participant is required to register to do business in the Sublessee’s
\n country of domicile; that there is no tort liability for owners not in
\n possession that is more extensive than under United States law or any state
\n law (it being understood that if such opinion cannot be given in a form
\n reasonably satisfactory to the Owner Participant such opinion will be
\n waived if insurance reasonably satisfactory to the Owner Participant and
\n the Lessor, in its individual capacity, is provided at Lessee’s expense to
\n cover such risk); that fair compensation in a currency freely convertible
\n into Dollars is mandated if there is a requisition of use or title of the
\n Aircraft by the country in which the Sublessee is domiciled (it being
\n understood that if such opinion cannot be given in a form reasonably
\n satisfactory to the Owner Participant such opinion will be waived if
\n insurance reasonably satisfactory to the Owner Participant, is provided at
\n Lessee’s expense to cover such risk); that there exist no possessory rights
\n in favor of the Sublessee which upon Lessee’s bankruptcy or other Default
\n hereunder (assuming the Sublessee is not then bankrupt) would prevent the
\n return of the Aircraft in accordance with the terms hereof or inhibit the
\n Lessor’s rights therein; and as to such other matters as Lessor, in its
\n individual capacity, and the Owner Participant may reasonably request,
\n provided, however, (A) that no sublease, including all permissible renewal
\n periods, shall extend beyond the Basic Term or any Renewal Term then in
\n effect, unless Lessee shall have irrevocably committed to purchase the
\n Aircraft or renew the Lease in accordance with the terms thereof at the end
\n of the Basic Term or Renewal Term, as the case may be, to a date beyond the
\n latest permissible expiration date of such sublease, (B) that, on the date
\n of such sublease, the United States and the country in which sublessee is
\n domiciled and principally located maintain diplomatic relations, (C) that
\n on or prior to entering into such sublease, Lessee shall provide to the
\n Lessor and, so long as the Lien of the Trust Indenture shall not have been
\n released, the Indenture Trustee assurances reasonably satisfactory to
\n Lessor, in its individual capacity, and Owner Participant to the effect
\n that the provisions of Section 11 hereof have been complied with after
\n giving effect to such sublease and (D) that, in the case of a sublease to a
\n sublessee described in (3) above, if the country of domicile of the
\n proposed sublessee<\/p>\n
39<\/p>\n
[Second Amended and Restated
\n Lease Agreement (1993 747 A)]<\/p>\n
at the time of such subleasing has not unqualifiedly ratified the Geneva
\n Convention for International Recognition of Rights in Aircraft, the Lessee
\n shall provide Lessor to the Lessor and, so long as the Lien of the Trust
\n Indenture shall not have been released, the Indenture Trustee an opinion of
\n counsel, which counsel and opinion shall be reasonably satisfactory to the
\n Owner Participant, to the effect that the country in which such sublessee
\n has its principal office and domicile would give effect to (i) the title of
\n Lessor in and to the Aircraft, (ii) the registry of the Aircraft in the
\n name of Lessor (or Lessee or Sublessee, as “lessee” or “sublessee” as
\n appropriate) and (iii) the priority and validity of the Lien of the Trust
\n Indenture.<\/p>\n
The rights of any Sublessee or other transferee (other than a
\ntransferee where the transfer is of an Engine which is deemed a termination
\nunder Section 9(d)) shall be subject and subordinate to, all the terms of the
\nLease (and any Sublease shall expressly state that it is so subject and
\nsubordinate), including, without limitation, the covenants contained in Section
\n7(a) hereof, the inspection rights contained in Section 12 hereof and Lessor’s
\n(and, so long as the Trust Indenture is in effect, the Indenture Trustee’s (as
\nLessor’s assignee)) rights to repossess the Aircraft and to void any Sublease
\nupon such repossession, and Lessee shall remain primarily liable for the
\nperformance of all of the terms of the Lease, and the terms of any such Sublease
\nshall not permit any Sublessee to take any action not permitted to be taken by
\nLessee in the Lease with respect to the Aircraft. No pooling agreement,
\nSublease or other relinquishment of possession of the Airframe or any Engine
\nshall in any way discharge or diminish any of Lessee’s obligations to Lessor
\nunder this Lease or constitute a waiver of Lessor’s rights or remedies
\nhereunder. Lessor agrees, for the benefit of Lessee (and any Sublessee) and for
\nthe benefit of any mortgagee or other holder of a security interest in any
\nengine owned by Lessee (or any Sublessee), any lessor of any engine other than
\nan Engine leased to Lessee (or any Sublessee) and any conditional vendor of any
\nengine other than an Engine purchased by Lessee (or any Sublessee) subject to a
\nconditional sale agreement or any other security agreement, that no interest
\nshall be created under the Lease in any engine so owned, leased or purchased and
\nthat neither Lessor nor its successors or assigns will acquire or claim, as
\nagainst Lessee (or any Sublessee) or any such mortgagee, lessor or conditional
\nvendor or other holder of a security interest or any successor or assignee of
\nany thereof, any right, title or interest in such engine as the result of such
\nengine being installed on the Airframe; provided, however, that such agreement
\nof Lessor shall not be for the benefit of any lessor or secured party of an
\nairframe leased to<\/p>\n
40<\/p>\n
[Second Amended and Restated
\n Lease Agreement (1993 747 A)]<\/p>\n
Lessee (or any Sublessee) or purchased by Lessee (or any Sublessee) subject to a
\nconditional sale or other security agreement or for the benefit of any mortgagee
\nor any other holder of a security interest in an airframe owned by Lessee (or
\nany Sublessee), on which airframe Lessee (or any Sublessee) then proposes to
\ninstall an Engine, unless such lessor, conditional vendor, other secured party
\nor mortgagee has expressly agreed (which agreement may be contained in such
\nlease, conditional sale or other security agreement or mortgage) that neither it
\nnor its successors or assigns will acquire, as against Lessor, any right title
\nor interest in an Engine as a result of such Engine being installed on such
\nairframe. Lessee shall provide the Owner Participant and the Indenture Trustee
\n(A) written notice (which notice shall be given (i) no later than thirty (30)
\ndays prior to entering into any Sublease with a term of more than one (1) year
\nor (ii) at any time prior to (to the extent that the giving of prior notice is
\nreasonably possible) or promptly after entering into any Sublease with a term of
\none (1) year or less) of any Sublease and (B) a copy of any Sublease which has a
\nterm of more than one (1) year.<\/p>\n
Lessee shall assign any Sublease to Lessor as security for its
\nobligations hereunder pursuant to an assignment instrument reasonably
\nsatisfactory to Lessor; provided, however, that any such assignment instrument
\nshall provide that the assignment of the Sublease shall only be effective,
\nwithout any further action, immediately upon the occurrence of a Section 14(a),
\n14(b), 14(f) or 14(g) Default or any Event of Default (and such effectiveness
\nshall terminate upon the curing or waiver of the aforesaid Defaults or Events of
\nDefault). In addition, any Sublease entered into by Lessee shall provide that
\nall payments due under such Sublease shall be paid by the Sublessee to Lessor
\nduring the continuance of a Section 14(a), 14(b), 14(f) or 14(g) Default or an
\nEvent of Default.<\/p>\n
In the event that during the term of a Sublease the Aircraft shall
\nhave been maintained under a block-overhaul program, Lessee shall at its option
\neither (i) cause the Aircraft to be returned to the Lessee by the Sublessee no
\nlater than three months prior to the end of the Term and Lessee shall upon such
\nreturn incorporate the Aircraft into Lessee’s continuous maintenance program for
\naircraft of the same make and model and in active commercial service or (ii)
\nupon return of the Aircraft to Lessor pursuant to Section 5(a), Lessee shall
\ncomply with those return conditions set forth in such Section 5(a) applicable in
\nthe event Lessee had adopted a block-overhaul program.<\/p>\n
Any Wet Lease or similar arrangement under which Lessee maintains
\noperational control of the Aircraft shall not<\/p>\n
41<\/p>\n
[Second Amended and Restated
\n Lease Agreement (1993 747 A)]<\/p>\n
constitute a delivery, transfer or relinquishment of possession for purposes of
\nthis section. Lessor acknowledges that any consolidation or merger of Lessee or
\nconveyance, transfer or lease of all or substantially all of Lessee’s assets
\npermitted by the Operative Documents shall not be prohibited by this Section.<\/p>\n
No Sublease permitted pursuant to this Section shall permit any
\nfurther sub-subleasing of the Aircraft.<\/p>\n
(c) Insignia. On or prior to the Delivery Date, or as soon thereafter
\nas practicable, Lessee agrees to affix and maintain (or cause to be affixed and
\nmaintained) in the cockpit of the Airframe adjacent to the registration
\ncertificate therein and on each Engine a nameplate bearing the inscription:<\/p>\n
Leased From<\/p>\n
State Street Bank and Trust Company, not in its individual capacity
\n but solely as Owner Trustee, Owner and Lessor<\/p>\n
and, for so long as the Airframe and each Engine shall be subject to the Lien of
\nthe Trust Indenture, bearing the following additional inscription:<\/p>\n
Mortgaged To<\/p>\n
First Security Bank of Utah, National Association, as Indenture
\n Trustee<\/p>\n
(such nameplate to be replaced, if necessary, with a nameplate reflecting the
\nname of any successor Lessor or successor Indenture Trustee, in each case as
\npermitted under the Operative Documents).<\/p>\n
Except as above provided, Lessee will not allow the name of any
\nperson, association or corporation to be placed on the Airframe or on any Engine
\nas a designation that might be interpreted as a claim of ownership; provided,
\nthat nothing herein contained shall prohibit Lessee (or any Sublessee) from
\nplacing its customary colors and insignia on the Airframe or any Engine.<\/p>\n
SECTION 8. Replacement and Pooling of Parts; Alterations,
\nModifications and Additions.<\/p>\n
(a) Replacement of Parts. Lessee, at its own cost and expense, will
\npromptly replace or cause to be replaced all Parts which may from time to time
\nbecome worn out, lost, stolen,<\/p>\n
42<\/p>\n
[Second Amended and Restated
\n Lease Agreement (1993 747 A)]<\/p>\n
destroyed, seized, confiscated, damaged beyond repair or permanently rendered
\nunfit for use for any reason whatsoever, except as otherwise provided in Section
\n8(c). All replacement Parts shall be owned by Lessee free and clear of all
\nLiens (except Permitted Liens, pooling arrangements permitted by Section 8(b)
\nhereof and replacement Parts temporarily installed on an emergency basis) and
\nshall be in as good operating condition as, and shall have a value and utility
\nsubstantially equal to, the Parts replaced assuming such replaced Parts were in
\nthe condition and repair required to be maintained by the terms hereof. All
\nParts at any time removed from the Airframe or any Engine shall remain the
\nproperty of Lessor, no matter where located, until such time as such Parts shall
\nbe replaced by Parts which meet the requirements for replacement Parts specified
\nabove. Immediately upon any replacement Part becoming incorporated or installed
\nin or attached to the Airframe or any Engine, without further act (subject only
\nto Permitted Liens and any pooling arrangement permitted by Section 8(b) hereof
\nand except replacement Parts temporarily installed on an emergency basis), (i)
\ntitle shall vest in and such replacement Part shall become the property of
\nLessor and shall become subject to this Lease and be deemed a Part for all
\npurposes hereof to the same extent as the Parts originally incorporated or
\ninstalled in or attached to the Airframe or such Engine and (ii) the replaced
\nPart shall no longer be the property of Lessor and shall no longer be deemed a
\nPart hereunder.<\/p>\n
(b) Pooling of Parts. Any Part removed from the Airframe or any
\nEngine as provided in Section 8(a) hereof may be subjected by Lessee (or any
\nSublessee) to a pooling arrangement of the type which is permitted by Section
\n7(b)(i) hereof; provided, that the Part replacing such removed Part shall be
\nincorporated or installed in or attached to such Airframe or Engine in
\naccordance with Section 8(a) as promptly as practicable after the removal of
\nsuch removed Part. In addition, any replacement Part when incorporated or
\ninstalled in or attached to the Airframe or an Engine in accordance with such
\nSections may be owned by any third party subject to such a pooling arrangement,
\nprovided, that Lessee (or any Sublessee), at its expense, as promptly thereafter
\nas practicable, and in any event within 90 days, either (i) causes such
\nreplacement Part to become the property of Lessor free and clear of all Liens
\nother than Permitted Liens or (ii) replaces such replacement Part with a further
\nreplacement Part owned by Lessee (or any Sublessee) which shall become the
\nproperty of Lessor, free and clear of all Liens other than Permitted Liens.<\/p>\n
(c) Alterations, Modifications and Additions. Lessee, at its own
\nexpense, will make (or cause to be made) such<\/p>\n
43<\/p>\n
[Second Amended and Restated
\n Lease Agreement (1993 747 A)]<\/p>\n
alterations and modifications in and additions to the Airframe and Engines as
\nmay be required from time to time to be made during the Term so as to comply
\nwith any law, rule, regulation or order of any regulatory agency or body of any
\njurisdiction in which the Aircraft may then be registered; provided, however,
\nthat, after Lessee shall have provided Lessor and, so long as the Lien of the
\nTrust Indenture shall not have been released, the Indenture Trustee, with a
\ncertificate of its President, any Vice President, the Treasurer or any Assistant
\nTreasurer stating all relevant facts pertaining thereto, Lessee or any Sublessee
\nmay, in good faith, and by appropriate proceedings contest the validity or
\napplication of any such law, rule, regulation or order in any reasonable manner
\nwhich does not jeopardize the right, title and interest of the Lessor or the
\nOwner Participant in and to the Airframe and\/or the Engines, or otherwise
\nmaterially adversely affect Lessor, the Owner Participant or the Indenture
\nTrustee but only so long as such proceedings do not involve any risk of criminal
\nliability or any unindemnified material risk of civil liability to Lessor or the
\nOwner Participant for which the Lessee is not then willing to indemnify Lessor
\nor the Owner Participant in a manner reasonably satisfactory to such Person. In
\naddition, Lessee (or any Sublessee), at its own expense, may from time to time
\nmake such alterations and modifications in and additions to the Airframe or any
\nEngine as Lessee (or any Sublessee) may deem desirable in the proper conduct of
\nits business, including removal of Parts which Lessee (or any Sublessee) deems
\nto be obsolete or no longer suitable or appropriate for use on the Airframe or
\nsuch Engine (such parts, “Obsolete Parts”); provided that no such alteration,
\nmodification, removal or addition impairs the condition or airworthiness of the
\nAirframe or such Engine, or decreases the value or the utility (or, in regard to
\nthe Airframe, remaining useful life) of the Airframe or such Engine below the
\nvalue or utility (or, in regard to the Airframe, remaining useful life) thereof
\nimmediately prior to such alteration, modification, removal or addition assuming
\nthe Airframe or such Engine was then in the condition required to be maintained
\nby the terms of this Lease. In addition, the value (but not the utility,
\ncondition, airworthiness or, in the case of the Airframe, remaining economic
\nuseful life) of the Airframe or any Engine may be reduced by the value, if any,
\nof Obsolete Parts which shall have been removed so long as the aggregate
\noriginal cost of all Obsolete Parts which shall have been removed and not
\nreplaced shall not exceed $900,000. All Parts incorporated or installed in or
\nattached or added to the Airframe or an Engine as the result of such alteration,
\nmodification or addition (except those parts which Lessee has leased from others
\nand which may be removed by Lessee pursuant to the next sentence) (the
\n“Additional Parts”) shall, without further act, become the property of, and
\ntitle to such<\/p>\n
44<\/p>\n
[Second Amended and Restated
\n Lease Agreement (1993 747 A)]<\/p>\n
Parts shall vest in, Lessor. Notwithstanding the foregoing sentence, Lessee (or
\nany Sublessee), subject to Lessor’s rights under Section 5(f) hereof, may, at
\nits own expense, at any time during the Term, so long as no Default under
\nSection 14(a), (b), (d) (solely with respect to Lessee’s obligations under
\nSection 7(a) or (b)(viii) or Section 8 hereof), (f) or (g) or an Event of
\nDefault shall have occurred and be continuing, remove or suffer to be removed
\nany Additional Part, provided that such Additional Part (i) is in addition to,
\nand not in replacement of or substitution for, any Part originally incorporated
\nor installed in or attached to such Airframe or any Engine at the time of
\ndelivery thereof hereunder or any Part in replacement of or substitution for any
\nsuch Part, (ii) is not required to be incorporated or installed in or attached
\nor added to the Airframe or any Engine pursuant to the terms of Section 7 hereof
\nor the first sentence of this paragraph (c) and (iii) can be removed from the
\nAirframe or such Engine without impairing the condition or airworthiness or
\ndiminishing the value or utility (or, in regard to the Airframe, remaining
\nuseful life) of the Airframe or such Engine which the Airframe or such Engine
\nwould have had at such time had such alteration, modification or addition not
\noccurred. Upon the removal thereof as provided above, such Additional Part
\nshall no longer be deemed the property of Lessor or part of the Airframe or
\nEngine from which it was removed. Any Additional Part not removed as above
\nprovided prior to the return of the Airframe or Engine to Lessor hereunder shall
\nremain the property of Lessor.<\/p>\n
SECTION 9. Early Termination.<\/p>\n
(a) [Intentionally reserved for potential future use].<\/p>\n
(b) Termination for Obsolescence\/Surplus. So long as no Section
\n14(a), (b), (d) (solely with respect to Lessee’s obligations under Section 7(a)
\nor (b)(viii) or Section 8 hereof), (f) or (g) Default or any Event of Default
\nshall have occurred and be continuing, Lessee shall have the right to terminate
\nthis Lease on the third Business Day prior to any Lease Period Date occurring on
\nor after the Restricted Period if Lessee shall have made a good faith
\ndetermination, which shall be evidenced by a certificate of any financial
\nofficer of Lessee, who is the Treasurer or more senior officer, that the
\nAircraft is surplus to Lessee’s requirements or economically obsolete to Lessee.<\/p>\n
Lessee shall give to Lessor and Indenture Trustee at least one hundred
\nand eighty (180) days revocable (except as provided below) advance written
\nnotice of Lessee’s intention to so terminate this Lease (any such notice, a
\n“Termination Notice”) specifying (i) the date on which Lessee intends to
\nterminate this<\/p>\n
45<\/p>\n
[Second Amended and Restated
\n Lease Agreement (1993 747 A)]<\/p>\n
Lease in accordance with this Section 9(b) (such specified date, a “Termination
\nDate”) and (ii) that Lessee has determined that the Aircraft is surplus to its
\nrequirements or economically obsolete to Lessee. Lessee shall exercise this
\noption by arranging for the sale of the Aircraft pursuant to Section 9(c),
\nprovided, however, that Lessee may not withdraw its notice if Lessor has elected
\nto retain the Aircraft pursuant to Section 9(c) or if the highest bid obtained
\nby Lessee pursuant to Section 9(c) is greater than the then applicable
\nTermination Value; provided, further, that if no sale of the Aircraft shall have
\noccurred on or prior to the Termination Date and if Lessor shall not have
\nelected to retain the Aircraft, Lessee’s Termination Notice shall be deemed
\nwithdrawn. The Termination Notice shall become irrevocable twenty-five (25)
\ndays prior to the Termination Date.<\/p>\n
(c) Sale of the Aircraft. In the event that Lessee shall have
\nproposed to terminate this Lease under Section 9(b), then during the period
\ncommencing with the date of the Termination Notice until the proposed
\nTermination Date Lessee, as non-exclusive agent for Lessor and at no expense to
\nLessor, shall use reasonable efforts to obtain bids in Dollars for the purchase
\nof the Aircraft and, in the event it receives any bid, Lessee shall, within five
\nBusiness Days after receipt thereof and at least ten Business Days prior to the
\nproposed Termination Date, advise Lessor in writing of the amount and terms of
\nsuch bid, and the name and address of the party or parties (who shall not be
\nLessee or any Affiliate of Lessee or any person with whom Lessee or any such
\nAffiliate has an arrangement or understanding regarding the future use of the
\nAircraft by Lessee or any such Affiliate but who may be the Owner Participant,
\nany Affiliate thereof or any person contacted by the Owner Participant)
\nsubmitting such bid. After Lessee shall have advised Lessor of all bids
\nreceived, the Owner Participant, any Affiliate thereof or any Person contacted
\nby the Owner Participant may submit a further bid or bids to Lessee not later
\nthan five Business Days prior to the Termination Date proposed by Lessee (unless
\nLessee shall have revoked the Termination Notice specifying such proposed
\nTermination Date). Subject to the next succeeding sentence, on or before the
\nTermination Date, subject to the release of all mortgage and security interests
\nwith respect to the Aircraft under the Trust Indenture: (1) Lessee shall
\ndeliver the Aircraft, or cause the Aircraft to be delivered to the highest
\nbidder as determined below, in the same manner and in the same condition and
\notherwise in accordance with all the terms of this Lease as if delivery were
\nmade to Lessor pursuant to Section 5, and Lessee shall duly transfer to Lessor
\ntitle to any engine installed on the Airframe and not owned by Lessor, all in
\naccordance with the terms of Section 5 (but subject to the<\/p>\n
46<\/p>\n
[Second Amended and Restated
\n Lease Agreement (1993 747 A)]<\/p>\n
provisions of Section 5(e) hereof), (2) Lessor shall comply with the terms of
\nthe Trust Indenture and shall, without recourse or warranty (except as to the
\nabsence of Lessor Liens (including for this purpose Liens that would be Lessor
\nLiens but for the proviso to the definition of Lessor Liens)), subject to prior
\nor concurrent payment by Lessee of all amounts due under clause (3) of this
\nsentence, sell the Aircraft for cash in Dollars to the entity, if any, which
\nshall have submitted the highest bona fide bid (evaluated on a net cash basis)
\ntherefor, the total selling price realized at such sale to be retained by
\nLessor, and (3) Lessee shall simultaneously pay or cause to be paid to Lessor in
\nthe manner provided in Section 3(e), (A) if the proceeds of the sale of the
\nAircraft so sold, net of reasonable out-of-pocket costs and expenses incurred by
\nLessor and the Owner Participant in connection therewith, including, without
\nlimitation, applicable sales or transfer taxes and legal fees, are less than the
\nTermination Value for the Aircraft computed as of the Redemption Date, the
\ndifference in Dollars, (B) all unpaid Basic Rent due on or prior to the
\napplicable Redemption Date (other than Basic Rent payable in advance on the
\nRedemption Date, if any) and all unpaid Supplemental Rent with respect to the
\nAircraft due on or prior to such Redemption Date, and (C) Premium, if any, due
\non the Loan Certificates and upon receiving all such payments referred to in
\nclauses (2) and (3) above Lessor simultaneously will transfer to Lessee, without
\nrecourse or warranty (except as to the absence of Lessor Liens (including for
\nthis purpose Liens that would be Lessor Liens but for the proviso to the
\ndefinition of Lessor Liens)), all of Lessor’s right, title and interest in and
\nto any Engines constituting part of the Aircraft which were not sold with the
\nAircraft. Notwithstanding the preceding sentence, Lessor may, if Lessee has not
\nalready revoked the Termination Notice, elect to retain title to the Aircraft.
\nIf Lessor so elects, Lessor shall give to Lessee written notice of such election
\nat least ten Business Days prior to the Termination Date accompanied by an
\nirrevocable undertaking by the Owner Participant to make available to Lessor for
\npayment to the Indenture Trustee on the Termination Date the amount required to
\npay in full the unpaid Original Amount of the Loan Certificates outstanding on
\nthe applicable Redemption Date together with all other amounts due on such
\nRedemption Date thereunder less amounts to be paid by Lessee as a result of the
\npayment thereof as set forth in the second following sentence. Upon receipt of
\nnotice of such an election by Lessor and the accompanying undertaking by the
\nOwner Participant, Lessee shall cease its efforts to obtain bids as provided
\nabove and shall reject all bids theretofore or thereafter received. On the
\nTermination Date, Lessor shall (subject to the payment by Lessee of all Rent due
\non or prior to the Redemption Date as set forth below) pay in full the unpaid
\nOriginal Amount of the Loan<\/p>\n
47<\/p>\n
[Second Amended and Restated
\n Lease Agreement (1993 747 A)]<\/p>\n
Certificates outstanding on the Redemption Date, plus interest accrued to, or to
\naccrue thereon to but excluding the applicable Redemption Date, together with
\nall other amounts due thereunder less any amounts to be paid by Lessee as a
\nresult of the payment thereof and, provided that the Loan Certificates are paid
\nas aforesaid, Lessee shall deliver the Airframe and Engines or engines to Lessor
\nin accordance with Section 5 and shall pay all Basic Rent due on or prior to the
\nRedemption Date (other than Basic Rent payable in advance on the Redemption
\nDate, if any) and all unpaid Supplemental Rent due on or prior to such
\nRedemption Date, and Premium, if any, on the Loan Certificates. If no sale
\nshall have occurred on the Termination Date for any reason (including, without
\nlimitation, by reason of Lessee’s revocation of its Termination Notice) or
\nLessor has not, after making its election referred to above, made the payment
\ncontemplated by the preceding sentence and thereby caused this Lease to
\nterminate, this Lease shall continue in full force and effect as to the
\nAircraft, Lessee shall be entitled to keep any deposits or other advances
\nreceived from the proposed purchaser(s) of the Aircraft (without in any way
\nlimiting any other rights or remedies against such proposed purchaser(s)
\navailable to Lessor or Lessee), Lessee shall pay the reasonable out-of-pocket
\ncosts and expenses, including legal fees, incurred by the Owner Participant,
\nIndenture Trustee and Lessor (unless such failure to terminate this Lease is a
\nconsequence of the failure of Lessor or the Owner Participant without due cause
\nto make, or cause to be made, the payment referred to in the immediately
\npreceding sentence), if any, in connection with preparation for such sale and
\nLessee may give one or more additional Termination Notices, provided no more
\nthan three such notices may be given during the Term and only one such notice
\nmay be given during any 365 day period (not counting, in either case, any
\nTermination Notice for a Termination Date on which this Lease does not terminate
\nas a consequence of the failure of Lessor or the Owner Participant without due
\ncause to make or cause to be made the payment referred to in the immediately
\npreceding sentence). In the event of any such sale or such retention of the
\nAircraft by Lessor and upon compliance by Lessee with the provisions of this
\nparagraph, the obligation of Lessee to pay Basic Rent or any other amounts
\nhereunder shall cease to accrue. Upon payment of all amounts that may then be
\ndue hereunder, this Lease shall terminate. Lessor may, but shall be under no
\nduty to, solicit bids, inquire into the efforts of Lessee to obtain bids or
\notherwise take any action in connection with any such sale other than to
\ntransfer (in accordance with the foregoing provisions) to the purchaser named in
\nthe highest bid certified by Lessee to Lessor all of Lessor’s right, title and
\ninterest in the Aircraft, against receipt of the payments provided herein.<\/p>\n
48<\/p>\n
[Second Amended and Restated
\n Lease Agreement (1993 747 A)]<\/p>\n
(d) Termination as to Engines. Upon compliance with the terms of the
\nTax Indemnity Agreement, Lessee shall have the right at its option at any time
\nduring the Term, on at least 30 days’ prior written notice, to terminate this
\nLease with respect to any Engine. In such event, and prior to the date of such
\ntermination, Lessee shall replace such Engine hereunder by complying with the
\nterms of Section 10(b) to the same extent as if an Event of Loss had occurred
\nwith respect to such Engine (provided that Lessee shall have no right to pay
\nStipulated Loss Value with respect to such Engine), and Lessor shall transfer
\ntitle to the replaced Engine as provided in Section 5(b). No termination of
\nthis Lease with respect to any Engine as contemplated by this Section 9(d) shall
\nresult in any reduction of Basic Rent.<\/p>\n
SECTION 10. Loss, Destruction, Requisition, etc. (a) Event of Loss
\nwith Respect to the Aircraft. Upon the occurrence of an Event of Loss with
\nrespect to the Airframe or the Airframe and the Engines and\/or engines then
\ninstalled thereon, Lessee shall (1) forthwith (and in any event, within fifteen
\ndays after such occurrence) give Lessor written notice of such Event of Loss and
\n(2) within 60 days after such occurrence, give Lessor written notice of its
\nelection to perform one of the following options (it being understood that the
\nfailure to give such notice shall be deemed to be an election of the option set
\nforth in clause (i) below):<\/p>\n
(i) Not later than the earlier of (x) the Business Day next
\n succeeding the 100th day following the occurrence of such Event of Loss or
\n (y) the third Business Day following receipt by the loss payee of the
\n insurance proceeds in respect to such Event of Loss (but not earlier than
\n the first Business Day next succeeding the 65th day following the
\n occurrence of such Event of Loss) (the applicable day being the “Loss
\n Payment Date”), Lessee shall, to the extent not paid to Lessor or Indenture
\n Trustee, as the case may be, as insurance proceeds, pay or cause to be paid
\n to Lessor as specified in Section 3(e) hereof, (A) the Stipulated Loss
\n Value of the Aircraft computed as of the Stipulated Loss Value Date
\n occurring on or immediately following the date of such Event of Loss, plus
\n (B) if such Stipulated Loss Value Date is a Lease Period Date, Basic Rent
\n due on such Lease Period Date (excluding Basic Rent payable in advance on
\n such Lease Period Date), plus (C) unpaid Supplemental Rent with respect to
\n the Aircraft due on or prior to the date of payment, plus (D) interest on
\n such Stipulated Loss Value at the Debt Rate from and including such
\n Stipulated Loss Value Date to, but not including, the date of any advance
\n payment in respect of Stipulated Loss<\/p>\n
49<\/p>\n
[Second Amended and Restated
\n Lease Agreement (1993 747 A)]<\/p>\n
Value as provided below, and thereafter on the unpaid balance of such
\n Stipulated Loss Value from and including the date of such advance payment
\n to, but excluding, the date such Stipulated Loss Value is paid in full;
\n provided, however, that if a Lease Period Date shall occur after the
\n Stipulated Loss Value Date with respect to which Stipulated Loss Value is
\n determined but prior to the date of such payment of the sum of the amounts
\n specified in clauses (A), (B), (C) and (D) above or if Basic Rent is
\n payable in advance on the Stipulated Loss Value Date, Lessee shall pay on
\n such Lease Period Date an amount equal to the Basic Rent that would have
\n been due on such Lease Period Date if such Event of Loss had not occurred,
\n which amount shall be credited as an advance against the amounts payable
\n pursuant to clauses (A), (B), (C) and (D) above, or<\/p>\n
(ii) Not later than the Business Day next succeeding the 100th day
\n following the occurrence of such Event of Loss, Lessee shall, provided that
\n no Section 14(a), (b), (f) or (g) Default or any Event of Default shall
\n have occurred and be continuing, substitute an aircraft or an airframe or
\n an airframe and one or more engines, as the case may be in accordance with
\n the terms hereof, provided that if Lessee shall have elected to make a
\n substitution under this clause (ii) and shall fail for any reason to make
\n such substitution in accordance with the terms hereof, Lessee shall make
\n the payments required by clause (i) above as and when due thereunder.<\/p>\n
At such time as Lessor shall have received the sum of the amounts
\nspecified in clauses (A), (B), (C) and (D) of subparagraph (i) above, together
\nwith all other amounts that then may be due hereunder (including, without
\nlimitation, all Basic Rent due on or before the date of such payment (other than
\nBasic Rent payable in advance, if any, on such date)), under the Participation
\nAgreement and under the Tax Indemnity Agreement, (1) the obligation of Lessee to
\npay the installments of Basic Rent, Supplemental Rent, Stipulated Loss Value,
\nTermination Value or any other amount shall cease to accrue, (2) this Lease
\nshall terminate, (3) Lessor will comply with the terms of the Trust Indenture
\nand transfer to or at the direction of Lessee, without recourse or warranty
\n(except as to the absence of Lessor Liens (including for this purpose Liens that
\nwould be Lessor Liens but for the proviso to the definition of Lessor Liens)),
\nall Lessor’s right, title and interest in and to the Airframe and the Engines
\n“as-is, where-is” and furnish to or at the direction of Lessee, at Lessee’s
\nexpense, a bill of sale in form and substance reasonably satisfactory to Lessee
\n(or any Sublessee), evidencing such transfer, and (4) Lessee will be subrogated
\nto all claims of<\/p>\n
50<\/p>\n
[Second Amended and Restated
\n Lease Agreement (1993 747 A)]<\/p>\n
Lessor if any against third parties (other than Lessor’s or the Owner
\nParticipant’s insurers under policies independently maintained at its own cost
\nand expense in accordance with Section 11(e) hereof), but only to the extent the
\nsame relate to physical damage to or loss of the Airframe and any Engines which
\nwere subject to such Event of Loss.<\/p>\n
In the event Lessee shall elect to substitute an aircraft (or an
\nairframe or an airframe and one or more engines, as the case may be) Lessee
\nshall (A) convey or cause to be conveyed to Lessor an aircraft (or an airframe
\nor an airframe and an engine which, together with the Engines or Engine
\nconstituting a part of the Aircraft but not installed thereon at the time of
\nsuch Event of Loss, constitute the Aircraft) free and clear of all Liens (other
\nthan Permitted Liens) and having at least the fair market value, utility and
\nremaining useful life and being in as good an operating condition as, the
\nAircraft subject to such Event of Loss assuming that the Aircraft had been
\nmaintained in accordance with this Lease; provided that any aircraft or airframe
\nso substituted hereunder shall be of the same make and model or improved model
\nas those initially leased hereunder and any engine substituted hereunder shall
\nbe an Acceptable Alternate Engine and (B) prior to or at the time of any such
\nsubstitution, Lessee (or any Sublessee), at its own expense, will (1) furnish
\nLessor with a full warranty bill of sale and a FAA bill of sale, in form and
\nsubstance reasonably satisfactory to the Owner Participant, evidencing such
\ntransfer of title, (2) cause a Lease Supplement and a Trust Supplement to be
\nduly executed by Lessee and filed for recording pursuant to the Federal Aviation
\nAct, or the applicable laws, rules and regulations of any other jurisdiction in
\nwhich the Airframe may then be registered, and cause a financing statement or
\nstatements or other requisite documents of a similar nature (including
\nprecautionary filings) to be filed in such place or places as necessary in order
\nto perfect the security interests therein created by or pursuant to the Trust
\nIndenture (and, with regard to precautionary filings, this Lease), (3) furnish
\nthe Owner Participant with such evidence of Lessor’s title to such replacement
\naircraft and of compliance with the insurance provisions of Section 11 with
\nrespect to such substituted property as Lessor, in its individual capacity, and
\nthe Owner Participant may reasonably request, (4) provide Owner Participant an
\nopinion of outside tax counsel, which opinion and counsel shall be satisfactory
\nto Owner Participant, to the effect that such substitution will not result in
\nany adverse tax consequences (including under Section 861 of the Code as then in
\neffect) to Lessor and\/or the Owner Participant (it being understood that if such
\nopinion cannot be given Lessee may indemnify Owner Participant for such adverse
\ntax consequences in lieu of such opinion in a manner satisfactory in form and<\/p>\n
51<\/p>\n
[Second Amended and Restated
\n Lease Agreement (1993 747 A)]<\/p>\n
substance to the Owner Participant), (5) provide Lessor, Owner Participant and
\nthe Indenture Trustee an opinion of counsel, which counsel and opinion shall be
\nreasonably acceptable to Lessor, in its individual capacity, and the Owner
\nParticipant, to the effect that Lessor and the Indenture Trustee (as assignee of
\nall right, title and interest of Lessor under the Lease) shall be entitled to
\nthe benefits and protections of Section 1110 of the Bankruptcy Code with respect
\nto the aircraft substituted hereunder, (6) provide an opinion of counsel to
\nLessor and the Indenture Trustee, which opinion and counsel shall be reasonably
\nacceptable to the Lessor, in its individual capacity, and the Owner Participant,
\nto the effect that title to such replacement aircraft has been duly conveyed to
\nLessor free and clear of all Liens except Permitted Liens and that such
\nreplacement aircraft is duly subjected to the Lien of the Trust Indenture and
\n(7) provide Lessor, Owner Participant and Indenture Trustee all the
\ndocumentation required (or, following the termination of the Trust Indenture,
\nall the documentation that prior to such termination would have been required)
\nto be provided by it pursuant to Section 5.01(b) of the Trust Indenture, and
\nLessor simultaneously will comply with the terms of the Trust Indenture and
\ntransfer to or at the direction of Lessee, without recourse or warranty (except
\nas to the absence of Lessor Liens (including for this purpose Liens that would
\nbe Lessor Liens but for the proviso to the definition of Lessor Liens)), all of
\nLessor’s right, title and interest, if any, in and to the Aircraft or the
\nAirframe and one or more Engines, as the case may be, “as-is, where-is” with
\nrespect to which such Event of Loss occurred and furnish to or at the direction
\nof Lessee, at Lessee’s expense, a bill of sale in form and substance reasonably
\nsatisfactory to Lessee, evidencing such transfer. Lessee will be subrogated to
\nall claims of Lessor, if any, against third parties (other than Lessor’s or the
\nOwner Participant’s insurers under policies independently maintained at their
\nown cost and expense in accordance with Section 11(e) hereof) but only to the
\nextent the same relate to physical damage to or loss of the Airframe and any
\nEngine which were subject to such Event of Loss. For all purposes hereof, the
\nproperty so substituted shall after such transfer be deemed part of the property
\nleased hereunder and shall be deemed an “Aircraft,” “Airframe” and “Engine,” as
\nthe case may be, as defined herein. No Event of Loss with respect to the
\nAirframe or the Airframe and the Engines or engines then installed thereon for
\nwhich substitution has been elected pursuant to Section 10(a)(ii) hereof shall
\nresult in any reduction in Basic Rent.<\/p>\n
(b) Event of Loss with Respect to an Engine. Upon the occurrence of
\nan Event of Loss with respect to an Engine under circumstances in which there
\nhas not occurred an Event of Loss<\/p>\n
52<\/p>\n
[Second Amended and Restated
\n Lease Agreement (1993 747 A)]<\/p>\n
with respect to the Airframe, Lessee shall forthwith (and in any event, within
\nfifteen days after such occurrence) give Lessor written notice thereof and
\nshall, within forty-five (45) days after the occurrence of such Event of Loss,
\nconvey or cause to be conveyed to Lessor, as replacement for the Engine with
\nrespect to which such Event of Loss occurred, title to an Acceptable Alternate
\nEngine free and clear of all Liens (other than Permitted Liens, which engine may
\nupon its transfer to Lessor become subject to any and all Permitted Liens) and
\nhaving a value and utility at least equal to, and being in as good an operating
\ncondition as and having been maintained in the same manner as, the Engine
\nsubject to such Event of Loss (assuming that such Engine had been maintained in
\naccordance with this Lease); provided, however, upon written notice to Lessee
\ngiven within 20 days after Lessor has received notice of such Event of Loss, the
\nLessor may require Lessee to pay with respect to the Engine subject to such
\nEvent of Loss within 45 days after the occurrence of such Event of Loss
\n(provided that in no event shall such payment be required to be made prior to
\nthe Commencement Date) an amount equal to (A) Engine Cost multiplied by the
\npercentage specified in Exhibit C hereto opposite the Stipulated Loss Value Date
\noccurring on or immediately following the date of such Event of Loss, plus (B)
\ninterest on the amount determined pursuant to clause (A) above at the Debt Rate
\nfrom and including such Stipulated Loss Value Date to, but excluding, the date
\nsuch amount is paid in full; and provided, further, if Lessee pays such
\nStipulated Loss Value and interest, then, subject to Section 5(e), Lessee shall
\nonly be obligated to return the Aircraft to Lessor with any Engine attached
\nthereto with respect to which Lessee has not paid Stipulated Loss Value pursuant
\nto this Section 10(b) at any time that Lessee is required to return the Aircraft
\nto Lessor pursuant to the terms hereof; provided further, however, that, in lieu
\nof paying such Stipulated Loss Value and interest, Lessee may replace the Engine
\nin accordance with this Section 10(b) if Lessee provides to the Owner
\nParticipant either: (x) an opinion of outside tax counsel, which opinion and
\ncounsel shall be satisfactory to the Owner Participant, to the effect that such
\nsubstitution will not result in any adverse tax consequences to the Owner
\nParticipant, or (y) an indemnity, satisfactory in form and substance to the
\nOwner Participant, for any adverse tax consequences resulting from such
\nsubstitution. Prior to or at the time of any such conveyance, Lessee, at its
\nown expense, will (i) furnish Lessor with a warranty (as to title) bill of sale,
\nin form and substance reasonably satisfactory to Lessor, with respect to such
\nreplacement engine, (ii) cause a Lease Supplement and Trust Supplement to be
\nduly executed by Lessee and to be filed for recording pursuant to the Federal
\nAviation Act, or the applicable laws, rules and regulations of any other
\njurisdiction in which<\/p>\n
53<\/p>\n
[Second Amended and Restated
\n Lease Agreement (1993 747 A)]<\/p>\n
the Airframe may then be registered, and cause a financing statement or
\nstatements or other requisite documents of a similar nature (including
\nprecautionary filings) to be filed in such place or places as necessary in order
\nto perfect the security interests therein created by or pursuant to the Trust
\nIndenture (and, with regard to precautionary filings, this Lease), (iii) furnish
\nLessor with such evidence of Lessor’s title to such Acceptable Alternate Engine
\nand of compliance with the insurance provisions of Section 11 hereof with
\nrespect to such replacement engine as Lessor, in its individual capacity, or the
\nOwner Participant may reasonably request, (iv) provide Lessor and the Indenture
\nTrustee an opinion of Lessee’s counsel which counsel and opinion shall be
\nreasonably satisfactory to Lessor, in its individual capacity, or the Owner
\nParticipant to the effect that title to such Acceptable Alternate Engine has
\nbeen duly conveyed to Lessor free and clear of all Liens except Permitted Liens
\nand that such Acceptable Alternate Engine is duly subjected to the Lien of the
\nTrust Indenture, and (v) provide Lessor, Owner Participant and Indenture Trustee
\nall the documentation required (or, following the termination of the Trust
\nIndenture, all the documentation that prior to such termination would have been
\nrequired) to be provided by it pursuant to Section 5.01(b) of the Trust
\nIndenture, and Lessor will comply with the terms of the Trust Indenture and
\ntransfer to or at the direction of Lessee without recourse or warranty (except
\nas to absence of Lessor Liens (including for this purpose Liens that would be
\nLessor Liens but for the proviso to the definition of Lessor Liens)) all of
\nLessor’s right, title and interest, if any, in and to (1) the Engine with
\nrespect to which such Event of Loss occurred and furnish to or at the direction
\nof Lessee, and at Lessee’s expense, a bill of sale in form and substance
\nreasonably satisfactory to Lessee, evidencing such transfer and (2) all claims,
\nif any, against third parties (other than Lessor’s or the Owner Participant’s
\ninsurers under policies independently maintained at their own cost and expense
\nin accordance with Section 11(e) hereof), for damage to or loss of the Engine
\nsubject to such Event of Loss, and such Engine shall thereupon cease to be an
\nEngine leased hereunder. For all purposes hereof, each such replacement engine
\nshall, after such conveyance, be deemed part of the property leased hereunder,
\nand shall be deemed an “Engine.” Except to the extent Lessor’s Cost is reduced
\npursuant to the definition thereof, no Event of Loss with respect to an Engine
\nunder the circumstances contemplated by the terms of this paragraph (b) shall
\nresult in any reduction in Basic Rent.<\/p>\n
(c) Application of Payments from Governmental Authorities for
\nRequisition of Title, etc. Any payments (other than insurance proceeds the
\napplication of which is provided for in Section 11) received at any time by
\nLessor or by Lessee from<\/p>\n
54<\/p>\n
[Second Amended and Restated
\n Lease Agreement (1993 747 A)]<\/p>\n
any governmental authority or other Person with respect to an Event of Loss,
\nother than a requisition for use by the United States Government or other
\ngovernment of registry of the Aircraft or any instrumentality or agency of any
\nthereof not constituting an Event of Loss, will be applied as follows:<\/p>\n
(i) if payments are received with respect to the Airframe (or the
\n Airframe and any Engine or engines then installed thereon), (A) unless the
\n same are replaced pursuant to the last paragraph of Section 10(a), after
\n reimbursement of Lessor (as provided in Section 7.01 of the Trust
\n Agreement) and the Owner Participant for reasonable costs and expenses, so
\n much of such payments remaining as shall not exceed the Stipulated Loss
\n Value and the other amounts payable under Section 10(a) hereof required to
\n be paid by Lessee pursuant to Section 10(a), shall be applied in reduction
\n of Lessee’s obligation to pay Stipulated Loss Value and the other amounts
\n payable under Section 10(a) hereof, if not already paid by Lessee, or, if
\n already paid by Lessee, shall be applied to reimburse Lessee for its
\n payment of Stipulated Loss Value and such other amounts, and following the
\n foregoing application, the balance, if any, of such payments shall be
\n distributed between Lessee and Lessor as their respective interests may
\n appear; or (B) if such property is replaced pursuant to the last paragraph
\n of Section 10(a), such payments shall be paid over to or retained by,
\n Lessee; provided, that Lessee shall have fully performed or, concurrently
\n therewith, will fully perform the terms of the last paragraph of Section
\n 10(a) with respect to the Event of Loss for which such payments are made;
\n and<\/p>\n
(ii) if such payments are received with respect to an Engine under
\n circumstances contemplated by Section 10(b) hereof, (A) unless the same is
\n replaced pursuant to the terms of Section 10(b), after reimbursement of
\n Lessor (as provided for in Section 7.01 of the Trust Agreement) and the
\n Owner Participant for reasonable costs and expenses, so much of such
\n payments remaining as shall not exceed the amounts payable under Section
\n 10(b) hereof by Lessee, shall be applied in reduction of Lessee’s
\n obligation to pay the same, if not already paid by Lessee, or if already
\n paid by Lessee, shall be applied to reimburse Lessee for its payment of
\n such amounts and following the foregoing application, the balance, if any,
\n shall be paid to Lessee; or (B) if such property is replaced pursuant to
\n Section 10(b), such payments shall be paid over to, or retained by, Lessee,
\n provided that Lessee shall have fully performed, or concurrently therewith
\n will perform, the terms of Section<\/p>\n
55<\/p>\n
[Second Amended and Restated
\n Lease Agreement (1993 747 A)]<\/p>\n
10(b) with respect to the Event of Loss for which such payments are made.<\/p>\n
(d) Requisition for Use of the Aircraft by the United States
\nGovernment or Government of Registry of the Aircraft. In the event of the
\nrequisition for use of the Airframe and the Engines or engines installed on the
\nAirframe during the Term by the United States Government or any other government
\nof registry of the Aircraft or any instrumentality or agency of any thereof,
\nLessee shall promptly notify Lessor of such requisition, and all of Lessee’s
\nobligations under this Lease Agreement with respect to the Aircraft shall
\ncontinue to the same extent as if such requisition had not occurred (unless
\ndeemed prior to the end of the Term an Event of Loss in which case the foregoing
\nprovisions of this Section 10 shall be applicable). If Lessee shall fail to
\nreturn the Aircraft (i) on or before the end of the Term, in the case of a
\nrequisition by the United States government or any agency or instrumentality
\nthereof or (ii) within the earlier of the end of the Term or two years after
\nsuch requisition in the case of a requisition for use by the government of
\nregistry of the Aircraft or any agency or instrumentality thereof (other than
\nthe United States government or any agency or instrumentality thereof), such
\nfailure shall constitute an Event of Loss which shall be deemed to have occurred
\nin the case of clause (i) on the last day of the Term, and in the case of clause
\n(ii), on the earlier of the last day of the Term or the expiration of such two-
\nyear period, provided, however, that Lessor may notify Lessee in writing on or
\nbefore the twentieth day prior to the last day of the Term that, in the event
\nLessee shall fail by reason of such requisition to return the Airframe and such
\nEngines or engines on or before the end of the Term, such failure shall not be
\ndeemed an Event of Loss. Upon the giving of such notice and such failure to
\nreturn by the end of the Term, Lessee shall be relieved of all of its
\nobligations pursuant to the provisions of Section 5 (but not under any other
\nSection), except that if any engine not owned by Lessor shall then be installed
\non the Airframe, Lessee will, at no cost to Lessor, furnish, or cause to be
\nfurnished, to Lessor a full warranty (as to title) bill of sale with respect to
\neach such engine, in form and substance reasonably satisfactory to Lessor, in
\nits individual capacity, and the Owner Participant (together with an opinion of
\ncounsel (which may be Lessee’s General Counsel) to the effect that such full
\nwarranty bill of sale has been duly authorized and delivered and is enforceable
\nin accordance with its terms and that such engines are free and clear of Liens
\nother than Lessor Liens (including for this purpose Liens that would be Lessor
\nLiens but for the proviso to the definition of Lessor Liens), against receipt
\nfrom Lessor, at Lessee’s expense, of a bill of sale evidencing the transfer,
\nwithout recourse or warranty (except as<\/p>\n
56<\/p>\n
[Second Amended and Restated
\n Lease Agreement (1993 747 A)]<\/p>\n
to the absence of Lessor Liens (including for this purpose Liens that would be
\nLessor Liens but for the proviso to the definition of Lessor Liens)), by Lessor
\nto Lessee or its designee of all of Lessor’s right, title and interest in and to
\nany Engine constituting part of the Aircraft but not then installed on the
\nAirframe. All payments received by Lessor or Lessee from such government for
\nthe use of such Airframe and Engines or engines during the Term shall be paid
\nover to, or retained by, Lessee (or, if directed by Lessee, any Sublessee); and
\nall payments received by Lessor or Lessee from such government for the use of
\nsuch Airframe and Engines or engines after the end of the Term shall be paid
\nover to, or retained by, Lessor unless Lessee shall have exercised its purchase
\noption hereunder, or there is a deemed Event of Loss hereunder, in which case
\nsuch payments shall be made to Lessee.<\/p>\n
(e) Requisition for Use of an Engine by the United States Government
\nor the Government of Registry of the Aircraft. In the event of the requisition
\nfor use of an Engine during the Term by the United States Government or any
\nother government of registry of the Aircraft or any agency or instrumentality of
\nany thereof (other than in the circumstances contemplated by subsection (d))
\nwhich shall have continued for more than 180 days or, if earlier, until the end
\nof the Term, Lessee shall replace (or cause any Sublessee to replace) such
\nEngine hereunder and Lessor and Lessee (or Sublessee as the case may be) shall
\ncomply with the terms of Section 10(b) to the same extent as if an Event of Loss
\nhad occurred with respect to such Engine. Upon compliance with Section 10(b)
\nhereof, any payments received by Lessor or Lessee from such government with
\nrespect to such requisition shall be paid over to, or retained by Lessee.<\/p>\n
(f) Application of Payments During Existence of Events of Default.
\nAny amount referred to in this Section 10 which is payable to or retainable by
\nLessee (or any Sublessee) shall not be paid to or retained by Lessee (or any
\nSublessee) if at the time of such payment or retention a Default or an Event of
\nDefault shall have occurred and be continuing, but shall be held by or paid over
\nto Lessor as security for the obligations of Lessee (or such Sublessee) under
\nthis Lease and applied against Lessee’s obligations hereunder as and when due.
\nAt such time as there shall not be continuing any such Default or Event of
\nDefault, such amount shall be paid to Lessee to the extent not previously
\napplied in accordance with the preceding sentence.<\/p>\n
SECTION 11. Insurance. (a) Public Liability and Property Damage
\nInsurance. (1) Except as provided in clause (2) of this Section 11(a), and
\nsubject to self-insurance to the extent permitted by Section 11(d) hereof,
\nLessee will carry or<\/p>\n
57<\/p>\n
[Second Amended and Restated
\n Lease Agreement (1993 747 A)]<\/p>\n
cause to be carried with respect to the Aircraft at its or any Sublessee’s
\nexpense (i) comprehensive airline liability (including, without limitation,
\npassenger, contractual, bodily injury, and property damage liability) insurance
\n(exclusive of manufacturer’s product liability insurance) and (ii) cargo
\nliability insurance, (A) in an amount not less than the greater of (x) the
\namounts of comprehensive airline liability insurance from time to time
\napplicable to aircraft owned or leased, and operated by Lessee of the same type
\nas the Aircraft and (y) $500,000,000 per occurrence, (B) of the type and
\ncovering the same risks as from time to time are applicable to aircraft owned or
\nleased, and operated by Lessee of the same type as the Aircraft, and (C) which
\nis maintained in effect with insurers of recognized reputation and
\nresponsibility; provided, however, that Lessee need not maintain cargo liability
\ninsurance, or may maintain such insurance in an amount less than $500,000,000
\nper occurrence, as long as the amount of cargo liability insurance, if any,
\nmaintained with respect to the Aircraft is the same as the cargo liability
\ninsurance, if any, maintained for other Boeing Model 747-422 aircraft owned or
\nleased, and operated by Lessee.<\/p>\n
(2) During any period that the Airframe or an Engine, as the case may
\nbe, is on the ground and not in operation, Lessee may carry or cause to be
\ncarried as to such non-operating property, in lieu of the insurance required by
\nclause (1) above, and subject to the self-insurance to the extent permitted by
\nSection 11(d) hereof, insurance by insurers of recognized reputation and
\nresponsibility otherwise conforming with the provisions of clause (1) except
\nthat (A) the amounts of coverage shall not be required to exceed the amounts of
\ncomprehensive airline liability insurance from time to time applicable to
\nproperty owned or leased by Lessee of the same type as such non-operating
\nproperty and which is on the ground and not in operation; and (B) the scope of
\nthe risks covered and the type of insurance shall be the same as from time to
\ntime shall be applicable to property owned or leased by Lessee of the same type
\nas such non-operating property and which is on the ground and not in operation.<\/p>\n
(b) Insurance Against Loss or Damage to the Aircraft. (1) Except as
\nprovided in clause (2) of this Section 11(b), and subject to the provisions of
\nSection 11(d) hereof permitting self-insurance, Lessee shall maintain or cause
\nto be maintained in effect, at its or any Sublessee’s expense, with insurers of
\nrecognized reputation and responsibility, all-risk aircraft hull insurance
\ncovering the Aircraft and fire and extended coverage and all-risk aircraft hull
\ninsurance covering Engines and Parts while temporarily removed from the Aircraft
\nand not replaced by<\/p>\n
58<\/p>\n
[Second Amended and Restated
\n Lease Agreement (1993 747 A)]<\/p>\n
similar components (including, without limitation, aircraft war risk and
\ngovernmental confiscation and expropriation (other than by the government of
\nregistry of the Aircraft) and hijacking insurance, if and to the extent the same
\nis maintained by Lessee (or any Sublessee) with respect to other aircraft owned
\nor leased, and operated by Lessee (or such Sublessee) on the same routes);
\nprovided, that such insurance shall at all times while the Aircraft is subject
\nto this Lease be for an amount (taking into account self-insurance to the extent
\npermitted by Section 11(d) hereof) not less than the Stipulated Loss Value for
\nthe Aircraft; and provided further, that subject to compliance with Section
\n11(d) hereof, such all-risk property damage insurance covering Engines and Parts
\nwhile temporarily removed from the Airframe or an airframe of (in the case of
\nParts) an Engine need be obtained only to the extent available at reasonable
\ncost (as reasonably determined by Lessee). In the case of a loss with respect
\nto an engine (other than an Engine) installed on the Airframe in circumstances
\nwhich do not constitute an Event of Loss with respect to the Airframe, Lessor
\nshall promptly remit any payment made to it of any insurance proceeds in respect
\nof such loss to Lessee or any other third party that is entitled to receive such
\nproceeds.<\/p>\n
Except during a period when a Section 14(a), (b), (f) or (g) Default
\nor an Event of Default has occurred and is continuing, all losses will be
\nadjusted by Lessee with the insurers giving due regard to Lessor’s interest. As
\nbetween Lessor and Lessee, it is agreed that all proceeds of insurance
\nmaintained in compliance with the preceding paragraph and received as the result
\nof the occurrence of an Event of Loss will be applied as follows:<\/p>\n
(x) if such payments are received with respect to the Airframe
\n (or the Airframe and the Engines installed thereon), (i) unless such
\n property is replaced pursuant to the last paragraph of Section 10(a)
\n hereof, so much of such payments remaining, after reimbursement of Lessor
\n (as provided in Section 7.01 of the Trust Agreement) and the Owner
\n Participant for reasonable costs and expenses, as shall not exceed the
\n Stipulated Loss Value and the other amounts payable under Section 10(a)
\n hereof required to be paid by Lessee pursuant to Section 10(a) hereof shall
\n be applied in reduction of Lessee’s obligation to pay such Stipulated Loss
\n Value and the other amounts payable under Section 10(a) hereof, if not
\n already paid by Lessee, or, if already paid by Lessee, shall be applied to
\n reimburse Lessee for its payment of such Stipulated Loss Value and the
\n other amounts payable under Section 10(a) hereof, and the balance, if any,
\n of such payments remaining thereafter will be paid<\/p>\n
59<\/p>\n
[Second Amended and Restated
\n Lease Agreement (1993 747 A)]<\/p>\n
over to, or retained by, Lessee (or if directed by Lessee, any Sublessee);
\n or (ii) if such property is replaced pursuant to the last paragraph of
\n Section 10(a) hereof, such payments shall be paid over to, or retained by,
\n Lessee (or if directed by Lessee, any Sublessee), provided that Lessee
\n shall have fully performed or, concurrently therewith, will fully perform
\n the terms of the last paragraph of Section 10(a) hereof with respect to the
\n Event of Loss for which such payments are made; and<\/p>\n
(y) if such payments are received with respect to an Engine under
\n the circumstances contemplated by Section 10(b) hereof, so much of such
\n payments remaining after reimbursement of Lessor and the Owner Participant
\n for reasonable costs and expenses shall be paid over to, or retained by,
\n Lessee (or if directed by Lessee, any Sublessee), provided that Lessee
\n shall have fully performed or, concurrently therewith, will fully perform
\n the terms of Section 10(b) hereof with respect to the Event of Loss for
\n which such payments are made.<\/p>\n
(2) During any period that the Aircraft is on the ground and not in
\noperation, Lessee may carry or cause to be carried, in lieu of the insurance
\nrequired by clause (1) above, and subject to the self-insurance to the extent
\npermitted by Section 11(d) hereof, insurance otherwise conforming with the
\nprovisions of said clause (1) except that the scope of the risks and the type of
\ninsurance shall be the same as from time to time applicable to aircraft owned or
\nleased by Lessee of the same type as the Aircraft similarly on the ground and
\nnot in operation, provided that, subject to the self-insurance to the extent
\npermitted by Section 11(d) hereof, Lessee shall maintain insurance against risk
\nof loss or damage to the Aircraft in an amount at least equal to the Stipulated
\nLoss Value of the Aircraft during such period that the Aircraft is on the ground
\nand not in operation.<\/p>\n
(c) Reports, etc. Lessee will furnish, or cause to be furnished, to
\nLessor, the Indenture Trustee, the Owner Participant and, so long as the Pass
\nThrough Trustees are the Certificate Holders, each Pass Through Trustee, on or
\nbefore the Delivery Date, and each annual anniversary of the Delivery Date
\nduring the Term, a report, signed by Rollins Hudig Hall of Illinois, Inc. or any
\nother independent firm of insurance brokers reasonably acceptable to Lessor
\nwhich brokers may be in the regular employ of Lessee (the “Insurance Brokers”),
\ndescribing in reasonable detail the hull and liability insurance (and property
\ninsurance for detached engines and parts) then carried and maintained with
\nrespect to the Aircraft and stating the opinion<\/p>\n
60<\/p>\n
[Second Amended and Restated
\n Lease Agreement (1993 747 A)]<\/p>\n
of such firm that (a) such insurance complies with the terms hereof and (b) that
\nsuch insurance together with any self-insurance permitted hereby provides
\ncoverage that are in substantially similar forms, are of such types and have
\nlimits within the range of limits as are customarily carried by U.S. carriers;
\nprovided, however, that the opinion set forth in clause (b) shall not be
\nrequired if the Insurance Broker then generally does not provide such an opinion
\nor will provide such an opinion for material additional cost; and provided
\nfurther that all information contained in the foregoing report shall not be made
\navailable by Lessor, the Indenture Trustee, the Pass Through Trustees or the
\nOwner Participant to anyone except (A) to prospective and permitted transferees
\nof Lessor’s, the Owner Participant’s, any Pass Through Trustee’s or the
\nIndenture Trustee’s interest or their respective counsel, independent certified
\npublic accountants, independent insurance brokers or other agents, who agree to
\nhold such information confidential, (B) to Lessor’s, Owner Participant’s, any
\nPass Through Trustee’s or the Indenture Trustee’s counsel or independent
\ncertified public accountants, independent insurance brokers or other agents who
\nagree to hold such information confidential, (C) as may be required by any
\nstatute, court or administrative order or decree or governmental ruling or
\nregulation, or (D) as may be necessary for purposes of protecting the interest
\nof any such Person or for enforcement of this Lease by Lessor or the Indenture
\nTrustee; provided, however, that any and all disclosures permitted by clauses
\n(C) or (D) above shall be made only to the extent necessary to meet the specific
\nrequirements or needs of the Persons to whom such disclosures are hereby
\npermitted. Lessee will cause such Insurance Broker to agree to advise Lessor,
\nthe Indenture Trustee, the Owner Participant and, so long as the Pass Through
\nTrustees are the Certificate Holders, each Pass Through Trustee in writing of
\nany act or omission on the part of Lessee of which it has knowledge and which
\nmight invalidate or render unenforceable, in whole or in part, any insurance on
\nthe Aircraft and to advise such Persons in writing at least 30 days (7 days in
\nthe case of war risk and allied perils coverage) prior to the cancellation or
\nmaterial adverse change of any insurance maintained pursuant to this Section 11,
\nprovided that if the notice period specified above is not reasonably obtainable,
\nthe Insurance Broker shall provide for as long a period of prior notice as shall
\nthen be reasonably obtainable. In addition, Lessee will also cause such
\nInsurance Broker to deliver to Lessor, the Indenture Trustee, the Owner
\nParticipant and, so long as the Pass Through Trustees are the Certificate
\nHolders, each Pass Through Trustee, on or prior to the date of expiration of any
\ninsurance policy referenced in a previously delivered certificate of insurance,
\na new certificate of insurance, substantially in the same form as delivered by
\nLessee to such<\/p>\n
61<\/p>\n
[Second Amended and Restated
\n Lease Agreement (1993 747 A)]<\/p>\n
parties on the Delivery Date except for the changes in the report or the
\ncoverage consistent with the terms hereof. In the event that Lessee or any
\nSublessee shall fail to maintain or cause to be maintained insurance as herein
\nprovided, Lessor, the Indenture Trustee or, so long as the Pass Through Trustees
\nare the Certificate Holders, each Pass Through Trustee may at its sole option,
\nbut shall be under no duty to, provide such insurance and, in such event, Lessee
\nshall, upon demand, reimburse Lessor, the Indenture Trustee or such Pass Through
\nTrustee, as Supplemental Rent, for the cost thereof to Lessor, such Pass Through
\nTrustee or the Indenture Trustee, as the case may be; provided, however, that no
\nexercise by Lessor, a Pass Through Trustee or the Indenture Trustee, as the case
\nmay be, of said option shall affect the provisions of this Lease, including the
\nprovisions that failure by Lessee to maintain the prescribed insurance shall
\nconstitute an Event of Default.<\/p>\n
(d) Self-Insurance. Lessee may self-insure the risks required to be
\ninsured against pursuant to this Section 11 under a program applicable to all
\naircraft (whether owned or leased) in Lessee’s fleet, but in no case shall the
\naggregate amount of such self-insurance in regard to Sections 11(a) and 11(b)
\nhereof exceed for any calendar year, with respect to all of the aircraft
\n(whether owned or leased) in Lessee’s fleet (including, without limitation, the
\nAircraft) the lesser of (A) 50% of the highest replacement value of any single
\naircraft in Lessee’s fleet or (B) 1-1\/2% of the average aggregate insurable
\nvalue (during the preceding calendar year) of all aircraft (including, without
\nlimitation, the Aircraft) on which Lessee carries insurance. In addition to the
\nforegoing right to self-insure, Lessee (and any Sublessee) may self-insure to
\nthe extent of any applicable mandatory minimum per aircraft (or, if applicable,
\nper annum or other period) hull or liability insurance deductible imposed by the
\naircraft hull or liability insurer.<\/p>\n
(e) Additional Insurance by Lessor and Lessee. Lessee (and any
\nSublessee) may at its own expense carry insurance with respect to its interest
\nin the Aircraft in amounts in excess of that required to be maintained by this
\nSection 11. The Owner Participant or Lessor may carry for its own account at
\nits sole cost and expense insurance with respect to its interest in the
\nAircraft, provided that such insurance does not prevent Lessee (or any
\nSublessee) from carrying the insurance required or permitted by this Section 11
\nor adversely affect such insurance or materially increase the cost thereof.<\/p>\n
(f) Indemnification by Government in Lieu of Insurance.
\nNotwithstanding any provisions of this Section 11 requiring insurance, Lessor
\nagrees to accept, in lieu of<\/p>\n
62<\/p>\n
[Second Amended and Restated
\n Lease Agreement (1993 747 A)]<\/p>\n
insurance against any risk with respect to the Aircraft, indemnification from,
\nor insurance provided by, the United States Government or any agency or
\ninstrumentality thereof, the obligations of which are supported by the full
\nfaith and credit of the federal government of the United States, against such
\nrisk in an amount which, when added to the amount of insurance against such risk
\nmaintained by Lessee (or any Sublessee) shall be at least equal to the amount of
\ninsurance against such risk otherwise required by this Section 11 (taking into
\naccount self-insurance permitted by Section 11(d) hereof).<\/p>\n
(g) Application of Payments During Existence of Default. Any amount
\nreferred to in this Section 11 which is payable to or retainable by Lessee (or
\nany Sublessee) shall not be paid to or retained by Lessee (or any Sublessee) if
\nat the time of such payment or retention a Default or an Event of Default shall
\nhave occurred and be continuing, but shall be held by or paid over to Lessor as
\nsecurity for the obligations of Lessee under this Lease and, if such a Default
\nor an Event of Default shall have occurred and be continuing, applied against
\nLessee’s obligations hereunder as and when due. At such time as there shall not
\nbe continuing any such Default or Event of Default, such amount shall be paid to
\nLessee to the extent not previously applied in accordance with the preceding
\nsentence.<\/p>\n
(h) Terms of Insurance Policies. Any policies carried in accordance
\nwith Sections 11(a) and 11(b) hereof covering the Aircraft, and any policies
\ntaken out in substitution or replacement for any such policies, (A) shall name
\nthe Additional Insureds as additional insureds, or, if appropriate, loss payees,
\nas their respective interests may appear (but without imposing on any such party
\nliability to pay premiums with respect to such insurance), (B) may provide for
\nself-insurance to the extent permitted in Section 11(d) hereof, (C) shall
\nprovide that if the insurers cancel such insurance for any reason whatever, or
\nif the same is allowed to lapse for non-payment of premium or if any material
\nchange is made in the insurance which adversely affects the interest of any
\nAdditional Insured, such lapse, cancellation or change shall not be effective as
\nto any Additional Insured for thirty days (ten days in the case of lapse for
\nnonpayment of premium and seven days in the case of war risk and allied perils
\ncoverage) after receipt by such Additional Insured of written notice by such
\ninsurers of such lapse, cancellation or change; provided, however, that if any
\nnotice period specified above is not reasonably obtainable, such policies shall
\nprovide for as long a period of prior notice as shall then be reasonably
\nobtainable, (D) shall provide that in respect of the respective interests of
\neach Additional Insured in such policies the insurance shall not be invalidated
\nby any action or inaction of<\/p>\n
63<\/p>\n
[Second Amended and Restated
\n Lease Agreement (1993 747 A)]<\/p>\n
Lessee (or any Sublessee) or any other Person and shall insure the respective
\ninterests of the Additional Insureds, as they appear, regardless of any breach
\nor violation of any warranty, declaration or condition contained in such
\npolicies by Lessee (or any Sublessee) or by any other Person, (E) shall be
\nprimary without any right of contribution from any other insurance which is
\ncarried by any Additional Insured, (F) shall expressly provide that all of the
\nprovisions thereof, except the limits of liability, shall operate in the same
\nmanner as if there were a separate policy covering each insured, (G) shall waive
\nany right of the insurers to set-off or counterclaim or any other deduction,
\nwhether by attachment or otherwise, in respect of any liability of any
\nAdditional Insured, and (H) shall provide that (i) in the event of a loss
\ninvolving the Aircraft, Airframe, or an Engine for which proceeds are in excess
\nof $5,000,000 ($2,500,000 if the Aircraft is under sublease), the proceeds in
\nrespect of such loss up to the amount of Stipulated Loss Value for the Aircraft
\nshall be payable to Lessor (or, so long as the Trust Indenture shall be in
\neffect, the Indenture Trustee), it being understood and agreed that in the case
\nof any payment to Lessor (or the Indenture Trustee) otherwise than in respect of
\nan Event of Loss, Lessor (or the Indenture Trustee) shall, upon receipt of
\nevidence reasonably satisfactory to it that the damages giving rise to such
\npayment shall have been repaired or that such payment shall then be required to
\npay for repairs then being made, pay the amount of such payment, and any
\ninterest or income earned thereon in accordance with Section 22 hereof, to
\nLessee or its order, and (ii) the entire amount of any such loss for which
\nproceeds are $5,000,000 ($2,500,000 if the Aircraft is under sublease) or less
\nor the amount of any proceeds of any such loss in excess of Stipulated Loss
\nValue for the Aircraft shall be paid to Lessee or its order unless a Default or
\nan Event of Default shall have occurred and be continuing and the insurers have
\nbeen notified thereof by Lessor or the Indenture Trustee.<\/p>\n
SECTION 12. Inspection. At reasonable times, and upon at least 10
\ndays (or one day if a Section 14(a), 14(b), 14(d) (solely with respect to
\nLessee’s obligations under Section 7(a) or (b)(viii) or Section 8 hereof), 14(f)
\nor 14(g) Default or any Event of Default shall have occurred and be continuing)
\nprior written notice, the Owner Participant or the Indenture Trustee, or their
\nrespective authorized representatives, may inspect the Aircraft (provided,
\nhowever, that such inspections by the Owner Participant and its authorized
\nrepresentatives or the Indenture Trustee and its authorized representative
\nshall, in regard to each of the Owner Participant and the Indenture Trustee, be
\nlimited to one inspection of the Aircraft during any consecutive twelve-month
\nperiod except during the continuance of a Default or an Event of Default when
\nsuch inspection right shall not be so<\/p>\n
64<\/p>\n
[Second Amended and Restated
\n Lease Agreement (1993 747 A)]<\/p>\n
limited) and inspect and make copies of the books and records of Lessee and any
\nSublessee required to be maintained by the FAA or the regulatory agency or body
\nof another jurisdiction in which the Aircraft is then registered relating to the
\nmaintenance of the Aircraft (at the Owner Participant’s or the Indenture
\nTrustee’s risk and expense (unless a Section 14(a), 14(b), 14(f) or 14(g)
\nDefault or any Event of Default shall have occurred and be continuing in which
\ncase such inspection shall be at Lessee’s expense), as the case may be) and
\nshall keep any information or copies obtained thereby confidential and shall not
\ndisclose the same to any Person, except (A) to Lessor and the Pass Through
\nTrustees and to prospective and permitted transferees of Lessor’s, the Owner
\nParticipant’s, any Pass Through Trustee’s or the Indenture Trustee’s interest
\n(and such prospective and permitted transferee’s counsel, independent insurance
\nadvisors or other agents) who agree to hold such information confidential, (B)
\nto Lessor’s, the Owner Participant’s, any Pass Through Trustee’s or the
\nIndenture Trustee’s counsel, independent insurance advisors or other agents who
\nagree to hold such information confidential, (C) as may be required by any
\nstatute, court or administrative order or decree or governmental ruling or
\nregulation, (D) as may be necessary for purposes of protecting the interest of
\nany such Person or for enforcement of this Lease by Lessor or the Indenture
\nTrustee; provided, however, that any and all disclosures permitted by clauses
\n(C) and (D) above shall be made only to the extent necessary to meet the
\nspecific requirements or needs of Persons for whom such disclosures are hereby
\npermitted. Any such inspection of the Aircraft shall be subject to Lessee’s
\nsafety and security rules applicable at the location of the Aircraft, shall be a
\nvisual, walk-around inspection of the interior and exterior of the Aircraft and
\nshall not include opening any panels, bays or the like without the express
\nconsent of Lessee (except in connection with a heavy maintenance visit when a
\npanel, bay or the like is scheduled or required to be open), which consent
\nLessee may in its sole discretion withhold; provided that no exercise of such
\ninspection right shall interfere with the normal operation or maintenance of the
\nAircraft by, or the business of, Lessee (or any Sublessee). Upon receipt by
\nLessee of a written request from the Owner Participant specifying that the Owner
\nParticipant desires to have an authorized representative observe the last
\nscheduled heavy maintenance visit to be performed on the Aircraft (or
\nsubstantially equivalent successor type of maintenance work) during the Term,
\nLessee shall cooperate with the Owner Participant to enable the Owner
\nParticipant’s representative to observe such last scheduled heavy maintenance
\nvisit to be performed on the Aircraft during the Term, including reasonable
\nadvance notification to the Owner Participant of the time and place of such
\nscheduled heavy maintenance visit; provided that<\/p>\n
65<\/p>\n
[Second Amended and Restated
\n Lease Agreement (1993 747 A)]<\/p>\n
the Owner Participant’s authorized representative shall merely observe such
\nscheduled heavy maintenance visit, shall not interfere with or extend in any
\nmanner the normal conduct or duration of the scheduled heavy maintenance visit,
\nand shall not be entitled to direct any of the work performed in connection with
\nsuch scheduled heavy maintenance visit. Neither the Owner Participant nor the
\nIndenture Trustee shall have any duty to make any such inspection nor shall any
\nof them incur any liability or obligations by reason of not making any such
\ninspection.<\/p>\n
SECTION 13. Assignment. Except as otherwise provided in the
\nOperative Documents, Lessee will not, without the prior written consent of
\nLessor, assign any of its rights hereunder. Lessor agrees that it will not
\nassign or convey its right, title and interest in and to this Lease or the
\nAircraft except as provided in the Operative Documents. Subject to the
\nforegoing, the terms and provisions of this Lease shall be binding upon and
\ninure to the benefit of Lessor and Lessee and their respective successors and
\npermitted assigns.<\/p>\n
SECTION 14. Events of Default. Each of the following events shall
\nconstitute an Event of Default (whether any such event shall be voluntary or
\ninvoluntary or come about or be effected by operation of law or pursuant to or
\nin compliance with any judgment, decree or order of any court or any order, rule
\nor regulation of any administrative or governmental body) and each such Event of
\nDefault shall continue so long as, but only as long as, it shall not have been
\nremedied:<\/p>\n
(a) Lessee shall not have made a payment of Basic Rent, Stipulated
\nLoss Value, Termination Value, EBO Price, Special Termination Value or Premium
\nwithin ten (10) days after the same shall have become due; or<\/p>\n
(b) Lessee shall have failed to make a payment of Supplemental Rent
\n(other than Supplemental Rent referred to in paragraph (a) of this Section 14)
\nafter the same shall have become due and such failure shall continue for fifteen
\n(15) days after Lessee’s receipt of written demand therefor by the party
\nentitled thereto (provided that any failure to pay any amount owed by Lessee
\nunder the Tax Indemnity Agreement or any failure of Lessee to pay to Lessor or
\nthe Owner Participant when due any Excluded Payments shall not constitute an
\nEvent of Default unless written notice is given by the Owner Participant to
\nLessee and the Indenture Trustee that such failure shall constitute an Event of
\nDefault); or<\/p>\n
(c) Lessee shall fail to carry and maintain on or with respect to the
\nAircraft (or cause to be carried and maintained)<\/p>\n
66<\/p>\n
[Second Amended and Restated
\n Lease Agreement (1993 747 A)]<\/p>\n
insurance required to be maintained in accordance with the provisions of Section
\n11 hereof; or<\/p>\n
(d) Lessee shall have failed to perform or observe (or caused to be
\nperformed and observed) any other covenant or agreement to be performed or
\nobserved by it under any Operative Document, and such failure shall continue
\nunremedied for a period of thirty days after written notice thereof by Lessor or
\nthe Indenture Trustee; provided, however, that if Lessee shall have undertaken
\nto cure any such failure and, notwithstanding the reasonable diligence of Lessee
\nin attempting to cure such failure, such failure is not cured within said thirty
\nday period but is curable with future due diligence, there shall exist no Event
\nof Default under this Section 14 so long as Lessee is proceeding with due
\ndiligence to cure such failure and such failure is in fact cured within 180
\ndays); or<\/p>\n
(e) any representation or warranty made by Lessee herein or in the
\nParticipation Agreement or in the Redemption and Refinancing Agreement or any
\ndocument or certificate furnished by Lessee in connection herewith or therewith
\nor pursuant hereto or thereto (except the representations and warranties set
\nforth in Section 4 of the Tax Indemnity Agreement) shall prove to have been
\nincorrect in any material respect at the time made and shall remain material at
\nthe time in question; provided, however, such incorrectness shall constitute a
\ndefault hereunder only if such incorrectness shall continue uncured for a period
\nof thirty (30) days after the receipt by Lessee of a written notice from Lessor
\nor the Indenture Trustee advising Lessee of the existence of such incorrectness;
\nor<\/p>\n
(f) the commencement of an involuntary case or other proceeding in
\nrespect of Lessee in an involuntary case under the federal bankruptcy laws, as
\nnow or hereafter constituted, or any other applicable federal or state
\nbankruptcy, insolvency or other similar law in the United States or seeking the
\nappointment of a receiver, liquidator, assignee, custodian, trustee,
\nsequestrator (or similar official) of Lessee or for all or substantially all of
\nits property, or seeking the winding-up or liquidation of its affairs and the
\ncontinuation of any such case or other proceeding undismissed or unstayed for a
\nperiod of ninety (90) consecutive days or an order for relief under Chapter 11
\nof the Bankruptcy Code with respect to Lessee as debtor or any other order,
\njudgment or decree shall be entered in any proceeding by any court of competent
\njurisdiction appointing, without the consent of Lessee, a receiver, trustee or
\nliquidator of Lessee, or for all or substantially all of its property, or
\nsequestering of all or substantially all of the property of Lessee and any such
\norder, judgment or decree or appointment or sequestration shall<\/p>\n
67<\/p>\n
[Second Amended and Restated
\n Lease Agreement (1993 747 A)]<\/p>\n
be final or shall remain in force undismissed, unstayed or unvacated for a
\nperiod of ninety (90) days after the date of entry thereof; or<\/p>\n
(g) the commencement by Lessee of a voluntary case under the federal
\nbankruptcy laws, as now constituted or hereafter amended, or any other
\napplicable federal or state bankruptcy, insolvency or other similar law in the
\nUnited States, or the consent by Lessee to the appointment of or taking
\npossession by a receiver, liquidator, assignee, trustee, custodian, sequestrator
\n(or other similar official) of Lessee or for all or substantially all of its
\nproperty, or the making by Lessee of any assignment for the benefit of creditors
\nor Lessee shall take any corporate action to authorize any of the foregoing; or<\/p>\n
(h) Lessee shall not be a Certificated Air Carrier;<\/p>\n
provided, however, that, notwithstanding anything to the contrary contained in
\nthis Section 14, any failure of Lessee to perform or observe any covenant,
\ncondition, agreement or any error in a representation or warranty shall not
\nconstitute an Event of Default if such failure or error is caused solely by
\nreason of any event that constitutes an Event of Loss so long as Lessee is
\ncontinuing to comply with all of the terms of Section 10 hereof.<\/p>\n
SECTION 15. Remedies. Upon the occurrence of any Event of Default
\nand at any time thereafter so long as any such Event of Default shall not have
\nbeen remedied, Lessor may, at its option, declare by written notice to Lessee
\nthis Lease Agreement to be in default; and at any time thereafter, so long as
\nsuch Event of Default shall be continuing, Lessor may do one or more of the
\nfollowing with respect to all or any part of the Airframe and any or all of the
\nEngines as Lessor in its sole discretion shall elect, to the extent permitted
\nby, and subject to compliance with any mandatory requirements of, applicable law
\nthen in effect; provided, however, that during any period the Aircraft is
\nsubject to the Civil Reserve Air Fleet Program in accordance with the provisions
\nof Section 7(b) hereof and in the possession of the United States Government or
\nan instrumentality or agency thereof, Lessor shall not, on account of any Event
\nof Default, be entitled to do any of the following in such manner as to limit
\nLessee’s control under this Lease (or any Sublessee’s control under any
\nSublease) of any Airframe or any Engines, unless at least 60 days’ (or such
\nlesser period as may then be applicable under the Military Airlift Command
\nprogram of the United States Government) prior written notice of default
\nhereunder shall have been given by Lessor by registered or certified mail to
\nLessee (and any Sublessee) with a copy<\/p>\n
68<\/p>\n
[Second Amended and Restated
\n Lease Agreement (1993 747 A)]<\/p>\n
addressed to the Contracting Office Representative for the Military Airlift
\nCommand of the United States Air Force under any contract with Lessee (or any
\nSublessee) relating to the Aircraft:<\/p>\n
(a) upon the written demand of Lessor and at Lessee’s expense,
\n cause Lessee to return promptly, and Lessee shall return promptly, the
\n Airframe or any Engine as Lessor may so demand to Lessor or its order in
\n the manner and condition required by, and otherwise in accordance with all
\n the provisions of, Section 5 as if such Airframe or Engine were being
\n returned at the end of the Term, or Lessor, at its option, may enter upon
\n the premises where all or any part of the Airframe or any Engine is located
\n and take immediate possession of and remove the same by summary proceedings
\n or otherwise, (and, at Lessor’s option, store the same at Lessee’s
\n premises until disposal thereof by Lessor), all without liability accruing
\n to Lessor for or by reason of such entry or taking of possession or
\n removing whether for the restoration of damage to property caused by such
\n action or otherwise;<\/p>\n
(b) sell the Aircraft, the Airframe or any Engine at public or
\n private sale, as Lessor may determine, or otherwise dispose of, hold, use,
\n operate, lease to others or keep idle the Aircraft as Lessor, in its sole
\n discretion, may determine, all free and clear of any rights of Lessee,
\n except as hereinafter set forth in this Section 15;<\/p>\n
(c) Lessor may hold, keep idle or lease to others the Aircraft,
\n the Airframe or any Engine or any Part thereof, as Lessor in its sole
\n discretion may determine, free and clear of any rights of Lessee and
\n without any duty to account to Lessee with respect thereto, except that
\n Lessee’s obligation to pay Basic Rent with respect to the Aircraft on Lease
\n Period Dates subsequent to the date upon which Lessee shall have been
\n deprived of use of the Aircraft pursuant to this Section 15 shall be
\n reduced by the net proceeds, if any, received by Lessor from leasing the
\n Aircraft, the Airframe or any Engine to any Person other than Lessee;<\/p>\n
(d) whether or not Lessor shall have exercised, or shall
\n thereafter at any time exercise, any of its rights under paragraph (a), (b)
\n or (c) above with respect to the Aircraft, Lessor, by written notice to
\n Lessee specifying a payment date which shall be the Lease Period Date not
\n earlier than ten days from the date of such notice, may demand that Lessee
\n pay to Lessor, and Lessee shall pay Lessor, on the payment date so
\n specified, as liquidated<\/p>\n
69<\/p>\n
[Second Amended and Restated
\n Lease Agreement (1993 747 A)]<\/p>\n
damages for loss of a bargain and not as a penalty (in lieu of the
\n installments of Basic Rent for the Aircraft due for Lease Periods
\n commencing on or after the Commencement Date or the Lease Period Date, as
\n the case may be, specified as the payment date in such notice), any unpaid
\n Basic Rent due on Lease Period Dates on or prior to the payment date so
\n specified plus whichever of the following amounts Lessor, in its sole
\n discretion, shall specify in such notice (with interest thereon at the Past
\n Due Rate from such specified payment date until the date of actual payment
\n of such amount): (i) an amount equal to the excess, if any, of the
\n Stipulated Loss Value for the Aircraft, computed as of the Lease Period
\n Date specified as the payment date in such notice over the aggregate fair
\n market rental value (computed as hereafter in this Section 15 provided) of
\n such Aircraft for the remainder of the Term, after discounting such
\n aggregate fair market rental value to present value as of the Lease Period
\n Date specified as the payment date in such notice at an annual rate equal
\n to the Past Due Rate; or (ii) an amount equal to the excess, if any, of the
\n Stipulated Loss Value for such Aircraft, computed as of the Lease Period
\n Date specified as the payment date in such notice, over the fair market
\n sales value of such Aircraft (computed as hereafter in this Section
\n provided) as of the Lease Period Date specified as the payment date in such
\n notice;<\/p>\n
(e) in the event Lessor pursuant to paragraph (b) above, shall
\n have sold the Aircraft, Lessor, in lieu of exercising its rights under
\n paragraph (d) above with respect to such Aircraft, may, if it shall so
\n elect, demand that Lessee pay Lessor, and Lessee shall pay to Lessor, on
\n the date of such sale, as liquidated damages for loss of a bargain and not
\n as a penalty, any unpaid Basic Rent with respect to the Aircraft due on or
\n prior to such date plus the amount of any deficiency between the net
\n proceeds of such sale (after deduction of all reasonable costs of sale) and
\n the Stipulated Loss Value of such Aircraft, computed as of the Stipulated
\n Loss Value date on or immediately following the date of such sale, together
\n with interest, if any, on the amount of such deficiency, at the Past Due
\n Rate, from the date of such sale to the date of actual payment of such
\n amount; and\/or<\/p>\n
(f) Lessor may rescind or terminate this Lease Agreement, and\/or
\n may exercise any other right or remedy which may be available to it under
\n applicable law or proceed by appropriate court action to enforce the terms
\n hereof or to recover damages for breach hereof.<\/p>\n
70<\/p>\n
[Second Amended and Restated
\n Lease Agreement (1993 747 A)]<\/p>\n
For the purposes of paragraph (c) above, the “fair market rental
\nvalue” or the “fair market sales value” of the Aircraft shall be the rental
\nvalue or sales value, as the case may be, which would be obtained in an arm’s-
\nlength transaction between an informed and willing lessee or purchaser, as the
\ncase may be, under no compulsion to lease or purchase, as the case may be, and
\nan informed and willing lessor or seller in possession, as the case may be, in
\neach case based upon the actual condition and location of the Aircraft, which
\nvalue shall be determined by mutual agreement or, in the absence of mutual
\nwritten agreement, pursuant to an appraisal prepared and delivered by a
\nnationally recognized firm of independent aircraft appraisers nominated by
\nLessor, and Lessor shall promptly notify Lessee of such nomination. Any
\nappraisal obtained pursuant to this Section 15 shall take into account then
\nprevailing market conditions for aircraft of the same type as the Aircraft. The
\ncost of such appraisal or appointment shall be borne by Lessee.<\/p>\n
In addition, Lessee shall be liable, except as otherwise provided
\nabove, without duplication of amounts payable hereunder, for any and all unpaid
\nRent due hereunder before, after or during the exercise of any of the foregoing
\nremedies, for the payment of Premium, if any, and for all reasonable and actual
\nlegal fees and other costs and expenses incurred by Lessor, the Indenture
\nTrustee, the Certificate Holders and the Owner Participant in connection with
\nany default or the exercise of remedies hereunder including the return of the
\nAirframe or any Engine in accordance with the terms of Section 5 or in placing
\nsuch Airframe or Engine in the condition and airworthiness required by such
\nSection.<\/p>\n
At any sale of the Aircraft or any part thereof pursuant to this
\nSection 15, Lessor, the Indenture Trustee, a Certificate Holder or the Owner
\nParticipant may bid for and purchase such property. Lessor agrees to give
\nLessee at least 10 days’ written notice of the date fixed for any public sale of
\nany Airframe or Engine or of the date on or after which will occur the execution
\nof any contract providing for any private sale. Except as otherwise expressly
\nprovided above, no remedy referred to in this Section 15 is intended to be
\nexclusive, but each shall be cumulative and in addition to any other remedy
\nreferred to above or otherwise available to Lessor at law or in equity; and the
\nexercise or beginning of exercise by Lessor of any one or more of such remedies
\nshall not preclude the simultaneous or later exercise by Lessor of any or all of
\nsuch other remedies. No waiver by Lessor of any Default or Event of Default
\nshall in any way be, or be construed to be, a waiver of any future or subsequent
\nDefault or Event of Default. To the extent permitted by applicable law, Lessee
\nhereby waives any right now or<\/p>\n
71<\/p>\n
[Second Amended and Restated
\n Lease Agreement (1993 747 A)]<\/p>\n
hereafter conferred by statute or otherwise which may require Lessor to sell,
\nlease, or otherwise use the Aircraft or Parts thereof in mitigation of Lessor’s
\ndamages as set forth in this Section 15 or which may otherwise limit or modify
\nany of Lessor’s rights and remedies in this Section 15.<\/p>\n
SECTION 16. Lessee’s Cooperation Concerning Certain Matters. (a)
\nForthwith upon the execution and delivery of each Lease Supplement and Trust
\nSupplement from time to time required by the terms hereof and upon the execution
\nand delivery of any amendment to this Lease or to the Trust Agreement or Trust
\nIndenture, Lessee at its expense will cause such Lease Supplement, Trust
\nSupplement (and, in the case of the initial Lease Supplement and Trust
\nSupplement, this Lease, the Trust Agreement and the Trust Indenture as well) or
\namendment to be duly filed and recorded, and maintained of record, in accordance
\nwith the applicable laws of the government of registry of the Aircraft. In
\naddition, Lessee at its expense will promptly and duly execute and deliver to
\nLessor such further documents and take such further action as Lessor may from
\ntime to time reasonably request in order more effectively to carry out the
\nintent and purpose of this Lease and to establish and protect the rights and
\nremedies created or intended to be created in favor of Lessor and the Indenture
\nTrustee hereunder, including, without limitation, if requested by Lessor, at the
\nexpense of Lessee, the execution and delivery of supplements or amendments
\nhereto, each in recordable form, subjecting to this Lease and the Trust
\nIndenture, any airframe or engine substituted for the Airframe or any Engine
\npursuant to the terms thereof and the recording or filing of counterparts
\nthereof, in accordance with the laws of such jurisdictions as Lessor may from
\ntime to time reasonably request.<\/p>\n
(b) Lessee will furnish to Lessor, the Indenture Trustee, the Owner
\nParticipant and, so long as the Pass Through Trustees are the Certificate
\nHolders, the Pass Through Trustees:<\/p>\n
(i) Quarterly Statements – As soon as practicable after the end
\n of the first, second, and third quarterly fiscal periods in each fiscal
\n year of Lessee, and in any event within 60 days thereafter, duplicate
\n copies of:<\/p>\n
(1) a consolidated balance sheet of Lessee as at the end of
\n such quarter setting forth in comparative form the amount for the end
\n of the corresponding period of the preceding fiscal year,<\/p>\n
(2) consolidated statements of income and retained earnings
\n of Lessee for such quarterly period,<\/p>\n
72<\/p>\n
[Second Amended and Restated
\n Lease Agreement (1993 747 A)]<\/p>\n
setting forth in comparative form the amount for the corresponding
\n period of the preceding fiscal year, and<\/p>\n
(3) consolidated statements of cash flow of Lessee for the
\n portion of the fiscal year ending with said quarter, setting forth in
\n comparative form the amount for the corresponding period of the
\n preceding fiscal year;<\/p>\n
(ii) Annual Statements – As soon as practicable after the end of
\n each fiscal year, and in any event within 120 days thereafter, duplicate
\n copies of:<\/p>\n
(1) a consolidated balance sheet of Lessee as at the end of
\n such year, and<\/p>\n
(2) consolidated statements of income and retained earnings
\n and of cash flow of Lessee for such year,<\/p>\n
prepared in accordance with generally accepted accounting principles and
\n setting forth in each case in comparative form the figures for the previous
\n fiscal year and accompanied by an auditor’s report of a firm of independent
\n certified public accountants of recognized national standing (which report
\n may be adverse, qualified or disclaim an opinion);<\/p>\n
(iii) SEC Reports – Promptly upon their becoming available, one
\n copy of each financial statement, report, or proxy statement sent by UAL
\n Corporation to its shareholders generally, and of each regular or periodic
\n report and any prospectus (in the form in which it becomes effective) filed
\n by Lessee or UAL Corporation with the Securities and Exchange Commission or
\n any successor agency; and<\/p>\n
(iv) Notice of Default or Claimed Default -Immediately upon an
\n officer of Lessee becoming aware of the existence of a Default or an Event
\n of Default (or that Lessor has given notice or taken any other action with
\n respect to an Event of Default or a claimed default under this Lease), a
\n written notice specifying the nature of the Default, Event of Default, or
\n claimed default and any such notice given or action taken by Lessor and
\n what action Lessee is taking or proposes to take with respect thereto.<\/p>\n
(c) Commencing in 1994, on or before April 30 of each year during the
\nTerm, Lessee will deliver to Lessor and the Indenture Trustee a certificate of
\nLessee, signed by the<\/p>\n
73<\/p>\n
[Second Amended and Restated
\n Lease Agreement (1993 747 A)]<\/p>\n
President, a Vice President, the Chief Financial Officer or the principal
\naccounting officer of Lessee to the effect that the signer is familiar with or
\nhas reviewed the relevant terms of this Lease and the signer does not have
\nknowledge of the existence, as of the date of such certificate, of any condition
\nor event which constitutes a Default or an Event of Default.<\/p>\n
SECTION 17. Notices. All notices required under the terms and
\nprovisions hereof shall be in writing (including telex, telecopier or similar
\nwriting) and shall be effective (a) if given by telecopier when transmitted and
\nthe appropriate confirmation received; provided, that any such notice is
\nconfirmed by certified mail, (b) if given by certified mail, three Business Days
\nafter being deposited in the mails, (c) if given by telex, upon receipt by the
\nparty transmitting the telex of such party’s callback code at the end of such
\ntelex (receipt of confirmation in writing not being necessary to the
\neffectiveness of any telex) and (d) if given by other means, when received or
\npersonally delivered, addressed:<\/p>\n
(i) if to Lessee, at P. O. Box 66100, Chicago, Illinois 60666(or,
\n if given by overnight delivery service, 1200 East Algonquin Road, Elk Grove
\n Township, Illinois 60007) Attention: Vice President and Treasurer,
\n telecopier number (708) 952-7117, or to such other address or telecopier
\n number as Lessee shall from time to time designate in writing to Lessor;<\/p>\n
(ii) if to Lessor, at 225 Franklin Street, Boston, Massachusetts
\n 02110 (or, if given by overnight delivery service) Two International Place,
\n Boston, Massachusetts 02110) Attention: _____________________, telecopier
\n number (617) 664-5367 or to such other address or telecopier number as
\n Lessor shall from time to time designate in writing to Lessee;<\/p>\n
(iii) if to the Indenture Trustee, the Owner Participant or any
\n Pass Through Trustee, addressed to the Indenture Trustee, the Owner
\n Participant or such Pass Through Trustee at such address or telecopier
\n number as the Indenture Trustee, the Owner Participant or such Pass Through
\n Trustee shall have furnished by notice to Lessor and to Lessee, and, until
\n an address is so furnished, addressed to the Indenture Trustee, the Owner
\n Participant or such Pass Through Trustee at its address or telecopier
\n number set forth in Schedule I to the Participation Agreement; and<\/p>\n
(iv) If to a Certificate Holder which is not a Pass Through
\n Trustee, addressed to such Certificate Holder<\/p>\n
74<\/p>\n
[Second Amended and Restated
\n Lease Agreement (1993 747 A)]<\/p>\n
at its address stated in the Loan Certificate Register maintained pursuant
\n to the Trust Indenture.<\/p>\n
A copy of each notice to Lessor shall be given by the sender thereof to the
\nOwner Participant.<\/p>\n
SECTION 18. Net Lease; No Set-Off, Counterclaim, Etc.<\/p>\n
(a) This Lease is a net lease, and it is intended that the Lessee
\nshall pay all costs and expenses of every character, whether seen or unforeseen,
\nordinary or extraordinary or structural or non-structural, in connection with
\nthe use, operation, maintenance, repair and reconstruction of the Airframe and
\neach Engine by the Lessee, including the costs and expenses particularly set
\nforth in this Lease. Except as set forth in this Section 18(a), the Rent which
\nLessee is obligated to pay shall be paid without the necessity of notice or
\ndemand and without set-off, counterclaim, abatement, suspension, deduction or
\ndefense. If at any time that Lessee is required (a) to make a payment of
\nTermination Value or Fair Market Sales Value pursuant to Section 9 or Stipulated
\nLoss Value pursuant to Section 10, or (b) to pay the purchase price of the
\nAircraft pursuant to Section 19(b), there shall exist a Lessor Lien with respect
\nto the Aircraft (including for this purpose Liens that would be Lessor Liens but
\nfor the proviso to the definition of Lessor Liens) relating to the Owner
\nParticipant (or Lessee shall have previously incurred a charge to discharge such
\na Lessor Lien), then Lessee shall be entitled to deduct from the portion
\nrequired to be paid to the Owner Participant of such payment of Termination
\nValue or Fair Market Sales Value, or such payment of the purchase price, or any
\ncombination thereof, as the case may be, an amount sufficient to so reimburse
\nLessee or to reimburse Lessee for the cost of discharging such Lessor Lien, as
\nthe case may be. Notwithstanding anything contained in this Section 18(a) to
\nthe contrary, any payments of Fair Market Sales Value, Termination Value,
\nStipulated Loss Value, Special Termination Value or EBO Price made to the
\nIndenture Trustee shall be in an amount which, together with any other amounts
\npayable hereunder, is at least sufficient to pay in full, as of the date of
\npayment thereof, the amount of principal of, and any accrued and unpaid interest
\non, the outstanding Loan Certificates, together with Premium, if any, thereon
\nand amounts due the Certificate Holders under the Trust Indenture, if any, and,
\nto such extent, shall not be subject to set-off hereunder.<\/p>\n
(b) Except as otherwise expressly provided, this Lease shall not
\nterminate nor shall the Lessee have any right to terminate this Lease or be
\nentitled to abatement, suspension, deferment or reduction of any Rent which the
\nLessee is obligated<\/p>\n
75<\/p>\n
[Second Amended and Restated
\n Lease Agreement (1993 747 A)]<\/p>\n
to pay hereunder, nor shall the obligations hereunder of the Lessee be affected,
\nby reason of (A) any damage to or the destruction or loss of all or any portion
\nof the Airframe or any Engine from whatever cause, (B) the loss or theft of any
\nportion of the Airframe or any Engine, (C) the taking of the Airframe or any
\nEngine or any portion thereof by condemnation, confiscation, requisition or
\notherwise, (D) the prohibition, limitation or restriction of the Lessee’s use of
\nall or any part of the Airframe or any Engine, or the interference with such use
\nby any Person, (E) the inadequacy or incorrectness of the description of any
\nportion of the Airframe or any Engine or the failure of this Lease to demise to
\nthe Lessee the Airframe or any Engine or any portion thereof, (F) the Lessee’s
\nacquisition or ownership of all or any part of the Airframe or any Engine
\notherwise than pursuant to an express provision of this Lease, (G) any defect in
\ncompliance with specifications, condition, merchantability, design,
\nairworthiness, quality, durability, operation or fitness for use for any purpose
\nof the Airframe or any Engine or any portion thereof, (H) any defect in the
\ntitle to, or registration of or the existence of any Liens or rights of others
\nwhatsoever with respect to, the Airframe or any Engine or any portion thereof,
\n(I) any insolvency, bankruptcy, reorganization or similar proceedings by or
\nagainst any Sublessee or any Person (J) any breach, default or misrepresentation
\nby the Lessor, any Participant or the Indenture Trustee under this Lease or any
\nother Operative Document or any of the documents referred to herein or therein
\nor (K) any invalidity or unenforceability, in whole or in part, of this Lease or
\nany other Operative Document or any of the documents referred to herein or
\ntherein, or any other infirmity herein or therein, or any lack of power or
\nauthority of any party to this Lease or any other Operative Document or any such
\ndocuments to enter into the same, or (L) any other circumstance, happening or
\nact whatsoever, whether or not unforeseen or similar to any of the foregoing, it
\nbeing the intention of the parties hereto that the obligations of the Lessee
\nshall be absolute and unconditional and shall be separate and independent
\ncovenants and agreements and shall continue unaffected unless and until this
\nLease shall have terminated in accordance with its terms upon payment by Lessee
\nof all sums payable by Lessee hereunder and performance by Lessee of all
\nobligations required to be performed by Lessee hereunder.<\/p>\n
The Lessee covenants that it will remain obligated under this Lease in
\naccordance with its terms and will take no action to terminate, rescind or avoid
\nthis lease, notwithstanding the bankruptcy, insolvency, reorganization,
\ncomposition, readjustment, liquidation, dissolution, winding-up or other
\nproceeding affecting the Lessor or the Owner Participant or any assignee of the
\nLessor the Owner Participant or any other action<\/p>\n
76<\/p>\n
[Second Amended and Restated
\n Lease Agreement (1993 747 A)]<\/p>\n
with respect to this Lease which may be taken in any such proceeding by any
\ntrustee or receiver of the Lessor or the Owner Participant or of any assignee of
\nthe Lessor or the Owner Participant or by any court or any of the foregoing
\nactions which may be taken by or against any of the Lessor’s predecessors in
\ninterest in the Airframe or any Engine.<\/p>\n
If for any reason whatsoever this Lease shall be terminated in whole
\nor in part by operation of law or otherwise except as specifically provided
\nherein, Lessee nonetheless agrees, without limitation of the other rights and
\nremedies of Lessor hereunder, to pay to Lessor an amount equal to each Rent
\npayment at the time such payment would have become due and payable in accordance
\nwith the terms hereof had this Lease not been terminated in whole or in part.<\/p>\n
Except as expressly provided herein, the Lessee waives all rights now
\nor hereafter conferred by law (x) to quit, terminate, rescind or surrender this
\nLease or the Airframe or any Engine or any part thereof, or (y) to any
\nabatement, suspension, deferment, return or reduction of the Rent.<\/p>\n
SECTION 19. Renewal Options; Purchase Options; Valuation. <\/p>\n
(a) Renewal Options.<\/p>\n
(1) Fixed Renewal Terms. Not less than 180 days nor more than
\n 365 days before the end of the Basic Term or any Fixed Renewal Term, Lessee
\n may, so long as no Section 14(a), (b), (d) (solely with respect to Lessee’s
\n obligations under Section 7(a) or (b)(viii) hereof or Section 8 hereof),
\n (f) or (g) Default or any Event of Default has occurred and is continuing,
\n deliver to Lessor an irrevocable written notice (which at the option of
\n Lessee made at any time prior to 90 days prior to the end of the Basic Term
\n or such Fixed Renewal Term may be deemed a notice to exercise the
\n applicable purchase option in Section 19(b)) electing to renew this Lease
\n for a term or terms having a duration and at a Basic Rent as determined
\n below (each such term being herein referred to as a “Fixed Renewal Term”).
\n At least 180 days, before the end of the Basic Term Lessee shall, as a
\n condition to its exercise of any option set forth in this Section 19(a)(1),
\n notify Lessor of its demand for an appraisal pursuant to the appraisal
\n procedures of Section 19(c) hereof. The appraiser(s) so appointed shall
\n determine the total useful life, the remaining useful life and the future
\n residual value of the Aircraft on the expiration date for a Fixed Renewal
\n Term as may be set by reason of the maximum period therefor in accordance
\n with the constraints set forth in the following two sentences. The
\n duration of<\/p>\n
77<\/p>\n
[Second Amended and Restated
\n Lease Agreement (1993 747 A)]<\/p>\n
each Fixed Renewal Term shall be a period specified by Lessee before the
\n end of the Basic Term (or the preceding Fixed Renewal Term, as the case may
\n be) which is not less than one year and not more than three years (in
\n integral multiples of six months). Notwithstanding the foregoing, the
\n aggregate term of all Fixed Renewal Terms shall not exceed the lesser of
\n (a) three years and (b) the longest period of time (i) which would cause
\n the Term, after giving effect to all such Fixed Renewal Terms, to be equal
\n to at least 80% of the then estimated useful life of the Aircraft as
\n determined by the appraiser(s) and (ii) at the expiration of which the
\n residual value of the Aircraft, as estimated by the appraiser(s), would be
\n at least equal to 20% of Lessor’s Cost (without taking into account
\n inflation or deflation during the Term). The annual Basic Rent payable
\n during each Fixed Renewal Term shall be equal to one-half of the average
\n annual Basic Rent payments for the Aircraft over the Basic Term.<\/p>\n
(2) Fair Market Renewal Term. So long as no Section 14(a), (b),
\n (d) (solely with respect to Lessee’s obligations under Section 7(a) or
\n (b)(viii) hereof or Section 8 hereof), (f) or (g) Default or any Event of
\n Default has occurred and is continuing, Lessee shall have the right to
\n renew this Lease for additional periods of at least one year commencing at
\n the end of the Basic Term, any Fixed Renewal Term or any prior Fair Market
\n Renewal Term for a Basic Rent equal to the Fair Market Rental Value of the
\n Aircraft for such period (each such renewal term, a “Fair Market Renewal
\n Term”); provided, however, each Fair Market Renewal Term shall be an
\n integral multiple of six months. Notwithstanding the foregoing, the
\n aggregate term for all Fair Market Renewal Terms shall not exceed three
\n years. Each such option to renew shall be exercised upon delivery by
\n Lessee to Lessor of irrevocable written notice of Lessee’s intent to renew
\n the Lease at least 180 days (but not more than 365 days) prior to the
\n commencement of such Fair Market Renewal Term (which at the option of the
\n Lessee made at any time prior to 90 days prior to the anticipated
\n commencement of such Fair Market Renewal Term may be deemed a notice to
\n exercise the applicable purchase option in Section 19(b)).<\/p>\n
(3) Waiver. If no written notice is delivered by Lessee to
\n Lessor pursuant to Section 19(a)(1) or (2) on or before the day specified
\n therefore, Lessee shall be deemed to have waived any right to renew this
\n Lease.<\/p>\n
78<\/p>\n
[Second Amended and Restated
\n Lease Agreement (1993 747 A)]<\/p>\n
(4) Conditions Precedent, Payment of Basic Rent. At the end of
\n the Basic Term or any Renewal Term, if Lessee has elected to renew this
\n Lease as aforesaid, and provided that there shall not then have occurred
\n and be continuing a Default or an Event of Default and that all necessary
\n governmental authorizations and approvals shall have been received and that
\n Basic Rent for the Renewal Term has already been determined as above
\n provided, (i) this Lease shall continue in full force and effect during the
\n Renewal Term, and (ii) Basic Rent for such Renewal Term shall be payable in
\n semi-annual installments in advance or arrears as was the basis of the
\n Basic Rent being paid immediately prior to such Renewal Term, each such
\n installment being due and payable on each Lease Period Date occurring
\n during the Renewal Term.<\/p>\n
(5) Termination Value; Stipulated Loss Value. The amounts which
\n are payable during any Renewal Term in respect of Termination Value as used
\n in Section 15 and Stipulated Loss Value with respect to the Aircraft shall
\n be determined on the basis of the Fair Market Sales Value of the Aircraft
\n as of the commencement of such Renewal Term, amortized on a straight-line
\n basis over such Renewal Term to the projected Fair Market Sales Value of
\n the Aircraft as of the expiration of such Renewal Term, as such Fair Market
\n Sales Value in each case is determined prior to the commencement of such
\n Renewal Term. In determining Fair Market Sales Value for purposes of
\n calculating Stipulated Loss Value and Termination Value for any Renewal
\n Term effect shall be given to the encumbrance on the Aircraft of any Fixed
\n Renewal Term available or in force.<\/p>\n
(b) Purchase Options. Lessee shall have the option, so long as no
\nSection 14(a), (b), (f) or (g) Default or any Event of Default exists on the
\ndate notice of exercise may be given, (i) with respect to subsections (1) and
\n(2) below, upon not more than 365 days and not less than 90 days irrevocable
\nprior written notice to Lessor and (ii) with respect to subsections (3) and (4)
\nbelow, upon not more than 365 days and not less than 180 days irrevocable prior
\nwritten notice to Lessor (which at the option of the Lessee made at any time
\nprior to 90 days prior to the relevant purchase date may be deemed a notice of
\nthe applicable renewal option pursuant to Section 19(a)(1) or 19(a)(2) as the
\nLessee may designate) (each a “Purchase Option Date”), to terminate this Lease
\nand to purchase the Aircraft:<\/p>\n
(1) on any Special Purchase Option Date for a purchase price
\n equal to the greater of (x) the Fair Market Sales Value of the Aircraft on
\n such date or (y) the amount<\/p>\n
79<\/p>\n
[Second Amended and Restated
\n Lease Agreement (1993 747 A)]<\/p>\n
determined by multiplying Lessor’s Cost by the Special Termination Value
\n Percentage with respect to such Date (with respect to any such Date, the
\n “Special Termination Value”);<\/p>\n
(2) on the EBO Date for a purchase price equal to the amount
\n determined by multiplying Lessor’s Cost by the EBO Percentage payable on
\n the EBO Date as provided in Exhibit H hereto (the “EBO Price”);<\/p>\n
(3) on the last Business Day of the Basic Term for a purchase
\n price equal to the Fair Market Sales Value of the Aircraft on such date;
\n and<\/p>\n
(4) on the last Business Day of any Renewal Term for a purchase
\n price equal to the Fair Market Sales Value of the Aircraft on such date.<\/p>\n
Notwithstanding the foregoing but subject to the provisions of Section 8(r) of
\nthe Participation Agreement, the purchase price on any Purchase Option Date
\nshall be sufficient, together with all other amounts payable simultaneously by
\nLessee, to pay in full the payments then required to be made on account of the
\nprincipal amount (and Premium, if any) of and interest on the Loan Certificates
\nthen outstanding. Upon payment to Lessor in immediately available funds of the
\nfull amount of the purchase price (less the principal amount of the Loan
\nCertificates assumed by the Lessee in accordance with Section 8(r) of the
\nParticipation Agreement) plus all Basic Rent due on or prior to such purchase
\ndate (unless denominated “advance” rental), all Supplemental Rent due on or
\nprior to such purchase date (including amounts equal to Premium, if any) and
\npayment of any other amounts then due hereunder (including all reasonable costs
\nor expenses of Lessor (including any applicable sales or transfer taxes) and the
\nOwner Participant in connection with such purchase), Lessor will transfer to
\nLessee, without recourse or warranty (except as to the absence of Lessor Liens
\n(including for this purpose Liens that would be Lessor Liens but for the proviso
\nto the definition of Lessor Liens)), all of Lessor’s right, title and interest
\nin and to the Aircraft.<\/p>\n
(c) Valuation. At any time not earlier than 365 days prior to the
\ndate on which Lessee may purchase an Aircraft pursuant to Section 19(b) hereof
\nor renew this Lease pursuant to Section 19(a) hereof, Lessee may deliver to
\nLessor a revocable notice of its intent to exercise its renewal option or
\npurchase option. For all purposes of this Section 19, including the appraisal
\nreferred to in this Section 19(c), in determining Fair Market Rental Value or
\nFair Market Sales Value, the Aircraft shall be valued (i) as if in the condition
\nand otherwise in<\/p>\n
80<\/p>\n
[Second Amended and Restated
\n Lease Agreement (1993 747 A)]<\/p>\n
compliance with the terms of Section 5 (but subject to Section 5(e)) upon a
\nreturn of the Aircraft in the United States and as if it had been maintained at
\nall times as required in accordance with Section 7(a)(1) and (2) and Section 8,
\n(ii) on the basis of the value which would obtain in an arm’s-length transaction
\nbetween an informed and willing buyer or user or lessee (other than a lessee or
\nan Affiliate of a lessee currently in possession or a used equipment scrap
\ndealer) under no compulsion to buy or lease and an informed and willing seller
\nor lessor unaffiliated with such buyer-user or lessee and under no compulsion to
\nsell or lease, and (iii) in the case of such valuation for determining Fair
\nMarket Rental Value, assuming such lessee would have substantially the same
\nobligations during the Fair Market Renewal Term as provided hereunder including
\nwithout limitation the obligations of Lessee to carry and maintain the insurance
\nrequired by Section 11 hereof. Upon receipt of such notice Lessor and Lessee
\nshall confer in good faith with a view to reaching agreement on the Fair Market
\nRental Value or Fair Market Sales Value of the Aircraft. If the parties have
\nnot so agreed by 240 days prior to the end of the Basic Term or the Renewal Term
\nin question, then the question shall be determined by an appraisal mutually
\nagreed to by two recognized independent aircraft appraisers, one of which
\nappraisers shall be chosen by Lessor and one by Lessee within five Business Days
\nafter Lessor or Lessee shall have received written notice from the other party
\nof a demand that such an appraisal be made, which notice shall specify the
\nappraiser chosen by the party giving the notice or, if such appraisers cannot
\nagree on the amount of such appraisal within five Business Days after the end of
\nsuch five-day period, each shall render its own appraisal and shall by mutual
\nconsent choose another appraiser within five Business Days after the end of such
\nfive-day period. If, within such five-day period, such two appraisers fail to
\nappoint a third appraiser, then either Lessor or Lessee, on behalf of both, may
\napply to the American Arbitration Association (or any successor organization
\nthereto) in Chicago, Illinois for the appointment of such third appraiser. The
\ndecision of the third appraiser so appointed shall be given within ten Business
\nDays after the appointment of such third appraiser. As soon as the third
\nappraiser has delivered his appraisal, that appraisal shall be compared with the
\nappraisals given by the other two appraisers. If the determination of one
\nappraiser is more disparate from the average of all three determinations than
\neach of the other two determinations, then the determination of such appraiser
\nshall be excluded, the remaining two determinations shall be averaged and such
\naverage shall be final and binding upon the parties hereto; otherwise the
\naverage of all three determinations shall be final and binding upon the parties
\nthereto. Lessee and Lessor shall equally bear all expenses relating to such
\nappraisal procedure (other than an<\/p>\n
81<\/p>\n
[Second Amended and Restated
\n Lease Agreement (1993 747 A)]<\/p>\n
appraisal procedure related to Lessee’s purchase option under Section 19(b)(1),
\nthe costs of which Lessee shall in all events bear), provided, that if such
\ntransaction is not consummated (other than as the result of the fault of Lessor)
\nLessee shall bear all expenses relating to such appraisal procedure.<\/p>\n
SECTION 20. Security for Lessor’s Obligation to Certificate Holders.
\nIn order to secure the indebtedness evidenced by the Loan Certificates, Lessor
\nhas agreed in the Trust Indenture, among other things, to assign to the
\nIndenture Trustee this Lease and to mortgage the Aircraft in favor of the
\nIndenture Trustee, subject to the reservations and conditions therein set forth.
\nTo the extent, if any, that this Lease constitutes chattel paper (as such term
\nis defined in the Uniform Commercial Code as in effect in any applicable
\njurisdiction), no security interest in this Lease may be created through the
\ntransfer or possession of any counterpart other than the original counterpart,
\nwhich shall be identified as the counterpart containing the receipt therefor
\nexecuted by the Indenture Trustee as indenture trustee under the Trust Indenture
\non the signature page thereof. Lessee hereby accepts and consents to the
\nassignment of all Lessor’s right, title and interest in and to this Lease
\npursuant to the terms of the Trust Indenture. Lessee agrees to pay directly to
\nthe Indenture Trustee (or, after receipt by Lessee of notice from the Indenture
\nTrustee of the discharge of the Trust Indenture, to Lessor), all amounts of Rent
\n(other than Excluded Payments) due or to become due hereunder and assigned to
\nthe Indenture Trustee and Lessee agrees that the Indenture Trustee’s right to
\nsuch payments hereunder shall be absolute and unconditional and shall not be
\naffected by any circumstance. Notwithstanding the foregoing assignment of this
\nLease, the obligations of Lessor to Lessee to perform the terms and conditions
\nof this Lease shall remain in full force and effect. Lessee further
\nacknowledges that the Trust Indenture provides that so long as the Loan
\nCertificates are outstanding Lessor may not consent to any amendment,
\nmodification or waiver to this Lease without the prior consent of the Indenture
\nTrustee (except as provided in Section 11.06 of the Trust Indenture) and Lessee
\nagrees to provide to the Indenture Trustee a copy of all notices, consents,
\ncertificates or other information provided hereunder to Lessor.<\/p>\n
SECTION 21. Lessor’s Right to Perform for Lessee. If Lessee fails to
\nmake any payment of Rent required to be made by it hereunder or fails to perform
\nor comply with any of its agreements contained herein, then (but in each case,
\nexcept in the case of failure to pay Rent or in the case of failure to maintain
\ninsurance as required hereunder, no earlier than five Business Days after notice
\nas to the occurrence of such failure,<\/p>\n
82<\/p>\n
[Second Amended and Restated
\n Lease Agreement (1993 747 A)]<\/p>\n
whether or not it shall yet constitute an Event of Default hereunder) Lessor may
\nitself make such payment or perform or comply with such agreement but shall not
\nbe obligated hereunder to do so, and the amount of such payment and the amount
\nof the reasonable expenses of Lessor incurred in connection with such payment or
\nthe performance of or compliance with such agreement, as the case may be,
\ntogether with interest thereon at the Past Due Rate, shall be deemed
\nSupplemental Rent, payable by Lessee upon demand.<\/p>\n
SECTION 22. Investment of Security Funds; Liability of Lessor Limited.<\/p>\n
(a) Investment of Security Funds. Any moneys held by Lessor as
\nsecurity hereunder for future payments to Lessee shall, until paid to Lessee, be
\ninvested by Lessor or, if the Trust Indenture shall not have been discharged, by
\nthe Indenture Trustee, as the case may be, as Lessee (or in the event a Default
\nunder Section 14(a), (b), (f) or (g) or an Event of Default has occurred and is
\ncontinuing, Lessor) may from time to time direct in writing (and in absence of a
\nwritten direction by Lessee, there shall be no obligation to invest such moneys)
\nin (i) obligations of, or guaranteed by, the United States Government or
\nagencies thereof, (ii) open market commercial paper of any corporation
\nincorporated under the laws of the United States of America or any State thereof
\nrated at least P-1 or its equivalent by Moody’s Investors Service, Inc. or at
\nleast A-1 or its equivalent by Standard & Poor’s Corporation, (iii) certificates
\nof deposit issued by commercial banks organized under the laws of the United
\nStates or of any political subdivision thereof having a combined capital and
\nsurplus in excess of $200,000,000 which banks or their holding companies have a
\nrating of A or its equivalent by Moody’s Investors Service, Inc. or Standard & Poor’s Corporation; provided, however, that the aggregate amount at any one time
\nso invested in certificates of deposit issued by any one bank shall not exceed
\n5% of such bank’s capital and surplus, (iv) U.S. dollar denominated offshore
\ncertificates of deposit issued by, or offshore time deposits with, any
\ncommercial bank described in (iii) or any subsidiary thereof and (v) repurchase
\nagreements with any financial institution having combined capital and surplus of
\nat least $200,000,000 with any of the obligations described in clause (i)
\nthrough (iv) as collateral. There shall be promptly remitted to Lessee or its
\norder (but no more frequently than monthly) any gain (including interest
\nreceived) realized as a result of any such investment (net of any fees, taxes,
\ncommissions and other expenses, if any, incurred in connection with such
\ninvestment) unless a Section 14(a), (b), (d) (solely with respect to Lessee’s
\nobligations under Section 7(a) or (b)(viii) or Section 8 hereof), (f) or (g)
\nDefault or an Event of Default shall have occurred and be continuing. If a
\nDefault<\/p>\n
83<\/p>\n
[Second Amended and Restated
\n Lease Agreement (1993 747 A)]<\/p>\n
under Section 14(a), (b), (d) (solely with respect to Lessee’s obligations under
\nSection 7(a) or (b)(viii) or Section 8 hereof), (f) or (g) or an Event of
\nDefault shall have occurred and be continuing, Lessor or if the Trust Indenture
\nshall not have been discharged, the Indenture Trustee as assignee of Lessor,
\nshall hold any such gain as security for the obligations of Lessee under this
\nLease and apply it against such obligations as and when due, and once all such
\nDefaults and Events of Default have been remedied any gain not so applied shall
\nbe remitted to Lessee. Lessee shall be responsible for any net loss realized as
\na result of any such investment and shall reimburse Lessor (or the Indenture
\nTrustee, as the case may be) therefor on demand.<\/p>\n
(b) Liability of Lessor Limited. It is expressly agreed and
\nunderstood that all representations, warranties and undertakings of Lessor
\nhereunder shall be binding upon Lessor only in its capacity as trustee under the
\nTrust Agreement, and the institution acting as Lessor shall not be liable in its
\nindividual capacity for any breach thereof except for its gross negligence or
\nwillful misconduct or for breach of its covenants, representations and
\nwarranties contained herein, to the extent covenanted or made in its individual
\ncapacity.<\/p>\n
SECTION 23. Miscellaneous. Any provision of this Lease which is
\nprohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
\nbe ineffective to the extent of such prohibition or unenforceability without
\ninvalidating the remaining provisions hereof, and any such prohibition or
\nunenforceability in any jurisdiction shall not invalidate or render
\nunenforceable such provision in any other jurisdiction. No term or provision of
\nthis Lease may be changed, waived, discharged or terminated orally, but only by
\nan instrument in writing signed by Lessor, Lessee and any assignee of Lessor’s
\nrights hereunder. This Lease shall constitute an agreement of lease, and
\nnothing contained herein shall be construed as conveying to Lessee any right,
\ntitle or interest in the Aircraft except as a lessee only. The section and
\nparagraph headings in this Lease and the table of contents are for convenience
\nof reference only and shall not modify, define, expand or limit any of the terms
\nor provisions hereof and all references herein to numbered sections, unless
\notherwise indicated, are to sections of this Lease. THIS LEASE HAS BEEN
\nDELIVERED IN THE STATE OF ILLINOIS AND SHALL IN ALL RESPECTS BE GOVERNED BY AND
\nCONSTRUED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF ILLINOIS
\nINCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE. This Lease may
\nbe executed by the parties hereto in separate counterparts, each of which when
\nso executed and delivered shall be an original, but all such counterparts shall
\ntogether constitute but one and the same instrument.<\/p>\n
84<\/p>\n
[Second Amended and Restated
\n Lease Agreement (1993 747 A)]<\/p>\n
SECTION 24. Successor Trustee. Lessee agrees that in the case of the
\nappointment of any successor Owner Trustee pursuant to the terms of the Trust
\nAgreement, such successor Owner Trustee shall, upon written notice by such
\nsuccessor Owner Trustee, succeed to all the rights, powers and title of Lessor
\nhereunder and shall be deemed to be Lessor and the owner of the Aircraft for all
\npurposes hereof without in any way altering the terms of this Lease or Lessee’s
\nobligations hereunder. One such appointment and designation of a successor
\nOwner Trustee shall not exhaust the right to appoint and designate further
\nsuccessor Owner Trustees pursuant to the Trust Agreement, but such right may be
\nexecuted repeatedly as long as this Lease shall be in effect.<\/p>\n
SECTION 25. Bankruptcy. Lessee hereby acknowledges that Lessor and
\nthe Indenture Trustee are entitled to the benefits of Section 1110 of the
\nBankruptcy Code with respect to the Aircraft and that this Lease is a “lease”
\nwithin the meaning of said Section 1110, including that it is to be treated as a
\nlease for federal tax purposes. Lessee agrees not to take any position in
\nconnection with any bankruptcy proceedings involving it that is inconsistent
\nwith a lessor’s rights under Section 1110 of the Bankruptcy Code or any
\ncomparable or successor provision affording protection to lessors of aircraft.<\/p>\n
* * *<\/p>\n
85<\/p>\n
[Second Amended and Restated
\n Lease Agreement (1993 747 A)]<\/p>\n
IN WITNESS WHEREOF, Lessor and Lessee have each caused this Second
\nAmended and Restated Lease Agreement to be duly executed as of the day and year
\nfirst above written.<\/p>\n
STATE STREET BANK AND TRUST COMPANY, not in its
\n individual capacity, except as expressly
\n provided in Section 4 hereof, but solely as
\n Owner Trustee,
\n Lessor<\/p>\n
By __________________________________
\n Vice President<\/p>\n
UNITED AIR LINES, INC.,
\n Lessee<\/p>\n
By __________________________________
\n Vice President and Treasurer<\/p>\n
Receipt of this original counterpart of the foregoing Second Amended and
\nRestated Lease Agreement is hereby acknowledged on this _____ day of May,
\n1995.\/1\/<\/p>\n
FIRST SECURITY BANK OF UTAH, NATIONAL ASSOCIATION
\n Indenture Trustee<\/p>\n
By _________________________________
\n Authorized Officer<\/p>\n
– ——————–
\n\/1\/This language contained in the original counterpart only.<\/p>\n
86<\/p>\n
[Second Amended and Restated
\n Lease Agreement (1993 747 A)]<\/p>\n
EXHIBIT A<\/p>\n
FIRST AMENDED AND RESTATED LEASE SUPPLEMENT NO. 1 (1993 747 A)<\/p>\n
FIRST AMENDED AND RESTATED LEASE SUPPLEMENT No. 1 (1993 747 A), dated
\nMay __, 1995, between STATE STREET BANK AND TRUST COMPANY, not in its individual
\ncapacity, but solely as Owner Trustee under the First Amended and Restated Trust
\nAgreement (1993 747 A), dated as of May 1, 1995, between such Owner Trustee and
\nthe Owner Participant referred to therein (such Owner Trustee, in its capacity
\nas such Owner Trustee being herein called “Lessor”), and UNITED AIR LINES, INC.
\n(“Lessee”).<\/p>\n
Lessor and Lessee have heretofore entered into that certain Second
\nAmended and Restated Lease Agreement (1993 747 A), dated as of May 1, 1995,
\nrelating to one Boeing 747-422 aircraft (herein called the “Lease” and the
\ndefined terms therein being hereinafter used with the same meanings). The Lease
\nprovides for the execution and delivery from time to time of Lease Supplements
\nfor the purpose of leasing the Airframe and Engines under the Lease as and when
\ndelivered by Lessor to Lessee in accordance with the terms thereof.<\/p>\n
The Lease relates to the Airframe and Engines described below, and a
\ncounterpart of the Lease is attached hereto, and made a part hereof, and this
\nLease Supplement together with such attachment, is being filed for recordation
\non the date hereof with the Federal Aviation Administration as one document.\/2\/<\/p>\n
The Lease relates to the Airframe and Engines described below, and a
\ncounterpart of that certain Lease Agreement (1993 747 A) dated as of April 1,
\n1993 between Lessee and Wilmington Trust Company, as Original Lessor, attached
\nand made a part of Lease Supplement No. 1 (1993 747 A) dated April 20, 1993, has
\nbeen recorded by the Federal Aviation Administration on April 21, 1995, as one
\ndocument and assigned Conveyance No. FF08936.\/3\/<\/p>\n
NOW, THEREFORE, in consideration of the premises and other good and
\nsufficient consideration, Lessor and Lessee hereby agree as follows:<\/p>\n
1. Lessor hereby delivers and leases to Lessee under the Lease
\n and Lessee hereby accepts and leases from Lessor under the Lease the
\n following described Boeing Model
\n– ——————-
\n \/2\/This language for Lease Supplement No. 1.<\/p>\n
\/3\/This language for other Lease Supplements.<\/p>\n
87<\/p>\n
[Second Amended and Restated
\n Lease Agreement (1993 747 A)]<\/p>\n
747-422 aircraft (the “Aircraft”), which Aircraft as of the date hereof
\n consists of the following components:<\/p>\n
(i) Airframe: U.S. Registration No. N189UA and
\n manufacturer’s serial no. 26878; and<\/p>\n
(ii) Engines: four (4) Pratt & Whitney Model PW4056 engines
\n bearing, respectively, manufacturer’s serial nos. P727301, P727302,
\n P727303 and P727304 (each of which engines has 750 or more rated
\n takeoff horsepower or the equivalent of such horsepower).<\/p>\n
2. The Delivery Date of the Aircraft was April 20, 1993. Except
\n as otherwise provided in the Lease, the Term for the Aircraft shall
\n commence on the Delivery Date and end on the Lease Expiry Date.<\/p>\n
3. Lessee hereby confirms its agreement to pay Lessor Basic Rent
\n for the Aircraft throughout the Term therefor in accordance with Section 3
\n of the Lease.<\/p>\n
4. Lessee hereby confirms to Lessor that Lessee has accepted the
\n Aircraft for all purposes hereof and of the Lease as being airworthy, in
\n good working order and repair and without defect or inherent vice in title,
\n condition, design, operation or fitness for use; provided, however, that
\n nothing contained herein or in the Lease shall in any way diminish or
\n otherwise affect any right Lessee or Lessor may have with respect to the
\n Aircraft against The Boeing Company, or any subcontractor or supplier of
\n The Boeing Company, under the Purchase Agreement or otherwise.<\/p>\n
5. All of the terms and provisions of the Lease are hereby
\n incorporated by reference in this Lease Supplement to the same extent as if
\n fully set forth herein.<\/p>\n
6. This Lease Supplement may be executed by the parties hereto
\n in separate counterparts, each of which when so executed and delivered
\n shall be an original, but all such counterparts shall together constitute
\n but one and the same instrument.<\/p>\n
* * *<\/p>\n
88<\/p>\n
[Second Amended and Restated
\n Lease Agreement (1993 747 A)]<\/p>\n
IN WITNESS WHEREOF, Lessor and Lessee have caused this First Amended and
\nRestated Lease Supplement to be duly executed on the day and year first above
\nwritten.<\/p>\n
STATE STREET BANK AND TRUST
\n COMPANY, not in its individual
\n capacity, but solely as Owner
\n Trustee,
\n Lessor<\/p>\n
By:
\n ———————————
\n Title:
\n ——————————<\/p>\n
UNITED AIR LINES, INC.,
\n Lessee<\/p>\n
By:
\n ———————————
\n Vice President and Treasurer<\/p>\n
Receipt of this original counterpart of the foregoing First Amended and
\nRestated Lease Supplement is hereby acknowledged on this _____ day of May,
\n1995.\/4\/<\/p>\n
FIRST SECURITY BANK OF UTAH,
\n NATIONAL ASSOCIATION
\n Indenture Trustee<\/p>\n
By
\n ———————————-
\n Authorized Officer<\/p>\n
– ———————
\n \/4\/This language contained in the original counterpart only.<\/p>\n
A-3<\/p>\n
[Second Amended and Restated
\n Lease Agreement (1993 747 A)]<\/p>\n
EXHIBIT B<\/p>\n
BASIC RENT AND EXCESS AMOUNT SCHEDULE
\n ————————————-<\/p>\n
\n\n ARREARS RENT ADVANCE RENT EXCESS AMOUNT
\n AS A PERCENTAGE AS A PERCENTAGE AS A PERCENTAGE
\nDATE OF LESSOR’S COST OF LESSOR’S COST OF LESSOR’S COST
\n– —- —————- —————- —————-
\n
\n<\/c><\/c><\/c><\/s><\/caption>\n<\/table>\n FOR PURPOSES OF CONFIDENTIALITY, EXHIBIT B TO THE LEASE AGREEMENT IS
\nINTENTIONALLY OMITTED FROM THE COPY OF THE LEASE AGREEMENT ON FILE WITH THE
\nFEDERAL AVIATION ADMINISTRATION.<\/p>\n
[Second Amended and Restated
\n Lease Agreement (1993 747 A)]<\/p>\n
EXHIBIT C<\/p>\n
STIPULATED LOSS VALUE SCHEDULE
\n ——————————<\/p>\n
\n\n STIPULATED LOSS VALUE
\nDATE (as a percentage of Lessor’s Cost)
\n– —- ———————————-
\n
\n<\/c><\/s><\/caption>\n<\/table>\n FOR PURPOSES OF CONFIDENTIALITY, EXHIBIT C TO THE LEASE AGREEMENT IS
\nINTENTIONALLY OMITTED FROM THE COPY OF THE LEASE AGREEMENT ON FILE WITH THE
\nFEDERAL AVIATION ADMINISTRATION.<\/p>\n
[Second Amended and Restated
\n Lease Agreement (1993 747 A)]<\/p>\n
EXHIBIT D<\/p>\n
TERMINATION VALUE SCHEDULE
\n ————————–<\/p>\n
\n\n TERMINATION VALUE
\nDATE (as a percentage of Lessor’s Cost)
\n– —- ———————————-
\n
\n<\/c><\/s><\/caption>\n<\/table>\n FOR PURPOSES OF CONFIDENTIALITY, EXHIBIT D TO THE LEASE AGREEMENT IS
\nINTENTIONALLY OMITTED FROM THE COPY OF THE LEASE AGREEMENT ON FILE WITH THE
\nFEDERAL AVIATION ADMINISTRATION.<\/p>\n
[Second Amended and Restated
\n Lease Agreement (1993 747 A)]<\/p>\n
EXHIBIT E<\/p>\n
RENT RECALCULATION AND
\n INDEMNIFICATION VERIFICATION
\n —————————-<\/p>\n
Any recalculation of Basic Rent, Stipulated Loss Value percentages,
\nTermination Value percentages, Special Termination Value percentages and EBO
\nPercentage pursuant to the Lease and any calculation of any payment to the Owner
\nParticipant or Lessee under the Tax Indemnity Agreement or Section 7(b) of the
\nParticipation Agreement shall be determined by the Owner Participant, computed
\non the basis of the same methodology and assumptions used by the Owner
\nParticipant in determining the Basic Rent, Stipulated Loss Value percentages,
\nTermination Value percentages, Special Termination Value percentages and EBO
\nPercentage as of the Delivery Date except as such assumptions have been modified
\npursuant to Section 3 of the Lease; provided, however, Lessee may request (A)
\nCapstar Partners, Inc., or any other financial advisor to Lessee to verify such
\ncalculations but without any requirement that the Owner Participant disclose to
\nsuch advisor such methodology and assumptions and (B) if Lessee believes that
\nsuch calculations by the Owner Participant are in error then a nationally
\nrecognized firm of accountants selected by the Owner Participant and reasonably
\nacceptable to Lessee (which may be the Owner Participant’s independent public
\naccountants) shall be permitted to verify such calculations and the Owner
\nParticipant will make available to such firm (subject to the execution by such
\nfirm of a confidentiality agreement reasonably acceptable to the Owner
\nParticipant) such methodology and assumptions and any changes made therein
\npursuant to Section 3 of the Lease and any other information reasonably
\nnecessary for such verification requested by such firm. In the event of a
\nverification under clause (B) of this Exhibit E the determination by such firm
\nof accountants shall be final. Lessee will pay the reasonable costs and expenses
\nof the verification under clause (B) of this Exhibit E; provided, however, if as
\na result of such verification process the Basic Rent is adjusted and such
\nadjustment causes the Net Present Value of Rents to decline by 10 or more basis
\npoints or there is a material error in the computation of the Stipulated Loss
\nValue percentages, Termination Value percentages, Special Termination Value
\npercentages or EBO Percentage in the Owner Participant’s original statement in
\nthe Owner Participant’s favor, or indemnity payment is reduced by $10,000 or
\nmore, the Owner Participant shall pay the reasonable costs and expenses of such
\nverification process. Such recalculated Basic Rent, Stipulated Loss Value
\npercentages, Termination Value percentages, Special Termination Value
\npercentages and EBO Percentage shall be set forth in an amendment to the Lease.<\/p>\n
[Second Amended and Restated
\n Lease Agreement (1993 747 A)]<\/p>\n
EXHIBIT F<\/p>\n
\n\n SCHEDULE OF COUNTRIES AUTHORIZED
\n FOR DOMICILE OF PERMITTED SUBLESSEES
\n ————————————
\n
\n Australia Luxembourg<\/p>\n Austria *Malaysia <\/p>\n
Belgium Netherlands<\/p>\n
*Brazil New Zealand<\/p>\n
Canada Norway<\/p>\n
Denmark *Portugal<\/p>\n
Finland Singapore<\/p>\n
France *South Korea<\/p>\n
Germany *Spain <\/p>\n
*Greece Sweden <\/p>\n
*Iceland Switzerland<\/p>\n
Ireland *Thailand<\/p>\n
Italy United Kingdom<\/p>\n
Japan *Venezuela
\n<\/c><\/s><\/caption>\n<\/table>\n
_______________________
\n* Designates “Restricted Country”.<\/p>\n
[Second Amended and Restated
\n Lease Agreement (1993 747 A)]<\/p>\n
EXHIBIT G<\/p>\n
\n\n SCHEDULE OF COUNTRIES AUTHORIZED
\n FOR AIRCRAFT REGISTRATION
\n ——————————–
\n
\n Australia Luxembourg<\/p>\n Austria *Malaysia<\/p>\n
Belgium Netherlands <\/p>\n
*Brazil New Zealand<\/p>\n
Canada Norway <\/p>\n
Denmark *Portugal<\/p>\n
Finland Singapore <\/p>\n
France *South Korea <\/p>\n
Germany *Spain <\/p>\n
*Greece Sweden <\/p>\n
*Iceland Switzerland<\/p>\n
Ireland *Thailand<\/p>\n
Italy United Kingdom<\/p>\n
Japan *Venezuela
\n<\/c><\/s><\/caption>\n<\/table>\n
_______________________
\n* Designates “Restricted Country”.<\/p>\n
[Second Amended and Restated
\n Lease Agreement (1993 747 A)]<\/p>\n
EXHIBIT H<\/p>\n
\n\n LESSOR’S COST, ENGINE COST, COMMENCEMENT DATE,
\n LEASE EXPIRY DATE, STIPULATED LOSS VALUE DATE,
\n EBO DATE, EBO PERCENTAGE, SPECIAL PURCHASE
\n OPTION DATES AND SPECIAL TERMINATION VALUE PERCENTAGES
\n (EBO Percentage, EBO Installment Percentages and
\n Special Termination Value Percentages expressed
\n as a percentage of Lessor’s Cost)
\n ————————————————————–
\n
\n Lessor’s Cost: $127,500,000<\/p>\n Engine Cost: $ 7,000,000<\/p>\n
Commencement Date: October 19, 1993<\/p>\n
Lease Expiry Date: October 19, 2017<\/p>\n
Stipulated Loss Value Date: the 19th day of each
\n calendar month during the
\n Interim Term, the Basic
\n Term and any Renewal Term<\/p>\n
EBO Date: October 19, 2011<\/p>\n
EBO Percentage: _____%<\/p>\n
Special Purchase Special Termination<\/p>\n
Option Dates: Value Percentages:
\n —————- ——————-<\/p>\n
_______________ _____%
\n _______________ _____%
\n _______________ _____%
\n<\/c><\/s><\/caption>\n<\/table>\n
[Second Amended and Restated
\n Lease Agreement (1993 747 A)]<\/p>\n
EXHIBIT H<\/p>\n
LESSOR’S COST, ENGINE COST, COMMENCEMENT DATE,
\n LEASE EXPIRY DATE, STIPULATED LOSS VALUE DATE,
\n EBO DATE, EBO PERCENTAGE, SPECIAL PURCHASE
\n OPTION DATES AND SPECIAL TERMINATION VALUE PERCENTAGES
\n (EBO Percentage, EBO Installment Percentages and
\n Special Termination Value Percentages expressed
\n as a percentage of Lessor’s Cost)
\n ————————————————————————<\/p>\n
FOR PURPOSES OF CONFIDENTIALITY, EXHIBIT H TO THE LEASE AGREEMENT IS
\n INTENTIONALLY OMITTED FROM THE COPY OF THE LEASE AGREEMENT ON FILE WITH THE
\n FEDERAL AVIATION ADMINISTRATION.<\/p>\n","protected":false},"template":"","meta":{"_acf_changed":false,"_stopmodifiedupdate":true,"_modified_date":"","_cloudinary_featured_overwrite":false},"corporate_contracts_companies":[8935,9136],"corporate_contracts_industries":[9521,9415],"corporate_contracts_types":[9613,9614],"class_list":["post-42099","corporate_contracts","type-corporate_contracts","status-publish","hentry","corporate_contracts_companies-state-street-corp","corporate_contracts_companies-ual-corp","corporate_contracts_industries-transportation__air","corporate_contracts_industries-financial__banks","corporate_contracts_types-operations","corporate_contracts_types-operations__equipment"],"acf":[],"_links":{"self":[{"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts\/42099","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts"}],"about":[{"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/types\/corporate_contracts"}],"wp:attachment":[{"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/media?parent=42099"}],"wp:term":[{"taxonomy":"corporate_contracts_companies","embeddable":true,"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts_companies?post=42099"},{"taxonomy":"corporate_contracts_industries","embeddable":true,"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts_industries?post=42099"},{"taxonomy":"corporate_contracts_types","embeddable":true,"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts_types?post=42099"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}