As filed with Securities and Exchange Commission on June , 1995
Registration No. 33-77574
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
POST-EFFECTIVE AMENDMENT NO. 1
FORM S-2
REGISTRATION STATEMENT
Under
THE SECURITIES ACT OF 1933
CCAIR, INC.
(Exact name of registrant as specified in charter)
Delaware 56-1428192
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
4700 Yorkmont Road, Second Floor
Charlotte, North Carolina 28208
(704) 359-8990
(Address, including Zip Code, and telephone number,
including area code, of registrant's principal executive office.)
KENNETH W. GANN, PRESIDENT
CCAIR, INC.
4700 Yorkmont Road, Second Floor
Charlotte, North Carolina 28208
(704) 359-8990
(Name, address, including Zip Code, and telephone number,
including area code, of agent for service)
Copies to:
W. SCOTT COOPER
RAYBURN, MOON & SMITH, P.A.
227 West Trade Street, Suite 1200
Charlotte, North Carolina 28202
(704) 334-0891
Approximate date of commencement of proposed offering to the public:
As soon as practicable after the effective date of this Post-Effective
Amendment.
If any of the securities being registered on this Form are to be offered
on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act of 1933, check the following box: [X]
If the Registrant elects to deliver its latest annual report to security
holders, or a complete and legible facsimile thereof, pursuant to Item
11(a)(1) of this Form, check the following box: [X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the
following box and list the Securities Act registration statement number
of the earlier effective registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the
Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule
434, please check the following box. [ ]
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
Title of each class of Se- Amount to be Proposed Maximum Of- Proposed Maximum Ag- Amount of Reg-
curities to be Registered Registered fering Price Per Unit (1) gregate Offering Price (1) istration Fee
Common Stock, par value
<S> <C> <C> <C> <C>
$0.01 per share 500,000 $3.875 $1,937,500 $668.10
</TABLE>
(1) Estimated in accordance with Rule 457(c) for the purpose of
calculating the amount of the registration fee. A filing fee of $668.10
was paid with the initial filing of this Registration Statement. No
additional fee is required
___________________________________________________________________________
Exhibit Index can be found on page E-I.
<PAGE>
CCAIR, INC.
CROSS REFERENCE SHEET
Form S-2 Item Location in Prospectus
I. Forepart of Registration Front Cover Page
Statement and Outside
Front Cover Page of
Prospectus
II. Inside Front and Outside Inside Front Cover Page;
Back Cover Pages of Available Information;
Prospectus Incorporation of Certain
Documents by Reference
III. Summary Information, Risk Risk
Factors and Ratio of Earn- Factors
ings to Fixed Charges
IV. Use of Proceeds Use of Proceeds
V. Determination of Offering Price Determination of
Offering Price
VI. Dilution Not Applicable
VII. Selling Security Holders Selling Shareholders
VIII.Plan of Distribution Description of Capital Stock
IX. Description of Securities Description of Capital Stock
X. Interests of Named Experts Not Applicable
and Counsel
XI. Information with Respect Incorporation of Certain
to the Registrant Documents by Reference
XII. Incorporation of Certain Incorporation of Certain
Information by Reference Documents by Reference
XIII.Disclosure of Commission Indemnification of
Position on Indemnification Officers and Directors
for Securities Act Liabilities
<PAGE>
PROSPECTUS
250,000
CCAIR, INC.
Common Stock
(Par Value $0.01 per share)
_____________________________
The 250,000 shares offered hereby (the "Shares") are being
offered by CCAIR, Inc. (the "Company") to Short Brothers (USA),
Inc. (the "Offeree"), a creditor of the Company under certain of
the Company's aircraft leases (the "Leases"). The Company's
common stock (the "Common Stock") is quoted in the National
Association of Securities Dealers, Inc. Automated Quotation
System ("NASDAQ") Small Cap Stock Market under the symbol CCAR.
On June 27, 1995, the closing bid price of the Common Stock, as
reported by NASDAQ, was $3.5625 per share. The Company has only
one class of voting common stock outstanding.
See "Risk Factors" for certain considerations relevant to an
investment in Common Stock.
_____________________________
This Prospectus will be used by the Offeree in connection with
the resale of the Shares.
_____________________________
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED
UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
____________________________
The date of this Prospectus is July ____, 1995.
(A Redherring appears in the left-hand corner of the page, rotated 90
degrees. The text is as follows:)
Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with
the Securities and Exchange Commission. These securities may not be
sold nor may offers to buy be accepted prior to the time the registration
statement becomes effective. This prospectus shall not constitute an
offer to sell or the solicitation of an offer to buy nor shall there be any
sale of these securities in any State in which such offer, solicitation
or sale would be unlawful prior to registration or qualification under the
securities laws of any such state.
<PAGE>
AVAILABLE INFORMATION
The Company is subject to the informational requirements of
the Securities Exchange Act of 1934 and, in accordance therewith,
files reports, proxy statements and other information with the
Securities and Exchange Commission (the "Commission"). Such
reports and proxy statements, and other information filed by the
Company with the Commission may be inspected and copied at the
public reference facilities maintained by the Commission at 450
Fifth Street, NW, Washington, DC, 20549 and at the following
regional offices of the Commission: Jacob K. Javits Federal
Building, 26 Federal Plaza, New York, New York, 10278; and the
Everett McKinley Dirksen Building, 219 South Dearborn Street,
Room 1204, Chicago, Illinois, 60604. Copies of such material may
be obtained from the Public Reference Section of the Commission
at 450 Fifth Street, NW, Washington, DC, 20549, upon payment at
prescribed rates. This Prospectus does not contain all the
information set forth in the Company's Registration Statement
filed with the Commission of which this Prospectus is a part and
to which reference is hereby made.
TABLE OF CONTENTS
Page
Risk Factors . . . . . . . . . . . . . . . . . . . . . . . . 3
Capitalization . . . . . . . . . . . . . . . . . . . . . . . 9
Use of Proceeds . . . . . . . . . . . . . . . . . . . . . . 10
Determination of Offering Price . . . . . . . . . . . . . . . 10
Selling Shareholders . . . . . . . . . . . . . . . . . . . . 11
Plan of Distribution . . . . . . . . . . . . . . . . . . . . 12
Certain Federal Income Tax Considerations . . . . . . . . . . 12
Description of Capital Stock . . . . . . . . . . . . . . . . 13
Indemnification of Officers and Directors . . . . . . . . . . 14
Legal Matters . . . . . . . . . . . . . . . . . . . . . . . . 14
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The Company's Annual Report on Form 10-K for the fiscal year
ended June 30, 1994, as previously filed by the Company with the
Commission (the "1994 10-K") and the Company's quarterly reports
on Form 10-Q for the quarters ended September 30, 1994 and
December 31, 1994 and March 31, 1995, are each incorporated by
reference in this Prospectus.
A copy of each of the 1994 10-K and the Company's most
recent quarterly report on Form 10-Q is being provided to each
person to whom this Prospectus is delivered. Any statement
contained in a document incorporated by reference herein or
attached as an Exhibit
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<PAGE>
shall be deemed to be modified or superseded for all purposes
to the extent that a statement contained in this Prospectus or
in any other subsequently filed document which is also
incorporated by reference herein modifies or replaces such
statement. The Company will provide, without charge, to each
person to whom this Prospectus is delivered, on the written or
oral request of any such person, a copy of any or all of the
foregoing documents which have been incorporated herein by
reference (other than exhibits to such documents). Requests
should be directed to: Eric Montgomery, Secretary, CCAIR,
Inc., 4700 Yorkmont Road, Second Floor, Charlotte, North
Carolina 28208.
RISK FACTORS
The following factors, among others, should be considered
carefully in evaluating the Company and its business before
purchasing the Common Stock offered by this Prospectus.
Relationship with USAir, Inc. Substantially all of the
Company's passenger revenue is generated by passengers who are
connecting with USAir, Inc. ("USAir") flights and is determined
under an agreement for the sharing of joint passenger fares and
division of revenue with USAir (the "Agreement"). The Agreement
expires on October 31, 1998. The Agreement provides that it may
be terminated upon 180 days prior written notice for any reason
by either USAir or the Company or upon ten (10) days prior
written notice by USAir under certain conditions, including if:
(i) the Company fails to maintain at least a minimum required
operating schedule; (ii) during any one month the Company's
flight completion percentage is less than 96% due to
cancellations attributable to maintenance or operational
deficiencies within the Company's control; (iii) the Company
fails to comply with the trademark licensing provisions of the
Agreement; (iv) the Company becomes insolvent; or (v) there is a
change of control or ownership of 51% or more of the Common Stock
without the consent of USAir. During the Company's Chapter 11
proceeding, USAir moved to terminate the Agreement, but the
motion to terminate was withdrawn. The Company believes that its
relationship with USAir is good.
The Agreement does not prevent USAir from serving markets
that the Company currently serves. If USAir chose to serve a
substantial number of routes presently served by the Company or
chose to replace Company flights with its own flights or flights
of its wholly owned regional carriers, there would be a material
adverse effect on the Company's business and the Company may have
to terminate its passenger operations as presently exists.
Although there is no assurance that USAir will not take any such
actions or that the Agreement will not be terminated or amended
prior to the expiration date, the Company believes that the
Agreement is beneficial to both the Company and USAir and that
there are significant incentives for the continuation of the
Agreement.
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<PAGE>
The Company and USAir have recently implemented schedule
changes that have had the effect of placing 87% of the Company's
scheduled service in market pairs not served by USAir jets. The
Company has experienced positive results from these schedule
changes through reduced operating expenses and greater control
over revenue opportunities.
Because of the Company's relationship with USAir, the
Company's business also could be adversely affected by events
that adversely affect USAir or by changes in business strategies
of USAir. For example, if USAir were adversely affected by work
stoppages or other labor difficulties, the Company's connecting
passenger traffic from USAir would be reduced and the Company's
ability to provide service to passengers desiring USAir
connecting flights likewise would be adversely affected. To the
extent that such labor difficulties affect the airports at which
USAir provides ground handling services to the Company, these
difficulties would also adversely affect the Company. Similarly,
if USAir were to decide to curtail growth at its Charlotte hub or
reduce its operations in Charlotte, the Company's operations and
prospects for continued growth would be adversely affected. The
Company is not aware of any such developments.
USAir reported a net loss of $684.9 million on revenue of $7
billion for the year ended December 31, 1994, compared with a net
loss of $393.1 million on revenue of $7.1 billion for the prior
year period. USAir cited adverse weather, two aircraft
accidents, an intense competitive environment and its own cost
structure as negative factors on the results of operations in
1994. USAir projects that to the extent that those factors,
particularly its higher cost structure relative to its
competitors, continue to be present, USAir's results of
operations will continue to be materially and adversely affected.
For the first quarter of 1995, USAir reported improved results
with a 50% reduction of its net loss from $196.7 million to $96.9
million as compared to the prior year period. USAir cited milder
weather and improved traffic as factors leading to the reduction
of its net loss. For the second quarter of 1995, USAir reported
income of $112.9 million or $1.47 per share.
Nature of the Airline Industry. The commercial airline
industry in the United States has undergone major structural
changes since it was deregulated by Congress in the latter part
of 1978. In the ensuing period, there has been substantial
consolidation and integration of both major and regional
carriers, including the acquisition or association of most
regional carriers by or with major carriers. Such consolidation
and integration, together with automated computer reservation
systems, "hub and spoke" route systems and marketing programs
such as frequent flyer programs have substantially influenced
competitive conditions. The Company believes that it has
properly positioned itself to benefit
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<PAGE>
from these structural realities. However, any event which
causes a material change in the Company's ability to benefit
from these factors, such as termination or modification of its
relationship with USAir, could cause these forces to work
against the Company and have a material adverse effect on its
results.
As is characteristic of the airline industry, the Company is
subject to a high degree of financial and operating leverage.
Due to high fixed costs, the expenses of each flight do not vary
proportionately with the number of passengers carried, but the
revenues generated from a particular flight are directly related
to the number of passengers carried. Accordingly, while a
decrease in the number of passengers carried would cause a
corresponding decrease in revenue if not offset by higher fares,
it may result in a disproportionately greater decrease in
profits.
The airline industry is also sensitive to cyclical downturns
in the general economy. Because a substantial portion of airline
travel, both personal and to lesser extent business, is
discretionary, the industry has historically tended to experience
weaker financial results during economic downturns. The
operating and financial results of the Company may be negatively
impacted by any downturn in national or regional economic
conditions.
The cost of fuel is a major component of operating expense
for all airlines. In general, market prices of fuel have
remained relatively level in the last five years, except for a
spike upward in the prices occasioned by the Gulf War from August
1990 to March 1991. There can be no assurance that increases in
fuel costs will not be substantial, or that supplies will remain
plentiful. Currently a federal fuel tax surcharge of 4.3(cent
mark) per gallon is scheduled to take effect October 1, 1995.
Substantial increases in the cost of fuel, or a reduction in fuel
supplies, can have an adverse effect on the Company's income and
growth prospects if increases are not passed on to its passengers
through higher fares, or adequate fuel cannot be acquired to
support operations.
In addition, pilot turnover has become a significant issue
among regional carriers as major carriers have satisfied their
expanding demand for experienced commercial pilots by hiring
increasing numbers of regional pilots. To date, pilot turnover
has not been a major issue for the Company since the Company has
been able to hire and train sufficient numbers of new pilots to
maintain its operations. However, no assurance can be given that
pilot turnover will not become a major issue in the future
particularly as major carriers expand and require significant
additional pilots. Similarly, there can be no assurance that
sufficient numbers of new pilots will be available to support any
future growth even if pilot turnover does not become a major
issue for the Company.
Liquidity. For the fiscal year ended June 30, 1994, the
Company reported a net loss of $4,755,769. The net loss followed
a net loss of $2,783,433 for the fiscal year ended June 30, 1993.
5
<PAGE>
In the fiscal year ended June 30, 1994, the Company experienced a
net decrease in cash of $2,094,137. The Company's ability to
meet its liquidity requirements is dependent upon its ability to
obtain sufficient cash flow from operations.
For the quarter ended March 31, 1995, the Company reported
net income of $447,091 as compared to a net loss of $1,850,922
for the prior year period. For the nine-month period ended March
31, 1995, the Company reported net income of $73,840 as compared
to a net loss of $4,171,365 for the prior year period. The Company's
cash position was $448,058 at March 31, 1995.The Company has reported
its preliminary unaudited results for the fourth quarter ended June
30, 1995 and the fiscal year then ended. The net profit for the June
1995 quarter was $734,000 or 10 cents per share compared to a net
loss of $584,000 or 8 cents per share in the June 1994 quarter.
The net income for the fiscal year ended June 1995 was $808,000
or 11 cents per share compared to a net loss of $4,756,000 or
68 cents per share for fiscal year 1994. The three-month and
nine-month results have been positively affected by increasing
revenues per passenger mile and by cost reduction strategies put
in place by the Company. The nine-month results reflect the
reversal of $585,000 of accrued lease payments previously due to a
lessor which were made a part of new lease terms in November of 1994.
The Company's cash needs result from accounts payable,
continuing operations, capital expenditures (expected to be
$400,000/month) and the payment of creditors in accordance with
the schedule set forth in the Company's plan of reorganization
(the "Plan"). One of the effects of the large operating losses
experienced by the Company in 1994 and 1993 was a substantial
increase in accounts payable and accrued expenses. The cash
provided by operating profits is being used to reduce the level
of accounts payable and accrued expenses and will continue to be
needed to make further reductions. The following table sets
forth the aggregate amount of payments to creditors remaining
under the Plan.
Date Amount
September, 1995 $ 1,000,915
September, 1996 747,307
September, 1997 492,807
September, 1998 492,807
September, 1999 492,807
Total $ 3,226,643
The Company has a $2.5 million line of credit that has been
used monthly since February of 1995. The Company had
traditionally used the predecessor to this line of credit to
provide cash flow during the middle of a particular month until
the Company receives its payment at the end of that month from
Airlines Clearing House. The net losses experienced by the
Company have caused the Company to use the line of credit to
finance indebtedness on an ongoing basis, meaning that, after the
line of credit is repaid in full out
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<PAGE>
of the clearing house proceeds each month, the Company
immediately reborrows significant sums that are necessary to
pay indebtedness. The Company has also used loans from
directors or affiliates of directors for cash flow needs.
These loans are made for limited time periods, and have
amounted to a maximum at any one time of $600,000.
The Company has achieved additional liquidity by extending
the payment dates of certain lease payments. Short Brothers
(USA), Inc. has exchanged certain lease payment obligations
arising in the Spring of 1994 for promissory notes that are due
in the Summer of 1995 (see discussion at page 10 below).
Additionally, Short Brothers (USA), Inc. and JSX Leasing have
recently permitted the Company to defer monthly lease payments
for periods of up to thirty (30) days.
The effect of the Company's recurring losses from
operations, the significant financing requirements the Company
faces and the cure of unpaid lease payments make the Company
dependent upon continuing financial support from its lender and
vendors, as well as a return to profitable operations in order to
meet its obligations. No adjustments have been made to the
financial statements incorporated herein should the Company be
unable to continue its normal course of business.
The acceptance of this offering by the Offeree will have a
positive effect on the Company's liquidity. At present market
prices, the offering will eliminate more than ninety percent
(90%) of the accumulated indebtedness to the Offeree.
Competition. The principal competition for the Company is
the air service provided by major and other regional air carriers
operating from hub airports in Atlanta and Nashville. From these
hub airports, Delta Air Lines ("Delta") and American Airlines
("American") offer service to some destinations also served by
USAir through its hub operations at the Charlotte/Douglas
International Airport. The Company competes with Delta and
American and with regional air carriers that have joint marketing
agreements with them for passengers traveling to destinations
served through hub airports. The principal customers for these
services are business travelers and competition is based upon
scheduling and flight connections, reliability and, to a lesser
extent, pricing. The Company constantly reviews its scheduling
and the frequency of its flights to reduce the layover time
experienced in connecting with a USAir flight, in order to
minimize the length of the combined trip and to compete with
similar service offered by Delta or American. To a lesser
extent, the Company competes with air service provided by
Continental Airlines, Inc. from Greensboro, North Carolina, by
Midway Airlines from Raleigh, North Carolina and by United
Airlines and its regional airline at Washington, D.C. (Dulles).
7
<PAGE>
Three (3) other sources of competition affect the Company's
operations to a lesser extent. One source is various forms of
ground transportation, primarily private automobiles, which are
used to travel to a hub airport for air service. Another source
arises from the USAir Agreement, which does not prevent USAir
from serving the routes also served by the Company; however,
through recent schedule changes, the Company and USAir have
significantly reduced the number of shared markets. Finally,
several new low-fare carriers have commenced operations in the
southeast. None of this new service currently has a strong
competitive impact on the Company. The Company believes that the
principal factors affecting the Company's competitive position are
scheduling and flight connections, reliability, pricing, customer
service and type of equipment.
Reliance on Key Employee. The Company's operations are
dependent upon the services of its President, Mr. Kenneth W.
Gann. The loss of Mr. Gann's services could have a material
adverse effect on the Company. The Company maintains a $500,000
key-man life insurance policy on Mr. Gann, the proceeds of which
are payable to the Company. Mr. Gann serves the Company under a
one-year renewable employment agreement.
Dilution. The consummation of the Offering will not result
in substantial dilution of existing shareholders of the Company.
However, the Company is not able to predict the effect, if any,
the Offering will have on the market price for the Common Stock.
Income Tax Considerations. The receipt of shares of Common
Stock from the Company pursuant to the transactions contemplated
by this Prospectus may result in taxable income to the Offeree,
the character and amount of which are not determinable. See
"CERTAIN FEDERAL INCOME TAX CONSIDERATIONS."
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<PAGE>
CAPITALIZATION
The following table sets forth the debt and capitalization
of the Company as of March 31, 1995, and as adjusted to give
effect to the issuance and sale of 250,000 shares of Common Stock
to Short Brothers (USA), Inc. (the "Offeree") offered hereby:
March 31, 1995
Actual As Adjusted
(Dollars in Thousands)(1)
Current Assets $10,090 $10,090
Property and Equipment less 12,261 12,261
accumulated depreciation and
amortization
Prepaid Lease Obligations 0 891(2)
Other Assets 46 46
Total Assets 22,397 23,288
Current Liabilities 10,682 10,682
Long term Debt, less 1,909 1,909
current maturities
Capital Lease Obligations 3,102 3,102
less current obligations
Deferred Credits 1,158 1,158
Noncurrent rent obligations 100 100
Total Liabilities 16,951 16,951
Shareholders' Equity:
Common Stock, $0.01 par value,
10,000,000 shares authorized,
7,381,195 outstanding at
December 31, 1995, 7,681,195
shares issued and outstanding
as adjusted 74 77
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<PAGE>
Additional paid-in-capital 16,997 17,885
Accumulated Deficit ( 11,625) ( 11,625)
Total Shareholders' Equity 5,446 6,337
Total Liabilities
and Shareholders Equity $22,397 $23,288
--------------------------
(1) The effect on Shareholders' Equity is computed based upon
the closing price of $3.5625 per share of June 28, 1995, for the
Common Stock.
(2) This amount represents a partial credit against lease and
note payments to the Offeree totalling $1 million that were due
as of July 1, 1995.
USE OF PROCEEDS
The Shares are being offered hereby to reduce the Company's
Lease and Note payments to the Offeree. See "PLAN OF
DISTRIBUTION." Lease and Note payments to the Offeree are
hereinafter sometimes referred to collectively as the
"Indebtedness." The exact amount of the Indebtedness to be
cancelled, and therefore, the amount that will remain after the
Offering are dependent upon the final Offering price, which
cannot be determined until Offeree resells the shares. See
"DETERMINATION OF OFFERING PRICE."
The Offeree, Short Brothers (USA), Inc., is owed $306,000
monthly under a lease of nine SD-360 aircraft. The lease
payments for the months of June and July, 1995 have not been
made. The Offeree is also owed $388,000 in note payments under a
note by the Company in the original principal amount of $573,200.
This note was substituted for a lease payment accruing during the
Summer of 1994 and for the bankruptcy plan payment to Offeree in
1994.
DETERMINATION OF OFFERING PRICE
The Offering price per share will be dependent upon the net
sales price of the Shares received and resold by the Offeree. It
is anticipated that the Offeree will resell all of the Shares as
soon as practicable upon receipt. Net sales price shall mean
gross sales price less normal brokerage commission; provided,
that if such Offeree has not resold all of the Shares issued to
it within thirty (30) business days of receipt thereof, net sales
price of such unsold Shares shall be equal to the issue price.
The issue price shall be equal to the average closing price of
the Common Stock on the NASDAQ Small-Cap Stock Market for the
period commencing on the date the Shares are delivered such
Offeree, and the preceding four (4) business days. The Company
will receive cancellation of indebtedness in an aggregate amount
equal to net
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sales price per share multiplied by the number of shares
issued. See "PLAN OF DISTRIBUTION." The closing price on the
NASDAQ Small-Cap Stock Market for shares of the Company's
Common Stock was $3.5625 on June 27, 1995.
The high and low bid quotations for shares of the Company's
Common Stock during the four fiscal quarters ending March 31,
1994 are as follows:
Three Month Period Ended High Low
June 30, 1994 3 1/2 1 3/8
September 30, 1994 2 3/8 1 1/2
December 31, 1994 2 1/4 7/8
March 31, 1994 2 9/16 1 1/8
SELLING SHAREHOLDERS
The Offeree anticipates reselling all of the Shares acquired
by it pursuant to the Offering as soon as practicable. The
following table sets forth, as of June 30, 1995, the name of such
selling shareholder (the "Selling Shareholder"). The Offeree has
had no position or other material relationship with respect to
the Company within the past three years except as creditor as
indicated herein. The table also sets forth the number of shares
of Common Stock held by such Selling Shareholder prior to the
Offering; the number of Shares to be issued to such Selling
Shareholder pursuant to the Offering; the number of shares of
Common Stock such Selling Shareholder will hold after the
completion of the Offering; and, the percentage of all issued and
outstanding Common Stock such Selling Shareholder will own after
completion of the Offering.
Name Number of Number of Number of Percentage
Shares Shares to Shares to of Issued
Owned be issued be held and
Prior to Pursuant after Outstanding
Offering to Completion Common Stock
Offering of to be owned
Offering after
Completion
of Offering
Short 0 250,000 0 0
Brothers
(USA), Inc.
11
<PAGE>
PLAN OF DISTRIBUTION
The Company is offering 250,000 shares of Common Stock, par
value $0.01 per share, to the Offeree. The Shares will be issued
to Offeree immediately upon the effectiveness of this
Registration Statement, and will be resold by Offeree as soon as
practicable thereafter. It is anticipated that such resales will
be conducted by the Offeree through registered broker-dealers by
means of ordinary brokerage transactions.
The Shares will be exchanged for an aggregate amount of
Indebtedness equal to the net sales price of the Shares. Net
sales price shall mean gross sales price less normal brokerage
commissions; provided, that if such Offeree has not resold all of
the Shares issued to it within thirty (30) business days of
receipt, the net sales price for the unsold Shares issued to it
shall be equal to the issue price. The issue price shall be
equal to the average closing price of the Common Stock on the
NASDAQ Small-Cap Stock Market for the period ending on the date
the Shares are delivered to such Offeree and the preceding four (4)
business days.
CERTAIN FEDERAL INCOME TAX CONSIDERATIONS
The following discussion summarizes certain of the federal
income tax considerations applicable to the receipt of Common
Stock by the Offeree in accordance with the Offering. Neither
this discussion nor the Tax Opinion (defined below) deals with
all federal income tax considerations that may be relevant to any
particular recipient of Common Stock, including without
limitation recipients who are dealers in securities, recipients
who are foreign persons or entities, or recipients who acquired
the Company's indebtedness from a person other than the Company.
In addition, the following discussion addresses only the tax
consequences of the transactions specifically described below and
does not address the tax consequences of transactions effectuated
prior to or after the receipt of such Common Stock. Furthermore,
no foreign, state or local tax considerations are addressed
herein. Accordingly, ANY RECIPIENT OF COMMON STOCK IS URGED TO
CONSULT WITH ITS OWN TAX ADVISORS AS TO THE SPECIFIC TAX
CONSEQUENCES OF THE RECEIPT OF COMMON STOCK AND RELATED
TRANSACTIONS, INCLUDING THE APPLICABLE FEDERAL STATE, LOCAL AND
FOREIGN TAX CONSEQUENCES OF SUCH RECEIPT AND RELATED
TRANSACTIONS.
Certain federal income tax aspects of the Offering are being
passed upon for the Company by Rayburn, Moon & Smith, P.A.,
Charlotte, North Carolina. In such tax opinion (the "Tax
Opinion"), counsel opines that any gain or loss realized on the
exchange of Indebtedness for Common Stock by the Offeree will be
recognized. Counsel also opines as to the manner of calculation
of any such gain or loss, the factors determining the
characterization of income or loss realized, and the limitations
on deductibility of capital losses for any Offeree who realizes
such losses as a result of the contemplated exchange.
12
<PAGE>
The primary issue regarding the tax consequences of the
exchange to a creditor receiving Common Stock is whether the
property exchanged, i.e., the indebtedness or accounts payable
(accounts receivable to the creditor), was a capital asset of the
creditor. Under Section 1221 of the Internal Revenue Code, as
amended ("IRC"), a capital asset is defined to include all
property with specific exceptions. One exception is accounts or
notes receivable acquired in the ordinary course of trade or
business. The determination of whether the property to be
exchanged by the creditors is not a capital asset is necessarily
factual and depends upon the circumstances of each creditor. If
it is determined that the property exchanged is not a capital
asset, then the gain or loss on the exchange would constitute
ordinary income or ordinary loss.
If the property exchanged is a capital asset, then the
exchange would create a capital gain or loss. Under Section
1001(c) of the IRC, the entire amount of the gain or loss on the
exchange of property shall be recognized. The gain on the
exchange shall be the excess of the amount realized over the
adjusted basis of the property given up in the exchange and the
loss on the exchange shall be the excess of that adjusted basis
over the amount realized. In the exchange the amount realized
will be the fair market value of the number of shares of Common
Stock received on the date of the exchange. The deductibility of
losses depends upon the status of the taxpayer. The first step
is to total all capital gains and losses for the tax year. If
the capital losses exceed the capital gains, then in the case of
a non-corporate taxpayer, the capital losses can be used to
offset up to $3,000 in ordinary income. A non-corporate taxpayer
may carry over an unused net capital loss for an unlimited time
until the loss is exhausted. A corporate taxpayer is allowed to
carry back unused capital losses to the three preceding tax years
and to carry over losses to the five following tax years.
Because the tax treatment depends upon many factors specific
to the status of each creditor, the Offeree should consult with
its own tax advisors to determine the most appropriate tax
reporting position with respect to the exchange in light of its
individual circumstances.
DESCRIPTION OF CAPITAL STOCK
The Company is authorized to issue 10,000,000 shares of
Common Stock, $0.01 par value per share. As of June 30, 1995,
there were 7,381,195 shares of Common Stock outstanding held of
record by approximately 6,000 stockholders. The Common Stock is
not divided into classes, and there are no dividend rights, terms
of conversion, redemption provisions, preemptive rights or other
relative rights, preferences or limitations established with
respect to the Common Stock.
13
<PAGE>
The Certificate of Incorporation of the Company provides
that no director of the Company shall be liable to the Company or
its shareholders for monetary damages for breach of fiduciary
duty, provided that such provision does not eliminate or limit
the liability of a director (i) for any breach of the duty of
loyalty to the Company or its stockholders, (ii) for acts and
omissions, not in good faith, involving intentional misconduct or
a knowing violation of the law, (iii) under Section 174 of the
General Corporation Law of the State of Delaware, or (iv) for any
transaction from which the director derived an improper personal
benefit.
INDEMNIFICATION OF OFFICERS AND DIRECTORS
The Company's Bylaws mandate that expenses incurred by a
director in defending a civil or criminal action arising by
reason of his/her status as a director of the Company will be
advanced by the Company, provided the director commits to repay
the advanced amount if it is ultimately determined that such
individual is not entitled to indemnification under the Delaware
General Corporation Law. Accordingly, the Company will provide
indemnity protection to its directors in all cases other than
those in which the actions of a director may be considered clear
violations of his/her duties to the Company.
Insofar as indemnification for liabilities arising under the
Securities Act of 1933 (the "1933 Act") may be permitted to
directors, officers and controlling persons of the Company
pursuant to the foregoing provisions or otherwise, the Company
has been advised that, in the opinion of the Securities and
Exchange Commission, such indemnification is against public
policy as expressed in the 1933 Act and is, therefore,
unenforceable.
LEGAL MATTERS
The legality of the securities offered hereby is being
passed upon for the Company by Rayburn, Moon & Smith, P.A.,
Charlotte, North Carolina.
14
<PAGE>
Part II
INFORMATION NOT REQUIRED IN THE PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution.
The following table sets forth the costs and expenses,
payable by the Registrant in connection with the sale of Common
Stock being registered (all amounts are estimated except the
registration fee and the fee to the National Association of
Securities Dealers, Inc. Automated Quotation System):
Amount
SEC registration fee . . . . . . . . . . . . . . $ 668.10
NASDAQ fee . . . . . . . . . . . . . . . . . . . $ 5000.00
Blue Sky fees and expenses . . . . . . . . . . . $ 0
Printing, shipping and engraving expenses . . . $ 2000.00
Legal fees and expenses . . . . . . . . . . . . $40000.00
Accounting fees and expenses . . . . . . . . . . $11000.00
Transfer Agent fees and expenses . . . . . . . . $ 0
Miscellaneous expenses . . . . . . . . . . . . . $ 0
TOTAL $58,668.10
Item 15. Indemnification of Directors and Officers.
Under provisions of Delaware law and the Company's Bylaws,
directors, officers and controlling persons of the Company may be
entitled to indemnification by the Company against liabilities
arising out of any suit or proceeding, whether civil, criminal,
administrative or investigative, including a suit or proceeding
under the Securities Act of 1933, to which they were a party by
reason of serving as a director, officer, employee or agent of
the Company. Such provisions require the Company to indemnify
any such person against expenses (including attorneys' fees),
judgments, fines and amounts paid in settlement actually and
reasonably incurred by such person in connection with such
action, suit or proceeding upon a determination, by a majority
vote of a quorum of the Board of Directors consisting of
directors who were not parties to such action, suit or
proceeding, or by independent legal counsel in a written opinion,
or by the stockholders of the Company, that such person acted in
good faith and in a manner he reasonably believed to be in or not
opposed to the best interests of the Company, and, with respect
to any criminal action or proceeding, had no reasonable cause to
believe his conduct was unlawful. Absent such determination,
the Company may, by a vote of the
<PAGE>
disinterested directors or the stockholders and to the extent
permitted by applicable law, indemnify any such person against
expenses (including attorneys' fees), judgments, fines and
amounts paid in settlement actually and reasonably incurred by
such person in connection with such suit or proceeding.
Item 16. Exhibits.
<TABLE>
<CAPTION>
<S> <C>
2. Plan of Reorganization of CCAIR, Inc., effective September 3,
1991. (5)
4. Specimen Common Stock Certificate. (1)
5. Opinion of Rayburn, Moon & Smith, P.A. (16)
8. Opinion of Rayburn, Moon & Smith, P.A. (16)
10.1 (a) The Company's Stock Option Plan dated May 18, 1989 with forms of
Incentive Stock Option Agreement and Nonqualified Stock Option
Agreement attached. (1)
(b) Amendment to the Amended and Restated Stock Option Plan, dated
February 6, 1992. (6)
(c) Second Amended and Restate Stock Option Plan, dated February 6,
1993. (13)
(d) Third Amended and Restated Stock Option Plan of the Company, dated
February 23, 1994. (10)
(e) Fourth Amended and Restated Stock Option Plan of the Company,
dated November 15, 1994. (14)
10.2 (a) Agreement dated October 16, 1991 between CCAIR, Inc. and The Air
Line Pilots in the service of CCAIR, Inc. as represented by the
Air Line Pilots Association International. (6)
(b) Letter of Agreement amendment dated December 14, 1991 between
CCAIR, Inc. and The Air Line Pilots in the service of CCAIR, Inc.
as represented by the Air Line Pilots Association International.
(6)
(c) Letter of Agreement amendment dated February 28, 1992 between
CCAIR, Inc. and The Air Line Pilots in the service of CCAIR, Inc.
as represented by the Air Line Pilots Association International.
(6)
(d) Letter of Agreement amendment dated February 28, 1992 between
CCAIR, Inc. and The Air Line Pilots in the service of CCAIR, Inc.
as represented by The Air Line Pilots Association International.
(6)
10.3 (a) Service Agreement between USAir, Inc. and CCAIR, Inc. dated
November 1, 1988. (1)
(b) First Amendment to Service Agreement between USAir, Inc., and
CCAIR, Inc., dated July 1, 1990. (3)
(c) Supplemental Agreement between USAir, Inc., and CCAIR, Inc., dated
July 30, 1990. (4)
(d) Second Amendment to Service Agreement between USAir, Inc., and
CCAIR, Inc., dated January 23, 1991. (4)
(e) Third Amendment to Service Agreement between USAir, Inc., and
CCAIR, Inc., dated August 1, 1991. (8)
(f) Ground Handling Agreement, dated February 1, 1994, between CCAIR.
Inc., and USAir, Inc. (10)
10.4 (a) Loan Agreement dated as of September 4, 1991, between CCAIR, Inc.,
and NCNB National Bank of North Carolina. (4)
(b) Revolving Credit Promissory Note by CCAIR, Inc. in favor of NCNB
National Bank of North Carolina, dated September 4, 1991. (4)
(c) Security Agreement dated as of September 4, 1991, between CCAIR,
Inc., and NCNB National Bank of North Carolina. (4)
Note: For footnote references, See page II-13.
II-2
<PAGE>
10.4 (con'd)
(d) Loan Purchase Agreement dated as of September 4, 1991, by and
among
NCNB National Bank of North Carolina, British Aerospace, Inc., and
CCAIR, Inc. (4)
(e) Security Agreement dated as of September 4, 1991, between CCAIR,
Inc. and British Aerospace, Inc. An identical agreement was
executed with Jet Acceptance Corporation as of September 4, 1991,
and is not filed herewith. (4)
(f) Pledge of Cash Collateral Account dated as of September 4, 1991,
by and among CCAIR, Inc., NCNB National Bank of North Carolina,
British Aerospace, Inc., and Jet Acceptance Corporation. (4)
(g) Loan Agreement dated as of August 14, 1992 between CCAIR, Inc. and
NationsBank of North Carolina, N.A. (6)
(h) Agreement dated as of January 17, 1994 among CCAIR, Inc.,
NationsBank of North Carolina, N.A., British Aerospace, Inc. and
Jet Acceptance Corporation. (10)
(i) Assignment and Bill of Sale dated as of January 10, 1995 by and
among CCAIR, Inc., NationsBank of North Carolina, N.A., British
Aerospace, Inc. and Jet Acceptance Corporation. (16)
10.5 Equipment Lease Agreement dated April 18, 1986 between CLG, Inc.
and CCAIR, Inc. (1)
10.6 (a) Spare Parts Lease Agreement dated as of December 9, 1985 between
Jet Acceptance Corporation and Sunbird Airlines 1984, Inc. (1)
(b) Amendment No. 1 to Spare Parts Lease Agreement, dated August 29,
1991, between Jet Acceptance Corporation and CCAIR, Inc. (4)
10.7 (a) Spare Parts Lease Agreement dated as of December 17, 1987 between
Jet Acceptance Corporation and CCAIR, Inc. (1)
(b) Amendment No. 1 to Spare Parts Lease Agreement, dated August 29,
1991, between Jet Acceptance Corporation and CCAIR, Inc., said
Amendment is substantially identical to the Amendment in Exhibit
10.6(b) and is not filed herewith.
10.8 (a) Spare Parts Lease Agreement dated as of June 19, 1986 between Jet
Acceptance Corporation and CCAIR, Inc. (1)
(b) Amendment No. 1 to Spare Parts Lease Agreement, dated August 29,
1991, between Jet Acceptance Corporation and CCAIR, Inc., said
Amendment is substantially identical to the Amendment in Exhibit
10.6(b) and is not filed herewith.
10.9 (a) Amended and Restated Aircraft Equipment Sublease Agreement dated
as of August 29, 1991, between Jet Acceptance Corporation and
CCAIR, Inc. (4)
(b) Acceptance Supplement dated September 5, 1991, between Jet
Acceptance Corporation and CCAIR, Inc. (4)
10.10(a)(i) Lease Agreement effective as of April 19, 1991 between the
Asheville Regional Airport Authority and CCAIR, Inc. (4)
(a)(ii) Letter dated August 28, 1991 by Asheville Regional Airport
Authority amending Lease. (4)
(b) Lease Agreement dated July 5, 1989 between Clarke County Airport
Authority and CCAIR, Inc. (4)
(c) Agreement dated October 10, 1987 between the Central West Virginia
Regional Airport Authority and CCAIR, Inc. (1)
(d) Commuter Airline Agreement and Lease dated May 20, 1988 between
the City of Charlotte and CCAIR, Inc. (1)
(e) Agreement dated July 16, 1991 between the Chattanooga Metropolitan
Airport Authority and CCAIR, Inc. (4)
(f) Airport Use and Lease Agreement entered into as of January 1, 1989
between the Richland-Lexington Airport District and CCAIR, Inc.
(4)
(g) Agreement dated July 1, 1988 between the City of Danville,
Virginia
and CCAIR, Inc. (1)
(h) Airport Use and Lease Agreement dated November 1, 1982 between
Greenville-Spartanburg Airport District and Sunbird, Inc. (1)
Note: For footnote references, See page II-13.
II-3
<PAGE>
10.10 (con'd)
(i)(i) Letter Agreement dated July 13, 1988 from CCAIR, Inc. to Tri-State
Airport Authority. (1)
(i)(ii) Letter dated February 25, 1991 by Tri-State Airport Authority
amending Lease. (4)
(j)(i) Airport Use Agreement dated March 1, 1988 between the Board of
Commissioners of Onslow County and CCAIR, Inc. (1)
(j)(ii) Amendment to Lease dated July 15, 1988 between the same parties.
(1)
(k) Operating Agreement dated April 15, 1987 between Metropolitan
Knoxville Airport Authority and CCAIR, Inc. (1)
(l) Lease Agreement dated March 1, 1988 between the City of Macon and
CCAIR, Inc. (1)
(m) Letter Agreement dated September 5, 1990 between New Hanover
County and CCAIR, Inc. (4)
(n) Lease Agreement dated May 1, 1989 between Tri-City Airport
Commission and CCAIR, Inc. (4)
(o) Use Agreement dated May 1, 1991 between Airport Commission of
Forsyth County and CCAIR, Inc. (4)
(p) Letter from Pitt County - City of Greenville Airport Authority
dated May 31, 1990 announcing fee structure. (4)
(q) Airport Use Agreement dated May 1, 1991 between Raleigh County
Airport Authority and CCAIR, Inc. (4)
(r) Letter Agreement dated July 7, 1990 between Mercer County Airport
Authority and CCAIR, Inc. (4)
(s) Contract for Conduct of Commercial Flight Operations dated
September 1, 1991 between Maryland Aviation Administration and
CCAIR, Inc. (6)
10.11
(a)(i) Aircraft Lease between Shorts Air Lease, Inc. and CCAIR, Inc.
dated as of July 27, 1987 (Reg. No. N-121PC). This Aircraft Lease
is substantially identical to Aircraft Leases dated as of July 30,
1987 (Reg. No. N-722PC), November 20, 1987 (Reg.No. N-729PC),
December 22, 1987 (Reg. No. N-360CC), January 25, 1989 (Reg. No.
N-747SA) and June 7, 1989 (Reg. No. N-153CC), not filed herewith.
(1)
(a)(ii) Aircraft Lease between Lynrise Air Lease, Inc. (formerly Shorts
Air Lease, Inc.) and CCAIR, Inc., dated as of August 1, 1991 (Reg.
No. N-748SA). (4)
(a)(iii) Aircraft Lease between Lynrise Air Lease, Inc., and CCAIR, Inc.
dated as of August 1, 1991 (Reg. No. N-159CC). (4)
(b) Lease Amendment No. 1 dated as of May 20, 1988 to Aircraft Lease
dated as of December 22, 1987 (Reg. No. N-730CC). This Lease
Amendment is substantially identical to Lease Amendment dated as
of May 20, 1988 (Reg. No. N-360CC), not filed herewith. (1)
(c) Lease Supplement No. 1 dated as of July 27, 1987 to Aircraft Lease
(Reg. No. N-121PC). This Lease Supplement No. 1 is substantially
identical to Lease Supplements dated as of July 30, 1987 (Reg.No.
N-722PC), November 20, 1987 (Reg. No. N-729PC), December 22, 1987
(Reg. No. N-360CC), August 30, 1988 (Reg. No. N-742CC), January
25, 1989 (Reg. No. N-747SA) and June 7, 1989 (Reg. No. N-153CC),
not filed herewith. (1)
(d) Covenant of Quiet Enjoyment by the First National Bank of Boston
and the CIT Group/Financing, Inc. in favor of CCAIR, Inc. and
Shorts Air Lease dated as of July 27, 1987 (Reg. No. N-121PC).
This Covenant of Quiet Enjoyment is substantially identical to
Covenants of Quiet Enjoyment dated as of July 30, 1987 (Reg. No.
N-722PC), November 20, 1987 (Reg. No. N-729PC) and December 22,
1987 (Reg. No. N-360CC). This Covenant of Quiet Enjoyment is also
substantially identical to Covenants of Quiet Enjoyment by the
First National Bank of Boston, Meridian Trust Company, Principal
Mutual Life Insurance Company and State Street Bank and Trust
Company in favor of CCAIR, Inc. and
Note: For footnote references, See page II-13.
II-4
<PAGE>
10.11 (con'd)
Shorts Air Lease, Inc. dated as of August 30, 1988 (Reg. No. N-
742CC), January 25, 1989 (Reg. No. N-747SA), January 25, 1989
(Reg. No. N-748SA), June 7, 1989 (Reg. No. N-153CC) and September
11, 1989 (Reg. No. N-159CC), not filed herewith. (1)
(e) Notice of Assignment and Consent from Shorts Air Lease, Inc. to
CCAIR, Inc. dated July 27, 1987 (Reg. No. N-121PC). This Notice
of Assignment and Consent to Assignment is substantially identical
to Notices of Assignment and Consents to Assignment dated as of
July 30, 1987 (Reg. No. N-722PC), November 20, 1987 (Reg. No. N
729PC), December 22, 1987 (Reg. No. N-360CC), August 12, 1988
(Reg. No. N -742CC), January 25, 1989 (Reg. No. N-747SA), January
25, 1989 (Reg. No. N-748SA), June 7, 1989 (Reg. No. N-153CC) and
September 11, 1989 (Reg. No. N-159CC), not filed herewith. (1)
(f) Consent to Assignment from CCAIR, Inc. to the First National Bank
of Boston dated July 27, 1987 (Reg. No. N-121PC). This Consent to
Assignment is substantially identical to Consents to Assignment
from CCAIR, Inc. to the First National Bank of Boston or State
Street Bank and Trust Company dated July 30, 1987 (Reg. No.
N-722PC), November 20, 1987 (Reg. No. N-729PC), December 22, 1987
(Reg. No. N-360CC), August 30, 1988 (Reg. No. N-742CC), January
25, 1989 (Reg. No. N-747SA), January 25, 1989 (Reg. No. N-748SA),
June 7, 1989 (Reg. No. N-153CC) and September 11, 1989 (Reg. No.
N-159CC), not filed herewith. (1)
(g) Sublease Assignment from Shorts Air Lease, Inc. to the First
National Bank of Boston dated July 27, 1987 (Reg. No. N-121PC).
This Sublease Assignment is substantially identical to Sublease
Assignments from the First National Bank of Boston or State Street
Bank and Trust Company dated July 30, 1987 (Reg. No. N-722PC),
November 20, 1987 (Reg. No. N-729PC), December 22, 1987 (Reg. No.
N-360CC), August 30, 1988 (Reg. No. N-742CC), January 25, 1989
(Reg. No. N-747HH), January 25, 1989 (Reg. No. N-748CC), June 7,
1989 (Reg. No. N-159CC), not filed herewith. (1)
(h) Lease Amendment (Reg. N-121PC) dated as of September 30, 1994
between Lynrise Air Lease, Inc., formerly Shorts Air Lease, Inc.,
and CCAIR, Inc. This Lease Amendment is substantially identical to
Lease Amendments between Lynrise Air Lease, Inc. and CCAIR, Inc.
dated as of September 30, 1995 (Reg. No. N-722PC, Reg. No. N-
729PC, Reg. No. N-360CC, Reg. No. N-159CC, Reg. No. N-153CC, Reg.
No. N-747HH, Reg. No. N-729PC, Reg. No. N-742CC, and Reg. No.
N-748CC), not filed herewith. (16)
10.12 Aircraft Lease between Shorts Air Lease, Inc. and CCAIR, Inc.
dated as of August 12, 1988 (Reg. No. N-742CC). (1)
10.13 Participation Agreement among Short Brothers PLC, Westinghouse
Credit Corporation, The First National Bank of Boston, Shorts Air
Lease, Inc. and the CIT Group/Capital Financing, Inc. dated as of
July 27, 1987 (Reg. No. N-121PC). This Participation Agreement is
substantially identical to Participation Agreements dated as of
July 30, 1987 (Reg. No. N-722PC) and November 20, 1987 (Reg. No.
N-729PC); a Participation Agreement dated as of December 22, 1987
(Reg. No. N-360CC) among Short Brothers PLC, Wells Fargo Leasing
Corporation, The First National Bank of Boston, Shorts Air Lease,
Inc.; and the CIT Group/Capital Financing, Inc. and Participation
Agreements among Short Brothers PLC, Westinghouse Credit
Corporation, The First National Bank of Boston, Shorts Air Lease,
Inc., Principal Mutual Life Insurance Company and Meridian Trust
Company dated as of August 12, 1988 (Reg. No. N-742CC), January
25, 1989 (Reg. No. N-747SA) and January 25, 1989 (Reg. No. N-
748SA), not filed herewith. (1)
Note: For footnote references, See page II-13.
II-5
<PAGE>
10.14 Trust Agreement between Westinghouse Credit Corporation and The
First National Bank of Boston dated as of July 27, 1987 (Reg. No.
N-121PC). This Trust Agreement is substantially identical to
Trust Agreements dated as of July 30, 1987 (Reg. No. N-722PC),
November 20, 1987 (Reg. No. N-729PC), August 12, 1988 (Reg. No. N-
742CC), January 25, 1989 (Reg. No. N-747SA) and January 25, 1989
(Reg. No. N-748SA) and a Trust Agreement between Wells Fargo
Leasing Corporation and The First National Bank of Boston dated as
of December 22, 1987 (Reg. No. N-360CC), not filed herewith. (1)
10.15 Trust Agreement and Security Agreement Supplement ("Trust and
Security Supplement") between The First National Bank of Boston
and Westinghouse Credit Corporation dated as of July 27, 1987
(Reg. No. N-121PC). This Trust and Security Supplement is
substantially identical to Trust and Security Supplements dated as
of July 30, 1987 (Reg. No. N-722PC), November 20, 1987 (Reg. No.
N-729PC),
August 12, 1988 (Reg. No. N-742CC), January 25, 1989 (Reg. No. N-
747SA) and January 25, 1989 (Reg. No. N-748SA) and a Trust and
Security Supplement between The First National Bank of Boston and
Wells Fargo Leasing Corporation dated as of December 22, 1987
(Reg. No. N-360CC), not filed herewith. (1)
10.16 Purchase Agreement among Short Brothers PLC, Short Aircraft
Delivery, Inc. and The First National Bank of Boston dated July
27, 1987 (Reg. No. N-121PC). This Purchase Agreement is
substantially identical to Purchase Agreements dated July 30, 1987
(Reg. No. N-722PC), November 20, 1987 (Reg. No. N-722PC), November
20, 1987
(Reg. No. N-729 PC), December 22, 1987 (Reg. No. N-360CC), August
12, 1988 (Reg. No. N-742CC), January 25, 1989 (Reg. No. N-747SA),
January 25, 1989 (Reg. No. N-748SA), June 7, 1989 (Reg. No. N-
153CC) and September 11, 1989 (Reg. No. N-159CC), not filed
herewith. (1)
10.17 Aircraft Lease between The First National Bank of Boston and
Shorts Air Lease, Inc. dated as of July 27, 1987 (Reg. No. N-
121PC). This Aircraft Lease is substantially identical to
Aircraft Leases dated as of July 30, 1987 (Reg. No. N-722PC),
November 20, 1987 (Reg. No. N-729PC), August 12, 1988 (Reg. No.
N-742CC), January 25, 1989 (Reg. No. N-747SA), January 25, 1989
(Reg. No. N-748SA), June 7,
1989 (Reg. No. N-153CC) and September 11, 1989 (Reg. No. N-159CC),
not filed herewith. (1)
10.18 Lease Supplement No. 1 between The First National Bank of Boston
and Shorts Air Lease, Inc. dated as of July 27, 1987 (Reg. No. N-
121PC). This Lease Supplement No. 1 is substantially identical to
Lease Supplements dated as of July 30,1987 (Reg. No. N-722PC),
November 20, 1987 (Reg. No. N-729PC), December 22, 1987 (Reg. No.
N-360CC), August 12, 1988 (Reg. No. N-742CC), January 25, 1989
(Reg. No. N-747SA), January 25, 1989 (Reg. No. N-748SA), June 7,
1989 (Reg. No. N-153CC) and September 11, 1989 (Reg. No. N-159CC),
Not filed herewith. (1)
10.19 Tax Indemnity Agreement between Westinghouse Credit Corporation
and Shorts Air Lease, Inc. dated as of July 27, 1987 (Reg. No. N-
121PC). This Tax Indemnity Agreement is substantially identical
to Tax Indemnity Agreements dated as of July 30, 1987 (Reg. No. N-
722PC), November 20, 1987 (Reg. No. N-729PC), December 22, 1987
(Reg. No. N-360CC), August 12, 1988 (Reg. No. N-742CC), January
25, 1989 (Reg. No. N-747SA), January 25, 1989 (Reg. No. N-748SA),
June 7, 1989 (Reg. No. N-153CC) and September 11, 1989 (Reg. No.
N-159CC), not filed herewith. (1)
10.20 Loan and Security Agreement between The First National Bank of
Boston and The CIT Group/Capital Financing, Inc. dated as of July
27, 1987 (Reg. No. N-121PC). This Loan and Security Agreement is
substantially identical to Loan and Security Agreements dated as
of July 30, 1987 (Reg. No. N-722PC), November 20, 1987 (Reg. No.
N-729PC), December 22, 1987 (Reg. No. N-360CC), August 12, 1988
(Reg.
Note: For footnote references, See page II-13.
II-6
<PAGE>
No. N-742CC), January 25, 1989 (Reg. No. N-747SA), January
25, 1989 (Reg. No. N-748SA), June 7, 1989 (Reg. No. N-153CC) and
September 11, 1989 (Reg. No. N-159CC), not filed herewith. (1)
10.21 (a) Interim Aircraft Sublease Agreement dated as of February 20, 1991,
between CCAIR, Inc., and Jet Acceptance Corporation (Reg. No. N-
162PC). This Interim Aircraft Sublease Agreement is substantially
identical to Interim Aircraft Sublease Agreements dated as of
April 4, 1991 (Reg. No. N-165PC), April 5, 1991 (Reg. No. N-164PC)
and April 8, 1991 (Reg. No. N-159PC), not filed herewith. (4)
(b) Acceptance Supplement dated February 22, 1991 between CCAIR, Inc.
and Jet Acceptance Corporation (Reg. No. N-162PC). This
Acceptance Supplement is substantially identical to Acceptance
Supplements dated April 4, 1991 (Reg. No. N-165PC), April 8, 1991,
(Reg. No. N-164PC) and April 8, 1991 (Reg. No. N-159PC), not filed
herewith.(4)
(c) Termination of Sublease between CCAIR, Inc. and Jet Acceptance
Corporation (Reg. No. N-162PC). This Termination of Sublease
is substantially identical to Terminations of Sublease (Reg. No.
N-165PC, N-164PC and N-159PC), not filed herewith. (4)
10.22 (a) Aircraft Sublease Agreement dated as of August 29, 1991, between
CCAIR, Inc., and Jet Acceptance Corporation (Reg. No. N-162PC).
This Aircraft Sublease Agreement is substantially identical to
Amended and Restated Aircraft Sublease Agreements dated as of
August
29, 1991, (Reg. No. N-161PC and Reg. No. N-163PC), not filed
herewith. (4)
(b) Acceptance Supplement dated September 5, 1991, between CCAIR, Inc.
and Jet Acceptance Corporation (Reg. No. N-162PC). This
Acceptance Supplement is substantially identical to Acceptance
Supplements
dated September 5, 1991 (Reg. No. N-161PC and Reg. No. N-163PC),
not filed herewith. (4)
(c) Limited Warranty Agreement and Disclaimer of Warranty dated as of
December 27, 1985 between British Aerospace, Inc. and Sunbird
Airlines 1984, Inc. (Reg. No. N-162PC). This Limited Warranty
Agreement is substantially identical to Limited Warranty
Agreements dated December 13, 1985 (Reg. No. N-161PC) and December
27, 1985 (Reg. No. N-163PC), not filed herewith. (1)
(d) Aircraft Lease Agreement dated as of November 15, 1985 between
American Bank & Trust Co. of PA and Jet Acceptance Corporation
(Reg. Nos. N-162PC, N-161PC and N-163PC). (1)
(e) Lease Supplement No. 5 dated November 15, 1985 between American
Bank & Trust Co. of PA and Jet Acceptance Corporation (Reg. No. N-
162PC). This Lease Supplement is substantially identical to Lease
Supplements dated November 15, 1985 (Reg. No. N-161PC) and
December 27, 1985 (Reg. No. N-163PC), not filed herewith. (1)
(f) Mortgage and Trust Indenture dated as of November 15, 1985 between
American Bank & Trust Company of PA and The Connecticut Bank and
Trust Company, National Association (Reg. Nos. N-162PC, N-161PC
and N-163PC). (1)
(g) Trust Agreement dated as of November 15, 1985 between Greyhound
Leasing & Financial Corporation and American Bank & Trust Co. of
PA (Reg. Nos. N162PC, N-161PC and N-163PC). (1)
(h) Trust Agreement and Mortgage Supplement No. 5 dated December 27,
1985 by American Bank & Trust Co. of PA (Reg. No. N-162PC). This
Trust Agreement and Mortgage Supplements dated December 13, 1985
(Reg. No. N-161PC) and December 27, 1985 (Reg. No. N-163PC), not
filed herewith. (1)
(i) Sublease Security Assignment dated as of November 15, 1985 by Jet
Acceptance Corporation (Reg. No. N-162PC). This Sublease Security
Assignment is substantially identical to Sublease Security
Assignments dated as of November 15, 1985 (Reg. No. N-161PC) and
November 15, 1985 (Reg. No. N-163PC), not filed herewith. (1)
Note: For footnote references, See page II-13.
II-7
<PAGE>
10.22 (con'd)
(j) Tax indemnification Agreement dated as of November 15, 1985
between Jet Acceptance Corporation and Greyhound Leasing &
Financial Corporation (Reg. Nos. N-162PC, N-161PC and N-163PC).
(1)
10.23 (a) Amended and Restated Aircraft Sublease Agreement dated as of
August 29, 1991, between CCAIR, Inc., and Jet Acceptance
Corporation (Reg. No. N-169PC). This Amended and Restated
Aircraft Sublease Agreement is substantially identical to an
Amended and Restated Aircraft Sublease Agreement dated as of
August 29, 1991, (Reg. No. N-168PC),
not filed herewith. (4)
(b) Acceptance Supplement dated September 5, 1991, between CCAIR, Inc.
and Jet Acceptance Corporation (Reg. No. N-169PC). This
Acceptance Supplement is substantially identical to an Acceptance
Supplement dated September 5, 1991 (Reg. No. N-168PC), not filed
herewith. (4)
(c) Limited Warranty Agreement and Disclaimer of Warranty dated as of
May 20, 1986 between British Aerospace, Inc. and CCAIR, Inc. (Reg.
No. N-169PC). This Limited Warranty Agreement is substantially
identical to a Limited Warranty Agreement dated as of May 20, 1986
(Reg. No. N-168PC), not filed herewith. (1)
(d) Aircraft Lease Agreement dated as of May 1, 1986 between Meridian
Trust Company and Jet Acceptance Corporation (Reg. Nos. N-169PC
and N-168PC), not filed herewith. (1)
(e) Lease Supplement No. 2 dated as of May 1, 1986 between Meridian
Trust Company and Jet Acceptance Corporation (Reg. No. N-169PC).
This Lease Supplement is substantially identical to a Lease
Supplement dated May 20, 1986 (Reg. No. N-168PC), not filed
herewith. (1)
(f) Mortgage and Trust Indenture dated as of May 1, 1986 between
Meridian Trust Company and the Connecticut Bank and Trust Company,
National Association (Reg. Nos. N-169PC and N-168PC). (1)
(g) Trust Agreement dated as of May 1, 1986 between EFC Leasing
Corporation and Meridian Trust Company (Reg. Nos. N-169PC and N-
168PC). (1)
(h) Trust Agreement and Mortgage Supplement No. 2 dated May 20, 1986
by Meridian Trust Company (Reg. No. N-169PC). This Trust
Agreement and Mortgage Supplement is substantially identical to a
Trust Agreement and Mortgage Supplement dated May 20, 1986 (Reg.
No. N-168PC), not filed herewith. (1)
(i) Sublease Security Assignment dated as of May 9, 1986 by Jet
Acceptance Corporation (Reg. No. N-169PC). This Sublease Security
Assignment is substantially identical to a Sublease Security
Assignment dated as of and May 8, 1986 (Reg. No. N-168PC), not
filed herewith. (1)
(j) Tax Indemnification Agreement dated as of May 1, 1986 between Jet
Acceptance Corporation and EFC Leasing Corporation (Reg. Nos. N-
169PC and N-168PC). (1)
10.24 (a) Aircraft Sublease Agreement dated as of August 29, 1991, between
CCAIR, Inc., and Jet Acceptance Corporation (Reg. No. N-164PC).
This Aircraft Sublease Agreement is substantially identical to an
Aircraft Sublease Agreement (Reg. No. N-165PC) and an Amended and
Restated Aircraft Sublease Agreement (Reg. No. N-170PC), dated as
of August 29, 1991, not filed herewith. (4)
(b) Acceptance Supplement dated September 5, 1991, between CCAIR, Inc.
and Jet Acceptance Corporation (Reg. No. N-164PC). This
Acceptance Supplement is substantially identical to Acceptance
Supplements dated September 5, 1991 (Reg. No. N-165PC and Reg. No.
N-170PC), not filed herewith. (4)
(c) Limited Warranty Agreement and Disclaimer of Warranty dated as of
June 19, 1986 between British Aerospace, Inc. and CCAIR, Inc.
(Reg. No. N-164PC). This Limited Warranty Agreement is
substantially
Note: For footnote references, See page II-13.
II-8
<PAGE>
10.24 (con'd)
identical to Limited Warranty Agreements dated as of July 7, 1986
(Reg. No. N-165PC) and December 22, 1986 (Reg. No. N-170PC), not
filed herewith. (1)
(d) Aircraft Lease Agreement dated as of March 1, 1986 between
Meridian Trust Company and Jet Acceptance Corporation (Reg. Nos.
N-164PC, N-165PC and N-170PC). (1)
(e) Lease Addendum dated December 22, 1986 between Meridian Trust
Company and Jet Acceptance Corporation (Reg. Nos. N-164PC, N-165PC
and N-170PC). (1)
(f) Lease Supplement No. 1 dated as of March 1, 1986 between Meridian
Trust Company and Jet Acceptance Corporation (Reg. No. N-164PC).
This Lease Supplement is substantially identical to Lease
Supplements dated March 14, 1986 (Reg. No. N-165PC) and December
22, 1986 (Reg. No. N-170PC), not filed herewith. (1)
(g) Mortgage and Trust Indenture dated as of March 1, 1986 between
Meridian Trust Company and The Connecticut Bank and Trust Company,
National Association (Reg. Nos. N-164PC, N-165PC and N-170PC). (1)
(h) Mortgage Addendum dated December 22, 1986 between Meridian Trust
Company and The Connecticut Bank and Trust Company, National
Association (Reg. Nos. N-164PC, N-165PC and N-170PC). (1)
(i) Trust Agreement dated as of March 1, 1986 between Greyhound
Leasing and Financial Corporation and Meridian Trust Company (Reg.
Nos. N-164PC, N-165PC and N-170PC). (1)
(j) Trust Agreement Mortgage Supplement dated March 14, 1986 by
Meridian Trust Company (Reg. No. N-164PC). This Trust Agreement
and Mortgage Supplement is substantially identical to Trust
Agreement and
Mortgage Supplements dated March 14, 1986 (Reg. No. N-165PC) and
December 22, 1986 (Reg. No. N-170PC), not filed herewith. (1)
(k) Sublease Security Assignment dated as of June 19, 1986 by Jet
Acceptance Corporation (Reg. No. N-164PC). This Sublease Security
Assignment is substantially identical to Sublease Security
Assignments dated June 19, 1986 (Reg. No. N-165PC) and June 19,
1986 (Reg. No. N-170PC), not filed herewith. (1)
(l) Tax Indemnification Agreement dated as of March 1, 1986 (Reg. Nos.
N-164PC, N-165PC and N-170PC). (1)
10.25 (a) Amended and Restated Aircraft Sublease Agreement dated as of
August 29, 1991, between CCAIR, Inc., and Jet Acceptance
Corporation (Reg. No. N-156PC). This Amended and Restated
Aircraft Sublease Agreement is substantially identical to an
Amended and Restated Aircraft Sublease Agreement dated as of
August 29, 1991 (Reg. No. N-157PC), not filed herewith. (4)
(b) Acceptance Supplement dated September 5, 1991, between CCAIR, Inc.
and Jet Acceptance Corporation (Reg. No. N-156PC). This
Acceptance Supplement is substantially identical to an Acceptance
Supplement dated September 5, 1991 (Reg. No. N-157PC), not filed
herewith. (4)
(c) Limited Warranty Agreement and Disclaimer of Warranty dated
December 17, 1987 between British Aerospace, Inc. and CCAIR, Inc.
(Reg. No. N-156PC). This Limited Warranty Agreement is
substantially identical to Limited Warranty Agreement dated as of
December 17, 1987 (Reg. No. N-157PC), not filed herewith. (1)
(d) Lease Agreement dated as of August 15, 1987 between First Security
Bank of Utah, National Association and Jet Acceptance Corporation
(Reg. Nos. N-156PC and N-157PC). (1)
(e) Lease Supplement No. 1 dated December 17, 1987 between First
Security of Utah, National Association and Jet Acceptance
Corporation (Reg. Nos. N-156PC and N-157PC). (1)
(f) Assignment of Sublease and Security Agreement dated as of August
15, 1987 from Jet Acceptance Corporation to First Security Bank of
Utah, National Association (Reg. Nos. N-156PC and N-157PC). (1)
Note: For footnote references, See page II-13.
II-9
<PAGE>
10.25 (con'd)
(g) Trust Agreement dated as of August 15, 1987 between First Security
Bank of Utah, National Association and TECO Investments, Inc.
(Reg. Nos. N-156PC and N-157PC). (1)
(h) Security Agreement-Trust Deed dated as of August 15, 1987 between
First Security Bank of Utah, National Association and The
Connecticut Bank and Trust Company, National Association (Reg.
Nos. N-156PC and N-157PC). (1)
(i) Security Agreement-Trust Deed Supplement No. 2 dated as of
December 17, 1987 between First Security Bank of Utah, National
Association and The Connecticut Bank and Trust Company, National
Association (Reg. Nos. N-156PC and N-157PC). (1)
(j) Tax Indemnification Agreement dated as of August 15, 1987 between
TECO Investments, Inc. and Jet Acceptance Corporation (Reg. Nos.
N-156PC and N-157PC). (1)
10.26 (a) Amended and Restated Aircraft Sublease Agreement dated as of
August 29, 1991, between CCAIR, Inc., and Jet Acceptance
Corporation (Reg. No. N-190PC). This Amended and Restated
Aircraft Sublease Agreement is substantially identical to an
Aircraft Sublease Agreement dated as of August 29, 1991 (Reg. No.
N-159PC), not filed herewith. (4)
(b) Acceptance Supplement dated September 5, 1991, between CCAIR, Inc.
and Jet Acceptance Corporation (Reg. No. N-190PC). This
Acceptance Supplement is substantially identical to an Acceptance
Supplement dated September 5, 1991 (Reg. No. N-159PC), not filed
herewith. (4)
(c) Limited Warranty Agreement and Disclaimer of Warranty dated as of
December 17, 1987 between British Aerospace, Inc. and CCAIR, Inc.
(Reg. No. N-190PC). This Limited Warranty Agreement is
substantially identical to Limited Warranty Agreement dated as of
December 17, 1987 (Reg. No. N-159PC), not filed herewith. (1)
(d) Lease Agreement dated as of November 15, 1987 between First
Security Bank of Utah, National Association and Jet Acceptance
Corporation (Reg. Nos. N-190PC and N-159PC). (1)
(e) Assignment of Sublease Security Agreement dated as of November 15,
1987 from Jet Acceptance Corporation to First Security Bank of
Utah, National Association (Reg. Nos. N-190PC and N-159PC). (1)
(f) Trust Agreement dated as of November 15, 1987 between First
Security Bank of Utah, National Association and NCNB Lease
Investments, Inc. (Reg. Nos. N-190PC and N-159PC). (1)
(g) Security Agreement-Trust Deed dated as of November 15, 1987
between First Security Bank of Utah, National Association and The
Connecticut Bank and Trust Company, National Association (Reg.
Nos. N-190PC and N-159PC). (1)
(h) Tax Indemnification Agreement dated as of November 15, 1987
between NCNB Lease Investments, Inc. and Jet Acceptance
Corporation (Reg. Nos. N-190PC and N-159PC. (1)
10.27 (a) Amended and Restated Aircraft Sublease Agreement dated as of
August 29, 1991, between CCAIR, Inc., and Jet Acceptance
Corporation (Reg. No. N-158PC). (4)
(b) Acceptance Supplement dated September 5, 1991, between CCAIR, Inc.
and Jet Acceptance Corporation (Reg. No. N-158PC). (4)
(c) Limited Warranty Agreement and Disclaimer of Warranty dated as of
February 17, 1988 between British Aerospace, Inc. and CCAIR, Inc.
(Reg. No. N-158PC). (1)
(d) Lease Agreement dated as of September 1, 1987 between First
Security Bank of Utah, National Association and Jet Acceptance
Corporation (Reg. No. N-158PC). (1)
(e) Assignment of Sublease and Security Agreement dated as of
September 1, 1987 from Jet Acceptance Corporation to First
Security Bank of Utah, National Association (Reg. No. N-158PC).
(1)
Note: For footnote references, See page II-13.
II-10
<PAGE>
10.27 (con'd)
(f) Trust Agreement dated as of September 1, 1987 between First
Security Bank of Utah, National Association and NCNB Lease
Investments, Inc. (Reg. No. N-158PC). (1)
(g) Security Agreement-Trust Deed dated as of September 1, 1987
between First Security Bank of Utah, National Association and The
Connecticut Bank and Trust Company, National Association (Reg. No.
N-158PC). (1)
(h) Tax Indemnification Agreement dated as of September 1, 1987
between NCNB Lease Investments, Inc. and Jet Acceptance
Corporation (Reg. No. N-158PC). (1)
10.28 Indemnity Agreement dated as of July 11, 1989 between CCAIR, Inc.
and Evrika Shipping Corporation. (1)
10.29 (a) Commercial Use Permit between CCAIR, Inc., and City of Charlotte,
North Carolina dated April 1, 1991, relating to Old Terminal
Building at Charlotte/Douglas International Airport. (4)
(b) Commercial Use Permit dated April 15, 1992 between the City of
Charlotte and CCAIR, Inc. (6)
10.30 (a) Flight Attendant Agreement between CCAIR, Inc., and the Flight
Attendants in the service of CCAIR, Inc., as represented by the
Association of Flight Attendants, effective May 22, 1991. (4)
(b) Letter of Agreement amendment dated May 6, 1992 between CCAIR,
Inc. and the Flight Attendants in service of CCAIR, Ins. as
represented by the Association of Flight Attendants. (6)
10.31 Letter Agreement dated February 27, 1991 between Pennsylvania
Airlines and CCAIR, Inc. (4)
10.32 (a) Purchase Agreement No. 8-0237, dated as of February 23, 1992
between CCAIR, Inc. and de Havilland Inc. (successor to Boeing of
Canada,
Ltd., a Delaware corporation, through its de Havilland Division)
as amended by letter agreements attached thereto for two de
Havilland DHC-8-102 Aircraft (N880CC) and (N881CC). (6)
(b) Purchase Agreement Assignment between CCAIR, Inc. and Mellon
Financial Services Corporation #3 dated as of May 15, 1992
(N880CC). This Purchase Agreement Assignment is substantially
identical to Purchase Agreement Assignment (N881CC), dated as of
May 15, 1992, not filed herewith. (6)
(c) Lease Agreement between CCAIR, Inc. and Mellon Financial Services
Corporation #3 dated as of May 15, 1992 (N880CC). This Lease
Agreement is substantially identical to Lease Agreements (N881CC),
(N882CC) and N883CC) dated as of May 15, 1992, not filed herewith.
(6)
(d) Lease Supplement #1 between CCAIR, Inc. and Mellon Financial
Services Corporation #3 dated as of May 22, 1992 (N880CC). This
Lease Supplement #1 is substantially identical to Lease
Supplements (N881CC), (N882CC) and (N883CC) dated as of May 22,
June 1 and June
12, 1992, respectively, not filed herewith. (6)
(e) Tax Indemnity Agreement between CCAIR, Inc. and Mellon Financial
Services Corporation #3 dated as of May 15, 1992 (N880CC). This
Tax Indemnity Agreement is substantially identical to Tax
Indemnity Agreements (N881CC), (N882CC) and (N883CC) dated as of
May 15, 1992, not filed herewith. (6)
(f) Assignment and Assumption Agreement dated as of November __, 1995
between C.I.T. Leasing Corporation and Mellon Financial Services
Corporation #3. (16)
(g) Aircraft Lease Termination dated as of November ___, 1995 between
Mellon Financial Services Corporation #3 and CCAIR, Inc. (16)
10.33 (a) Lease Agreement (Spares) between CCAIR, Inc. and Mellon Financial
Services Corporation #3 dated as of August 14, 1992. (6)
(b) Lease Supplement between CCAIR, Inc. and Mellon Financial Services
Corporation #3 dated as of August 28, 1992. (6)
Note: For footnote references, See page II-13.
II-11
<PAGE>
10.33 (con'd)
(c) Tax Indemnity Agreement between CCAIR, Inc. and Mellon Financial
Services Corporation #3 dated as of August 14, 1992. (6)
10.34 Agreement dated January 1, 1994 between CCAIR, Inc. and the
Mechanics and related employees in the service of CCAIR as
represented by the International Brotherhood of Teamsters. (13)
10.35 Employment Agreement between Kenneth W. Gann and CCAIR, Inc. dated
February 8, 1994. (13)
10.36(a) Agreement dated November 14, 1994, by and among CCAIR, Inc.,
British Aerospace Holdings, Inc., formerly British Aerospace,
Inc., and Jet Acceptance Corporation. (16)
(b) Acceptance Supplement No. 2(N158PC) dated as of November 14, 1994
between Jet Acceptance Corporation and CCAIR, Inc. This
Acceptance Supplement No. 2 is substantially identical to
Acceptance Supplements No. 2 between Jet Acceptance Corporation
and CCAIR, Inc. (N164PC, N162PC, N159PC, N157PC, N156PC, N190PC,
N170PC, N169PC, N168PC, N163PC and N161PC), notified herewith.
(16)
10.37 (a) Lease Agreement dated as of November 15, 1994 between C.I.T.
Leasing Corporation and CCAIR, Inc. for DHC-8-102 Aircraft (Reg.
No. 880CC). This Lease Agreement is substantially identical to
Lease Agreements dated as of November 15, 1994 between C.I.T.
Leasing Corporation and CCAIR, Inc. for DHC-8-102 Aircraft (Reg.
No. 881CC, Reg. No. 882CC and Reg. No. 883CC), not filed herewith.
(16)
(b) Lease Agreement (Spares) dated as of November 15, 1994 between
C.I.T. Leasing Corporation and CCAIR, Inc. (16)
(c) Lease Supplement No. 1 is substantially identical to Lease
Supplements No. 1 between C.I.T. Leasing Corporation and CCAIR,
Inc. for DHC-8-102 Aircraft (Reg. No. 881CC, Reg. No. 882CC and
Reg. No. 883CC) and Lease Supplement No. 1 (Spares), not filed
herewith. (16)
10.38 (a) Amended and Restated Loan Agreement dated as of February 10, 1995,
between JSX Capital Corporation and CCAIR, Inc. (16)
(b) Revolving Note dated February 10, 1995 in the principal amount of
$2,500,000 by CCAIR, Inc. to the order of British Aerospace
Holdings, Inc. (16)
(c) Amended and Restated Security Agreement dated as of February 10,
1995 between JSX Capital Corporation and CCAIR, Inc. (16)
(d) Amended and Restated Special Account and Disbursement
Authorization Agreement dated as of February 10, 1995 among
Wachovia Bank of North Carolina, N.A., CCAIR, Inc., British
Aerospace Holdings, Inc., Jet Acceptance Corporation and JSX
Capital Corporation. (16)
11 Computation of earnings per share. (13)
13 (a) Annual Report on Form 10-K for the fiscal year ended June 30,
1994. (13)
(b) Quarterly report on Form 10-Q for the three-month period ended
March 31, 1995. (15)
16 Letter regarding change in Company's certifying accountant. (9)
23.1 Consent of Arthur Andersen, LLP. (16)
23.2 Consent of Rayburn, Moon & Smith, P.A. (included in opinion in
Exhibit 5).
23.3 Consent of Rayburn, Moon & Smith, P.A. (included in opinion in
Exhibit 8).
23.4 Consent of Coopers & Lybrand, LLP. (16)
Note: For footnote references, See page II-13.
II-12
<PAGE>
Footnotes:
(1) Incorporated by reference to Registration Statement on Form S-1, File
No. 33-28967.
(2) Incorporated by reference to Annual Report on Form 10-K for the fiscal
year ended June 30, 1989, File No. 0-17846.
(3) Incorporated by reference to Annual Report on Form 10-K for the fiscal
year ended June 30, 1990, File No. 0-17846.
(4) Incorporated by reference to Annual Report on Form 10-K for the fiscal
year ended June 30, 1991, File No. 0-17846.
(5) Incorporated by reference to Current Report on Form 8-K, filed August 1,
1991.
(6) Incorporated by reference to Annual Report on Form 10-K for the fiscal
year ended June 30, 1992, File No. 0-17846.
(7) Incorporated by reference to Annual Report on Form 10-K for the fiscal
year ended June 30, 1993, File No. 0-17846.
(8) Incorporated by reference to Pre-Effective Amendment No. 1 to
Registration Statement on Form S-2, File No. 33-65878.
(9) Incorporated by reference to Current Report on Form 8-K/A, dated
November 30, 1993, File No. 0-17846
(10) Incorporated by reference to Registration Statement on Form S-2, File
No. 33-77574.
(11) Incorporated by reference to Amendment No. 1 to Registration Statement
on Form S-2, File No. 33-77574.
(12) Incorporated by reference to Amendment No. 2 to Registration Statement
on Form S-2, File No. 33-77574.
(13) Incorporated by reference to Annual Report on Form 10-K for the fiscal
year ended June 30, 1994, File No. 0-17846.
(14) Incorporated by reference to Registration Statement on Form S-8 and Form
S-3, File No. 33-89832.
(15) Incorporated by reference to Quarterly Report on Form 10-Q for the
three-month period ended March 31, 1995, File No. 0-17846.
(16) Filed herewith.
</TABLE>
II-13
<PAGE>
Item 17. Undertakings.
Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers
and controlling persons of the registrant, the registrant has
been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as
expressed in the Act and is, therefore, unenforceable. In the
event that a claim for indemnification against such liabilities
(other than the payment by the registrant of expenses incurred or
paid by a director, officer or controlling person of the
registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling
person in connection with the securities being registered, the
registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in
the Act and will be governed by the final adjudication of such
issue.
The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are
being made, a post-effective amendment to this
registration statement:
(i) To include any prospectus required by section
10(a)(3) of the Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events
arising after the effective date of the
registration statement (or the most recent post-
effective amendment thereof) which, individually
or in the aggregate, represent a fundamental
change in the information set forth in the
registration statement. Notwithstanding the
foregoing, any increase or decrease in volume
of securities offered (if the total dollar value
of securities offered would not exceed that which
was registered) and any deviation from the low or
high end of the estimated maximum offering range
may be reflected in the form of prospectus filed
with the Commission pursuant to Rule 424(b) if,
in the aggregate, the changes in volume and price
represent no more than a 20% change in the maximum
aggregate offering price set forth in the
"Calculation of Registration Fee" table in the
effective registration statement.
(iii) To include any material information with respect
to the plan of distribution not previously
disclosed in the registration statement or any
material change to such information in the
registration statement;
(2) That, for the purpose of determining any liability
under the Securities Act of 1933, each such post-
effective amendment shall be deemed to be a new
registration statement relating to the securities
offered therein, and the offering of such securities at
that time shall be deemed to be the initial bona fide
offering thereof.
(3) To remove from registration by means of a post-
effective amendment any of the securities being
registered which remain unsold at the termination of
the offering.
II-14
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933,
the Registrant certifies that it has reasonable grounds to
believe that it meets all of the requirements for filing on Form
S-2 and has duly caused this Post-Effective Amendment to be
signed on its behalf by the undersigned, thereto duly authorized,
in the City of Charlotte, State of North Carolina, on July 31,
1995.
CCAIR, INC.
By:/s/ Kenneth W. Gann
Kenneth W. Gann, President
and Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933,
this Registration Statement has been signed by the following
persons in the capacities and on the dates indicated:
Signature Title Date
/s/ Kenneth W. Gann July 31, 1995
Kenneth W. Gann Chief Executive Officer,
President and Director
(Principal Executive
Officer)
/s/ Eric W. Montgomery July 31, 1995
Eric W. Montgomery Vice President-Finance
and Secretary
(Principal Finance and
Accounting Officer)
/s/ Dean E. Painter July 31, 1995
Dean E. Painter Director
/s/ John A. Adams
John A. Adams July 31, 1995
Director
/s/ Gordon Linkon
Gordon Linkon July 31, 1995
Director
/s/ K. Ray Allen July 31, 1995
K. Ray Allen Director
II-15
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
Item Description Filed
Herewith At
<S> <C>
2. Plan of Reorganization of CCAIR, Inc., effective September 3,
1991. (5)
4. Specimen Common Stock Certificate. (1)
5. Opinion of Rayburn, Moon & Smith, P.A. (16)
8. Opinion of Rayburn, Moon & Smith, P.A. (16)
10.1 (a) The Company's Stock Option Plan dated May 18, 1989 with forms of
Incentive Stock Option Agreement and Nonqualified Stock Option
Agreement attached. (1)
(b) Amendment to the Amended and Restated Stock Option Plan, dated
February 6, 1992. (6)
(c) Second Amended and Restate Stock Option Plan, dated February 6,
1993. (13)
(d) Third Amended and Restated Stock Option Plan of the Company, dated
February 23, 1994. (10)
(e) Fourth Amended and Restated Stock Option Plan of the Company,
dated November 15, 1994. (14)
10.2 (a) Agreement dated October 16, 1991 between CCAIR, Inc. and The Air
Line Pilots in the service of CCAIR, Inc. as represented by the
Air Line Pilots Association International. (6)
(b) Letter of Agreement amendment dated December 14, 1991 between
CCAIR, Inc. and The Air Line Pilots in the service of CCAIR, Inc.
as represented by the Air Line Pilots Association International.
(6)
(c) Letter of Agreement amendment dated February 28, 1992 between
CCAIR, Inc. and The Air Line Pilots in the service of CCAIR, Inc.
as represented by the Air Line Pilots Association International.
(6)
(d) Letter of Agreement amendment dated February 28, 1992 between
CCAIR, Inc. and The Air Line Pilots in the service of CCAIR, Inc.
as represented by The Air Line Pilots Association International.
(6)
10.3 (a) Service Agreement between USAir, Inc. and CCAIR, Inc. dated
November 1, 1988. (1)
(b) First Amendment to Service Agreement between USAir, Inc., and
CCAIR, Inc., dated July 1, 1990. (3)
(c) Supplemental Agreement between USAir, Inc., and CCAIR, Inc., dated
July 30, 1990. (4)
(d) Second Amendment to Service Agreement between USAir, Inc., and
CCAIR, Inc., dated January 23, 1991. (4)
(e) Third Amendment to Service Agreement between USAir, Inc., and
CCAIR, Inc., dated August 1, 1991. (8)
(f) Ground Handling Agreement, dated February 1, 1994, between CCAIR,
Inc., and USAir, Inc. (10)
10.4 (a) Loan Agreement dated as of September 4, 1991, between CCAIR, Inc.,
and NCNB National Bank of North Carolina. (4)
Note: For footnote reference see page 14
E-1
<PAGE>
(b) Revolving Credit Promissory Note by CCAIR, Inc. in favor of NCNB
National Bank of North Carolina, dated September 4, 1991. (4)
(c) Security Agreement dated as of September 4, 1991, between CCAIR,
Inc., and NCNB National Bank of North Carolina. (4)
(d) Loan Purchase Agreement dated as of September 4, 1991, by and
among
NCNB National Bank of North Carolina, British Aerospace, Inc., and
CCAIR, Inc. (4)
(e) Security Agreement dated as of September 4, 1991, between CCAIR,
Inc. and British Aerospace, Inc. An identical agreement was
executed with Jet Acceptance Corporation as of September 4, 1991,
and is not filed herewith. (4)
(f) Pledge of Cash Collateral Account dated as of September 4, 1991,
by and among CCAIR, Inc., NCNB National Bank of North Carolina,
British Aerospace, Inc., and Jet Acceptance Corporation. (4)
(g) Loan Agreement dated as of August 14, 1992 between CCAIR, Inc. and
NationsBank of North Carolina, N.A. (6)
(h) Agreement dated as of January 17, 1994 among CCAIR, Inc.,
NationsBank of North Carolina, N.A., British Aerospace, Inc. and
Jet Acceptance Corporation. (10)
(i) Assignment and Bill of Sale dated as of January 10, 1995 by and
among CCAIR, Inc., NationsBank of North Carolina, N.A., British
Aerospace, Inc. and Jet Acceptance Corporation. (16)
10.5 Equipment Lease Agreement dated April 18, 1986 between CLG, Inc.
and CCAIR, Inc. (1)
10.6 (a) Spare Parts Lease Agreement dated as of December 9, 1985 between
Jet Acceptance Corporation and Sunbird Airlines 1984, Inc. (1)
(b) Amendment No. 1 to Spare Parts Lease Agreement, dated August 29,
1991, between Jet Acceptance Corporation and CCAIR, Inc. (4)
10.7 (a) Spare Parts Lease Agreement dated as of December 17, 1987 between
Jet Acceptance Corporation and CCAIR, Inc. (1)
(b) Amendment No. 1 to Spare Parts Lease Agreement, dated August 29,
1991, between Jet Acceptance Corporation and CCAIR, Inc., said
Amendment is substantially identical to the Amendment in Exhibit
10.6(b) and is not filed herewith.
10.8 (a) Spare Parts Lease Agreement dated as of June 19, 1986 between Jet
Acceptance Corporation and CCAIR, Inc. (1)
(b) Amendment No. 1 to Spare Parts Lease Agreement, dated August 29,
1991, between Jet Acceptance Corporation and CCAIR, Inc., said
Amendment is substantially identical to the Amendment in Exhibit
10.6(b) and is not filed herewith.
10.9 (a) Amended and Restated Aircraft Equipment Sublease Agreement dated
as of August 29, 1991, between Jet Acceptance Corporation and
CCAIR, Inc. (4)
(b) Acceptance Supplement dated September 5, 1991, between Jet
Acceptance Corporation and CCAIR, Inc. (4)
10.10(a)(i) Lease Agreement effective as of April 19, 1991 between the
Asheville Regional Airport Authority and CCAIR, Inc. (4)
Note: For footnote reference see page 14
E-2
<PAGE>
(b) Lease Agreement dated July 5, 1989 between Clarke County Airport
Authority and CCAIR, Inc. (4)
(c) Agreement dated October 10, 1987 between the Central West Virginia
Regional Airport Authority and CCAIR, Inc. (1)
(d) Commuter Airline Agreement and Lease dated May 20, 1988 between
the City of Charlotte and CCAIR, Inc. (1)
(e) Agreement dated July 16, 1991 between the Chattanooga Metropolitan
Airport Authority and CCAIR, Inc. (4)
(f) Airport Use and Lease Agreement entered into as of January 1, 1989
between the Richland-Lexington Airport District and CCAIR, Inc.
(4)
(g) Agreement dated July 1, 1988 between the City of Danville,
Virginia and CCAIR, Inc. (1)
(h) Airport Use and Lease Agreement dated November 1, 1982 between
Greenville-Spartanburg Airport District and Sunbird, Inc. (1)
(i)(i) Letter Agreement dated July 13, 1988 from CCAIR, Inc. to Tri-State
Airport Authority. (1)
(i)(ii) Letter dated February 25, 1991 by Tri-State Airport Authority
amending Lease. (4)
(j)(i) Airport Use Agreement dated March 1, 1988 between the Board of
Commissioners of Onslow County and CCAIR, Inc. (1)
(j)(ii) Amendment to Lease dated July 15, 1988 between the same parties.
(1)
(k) Operating Agreement dated April 15, 1987 between Metropolitan
Knoxville Airport Authority and CCAIR, Inc. (1)
(l) Lease Agreement dated March 1, 1988 between the City of Macon and
CCAIR, Inc. (1)
(m) Letter Agreement dated September 5, 1990 between New Hanover
County and CCAIR, Inc. (4)
(n) Lease Agreement dated May 1, 1989 between Tri-City Airport
Commission and CCAIR, Inc. (4)
(o) Use Agreement dated May 1, 1991 between Airport Commission of
Forsyth County and CCAIR, Inc. (4)
(p) Letter from Pitt County - City of Greenville Airport Authority
dated May 31, 1990 announcing fee structure. (4)
(q) Airport Use Agreement dated May 1, 1991 between Raleigh County
Airport Authority and CCAIR, Inc. (4)
(r) Letter Agreement dated July 7, 1990 between Mercer County Airport
Authority and CCAIR, Inc. (4)
(s) Contract for Conduct of Commercial Flight Operations dated
September 1, 1991 between Maryland Aviation Administration and
CCAIR, Inc. (6)
10.11
(a)(i) Aircraft Lease between Shorts Air Lease, Inc. and CCAIR, Inc.
dated as of July 27, 1987 (Reg. No. N-121PC). This Aircraft Lease
is substantially identical to Aircraft Leases dated as of July 30,
1987 (Reg. No. N-722PC), November 20, 1987 (Reg.No. N-729PC),
December 22, 1987 (Reg. No. N-360CC), January 25, 1989 (Reg. No.
N-747SA) and June 7, 1989 (Reg. No. N-153CC), not filed herewith.
(1)
(a)(ii) Aircraft Lease between Lynrise Air Lease, Inc. (formerly Shorts
Air Lease, Inc.) and CCAIR, Inc., dated as of August 1, 1991 (Reg.
No. N-748SA). (4)
(a)(iii) Aircraft Lease between Lynrise Air Lease, Inc., and CCAIR, Inc.
dated as of August 1, 1991 (Reg. No. N-159CC). (4)
(b) Lease Amendment No. 1 dated as of May 20, 1988 to Aircraft Lease
dated as of December 22, 1987 (Reg. No.
Note: For footnote reference see page 14
E-3
<PAGE>
N-730CC). This Lease Amendment is substantially identical to
Lease Amendment dated as of May 20, 1988 (Reg. No. N-360CC), not
filed herewith. (1)
(c) Lease Supplement No. 1 dated as of July 27, 1987 to Aircraft Lease
(Reg. No. N-121PC). This Lease Supplement No. 1 is substantially
identical to Lease Supplements dated as of July 30, 1987 (Reg.No.
N-722PC), November 20, 1987 (Reg. No. N-729PC), December 22, 1987
(Reg. No. N-360CC), August 30, 1988 (Reg. No. N-742CC), January
25, 1989 (Reg. No. N-747SA) and June 7, 1989 (Reg. No. N-153CC),
not filed herewith. (1)
(d) Covenant of Quiet Enjoyment by the First National Bank of Boston
and the CIT Group/Financing, Inc. in favor of CCAIR, Inc. and
Shorts Air Lease dated as of July 27, 1987 (Reg. No. N-121PC).
This Covenant of Quiet Enjoyment is substantially identical to
Covenants of Quiet Enjoyment dated as of July 30, 1987 (Reg. No.
N-722PC), November 20, 1987 (Reg. No. N-729PC) and December 22,
1987 (Reg. No. N-360CC). This Covenant of Quiet Enjoyment is also
substantially identical to Covenants of Quiet Enjoyment by the
First National Bank of Boston, Meridian Trust Company, Principal
Mutual Life Insurance Company and State Street Bank and Trust
Company in favor of CCAIR, Inc. and Shorts Air Lease, Inc. dated
as of August 30, 1988 (Reg. No. N-742CC), January 25, 1989
(Reg. No. N-747SA), January 25, 1989 (Reg. No. N-748SA), June 7,
1989 (Reg. No. N-153CC) and September 11, 1989 (Reg. No. N-159CC),
not filed herewith. (1)
(e) Notice of Assignment and Consent from Shorts Air Lease, Inc. to
CCAIR, Inc. dated July 27, 1987 (Reg. No. N-121PC). This Notice
of Assignment and Consent to Assignment is substantially identical
to Notices of Assignment and Consents to Assignment dated as of
July 30, 1987 (Reg. No. N-722PC), November 20, 1987 (Reg. No. N
729PC), December 22, 1987 (Reg. No. N-360CC), August 12, 1988
(Reg. No. N -742CC), January 25, 1989 (Reg. No. N-747SA), January
25, 1989 (Reg. No. N-748SA), June 7, 1989 (Reg. No. N-153CC) and
September 11, 1989 (Reg. No. N-159CC), not filed herewith. (1)
(f) Consent to Assignment from CCAIR, Inc. to the First National Bank
of Boston dated July 27, 1987 (Reg. No. N-121PC). This Consent to
Assignment is substantially identical to Consents to Assignment
from CCAIR, Inc. to the First National Bank of Boston or State
Street Bank and Trust Company dated July 30, 1987 (Reg. No.
N-722PC), November 20, 1987 (Reg. No. N-729PC), December 22, 1987
(Reg. No. N-360CC), August 30, 1988 (Reg. No. N-742CC), January
25, 1989 (Reg. No. N-747SA), January 25, 1989 (Reg. No. N-748SA),
June 7, 1989 (Reg. No. N-153CC) and September 11, 1989 (Reg. No.
N-159CC), not filed herewith. (1)
(g) Sublease Assignment from Shorts Air Lease, Inc. to the First
National Bank of Boston dated July 27, 1987 (Reg. No. N-121PC).
This Sublease Assignment is substantially identical to Sublease
Assignments from the First National Bank of Boston or State Street
Bank and Trust Company dated July 30, 1987 (Reg. No. N-722PC),
November 20, 1987 (Reg. No. N-729PC), December 22, 1987 (Reg. No.
N-360CC), August 30, 1988 (Reg. No. N-742CC), January
Note: For footnote reference see page 14
E-4
<PAGE>
25, 1989 (Reg. No. N-747SA), January 25, 1989 (Reg. No. N-748SA),
June 7, 1989 (Reg. No. N-159CC), not filed herewith. (1)
(h) Lease Amendment (Reg. N-121PC) dated as of September 30, 1994
between Lynrise Air Lease, Inc., formerly Shorts Air Lease, Inc.,
and CCAIR, Inc. This Lease Amendment is substantially identical to
Lease Amendments between Lynrise Air Lease, Inc. and CCAIR, Inc.
dated as of September 30, 1995 (Reg. No. N-722PC, Reg. No. N-
729PC, Reg. No. N-360CC, Reg. No. N-159CC, Reg. No. N-153CC, Reg.
No. N-747__ __, Reg. No. N-729PC, Reg. No. N-742CC, and Reg. No.
N-748 __ __), not filed herewith. (16)
10.12 Aircraft Lease between Shorts Air Lease, Inc. and CCAIR, Inc.
dated as of August 12, 1988 (Reg. No. N-742CC). (1)
10.13 Participation Agreement among Short Brothers PLC, Westinghouse
Credit Corporation, The First National Bank of Boston, Shorts Air
Lease, Inc. and the CIT Group/Capital Financing, Inc. dated as of
July 27, 1987 (Reg. No. N-121PC). This Participation Agreement is
substantially identical to Participation Agreements dated as of
July 30, 1987 (Reg. No. N-722PC) and November 20, 1987 (Reg. No.
N-729PC); a Participation Agreement dated as of December 22, 1987
(Reg. No. N-360CC) among Short Brothers PLC, Wells Fargo Leasing
Corporation, The First National Bank of Boston, Shorts Air Lease,
Inc.; and the CIT Group/Capital Financing, Inc. and Participation
Agreements among Short Brothers PLC, Westinghouse Credit
Corporation, The First National Bank of Boston, Shorts Air Lease,
Inc., Principal Mutual Life Insurance Company and Meridian Trust
Company dated as of August 12, 1988 (Reg. No. N-742CC), January
25, 1989 (Reg. No. N-747SA) and January 25, 1989 (Reg. No. N-
748SA), not filed herewith. (1)
10.14 Trust Agreement between Westinghouse Credit Corporation and The
First National Bank of Boston dated as of July 27, 1987 (Reg. No.
N-121PC). This Trust Agreement is substantially identical to
Trust Agreements dated as of July 30, 1987 (Reg. No. N-722PC),
November 20, 1987 (Reg. No. N-729PC), August 12, 1988 (Reg. No. N-
742CC), January 25, 1989 (Reg. No. N-747SA) and January 25, 1989
(Reg. No. N-748SA) and a Trust Agreement between Wells Fargo
Leasing Corporation and The First National Bank of Boston dated as
of December 22, 1987 (Reg. No. N-360CC), not filed herewith. (1)
10.15 Trust Agreement and Security Agreement Supplement ("Trust and
Security Supplement") between The First National Bank of Boston
and Westinghouse Credit Corporation dated as of July 27, 1987
(Reg. No. N-121PC). This Trust and Security Supplement is
substantially identical to Trust and Security Supplements dated as
of July 30, 1987 (Reg. No. N-722PC), November 20, 1987 (Reg. No.
N-729PC), August 12, 1988 (Reg. No. N-742CC), January 25, 1989
(Reg. No. N-747SA) and January 25, 1989 (Reg. No. N-748SA) and
a Trust and Security Supplement between The First National Bank of
Boston and Wells Fargo Leasing Corporation dated as of December
22, 1987 (Reg. No. N-360CC), not filed herewith. (1)
10.16 Purchase Agreement among Short Brothers PLC, Short Aircraft
Delivery, Inc. and The First National Bank of Boston dated July
27, 1987 (Reg. No. N-121PC). This
Note: For footnote reference see page 14
E-5
<PAGE>
Purchase Agreement is substantially identical to Purchase
Agreements dated July 30, 1987 (Reg. No. N-722PC), November 20,
1987 (Reg. No. N-722PC), November 20, 1987 (Reg. No. N-729 PC),
December 22, 1987 (Reg. No. N-360CC), August 12, 1988 (Reg. No.
N-742CC), January 25, 1989 (Reg. No. N-747SA), January 25, 1989
(Reg. No. N-748SA), June 7, 1989 (Reg. No. N-153CC) and
September 11, 1989 (Reg. No. N-159CC), not filed herewith. (1)
10.17 Aircraft Lease between The First National Bank of Boston and
Shorts Air Lease, Inc. dated as of July 27, 1987 (Reg. No. N-
121PC). This Aircraft Lease is substantially identical to
Aircraft Leases dated as of July 30, 1987 (Reg. No. N-722PC),
November 20, 1987 (Reg. No.
N-729PC), August 12, 1988 (Reg. No. N-742CC), January 25, 1989
(Reg. No. N-747SA), January 25, 1989 (Reg. No. N-748SA), June 7,
1989 (Reg. No. N-153CC) and September 11, 1989 (Reg. No. N-159CC),
not filed herewith. (1)
10.18 Lease Supplement No. 1 between The First National Bank of Boston
and Shorts Air Lease, Inc. dated as of July 27, 1987 (Reg. No. N-
121PC). This Lease Supplement No. 1 is substantially identical to
Lease Supplements dated as of July 30,1987 (Reg. No. N-722PC),
November 20, 1987 (Reg. No. N-729PC), December 22, 1987 (Reg. No.
N-360CC), August 12, 1988 (Reg. No. N-742CC), January 25, 1989
(Reg. No. N-747SA), January 25, 1989 (Reg. No. N-748SA), June 7,
1989 (Reg. No. N-153CC) and September 11, 1989 (Reg. No. N-159CC),
Not filed herewith. (1)
10.19 Tax Indemnity Agreement between Westinghouse Credit Corporation
and Shorts Air Lease, Inc. dated as of July 27, 1987 (Reg. No. N-
121PC). This Tax Indemnity Agreement is substantially identical
to Tax Indemnity Agreements dated as of July 30, 1987 (Reg. No. N-
722PC), November 20, 1987 (Reg. No. N-729PC), December 22, 1987
(Reg. No. N-360CC), August 12, 1988 (Reg. No. N-742CC), January
25, 1989 (Reg. No. N-747SA), January 25, 1989 (Reg. No. N-748SA),
June 7, 1989 (Reg. No. N-153CC) and September 11, 1989 (Reg. No.
N-159CC), not filed herewith. (1)
10.20 Loan and Security Agreement between The First National Bank of
Boston and The CIT Group/Capital Financing, Inc. dated as of July
27, 1987 (Reg. No. N-121PC). This Loan and Security Agreement is
substantially identical to Loan and Security Agreements dated as
of July 30, 1987 (Reg. No. N-722PC), November 20, 1987 (Reg. No.
N-729PC), December 22, 1987 (Reg. No. N-360CC), August 12, 1988
(Reg. No. N-742CC), January 25, 1989 (Reg. No. N-747SA), January
25, 1989 (Reg. No. N-748SA), June 7, 1989 (Reg. No. N-153CC) and
September 11, 1989 (Reg. No. N-159CC), not filed herewith. (1)
10.21 (a) Interim Aircraft Sublease Agreement dated as of February 20, 1991,
between CCAIR, Inc., and Jet Acceptance Corporation (Reg. No. N-
162PC). This Interim Aircraft Sublease Agreement is substantially
identical to Interim Aircraft Sublease Agreements dated as of
April 4, 1991 (Reg. No. N-165PC), April 5, 1991 (Reg. No. N-164PC)
and April 8, 1991 (Reg. No. N-159PC), not filed herewith. (4)
(b) Acceptance Supplement dated February 22, 1991 between CCAIR, Inc.
and Jet Acceptance Corporation (Reg. No. N-
Note: For footnote reference see page 14
E-6
<PAGE>
162PC). This Acceptance Supplement is substantially identical to
Acceptance zSupplements dated April 4, 1991 (Reg. No. N-165PC),
April 8, 1991, (Reg. No. N-164PC) and April 8, 1991 (Reg. No.
N-159PC), not filed herewith.(4)
(c) Termination of Sublease between CCAIR, Inc. and Jet Acceptance
Corporation (Reg. No. N-162PC). This Termination of Sublease
is substantially identical to Terminations of Sublease (Reg. No.
N-165PC, N-164PC and N-159PC), not filed herewith. (4)
10.22 (a) Aircraft Sublease Agreement dated as of August 29, 1991, between
CCAIR, Inc., and Jet Acceptance Corporation (Reg. No. N-162PC).
This Aircraft Sublease Agreement is substantially identical to
Amended and Restated Aircraft Sublease Agreements dated as of
August 29, 1991, (Reg. No. N-161PC and Reg. No. N-163PC), not filed
herewith. (4)
(b) Acceptance Supplement dated September 5, 1991, between CCAIR, Inc.
and Jet Acceptance Corporation (Reg. No. N-162PC). This
Acceptance Supplement is substantially identical to Acceptance
Supplements dated September 5, 1991 (Reg. No. N-161PC and Reg.
No. N-163PC), not filed herewith. (4)
(c) Limited Warranty Agreement and Disclaimer of Warranty dated as of
December 27, 1985 between British Aerospace, Inc. and Sunbird
Airlines 1984, Inc. (Reg. No. N-162PC). This Limited Warranty
Agreement is substantially identical to Limited Warranty
Agreements dated December 13, 1985 (Reg. No. N-161PC) and December
27, 1985 (Reg. No. N-163PC), not filed herewith. (1)
(d) Aircraft Lease Agreement dated as of November 15, 1985 between
American Bank & Trust Co. of PA and Jet Acceptance Corporation
(Reg. Nos. N-162PC, N-161PC and N-163PC). (1)
(e) Lease Supplement No. 5 dated November 15, 1985 between American
Bank & Trust Co. of PA and Jet Acceptance Corporation (Reg. No. N-
162PC). This Lease Supplement is substantially identical to Lease
Supplements dated November 15, 1985 (Reg. No. N-161PC) and
December 27, 1985 (Reg. No. N-163PC), not filed herewith. (1)
(f) Mortgage and Trust Indenture dated as of November 15, 1985 between
American Bank & Trust Company of PA and The Connecticut Bank and
Trust Company, National Association (Reg. Nos. N-162PC, N-161PC
and N-163PC). (1)
(g) Trust Agreement dated as of November 15, 1985 between Greyhound
Leasing & Financial Corporation and American Bank & Trust Co. of
PA (Reg. Nos. N162PC, N-161PC and N-163PC). (1)
(h) Trust Agreement and Mortgage Supplement No. 5 dated December 27,
1985 by American Bank & Trust Co. of PA (Reg. No. N-162PC). This
Trust Agreement and Mortgage Supplements dated December 13, 1985
(Reg. No. N-161PC) and December 27, 1985 (Reg. No. N-163PC), not
filed herewith. (1)
(i) Sublease Security Assignment dated as of November 15, 1985 by Jet
Acceptance Corporation (Reg. No. N-162PC). This Sublease Security
Assignment is substantially identical to Sublease Security
Assignments dated as of
Note: For footnote reference see page 14
E-7
<PAGE>
November 15, 1985 (Reg. No. N-161PC) and November 15, 1985 (Reg.
No. N-163PC), not filed herewith. (1)
(j) Tax indemnification Agreement dated as of November 15, 1985
between Jet Acceptance Corporation and Greyhound Leasing &
Financial Corporation (Reg. Nos. N-162PC, N-161PC and N-163PC).
(1)
10.23 (a) Amended and Restated Aircraft Sublease Agreement dated as of
August 29, 1991, between CCAIR, Inc., and Jet Acceptance
Corporation (Reg. No. N-169PC). This Amended and Restated
Aircraft Sublease Agreement is substantially identical to an
Amended and Restated Aircraft Sublease Agreement dated as of
August 29, 1991, (Reg. No. N-168PC), not filed herewith. (4)
(b) Acceptance Supplement dated September 5, 1991, between CCAIR, Inc.
and Jet Acceptance Corporation (Reg. No. N-169PC). This
Acceptance Supplement is substantially identical to an Acceptance
Supplement dated September 5, 1991 (Reg. No. N-168PC), not filed
herewith. (4)
(c) Limited Warranty Agreement and Disclaimer of Warranty dated as of
May 20, 1986 between British Aerospace, Inc. and CCAIR, Inc. (Reg.
No. N-169PC). This Limited Warranty Agreement is substantially
identical to a Limited Warranty Agreement dated as of May 20, 1986
(Reg. No. N-168PC), not filed herewith. (1)
(d) Aircraft Lease Agreement dated as of May 1, 1986 between Meridian
Trust Company and Jet Acceptance Corporation (Reg. Nos. N-169PC
and N-168PC), not filed herewith. (1)
(e) Lease Supplement No. 2 dated as of May 1, 1986 between Meridian
Trust Company and Jet Acceptance Corporation (Reg. No. N-169PC).
This Lease Supplement is substantially identical to a Lease
Supplement dated May 20, 1986 (Reg. No. N-168PC), not filed
herewith. (1)
(f) Mortgage and Trust Indenture dated as of May 1, 1986 between
Meridian Trust Company and the Connecticut Bank and Trust Company,
National Association (Reg. Nos. N-169PC and N-168PC). (1)
(g) Trust Agreement dated as of May 1, 1986 between EFC Leasing
Corporation and Meridian Trust Company (Reg. Nos. N-169PC and N-
168PC). (1)
(h) Trust Agreement and Mortgage Supplement No. 2 dated May 20, 1986
by Meridian Trust Company (Reg. No. N-169PC). This Trust
Agreement and Mortgage Supplement is substantially identical to a
Trust Agreement and Mortgage Supplement dated May 20, 1986 (Reg.
No. N-168PC), not filed herewith. (1)
(i) Sublease Security Assignment dated as of May 9, 1986 by Jet
Acceptance Corporation (Reg. No. N-169PC). This Sublease Security
Assignment is substantially identical to a Sublease Security
Assignment dated as of and May 8, 1986 (Reg. No. N-168PC), not
filed herewith. (1)
(j) Tax Indemnification Agreement dated as of May 1, 1986 between Jet
Acceptance Corporation and EFC Leasing Corporation (Reg. Nos. N-
169PC and N-168PC). (1)
10.24 (a) Aircraft Sublease Agreement dated as of August 29, 1991, between
CCAIR, Inc., and Jet Acceptance Corporation (Reg. No. N-164PC).
This Aircraft Sublease Agreement is substantially identical to an
Aircraft Sublease Agreement (Reg. No. N-165PC) and an Amended and
Restated
Note: For footnote reference see page 14
E-8
<PAGE>
Aircraft Sublease Agreement (Reg. No. N-170PC), dated as
of August 29, 1991, not filed herewith. (4)
(b) Acceptance Supplement dated September 5, 1991, between CCAIR, Inc.
and Jet Acceptance Corporation (Reg. No. N-164PC). This
Acceptance Supplement is substantially identical to Acceptance
Supplements dated September 5, 1991 (Reg. No. N-165PC and Reg. No.
N-170PC), not filed herewith. (4)
(c) Limited Warranty Agreement and Disclaimer of Warranty dated as of
June 19, 1986 between British Aerospace, Inc. and CCAIR, Inc.
(Reg. No.N-164PC). This Limited Warranty Agreement is substantially
identical to Limited Warranty Agreements dated as of July 7, 1986
(Reg. No. N-165PC) and December 22, 1986 (Reg. No. N-170PC), not
filed herewith. (1)
(d) Aircraft Lease Agreement dated as of March 1, 1986 between
Meridian Trust Company and Jet Acceptance Corporation (Reg. Nos.
N-164PC, N-165PC and N-170PC). (1)
(e) Lease Addendum dated December 22, 1986 between Meridian Trust
Company and Jet Acceptance Corporation (Reg. Nos. N-164PC, N-165PC
and N-170PC). (1)
(f) Lease Supplement No. 1 dated as of March 1, 1986 between Meridian
Trust Company and Jet Acceptance Corporation (Reg. No. N-164PC).
This Lease Supplement is substantially identical to Lease
Supplements dated March 14, 1986 (Reg. No. N-165PC) and December
22, 1986 (Reg. No. N-170PC), not filed herewith. (1)
(g) Mortgage and Trust Indenture dated as of March 1, 1986 between
Meridian Trust Company and The Connecticut Bank and Trust Company,
National Association (Reg. Nos. N-164PC, N-165PC and N-170PC). (1)
(h) Mortgage Addendum dated December 22, 1986 between Meridian Trust
Company and The Connecticut Bank and Trust Company, National
Association (Reg. Nos. N-164PC, N-165PC and N-170PC). (1)
(i) Trust Agreement dated as of March 1, 1986 between Greyhound
Leasing and Financial Corporation and Meridian Trust Company (Reg.
Nos. N-164PC, N-165PC and N-170PC). (1)
(j) Trust Agreement Mortgage Supplement dated March 14, 1986 by
Meridian Trust Company (Reg. No. N-164PC). This Trust Agreement
and Mortgage Supplement is substantially identical to Trust
Agreement and Mortgage Supplements dated March 14, 1986 (Reg. No.
N-165PC) and December 22, 1986 (Reg. No. N-170PC), not filed
herewith. (1)
(k) Sublease Security Assignment dated as of June 19, 1986 by Jet
Acceptance Corporation (Reg. No. N-164PC). This Sublease Security
Assignment is substantially identical to Sublease Security
Assignments dated June 19, 1986 (Reg. No. N-165PC) and June 19,
1986 (Reg. No. N-170PC), not filed herewith. (1)
(l) Tax Indemnification Agreement dated as of March 1, 1986 (Reg. Nos.
N-164PC, N-165PC and N-170PC). (1)
10.25 (a) Amended and Restated Aircraft Sublease Agreement dated as of
August 29, 1991, between CCAIR, Inc., and Jet Acceptance
Corporation (Reg. No. N-156PC). This Amended and Restated
Aircraft Sublease Agreement is substantially identical to an
Amended and Restated
Note: For footnote reference see page 14
E-9
<PAGE>
Aircraft Sublease Agreement dated as of
August 29, 1991 (Reg. No. N-157PC), not filed herewith. (4)
(b) Acceptance Supplement dated September 5, 1991, between CCAIR, Inc.
and Jet Acceptance Corporation (Reg. No. N-156PC). This
Acceptance Supplement is substantially identical to an Acceptance
Supplement dated September 5, 1991 (Reg. No. N-157PC), not filed
herewith. (4)
(c) Limited Warranty Agreement and Disclaimer of Warranty dated
December 17, 1987 between British Aerospace, Inc. and CCAIR, Inc.
(Reg. No. N-156PC). This Limited Warranty Agreement is
substantially identical to Limited Warranty Agreement dated as of
December 17, 1987 (Reg. No. N-157PC), not filed herewith. (1)
(d) Lease Agreement dated as of August 15, 1987 between First Security
Bank of Utah, National Association and Jet Acceptance Corporation
(Reg. Nos. N-156PC and N-157PC). (1)
(e) Lease Supplement No. 1 dated December 17, 1987 between First
Security of Utah, National Association and Jet Acceptance
Corporation (Reg. Nos. N-156PC and N-157PC). (1)
(f) Assignment of Sublease and Security Agreement dated as of August
15, 1987 from Jet Acceptance Corporation to First Security Bank of
Utah, National Association (Reg. Nos. N-156PC and N-157PC). (1)
(g) Trust Agreement dated as of August 15, 1987 between First Security
Bank of Utah, National Association and TECO Investments, Inc.
(Reg. Nos. N-156PC and N-157PC). (1)
(h) Security Agreement-Trust Deed dated as of August 15, 1987 between
First Security Bank of Utah, National Association and The
Connecticut Bank and Trust Company, National Association (Reg.
Nos. N-156PC and N-157PC). (1)
(i) Security Agreement-Trust Deed Supplement No. 2 dated as of
December 17, 1987 between First Security Bank of Utah, National
Association and The Connecticut Bank and Trust Company, National
Association (Reg. Nos. N-156PC and N-157PC). (1)
(j) Tax Indemnification Agreement dated as of August 15, 1987 between
TECO Investments, Inc. and Jet Acceptance Corporation (Reg. Nos.
N-156PC and N-157PC). (1)
10.26 (a) Amended and Restated Aircraft Sublease Agreement dated as of
August 29, 1991, between CCAIR, Inc., and Jet Acceptance
Corporation (Reg. No. N-190PC). This Amended and Restated
Aircraft Sublease Agreement is substantially identical to an
Aircraft Sublease Agreement dated as of August 29, 1991 (Reg. No.
N-159PC), not filed herewith. (4)
(b) Acceptance Supplement dated September 5, 1991, between CCAIR, Inc.
and Jet Acceptance Corporation (Reg. No. N-190PC). This
Acceptance Supplement is substantially identical to an Acceptance
Supplement dated September 5, 1991 (Reg. No. N-159PC), not filed
herewith. (4)
(c) Limited Warranty Agreement and Disclaimer of Warranty dated as of
December 17, 1987 between British Aerospace, Inc. and CCAIR, Inc.
(Reg. No. N-190PC). This Limited Warranty Agreement is
substantially identical to Limited Warranty Agreement dated as of
December 17, 1987 (Reg. No. N-159PC), not filed herewith. (1)
Note: For footnote reference see page 14
E-10
<PAGE>
(d) Lease Agreement dated as of November 15, 1987 between First
Security Bank of Utah, National Association and Jet Acceptance
Corporation (Reg. Nos. N-190PC and N-159PC). (1)
(e) Assignment of Sublease Security Agreement dated as of November 15,
1987 from Jet Acceptance Corporation to First Security Bank of
Utah, National Association (Reg. Nos. N-190PC and N-159PC). (1)
(f) Trust Agreement dated as of November 15, 1987 between First
Security Bank of Utah, National Association and NCNB Lease
Investments, Inc. (Reg. Nos. N-190PC and N-159PC). (1)
(g) Security Agreement-Trust Deed dated as of November 15, 1987
between First Security Bank of Utah, National Association and The
Connecticut Bank and Trust Company, National Association (Reg.
Nos. N-190PC and N-159PC). (1)
(h) Tax Indemnification Agreement dated as of November 15, 1987
between NCNB Lease Investments, Inc. and Jet Acceptance
Corporation (Reg. Nos. N-190PC and N-159PC. (1)
10.27 (a) Amended and Restated Aircraft Sublease Agreement dated as of
August 29, 1991, between CCAIR, Inc., and Jet Acceptance
Corporation (Reg. No. N-158PC). (4)
(b) Acceptance Supplement dated September 5, 1991, between CCAIR, Inc.
and Jet Acceptance Corporation (Reg. No. N-158PC). (4)
(c) Limited Warranty Agreement and Disclaimer of Warranty dated as of
February 17, 1988 between British Aerospace, Inc. and CCAIR, Inc.
(Reg. No. N-158PC). (1)
(d) Lease Agreement dated as of September 1, 1987 between First
Security Bank of Utah, National Association and Jet Acceptance
Corporation (Reg. No. N-158PC). (1)
(e) Assignment of Sublease and Security Agreement dated as of
September 1, 1987 from Jet Acceptance Corporation to First
Security Bank of Utah, National Association (Reg. No. N-158PC).
(1)
(f) Trust Agreement dated as of September 1, 1987 between First
Security Bank of Utah, National Association and NCNB Lease
Investments, Inc. (Reg. No. N-158PC). (1)
(g) Security Agreement-Trust Deed dated as of September 1, 1987
between First Security Bank of Utah, National Association and The
Connecticut Bank and Trust Company, National Association (Reg. No.
N-158PC). (1)
(h) Tax Indemnification Agreement dated as of September 1, 1987
between NCNB Lease Investments, Inc. and Jet Acceptance
Corporation (Reg. No. N-158PC). (1)
10.28 Indemnity Agreement dated as of July 11, 1989 between CCAIR, Inc.
and Evrika Shipping Corporation. (1)
10.29 (a) Commercial Use Permit between CCAIR, Inc., and City of Charlotte,
North Carolina dated April 1, 1991, relating to Old Terminal
Building at Charlotte/Douglas International Airport. (4)
(b) Commercial Use Permit dated April 15, 1992 between the City of
Charlotte and CCAIR, Inc. (6)
10.30 (a) Flight Attendant Agreement between CCAIR, Inc., and the Flight
Attendants in the service of CCAIR, Inc., as represented by the
Association of Flight Attendants, effective May 22, 1991. (4)
(b) Letter of Agreement amendment dated May 6, 1992 between CCAIR,
Inc. and the Flight Attendants in service of
Note: For footnote reference see page 14
E-11
<PAGE>
CCAIR, Ins. as represented by the Association of Flight
Attendants. (6)
10.31 Letter Agreement dated February 27, 1991 between Pennsylvania
Airlines and CCAIR, Inc. (4)
10.32 (a) Purchase Agreement No. 8-0237, dated as of February 23, 1992
between CCAIR, Inc. and de Havilland Inc. (successor to Boeing of
Canada, Ltd., a Delaware corporation, through its de Havilland
Division) as amended by letter agreements attached thereto for two
de Havilland DHC-8-102 Aircraft (N880CC) and (N881CC). (6)
(b) Purchase Agreement Assignment between CCAIR, Inc. and Mellon
Financial Services Corporation #3 dated as of May 15, 1992
(N880CC). This Purchase Agreement Assignment is substantially
identical to Purchase Agreement Assignment (N881CC), dated as of
May 15, 1992, not filed herewith. (6)
(c) Lease Agreement between CCAIR, Inc. and Mellon Financial Services
Corporation #3 dated as of May 15, 1992 (N880CC). This Lease
Agreement is substantially identical to Lease Agreements (N881CC),
(N882CC) and N883CC) dated as of May 15, 1992, not filed herewith.
(6)
(d) Lease Supplement #1 between CCAIR, Inc. and Mellon Financial
Services Corporation #3 dated as of May 22, 1992 (N880CC). This
Lease Supplement #1 is substantially identical to Lease
Supplements (N881CC), (N882CC) and (N883CC) dated as of May 22,
June 1 and June 12, 1992, respectively, not filed herewith. (6)
(e) Tax Indemnity Agreement between CCAIR, Inc. and Mellon Financial
Services Corporation #3 dated as of May 15, 1992 (N880CC). This
Tax Indemnity Agreement is substantially identical to Tax
Indemnity Agreements (N881CC), (N882CC) and (N883CC) dated as of
May 15, 1992, not filed herewith. (6)
(f) Assignment and Assumption Agreement dated as of November __, 1995
between C.I.T. Leasing Corporation and Mellon Financial Services
Corporation #3. (16)
(g) Aircraft Lease Termination dated as of November ___, 1995 between
Mellon Financial Services Corporation #3 and CCAIR, Inc. (16)
10.33 (a) Lease Agreement (Spares) between CCAIR, Inc. and Mellon Financial
Services Corporation #3 dated as of August 14, 1992. (6)
(b) Lease Supplement between CCAIR, Inc. and Mellon Financial Services
Corporation #3 dated as of August 28, 1992. (6)
(c) Tax Indemnity Agreement between CCAIR, Inc. and Mellon Financial
Services Corporation #3 dated as of August 14, 1992. (6)
10.34 Agreement dated January 1, 1994 between CCAIR, Inc. and the
Mechanics and related employees in the service of CCAIR as
represented by the International Brotherhood of Teamsters. (13)
10.35 Employment Agreement between Kenneth W. Gann and CCAIR, Inc. dated
February 8, 1994. (13)
10.36(a) Agreement dated November 14, 1994, by and among CCAIR, Inc.,
British Aerospace Holdings, Inc., formerly British Aerospace,
Inc., and Jet Acceptance Corporation. (16)
Note: For footnote reference see page 14
E-12
<PAGE>
(b) Acceptance Supplement No. 2(N158PC) dated as of November 14, 1994
between Jet Acceptance Corporation and CCAIR, Inc. This
Acceptance Supplement No. 2 is substantially identical to
Acceptance Supplements No. 2 between Jet Acceptance Corporation
and CCAIR, Inc. (N164PC, N162PC, N159PC, N157PC, N156PC, N190PC,
N170PC, N169PC, N168PC, N163PC and N161PC), notified herewith.
(16)
10.37 (a) Lease Agreement dated as of November 15, 1994 between C.I.T.
Leasing Corporation and CCAIR, Inc. for DHC-8-102 Aircraft (Reg.
No. 880CC). This Lease Agreement is substantially identical to
Lease Agreements dated as of November 15, 1994 between C.I.T.
Leasing Corporation and CCAIR, Inc. for DHC-8-102 Aircraft (Reg.
No. 881CC, Reg. No. 882CC and Reg. No. 883CC), not filed herewith.
(16)
(b) Lease Agreement (Spares) dated as of November 15, 1994 between
C.I.T. Leasing Corporation and CCAIR, Inc. (16)
(c) Lease Supplement No. 1 is substantially identical to Lease
Supplements No. 1 between C.I.T. Leasing Corporation and CCAIR,
Inc. for DHC-8-102 Aircraft (Reg. No. 881CC, Reg. No. 882CC and
Reg. No. 883CC) and Lease Supplement No. 1 (Spares), not filed
herewith. (16)
10.38 (a) Amended and Restated Loan Agreement dated as of February 10, 1995,
between JSX Capital Corporation and CCAIR, Inc. (16)
(b) Revolving Note dated February 10, 1995 in the principal amount of
$2,500,000 by CCAIR, Inc. to the order of British Aerospace
Holdings, Inc. (16)
(c) Amended and Restated Security Agreement dated as of February 10,
1995 between JSX Capital Corporation and CCAIR, Inc. (16)
(d) Amended and Restated Special Account and Disbursement
Authorization Agreement dated as of February 10, 1995 among
Wachovia Bank of North Carolina, N.A., CCAIR, Inc., British
Aerospace Holdings, Inc., Jet Acceptance Corporation and JSX
Capital Corporation. (16)
11 Computation of earnings per share. (13)
13 (a) Annual Report on Form 10-K for the fiscal year ended June 30,
1994. (13)
(b) Quarterly report on Form 10-Q for the three-month period ended
March 31, 1995. (15)
16 Letter regarding change in Company's certifying accountant. (9)
23.1 Consent of Arthur Andersen, LLP. (16)
23.2 Consent of Rayburn, Moon & Smith, P.A. (included in opinion in
Exhibit 5).
23.3 Consent of Rayburn, Moon & Smith, P.A. (included in opinion in
Exhibit 8).
23.4 Consent of Coopers & Lybrand, LLP. (16)
Note: For footnote reference see page 14
E-13
<PAGE>
Footnotes:
(1) Incorporated by reference to Registration Statement on Form S-1, File
No. 33-28967.
(2) Incorporated by reference to Annual Report on Form 10-K for the fiscal
year ended June 30, 1989, File No. 0-17846.
(3) Incorporated by reference to Annual Report on Form 10-K for the fiscal
year ended June 30, 1990, File No. 0-17846.
(4) Incorporated by reference to Annual Report on Form 10-K for the fiscal
year ended June 30, 1991, File No. 0-17846.
(5) Incorporated by reference to Current Report on Form 8-K, filed August 1,
1991.
(6) Incorporated by reference to Annual Report on Form 10-K for the fiscal
year ended June 30, 1992, File No. 0-17846.
(7) Incorporated by reference to Annual Report on Form 10-K for the fiscal
year ended June 30, 1993, File No. 0-17846.
(8) Incorporated by reference to Pre-Effective Amendment No. 1 to
Registration Statement on Form S-2, File No. 33-65878.
(9) Incorporated by reference to Current Report on Form 8-K/A, dated
November 30, 1993, File No. 0-17846
(10) Incorporated by reference to Registration Statement on Form S-2, File
No. 33-77574.
(11) Incorporated by reference to Amendment No. 1 to Registration Statement
on Form S-2, File No. 33-77574.
(12) Incorporated by reference to Amendment No. 2 to Registration Statement
on Form S-2, File No. 33-77574.
(13) Incorporated by reference to Annual Report on Form 10-K for the fiscal
year ended June 30, 1994, File No. 0-17846.
(14) Incorporated by reference to Registration Statement on Form S-8 and Form
S-3, File No. 33-89832.
(15) Incorporated by reference to Quarterly Report on Form 10-Q for the
three-month period ended March 31, 1995, File No. 0-17846.
(16) Filed herewith.
E-14
</TABLE>
<PAGE>
Exhibit 5
July 31, 1995
CCAIR, Inc.
4700 Yorkmont Road
Second Floor
Charlotte, North Carolina 28208
Re: CCAIR, Inc. Common Stock, par value $0.01 per share
Gentlemen:
At your request, we have examined the Post-Effective Amend-
ment No. 1 to the Registration Statement on Form S-2 (the "Regis-
tration Statement"), which CCAIR, Inc. (the "Company") intends to
file with the Securities and Exchange Commission in connection
with the registration under the Securities Act of 1933, as
amended, of the offering of 250,000 shares of Common Stock par
value $0.01 per share (the "Shares"). The Registration State-
ment, as amended, relates to the registration of the Shares,
which are to be offered in exchange for certain indebtedness of
the Company. We are familiar with the proceedings taken and to be
taken in connection with the authorization, issuance and sale of
the Shares. Additionally, we have examined such questions of law
and fact as we have considered necessary or appropriate for
purposes of this opinion.
Based upon the foregoing and the proceedings to be taken by
the Company as referred to above, we are of the opinion that the
Shares to be issued have been duly authorized, and upon the
issuance of Shares under the terms of the exchange offer and
delivery and payment therefor of legal consideration in excess of
the aggregate par value of the Shares issued, such Shares will be
validly issued, fully paid and nonassessable.
We consent to your filing this opinion as an exhibit to the
Amendment and to the reference to our firm contained under the
heading "Legal Matters" of the prospectus included therein.
Very truly yours,
Rayburn, Moon & Smith, P.A.
<PAGE>
Exhibit 8
July 31, 1995
CCAIR, Inc.
4700 Yorkmont Road
Second Floor
Charlotte, North Carolina 28208
Gentlemen:
You have requested our opinion with respect to certain
federal income tax aspects of an investment in CCAIR, Inc., a
Delaware corporation (the "Company").
In rendering our opinion, we have examined: (a) such
provisions of the Internal Revenue Code of 1986, as amended (the
"Code"), final Treasury Regulations, reported judicial decisions,
and published administrative rulings and procedures as are in
full force and effect as of the date hereof as we have considered
appropriate for purposes of this opinion, all of which are
subject to changes which might render this opinion invalid and
(b) the Post-Effective Amendment No. 1 to the Registration
Statement on Form S-2 as filed with the Securities and Exchange
Commission on July ___, 1995 and the Preliminary Prospectus
contained therein (the "Prospectus") for the offering of 250,000
shares of the common stock ($0.01 par value) of the Company to
Shorts Brothers (USA), Inc. (the "Offeree"), a creditor of the
Company under certain of the Company's aircraft leases. The
terms used in this opinion, unless otherwise provided, shall have
the same meanings as set forth in the Prospectus.
We rely upon your representations that the Company's common
stock is not listed on any exchange, but traded on the over-the-
counter market by brokers and quoted through the National
Association of Securities Dealers, Inc. Automated Quotation
System Small Cap Stock Market ("NASDAQ market") and that the
Creditor to whom exchange is offered is not related to the
issuer.
<PAGE>
Page Two
July 31, 1995
Based solely on the foregoing, and subject to the
qualifications set forth herein, we are of the opinion that:
1. Any gain or loss realized on the exchange of Company
indebtedness for Company Common Stock by the recipient will be
recognized pursuant to section 1001 of the Code. In particular,
although the transaction proposed by the Prospectus might be
characterized as a recapitalization reorganization under section
368(a)(1)(E) of the Code, it is not likely that any of the
Company indebtedness for which exchange is offered constitute
securities of the Company within the meaning of section 354(a)(1)
of the Code.
2. The amount of gain (or loss) realized by a particular
recipient on any such exchange will be the amount by which the
fair market value of the Company Common Stock received exceeds
(or is exceeded by) the Creditor's adjusted basis in the Company
indebtedness exchanged. The amount of the Company indebtedness
exchanged will equal the gross sales price of the shares upon
resale by the Offeree within 30 business days of receipt less
normal brokerage commissions plus the issue price of any shares
not resold within 30 business days of receipt. The fair market
value of the Company Common Stock for this purpose will be the
mean between the highest and lowest selling prices of shares of
the Company Common Stock traded in the NASDAQ market on the date
of the exchange or, if there are no sales on that date, on the
nearest preceding or succeeding date on which sales were made in
such market, within a reasonable period. If there are no sales
within a reasonable period of the date of exchange, the fair
market value of the Company Common Stock for this purpose will be
the mean between the bid and asked prices for shares of the
Company Common Stock in the NASDAQ market on the date of exchange
or the nearest preceding or succeeding date within a reasonable
period. The adjusted basis of the recipient in the Company
indebtedness exchanged is an issue of fact depending in part on
the recipient's prior tax treatment of the Company's indebtedness
and the net sales price of the shares upon resale by the Offeree
and about which we have no reliable information or basis upon
which to make a reasonable general assumption. Accordingly, we
express no opinion on whether the recipient will realize income
or loss.
3. The character of income or loss realized by the
recipient will depend upon whether the Company indebtedness
exchanged by the recipient is a capital asset in the hands of the
recipient. Capital assets are defined by section 1221 of the
Code and the judicial interpretations thereof. Section 1221
provides that all property is capital, with specified exceptions
including stock in
<PAGE>
Page Three
July 31, 1995
trade, property properly included in inventory, and property held
primarily for sale to customers in the ordinary course of
business or trade, as well as accounts and notes receivable
acquired in the ordinary course of business for services rendered
or from the sale of above-described property. Judicial
interpretations have expanded these exceptions to include
property not literally described therein. If the indebtedness
for which exchange is offered arose in the ordinary course of the
holder's business for services or for excepted property, then the
recipient will realize ordinary income or loss. The recipient
for whom the Company indebtedness exchanged is not of this
character, if any, will realize capital gain or loss. A
recipient who would otherwise realize capital gain may have a
portion of the gain characterized as ordinary income if the
Company indebtedness held by such recipient is subject to
original issue discount or unstated interest rules of Sections
1274 and 483 of the Code. The character of Company indebtedness
in the hands of the creditor is an issue of fact about which we
have no reliable information or basis upon which to make a
reasonable general assumption. Accordingly, we express no
opinion on whether any income or loss realized will be
characterized as ordinary or capital.
4. The deductibility of capital losses for the recipient
who realizes such losses as a result of the contemplated exchange
is limited. If the recipient's capital losses for the
recipient's tax year exceed capital gains, then, in the case of a
non-corporate taxpayer, the capital losses may be used to offset
up to $3,000 in ordinary income. Corporations may carry back any
remaining capital losses for three years and carry such losses
forward for a maximum of five years. Individuals may carry
forward any unused capital losses indefinitely.
We express no opinion on any matter not specifically
discussed herein. Without limiting the generality of the
foregoing sentence, we express no opinion with respect to whether
the Company indebtedness for which exchange is offered
constitutes a capital asset of the creditor or whether the
Company Common Stock received will be a capital asset in the
hands of the recipient, nor do we express an opinion on any
previous or subsequent transaction with respect to the Company
Common Stock and indebtedness exchanged. In addition, we offer
no opinion on federal income tax considerations that may be
relevant to either (i) particular recipients of Company Common
Stock, including without limitation recipients who are dealers in
securities, recipients who are foreign persons or entities,
recipients who acquired the Company's indebtedness
<PAGE>
Page Four
July 31, 1995
from a person other than the Company, or recipients that are tax-
exempt entities, or (ii) any subsequent secondary disposition or
distribution of Company Common Stock. The foregoing opinion is
limited to matters of federal income tax law, and we express no
opinion as to the law of any other jurisdiction.
Very truly yours,
RAYBURN, MOON & SMITH, P.A.
<PAGE>
Exhibit 10.11(i)
LEASE AMENDMENT
(N-121PC)
This Lease Amendment (N-121PC) dated as of 30 September,
1994, between Lynrise Air Lease, Inc., a Delaware Corporation,
formerly Shorts Air Lease, Inc. ("Lessor") and CCAIR, Inc., a
Delaware Corporation ("Lessee").
Lessor and Lessee have heretofore entered into a Lease
Agreement dated as of July 27, 1987 (herein called the "Lease"
and the defined terms therein being hereinafter used with the
same meanings) and Lessor and Lessee desire to amend the Lease
according to the terms and provisions herein.
Lessee has obtained reductions in the basic rent it pays for
its fleet of Jetstream aircraft which are comparable to the
reduction in rent provided herein, and Lessee has obtained
assurance from Her Majesty the Queen in right of Canada that,
upon assignment by Mellon Financial Services Corporation #3 of
its four Dash-8 aircraft leases with Lessee, rent reductions of
similar amounts per aircraft will be made.
NOW, THEREFORE, in consideration of the premises and other
good and sufficient consideration, Lessor and Lessee hereby agree
as follows:
1. Section 3(b) of the Lease, entitled "Basic Rent" shall
be
amended by addition of the following sentence at the end of the
existing paragraph.
"Notwithstanding the foregoing, the Basic Rent to be
paid on each Basic Rent Date from October 1, 1994 up to
but not including January 1, 1996 shall be $34,000."
The amended Section 3(b) shall then read in its entirety:
b. Basic Rent. The Lessee shall pay to the Lessor on
the Interim Rent Date $1,433.00 for each day from
the Interim Rent Date to but not including the
First Basic Rent Date and $43,000 on the First
Basic Rent Date and on each Basic Rent Date
thereafter to, and including, the Last Basic Rent
Date as basic rent (herein referred to as "Basic
Rent"). Notwithstanding the foregoing, the Basic
Rent to be paid on each Basic Rent Date from
October 1, 1994 up to but not including January 1,
1996 shall be $34,000.
2. All other terms of the Lease remain in full force and
effect to the same extent as if fully set forth herein.
<PAGE>
3. This Lease Amendment (N-121PC) may be executed in any
number of counterparts and by the different parties hereto on
separate counterparts.
IN WITNESS WHEREOF Lessor and Lessee have caused this Lease
Amendment (N-121PC) to be duly executed as of the day and year
first above written.
LESSOR:
Lynrise Air Lease, Inc.
By:/s/ Michael Wayshner
Its:Vice President
LESSEE:
CCAIR, Inc.
By:/s/ Kenneth W. Gann
Its:President
<PAGE>
Exhibit 10.32(f)
ASSIGNMENT AND ASSUMPTION AGREEMENT
ASSIGNMENT AND ASSUMPTION AGREEMENT, dated the latest
of the dates set forth below the signatures hereto (this,
"Agreement"), between C.I.T. LEASING CORPORATION, a Delaware
corporation ("Purchaser"), and MELLON FINANCIAL SERVICES
CORPORATION #3, a Pennsylvania corporation ("Seller").
SECTION 1. Definitions. For purposes of this
Agreement, the following specific terms shall have the respective
meanings set forth below.
Equipment shall mean the Aircraft, Engines, and
Propellers described in Schedule 1 hereto.
Lease Insurance Agreement shall mean the Aircraft Lease
Insurance Agreement identified on Schedule 1 hereto.
Lease Transaction shall mean the lease transaction
identified in Schedule 1 hereto and the transactions entered into
pursuant thereto.
Lessee shall mean the person identified as such in the
Transaction Documents.
Lien shall mean any mortgage, pledge, security
interest, encumbrance, lien, easement, servitude or charge of any
kind.
Transaction Documents shall mean all of the agreements,
instruments, certificates, financing statements and other
documents of any nature executed in connection with the Equipment
or the Lease Transaction, including, but not limited to those
Transaction Documents listed on Schedule 2 hereto and any
amendments, assignments, modifications or supplement thereto or
thereof.
SECTION 2. Sale and Assignment. Seller, for good and
valuable consideration to it, receipt of which is hereby
acknowledged, does hereby assign, transfer, sell and convey unto
Purchaser all of Seller's right, title and interest in and to the
Lease Transaction (including, without limitation, any claim of
Seller under or pursuant to the Lease Insurance Agreement),
subject to no Liens created by or arising through Seller other
than Liens created pursuant to, permitted by, or which are the
express responsibility of another person to discharge or remove
under the Transaction Documents, to have and hold said Lease
Transaction unto Purchaser to and for its use forever; provided,
however, that Seller retains and does not assign to Purchaser
hereby, all benefits accrued and all rights vested in Seller
pursuant to any and all Transaction Documents (other than the
Lease Insurance Agreement) in respect of the period ending on the
date hereof, including, without limitation, all rights to
indemnification by
<PAGE>
Lessee; provided, further, however, that such reserved rights shall
not include any Basic Rent (as defined in the Lease Transaction)
payable in respect of any period before or after the date hereof.
SECTION 3. Assumption. (a) Purchaser hereby assumes
all of the duties and obligations of Seller under the Transaction
Documents arising or accruing on or after the date hereof, and
agrees that it shall be bound by all the terms of, and shall
undertake all the obligations of Seller contained in, the
Transaction Documents, whether arising on or subsequent to the
date hereof; provided, however, that Purchaser does not assume
and Seller shall remain obligated with respect to any payments
due to the Lessee as a result of any indemnity payments paid by
the Lessee to Seller, either prior to or after the Closing Date.
(b) Purchaser and Seller hereby covenant and agree to
execute and to deliver to the other parties to the Transaction
Documents from time to time such other documents, instruments and
agreements as they reasonably may request in order to further
evidence the assignment, assumption and substitution effected
hereby or otherwise to carry out the purposes and intent of this
Agreement.
SECTION 4. Novation. Except with respect to benefits
accrued and rights vested in, and obligations to be performed by,
Seller prior to the date hereof (which shall not include any
claim under the Lease Insurance Agreement and any Basic Rent due
under the Lease Transaction), upon the effectiveness hereof in
accordance with Section 7, Seller shall be released and
discharged from each obligation, liability or duty pursuant to
the Transaction Documents arising or accruing on or after the
date of effectiveness hereof and Purchaser shall be substituted
in lieu of Seller as a party to each of the Transaction Documents
to which Seller is a party.
SECTION 5. Successors and Assigns. This Agreement
shall be binding upon and inure to the benefit of the parties
hereto and their permitted successors and assigns and shall inure
to the benefit of the other parties to the Transaction Documents.
SECTION 6. Governing Law. This Agreement, including
all matters of construction, validity and performance, shall in
all respects be governed by, and construed in accordance with,
the law of the State of New York applicable to contracts made in
such state and to be performed entirely within such state,
without giving effect to principles relating to conflicts of law.
SECTION 7. Counterparts; Effective Date. This
Agreement may be executed by the parties hereto in separate
counterparts, each of which when so executed and delivered shall
be an original, but all such counterparts shall together
constitute but one and the same instrument. This Agreement shall
become effective as of the later of the dates set forth below
under the signatures of the
2
<PAGE>
officers of the parties hereto on the execution page hereof.
SECTION 8. Notices. All notices, offers, acceptances,
approvals, waivers, requests, demands and other communications
hereunder or under any instrument, certificate or other
instrument delivered in connection with the transactions
described herein shall be in writing, shall be addressed as
provided below and shall be considered as properly given (a) if
delivered in person, (b) if sent by overnight delivery service,
(c) if mailed by first class United States mail, postage prepaid,
registered or certified with return receipt requested, (d) if
sent by prepaid telegram or by telex and confirmed, or (e) if
sent by any electronic data transmission facility and confirmed.
Notice so given shall be effective upon receipt; provided, that
if any notice is tendered to an addressee and the delivery
thereof is refused by such addressee, such notice shall be
effective upon such tender. For the purpose of notice, the
address of the parties shall be as set forth below; provided that
any party shall have the right to change its address for notice
hereunder to any other location by the giving of prior notice to
the other party in the manner set forth hereinabove. The initial
addresses of the parties hereto are as follows:
Seller: MELLON FINANCIAL SERVICES
CORPORATION #3
One Mellon Bank Center
Suite 4444
Pittsburgh, PA 15258
Attention: President
Fax: 412-234-3948
Purchaser: C.I.T. LEASING CORPORATION
1211 Avenue of the Americas
New York, NY 10036
Attention: Senior Vice President-
Legal
Fax: 212-536-1322
3
<PAGE>
IN WITNESS WHEREOF, the parties hereto have each caused
this Agreement to be duly executed and delivered by their
respective officers thereunto duly authorized as of the day and
year set forth below under the signatures of their respective
officers.
SELLER: MELLON FINANCIAL SERVICES
CORPORATION #3
By:
Alan J. Copolow
Attorney in Fact
November _____, 1994
PURCHASER: C.I.T. LEASING CORPORATION
By:
Name:
Title:
November _____, 1994
Each of the undersigned hereby consents to the foregoing
Assignment and Assumption Agreement and agrees to be bound by the
terms thereof:
de HAVILLAND, INC. HER MAJESTY THE QUEEN IN RIGHT
OF CANADA
as represented by the Minister of
Industry, Science and Technology
By: Per:
Name: Name:
Title: Title:
November _____, 1994 November _____, 1994
CCAIR, INC.
By:
Kenneth W. Gann
President
November _____, 1994
4
<PAGE>
Schedule 1
Lease Transaction
Lease Agreement (N880CC), dated as of May 15, 1992, between
Mellon Financial Services Corporation #3, as lessor ("Lessor")
and CCAIR, Inc., as lessee ("Lessee"), which lease, with Lease
Supplement No. 1 (N880CC), dated May 22, 1992, attached thereto,
was recorded by the Federal Aviation Administration ("FAA") on
June 1, 1992, and assigned Conveyance No. M29459, as amended by
Amendment No. 1 (N880CC), dated as of November 2, 1992, between
Lessor and Lessee, recorded by the FAA on November 17, 1992, and
assigned Conveyance No. U63617, as further amended by Amendment
No. 2 (N880CC), dated as of March 29, 1993, between Lessor and
Lessee, recorded by the FAA on June 14, 1993, and assigned
Conveyance No. FF09723.
Airframes, Engines and Propellers
One Boeing DHC-8-102 aircraft, serial number 277, bearing
FAA registration number N880CC, including two (2) Pratt 7
Whitney, PW120A turboprop engines, bearing serial numbers PC-
E121066 and PC-E121064, and two (2) Hamilton Standard Model 14SF-
7 propellers, bearing serial numbers 910305 and 910130.
Lease Insurance Agreement
Aircraft Lease Insurance Agreement, dated May 22, 1994,
between Mellon Financial Services Corporation #3 ("Mellon") and
Her Majesty the Queen in right of Canada, as represented by the
Minister of Industry, Science and Technology (the "Minister"), as
amended and supplemented to the date hereof, including the
Consent and Agreement, dated July 29, 1994, between Mellon and
the Minister.
<PAGE>
Schedule 2
MATERIAL TRANSACTION DOCUMENTS
Serial No. 277, FAA Registration Number N880CC
1. Lease Agreement (N880CC), dated as of May 15, 1992 (the
"Lease"), between Mellon Financial Services Corporation #3,
as Lessor, and CCAIR, Inc., as Lessee. Capitalized terms
not defined herein shall have the meanings assigned in the
Lease.
2. Lease Supplement No. 1, dated May 22, 1992, between Lessor
and Lessee.
Items 1 and 2 filed as a single document with the FAA on May
22, 1992 and recorded by the FAA on June 1, 1992, and
assigned Conveyance Number M29459.
3. Purchase Agreement Assignment (N880CC), dated as of May 15,
1992, between Lessee, as Assignor, and Lessor, as Assignee,
relating to the Aircraft.
4. Consent and Agreement, dated May 22, 1992, of de Havilland,
Inc. ("Seller"), relating to the Assignment in item 3 above.
5. Lease Insurance Agreement, dated as of May 22, 1992, between
the Minister and Lessor, together with letter of indemnity
from de Havilland and opinion of de Havilland's counsel.
6. Lessor's initial request for insurance under the Insurance
Agreement (including Insurance Schedule attached thereto),
together with Schedule of Insured Stipulated Loss Values and
check in payment of initial premium.
7. Warranty Bill of Sale, dated May 22, 1992, from Seller to
Lessor, for the Aircraft with opinion of Seller's counsel.
8. FAA Aircraft Bill of Sale for the Aircraft. Filed on May
22, 1992, and recorded by the FAA on May 22, 1992, and
assigned Conveyance Number M29421.
9. FAA Aircraft Registration Application, AC Form 8050-1, for
the Aircraft. Filed for recordation with the FAA on May 22,
1992.
10. FAA Certificate of Airworthiness.
11. Seller's invoice and acceptance documents.
12. Tax Indemnity Agreement, dated as of May 15, 1992, between
Lessor and Lessee.
13. Insurance Certificate evidencing coverages required under
the Lease and naming Lessor and the Minister as additional
insureds and Lessor as loss payee.
14. Officer's Certificate of Lessee.
<PAGE>
15. Officer's Certificate for Lessor.
16. Opinion of Lessee's special counsel to Lessor.
17. Opinion of Lessor's special counsel to Lessee.
18. Opinion of Lessor's special counsel to the Minister.
19. Opinion of Lessor's special Canadian counsel.
20. Opinion of special FAA counsel.
21. UCC filings in North Carolina.
22. Post-closing opinion of special FAA Counsel.
23. Amendment No. 1 (N880CC) to Lease Agreement, dated as of May
22, 1992, between Lessor and Lessee.
24. Consent of Minister to Amendment No. 1 (N880CC)
25. Amendment No. 2 (N880CC) to Lease Agreement, dated as of May
22, 1992, between Lessor and Lessee.
26. Consent of Minister to Amendment No. 2 (N880CC)
27. Revised Request for Insurance for S/N 168 (N880CC) with
Insurance Schedule and Schedule of Insured Stipulated Loss
Values S/N 277 (N880CC) Attached
28. Letter from Mellon to de Havilland regarding the
Manufacturer Payment
29. Notice of Default (N880CC)
30. Consent and Agreement, dated July 29, 1994, between Lessor
and the Minister relative to the Lease Insurance Agreement.
31. Letter, dated October 26, 1994, from Mellon to the Minister
requesting that an auction of Mellon's rights in the
Equipment be held on November 16, 1994, pursuant to Section
7 of the Insurance Agreement.
2
<PAGE>
Exhibit 10.32(g)
AIRCRAFT LEASE TERMINATION
The undersigned, Mellon Financial Services Corporation
#3 (the "Lessor"), and CCAIR, Inc. (the "Lessee"), as Lessor and
Lessee, respectively, under a certain Lease Agreement, more
particularly described in Annex I attached hereto (the "Lease"),
with respect to the Aircraft, as more particularly described in
Annex I attached hereto, hereby terminate the Lease and release
the Aircraft from the terms and conditions thereof.
This Aircraft Lease Termination may be executed in
counterparts, each of which when executed and delivered shall be
deemed an original and all together shall constitute one and the
same instrument.
Dated this _____ day of November 1994.
LESSOR: MELLON FINANCIAL SERVICES
CORPORATION #3
By:
Arthur Folsom, Jr.
Senior Vice President
LESSEE: CCAIR, INC.
By:
Kenneth W. Gann
President
<PAGE>
Annex I
(N880CC)
Description of Lease
Lease Agreement (N880CC) dated as of May 15, 1992
between Mellon Financial Services Corporation #3, as lessor and
CCAir, Inc., as lessee, which was recorded by the Federal
Aviation Administration on June 1, 1992 and assigned Conveyance
No. M29459, as supplemented and amended by the following
described instruments:
Date of FAA FAA
Instrument Instrument Recording Date Conveyance
No.
Lease Supplement
No. 1 (N880CC) 05/22/92 06/01/92 M29459
Amendment No. 1 as of
(N880CC) 11/02/92 11/17/92 U63617
Amendment No. 2 as of
(N880CC) 03/29/93 06/14/93 FF09723
Description of Aircraft
One (1) Boeing DHC-8-102 bearing manufacturer's serial
number 277 and U.S. Registration No. N880CC, two (2) Pratt &
Whitney PW 120A aircraft engines bearing manufacturer's serial
numbers PC-E121066 and PC-E121064 and two (2) Hamilton Standard
14SF-7 aircraft propellers bearing manufacturer's serial numbers
910305 and 910130.
<PAGE>
Exhibit 10.36(a)
STATE OF NORTH CAROLINA
AGREEMENT
COUNTY OF MECKLENBURG
THIS AGREEMENT, made and entered into the 16th day of
November, 1994 by and among CCAIR, INC., d/b/a USAir Express
("CCAIR"), BRITISH AEROSPACE HOLDINGS, INC., formerly British
Aerospace, Inc. ("BAH") and JET ACCEPTANCE CORPORATION ("JACO").
WHEREAS, the CCAIR Plan of Reorganization confirmed on July
19, 1991 by order of the United States Bankruptcy Court for the
Western District of North Carolina in Case No. C-B-90-30927 ("the
Plan") makes provision for the payment of certain annual
installments to JACO by CCAIR with respect to aircraft lease
arrearage; and
WHEREAS, CCAIR and JACO are making modifications to the
aircraft lease payments due between September 1, 1994 and January
1, 1996 as embodied in certain aircraft lease acceptance
supplements of even date herewith (the "Acceptance Supplements");
and
WHEREAS, in consideration of the provisions contained in the
Acceptance Supplements and other good and valuable consideration,
JACO and BAH are willing to waive payment of the Plan installment
due in September, 1994 in the amount of $241,358 (the "Payment")
pursuant to the terms and conditions provided herein;
NOW, THEREFORE, in consideration of the receipt of $10 and
other good and valuable consideration, the receipt of which is
hereby acknowledged, the parties hereto agree as follows:
1. JACO and BAH hereby waive payment of the Payment
provided, however, that such waiver of the Payment applies only
to CCAIR in its present form and will be immediately invalidated
upon any merger of CCAIR with or into any other company, either
voluntarily or otherwise, or upon any other significant change in
the ownership of CCAIR. In the event of any such merger or
significant change in ownership occurring prior to September,
1995, the Payment shall immediately be reinstated and be due and
payable.
2. This Agreement applies only to the Payment and not to
other obligations of CCAIR under the Plan, including the payment
of subsequent annual installments which obligations remain
unchanged.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed as of the day and year first above
written.
CCAIR, INC.
By: /s/ Kenneth W. Gann
(SEAL)
Title: President
BRITISH AEROSPACE HOLDINGS, INC.
By: /s/ Patricia L. Maskell
(SEAL)
Title: Assistant Secretary
JET ACCEPTANCE CORPORATION
By: David Tomkins
(SEAL)
Title: Vice President
<PAGE>
Exhibit 10.36(b)
ACCEPTANCE SUPPLEMENT NO. 2 (N158PC)
THIS ACCEPTANCE SUPPLEMENT NO. 2 (N158PC) dated as of
November 15, 1994 is executed and agreed by and between JET
ACCEPTANCE CORPORATION, a Delaware corporation (hereinafter
referred to as "JACO") and CCAIR, INC., a Delaware corporation
(hereinafter referred to as "CCAIR").
WITNESSETH:
1. JACO and CCAIR have heretofore entered into an Aircraft
Sublease Agreement dated as of August 29, 1991 ("the Sublease")
and an Acceptance Supplement dated September 5, 1991 (the "First
Acceptance Supplement"). The terms defined in the Sublease shall
have the same meanings when used herein.
2. The parties desire to modify the Basic Rent for the
Aircraft pursuant to the terms hereof.
NOW, THEREFORE, in consideration of the premises herein, the
payment of ten dollars, and other good and sufficient
consideration, the receipt of which is hereby acknowledged, JACO
and CCAIR hereby agree as follows:
1. CCAIR hereby agrees to pay and JACO hereby agrees to
accept as Basic Rent for the Aircraft the amounts set forth in
the Schedule of Rental Payments attached hereto as Exhibit A in
place and in lieu of the amounts set forth in the Schedule of
Rental Payments attached to the First Acceptance Supplement as
Schedule 2.
2. The terms of this Acceptance Supplement No. 2 apply
only to CCAIR in its present form and shall be invalidated by any
merger voluntary or otherwise, or by other significant change in
ownership of CCAIR. In the event of any such merger or
significant change in ownership of CCAIR, the Basic Rent provided
in the Schedule of Rental Payments attached to the First
Acceptance Supplement as Schedule 2 shall be immediately
reinstated.
3. The terms of this Acceptance Supplement No. 2 are
conditioned upon receipt by JACO from CCAIR on or before January
31, 1995 of a detailed business plan in form and substance
satisfactory to JACO for a period covering two calendar years and
reflecting new originations and destinations and other routes.
If such business plan is not timely received, the Basic Rent
provided in the Schedule of rental payments attached to the First
Acceptance Supplement as Schedule 2 shall be immediately
reinstated.
4. All other terms of the Sublease and the First
Acceptance Supplement are hereby incorporated by reference in
this Acceptance Supplement No. 2 to the same extent as if fully
set forth herein.
5. This Acceptance Supplement No. 2 may be executed by the
parties hereto in separate counterparts, each of which when so
<PAGE>
executed and delivered shall be an original, but all such
counterparts shall together constitute one and the same
instrument.
IN WITNESS WHEREOF, the parties have caused this Acceptance
Supplement No. 2 to be duly executed as of the day and year first
above written.
JET ACCEPTANCE CORPORATION
By: ______________________________
Its: ______________________________
CCAIR, INC.
By: ______________________________
Its: ______________________________
<PAGE>
N158PC Schedule of Rental Payments
Due Date Amount
On September 29, October 29, November 30,
and December 29, 1994 $ 29,802.00
Beginning on January 1, 1995 and
monthly on the first business day
following the 28th day of the month
if the 28th day of the month is a
business day, otherwise on the second
business day following the 28th day
of the month thereafter through and
including December, 1995 24,774.00
Beginning on January 1, 1996 and
monthly on the first business day
following the 28th day of the month
if the 28th day of the month is a
business day, otherwise on the second
business day following the 28th day
of the month thereafter through and
including December, 2001 32,598.00
On January 2, 2002 2,173.00
Exhibit A
(to Acceptance Supplement No. 2)
<PAGE>
ACCEPTANCE SUPPLEMENT NO. 2 (N164PC)
THIS ACCEPTANCE SUPPLEMENT NO. 2 (N164PC) dated as of
November 15, 1994 is executed and agreed by and between JET ACCEPTANCE
CORPORATION, a Delaware corporation (hereinafter referred to as "JACO")
and CCAIR, INC., a Delaware corporation (hereinafter referred to as
"CCAIR").
WITNESSETH:
1. JACO and CCAIR have heretofore entered into an Aircraft
Sublease Agreement dated as of August 29, 1991 ("the Sublease") and an
Acceptance Supplement dated September 5, 1991 (the "First Acceptance
Supplement"). The terms defined in the Sublease shall have the same
meanings when used herein.
2. The parties desire to modify the Basic Rent for the
Aircraft pursuant to the terms hereof.
NOW, THEREFORE, in consideration of the premises herein,
the payment of ten dollars, and other good and sufficient consideration,
the receipt of which is hereby acknowledged, JACO and CCAIR hereby agree
as follows:
1. CCAIR hereby agrees to pay and JACO hereby agrees
to accept as Basic Rent for the Aircraft the amounts set forth in the
Schedule of Rental Payments attached hereto as Exhibit A in place and in
lieu of the amounts set forth in the Schedule of Rental Payments
attached to the First Acceptance Supplement as Schedule 2.
2. The terms of this Acceptance Supplement No. 2 apply
only to CCAIR in its present form and shall be invalidated by any merger
voluntary or otherwise, or by other significant change in ownership of
CCAIR. In the event of any such merger or significant change in
ownership of CCAIR, the Basic Rent provided in the Schedule of Rental
Payments attached to the First Acceptance Supplement as Schedule 2 shall
be immediately reinstated.
3. The terms of this Acceptance Supplement No. 2 are
conditioned upon receipt by JACO from CCAIR on or before January 31,
1995 of a detailed business plan in form and substance satisfactory to
JACO for a period covering two calendar years and reflecting new
originations and destinations and other routes. If such business plan is
not timely received, the Basic Rent provided in the Schedule of rental
payments attached to the First Acceptance Supplement as Schedule 2 shall
be immediately reinstated.
4. All other terms of the Sublease and the First
Acceptance Supplement are hereby incorporated by reference in this
Acceptance Supplement No. 2 to the same extent as if fully set forth
herein.
5. This Acceptance Supplement No. 2 may be executed by
the parties hereto in separate counterparts, each of which when so
<PAGE>
executed and delivered shall be an original, but all such counterparts
shall together constitute one and the same instrument.
IN WITNESS WHEREOF, the parties have caused this Acceptance
Supplement No. 2 to be duly executed as of the day and year first above
written.
JET ACCEPTANCE CORPORATION
By: ______________________________
Its: ______________________________
CCAIR, INC.
By: ______________________________
Its: ______________________________
<PAGE>
N164PC Schedule of Rental Payments
Due Date Amount
On September 29, October 29, November 30,
and December 29, 1994 $32,302.00
Beginning on January 1, 1995 and monthly on the first
business day following the 28th day of the month if the
28th day of the month is a business day, otherwise on
the second business day following the 28th day of the
month thereafter through and including December, 1995 27,274.00
Beginning on January 1, 1996 and monthly on the first
business day following the 28th day of the month if the
28th day of the month is a business day, otherwise on the
second business day following the 28th day of the month
thereafter through and including December, 1998 35,888.00
On January 2, 1999 2,392.53
Exhibit A
(to Acceptance Supplement No. 2)
<PAGE>
ACCEPTANCE SUPPLEMENT NO. 2 (N162PC)
THIS ACCEPTANCE SUPPLEMENT NO. 2 (N162PC) dated as of November
15, 1994 is executed and agreed by and between JET ACCEPTANCE
CORPORATION, a Delaware corporation (hereinafter referred to as "JACO")
and CCAIR, INC., a Delaware corporation (hereinafter referred to as
"CCAIR").
WITNESSETH:
1. JACO and CCAIR have heretofore entered into an Aircraft
Sublease Agreement dated as of August 29, 1991 ("the Sublease") and an
Acceptance Supplement dated September 5, 1991 (the "First Acceptance
Supplement"). The terms defined in the Sublease shall have the same
meanings when used herein.
2. The parties desire to modify the Basic Rent for the
Aircraft pursuant to the terms hereof.
NOW, THEREFORE, in consideration of the premises herein, the
payment of ten dollars, and other good and sufficient consideration, the
receipt of which is hereby acknowledged, JACO and CCAIR hereby agree as
follows:
1. CCAIR hereby agrees to pay and JACO hereby agrees to
accept as Basic Rent for the Aircraft the amounts set forth in the
Schedule of Rental Payments attached hereto as Exhibit A in place and in
lieu of the amounts set forth in the Schedule of Rental Payments
attached to the First Acceptance Supplement as Schedule 2.
2. The terms of this Acceptance Supplement No. 2 apply
only to CCAIR in its present form and shall be invalidated by any merger
voluntary or otherwise, or by other significant change in ownership of
CCAIR. In the event of any such merger or significant change in
ownership of CCAIR, the Basic Rent provided in the Schedule of Rental
Payments attached to the First Acceptance Supplement as Schedule 2 shall
be immediately reinstated.
3. The terms of this Acceptance Supplement No. 2 are
conditioned upon receipt by JACO from CCAIR on or before January 31,
1995 of a detailed business plan in form and substance satisfactory to
JACO for a period covering two calendar years and reflecting new
originations and destinations and other routes. If such business plan is
not timely received, the Basic Rent provided in the Schedule of rental
payments attached to the First Acceptance Supplement as Schedule 2 shall
be immediately reinstated.
4. All other terms of the Sublease and the First
Acceptance Supplement are hereby incorporated by reference in this
Acceptance Supplement No. 2 to the same extent as if fully set forth
herein.
5. This Acceptance Supplement No. 2 may be executed by
the parties hereto in separate counterparts, each of which when so
<PAGE>
executed and delivered shall be an original, but all such counterparts
shall together constitute one and the same instrument.
IN WITNESS WHEREOF, the parties have caused this Acceptance
Supplement No. 2 to be duly executed as of the day and year first above
written.
JET ACCEPTANCE CORPORATION
By: ______________________________
Its: ______________________________
CCAIR, INC.
By: ______________________________
Its: ______________________________
<PAGE>
N162PC Schedule of Rental Payments
Due Date Amount
On September 29, October 29, November 30,
and December 29, 1994 $30,716.00
Beginning on January 1, 1995 and monthly
on the first business day following the 28th
day of the month if the 28th day of the month is a
business day, otherwise on the second business
day following the 28th day of the month thereafter
through and including December, 1995 25,688.00
Beginning on January 1, 1996 and monthly on the
first business day following the 28th day of the
month if the 28th day of the month is a business day,
otherwise on the second business day following the 28th
day of the month thereafter through and including December, 1997 33,800.00
On January 2, 1998 2,253.33
Exhibit A
(to Acceptance Supplement No. 2)
<PAGE>
ACCEPTANCE SUPPLEMENT NO. 2 (N159PC)
THIS ACCEPTANCE SUPPLEMENT NO. 2 (N159PC) dated as of
November 15, 1994 is executed and agreed by and between JET ACCEPTANCE
CORPORATION, a Delaware corporation (hereinafter referred to as "JACO")
and CCAIR, INC., a Delaware corporation (hereinafter referred to as
"CCAIR").
WITNESSETH:
1. JACO and CCAIR have heretofore entered into an Aircraft
Sublease Agreement dated as of August 29, 1991 ("the Sublease") and an
Acceptance Supplement dated September 5, 1991 (the "First Acceptance
Supplement"). The terms defined in the Sublease shall have the same
meanings when used herein.
2. The parties desire to modify the Basic Rent for the
Aircraft pursuant to the terms hereof.
NOW, THEREFORE, in consideration of the premises herein, the
payment of ten dollars, and other good and sufficient consideration, the
receipt of which is hereby acknowledged, JACO and CCAIR hereby agree as
follows:
1. CCAIR hereby agrees to pay and JACO hereby agrees to
accept as Basic Rent for the Aircraft the amounts set forth in the
Schedule of Rental Payments attached hereto as Exhibit A in place and in
lieu of the amounts set forth in the Schedule of Rental Payments
attached to the First Acceptance Supplement as Schedule 2.
2. The terms of this Acceptance Supplement No. 2 apply
only to CCAIR in its present form and shall be invalidated by any merger
voluntary or otherwise, or by other significant change in ownership of
CCAIR. In the event of any such merger or significant change in
ownership of CCAIR, the Basic Rent provided in the Schedule of Rental
Payments attached to the First Acceptance Supplement as Schedule 2 shall
be immediately reinstated.
3. The terms of this Acceptance Supplement No. 2 are
conditioned upon receipt by JACO from CCAIR on or before January 31,
1995 of a detailed business plan in form and substance satisfactory to
JACO for a period covering two calendar years and reflecting new
originations and destinations and other routes. If such business plan is
not timely received, the Basic Rent provided in the Schedule of rental
payments attached to the First Acceptance Supplement as Schedule 2 shall
be immediately reinstated.
4. All other terms of the Sublease and the First
Acceptance Supplement are hereby incorporated by reference in this
Acceptance Supplement No. 2 to the same extent as if fully set forth
herein.
5. This Acceptance Supplement No. 2 may be executed by
the parties hereto in separate counterparts, each of which when so
<PAGE>
executed and delivered shall be an original, but all such counterparts
shall together constitute one and the same instrument.
IN WITNESS WHEREOF, the parties have caused this Acceptance
Supplement No. 2 to be duly executed as of the day and year first above
written.
JET ACCEPTANCE CORPORATION
By: ______________________________
Its: ______________________________
CCAIR, INC.
By: ______________________________
Its: ______________________________
<PAGE>
N159PC Schedule of Rental Payments
Due Date Amount
On September 29, October 29, November 30,
and December 29, 1994 $29,802.00
Beginning on January 1, 1995 and monthly on
the first business day following the 28th day
of the month if the 28th day of the month is a
business day, otherwise on the second business
day following the 28th day of the month thereafter
through and including December, 1995 24,774.00
Beginning on January 1, 1996 and monthly on the
first business day following the 28th day of the
month if the 28th day of the month is a business day,
otherwise on the second business day following the 28th
day of the month thereafter through and including
December, 2001 32,598.00
On January 2, 2002 2,173.20
Exhibit A
(to Acceptance Supplement No. 2)
<PAGE>
ACCEPTANCE SUPPLEMENT NO. 2 (N157PC)
THIS ACCEPTANCE SUPPLEMENT NO. 2 (N157PC) dated as of
November 15, 1994 is executed and agreed by and between JET ACCEPTANCE
CORPORATION, a Delaware corporation (hereinafter referred to as "JACO")
and CCAIR, INC., a Delaware corporation (hereinafter referred to as
"CCAIR").
WITNESSETH:
1. JACO and CCAIR have heretofore entered into an Aircraft
Sublease Agreement dated as of August 29, 1991 ("the Sublease") and an
Acceptance Supplement dated September 5, 1991 (the "First Acceptance
Supplement"). The terms defined in the Sublease shall have the same
meanings when used herein.
2. The parties desire to modify the Basic Rent for the
Aircraft pursuant to the terms hereof.
NOW, THEREFORE, in consideration of the premises herein, the
payment of ten dollars, and other good and sufficient consideration, the
receipt of which is hereby acknowledged, JACO and CCAIR hereby agree as
follows:
1. CCAIR hereby agrees to pay and JACO hereby agrees to
accept as Basic Rent for the Aircraft the amounts set forth in the
Schedule of Rental Payments attached hereto as Exhibit A in place and in
lieu of the amounts set forth in the Schedule of Rental Payments
attached to the First Acceptance Supplement as Schedule 2.
2. The terms of this Acceptance Supplement No. 2 apply
only to CCAIR in its present form and shall be invalidated by any merger
voluntary or otherwise, or by other significant change in ownership of
CCAIR. In the event of any such merger or significant change in
ownership of CCAIR, the Basic Rent provided in the Schedule of Rental
Payments attached to the First Acceptance Supplement as Schedule 2 shall
be immediately reinstated.
3. The terms of this Acceptance Supplement No. 2 are
conditioned upon receipt by JACO from CCAIR on or before January 31,
1995 of a detailed business plan in form and substance satisfactory to
JACO for a period covering two calendar years and reflecting new
originations and destinations and other routes. If such business plan is
not timely received, the Basic Rent provided in the Schedule of rental
payments attached to the First Acceptance Supplement as Schedule 2 shall
be immediately reinstated.
4. All other terms of the Sublease and the First
Acceptance Supplement are hereby incorporated by reference in this
Acceptance Supplement No. 2 to the same extent as if fully set forth
herein.
5. This Acceptance Supplement No. 2 may be executed by the
parties hereto in separate counterparts, each of which when so
<PAGE>
executed and delivered shall be an original, but all such counterparts shall
together constitute one and the same instrument.
IN WITNESS WHEREOF, the parties have caused this Acceptance
Supplement No. 2 to be duly executed as of the day and year first above
written.
JET ACCEPTANCE CORPORATION
By: ______________________________
Its: ______________________________
CCAIR, INC.
By: ______________________________
Its: ______________________________
<PAGE>
N157PC Schedule of Rental Payments
Due Date Amount
On September 29, October 29, November 30,
and December 29, 1994 $29,802.00
Beginning on January 1, 1995 and
monthly on the first business day
following the 28th day of the month
if the 28th day of the month is a
business day, otherwise on the second
business day following the 28th day
of the month thereafter through and
including December, 1995 24,774.00
Beginning on January 1, 1996 and
monthly on the first business day
following the 28th day of the month
if the 28th day of the month is a
business day, otherwise on the second
business day following the 28th day
of the month thereafter through and
including December, 2001 32,598.00
On January 2, 2002 2,173.20
Exhibit A
(to Acceptance Supplement No. 2)
<PAGE>
ACCEPTANCE SUPPLEMENT NO. 2 (N156PC)
THIS ACCEPTANCE SUPPLEMENT NO. 2 (N156PC)
dated as of November 15, 1994 is executed and agreed by
and between JET ACCEPTANCE CORPORATION, a Delaware
corporation (hereinafter referred to as "JACO") and
CCAIR, INC., a Delaware corporation (hereinafter
referred to as "CCAIR").
WITNESSETH:
1. JACO and CCAIR have heretofore entered into an
Aircraft Sublease Agreement dated as of August 29, 1991 ("the
Sublease") and an Acceptance Supplement dated September 5,
1991 (the "First Acceptance Supplement"). The terms defined
in the Sublease shall have the same meanings when used herein.
2. The parties desire to modify the Basic Rent
for the Aircraft pursuant to the terms hereof.
NOW, THEREFORE, in consideration of the premises
herein, the payment of ten dollars, and other good and
sufficient consideration, the receipt of which is hereby
acknowledged, JACO and CCAIR hereby agree as follows:
1. CCAIR hereby agrees to pay and JACO hereby
agrees to accept as Basic Rent for the Aircraft the amounts
set forth in the Schedule of Rental Payments attached hereto
as Exhibit A in place and in lieu of the amounts set forth in
the Schedule of Rental Payments attached to the First
Acceptance Supplement as Schedule 2.
2. The terms of this Acceptance Supplement No. 2
apply only to CCAIR in its present form and shall be
invalidated by any merger voluntary or otherwise, or by other
significant change in ownership of CCAIR. In the event of any
such merger or significant change in ownership of CCAIR, the
Basic Rent provided in the Schedule of Rental Payments
attached to the First Acceptance Supplement as Schedule 2
shall be immediately reinstated.
3. The terms of this Acceptance Supplement No. 2
are conditioned upon receipt by JACO from CCAIR on or before
January 31, 1995 of a detailed business plan in form and
substance satisfactory to JACO for a period covering two
calendar years and reflecting new originations and
destinations and other routes. If such business plan is not
timely received, the Basic Rent provided in the Schedule of
rental payments attached to the First Acceptance Supplement as
Schedule 2 shall be immediately reinstated.
4. All other terms of the Sublease and the First
Acceptance Supplement are hereby incorporated by reference in
this Acceptance Supplement No. 2 to the same extent as if
fully set forth herein.
5. This Acceptance Supplement No. 2 may be
executed by the parties hereto in separate counterparts, each
of which when so
<PAGE>
executed and delivered shall be an original, but all such
counterparts shall together constitute one and the same
instrument.
IN WITNESS WHEREOF, the parties have caused this
Acceptance Supplement No. 2 to be duly executed as of the day
and year first above written.
JET ACCEPTANCE CORPORATION
By: ______________________________
Its: ______________________________
CCAIR, INC.
By: ______________________________
Its: ______________________________
<PAGE>
N156PC Schedule of Rental Payments
Due Date Amount
On September 29, October 29, November 30,
and December 29, 1994 $29,802.00
Beginning on January 1, 1995 and
monthly on the first business day
following the 28th day of the month
if the 28th day of the month is a
business day, otherwise on the second
business day following the 28th day
of the month thereafter through and
including December, 1995 24,774.00
Beginning on January 1, 1996 and
monthly on the first business day
following the 28th day of the month
if the 28th day of the month is a
business day, otherwise on the second
business day following the 28th day
of the month thereafter through and
including December, 2001 32,598.00
On January 2, 2002 2,173.20
Exhibit A
(to Acceptance Supplement No. 2)
<PAGE>
ACCEPTANCE SUPPLEMENT NO. 2 (N190PC)
THIS ACCEPTANCE SUPPLEMENT NO. 2 (N190PC) dated as of
November 15, 1994 is executed and agreed by and between JET
ACCEPTANCE CORPORATION, a Delaware corporation (hereinafter
referred to as "JACO") and CCAIR, INC., a Delaware corporation
(hereinafter referred to as "CCAIR").
WITNESSETH:
1. JACO and CCAIR have heretofore entered into an
Aircraft Sublease Agreement dated as of August 29, 1991 ("the
Sublease") and an Acceptance Supplement dated September 5,
1991 (the "First Acceptance Supplement"). The terms defined
in the Sublease shall have the same meanings when used herein.
2. The parties desire to modify the Basic Rent for
the Aircraft pursuant to the terms hereof.
NOW, THEREFORE, in consideration of the premises herein,
the payment of ten dollars, and other good and sufficient
consideration, the receipt of which is hereby acknowledged,
JACO and CCAIR hereby agree as follows:
1. CCAIR hereby agrees to pay and JACO hereby agrees
to accept as Basic Rent for the Aircraft the amounts set forth
in the Schedule of Rental Payments attached hereto as Exhibit
A in place and in lieu of the amounts set forth in the
Schedule of Rental Payments attached to the First Acceptance
Supplement as Schedule 2.
2. The terms of this Acceptance Supplement No. 2
apply only to CCAIR in its present form and shall be
invalidated by any merger voluntary or otherwise, or by other
significant change in ownership of CCAIR. In the event of
any such merger or significant change in ownership of CCAIR,
the Basic Rent provided in the Schedule of Rental Payments
attached to the First Acceptance Supplement as Schedule 2
shall be immediately reinstated.
3. The terms of this Acceptance Supplement No. 2 are
conditioned upon receipt by JACO from CCAIR on or before
January 31, 1995 of a detailed business plan in form and
substance satisfactory to JACO for a period covering two
calendar years and reflecting new originations and
destinations and other routes. If such business plan is not
timely received, the Basic Rent provided in the Schedule of
rental payments attached to the First Acceptance Supplement
as Schedule 2 shall be immediately reinstated.
4. All other terms of the Sublease and the First
Acceptance Supplement are hereby incorporated by reference in
this Acceptance Supplement No. 2 to the same extent as if
fully set forth herein.
5. This Acceptance Supplement No. 2 may be executed
by the parties hereto in separate counterparts, each of which
when so
<PAGE>
executed and delivered shall be an original, but all
such counterparts shall together constitute one and the same
instrument.
IN WITNESS WHEREOF, the parties have caused this
Acceptance Supplement No. 2 to be duly executed as of the day
and year first above written.
JET ACCEPTANCE CORPORATION
By: ______________________________
Its: ______________________________
CCAIR, INC.
By: ______________________________
Its: ______________________________
<PAGE>
N190PC Schedule of Rental Payments
Due Date Amount
On September 29, October 29, November 30,
and December 29, 1994 $29,802.00
Beginning on January 1, 1995 and
monthly on the first business day
following the 28th day of the month
if the 28th day of the month is a
business day, otherwise on the second
business day following the 28th day
of the month thereafter through and
including December, 1995 24,774.00
Beginning on January 1, 1996 and
monthly on the first business day
following the 28th day of the month
if the 28th day of the month is a
business day, otherwise on the second
business day following the 28th day
of the month thereafter through and
including December, 2001 32,598.00
On January 2, 2002 2,173.20
Exhibit A
(to Acceptance Supplement No. 2)
<PAGE>
ACCEPTANCE SUPPLEMENT NO. 2 (N170PC)
THIS ACCEPTANCE SUPPLEMENT NO. 2 (N170PC) dated as of
November 15, 1994 is executed and agreed by and between JET
ACCEPTANCE CORPORATION, a Delaware corporation (hereinafter
referred to as "JACO") and CCAIR, INC., a Delaware
corporation (hereinafter referred to as "CCAIR").
WITNESSETH:
1. JACO and CCAIR have heretofore entered into an
Aircraft Sublease Agreement dated as of August 29, 1991 ("the
Sublease") and an Acceptance Supplement dated September 5,
1991 (the "First Acceptance Supplement"). The terms defined
in the Sublease shall have the same meanings when used herein.
2. The parties desire to modify the Basic Rent for
the Aircraft pursuant to the terms hereof.
NOW, THEREFORE, in consideration of the premises herein,
the payment of ten dollars, and other good and sufficient
consideration, the receipt of which is hereby acknowledged,
JACO and CCAIR hereby agree as follows:
1. CCAIR hereby agrees to pay and JACO hereby agrees
to accept as Basic Rent for the Aircraft the amounts set forth
in the Schedule of Rental Payments attached hereto as Exhibit
A in place and in lieu of the amounts set forth in the
Schedule of Rental Payments attached to the First Acceptance
Supplement as Schedule 2.
2. The terms of this Acceptance Supplement No. 2
apply only to CCAIR in its present form and shall be
invalidated by any merger voluntary or otherwise, or by other
significant change in ownership of CCAIR. In the event of any
such merger or significant change in ownership of CCAIR, the
Basic Rent provided in the Schedule of Rental Payments
attached to the First Acceptance Supplement as Schedule 2
shall be immediately reinstated.
3. The terms of this Acceptance Supplement No. 2 are
conditioned upon receipt by JACO from CCAIR on or before
January 31, 1995 of a detailed business plan in form and
substance satisfactory to JACO for a period covering two
calendar years and reflecting new originations and
destinations and other routes. If such business plan is not
timely received, the Basic Rent provided in the Schedule of
rental payments attached to the First Acceptance Supplement as
Schedule 2 shall be immediately reinstated.
4. All other terms of the Sublease and the First
Acceptance Supplement are hereby incorporated by reference in
this Acceptance Supplement No. 2 to the same extent as if
fully set forth herein.
5. This Acceptance Supplement No. 2 may be executed
by the parties hereto in separate counterparts, each of which
when so
<PAGE>
executed and delivered shall be an original, but all
such counterparts shall together constitute one and the same
instrument.
IN WITNESS WHEREOF, the parties have caused this
Acceptance Supplement No. 2 to be duly executed as of the day
and year first above written.
JET ACCEPTANCE CORPORATION
By: ______________________________
Its: ______________________________
CCAIR, INC.
By: ______________________________
Its: ______________________________
<PAGE>
N170PC Schedule of Rental Payments
Due Date Amount
On September 29, October 29, November 30,
and December 29, 1994 $ 32,302.00
Beginning on January 1, 1995 and
monthly on the first business day
following the 28th day of the month
if the 28th day of the month is a
business day, otherwise on the second
business day following the 28th day
of the month thereafter through and
including December, 1995 27,274.00
Beginning on January 1, 1996 and
monthly on the first business day
following the 28th day of the month
if the 28th day of the month is a
business day, otherwise on the second
business day following the 28th day
of the month thereafter through and
including December, 1998 35,888.00
On January 2, 1999 2,374,13
Exhibit A
(to Acceptance Supplement No. 2)
<PAGE>
ACCEPTANCE SUPPLEMENT NO. 2 (N169PC)
THIS ACCEPTANCE SUPPLEMENT NO. 2 (N169PC) dated as of
November 15, 1994 is executed and agreed by and between JET
ACCEPTANCE CORPORATION, a Delaware corporation (hereinafter
referred to as "JACO") and CCAIR, INC., a Delaware
corporation (hereinafter referred to as "CCAIR").
WITNESSETH:
1. JACO and CCAIR have heretofore entered into an
Aircraft Sublease Agreement dated as of August 29, 1991
("the Sublease") and an Acceptance Supplement dated
September 5, 1991 (the "First Acceptance Supplement"). The
terms defined in the Sublease shall have the same meanings
when used herein.
2. The parties desire to modify the Basic Rent
for the Aircraft pursuant to the terms hereof.
NOW, THEREFORE, in consideration of the premises
herein, the payment of ten dollars, and other good and
sufficient consideration, the receipt of which is hereby
acknowledged, JACO and CCAIR hereby agree as follows:
1. CCAIR hereby agrees to pay and JACO hereby
agrees to accept as Basic Rent for the Aircraft the amounts
set forth in the Schedule of Rental Payments attached hereto
as Exhibit A in place and in lieu of the amounts set forth
in the Schedule of Rental Payments attached to the First
Acceptance Supplement as Schedule 2.
2. The terms of this Acceptance Supplement No. 2
apply only to CCAIR in its present form and shall be
invalidated by any merger voluntary or otherwise, or by
other significant change in ownership of CCAIR. In the
event of any such merger or significant change in ownership
of CCAIR, the Basic Rent provided in the Schedule of Rental
Payments attached to the First Acceptance Supplement as
Schedule 2 shall be immediately reinstated.
3. The terms of this Acceptance Supplement No. 2
are conditioned upon receipt by JACO from CCAIR on or before
January 31, 1995 of a detailed business plan in form and
substance satisfactory to JACO for a period covering two
calendar years and reflecting new originations and
destinations and other routes. If such business plan is not
timely received, the Basic Rent provided in the Schedule of
rental payments attached to the First Acceptance Supplement
as Schedule 2 shall be immediately reinstated.
4. All other terms of the Sublease and the First
Acceptance Supplement are hereby incorporated by reference
in this Acceptance Supplement No. 2 to the same extent as if
fully set forth herein.
5. This Acceptance Supplement No. 2 may be executed
by the parties hereto in separate counterparts, each of
which when so
<PAGE>
executed and delivered shall be an original, but all such
counterparts shall together constitute one and the same
instrument.
IN WITNESS WHEREOF, the parties have caused this
Acceptance Supplement No. 2 to be duly executed as of the
day and year first above written.
JET ACCEPTANCE CORPORATION
By: ______________________________
Its: ______________________________
CCAIR, INC.
By: ______________________________
Its: ______________________________
<PAGE>
N169PC Schedule of Rental Payments
Due Date Amount
On September 29, October 29, November 30,
and December 29, 1994 $ 32,093.00
Beginning on January 1, 1995 and
monthly on the first business day
following the 28th day of the month
if the 28th day of the month is a
business day, otherwise on the second
business day following the 28th day
of the month thereafter through and
including December, 1995 27,065.00
Beginning on January 1, 1996 and
monthly on the first business day
following the 28th day of the month
if the 28th day of the month is a
business day, otherwise on the second
business day following the 28th day
of the month thereafter through and
including June, 1998 35,612.00
On July 2, 1998 2,374.13
Exhibit A
(to Acceptance Supplement No. 2)
<PAGE>
ACCEPTANCE SUPPLEMENT NO. 2 (N168PC)
THIS ACCEPTANCE SUPPLEMENT NO. 2 (N168PC) dated as of
November 15, 1994 is executed and agreed by and between JET
ACCEPTANCE CORPORATION, a Delaware corporation (hereinafter
referred to as "JACO") and CCAIR, INC., a Delaware
corporation (hereinafter referred to as "CCAIR").
WITNESSETH:
1. JACO and CCAIR have heretofore entered into an
Aircraft Sublease Agreement dated as of August 29, 1991
("the Sublease") and an Acceptance Supplement dated
September 5, 1991 (the "First Acceptance Supplement"). The
terms defined in the Sublease shall have the same meanings
when used herein.
2. The parties desire to modify the Basic Rent for
the Aircraft pursuant to the terms hereof.
NOW, THEREFORE, in consideration of the premises herein,
the payment of ten dollars, and other good and sufficient
consideration, the receipt of which is hereby acknowledged,
JACO and CCAIR hereby agree as follows:
1. CCAIR hereby agrees to pay and JACO hereby
agrees to accept as Basic Rent for the Aircraft the amounts
set forth in the Schedule of Rental Payments attached hereto
as Exhibit A in place and in lieu of the amounts set forth
in the Schedule of Rental Payments attached to the First
Acceptance Supplement as Schedule 2.
2. The terms of this Acceptance Supplement No. 2
apply only to CCAIR in its present form and shall be
invalidated by any merger voluntary or otherwise, or by
other significant change in ownership of CCAIR. In the
event of any such merger or significant change in ownership
of CCAIR, the Basic Rent provided in the Schedule of Rental
Payments attached to the First Acceptance Supplement as
Schedule 2 shall be immediately reinstated.
3. The terms of this Acceptance Supplement No. 2
are conditioned upon receipt by JACO from CCAIR on or before
January 31, 1995 of a detailed business plan in form and
substance satisfactory to JACO for a period covering two
calendar years and reflecting new originations and
destinations and other routes. If such business plan is not
timely received, the Basic Rent provided in the Schedule of
rental payments attached to the First Acceptance Supplement
as Schedule 2 shall be immediately reinstated.
4. All other terms of the Sublease and the First
Acceptance Supplement are hereby incorporated by reference
in this Acceptance Supplement No. 2 to the same extent as if
fully set forth herein.
5. This Acceptance Supplement No. 2 may be executed
by the parties hereto in separate counterparts, each of
which when so
<PAGE>
executed and delivered shall be an original, but all such
counterparts shall together constitute one and the same
instrument.
IN WITNESS WHEREOF, the parties have caused this
Acceptance Supplement No. 2 to be duly executed as of the
day and year first above written.
JET ACCEPTANCE CORPORATION
By: ______________________________
Its: ______________________________
CCAIR, INC.
By: ______________________________
Its: ______________________________
<PAGE>
N168PC Schedule of Rental Payments
Due Date Amount
On September 29, October 29, November 30,
and December 29, 1994 $32,093.00
Beginning on January 1, 1995 and
monthly on the first business day
following the 28th day of the month
if the 28th day of the month is a
business day, otherwise on the second
business day following the 28th day
of the month thereafter through and
including December, 1995 27,065.00
Beginning on January 1, 1996 and
monthly on the first business day
following the 28th day of the month
if the 28th day of the month is a
business day, otherwise on the second
business day following the 28th day
of the month thereafter through and
including June, 1998 35,612.00
On July 2, 1998 2,374.13
Exhibit A
(to Acceptance Supplement No. 2)
<PAGE>
ACCEPTANCE SUPPLEMENT NO. 2 (N163PC)
THIS ACCEPTANCE SUPPLEMENT NO. 2 (N163PC) dated as of
November 15, 1994 is executed and agreed by and between JET
ACCEPTANCE CORPORATION, a Delaware corporation (hereinafter
referred to as "JACO") and CCAIR, INC., a Delaware corporation
(hereinafter referred to as "CCAIR").
WITNESSETH:
1. JACO and CCAIR have heretofore entered into an
Aircraft Sublease Agreement dated as of August 29, 1991 ("the
Sublease") and an Acceptance Supplement dated September 5, 1991
(the "First Acceptance Supplement"). The terms defined in the
Sublease shall have the same meanings when used herein.
2. The parties desire to modify the Basic Rent for
the Aircraft pursuant to the terms hereof.
NOW, THEREFORE, in consideration of the premises herein,
the payment of ten dollars, and other good and sufficient
consideration, the receipt of which is hereby acknowledged,
JACO and CCAIR hereby agree as follows:
1. CCAIR hereby agrees to pay and JACO hereby agrees
to accept as Basic Rent for the Aircraft the amounts set forth
in the Schedule of Rental Payments attached hereto as Exhibit A
in place and in lieu of the amounts set forth in the Schedule
of Rental Payments attached to the First Acceptance Supplement
as Schedule 2.
2. The terms of this Acceptance Supplement No. 2
apply only to CCAIR in its present form and shall be
invalidated by any merger voluntary or otherwise, or by other
significant change in ownership of CCAIR. In the event of any
such merger or significant change in ownership of CCAIR, the
Basic Rent provided in the Schedule of Rental Payments attached
to the First Acceptance Supplement as Schedule 2 shall be
immediately reinstated.
3. The terms of this Acceptance Supplement No. 2 are
conditioned upon receipt by JACO from CCAIR on or before
January 31, 1995 of a detailed business plan in form and
substance satisfactory to JACO for a period covering two
calendar years and reflecting new originations and destinations
and other routes. If such business plan is not timely received,
the Basic Rent provided in the Schedule of rental payments
attached to the First Acceptance Supplement as Schedule 2 shall
be immediately reinstated.
4. All other terms of the Sublease and the First
Acceptance Supplement are hereby incorporated by reference in
this Acceptance Supplement No. 2 to the same extent as if fully
set forth herein.
5. This Acceptance Supplement No. 2 may be executed
by the parties hereto in separate counterparts, each of which
when so
<PAGE>
executed and delivered shall be an original, but all such
counterparts shall together constitute one and the same
instrument.
IN WITNESS WHEREOF, the parties have caused this
Acceptance Supplement No. 2 to be duly executed as of the day
and year first above written.
JET ACCEPTANCE CORPORATION
By: ______________________________
Its: ______________________________
CCAIR, INC.
By: ______________________________
Its: ______________________________
<PAGE>
N163PC Schedule of Rental Payments
Due Date Amount
On September 29, October 29, November 30,
and December 29, 1994 $ 30,716.00
Beginning on January 1, 1995 and
monthly on the first business day
following the 28th day of the month
if the 28th day of the month is a
business day, otherwise on the second
business day following the 28th day
of the month thereafter through and
including December, 1995 25,688.00
Beginning on January 1, 1996 and
monthly on the first business day
following the 28th day of the month
if the 28th day of the month is a
business day, otherwise on the second
business day following the 28th day
of the month thereafter through and
including December, 1997 33,800.00
On January 2, 1998 2,253.33
Exhibit A
(to Acceptance Supplement No. 2)
<PAGE>
ACCEPTANCE SUPPLEMENT NO. 2 (N161PC)
THIS ACCEPTANCE SUPPLEMENT NO. 2 (N161PC) dated as of
November 15, 1994 is executed and agreed by and between JET
ACCEPTANCE CORPORATION, a Delaware corporation (hereinafter
referred to as "JACO") and CCAIR, INC., a Delaware
corporation (hereinafter referred to as "CCAIR").
WITNESSETH:
1. JACO and CCAIR have heretofore entered into an
Aircraft Sublease Agreement dated as of August 29, 1991
("the Sublease") and an Acceptance Supplement dated
September 5, 1991 (the "First Acceptance Supplement"). The
terms defined in the Sublease shall have the same meanings
when used herein.
2. The parties desire to modify the Basic Rent for
the Aircraft pursuant to the terms hereof.
NOW, THEREFORE, in consideration of the premises herein,
the payment of ten dollars, and other good and sufficient
consideration, the receipt of which is hereby acknowledged,
JACO and CCAIR hereby agree as follows:
1. CCAIR hereby agrees to pay and JACO hereby
agrees to accept as Basic Rent for the Aircraft the amounts
set forth in the Schedule of Rental Payments attached hereto
as Exhibit A in place and in lieu of the amounts set forth
in the Schedule of Rental Payments attached to the First
Acceptance Supplement as Schedule 2.
2. The terms of this Acceptance Supplement No. 2
apply only to CCAIR in its present form and shall be
invalidated by any merger voluntary or otherwise, or by
other significant change in ownership of CCAIR. In the
event of any such merger or significant change in ownership
of CCAIR, the Basic Rent provided in the Schedule of Rental
Payments attached to the First Acceptance Supplement as
Schedule 2 shall be immediately reinstated.
3. The terms of this Acceptance Supplement No. 2 are
conditioned upon receipt by JACO from CCAIR on or before
January 31, 1995 of a detailed business plan in form and
substance satisfactory to JACO for a period covering two
calendar years and reflecting new originations and
destinations and other routes. If such business plan is not
timely received, the Basic Rent provided in the Schedule of
rental payments attached to the First Acceptance Supplement
as Schedule 2 shall be immediately reinstated.
4. All other terms of the Sublease and the First
Acceptance Supplement are hereby incorporated by reference
in this Acceptance Supplement No. 2 to the same extent as if
fully set forth herein.
5. This Acceptance Supplement No. 2 may be executed
by the parties hereto in separate counterparts, each of
which when so
<PAGE>
executed and delivered shall be an original, but all such
counterparts shall together constitute one and the same
instrument.
IN WITNESS WHEREOF, the parties have caused this
Acceptance Supplement No. 2 to be duly executed as of the
day and year first above written.
JET ACCEPTANCE CORPORATION
By: ______________________________
Its: ______________________________
CCAIR, INC.
By: ______________________________
Its: ______________________________
<PAGE>
N161PC Schedule of Rental Payments
Due Date Amount
On September 29, October 29, November 30,
and December 29, 1994 $ 30,716.00
Beginning on January 1, 1995 and
monthly on the first business day
following the 28th day of the month
if the 28th day of the month is a
business day, otherwise on the second
business day following the 28th day
of the month thereafter through and
including December, 1995 25,688.00
Beginning on January 1, 1996 and
monthly on the first business day
following the 28th day of the month
if the 28th day of the month is a
business day, otherwise on the second
business day following the 28th day
of the month thereafter through and
including December, 1997 33,800.00
On January 2, 1998 2,253.33
Exhibit A
(to Acceptance Supplement No. 2)
<PAGE>
Exhibit 10.37(a)
LEASE AGREEMENT (N880CC/#277)
Dated as of November 15, 1994
between
C.I.T. LEASING CORPORATION,
Lessor
and
CCAIR, INC.,
Lessee
One Boeing DHC-8-102 Aircraft
Manufacturer's Serial No. 277, and
FAA Registration No. N880CC
<PAGE>
TABLE OF CONTENTS
Page
SECTION 1. Definitions. . . . . . . . . . . . . . . . . . . 1
SECTION 2. Termination of Prior Leases; Lease, Conditions
of Leasing.
2.1. Termination of Prior Lease. . . . . . . . . . . 9
2.2. Leasing; Notices; Actions. . . . . . . . . . . . 9
2.3. Lessor's Conditions. . . . . . . . . . . . . . . 10
2.4. Lessee's Conditions. . . . . . . . . . . . . . . 12
SECTION 3. Rent. . . . . . . . . . . . . . . . . . . . . . 13
3.1. Interim Rent; Basic Rent. . . . . . . . . . . . 13
3.2. Net Lease; No Set-Off or Deductions. . . . . . . 13
3.3. Supplemental Rent. . . . . . . . . . . . . . . . 14
3.4. Payments on Business Days. . . . . . . . . . . . 14
3.5. Place and Manner of Payments. . . . . . . . . . 14
SECTION 4. Representations and Warranties. . . . . . . . . 15
4.1. Lessee's Representations and Warranties. . . . . 15
4.2. Lessor's Representations and Warranties. . . . . 18
4.3. Limitation on Lessor's Liability. . . . . . . . 19
SECTION 5. Return of the Aircraft. . . . . . . . . . . . . 21
5.1. Return of Aircraft. . . . . . . . . . . . . . . 21
5.2. Engines and Propellers. . . . . . . . . . . . . 21
5.3. Records. . . . . . . . . . . . . . . . . . . . . 21
5.4. Condition of Aircraft. . . . . . . . . . . . . . 22
5.5. Airworthiness Directives; Service Bulletins. . . 24
5.6. Maintenance. . . . . . . . . . . . . . . . . . . 24
5.7. Storage. . . . . . . . . . . . . . . . . . . . . 27
5.8. Inspection. . . . . . . . . . . . . . . . . . . 27
5.9. Payment Requirements. . . . . . . . . . . . . . 27
5.10. Service Bulletin Kits. . . . . . . . . . . . . . 28
5.11. Non-discrimination. . . . . . . . . . . . . . . 28
5.12. Ownership. . . . . . . . . . . . . . . . . . . . 28
5.13. Corrections and Subsequent Corrections. . . . . 28
SECTION 6. Liens. . . . . . . . . . . . . . . . . . . . . . 29
SECTION 7. Registration and Operation; Possession;
Insignia. . . . . . . . . . . . . . . . . . . . 29
7.1. Registration and Operation. . . . . . . . . . . 29
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TABLE OF CONTENTS (cont'd.)
Page
7.2. Possession. . . . . . . . . . . . . . . . . . . 30
7.3. No Release of Lessee. . . . . . . . . . . . . . 32
7.4. No Claim by Lessor. . . . . . . . . . . . . . . 32
7.5. Insignia. . . . . . . . . . . . . . . . . . . . 32
SECTION 8. Replacement of Parts; Alterations and
Modifications; Maintenance. . . . . . . . . . . 32
8.1. Replacement of Parts. . . . . . . . . . . . . . 32
8.2. Intentionally Left Blank. . . . . . . . . . . . 33
8.3. Alterations, Modifications and Additions. . . . 33
8.4. Maintenance in General. . . . . . . . . . . . . 34
8.5. Specific Items of Maintenance. . . . . . . . . . 35
8.6. Airworthiness Directives. . . . . . . . . . . . 37
8.7. Service Bulletins. . . . . . . . . . . . . . . . 37
SECTION 9. Intentionally Left Blank. . . . . . . . . . . . 37
SECTION 10. Loss, Destruction, Requisition, Etc. . . . . . . 37
10.1. Event of Loss with Respect to the Airframe. . . 37
10.2. Event of Loss with Respect to an Engine. . . . . 38
10.3. Event of Loss with Respect to a Propeller. . . . 39
10.4. Application of Payments from Governmental
Authorities for Requisition of Title, etc. . . . 40
10.5. Requisition for Use by the United States
Government. . . . . . . . . . . . . . . . . . . 41
SECTION 11. Insurance. . . . . . . . . . . . . . . . . . . . 41
11.1. Public Liability and Property Damage Insurance. 41
11.2. Insurance Against Loss or Damage to the
Aircraft. . . . . . . . . . . . . . . . . . . . 43
11.3. Reports, etc. . . . . . . . . . . . . . . . . . 45
11.4. Indemnification by the United States Government
in Lieu of Insurance. . . . . . . . . . . . . . 46
11.5. Additional Insurance by Lessor and Lessee. . . . 46
SECTION 12. Inspection. . . . . . . . . . . . . . . . . . . 46
SECTION 13. Assignment; Binding Effect; Security Interests. 47
13.1. Assignment by Lessor. . . . . . . . . . . . . . 47
13.2. Assignment by Lessee. . . . . . . . . . . . . . 48
13.3. Binding Effect. . . . . . . . . . . . . . . . . 48
13.4. Security Interests. . . . . . . . . . . . . . . 48
ii
<PAGE>
TABLE OF CONTENTS (cont'd.)
Page
SECTION 14. Events of Default. . . . . . . . . . . . . . . . 49
14.1. Events of Default. . . . . . . . . . . . . . . . 49
SECTION 15. Remedies. . . . . . . . . . . . . . . . . . . . 50
15.1. Remedies. . . . . . . . . . . . . . . . . . . . 50
15.2. Lease Insurance Payments. . . . . . . . . . . . 54
SECTION 16. Further Assurances. . . . . . . . . . . . . . . 54
SECTION 17. Notices. . . . . . . . . . . . . . . . . . . . . 55
SECTION 18. Covenants. . . . . . . . . . . . . . . . . . . . 55
18.1. Lessor's Covenants. . . . . . . . . . . . . . . 55
18.2. Lessee's Covenants. . . . . . . . . . . . . . . 56
SECTION 19. Extension of Lease Term . . . . . . . . . . . . 59
SECTION 20. Lessor's Right To Perform for Lessee. . . . . . 59
SECTION 21. Intentionally Left Blank. . . . . . . . . . . . 59
SECTION 22. Quiet Enjoyment. . . . . . . . . . . . . . . . . 59
SECTION 23. General Tax Indemnity. . . . . . . . . . . . . . 60
23.1. Indemnity. . . . . . . . . . . . . . . . . . . . 60
23.2. Exceptions from Indemnity. . . . . . . . . . . . 61
23.3. Calculation of Indemnity Payments. . . . . . . . 62
23.4. Contest. . . . . . . . . . . . . . . . . . . . . 63
23.5. Reports. . . . . . . . . . . . . . . . . . . . . 65
23.6. Payment. . . . . . . . . . . . . . . . . . . . . 66
23.7. Computations; Consolidated or Combined Return. . 67
23.8. Covered Tax. . . . . . . . . . . . . . . . . . . 67
23.9. Payments and Survival of Indemnities. . . . . . 68
SECTION 24. General Indemnity. . . . . . . . . . . . . . . . 68
24.1. Claims Defined. . . . . . . . . . . . . . . . . 68
24.2. Claims Indemnified. . . . . . . . . . . . . . . 68
24.3. Claims Excluded. . . . . . . . . . . . . . . . . 69
24.4. Insured Claims. . . . . . . . . . . . . . . . . 70
24.5. Claims Procedure. . . . . . . . . . . . . . . . 70
24.6. Subrogation. . . . . . . . . . . . . . . . . . . 71
iii
<PAGE>
TABLE OF CONTENTS (cont'd.)
Page
24.7. Waiver of Certain Claims. . . . . . . . . . . . 71
24.8. Conflicting Provisions. . . . . . . . . . . . . 71
24.9. Continuing Indemnification. . . . . . . . . . . 72
SECTION 25. Transaction and Other Costs. . . . . . . . . . . 72
25.1. Transaction Expenses. . . . . . . . . . . . . . 72
25.2. Costs of Amendments, Waivers, Etc. . . . . . . . 72
SECTION 26. Miscellaneous. . . . . . . . . . . . . . . . . . 72
26.1. Severability. . . . . . . . . . . . . . . . . . 72
26.2. Amendments. . . . . . . . . . . . . . . . . . . 72
26.3. Lease Only. . . . . . . . . . . . . . . . . . . 73
26.4. Security Agreement; Chattel Paper . . . . . . . 73
26.5. Headings. . . . . . . . . . . . . . . . . . . . 73
26.6. Governing Law. . . . . . . . . . . . . . . . . . 73
26.7. Amendments. . . . . . . . . . . . . . . . . . . 73
26.8. Table of Contents; Section Headings. . . . . . . 74
26.9. Currency. . . . . . . . . . . . . . . . . . . . 74
26.10. Reproduction of Documents. . . . . . . . . . . . 74
26.11. Entire Agreement. . . . . . . . . . . . . . . . 74
26.12. Counterparts. . . . . . . . . . . . . . . . . . 74
Exhibit A Equipment Description
Exhibit B Form of Lease Supplement
Exhibit C Maintenance Reserves
Schedule 1 Interim and Basic Rent
Schedule 2 Stipulated Loss Values
Schedule 3 Prior Leases
iv
<PAGE>
LEASE AGREEMENT (N880CC/#277), dated as of November 15,
1994, between C.I.T. LEASING CORPORATION, a Delaware corporation,
with its chief executive office at 1211 Avenue of the Americas,
New York, New York 10036 ("Lessor"), and CCAIR, INC., a Delaware
corporation, with its chief executive office and principal place
of business at 4700 Yorkmont Road, Charlotte, North Carolina
28208 ("Lessee").
W I T N E S S E T H:
WHEREAS, pursuant to the Purchase Agreement (such term
and other capitalized terms used as defined below), the Mellon
Financial Services Corporation #3, a Pennsylvania corporation
("Mellon"), has agreed to sell to Lessor and Lessor has agreed to
purchase from Mellon the Aircraft and related Operative Documents
to which Mellon is a party;
WHEREAS, Lessee desires to lease from Lessor and Lessor
is willing to lease to Lessee the Aircraft upon and subject to
the terms and conditions of this Lease;
NOW, THEREFORE, in consideration of the mutual
covenants and agreements contained herein and other good and
valuable consideration, Lessor and Lessee agree as follows:
SECTION 1. Definitions.
Unless the context shall otherwise require, the
following terms shall have the following meanings for all
purposes of this Lease (such definitions to be equally applicable
to both the singular and plural forms of the terms herein
defined):
"Act" means the Federal Aviation Act of 1958, as
amended from time to time.
"Affiliate" means, with respect to any Person, any
other Person directly or indirectly controlling or controlled by
or under common control with, such Person.
"Aircraft" means the Airframe together with the two
Engines and two Propellers, all as more fully described in
Exhibit A hereto, whether or not any of the Engines or Propellers
may from time to time be installed on the Airframe or any other
airframe.
"Aircraft Manufacturer" means de Havilland, Inc.
(successor to Boeing of Canada Ltd., a Delaware corporation,
through its de Havilland Division).
<PAGE>
"Aircraft Manufacturer Bill of Sale" means the full
Warranty Bill of Sale for the Aircraft from the Aircraft
Manufacturer to Lessee (as previously assigned to Mellon).
"Aircraft Records" means all historical records
delivered with the Aircraft for work accomplished prior to the
Delivery Date and current records for work accomplished
subsequent to the Delivery Date including, but not limited to,
documents, manuals, data, overhaul records, life limited part
traceability to "zero time since new", log books, original
Aircraft and Engine delivery documents, serviceable parts tags,
FAA forms, modifications records, inspection records, and all
other documentation pertaining to the Aircraft, and related
Engines and Parts.
"Aircraft Registration Application" means Aircraft
Registration Application, AC Form 8050-1, or such other form as
may be approved by the FAA.
"Airframe" means (i) the Boeing/de Havilland DHC-8-100
airframe (excluding Engines or engines and Propellers or
propellers from time to time installed thereon) described in
Exhibit A hereto; and (ii) any and all Parts incorporated therein
or installed thereon or attached thereto and any and all Parts
removed therefrom so long as title thereto shall remain vested in
Lessor in accordance with Section 8.
"Airworthiness Directive" shall have the meaning as-
signed in Section 8.6 hereof.
"Applicable Law" shall mean all laws, treaties,
judgments, decrees, injunctions, writs and orders of any court,
governmental agency or authority and rules, regulations, orders,
directives, licenses and permits of any governmental body,
instrumentality, agency or authority, having jurisdiction over
Lessee or Lessor, as the case may be, and over their respective
properties.
"Applicable Rate" shall mean the rate of interest
announced publicly from time to time by Chemical Bank, New York,
New York as its base or prime rate.
"Application for Registration" means Aircraft
Registration Application on AC Form 8050-1, or such other form as
may be approved by the FAA for use on the Delivery Date.
"Basic Rent" means, for the Term, the rent payable
pursuant to Section 3.1(a) as set forth in Schedule 1 hereto.
"Basic Term" means the period commencing on December 2,
1994 and ending on the date that is the last Rent Payment Date
set
2
<PAGE>
forth on Schedule 1 hereto or ending on such earlier date as
this Lease may be terminated in accordance with the terms hereof.
"Bills of Sale" means the FAA Bill of Sale and the
Warranty Bill of Sale.
"Business Day" means any day other than a Saturday,
Sunday or other day on which commercial banks are required or
authorized to be closed in New York, New York or Charlotte, North
Carolina.
"'C' Check" means Lessee's structural inspection
service on the Airframe performed in accordance with Lessee's
then-current maintenance program, using substantially the same
procedures used by Lessee in connection with inspections of
similar de Havilland DHC-8-100 airframes owned or leased by
Lessee.
"Closing Date" means the date designated by Lessor by
written notice to Lessee, on which Lessee and Lessor execute and
deliver the Lease Supplement placing the Aircraft under this
Lease.
"Code" means the Internal Revenue Code of 1986 and any
successor thereto.
"Consents and Agreements" means (i) the Consent and
Agreement, dated July 29, 1994, between Mellon and the Minister
and (ii) the Consent and Agreement dated as of November 15, 1994,
between Lessor and the Minister, relative to the Aircraft Lease
Insurance Agreement, dated as of May 22, 1992, between the
Minister and Mellon.
"Cycle" means one takeoff and landing of the Aircraft
and any other aircraft on which an Engine is mounted.
"Default" shall mean an event which, with notice or
lapse of time, or both, would become an Event of Default.
"Delivery Date" shall mean the date on which the
Aircraft is purchased by Lessor, and leased to Lessee hereunder
as reflected in the Lease Supplement.
"Department of Transportation" means the United States
Department of Transportation and any agency or instrumentality of
the United States Government succeeding to its functions.
"Engine" means (i) each of the Pratt & Whitney PW 120A
engines described more fully in Exhibit A hereto, and (ii) any
Replacement Engine that may from time to time be substituted for
an Engine pursuant to Section 5.2, or 10.2, and in the case of
substitutions pursuant to Section 10.2, whether or not from time
to time installed on the Airframe (or any other airframe);
together,
3
<PAGE>
in each case with any and all Parts incorporated or
installed thereon or attached thereto and any and all Parts
removed therefrom so long as title thereto shall remain vested in
Lessor in accordance with Section 8; provided, however, that at
such time as a Replacement Engine shall be substituted for an
Engine pursuant to the applicable provisions hereof, the replaced
Engine shall cease to be an Engine for all purposes hereunder.
The term "Engines" means, as of any date of determination, all
Engines then leased hereunder.
"ERISA" means the Employee Retirement Income Security
Act of 1974, as amended.
"Event of Default" has the meaning specified in Section
14.
"Event of Loss" means, with respect to the Aircraft,
the Airframe or any Engine, any of the following events or
conditions with respect to such property: (i) loss of such
property or the use thereof due to the destruction of or damage
to such property that renders repair uneconomic to Lessee or that
renders such property permanently unfit for normal use by Lessee;
(ii) any damage to such property which results in an insurance
settlement with respect to such property on the basis of a total
loss or a constructive or compromised total loss; (iii) the
theft, disappearance, confiscation, condemnation or seizure of,
or requisition of title to or use of, such property by any
governmental or purported governmental authority (other than a
requisition for use by the United States Government), which shall
have resulted in the loss of possession of such property by
Lessee for a period in excess of 90 consecutive days; (iv) as a
result of any rule, regulation, order or other action by the FAA,
the use of such property in the normal course of the business of
air transportation shall have been prohibited for a period of
three consecutive months, unless Lessee, prior to the expiration
of such three-month period, shall have undertaken and shall be
diligently carrying forward all steps which in Lessee's
reasonable judgment are necessary or desirable to permit the
normal use of such property by Lessee, or (v) with respect to any
Engine, any divestiture of title to such Engine treated as an
Event of Loss pursuant to Section 7.2). An Event of Loss with
respect to the Aircraft shall be deemed to have occurred if an
Event of Loss shall occur with respect to the Airframe.
"FAA" means the Federal Aviation Administration and any
successor agency or agencies.
"FAA Bill of Sale" means the Aircraft Bill of Sale on
AC Form 8050-2, or such other form as may be approved for use by
the FAA on the Delivery Date.
4
<PAGE>
"Financing Statement" means any financing statement
required or permitted to be filed under the Uniform Commercial
Code as in effect in any applicable jurisdiction.
"Government of Canada" means Her Majesty the Queen in
Right of Canada, as represented by the Minister.
"Hours" means Aircraft flight time between takeoff and
landing.
"Indemnified Person" has the meaning specified in
Section 24.
"Insurance Agreement" means the Aircraft Lease
Insurance Agreement (N880CC), dated as of May 22, 1992, between
the Government of Canada and Lessor, as modified by both of the
Consents and Agreements.
"Interim Rent" means, for the Interim Term, the rent
payable pursuant to Section 3.1 as set forth in such Section.
"Interim Term" means the period commencing on the
Delivery Date and ending on the date that the Basic Term
commences.
"Lease", "this Lease", "herein", "hereof", "hereunder",
"hereby" or other like words mean this Lease Agreement, as it may
be amended, modified or supplemented from time to time pursuant
to the applicable provisions hereof including, without
limitation, supplementation hereof by one or more Lease
Supplements entered into pursuant to the applicable provisions
hereof and includes any written agreement with respect to which
Lessor and Lessee, have expressed in the agreement or in a
substantially contemporaneous writing that the agreement is to be
treated as a lease for Federal income tax purposes.
"Lease Supplement" means a Lease Supplement
substantially in the form of Exhibit B, to be entered into
between Lessor and Lessee on the Delivery Date for the purpose of
leasing the Aircraft under and pursuant to the terms of this
Lease, and any subsequent Lease Supplement entered into in
accordance with the terms hereof.
"Lender" means any Person or Persons which is the
holder of a security interest in the Aircraft or assignee of
Lessor's interest in this Lease (or any interest therein), which
security interest or assignment was acquired in exchange for
financing provided to Lessor to acquire the Aircraft or to
refinance Lessor's acquisition of the Aircraft and which security
interest or assignment is granted and existing in accordance with
this Lease.
"Lessor Lien" means any Lien with respect to the
Aircraft, the Airframe, any Engine, Propeller or Part that arises
5
<PAGE>
as a result of or results from (i) Taxes or expenses imposed on
Lessor (or the consolidated group of taxpayers of which any of
them is a part), other than Taxes or expenses for which Lessee is
obligated but fails to indemnify pursuant to any provisions of
this Lease, (ii) any act or omission of or claim against or
affecting Lessor involving or arising out of (A) events or
conditions not related to the transactions contemplated by this
Lease or (B) the breach by Lessor of any of the provisions of
this Lease, including, without limitation, the breach by Lessor
of its covenant of quiet enjoyment contained herein, or (iii) any
transfer by Lessor of all or any portion of its interest in the
Aircraft, including the granting to a third party of any Lien,
but excluding a transfer pursuant to Section 9, 10 or 13 hereof
or as a result of the exercise of remedies set forth in Section
15.
"Lessor's Cost" for the Aircraft means the amount so
described in the Lease Supplement for the Aircraft.
"Lien" means any mortgage, pledge, lien, charge,
encumbrance, lease, sublease, security interest, conditional sale
agreement, title retention agreement or claim.
"Maintenance Program" shall have the meaning set forth
in Section 8.4.
"Minister" shall mean Her Majesty the Queen in Right of
Canada, as represented by the Minister of Industry, Science and
Technology of Canada.
"1992 Lease" means that certain Lease Agreement
(N880CC), dated as of May 15, 1992, as supplemented by Lease
Supplement No. 1 (N880CC), dated May 22, 1992, pursuant to which
Mellon leased the Aircraft (as hereinafter defined) to Lessee, as
amended by Amendment No. 1 (N880CC), dated as of November 2,
1992, and by Amendment No. 2 (N880CC), dated as of March 29,
1993.
"Operative Documents" means this Lease, the Lease
Supplement, the Prior Leases, any filings under the Uniform
Commercial Code in effect on or before the Closing Date, the Tax
Indemnity Agreement, the Insurance Agreement (including both of
the Consents and Agreements), the Aircraft Manufacturer Bill of
Sale, and the Bills of Sale.
"Overdue Rate" means the Applicable Rate plus 200 basis
points.
"Parts" means all appliances, parts (including landing
gear), instruments, appurtenances, accessories, furnishings and
other equipment of whatever nature (but excluding (i) complete
Engines and engines, (ii) any items leased by Lessee from a
third-party lessor and (iii) cargo and baggage containers) so
long as the
6
<PAGE>
same shall be incorporated in or installed on or
attached to the Airframe or any Engine or so long as title
thereto shall remain vested in Lessor in accordance with Section
8 after removal therefrom.
"Permitted Lien" means any Lien referred to in clauses
(a) through (h) of Section 6.
"Person" means any individual, corporation,
partnership, joint stock company, trust, unincorporated
organization, joint venture, governmental authority or any agency
or instrumentality thereof, or any other entity of whatsoever
nature.
"Prior Leases" means the 1992 Lease and the Short-Term
Lease, collectively as listed on Schedule 3 hereto.
"Propeller" means (i) each of the Hamilton Standard
propellers Model 14SF-7 described more fully in Exhibit A hereto,
and (ii) any Replacement Propeller that may from time to time be
substituted for a Propeller pursuant to Section 5.2, or 10.3, and
in the case of substitutions pursuant to Section 10.3, whether or
not from time to time installed on the Airframe (or any other
airframe); together, in each case with any and all Parts
incorporated or installed thereon or attached thereto and any and
all Parts removed therefrom so long as title thereto shall remain
vested in Lessor in accordance with Section 8; provided, however,
that at such time as a Replacement Propeller shall be substituted
for a Propeller pursuant to the applicable provisions hereof, the
replaced Propeller shall cease to be a Propeller for all purposes
hereunder. The term "Propellers" means, as of any date of
determination, all Propellers then leased hereunder.
"Purchase Agreement" means the Purchase Agreement,
dated as of November 15, 1994, between Mellon, as seller, and
Lessor, as purchaser, with respect to the Aircraft and the
Operative Documents to which Mellon is a party.
"Rent" means Interim Rent, Basic Rent and Supplemental
Rent, collectively.
"Rent Payment Date" means each date set forth on
Schedule 1 hereto on which a payment of Basic Rent or Interim
Rent is due.
"Replacement Engine" means a Pratt & Whitney Model PW
120A engine (or engine of the same or another manufacturer and of
the same, an equivalent or an improved model and suitable for
installation and use on the Airframe that is compatible with the
other Engines) which shall have been leased or returned hereunder
as contemplated by Section 5.2, or 10.2, together with all Parts
relating to such engine.
7
<PAGE>
"Replacement Propeller" means a Hamilton Standard Model
14SF-7 propeller (or propeller of the same or another
manufacturer and of the same, an equivalent or an improved model
and suitable for installation and use on the Airframe that is
compatible with the other propeller) which shall have been leased
or returned hereunder as contemplated by Section 5.2, or 10.3,
together with all Parts relating to such propeller.
"Security Agreement" means the then applicable Security
Agreement and Assignment of Lease entered into between Lessor and
any Lender in accordance with Section 13.4 hereof.
"Short-Term Lease" means the Short-Term Lease Agreement
(N880CC), dated as of April 1, 1994, as amended, supplemented or
renewed, between Mellon and Lessee.
"Stipulated Loss Value" for the Aircraft means as of
any date of determination, the amount set forth on Schedule 2
hereto, opposite the month with respect to which the amount is
determined pursuant to Section 10 hereof.
"Supplemental Rent" means any and all amounts,
liabilities and obligations (other than Basic Rent or Interim
Rent) that Lessee assumes or agrees to pay hereunder.
"Tax Indemnity Agreement" means the Tax Indemnity
Agreement (N880CC), dated as of November 15, 1994, between Lessor
and Lessee.
"Taxes" means all fees (including, without limitation,
documentation, license and registration fees), taxes (including,
without limitation, such taxes as personal property and real
property, tangible and intangible property, gross or net income,
gross or net receipts, value added, capital, excise, sales, use,
leasing, fuel, excess profits, transfer, recording and stamp or
other taxes), imposts, duties, withholdings, levies, assessments
and other governmental charges of whatever kind or character,
however designated, together with any interest thereon, additions
to tax, penalties or fines.
"Term" means the Interim Term, Basic Term and any
renewal period agreed to by Lessor (if any), collectively.
"Time Controlled Part" means any item of equipment that
has a predetermined time limit or interval in accordance with
Lessee's FAA approved maintenance program which requires such
item of equipment to be discarded, overhauled, or recertified
upon reaching such time limit or interval.
"United States Government" means the United States of
America or any agency or instrumentality thereof.
8
<PAGE>
"Warranty Bill of Sale" means the full warranty bill of
sale for the Aircraft from Mellon to Lessor.
SECTION 2. Termination of Prior Leases; Lease, Conditions
of Leasing.
2.1. Termination of Prior Lease.
Lessee hereby acknowledges and agrees that the Prior
Leases have been properly terminated and that Lessee has no
further rights thereunder. Lessee further acknowledges and
agrees that, notwithstanding such terminations, C.I.T. Leasing
Corporation shall retain any and all of Lessor's rights under the
Prior Leases (as successor in interest to Mellon) which are
covered by or relate to the Insurance Agreement, which rights,
indemnities and obligations shall continue to exist
notwithstanding such termination. Lessee agrees that Lessor's
entering into this Lease shall not constitute a waiver of any
such right or remedy available to Lessor under the Prior Leases
or otherwise diminish any obligation of Lessee under the Prior
Leases with respect thereto.
2.2. Leasing; Notices; Actions.
(a) Subject to satisfaction of the conditions set
forth in Section 2.2, Lessor hereby agrees to purchase from
Mellon and lease to Lessee hereunder for the Term, the Aircraft
and subject to satisfaction of the conditions set forth in
Section 2.3, Lessee hereby agrees to lease from Lessor hereunder
for the Term, the Aircraft on the Delivery Date, which leasing
shall be evidenced by the execution and delivery by Lessor and
Lessee of a Lease Supplement leasing the Aircraft hereunder.
(b) On the Delivery Date, Lessee agrees to give, or
cause to be given, to Lessor written, telecopy, telex or
telegraphic notice (a "Delivery Notice") of the anticipated date
of delivery of the Aircraft ("Proposed Delivery Date") not later
than 12:00 noon E.S.T., on the third Business Day preceding such
Proposed Delivery Date (or such shorter period to which Lessee
and Lessor may agree), which notice shall specify (i) the
Proposed Delivery Date; and (ii) the location at which the
Aircraft will be delivered (the "Delivery Site").
(c) On the Delivery Date, upon confirmation by Lessor
that it has purchased the Aircraft from Mellon and received the
FAA Bill of Sale for the Aircraft, Lessee shall cause the FAA
Bill of Sale, the Application for Registration in the name of
Lessor as owner of the Aircraft, the Lease and the Lease
Supplement to be filed with the FAA. Upon acceptance of delivery
of the Aircraft by Lessee at the Delivery Site, Lessor shall take
title to, and accept delivery of, the Aircraft and the Bills of
Sale and Lessee shall execute and deliver the Lease Supplement.
9
<PAGE>
(d) Lessor and Lessee hereby agree that execution and
delivery of the Lease Supplement for the Aircraft shall, without
further act, irrevocably constitute acceptance of the Aircraft by
Lessor and Lessee for all purposes of this Lease.
(e) The closing on the Closing Date and the Delivery
Date shall take place simultaneously at 10:00 a.m. (E.S.T.) at
the offices of Mudge Rose Guthrie Alexander & Ferdon, New York,
New York and at the FAA Aircraft Registry in Oklahoma City and at
the Lessee's offices, or at such other time and places as the
parties hereto shall agree.
(f) Lessee, with Lessor's cooperation, will:
(i) concurrently with the delivery of the Aircraft
under the Lease, cause to be duly filed for recordation with the
FAA, in accordance with applicable Federal law, all of the
following documents with respect to the Aircraft, in such order
and with such number of copies as may be required by the FAA:
(A) the FAA Bill of Sale; (B) the Application for Registration in
the name of Lessor; and (C) executed counterparts of this Lease
and the Lease Supplement;
(ii) promptly upon completion of the actions
referred to above, cause Daugherty, Fowler & Peregrin, special
FAA counsel in Oklahoma City, Oklahoma, to deliver to Lessor the
opinion described in Section 2.3 (d) (iv); and
(iii) cause the FAA to issue a standard certificate
of airworthiness with respect to the Aircraft.
2.3. Lessor's Conditions.
Lessor's obligation to lease the Aircraft to Lessee
shall be subject to the following conditions having been complied
with to the reasonable satisfaction of Lessor, or waived, on the
Delivery Date:
(a) The Operative Documents shall have been duly
authorized, executed and delivered by Lessee and the other
parties thereto and shall be in full force and effect on the
Delivery Date and Lessor shall have received a copy of each
thereof; and
(b) On the date of execution and delivery of this
Lease and on the Delivery Date, the representations and
warranties of Lessee contained herein shall be true and correct
and no event shall have occurred and be continuing, or would
result from the lease of the Aircraft, which constitutes a
Default; and
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(c) No change shall have occurred in Applicable Law on
or before the Delivery Date which would, in the opinion of
Lessor, make it illegal for Lessee to lease the Aircraft here-
under; and
(d) Lessor shall have received the following, in each
case in form and substance reasonably satisfactory to it:
(i) a copy of resolutions of the Board of
Directors of Lessee, certified by the Secretary or an Assistant
Secretary of Lessee, duly authorizing the execution, delivery and
performance by Lessee of this Lease, all other Operative
Documents to which it is a party, and all other documents and
certificates contemplated hereby or thereby to be executed on
behalf of Lessee;
(ii) a report of Rollins Hudig Hall of Virginia,
Inc. (or other independent aircraft insurance broker
satisfactory to Lessor) as to the due compliance with the
insurance provisions of Section 11 hereof;
(iii) an opinion addressed to it from Rayburn, Moon
& Smith, counsel to Lessee, dated the Delivery Date, in form and
substance satisfactory to it;
(iv) an opinion addressed to Lessor and Lessee from
Daugherty, Fowler & Peregrin, special FAA counsel, to the effect
that (l) each of this Lease and the Lease Supplement are in due
form for filing and shall have been duly filed for recordation
with the FAA pursuant to the Act, (2) the records of the FAA
disclose no Liens against the Airframe or the Engines, and (3)
such other matters as Lessor may reasonably request;
(v) an opinion addressed to Lessor from Ogilvy
Renault, special Canadian counsel, in form and substance
satisfactory to Lessor;
(vi) the report of AISI (or other appraiser
satisfactory to Lessor) as to the Fair Market Sales Value, useful
life, and residual value of the Aircraft on the Delivery Date and
such other matters affecting the Aircraft as Lessor may
reasonably request;
(vii) Financing Statements covering all the
interests created by the Operative Documents in the Aircraft,
Engines, and Propellers shall have been duly executed by Lessee,
as debtor, and filed under the applicable Uniform Commercial Code
to the extent deemed necessary or desirable by Lessor or its
special counsel to protect and perfect Lessor's interests in the
Aircraft, Engines, Propellers and such Operative Documents;
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(viii) an incumbency certificate of Lessee regarding
the officers of Lessee authorized to execute and deliver the
Operative Documents to which it is a party and any other document
or certificate delivered in connection therewith;
(ix) satisfactory evidence of a valid air carrier
operating certificate of Lessee; and
(x) such other documents and evidence with respect
to Lessee as Lessor may reasonably request in order to establish
consummation of the transactions contemplated by this Lease and
the other operative documents, the taking of all corporate
proceedings in connection therewith and compliance with the
conditions herein set forth.
2.4. Lessee's Conditions.
The obligation of Lessee to lease the Aircraft is
subject to the following conditions having been complied with to
the reasonable satisfaction of Lessee, or waived, on the Delivery
Date:
(a) The Operative Documents to which Lessor is a party
shall have been duly authorized, executed and delivered by Lessor
and the other parties thereto and shall be in full force and
effect on the Delivery Date, and Lessee shall have received a
copy thereof;
(b) On the date of execution and delivery of this
Lease and on the Delivery Date, the representations and
warranties of Lessor contained herein shall be true and correct;
(c) No change shall have occurred in Applicable Law on
or before the Delivery Date which would, in the reasonable
opinion of Lessee, make it illegal for Lessee to lease the
Aircraft here-under; and
(d) Lessee shall have received the following, in each
case, in form and substance reasonably satisfactory to it;
(i) Lessee shall have received an opinion of Mudge
Rose Guthrie Alexander & Ferdon, special counsel to Lessor, dated
the Delivery Date, in form and substance satisfactory to it;
(ii) (a) evidence of the due authorization,
execution and delivery by Lessor of the Operative Documents to
which it is a party and all other agreements, documents and
certificates contemplated hereby or thereby to be executed on
behalf of Lessor and (b) an incumbency certificate of Lessor
regarding the officers of Lessor authorized to execute and
deliver this Lease, the other Operative Documents to which it is
a party, and any other document or certificate delivered in
connection therewith;
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(iii) the opinion referred to in Section 2.3(d)(iv)
hereof; and
(iv) such other documents and evidence with respect
to Lessor as Lessee may reasonably request in order to establish
consummation of the transactions contemplated by Operative
Documents, the taking of all corporate proceedings in connection
therewith and compliance with the conditions herein set forth.
SECTION 3. Rent.
3.1. Interim Rent; Basic Rent.
(a) Lessee hereby agrees to pay to Lessor Interim Rent
for the Aircraft payable in arrears on the first Rent Payment
Date, in the amount set forth opposite such Rent Payment Date in
Schedule 1 hereto.
(b) Lessee hereby agrees to pay to Lessor Basic Rent
for the Aircraft on each Rent Payment Date during the Basic Term,
in monthly installments payable in arrears on each Rent Payment
Date during the Basic Term, in the amount set forth opposite each
such Rent Payment Date in Schedule 1 hereto.
3.2. Net Lease; No Set-Off or Deductions.
(a) This Lease is a net lease. Lessee acknowledges
and agrees that its obligation to pay all Rent due and owing
under the terms hereof shall be absolute and unconditional and
shall not be affected by any circumstance whatsoever, including,
without limitation (i) any set-off, counterclaim, recoupment,
defense or other right which Lessee may have against Lessor, any
Lender or anyone else for any reason whatsoever, including any
matters arising under the Prior Leases, (ii) any defect in the
title, unairworthiness, or any damage to or loss or destruction
of, the Aircraft, or any Engine or Propeller, or any
interference, interruption or cessation in or prohibition of the
use or possession thereof by Lessee for any reason whatsoever,
including, without limitation, any such interference,
interruption, cessation or prohibition resulting from the act of
any governmental authority, (iii) any Liens (other than Lessor
Liens) or rights of others with respect to the Aircraft, or (iv)
the invalidity or unenforceability or lack of due authorization
or other infirmity of this Lease or any lack of right, power or
authority.
(b) Lessee will not seek to recover all or any part of
such payment from Lessor (or any Lender) for any reason
whatsoever. If for any reason whatsoever this Lease shall be
terminated in whole or in part by operation of law or otherwise,
except as specifically provided in Sections 10.1 hereof, or
except for termination attributable to the default of Lessee
which is governed
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by Section 15 below, Lessee, so long as Lessor
has not breached its covenant of quiet enjoyment set forth in
Section 22 hereof, agrees to pay to Lessor an amount equal to
each Rent payment due hereunder at the time such payment would
have become due and payable in accordance with the terms hereof
had this Lease not been terminated in whole or in part. The
obligation of Lessee in the immediately preceding sentence shall
survive the expiration or the termination of this Lease other
than in accordance with its terms. To the extent permitted by
Applicable Law, Lessee hereby waives any rights which it may now
have or which may be conferred upon it, by statute or otherwise,
to terminate, cancel, quit or surrender this Lease except in
accordance with the terms hereof.
3.3. Supplemental Rent.
Lessee also agrees to pay to whomsoever shall be
entitled thereto any and all Supplemental Rent promptly as the
same shall become due and owing. All amounts of Supplemental
Rent as to which no due date is specified herein shall become due
and owing ten (10) days after written demand by Lessor or any
other Person to whom such Supplemental Rent may be due and owing.
In the event of any failure on the part of Lessee to pay any
Supplemental Rent, Lessor shall have all rights, powers and
remedies provided for herein or by law or equity or otherwise in
the case of nonpayment of Interim Rent or Basic Rent. Lessee
will also pay to Lessor, on demand, as Supplemental Rent, to the
extent permitted by Applicable Law, interest at the Overdue Rate
on any part of any installment of Basic Rent not paid when due
for any period for which the same shall be overdue and on any
payment of Supplemental Rent (other than interest comprised in
Supplemental Rent), not paid when due for the period from the due
date thereof as provided herein to, but not including, the date
the same shall be paid.
3.4. Payments on Business Days.
If any date on which a payment of Rent becomes due and
payable is not a Business Day, then such payment shall be made on
the next preceding Business Day, if such day is a Tuesday through
Saturday, and on the next succeeding Business Day, if such day is
a Sunday or a Monday.
3.5. Place and Manner of Payments.
All Rent payable by Lessee to Lessor shall be paid to
Lessor at Account 134-0-86460, ABA No. 021-000-128, Account Name:
CEF at Chemical Bank, 640 Madison Avenue, New York, New York
10022, Reference : CCAIR, Inc. (N880CC/#277), or at such other
place in the United States as Lessor may from time to time
designate to Lessee in writing. Each such payment of Rent shall
be made by Lessee in United States Dollars, free and clear of all
Taxes, by
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wire transfer in immediately available funds on the day
when such payment shall be due.
SECTION 4. Representations and Warranties.
4.1. Lessee's Representations and Warranties.
Lessee represents and warrants that:
(a) Lessee is (i) a corporation duly organized and
validly existing in good standing under the laws of the State of
Delaware with the corporate power and authority to carry on its
business as now conducted, (ii) duly qualified to do business and
in good standing in each other jurisdiction in which the failure
so to qualify would materially adversely affect its business or
financial condition or would impair its ability to perform its
obligations under this Lease, (iii) a "citizen of the United
States" within the meaning of 49 U.S.C. Section 40102(a)(15) and
the rules and regulations of the FAA thereunder, and (iv) a
holder of an air carrier operating certificate issued by the
Department of Transportation pursuant to chapter 447 of title 49
for aircraft capable of carrying 10 or more individuals.
(b) Lessee has full power, authority and legal right
to own, hold under lease and operate its properties, to carry on
its business as presently conducted and to execute and deliver
and to perform its obligations under this Lease and each of the
other Operative Documents to which it is a party;
(c) the execution and delivery of this Lease and each
of the other Operative Documents to which it is a party has been
duly authorized by all necessary corporate action of Lessee and
has been duly executed and delivered by Lessee and, assuming the
due authorization, execution and delivery thereof by the other
parties thereto and that such other parties have full power,
authority and legal right to enter into the Operative Documents,
this Lease and each of the other Operative Documents to which
Lessee is a party is a legal, valid and binding obligation of
Lessee, enforceable against Lessee in accordance with its terms;
(d) the execution and delivery of this Lease and each
of the other Operative Documents to which it is a party, and
compliance by Lessee with the terms and provisions thereof, as of
the Delivery Date, do not and will not (i) result in the
violation of the provisions of the charter documents or the by-
laws of Lessee as in effect on the date hereof, (ii) require
stockholder approval or approval or consent of any trustee or
holders of any indebtedness of Lessee, except such as shall have
been duly obtained on or prior to the Delivery Date, (iii) result
in a breach of any terms or provisions of, or constitute a
default under, any
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<PAGE>
material indenture, mortgage or other agreement or instrument
as in effect on the date hereof to which Lessee is a party or by
which it or any of its property is bound, (iv) violate any
applicable law, rule or regulation, judgment, order or decree
as in effect on the date hereof and on the Delivery Date of
any government, governmental instrumentality or court having
jurisdiction over Lessee or any of its properties, or (v) result
in the creation or imposition of a Lien upon or with respect to
any of the properties of Lessee;
(e) no approval or consent of, or registration with,
or the giving of notice to, or the taking of any other action in
respect of, any court, governmental authority or agency competent
to assert jurisdiction (including, without limitation, the
Department of Transportation and the FAA) is necessary for the
valid authorization, execution, delivery and performance by
Lessee of this Lease and each of the other Operative Documents to
which it is a party, except for (i) the filing and recording
pursuant to the Act of this Lease, the Lease Supplement, the FAA
Bill of Sale, and the Aircraft Registration Application and the
placement on board the Aircraft of evidence of temporary or
permanent authority to operate the Aircraft pursuant to the Act,
(ii) the filing of the Financing Statements as set forth in
clause (f) (ii) below; and (iii) in the case of performance after
the Delivery Date, as may be required in connection with the
operation or maintenance of the Aircraft, any Engine or any
Propeller;
(f) except for (i) the filing for recordation pursuant
to the Act of this Lease and the Lease Supplement, and (ii) the
filing of the Financing Statements (and continuation statements
at periodic intervals) with respect to the security and other
interests in the Aircraft created by the Financing Statement
under the Uniform Commercial Code (as in effect in any applicable
jurisdiction), no further action, including the filing or
recording of any document (including any Financing Statement)
under the laws of any applicable jurisdiction, is necessary or
advisable in any jurisdiction in or of the United States in or to
establish or perfect (A) Lessor's interest in the Aircraft, as
against Lessee, the Aircraft Manufacturer, Mellon, or any third
parties, or (B) assuming the accuracy of the representations and
warranties of Lessor set forth in Section 4.2, a first priority
security interest in and to the Aircraft, Airframe, Engines and
Propellers;
(g) its chief executive office (as that term is used
in Section 9-103(d) of the Uniform Commercial Code as in effect
in any applicable jurisdiction), and the place where it keeps its
corporate records concerning the Aircraft, all interest in, to
and under any Operative Document, and its contracts relating
thereto, is located in Charlotte, Mecklenburg County, North
Carolina, and such chief executive office, and place for records,
has been
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located in Charlotte, Mecklenburg County, North Carolina
for at least four (4) months prior to the date hereof;
(h) assuming the accuracy of the representations and
warranties of Lessor set forth in Section 4.2, the execution and
delivery of the Operative Documents and the consummation of the
transactions contemplated thereby will not involve any
transaction which is subject to the prohibitions of Section 406
of ERISA (for which a statutory or administrative exemption is
not available) or in connection with which a tax could be imposed
under section 4975 of the Code;
(i) no part of the Rent or other payments to be made
by Lessee under the Operative Documents will be made with assets
of any plan (or its related trust), as defined in section 4975(e)
of the Code, or of any employee benefit plan (or its related
trust), as defined in Section 3(3) of ERISA;
(j) neither Lessee nor any Person acting on behalf of
Lessee has directly or indirectly offered any equity interest in
and to the Aircraft and/or this Lease or any similar security for
sale to, or solicited any offer to acquire any equity interest in
the Aircraft and/or this Lease or any similar security from, any
Person in violation of Section 5 of the Securities Act of 1933,
as amended;
(k) on the Delivery Date, all premiums on the policies
of insurance required by Section 11 of this Lease, to the extent
due and payable, shall have been paid;
(l) no Default or Event of Default has occurred and is
continuing under this Lease or any of the other Operative
Documents to which it is a party;
(m) on the Delivery Date, the Aircraft is free and
clear of all Liens other than Lessor Liens and Permitted Liens;
(n) there are no pending, or to the knowledge of
Lessee, threatened actions or proceedings before any court or
administrative agency or arbitrator that would, either
individually or in the aggregate, materially adversely affect the
financial condition, business or operations of Lessee or the
ability of Lessee to perform its obligations under this Lease or
any of the other Operative Documents to which it is a party;
(o) Lessee is not a party to any agreement or
instrument or subject to any charter or other corporate
restriction, which, if performed in the ordinary course of
Lessee's business in accordance with its terms, would prevent
Lessee from performing any of its obligations under this Lease or
any of the other Operative Documents to which it is a party; and
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(p) Lessee has previously delivered to Lessor copies
of its most recent financial statements, Form 10-K for the year
June 30, 1994 and a Form 10-Q in substantially final form for the
quarter ended September 30, 1994. Such financial statements are
complete and correct and fairly present the financial condition
of Lessee and the results of its operations as of the respective
dates and for the respective periods covered thereby; there are
no known contingent liabilities or liabilities for taxes of
Lessee which are not reflected in said financial statements that
could have a material adverse effect on the ability of Lessee to
perform its obligations under this Lease.
4.2. Lessor's Representations and Warranties.
Lessor represents and warrants that:
(a) Lessor is a corporation duly organized and validly
existing in good standing under the laws of the State of Delaware
and is a "citizen of the United States" within the meaning of 49
U.S.C. Section 40102(a)(15) and the rules and regulations of the
FAA thereunder;
(b) Lessor has full power, authority and legal right
to execute and deliver and to perform its obligations under this
Lease and the other Operative Documents to which it is a party;
(c) the execution and delivery of this Lease and the
other Operative Documents to which it is a party, and compliance
by Lessor with the terms and provisions thereof, as of the
Delivery Date, do not (i) result in the violation of the
provisions of the charter documents or the by-laws of Lessor as
in effect on the date hereof, (ii) require stockholder approval
or approval or consent of any trustee or holders of any
indebtedness of Lessor, except such as shall have been obtained
on or prior to the Delivery Date, (iii) result in a breach of any
terms or provisions of, or constitute a default under, any
material indenture, mortgage or other agreement or instrument as
in effect on the date hereof to which Lessor is a party or by
which it or any of its property is bound, (iv) violate any
applicable law, published rule or regulation, judgment, order or
decree as in effect on the date hereof of any government,
governmental instrumentality or court having jurisdiction over
Lessor or any of its properties or (v) result in the creation or
imposition of a Lien upon or with respect to any of the
properties of Lessor;
(d) neither the execution and delivery by Lessor of
any of this Lease and the other Operative Documents to which it
is a party, nor its performance thereunder requires the consent
or approval of, the giving of notice to, the registration with,
the recording or filing of any document with or the taking of any
other action in respect of, any Federal, state or local
governmental body
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<PAGE>
or regulatory authority, except for the filing
of the Lease, the Lease Supplement, the FAA Bill of Sale, and the
Aircraft Registration Application with the FAA under the Act and
except for filings, if any, made pursuant to any periodic
reporting requirements applicable to Lessor;
(e) the execution and delivery of this Lease and the
other Operative Documents to which it is a party has been duly
authorized by all necessary corporate action of Lessor and each
has been duly executed and delivered by Lessor and, assuming the
due authorization, execution and delivery thereof by Lessee and
the other parties thereto and that the Lessee and such other
parties has full power, authority and legal right to enter into
this Lease and the other Operative Documents to which it is a
party, is a legal, valid and binding obligation of Lessor,
enforceable against Lessor in accordance with its terms;
(f) neither Lessor nor any Person acting on behalf of
Lessor has directly or indirectly offered any interest in and to
the Aircraft and/or the Lease or any similar security for sale
to, or solicited any offer to acquire the Aircraft and/or the
Lease or any similar security from, any Person in violation of
Section 5 of the Securities Act of 1933, as amended;
(g) Lessor is not acquiring the Aircraft with the
assets of any plan (or its related trust), as defined in section
4975(e) of the Code, or of any employee benefit plan (or its
related trust), as defined in Section 3(3) of ERISA, in either
case, as interpreted by the final regulations issued thereunder
or any published ruling which may be relied on as a precedent of
the Internal Revenue Service or the Department of Labor, as in
effect on the date this representation is made;
(h) on the Delivery Date, Lessor shall have whatever
title to the Airframe and each Engine and Propeller as was
conveyed to it by Mellon pursuant to the Bills of Sale; and
(i) on the Delivery Date, the Aircraft is free of
Lessor Liens.
4.3. Limitation on Lessor's Liability.
(a) AS BETWEEN LESSOR AND LESSEE, LESSEE REPRESENTS
AND ACKNOWLEDGES THAT IT IS RELYING ON ITS OWN INSPECTION AND
KNOWLEDGE OF THE AIRCRAFT AND ACCEPTS THE AIRCRAFT IN ITS "AS IS,
WHERE IS" CONDITION. IT IS EXPRESSLY AGREED THAT, LESSOR SHALL
BE DEEMED TO HAVE MADE OR GIVEN NO WARRANTY OR REPRESENTATION OF
ANY KIND WITH RESPECT TO OR IN RESPECT OF THE AIRCRAFT AS TO
AIRWORTHINESS, DESCRIPTION, FITNESS FOR PURPOSE, VALUE,
CONDITION, DESIGN OR OPERATION OF ANY KIND OR NATURE AND ALL
WARRANTIES OR REPRESENTATIONS, EXPRESS OR IMPLIED, STATUTORY OR
OTHERWISE IN
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RESPECT THEREOF ARE EXPRESSLY EXCLUDED. LESSOR
SHALL NOT BE DEEMED TO HAVE MADE, BY VIRTUE OF HAVING LEASED THE
AIRCRAFT UNDER THIS LEASE OR HAVING DONE OR FAILED TO DO ANY ACT
OR HAVING ACQUIRED OR FAILED TO ACQUIRE ANY STATUS UNDER OR IN
RELATION TO THIS LEASE, AND LESSOR HEREBY SPECIFICALLY DISCLAIMS,
ANY REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, AS TO
AIRWORTHINESS, CONDITION, DESIGN, OPERATION, MERCHANTABILITY, OR
FITNESS FOR USE FOR A PARTICULAR PURPOSE OF THE AIRCRAFT, OR AS
TO THE QUALITY OF THE MATERIAL OR WORKMANSHIP OF THE AIRCRAFT, OR
AS TO ANY OTHER REPRESENTATION OR WARRANTY WHATSOEVER, EXPRESS OR
IMPLIED, WITH RESPECT TO THE AIRCRAFT, INCLUDING, WITHOUT
LIMITATION, ANY LIABILITY IN TORT, OBLIGATION OR LIABILITY
ARISING FROM NEGLIGENCE, STRICT LIABILITY, ANY IMPLIED WARRANTY
ARISING FROM COURSE OF PERFORMANCE OR DEALING OR USAGE OR TRADE,
OR LOSS OR INTERRUPTION OF USE, PROFIT, OR BUSINESS, OR OTHER
CONSEQUENTIAL DAMAGES; AND LESSEE HEREBY WAIVES, RELEASES,
RENOUNCES AND DISCLAIMS EXPECTATION OF OR RELIANCE UPON ANY SUCH
REPRESENTATIONS OR WARRANTIES. The amount of the Basic Rent
contained herein is based, in part, on the exculpatory clauses
stated above.
(b) Without limiting any of the foregoing, Lessee
waives any claim that it may have against Lessor on account of
any defect or alleged defect, known or unknown, exterior or
interior, apparent or concealed, with respect to the Aircraft,
and Lessee acknowledges that Lessor shall have no responsibility
or liability whatsoever on account of the condition or operation
of the Aircraft, any part thereof or the records therefor unless
such defect or condition is caused by or results from Lessor's
willful misconduct.
(c) So long as no Default or Event of Default has
occurred and is continuing, Lessor hereby authorizes Lessee to
enforce in its own name such rights as Lessor may have with
respect to the Aircraft, Airframe, any Engine, any Propeller, or
any Part, under any warranty, service policy or product agreement
of the Aircraft Manufacturer, the maintenance and overhaul
agencies of the Aircraft and the Engines, or any subcontractor
thereof, to the extent that the same may be assigned or otherwise
made available to Lessee, and to the extent that the same may not
be so assigned or otherwise made available to Lessee, Lessor
agrees to exercise reasonable diligence, at Lessee's expense, to
enforce such rights as Lessor may have with respect thereto for
the benefit of Lessee; provided, however, that Lessee shall not
institute any litigation in the name of Lessor against any such
manufacturer or supplier without having first obtained Lessor's
consent, which shall not unreasonably be withheld or delayed,
and; provided, further, that upon the occurrence of any Event of
Default and receipt of notice from Lessor to such effect, all
such rights shall immediately revert to Lessor, including all
claims thereunder, whether or not perfected.
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SECTION 5. Return of the Aircraft.
5.1. Return of Aircraft.
On the last day of the Term or upon the termination of
this Lease pursuant to Section 15, Lessee, at its own expense,
shall return the Aircraft by delivering the same to Lessor at any
airport within the continental contiguous United States, Mexico
or Canada as may be designated by Lessor. Upon such return, the
Aircraft shall be fully equipped with two Engines and two
Propellers (or engines or propellers described in Section 5.2)
duly installed on the Airframe.
5.2. Engines and Propellers.
No engine or propeller which is not owned by Lessor
shall be returned with the Airframe, unless it is a replacement
Engine or Propeller, due to the occurrence of an Event of Loss
and such engine or propeller (a) shall have a value, utility and
remaining useful life at least equal to, and shall be in as good
operating condition as, an Engine or Propeller, as the case may
be, assuming such Engine or Propeller was in the condition and
repair required by the terms hereof for an Engine or Propeller
immediately prior to such return, (b) shall not have accumulated
more time since its last overhaul, and time since its last hot
section inspection, than was accumulated on the replaced engine,
(c) shall be an engine or propeller of the same manufacturer and
the same or a comparable or an improved model and suitable for
installation and use on the Airframe and compatible for use with
the other Engines or Propellers, and (d) shall be mutually
acceptable to Lessor and Lessee, and Lessee will, at its own
expense and concurrently with such return, furnish Lessor with a
full warranty bill of sale as to title, in form and substance
satisfactory to Lessor, with respect to each such engine or
propeller and shall take such other action as Lessor may
reasonably request in order that such engine or propeller shall
be duly and properly titled in Lessor. Upon passage of title as
aforesaid to Lessor free and clear of all Liens, such engine or
propeller shall be deemed to be an Engine or Propeller, as the
case may be, for all purposes hereof and thereupon Lessor will
transfer to Lessee, without recourse or warranty except a
warranty against Lessor's Liens, all of Lessor's right, title and
interest in and to an Engine or Propeller not installed on the
Airframe at the time of the return thereof.
5.3. Records.
(a) All current and historical records pertaining to
the Aircraft shall be returned with the Aircraft including
without limitation, time logs showing Hours and Cycles on any
given date; all documents; manuals (as revised up to and
including the most current revisions issued by the manufacturer);
data; overhaul
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records; Time Controlled Part traceability to overhaul
and "zero time since new" for life limited Parts; log
books; original Aircraft and Engine delivery documents;
serviceable parts tags; F.A.A. forms; modification records;
inspection records including NDT documentation (xray, eddy
current, etc.); and all other documentation pertaining to the
Aircraft, Engines and Parts. Such records (i) shall provide all
documentation necessary to verify compliance with all applicable
FAA and federal aviation regulation requirements, (ii) shall
contain all original Maintenance Program task cards for the
accomplishment of all FAA and Maintenance Program required tasks,
(iii) shall contain all documentation necessary for the Aircraft
to be placed on the operation specifications of a certificated
air carrier approved by the FAA for operation of an aircraft
under FAR Part 121. If noncomputerized copies of maintenance
records are not available, then Lessee shall take action to
insure that Lessor and the FAA are provided with all requested
documentation of methods of compliance, component overhaul and
management, scheduling, quality control, serial number
verification, etc. These records shall be all-inclusive for the
Aircraft, Airframe, Engines, components, rotables and assemblies,
and, at the minimum, extend to include all activities associated
with each of the last completed maintenance checks, MRB SSI
sampling program, repairs, SID Program, Aging Aircraft Program,
scheduled inspections and functional tests, and overhauls
performed in accordance with Lessee's Maintenance Program.
(b) All components and assemblies identified with safe
life limits shall be identified with their service histories
traceable to zero time since new, accumulated Cycles or flight
Hours as applicable and remaining service lives on a separate
listing.
(c) All documentation, flight and maintenance records
shall be delivered to Lessor with the Aircraft. In the event of
missing or incomplete or records which do not comply with the
terms of this Lease, Lessee, at its cost, shall reaccomplish the
tasks necessary to produce such records in accordance with its
FAA approved maintenance programs prior to return of the
Aircraft.
(d) All such documentation and records shall be in the
English language or (if not originally in the English language)
accompanied by a certified English translation and shall be made
available to Lessor for review at a central location thirty (30)
days prior to the agreed date of Aircraft delivery to Lessor.
5.4. Condition of Aircraft.
In addition to the requirements set forth in Section
5.6 of this Lease, on or before the expiration or earlier
termination of this Lease, Lessee, at its own expense, shall
return the
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<PAGE>
Aircraft in airworthy condition and in compliance with
all applicable federal aviation regulations ("FAR's"), including
FAR Part 121, and all of the following provisions:
(a) be free and clear of all Liens other than this
Lease, any Lessor's Liens and any Security Interest;
(b) The Aircraft shall meet the requirements for
airworthiness certification for a transport category commercial
aircraft in accordance with all applicable federal aviation
regulations and shall have a current and effective airworthiness
certificate issued by the FAA.
(c) The Aircraft shall be in as good operating
condition as when delivered to Lessee hereunder, ordinary wear
and tear excepted. Cockpit windows shall be within maintenance
manual allowable limits and passenger compartment windows shall
have no crazing or delamination. All equipment and furnishings
in the interior of the Aircraft which are defective, damaged, or
excessively worn shall be repaired or replaced by Lessee.
(d) The Aircraft exterior shall be washed and the
interior shall be clean by domestic commercial airline standards.
The cockpit shall be repainted, as required, and placards
replaced as required.
(e) The Aircraft, except as otherwise provided in this
Lease or as consented to by Lessor, shall be in the same
configuration (including, but not limited to, interior seating
configuration, galleys and lavatories) as when such Aircraft was
originally delivered to Lessee hereunder and shall have installed
the full complement of Engines and Propellers (as used herein the
terms "Engines" and "Propellers" includes engines and propellers
for which title will be transferred to Lessor pursuant to Section
10 of this Lease) and other equipment, parts, components,
accessories, and loose equipment as would remain installed on the
Aircraft were Lessee to continue operating the same in continued
regular passenger service, each such item functioning in
accordance with its intended use;
(f) The exterior paint shall be removed from the
Aircraft by sanding or stripping, and the Aircraft shall be
repainted white using Jet-Glo paint (or other equivalent quality
paint approved by Lessor), all in accordance with standard
industry practice so as to produce a uniform appearance. Lessee
shall prepare the Aircraft for such repainting by restoring
aerodynamic sealer as required. Wing and tail surfaces normally
painted shall also be painted, including control surfaces not
requiring balancing due to painting. Required placards shall be
replaced if necessary; and
23
<PAGE>
(g) The Aircraft shall be free of all corrosion.
Lessee shall provide documentation of compliance with the
manufacturer's recommended corrosion prevention and control
program, or other FAA approved corrosion prevention and control
program.
5.5. Airworthiness Directives; Service Bulletins.
At the time of return of the Aircraft, (i) the Aircraft
shall comply with the manufacturer's original type certificate
specifications, as revised up to the end of Term, (ii) the
Airframe, Engines, Propellers, and Parts (appliances) shall
comply with all applicable FAR's and Airworthiness Directives
("AD's") issued by the FAA, which require compliance within three
(3) months after the date of return of the Aircraft, including
termination of all AD's for which such terminating action is
permitted by the AD, notwithstanding any waiver, deviation or
time extension obtained by Lessee from the FAA or otherwise other
than any waiver, deviation or time extension which is issued for
all aircraft or engines, as the case may be, of the same model
and type as such Aircraft or such Engine, as the case may be,
without a requirement for application to the FAA for such waiver,
deviation, or time extension and (iii) the Aircraft shall be in
terminating compliance with all manufacturer's mandatory service
bulletins, SSI, SID, and aging aircraft programs which require
compliance within three (3) months after the date of return of
the Aircraft.
5.6. Maintenance.
(a) At the time of the return of the Aircraft, (i) a
complete "C" check (or its equivalent) shall have been
accomplished immediately prior to the return of the Aircraft in
accordance with the manufacturer's Maintenance Planning Data
Document or its equivalent ("MPD"), including such structural
inspection in accordance with the MPD structural inspection
requirements and all Maintenance Review Board ("MRB") Document
tasks which would require accomplishment prior to the end of the
next full "C" Check interval, with all discrepancies permanently
repaired notwithstanding anything to the contrary above, if the
majority of the industry of operators of the same make and model
as the Aircraft are on an equalization program, the "C" Check
requirement set forth herein shall not apply, (ii) the "C" Check
shall include all lesser checks, (iii) the time remaining to the
next scheduled "D" Check (or equivalent major structural
inspection), shall not be less than 50% of the allowable time
(Hours, Cycles, and calendar time) between such scheduled "D"
Checks (or equivalent), (iv) the number of Hours and Cycles of
operation remaining until the next scheduled shop visit or
scheduled module change for the Engines shall be at least 50% of
the allowable Hours and Cycles between scheduled shop visits or
scheduled module changes, provided that no Engine may have less
than 30% of the allowable Hours and/or Cycles (whichever is more
limiting) remaining to its next scheduled shop
24
<PAGE>
visit or scheduled
module change, (v) landing gear and all time controlled
components on the Aircraft and Engines shall have a minimum of
50% time remaining (Hours, Cycles, calendar time) of the
allowable time between scheduled overhauls (Hours, Cycles,
calendar time), (vi) replacement components must have an
equivalent or later part number, equal to the replaced component
and be completely interchangeable as to form, fit, and function,
and the replacement component must have at least an equal number
of Hours, Cycles and calendar time remaining as the replaced
component, but not less than the 50% limitation stated above,
(vii) in the event that the Aircraft is equipped with an
auxiliary power unit APU, APU of the Aircraft shall have a
minimum of 50% time remaining (Hours, Cycles, calendar time) of
the allowable time between scheduled shop visits (Hours, Cycles,
calendar time) if the APU is being maintained on a time-
controlled basis in accordance with Lessee's FAA approved
maintenance program, and in any event, not more than 12 months
shall have elapsed since its last shop visit for a major
refurbishment and (viii) if the maintenance manual provides for a
baroscope inspection of the APU, such baroscope inspection,
performed by Lessor's representative, or an agency of Lessor's
choosing, shall be accomplished immediately prior to return, and
all discrepancies found shall be corrected by Lessee.
(b) If Lessee does not meet the above conditions with
respect to such Engines (it being understood that the 30% minimum
for each Engine must be met), Lessee shall pay Lessor the higher
Dollar amount between (i) the Dollar amount computed by
multiplying (A) the product of (x) 125% of the actual cost of a
reputable qualified third party mutually acceptable to Lessor and
Lessee to perform such scheduled shop visit or module change
multiplied by (y) the number of Engines returned by (B) a
fraction of which (x) the numerator shall be the difference
between 50% of the allowable Hours and Cycles for the Engines or
engines on the Aircraft and the actual number of Hours and Cycles
of operation remaining to the next scheduled shop visit or module
change for such Engines or engines and (y) the denominator shall
be the number of Hours of time and Cycles allowable between
scheduled shop visits or module changes for an Engine, and (ii)
the Dollar amount representing the decrease in the fair market
sales value of the Engines returned due to Lessee's failure to
comply with the maintenance standards of this Section 5.6.
Lessor shall not be required to pay any amount to Lessee in the
event the net amounts are positive values.
(c) Prior to the end of the Term of the Lease, all
repairs accomplished during the Term of the Lease of a temporary
or interim nature, including repairs using blind fasteners
(except to the extent that double fasteners are considered
permanent repairs under the manufacturer's structural repair
manual as related to such repairs) and those requiring repetitive
inspections or future upgrading, shall be upgraded to a permanent
repair and all external doublers (scab patches) shall be replaced
with flush repairs
25
<PAGE>
(except to the extent that external doublers
are the only approved repairs for such areas), all in accordance
with the applicable manufacturer's maintenance manual, structural
repair manual, or other FAA approved data.
(d) All aircraft and engine systems (including
galleys, passenger and cargo compartments) shall be fully
operational for their intended functions. Lessor shall
operationally check all systems prior to the return of the
Aircraft and all defects found shall be permanently repaired by
Lessee, at Lessee's expense.
(e) In the event the Aircraft has been maintained on a
maintenance program other than an FAA approved maintenance
program, at Lessor's option, Lessee shall cause the Aircraft to
be bridged onto (i) an FAA approved maintenance program or (ii)
the manufacturer's recommended maintenance program in accordance
with the Maintenance Planning Data Document, or its equivalent.
(f) Neither the Aircraft nor any Engine shall have any
open, deferred or placarded maintenance items or "watch" items,
nor shall they have any Hour, Cycle, or calendar time extensions,
waivers, or non-transferable alternate methods of compliance. A
watch item shall be defined as any item or discrepancy requiring
further inspection, where such additional inspection shall be
required at an interval of less than (i) a full "C" Check, or
(ii) 4,000 hours, whichever is greater.
(g) At the end of the Term of the Lease, upon the
request of Lessor, at Lessee's expense, Lessee shall obtain an
Export Certificate of Airworthiness for the Aircraft, provided,
however, that Lessee shall not be responsible for any cost or
expense associated with overhaul or modifying the Aircraft in
order to obtain such export certificate. The Aircraft shall be
weighed within 30 days prior to the expiration of the Lease.
(h) Each Engine shall be capable of developing full
rated take-off power at the critical maximum outside air
temperature without exceeding the maximum limits for all
parameters (temperature, fuel flow, rotor speed, shaft speed,
torque, etc.) as per the Engine manufacturer's specifications. A
full take-off power engine run-up shall be performed in the
presence of Lessor's representatives immediately prior to the
return of the Aircraft, in accordance with the performance test
in the maintenance manual, or other comparable test (as agreed to
by Lessor), using temperature corrected charts. The test results
must not exceed the corrected limits in the charts for any
parameter.
26
<PAGE>
5.7. Storage.
Upon any expiration or termination of this Lease, at
the written request of Lessor received by Lessee at least 30 days
in advance of the date provided for redelivery to Lessor
hereunder (provided that no such notice period shall be necessary
if such expiration or termination results from an Event of
Default), Lessee will arrange, or will cause to be arranged,
storage of the Aircraft beyond the Term for a period not
exceeding 90 (provided that no such time limit shall apply if
such expiration or termination results from an Event of Default)
days at a mutually agreed location at Lessor's risk and at
Lessor's expense. During such storage period Lessee shall, if
requested by Lessor at least 30 days in advance of the date
provided for redelivery, use all reasonable efforts to arrange
for insurance meeting the requirements of Section 11 hereof in
Lessor's name and at Lessor's expense.
5.8. Inspection.
On or immediately prior to the Expiration Date, Lessee
shall perform a two (2) hour flight test of the Aircraft with
Lessor's representatives on board, who will determine which
systems shall be operated. Lessee shall be responsible for all
expenses associated with such flight test, and shall furnish the
necessary crews and fuel. All discrepancies found during the
flight test shall be corrected at Lessee's expense.
Lessor shall inspect the Aircraft and records prior to
the Lease Expiration. The inspection will include the opening or
removal of panels as required by Lessor, and shall include access
to all compartments and bays. All discrepancies discovered
during such inspection shall be permanently repaired by Lessee.
Immediately prior to the return of the Aircraft, which
shall be after the redelivery flight, each Engine shall have
accomplished a hot and cold section baroscope inspection,
performed by Lessor's representative or an agency of Lessor's
choosing, in accordance with the Engine manufacturer's
maintenance manual, and any defects discovered as a result of
such inspection, which exceed the Engine manufacturer's allowable
limits, shall be corrected at Lessee's expense.
5.9. Payment Requirements.
Any amount due Lessor under this Section 5 shall be
payable not later than thirty (30) days after the date the
Aircraft is returned as described in this Section 5.
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<PAGE>
5.10. Service Bulletin Kits.
All no-charge vendors' and manufacturers' service
bulletin kits ordered for the Aircraft and Engines but not
installed therein shall be available without charge to Lessor at
the time of return of the Aircraft. Additionally, any
outstanding purchase orders for such kits with the manufacturers
shall be assigned by Lessee to Lessor, without cost, at such time
or such kits shall be delivered to Lessor when received by
Lessee.
5.11. Non-discrimination.
Lessee agrees that it shall not discriminate against
the Aircraft with respect to use and operation thereof in order
to avoid or reduce compliance by Lessee with the requirements of
this Section 5, except any reduced use or operation reasonably
necessary to comply with the provisions of this Section 5.
5.12. Ownership.
Any documents, equipment and any other items returned
to Lessor pursuant to this Section 5, which are not already owned
by Lessor, shall thereupon become the property of Lessor.
All references in this Section 5 to Hours and Cycles
remaining shall be references to FAA required limitations under
Lessee's then-current FAA-approved maintenance program.
5.13. Corrections and Subsequent Corrections.
In the event that the Aircraft, any Engine or any Part
fails upon the return thereof hereunder to conform to any return
condition requirement imposed by this Lease, Lessee shall,
without prejudice to the right of Lessee to claim that the
Aircraft did comply with such return condition requirement, at
Lessor's option, shall either (i) continue this Lease in effect,
including the obligation to pay Basic Rent hereunder, until such
time as the Aircraft is brought up to the condition required by
this Section 5, or (ii) return the Aircraft to Lessor and
thereafter reimburse Lessor for all costs reasonably incurred by
Lessor to have any such nonconformance corrected, at such time as
Lessor may deem appropriate at commercial rates then charged by
the Person selected by Lessor to perform such correction. Any
direct expense incurred by Lessor for such correction shall
become Supplemental Rent payable by Lessee within thirty (30)
days following the submission of a written statement by Lessor to
Lessee, identifying the items corrected and setting forth the
expense of such correction. Lessee's obligations to pay such
Supplemental Rent shall survive the passage of the end of the
Term or other termination of this Lease.
28
<PAGE>
SECTION 6. Liens.
Lessee shall not directly or indirectly create, incur,
assume or suffer to exist any Lien on or with respect to the
Airframe or any Engine or Propeller, title thereto or any
interest therein or in this Lease, except (a) the respective
rights of Lessor and Lessee as provided herein, (b) Lessor Liens,
(c) Liens for Taxes either not yet delinquent or being contested
in good faith (and for the payment of which such reserves, if
any, required under generally accepted accounting principles have
been provided) by appropriate proceedings conducted with due
diligence so long as such proceedings shall not involve any
material danger of the sale, forfeiture or loss of the Airframe,
any Engine, any Propeller, or any interest therein, (d)
materialmen's, mechanics', workmen's, repairmen's, employees' or
other like liens arising in the ordinary course of Lessee's
business securing obligations the payment of which either shall
not be overdue for a period of more than thirty (30) days or are
being contested in good faith (and for the payment of which such
reserves, if any, required under generally accepted accounting
principles have been provided) by appropriate proceedings
conducted with due diligence so long as such proceedings shall
not involve any danger of the sale, forfeiture or loss of the
Airframe, any Engine, any Propeller, or any interest therein, (f)
Liens arising out of judgments or awards against Lessee, unless
the judgment or award secured shall not, within sixty (60) days
after the entry thereof, have been discharged, vacated or
reversed or the execution thereof stayed pending appeal or, in
the event of any such stay, such judgment or award shall not have
been discharged, vacated or reversed within sixty (60) days after
the expiration of such stay, (g) the Lien of the Security
Agreement and any other Lien created pursuant to Section 13.4
hereof, and (h) any other Lien with respect to which Lessee shall
have provided a bond or other security adequate in the reasonable
opinion of Lessor.
SECTION 7. Registration and Operation; Possession;
Insignia.
7.1. Registration and Operation.
Lessee shall at all times during the Term hereof cause
the Aircraft to remain duly registered, in the name of Lessor,
under the Act and the rules and regulations except to the extent
the failure to maintain such registration is attributable to
Lessor's failure to qualify as "a citizen of the United States"
as defined in 49 U.S.C. Section 40102(a)(15) and the rules and
regulations thereunder, and the Aircraft shall not be registered
under the laws of any other country. Lessee shall maintain or
cause the Aircraft to be maintained in order to keep the Aircraft
in such operating condition as may be required for commercial
passenger operations in the United States under U. S. registry in
accordance with FAR Part 121 and all other applicable FAR's; and
29
<PAGE>
Lessee shall maintain the Aircraft under the Maintenance Program,
except when a substantial portion of de Havilland DHC-8-100
aircraft registered in the United States and the Aircraft have
been grounded by the FAA other than as a result of actions taken
or omitted to be taken by Lessee. Lessee shall maintain in the
English language all records, logs and other materials required
to be maintained in respect of the Aircraft by the FAA. Lessee
shall promptly furnish to Lessor such information as may be
requested by Lessor to enable Lessor to file any reports required
to be filed by Lessor with any governmental authority because of
Lessor's ownership of the Aircraft. Lessee agrees that the
Aircraft shall not be maintained, used or operated in violation
of Applicable Law or in violation of any airworthiness
certificate, license or registration relating to the Aircraft,
except to the extent Lessee shall be contesting in good faith the
validity or application of any such Applicable Law in any
reasonable manner that does not materially adversely affect
Lessor, the Aircraft, any Engine or Propeller. Lessee also
agrees not to operate or locate the Aircraft, or permit any
Person to operate or locate the Aircraft in any area excluded, or
in any manner that causes the Aircraft to be excluded, from
coverage by any insurance required by the terms of Section 11,
except when operated under contract with, or in the case of
requisition by, the United States Government, where Lessee shall
obtain or cause to be obtained indemnity or insurance in lieu of
such insurance from the United States Government against the
risks and in the amounts required by Section 11 covering such
operations.
7.2. Possession.
Lessee shall not, without the prior written consent of
Lessor, sublease or otherwise in any manner deliver, transfer or
relinquish possession of the Airframe, any Engine, or any
Propeller, or permit the Airframe, any Engine, or any Propeller
to be subleased or possession of the Airframe, any Engine, or any
Propeller otherwise in any manner to be delivered, transferred or
relinquished, or install any Engine or Propeller, or permit any
Engine or Propeller to be installed, on any airframe other than
the Airframe; provided, however, that so long as no Event of
Default shall have occurred and be continuing at the time of such
delivery, transfer or relinquishment of possession or
installation and so long as Lessee shall comply with the
provisions of Section 11, Lessee may, without the prior written
consent of Lessor:
(a) Intentionally Left Blank;
(b) deliver possession of the Airframe or any Engine
or Propeller to the manufacturer thereof (or for delivery
thereto) or to any FAA certified repair station (or for delivery
thereto) for testing, service, repair, maintenance or overhaul
work on the Airframe, such Engine or Propeller or any part
thereof or for
30
<PAGE>
alterations or modifications in or additions to
the Airframe, such Engine or Propeller to the extent required or
permitted by the terms of Section 8.3;
(c) subject to prompt delivery by Lessee to Lessor of
written notice, install an engine or propeller not owned by
Lessee on an Airframe owned by Lessor for a period of up to ten
(10) days or, with the prior written consent of Lessor, such
longer period as to which Lessor, in its sole discretion, agrees;
provided, however, that no claim or right, title or interest in
any Airframe or any Engine, Propeller or Part owned by Lessor is
obtained by any owner, secured party, lessor or conditional
vendor of such engine or propeller or Lessee as a result of such
installation;
(d) install an Engine or Propeller on an airframe
owned by Lessee free and clear of all Liens, except (i) Permitted
Liens and those that apply only to the engines, propellers (other
than Engines or Propellers), appliances, parts, instruments,
appurtenances, accessories, furnishings and other equipment
(other than Parts) installed on such airframe (but not to the
airframe as an entirety) and (ii) mortgage liens or other
security interests; provided, however, that, in the case of
clause (ii), Lessor's right, title and interest in and to such
Engine or Propeller shall not be subject to such mortgage liens
or other security interests, notwithstanding the installation of
such Engine or Propeller on such airframe;
(e) install an Engine or Propeller on an airframe
leased to Lessee or purchased by Lessee subject to a conditional
sale or other security interest; provided, however, that (i) such
airframe is free and clear of all Liens, except the rights of the
parties to the lease or conditional sale or other security
agreement covering such airframe, or their assignees, and except
Liens of the type permitted by paragraph (d) of this Section 7.2,
and (ii) Lessor's right, title and interest in and to such Engine
or Propeller shall not be subject to such conditional sale or
other security interests, notwithstanding the installation of
such Engine or Propeller on such airframe; and
(f) install an Engine or Propeller on an airframe
owned by Lessee, leased to Lessee or purchased by Lessee under
circumstances where neither paragraph (d) nor paragraph (e) above
is applicable; provided, however, that, if such installation
shall adversely affect Lessor's right, title and interest in and
to such Engine or Propeller, such installation shall be deemed an
Event of Loss with respect to such Engine or Propeller and Lessee
shall comply with Sections 10.2 or 10.3 in respect thereof,
Lessor not intending hereby to waive any right or interest it may
have to or in such Engine or Propeller under Applicable Law until
compliance by Lessee with Section 10.2 or 10.3.
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<PAGE>
7.3. No Release of Lessee.
No transfer of possession permitted by Section 7.2
above shall relieve Lessee of any obligations of Lessee under
this Lease.
7.4. No Claim by Lessor.
Lessor hereby agrees that no interest shall be created
hereunder in any engine installed at any time on the Airframe and
that Lessor shall not acquire or claim, as against any lessor,
conditional vendor or secured party of such engine any right,
title or interest in such engine by reason of such engine being
installed on the Airframe at any time while such engine is owned
by such lessor or conditional vendor or subject to the security
interest of such secured party.
7.5. Insignia.
On or prior to the Delivery Date, Lessee agrees to affix and
maintain in the cockpit of the Airframe adjacent to the
airworthiness certificate therein and on each Engine and
Propeller (if not prevented by applicable law or regulations or
by any governmental authority) a nameplate bearing the
inscription:
"Leased From
C.I.T. Leasing Corporation"
or such other nameplate as from time to time may be reasonably
requested by Lessor. Except as above provided, Lessee shall not
allow the name of any Person to be placed on the Airframe or any
Engine as a designation that might be interpreted as a claim of
ownership; provided, however, that nothing herein shall prohibit
Lessee from placing its customary colors and insignia or the
insignia of the manufacturer on the Airframe or any Engine.
SECTION 8. Replacement of Parts; Alterations and
Modifications; Maintenance.
8.1. Replacement of Parts.
Lessee, at its own cost and expense, shall promptly
replace or cause to be replaced all Parts that may from time to
time be incorporated in or installed on or attached to the
Airframe, any Engine or Propeller and that may from time to time
become worn out, lost, stolen, destroyed, seized, confiscated,
damaged beyond repair or permanently rendered unfit for use for
any reason whatsoever, except as otherwise provided in Section
8.3 below. In addition, Lessee may, at its own cost and expense,
remove in the ordinary course of maintenance, service, repair,
overhaul or testing, any Parts, whether or not worn out, lost,
stolen, destroyed, seized, confiscated, damaged beyond repair or
32
<PAGE>
permanently rendered unfit for use; provided, however, that,
except as otherwise provided in Section 8.3 below, Lessee, at its
own cost and expense, shall replace such Parts as promptly as
practicable. Except as otherwise provided in Section 8.2 below,
all replacement Parts shall be free and clear of all Liens
(except for Permitted Liens) and shall be in good operating
condition and shall have a value, utility and remaining useful
life at least equal to, the Parts replaced assuming such replaced
Parts were in the condition and repair required to be maintained
by the terms of this Lease and, in the case of Time Controlled
Parts shall not have more time accumulated since overhaul (and
time since new, in the case of a life limited part) than the
replaced part. Except as otherwise provided in Section 8.3
below, all Parts at any time removed from the Airframe or any
Engine or Propeller shall remain the property of Lessor, no
matter where located, until such time as such Parts shall be
replaced by Parts, other than Spare Parts subject to a lease
agreement with Lessor, that shall have been incorporated in or
installed on or attached to the Airframe or such Engine or
Propeller and that shall meet the requirements for replacement
Parts specified above.
8.2. Intentionally Left Blank.
8.3. Alterations, Modifications and Additions.
(a) Lessee, at its own expense, shall make or cause to
be made such alterations and modifications in and additions to
the Airframe, the Engines and Propellers as may be required to be
made from time to time by Applicable Law during the Term
regardless of on whom such requirements are, by their terms,
nominally imposed; provided, however, that Lessee may, in good
faith, contest the validity or application of such Applicable Law
in any reasonable manner; provided, that such contest shall not
adversely affect Lessor, the Aircraft, the Engines, the
Propellers, or Lessor's rights therein, or expose Lessor to
criminal liability or, to the extent Lessor is not indemnified
pursuant to Section 24 hereof, civil liability.
(b) In addition, Lessee, at its own expense, may from
time to time make such alterations and modifications in and
additions to the Airframe, any Engine or Propeller as Lessee may
deem desirable in the proper conduct of its business, including,
without limitation, (i) removal of Parts (for purposes of this
Section 8.3 called "Obsolete Parts") that Lessee shall deem
obsolete or no longer suitable or appropriate for use in the
Airframe, such Engine, or Propeller; provided, however, that
Lessee shall notify Lessor in writing of the removal of such
Obsolete Parts and upon request of Lessor within thirty (30) days
of receipt of such notification by Lessor, shall deliver such
Obsolete Parts as directed by Lessor at Lessee's expense and (ii)
subject to
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<PAGE>
Section 8.1 and Section 8.3(a), installation of replacement
Parts and thereafter from time to time replacing any such
replacement Parts with the Parts replaced thereby; provided,
however, that no such alteration, modification or addition shall
diminish the value, utility or remaining useful life of the
Airframe, such Engine, or such Propeller, or impair the condition
or airworthiness thereof, below the value, utility, remaining
useful life, condition and airworthiness thereof on the Delivery
Date (assuming the Airframe, such Engine or such Propeller was
then of the value, utility, and remaining useful life and in the
condition and airworthiness required to be maintained by the
terms of this Lease). Except as otherwise provided in Section
8.2, title to all Parts incorporated in or installed on or
attached or added to the Airframe, any Engine or Propeller as the
result of such alteration, modification or addition shall,
without further act, vest in Lessor.
(c) Notwithstanding the foregoing Section 8.3(b) and
provided that no Event of Default shall have occurred and be
continuing, Lessee may, at any time during the Term, remove any
Part; provided, however, that (i) such Part shall be in addition
to, and not in replacement of or substitution for, any Part
originally incorporated in or installed on or attached to the
Airframe, any Engine or Propeller at the time of delivery thereof
hereunder or any Part in replacement of or substitution for any
such Part, (ii) such Part shall not be required to be
incorporated in or installed on or attached or added to the
Airframe, such Engine or Propeller pursuant to the terms of this
Section 8, (iii) such Part can be removed from the Airframe or
such Engine without diminishing or impairing the value, utility,
or airworthiness required to be maintained by the terms of this
Lease that the Airframe or such Engine would have had at such
time had such original alteration, modification or addition not
been made, and (iv) Lessee shall restore any area where such Part
has been removed to the condition it would have been in had the
Part not been installed or to the requirements of this Agreement,
whichever is greater. Upon the removal by Lessee of any Part as
above provided, title thereto shall, without further act, vest in
Lessee and such Part shall no longer be deemed part of the
Airframe or the Engine from which it was removed. Any Part not
removed by Lessee as above provided prior to the return of the
Airframe, any Engine or Propeller to Lessor hereunder shall
remain the property of Lessor.
8.4. Maintenance in General.
Lessee agrees it has sole obligation to maintain,
repair, service and overhaul the Aircraft to keep it at all times
in an airworthy condition, and to keep it in as good condition as
it was on the Delivery Date throughout the Term and until the
Aircraft is redelivered to Lessor pursuant to Section 5 hereof,
ordinary wear and tear excepted, and to keep it on the U.S.
Registry under the
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Act (unless the right to U.S. Registry under the Act is not
available solely as a result of any act or omission of Lessor
or Lender) and to maintain it under the FAA-approved maintenance
and inspection program of Lessee which meets the FAA requirements
for United States commercial airline operations under Part 121
of the Federal Aviation Regulations and is approved by the
appropriate FAA Flight Standards Air Carrier District Office having
responsibility for Lessee's operations and maintenance of the
Aircraft and Engines by Lessee (the "Maintenance Program").
8.5. Specific Items of Maintenance.
(i) Lessee acknowledges that maintenance and repairs shall
include, but shall not be limited to, the following specific
items which Lessee agrees:
(a) to perform or have performed in accordance with
the Maintenance Program all maintenance work, and to ensure that
all such maintenance shall be in accordance with the regulations
and directives of the FAA; provided, however, Lessee may contest
in good faith the validity or applicability of any such
regulations or directives in any reasonable manner that does not
materially adversely affect Lessor or Lessor's interest in the
Aircraft if such contest does not expose Lessor to criminal
liability or, to the extent Lessor is not indemnified pursuant to
Section 24 hereof, civil liability. Lessee shall have all
maintenance and repairs performed at repair facilities approved
by the FAA (and authorized by the manufacturer, as appropriate)
to repair or work on de Havilland DHC-8-100 airframes, Pratt &
Whitney PW 120A engines, or Hamilton Standard 14SF-7 propellers,
as appropriate. Such work shall be performed with no less skill
and care than work performed on other de Havilland DHC-8-100
airframes, Pratt & Whitney PW 120A engines, or Hamilton Standard
14SF-7 propellers, as the case may be, operated by Lessee. With
respect to the maintenance of Engines and Propellers, Lessee
shall apply the same criteria to the Engines and Propellers as it
applies to the maintenance of other Lessee owned or operated
Pratt & Whitney PW 120A engines or Hamilton Standard 14SF-7
propellers, respectively;
(b) to correct or cause to be corrected, within such
timeframes as mandated by the Maintenance Program, deficiencies
revealed at any time by any inspection of Lessor or Lessee which,
under the Maintenance Program, require repair, replacement,
overhaul or adjustment. Such work shall be performed with no
less skill and care than work performed on other de Havilland
DHC-8-100 airframes, Pratt & Whitney PW 120A engines, or Hamilton
Standard 14SF-7 propellers, as the case may be, operated by
Lessee. With respect to the maintenance of Engines or
Propellers, Lessee shall apply the same criteria to the Engines
and Propellers as it applies to the maintenance of other Lessee
owned or operated Pratt & Whitney PW 120A engines or Hamilton
Standard 14SF-7 propellers, respectively;
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(c) to maintain all Aircraft, Engine and Propeller
documentation, including, without limitation, the logs, manuals
and technical records relating to the service, inspection,
maintenance, modification, repair and overhaul of the Aircraft,
Engines, Propellers and Parts installed therein and thereon, in
compliance with FAA regulations, including without limitation,
Federal Aviation Regulations Part 121, in the English language,
and in up-to-date status and to make these available for review
by Lessor on reasonable notice at Lessee's principal de Havilland
DHC-8 maintenance base, in order to facilitate Lessor's ability
to inspect periodically the Aircraft, monitor the maintenance
during the Term, and to facilitate the use, sale or lease of the
Aircraft to a third party at the end of the Term;
(d) provide to Lessor, upon Lessor's prior request
from time to time, copies of any written communications with
manufacturers of the Airframe, Engines or Propellers with respect
to any discrepancies or malfunctions identified by Lessor in such
request and to permit Lessor to copy same;
(e) provide to Lessor, upon Lessor's prior request
from time to time, copies of reports as to (i) the Hours/Cycles
operated for the Aircraft and each Engine or Propeller and the
time remaining to the next significant check or inspection; (ii)
Airworthiness Directive compliance status and Time Controlled
Component Status, (iii) a list of those Service Bulletins,
Airworthiness Directives and engineering modifications applicable
to de Havilland DHC-8 aircraft, Pratt & Whitney PW 120A engines
or Hamilton Standard 14SF-7 propellers in Lessee's fleet, and
(iv) copies of all damage reports submitted to the FAA with
respect to the Aircraft, the Engines, and the Propellers and to
permit Lessor to copy same;
(f) provide to Lessor, upon Lessor's prior request
from time to time, a copy of Lessee's most recent FAA-Approved
Operations Specifications-Part D applicable to the Aircraft,
Engines, and Propellers with copies of any amendments or
additions made thereto and to permit Lessor to copy same;
(g) provide to Lessor and make available for
inspection, upon Lessor's prior request from time to time, a
complete and current copy of Lessee's de Havilland DHC-8
Maintenance Manual on microfilm and the Maintenance Program; and
(h) to provide to Lessor, upon request from time to
time, a report setting forth the engine airframe position and
tail number of each Engine and Propeller (or its physical
location if not installed on an Airframe).
(ii) Lessee agrees to pay to Lessor maintenance reserves
with respect to the Aircraft during the Term of this Lease in
accordance
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with Exhibit C hereto. All maintenance reserves shall be
applied in accordance with the applicable provisions of
Exhibit C hereto.
8.6. Airworthiness Directives.
Lessee agrees at its sole cost and expense to
accomplish on the Aircraft, Engines, Propellers and Parts any
airworthiness directive or any other mandatory regulation,
directive or instruction ("Airworthiness Directive") which the
FAA or any other government agency having jurisdiction may from
time to time issue prior to or during the Term and which becomes
due during the Term. All Airworthiness Directives shall be
accomplished in accordance with the requirements of the
Airworthiness Directive and all Federal Aviation Regulations,
bulletins and manuals published by the manufacturer of the
Aircraft, Engines, Propellers or Parts, or any method acceptable
to the FAA Administrator, as appropriate. Lessee agrees to
accomplish Airworthiness Directives on the Aircraft on
substantially the same timetable (considering such factors as
normally scheduled maintenance shop visits) as that used in
scheduling accomplishment of Airworthiness Directives on similar
Lessee-operated aircraft.
8.7. Service Bulletins.
Lessee agrees, at its sole cost and expense, to incorporate
into the Aircraft, Engines, and Propellers de Havilland, Pratt &
Whitney, Hamilton Standard and other vendor service bulletins
("Service Bulletins") which Lessee plans to adopt during the Term
for the other de Havilland DHC-8-100 aircraft, Pratt & Whitney PW
120A engines, or Hamilton Standard 14SF-7 propellers in its
fleet, on substantially the same timetable (considering such
factors as normally scheduled maintenance shop visits) as that
used in scheduling similar Lessee-operated aircraft for
incorporation of such service bulletins.
SECTION 9. Intentionally Left Blank.
SECTION 10. Loss, Destruction, Requisition, Etc.
10.1. Event of Loss with Respect to the Airframe.
Upon the occurrence of an Event of Loss with respect to
the Aircraft or the Airframe (or the Airframe and any one or more
Engines or engines), Lessee shall forthwith (and in any event
within fifteen (15) days after such occurrence) give Lessor
written notice thereof and Lessee shall, on the Stipulated Loss
Payment Date (as set forth on Schedule 2 hereto) next following
the date of occurrence of such Event of Loss, pay to Lessor, in
immediately available funds, the Stipulated Loss Value for the
Aircraft, determined as of such Stipulated Loss Payment Date. At
such time
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as Lessor shall have received the amount specified above,
the obligation of Lessee to pay the installments of Basic Rent
due and payable on and after the date of such payment shall
cease and the Term with respect to the Aircraft shall end.
Upon such payment (together with the payment of all other
unpaid Rent) Lessor shall transfer to Lessee or its designee,
without recourse or warranty (except as to the absence of
Lessor Liens), all Lessor's right, title and interest in and
to (x) the Airframe and any Engines subject to such Event of
Loss, as well as any Engines not subject to such Event of
Loss, and furnish to Lessee or its designee a bill of
sale in form and substance reasonably satisfactory to
Lessee, evidencing such transfer and (y) all claims of
Lessor, if any, against third parties, for damage to or loss
of the Airframe and any Engines that were subject to such
Event of Loss.
10.2. Event of Loss with Respect to an Engine.
Upon the occurrence of an Event of Loss with respect to
an Engine under circumstances in which there has not occurred an
Event of Loss with respect to the Airframe, Lessee shall
forthwith (and in any event within fifteen (15) days after such
occurrence) give Lessor written notice thereof and shall, within
30 days after the occurrence of such Event of Loss, or on the
last day of the Term, if earlier, convey or cause to be conveyed
to Lessor, as replacement for the Engine with respect to which
such Event of Loss occurred, title, free and clear of all Liens
(other than Permitted Liens) to a Replacement Engine not
constituting an Engine, but having a value, utility and remaining
useful life at least equal to, and being in as good operating
condition as, the Engine with respect to which such Event of Loss
occurred assuming such Engine was in the condition and repair
required by the terms of this Lease immediately prior to the
occurrence of such Event of Loss and assuming such Engine was,
and such Replacement Engine is, in half-time condition. Prior to
or at the time of any such conveyance, Lessee, at its own
expense, shall (i) furnish Lessor with a full warranty (as to
title) bill of sale, in form and substance reasonably
satisfactory to Lessor, with respect to such Replacement Engine,
(ii) cause a Lease Supplement to be duly executed by Lessee and
filed for recording pursuant to the Act, (iii) furnish Lessor
with such evidence of compliance with the insurance provisions of
Section 11 with respect to such Replacement Engine as Lessor may
reasonably request, (iv) furnish Lessor with an opinion of
counsel (and such evidence of title as Lessor may reasonably
request) to the effect that, upon such conveyance, such
Replacement Engine will be leased hereunder to the same extent as
the Engine replaced thereby and that the execution and delivery
of the warranty bill of sale referred to in clause (i) above and
the Lease Supplement referred to in clause (ii) above have been
duly authorized by all necessary corporate action, and (v)
furnish Lessor with an opinion of FAA counsel with respect to the
interest of Lessor in such Replacement Engine. Upon full
compliance by Lessee with the terms
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of this Section 10.2, Lessor shall transfer to Lessee or its
designee, without recourse or warranty (except as to the
absence of Lessor Liens), all Lessor's right, title and
interest, if any, in and to (A) the Engine with respect to
which such Event of Loss occurred and furnish to Lessee a
bill of sale, in form and substance reasonably
satisfactory to Lessee, evidencing such transfer and (B)
all claims of Lessor, if any, against third parties, for
damage to or loss of the Engine subject to such Event of
Loss. The parties hereto agree that the procedure
outlined in the preceding sentence shall not apply to any
Engine with respect to which an Event of Loss occurs or to
the related Replacement Engine if such replacement is owned by
Lessor. In such case Lessor shall retain title to both and
Lessee shall promptly replace the Engine to which the
Event of Loss has occurred with an engine in the
condition required by the first sentence of this Section and
as otherwise required by this Lease. For all purposes
hereof, each such Replacement Engine shall, after such
conveyance, be deemed part of the property leased hereunder
and shall be deemed an "Engine" as defined herein. No Event
of Loss with respect to an Engine under the circumstances
contemplated by the terms of this Section 10.2 shall result in
any reduction or abatement in Rent.
10.3. Event of Loss with Respect to a Propeller.
Upon the occurrence of an Event of Loss with respect to
a Propeller under circumstances in which there has not occurred
an Event of Loss with respect to the Airframe, Lessee shall
forthwith (and in any event within fifteen (15) days after such
occurrence) give Lessor written notice thereof and shall, within
30 days after the occurrence of such Event of Loss, or on the
last day of the Term, if earlier, convey or cause to be conveyed
to Lessor, as replacement for the Propeller with respect to which
such Event of Loss occurred, title, free and clear of all Liens
(other than Permitted Liens) to a Replacement Propeller not
constituting a Propeller, but having a value, utility and
remaining useful life at least equal to, and being in as good
operating condition as, the Propeller with respect to which such
Event of Loss occurred assuming such Propeller was in the
condition and repair required by the terms hereof immediately
prior to the occurrence of such Event of Loss. Prior to or at
the time of any such conveyance, Lessee, at its own expense,
shall (i) furnish Lessor with a full warranty (as to title) bill
of sale, in form and substance reasonably satisfactory to Lessor,
with respect to such Replacement Propeller, (ii) cause a Lease
Supplement to be duly executed by Lessee and filed for recording
pursuant to the Act, (iii) furnish Lessor with such evidence of
compliance with the insurance provisions of Section 11 with
respect to such Replacement Propeller as Lessor may reasonably
request, (iv) furnish Lessor with an opinion of counsel (and such
evidence of title as Lessor may reasonably request) to the effect
that, upon such conveyance, such Replacement Propeller will be
leased hereunder to the same extent as the Propeller
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<PAGE>
replaced thereby and that the execution and delivery of the
warranty bill of sale referred to in clause (i) above and the
Lease Supplement referred to in clause (ii) above have been
duly authorized by all necessary corporate action, and (v)
furnish Lessor with an opinion of FAA counsel with respect
to the interest of Lessor in such Replacement Propeller. Upon
full compliance by Lessee with the terms of this Section
10.3, Lessor shall transfer to Lessee or its designee,
without recourse or warranty (except as to the absence of
Lessor Liens), all Lessor's right, title and interest, if any,
in and to (A) the Propeller with respect to which such Event
of Loss occurred and furnish to Lessee a bill of sale, in
form and substance reasonably satisfactory to Lessee,
evidencing such transfer and (B) all claims of Lessor, if any,
against third parties, for damage to or loss of the
Propeller subject to such Event of Loss. The parties
hereto agree that the procedure outlined in the preceding
sentence shall not apply to any Propeller with respect to
which an Event of Loss occurs or to the related Replacement
Propeller if such replacement is owned by Lessor. In any
case Lessor shall retain title to both and Lessee shall
promptly replace the Propeller to which the Event of Loss
has occurred with a propeller in the condition required by
the first sentence of this Section and as otherwise required
by this Lease. For all purposes hereof, each such
Replacement Propeller shall, after such conveyance, be
deemed part of the property leased hereunder and shall be
deemed a "Propeller" as defined herein. No Event of Loss
with respect to a Propeller under the circumstances
contemplated by the terms of this Section 10.3 shall
result in any reduction or abatement in Rent.
10.4. Application of Payments from Governmental
Authorities for Requisition of Title, etc.
Any payments (other than insurance proceeds the
application of which is provided for in Section 11) received at
any time by Lessor or by Lessee from any governmental authority
or other person with respect to an Event of Loss shall be applied
as follows:
(a) if such payments shall be received with respect to
the Airframe (or the Airframe and any Engines or engines or
Propellers or propellers installed on the Airframe), so much of
such payments as shall not exceed the Stipulated Loss Value for
the Aircraft required to be paid by Lessee pursuant to Section
10.1 shall be paid to Lessor and applied in reduction of Lessee's
obligation to pay such Stipulated Loss Value, if not already paid
by Lessee, and, to the extent already paid by Lessee, shall be
applied to reimburse Lessee therefor, and the balance, if any, of
such payments remaining thereafter shall be paid over to, or
retained by, Lessor; and
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(b) if such payments shall be received with respect to
an Engine or Propeller under circumstances contemplated by
Sections 10.1, 10.2 or 10.3 such payments shall be paid over to,
or retained by Lessee if Lessee shall have fully performed its
obligations under such Sections 10.1, 10.2 or 10.3, as
applicable.
10.5. Requisition for Use by the United States
Government.
In the event of the requisition for use by the United
States Government of the Airframe or any Engine or Propeller
during the Term, Lessee shall promptly notify Lessor of such
requisition and all Lessee's obligations under this Lease with
respect to the Airframe or such Engine or Propeller shall
continue to the same extent as if such requisition had not
occurred; provided, however, that if the Airframe or such Engine
or Propeller shall not be returned by the United States
Government prior to the end of the Term, Lessee shall be
obligated to return the Airframe or such Engine or Propeller to
Lessor pursuant to, and in all other respects in compliance with
the provisions of, Section 5 promptly upon its return by the
United States Government. All payments received by Lessor or
Lessee from the United States Government for the use of the
Airframe or such Engine or Propeller during the Term shall be
paid over to, or retained by, Lessee; and all payments received
by Lessor or Lessee from the United States Government for use of
the Airframe or such Engine or Propeller after the Term shall be
paid over to, or retained by, Lessor.
SECTION 11. Insurance.
11.1. Public Liability and Property Damage Insurance.
(a) Except as provided in paragraph (d) of this
Section 11.1, Lessee shall carry or cause to be carried, at no
cost and expense to Lessor, commercial aircraft liability
(including, without limitation, passenger legal liability)
insurance and property damage insurance, cargo liability,
contractual liability and products liability (exclusive of
manufacturer's product liability insurance) with respect to the
Aircraft, and war risk insurance (i) in an amount not less than
$125,000,000 combined single limit, (ii) of the type usually
carried by United States regional or commuter air carriers owning
or operating similar aircraft and which shall cover risks of the
kind customarily insured against by such air carriers, and (iii)
which shall be maintained in effect with insurers of recognized
responsibility and acceptable to Lessor.
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(b) Any policies of insurance carried in accordance
with this Section 11.1 and any policies taken out in substitution
or replacement for any of such policies (i) shall name Lessor, as
owner of the Aircraft, and Lessor, the Minister and Mellon as
additional insureds, as their interests may appear (but without
imposing on Lessor, the Minister or Mellon liability to pay the
premiums for such insurance or increasing the insurer's limit of
liability as a result of the inclusion of an additional insured),
(ii) shall provide that, in respect of the interest of Lessor in
such policies, the insurance shall not be invalidated regardless
of any breach or violation of any warranty, declaration or
condition contained in such policies by Lessee, and (iii) shall
provide that if such insurance shall be canceled for any reason
whatever (other than due to lapse at the normal expiration date
in accordance with the terms of any such policy), or if any
material change shall be made in such insurance which adversely
affects the interest of Lessor, such cancellation or change shall
not be effective as to Lessor for thirty (30) days (seven (7)
days in the case of war risk and allied perils coverage) after
receipt by Lessor of written notice from such insurers of such
cancellation or change. Lessor shall not be responsible for
representations or warranties made to underwriters.
(c) Each liability policy (i) shall be primary without
right of contribution from any other insurance carried by Lessor,
(ii) shall expressly provide that all the provisions thereof,
except the limits of liability, shall operate in the same manner
as if there were a separate policy covering each insured and
(iii) shall waive any right of the insurers to any set-off or
counterclaim or any other deduction, whether by attachment or
otherwise, in respect of any liability of Lessor to the extent of
any moneys due to Lessor.
(d) During any period that the Aircraft is in storage,
Lessee may carry, in lieu of the insurance required by paragraph
(a) above, insurance otherwise conforming with the provisions of
said paragraph (a), except that (i) the amounts of coverage shall
not be required to exceed the amounts of public liability and
property damage insurance from time to time applicable to similar
passenger aircraft that comprise Lessee's fleet in similar
storage; and (ii) the scope of the risks covered and the type of
insurance shall be the same as from time to time shall be
applicable to similar passenger aircraft that comprise Lessee's
fleet in similar storage; provided that Lessee shall have
provided prior written notice to Lessor of its intention to place
the Aircraft in storage and the proposed changes to the insurance
coverage required by paragraph (a) and Lessor shall have provided
its prior written approval of such changes.
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11.2. Insurance Against Loss or Damage to the
Aircraft.
(a) Except as provided in paragraph (e) of this
Section 11.2, Lessee shall maintain or cause to be maintained in
effect, at no cost or expense to Lessor, with insurers of
recognized responsibility and acceptable to Lessor, all-risk
ground, taxiing and flight aircraft hull insurance covering the
Aircraft and all-risk coverage with respect to any Engines, any
Propellers or Parts while removed from the Aircraft insured for
their replacement cost (including, without limitation, war risk
and governmental confiscation and expropriation, nationalization,
seizure (other than by the United States Government), hijacking
and terrorism insurance. Such insurance covering the Aircraft
shall at all times while the Aircraft is subject to this Lease be
in an amount not less than the applicable Stipulated Loss Value
of the Aircraft as in effect from time to time, the "agreed
value".
(b) Any policies carried in accordance with this
Section 11.2 covering the Aircraft and any policies taken out in
substitution or replacement for any such policies (i) shall name
Lessor, as owner of the Aircraft, as sole loss payee, and Lessor
and the Minister, as their interests may appear, as additional
insureds (but without imposing on Lessor or the Minister
liability to pay premiums nor shall Lessor have responsibility
for representations or warranties to underwriters with respect to
such insurance), (ii) shall provide that (x) in the event of a
loss involving proceeds in excess of $100,000, the proceeds in
respect of such loss up to the amount of Stipulated Loss Value
for the Aircraft shall be payable to Lessor, including in the
case of a loss with respect to an Engine or Propeller installed
on an airframe other than the Airframe, it being understood and
agreed that, in the case of any payment to Lessor otherwise than
in respect of an Event of Loss, Lessor shall, upon receipt of
evidence satisfactory to it that the damage giving rise to such
payment shall have been repaired or that such payment shall then
be required to pay for repairs then being made, pay the amount of
such payment to Lessee or its order, (y) the entire amount of any
loss involving proceeds of $100,000 or less shall be paid to
Lessee or its order unless a Default or an Event of Default shall
have occurred and be continuing and the insurer shall have been
so notified by Lessor, (iii) the amount of any proceeds to the
extent in excess of the Stipulated Loss Value for the Aircraft
shall be paid to Lessee or its order, so long as no default has
occurred, (iv) shall provide that if such insurance shall be
canceled for any reason whatever (other than due to lapse at the
normal expiration date in accordance with the terms of any such
policy), or if any material change shall be made in such
insurance which adversely affects the interest of Lessor, such
cancellation or change shall not be effective as to Lessor for
thirty (30) days (seven (7) days in the case of war risk and
allied perils coverage) after receipt by Lessor of written notice
from such insurers of such cancellation
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or change, (v) shall provide that, in respect of the
interest of Lessor in such policies, the insurance shall
not be invalidated regardless of any breach or violation of
any warranty, declaration or condition contained in such
policies by Lessee, (vi) to the extent that Lessee has
waived its rights of recovery against Lessor hereunder,
shall waive any rights of subrogation of the insurers against
Lessor, as owner of the Aircraft; provided, however, that the
exercise by the insurers of such right of subrogation shall
not in any way delay payment of any claim that would otherwise
be payable by such insurers but for the existence of such
rights of subrogation, (vii) shall be primary without
any right of contribution from any other insurance
carried by Lessor, and (viii) shall waive any right of
the insurers to set-off or counterclaim or any other
deduction, whether by attachment or otherwise, in respect of
any liability of Lessor to the extent of any moneys due to
Lessor. In the case of a loss with respect to an engine or
propeller (other than an Engine and a Propeller) installed
on the Airframe, Lessor shall arrange for any payment to it
of any insurance proceeds in respect of such loss to be
paid to Lessee or any other third party that is entitled
to receive such proceeds.
(N880CC)
ML01 \2896\138226.9 4990.999945
(c) As between Lessor and Lessee, it is agreed that
all insurance payments under insurance policies required to be
maintained by Lessee pursuant to this Section 11.2 received as a
result of the occurrence of an Event of Loss shall be applied as
follows: (i) if such payments shall be received with respect to
the Airframe (or the Airframe and any Engines or engines
installed on the Airframe), so much of such payments as shall not
exceed the Stipulated Loss Value for the Aircraft required to be
paid by Lessee pursuant to Section 10.1 or 10.4 shall be applied
in reduction of Lessee's obligation to pay such Stipulated Loss
Value, if not already paid by Lessee, or, if already paid by
Lessee, shall be applied to reimburse Lessee therefor and the
balance, if any, of such payments remaining thereafter shall be
paid over to, or retained by, Lessee; provided, however, that
Lessee shall have fully performed, or concurrently therewith
shall fully perform, the terms of Section 10.1 or 10.4 with
respect to the Event of Loss for which such payments are made;
and (ii) if such payments shall be received with respect to an
Engine or Propeller under the circumstances contemplated by
Sections 10.2 or 10.3, such payments shall be paid over to, or
retained by, Lessee; provided, however, that Lessee shall have
fully performed, the terms of Sections 10.2 or 10.3 with respect
to the Event of Loss for which such payments are made.
As between Lessor and Lessee, the insurance payments
received as a result of any property damage loss not constituting
an Event of Loss shall be applied in payment for repairs or for
replacement property in accordance with the terms of Sections 7
and 8, if not already paid for by Lessee or, if already paid for
by Lessee, to reimburse Lessee therefor, and any balance
remaining
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after compliance with such Sections with respect to
such loss shall be paid to Lessee.
(d) Notwithstanding the foregoing provisions of this
Section 11.2, any amount referred to in the immediately preceding
paragraph or in clause (i) or (ii) of paragraph (c) above that
shall be payable to Lessee as provided therein (other than any
such amount to the extent in excess of the Stipulated Loss Value
for the Aircraft) shall nevertheless not be paid to Lessee or, if
it shall have already been paid directly to Lessee, shall not be
retained by Lessee, if at the time of such payment a Default or
an Event of Default shall have occurred and be continuing, but
shall be paid to and held by Lessor as security for the
obligations of Lessee under this Lease and, if Lessor shall
declare this Lease to be in default pursuant to Section 15, shall
be applied against Lessee's obligation hereunder as and when due.
At such time as there shall not be continuing any such Default or
Event of Default, such amount shall be paid to Lessee to the
extent not previously applied in accordance with the preceding
sentence.
(e) During any period that the Aircraft is in storage,
Lessee may carry or cause to be carried, in lieu of the insurance
required by paragraph (a) above, insurance otherwise conforming
with the provisions of said paragraph (a) except that the scope
of the risks and the type of insurance shall be the same as from
time to time applicable to similar passenger aircraft that
comprise Lessee's fleet in similar storage and acceptable to
Lessor.
11.3. Reports, etc.
On or before the Delivery Date and at least annually
thereafter during the Term, prior to expiration of each insurance
policy, Lessee shall furnish to Lessor and the Minister an
original certificate of insurance and/or a report signed by
Rollins Burdick Hunter of Virginia, Inc. (or any other
independent aircraft insurance brokers reasonably acceptable to
Lessor) describing in reasonable detail the insurance then
carried and maintained with respect to the Aircraft and stating
the opinion of such firm that the insurance then carried and
maintained with respect to the Aircraft complies with the terms
hereof; provided, however, that the information contained in such
report shall not be made available by Lessor or the Minister to
anyone except (a) to their respective counsel or independent
public accountants or independent insurance advisors so long as
such persons in turn agree to hold such information confidential,
(b) as may be required by any statute, court or administrative
order or decree or governmental ruling or regulation or (c) as
may be required by any governmental authority. Lessee shall cause
such firm to agree to advise Lessor and the Minister in writing
of any default in the payment of any premium, of any other act or
omission on the part of Lessee of which it shall have knowledge
and which might invalidate or render
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unenforceable, in whole or in part, any insurance on the
Aircraft and of any lapse in the insurance carried and
maintained on the Aircraft pursuant to this Section 11 at the
normal expiration date. Each insurance policy provided for
by this Section shall be in form and with deductibles
satisfactory to Lessor.
11.4. Indemnification by the United States Government
in Lieu of Insurance.
Notwithstanding any provisions of this Section 11
requiring insurance, Lessor agrees to accept, in lieu of
insurance against any risk with respect to the Aircraft,
indemnification from, or insurance provided by, the United States
Government against such risk in an amount which, when added to
the amount of insurance against such risk maintained by Lessee
with respect to the Aircraft shall be at least equal to the
amount of insurance against such risk otherwise required by this
Section 11.
11.5. Additional Insurance by Lessor and Lessee.
Lessee may, at its own expense, carry insurance with
respect to its interest in the Aircraft in amounts in excess of
that required to be maintained by this Section 11. Lessor may,
at its own expense, carry insurance with respect to its interest
in the Aircraft, provided that such insurance maintained by
Lessor does not prevent Lessee from carrying the insurance
required by this Section 11 or adversely affect such insurance or
the cost thereof. The proceeds of any such insurance carried by
Lessee or Lessor shall be paid to Lessee or Lessor, respectively.
SECTION 12. Inspection.
At all reasonable times, Lessor, the Minister or their
respective authorized representatives may, at their own risk and
expense, inspect the Aircraft, examine the books and records of
Lessee relating thereto, and reasonably request information
concerning the Aircraft; provided, however, that no exercise of
such inspection or examination right shall, in the good faith
opinion of Lessee, interfere with the normal operation of the
Aircraft by, or the business of, Lessee. Neither Lessor nor the
Minister shall have any duty to make any such inspection or
examination nor shall either of them incur any liability or
obligation by reason of not making any such inspection or
examination. Without limiting the generality of the foregoing,
Lessor shall have the right to visually inspect the Aircraft six
(6) months prior to the end of the Term, to determine if the
modifications, alterations or improvements to the Aircraft, if
any, have diminished the value, utility, remaining useful life or
airworthiness of the Aircraft; provided, that any such inspection
accords with the requirements of the first sentence of this
Section 12.
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SECTION 13. Assignment; Binding Effect; Security Interests.
13.1. Assignment by Lessor.
Lessor shall not cause or suffer any assignment,
conveyance or other transfer of all or any portion of its right,
title or interest in, to or under this Lease or its interest in
the Aircraft (a "Transfer") except as provided below (provided
that no such restrictions shall apply if an Event of Default has
occurred):
(a) Without the prior consent of Lessee, Lessor may
make any Transfer to (i) any Affiliate of Lessor, if Lessor
remains directly and primarily liable and not merely as a surety
for the obligations of such Affiliate hereunder; (ii) to any
Person if such Person has a net worth, or combined capital,
surplus, and undivided profits, as of its most recent audited
financial statements of not less than $25,000,000; or (iii) to
any other Person if the obligations or such Person under the
Operative Documents applicable to Lessor are guaranteed by a
Person which meets the requirements of clause (ii) of this
paragraph (a);
(b) Any Transfer to any Person other than one
satisfying the requirements set forth in clause (a) (i), (ii) or
(iii) above, may be made only with the prior written consent of
Lessee, which shall not unreasonably be withheld;
(c) Notwithstanding any other provision of this
Section 13, no Transfer shall be made (i) except to a Person that
on the date of such Transfer is a "citizen of the United States"
within the meaning of 49 U.S.C. Section 40102(a)(15), (ii) that
would create a relationship that would be in violation of the Act
or that would prevent the continued United States registration of
the Aircraft under the Act, without regard to the "based and
primarily used" provisions of the Act and without any other
actions being required to be taken by Lessee or any other Person
relating to the status or citizenship of the Transferee, and
(iii) that would result in a violation of Section 5 of the
Securities Act of 1933, as amended, or constitute a "prohibited
transaction" within the meaning of ERISA;
(d) Each transferee shall execute and deliver an
agreement in form and substance reasonably satisfactory to Lessee
whereby such transferee agrees to be bound by all the terms and
provisions of, and to assume and confirm all of the obligations
of Lessor under, this Lease from after the effective date of such
Transfer and makes representations of the scope provided for as
Lessor in each of such agreements;
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(e) No Transfer pursuant to this Section 13.1 shall
impair or diminish Lessee's rights hereunder; and
(f) Lessor shall give notice of each such proposed
Transfer to Lessee at least five (5) Business Days prior to the
date on which such proposed Transfer is to become effective,
setting forth the name and address of the proposed Transferee and
the date on which such transfer is proposed to become effective
and shall furnish such additional information (including opinions
of counsel) as may be reasonably requested or required to
demonstrate compliance with the provisions of this Section 13.1.
13.2. Assignment by Lessee.
Except as otherwise expressly provided herein, Lessee
will not, without the prior written consent of Lessor, assign or
otherwise transfer any of its rights hereunder.
13.3. Binding Effect.
Subject to the foregoing Sections 13.1 and 13.2, the
terms and provisions of this Lease shall be binding upon and
inure to the benefit of Lessor and Lessee and their respective
permitted successors and permitted assigns.
13.4. Security Interests.
Lessor may encumber the Aircraft or the Airframe or the
Engines or the Propellers, or assign its interest or any part
thereof under this Lease to a Lender (who may act as agent for
other Lenders); provided that (a) the Lender shall be a reputable
financial institution, (b) the offering and sale of such
indebtedness shall have been made in compliance with all
securities laws and shall not require, or shall be exempt from,
registration or qualification under such securities laws, (c)
entering into the Security Agreement shall not constitute a
"prohibited transaction" within the meaning of ERISA, (d) Lessee
shall have received an opinion of counsel to Lessor, reasonably
acceptable to Lessee, as to matters set out in clauses (b) and
(c) and such other matters as Lessee may reasonably require, (e)
Lessor shall reimburse Lessee for all costs and expenses,
including reasonable attorneys fees, incurred in connection with
such assignment or security interest, and (f) Lessor shall have
provided Lessee prior written notice of its intent to enter into
such Security Agreement or assignment.
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SECTION 14. Events of Default.
14.1. Events of Default.
Each of the following events shall constitute an "Event
of Default" (whether any such event shall be voluntary or
involuntary or come about or be effected by operation of law or
pursuant to or in compliance with any judgment, decree or order
of any court or any order, rule or regulation of any
administrative or governmental body) and each such Event of
Default shall be deemed to exist and continue so long as, but
only so long as, it shall not have been fully remedied:
(a) Lessee shall fail to make any payment of Interim
or Basic Rent within five (5) Business Days after the same shall
have become due; or
(b) Lessee shall fail to make any payment of
Supplemental Rent within ten (10) Business Days after receiving
written notice from Lessor that the same shall have become due;
or
(c) Lessee shall fail to perform or observe any other
covenant or agreement to be performed or observed by it hereunder
and such failure shall continue unremedied for a period of thirty
(30) days after written notice thereof by Lessor; or
(d) any representation or warranty made by Lessee
herein or in any document or certificate required to be furnished
by Lessee in connection herewith or therewith or pursuant hereto
or thereto shall at any time prove to have been incorrect in any
material respect at the time made; or
(e) the entry of a decree or order for relief by a
court having jurisdiction in the premises in respect of Lessee in
an involuntary case under the Federal bankruptcy laws, as now or
hereafter constituted, or any other bankruptcy, insolvency or
other similar Applicable Law, or, appointing a receiver,
liquidator, assignee, custodian, trustee, sequestrator (or other
similar official) of Lessee or for all or any material portion of
its property, or ordering the winding-up or liquidation of its
affairs, and the continuance of any such decree or order
unvacated, unstayed and in effect for a period of ninety (90)
days after the date of its entry; or
(f) the commencement by Lessee of a voluntary case
under the Federal bankruptcy laws, as now or hereafter
constituted, or any other bankruptcy, insolvency or other similar
Applicable Law, or the consent by it to the appointment of or
taking possession by a receiver, liquidator, assignee, custodian,
trustee, sequestrator (or other similar official) of Lessee or
for all or any material portion of its property; or
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(g) Lessee shall fail to maintain insurance coverage
with respect to the Aircraft required to be maintained in
accordance with the provisions of Section 11 hereof, shall
operate the Aircraft without having the insurance required
hereunder or shall operate the Aircraft outside the scope of
coverage of such insurance; or
(h) an Event of Default (as defined therein) shall
have occurred under any other lease agreement between Lessor and
Lessee entered into on or after the Closing Date; or
(i) Lessee shall default in the due observance and
performance of any covenant or agreement imposed on Lessee in any
other aircraft lease or by any agreement securing or evidencing
any obligation of Lessee for the payment of borrowed money or for
the deferred purchase price of property evidenced by a promissory
note (excluding trade payables), such default shall have
continued for a period sufficient to permit the acceleration of
the maturity of such obligation, and the aggregate amount of all
such defaulted obligations shall be at least one million dollars
($1,000,000); or
(j) a final judgment for the payment of money in
excess of one million dollars ($1,000,000) shall be rendered by a
court of competent jurisdiction against Lessee and the same shall
remain undischarged and in effect for a period of 90 days during
which execution of such judgment shall not be effectively stayed;
or
(k) the Insurance Agreement or any other insurance
agreement of the Minister with respect to which Lessor has an
interest on or after the Closing Date shall cease to be in full
force and effect for any reason whatsoever.
SECTION 15. Remedies.
15.1. Remedies.
Upon the occurrence of any Event of Default and at any
time thereafter so long as the same shall be continuing, Lessor
may, at its option, by notice to Lessee, declare this Lease to be
in default (provided that no such notice or declaration shall be
necessary with respect to an Event of Default pursuant to Section
14.1 (e) or (f)); and, at any time thereafter, Lessor may do one
or more of the following with respect to the Airframe and any of
or all the Engines and Propellers, as Lessor in its sole
discretion shall elect, to the extent permitted by, and subject
to compliance with any mandatory requirements of, Applicable Law
then in effect:
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(a) cause Lessee, upon the written demand of Lessor
and at Lessee's expense, to return promptly, and Lessee shall
return promptly, the Aircraft and all Parts to Lessor or its
order in the manner and condition required by, and otherwise in
accordance with all the provisions of, Section 5 as if the
Aircraft were being returned at the end of the Term or Lessor, at
its option, may enter upon the premises where all or any part of
the Airframe, any Engine or any Propeller is located and take
immediate possession of and remove the same, all without
liability accruing to Lessor for or by reason of such entry or
taking of possession or removing, whether for the restoration of
damage to property caused by such action or otherwise;
(b) sell the Airframe, any Engine or any Propeller at
public or private sale, as Lessor may determine, or otherwise
dispose of, hold, use, operate, lease to others or keep idle the
Airframe, any Engine or any Propeller as Lessor, in its sole
discretion, may determine, all free and clear of any rights of
Lessee and without any duty to account to Lessee with respect to
such action or inaction or (except that any proceeds derived
therefrom shall be applied against amounts due and payable by
Lessee to Lessor pursuant to paragraph (c) of this Section 15.1
to the extent that Lessor elects to exercise its rights under
such paragraph) for any proceeds with respect thereto;
(c) whether or not Lessor shall have exercised, or
shall thereafter at any time exercise, any of its rights under
paragraph (a) or paragraph (b) of this Section 15.1 with respect
to the Airframe, any Engine or any Propeller, Lessor, by written
notice to Lessee requesting that the Fair Market Sales Value or
Fair Market Rental Value of the Aircraft be determined, may
demand that Lessee pay to Lessor, and Lessee shall pay to Lessor,
on the first Rent Payment Date occurring at least five Business
Days after the determination of such Fair Market Sales Value or
Fair Market Rental Value, as the case may be, as liquidated
damages for loss of a bargain and not as a penalty (in lieu of
the installments of Basic Rent for the Aircraft due and payable
on and after such Rent Payment Date), any unpaid Rent for the
Aircraft due and payable prior to such Rent Payment Date plus
whichever of the following amounts Lessor, in its sole
discretion, shall specify in such notice (together with interest,
if any, on such amount at the Overdue Rate from such Rent Payment
Date to but excluding the date of actual payment): (i) provided
Lessor shall not have sold the Airframe, any Engine or any
Propeller pursuant to paragraph (b) of this Section 15.1, an
amount equal to the excess, if any, of the Stipulated Loss Value
for the Aircraft determined with reference to the Rent Payment
Date specified for payment in such notice, over the Fair Market
Rental Value of the Aircraft for the remainder of the Term, after
discounting such Fair Market Rental Value monthly (effective on
Rent Payment Dates) to present value as of the payment date
specified in such notice at the Applicable Rate; or
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(ii) an amount equal to the excess, if any, of the Stipulated
Loss Value for the Aircraft (determined with reference to
such Rent Payment Date), over the sum of (x) Fair Market
Sales Value, as of the payment date specified in such
notice, of the Airframe, any Engine or any Propeller which
shall not have been sold pursuant to paragraph (b) of this
Section 15.1 and (y) if the Airframe, any Engine or any
Propeller shall have been so sold, the net proceeds of such
sale (after deduction of all reasonable costs of remarketing
and sale), plus interest at the Overdue Rate on the amount
of such net proceeds (after such deduction) from and
including the date of such sale to but excluding such
Rent Payment Date; and/or
(d) Lessor may terminate or rescind this Lease as to
the Aircraft, any Airframe, Engine or Propeller, and/or may
exercise any other right or remedy which may be available to it
under Applicable Law or proceed by appropriate court action to
enforce the terms hereof or to recover damages for the breach
hereof.
(e) In addition, Lessee shall be liable, except as
otherwise provided above, for any and all unpaid Rent due
hereunder before, during or after the exercise of any of the
foregoing remedies, together with interest on such unpaid amounts
at the Overdue Rate and for all legal fees and other costs and
expenses incurred by reason of the occurrence of any Event of
Default or the exercise of Lessor's remedies with respect
thereto, including all costs and expenses incurred in connection
with the return of the Airframe, any Engine or any Propeller in
accordance with the terms of Section 5 hereof or in placing the
Airframe, any Engine or any Propeller in the condition and with
airworthiness certification as required by this Lease, and
particularly such Section; provided, however, that if Lessee is
required to return or surrender possession of the Airframe, any
Engine or any Propeller in accordance with this Section 15 and
Lessor does not within 360 days after the date of such return or
surrender exercise its rights under paragraph (c) of this Section
15.1 with respect to the Airframe, any Engine or any Propeller,
there shall be deducted from each installment of Basic Rent for
the Airframe, any Engine or any Propeller becoming due after the
expiration of such 360-day period an amount equal to the Fair
Market Rental Value of the Airframe, any Engine or any Propeller,
for the remainder of the Term after the expiration of such 360-
day period (computed as of the date of such expiration). At any
sale of the Airframe or any Engine or any Propeller pursuant to
this Section 15, Lessor (but not Lessee) may bid for and purchase
such property. Lessor agrees to give Lessee at least fifteen
(15) days' written notice (which the parties agree constitutes
commercially reasonable notice) of the date fixed for any public
sale of the Airframe or any Engine or any Propeller or of the
date on or after which will occur the execution of any contract
providing for any private sale and any such sale shall be
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conducted in general so as to afford Lessee a reasonable
opportunity to bid.
(f) In effecting any repossession, Lessor and its
representatives and agents, to the extent permitted by law shall:
(i) have the right to enter upon any premises where it reasonably
believes the Aircraft, the Airframe, an Engine, a Propeller, or
any Part to be located; (ii) not be liable, in conversion or
otherwise, for the taking of any personal property of Lessee
which is in or attached to the Aircraft, the Airframe, an Engine,
a Propeller, or any Part which is repossessed; provided, however,
that Lessor shall return to Lessee all personal property of
Lessee or its passengers which was on the Aircraft at the time
Lessor retakes possession of the Aircraft; (iii) not be liable or
responsible, in any manner, for any inadvertent damage or injury
to any of Lessee's property in repossessing and holding the
Aircraft, the Airframe, an Engine, a Propeller, or any Part,
except for that directly and solely caused by or in connection
with Lessor's gross negligence or willful acts; (iv) have the
right to maintain possession of and dispose of the Aircraft, the
Airframe, an Engine, a Propeller, or any Part on any premises
owned by Lessee or under Lessee's control; and (v) have the right
to obtain a key to any premises at which the Aircraft, the
Airframe, an Engine, a Propeller, or any Part may be located from
the landlord or owner thereof.
(g) If required by Lessor, Lessee, at its sole
expense, shall assemble and make the Aircraft, the Airframe, an
Engine, a Propeller, or any Part available at a place designated
by Lessor in accordance with Section 5 hereof. Lessee hereby
agrees that, in the event of the return to or repossession by
Lessor of the Aircraft, the Airframe, an Engine, a Propeller, or
any Part any rights in any warranty (express or implied)
heretofore assigned to Lessee or otherwise held by Lessee shall
without further act, notice or writing be assigned or reassigned
to Lessor, if assignable. Following an Event of Default, Lessee
shall be liable to Lessor for all expenses, disbursements, costs
and fees, included all legal fees and expenses, incurred in (i)
repossessing, storing, preserving, shipping, maintaining,
repairing and refurbishing the Aircraft, the Airframe, an Engine,
a Propeller, or any Part to the condition required by Section 5
hereof, (ii) preparing the Aircraft, the Airframe, an Engine, a
Propeller, or any Part for sale or lease, advertising the sale or
lease of the Aircraft, the Airframe, an Engine, a Propeller, or
any Part and selling or releasing the Aircraft, the Airframe, an
Engine, a Propeller, or any Part, and (iii) in exercising its
rights hereunder. Lessor is hereby authorized and instructed, at
its option, to make expenditures which Lessor reasonably
considers advisable to repair and restore the Aircraft, the
Airframe, an Engine, a Propeller, or any Part to the condition
required by Section 5 hereof, all at Lessee's sole expense.
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(h) No remedy referred to in this Section 15 is
intended to be exclusive, but, to the extent permissible
hereunder or under Applicable Law, each shall be cumulative and
in addition to any other remedy referred to above or otherwise
available to Lessor at law or in equity; and the exercise or
beginning of exercise by Lessor of any one or more of such
remedies shall not preclude the simultaneous or later exercise by
Lessor of any or all of such other remedies. No express or
implied waiver by Lessor of any Default or Event of Default shall
in any way be, or be construed to be, a waiver of any future or
subsequent Default or Event of Default. Except as set forth
herein and to the extent permitted by applicable law, Lessee
hereby waives any rights now or hereafter conferred by statute or
otherwise which may require Lessor to sell, lease or otherwise
use the Aircraft, the Airframe or any Engine or Propeller or Part
in mitigation of Lessor's damages as set forth in this Section 15
or which may otherwise limit or modify any of Lessor's rights or
remedies under this Section 15.
For purposes of this Section 15, the Fair Market Rental Value or
the Fair Market Sales Value of any property shall be determined
by a nationally recognized aircraft appraiser, chosen by Lessor,
who shall determine such values on the basis of the lesser of (a)
the actual location and condition of the Aircraft or (b) the
location and condition required upon return of the Aircraft
pursuant to this Lease.
15.2. Lease Insurance Payments.
Any amounts paid by Lessee to Lessor in accordance with
this Section 15 shall also reduce Lessee's monetary obligations
hereunder in the event this Lease is assigned to the Minister
pursuant to the Insurance Agreement, with the result that Lessee
shall in no event be liable for more than one payment of any
monetary obligation hereunder.
SECTION 16. Further Assurances.
Forthwith upon the execution and delivery of each Lease
Supplement, Lessee shall cause such Lease Supplement, and, in the
case of the initial Lease Supplement this Lease, to be duly filed
and recorded in accordance with the Act. Lessee will also
execute and deliver such further documents and take such further
action as Lessor may from time to time reasonably request in
order more effectively to carry out the intent and purpose of
this Lease and to establish and protect the rights and remedies
created or intended to be created herein and in this Lease and
any Security Agreement permitted by Section 13.
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SECTION 17. Notices.
All notices, requests, demands or other communications
required hereunder or given pursuant hereto shall be in writing
unless otherwise expressly provided and shall become effective
when delivered by hand or received by telex, facsimile
transmission, telegram or registered mail, postage prepaid,
addressed as follows:
(a) if to Lessee, at
CCAIR, Inc.
4700 Yorkmont Road, Second Floor
Charlotte, NC 28208
Attention: President and
Chief Executive Officer
FAX: 704-359-0351
(b) if to Lessor, at
C.I.T. Leasing Corporation
1211 Avenue of the Americas
New York, New York 10036
Attention: Senior Vice President - Legal
FAX: 212-536-1388
or at such other address as any party may from time to time
hereafter designate to the other party in writing.
SECTION 18. Covenants.
18.1. Lessor's Covenants.
Lessor covenants that:
(a) Lessor shall remain, a "citizen of the United
States" within the meaning of 49 U.S.C. Section 40102(a)(15) and
the rules and regulations of the FAA thereunder.
(b) In the event that the Aircraft shall be or at any
time become ineligible for registration in the name of Lessor
under the Act and the regulations promulgated thereunder, as a
result of the identity, citizenship or other status of Lessor,
any owner of any equity interest in Lessor or any person deemed
to control Lessor, Lessor shall (at its own expense and without
any right to reimbursement from Lessee) promptly take such action
(including without limitation a Transfer of its entire interest
in this Lease and the Aircraft in accordance with Section 13
hereof and/or the creation of a voting trust) as may be necessary
to maintain the registration (or prevent the de-registration) of
the Aircraft with the FAA in the name of Lessor in accordance
with the Act (without
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regard to the "based and primarily used" provisions thereof)
and to prevent Lessee from being materially adversely
affected thereby and Lessor will indemnify and hold
harmless Lessee against any and all reasonable claims,
losses, liabilities, damages, penalties, actions, suits, out
of pocket costs, expenses and disbursements (including
reasonable legal fees and expenses) of whatsoever kind and
nature, imposed on, incurred by or asserted against Lessee
as a consequence of any such ineligibility.
(c) In connection with any Transfer of its interest,
Lessor shall (i) provide Lessee with the "pink copy" of the
Aircraft Registration Application so that it may be placed on the
Aircraft, and (ii) furnish Lessee with all such information and
copies of appropriate documentation filed under the Act in
connection with any such Transfer immediately upon the filing
thereof.
(d) Lessor will not directly or indirectly create,
incur, assume or suffer to exist any Lessor Lien on or against
the Aircraft; provided, however, that Lessor shall not be
required to remove any Lien which would otherwise constitute a
Lessor Lien hereunder so long as (i) the existence of the Lien,
in the reasonable opinion of Lessee, poses no material risk of
seizure of the Aircraft or interfere, in any way, with the use or
operation of the Aircraft by Lessee pursuant to the terms hereof,
(ii) the existence of the Lien does not affect the priority or
perfection of, or otherwise jeopardize, the Lien of any Lender or
result in threatened or actual interruption in the payment of
Rent or any portion thereof, and (iii) Lessor is diligently
contesting such Lien. Lessor will, at its own cost and expense,
promptly take such action as may be necessary duly to discharge
any Lessor Lien and shall indemnify and hold harmless Lessee
against any and all claims, losses, liabilities, damages,
penalties, actions, suits, costs, expenses and disbursements
(including reasonable legal fees and expenses) of whatsoever kind
and nature imposed on, incurred by or asserted against Lessee or
the Aircraft as a consequence of any such Lessor Lien.
18.2. Lessee's Covenants.
Lessee covenants that:
(a) Lessee shall furnish:
(i) to Lessor and the Minister, as soon as
available, and in any event within 90 days after the end of each
of the first three fiscal quarters of each fiscal year of Lessee,
commencing with the fiscal quarter ending September 30, 1994, an
unaudited balance sheet of Lessee and its subsidiaries as at the
end of such quarter and the related statements of operations for
such quarter and for the period from the beginning of the fiscal
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year to the end of such quarter, setting forth in each case in
comparative form the corresponding figures for the corresponding
period in such other preceding fiscal year, all in reasonable
detail and duly certified by the chief financial officer or
controller of Lessee as having been prepared in accordance with
generally accepted accounting principles;
(ii) to Lessor and the Minister, as soon as
available, and in any event within 120 days after the end of each
fiscal year of Lessee, commencing with the fiscal year ending
June 30, 1994, balance sheets of Lessee and its subsidiaries as
at the close of such fiscal year and the related consolidated
statements of operations and statements of cash flows for such
year, in comparative form with the preceding fiscal year, in each
case certified by independent public accountants of national
standing selected by Lessee as having been prepared in accordance
with generally accepted accounting principles and practices
consistently applied (except as noted therein); provided,
however, that Lessee shall be deemed to have satisfied its
obligations under this clause (B) and under clause (A) above if
and to the extent that Lessee has provided to Lessor periodic
reports required to be filed by Lessee with the Securities and
Exchange Commission containing the required financial information
for the periods described in such clauses (A) and (B); and
(iii) to Lessor and the Minister, promptly upon the
sending or filing thereof, copies of all such financial
statements and reports which Lessee or the affiliated group of
which Lessee is a member sends to its stockholders, and copies of
all Forms 10-K, 10-Q and 8-K filed under the Securities Act of
1933, as amended, which Lessee files with the Securities and
Exchange Commission or any governmental authority which may be
substituted therefor, or with any national securities exchange;
and
(iv) to Lessor and the Minister, from time to time,
such other information relating to its financial, operational or
business affairs or condition as Lessor or the Minister may
reasonably request; and
(v) upon reasonable request of Lessor (except that
a request will not be necessary if Lessee has a duty to disclose
the information to Lessor pursuant to the terms of any Operative
Document), Lessee shall promptly furnish to Lessor such
information within its knowledge or readily obtainable by it as
may be required to enable Lessor timely to file any reports
required to be filed by Lessor with any governmental body or
otherwise to the transactions contemplated by such Operative
Documents; and
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(vi) to Lessor, forthwith upon any officer of
Lessee obtaining knowledge of any condition or event which
constitutes a Default or Event of Default, an officer's
certificate specifying the nature and period of existence thereof
and what action it has taken or is taking or proposes to take
with respect thereto; and
(vii) to Lessor, notice in writing of any proceeding
by or against Lessee the adverse determination of which would
materially adversely affect its ability to perform under this
Lease or any other Operative Document.
(b) Lessee will give at least ten (10) Business Days
prior written notice to Lessor of any change in its chief
executive office (as that term is used in Section 9-103(3) (d) of
the Uniform Commercial Code as in effect in any applicable
jurisdiction) or in the place where it keeps its corporate
records concerning the Aircraft, its interest in, to or under any
Operative Document or its contracts relating thereto.
(c) If any recording, filing, rerecording or refiling
of the Lease, any Lease Supplement, or any Financing Statement or
other instrument under the laws of the United States or any state
thereof becomes necessary or reasonably advisable after the
Delivery Date in order to establish, protect and perfect, or to
maintain the establishment, protection and perfection of Lessor's
title to and interest in the Aircraft intended to be created by
the Operative Documents, Lessee will accomplish such filing or
rerecording and furnish Lessor with an opinion of counsel
reasonably acceptable to Lessor to the effect that such
recording, filing, rerecording or refiling has been made and
accomplished such purposes.
(d) Lessee shall not consolidate with or merge into
any other Person, or convey, transfer or lease all or any
material portion of its assets as an entirety to any Person,
without the prior written consent of Lessor.
(e) Lessee will do or cause to be done all things
necessary to preserve and keep in full force and effect its
rights (charter and statutory), privileges and franchises;
provided, however, that Lessee shall not be required to preserve
any right or franchise if the preservation thereof is no longer
desirable in the conduct of its business and the loss thereof
does not adversely affect the rights of Lessor.
(f) Lessee will at all times be a "citizen of the
United States" within the meaning of 49 U.S.C. Section
40102(a)(15), and an "air carrier" (as defined in 49 U.S.C.
Section 40102(a)(2)).
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(g) Lessee will maintain on file with the Department
of Transportation certification as an "air carrier" and its
certificate of public convenience and necessity under Section 401
of the Act.
SECTION 19. Extension of Lease Term.
Upon the mutual agreement of Lessor and Lessee, it
being understood that neither Lessor nor Lessee is obligated to
so agree, the Term of this Lease may be extended (a "Renewal
Term") upon the expiration of the Basic Term or any such Renewal
Term. Any such extension shall be evidenced by the execution and
delivery of a Lease Supplement which shall set forth the period
of such Renewal Term, the Basic Rent payable with respect
thereto, and such other matters as the parties shall agree.
SECTION 20. Lessor's Right To Perform for Lessee.
If Lessee fails to make any payment of Supplemental
Rent required to be made by it hereunder or fails to perform or
comply with any of its agreements contained herein, Lessor may
itself make such payment or perform or comply with such
agreement, and the amount of such payment and the amount of the
reasonable expenses of Lessor incurred in connection with such
payment or the performance of or compliance with such agreement,
as the case may be, together with interest thereon at the Overdue
Rate shall be deemed Supplemental Rent, payable by Lessee upon
demand.
SECTION 21. Intentionally Left Blank.
SECTION 22. Quiet Enjoyment.
Lessor covenants that Lessor will not, through its
actions or inactions, interfere in Lessee's quiet enjoyment of
the Aircraft during the Term so long as no Event of Default shall
have occurred and be continuing and, with respect to any Event of
Default except for pursuant to Section 14.1 (e), (f)or (g), so
long as Lessor shall not have declared this Lease to be in
default pursuant to Section 15 hereof. Lessor agrees that it
will keep the Airframe and each Engine and Propeller free and
clear of any Lessor Lien.
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SECTION 23. General Tax Indemnity.
23.1. Indemnity.
(a) Lessee agrees that each payment of Rent with
respect to the Aircraft and any amount payable under the Lease
shall be free and clear of all withholdings of any nature
whatsoever. If any withholding is required, Lessee shall pay an
additional amount of Rent such that the net amount of Rent
actually received by an Indemnified Person or the net amount of
any amount payable under the Lease, will be equal to the amount
of Rent or such amount payable under the Lease that would be due
absent such withholding. Any withholding tax paid by Lessee
which is for the payment of any Tax which is excluded from this
Section 23 by Section 23.2 hereof shall be promptly repaid to
Lessee by the appropriate Indemnified Person after receipt by
such Indemnified Person of (a) a written statement that such a
Tax has been paid and (b) a receipt or other documentation
evidencing payment of the withheld amount.
(b) Whether or not any of the transactions
contemplated hereby are consummated, Lessee hereby assumes
liability for, agrees to timely pay, and on written demand shall
indemnify and hold each Indemnified Person harmless from and
against, any and all Taxes (whether or not such Taxes are now
existing or hereafter adopted, enacted or amended) howsoever
levied, asserted or imposed and whether levied or asserted or
imposed against such Indemnified Person, Lessee, the Aircraft,
Engine or Propeller or any part thereof or any interest therein,
or otherwise (i) by any Federal, state or local government or
other taxing authority in the United States, (ii) by any foreign
government, foreign governmental subdivision or other foreign
taxing authority, (iii) by any territory or possession of the
United States, or (iv) by any international organization, (A)
upon or with respect to, based upon or measured by the Aircraft
or any part thereof or any interest therein, (B) upon or with
respect to the construction, manufacture, servicing, financing,
purchase, acquisition, importation, acceptance, rejection,
delivery, nondelivery, registration or deregistration, transport,
purchase, ownership, assembly, storage, possession, repossession,
operation, use, condition, testing, maintenance, repair, sale,
rejection, return, abandonment, preparation, installation,
replacement, redelivery, importation, exportation, lease,
sublease, modification, rebuilding, transfer of title, rental,
substitution, insuring, mortgaging, or other application or
disposition of, or the imposition of any Lien on, the Aircraft or
any part thereof or any interest therein, (C) upon or with
respect to the rentals, receipts, earnings or profits arising
from or received with respect to the Aircraft or any part thereof
or any interest therein or any applications or dispositions
thereof or with respect to any Operative Document, including,
without limitation, indemnity payments, (D) upon or with respect
to any Lease or any other Operative Document, including the
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performance of any of the transactions contemplated hereby or
thereby, (E) upon or with respect to any of the Operative
Documents; (F) upon or with respect to Lessee's receipt of or
right to receive directly or indirectly any refund or credit
pursuant to the purchase of the Aircraft or any payment by the
Aircraft Manufacturer in satisfaction of a claim against the
Manufacturer with respect to the Aircraft under any warranty or
indemnity agreement; (G) upon or with respect to the replacement
of or substitution for any Engine or Propeller or any part
thereof pursuant to Sections 9 or 10 of this Lease; (H) upon or
with respect to the property, or the income or other proceeds
received with respect to property, held under this Lease; or (I)
otherwise upon or with respect to the transactions contemplated
by the Operative Documents.
23.2. Exceptions from Indemnity.
The provisions of Section 23.1 shall not apply to:
(a) any Tax imposed by the United States of America on
an Indemnified Person measured by the net income (which term for
purposes of this clause (a) shall exclude any gross withholding
tax and any tax payable with respect to the receipt of any
indemnity payment by or any tax payment on behalf of such
Indemnified Person, but shall include any minimum tax on items of
tax preference or any franchise or conduct of business tax, in
each case, in the nature of a net income tax) of such Indemnified
Person; provided, however, that any indemnity payment made by
Lessee with respect to a Tax which is excluded under this clause
(a) shall be promptly repaid to Lessee by the Indemnified Person
receiving such payment;
(b) any Tax (i) imposed by any state, local or foreign
government, or political subdivision thereof, on, based on or
measured by the net income, capital or net worth, franchises,
excess profits or conduct of business of an Indemnified Person
(other than Taxes which are, or are in the nature of, sales, use,
value added, rental or property taxes or license fees) and (ii)
which is not a Covered Tax (as defined in Section 23.8).
(c) any Tax imposed on an Indemnified Person with
respect to any period commencing after the expiration or other
termination of any Lease and the sale or return of the Aircraft
pursuant to Section 5 of the Lease; provided, however, that this
exception shall not apply to Taxes relating to events occurring
or matters arising prior to or coincident with such time;
(d) any Tax which is not yet required to be paid under
Applicable Laws, except any such Tax that the Indemnified Person
has determined to pay pursuant to Section 23.4 and which is being
contested in accordance with the provisions of Section 23.4,
during the pendency of such contest; provided that no Event of
Default
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exists and Lessor is receiving all amounts of Rent when
due notwithstanding such contest;
(e) any Tax that is imposed on any Indemnified Person
to the extent that such Tax results solely from the willful
misconduct or gross negligence of such Indemnified Person;
(f) any Tax imposed on an Indemnified Person in
connection with (i) a voluntary sale, transfer, assignment or
other disposition by such Indemnified Person or (ii) a sale,
assignment, transfer or other disposition by such Indemnified
Person, whether or not voluntary, resulting from bankruptcy,
foreclosure, or similar proceedings in which such Indemnified
Person is the debtor, of the Aircraft or any part thereof, or any
interest therein; provided, however, that this clause (f) shall
not apply if such sale, transfer, assignment or other disposition
occurs when a Event of Default exists, or in connection with the
exercise of remedies under Section 15 of the Lease or pursuant to
Lessee's request;
(g) any Tax imposed upon Lessor by reason of it
ceasing to be a United States person as defined in Section
7701(a) (30) of the Code;
(h) Taxes which are included in Lessor's Cost.
23.3. Calculation of Indemnity Payments.
Any payments which Lessee shall be required to make to
or for the account of any Indemnified Person with respect to any
Tax which is subject to indemnification under this Section 23
shall include the amount necessary to hold such Indemnified
Person harmless on an after-tax basis from the net amount of all
Taxes required to be paid by such Indemnified Person as the
result of such payment. If any Indemnified Person realizes a net
tax benefit (as determined by such Indemnified Person in its sole
good faith discretion, it being understood that Lessee shall have
no right to examine or inspect any tax returns or related
documents and records of such Indemnified Person) by reason of
such payment of the Tax or of the indemnity, such Indemnified
Person shall pay Lessee, when such tax benefit shall have been
actually realized and utilized, an amount equal to the lesser of
(x) the sum of such tax benefit plus any other tax benefit
actually realized and utilized by such Indemnified Person (as
determined by such Indemnified Person in its sole good faith
discretion, it being understood that Lessee shall have no right
to examine or inspect any tax returns or related documents and
records of such Indemnified Person) as the result of any payment
made by such Indemnified Person pursuant to this sentence, or (y)
the amount of such payment by Lessee to such Indemnified Person
reduced by any prior payments to Lessee with respect to such
payment by Lessee; provided, however, that notwithstanding the
foregoing portions of this sentence, such
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Indemnified Person shall not be obligated to make any
payment to Lessee pursuant to this sentence so long as an
Event of Default exists or prior to the time Lessee has made
all payments theretofore due to such Indemnified Person
pursuant to the Operative Documents. Any Taxes that are
imposed on such Indemnified Person as a result of the
subsequent disallowance or reduction of the tax benefits
referred to in the preceding sentence subsequent to the year
of realization and utilization of such benefits by such
Indemnified Person shall be indemnified by Lessee pursuant to
the provisions of this Section 23 (without regard to any
exclusions in Sections 23.2 or 23.4 hereof) up to the amount
which, after reduction by all Taxes payable with respect to
the receipt or accrual of Lessee's indemnity payment
pursuant to this sentence, shall equal the sum of (A) the
aggregate amounts previously paid by such Indemnified
Person to Lessee in connection with such tax benefits,
plus (B) any interest, penalties, and/or additions to tax
payable as a result of such disallowance or reduction of tax
benefits.
23.4. Contest.
If a claim is made against any Indemnified Person for
any Tax for which Lessee is obligated to indemnify pursuant to
this Section 23, such Indemnified Person shall promptly notify
Lessee after such Indemnified Person becomes aware of such action
and in any event within fifteen (15) days after receipt by such
Indemnified Person of a written claim; provided, however, that
the failure of such Indemnified Person to provide such notice
shall not relieve Lessee from its duty to indemnify hereunder
unless Lessee's right to contest such claim is materially
adversely affected by such failure. If Lessee so requests in
writing after receipt of such notice, such Indemnified Person
shall, subject to the provisions of the next succeeding sentence
hereof and the last sentence of this Section 23.4, contest at
Lessee's expense the imposition, validity or applicability of
such Tax; provided, however, that such Indemnified Person shall
keep Lessee fully informed as to the progress thereof, consult
with Lessee within a reasonable period before any significant
action with respect thereto is taken or omitted and consider in
good faith any suggestions made by Lessee or its counsel;
provided, however, that the failure of such Indemnified Person to
comply with this provision shall not relieve Lessee from its
obligations to indemnify under this Section 23. No such
proceedings or litigation shall be settled or otherwise
compromised without the prior written consent of Lessee, which
consent shall not be unreasonably withheld but, if at any time,
whether before or after commencing to take any action required by
Section 23.4, such Indemnified Person declines or fails to take
such action with respect to all or any portion of a proposed
adjustment, such Indemnified Person shall so advise Lessee in
writing, and Lessee shall be relieved of its obligation to
indemnify such Indemnified Person with respect to all or such
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portion of the proposed Tax as may be specified in such notice.
Notwithstanding anything in the foregoing sentence to the
contrary, such Indemnified Person shall have sole control over
the conduct of the contest, including the right to forego any and
all administrative appeals, proceedings, hearings and conferences
in respect to such claim, and may in its sole discretion select
the forum for such contest and determine whether any such contest
shall be by (i) resisting payment of such Tax, (ii) paying such
Tax under protest or (iii) paying such Tax and seeking a refund
thereof; provided, further, however, that (i) at such Indemnified
Person's option, such contest shall be conducted by Lessee in the
name of such Indemnified Person (subject to the preceding
provisions) and (ii) in no event shall such Indemnified Person be
required or Lessee permitted to contest or to continue to
contest, as the case may be, the imposition of any Tax for which
Lessee is obligated to indemnify pursuant to this Section 23
unless (1) such Indemnified Person receives from Lessee (i) an
indemnity satisfactory to such Indemnified Person for any
liability, expense or loss arising out of or relating to such
contest and (ii) an opinion of independent tax counsel selected
by Lessee and reasonably satisfactory to such Indemnified Person
to the effect that there is a reasonable basis for contesting
such claim, or, in the case of an appeal of an adverse judicial
decision, there is a reasonable basis that such Indemnified
Person is likely to prevail in such appeal, which opinion is in
form and substance satisfactory to such Indemnified Person and is
furnished at Lessee's sole expense; (2) Lessee agrees to pay such
Indemnified Person on demand all reasonable costs and expenses
such Indemnified Person may incur in connection with contesting
such claim (including, without limitation, all costs, expenses,
losses, reasonable legal and accounting fees, disbursements,
interest, penalties, additions to tax and fines); (3) that the
action to be taken will not result in any material risk of the
imposition of a Lien on the Aircraft other than a Permitted Lien
or any material danger of sale, forfeiture or loss of the
Aircraft, or any part thereof or any interest therein or in any
way interfere with the timely payment of Rent from time to time
becoming due and payable; (4) if such contest is conducted in a
manner requiring the payment of the claim, Lessee pays the amount
required; (5) no Default or Event of Default exists; (6) the
amount of such claim is at least Fifty Thousand Dollars
($50,000); and (7) Lessee acknowledges in writing prior to the
commencement of such contest its liability to such Indemnified
Person for an indemnity payment in accordance with the provisions
of this Section 23 as a result of such claim if and to the extent
such Indemnified Person or Lessee, as the case may be, does not
prevail in the contest of such claim. Any tax imposed on an
Indemnified Person as a result of an advance by Lessee of a Tax
payment or other costs incurred by such Indemnified Person
pursuant to this paragraph shall be indemnified under this
Section 23 without regard to the exclusions in Sections 23.2 or
23.4 hereof. If any Indemnified Person obtains a refund of all
or any part of any Tax paid by Lessee, such
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Indemnified Person shall pay Lessee when such refund is
received, but not before Lessee makes all payments
theretofore due to such Indemnified Person pursuant to the
Operative Documents, an amount equal to the lesser of (A) the
amount of such refund, including interest received
attributable thereto, plus any net tax benefit actually
realized and utilized by such Indemnified Person as a result
of any payment by such Indemnified Person made pursuant to
this sentence, or (B) the sum of such tax payment by
Lessee, and interest actually received by such
Indemnified Person attributable thereto, to such
Indemnified Person reduced by any prior payments to Lessee
with respect to such payment by Lessee; provided, however,
that notwithstanding the foregoing portions of this sentence,
such Indemnified Person shall not be obligated to make any
payment to Lessee pursuant to this sentence so long as (i)
Lessee has not made all payments theretofore due to such
Indemnified Person pursuant to the Operative Documents, or
(ii) an Event of Default exists. Any Taxes imposed
on such Indemnified Person as a result of the subsequent
disallowance or reduction of the tax benefits referred to
in the preceding sentence subsequent to the year of
realization and utilization of such benefits by such
Indemnified Person shall be indemnified by Lessee pursuant
to this Section 23 (without regard to any exclusions in
Sections 23.2 or 23.4 hereof) up to the amount which,
after reduction by all Taxes payable with respect to the
receipt or accrual of Lessee's indemnity payment pursuant to
this sentence, shall equal the sum of (i) the aggregate
amounts previously paid by such Indemnified Person to
Lessee in connection with such tax benefits, plus (ii)
any interest, penalties, and/or additions to tax payable as
a result of such disallowance or reduction of tax
benefits. Notwithstanding anything contained in this
Section 23.4 to the contrary, no Indemnified Person shall
be required to contest any claim if the subject matter
thereof is of a continuing nature and has previously
been adversely decided pursuant to the contest
provisions of this Section 23.4 unless there has been a change
in the facts or law after such claim has been so previously
decided, and such Indemnified Person receives an opinion,
reasonably satisfactory to such Indemnified Person, of its
independent tax counsel (furnished at Lessee's sole expense)
to the effect that as a result of such change in facts or law
it is more likely than not that such Indemnified Person will
prevail in a contest of such claim.
23.5. Reports.
If any report, return or statement is required to be
filed by an Indemnified Person with respect to any Tax which is
subject to indemnification under this Section 23, Lessee shall
promptly notify the appropriate Indemnified Person of such
requirement and shall timely file the same, except for any such
report, return or statement which Lessee is not permitted to file
or which an Indemnified Person has notified Lessee that such
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Indemnified Person intends to file; provided, however, that if an
Indemnified Person has received specific notice from a taxing
authority that a report, return, or statement with respect to the
Aircraft or the operation thereof is required, it shall promptly
notify Lessee, provided, however, that the failure of such
Indemnified Person to so notify Lessee shall not relieve Lessee
from its duty to indemnify hereunder unless Lessee's right to
contest such claim is materially adversely affected by such
failure, and provided, further, that such Indemnified Person
shall, if requested by Lessee, consult with Lessee regarding the
manner in which such report, return or statement should be filed.
Lessee shall either file such report, return or statement so as
to show the ownership of the Aircraft in Lessor and send a copy
of such report, return or statement to Lessor, or where not so
permitted, shall promptly notify the Indemnified Person of such
requirement and prepare and deliver such report, return or
statement to such Indemnified Person in a manner satisfactory to
such Indemnified Person within a reasonable time prior to the
time such report, return or statement is to be filed. Lessee
shall also furnish such data as may be reasonably requested by an
Indemnified Person or required to enable such Indemnified Person
to fulfill its tax filing, audit, and litigation requirements,
including but not limited to, the location and use of the
Aircraft.
23.6. Payment.
Unless otherwise requested by the appropriate
Indemnified Person, Lessee shall pay any Tax for which it is
liable pursuant to this Section 23 directly to the appropriate
taxing authority and, if so otherwise requested shall pay such
Indemnified Person within fifteen (15) days after demand, but not
prior to the date of payment of such Tax by such Indemnified
Person, in immediately available funds any amount due such
Indemnified Person pursuant to this Section 23 with respect to
such Tax. Any such demand shall specify in reasonable detail the
amount of the payment and the facts upon which the right to
payment is based. If Lessee pays a Tax directly to a taxing
authority for the benefit of an Indemnified Person, Lessee shall
contemporaneously pay directly to such Indemnified Person the
amount which, after deducting the amount of all taxes payable by
such Indemnified Person with respect to receipt thereof, is
necessary to hold such Indemnified Person harmless on an after-
tax basis from the net amount of all Taxes required to be paid by
such Indemnified Person as the result of Lessee's payment of such
Tax. Each Indemnified Person shall promptly forward to Lessee any
notice, bill or advice received by it concerning any Tax,
provided, however, that the failure of such Indemnified Person to
forward any such notice, bill or advice shall not relieve Lessee
from its duty to indemnify hereunder unless Lessee's right to
contest such claim is materially adversely affected by such
failure. Within thirty (30) days after the date of each payment
by Lessee of any Tax on behalf of an Indemnified
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Person, Lessee shall furnish such Indemnified Person the
original or a certified copy of a receipt for Lessee's
payment of such Tax or such other evidence of payment of
such Tax as is acceptable to such Indemnified Person.
23.7. Computations; Consolidated or Combined Return.
All computations required to be made by an Indemnified
Person pursuant to this Section 23 shall be made in accordance
with all of the provisions hereof on the assumption (a) that such
Indemnified Person is subject to or benefited by United States,
federal and other taxes based on or measured by net income of
such Indemnified Person, and by other Taxes, at the tax rates
applicable to such Indemnified Person, determined by treating the
item of income, deduction or credit or other item as the last
(marginal) such item of the period in which it is included or
deemed under this Section 23 to be used, and (b) that such
Indemnified Person will be deemed to realize any tax benefit
arising from any Taxes indemnified against or from any payment
made by the Indemnified Person to Lessee only if, when and to the
extent such Indemnified Person shall actually recognize a
reduction in Taxes which would not have been then recognized but
for such tax benefit, after taking into account any adverse tax
consequence to such Indemnified Person arising from such tax
benefit. In the case of any Tax reported on a consolidated or
combined basis by an Indemnified Person, the rules applicable to
the consolidated or combined return of the Indemnified Person
shall be taken into account in computing the amount of any
indemnity or payment by or to Lessee under this Section 23 in
respect of such Tax.
23.8. Covered Tax.
As used herein, "Covered Tax" shall mean any Tax
described in Section 23.2(b) (i) that is imposed on an
Indemnified Person by a taxing authority (A) (i) in whose
jurisdiction such Indemnified Person did not engage in business,
did not maintain an office or other place of business or was not
otherwise located, or any jurisdiction where such Indemnified
Person is deemed to engage in business or be otherwise located
solely as a result of the registration, operation or location of
the Aircraft, and (ii) that is imposed solely as a result of the
registration, operations or location of the Aircraft in such
jurisdiction, or the transactions contemplated by the Operative
Documents, or (B) (i) in whose jurisdiction such Indemnified
Person is doing business, maintains an office or other place of
business or is otherwise located, but (ii) only to the extent of
any incremental Tax that would not have been imposed but for the
registration, operation or location of the Aircraft in such
jurisdiction or the transactions contemplated by the Operative
Documents. In calculating the indemnity payment attributable to
a Covered Tax in accordance with Section 23.3, such calculation
shall reflect any tax savings resulting from the
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payment of such Covered Tax that is actually realized by such
Indemnified Person with respect to Taxes imposed on the
net income of such Indemnified Person by the state in
which such Indemnified Person maintains its principal place
of business and such Indemnified Person agrees that any net
income tax return filed with the state in which such
Indemnified Person maintains its principal place of business
shall reflect such tax savings to the extent permitted under
applicable statutes and regulations of such state.
23.9. Payments and Survival of Indemnities.
Except as otherwise set forth in Section 23.6 hereof,
all amounts payable by Lessee pursuant to this Section 23 shall
be payable directly to the Person entitled to payment or
indemnification. Unless otherwise specifically provided herein
or therein, the indemnities provided for in this Section 23 shall
survive the termination of this Lease and the other Operative
Documents.
SECTION 24. General Indemnity.
24.1. Claims Defined.
For the purposes of this Section 24, "Claims" shall
mean any and all liabilities (including strict or absolute
liability without fault in tort or otherwise), losses, damages,
penalties, costs, actions or suits and all legal proceedings
whether civil or criminal, fines and other sanctions, which may
be imposed on, incurred by, suffered by, or asserted against
Lessor (but solely in its capacity as Lessor under this Lease),
the Minister (but solely in connection with its involvement in
the transactions contemplated by this Lease and the Insurance
Agreement), any Lender (but solely in its capacity as Lender
under this Lease), and their respective directors, officers,
agents, employees, and controlling persons (individually, an
"Indemnified Person" for purposes of this Section 24) and, except
as otherwise expressly provided in this Section 24, shall include
all reasonable costs, disbursements and expenses (including
reasonable legal fees and expenses) of an Indemnified Person in
connection therewith or related thereto.
24.2. Claims Indemnified.
Subject to the exclusions stated in Section 24.3,
Lessee agrees to indemnify, defend and hold harmless each
Indemnified Person on an after-tax basis against Claims resulting
from, arising out of, or related to:
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(a) the operation, possession, use, non-use,
maintenance, storage, overhaul or testing of the Aircraft, the
Engines, the Propellers, or any Part thereof by Lessee or any
other Person whatsoever, whether or not such operation,
possession, use, non-use, maintenance, storage, overhaul or
testing is in compliance with the terms of this Lease, including,
without limitation, Claims for death, personal injury or property
damage or other loss or harm to any Person whatsoever, including,
without limitation, any passengers, shippers or other persons
wherever located, and Claims relating to any laws, rules or
regulations, including, without limitation, environmental
control, noise and pollution laws, rules or regulations;
(b) the manufacture, design, sale, purchase, lease of,
acceptance, rejection, delivery, condition, repair, modification,
servicing, rebuilding, airworthiness, performance, non-delivery,
sublease, merchantability, fitness for use, substitution or
replacement of the Aircraft, Engines, the Propellers, or Parts
under this Lease or other transfer of use or possession of the
Aircraft, Engines, the Propellers or Parts, and registration of
the Aircraft, including, without limitation, any liability,
right, claim or remedy for loss of or damage to the Aircraft,
Engines, the Propellers or Parts, for loss of use, revenue or
profit with respect to the Aircraft, Engines, the Propellers or
Parts, or for any incidental or consequential damages, latent and
other defects, whether or not discoverable, and patent, trademark
or copyright infringement, provided, however, that Lessee shall
be subrogated to all rights and remedies which such Indemnified
Person may have against any supplier (including the Aircraft
Manufacturer or relevant subcontractors or vendors with respect
thereto) which rights and remedies shall be assigned at Lessee's
expense by such Indemnified Person to Lessee; and
(c) any breach of or failure to perform or observe, or
any other noncompliance with, any covenant or agreement to be
performed, or other obligation of Lessee hereunder, or the
falsity or inaccuracy of any representation or warranty of Lessee
in this Lease.
24.3. Claims Excluded.
The following are excluded from Lessee's agreements to
indemnify under Section 24.2:
(a) Claims attributable to acts or events occurring
after the Term (except during the exercise of remedies pursuant
to Section 15 hereof) or, if the Aircraft is returned at a later
date pursuant to Section 10.5 of this Lease, acts or events
occurring after such return;
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(b) Claims which are Taxes, whether or not Lessee is
required to indemnify therefor under Section 23 hereof;
(c) With respect to any particular Indemnified Person,
Claims attributable to the gross negligence or willful misconduct
of such Indemnified Person, unless such willful misconduct or
gross negligence results from acts or omissions of Lessee on
behalf of such Indemnified Person or imputed negligence to Lessor
solely as a result of its ownership of the Aircraft;
(d) With respect to any particular Indemnified Person,
Claims which result from any inaccuracy in the representations or
warranties of such Indemnified Person set forth in this Lease or
in any Security Agreement, or Claims which result from the
material breach of any covenant or agreement of such Indemnified
Person set forth in this Lease or in such Security Agreement;
(e) Claims which result from the disposition by any
Indemnified Person of all or any part of its interest in the
Aircraft, this Lease or any Security Agreement; and
(f) Claims for any expense to be borne by such
Indemnified Person pursuant to the express provisions of this
Lease or any Security Agreement.
24.4. Insured Claims.
In the case of any Claim indemnified by Lessee
hereunder which is covered by a policy of insurance maintained by
Lessee pursuant to Section 11 of this Lease, each Indemnified
Person agrees to cooperate with the insurers in the exercise of
their rights to investigate, defend or compromise such Claim as
may be required to retain the benefits of such insurance with
respect to such Claim.
24.5. Claims Procedure.
An Indemnified Person shall promptly notify Lessee of
any Claim as to which indemnification is sought. Subject to the
rights of insurers under policies of insurance maintained
pursuant to Section 11 of this Lease, Lessee shall have the right
to investigate and the right in its sole discretion to defend or
compromise any Claim for which indemnification is sought under
this Section 24, and the Indemnified Person shall cooperate with
all reasonable requests of Lessee in connection therewith and
shall not enter into a settlement or other compromise of a claim
hereunder (provided, that Indemnified Person has already received
its indemnity payment with respect to such Claim) without the
prior written consent of Lessee, unless such Indemnified Person
waives its right to be indemnified hereunder. Subject to the
requirements of any policy of insurance, an Indemnified Person
may participate
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at its own expense in any judicial proceeding controlled
by Lessee pursuant to the preceding provisions, provided
that such party's participation does not, in the opinion of
the independent counsel to Lessee or its insurers conducting
such proceedings, interfere with such control; and
such participation shall not constitute a waiver
of the indemnification provided in this Section 24.
Nothing contained in this Section 24.5 shall be deemed to
require an Indemnified Person to contest any Claim or to
assume responsibility for or control of any judicial
proceeding with respect thereto. As a condition to any
Person being indemnified hereunder, such Person, on request
of Lessee, must agree in writing to be bound by the terms of
this Section 24.
24.6. Subrogation.
To the extent that a Claim indemnified by Lessee under
this Section 24 is in fact paid in full by Lessee and/or an
insurer under a policy of insurance maintained by Lessee pursuant
to Section 11 of this Lease, Lessee and/or such insurer, as the
case may be, shall be subrogated to the rights and remedies of
the Indemnified Person on whose behalf such Claim was paid with
respect to the transaction or event giving rise to such Claim.
Should an Indemnified Person receive any refund, in whole or in
part, with respect to any Claim paid by or on behalf of Lessee
hereunder, it shall promptly pay the amount refunded (but not an
amount in excess of the amount Lessee has paid in respect of such
Claim) over to Lessee.
24.7. Waiver of Certain Claims.
Lessee hereby waives and releases any Claim now or
hereafter existing against any Indemnified Person arising out of
death or personal injury to personnel of Lessee, loss or damage
to property of Lessee, or the loss of use of any property of
Lessee, which may result from or arise out of the condition, use
or operation of the Aircraft during the Term, including without
limitation any latent or patent defect whether or not
discoverable; provided, however, that such waiver shall not apply
to any Claim arising directly and solely from the gross
negligence or willful misconduct of any such Indemnified Person.
24.8. Conflicting Provisions.
The general indemnification provisions of this Section
24 are not intended to waive or supersede any specific provisions
of this Lease to the extent such provisions apply to any Claim.
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24.9. Continuing Indemnification.
The agreements and indemnities contained in this
Section 24 shall survive the expiration of the Term.
SECTION 25. Transaction and Other Costs.
25.1. Transaction Expenses.
Lessee shall pay the reasonable fees, costs and
expenses associated with the negotiation and documentation of the
Operative Documents, including (a) the fees and expenses of legal
counsel of Lessee and special FAA counsel; and (b) the costs and
expenses of recordation of this Lease and any other document,
certificate or financing statement filed in accordance therewith
or any other Operative Document (collectively, the "Expenses").
Lessee shall also pay all Transaction Expenses if the Aircraft is
not delivered and accepted under the Lease, unless such failure
is due solely and directly to a breach by Lessor of its
obligations hereunder.
25.2. Costs of Amendments, Waivers, Etc.
Lessee shall pay all costs and expenses incurred in
connection with the entering into or the giving or withholding of
any future amendments, supplements, waivers or consents with
respect to the Operative Documents whether or not the same shall
become effective if such amendment, supplement, waiver or consent
is a result of any action, inaction or request of Lessee.
SECTION 26. Miscellaneous.
26.1. Severability.
Any provision of this Lease that is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions
hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such
provision in any other jurisdiction. To the extent permitted by
Applicable Law, Lessee hereby waives any provision of law that
renders any provision hereof prohibited or unenforceable in any
respect.
26.2. Amendments.
No term or provision of this Lease may be changed,
waived, discharged or terminated orally, but only by an
instrument in writing signed by the party against which the
enforcement of the change, waiver, discharge or termination is
sought.
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26.3. Lease Only.
This Lease shall constitute an agreement of lease, and
nothing herein shall be construed as conveying to Lessee any
right, title or interest in or to the Aircraft except as a lessee
only.
26.4. Security Agreement; Chattel Paper
In the event this Lease is determined to be a security
agreement and not a lease, or in the event Lessee is determined
to own all or any part of the Equipment rather than having a
leasehold interest therein, then the parties intend that this
Lease constitutes a "security agreement" within the meaning of
Section 9-105 of the Uniform Commercial Code, and Lessee, by
executing and delivering this Lease and the Lease Supplements,
has created, and does hereby create, in favor of Lessor a
security interest in and to all of Lessee's rights, both tangible
and intangible, in the Equipment under the Uniform Commercial
Code. Lessee agrees, at Lessee's cost and expense, to execute
and cause to be filed and to remain in effect during the Term,
Financing Statements under the applicable Uniform Commercial Code
to perfect the foregoing security interests.
26.5. Headings.
The section and paragraph headings in this Lease and
the table of contents are for convenience of reference only and
shall not modify, define, expand or limit any of the terms or
provisions hereof and all references herein to numbered sections,
unless otherwise indicated, are to sections of this Lease.
26.6. Governing Law.
This Lease shall in all respects be governed by and
construed in accordance with the law of the State of New York
(other than its law with respect to conflicts of laws), including
all matters of construction, validity and performance.
26.7. Amendments.
Neither this Lease nor any of the terms hereof may be
terminated, amended, supplemented, waived or modified orally, but
only by an instrument in writing signed by the party against
which the enforcement of the termination, amendment, supplement,
waiver or modification is sought; and no such termination,
amendment, supplement, waiver or modification shall be effective
unless a signed copy thereof is delivered to Lessor.
73
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26.8. Table of Contents; Section Headings.
The table of contents preceding this Lease and the
headings of the various Sections of this Lease are for
convenience of reference only and shall not modify, define,
expand or limit any of the terms or provisions hereof.
26.9. Currency.
All amounts and moneys referred to in this Lease and
the other Operative Documents shall be construed to mean money
which at the time of payment is lawful money of the United
States.
26.10. Reproduction of Documents.
This Lease, all documents constituting exhibits hereto and
all documents relating hereto, including, without limitation, (a)
consents, waivers and modifications which may hereafter be
executed, (b) documents received by Lessor in connection with its
purchase of the Aircraft and (c) financial statements,
certificates and other information previously furnished to
Lessor, may be reproduced by Lessor by any photographic or other
similar process and Lessor may destroy any original documents so
reproduced. Lessee and Lessor agree and stipulate that, to the
extent permitted by law, any such reproduction shall be
admissible in evidence as the original itself in any judicial or
administrative proceeding (whether or not such reproduction was
made by Lessee or Lessor in the regular course of business) and
that, to the extent, permitted by law, any enlargement, facsimile
or further reproduction of such reproduction shall likewise be
admissible in evidence.
26.11. Entire Agreement.
This Lease and the other documents referred to herein
constitute the entire agreement of the parties hereto with
respect to the subject matter hereof and supersede all written
and oral agreements and understandings made or entered into prior
to the date of this Lease.
26.12. Counterparts.
This Lease may be executed by the parties hereto in
separate counterparts, each of which when so executed and
delivered shall be an original, but all such counterparts shall
together constitute one and the same instrument. The single
executed original of this Lease marked "Original" shall be the
Original and all other counterparts hereof shall be duplicate
originals. To the extent, if any, that this Lease constitutes
chattel paper, as such term is defined in the Uniform Commercial
Code as in effect in any applicable jurisdiction, no security
interest in this Lease may be
74
<PAGE>
created through the transfer or possession of any
counterpart other than the Original.
75
<PAGE>
IN WITNESS WHEREOF, Lessor and Lessee have caused this
Lease to be duly executed on the later of the dates set forth
beneath the signatures below, but as of the day and year first
above written.
LESSOR:
C.I.T. LEASING CORPORATION
By
Name:
Title:
Date:
LESSEE:
CCAIR, INC.
By
Name:
Title:
Date:
<PAGE>
EXHIBIT A
AIRCRAFT DESCRIPTION
and
IDENTIFICATION
The Aircraft leased hereunder is identified and
described herein and, at the time of delivery to Lessee and,
subject to such changes as are permitted or required by the
Lease, upon return to Lessor pursuant to the Lease, shall have
the equipment installed thereon as identified below:
AIRCRAFT SPECIFICATIONS AND DATA
AIRFRAME
FAA Manufacturer's
Manufacturer Model Registration No. Serial No.
Boeing/
de Havilland DHC-8-102 N880CC 277
ENGINES
Manufacturer's
Manufacturer Model Serial No.
Pratt & Whitney PW 120A PC-E121066
Pratt & Whitney PW 120A PC-E121064
Each of said Engines has 750 or more rated take-off horsepower or
the equivalent of such horsepower.
PROPELLERS
Manufacturer's
Manufacturer Model Serial No.
Hamilton Standard 14SF-7 910305
Hamilton Standard 14SF-7 910130
Each of said Propellers is capable of absorbing 750 or more rated
take-off shaft horsepower or the equivalent of such horsepower.
EXHIBIT A - Page 1
<PAGE>
EXHIBIT B
LEASE SUPPLEMENT (N880CC/#277)
LEASE SUPPLEMENT NO. __ (N880CC/#277), dated ________,
____ between C.I.T. LEASING CORPORATION, a Delaware corporation
("Lessor"), and CCAIR, INC., a Delaware corporation ("Lessee").
Lessor and Lessee have heretofore entered into the
Lease Agreement (N880CC/#277), dated as of November 15, 1994
(herein called the "Lease" and the defined terms therein being
hereinafter used with the same meanings). The Lease provides for
the execution and delivery from time to time of Lease Supplements
substantially in the form hereof for the purpose of leasing the
Aircraft under the Lease as and when delivered by Lessor to
Lessee in accordance with the terms thereof.
*The Lease relates to the airframe, engines,
propellers and parts described below, and a counterpart of the
Lease is attached hereto and made a part hereof and this Lease
Supplement, together with such attachment, is being filed for
recordation on the date hereof with the FAA as one document.
**The Lease relates to the airframe, engines,
propellers and parts described below, and a counterpart of the
Lease, attached to and made a part of Lease Supplement No. 1
dated November __, 1994, to the Lease, has been recorded by the
FAA on ____________, 1994, as one document and assigned
Conveyance No. __________.
NOW, THEREFORE, in consideration of the premises and
other good and sufficient consideration, Lessor and Lessee hereby
agree as follows:
1. Lessor hereby delivers and leases to Lessee, and
Lessee hereby accepts and leases from Lessor, under the Lease, as
herein supplemented, the following described aircraft (the
"Aircraft"), which Aircraft as of the date hereof consists of the
following components:
* This language for Lease Supplement No. 1.
** This language for other Lease Supplements.
Exhibit B - Page 1
<PAGE>
AIRFRAME
FAA Manufacturer's
Manufacturer Model Registration No. Serial No.
Boeing/
de Havilland DHC-8-102 N880CC 277
ENGINES
Manufacturer Model Serial No.
Pratt & Whitney PW 120A PC-E121066
Pratt & Whitney PW 120A PC-E121064
Each of said Engines has 750 or more rated take-off horsepower or
the equivalent of such horsepower.
PROPELLERS
Manufacturer's
Manufacturer Model Serial No.
Hamilton Standard 14SF-7 910305
Hamilton Standard 14SF-7 910130
Each of said Propellers is capable of absorbing 750 or more rated
take-off shaft horsepower or the equivalent of such horsepower.
2. The Delivery Date is the date of this Lease
Supplement as set forth above.
3. Lessee hereby confirms its agreement to pay Lessor
Interim Rent for the Aircraft for the Interim Term and Basic Rent
for the Aircraft throughout the Basic Term in accordance with
Section 3 of the Lease and throughout any Renewal Term, if any,
as the parties may agree.
4. Lessee also represents and warrants that the
description of the Aircraft as set forth above is complete and
correct.
5. Lessor's Cost for the Aircraft is $______________.
6. All the terms and provisions of the Lease are
hereby incorporated by reference in this Lease Supplement to the
same extent as if fully set forth herein, including, without
limitation, the representations and warranties set forth in
Sections 4.1 and
Exhibit B - Page 2
<PAGE>
4.2 of the Lease, which Lessor and Lessee hereby make on the
date hereof.
7. This Lease Supplement may be executed by the
parties hereto in separate counterparts, each of which when so
executed and delivered shall be an original, but all such
counterparts shall together constitute one and the same
instrument. The single executed original of this Lease
Supplement marked "Original" shall be the Original and all other
counterparts hereof shall be duplicate originals. To the extent,
if any, that this Lease Supplement constitutes chattel paper, as
such term is defined in the Uniform Commercial Code as in effect
in any applicable jurisdiction, no security interest in this
Lease Supplement may be created through the transfer or
possession of any counterpart other than the Original.
8. This Lease Supplement is being delivered in the
State of ______________ and shall in all respects be governed by
and construed in accordance with the laws of the State of New
York (other than its laws with respect to conflicts of law),
including all matters of construction, validity and performance.
IN WITNESS WHEREOF, Lessor and Lessee have caused this Lease
Supplement to be duly executed as of the day and year first above
written.
LESSOR:
C.I.T. LEASING CORPORATION
By:
Name:
Title:
LESSEE:
CCAIR, INC.
By:
Name:
Title:
Exhibit B - Page 3
<PAGE>
EXHIBIT C
MAINTENANCE RESERVES
1. Lessee agrees to pay maintenance reserves to Lessor as
follows:
(a) Engine and Propeller Reserves. Beginning December
1, 1994, during the Term, Lessee shall deposit with Lessor within
five days after the end of each month an amount equal to the
flight Hours that each Engine or Propeller has been operated
during the previous month multiplied by the Engine Rate or
Propeller Rate, respectively (hereinafter referred to as the
"Engine and Propeller Reserves"). The initial Engine Rate shall
be $30 per flight Hour per Engine. The initial Propeller Rate
shall be $1.50 per flight Hour per Propeller.
Lessee shall be responsible to perform all engine and
propeller maintenance at its own expense (but may be reimbursed
from funds accrued in the Engine and Propeller Reserves for
Engines or Propellers as determined below). Lessor, however,
reserves the right to review and approve any engine or propeller
repair facility which is to perform any such work. If any Engine
or Propeller overhaul or refurbishment shall exceed the allowed
reimbursement for any reason, including premature removal for any
cause or because of increased prices, such excess shall be the
responsibility of Lessee.
After the accomplishment of any complete overhaul or
complete refurbishment of an Engine or Propeller (including
replacement of internal time-limited parts replaced during such
overhaul, disassembly, assembly, and testing required thereof,
but excluding hot section inspections and other scheduled or
unscheduled maintenance) during the Term requiring shop repair
(but excluding foreign object damage, accident, incident, abuse,
misuse, and elective parts replacement), then the Engine and
Propeller Reserve for such Engine or Propeller shall be used to
reimburse Lessee, or pay at Lessee's direction, for Lessee's
actual cost incurred in completing such maintenance ("Engine or
Propeller Reimbursement Expenses"). Upon accomplishment of any
such maintenance, Lessee shall present written evidence
satisfactory to Lessor as to the completion of such overhaul or
refurbishment of such Engine or Propeller and the costs
associated therewith for approval by Lessor. Such shop visit
shall include a build standard acceptable to Lessor. Promptly
after receiving such written evidence, if no Default or Event of
Default exists, Lessor shall reimburse Lessee by paying to the
maintenance provider (whether Lessee or a third party) an amount
equal to the lesser of (i) the
Exhibit C - Page 1
<PAGE>
amount of the Engine or Propeller Reimbursement Expenses
with respect to such Engine or Propeller and (ii) the amount
then held in the Engine and Propeller Reserve established for
such Engine or Propeller. Lessee acknowledges that it may
apply the amounts held with respect to such Engine or
Propeller in the Engine and Propeller Reserves only with
respect to such Engine or Propeller. If the cost of a
complete overhaul or complete refurbishment of such Engine or
Propeller exceeds the balance in the Engine and Propeller
Reserves established for such Engine or Propeller, Lessee
will be required to pay such excess amount with respect to
such Engine or Propeller.
Lessor shall be under no obligation to reimburse any
amount in excess of the outstanding Engine and Propeller Reserve
balance or for any engine or propeller repair other than a
complete overhaul or complete refurbishment of an Engine or
Propeller, nor shall Lessee be entitled to a refund of any
amounts remaining in the Engine and Propeller Reserve except as
otherwise stated in this Lease. "Complete overhaul or complete
refurbishment" as used herein with respect to an Engine shall
mean a major zero time overhaul performed by the manufacturer of
the Engine or its authorized service center. Any amounts so
remaining at the termination of this Lease shall become the sole
property of Lessor or its Assignee. Any declaration of default
by Lessor against Lessee shall also cause any amounts so
remaining to revert to Lessor or its Assignee.
(b) Landing Gear Reserve. Beginning December 1, 1994,
during the Term, Lessee shall deposit with Lessor within five
days after the end of each month an amount equal to the flight
Cycles that the Airframe has been operated during the previous
month multiplied by the Landing Gear Rate (hereinafter referred
to as the "Landing Gear Reserves"). The initial Landing Gear
Rate shall be $5 per flight Cycle for all three landing gear
together (the "Landing Gear").
Lessee shall be responsible to perform all Landing Gear
maintenance at its own expense; provided, however, Lessee may be
reimbursed from funds accrued in the Landing Gear Reserves for
replacement of the Landing Gear before or at the expiration of
its safe life limits under the manufacturer's FAA approved
maintenance program ("Landing Gear Replacement"), as determined
below. Lessor, however, reserves the right to review and approve
any landing gear repair facility which is to perform any such
work. If any Landing Gear Replacement cost shall exceed the
allowed reimbursement (as described below) for any reason
including premature removal for any cause or because of increased
prices, such excess amount shall be the responsibility of Lessee.
If a Landing Gear is replaced prior to the expiration
of its safe life limits under the manufacturer's FAA approved
Exhibit C - Page 2
<PAGE>
maintenance program in which the total Cycles since new on an
individual Landing Gear Replacement is less than the total Cycles
since new on the individual Landing Gear being replaced, Lessor
will reimburse to Lessee the difference between the two
multiplied by $1.67 up to a maximum amount of one-third (1/3) of
the total amount in the Landing Gear Reserve at that time;
provided that Lessee cannot install an individual Landing Gear
Replacement if the total Cycles since new on the individual
Landing Gear Replacement is more than the total Cycles since new
on the individual Landing Gear.
Lessor shall be under no obligation to reimburse any
amount in excess of the outstanding Landing Gear Reserve balance
or for any landing gear repair other than a complete replacement
at the expiration of its safe life limits, nor shall Lessee be
entitled to a refund of any amounts remaining in the Landing Gear
Reserve except as otherwise stated in this Lease. Any amounts so
remaining at the termination of this Lease shall become the sole
property of Lessor or its Assignee. Any declaration of default
by Lessor against Lessee shall also cause any amounts so
remaining to revert to Lessor or its Assignee.
(c) Airframe Reserve. Beginning on December 1, 1994,
during the Term, Lessee shall deposit with Lessor within five
days after the end of each month an amount equal to the flight
Hours that the Airframe has been operated during the previous
month multiplied by the Airframe Rate (hereinafter referred to as
the "Airframe Reserves"). The Airframe Rate shall be $10 per
flight Hour. However, for the first 3000 flight Hours Lessee may
defer payment of $5.00 per flight Hour (the "Deferred Payment")
of the applicable Airframe Rate. The Lessee shall repay such
Deferred Payment to Lessor during the following 6000 flight Hours
in an amount of an additional $2.50 per flight Hour together with
the Airframe Rate then in effect as adjusted for inflation in
accordance with paragraph (d) below. In the case of a Default
under the Lease, all Deferred Payments will be immediately due
and payable. After 9000 flight Hours the adjusted Airframe Rate
will be based on $10 per flight Hour as adjusted for inflation in
accordance with paragraph (d) below. The annual adjustment to
the Airframe Rate beginning December 2, 1995 in accordance with
subsection (d) below will be based on a $10 per flight Hour
Airframe Rate.
The Airframe Reserves shall be fully reimbursable to
Lessee provided that the Airframe is returned in full compliance
with Section 5 of this Lease. In addition, Lessee may draw upon
the Airframe Reserves as described below and expend such amounts
to comply with Section 5 of this Lease.
Lessee shall be responsible to perform all Airframe
maintenance at its own expense; provided, however, Lessee, with
Exhibit C - Page 3
<PAGE>
Lessor written consent, may draw upon funds accrued in the
Airframe Reserves for the amount by which unscheduled maintenance
items exceed $10,000 (including exterior painting of the Airframe
but excluding Airworthiness Directives requirements and
equalization program requirements) ("Allowed Airframe Maintenance
Cost"), as determined below. Lessor, however, reserves the right
to review and approve any maintenance facility which is to
perform any such work. If any such Allowed Airframe Maintenance
Cost shall exceed the allowed reimbursement for any reason
including premature removal for any cause or because of increased
prices, such excess shall be the responsibility of Lessee.
Lessor shall be under no obligation to reimburse any
amount in excess of the outstanding Airframe Reserve balance or
for any Airframe maintenance or repair other than as set forth
above, nor shall Lessee be entitled to a refund of any amounts
remaining in the Airframe Reserve except as otherwise stated in
this Lease. Any declaration of default by Lessor against Lessee
shall cause any amounts so remaining to revert to Lessor or its
Assignee. Any amounts so remaining at the termination of this
Lease shall be promptly paid over to and shall become the sole
property of Lessee or its Assignee.
(d) Adjustment of Initial Rates. Notwithstanding
anything to the contrary contained in this Section, Lessor and
Lessee agree that the Initial Engine Rate, Initial Propeller
Rate, Initial Landing Gear Rate and Initial Airframe Rate
(collectively, the "Initial Rates") shall be increased on
December 2, 1995 and annually each year thereafter during the
Term of this Lease on December 2 (each a "Recalculation Date") by
a percentage factor equivalent to inflation as evidenced by the
Consumer Price Index ("CPI") as announced and in effect by the
United States Government Department of Commerce, or successor
agency thereto, immediately prior to each annual Recalculation
Date (the "Inflation Rate"). Each such Initial Rate, as increased
by the applicable Inflation Rate shall be referred to herein as
the "Engine Rate", "Propeller Rate", "Landing Gear Rate" and
"Airframe Rate", respectively. Each such annual inflation
increase shall be based on the applicable Engine Rate, Propeller
Rate, Landing Gear Rate and Airframe Rate as recalculated for the
one year period (December 1 to November 30 of the following year)
immediately preceding such Recalculation Date.
By way of illustration of the foregoing, the following
chart sets forth an example of Engine Rate increases from the
initial base rate for each year, increased annually on the
Recalculation Date, assuming a 3% Inflation Rate:
Exhibit C - Page 4
<PAGE>
Recalculation 12/1/94 12/1/95 12/1/96 12/1/97 12/1/98
Date
Rate $10 $10.30 $10.61 $10.93 $11.26
2. Lessee agrees to deliver to Lessor, on each Rent
Payment Date, a Maintenance Reserves Certificate in the form of
Schedule 1 hereto.
Exhibit C - Page 5
<PAGE>
Schedule 1
FORM OF MAINTENANCE RESERVES CERTIFICATE
The undersigned, [title], of
CCAir, Inc. ("Lessee") pursuant to Section 8.5 of that certain
Lease Agreement (N880CC/#277) dated as of November 15, 1994 (the
"Lease") between Lessee and C.I.T Leasing Corporation ("Lessor"),
with respect to one Boeing/de Havilland DHC-8-102 Aircraft,
Manufacturer's Serial No. 277, FAA Registration No. N880CC, DOES
HEREBY CERTIFY to Lessor that the following information required
with respect to the operation of the Aircraft and the calculation
of the Maintenance Reserves for the Rent period from __________
to __________ (the "Current Rent Period"):
1. Airframe
a. Total Hours Since New:
b. Total Cycles Since New:
c. Total Hours Operated During Current Rent Period:
d. Total Cycles Operated During Current Rent Period:
e. Airframe Rate for Current Rent Period:
f. Airframe Reserve Payment:
2. Engine (S/N PC-E121066)
a. Location:
b. Total Hours Since New:
c. Total Cycles Since New:
d. Total Hours Operated During Current Rent Period:
e. Total Cycles Operated During Current Rent Period:
f. Engine Rate for Current Rent Period:
g. Engine Reserve Payment:
3. Engine (S/N PC-E121064)
a. Location:
b. Total Hours Since New:
c. Total Cycles Since New:
d. Total Hours Operated During Current Rent Period:
e. Total Cycles Operated During Current Rent Period:
f. Engine Rate for Current Rent Period:
g. Engine Reserve Payment:
Exhibit C - Page 6
<PAGE>
4. Propeller (S/N 910305)
a. Location:
b. Total Hours Since New:
c. Total Cycles Since New:
d. Total Hours Operated During Current Rent Period:
e. Total Cycles Operated During Current Rent Period:
f. Propeller Rate for Current Rent Period:
g. Propeller Reserve Payment:
5. Propeller (S/N 910130)
a. Location:
b. Total Hours Since New:
c. Total Cycles Since New:
d. Total Hours Operated During Current Rent Period:
e. Total Cycles Operated During Current Rent Period:
f. Propeller Rate for Current Rent Period:
g. Propeller Reserve Payment:
6. Landing Gear
Nose Left Right
a. Location:
b. Total Hours Since New:
c. Total Cycles Since New:
d. Total Hours Operated During
Current Rent Period:
e. Total Cycles Operated During
Current Rent Period:
f. Landing Gear Rate for Current Rent Period:
g. Landing Gear Reserve Payment:
Except as otherwise defined herein, the terms used
herein shall have the meaning set forth in the Lease.
IN WITNESS WHEREOF, the undersigned has caused this
Certificate to be duly executed as of the date set forth below.
CCAIR, INC.
By:
Name:
Title:
Date:
Exhibit C - Page 7
<PAGE>
Schedule 1 (N880CC/#277)
INTERIM AND BASIC RENT
Rent
Payment Date Rent
[To Come]
Schedule 1 - Page 1
<PAGE>
Schedule 2 (N880CC/#277)
STIPULATED LOSS VALUES
Stipulated Loss Percent of
Payment Date Lessor's Cost
[To Come]
Schedule 2 - Page 1
<PAGE>
Schedule 3 (N880CC/#277)
PRIOR LEASES
Lease Agreement (N880CC), dated as of May 15, 1992, as amended
and supplemented, between Mellon Financial Services Corporation
#3, as Lessor ("Mellon"), and CCAir, Inc., as Lessee (the
"Lessee").
Short Term Lease Agreement (N880CC), dated as of April 1, 1994,
as amended and supplemented, between Mellon and the Lessee.
Schedule 3 - Page 1
<PAGE>
<PAGE>
Exhibit 10.37(b)
LEASE AGREEMENT (SPARES)
Dated as of November 15, 1994
between
C.I.T. LEASING CORPORATION,
Lessor
and
CCAIR, INC.,
Lessee
Certain Rotables and Ground Support Equipment
for use with
de Havilland DHC-8-102 Aircraft
<PAGE>
TABLE OF CONTENTS
<TABLE>
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<S> <C> <C>
Page
SECTION 1 Definitions. . . . . . . . . . . . . . . . . . . 1
SECTION 2 Termination of Prior Leases; Lease, Conditions of
Leasing.
2.1 Termination of Prior Lease. . . . . . . . . . . 8
2.2 Leasing; Notices; Actions. . . . . . . . . . . . 9
2.3 Lessor's Conditions. . . . . . . . . . . . . . . 10
2.4 Lessee's Conditions. . . . . . . . . . . . . . . 12
SECTION 3 Rent. . . . . . . . . . . . . . . . . . . . . . 13
3.1 Interim Rent; Basic Rent. . . . . . . . . . . . 13
3.2 Net Lease; No Set-Off or Deductions. . . . . . . 13
3.3 Supplemental Rent. . . . . . . . . . . . . . . . 14
3.4 Payments on Business Days. . . . . . . . . . . . 14
3.5 Place and Manner of Payments. . . . . . . . . . 14
SECTION 4 Representations and Warranties. . . . . . . . . 15
4.1 Lessee's Representations and Warranties. . . . . 15
4.2 Lessor's Representations and Warranties. . . . . 18
4.3 Limitation on Lessor's Liability. . . . . . . . 19
SECTION 5 Return of the Equipment. . . . . . . . . . . . . 21
5.1 Return of Equipment. . . . . . . . . . . . . . . 21
5.2 Engines and Propellers. . . . . . . . . . . . . 21
5.3 Records. . . . . . . . . . . . . . . . . . . . . 21
5.4 Condition of Equipment. . . . . . . . . . . . . 22
5.5 Airworthiness Directives; Service Bulletins. . . 23
5.6 Maintenance. . . . . . . . . . . . . . . . . . . 24
5.7 Storage. . . . . . . . . . . . . . . . . . . . . 26
5.8 Inspection. . . . . . . . . . . . . . . . . . . 26
5.9 Payment Requirements. . . . . . . . . . . . . . 27
5.10 Service Bulletin Kits. . . . . . . . . . . . . . 27
5.11 Non-discrimination. . . . . . . . . . . . . . . 27
5.12 Ownership. . . . . . . . . . . . . . . . . . . . 27
5.13 Corrections and Subsequent Corrections. . . . . 27
SECTION 6 Liens. . . . . . . . . . . . . . . . . . . . . . 28
SECTION 7 Registration and Operation; Possession; Insignia. 28
7.1 Registration and Operation. . . . . . . . . . . 28
7.2 Possession. . . . . . . . . . . . . . . . . . . 29
7.3 No Release of Lessee. . . . . . . . . . . . . . 30
</TABLE>
i
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TABLE OF CONTENTS (cont'd.)
<TABLE>
<CAPTION>
<S> <C> <C>
Page
7.4 Insignia. . . . . . . . . . . . . . . . . . . . 30
7.5 Location of Equipment. . . . . . . . . . . . . . 31
SECTION 8 Replacement of Parts; Alterations and Modifications;
Maintenance. . . . . . . . . . . . . . . . . . . 31
8.1 Replacement of Parts. . . . . . . . . . . . . . 31
8.2 Intentionally Left Blank. . . . . . . . . . . . 32
8.3 Alterations, Modifications and Additions. . . . 32
8.4 Maintenance in General. . . . . . . . . . . . . 34
8.5 Specific Items of Maintenance. . . . . . . . . . 34
8.6 Airworthiness Directives. . . . . . . . . . . . 36
8.7 Service Bulletins. . . . . . . . . . . . . . . . 36
SECTION 9 Intentionally Left Blank. . . . . . . . . . . . 37
SECTION 10 Loss, Destruction, Requisition, Etc. . . . . . . 37
10.1 Event of Loss with Respect to Spare Part(s). . . 37
10.2 Event of Loss with Respect to an Engine. . . . . 37
10.3 Event of Loss with Respect to a Propeller. . . . 38
10.4 Event of Loss with Respect to Class B
Equipment. . . . . . . . . . . . . . . . . . . . 40
10.5 Application of Payments from Governmental
Authorities for Requisition of Title, etc. . . . 40
10.6 Requisition for Use by the United States
Government. . . . . . . . . . . . . . . . . . . 41
SECTION 11 Insurance. . . . . . . . . . . . . . . . . . . . 41
11.1 Public Liability and Property Damage
Insurance. . . . . . . . . . . . . . . . . . . . 41
11.2 Insurance Against Loss or Damage to the
Equipment. . . . . . . . . . . . . . . . . . . . 42
11.3 Reports, etc. . . . . . . . . . . . . . . . . . 45
11.4 Indemnification by the United States
Government in Lieu of Insurance. . . . . . . . . 45
11.5 Additional Insurance by Lessor and Lessee. . . . 46
SECTION 12 Inspection. . . . . . . . . . . . . . . . . . . 46
SECTION 13 Assignment; Binding Effect; Security Interests. 46
13.1 Assignment by Lessor. . . . . . . . . . . . . . 46
13.2 Assignment by Lessee. . . . . . . . . . . . . . 48
13.3 Binding Effect. . . . . . . . . . . . . . . . . 48
</TABLE>
ii
<PAGE>
TABLE OF CONTENTS (cont'd.)
<TABLE>
<CAPTION>
<S> <C> <C>
Page
13.4 Security Interests. . . . . . . . . . . . . . . 48
SECTION 14 Events of Default. . . . . . . . . . . . . . . . 48
14.1 Events of Default. . . . . . . . . . . . . . . . 48
SECTION 15 Remedies. . . . . . . . . . . . . . . . . . . . 50
15.1 Remedies. . . . . . . . . . . . . . . . . . . . 50
15.2 Lease Insurance Payments. . . . . . . . . . . . 53
SECTION 16 Further Assurances. . . . . . . . . . . . . . . 54
SECTION 17 Notices. . . . . . . . . . . . . . . . . . . . . 54
SECTION 18 Covenants. . . . . . . . . . . . . . . . . . . . 54
18.1 Lessor's Covenants. . . . . . . . . . . . . . . 54
18.2 Lessee's Covenants. . . . . . . . . . . . . . . 55
SECTION 19 Extension of Lease Term . . . . . . . . . . . . 57
SECTION 20 Lessor's Right To Perform for Lessee. . . . . . 58
SECTION 21 Intentionally Left Blank. . . . . . . . . . . . 58
SECTION 22 Quiet Enjoyment. . . . . . . . . . . . . . . . . 58
SECTION 23 General Tax Indemnity. . . . . . . . . . . . . . 58
23.1 Indemnity. . . . . . . . . . . . . . . . . . . . 58
23.2 Exceptions from Indemnity. . . . . . . . . . . . 59
23.3 Calculation of Indemnity Payments. . . . . . . . 61
23.4 Contest. . . . . . . . . . . . . . . . . . . . . 62
23.5 Reports. . . . . . . . . . . . . . . . . . . . . 64
23.6 Payment. . . . . . . . . . . . . . . . . . . . . 65
23.7 Computations; Consolidated or Combined
Return. . . . . . . . . . . . . . . . . . . . . 65
23.8 Covered Tax. . . . . . . . . . . . . . . . . . . 66
23.9 Payments and Survival of Indemnities. . . . . . 66
SECTION 24 General Indemnity. . . . . . . . . . . . . . . . 67
24.1 Claims Defined. . . . . . . . . . . . . . . . . 67
24.2 Claims Indemnified. . . . . . . . . . . . . . . 67
24.3 Claims Excluded. . . . . . . . . . . . . . . . . 68
</TABLE>
iii
<PAGE>
TABLE OF CONTENTS (cont'd.)
<TABLE>
<CAPTION>
<S> <C> <C>
Page
24.4 Insured Claims. . . . . . . . . . . . . . . . . 69
24.5 Claims Procedure. . . . . . . . . . . . . . . . 69
24.6 Subrogation. . . . . . . . . . . . . . . . . . . 69
24.7 Waiver of Certain Claims. . . . . . . . . . . . 70
24.8 Conflicting Provisions. . . . . . . . . . . . . 70
24.9 Continuing Indemnification. . . . . . . . . . . 70
SECTION 25 Transaction and Other Costs. . . . . . . . . . . 70
25.1 Transaction Expenses. . . . . . . . . . . . . . 70
25.2 Costs of Amendments, Waivers, Etc. . . . . . . . 70
SECTION 26 Miscellaneous. . . . . . . . . . . . . . . . . . 71
26.1 Severability. . . . . . . . . . . . . . . . . . 71
26.2 Amendments. . . . . . . . . . . . . . . . . . . 71
26.3 Lease Only. . . . . . . . . . . . . . . . . . . 71
26.4 Security Agreement; Chattel Paper. . . . . . . . 71
26.5 Headings. . . . . . . . . . . . . . . . . . . . 72
26.6 Governing Law. . . . . . . . . . . . . . . . . . 72
26.7 Amendments. . . . . . . . . . . . . . . . . . . 72
26.8 Table of Contents; Section Headings. . . . . . . 72
26.9 Currency. . . . . . . . . . . . . . . . . . . . 72
26.10 Reproduction of Documents. . . . . . . . . . . . 72
26.11 Entire Agreement. . . . . . . . . . . . . . . . 73
26.12 Counterparts. . . . . . . . . . . . . . . . . . 73
Exhibit A Equipment Description
Exhibit B Form of Lease Supplement
Exhibit C Maintenance Reserves
Schedule 1 Interim and Basic Rent
Schedule 2 Stipulated Loss Values
Schedule 3 Prior Leases
</TABLE>
iv
<PAGE>
LEASE AGREEMENT (Spares), dated as of November 15,
1994, between C.I.T. LEASING CORPORATION, a Delaware
corporation, with its chief executive office at 1211 Avenue
of the Americas, New York, New York 10036 ("Lessor"), and
CCAIR, INC., a Delaware corporation, with its chief
executive office and principal place of business at 4700
Yorkmont Road, Charlotte, North Carolina 28208 ("Lessee").
W I T N E S S E T H:
WHEREAS, pursuant to the Purchase Agreement (such
term and other capitalized terms used as defined below),
the Mellon Financial Services Corporation #3, a
Pennsylvania corporation ("Mellon"), has agreed to sell to
Lessor and Lessor has agreed to purchase from Mellon the
Equipment and related Operative Documents to which Mellon
is a party;
WHEREAS, Lessee desires to lease from Lessor and
Lessor is willing to lease to Lessee the Equipment upon and
subject to the terms and conditions of this Lease;
NOW, THEREFORE, in consideration of the
mutual covenants and agreements contained herein and other
good and valuable consideration, Lessor and Lessee agree as
follows:
SECTION 1. Definitions.
Unless the context shall otherwise require,
the following terms shall have the following meanings
for all purposes of this Lease (such definitions to be
equally applicable to both the singular and plural forms
of the terms herein defined):
"Act" means the Federal Aviation Act of 1958,
as amended from time to time.
"Affiliate" means, with respect to any Person,
any other Person directly or indirectly controlling or
controlled by or under common control with, such Person.
"Aircraft Manufacturer" means de Havilland,
Inc. (successor to Boeing of Canada Ltd., a Delaware
corporation, through its de Havilland Division).
"Aircraft Manufacturer Bill of Sale" means the
full Warranty Bill of Sale for the Aircraft from the
Aircraft Manufacturer to Lessee (as previously assigned to
Mellon).
"Aircraft Records" means all historical
records delivered with the Aircraft for work accomplished
prior to the Delivery Date and current records for
work accomplished subsequent to the
<PAGE>
Delivery Date including, but not limited to, documents,
manuals, data, overhaul records, life limited part
traceability to "zero time since new", log books,
original Aircraft and Engine delivery documents, serviceable
parts tags, FAA forms, modifications records, inspection
records, and all other documentation pertaining to the
Aircraft, and related Engines and Parts.
"Airframe" means a Boeing/de Havilland
DHC-8-102 airframe owned by Lessor or by Lessee.
"Airworthiness Directive" shall have the meaning
as- signed in Section 8.6 hereof.
"Applicable Law" shall mean all laws,
treaties, judgments, decrees, injunctions, writs and orders
of any court, governmental agency or authority and rules,
regulations, orders, directives, licenses and permits of
any governmental body, instrumentality, agency or
authority, having jurisdiction over Lessee or Lessor, as the
case may be, and over their respective properties.
"Applicable Rate" shall mean the rate of
interest announced publicly from time to time by Chemical
Bank, New York, New York as its base or prime rate.
"Basic Rent" means, for the Term, the rent
payable pursuant to Section 3.1(a) as set forth in Schedule 1
hereto.
"Basic Term" means the period commencing on December
2, 1994 and ending on the date that is the last Rent
Payment Date set forth on Schedule 1 hereto or ending on such
earlier date as this Lease may be terminated in accordance
with the terms hereof.
"Bill of Sale" means the Warranty Bill of Sale.
"Business Day" means any day other than a
Saturday, Sunday or other day on which commercial banks are
required or authorized to be closed in New York, New York or
Charlotte, North Carolina.
"Class A Equipment" means those items of
Equipment listed as "Class A Equipment" on all Exhibit A
hereto, including any Engines and any Propellers listed
thereon.
"Class B Equipment" means those items of
Equipment listed as "Class B Equipment" on all Exhibit A
hereto.
"Closing Date" means the date designated by Lessor
by written notice to Lessee, on which Lessee and Lessor
execute and deliver the Lease Supplement placing the
Equipment under this Lease.
2
<PAGE>
"Code" means the Internal Revenue Code of 1986 and
any successor thereto.
"Consents and Agreements" means (i) the Consent
and Agreement, dated as of July 29, 1994, between Mellon
and the Minister and (ii) the Consent and Agreement dated as
of November 15, 1994, between Lessor and the Minister,
relative to the Aircraft Lease Insurance Agreement dated as
of August 28, 1992, between the Minister and Mellon.
"Cycle" means one takeoff and landing of the
Aircraft and any other aircraft on which an Engine is mounted.
"Default" shall mean an event which, with notice
or lapse of time, or both, would become an Event of Default.
"Delivery Date" shall mean the date on which
the Aircraft is purchased by Lessor, and leased to Lessee
hereunder as reflected in the Lease Supplement.
"Department of Transportation" means the United
States Department of Transportation and any agency or
instrumentality of the United States Government succeeding to
its functions.
"Engine" means (i) each of the Pratt & Whitney PW
120A engines described more fully in Exhibit A hereto, and
(ii) any Replacement Engine that may from time to time be
substituted for an Engine pursuant to Section 5.2, or 10.2,
and in the case of substitutions pursuant to Section 10.2,
whether or not from time to time installed on the
Airframe (or any other airframe); together, in each case
with any and all Parts incorporated or installed thereon
or attached thereto and any and all Parts removed
therefrom so long as title thereto shall remain vested in
Lessor in accordance with Section 8; provided, however, that
at such time as a Replacement Engine shall be substituted
for an Engine pursuant to the applicable provisions hereof,
the replaced Engine shall cease to be an Engine for all
purposes hereunder. The term "Engines" means, as of any date
of determination, all Engines then leased hereunder.
"Equipment" means the Class A Equipment and the
Class B Equipment, collectively. An "item of Equipment"
means any item of Class A Equipment, Class B Equipment, or
both.
"ERISA" means the Employee Retirement Income
Security Act of 1974, as amended.
"Event of Default" has the meaning specified in
Section 14.
3
<PAGE>
"Event of Loss" means, with respect to any item
of Equipment, any of the following events or conditions with
respect to such property: (i) loss of such property or the
use thereof due to the destruction of or damage to such
property that renders repair uneconomic to Lessee or that
renders such property permanently unfit for normal use by
Lessee; (ii) any damage to such property which results in
an insurance settlement with respect to such property on
the basis of a total loss or a constructive or
compromised total loss; (iii) the theft, disappearance,
confiscation, condemnation or seizure of, or requisition
of title to or use of, such property by any
governmental or purported governmental authority (other
than a requisition for use by the United States Government),
which shall have resulted in the loss of possession of
such property by Lessee for a period in excess of 90
consecutive days; (iv) as a result of any rule, regulation,
order or other action by the FAA, the use of such property in
the normal course of the business of air transportation shall
have been prohibited for a period of three consecutive
months, unless Lessee, prior to the expiration of such
three-month period, shall have undertaken and shall be
diligently carrying forward all steps which in
Lessee's reasonable judgment are necessary or desirable to
permit the normal use of such property by Lessee, or (v) with
respect to any Engine, any divestiture of title to such
Engine treated as an Event of Loss pursuant to Section 7.2).
"FAA" means the Federal Aviation Administration and
any successor agency or agencies.
"Financing Statement" means any financing
statement required or permitted to be filed under the
Uniform Commercial Code as in effect in any applicable
jurisdiction.
"Government of Canada" means Her Majesty the Queen
in Right of Canada, as represented by the Minister.
"Hours" means Aircraft flight time between takeoff
and landing.
"Indemnified Person" has the meaning specified
in Section 24.
"Insurance Agreement" means the Aircraft
Lease Insurance Agreement (Spares), dated as of August
28, 1992, between the Government of Canada and Lessor, as
modified by both of the Consents and Agreements.
"Interim Rent" means, for the Interim Term, the
rent payable pursuant to Section 3.1 as set forth in such
Section.
"Interim Term" means the period commencing on
the Delivery Date and ending on the date that the Basic Term
commences.
4
<PAGE>
"Lease", "this Lease", "herein", "hereof",
"hereunder", "hereby" or other like words mean this Lease
Agreement, as it may be amended, modified or supplemented
from time to time pursuant to the applicable provisions
hereof including, without limitation, supplementation
hereof by one or more Lease Supplements entered into
pursuant to the applicable provisions hereof and includes
any written agreement with respect to which Lessor and
Lessee, have expressed in the agreement or in a
substantially contemporaneous writing that the agreement is to
be treated as a lease for Federal income tax purposes.
"Lease Supplement" means a Lease
Supplement substantially in the form of Exhibit B, to be
entered into between Lessor and Lessee on the Delivery Date
for the purpose of leasing the Aircraft under and pursuant
to the terms of this Lease, and any subsequent Lease
Supplement entered into in accordance with the terms
hereof.
"Lender" means any Person or Persons which is
the holder of a security interest in the Aircraft or
assignee of Lessor's interest in this Lease (or any interest
therein), which security interest or assignment was
acquired in exchange for financing provided to Lessor to
acquire the Aircraft or to refinance Lessor's acquisition
of the Aircraft and which security interest or assignment is
granted and existing in accordance with this Lease.
"Lessor Lien" means any Lien with respect to any
item of Equipment that arises as a result of or results from
(i) Taxes or expenses imposed on Lessor (or the
consolidated group of taxpayers of which any of them is a
part), other than Taxes or expenses for which Lessee is
obligated but fails to indemnify pursuant to any
provisions of this Lease, (ii) any act or omission of or
claim against or affecting Lessor involving or arising out
of (A) events or conditions not related to the
transactions contemplated by this Lease or (B) the breach
by Lessor of any of the provisions of this Lease, including,
without limitation, the breach by Lessor of its covenant
of quiet enjoyment contained herein, or (iii) any transfer
by Lessor of all or any portion of its interest in the
Equipment, including the granting to a third party of any
Lien, but excluding a transfer pursuant to Section 9, 10 or
13 hereof or as a result of the exercise of remedies set forth
in Section 15.
"Lessor's Cost" for any item of Equipment means
the amount so described in the Lease Supplement for such
item of Equipment.
"Lien" means any mortgage, pledge, lien,
charge, encumbrance, lease, sublease, security interest,
conditional sale agreement, title retention agreement or
claim.
"Maintenance Program" shall have the meaning set
forth in Section 8.4.
5
<PAGE>
"Minister" shall mean Her Majesty the Queen in Right
of Canada as represented by the Minister of Industry,
Science and Technology of Canada.
"1992 Lease" means that certain Lease
Agreement (Spares), dated as of August 14, 1992, as
supplemented by Lease Supplement No. 1 (Spares), dated
August 28, 1992, pursuant to which Mellon leased the
Equipment (as hereinafter defined) to Lessee, as amended
by Amendment No. 1 (Spares), dated as of November 2, 1992.
"Operative Documents" means this Lease, the
Lease Supplement, the Prior Leases, any filings under the
Uniform Commercial Code in effect on or before the Closing
Date, the Tax Indemnity Agreement, the Insurance Agreement
(including both of the Consents and Agreements) and the Bills
of Sale.
"Overdue Rate" means the Applicable Rate plus 200
basis points.
"Parts" means all appliances, parts,
instruments, appurtenances, accessories, furnishings and
other equipment of whatever nature (but excluding (i)
complete Engines and engines, and (ii) Spare Parts) so long
as the same shall be incorporated in or installed on or
attached to any item of Equipment or so long as title
thereto shall remain vested in Lessor in accordance with
Section 8 after removal therefrom.
"Permitted Lien" means any Lien referred to in
clauses (a) through (h) of Section 6.
"Person" means any individual,
corporation, partnership, joint stock company, trust,
unincorporated organization, joint venture, governmental
authority or any agency or instrumentality thereof, or any
other entity of whatsoever nature.
"Prior Leases" means the 1992 Lease and the
Short-Term Lease, collectively as listed on Schedule 3 hereto.
"Propeller" means (i) each of the Hamilton
Standard propellers Model 14SF-7 described more fully in
Exhibit A hereto, and (ii) any Replacement Propeller that may
from time to time be substituted for a Propeller pursuant to
Section 5.2, or 10.3, and in the case of substitutions
pursuant to Section 10.3, whether or not from time to time
installed on the Airframe (or any other airframe);
together, in each case with any and all Parts
incorporated or installed thereon or attached thereto and any
and all Parts removed therefrom so long as title thereto shall
remain vested in Lessor in accordance with Section 8;
provided, however, that at such time as a Replacement
Propeller shall be substituted for a Propeller pursuant to the
applicable provisions hereof, the replaced Propeller shall
cease to be a Propeller for all purposes
6
<PAGE>
hereunder. The term "Propellers" means, as of any date
of determination, all Propellers then leased hereunder.
"Purchase Agreement" means the Purchase
Agreement, dated as of November 15, 1994, between Mellon,
as seller, and Lessor, as purchaser, with respect to the
Aircraft and the Operative Documents to which Mellon is a
party.
"Rent" means Interim Rent, Basic Rent and
Supplemental Rent, collectively.
"Rent Payment Date" means each date set forth
on Schedule 1 hereto on which a payment of Basic Rent or
Interim Rent is due.
"Replacement Engine" means a Pratt & Whitney Model
PW 120A engine (or engine of the same or another manufacturer
and of the same, an equivalent or an improved model and
suitable for installation and use on any Airframe that is
compatible with the other Engines) which shall have been
leased or returned hereunder as contemplated by Section 5.2,
or 10.2, together with all Parts relating to such engine.
"Replacement Propeller" means a Hamilton Standard
Model 14SF-7 propeller (or propeller of the same or
another manufacturer and of the same, an equivalent or an
improved model and suitable for installation and use on any
Airframe that is compatible with the other propeller) which
shall have been leased or returned hereunder as contemplated
by Section 5.2, or 10.3, together with all Parts relating to
such propeller.
"Replacement Spare Part" means any spare part
conveyed to Lessor pursuant to Section 10.1 hereof in
replacement of a Spare Part leased hereunder.
"Security Agreement" means the then applicable
Security Agreement and Assignment of Lease entered into
between Lessor and any Lender in accordance with Section 13.4
hereof.
"Short-Term Lease" means the Short-Term Lease
Agreement (Spares), dated as of April 1, 1994, as amended,
supplemented or renewed, between Mellon and Lessee.
"Spare Parts" means each item of Class A
Equipment, other than any Engines and any Propellers, and each
item of Class B Equipment.
"Spare Parts Location" means Lessee's
Parts-Maintenance Facility, 4830 Express Drive, Charlotte
Douglas International Airport, Charlotte, North Carolina,
and Lessee's facilities at each of the addresses set forth in
Exhibit A hereto.
7
<PAGE>
"Stipulated Loss Value" for the Aircraft means as
of any date of determination, the amount set forth on
Schedule 2 hereto, opposite the month with respect to which
the amount is determined pursuant to Section 10 hereof.
"Supplemental Rent" means any and all
amounts, liabilities and obligations (other than Basic Rent
or Interim Rent) that Lessee assumes or agrees to pay
hereunder.
"Tax Indemnity Agreement" means the Tax
Indemnity Agreement (Spares), dated as of November 15, 1994,
between Lessor and Lessee.
"Taxes" means all fees (including, without
limitation, documentation, license and registration fees),
taxes (including, without limitation, such taxes as
personal property and real property, tangible and intangible
property, gross or net income, gross or net receipts, value
added, capital, excise, sales, use, leasing, fuel, excess
profits, transfer, recording and stamp or other taxes),
imposts, duties, withholdings, levies, assessments and other
governmental charges of whatever kind or character, however
designated, together with any interest thereon, additions to
tax, penalties or fines.
"Term" means the Interim Term, Basic Term and
any renewal period agreed to by Lessor (if any), collectively.
"Time Controlled Parts" means any item of
equipment that has a predetermined time limit or interval
in accordance with Lessee's FAA approved maintenance
program which requires such item of equipment to be
discarded, overhauled, or recertified upon reaching such
time limit or interval.
"United States Government" means the United States
of America or any agency or instrumentality thereof.
"Warranty Bill of Sale" means the full warranty bill
of sale for the Spare Parts from Mellon to Lessor.
SECTION 2. Termination of Prior Leases; Lease,
Conditions of Leasing.
2.1. Termination of Prior Lease.
Lessee hereby acknowledges and agrees that the
Prior Leases have been properly terminated and that
Lessee has no further rights thereunder. Lessee further
acknowledges and agrees that, notwithstanding such
terminations, C.I.T. Leasing Corporation shall retain any and
all of Lessor's rights under the Prior Leases (as successor
in interest to Mellon) which are covered by or relate to
the Insurance Agreement, which rights, indemnities and
obligations
8
<PAGE>
shall continue to exist notwithstanding such
termination. Lessee agrees that Lessor's entering into this
Lease shall not constitute a waiver of any such right or
remedy available to Lessor under the Prior Leases or
otherwise diminish any obligation of Lessee under the Prior
Leases with respect thereto.
2.2. Leasing; Notices; Actions.
(a) Subject to satisfaction of the conditions
set forth in Section 2.2, Lessor hereby agrees to
purchase from Mellon and lease to Lessee hereunder for the
Term, the Equipment and subject to satisfaction of the
conditions set forth in Section 2.3, Lessee hereby agrees
to lease from Lessor hereunder for the Term, the Equipment on
the Delivery Date, which leasing shall be evidenced by the
execution and delivery by Lessor and Lessee of a Lease
Supplement leasing the Equipment hereunder.
(b) On the Delivery Date, Lessee agrees to give,
or cause to be given, to Lessor written, telecopy,
telex or telegraphic notice (a "Delivery Notice") of the
anticipated date of delivery of the Equipment ("Proposed
Delivery Date") not later than 12:00 noon E.S.T., on the
third Business Day preceding such Proposed Delivery Date (or
such shorter period to which Lessee and Lessor may agree),
which notice shall specify (i) the Proposed Delivery
Date; and (ii) the location at which the Equipment will
be delivered (the "Delivery Site").
(c) On the Delivery Date, upon confirmation by
Lessor that it has purchased the Equipment from Mellon and
received the FAA Bill of Sale for the Equipment, Lessee shall
cause the Lease and the Lease Supplement to be filed with
the FAA. Upon acceptance of delivery of the Equipment by
Lessee at the Delivery Site, Lessor shall take title to, and
accept delivery of, the Equipment and the Bill of Sale
and Lessee shall execute and deliver the Lease Supplement.
(d) Lessor and Lessee hereby agree that execution
and delivery of the Lease Supplement for the Equipment shall,
without further act, irrevocably constitute acceptance of
the Equipment by Lessor and Lessee for all purposes of this
Lease.
(e) The closing on the Closing Date and the
Delivery Date shall take place simultaneously at 10:00 a.m.
(E.S.T.) at the offices of Mudge Rose Guthrie Alexander &
Ferdon, New York, New York and at the FAA Aircraft Registry
in Oklahoma City and at the Lessee's offices, or at such
other time and places as the parties hereto shall agree.
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(f) Lessee, with Lessor's cooperation, will:
(i) concurrently with the delivery of any items
of Equipment under the Lease, cause to be duly filed for
recordation with the FAA, in accordance with applicable
Federal law, all of the following documents with respect to
the Aircraft, in such order and with such number of copies
as may be required by the FAA: executed counterparts of
this Lease and the Lease Supplement;
(ii) promptly upon completion of the
actions referred to above, cause Daugherty, Fowler &
Peregrin, special FAA counsel in Oklahoma City, Oklahoma, to
deliver to Lessor the opinion described in Section 2.3(d)(iv);
and
(iii) cause the FAA to issue a standard
certificate of airworthiness with respect to the Aircraft.
2.3. Lessor's Conditions.
Lessor's obligation to lease the Equipment to
Lessee shall be subject to the following conditions having
been complied with to the reasonable satisfaction of Lessor,
or waived, on the Delivery Date:
(a) The Operative Documents shall have been
duly authorized, executed and delivered by Lessee and
the other parties thereto and shall be in full force and
effect on the Delivery Date and Lessor shall have
received a copy of each thereof; and
(b) On the date of execution and delivery of
this Lease and on the Delivery Date, the
representations and warranties of Lessee contained herein
shall be true and correct and no event shall have occurred
and be continuing, or would result from the lease of the
Equipment, which constitutes a Default; and
(c) No change shall have occurred in Applicable Law
on or before the Delivery Date which would, in the
opinion of Lessor, make it illegal for Lessee to lease
the Equipment hereunder; and
(d) Lessor shall have received the following, in
each case in form and substance reasonably satisfactory to it:
(i) a copy of resolutions of the Board
of Directors of Lessee, certified by the Secretary or an
Assistant Secretary of Lessee, duly authorizing the execution,
delivery and performance by Lessee of this Lease, all
other Operative Documents to which it is a party, and all
other documents and certificates contemplated hereby or
thereby to be executed on behalf of Lessee;
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(ii) a report of Rollins Hudig Hall of
Virginia, Inc. (or other independent aircraft
insurance broker satisfactory to Lessor) as to the due
compliance with the insurance provisions of Section 11
hereof;
(iii) an opinion addressed to it from Rayburn,
Moon & Smith, counsel to Lessee, dated the Delivery Date, in
form and substance satisfactory to it;
(iv) an opinion addressed to Lessor and Lessee
from Daugherty, Fowler & Peregrin, special FAA counsel, to
the effect that (l) each of this Lease and the Lease
Supplement are in due form for filing and shall have been
duly filed for recordation with the FAA pursuant to the
Act, (2) the records of the FAA disclose no Liens against
the Equipment, and (3) such other matters as Lessor may
reasonably request;
(v) an opinion addressed to Lessor from
Ogilvy Renault, special Canadian counsel, in form and
substance satisfactory to Lessor;
(vi) the report of AISI (or other
appraiser satisfactory to Lessor) as to the Fair Market Sales
Value, useful life, and residual value of the Equipment on
the Delivery Date and such other matters affecting the
Equipment as Lessor may reasonably request;
(vii) Financing Statements covering all
the interests created by the Operative Documents in the
Equipment have been duly executed by Lessee, as debtor, and
filed under the applicable Uniform Commercial Code to the
extent deemed necessary or desirable by Lessor or its
special counsel to protect and perfect Lessor's interests
in the Equipment and such Operative Documents;
(viii) an incumbency certificate of Lessee regarding
the officers of Lessee authorized to execute and deliver
the Operative Documents to which it is a party and any other
document or certificate delivered in connection therewith;
(ix) satisfactory evidence of a valid air
carrier operating certificate; and
(x) such other documents and evidence with
respect to Lessee as Lessor may reasonably request in order
to establish consummation of the transactions contemplated by
this Lease and the other operative documents, the taking
of all corporate proceedings in connection therewith and
compliance with the conditions herein set forth.
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2.4. Lessee's Conditions.
The obligation of Lessee to lease each item
of Equipment is subject to the following conditions having
been complied with to the reasonable satisfaction of
Lessee, or waived, on the Delivery Date:
(a) The Operative Documents to which Lessor is a
party shall have been duly authorized, executed and delivered
by Lessor and the other parties thereto and shall be in
full force and effect on the Delivery Date, and Lessee
shall have received a copy thereof;
(b) On the date of execution and delivery of
this Lease and on the Delivery Date, the
representations and warranties of Lessor contained herein
shall be true and correct;
(c) No change shall have occurred in Applicable Law
on or before the Delivery Date which would, in the
reasonable opinion of Lessee, make it illegal for Lessee
to lease the Equipment here-under; and
(d) Lessee shall have received the following, in
each case, in form and substance reasonably satisfactory to
it;
(i) Lessee shall have received an opinion of
Mudge Rose Guthrie Alexander & Ferdon, special counsel to
Lessor, dated the Delivery Date, in form and substance
satisfactory to it;
(ii) (a) evidence of the due
authorization, execution and delivery by Lessor of the
Operative Documents to which it is a party and all other
agreements, documents and certificates contemplated hereby
and thereby to be executed on behalf of Lessor and (b) an
incumbency certificate of Lessor regarding the officers of
Lessor authorized to execute and deliver this Lease, the
other Operative Documents to which it is
a party, and any other document or certificate delivered
in connection therewith;
(iii) the opinion referred to in Section
2.3(d)(iv) hereof; and
(iv) such other documents and evidence with
respect to Lessor as Lessee may reasonably request in order
to establish consummation of the transactions contemplated
by Operative Documents, the taking of all corporate
proceedings in connection therewith and compliance with the
conditions herein set forth.
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SECTION 3. Rent.
3.1. Interim Rent; Basic Rent.
(a) Lessee hereby agrees to pay to Lessor Interim
Rent for the Aircraft payable in arrears on the first Rent
Payment Date, in the amount set forth opposite such Rent
Payment Date in Schedule 1 hereto.
(b) Lessee hereby agrees to pay to Lessor Basic
Rent for the Aircraft on each Rent Payment Date during the
Basic Term, in monthly installments payable in arrears on
each Rent Payment Date during the Basic Term, in the amount
set forth opposite each such Rent Payment Date in Schedule 1
hereto.
3.2. Net Lease; No Set-Off or Deductions.
(a) This Lease is a net lease. Lessee
acknowledges and agrees that its obligation to pay all
Rent due and owing under the terms hereof shall be absolute
and unconditional and shall not be affected by any
circumstance whatsoever, including, without limitation (i)
any set-off, counterclaim, recoupment, defense or other
right which Lessee may have against Lessor, any Lender or
anyone else for any reason whatsoever, including any matters
arising under the Prior Leases, (ii) any defect in the
title, unairworthiness, or any damage to or loss or
destruction of, the Equipment, or any interference,
interruption or cessation in or prohibition of the use or
possession thereof by Lessee for any reason whatsoever,
including, without limitation, any such interference,
interruption, cessation or prohibition resulting from the
act of any governmental authority, (iii) any Liens (other
than Lessor Liens) or rights of others with respect to the
Equipment, or (iv) the invalidity or unenforceability or lack
of due authorization or other infirmity of this Lease or any
lack of right, power or authority.
(b) Lessee will not seek to recover all or any part
of such payment from Lessor (or any Lender) for any
reason whatsoever. If for any reason whatsoever this Lease
shall be terminated in whole or in part by operation of law
or otherwise, except as specifically provided in Sections
10.1 hereof, or except for termination attributable to the
default of Lessee which is governed by Section 15 below,
Lessee, so long as Lessor has not breached its covenant of
quiet enjoyment set forth in Section 22 hereof, agrees to
pay to Lessor an amount equal to each Rent payment due
hereunder at the time such payment would have become due and
payable in accordance with the terms hereof had this Lease
not been terminated in whole or in part. The obligation
of Lessee in the immediately preceding sentence shall survive
the expiration or the termination of this Lease other than
in accordance with its terms. To the extent permitted by
Applicable Law, Lessee hereby waives any rights
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which it may now have or which may be conferred upon it, by
statute or otherwise, to terminate, cancel, quit or
surrender this Lease except in accordance with the terms
hereof.
3.3. Supplemental Rent.
Lessee also agrees to pay to whomsoever shall
be entitled thereto any and all Supplemental Rent promptly
as the same shall become due and owing. All amounts of
Supplemental Rent as to which no due date is specified herein
shall become due and owing ten (10) days after written
demand by Lessor or any other Person to whom such
Supplemental Rent may be due and owing. In the event of any
failure on the part of Lessee to pay any Supplemental
Rent, Lessor shall have all rights, powers and remedies
provided for herein or by law or equity or otherwise in the
case of nonpayment of Interim Rent or Basic Rent. Lessee
will also pay to Lessor, on demand, as Supplemental Rent, to
the extent permitted by Applicable Law, interest at the
Overdue Rate on any part of any installment of Basic Rent
not paid when due for any period for which the same shall
be overdue and on any payment of Supplemental Rent (other
than interest comprised in Supplemental Rent), not paid when
due for the period from the due date thereof as provided
herein to, but not including, the date the same shall be
paid.
3.4. Payments on Business Days.
If any date on which a payment of Rent becomes due
and payable is not a Business Day, then such payment shall be
made on the next preceding Business Day, if such day is a
Tuesday through Saturday, and on the next succeeding Business
Day, if such day is a Sunday or a Monday.
3.5. Place and Manner of Payments.
All Rent payable by Lessee to Lessor shall be paid
to Lessor at Account 134-0-86460, ABA No. 021-000-128, Account
Name: CEF at Chemical Bank, 640 Madison Avenue, New York,
New York 10022, Reference: CCAir, Inc. (Spares) or at such
other place in the United States as Lessor may from time to
time designate to Lessee in writing. Each such payment of
Rent shall be made by Lessee in United States Dollars, free
and clear of all Taxes, by wire transfer in immediately
available funds on the day when such payment shall be due.
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SECTION 4. Representations and Warranties.
4.1. Lessee's Representations and Warranties.
Lessee represents and warrants that:
(a) Lessee is (i) a corporation duly organized
and validly existing in good standing under the laws of the
State of Delaware with the corporate power and authority to
carry on its business as now conducted, (ii) duly qualified
to do business and in good standing in each other
jurisdiction in which the failure so to qualify would
materially adversely affect its business or financial
condition or would impair its ability to perform its
obligations under this Lease, (iii) a "citizen of the
United States" within the meaning of 49 U.S.C. Section
40102(a)(15), and the rules and regulations of the FAA
thereunder, and (iv) a holder of an air carrier operating
certificate issued by the Department of Transportation
pursuant to 44705 of title 49 of the United States Code for
aircraft capable of carrying 10 or more individuals.
(b) Lessee has full power, authority and legal
right to own, hold under lease and operate its properties, to
carry on its business as presently conducted and to execute
and deliver and to perform its obligations under this Lease
and each of the other Operative Documents to which it is a
party;
(c) the execution and delivery of this Lease and
each of the other Operative Documents to which it is a party
has been duly authorized by all necessary corporate action
of Lessee and has been duly executed and delivered by Lessee
and, assuming the due authorization, execution and delivery
thereof by the other parties thereto and that such other
parties have full power, authority and legal right to enter
into the Operative Documents, this Lease and each of the
other Operative Documents to which Lessee is a party is a
legal, valid and binding obligation of Lessee, enforceable
against Lessee in accordance with its terms;
(d) the execution and delivery of this Lease and each of the
other Operative Documents to which it is a party, and
compliance by Lessee with the terms and provisions thereof, as
of the Delivery Date, do not and will not (i) result in
the violation of the provisions of the charter documents or
the by- laws of Lessee as in effect on the date hereof,
(ii) require stockholder approval or approval or consent of
any trustee or holders of any indebtedness of Lessee, except
such as shall have been duly obtained on or prior to the
Delivery Date, (iii) result in a breach of any terms or
provisions of, or constitute a default under, any
material indenture, mortgage or other agreement or
instrument as in effect on the date hereof to which Lessee is
a party or by which it or any of its property is bound, (iv)
violate any applicable law,
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rule or regulation, judgment, order or decree as in effect
on the date hereof and on the Delivery Date of any
government, governmental instrumentality or court having
jurisdiction over Lessee or any of its properties, or (v)
result in the creation or imposition of a Lien upon or
with respect to any of the properties of Lessee;
(e) no approval or consent of, or registration
with, or the giving of notice to, or the taking of any other
action in respect of, any court, governmental authority or
agency competent to assert jurisdiction (including,
without limitation, the Department of Transportation and
the FAA) is necessary for the valid authorization,
execution, delivery and performance by Lessee of this
Lease and each of the other Operative Documents to which it
is a party, except for (i) the filing and recording
pursuant to the Act of this Lease and the Lease Supplement,
(ii) the filing of the Financing Statements as set forth in
clause (f) (ii) below; and (iii) in the case of
performance after the Delivery Date, as may be required
in connection with the operation or maintenance of the
Equipment;
(f) except for (i) the filing for recordation
pursuant to the Act of this Lease and the Lease Supplement,
and (ii) the filing of the Financing Statements (and
continuation statements at periodic intervals) with respect
to the security and other interests in the Aircraft
created by the Financing Statement under the Uniform
Commercial Code (as in effect in any applicable jurisdiction),
no further action, including the filing or recording of
any document (including any Financing Statement) under the
laws of any applicable jurisdiction, is necessary or
advisable in any jurisdiction in or of the United States in or
to establish or perfect (A) Lessor's interest in the
Equipment, as against Lessee, the Aircraft Manufacturer,
Mellon, or any third parties, or (B) assuming the accuracy
of the representations and warranties of Lessor set forth in
Section 4.2, a first priority security interest in and to the
Equipment;
(g) its chief executive office (as that term is
used in Section 9-103(d) of the Uniform Commercial Code as
in effect in any applicable jurisdiction), and the place where
it keeps its corporate records concerning the Equipment, all
interest in, to and under any Operative Document, and its
contracts relating thereto, is located in Charlotte,
Mecklenburg County, North Carolina, and such chief executive
office, and place for records, has been located in Charlotte,
Mecklenburg County, North Carolina for at least four (4)
months prior to the date hereof;
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<PAGE>
(h) assuming the accuracy of the representations
and warranties of Lessor set forth in Section 4.2, the
execution and delivery of the Operative Documents and the
consummation of the transactions contemplated thereby
will not involve any transaction which is subject to the
prohibitions of Section 406 of ERISA (for which a statutory
or administrative exemption is not available) or in
connection with which a tax could be imposed under section
4975 of the Code;
(i) no part of the Rent or other payments to be
made by Lessee under the Operative Documents will be made
with assets of any plan (or its related trust), as defined in
section 4975(e) of the Code, or of any employee benefit
plan (or its related trust), as defined in Section 3(3) of
ERISA;
(j) neither Lessee nor any Person acting on behalf
of Lessee has directly or indirectly offered any equity
interest in and to the Equipment and/or this Lease or any
similar security for sale to, or solicited any offer to
acquire any equity interest in the Equipment and/or this
Lease or any similar security from, any Person in
violation of Section 5 of the Securities Act of 1933, as
amended;
(k) on the Delivery Date, all premiums on the
policies of insurance required by Section 11 of this Lease,
to the extent due and payable, shall have been paid;
(l) no Default or Event of Default has occurred and
is continuing under this Lease or any of the other
Operative Documents to which it is a party;
(m) on the Delivery Date, each item of Equipment
is free and clear of all Liens other than Lessor Liens and
Permitted Liens;
(n) there are no pending, or to the knowledge
of Lessee, threatened actions or proceedings before any
court or administrative agency or arbitrator that
would, either individually or in the aggregate, materially
adversely affect the financial condition, business or
operations of Lessee or the ability of Lessee to perform
its obligations under this Lease or any of the other Operative
Documents to which it is a party;
(o) Lessee is not a party to any agreement
or instrument or subject to any charter or other
corporate restriction, which, if performed in the
ordinary course of Lessee's business in accordance with
its terms, would prevent Lessee from performing any of its
obligations under this Lease or any of the other Operative
Documents to which it is a party; and
17
<PAGE>
(p) Lessee has previously delivered to Lessor
copies of its most recent financial statements, Form 10-K for
the year June 30, 1994 and a Form 10-Q in substantially final
form for the quarter ended September 30, 1994. Such financial
statements are complete and correct and fairly present the
financial condition of Lessee and the results of its
operations as of the respective dates and for the respective
periods covered thereby; there are no known contingent
liabilities or liabilities for taxes of Lessee which are
not reflected in said financial statements that could have a
material adverse effect on the ability of Lessee to perform
its obligations under this Lease.
4.2. Lessor's Representations and Warranties.
Lessor represents and warrants that:
(a) Lessor is a corporation duly organized and
validly existing in good standing under the laws of the State
of Delaware and is a "citizen of the United States" within
the meaning of 49 U.S.C. Section 40102(a)(15) and the rules
and regulations of the FAA thereunder;
(b) Lessor has full power, authority and legal
right to execute and deliver and to perform its obligations
under this Lease and the other Operative Documents to which it
is a party;
(c) the execution and delivery of this Lease and
the other Operative Documents to which it is a party, and
compliance by Lessor with the terms and provisions
thereof, as of the Delivery Date, do not (i) result in
the violation of the provisions of the charter documents
or the by-laws of Lessor as in effect on the date hereof,
(ii) require stockholder approval or approval or consent
of any trustee or holders of any indebtedness of Lessor,
except such as shall have been obtained on or prior to the
Delivery Date, (iii) result in a breach of any terms or
provisions of, or constitute a default under, any
material indenture, mortgage or other agreement or instrument
as in effect on the date hereof to which Lessor is a party
or by which it or any of its property is bound, (iv)
violate any applicable law, published rule or regulation,
judgment, order or decree as in effect on the date
hereof of any government, governmental instrumentality or
court having jurisdiction over Lessor or any of its
properties or (v) result in the creation or imposition of a
Lien upon or with respect to any of the properties of
Lessor;
(d) neither the execution and delivery by Lessor
of any of this Lease and the other Operative Documents to
which it is a party, nor its performance thereunder requires
the consent or approval of, the giving of notice to, the
registration with, the recording or filing of any document
with or the taking of any other action in respect of,
any Federal, state or local governmental body
18
<PAGE>
or regulatory authority, except for the filing of the Lease
and the Lease Supplement with the FAA under the Act and
except for filings, if any, made pursuant to any
periodic reporting requirements applicable to Lessor;
(e) the execution and delivery of this Lease and
the other Operative Documents to which it is a party has
been duly authorized by all necessary corporate action of
Lessor and each has been duly executed and delivered by
Lessor and, assuming the due authorization, execution and
delivery thereof by Lessee and the other parties thereto and
that Lessee and such other parties has full power, authority
and legal right to enter into this Lease and the other
Operative Documents to which it is a party, is a legal,
valid and binding obligation of Lessor, enforceable against
Lessor in accordance with its terms;
(f) neither Lessor nor any Person acting on behalf
of Lessor has directly or indirectly offered any interest in
and to the Equipment and/or the Lease or any similar security
for sale to, or solicited any offer to acquire the
Equipment and/or the Lease or any similar security from, any
Person in violation of Section 5 of the Securities Act of
1933, as amended;
(g) Lessor is not acquiring the Equipment with
the assets of any plan (or its related trust), as defined in
section 4975(e) of the Code, or of any employee benefit
plan (or its related trust), as defined in Section 3(3) of
ERISA, in either case, as interpreted by the final
regulations issued thereunder or any published ruling which
may be relied on as a precedent of the Internal Revenue
Service or the Department of Labor, as in effect on the date
this representation is made;
(h) on the Delivery Date, Lessor shall have
whatever title to the items of Equipment as was conveyed to
it by Mellon pursuant to the Bills of Sale; and
(i) on the Delivery Date, the Equipment is free
of Lessor Liens.
4.3. Limitation on Lessor's Liability.
(a) AS BETWEEN LESSOR AND LESSEE, LESSEE
REPRESENTS AND ACKNOWLEDGES THAT IT IS RELYING ON ITS OWN
INSPECTION AND KNOWLEDGE OF THE EQUIPMENT AND ACCEPTS THE
EQUIPMENT IN ITS "AS IS, WHERE IS" CONDITION. IT IS
EXPRESSLY AGREED THAT, LESSOR SHALL BE DEEMED TO HAVE
MADE OR GIVEN NO WARRANTY OR REPRESENTATION OF ANY KIND
WITH RESPECT TO OR IN RESPECT OF THE EQUIPMENT AS TO
AIRWORTHINESS, DESCRIPTION, FITNESS FOR PURPOSE, VALUE,
CONDITION, DESIGN OR OPERATION OF ANY KIND OR NATURE AND ALL
WARRANTIES OR REPRESENTATIONS, EXPRESS OR IMPLIED, STATUTORY
OR OTHERWISE IN RESPECT THEREOF ARE EXPRESSLY EXCLUDED.
LESSOR SHALL NOT BE DEEMED
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TO HAVE MADE, BY VIRTUE OF HAVING LEASED THE EQUIPMENT UNDER
THIS LEASE OR HAVING DONE OR FAILED TO DO ANY ACT OR HAVING
ACQUIRED OR FAILED TO ACQUIRE ANY STATUS UNDER OR IN
RELATION TO THIS LEASE, AND LESSOR HEREBY SPECIFICALLY
DISCLAIMS, ANY REPRESENTATION OR WARRANTY, EXPRESS OR
IMPLIED, AS TO AIRWORTHINESS, CONDITION, DESIGN,
OPERATION, MERCHANTABILITY, OR FITNESS FOR USE FOR A
PARTICULAR PURPOSE OF THE EQUIPMENT, OR AS TO THE QUALITY OF
THE MATERIAL OR WORKMANSHIP OF THE AIRCRAFT, OR AS TO ANY
OTHER REPRESENTATION OR WARRANTY WHATSOEVER, EXPRESS OR
IMPLIED, WITH RESPECT TO THE EQUIPMENT, INCLUDING,
WITHOUT LIMITATION, ANY LIABILITY IN TORT, OBLIGATION OR
LIABILITY ARISING FROM NEGLIGENCE, STRICT LIABILITY, ANY
IMPLIED WARRANTY ARISING FROM COURSE OF PERFORMANCE OR
DEALING OR USAGE OR TRADE, OR LOSS OR INTERRUPTION OF USE,
PROFIT, OR BUSINESS, OR OTHER CONSEQUENTIAL DAMAGES; AND
LESSEE HEREBY WAIVES, RELEASES, RENOUNCES AND DISCLAIMS
EXPECTATION OF OR RELIANCE UPON ANY SUCH REPRESENTATIONS OR
WARRANTIES. The amount of the Basic Rent contained
herein is based, in part, on the exculpatory clauses stated
above.
(b) Without limiting any of the foregoing,
Lessee waives any claim that it may have against Lessor on
account of any defect or alleged defect, known or
unknown, exterior or interior, apparent or concealed, with
respect to the Equipment, and Lessee acknowledges that
Lessor shall have no responsibility or liability whatsoever on
account of the condition or operation of the Equipment, any
part thereof or the records therefor unless such defect or
condition is caused by or results from Lessor's willful
misconduct.
(c) So long as no Default or Event of Default
has occurred and is continuing, Lessor hereby authorizes
Lessee to enforce in its own name such rights as Lessor
may have with respect to the Equipment or any Part, under any
warranty, service policy or product agreement of the
Aircraft Manufacturer, the maintenance and overhaul
agencies of the Equipment, or any subcontractor thereof,
to the extent that the same may be assigned or otherwise
made available to Lessee, and to the extent that the same may
not be so assigned or otherwise made available to Lessee,
Lessor agrees to exercise reasonable diligence, at Lessee's
expense, to enforce such rights as Lessor may have with
respect thereto for the benefit of Lessee; provided,
however, that Lessee shall not institute any litigation in
the name of Lessor against any such manufacturer or
supplier without having first obtained Lessor's consent,
which shall not unreasonably be withheld or delayed, and;
provided, further, that upon the occurrence of any Event
of Default and receipt of notice from Lessor to such
effect, all such rights shall immediately revert to Lessor,
including all claims thereunder, whether or not
perfected.
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SECTION 5. Return of the Equipment.
5.1. Return of Equipment.
On the last day of the Term or upon the termination
of this Lease pursuant to Section 15, Lessee, at its own
expense, shall return the Class A Equipment or the Class B
Equipment, as the case may be, by delivering the same to
Lessor at any airport within the continental contiguous United
States, Mexico or Canada as may be designated by Lessor.
5.2. Engines and Propellers.
No engine or propeller not owned by Lessor shall
be returned with the Equipment unless it is a replacement
Engine or Propeller, due to the occurrence of an Event of
Loss and such engine or propeller (a) shall have a value,
utility and remaining useful life at least equal to, and
shall be in as good operating condition as, an Engine or
Propeller, as the case may be, assuming such Engine or
Propeller was in the condition and repair required by the
terms hereof for an Engine or Propeller immediately
prior to such return, (b) shall not have accumulated more
time since its last overhaul, and time since its last hot
section inspection, than was accumulated on the replaced
engine, (c) shall be an engine or propeller of the same
manufacturer and the same or a comparable or an improved
model and suitable for installation and use on an
Airframe owned by Lessor and compatible for use with the
other Engines or Propellers, and (d) shall be mutually
acceptable to Lessor and Lessee, and Lessee will, at its
own expense and concurrently with such return, furnish
Lessor with a full warranty bill of sale as to title, in form
and substance satisfactory to Lessor, with respect to each
such engine or propeller and shall take such other action
as Lessor may reasonably request in order that such
engine or propeller shall be duly and properly titled in
Lessor. Upon passage of title as aforesaid to Lessor free
and clear of all Liens, such engine or propeller shall be
deemed to be an Engine or Propeller, as the case may be,
for all purposes hereof and thereupon Lessor will transfer
to Lessee, without recourse or warranty except a warranty
against Lessor's Liens, all of Lessor's right, title
and interest in and to an Engine or Propeller not
installed on an Airframe owned by Lessor at the time of
the return thereof.
5.3. Records.
(a) All current and historical records pertaining
to the Equipment shall be returned with the Equipment
including without limitation, time logs showing Hours and
Cycles on any given date; all documents; manuals (as
revised up to and including the most current revisions
issued by the manufacturer); data; overhaul records; Time
Controlled Part traceability to overhaul and "zero
21
<PAGE>
time since new" for life limited Parts; log books;
original Engine delivery documents; serviceable parts tags;
F.A.A. forms; modification records; inspection records
including NDT documentation (xray, eddy current,
etc.); and all other documentation pertaining to the
Equipment, Engines and Parts. Such records (i) shall
provide all documentation necessary to verify compliance
with all applicable FAA and federal aviation regulation
requirements, (ii) shall contain all original Maintenance
Program task cards for the accomplishment of all FAA and
Maintenance Program required tasks, (iii) shall contain all
documentation necessary for the Equipment to be placed on
the operation specifications of a certificated air carrier
approved by the FAA for operation of an aircraft under FAR
Part 121. If noncomputerized copies of maintenance records
are not available, then Lessee shall take action to insure
that Lessor and the FAA are provided with all requested
documentation of methods of compliance, component
overhaul and management, scheduling, quality control,
serial number verification, etc. These records shall be
all-inclusive for the Equipment, Engines, components,
rotables and assemblies, and, at the minimum, extend to
include all activities associated with each of the last
completed maintenance checks, MRB SSI sampling program,
repairs, SID Program, Aging Aircraft Program, scheduled
inspections and functional tests, and overhauls performed
in accordance with Lessee's Maintenance Program.
(b) All components and assemblies identified with
safe life limits shall be identified with their service
histories traceable to zero time since new, accumulated
Cycles or flight Hours as applicable and remaining service
lives on a separate listing.
(c) All documentation, flight and maintenance
records shall be delivered to Lessor with the Equipment. In
the event of missing or incomplete or records which do not
comply with the terms of this Lease, Lessee, at its cost,
shall reaccomplish the tasks necessary to produce such
records in accordance with its FAA approved maintenance
programs prior to return of the Equipment.
(d) All such documentation and records shall be in
the English language or (if not originally in the English
language) accompanied by a certified English translation and
shall be made available to Lessor for review at a central
location thirty (30) days prior to the agreed date of
Equipment delivery to Lessor.
5.4. Condition of Equipment.
In addition to the requirements set forth in
Section 5.6 of this Lease, on or before the expiration
or earlier termination of this Lease, Lessee, at its own
expense, shall return the Equipment in airworthy condition
and in compliance with all
22
<PAGE>
applicable federal aviation regulations ("FAR's"),
including FAR Part 121, and all of the following provisions:
(a) be free and clear of all Liens other than
this Lease, any Lessor's Liens and any Security Interest;
(b) The Equipment shall meet the requirements
for airworthiness certification for a transport category
commercial Aircraft in accordance with all applicable
federal aviation regulations and shall have a current and
effective airworthiness certificate issued by the FAA.
(c) The Equipment shall be in as good
operating condition as when delivered to Lessee hereunder,
ordinary wear and tear excepted. All items of Equipment used
in the interior of an Aircraft which are defective, damaged,
or excessively worn shall be repaired or replaced by Lessee.
(d) be clean by the standards of United
States passenger airlines;
(e) be "serviceable" and identified as
"serviceable" as required under the Federal Aviation
Regulations;
(f) otherwise be in the condition required by Part
121 of the Federal Aviation Regulations for use in
commercial passenger operation in the United States, if
applicable;
(g) be clean of all Lessee interior or exterior
names, logos, or similar markings, which names, logos
or similar markings shall have been removed or painted over
with the areas thereof refinished to match adjacent areas,
all in a workmanlike manner; and
(h) The Equipment shall be free of all
corrosion. Lessee shall provide documentation of
compliance with the manufacturer's recommended corrosion
prevention and control program, or other FAA approved
corrosion prevention and control program.
5.5. Airworthiness Directives; Service Bulletins.
At the time of return of the Equipment, (i)
the Equipment shall comply with the manufacturer's
original type certificate specifications, as revised up to
the end of Term, (ii) the Equipment, Propellers, and
Parts (appliances) shall comply with all applicable FAR's
and Airworthiness Directives ("AD's") issued by the FAA,
which require compliance within three (3) months after the
date of return of the Equipment, including termination of
all AD's for which such terminating action is permitted by
the AD, notwithstanding any waiver, deviation or time
extension obtained by
23
<PAGE>
Lessee from the FAA or otherwise other than any waiver,
deviation or time extension which is issued for all aircraft
or engines, as the case may be, of the same model and type as
such Airframe or such Engine, as the case may be,
without a requirement for application to the FAA for
such waiver, deviation, or time extension and (iii) the
Equipment shall be in terminating compliance with all
manufacturer's mandatory service bulletins, SSI, SID, and
aging aircraft programs which require compliance within three
(3) months after the date of return of the Equipment.
5.6. Maintenance.
(a) At the time of the return of the Equipment,
(i) the number of Hours and Cycles of operation remaining
until the next scheduled shop visit or scheduled module
change for the Engines shall be at least 50% of the
allowable Hours and Cycles between scheduled shop visits
or scheduled module changes, provided that no Engine may
have less than 30% of the allowable Hours and/or Cycles
(whichever is more limiting) remaining to its next scheduled
shop visit or scheduled module change, (ii) landing gear
and all time controlled components of Equipment and Engines
shall have a minimum of 50% time remaining (Hours,
Cycles, calendar time) of the allowable time between
scheduled overhauls (Hours, Cycles, calendar time), (iii)
replacement components must have an equivalent or later part
number, equal to the replaced component and be completely
interchangeable as to form, fit, and function, and the
replacement component must have at least an equal number of
Hours, Cycles and calendar time remaining as the replaced
component, but not less than the 50% limitation stated
above, (iv) in the event that any item of Equipment is an
auxiliary power unit ("APU"), the APU shall have a minimum of
50% time remaining (Hours, Cycles, calendar time) of the
allowable time between scheduled shop visits (Hours, Cycles,
calendar time) if the APU is being maintained on a
time- controlled basis in accordance with Lessee's FAA
approved maintenance program, and in any event, not more
than 12 months shall have elapsed since its last shop
visit for a major refurbishment and (v) if the
maintenance manual provides for a baroscope inspection of
the APU, such baroscope inspection, performed by Lessor's
representative, or an agency of Lessor's choosing, shall be
accomplished immediately prior to return, and all
discrepancies found shall be corrected by Lessee.
(b) If Lessee does not meet the above conditions
with respect to such Engines (it being understood that the 30%
minimum for each Engine must be met), Lessee shall pay Lessor
the higher Dollar amount between (i) the Dollar amount
computed by multiplying (A) the product of (x) 125% of the
actual cost of a reputable qualified third party mutually
acceptable to Lessor and Lessee to perform such scheduled
shop visit or module change multiplied by (y) the number
of Engines returned by (B) a fraction of which (x) the
numerator shall be the difference between 50% of the
allowable
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<PAGE>
Hours and Cycles for the Engines and the actual number of
Hours and Cycles of operation remaining to the next
scheduled shop visit or module change for such Engines and
(y) the denominator shall be the number of Hours of time and
Cycles allowable between scheduled shop visits or module
changes for an Engine, and (ii) the Dollar amount
representing the decrease in the fair market sales value of
the Engines returned due to Lessee's failure to comply with
the maintenance standards of this Section 5.6. Lessor shall
not be required to pay any amount to Lessee in the event
the net amounts are positive values.
(c) Prior to the end of the Term of the Lease,
all repairs accomplished during the Term of the Lease of a
temporary or interim nature, including repairs using
blind fasteners (except to the extent that double
fasteners are considered permanent repairs under the
manufacturer's structural repair manual as related to such
repairs) and those requiring repetitive inspections or future
upgrading, shall be upgraded to a permanent repair and all
external doublers (scab patches) shall be replaced with flush
repairs (except to the extent that external doublers are the
only approved repairs for such areas), all in accordance with
the applicable manufacturer's maintenance manual, structural
repair manual, or other FAA approved data.
(d) All aircraft and engine systems
(including galleys, passenger and cargo compartments)
shall be fully operational for their intended
functions. Lessor shall operationally check all
systems prior to the return of the Equipment and all
defects found shall be permanently repaired by Lessee, at
Lessee's expense.
(e) In the event any of the Equipment has
been maintained on a maintenance program other than an FAA
approved maintenance program, at Lessor's option, Lessee
shall cause the Equipment to be bridged onto (i) an FAA
approved maintenance program or (ii) the manufacturer's
recommended maintenance program in accordance with the
Maintenance Planning Data Document, or its equivalent.
(f) Neither any other item of Equipment nor any
Engine shall have any open, deferred or placarded
maintenance items or "watch" items, nor shall they have any
Hour, Cycle, or calendar time extensions, waivers, or
non-transferable alternate methods of compliance. A watch
item shall be defined as any item or discrepancy requiring
further inspection, where such additional inspection shall
be required at an interval of less than (i) a full "C"
Check, or (ii) 4,000 hours, whichever is greater.
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<PAGE>
(g) Each Engine shall be capable of developing
full rated take-off power at the critical maximum
outside air temperature without exceeding the maximum
limits for all parameters (temperature, fuel flow, rotor
speed, shaft speed, torque, etc.) as per the Engine
manufacturer's specifications. A full take-off power engine
run-up shall be performed in the presence of Lessor's
representatives immediately prior to the return of
Equipment, in accordance with the performance test in the
maintenance manual, or other comparable test (as agreed to by
Lessor), using temperature corrected charts. The test
results must not exceed the corrected limits in the
charts for any parameter.
5.7. Storage.
Upon any expiration or termination of this Lease,
at the written request of Lessor received by Lessee at least
30 days in advance of the date provided for redelivery
to Lessor hereunder (provided that no such notice period
shall be necessary if such expiration or termination
results from an Event of Default), Lessee will arrange,
or will cause to be arranged, storage of the Equipment
beyond the Term for a period not exceeding 90 (provided
that no such time limit shall apply if such expiration or
termination results from an Event of Default) days at a
mutually agreed location at Lessor's risk and at Lessor's
expense. During such storage period Lessee shall, if
requested by Lessor at least 30 days in advance of the
date provided for redelivery, use all reasonable efforts to
arrange for insurance meeting the requirements of Section 11
hereof in Lessor's name and at Lessor's expense.
5.8. Inspection.
Lessor shall inspect the Equipment and records prior
to the end of the Term of the Lease. The inspection will
include the opening or removal of panels as required by
Lessor, and shall include access to all compartments and
bays. All discrepancies discovered during such inspection
shall be permanently repaired by Lessee.
Immediately prior to the return of the Equipment,
each Engine shall have accomplished a hot and cold section
baroscope inspection, performed by Lessor's representative or
an agency of Lessor's choosing, in accordance with the
Engine manufacturer's maintenance manual, and any defects
discovered as a result of such inspection, which exceed the
Engine manufacturer's allowable limits, shall be corrected at
Lessee's expense.
26
<PAGE>
5.9. Payment Requirements.
Any amount due Lessor under this Section 5 shall
be payable not later than thirty (30) days after the
date the Equipment is returned as described in this Section
5.
5.10. Service Bulletin Kits.
All no-charge vendors' and manufacturers'
service bulletin kits ordered for the Equipment and
Engines but not installed therein shall be available without
charge to Lessor at the time of return of the
Equipment. Additionally, any outstanding purchase orders
for such kits with the manufacturers shall be assigned by
Lessee to Lessor, without cost, at such time or such kits
shall be delivered to Lessor when received by Lessee.
5.11. Non-discrimination.
Lessee agrees that it shall not discriminate
against the Equipment with respect to use and operation
thereof in order to avoid or reduce compliance by Lessee with
the requirements of this Section 5, except any reduced use
or operation reasonably necessary to comply with the
provisions of this Section 5.
5.12. Ownership.
Any documents, equipment and any other items
returned to Lessor pursuant to this Section 5, which are not
already owned by Lessor, shall thereupon become the property
of Lessor.
All references in this Section 5 to Hours and
Cycles remaining shall be references to FAA required
limitations under Lessee's then-current FAA-approved
maintenance program.
5.13. Corrections and Subsequent Corrections.
In the event that any item of Equipment, any Engine
or any Part fails upon the return thereof hereunder to
conform to any return condition requirement imposed by this
Lease, Lessee shall, without prejudice to the right of Lessee
to claim that the Equipment did comply with such return
condition requirement, at Lessor's option, shall either (i)
continue this Lease in effect, including the obligation to pay
Basic Rent hereunder, until such time as the Equipment is
brought up to the condition required by this Section 5, or
(ii) return the Equipment to Lessor and thereafter
reimburse Lessor for all costs reasonably incurred by Lessor
to have any such nonconformance corrected, at such time as
Lessor may deem appropriate at commercial rates then charged
by the Person selected by Lessor to perform such correction.
Any direct expense incurred by Lessor for such correction
shall become Supplemental Rent payable by Lessee within
thirty (30) days
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<PAGE>
following the submission of a written statement by Lessor
to Lessee, identifying the items corrected and setting
forth the expense of such correction. Lessee's obligations
to pay such Supplemental Rent shall survive the passage of
the end of the Term or other termination of this Lease.
SECTION 6. Liens.
Lessee shall not directly or indirectly create,
incur, assume or suffer to exist any Lien on or with respect
to any item of Equipment, title thereto or any interest
therein or in this Lease, except (a) the respective rights
of Lessor and Lessee as provided herein, (b) Lessor Liens,
(c) Liens for Taxes either not yet delinquent or being
contested in good faith (and for the payment of which such
reserves, if any, required under generally accepted
accounting principles have been provided) by appropriate
proceedings conducted with due diligence so long as
such proceedings shall not involve any material danger of
the sale, forfeiture or loss of any item of Equipment, or
any interest therein, (d) materialmen's, mechanics',
workmen's, repairmen's, employees' or other like liens
arising in the ordinary course of Lessee's business securing
obligations the payment of which either shall not be
overdue for a period of more than thirty (30) days or are
being contested in good faith (and for the payment of which
such reserves, if any, required under generally accepted
accounting principles have been provided) by
appropriate proceedings conducted with due diligence so
long as such proceedings shall not involve any danger of
the sale, forfeiture or loss of any item of Equipment, or
any interest therein, (f) Liens arising out of judgments or
awards against Lessee, unless the judgment or award secured
shall not, within sixty (60) days after the entry thereof,
have been discharged, vacated or reversed or the
execution thereof stayed pending appeal or, in the event of
any such stay, such judgment or award shall not have been
discharged, vacated or reversed within sixty (60) days after
the expiration of such stay, (g) the Lien of the
Security Agreement and any other Lien created pursuant to
Section 13.4 hereof, and (h) any other Lien with respect to
which Lessee shall have provided a bond or other security
adequate in the reasonable opinion of Lessor.
SECTION 7. Registration and Operation;
Possession; Insignia.
7.1. Registration and Operation.
Lessee shall maintain or cause each item of
Equipment to be maintained in order to keep such item of
Equipment in such operating condition as may be required for
commercial passenger operations in the United States
under U. S. registry in accordance with FAR Part 121 and
all other applicable FAR's; and Lessee shall maintain the
Equipment under the Maintenance Program. Lessee shall
maintain in the English language all records, logs and
other
28
<PAGE>
materials required to be maintained in respect of the
Equipment by the FAA. Lessee shall promptly furnish to
Lessor such information as may be requested by Lessor to
enable Lessor to file any reports required to be filed by
Lessor with any governmental authority because of
Lessor's ownership of the Equipment. Lessee agrees that
the Equipment shall not be maintained, used or operated
in violation of Applicable Law or in violation of any
airworthiness certificate, license or registration relating to
the Equipment, except to the extent Lessee shall be
contesting in good faith the validity or application of any
such Applicable Law in any reasonable manner that does not
materially adversely affect Lessor, the Equipment or any item
thereof. Lessee also agrees not to operate or locate the
Equipment, or permit any Person to operate or locate the
Equipment in any area excluded, or in any manner that causes
the Equipment to be excluded, from coverage by any insurance
required by the terms of Section 11, except when operated
under contract with, or in the case of requisition by,
the United States Government, where Lessee shall obtain or
cause to be obtained indemnity or insurance in lieu of such
insurance from the United States Government against the risks
and in the amounts required by Section 11 covering such
operations.
7.2. Possession.
Lessee shall not, without the prior written consent
of Lessor, sublease or otherwise in any manner deliver,
transfer or relinquish possession of any item of Equipment,
including any Engine or any Propeller, or permit any item of
Equipment to be subleased or possession of any item of
Equipment, including any Engine or any Propeller, otherwise
in any manner to be delivered, transferred or relinquished,
or install any item of Equipment, including any Engine or
Propeller, or permit any item of Equipment including any
Engine or Propeller to be installed, on any airframe other
than an Airframe; provided, however, that so long as no Event
of Default shall have occurred and be continuing at the time
of such delivery, transfer or relinquishment of possession
or installation and so long as Lessee shall comply with
the provisions of Section 11, Lessee may, without the prior
written consent of Lessor:
(a) Intentionally Left Blank;
(b) deliver possession of any item of
Equipment, including any Engine or Propeller, to the
manufacturer thereof (or for delivery thereto) or to any FAA
certified repair station (or for delivery thereto) for
testing, service, repair, maintenance or overhaul work
on such Equipment or Engine or Propeller or any part
thereof or for alterations or modifications in or additions
to the Equipment or such Engine or Propeller to the extent
required or permitted by the terms of Section 8.3;
29
<PAGE>
(c) Intentionally Left Blank;
(d) install an Engine or Propeller on an
Airframe owned by Lessee or by Lessor free and clear of all
Liens, except (i) Permitted Liens and those that apply only
to the engines, propellers (other than Engines or
Propellers), appliances, parts, instruments, appurtenances,
accessories, furnishings and other equipment (other than
Parts) installed on such Airframe (but not to the Airframe as
an entirety) and, with respect to an Airframe owned by Lessor
and leased to Lessee, the rights of the parties to the lease
covering such Airframe or their assignees (ii) mortgage
liens or other security interests; provided, however, that,
in the case of clause (ii), Lessor's right, title and
interest in and to such Engine or Propeller shall not be
subject to such mortgage liens or other security
interests, notwithstanding the installation of such Engine
or Propeller on such Airframe;
(e) install an Engine or Propeller on an
Airframe leased to Lessee or purchased by Lessee subject to a
conditional sale or other security interest; provided,
however, that (i) such Airframe is free and clear of all
Liens, except the rights of the parties to the lease or
conditional sale or other security agreement covering such
Airframe, or their assignees, and except Liens of the type
permitted by paragraph (d) of this Section 7.2, and (ii)
Lessor's right, title and interest in and to such Engine or
Propeller shall not be subject to such conditional sale or
other security interests, notwithstanding the installation
of such Engine or Propeller on such Airframe; and
(f) install an Engine or Propeller on an
airframe owned by Lessee, leased to Lessee or purchased by
Lessee under circumstances where neither paragraph (d) nor
paragraph (e) above is applicable; provided, however, that,
if such installation shall adversely affect Lessor's right,
title and interest in and to such Engine or Propeller, such
installation shall be deemed an Event of Loss with respect to
such Engine or Propeller and Lessee shall comply with
Sections 10.2 or 10.3 in respect thereof, Lessor not
intending hereby to waive any right or interest it may have to
or in such Engine or Propeller under Applicable Law until
compliance by Lessee with Section 10.2 or 10.3.
7.3. No Release of Lessee.
No transfer of possession permitted by Section
7.2 above shall relieve Lessee of any obligations of
Lessee under this Lease.
7.4. Insignia.
On or prior to the Delivery Date, Lessee agrees to affix
and maintain on each Engine, on each item of Class B
Equipment, and on any other item of Class A Equipment having
a Lessor's Cost in
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<PAGE>
excess of $50,000 (if not prevented by applicable law
or regulations or by any governmental authority) a nameplate
bearing the inscription:
"Leased From
C.I.T. Leasing Corporation"
or such other nameplate as from time to time may be
reasonably requested by Lessor. Except as above provided,
Lessee shall not allow the name of any Person to be placed
on any Engine or any other item of Equipment as a
designation that might be interpreted as a claim of
ownership; provided, however, that nothing herein shall
prohibit Lessee from placing its customary colors and
insignia or the insignia of the manufacturer on any Engine
or other item of Equipment.
7.5. Location of Equipment.
(a) Notwithstanding anything to the contrary
contained herein or in any of the other Operative Documents,
Lessee shall initially locate the Spare Parts at the Spare
Parts Location. Lessee shall maintain the Spare Parts at the
Spare Parts Location and shall not move, or permit to be
moved, any of the Spare Parts to any other place except
after giving 30 days' prior written notice to Lessor and
after making all filings and recordings as are necessary or
advisable to protect the legal title of Lessor in such Spare
Parts. In any event, Lessee shall not locate any Spare
Part, or permit any Spare Part to be located, anywhere
other than at a maintenance base operated by Lessee on its
route system.
(b) Lessee shall initially locate the Class
B Equipment as set forth in the Exhibit A hereto. Lessee
shall maintain the Class B Equipment as set forth on
Exhibit A, as applicable thereto, and shall not move, or
permit to be moved, any of the Class B Equipment to any
other place except after giving 10 days' prior written
notice to Lessor and after making all filings and
recordings as are necessary or advisable to protect the
legal title of Lessor in such Class B Equipment. In any
event, Lessee shall not locate any of the Class B Equipment,
or permit any of the Class B Equipment to be located,
anywhere other than at a station facility operated by Lessee
on its route system.
SECTION 8. Replacement of Parts; Alterations
and Modifications; Maintenance.
8.1. Replacement of Parts.
Lessee, at its own cost and expense, shall
promptly replace or cause to be replaced all Parts that may
from time to time be incorporated in or installed on or
attached to any Engine or Propeller or any other item of
Equipment and that may from time
31
<PAGE>
to time become worn out, lost, stolen, destroyed, seized,
confiscated, damaged beyond repair or permanently rendered
unfit for use for any reason whatsoever, except as otherwise
provided in Section 8.3 below. In addition, Lessee may, at
its own cost and expense, remove in the ordinary course
of maintenance, service, repair, overhaul or testing, any
Parts, whether or not worn out, lost, stolen, destroyed,
seized, confiscated, damaged beyond repair or permanently
rendered unfit for use; provided, however, that, except as
otherwise provided in Section 8.3 below, Lessee, at its own
cost and expense, shall replace such Parts as promptly as
practicable and any such Part shall be immediately restored
or refurbished to the condition required by this Lease.
Except as otherwise provided in Section 8.2 below,
all replacement Parts shall be free and clear of all Liens
(except for Permitted Liens) and shall be in good operating
condition and shall have a value, utility and remaining
useful life at least equal to, the Parts replaced assuming
such replaced Parts were in the condition and repair required
to be maintained by the terms of this Lease and, in the case
of Time Controlled Parts shall not have more time accumulated
since overhaul (and time since new, in the case of a life
limited part) than the replaced part. Except as otherwise
provided in Section 8.3 below, all Parts at any time removed
from any item of Equipment, any Engine or any Propeller
shall remain the property of Lessor, no matter where
located, until such time as such Parts shall be replaced by
Parts, other than Spare Parts subject to a lease agreement
with Lessor, that shall have been incorporated in or
installed on or attached to such item of Equipment, Engine
or Propeller and that shall meet the requirements for
replacement Parts specified above. In the event that any
Spare Part is installed in any engine (including an Engine),
propeller (including a Propeller), or any Airframe or any
other item of Equipment as permitted herein, Lessee shall
replace such Spare Part by complying with the provisions
of Section 10.1 hereof to the same extent as if an Event of
Loss had occurred with respect to such Spare Part. Any
Spare Part thus installed in any Engine, Propeller, or item
of Equipment shall be deemed a Part for purposes of this
Lease.
8.2. Intentionally Left Blank.
8.3. Alterations, Modifications and Additions.
(a) Lessee, at its own expense, shall make or cause
to be made such alterations and modifications in and
additions to such items of Equipment, the Engines and
Propellers as may be required to be made from time to time
by Applicable Law during the Term regardless of on whom
such requirements are, by their terms, nominally imposed;
provided, however, that Lessee may, in good faith, contest
the validity or application of such Applicable Law in
any reasonable manner; provided, that such contest shall
not
32
<PAGE>
adversely affect Lessor, such items of Equipment, the
Engines, the Propellers, or Lessor's rights therein, or
expose Lessor to criminal liability or, to the extent Lessor
is not indemnified pursuant to Section 24 hereof, civil
liability.
(b) In addition, Lessee, at its own expense, may
from time to time make such alterations and modifications
in and additions to any item of Equipment, Engine or
Propeller as Lessee may deem desirable in the proper
conduct of its business, including, without limitation, (i)
removal of Parts (for purposes of this Section 8.3 called
"Obsolete Parts") that Lessee shall deem obsolete or no
longer suitable or appropriate for use in such item of
Equipment, Engine, or Propeller; provided, however, that
Lessee shall notify Lessor in writing of the removal of such
Obsolete Parts and upon request of Lessor within thirty (30)
days of receipt of such notification by Lessor, shall
deliver such Obsolete Parts as directed by Lessor at Lessee's
expense and (ii) subject to Section 8.1 and Section
8.3(a), installation of replacement Parts and thereafter
from time to time replacing any such replacement Parts with
the Parts replaced thereby; provided, however, that no such
alteration, modification or addition shall diminish the value,
utility or remaining useful life of such item of Equipment,
Engine, or Propeller, or impair the condition or
airworthiness thereof, below the value, utility, remaining
useful life, condition and airworthiness thereof on the
Delivery Date (assuming such item of Equipment, Engine or
Propeller was then of the value, utility, and remaining
useful life and in the condition and airworthiness
required to be maintained by the terms of this Lease).
Except as otherwise provided in Section 8.2, title to all
Parts incorporated in or installed on or attached or added
to any item of Equipment, Engine or Propeller as the result
of such alteration, modification or addition shall, without
further act, vest in Lessor.
(c) Notwithstanding the foregoing Section 8.3(b)
and provided that no Event of Default shall have occurred
and be continuing, Lessee may, at any time during the Term,
remove any Part; provided, however, that (i) such Part shall
be in addition to, and not in replacement of or
substitution for, any Part originally incorporated in or
installed on or attached to any item of Equipment, Engine
or Propeller at the time of delivery thereof hereunder or
any Part in replacement of or substitution for any such
Part, (ii) such Part shall not be required to be
incorporated in or installed on or attached or added to such
item of Equipment, Engine or Propeller pursuant to the terms
of this Section 8, (iii) such Part can be removed from
such item of Equipment, Engine or Propeller without
diminishing or impairing the value, utility, or airworthiness
required to be maintained by the terms of this Lease that
such item of Equipment, Engine or Propeller would have had
at such time had such original alteration, modification
or addition not been made, and (iv) Lessee shall restore
any area where such Part has been removed to the condition it
would have
33
<PAGE>
been in had the Part not been installed or to the
requirements of this Agreement, whichever is greater. Upon
the removal by Lessee of any Part as above provided,
title thereto shall, without further act, vest in Lessee
and such Part shall no longer be deemed part of the item of
Equipment, Engine or Propeller from which it was removed. Any
Part not removed by Lessee as above provided prior to the
return of the Equipment, any Engine or Propeller to Lessor
hereunder shall remain the property of Lessor.
8.4. Maintenance in General.
Lessee agrees it has sole obligation to
maintain, repair, service and overhaul each item of Equipment
to keep it at all times (regardless of whether it is attached
to an operating Airframe, Engine or Propeller) in an
airworthy condition and in compliance with all applicable
FAR and AD requirements and any maintenance programs, and
to keep it in as good condition as it was on the Delivery
Date throughout the Term and until such item is redelivered
to Lessor pursuant to Section 5 hereof, ordinary wear and
tear excepted, and to keep it on the U.S. Registry under
the Act (unless the right to U.S. Registry under the Act is
not available solely as a result of any act or omission of
Lessor or Lender) and to maintain it under the FAA-approved
maintenance and inspection program of Lessee which meets the
FAA requirements for United States commercial airline
operations under Part 121 of the Federal Aviation Regulations
and is approved by the appropriate FAA Flight Standards
Air Carrier District Office having responsibility for
Lessee's operations and maintenance of the Equipment by
Lessee (the "Maintenance Program").
8.5. Specific Items of Maintenance.
(i) Lessee acknowledges that maintenance and repairs
shall include, but shall not be limited to, the following
specific items which Lessee agrees:
(a) to perform or have performed in accordance
with the Maintenance Program all maintenance work, and to
ensure that all such maintenance shall be in accordance with
the regulations and directives of the FAA; provided,
however, Lessee may contest in good faith the validity
or applicability of any such regulations or directives in
any reasonable manner that does not materially adversely
affect Lessor or Lessor's interest in the Equipment if such
contest does not expose Lessor to criminal liability or, to
the extent Lessor is not indemnified pursuant to Section 24
hereof, civil liability. Lessee shall have all
maintenance and repairs performed at repair facilities
approved by the FAA (and authorized by the manufacturer, as
appropriate) to repair or work on de Havilland DHC-8-100
airframes, Pratt & Whitney PW 120A engines, or Hamilton
Standard 14SF-7 propellers, or other items of Equipment, as
appropriate. Such work shall be performed with no less
skill
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and care than work performed on other de Havilland DHC-8-100
airframes, Pratt & Whitney PW 120A engines, or Hamilton
Standard 14SF-7 propellers, or other items of Equipment, as
the case may be, operated by Lessee. With respect to the
maintenance of Engines and Propellers, Lessee shall apply
the same criteria to the Engines and Propellers as it applies
to the maintenance of other Lessee owned or operated Pratt
& Whitney PW 120A engines or Hamilton Standard 14SF-7
propellers, respectively;
(b) to correct or cause to be corrected, within
such time frames as mandated by the Maintenance Program,
deficiencies revealed at any time by any inspection of Lessor
or Lessee which, under the Maintenance Program, require
repair, replacement, overhaul or adjustment. Such work
shall be performed with no less skill and care than work
performed on other de Havilland DHC-8-100 airframes, Pratt &
Whitney PW 120A engines, or Hamilton Standard 14SF-7
propellers, or other items of Equipment, as the case may be,
operated by Lessee. With respect to the maintenance of
Engines or Propellers, Lessee shall apply the same criteria to
the Engines and Propellers as it applies to the maintenance
of other Lessee owned or operated Pratt & Whitney PW 120A
engines or Hamilton Standard 14SF-7 propellers, respectively;
(c) to maintain all Equipment, Engine and
Propeller documentation, including, without limitation, the
logs, manuals and technical records relating to the
service, inspection, maintenance, modification, repair and
overhaul of the Equipment, Engines, Propellers and Parts
installed therein and thereon, in compliance with FAA
regulations, including without limitation, Federal Aviation
Regulations Part 121, in the English language, and in
up-to-date status and to make these available for review by
Lessor on reasonable notice at Lessee's principal de Havilland
DHC-8 maintenance base, in order to facilitate Lessor's
ability to inspect periodically the Equipment, monitor the
maintenance during the Term, and to facilitate the use, sale
or lease of the Equipment to a third party at the end of the
Term;
(d) provide to Lessor, upon Lessor's prior
request from time to time, copies of any written
communications with manufacturers of the Equipment,
Engines or Propellers with respect to any discrepancies or
malfunctions identified by Lessor in such request and to
permit Lessor to copy same;
(e) provide to Lessor, upon Lessor's prior
request from time to time, copies of reports as to (i) the
Hours/Cycles operated for each Engine, Propeller and
Hour/Cycle controlled Spare Part and the time remaining to
the next significant check or inspection; (ii) Airworthiness
Directive compliance status and Time Controlled Component
Status, (iii) a list of those Service Bulletins,
Airworthiness Directives and engineering modifications
applicable to de Havilland DHC-8 aircraft, Pratt & Whitney
PW 120A engines or
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Hamilton Standard 14SF-7 propellers in Lessee's fleet, and
(iv) copies of all damage reports submitted to the FAA with
respect to the Equipment and to permit Lessor to copy same;
(f) provide to Lessor, upon Lessor's prior
request from time to time, a copy of Lessee's most recent
FAA-Approved Operations Specifications-Part D applicable to
the Equipment, Engines, and Propellers with copies of
any amendments or additions made thereto and to permit
Lessor to copy same;
(g) provide to Lessor and make available
for inspection, upon Lessor's prior request from time to
time, a complete and current copy of Lessee's de
Havilland DHC-8 Maintenance Manual on microfilm and the
Maintenance Program; and
(h) to provide to Lessor, upon request from time
to time, a report setting forth the engine airframe
position and tail number of each Engine and Propeller
(or its physical location if not installed on an Airframe).
(ii) Lessee agrees to pay to Lessor maintenance
reserves with respect to the Equipment during the Term of
this Lease in accordance with Exhibit C hereto. All
maintenance reserves shall be applied in accordance with
the applicable provisions of Exhibit C hereto.
8.6. Airworthiness Directives.
Lessee agrees at its sole cost and expense
to accomplish on the Equipment, Engines, Propellers and
Parts any airworthiness directive or any other mandatory
regulation, directive or instruction ("Airworthiness
Directive") which the FAA or any other government agency
having jurisdiction may from time to time issue prior to or
during the Term and which becomes due during the Term.
All Airworthiness Directives shall be accomplished in
accordance with the requirements of the Airworthiness
Directive and all Federal Aviation Regulations, bulletins
and manuals published by the manufacturer of the
Aircraft, Engines, Propellers or Parts, or any method
acceptable to the FAA Administrator, as appropriate.
Lessee agrees to accomplish Airworthiness Directives on
the Equipment on substantially the same timetable
(considering such factors as normally scheduled
maintenance shop visits) as that used in scheduling
accomplishment of Airworthiness Directives on similar
Lessee-operated items of Equipment.
8.7. Service Bulletins.
Lessee agrees, at its sole cost and expense, to
incorporate into the Equipment, Engines, and Propellers de
Havilland, Pratt & Whitney, Hamilton Standard and other
vendor service bulletins ("Service Bulletins") which Lessee
plans to adopt during the Term
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for the other de Havilland DHC-8-100 aircraft, Pratt & Whitney
PW 120A engines, or Hamilton Standard 14SF-7 propellers
in its fleet, on substantially the same timetable
(considering such factors as normally scheduled maintenance
shop visits) as that used in scheduling similar
Lessee-operated aircraft for incorporation of such service
bulletins.
SECTION 9. Intentionally Left Blank.
SECTION 10. Loss, Destruction, Requisition, Etc.
10.1. Event of Loss with Respect to Spare Part(s).
Upon the occurrence of an Event of Loss with respect
to one or more Spare Parts, Lessee shall forthwith (and in any
event within fifteen (15) days after such occurrence)
give Lessor written notice thereof and Lessee shall, on the
Stipulated Loss Payment Date (as set forth on Schedule 2
hereto) next following the date of occurrence of such Event
of Loss, pay to Lessor, in immediately available funds, the
Stipulated Loss Value of such Spare Parts, determined as of
such Stipulated Loss Payment Date. At such time as Lessor
shall have received the amount specified above, the
obligation of Lessee to pay the installments of Basic Rent due
and payable after (but not on) the date of such payment with
respect to such Spare Parts shall cease and the Term with
respect to such Spare Parts shall end. Upon such
payment (together with the payment of all other unpaid Rent)
Lessor shall transfer to Lessee or its designee, without
recourse or warranty (except as to the absence of Lessor
Liens), all Lessor's right, title and interest in and to (x)
such Spare Parts, and furnish to Lessee or its designee a
bill of sale in form and substance reasonably satisfactory
to Lessee, evidencing such transfer and (y) all claims of
Lessor, if any, against third parties, for damage to or
loss of such Spare Parts that were subject to such Event of
Loss.
10.2. Event of Loss with Respect to an Engine.
Upon the occurrence of an Event of Loss with respect
to an Engine, Lessee shall forthwith (and in any event
within fifteen (15) days after such occurrence) give
Lessor written notice thereof and shall, within 30 days
after the occurrence of such Event of Loss, or on the last
day of the Term, if earlier, convey or cause to be conveyed
to Lessor, as replacement for the Engine with respect to
which such Event of Loss occurred, title, free and clear of
all Liens (other than Permitted Liens) to a Replacement
Engine not constituting an Engine, but having a value,
utility and remaining useful life at least equal to, and
being in as good operating condition as, the Engine with
respect to which such Event of Loss occurred assuming such
Engine was in the condition and repair required by the
terms of this Lease immediately prior to the
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occurrence of such Event of Loss and assuming such Engine
was, and such Replacement Engine is, in half-time
condition. Prior to or at the time of any such
conveyance, Lessee, at its own expense, shall (i) furnish
Lessor with a full warranty (as to title) bill of sale, in
form and substance reasonably satisfactory to Lessor, with
respect to such Replacement Engine, (ii) cause a Lease
Supplement to be duly executed by Lessee and filed for
recording pursuant to the Act, (iii) furnish Lessor with
such evidence of compliance with the insurance provisions
of Section 11 with respect to such Replacement Engine
as Lessor may reasonably request, (iv) furnish Lessor with an
opinion of counsel (and such evidence of title as Lessor may
reasonably request) to the effect that, upon such
conveyance, such Replacement Engine will be leased hereunder
to the same extent as the Engine replaced thereby and
that the execution and delivery of the warranty bill of sale
referred to in clause (i) above and the Lease Supplement
referred to in clause (ii) above have been duly authorized
by all necessary corporate action, and (v) furnish Lessor
with an opinion of FAA counsel with respect to the
interest of Lessor in such Replacement Engine. Upon full
compliance by Lessee with the terms of this Section 10.2,
Lessor shall transfer to Lessee or its designee, without
recourse or warranty (except as to the absence of Lessor
Liens), all Lessor's right, title and interest, if any, in and
to (A) the Engine with respect to which such Event of Loss
occurred and furnish to Lessee a bill of sale, in form
and substance reasonably satisfactory to Lessee,
evidencing such transfer and (B) all claims of Lessor, if
any, against third parties, for damage to or loss of the
Engine subject to such Event of Loss. The parties hereto
agree that the procedure outlined in the preceding sentence
shall not apply to any Engine with respect to which an Event
of Loss occurs or to the related Replacement Engine if such
replacement is owned by Lessor. In such case Lessor shall
retain title to both and Lessee shall promptly replace the
Engine to which the Event of Loss has occurred with an
Engine in the condition required by the first sentence of
this Section and as otherwise required by this Lease. For all
purposes hereof, each such Replacement Engine shall, after
such conveyance, be deemed part of the property leased
hereunder and shall be deemed an "Engine" as defined herein.
No Event of Loss with respect to an Engine under the
circumstances contemplated by the terms of this Section 10.2
shall result in any reduction or abatement in Rent.
10.3. Event of Loss with Respect to a Propeller.
Upon the occurrence of an Event of Loss with respect
to a Propeller under circumstances, Lessee shall forthwith
(and in any event within fifteen (15) days after such
occurrence) give Lessor written notice thereof and shall,
within 30 days after the occurrence of such Event of Loss, or
on the last day of the Term, if earlier, convey or cause
to be conveyed to Lessor, as replacement for the
Propeller with respect to which such Event of
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Loss occurred, title, free and clear of all Liens (other
than Permitted Liens) to a Replacement Propeller not
constituting a Propeller, but having a value, utility and
remaining useful life at least equal to, and being in as good
operating condition as, the Propeller with respect to which
such Event of Loss occurred assuming such Propeller was in
the condition and repair required by the terms hereof
immediately prior to the occurrence of such Event of Loss.
Prior to or at the time of any such conveyance, Lessee, at
its own expense, shall (i) furnish Lessor with a full warranty
(as to title) bill of sale, in form and substance
reasonably satisfactory to Lessor, with respect to
such Replacement Propeller, (ii) cause a Lease Supplement to
be duly executed by Lessee and filed for recording pursuant
to the Act, (iii) furnish Lessor with such evidence of
compliance with the insurance provisions of Section 11
with respect to such Replacement Propeller as Lessor
may reasonably request, (iv) furnish Lessor with an opinion
of counsel (and such evidence of title as Lessor may
reasonably request) to the effect that, upon such conveyance,
such Replacement Propeller will be leased hereunder to
the same extent as the Propeller replaced thereby and that
the execution and delivery of the warranty bill of sale
referred to in clause (i) above and the Lease Supplement
referred to in clause (ii) above have been duly
authorized by all necessary corporate action, and (v)
furnish Lessor with an opinion of FAA counsel with respect
to the interest of Lessor in such Replacement Propeller. Upon
full compliance by Lessee with the terms of this Section
10.3, Lessor shall transfer to Lessee or its designee,
without recourse or warranty (except as to the absence of
Lessor Liens), all Lessor's right, title and interest, if any,
in and to (A) the Propeller with respect to which such Event
of Loss occurred and furnish to Lessee a bill of sale, in
form and substance reasonably satisfactory to Lessee,
evidencing such transfer and (B) all claims of Lessor, if any,
against third parties, for damage to or loss of the Propeller
subject to such Event of Loss. The parties hereto agree
that the procedure outlined in the preceding sentence
shall not apply to any Propeller with respect to which an
Event of Loss occurs or to the related Replacement Propeller
if such replacement is owned by Lessor. In such case
Lessor shall retain title to both and Lessee shall promptly
replace the Propeller to which the Event of Loss has occurred
with a propeller in the condition required by the first
sentence of this Section and as otherwise required by this
Lease. For all purposes hereof, each such Replacement
Propeller shall, after such conveyance, be deemed part of
the property leased hereunder and shall be deemed a
"Propeller" as defined herein. No Event of Loss with
respect to a Propeller under the circumstances contemplated
by the terms of this Section 10.3 shall result in any
reduction or abatement in Rent.
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10.4. Event of Loss with Respect to Class B
Equipment.
Upon the occurrence of an Event of Loss with respect
to any item of Class B Equipment, Lessee shall, on the
Stipulated Loss Payment Date (as set forth on Schedule 1
hereto) next following the date of occurrence of such Event
of Loss, pay to Lessor, in immediate available funds, the
Stipulated Loss Value for such item of Class B Equipment,
determined as of such Stipulated Loss Payment Date. At
such time as Lessor shall have received the amount specified
above, the obligation of Lessee to pay Basic Rent due and
payable after (but not on) the date of such payment with
respect to such item of Class B Equipment shall cease and the
Term with respect to such item of Class B Equipment shall end.
Upon such payment (together with the payment of all other
unpaid Rent) Lessor shall transfer to Lessee or its
designee, without recourse or warranty (except as to the
absence of Lessor Liens), all Lessor's right, title and
interest in and to (x) such item of Class B Equipment, and
furnish to Lessee or its designee a bill of sale in form
and substance reasonably satisfactory to Lessee, evidencing
such transfer and (y) all claims of Lessor, if any, against
third parties, for damage to or loss of such item of Class B
Equipment that was subject to such Event of Loss.
10.5. Application of Payments from
Governmental Authorities for Requisition of Title, etc.
Any payments (other than insurance proceeds
the application of which is provided for in Section 11)
received at any time by Lessor or by Lessee from any
governmental authority or other person with respect to an
Event of Loss shall be applied as follows:
(a) if such payments shall be received with respect
to Spare Parts or with respect to Class B Equipment, so much
of such payments as shall not exceed the Stipulated Loss
Value for such Spare Parts or the Class B Equipment
required to be paid by Lessee pursuant to Section 10.1 or
10.4 shall be paid to Lessor and applied in reduction of
Lessee's obligation to pay such Stipulated Loss Value, if
not already paid by Lessee, and, to the extent already paid
by Lessee, shall be applied to reimburse Lessee therefor,
and the balance, if any, of such payments remaining
thereafter shall be paid over to, or retained by, Lessor;
and
(b) if such payments shall be received with respect
to Spare Parts or an Engine or Propeller under
circumstances contemplated by Sections 10.1, 10.2 or 10.3
such payments shall be paid over to, or retained by Lessee if
Lessee shall have fully performed its obligations under such
Sections 10.1, 10.2 or 10.3, as applicable.
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10.6. Requisition for Use by the United
States Government.
In the event of the requisition for use by the
United States Government of any item of Equipment during
the Term, Lessee shall promptly notify Lessor of such
requisition and all Lessee's obligations under this Lease
with respect to such item of Equipment shall continue to
the same extent as if such requisition had not occurred;
provided, however, that if such item of Equipment shall
not be returned by the United States Government prior to
the end of the Term, Lessee shall be obligated to
return such item of Equipment to Lessor pursuant to, and in
all other respects in compliance with the provisions of,
Section 5 promptly upon its return by the United
States Government. All payments received by Lessor or Lessee
from the United States Government for the use of such item
of Equipment during the Term shall be paid over to, or
retained by, Lessee; and all payments received by Lessor or
Lessee from the United States Government for use of such
item of Equipment after the Term shall be paid over to, or
retained by, Lessor.
SECTION 11. Insurance.
11.1. Public Liability and Property Damage
Insurance.
(a) Except as provided in paragraph (d) of
this Section 11.1, Lessee shall carry or cause to be
carried, at no cost and expense to Lessor, commercial
aircraft liability (including, without limitation,
passenger legal liability) insurance and property
damage insurance, cargo liability, contractual liability
and products liability (exclusive of manufacturer's
product liability insurance) with respect to the Equipment,
and war risk insurance (i) in an amount not less than
$125,000,000 combined single limit, (ii) of the type
usually carried by United States regional or commuter air
carriers owning or operating similar aircraft and which shall
cover risks of the kind customarily insured against by such
air carriers, and (iii) which shall be maintained in effect
with insurers of recognized responsibility and acceptable to
Lessor.
(b) Any policies of insurance carried in
accordance with this Section 11.1 and any policies taken out
in substitution or replacement for any of such policies (i)
shall name Lessor, as owner of the Equipment, and Lessor,
the Minister and Mellon as additional insureds, as their
interests may appear (but without imposing on Lessor, the
Minister or Mellon liability to pay the premiums for such
insurance or increasing the insurer's limit of liability as a
result of the inclusion of an additional insured), (ii) shall
provide that, in respect of the interest of Lessor in such
policies, the insurance shall not be invalidated regardless
of any breach or violation of any warranty, declaration
or condition contained in such policies by Lessee, and (iii)
shall provide that
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if such insurance shall be canceled for any reason whatever
(other than due to lapse at the normal expiration date in
accordance with the terms of any such policy), or if any
material change shall be made in such insurance which
adversely affects the interest of Lessor, such cancellation or
change shall not be effective as to Lessor for thirty (30)
days (seven (7) days in the case of war risk and allied
perils coverage) after receipt by Lessor of written notice
from such insurers of such cancellation or change. Lessor
shall not be responsible for representations or warranties
made to underwriters.
(c) Each liability policy (i) shall be primary
without right of contribution from any other insurance carried
by Lessor, (ii) shall expressly provide that all the
provisions thereof, except the limits of liability, shall
operate in the same manner as if there were a separate
policy covering each insured and (iii) shall waive any
right of the insurers to any set-off or counterclaim or
any other deduction, whether by attachment or otherwise, in
respect of any liability of Lessor to the extent of any moneys
due to Lessor.
(d) During any period that the Equipment is
in storage, Lessee may carry, in lieu of the insurance
required by paragraph (a) above, insurance otherwise
conforming with the provisions of said paragraph (a), except
that (i) the amounts of coverage shall not be required to
exceed the amounts of public liability and property damage
insurance from time to time applicable to similar
passenger aircraft that comprise Lessee's fleet in similar
storage; and (ii) the scope of the risks covered and the type
of insurance shall be the same as from time to time shall be
applicable to similar passenger aircraft that comprise
Lessee's fleet in similar storage; provided that Lessee
shall have provided prior written notice to Lessor of its
intention to place the Equipment in storage and the proposed
changes to the insurance coverage required by paragraph (a)
and Lessor shall have provided its prior written approval of
such changes.
11.2. Insurance Against Loss or Damage to
the Equipment.
(a) Except as provided in paragraph (e) of
this Section 11.2, Lessee shall maintain or cause to be
maintained in effect, at no cost or expense to Lessor,
with insurers of recognized responsibility and acceptable
to Lessor, all-risk ground, taxiing and flight aircraft
hull insurance covering any Engine or Propeller while
installed on an Airframe and all-risk coverage with respect
to any Engines, any Propellers or Parts while removed from
an Airframe insured for their replacement cost (including,
without limitation, war risk and governmental
confiscation and expropriation, nationalization, seizure
(other than by the United States Government), hijacking and
terrorism insurance. Such insurance shall at all times while
the Equipment is subject to this
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Lease be in an amount not less than the applicable
Stipulated Loss Value of the Equipment as in effect from
time to time, the "agreed value".
(b) Any policies carried in accordance with
this Section 11.2 covering the Equipment and any policies
taken out in substitution or replacement for any such
policies (i) shall name Lessor, as owner of the Equipment, as
sole loss payee, and Lessor and the Minister, as additional
insureds, as their interests may appear (but without
imposing on Lessor or the Minister liability to pay premiums
nor shall Lessor have responsibility for representations
or warranties to underwriters with respect to such
insurance), (ii) shall provide that (x) in the event of a
loss involving proceeds in excess of $100,000, the proceeds
in respect of such loss up to the amount of Stipulated Loss
Value for the item of Equipment shall be payable to Lessor,
including in the case of a loss with respect to an Engine
or Propeller installed on an Airframe other than an Airframe
owned by Lessor, in which case Lessee shall arrange for any
payment of insurance proceeds in respect of such loss to be
held for the account of Lessor, whether such payment is
made to Lessee or any third party, it being understood and
agreed that, in the case of any payment to Lessor otherwise
than in respect of an Event of Loss, Lessor shall, upon
receipt of evidence satisfactory to it that the damage
giving rise to such payment shall have been repaired or that
such payment shall then be required to pay for repairs then
being made, pay the amount of such payment to Lessee or its
order, (y) the entire amount of any loss involving proceeds
of $100,000 or less shall be paid to Lessee or its order
unless a Default or an Event of Default shall have
occurred and be continuing and the insurer shall have been so
notified by Lessor, (iii) the amount of any proceeds to the
extent in excess of the Stipulated Loss Value for the
applicable item of Equipment shall be paid to Lessee or its
order, so long as no default has occurred, (iv) shall
provide that if such insurance shall be canceled for any
reason whatever (other than due to lapse at the normal
expiration date in accordance with the terms of any such
policy), or if any material change shall be made in
such insurance which adversely affects the interest of
Lessor, such cancellation or change shall not be effective
as to Lessor for thirty (30) days (seven (7) days in the
case of war risk and allied perils coverage) after receipt by
Lessor of written notice from such insurers of such
cancellation or change, (v) shall provide that, in respect
of the interest of Lessor in such policies, the insurance
shall not be invalidated regardless of any breach or
violation of any warranty, declaration or condition contained
in such policies by Lessee, (vi) to the extent that Lessee
has waived its rights of recovery against Lessor
hereunder, shall waive any rights of subrogation of the
insurers against Lessor, as owner of the Equipment;
provided, however, that the exercise by the insurers of such
right of subrogation shall not in any way delay payment of
any claim that would otherwise be payable by such insurers
but for
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the existence of such rights of subrogation, (vii) shall be
primary without any right of contribution from any other
insurance carried by Lessor, and (viii) shall waive any right
of the insurers to set-off or counterclaim or any other
deduction, whether by attachment or otherwise, in respect of
any liability of Lessor to the extent of any moneys due to
Lessor.
(c) As between Lessor and Lessee, it is agreed
that all insurance payments under insurance policies
required to be maintained by Lessee pursuant to this Section
11.2 received as a result of the occurrence of an Event of
Loss shall be applied as follows: (i) if such payments shall
be received with respect to Class B Equipment or Spare
Parts, so much of such payments as shall not exceed the
Stipulated Loss Value for such Spare Parts or Class B
Equipment required to be paid by Lessee pursuant to Section
10.1 or 10.4 shall be applied in reduction of Lessee's
obligation to pay such Stipulated Loss Value, if not already
paid by Lessee, or, if already paid by Lessee, shall be
applied to reimburse Lessee therefor and the balance, if
any, of such payments remaining thereafter shall be paid
over to, or retained by, Lessee; provided, however, that
Lessee shall have fully performed, or concurrently
therewith shall fully perform, the terms of Section 10.1 or
10.4 with respect to the Event of Loss for which such
payments are made; and (ii) if such payments shall be
received with respect to an Engine or Propeller under the
circumstances contemplated by Sections 10.2 or 10.3,
such payments shall be paid over to, or retained by, Lessee;
provided, however, that Lessee shall have fully performed,
the terms of Sections 10.2 or 10.3 with respect to the Event
of Loss for which such payments are made.
As between Lessor and Lessee, the insurance
payments received as a result of any property damage loss not
constituting an Event of Loss shall be applied in payment
for repairs or for replacement property in accordance with
the terms of Sections 7 and 8, if not already paid for by
Lessee or, if already paid for by Lessee, to reimburse
Lessee therefor, and any balance remaining after
compliance with such Sections with respect to such loss
shall be paid to Lessee.
(d) Notwithstanding the foregoing provisions of
this Section 11.2, any amount referred to in the immediately
preceding paragraph or in clause (i) or (ii) of paragraph
(c) above that shall be payable to Lessee as provided
therein (other than any such amount to the extent in excess
of the Stipulated Loss Value for the Equipment) shall
nevertheless not be paid to Lessee or, if it shall have
already been paid directly to Lessee, shall not be retained by
Lessee, if at the time of such payment a Default or an Event
of Default shall have occurred and be continuing, but shall
be paid to and held by Lessor as security for the
obligations of Lessee under this Lease and, if Lessor
shall declare this Lease to be in default
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pursuant to Section 15, shall be applied against Lessee's
obligation hereunder as and when due. At such time as there
shall not be continuing any such Default or Event of Default,
such amount shall be paid to Lessee to the extent not
previously applied in accordance with the preceding
sentence.
(e) During any period that any item of Equipment is
in storage, Lessee may carry or cause to be carried, in lieu
of the insurance required by paragraph (a) above, insurance
otherwise conforming with the provisions of said paragraph (a)
except that the scope of the risks and the type of
insurance shall be the same as from time to time
applicable to similar passenger aircraft and equipment
that comprise Lessee's fleet in similar storage and
acceptable to Lessor.
11.3. Reports, etc.
On or before the Delivery Date and at least
annually thereafter during the Term, prior to expiration of
each insurance policy, Lessee shall furnish to Lessor and
the Minister an original certificate of insurance and/or
a report signed by Rollins Burdick Hunter of Virginia,
Inc. (or any other independent aircraft insurance brokers
reasonably acceptable to Lessor) describing in reasonable
detail the insurance then carried and maintained with
respect to the Equipment and stating the opinion of such
firm that the insurance then carried and maintained with
respect to the Equipment complies with the terms hereof;
provided, however, that the information contained in such
report shall not be made available by Lessor or the Minister
to anyone except (a) to their respective counsel or
independent public accountants or independent insurance
advisors so long as such persons in turn agree to hold such
information confidential, (b) as may be required by any
statute, court or administrative order or decree or
governmental ruling or regulation or (c) as may be required
by any governmental authority. Lessee shall cause such firm
to agree to advise Lessor and the Minister in writing of any
default in the payment of any premium, of any other act or
omission on the part of Lessee of which it shall have
knowledge and which might invalidate or render unenforceable,
in whole or in part, any insurance on the Equipment and of
any lapse in the insurance carried and maintained on the
Equipment pursuant to this Section 11 at the normal
expiration date. Each insurance policy provided for by this
Section shall be in form and with deductibles satisfactory
to Lessor.
11.4. Indemnification by the United States
Government in Lieu of Insurance.
Notwithstanding any provisions of this Section
11 requiring insurance, Lessor agrees to accept, in
lieu of insurance against any risk with respect to the
Equipment, indemnification from, or insurance provided by, the
United States Government
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against such risk in an amount which, when added to the
amount of insurance against such risk maintained by Lessee
with respect to the Equipment shall be at least equal to
the amount of insurance against such risk otherwise required
by this Section 11.
11.5. Additional Insurance by Lessor and Lessee.
Lessee may, at its own expense, carry insurance
with respect to its interest in the Equipment in amounts in
excess of that required to be maintained by this Section 11.
Lessor may, at its own expense, carry insurance with respect
to its interest in the Equipment, provided that such
insurance maintained by Lessor does not prevent Lessee
from carrying the insurance required by this Section 11 or
adversely affect such insurance or the cost thereof. The
proceeds of any such insurance carried by Lessee or Lessor
shall be paid to Lessee or Lessor, respectively.
SECTION 12. Inspection.
At all reasonable times, Lessor, the Minister or
their respective authorized representatives may, at their own
risk and expense, inspect the Equipment, examine the books
and records of Lessee relating thereto, and reasonably
request information concerning the Equipment; provided,
however, that no exercise of such inspection or examination
right shall, in the good faith opinion of Lessee,
interfere with the normal operation of the Equipment by, or
the business of, Lessee. Neither Lessor nor the Minister
shall have any duty to make any such inspection or
examination nor shall either of them incur any liability
or obligation by reason of not making any such
inspection or examination. Without limiting the generality
of the foregoing, Lessor shall have the right to visually
inspect the Equipment six (6) months prior to the end of
the Term, to determine if the modifications, alterations or
improvements to the Equipment, if any, have diminished the
value, utility, remaining useful life or airworthiness of
the Equipment; provided, that any such inspection
accords with the requirements of the first sentence of this
Section 12.
SECTION 13. Assignment; Binding Effect; Security
Interests.
13.1. Assignment by Lessor.
Lessor shall not cause or suffer any
assignment, conveyance or other transfer of all or any
portion of its right, title or interest in, to or under this
Lease or its interest in the Equipment (a "Transfer") except
as provided below (provided that no such restrictions shall
apply if an Event of Default has occurred):
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(a) Without the prior consent of Lessee, Lessor
may make any Transfer to (i) any Affiliate of Lessor, if
Lessor remains directly and primarily liable and not merely
as a surety for the obligations of such Affiliate
hereunder; (ii) to any Person if such Person has a net
worth, or combined capital, surplus, and undivided profits,
as of its most recent audited financial statements of not
less than $25,000,000; or (iii) to any other Person if the
obligations or such Person under the Operative Documents
applicable to Lessor are guaranteed by a Person which
meets the requirements of clause (ii) of this paragraph
(a);
(b) Any Transfer to any Person other than
one satisfying the requirements set forth in clause (a) (i),
(ii) or (iii) above, may be made only with the prior written
consent of Lessee, which shall not unreasonably be withheld;
(c) Notwithstanding any other provision of
this Section 13, no Transfer shall be made (i) except to a
Person that on the date of such Transfer is a "citizen of the
United States" within the meaning of 49 U.S.C. Section
40102(a)(15), (ii) that would create a relationship that would
be in violation of the Act or that would prevent the continued
United States registration of the Aircraft under the Act,
without regard to the "based and primarily used"
provisions of the Act and without any other actions being
required to be taken by Lessee or any other Person relating
to the status or citizenship of the Transferee, and (iii)
that would result in a violation of Section 5 of the
Securities Act of 1933, as amended, or constitute a
"prohibited transaction" within the meaning of ERISA;
(d) Each transferee shall execute and deliver
an agreement in form and substance reasonably satisfactory to
Lessee whereby such transferee agrees to be bound by all the
terms and provisions of, and to assume and confirm all of
the obligations of Lessor under, this Lease from after the
effective date of such Transfer and makes representations of
the scope provided for as Lessor in each of such agreements;
(e) No Transfer pursuant to this Section 13.1
shall impair or diminish Lessee's rights hereunder; and
(f) Lessor shall give notice of each such
proposed Transfer to Lessee at least five (5) Business Days
prior to the date on which such proposed Transfer is to
become effective, setting forth the name and address of the
proposed Transferee and the date on which such transfer is
proposed to become effective and shall furnish such
additional information (including opinions of counsel) as
may be reasonably requested or required to demonstrate
compliance with the provisions of this Section 13.1.
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13.2. Assignment by Lessee.
Except as otherwise expressly provided herein,
Lessee will not, without the prior written consent of Lessor,
assign or otherwise transfer any of its rights hereunder.
13.3. Binding Effect.
Subject to the foregoing Sections 13.1 and 13.2,
the terms and provisions of this Lease shall be binding
upon and inure to the benefit of Lessor and Lessee and
their respective permitted successors and permitted assigns.
13.4. Security Interests.
Lessor may encumber any item of Equipment, or
assign its interest or any part thereof under this Lease to
a Lender (who may act as agent for other Lenders); provided
that (a) the Lender shall be a reputable financial
institution, (b) the offering and sale of such
indebtedness shall have been made in compliance with all
securities laws and shall not require, or shall be exempt
from, registration or qualification under such securities
laws, (c) entering into the Security Agreement shall not
constitute a "prohibited transaction" within the meaning of
ERISA, (d) Lessee shall have received an opinion of counsel
to Lessor, reasonably acceptable to Lessee, as to matters set
out in clauses (b) and (c) and such other matters as
Lessee may reasonably require, (e) Lessor shall reimburse
Lessee for all costs and expenses, including reasonable
attorneys fees, incurred in connection with such assignment
or security interest, and (f) Lessor shall have provided
Lessee prior written notice of its intent to enter into
such Security Agreement or assignment.
SECTION 14. Events of Default.
14.1. Events of Default.
Each of the following events shall constitute an
"Event of Default" (whether any such event shall be
voluntary or involuntary or come about or be effected by
operation of law or pursuant to or in compliance with any
judgment, decree or order of any court or any order,
rule or regulation of any administrative or
governmental body) and each such Event of Default shall
be deemed to exist and continue so long as, but only so
long as, it shall not have been fully remedied:
(a) Lessee shall fail to make any payment of
Interim or Basic Rent within five (5) Business Days after the
same shall have become due; or
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(b) Lessee shall fail to make any payment
of Supplemental Rent within ten (10) Business Days after
receiving written notice from Lessor that the same shall have
become due; or
(c) Lessee shall fail to perform or observe any
other covenant or agreement to be performed or observed by it
hereunder and such failure shall continue unremedied for a
period of thirty (30) days after written notice thereof by
Lessor; or
(d) any representation or warranty made by
Lessee herein or in any document or certificate required to be
furnished by Lessee in connection herewith or therewith or
pursuant hereto or thereto shall at any time prove to have
been incorrect in any material respect at the time made; or
(e) the entry of a decree or order for relief by
a court having jurisdiction in the premises in respect of
Lessee in an involuntary case under the Federal bankruptcy
laws, as now or hereafter constituted, or any other
bankruptcy, insolvency or other similar Applicable Law,
or, appointing a receiver, liquidator, assignee,
custodian, trustee, sequestrator (or other similar official)
of Lessee or for all or any material portion of its property,
or ordering the winding-up or liquidation of its affairs,
and the continuance of any such decree or order
unvacated, unstayed and in effect for a period of ninety
(90) days after the date of its entry; or
(f) the commencement by Lessee of a voluntary
case under the Federal bankruptcy laws, as now or
hereafter constituted, or any other bankruptcy, insolvency or
other similar Applicable Law, or the consent by it to the
appointment of or taking possession by a receiver,
liquidator, assignee, custodian, trustee, sequestrator (or
other similar official) of Lessee or for all or any material
portion of its property; or
(g) Lessee shall fail to maintain insurance
coverage with respect to the Equipment required to be
maintained in accordance with the provisions of Section
11 hereof, shall operate the Equipment without having
the insurance required hereunder or shall operate the
Equipment outside the scope of coverage of such insurance;
or
(h) an Event of Default (as defined therein)
shall have occurred under any other lease agreement between
Lessor and Lessee entered into on or after the Closing Date;
or
(i) Lessee shall default in the due observance
and performance of any covenant or agreement imposed on Lessee
in any other aircraft lease or by any agreement securing or
evidencing any obligation of Lessee for the payment of
borrowed money or for the deferred purchase price of property
evidenced by a promissory note
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(excluding trade payables), such default shall have
continued for a period sufficient to permit the acceleration
of the maturity of such obligation, and the aggregate amount
of all such defaulted obligations shall be at least one
million dollars ($1,000,000); or
(j) a final judgment for the payment of money
in excess of one million dollars ($1,000,000) shall be
rendered by a court of competent jurisdiction against Lessee
and the same shall remain undischarged and in effect for a
period of 90 days during which execution of such judgment
shall not be effectively stayed; or
(k) the Insurance Agreement or any other
insurance agreement of the Minister with respect to which
Lessor has an interest on or after the Closing Date shall
cease to be in full force and effect for any reason
whatsoever.
SECTION 15. Remedies.
15.1. Remedies.
Upon the occurrence of any Event of Default and at
any time thereafter so long as the same shall be continuing,
Lessor may, at its option, by notice to Lessee, declare this
Lease to be in default (provided that no such notice or
declaration shall be necessary with respect to an Event of
Default pursuant to Section 14.1 (e) or (f)); and, at any
time thereafter, Lessor may do one or more of the following
with respect to any item of Equipment, as Lessor in its
sole discretion shall elect, to the extent permitted by,
and subject to compliance with any mandatory requirements
of, Applicable Law then in effect:
(a) cause Lessee, upon the written demand of
Lessor and at Lessee's expense, to return promptly, and
Lessee shall return promptly, the Equipment to Lessor or
its order in the manner and condition required by, and
otherwise in accordance with all the provisions of, Section
5 as if the Equipment were being returned at the end of the
Term or Lessor, at its option, may enter upon the premises
where all or any part of the Equipment is located and
take immediate possession of and remove the same, all
without liability accruing to Lessor for or by reason of
such entry or taking of possession or removing, whether for
the restoration of damage to property caused by such action
or otherwise;
(b) sell any item of Equipment at public or
private sale, as Lessor may determine, or otherwise dispose
of, hold, use, operate, lease to others or keep idle any item
of Equipment as Lessor, in its sole discretion, may
determine, all free and clear of any rights of Lessee and
without any duty to account to Lessee with respect to such
action or inaction or (except that any proceeds derived
therefrom shall be applied against amounts due and payable
by Lessee to Lessor pursuant to paragraph (c) of this
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Section 15.1 to the extent that Lessor elects to exercise
its rights under such paragraph) for any proceeds with
respect thereto;
(c) whether or not Lessor shall have exercised,
or shall thereafter at any time exercise, any of its rights
under paragraph (a) or paragraph (b) of this Section 15.1
with respect to any item of Equipment, Lessor, by written
notice to Lessee requesting that the Fair Market Sales Value
or Fair Market Rental Value of any such item of Equipment be
determined, may demand that Lessee pay to Lessor, and Lessee
shall pay to Lessor, on the first Rent Payment Date
occurring at least five Business Days after the
determination of such Fair Market Sales Value or Fair Market
Rental Value, as the case may be, as liquidated damages for
loss of a bargain and not as a penalty (in lieu of the
installments of Basic Rent for any such item of Equipment due
and payable on and after such Rent Payment Date), any unpaid
Rent for the Equipment due and payable prior to such Rent
Payment Date plus whichever of the following amounts
Lessor, in its sole discretion, shall specify in such notice
(together with interest, if any, on such amount at the Overdue
Rate from such Rent Payment Date to but excluding the date of
actual payment): (i) provided Lessor shall not have sold the
Equipment pursuant to paragraph (b) of this Section 15.1, an
amount equal to the excess, if any, of the Stipulated Loss
Value for the Equipment determined with reference to the
Rent Payment Date specified for payment in such notice, over
the Fair Market Rental Value of the Equipment for the
remainder of the Term, after discounting such Fair Market
Rental Value monthly (effective on Rent Payment Dates) to
present value as of the payment date specified in such
notice at the Applicable Rate; or (ii) an amount equal to
the excess, if any, of the Stipulated Loss Value for the
Equipment (determined with reference to such Rent Payment
Date), over the sum of (x) Fair Market Sales Value, as of
the payment date specified in such notice, of any item of
Equipment which shall not have been sold pursuant to
paragraph (b) of this Section 15.1 and (y) if any item of
Equipment shall have been so sold, the net proceeds of such
sale (after deduction of all reasonable costs of remarketing
and sale), plus interest at the Overdue Rate on the amount
of such net proceeds (after such deduction) from and
including the date of such sale to but excluding such Rent
Payment Date; and/or
(d) Lessor may terminate or rescind this Lease as
to any item of Equipment, and/or may exercise any other
right or remedy which may be available to it under
Applicable Law or proceed by appropriate court action to
enforce the terms hereof or to recover damages for the breach
hereof.
(e) In addition, Lessee shall be liable, except
as otherwise provided above, for any and all unpaid
Rent due hereunder before, during or after the exercise
of any of the foregoing remedies, together with interest on
such unpaid amounts at the Overdue Rate and for all legal
fees and other costs and expenses
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incurred by reason of the occurrence of any Event of
Default or the exercise of Lessor's remedies with
respect thereto, including all costs and expenses incurred in
connection with the return of the Equipment in accordance
with the terms of Section 5 hereof or in placing the Equipment
in the condition and with airworthiness certification as
required by this Lease, and particularly such Section;
provided, however, that if Lessee is required to return or
surrender possession of the Equipment in accordance with
this Section 15 and Lessor does not within 360 days after
the date of such return or surrender exercise its rights
under paragraph (c) of this Section 15.1 with respect to the
Equipment, there shall be deducted from each installment of
Basic Rent for the Equipment becoming due after the expiration
of such 360-day period an amount equal to the Fair Market
Rental Value of the Equipment, for the remainder of the Term
after the expiration of such 360-day period (computed as of
the date of such expiration). At any sale of the Equipment or
any Engine or any Propeller pursuant to this Section 15,
Lessor (but not Lessee) may bid for and purchase such
property. Lessor agrees to give Lessee at least fifteen (15)
days' written notice (which the parties agree constitutes
commercially reasonable notice) of the date fixed for any
public sale of the Equipment or any Engine or any Propeller or
of the date on or after which will occur the execution of
any contract providing for any private sale and any such sale
shall be conducted in general so as to afford Lessee a
reasonable opportunity to bid.
(f) In effecting any repossession, Lessor and
its representatives and agents, to the extent permitted by law
shall: (i) have the right to enter upon any premises where it
reasonably believes any item of Equipment to be located; (ii)
not be liable, in conversion or otherwise, for the taking
of any personal property of Lessee which is in or
attached to any item of Equipment which is repossessed;
(iii) not be liable or responsible, in any manner, for
any inadvertent damage or injury to any of Lessee's property
in repossessing and holding any item of Equipment, except for
that directly and solely caused by or in connection with
Lessor's gross negligence or willful acts; (iv) have the
right to maintain possession of and dispose of any item of
Equipment on any premises owned by Lessee or under Lessee's
control; and (v) have the right to obtain a key to any
premises at which any item of Equipment may be located from
the landlord or owner thereof.
(g) If required by Lessor, Lessee, at its
sole expense, shall assemble and make the Equipment
available at a place designated by Lessor in accordance
with Section 5 hereof. Lessee hereby agrees that, in the
event of the return to or repossession by Lessor of the
Equipment any rights in any warranty (express or implied)
heretofore assigned to Lessee or otherwise held by Lessee
shall without further act, notice or writing be assigned
or reassigned to Lessor, if assignable. Following an Event
of Default, Lessee shall be liable to Lessor for all
expenses,
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disbursements, costs and fees, included all legal fees and
expenses, incurred in (i) repossessing, storing, preserving,
shipping, maintaining, repairing and refurbishing any item of
Equipment to the condition required by Section 5 hereof, (ii)
preparing any item of Equipment for sale or lease,
advertising the sale or lease of any item of Equipment
and selling or releasing any item of Equipment, and
(iii) in exercising its rights hereunder. Lessor is hereby
authorized and instructed, at its option, to make
expenditures which Lessor reasonably considers advisable to
repair and restore any item of Equipment to the condition
required by Section 5 hereof, all at Lessee's sole expense.
(h) No remedy referred to in this Section 15
is intended to be exclusive, but, to the extent
permissible hereunder or under Applicable Law, each shall be
cumulative and in addition to any other remedy referred to
above or otherwise available to Lessor at law or in equity;
and the exercise or beginning of exercise by Lessor of
any one or more of such remedies shall not preclude the
simultaneous or later exercise by Lessor of any or all of
such other remedies. No express or implied waiver by
Lessor of any Default or Event of Default shall in any way
be, or be construed to be, a waiver of any future or
subsequent Default or Event of Default. Except as set
forth herein and to the extent permitted by applicable
law, Lessee hereby waives any rights now or hereafter
conferred by statute or otherwise which may require Lessor to
sell, lease or otherwise use any item of Equipment in
mitigation of Lessor's damages as set forth in this Section
15 or which may otherwise limit or modify any of Lessor's
rights or remedies under this Section 15.
For purposes of this Section 15, the Fair Market Rental Value
or the Fair Market Sales Value of any property shall be
determined by a nationally recognized aircraft appraiser,
chosen by Lessor, who shall determine such values on the basis
of the lesser of (a) the actual location and condition of
the Equipment or (b) the location and condition required
upon return of the Equipment pursuant to this Lease.
15.2. Lease Insurance Payments.
Any amounts paid by Lessee to Lessor in accordance
with this Section 15 shall also reduce Lessee's monetary
obligations hereunder in the event this Lease is assigned
to the Minister pursuant to the Insurance Agreement, with
the result that Lessee shall in no event be liable for more
than one payment of any monetary obligation hereunder.
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SECTION 16. Further Assurances.
Forthwith upon the execution and delivery of each
Lease Supplement, Lessee shall cause such Lease Supplement,
and, in the case of the initial Lease Supplement this Lease,
to be duly filed and recorded in accordance with the Act.
Lessee will also execute and deliver such further documents
and take such further action as Lessor may from time to
time reasonably request in order more effectively to carry
out the intent and purpose of this Lease and to establish
and protect the rights and remedies created or intended to
be created herein and in this Lease and any Security
Agreement permitted by Section 13.
SECTION 17. Notices.
All notices, requests, demands or other
communications required hereunder or given pursuant hereto
shall be in writing unless otherwise expressly provided and
shall become effective when delivered by hand or
received by telex, facsimile transmission, telegram or
registered mail, postage prepaid, addressed as follows:
(a) if to Lessee, at
CCAIR, Inc.
4700 Yorkmont Road, Second Floor
Charlotte, NC 28208
Attention: President and
Chief Executive Officer
FAX: 704-359-0351
(b) if to Lessor, at
C.I.T. Leasing Corporation
1211 Avenue of the Americas
New York, New York 10036
Attention: Senior Vice President - Legal
FAX: 212-536-1388
or at such other address as any party may from time to
time hereafter designate to the other party in writing.
SECTION 18. Covenants.
18.1. Lessor's Covenants.
Lessor covenants that:
Lessor will not directly or indirectly create,
incur, assume or suffer to exist any Lessor Lien on or
against the Equipment; provided, however, that Lessor shall
not be required to
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remove any Lien which would otherwise constitute a Lessor Lien
hereunder so long as (i) the existence of the Lien, in
the reasonable opinion of Lessee, poses no material risk of
seizure of the Equipment or interfere, in any way, with
the use or operation of the Equipment by Lessee pursuant
to the terms hereof, (ii) the existence of the Lien does
not affect the priority or perfection of, or otherwise
jeopardize, the Lien of any Lender or result in threatened or
actual interruption in the payment of Rent or any portion
thereof, and (iii) Lessor is diligently contesting such
Lien. Lessor will, at its own cost and expense, promptly
take such action as may be necessary duly to discharge any
Lessor Lien and shall indemnify and hold harmless Lessee
against any and all claims, losses, liabilities, damages,
penalties, actions, suits, costs, expenses and
disbursements (including reasonable legal fees and expenses)
of whatsoever kind and nature imposed on, incurred by or
asserted against Lessee or the Equipment as a consequence
of any such Lessor Lien.
18.2. Lessee's Covenants.
Lessee covenants that:
(a) Lessee shall furnish:
(i) to Lessor and the Minister, as soon
as available, and in any event within 90 days after the end
of each of the first three fiscal quarters of each fiscal year
of Lessee, commencing with the fiscal quarter ending
September 30, 1994, an unaudited balance sheet of Lessee and
its subsidiaries as at the end of such quarter and the
related statements of operations for such quarter and for the
period from the beginning of the fiscal year to the end of
such quarter, setting forth in each case in comparative form
the corresponding figures for the corresponding period in
such other preceding fiscal year, all in reasonable detail
and duly certified by the chief financial officer or
controller of Lessee as having been prepared in accordance
with generally accepted accounting principles;
(ii) to Lessor and the Minister, as soon
as available, and in any event within 120 days after the end
of each fiscal year of Lessee, commencing with the fiscal
year ending June 30, 1994, balance sheets of Lessee and its
subsidiaries as at the close of such fiscal year and the
related consolidated statements of operations and
statements of cash flows for such year, in comparative form
with the preceding fiscal year, in each case certified by
independent public accountants of national standing
selected by Lessee as having been prepared in accordance with
generally accepted accounting principles and practices
consistently applied (except as noted therein);
provided, however, that Lessee shall be deemed to have
satisfied its obligations under this clause (B) and under
clause (A) above if and to the extent that Lessee has
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provided to Lessor periodic reports required to be filed by
Lessee with the Securities and Exchange Commission containing
the required financial information for the periods described
in such clauses (A) and (B); and
(iii) to Lessor and the Minister, promptly upon
the sending or filing thereof, copies of all such
financial statements and reports which Lessee or the
affiliated group of which Lessee is a member sends to its
stockholders, and copies of all Forms 10-K, 10-Q and 8-K
filed under the Securities Act of 1933, as amended, which
Lessee files with the Securities and Exchange Commission
or any governmental authority which may be substituted
therefor, or with any national securities exchange; and
(iv) to Lessor and the Minister, from time to
time, such other information relating to its financial,
operational or business affairs or condition as Lessor or
the Minister may reasonably request; and
(v) upon reasonable request of Lessor (except
that a request will not be necessary if Lessee has a duty to
disclose the information to Lessor pursuant to the terms of
any Operative Document), Lessee shall promptly furnish
to Lessor such information within its knowledge or readily
obtainable by it as may be required to enable Lessor
timely to file any reports required to be filed by Lessor
with any governmental body or otherwise to the
transactions contemplated by such Operative Documents; and
(vi) to Lessor, forthwith upon any officer
of Lessee obtaining knowledge of any condition or event
which constitutes a Default or Event of Default, an
officer's certificate specifying the nature and period of
existence thereof and what action it has taken or is taking
or proposes to take with respect thereto; and
(vii) to Lessor, notice in writing of any
proceeding by or against Lessee the adverse determination
of which would materially adversely affect its ability to
perform under this Lease or any other Operative Document.
(b) Lessee will give at least ten (10) Business
Days prior written notice to Lessor of any change in
its chief executive office (as that term is used in Section
9-103(3) (d) of the Uniform Commercial Code as in effect
in any applicable jurisdiction) or in the place where it
keeps its corporate records concerning the Equipment, its
interest in, to or under any Operative Document or its
contracts relating thereto.
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(c) If any recording, filing, rerecording or
refiling of the Lease, any Lease Supplement, or any Financing
Statement or other instrument under the laws of the United
States or any state thereof becomes necessary or reasonably
advisable after the Delivery Date in order to establish,
protect and perfect, or to maintain the establishment,
protection and perfection of Lessor's title to and interest in
the Equipment intended to be created by the Operative
Documents, Lessee will accomplish such filing or rerecording
and furnish Lessor with an opinion of counsel
reasonably acceptable to Lessor to the effect that
such recording, filing, rerecording or refiling has been
made and accomplished such purposes.
(d) Lessee shall not consolidate with or merge
into any other Person, or convey, transfer or lease all
or any material portion of its assets as an entirety to
any Person, without the prior written consent of Lessor.
(e) Lessee will do or cause to be done all
things necessary to preserve and keep in full force and
effect its rights (charter and statutory), privileges
and franchises; provided, however, that Lessee shall not be
required to preserve any right or franchise if the
preservation thereof is no longer desirable in the conduct
of its business and the loss thereof does not adversely
affect the rights of Lessor.
(f) Lessee will at all times be a "citizen of
the United States" within the meaning of 49 U.S.C.
Section 40102(a)(15), and an "air carrier" (as defined in
49 U.S.C. Section 40102(a)(2)).
(g) Lessee will maintain on file with the
Department of Transportation certification as an "air
carrier" and its certificate of public convenience and
necessity under Section 401 of the Act.
SECTION 19. Extension of Lease Term.
Upon the mutual agreement of Lessor and Lessee,
it being understood that neither Lessor nor Lessee is
obligated to so agree, the Term of this Lease may be
extended (a "Renewal Term") upon the expiration of the Basic
Term or any such Renewal Term. Any such extension shall be
evidenced by the execution and delivery of a Lease Supplement
which shall set forth the period of such Renewal Term,
the Basic Rent payable with respect thereto, and such
other matters as the parties shall agree.
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SECTION 20. Lessor's Right To Perform for Lessee.
If Lessee fails to make any payment of
Supplemental Rent required to be made by it hereunder or
fails to perform or comply with any of its agreements
contained herein, Lessor may itself make such payment or
perform or comply with such agreement, and the amount of
such payment and the amount of the reasonable expenses of
Lessor incurred in connection with such payment or the
performance of or compliance with such agreement, as the case
may be, together with interest thereon at the Overdue Rate
shall be deemed Supplemental Rent, payable by Lessee upon
demand.
SECTION 21. Intentionally Left Blank.
SECTION 22. Quiet Enjoyment.
Lessor covenants that Lessor will not, through
its actions or inactions, interfere in Lessee's quiet
enjoyment of the Aircraft during the Term so long as no Event
of Default shall have occurred and be continuing and, with
respect to any Event of Default except for pursuant to
Section 14.1 (e), (f)or (g), so long as Lessor shall not
have declared this Lease to be in default pursuant to
Section 15 hereof. Lessor agrees that it will keep the
Equipment free and clear of any Lessor Lien.
SECTION 23. General Tax Indemnity.
23.1. Indemnity.
(a) Lessee agrees that each payment of Rent
with respect to the Equipment and any amount payable under
the Lease shall be free and clear of all withholdings
of any nature whatsoever. If any withholding is required,
Lessee shall pay an additional amount of Rent such that
the net amount of Rent actually received by an Indemnified
Person or the net amount of any amount payable under the
Lease, will be equal to the amount of Rent or such amount
payable under the Lease that would be due absent such
withholding. Any withholding tax paid by Lessee which is
for the payment of any Tax which is excluded from this
Section 23 by Section 23.2 hereof shall be promptly repaid
to Lessee by the appropriate Indemnified Person after
receipt by such Indemnified Person of (a) a written
statement that such a Tax has been paid and (b) a
receipt or other documentation evidencing payment of the
withheld amount.
(b) Whether or not any of the
transactions contemplated hereby are consummated, Lessee
hereby assumes liability for, agrees to timely pay, and on
written demand shall indemnify and hold each Indemnified
Person harmless from and against, any and all Taxes
(whether or not such Taxes are now existing or hereafter
adopted, enacted or amended) howsoever levied, asserted or
imposed and whether levied or asserted or imposed against
such Indemnified
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Person, Lessee, any item of Equipment, Engine or Propeller
or any part thereof or any interest therein, or otherwise
(i) by any Federal, state or local government or other taxing
authority in the United States, (ii) by any foreign
government, foreign governmental subdivision or other foreign
taxing authority, (iii) by any territory or possession
of the United States, or (iv) by any international
organization, (A) upon or with respect to, based upon or
measured by the Equipment or any part thereof or any interest
therein, (B) upon or with respect to the construction,
manufacture, servicing, financing, purchase, acquisition,
importation, acceptance, rejection, delivery, nondelivery,
registration or deregistration, transport, purchase,
ownership, assembly, storage, possession, repossession,
operation, use, condition, testing, maintenance, repair,
sale, rejection, return, abandonment, preparation,
installation, replacement, redelivery, importation,
exportation, lease, sublease, modification, rebuilding,
transfer of title, rental, substitution, insuring,
mortgaging, or other application or disposition of, or the
imposition of any Lien on, the Equipment or any part
thereof or any interest therein, (C) upon or with respect to
the rentals, receipts, earnings or profits arising from or
received with respect to the Equipment or any part thereof
or any interest therein or any applications or
dispositions thereof or with respect to any Operative
Document, including, without limitation, indemnity payments,
(D) upon or with respect to any Lease or any other
Operative Document, including the performance of any of the
transactions contemplated hereby or thereby, (E) upon or
with respect to any of the Operative Documents; (F) upon or
with respect to Lessee's receipt of or right to receive
directly or indirectly any refund or credit pursuant to the
purchase of the Equipment or any payment by the Aircraft
Manufacturer in satisfaction of a claim against the
Manufacturer with respect to the Equipment under any warranty
or indemnity agreement; (G) upon or with respect to
the replacement of or substitution for any item of Equipment
or any part thereof pursuant to Sections 9 or 10 of this
Lease; (H) upon or with respect to the property, or the income
or other proceeds received with respect to property, held
under this Lease; or (I) otherwise upon or with respect to
the transactions contemplated by the Operative Documents.
23.2. Exceptions from Indemnity.
The provisions of Section 23.1 shall not apply to:
(a) any Tax imposed by the United States of America
on an Indemnified Person measured by the net income (which
term for purposes of this clause (a) shall exclude any gross
withholding tax and any tax payable with respect to the
receipt of any indemnity payment by or any tax payment
on behalf of such Indemnified Person, but shall include any
minimum tax on items of tax preference or any franchise or
conduct of business tax, in each case, in the nature
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of a net income tax) of such Indemnified Person; provided,
however, that any indemnity payment made by Lessee with
respect to a Tax which is excluded under this clause (a)
shall be promptly repaid to Lessee by the Indemnified Person
receiving such payment;
(b) any Tax (i) imposed by any state, local or
foreign government, or political subdivision thereof, on,
based on or measured by the net income, capital or net
worth, franchises, excess profits or conduct of business of
an Indemnified Person (other than Taxes which are, or are in
the nature of, sales, use, value added, rental or property
taxes or license fees) and (ii) which is not a Covered Tax
(as defined in Section 23.8).
(c) any Tax imposed on an Indemnified Person
with respect to any period commencing after the expiration
or other termination of any Lease and the sale or return of
the Equipment pursuant to Section 5 of the Lease; provided,
however, that this exception shall not apply to Taxes
relating to events occurring or matters arising prior to or
coincident with such time;
(d) any Tax which is not yet required to be paid
under Applicable Laws, except any such Tax that the
Indemnified Person has determined to pay pursuant to Section
23.4 and which is being contested in accordance with the
provisions of Section 23.4, during the pendency of such
contest; provided that no Event of Default exists and Lessor
is receiving all amounts of Rent when due notwithstanding
such contest;
(e) any Tax that is imposed on any Indemnified
Person to the extent that such Tax results solely from
the willful misconduct or gross negligence of such Indemnified
Person;
(f) any Tax imposed on an Indemnified Person
in connection with (i) a voluntary sale, transfer,
assignment or other disposition by such Indemnified Person
or (ii) a sale, assignment, transfer or other disposition
by such Indemnified Person, whether or not voluntary,
resulting from bankruptcy, foreclosure, or similar
proceedings in which such Indemnified Person is the debtor,
of the Equipment or any part thereof, or any interest
therein; provided, however, that this clause (f) shall not
apply if such sale, transfer, assignment or other
disposition occurs when a Event of Default exists, or
in connection with the exercise of remedies under Section 15
of the Lease or pursuant to Lessee's request;
(g) any Tax imposed upon Lessor by reason of
it ceasing to be a United States person as defined in
Section 7701(a) (30) of the Code;
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(h) Taxes which are included in Lessor's Cost.
23.3. Calculation of Indemnity Payments.
Any payments which Lessee shall be required to make
to or for the account of any Indemnified Person with respect
to any Tax which is subject to indemnification under this
Section 23 shall include the amount necessary to hold
such Indemnified Person harmless on an after-tax basis from
the net amount of all Taxes required to be paid by such
Indemnified Person as the result of such payment. If any
Indemnified Person realizes a net tax benefit (as determined
by such Indemnified Person in its sole good faith discretion,
it being understood that Lessee shall have no right to
examine or inspect any tax returns or related documents
and records of such Indemnified Person) by reason of such
payment of the Tax or of the indemnity, such Indemnified
Person shall pay Lessee, when such tax benefit shall have
been actually realized and utilized, an amount equal to the
lesser of (x) the sum of such tax benefit plus any other
tax benefit actually realized and utilized by such
Indemnified Person (as determined by such Indemnified
Person in its sole good faith discretion, it being
understood that Lessee shall have no right to examine or
inspect any tax returns or related documents and records of
such Indemnified Person) as the result of any payment made by
such Indemnified Person pursuant to this sentence, or (y) the
amount of such payment by Lessee to such Indemnified Person
reduced by any prior payments to Lessee with respect to
such payment by Lessee; provided, however, that
notwithstanding the foregoing portions of this sentence,
such Indemnified Person shall not be obligated to make any
payment to Lessee pursuant to this sentence so long as an
Event of Default exists or prior to the time Lessee has made
all payments theretofore due to such Indemnified Person
pursuant to the Operative Documents. Any Taxes that are
imposed on such Indemnified Person as a result of the
subsequent disallowance or reduction of the tax benefits
referred to in the preceding sentence subsequent to the year
of realization and utilization of such benefits by such
Indemnified Person shall be indemnified by Lessee pursuant to
the provisions of this Section 23 (without regard to any
exclusions in Sections 23.2 or 23.4 hereof) up to the amount
which, after reduction by all Taxes payable with respect to
the receipt or accrual of Lessee's indemnity payment
pursuant to this sentence, shall equal the sum of (A) the
aggregate amounts previously paid by such Indemnified
Person to Lessee in connection with such tax benefits,
plus (B) any interest, penalties, and/or additions to tax
payable as a result of such disallowance or reduction of tax
benefits.
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23.4. Contest.
If a claim is made against any Indemnified Person
for any Tax for which Lessee is obligated to indemnify
pursuant to this Section 23, such Indemnified Person shall
promptly notify Lessee after such Indemnified Person becomes
aware of such action and in any event within fifteen (15)
days after receipt by such Indemnified Person of a written
claim; provided, however, that the failure of such
Indemnified Person to provide such notice shall not
relieve Lessee from its duty to indemnify hereunder unless
Lessee's right to contest such claim is materially
adversely affected by such failure. If Lessee so requests
in writing after receipt of such notice, such Indemnified
Person shall, subject to the provisions of the next succeeding
sentence hereof and the last sentence of this Section 23.4,
contest at Lessee's expense the imposition, validity or
applicability of such Tax; provided, however, that such
Indemnified Person shall keep Lessee fully informed as to
the progress thereof, consult with Lessee within a
reasonable period before any significant action with respect
thereto is taken or omitted and consider in good faith any
suggestions made by Lessee or its counsel; provided,
however, that the failure of such Indemnified Person to comply
with this provision shall not relieve Lessee from its
obligations to indemnify under this Section 23. No
such proceedings or litigation shall be settled or
otherwise compromised without the prior written consent of
Lessee, which consent shall not be unreasonably withheld but,
if at any time, whether before or after commencing to take
any action required by Section 23.4, such Indemnified Person
declines or fails to take such action with respect to all or
any portion of a proposed adjustment, such Indemnified
Person shall so advise Lessee in writing, and Lessee shall
be relieved of its obligation to indemnify such
Indemnified Person with respect to all or such portion of
the proposed Tax as may be specified in such notice.
Notwithstanding anything in the foregoing sentence to
the contrary, such Indemnified Person shall have sole
control over the conduct of the contest, including the right
to forego any and all administrative appeals, proceedings,
hearings and conferences in respect to such claim, and may in
its sole discretion select the forum for such contest and
determine whether any such contest shall be by (i) resisting
payment of such Tax, (ii) paying such Tax under protest or
(iii) paying such Tax and seeking a refund thereof;
provided, further, however, that (i) at such Indemnified
Person's option, such contest shall be conducted by Lessee in
the name of such Indemnified Person (subject to the
preceding provisions) and (ii) in no event shall such
Indemnified Person be required or Lessee permitted to
contest or to continue to contest, as the case may be, the
imposition of any Tax for which Lessee is obligated to
indemnify pursuant to this Section 23 unless (1) such
Indemnified Person receives from Lessee (i) an indemnity
satisfactory to such Indemnified Person for any
liability, expense or loss arising out of or relating to
such contest and (ii) an opinion of independent
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tax counsel selected by Lessee and reasonably satisfactory to
such Indemnified Person to the effect that there is a
reasonable basis for contesting such claim, or, in the case
of an appeal of an adverse judicial decision, there is a
reasonable basis that such Indemnified Person is likely to
prevail in such appeal, which opinion is in form and
substance satisfactory to such Indemnified Person and is
furnished at Lessee's sole expense; (2) Lessee agrees to pay
such Indemnified Person on demand all reasonable costs and
expenses such Indemnified Person may incur in connection
with contesting such claim (including, without limitation,
all costs, expenses, losses, reasonable legal and
accounting fees, disbursements, interest, penalties,
additions to tax and fines); (3) that the action to be
taken will not result in any material risk of the imposition
of a Lien on any item of Equipment other than a
Permitted Lien or any material danger of sale, forfeiture or
loss of any item of Equipment, or any part thereof or any
interest therein or in any way interfere with the timely
payment of Rent from time to time becoming due and payable;
(4) if such contest is conducted in a manner requiring the
payment of the claim, Lessee pays the amount required; (5)
no Default or Event of Default exists; (6) the amount of
such claim is at least Fifty Thousand Dollars ($50,000);
and (7) Lessee acknowledges in writing prior to the
commencement of such contest its liability to such
Indemnified Person for an indemnity payment in accordance with
the provisions of this Section 23 as a result of such claim
if and to the extent such Indemnified Person or Lessee, as
the case may be, does not prevail in the contest of such
claim. Any tax imposed on an Indemnified Person as a result
of an advance by Lessee of a Tax payment or other costs
incurred by such Indemnified Person pursuant to this
paragraph shall be indemnified under this Section 23
without regard to the exclusions in Sections 23.2 or 23.4
hereof. If any Indemnified Person obtains a refund of all
or any part of any Tax paid by Lessee, such Indemnified
Person shall pay Lessee when such refund is received, but not
before Lessee makes all payments theretofore due to such
Indemnified Person pursuant to the Operative Documents,
an amount equal to the lesser of (A) the amount of such
refund, including interest received attributable thereto,
plus any net tax benefit actually realized and utilized by
such Indemnified Person as a result of any payment by such
Indemnified Person made pursuant to this sentence, or (B) the
sum of such tax payment by Lessee, and interest actually
received by such Indemnified Person attributable thereto,
to such Indemnified Person reduced by any prior payments
to Lessee with respect to such payment by Lessee; provided,
however, that notwithstanding the foregoing portions of this
sentence, such Indemnified Person shall not be obligated to
make any payment to Lessee pursuant to this sentence so
long as (i) Lessee has not made all payments theretofore
due to such Indemnified Person pursuant to the Operative
Documents, or (ii) an Event of Default exists. Any Taxes
imposed on such Indemnified Person as a result of the
subsequent disallowance or reduction of the tax benefits
referred to in the
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preceding sentence subsequent to the year of
realization and utilization of such benefits by such
Indemnified Person shall be indemnified by Lessee pursuant to
this Section 23 (without regard to any exclusions in
Sections 23.2 or 23.4 hereof) up to the amount which,
after reduction by all Taxes payable with respect to the
receipt or accrual of Lessee's indemnity payment pursuant
to this sentence, shall equal the sum of (i) the aggregate
amounts previously paid by such Indemnified Person to Lessee
in connection with such tax benefits, plus (ii) any interest,
penalties, and/or additions to tax payable as a result of
such disallowance or reduction of tax benefits.
Notwithstanding anything contained in this Section 23.4 to
the contrary, no Indemnified Person shall be required to
contest any claim if the subject matter thereof is of a
continuing nature and has previously been adversely decided
pursuant to the contest provisions of this Section 23.4
unless there has been a change in the facts or law after such
claim has been so previously decided, and such Indemnified
Person receives an opinion, reasonably satisfactory to
such Indemnified Person, of its independent tax counsel
(furnished at Lessee's sole expense) to the effect that as a
result of such change in facts or law it is more likely than
not that such Indemnified Person will prevail in a contest
of such claim.
23.5. Reports.
If any report, return or statement is required to
be filed by an Indemnified Person with respect to any Tax
which is subject to indemnification under this Section 23,
Lessee shall promptly notify the appropriate Indemnified
Person of such requirement and shall timely file the same,
except for any such report, return or statement which Lessee
is not permitted to file or which an Indemnified Person has
notified Lessee that such Indemnified Person intends to file;
provided, however, that if an Indemnified Person has
received specific notice from a taxing authority that a
report, return, or statement with respect to the Equipment or
the operation thereof is required, it shall promptly notify
Lessee, provided, however, that the failure of such
Indemnified Person to so notify Lessee shall not relieve
Lessee from its duty to indemnify hereunder unless Lessee's
right to contest such claim is materially adversely
affected by such failure, and provided, further, that
such Indemnified Person shall, if requested by Lessee,
consult with Lessee regarding the manner in which such
report, return or statement should be filed. Lessee shall
either file such report, return or statement so as to show
the ownership of the Equipment in Lessor and send a copy of
such report, return or statement to Lessor, or where not so
permitted, shall promptly notify the Indemnified Person of
such requirement and prepare and deliver such report,
return or statement to such Indemnified Person in a manner
satisfactory to such Indemnified Person within a reasonable
time prior to the time such report, return or statement is
to be filed. Lessee shall also furnish such
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data as may be reasonably requested by an Indemnified Person
or required to enable such Indemnified Person to fulfill its
tax filing, audit, and litigation requirements, including
but not limited to, the location and use of the
Equipment.
23.6. Payment.
Unless otherwise requested by the
appropriate Indemnified Person, Lessee shall pay any Tax
for which it is liable pursuant to this Section 23 directly
to the appropriate taxing authority and, if so otherwise
requested shall pay such Indemnified Person within fifteen
(15) days after demand, but not prior to the date of payment
of such Tax by such Indemnified Person, in immediately
available funds any amount due such Indemnified Person
pursuant to this Section 23 with respect to such Tax. Any
such demand shall specify in reasonable detail the amount of
the payment and the facts upon which the right to payment
is based. If Lessee pays a Tax directly to a taxing
authority for the benefit of an Indemnified Person, Lessee
shall contemporaneously pay directly to such Indemnified
Person the amount which, after deducting the amount of all
taxes payable by such Indemnified Person with respect to
receipt thereof, is necessary to hold such Indemnified
Person harmless on an after- tax basis from the net amount of
all Taxes required to be paid by such Indemnified Person as
the result of Lessee's payment of such Tax. Each Indemnified
Person shall promptly forward to Lessee any notice, bill or
advice received by it concerning any Tax, provided,
however, that the failure of such Indemnified Person to
forward any such notice, bill or advice shall not relieve
Lessee from its duty to indemnify hereunder unless Lessee's
right to contest such claim is materially adversely
affected by such failure. Within thirty (30) days after the
date of each payment by Lessee of any Tax on behalf of an
Indemnified Person, Lessee shall furnish such Indemnified
Person the original or a certified copy of a receipt for
Lessee's payment of such Tax or such other evidence of
payment of such Tax as is acceptable to such
Indemnified Person.
23.7. Computations; Consolidated or Combined Return.
All computations required to be made by an
Indemnified Person pursuant to this Section 23 shall be
made in accordance with all of the provisions hereof on the
assumption (a) that such Indemnified Person is subject to or
benefited by United States, federal and other taxes based
on or measured by net income of such Indemnified Person,
and by other Taxes, at the tax rates applicable to such
Indemnified Person, determined by treating the item of
income, deduction or credit or other item as the last
(marginal) such item of the period in which it is included
or deemed under this Section 23 to be used, and (b)
that such Indemnified Person will be deemed to realize any
tax benefit arising from any Taxes indemnified against or
from any payment made by the Indemnified
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Person to Lessee only if, when and to the extent such
Indemnified Person shall actually recognize a reduction
in Taxes which would not have been then recognized but for
such tax benefit, after taking into account any adverse tax
consequence to such Indemnified Person arising from such
tax benefit. In the case of any Tax reported on a
consolidated or combined basis by an Indemnified Person, the
rules applicable to the consolidated or combined return of
the Indemnified Person shall be taken into account in
computing the amount of any indemnity or payment by or to
Lessee under this Section 23 in respect of such Tax.
23.8. Covered Tax.
As used herein, "Covered Tax" shall mean any
Tax described in Section 23.2(b) (i) that is imposed
on an Indemnified Person by a taxing authority (A)
(i) in whose jurisdiction such Indemnified Person did not
engage in business, did not maintain an office or other place
of business or was not otherwise located, or any
jurisdiction where such Indemnified Person is deemed to
engage in business or be otherwise located solely as a
result of the registration, operation or location of any item
of Equipment, and (ii) that is imposed solely as a result
of the registration, operations or location of any item of
Equipment in such jurisdiction, or the transactions
contemplated by the Operative Documents, or (B) (i) in whose
jurisdiction such Indemnified Person is doing business,
maintains an office or other place of business or is
otherwise located, but (ii) only to the extent of any
incremental Tax that would not have been imposed but for
the registration, operation or location of any item of
Equipment in such jurisdiction or the transactions
contemplated by the Operative Documents. In calculating
the indemnity payment attributable to a Covered Tax in
accordance with Section 23.3, such calculation shall reflect
any tax savings resulting from the payment of such Covered
Tax that is actually realized by such Indemnified Person with
respect to Taxes imposed on the net income of such
Indemnified Person by the state in which such Indemnified
Person maintains its principal place of business and such
Indemnified Person agrees that any net income tax return
filed with the state in which such Indemnified Person
maintains its principal place of business shall reflect such
tax savings to the extent permitted under applicable
statutes and regulations of such state.
23.9. Payments and Survival of Indemnities.
Except as otherwise set forth in Section 23.6
hereof, all amounts payable by Lessee pursuant to this
Section 23 shall be payable directly to the Person
entitled to payment or indemnification. Unless otherwise
specifically provided herein or therein, the indemnities
provided for in this Section 23 shall survive the termination
of this Lease and the other Operative Documents.
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SECTION 24. General Indemnity.
24.1. Claims Defined.
For the purposes of this Section 24, "Claims"
shall mean any and all liabilities (including strict or
absolute liability without fault in tort or otherwise),
losses, damages, penalties, costs, actions or suits and
all legal proceedings whether civil or criminal, fines and
other sanctions, which may be imposed on, incurred by,
suffered by, or asserted against Lessor (but solely in its
capacity as Lessor under this Lease), the Minister (but
solely in connection with its involvement in the
transactions contemplated by this Lease and the Insurance
Agreement), any Lender (but solely in its capacity as
Lender under this Lease), and their respective directors,
officers, agents, employees, and controlling persons
(individually, an "Indemnified Person" for purposes of this
Section 24) and, except as otherwise expressly provided in
this Section 24, shall include all reasonable costs,
disbursements and expenses (including reasonable legal
fees and expenses) of an Indemnified Person in connection
therewith or related thereto.
24.2. Claims Indemnified.
Subject to the exclusions stated in Section
24.3, Lessee agrees to indemnify, defend and hold
harmless each Indemnified Person on an after-tax basis
against Claims resulting from, arising out of, or related to:
(a) the operation, possession, use,
non-use, maintenance, storage, overhaul or testing of the
any item of Equipment, Engines, Propellers, or any Part
thereof by Lessee or any other Person whatsoever, whether
or not such operation, possession, use, non-use,
maintenance, storage, overhaul or testing is in compliance
with the terms of this Lease, including, without limitation,
Claims for death, personal injury or property damage or other
loss or harm to any Person whatsoever, including, without
limitation, any passengers, shippers or other persons
wherever located, and Claims relating to any laws, rules
or regulations, including, without limitation,
environmental control, noise and pollution laws, rules or
regulations;
(b) the manufacture, design, sale, purchase, lease
of, acceptance, rejection, delivery, condition, repair,
modification, servicing, rebuilding, airworthiness,
performance, non-delivery, sublease, merchantability,
fitness for use, substitution or replacement of any item
of Equipment, Engines, Propellers, or Parts under this
Lease or other transfer of use or possession of any item of
Equipment, Engines, Propellers or Parts, and
registration of any item of Equipment, including,
without limitation, any liability, right, claim or remedy for
loss of or damage to any item of Equipment, Engines,
Propellers or Parts, for loss of use, revenue
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or profit with respect to any item of Equipment, Engines,
Propellers or Parts, or for any incidental or consequential
damages, latent and other defects, whether or not
discoverable, and patent, trademark or copyright
infringement, provided, however, that Lessee shall be
subrogated to all rights and remedies which such Indemnified
Person may have against any supplier (including the
Aircraft Manufacturer or relevant subcontractors or
vendors with respect thereto) which rights and remedies
shall be assigned at Lessee's expense by such
Indemnified Person to Lessee; and
(c) any breach of or failure to perform or observe,
or any other noncompliance with, any covenant or agreement
to be performed, or other obligation of Lessee hereunder,
or the falsity or inaccuracy of any representation or
warranty of Lessee in this Lease.
24.3. Claims Excluded.
The following are excluded from Lessee's agreements
to indemnify under Section 24.2:
(a) Claims attributable to acts or events
occurring after the Term (except during the exercise of
remedies pursuant to Section 15 hereof) or, if any item of
Equipment is returned at a later date pursuant to Section
10.5 of this Lease, acts or events occurring after such
return;
(b) Claims which are Taxes, whether or not Lessee
is required to indemnify therefor under Section 23 hereof;
(c) With respect to any particular Indemnified
Person, Claims attributable to the gross negligence or willful
misconduct of such Indemnified Person, unless such willful
misconduct or gross negligence results from acts or
omissions of Lessee on behalf of such Indemnified Person or
imputed negligence to Lessor solely as a result of its
ownership of any item of Equipment;
(d) With respect to any particular Indemnified
Person, Claims which result from any inaccuracy in the
representations or warranties of such Indemnified Person set
forth in this Lease or in any Security Agreement, or
Claims which result from the material breach of any
covenant or agreement of such Indemnified Person set forth in
this Lease or in such Security Agreement;
(e) Claims which result from the disposition by
any Indemnified Person of all or any part of its interest
in the Equipment, this Lease or any Security Agreement; and
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(f) Claims for any expense to be borne by
such Indemnified Person pursuant to the express provisions
of this Lease or any Security Agreement.
24.4. Insured Claims.
In the case of any Claim indemnified by
Lessee hereunder which is covered by a policy of insurance
maintained by Lessee pursuant to Section 11 of this Lease,
each Indemnified Person agrees to cooperate with the insurers
in the exercise of their rights to investigate, defend or
compromise such Claim as may be required to retain the
benefits of such insurance with respect to such Claim.
24.5. Claims Procedure.
An Indemnified Person shall promptly notify Lessee
of any Claim as to which indemnification is sought. Subject
to the rights of insurers under policies of insurance
maintained pursuant to Section 11 of this Lease, Lessee shall
have the right to investigate and the right in its sole
discretion to defend or compromise any Claim for which
indemnification is sought under this Section 24, and the
Indemnified Person shall cooperate with all reasonable
requests of Lessee in connection therewith and shall not
enter into a settlement or other compromise of a claim
hereunder (provided, that Indemnified Person has already
received its indemnity payment with respect to such Claim)
without the prior written consent of Lessee, unless such
Indemnified Person waives its right to be indemnified
hereunder. Subject to the requirements of any policy of
insurance, an Indemnified Person may participate at its own
expense in any judicial proceeding controlled by Lessee
pursuant to the preceding provisions, provided that such
party's participation does not, in the opinion of the
independent counsel to Lessee or its insurers conducting
such proceedings, interfere with such control; and
such participation shall not constitute a waiver
of the indemnification provided in this Section 24.
Nothing contained in this Section 24.5 shall be deemed to
require an Indemnified Person to contest any Claim or to
assume responsibility for or control of any judicial
proceeding with respect thereto. As a condition to any
Person being indemnified hereunder, such Person, on request
of Lessee, must agree in writing to be bound by the terms of
this Section 24.
24.6. Subrogation.
To the extent that a Claim indemnified by Lessee
under this Section 24 is in fact paid in full by Lessee
and/or an insurer under a policy of insurance maintained by
Lessee pursuant to Section 11 of this Lease, Lessee and/or
such insurer, as the case may be, shall be subrogated to
the rights and remedies of the Indemnified Person on whose
behalf such Claim was paid with respect
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to the transaction or event giving rise to such Claim.
Should an Indemnified Person receive any refund, in whole or
in part, with respect to any Claim paid by or on behalf of
Lessee hereunder, it shall promptly pay the amount refunded
(but not an amount in excess of the amount Lessee has paid in
respect of such Claim) over to Lessee.
24.7. Waiver of Certain Claims.
Lessee hereby waives and releases any Claim now
or hereafter existing against any Indemnified Person arising
out of death or personal injury to personnel of Lessee, loss
or damage to property of Lessee, or the loss of use of any
property of Lessee, which may result from or arise out of the
condition, use or operation of any item of Equipment during
the Term, including without limitation any latent or patent
defect whether or not discoverable; provided, however, that
such waiver shall not apply to any Claim arising directly
and solely from the gross negligence or willful
misconduct of any such Indemnified Person.
24.8. Conflicting Provisions.
The general indemnification provisions of this
Section 24 are not intended to waive or supersede any specific
provisions of this Lease to the extent such provisions apply
to any Claim.
24.9. Continuing Indemnification.
The agreements and indemnities contained in
this Section 24 shall survive the expiration of the Term.
SECTION 25. Transaction and Other Costs.
25.1. Transaction Expenses.
Lessee shall pay the reasonable fees, costs
and expenses associated with the negotiation and documentation
of the Operative Documents, including (a) the fees and
expenses of legal counsel of Lessee and special FAA counsel;
and (b) the costs and expenses of recordation of this Lease
and any other document, certificate or financing statement
filed in accordance therewith or any other Operative Document
(collectively, the "Expenses"). Lessee shall also pay all
Transaction Expenses if the Aircraft is not delivered and
accepted under the Lease, unless such failure is due
solely and directly to a breach by Lessor of its
obligations hereunder.
25.2. Costs of Amendments, Waivers, Etc.
Lessee shall pay all costs and expenses incurred
in connection with the entering into or the giving or
withholding of any future amendments, supplements, waivers
or consents with
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respect to the Operative Documents whether or not the same
shall become effective if such amendment, supplement, waiver
or consent is a result of any action, inaction or request of
Lessee.
SECTION 26. Miscellaneous.
26.1. Severability.
Any provision of this Lease that is prohibited
or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such
prohibition or unenforceability without invalidating the
remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any other
jurisdiction. To the extent permitted by Applicable Law,
Lessee hereby waives any provision of law that renders any
provision hereof prohibited or unenforceable in any respect.
26.2. Amendments.
No term or provision of this Lease may be
changed, waived, discharged or terminated orally, but
only by an instrument in writing signed by the party
against which the enforcement of the change, waiver,
discharge or termination is sought.
26.3. Lease Only.
This Lease shall constitute an agreement of lease,
and nothing herein shall be construed as conveying to
Lessee any right, title or interest in or to the Equipment
except as a lessee only.
26.4. Security Agreement; Chattel Paper.
In the event this Lease is determined to be a
security agreement and not a lease, or in the event Lessee
is determined to own all or any part of the Equipment
rather than having a leasehold interest therein, then the
parties intend that this Lease constitutes a "security
agreement" within the meaning of Section 9-105 of the
Uniform Commercial Code, and Lessee, by executing and
delivering this Lease and the Lease Supplements, has
created, and does hereby create, in favor of Lessor a
security interest in and to all of Lessee's rights, both
tangible and intangible, in the Equipment under the
Uniform Commercial Code. Lessee agrees, at Lessee's cost
and expense, to execute and cause to be filed and to remain
in effect during the Term, Financing Statements under the
applicable Uniform Commercial Code to perfect the foregoing
security interests.
71
<PAGE>
26.5. Headings.
The section and paragraph headings in this Lease
and the table of contents are for convenience of reference
only and shall not modify, define, expand or limit any of
the terms or provisions hereof and all references herein to
numbered sections, unless otherwise indicated, are to sections
of this Lease.
26.6. Governing Law.
This Lease shall in all respects be governed by
and construed in accordance with the law of the State of
New York (other than its law with respect to conflicts of
laws), including all matters of construction, validity and
performance.
26.7. Amendments.
Neither this Lease nor any of the terms hereof may
be terminated, amended, supplemented, waived or modified
orally, but only by an instrument in writing signed by the
party against which the enforcement of the termination,
amendment, supplement, waiver or modification is sought;
and no such termination, amendment, supplement, waiver or
modification shall be effective unless a signed copy thereof
is delivered to Lessor.
26.8. Table of Contents; Section Headings.
The table of contents preceding this Lease and
the headings of the various Sections of this Lease
are for convenience of reference only and shall not
modify, define, expand or limit any of the terms or
provisions hereof.
26.9. Currency.
All amounts and moneys referred to in this Lease
and the other Operative Documents shall be construed to
mean money which at the time of payment is lawful money
of the United States.
26.10. Reproduction of Documents.
This Lease, all documents constituting exhibits hereto
and all documents relating hereto, including, without
limitation, (a) consents, waivers and modifications which
may hereafter be executed, (b) documents received by Lessor
in connection with its purchase of the Equipment and
(c) financial statements, certificates and other
information previously furnished to Lessor, may be
reproduced by Lessor by any photographic or other similar
process and Lessor may destroy any original documents so
reproduced. Lessee and Lessor agree and stipulate that, to
the extent permitted by law, any such reproduction
shall be admissible
72
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in evidence as the original itself in
any judicial or administrative proceeding (whether or not
such reproduction was made by Lessee or Lessor in the
regular course of business) and that, to the extent,
permitted by law, any enlargement, facsimile or further
reproduction of such reproduction shall likewise be
admissible in evidence.
26.11. Entire Agreement.
This Lease and the other documents referred to
herein constitute the entire agreement of the parties
hereto with respect to the subject matter hereof and
supersede all written and oral agreements and understandings
made or entered into prior to the date of this Lease.
26.12. Counterparts.
This Lease may be executed by the parties hereto
in separate counterparts, each of which when so
executed and delivered shall be an original, but all such
counterparts shall together constitute one and the same
instrument. The single executed original of this Lease
marked "Original" shall be the Original and all other
counterparts hereof shall be duplicate originals. To the
extent, if any, that this Lease constitutes chattel paper,
as such term is defined in the Uniform Commercial Code as in
effect in any applicable jurisdiction, no security interest
in this Lease may be created through the transfer or
possession of any counterpart other than the Original.
73
<PAGE>
IN WITNESS WHEREOF, Lessor and Lessee have caused
this Lease to be duly executed on the later of the dates
set forth beneath the signatures below, but as of the day
and year first above written.
LESSOR:
C.I.T. LEASING CORPORATION
By Evan M. Wallach
Name: Evan M. Wallach
Title: Vice President
Date: November 22, 1994
LESSEE:
CCAIR, INC.
(signature of Kenneth W. Gann)
By Kenneth W. Gann
Name: Kenneth W. Gann
Title: President & C.E.O.
Date: November 22, 1994
<PAGE>
EXHIBIT A
EQUIPMENT DESCRIPTION
and
IDENTIFICATION
Exhibit A - Page 1
<PAGE>
EXHIBIT B
LEASE SUPPLEMENT (SPARES)
LEASE SUPPLEMENT NO. __ (SPARES), dated ________, ____
between C.I.T. LEASING CORPORATION, a Delaware corporation
("Lessor"), and CCAIR, INC., a Delaware corporation ("Lessee").
Lessor and Lessee have heretofore entered into the
Lease Agreement (Spares), dated as of November 15, 1994 (herein
called the "Lease" and the defined terms therein being
hereinafter used with the same meanings). The Lease provides for
the execution and delivery from time to time of Lease Supplements
substantially in the form hereof for the purpose of leasing the
Equipment under the Lease as and when delivered by Lessor to
Lessee in accordance with the terms thereof.
*The Lease relates to the Equipment described on Annex
A attached hereto, and a counterpart of the Lease is attached
hereto and made a part hereof and this Lease Supplement, together
with such attachment, is being filed for recordation on the date
hereof with the FAA as one document.
**The Lease relates to the Equipment described on
Annex A attached hereto, and a counterpart of the Lease, attached
to and made a part of Lease Supplement No. 1 dated November __,
1994, to the Lease, has been recorded by the FAA on ____________,
1994, as one document and assigned Conveyance No. __________.
NOW, THEREFORE, in consideration of the premises and
other good and sufficient consideration, Lessor and Lessee hereby
agree as follows:
1. Lessor hereby delivers and leases to Lessee, and
Lessee hereby accepts and leases from Lessor, under the Lease, as
herein supplemented, the following items of Equipment described
on Exhibit A to the Lease (the "Equipment").
2. The Delivery Date is the date of this Lease
Supplement as set forth above.
3. Lessee hereby confirms its agreement to pay Lessor
Interim Rent for the Equipment for the Interim Term and Basic
Rent
* This language for Lease Supplement No. 1.
** This language for other Lease Supplements.
Exhibit B - Page 1
<PAGE>
for the Equipment throughout the Basic Term in accordance
with Section 3 of the Lease and throughout any Renewal Term, if
any, as the parties may agree.
4. Lessee also represents and warrants that the
description of the Equipment as set forth in Exhibit A to the
Lease is complete and correct.
5. Lessor's Cost for the Equipment is
$______________.
6. The location of each item of the Class A Equipment
is the Spare Parts Location; the location of each item of Class B
Equipment is as set forth on Exhibit A to the Lease. Lessee
confirms its undertaking in Section 7.5 of the Lease to notify
Lessor prior to moving any item of the Equipment from such
locations and to otherwise comply with Section 7.5 of the Lease.
7. All the terms and provisions of the Lease are
hereby incorporated by reference in this Lease Supplement to the
same extent as if fully set forth herein, including without
limitation, the representations and warranties set forth in
Section 4.1 and 4.2 of the Lease which the parties hereby make on
the date hereof.
8. This Lease Supplement may be executed by the
parties hereto in separate counterparts, each of which when so
executed and delivered shall be an original, but all such
counterparts shall together constitute one and the same
instrument. The single executed original of this Lease
Supplement marked "Original" shall be the Original and all other
counterparts hereof shall be duplicate originals. To the extent,
if any, that this Lease Supplement constitutes chattel paper, as
such term is defined in the Uniform Commercial Code as in effect
in any applicable jurisdiction, no security interest in this
Lease Supplement may be created through the transfer or
possession of any counterpart other than the Original.
9. This Lease Supplement is being delivered in the
State of ______________ and shall in all respects be governed by
and construed in accordance with the laws of the State of New
York (other than its laws with respect to conflicts of law),
including all matters of construction, validity and performance.
Exhibit B - Page 2
<PAGE>
IN WITNESS WHEREOF, Lessor and Lessee have caused this Lease
Supplement to be duly executed as of the day and year first above
written.
LESSOR:
C.I.T. LEASING CORPORATION
By:
Name:
Title:
LESSEE:
CCAIR, INC.
By:
Name:
Title:
Exhibit B - Page 3
<PAGE>
EXHIBIT C
MAINTENANCE RESERVES
1. Lessee agrees to pay maintenance reserves to Lessor as
follows:
(a) Engine and Propeller Reserves. Beginning December
1, 1994, during the Term, Lessee shall deposit with Lessor within
five days after the end of each month an amount equal to the
flight Hours that each Engine or Propeller has been operated
during the previous month multiplied by the Engine Rate or
Propeller Rate, respectively (hereinafter referred to as the
"Engine and Propeller Reserves"). The initial Engine Rate shall
be $30 per flight Hour per Engine. The initial Propeller Rate
shall be $1.50 per flight Hour per Propeller.
Lessee shall be responsible to perform all engine and
propeller maintenance at its own expense (but may be reimbursed
from funds accrued in the Engine and Propeller Reserves for
Engines or Propellers as determined below). Lessor, however,
reserves the right to review and approve any engine or propeller
repair facility which is to perform any such work. If any Engine
or Propeller overhaul or refurbishment shall exceed the allowed
reimbursement for any reason, including premature removal for any
cause or because of increased prices, such excess shall be the
responsibility of Lessee.
After the accomplishment of any complete overhaul or
complete refurbishment of an Engine or Propeller (including
replacement of internal time-limited parts replaced during such
overhaul, disassembly, assembly, and testing required thereof,
but excluding hot section inspections and other scheduled or
unscheduled maintenance) during the Term requiring shop repair
(but excluding foreign object damage, accident, incident, abuse,
misuse, and elective parts replacement), then the Engine and
Propeller Reserve for such Engine or Propeller shall be used to
reimburse Lessee, or pay at Lessee's direction, for Lessee's
actual cost incurred in completing such maintenance ("Engine or
Propeller Reimbursement Expenses"). Upon accomplishment of any
such maintenance, Lessee shall present written evidence
satisfactory to Lessor as to the completion of such overhaul or
refurbishment of such Engine or Propeller and the costs
associated therewith for approval by Lessor. Such shop visit
shall include a build standard acceptable to Lessor. Promptly
after receiving such written evidence, if no Default or Event of
Default exists, Lessor shall reimburse Lessee by paying to the
maintenance provider (whether
Exhibit C - Page 1
<PAGE>
Lessee or a third party) an amount equal to the lesser of (i) the
amount of the Engine or Propeller Reimbursement Expenses with
respect to such Engine or Propeller and (ii) the amount then held
in the Engine and Propeller Reserve established for such Engine or
Propeller. Lessee acknowledges that it may apply the amounts held
with respect to such Engine or Propeller in the Engine and
Propeller Reserves only with respect to such Engine or Propeller.
If the cost of a complete overhaul or complete refurbishment of such
Engine or Propeller exceeds the balance in the Engine and Propeller
Reserves established for such Engine or Propeller, Lessee will be
required to pay such excess amount with respect to such Engine or
Propeller.
Lessor shall be under no obligation to reimburse any
amount in excess of the outstanding Engine and Propeller Reserve
balance or for any engine or propeller repair other than a
complete overhaul or complete refurbishment of an Engine or
Propeller, nor shall Lessee be entitled to a refund of any
amounts remaining in the Engine and Propeller Reserve except as
otherwise stated in this Lease. "Complete overhaul or complete
refurbishment" as used herein with respect to an Engine shall
mean a major zero time overhaul performed by the manufacturer of
the Engine or its authorized service center. Any amounts so
remaining at the termination of this Lease shall become the sole
property of Lessor or its Assignee. Any declaration of default
by Lessor against Lessee shall also cause any amounts so
remaining to revert to Lessor or its Assignee.
(b) Landing Gear Reserve. Beginning December 1, 1994,
during the Term, Lessee shall deposit with Lessor within five
days after the end of each month an amount equal to the flight
Cycles that the Airframe has been operated during the previous
month multiplied by the Landing Gear Rate (hereinafter referred
to as the "Landing Gear Reserves"). The initial Landing Gear
Rate shall be $5 per flight Cycle for all three landing gear
together (the "Landing Gear").
Lessee shall be responsible to perform all Landing Gear
maintenance at its own expense; provided, however, Lessee may be
reimbursed from funds accrued in the Landing Gear Reserves for
replacement of the Landing Gear before or at the expiration of
its safe life limits under the manufacturer's FAA approved
maintenance program ("Landing Gear Replacement"), as determined
below. Lessor, however, reserves the right to review and approve
any landing gear repair facility which is to perform any such
work. If any Landing Gear Replacement cost shall exceed the
allowed reimbursement (as described below) for any reason
including premature removal for any cause or because of increased
prices, such excess amount shall be the responsibility of Lessee.
Exhibit C - Page 2
<PAGE>
If a Landing Gear is replaced prior to the expiration
of its safe life limits under the manufacturer's FAA approved
maintenance program in which the total Cycles since new on an
individual Landing Gear Replacement is less than the total Cycles
since new on the individual Landing Gear being replaced, Lessor
will reimburse to Lessee the difference between the two
multiplied by $1.67 up to a maximum amount of one-third (1/3) of
the total amount in the Landing Gear Reserve at that time;
provided that Lessee cannot install an individual Landing Gear
Replacement if the total Cycles since new on the individual
Landing Gear Replacement is more than the total Cycles since new
on the individual Landing Gear.
Lessor shall be under no obligation to reimburse any
amount in excess of the outstanding Landing Gear Reserve balance
or for any landing gear repair other than a complete replacement
at the expiration of its safe life limits, nor shall Lessee be
entitled to a refund of any amounts remaining in the Landing Gear
Reserve except as otherwise stated in this Lease. Any amounts so
remaining at the termination of this Lease shall become the sole
property of Lessor or its Assignee. Any declaration of default
by Lessor against Lessee shall also cause any amounts so
remaining to revert to Lessor or its Assignee.
(c) Adjustment of Initial Rates. Notwithstanding
anything to the contrary contained in this Section, Lessor and
Lessee agree that the Initial Engine Rate, Initial Propeller Rate
and the Initial Landing Gear Rate (collectively, the "Initial
Rates") shall be increased on December 2, 1995 and annually each
year thereafter during the Term of this Lease on December 2 (each
a "Recalculation Date") by a percentage factor equivalent to
inflation as evidenced by the Consumer Price Index ("CPI") as
announced and in effect by the United States Government
Department of Commerce, or successor agency thereto, immediately
prior to each annual Recalculation Date (the "Inflation Rate").
Each such Initial Rate, as increased by the applicable Inflation
Rate shall be referred to herein as the "Engine Rate", "Propeller
Rate" and the "Landing Gear Rate", respectively. Each such
annual inflation increase shall be based on the applicable Engine
Rate or Propeller Rate as recalculated for the one year period
(December 1 to November 30 of the following year) immediately
preceding such Recalculation Date.
By way of illustration of the foregoing, the following
chart sets forth an example of Engine Rate increases from the
initial base rate for each year, increased annually on the
Recalculation Date, assuming a 3% Inflation Rate:
Exhibit C - Page 3
<PAGE>
Recalculation 12/1/94 12/1/95 12/1/96 12/1/97 12/1/98
Date
Rate $10 $10.30 $10.61 $10.93 $11.26
2. Lessee agrees to deliver to Lessor, on each Rent
Payment Date, a Maintenance Reserves Certificate in the form of
Schedule 1 hereto.
Exhibit C - Page 4
<PAGE>
Schedule 1
FORM OF MAINTENANCE RESERVES CERTIFICATE
The undersigned, [title], of
CCAir, Inc. ("Lessee") pursuant to Section 8.5 of that certain
Lease Agreement (Spares) dated as of November 15, 1994 (the
"Lease") between Lessee and C.I.T Leasing Corporation ("Lessor"),
with respect to the Equipment leased thereunder, DOES HEREBY
CERTIFY to Lessor that the following information required with
respect to the operation of the Aircraft and the calculation of
the Maintenance Reserves for the Rent period from __________ to
__________ (the "Current Rent Period"):
1. Engine (S/N PC-E120955)
a. Location:
b. Total Hours Since New:
c. Total Cycles Since New:
d. Total Hours Operated During Current Rent Period:
e. Total Cycles Operated During Current Rent Period:
f. Engine Rate for the Current Rent Period:
g. Engine Reserve Payment:
2. Propeller (S/N 920535)
a. Location:
b. Total Hours Since New:
c. Total Cycles Since New:
d. Total Hours Operated During Current Rent Period:
e. Total Cycles Operated During Current Rent Period:
f. Propeller Rate for the Current Rent Period:
g. Propeller Reserve Payment:
3. Propeller (S/N 920536)
a. Location:
b. Total Hours Since New:
c. Total Cycles Since New:
d. Total Hours Operated During Current Rent Period:
e. Total Cycles Operated During Current Rent Period:
f. Propeller Rate for the Current Rent Period:
g. Propeller Reserve Payment:
Exhibit C - Page 5
<PAGE>
4. Landing Gear
Nose Left Right
a. Location:
b. Total Hours Since New:
c. Total Cycles Since New:
d. Total Hours Operated During
Current Rent Period:
e. Total Cycles Operated During
Current Rent Period:
f. Landing Gear Rate for the
Current Rent Period:
g. Landing Gear Reserve Payment:
Except as otherwise defined herein, the terms used
herein shall have the meaning set forth in the Lease.
IN WITNESS WHEREOF, the undersigned has caused this
Certificate to be duly executed as of the date set forth below.
CCAIR, INC.
By:
Name:
Title:
Date:
Exhibit C - Page 6
<PAGE>
Schedule 1 (Spares)
INTERIM AND BASIC RENT
Rent
Payment Date Rent
[To Come]
Schedule 1 - Page 1
<PAGE>
Schedule 2 (Spares)
STIPULATED LOSS VALUES
Stipulated Loss Percent of
Payment Date Lessor's Cost
[To Come]
Schedule 2 - Page 1
<PAGE>
Schedule 3 (Spares)
PRIOR LEASES
Lease Agreement (Spares), dated as of August 14, 1992, as amended
and supplemented, between Mellon Financial Services Corporation
#3, as Lessor ("Mellon"), and CCAir, Inc., as Lessee, (the
"Lessee").
Short Term Lease Agreement (Spares), dated as of April 1, 1994,
as amended and supplemented, between Mellon and the Lessee.
Schedule 3 - Page 1
Exhibit 10.37(c)
LEASE SUPPLEMENT (N880CC/#277)
LEASE SUPPLEMENT NO. 1 (N880CC/#277), dated November
, 1994 between C.I.T. LEASING CORPORATION, a Delaware corporation
("Lessor"), and CCAIR, INC., a Delaware corporation ("Lessee").
Lessor and Lessee have heretofore entered into the
Lease Agreement (N880CC/#277), dated as of November 15, 1994
(herein called the "Lease" and the defined terms therein being
hereinafter used with the same meanings). The Lease provides for
the execution and delivery from time to time of Lease Supplements
substantially in the form hereof for the purpose of leasing the
Aircraft under the Lease as and when delivered by Lessor to
Lessee in accordance with the terms thereof.
The Lease relates to the airframe, engines, propellers
and parts described below, and a counterpart of the Lease is
attached hereto and made a part hereof and this Lease Supplement,
together with such attachment, is being filed for recordation on
the date hereof with the FAA as one document.
NOW, THEREFORE, in consideration of the premises and
other good and sufficient consideration, Lessor and Lessee hereby
agree as follows:
1. Lessor hereby delivers and leases to Lessee, and
Lessee hereby accepts and leases from Lessor, under the Lease, as
herein supplemented, the following described aircraft (the
"Aircraft"), which Aircraft as of the date hereof consists of the
following components:
AIRFRAME
FAA Manufacturer's
Manufacturer Model Registration No. Serial No.
Boeing/
de Havilland DHC-8-102 N880CC 277
ENGINES
Manufacturer Model Serial No.
Pratt & Whitney PW 120A PC-E121066
Pratt & Whitney PW 120A PC-E121064
Each of said Engines has 750 or more rated take-off horsepower or
the equivalent of such horsepower.
<PAGE>
PROPELLERS
Manufacturer's
Manufacturer Model Serial No.
Hamilton Standard 14SF-7 910305
Hamilton Standard 14SF-7 910130
Each of said Propellers is capable of absorbing 750 or more rated
take-off shaft horsepower or the equivalent of such horsepower.
2. The Delivery Date is the date of this Lease
Supplement as set forth above.
3. Lessee hereby confirms its agreement to pay Lessor
Interim Rent for the Aircraft for the Interim Term and Basic Rent
for the Aircraft throughout the Basic Term in accordance with
Section 3 of the Lease and throughout any Renewal Term, if any,
as the parties may agree.
4. Lessee also represents and warrants that the
description of the Aircraft as set forth above is complete and
correct.
5. Lessor's Cost for the Aircraft is $6,000,000.
6. All the terms and provisions of the Lease are
hereby incorporated by reference in this Lease Supplement to the
same extent as if fully set forth herein, including, without
limitation, the representations and warranties set forth in
Sections 4.1 and 4.2 of the Lease, which the Lessor and Lessee
hereby make on the date hereof.
7. This Lease Supplement may be executed by the
parties hereto in separate counterparts, each of which when so
executed and delivered shall be an original, but all such
counterparts shall together constitute one and the same
instrument. The single executed original of this Lease
Supplement marked "Original" shall be the Original and all other
counterparts hereof shall be duplicate originals. To the extent,
if any, that this Lease Supplement constitutes chattel paper, as
such term is defined in the Uniform Commercial Code as in effect
in any applicable jurisdiction, no security interest in this
Lease Supplement may be created through the transfer or
possession of any counterpart other than the Original.
8. This Lease Supplement is being delivered in the
State of New York and shall in all respects be governed by and
construed in accordance with the laws of the State of New York
(other than its laws with respect to conflicts of law), including
all matters of construction, validity and performance.
2
<PAGE>
IN WITNESS WHEREOF, Lessor and Lessee have caused this Lease
Supplement to be duly executed as of the day and year first above
written.
LESSOR:
C.I.T. LEASING CORPORATION
By:
Name:
Title:
LESSEE:
CCAIR, INC.
By:
Name:
Title:
<PAGE>
Exhibit 10.38(a)
AMENDED AND RESTATED
LOAN AGREEMENT
THIS AMENDED AND RESTATED LOAN AGREEMENT (the
"Agreement") made as of the ___ day of February, 1995,
by and between CCAIR, INC., a Delaware corporation
("Borrower") and JSX CAPITAL CORPORATION, a Delaware
corporation ("Lender");
RECITALS:
A. Borrower is presently indebted to
Lender for money loaned (exclusive of accrued interest
and costs) in the principal amount of $1,450,000. The
existing loan was made by British Aerospace Holdings,
Inc., a Delaware corporation ("BAH") to Borrower
pursuant to the Fourth Modification and Extension
Agreement. The existing loan is evidenced by and
secured by that certain Loan Agreement dated as of
September 4, 1991, by and between Borrower and NCNB
National Bank of North Carolina, as amended, and
various documents, instruments and agreements executed
by Borrower pursuant thereto (collectively referred to
as the "Existing Loan Documents"). BAH became the
owner and holder of the Existing Loan Documents
pursuant to that certain Assignment and Bill of Sale
Agreement dated as of January 10, 1995 ("NationsBank
Bill of Sale"). Lender became the owner and holder of
the Existing Loan Documents pursuant to that certain
Assignment and Bill of Sale Agreement dated as of even
date ("BAH Bill of Sale").
B. Borrower has requested and Lender has
agreed to make available to Borrower additional
revolving credit.
C. Borrower and Lender desire to amend
and restate the Existing Loan Documents in order to
confirm the additional credit availability and to set
forth all of the terms and conditions of this amended
and restated revolving credit facility in this
Agreement and the documents instruments and agreements
provided for herein.
NOW, THEREFORE, Borrower and Lender hereby
agree as follows:
ARTICLE l
REVOLVING LOAN
Upon the terms and subject to the conditions
of this Agreement, and in reliance upon the
representations, warranties and covenants made under
this Agreement by Borrower, Lender shall make a
revolving loan to Borrower as follows:
<PAGE>
DEFINITIONS
For purposes of this Agreement:
(a) "Accounts" shall have the meaning
given to that term in the Uniform Commercial Code.
(b) "Advance" means the amount advanced by
Lender on the occasion of a borrowing pursuant to
Article I of this Agreement.
(c) "Affiliate" means, with respect to any
entity, any Person who is a shareholder, partner,
officer or director of that entity or any partner of
that entity, any spouse of any such Person, any
relative (within the third degree) of any such Person
or spouse, or any other Person who, either directly or
indirectly, owns and/or controls or is owned and/or
controlled by, or is under common control and/or
ownership with, that entity.
(d) "Agreement" means this Agreement, as
amended from time to time.
(e) "Aircraft Leases" means all current
and future agreements between Jet Acceptance
Corporation, (and any other Affiliate of Lender) and
Borrower (or any affiliate of Borrower) for the use of
aircraft, engines, propellers, spare parts, or
equipment or services including without limitation
those agreements listed on Exhibit C.
(f) "BAH" means British Aerospace
Holdings, Inc., a Delaware corporation.
(g) "Bankruptcy Code" means the Bankruptcy
Reform Act of 1978 (11 U.S.C. Sec. 101, et seq.), as
amended.
(h) "Borrower" means CCAIR, Inc., a
Delaware corporation.
(i) "Borrowing Base" means 50% of the
Eligible Receivables. The calculation of the Borrowing
Base shall be based upon the latest Monthly Market Pair
Summary and the latest Interim Monthly Market Pair
Summary, as applicable, and, with respect to
Non-Transportation Receivables, Borrower's reasonable
good faith estimate of these Non-Transportation
Receivables. In no event shall such Non-Transportation
Receivables in excess of $350,000 constitute any
portion of the Eligible Receivables for computation of
the Borrowing Base in any given month. The calculation
of the Borrowing Base shall be subject to adjustment by
Lender at any time to reflect contrary information
contained in (a) the Chase Manhattan Bank, N.A.,
Settlement Statements Relating to Inter-Airline
Accounts Receivable delivered pursuant
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<PAGE>
to Section 4.01 (f) and/or (b) any alternate source of
information deemed appropriate by Lender.
(j) "Business Day" means any day other
than a Saturday, Sunday or other day on which national
banks in Charlotte, North Carolina, are authorized to
close.
(k) "Chattel Paper" shall have the meaning
ascribed to that term in the Uniform Commercial Code.
(l) "Clearinghouse Agreement" means the
Associate Membership Agreement dated November 30, 1979
(which incorporates by reference the Agreement Relating
to the Settlement of Interline Accounts dated as of
February 1, 1948), as amended from time to time, each
among the Airline Clearing House, Inc. and certain air
carriers, including Borrower, together with all
amendments, modifications, renewals, extensions,
substitutes, successors and replacements thereto.
(m) "Clearinghouse Payment Date" means
each day on which a payment is made to or for the
account or benefit of Borrower under the Clearinghouse
Agreement.
(n) "Clearinghouse Payment Instruction
Letter" means that certain letter agreement dated
______ among Borrower, Lender, Chase Manhattan Bank,
N.A. and Wachovia Bank of North Carolina, N.A.,
establishing payment instructions for sums paid
pursuant to the Clearinghouse Agreement.
(o) "Closing" means 1:00 P. M. on February
10, 1995, or such other time and date as to which
Lender and Borrower shall agree in writing.
(p) "Confirmed Plan" means that certain
Plan of Reorganization, as amended, of Borrower which
was confirmed by the United States Bankruptcy Court for
the Western District of North Carolina on or about July
19, 1991.
(q) "Contract Rights" shall have the
meaning ascribed to that term in the Uniform Commercial
Code.
(r) "Deposit Agreement" means that certain
Special Account and Disbursement Authorization
Agreement dated of even date among Lender, Borrower,
BAH, Jet Acceptance Corporation, a Delaware
corporation, and Wachovia Bank of North Carolina, N.A.,
a national banking association, and all renewals
amendments, modifications, replacements and successors
thereto.
(s) "Eligible Receivables" means those
Receivables of Borrower which meet the following
requirements: (i) such Receivable arose in the
ordinary course of business and is not
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more than ninety (90) days past due, (ii) the right to
payment has been fully earned by completed performance,
(iii) the Receivable includes only that portion thereof
not subject to any offset, defense, counterclaim,
credit, allowance or adjustment, (iv) Borrower's title
to such Receivable is absolute and is subject to no
assignment, claim, lien or security interest, (v) the
full amount reflected on Borrower's books and on any
invoice or statement delivered to the Lender related to
such Receivable is owing to Borrower and no partial
payment has been made thereon, and (vi) constitutes
payment(s) due to Borrower pursuant to the
Clearinghouse Agreement to the extent that there are no
disputes, defaults, offsets or other defenses to
immediate payment of the same to Borrower.
Non-Transportation Receivables aggregating in excess of
$350,000 in any given month shall not constitute
"Eligible Receivables" to the extent of the excess.
(t) "Environmental Laws" means all laws
relating to environmental matters, including, without
limitation, those relating to fines, orders,
injunctions, penalties, damages, contribution, cost
recovery compensation, losses or injuries resulting
from the release or threatened release of Hazardous
Materials and to the generation, use, storage,
transportation, or disposal or Hazardous Materials, in
any manner applicable to any of the Mortgaged
Properties, including, without limitation, the
Comprehensive Environmental Response, Compensation, and
Liability Act (42 U.S.C. (section mark)9601 et seq.), the
Hazardous Material Transportation Act (49 U.S.C. (section
mark) 1801 et seq.),
the Resource Conservation and Recovery Act (42 U.S.C.
(section mark) 6901 et seq.), the Federal Water
Pollution Control Act
(33 U.S.C. (section mark) 1251 et seq.), the
Clean Air Act (42 U.S.C.
(section mark) 7401 et seq.), the Toxic
Substances Control Act (15
U.S.C. (section mark) 2601 et seq.), the
Occupational Safety and
Health Act (29 U.S.C. (section mark) 651 et seq.)
and the Emergency
Planning and Community Right-to-Know Act (42 U.S.C.
(section mark) 1101 et seq.), each as amended
or supplemented, and
any analogous future or present local, state and
federal statutes and regulations promulgated pursuant
thereto, each as in effect as of the date of
determination.
(u) "ERISA" means the Employment
Retirement Income Security Act of 1974, as in effect
from time to time.
(v) "Event of Default" means any of the
events specified in Section 6.01.
(w) "Existing Loan Documents" ascribed to
that term in that certain Fourth Modification and
Extension Agreement dated as of January 10, 1995,
between Borrower and BAH.
(x) "Fiscal Year" means, when used in
conjunction with any calendar year, the fiscal year of
Borrower which ends on June 30 of such calendar year.
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<PAGE>
(y) "General Intangibles" shall have the
meaning ascribed to that term in the Uniform Commercial
Code.
(z) "Generally Accepted Accounting
Principles" means generally accepted accounting
principles in effect in the United States and
consistently applied and maintained throughout the
period indicated and consistent with the prior
financial practice of Borrower, as reflected on the
financial statements referred to in Section 4.01
hereof; provided, however, that, in the event that
changes shall be mandated by the Financial Accounting
Standards Board, or any similar accounting body of
comparable standing, or shall be recommended by
Borrower's certified public accountants, such changes
shall be included in Generally Accepted Accounting
Principles only from and after such date as Borrower
and Lender shall have amended this Agreement to the
extent necessary to reflect any such changes in the
financial covenants and other terms and conditions of
this Agreement.
(aa) "Goods" shall have the meaning
ascribed to that term in the Uniform Commercial Code.
(bb) "Hazardous Materials" means (i) any
chemical, material or substance defined as or included
in the definition of "hazardous substances," "hazardous
wastes," "hazardous materials," "extremely hazardous
waste," "restricted hazardous waste," or "toxic
substances" or words of similar import under any
applicable Environmental Laws, (ii) any oil, petroleum
or petroleum derived substance, any drilling fluids,
produced waters and other wastes associated with the
exploration, development or production of crude oil,
any flammable substances or explosives, any radioactive
materials, any hazardous wastes or substances, any
toxic wastes or substances or any other materials or
pollutants which (a) pose a material hazard to any
property of Borrower or to Persons on or about such
property or (b) cause such property to be in violation
of any Environmental Laws, (iii) asbestos in any form
which is or could become friable, urea formaldehyde
foam insulation, electrical equipment which contains
any oil or dielectric fluid containing levels of
polychlorinated biphenyls in excess of fifty parts per
million, and (iv) any other chemical, material or
substance, exposure to which is prohibited, limited or
regulated by any governmental authority or may or could
pose a hazard to the health and safety of any Persons.
(cc) "Indebtedness" shall mean and include,
without duplication, (l) all items which, in accordance
with Generally Accepted Accounting Principles, would be
included on the liability side of a balance sheet as at
the date as of which Indebtedness is to be determined
excluding capital stock, surplus, capital and earned
surplus, (2) all Indebtedness secured by any mortgage,
pledge, security interest or lien existing on
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<PAGE>
property owned subject to such mortgage, pledge,
security interest or lien whether or not the
Indebtedness secured thereby shall have been assumed,
(3) all amounts representing the capitalization of
lease payments in accordance with Generally Accepted
Accounting Principles, and (4) all guarantees,
endorsements and other contingent obligations,
including without limitation all Indebtedness
guaranteed, directly or indirectly, in any manner, or
in effect guaranteed or supported, directly or
indirectly, through an agreement, contingent or
otherwise, (a) to purchase or sell services at prices
or in amounts designed to enable the debtor to make
payment of the Indebtedness or to assure the owner of
the Indebtedness against loss, or (b) to supply or
advance funds to or in any other manner invest in the
debtor, provided, however, that such term shall not
mean and include any Indebtedness in respect of which
moneys sufficient to pay and discharge the same in full
(either on the expressed date of maturity thereof or on
such earlier date as such Indebtedness may be duly
called for redemption and payment) shall be deposited
with a depositary, agency or trustee in trust for the
payment thereof.
(dd) "Instruments" shall have the meaning
ascribed to that term in the Uniform Commercial Code.
(ee) "Interim Market Pair Summary" means a
report similar to the Monthly Market Pair Summary but
which is issued between the 1st day of any given month
and before the 10th day of the immediately following
month and which provides the most recently available
data with respect to passengers carried during the
period covered by the Interim Market Pair Summary.
(ff) "Lender" means JSX Capital
Corporation, a Delaware corporation.
(gg) "Loan" means the Revolving Loan.
(hh) "Loan Documents" means this Agreement,
the Note, the Security Agreement, the Deposit
Agreement, the UCC Financing Statements, the
Clearinghouse Payment Instruction Letter, the BAH Bill
of Sale, the NationsBank Bill of Sale and Borrower's
counsel's opinion letter referred to in Section
2.01(a)(v).
(ii) "Monthly Market Pair Summary means a
report regarding the quantity of all passengers carried
(specifying both revenue and non-revenue passengers)
and including revenue data therefor in the calendar
month immediately preceding the date of issue. An
example of a Monthly Market Pair Summary is attached as
Exhibit D.
6
<PAGE>
(jj) "Non-Transportation Receivables" means
an otherwise Eligible Receivable which arises
exclusively from freight charges or Concourse D fees;
(kk) "Note" means the Revolving Note.
(ll) "Permitted Encumbrances" means and
includes:
(i) Liens for taxes, assessments
or similar governmental
charges being contested in
good faith or not in default;
(ii) Workers', mechanics' and
materialmen's liens and
similar liens incurred in the
ordinary course of business
remaining undischarged or
unstayed for not longer than
30 days from the filing
thereof;
(iii) Liens in respect of pledges
or deposits under worker's
compensation laws,
unemployment insurance or
similar legislation and in
respect of pledges or
deposits, to secure bids,
tenders, contracts (other
than contracts for the
payment of money), leases or
statutory obligations, or in
connection with surety,
appeal and similar bonds
incidental to the conduct of
litigation; and
(iv) Liens in favor of Lender and
its Affiliates.
(mm) "Person" means an individual,
partnership, corporation, trust, unincorporated
organization, association, joint venture or a
government or agency or political subdivision or
instrumentality thereof.
(nn) "Prime Rate" means that rate published
in the Wall Street Journal as the prime rate from time
to time in effect, said changes to occur on the date
the Prime Rate changes, and may or may not be the
lowest or best rate charged by creditors or
institutional lenders.
(oo) "Receivables" means all obligations
of every kind at any time owing to Borrower, whether
now existing or hereafter arising, and whether
classified under the Uniform Commercial Code as
Accounts, Instruments, Contract Rights, Chattel Paper,
General Intangibles or otherwise), all proceeds
thereof, all security therefor and all Borrower's
rights to goods or other property sold or leased which
may be represented thereby.
(pp) "Revolving Loan" means at any time the
aggregate unpaid principal amount at that time of all
of the Advances made by the Lender pursuant to this
Agreement.
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<PAGE>
(qq) "Revolving Loan Commitment" means Two
Million Five Hundred Thousand Dollars ($2,500,000) or,
as the context may require, the obligation of Lender
hereunder to make Advances in an aggregate amount not
exceeding such amount.
(rr) "Revolving Note" means a promissory
note evidencing the Revolving Loan and otherwise
complying with Section l.05.
(ss) "Security Agreement" means the Amended
and Restated Security Agreement of even date herewith
between Lender and Borrower.
(tt) "Shorts Leases" means the leases
described on the attached Exhibit G, which is
incorporated by this reference, and all successors,
substitutions, replacements, modifications and
amendments thereto.
(uu) "Subsidiary" and "Subsidiaries" means,
with respect to any Person, any corporation, whether
organized and existing under the laws of any state of
the United States, including the District of Columbia
and Puerto Rico, or under the laws of any foreign
country, of which 50% or more of voting stock at any
time is owned or controlled directly or indirectly by
such Person or one or more Subsidiaries of such Person
or by such Person and one or more Subsidiaries of such
Person.
(vv) "Termination Date" means December 31,
1995 or such other date as may be determined under
Section 6.02 or to which Lender has consented pursuant
to Section 1.04 of this Agreement.
(ww) "Total Liabilities" means with respect
to any Person, the aggregate amount of all liabilities
of such Person, as determined in accordance with
Generally Accepted Accounting Principles.
(xx) "UCC Financing Statements" means
recordable financing statements perfecting the security
interests granted in the Loan Documents.
(yy) "Uniform Commercial Code" shall mean
the uniform commercial code as adopted in North
Carolina (N.C.G.S. (section mark) 25-1 et seq.).
(zz) "USAir Service Agreement" means any
current or future agreement between Borrower (or any
Affiliate of Borrower) and USAir, Inc., (or any
Affiliate of USAir, Inc.) with respect to the sale,
lease or use of any goods or services, including
without limitation those listed on Exhibit F, which is
incorporated by this reference, together with all
amendments, modifications, renewals, extensions,
substitutes, successors and replacements thereto.
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<PAGE>
Section 1.01 Advances. Lender shall make and
remake from time to time prior to the Termination Date,
one or more Advances to Borrower in amounts which in
the aggregate at any one time outstanding do not exceed
the lesser of (i) the Borrowing Base or (ii) the
Revolving Loan Commitment. Lender may, in its sole and
absolute discretion, make advances in excess of the
Borrowing Base but not more than the Revolving Loan
Commitment. All Advances made by Lender under the
Revolving Loan shall be used for Borrower's working
capital needs and to make payments required under
Confirmed Plan.
Section l.02. Manner of Borrowing. Borrower
shall give Lender at least five (5) Business Days'
notice (except for the Initial Advance, for which only
one (1) Business Day's notice need be given) of
Borrower's intention to borrow a designated amount
hereunder by submitting to Lender a request in the
appropriate form attached hereto as Exhibit E-1 or E-2,
as applicable, which are incorporated by this
reference. Each borrowing hereunder shall be made on a
Business Day and shall be in an aggregate principal
amount which is at least $100,000 or an integral
multiple thereof, except a borrowing which is in an
amount equal to the unused amount of the Revolving Loan
Commitment, which borrowing may be in such unused
amount. Prior to 2:00 P. M. (North Carolina Time) on
the date of a borrowing hereunder, Lender shall, upon
the satisfaction of the conditions set forth in Article
2, by wire transfer, deposit into the existing account
of Borrower maintained at NationsBank, N.A.
(Carolinas), the amount of the Advance then requested.
Section l.03. (a) Interest. Borrower shall
pay interest on the balance of the Revolving Loan for
each day it is outstanding at a rate per annum equal to
the Prime Rate in effect on such day plus two
percentage points (2%) . If Borrower shall fail to pay
any amount payable hereunder or under the Revolving
Note when due (whether at maturity or by reason of
acceleration or notice of prepayment or otherwise),
Borrower shall pay interest on such unpaid amount for
each day during the period from the date such amount
became due until it shall be paid in full (whether
before or after judgment) at a rate per annum equal to
the applicable rate of interest on the Revolving Loan
in effect on such day plus four percentage points
(4%).
(b) Time of Adjustment. The interest rates
provided herein shall be adjusted automatically as of
the opening of business on the effective date of each
change in the Prime Rate.
(c) Interest Payment Dates. All accrued but
unpaid interest on the Revolving Loan shall be payable
in full (i) on the day after each successive
Clearinghouse Payment Date, commencing with the first
such date occurring after the date on which the initial
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<PAGE>
Advance is made, and (ii) when all or any amount of the
Revolving Loan shall be due (whether at maturity or by
reason of acceleration or notice of prepayment or
otherwise), but only to the extent then accrued on the
amount then due. Interest on overdue amounts payable
hereunder or under the Revolving Note shall be payable
on demand.
(d) Maximum Interest Rate. Nothing contained
in this Agreement or in the Revolving Note shall be
deemed to establish or require the payment of interest
to Lender at a rate in excess of the maximum rate
permitted by governing law. In the event that the rate
of interest required to be paid under this Agreement or
the Revolving Note exceeds the maximum rate permitted
by governing law, the rate of interest required to be
paid hereunder and under the Revolving Note shall be
automatically reduced to the maximum rate permitted by
governing law and any amounts collected in excess of
the permissible amount shall be deemed a prepayment of
principal on the Revolving Loan and Revolving Note.
Section l.04. Repayment. Except as provided
in Section 1.06(b), Section l.06(c) or Section 6.02,
the Revolving Loan shall mature and become due and
payable, and shall be repaid by the Borrower, on demand
and, if no earlier demand is made, on the Termination
Date; provided, that the Termination Date may be
extended upon the written request of Borrower (which
must be received by Lender not less than sixty (60)
days prior to the Termination Date) by Lender in its
sole and absolute discretion for additional periods of
up to one year each, by giving its prior written notice
of an extension to Borrower.
Section l.05. Revolving Note. The Revolving
Loan and Borrower's obligation to repay the Revolving
Loan with interest in accordance with the terms of this
Agreement shall be evidenced by this Agreement and by a
single Revolving Note payable to the order of Lender,
substantially in the form of Exhibit A attached hereto.
The Revolving Note shall (i) be dated as of the date
hereof, (ii) be in a principal amount equal to the
amount of the Revolving Loan Commitment, (iii) be duly
executed and delivered by the duly authorized officers
of Borrower, and (iv) be payable in the amount of the
Revolving Loan evidenced by it.
Section l.06. Payments. (a) Borrower shall
pay the outstanding principal balance of the Revolving
Loan and all interest thereon, in full, on the day
after each successive Clearinghouse Payment Date.
Amounts paid under this Section 1.06(a) may be
reborrowed prior to the Termination Date, subject to
the provisions of Article 2.
(b) Unless Lender has specifically agreed in
writing to making an Advance in excess of the Borrowing
Base pursuant to a
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request made by Borrower in the form set forth as
Exhibit E-2, Borrower shall immediately repay the
Revolving Loan and the Revolving Note in the amount by
which the sum of the principal amounts thereof plus all
accrued but unpaid interest exceed the lesser of (i)
the Borrowing Base or (ii) the Revolving Loan
Commitment at any time.
(c) Borrower may at any time and from time to
time, prepay the Revolving Loan and the Revolving Note
in whole or in part without premium. Each partial
prepayment shall be in an aggregate principal amount
which is at least $100,000, unless the prepayment is in
the full amount transferred in any given payments
pursuant to the Deposit Agreement. Amounts prepaid
pursuant to this Section l.06(a) may be reborrowed
prior to the Termination Date, subject to the
provisions of Article 2.
Section l.07. (a) Manner of Payment. All
payments of principal (including prepayments thereof),
interest, fees and other amounts payable hereunder or
under the Revolving Note shall be made to Lender as set
forth in the Deposit Agreement. Borrower shall pay
principal, interest, fees and all other amounts payable
hereunder or under the Revolving Note without any
deduction whatsoever, including, but not limited to,
any deduction for any setoff, recoupment or
counterclaim.
(b) Effect of Payment. Each payment of
principal of or interest on the Revolving Loan shall be
deemed to be an equivalent payment of principal of or
interest on the Revolving Note, and payment of
principal of or interest on the Revolving Note shall be
deemed to be an equivalent payment of principal of or
interest on the Revolving Loan.
Section l.08. (a) Computation of Interest.
Interest hereunder and under the Revolving Note shall
be computed on the basis of a year of 360 days and for
the actual number of days elapsed.
(b) Payment on a Non-Business Day. If any
payment hereunder or under the Revolving Note shall be
specified to be due on a day which is not a Business
Day, it shall be due on the next succeeding day which
is Business Day. Interest shall be due and payable to
and including the date of actual payment.
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ARTICLE 2
CONDITIONS PRECEDENT
Section 2.01. Conditions Precedent to Initial
Advance. The obligation of Lender to make its initial
Advance under the Revolving Note at or subsequent to
the Closing is subject to the fulfillment of each of
the following conditions prior to or contemporaneously
with such Advance:
(a) Lender shall have received each of the
following, in form and substance satisfactory to
Lender: (i) fully executed originals of this Agreement
and each of the other Loan Documents, together with
evidence satisfactory to Lender of the due
authorization, execution and delivery of each of such
documents; (ii) certified copies of the Borrower's
bylaws and all corporate (including director and/or
shareholder, if required) action to authorize the
transactions herein contemplated; (iii) a certified
copy of the Articles of Incorporation for Borrower,
issued of recent date by the Secretary of State of
Delaware; (iv) an opinion of Borrower's counsel
substantially in the form of Exhibit B; (v) a
Certificate of Authority to transact business as a
foreign corporation in the State of North Carolina,
issued of recent date by the Secretary of State of
North Carolina; (vi) UCC-11 searches from all
appropriate jurisdictions establishing the absence of
filings in favor of any Person other than Lender; and
(vii) all such other documents as Lender may reasonably
request, certified by an appropriate governmental
official or by the chief financial officer of Borrower
if so requested.
(b) Lender shall have received the fully
executed Revolving Note.
Section 2.02. Conditions Precedent to Each
Advance. The obligation of Lender to make each
Advance, including the initial Advance under the
Revolving Note, is subject to the fulfillment,
immediately prior to or contemporaneously with each
such Advance, of each of the following conditions:
(a) All of the representations and warranties
under this Agreement (which pursuant to Section 3.02
are made at and as of the time of each such Advance),
shall be true and correct at the time of each such
Advance (or, in the case of representations and
warranties made in Subsection 3.02(c), shall have been
true and correct at the time made), with and without
giving effect to the Advance to be made at such time
and the application of the proceeds thereof. Lender
may, without waiving this condition, consider it
fulfilled and a representation by Borrower to such
effect made, if no written notice to the contrary,
dated the date of such Advance, is received by Lender
from Borrower.
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(b) Receipt by Lender of all documents
required to be delivered under this Agreement
including, without limitation, Sections 4.01(e) and
(f).
(c) Receipt by Lender of such additional
materials as reasonably may have been requested by it
in connection with such Advance (such materials to be
in form and substance satisfactory to Lender).
(d) No default shall exist under this
Agreement or the Revolving Note and no state of facts
shall exist which but for notice and/or with the
passage of time could result in a default under this
Agreement or the Revolving Note.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF BORROWER
Section 3.01. Representations and Warranties.
Borrower represents and warrants to Lender, upon which
representations and warranties Lender is relying, that:
(a) Organization; Good Standing;
Qualification. Borrower (i) is a corporation duly
organized, validly existing and in good standing under
the laws of Delaware, (ii) has the power and authority
to own its properties and to carry on its business as
now being conducted; and (iii) is duly qualified to
transact business and is in good standing as a foreign
corporation in North Carolina and all other
jurisdictions where Borrower's operations would require
it to so qualify.
(b) Power and Authority. Borrower is duly
authorized under all applicable provisions of law to
execute, deliver and perform each of the Loan Documents
to which it is a party and the Revolving Note, and all
action (corporate or otherwise and including any
necessary director or shareholder action) on its part
required for the lawful execution, delivery and
performance thereof has been duly taken. Each of the
Loan Documents to which Borrower is a party has been
duly executed and delivered by a duly authorized
officer of Borrower and is, and the Revolving Note,
when executed and delivered in accordance with this
Agreement will be, a legal, valid and binding
obligation of Borrower, enforceable in accordance with
its terms. Neither the execution and delivery of the
Loan Documents and the Revolving Note, nor the
fulfillment of or compliance with their provisions and
terms, will conflict with, or result in a breach of the
terms, conditions or provisions of, or constitute a
violation of or default under any applicable law,
regulation, judgment, writ, order or decree to which
Borrower or any of its properties are subject, or the
articles of incorporation or bylaws of Borrower, or any
agreement or instrument to which Borrower is now a
party
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or by which it or its properties are bound or affected,
or create any lien, charge or encumbrance upon any of
the properties or assets of Borrower.
(c) Financial Information. Borrower has
provided Lender with copies of the following financial
or information statements:
(i) the unaudited balance sheet
of Borrower as of December
31, 1994, which is dated as
of January 30, 1995, and
unaudited income and expense
statements for Borrower as of
December 31, 1994, and dated
January 30, 1995; and
(ii) the statements of cash flows
for the six months' period
ending December 31, 1994, of
Borrower, prepared by
Borrower and dated January
30, 1995.
(iii) monthly cash flow budgets
effective January 31, 1995,
through August 31, 1995,
prepared by Borrower and
dated January 30, 1995.
The financial statements described in paragraphs (i),
(ii) and (iii) above are accurate and complete and
present fairly the financial position of Borrower as of
its date, in conformity with Generally Accepted
Accounting Principles. There have been no material
adverse changes in the business, properties or
condition of Borrower, financial or otherwise, since
the date of such statements.
(d) Existing Liens and Security Interests in
Favor of Lender; Absence of Offsets, Etc. The existing
liens, security interests, collateral assignments and
other encumbrances in favor of Lender arising under the
Existing Loan Documents are valid and binding
obligations of Borrower and are not subject to
avoidance or invalidation for any reason (the "Existing
Liens"). The Existing Liens shall secure all present
and future indebtedness of Borrower to Lender arising
under this Agreement and the Existing Loan Documents.
There are no offsets, defenses or claims of Borrower
against Lender arising under the Existing Loan
Documents or otherwise.
(e) Title to Assets. Borrower has good and
marketable title to its properties and assets,
including all the properties and assets reflected in
the financial statements described in Section
3.01(c)(i) hereof, except for such assets as may have
been disposed of in the ordinary course of business
since the date of said financial statements or as are
no longer useful in the conduct of business, and all
such properties and assets are free and clear of all
liens, mortgages, pledges, encumbrances or charges of
any kind except as permitted by Section 5.05.
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(f) Contingent Liabilities. Borrower has not
guaranteed any obligations of others and, to the best
of its knowledge, is not contingently liable in any
manner, direct or indirect, except as permitted by
Section 5.07.
(g) Litigation. Except as set forth in
Schedule 3.01 (g) attached hereto and incorporated
herein by reference, there are no pending or, to the
best of Borrower's knowledge, threatened actions,
litigation, disputes, alleged defaults or breaches,
suits or proceedings against or in any way relating
adversely to Borrower or any of its properties before
any court, arbitrator or governmental or administrative
body or agency which (i) may materially adversely
affect the business or condition, financial or
otherwise, of Borrower, (ii) involve money or property
valued in excess of $50,000; or (iii) in any way
involve the Clearinghouse Agreement or the USAir
Service Agreement.
(h) Taxes. Borrower has filed all income tax
returns required to be filed by it and all taxes shown
thereon, and all other taxes payable (except for
Mecklenburg County ad valorem taxes for 1994), have
been paid, and no controversy in respect of additional
income taxes, state, federal or foreign, is pending,
or, to the knowledge of Borrower, threatened against
it. Adequate reserves have been established by
Borrower for the payment of all such taxes owing but
not yet due and payable.
(i) Trademarks, Franchises and Licenses.
Borrower owns, possesses or has the right to use all
necessary and/or desirable patents, licenses,
franchises, trademarks, trademark rights, trade names,
trade name rights, copyrights, trade secrets, know-how
and confidential commercial and proprietary information
to conduct its business as now and to be conducted, the
absence of which might have a material adverse effect
on such business, without known material conflict with
any patent, license, franchise, trademark, trade name,
copyright or other proprietary right of any other
Person.
(j) No Default. Borrower is not in default in
the performance, observance or fulfillment of any of
the obligations, covenants or conditions contained in
any agreement or instrument to which it is a party or
by which it may be bound including expressly but
without limitation the USAir Service Agreement, the
effect of which default would give rise to a claim
against it or allow any Person to cause such obligation
under the agreement or instrument to become due prior
to its stated maturity.
(k) Governmental Authority. Borrower has
received the written approval of all federal, state,
local and foreign governmental authorities, if any,
necessary to carry out the terms of the Loan Documents,
and no further governmental consents
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or approvals are required in the making or performance
of the Loan Documents or the Revolving Note.
(l) No Untrue Statements. Neither this
Agreement nor any report, schedule, certificate,
agreement or instrument heretofore or simultaneously
with the execution of this Agreement delivered to
Lender by Borrower in connection with the Revolving
Loan contains any misrepresentation or untrue statement
of fact or omits to state any material fact necessary
to make this Agreement or any such report, schedule,
certificate, agreement or instrument not misleading.
(m) ERISA Requirements. Borrower has not
incurred any material accumulated unfunded deficiency
within the meaning of ERISA, or incurred any material
liability to the Pension Benefit Guaranty Corporation
established under ERISA (or any successor thereto under
ERISA) in connection with any employee benefit plan
established or maintained by Borrower and no Reportable
Event or Prohibited Transaction (as these terms are
defined by ERISA) has occurred or is occurring.
(n) Subsidiaries. Borrower does not own stock
or other equity interest in any corporation other than
Piedmont Commuter, Inc., a Delaware corporation, and
Piedmont Charter, Inc., a Delaware corporation.
(o) Margin Transactions. Borrower is not
engaged principally, or as one of its important
activities, in the business of extending credit for the
purpose of purchasing or carrying margin stock (within
the meaning of Regulations U and X of the Board of
Governors of the Federal Reserve System).
(p) Monthly Borrowing Base Report and
Certificates. No Monthly Borrowing Base Reports and
Certificate now or hereafter delivered to Lender shall
contain any misrepresentation or untrue statement of
fact or omit to state any material fact necessary to
make any such report and certificate not misleading.
Section 3.02. Survival of Representations and
Warranties, etc. All statements contained in this
Agreement and in any certificate, financial statement,
legal opinion or other instrument delivered by or on
behalf of Borrower pursuant to or in connection with
this Agreement (including, but not limited to, any such
statements made in or in connection with any amendment
hereto) shall constitute representations and warranties
made under this Agreement. All representations and
warranties made under this Agreement shall be made at
and as of the date hereof. Additionally, each request
for an Advance shall constitute a reaffirmation of all
representations and warranties at and as of the date of
each borrowing under the Revolving Loan.
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ARTICLE 4
AFFIRMATIVE COVENANTS
Until the payment in full of the Revolving
Loan and all other amounts payable hereunder, unless
Lender shall otherwise consent in writing, Borrower
shall:
Section 4.01. Financial Reports and Other
Data. (a) As soon as practicable, and in any event
within forty-five (45) days, after the end of each of
the first three quarterly periods of each Fiscal Year,
deliver to Lender (i) a balance sheet of Borrower as at
the end of such quarterly period, and related
statements of income, results of operations and changes
in financial position for such quarterly period and for
the period from the beginning of the then current
Fiscal Year to the end of such quarterly period,
setting forth in comparative form figures for the
corresponding periods in the preceding Fiscal Year, all
in reasonable detail and certified by the chief
financial officer of the Borrower to have been prepared
in accordance with Generally Accepted Accounting
Principles subject only to changes resulting from
normal, recurring year-end adjustments;
(b) As soon as practicable and in any event
within ninety (90) days after the end of each Fiscal
Year, deliver to Lender an audited balance sheet of
Borrower as at the end of its Fiscal Year, and related
statements of income, results of operations and changes
in financial condition for such fiscal Year, setting
forth in each case in comparative form corresponding
figures from the preceding annual report, all in
reasonable detail and satisfactory in scope to Lender
and prepared in accordance with Generally Accepted
Accounting Principles and accompanied by an unqualified
audit report of an independent certified public
accountant acceptable to Lender certified by said
certified public accountant, together with any
management letters issued by said certified public
accountant to Borrower;
(c) On or before the twentieth (20th) day of
each successive calendar month hereafter, an internally
prepared statement of income and expense, cash flows,
financial and operational statistics, and balance
sheet, certified by the chief financial officer as
being true and correct in all material respects, and
prepared in accordance with Generally Accepted
Accounting Procedures;
(d) Together with each delivery of financial
statements required by (a) (b) and (c) above, deliver
to Lender a certificate of no default from the chief
executive officer or chief financial officer of
Borrower, setting forth that no Event of Default
specified in Section 6.01 hereof has occurred or, but
for the requirements that notice be given or time
elapse, or
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both, would occur, or, if such is not the case,
specifying any and all such defaults and Events of
Default of which the chief financial officer may have
knowledge;
(e) On or before the tenth (10th) day of each
successive calendar month hereafter, deliver to Lender
a Monthly Market Pair Summary for the preceding month.
Borrower shall also submit an Interim Monthly Market
Pair Summary at the request of Lender and/or in support
of all requests for Advances. All Monthly Market Pair
Summaries and Interim Monthly Market Pair Summaries
shall be accompanied by a written certification of
accuracy and completeness signed by the chief financial
officer of Borrower;
(f) Within one (1) day of receipt by
Borrower, deliver to Lender each most recent Chase
Manhattan Bank, N.A. Settlement Statement of
Inter-Airline Accounts Receivable issued pursuant to
the Clearinghouse Agreement;
(g) On or before the twentieth (20th) day of
each successive calendar month hereafter, deliver to
Lender a copy of all reports and summaries filed
pursuant to the Clearinghouse Agreement with respect to
the preceding calendar month;
(h) Prior to March 31 of each successive
year, submit to Lender an annual budget and business
plan (including balance sheet and cash flow
projections) for the upcoming two Fiscal Years
providing for the sum of net profit or loss before tax,
plus depreciation expense, plus other non-cash expenses
at least equal to interest payment and principal
repayment requirements, constructed on a basis in
accordance with Generally Accepted Accounting
Principles, and in a form satisfactory to Lender;
(i) Prior to March 31 of each successive year,
submit to Lender a proposed capital budget for the
upcoming Fiscal Year for Lender's review and approval
(each such budget, once approved by Lender in writing,
being referred to as an "Approved Capital Budget"); and
(j) With reasonable promptness, deliver to
Lender such additional financial or other data as
Lender may reasonably request.
Section 4.02. Taxes and Liens. Promptly pay,
or cause to be paid, all taxes, assessments or other
governmental charges which may lawfully be levied or
assessed upon the income or profits of Borrower, or
upon any property, real, personal or mixed, belonging
to Borrower, or upon any part thereof and also any
lawful claims for labor, material and supplies which,
if unpaid, might become a lien or charge against any
such property; provided, however, Borrower shall not be
required to pay any such
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<PAGE>
tax, assessment, charge, levy or claim so long as the
validity thereof shall be actively contested in good
faith by proper proceedings; but provided further that
any such tax, assessment, charge, levy or claim shall
be paid forthwith upon the commencement of proceedings
to foreclose any lien securing the same unless Borrower
obtains and delivers to the Lender a surety bond
satisfactory to Lender. Mecklenburg County ad valorem
taxes shall be paid in full, and proof of payment in
full provided to Lender, by May 31, 1995
Section 4.03. Business, Existence and
Qualification. Qualify to do business in all
jurisdictions where the Borrower's activities require
it to do so, and do or cause to be done all things
necessary to preserve and to keep in full force, effect
and good standing the existence of Borrower in its
current form and all rights and franchises, trade
names, patents, trademarks, licenses, leases, permits,
copyrights, trade secrets and other proprietary
information.
Section 4.04. Maintain Assets. Maintain the
assets of Borrower in good order and repair and, from
time to time, make all needful and proper repairs,
renewals, replacements, additions and improvements
thereto.
Section 4.05. Right of Inspection. Permit any
person designated by Lender, at Lender's expense, to
visit and inspect the properties and assets, the
corporate books and records and the financial reports
of Borrower and to discuss its business affairs,
finances and accounts with its officers, directors,
accountants and other professionals employed by
Borrower, all at such reasonable times and as often as
Lender may reasonably request.
Section 4.06. Observe All Laws. Conform to
and duly observe all laws, regulations and other valid
requirements of any regulatory authority, public or
private with respect to the conduct of its business
including, without limitation, Environmental Laws.
Section 4.07. Insurance. Maintain, with
well-rated and responsible insurance companies,
insurance of the types and in the amounts as are
customarily carried by businesses of similar type and
size, unless higher limits or other types of coverage
are reasonably required by Lender. Borrower shall
furnish Lender, upon request, with a detailed list of
the insurance then in effect and stating the names of
the insurance companies, the types, the rates and the
amounts of the insurance, and dates of the expiration
thereof and the properties and risks covered thereby.
Upon request of Lender, Borrower shall immediately
deliver to Lender certificates and evidence of such
insurance, copies of all policies of insurance, proof
of the payment of all
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<PAGE>
premiums, and designations of Lender as loss
payee/additional insured.
Section 4.08. ERISA. Comply with all
requirements of ERISA applicable to Borrower and
furnish to Lender as soon as possible and in any event
within thirty (30) days after Borrower or the duly
appointed administrator of a Plan of Borrower (as
defined in ERISA) knows or has reason to know that any
Reportable Event or Prohibited Transaction (as these
terms are defined in ERISA) has occurred, the statement
of the chief financial officer of Borrower describing
in reasonable detail such Reportable Event or
Prohibited Transaction and any action which Borrower
proposes to take with respect thereto, together with a
copy of the notice of such Reportable Event given to
the Pension Benefit Guaranty Corporation or a statement
that said notice will be filed with the annual report
to the United States Department of Labor with respect
to such Plan if such filing has been authorized.
Section 4.09. Accounting Methods and
Financial Records. Maintain a system of accounting,
and keep such books, records and accounts (which shall
be true and complete), as may be required or necessary
to permit the preparation of financial statements in
accordance with Generally Accepted Accounting
Principles.
Section 4.10. Knowledge of Default, Etc.
Immediately give written notice to Lender (i) of the
occurrence of any Event of Default (as defined in
Section 6.01 hereof) hereunder, (ii) of an event which
would constitute such an Event of Default but for the
requirement that notice be given or time elapse or both
hereunder, (iii) of a monetary default of $50,000 or
more or any other event of default under any other
obligation of Borrower; or (iv) of any developments or
other information which would have a material adverse
effect on the business, operations or financial
condition of Borrower, specifying in each case the
nature thereof, the period of existence thereof and
what action is proposed to be taken with respect
thereto.
Section 4.11. Suits or Other Proceedings.
Promptly give Lender written notice of any pending or
threatened (in writing) action, suit, or other
proceeding not previously disclosed pursuant to Section
3.01 (g) hereof against or otherwise adversely
affecting Borrower involving claims for money or
property valued at $50,000 or more or of any
attachment, levy, execution, or other process being
instituted against any assets of Borrower pursuant to
such claims.
Section 4.12. Use of Proceeds. Use the
proceeds of the Revolving Loan for general working
capital purposes and to make payments required under
the Confirmed Plan.
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Section 4.13. Collection of Receivables;
Enforcement of Contracts. Collect its Receivables and
comply with, and compel compliance by all parties
thereto, with all contracts of Borrower including
without limitation the Clearinghouse Agreement and all
USAir Service Agreements, and comply with all reporting
requirements of the foregoing.
Section 4.14. Facility Availability Fee. Pay
to Lender in arrears, on each March 31, June 30,
September 30 and December 31 hereafter, a quarterly
facility availability fee of $3500. All quarterly
facility availability fees are payable hereunder
regardless of whether any Advances are ever made.
Section 4.15. Notice of Securities Offerings.
Promptly notify Lender of Borrower's plans to offer,
and all offers, securities of Borrower (whether by
public offering or private placement).
ARTICLE 5
NEGATIVE COVENANTS
For so long as this Agreement is in effect,
unless Lender shall otherwise consent in writing,
Borrower shall not, nor shall it enter into any binding
agreement either directly or indirectly to:
Section 5.01. Consolidation or Merger. Enter
into any transaction of merger or consolidation.
Section 5.02. Sale of Assets, Etc. Sell,
assign, lease, discount, transfer or otherwise dispose
of substantial assets of Borrower (in liquidation or
otherwise) (as used here, "substantial assets" are
those aggregating to a value of $50,000 or more),
including any Indebtedness or any capital stock of any
Subsidiary.
Section 5.03. Loans and Investments. Make or
permit to remain outstanding any loan or advance to, or
own, purchase or acquire any stock or securities of, or
any interest in, or make any capital contribution to,
any Person, except that this Section shall not apply
to:
(a) loans, advances or investments
disclosed in the financial statements
described in Section 3.01(c)(i) hereof
and approved by Lender in writing; and
(b) investments consisting of (i)
certificates of deposit issued by
United States commercial Lenders
(including foreign branches of such
Lenders) having capital resources in
excess of $1,000,000,000.00 or (ii)
prime
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commercial paper rated by Standard &
Poor's, Moody's or any other rating
agency of nationally recognized
standing at its highest rating.
Section 5.04. Indebtedness. Incur, create,
assume or permit to exist any Indebtedness, except that
this Section shall not apply to:
(a) Indebtedness disclosed in the
financial statements described in Section
3.01(c)(i) hereof;
(b) Indebtedness owed to Lender; and
(c) current Indebtedness consisting of
unsecured accounts payable and other
unsecured obligations incurred other
than as a result of borrowing money
and in the ordinary and regular course
of business which are not overdue.
Section 5.05. Limitation on Liens. Incur, create,
assume or permit to exist any mortgage, pledge,
security interest, encumbrance, lien or charge of any
kind upon any of its assets now owned or hereafter
acquired, including those arising under conditional
sales or other title retention agreements, except that
this Section shall not apply to:
(a) liens, pledges and other charges
described in the financial statements
and notes thereto referred to in
Section 3.01(c)(i) ; and
(b) Permitted Encumbrances.
Section 5.06. Capital Expenditure. Make any
capital expenditure not shown on that Fiscal Year's
Approved Capital Budget.
Section 5.07. Guaranties. Guarantee, assume,
endorse or otherwise become or remain liable in
connection with the obligations of any other Person,
other than:
(a) the endorsement of negotiable
instruments in the ordinary course of
business for deposit or collection;
and
(b) any guaranties in favor of Lender.
Section 5.08. Leases. Create, incur, assume
or otherwise become obligated in respect of any
liability for payments under any lease of real or
personal property, other than those in existence as of
this date (which shall not be materially modified or
amended without the prior written consent of Lender)
which call for aggregate annual lease payments in
excess of $100,000.
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Borrower agrees to deliver to Lender certified true and
complete copies of all leases entered into by Borrower
promptly upon execution.
Section 5.09. Transactions With Affiliates,
Make any transfer, distribution or payment, directly or
indirectly, and whether as a salary, fee, payment for
goods or services or otherwise, to any Affiliate, incur
any liability or enter into any transactions with any
Affiliate other than those entered into in the ordinary
course and pursuant to the reasonable requirements of
its business and effected on a basis as substantially
favorable to it as would be the case if the transaction
were effected with a Person not an Affiliate.
Reasonable compensation to directors whether in fees or
in the form of stock options in lieu of fees, is not a
violation of this Section.
Section 5.10. Use of Proceeds. Use any part
of the proceeds of the Revolving Loan or any of the
Advances to purchase or carry, or reduce or retire or
refinance any credit incurred to purchase or carry, any
margin stock (within the meaning of Regulations U and X
of the Board of Governors of the Federal Reserve
System) or to extend credit to others for the purpose
of purchasing or carrying any margin stock. If
requested by Lender, Borrower will furnish to Lender
statements in conformity with the requirements of
Federal Reserve Form U-l referred to in said
Regulation.
Section 5.11. Name and Fiscal Year. Change
Borrower's name, Fiscal Year or the location of its
principal place of business.
Section 5.12. Hazardous Materials. Produce,
manufacture, process, store or dispose of any Hazardous
Materials in violation of Environmental Laws.
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ARTICLE 6
DEFAULT
Section 6.01. Events of Default. Each of the
following shall constitute an Event of Default under
this Agreement and the Revolving Note, whatever the
reason for such event and whether it shall be voluntary
or involuntary or be effected by operation of law or
otherwise:
(a) Borrower's failure to cure any default in
payment of principal or interest on the Revolving Loan
or the Revolving Note within five (5) days;
(b) Borrower's default in the performance or
observance of any covenant or agreement contained in
this Agreement or any of the Loan Documents (other than
those contained in 6.01(a)) if Borrower fails to cure
the same within thirty (30) days after Lender gives
written notice of the same to Borrower; provided,
however, that if the nature of such default is such
that it may not reasonably be cured within thirty (30)
days, the right to cure such default shall extend
beyond the thirty (30) day period provided that
Borrower shall promptly, diligently and continuously
pursue the remedy of such default and cures the same
within one hundred twenty (120) days after the giving
of the original notice;
(c) The occurrence of an "Event of Default" or
a default (which is not cured within applicable time
periods) under any of the Loan Documents;
(d) The occurrence of an "Event of Default"
under any of the Aircraft Leases;
(e) Borrower's default, beyond any period of grace
provided with respect thereto, in the payment of
principal when due, whether by acceleration or
otherwise, or interest or amount payable in respect of
any other Indebtedness, or in the performance of any
other agreement, term or condition contained in any
agreement to which Borrower is a party, if the effect
of such default is (i) to cause, or permit the holder
or holders of such obligation (or a trustee for such
holder or holders) to cause, such obligation to become
due prior to its stated maturity or (ii) to allow, or
to permit, any person or entity to terminate said
agreement;
(f) Any representation or warranty made by
Borrower herein, in the Loan Documents or in any
writing furnished by Borrower (including without
limitation, any request for an Advance) in connection
with the Revolving Loan or pursuant to this Agreement
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<PAGE>
shall have been false, misleading or incomplete in any
material respect on the date as of which made;
(g) Any litigation or proceedings are
instituted against Borrower which could, in the sole
opinion of Lender, have a materially adverse impact on
Borrower if an adverse result ensues and Borrower fails
to take corrective measures, adequate in the judgment
of Lender, within forty-five (45) days or as may be
earlier required by the litigation or proceedings;
(h) The liquidation or dissolution of Borrower
or suspension of the business of, or the filing by
Borrower or of a voluntary petition in bankruptcy or a
voluntary petition or an answer seeking reorganization,
arrangement, readjustment of its debts or for any other
relief under the United States Bankruptcy Code, as
amended, or under any other insolvency act or law,
state or federal, now or hereafter existing; or any
other action of Borrower indicating its consent to,
approval of, or acquiescence in any such petition or
proceeding; the application for, or the appointment of,
a receiver or a trustee for Borrower, the application
for, or the consent to or acquiescence in, an
assignment for the benefit of creditors of Borrower, of
its inability to pay its debts as they mature;
(i) The filing of an involuntary petition
against Borrower in bankruptcy or seeking
reorganization, arrangement, readjustment of its debts
or for any other relief under the Bankruptcy Code, as
amended, or under any other insolvency act or law,
state or federal, now or hereafter existing; or the
involuntary appointment of a receiver or trustee for
Borrower or for all or a substantial part of the
property of Borrower; the issuance of a warrant of
attachment, execution or similar process against any
substantial part of the property of Borrower and the
continuance of any of such events or conditions for
ninety (90) days undismissed or undischarged;
(j) The entry of a final judgment against
Borrower, which with other outstanding final judgments
against Borrower exceeds an aggregate of $50,000, and
if (i) within thirty (30) days after entry thereof,
such judgment shall not have been discharged or
execution thereof stayed pending appeal, or if within
thirty (30) days after the expiration of any such stay
such judgment shall not have been discharged or (ii)
said judgment is not indisputably and fully covered by
insurance; or
(k) The termination for any reason of
Borrower's rights under the Clearinghouse Agreement,
the USAir Service Agreement or the Shorts Leases.
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Section 6.02. Remedies Upon Default. Upon the
occurrence of any Event of Default and in every such
event, Lender, upon notice to the Borrower (except in
the case of an Event of Default under Sections 6.01(h)
or (i), in which event no notice shall be required),
may declare the principal of and interest on the
Revolving Loan and the Revolving Note and other amounts
due under this Agreement to be, and the Revolving Loan
and Revolving Note and all such other amounts shall
thereupon become, immediately due and payable to
Lender, without presentment, demand, protest or other
notice of any kind, all of which are expressly waived,
anything in this Agreement or the Revolving Note to the
contrary notwithstanding, and the Revolving Loan
Commitment shall thereupon forthwith terminate.
Section 6.03. No Remedy Exclusive. No remedy
herein conferred upon or reserved to Lender is intended
to be exclusive of any other available remedy or
remedies, but each and every such remedy shall be
cumulative and shall be in addition to every other
remedy given under this Agreement or now or hereafter
existing at law or in equity or by statute.
ARTICLE 7
MISCELLANEOUS
Section 7.01. Notice. All notices and other
communications under this Agreement shall (a) be in
writing (which shall include communications by telex),
except that notices under Section 6.02 by Lender to
Borrower may be by telephone, subsequently confirmed in
writing (but the failure to give any such written
confirmation shall not invalidate any such telephonic
notice); (b) be (i) sent by registered or certified
mail, postage prepaid, return receipt requested, by
prepaid telegram or by telefacsimile, (ii) delivered
by hand or (iii) where so specified, by telephone; (c)
be given to the Person to whom addressed at the
following respective addresses, telefacsimile numbers,
and telephone numbers: (i) if to Borrower, to it at
Second Floor, 4700 Yorkmont, Charlotte, North Carolina
28208, Telephone No. (704) 359-8990, telefacsimile No.
(704) 359-0351, Attention: Chief Financial Officer, and
(ii) if to Lender, to it at: 22070 Broderick Drive,
Sterling, Virginia 21066, Telephone No.: (703)
406-1650, telefacsimile No. (703) 406-1208, Attention:
Chief Financial Officer with a copy to Lender's general
counsel at the same address but Telephone No. (703)
406- 1240 and Telefacsimile No. (703) 406-1250, or
(iii) at such other address, telefacsimile or
telephone number as may hereafter be specified for the
purpose in a notice to Lender or Borrower, as the case
may be, specifically captioned "Notice of Change of
Address Pursuant to Section 8.01"; and (d) be effective
(i) if given by mail, the second Business Day after the
date such communication
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is deposited in the mail, addressed as above provided,
(ii) if given by telefacsimile, when such
communication is transmitted to the appropriate number
determined as above provided in this Section 8.01 and
the appropriate answerback is received or receipt is
otherwise acknowledged, (iii) if given by hand
delivery, when delivered to the address determined as
provided in this Section 8.01, and (iv) if given by
telephone, when communicated to the Person or to the
holder of the office specified as the Person or office
holder to whose attention communications are to be
given, or, in the case of telephonic notice to Borrower
under Section 6.02, if such officer of Borrower, except
that notices and other communications to the Lender
under Sections l.02 and l.06(a) shall not be effective
until received.
Section 7.02. Expenses. Borrower will (a) pay
all fees and expenses (including legal fees) incurred
by Lender in connection with the preparation,
execution, delivery, administration of, and operations
under, the Loan Documents and in connection with any
amendment, modification, review or waiver thereof
(whether or not executed) and the enforcement of any
rights thereunder or under the Revolving Note or the
defense of any claim arising out of or in any way
related to or connected with the Loan Documents or the
Revolving Note and (b) pay, and indemnify the Lender
against, all taxes, including transfer and documentary
stamp and similar taxes and recording and filing fees,
payable in respect of the Loan Documents, the Revolving
Note or the making of the Revolving Loan or the
Advances.
Section 7.03. Environmental Laws and Hazardous
Materials. Borrower has complied, and at all times
will comply, with all Environmental Laws. Borrower has
not and will not cause or permit any Hazardous
Materials to be located, incorporated, generated,
stored, manufactured, transported to or from, released,
disposed of, or used at, upon, under, or within any
premises at which Borrower conducts its business, or in
connection with Borrower's business, except as
previously disclosed to Lender in writing. To the best
of Borrower's knowledge, no prior owner or operator of
any premises at which Borrower conducts its business
has caused or permitted any of the above to occur at,
upon, under, or within any of the premises. Borrower
will promptly notify Lender of an proceeding, inquiry
or claim relating to any alleged violation of any
Environmental Law, or any alleged loss, damage or
injury resulting from any Hazardous Material. Borrower
shall defend, indemnify and hold Lender, its directors,
officers, agents, employees, participants and assigns,
harmless against any and all claims, suits, actions,
causes of action, debts, liabilities, damages, losses,
obligations, charges, judgments and expenses, including
attorneys' fees and costs, of any nature whatsoever, in
any way relating to or arising from the breach of any
warranty or
27
<PAGE>
covenant contained herein, any alleged or actual
violation of any Environmental Law, or any loss,
damage, or injury resulting from any Hazardous
Material. Lender shall have the right to join and
participate in, as a party if it so elects, any legal
or administrative proceeding initiated with respect to
any Hazardous Material or in connection with any
Environmental Law.
Section 7.04. Rights Cumulative. The rights
and remedies of Lender under the Loan Documents and the
Revolving Note shall be cumulative and not exclusive of
any rights or remedies which it would otherwise have,
and no failure or delay by Lender in exercising any
right shall operate as a waiver of it, nor shall any
single or partial exercise of any power or right
preclude its other or further exercise or the exercise
of any other power or right. Without limitation of the
foregoing, all rights and remedies of Lender under the
Security Agreement and the Deposit Agreement shall be
cumulative and shall be supplementary of and in
addition to those granted or available to Lender
hereunder or under the Revolving Note or otherwise, and
nothing herein shall be construed as limiting any such
rights and remedies of Lender under the Loan Documents.
Section 7.05. Waivers; Amendments. Any term,
covenant, agreement or condition of this Agreement, the
other Loan Documents or the Revolving Note may be
amended or waived, and any departure therefrom may be
consented to, if, but only if, such amendment, waiver
or consent is in writing and is signed by Lender and,
in the case of an amendment, by Borrower. In any such
event, the failure to observe, perform or discharge any
such term, covenant, agreement or condition (whether
such amendment is executed or such waiver or consent is
given before or after such failure) shall not be
construed as a breach of such term, covenant, agreement
or condition or an Event of Default.
Section 7.06. Setoff. In addition to any
rights now or hereafter granted under applicable law
and not by way of limitation of any such rights, upon
and after the occurrence of any Event of Default,
Lender and each holder of the Revolving Note is hereby
authorized by Borrower, at any time or from time to
time, without notice to the Borrower or to any other
Person, any such notice being hereby expressly waived,
to set off and to appropriate and to apply any and all
deposits (general or special, including, but not
limited to, Indebtedness evidenced by certificates of
deposit, whether matured or unmatured) and any other
Indebtedness at any time held or owing by Lender or
such holder to or for the credit or the account of
Borrower against and on account of the obligations and
liabilities of Borrower to Lender or such holder under
this Agreement and the Revolving Note, including, but
not limited to, all claims of any nature or description
arising out of or connected with the Agreement or the
Revolving Note, irrespective of whether or not (a)
Lender or the
28
<PAGE>
holder of the Revolving Note shall have made any demand
hereunder or (b) Lender shall have declared the
principal of and interest on the Revolving Loan and the
Revolving Note and other amounts due hereunder to be
due and payable as permitted by Section 6.02 and
although said obligations and liabilities, or any of
them, shall be contingent or unmatured.
Section 7.07. Release and Indemnity. In
addition to the indemnification by Borrower of Lender
under Section 7.02 and 7.03 of this Agreement,
Borrower hereby agrees to indemnify Lender and hold
Lender harmless from and against any liability, loss,
damage, suit, action or proceeding ever suffered or
incurred by Lender as the result of Borrower's failure
to observe, perform or discharge Borrower's duties
hereunder. Notwithstanding any provision of the Loan
Agreement to the contrary, the indemnity obligation of
Borrower under Sections 7.02, 7.03 and 7.07 shall
survive the payment in full of the Revolving Loan and
the Revolving Note.
Section 7.08. Assignment. All the provisions
of this Agreement shall be binding upon and inure to
the benefit of the parties hereto and their respective
successors and assigns, except that Borrower shall not
assign or transfer any of its rights under this
Agreement and any attempted such assignment or transfer
by Borrower shall be void. Lender shall be entitled to
assign its rights under the Loan Documents, in which
case it shall give Borrower written notice of this
Assignment and written acceptance by the assignee, at
which Lender shall be released from all liability
hereunder without the need of further action by any
party.
Section 7.09. Counterparts. This Agreement
may be executed in any number of counterparts, each of
which shall be deemed to be an original and shall be
binding upon all parties, their successors and assigns.
Section 7.10. Governing Law. This Agreement
has been executed, and the Note has been accepted, by
Lender in Charlotte, North Carolina, and each shall be
construed in accordance with and governed by the laws
of the State of North Carolina.
Section 7.11. Judicial Proceedings. Any
judicial proceeding brought against Borrower with
respect to the Agreement may be brought in the Superior
Court Division of the General Court of Justice for
Mecklenburg County, North Carolina, or in the United
States District Court for the Western District of North
Carolina (Charlotte Division) and, by execution and
delivery of this Agreement, Borrower accepts for itself
and in connection with its properties, generally and
unconditionally, the non-exclusive jurisdiction of the
aforesaid courts, and irrevocably agrees to be bound by
any judgment rendered thereby
29
<PAGE>
in connection with this Agreement. Nothing herein
shall limit the right of Lender to bring proceedings
against Borrower in the courts of any other
jurisdiction.
Section 7.12. Security Interest and
Collateral. This Agreement and the Revolving Note, and
all of the obligations of Borrower hereunder and
thereunder, are entitled to the benefit of and are
secured by the Security Agreement and the other Loan
Documents. The liens and security interests created
thereby shall at all times be valid, perfected and
enforceable against Borrower and all third parties as
security for the obligations of Borrower under this
Agreement and the Revolving Note, and Borrower shall,
at its sole cost and expense, take all action that may
be necessary or desirable, or that Lender may request,
so as at all times (a) to maintain such validity,
perfection and enforceability, or (b) to enable Lender
to exercise its rights under the Security Agreement and
the other Loan Documents.
Section 7.13. Severability of Provisions.
Any provision of this Agreement which is prohibited or
unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such
prohibition or unenforceability without invalidating
the remaining provisions hereof or affecting the
validity or enforceability of such provision in any
other jurisdiction.
Section 7.14 Negotiated Agreement. This
Agreement has been negotiated between the parties. In
interpreting and enforcing this Agreement, no
presumptions shall arise because of, nor shall weight
be given to, any evidence that one Party or the other
is more or less responsible for the drafting of this
Agreement.
Section 7.15 Survival of Deposit Agreement.
The Deposit Agreement, including without limitation the
lien perfection, collection/disbursement mechanism and
bailee designations set forth therein, shall survive
the termination of this Agreement and/or the repayment
in full of the Revolving Loan.
30
<PAGE>
IN WITNESS WHEREOF, each party hereto has
caused this Agreement to be executed by its duly
authorized officers in counterparts all as of the day
and year first above written.
BORROWER:
CCAIR, INC., a Delaware corporation
CORPORATE SEAL
ATTEST: By:
_______________________________
Title:
_______________________________
______________________
__________ Secretary
LENDER:
JSX CAPITAL CORPORATION, a
Delaware corporation
CORPORATE SEAL
ATTEST: By:
_______________________________Title:
_______________________________
______________________
__________ Secretary
31
<PAGE>
EXHIBITS
Exhibit A - Form of Revolving Note
Exhibit B - Form of Borrower's Counsel's Opinion Letter
Exhibit C - List of Aircraft Leases
Exhibit D - Monthly Market Pair Summary
Exhibit E-1 - Borrowing [Form (Form 1)
Exhibit E-2 - Borrowing Form (Form 2)
Exhibit F - List of USAIR Service Agreement
Exhibit G - List of Shorts Leases
SCHEDULES
Schedule 3.01(g) - Litigation
32
<PAGE>
EXHIBIT A
REVOLVING NOTE
$2,500,000.00 February ____,
1995
FOR VALUE RECEIVED, CCAIR, INC., a Delaware
corporation (the "Borrower") promises to pay to the order of
BRITISH AEROSPACE HOLDINGS, INC., a Delaware corporation
("BAH"), of (i) the principal sum of TWO MILLION FIVE HUNDRED
THOUSAND AND NO/100 DOLLARS ($2,500,000.00) or (ii) the
aggregate unpaid principal amount of all advances of the
Revolving Loan, all in accordancewith the terms and
provisions of the Loan Agreement (as defined below) and, on
the dates and in the amounts provided in such Loan Agreement.
The Borrower promises to pay interest on the unpaid principal
amount of the Revolving Loan on the dates and at the rate or
rates provided for in the Loan Agreement. All such payments
of principal and interest shall be made not later than 1:00
P.M. (Charlotte, North Carolina time) on the date when due in
lawful money of the United States in Federal or other
immediately available funds as set forth in the Loan
Agreementor, if no specific payment procedure is set forth in
the Loan Agreement to the contrary, at the office of the
holder of this Note at the address set forth in Section 8.01
of the Loan Agreement or at such other place as the holder of
this Note shall direct in writing. Subject to the terms of
Section 1.06(c) of the Loan Agreement, the entire principal
amount of this Note and all accrued interest thereon shall be
due and payable in full on demand or, if no earlier demand is
made, on the Termination Date.
This Note is the Revolving Note referred to the
Amended and Restated Loan Agreement, dated as of even date
herewith (as the same may be modified or amended from time to
time, the "Loan Agreement"), between the Borrower and BAH.
Terms defined in the Loan Agreement are used herein with the
same meanings. Reference is made to the Loan Agreement for
provisions for the acceleration of the maturity hereof.
All parties to this Note, including indorsers,
sureties, and guarantors, if any, hereby waive presentment
forpayment, demand, protest, notice of nonpayment or dishonor
and of protest, and any and all other notices and demands
whatsoever, and agree to remain bound until the principal and
interest are paid in full, notwithstanding any extensions of
time for payment which may be granted even though the period
or periods of extension be indefinite and notwithstanding any
inaction by, or failure to assert any legal rights available
to the holder of this Note.
33
<PAGE>
IN WITNESS WHEREOF, the Borrower has caused this
instrument to be executed under seal by its duly
authorizeofficers, the day and year first above written.
CCAIR, INC.
ATTEST: By:
____________________________________
President
__________________________________
Secretary
CORPORATE SEAL
34
<PAGE>
EXHIBIT B
OPINION LETTER
35
<PAGE>
EXHIBIT C
AIRCRAFT LEASES
36
<PAGE>
Exhibit 10.38(a)
EXHIBIT D
SAMPLE MONTHLY MARKET PAIR SUMMARY
37
<PAGE>
EXHIBIT E-1
USAIR EXPRESS
February 1, 1995
Via: Facsimile to: 703-406-1208 and Mail
To: JSX Capital Corporation
22070 Broderick Drive
Sterling, Virginia 20166
Atten: David Tomkins
Subject: Amended and Restated Loan Agreement dated as of
February __, 1995 by and between JSX Capital Corporation and
CCAIR, Inc. ("Loan Agreement").
Dear Sirs,
The attached Interim Market Pair Summary includes tickets
processed from the 1st of (Month/yr) through ______ of
(Month/yr). In accordance with the above-mentioned loan
agreement the current interim Borrowing Base calculated from
the attached Interim Market Pair Summary would be as follows:
Gross Ticket Revenues $
Additional ACH Receivable due from
USAIR for D-Concourse Services $________________
$
Available for borrowing (50%): $
On this basis CCAIR, Inc. requests a loan transfer of
$____________________ to its master account at NationsBank,
Charlotte, NC. ABA:053-000196.
For the Account of CCAIR, Inc. Account Number 001857101.
Please arrange for the requested loan amount to be deposited
in this account on (date).
With reference to the above mentioned loan agreement, I hereby
certify on behalf of CCAIR, Inc. as follows:
A. The above statements are true and correct;
38
<PAGE>
B. As of the date hereof, no event of default or an event
which might mature into an event of default as defined in the
Loan Agreement has occurred and is continuing.
CCAIR, Inc.
By: ____________________________
Title: ____________________________
39
<PAGE>
EXHIBIT E-2
USAIR EXPRESS
February 1, 1995
Via: Facsimile to: 703-406-1208 and Mail
To: JSX Capital Corporation
22070 Broderick Drive
Sterling, Virginia 20166
Atten: David Tomkins
Subject: Amended and Restated Loan Agreement dated as of
February __, by and between JSX Capital Corporation and CCAIR,
Inc. ("Loan Agreement").
Dear Sirs,
The attached Monthly Market Pair Summary includes tickets
processed for the complete month of __________. In accordance
with the above mentioned loan agreement the Borrowing Base
calculated from the attached Monthly Market Pair Summary would
be as follows:
Gross Ticket Revenues $
Additional ACH Receivable due from
USAIR for D-Concourse Services $________________
$
Available for borrowing (50%): $
On this basis CCAIR, Inc. requests a loan transfer of
$____________________ to its master account at NationsBank,
Charlotte, NC. ABA:053-000196.
For the Account of CCAIR, Inc. Account Number 001857101.
This request is in excess of the Borrowing Base but less than
the Revolving Loan Commitment and CCAIR requests Lender to
permit this specific Advance in excess of the Borrowing Base
for the current month only.
Please arrange for the requested loan amount to be deposited
in this account on (date).
40
<PAGE>
With reference to the above mentioned loan agreement, I hereby
certify on behalf of CCAIR, Inc. as follows:
A. The above statements are true and correct;
B. As of the date hereof, no event of default or an event which
might mature into an event of default as defined in the Loan
Agreement has occurred and is continuing.
CCAIR, Inc.
By: ____________________________
Title: ____________________________
41
<PAGE>
EXHIBIT F
USAIR SERVICE AGREEMENT
42
<PAGE>
EXHIBIT G
SHORTS LEASES
43
<PAGE>
SCHEDULE 3.01(g)
LITIGATION
44
EXHIBIT 10.38(B)
REVOLVING NOTE
$2,500,000.00 February 10,1995
FOR VALUE RECEIVED, CCAIR, INC. a Delaware corporation (the
"Borrower") promises to pay to the order of BRITISH AEROSPACE HOLDINGS,
INC., a Delaware corporation ("BAH"), of (i) the principal sum of TWO
MILLION FIVE HUNDRED THOUSAND AND NO/100 DOLLARS ($2,500,000.00) or
(ii) the aggregate unpaid principal amount of all advances of the
Revolving Loan, all in accordance with the terms and provisions of the
Loan Agreement (as defined below) and, on the dates and in the amounts
provided in such Loan Agreement. The Borrower promises to pay interest
on the unpaid principal amount of the Revolving Loan on the dates and
at the rate or rates provided for in the Loan Agreement. All such
payments of principal and interest shall be made not later than 1:00
P.M. (Charlotte, North Carolina time) on the date when due in lawful
money of the United States in Federal or other immediately available
funds as set forth in the Loan Agreement or, if no specific payment
procedure is set forth in the Loan Agreement to the contrary, at the
office of the holder of this Note at the address set forth in Section
8.01 of the Loan Agreement or at such other place as the holder of this
Note shall direct in writing. Subject to the terms of Section 1.06(c)
of the Loan Agreement, the entire principal amount of this Note and all
accrued interest thereon shall be due and payable in full on demand or,
if no earlier demand is made, on the Termination Date.
This Note is the Revolving Note referred to in the Amended and
Restated Loan Agreement, dated as of even date herewith (as the same
may be modified or amended from time to time, the "Loan Agreement"),
between the Borrower and BAH. Terms defined in the Loan Agreement are
used herein with the same meanings. Reference is made to the Loan
Agreement for provisions for the acceleration of the maturity hereof.
All parties to this Note, including indorsers, sureties, and
guarantors, if any, hereby waive presentment for payment, demand,
protest, notice of nonpayment or dishonor and of protest, and any and
all other notices and demands whatsoever, and agree to remain bound
until the principal and interest are paid in full, notwithstanding any
extensions of time for payment which may be granted even though the
period or periods of extension be indefinite and notwithstanding any
inaction by, or failure to assert any legal rights available to the
holder of this Note.
IN WITNESS WHEREOF, the Borrower has caused this instrument to be
executed under seal by its duly authorized officers, the day and year
first above written.
ATTEST: CCAIR, INC.
PATRICIA H. BERGMAN KENNETH GANN
___________________________ By:_____________________________
Secretary President
CORPORATE SEAL
<PAGE>
Exhibit 10.38(c)
AMENDED AND RESTATED
SECURITY AGREEMENT
THIS AMENDED AND RESTATED SECURITY AGREEMENT,
dated as of the ___ day of February, 1995 (the
"Security Agreement"), is made by and between CCAIR,
INC. a Delaware corporation ("Company" or "Borrower")
and JSX CAPITAL CORPORATION. a Delaware corporation
("Secured Party").
RECITALS
A. Borrower and Secured Party have
entered into an Amended and Restated Loan Agreement of
even date (the "Loan Agreement") .
B. Pursuant to the provisions of the Loan
Agreement, the parties desire to amend and restate
this agreement.
NOW, THEREFORE, in consideration of the
foregoing premises and other good and valuable
consideration, the receipt and sufficiency of which is
hereby acknowledged by the Company and Secured Party,
the parties hereto covenant and agree as follows:
ARTICLE I
Definitions
For the purposes of this Security Agreement,
capitalized terms shall have the respective meanings
ascribed to them in the recitals to this Security
Agreement or as set forth below:
"Collateral" means (i) all Receivables including
without limitation all additions, accessions and
substitutions for renewals or replacements of the same;
and (ii) the proceeds, including without limitation
insurance proceeds, of any property covered by clause
(i) above.
"Loan Documents" shall have the meaning ascribed
to that term in the Loan Agreement.
"Liabilities" wherever used in this Agreement
shall mean all liabilities and indebtedness of any and
every kind and nature, heretofore, now or hereafter
owing, arising, due or payable from the Company to
Secured Party under the Loan Documents.
<PAGE>
"Other Agreements" means, in addition to the
Loan Documents, all other credit agreements, security
agreements, pledges, instruments, documents,
assignments, leases, guaranties or contracts (including
any such agreements in substitution, amendment,
replacement, extension or renewal thereof) now or at
any time or times hereafter executed and delivered by
the Company to Secured Party in connection with the
Liabilities.
"Receivables" means and includes all of the
Company's accounts, accounts receivable, contracts,
contract rights, book debts, general intangibles,
documents, checks, notes, drafts, chattel paper and
instruments, whether now existing or hereafter acquired
or arising or in which the Company now has or hereafter
acquires any rights, including, without limitation, all
present and future rights to payments for goods,
merchandise or inventory sold or leased or for services
rendered, whether or not represented by instruments or
chattel paper, and whether or not earned by
performance; proceeds of any letter of credit in which
the Company is a beneficiary, and all forms of
obligation whatsoever owing to the company, together
with all instruments and documents of title
representing any of the foregoing, all rights and any
goods, merchandise or Inventory which any of the
foregoing may represent, all rights of any returned or
repossessed goods, merchandise or Inventory, and all
rights, security and guaranties with respect to each of
the foregoing, including, without limitation, any right
of stoppage and transit, a further including without
limitation:
a. All sums now or hereafter due and payable to
the Company under the Clearinghouse Agreement
(as defined in the Loan Agreement) and all
amendments, modifications, extensions, renewals,
successors, substitutions and replacements
thereof: and
b. All sums now hereafter due and payable to
the Company on an account of any USAir Service
Agreement (as defined in the Loan Agreement)
together with all amendments, modifications,
renewals, extensions, successors, replacements
and substitutions thereof.
All proceeds of all of the foregoing.
All of the other capitalized terms in this
Security Agreement shall have the meanings provided by
the Loan Agreement. All other terms shall have the
meanings provided by the Uniform Commercial Code of
North Carolina to the extent the same are used or
defined therein.
2
<PAGE>
ARTICLE II
Creation of Security Interest
2.01 To secure the repayment to Secured Party
of the Liabilities, the Company hereby grants to
Secured Party a security interest in the Collateral.
2.02 The Company shall execute and deliver to
Secured Party concurrently with the execution of this
Security Agreement, and at any time or times hereafter
at the request of Secured Party, all assignments,
certificates of title, conveyances, assignment
statements, financing statements, renewal financing
statements, security agreements, affidavits, notices
and all other agreements, instruments and documents
that Secured Party may reasonably request, in form
satisfactory to Secured Party and shall take any and
all other lawful and reasonable steps requested by
Secured Party, in order to perfect and maintain the
security interests and liens granted herein by the
Company to Secured Party and to fully consummate all of
the transactions contemplated under the Security
Agreement and any Other Agreements.
2.03 Until the payment in full of all of the
Liabilities, the Company does hereby irrevocably make,
constitute and appoint Secured Party and any of its
officers, employees or agents as the true and lawful
attorneys of the Company with power to sign the name of
the Company on any financing statement, renewal
financing statement, notice or other similar document
which in Secured Party's opinion must be filed in order
to perfect or continue perfected the security interests
granted to Secured Party in this Security Agreement or
any Other Agreements.
ARTICLE III
Priority of Security Interests
3.01 The Company warrants and represents that
the security interests granted to Secured Party
hereunder shall constitute at all times valid and
perfected security interests in the Collateral and that
said security interests in said Collateral shall not
become subordinate or junior to the security interests,
liens or claims of any other person, firm or
corporation, including the United States or any
department, agency or instrumentality thereof, or any
state, county or local governmental agency. The
Company shall not grant (nor suffer to exist) a
security interest in or permit a lien or encumbrance
upon any of the Collateral to any person or entity
other than Secured Party or Affiliates of Secured Party
as long as any of the Liabilities remain outstanding
and unpaid.
3
<PAGE>
ARTICLE IV
Location of Collateral
4.01 The Company represents and warrants that
(i) Exhibit A hereto lists the principal place of
business of the Company as of the date hereof and
during the four month period ending on the date hereof,
and the location of all of the Collateral; and (ii) the
Collateral and the offices where it keeps all of its
records, ledger sheets, correspondence and invoice
documents and instruments relating to or evidencing the
Collateral and Collateral records shall be kept on the
Company's premises identified in Exhibit A hereto, such
records to be kept in appropriate containers in safe
places, bearing suitable legends identifying them and
all related files, containers, receptacles and cabinets
deemed as being under Secured Party's dominion and
control. Secured Party shall at all reasonable times
have full access to and the right to audit the
Company's books and records and to do whatever else
Secured Party reasonably deems necessary to protect its
interests. Other than in the ordinary course of
business, the Company shall not change its principal
place of business or remove any of such Collateral to
locations other than those identified in Exhibit A or
any records of such Collateral from the premises
identified in Exhibit A unless written notice thereof
is given to Secured Party at least ten (10) days prior
to such removal, which notice shall also identify the
new location of the principal place of business of the
Company and records of such Collateral.
4.02 The Company represents and warrants that,
except as otherwise disclosed on Exhibit B hereto, it
utilizes no trade names in the conduct of its business
and has not changed its name or been a party to any
merger or change in corporate structure during the four
month period ending on the date hereof.
ARTICLE V
Warranty of Title; Prohibition of Sale.
5.01 The Company warrants and represents that
it is, or at the time of acquisition will be, the owner
of marketable title to the Collateral free and clear of
any liens, security interests and encumbrances other
than the liens of the Secured Party hereunder.
5.02 Except as otherwise expressly provided
herein or permitted under the Other Agreements, the
Company will not sell, lease, transfer, assign, grant a
security interest in or otherwise encumber or dispose
of the Collateral or any part
4
<PAGE>
thereof without the prior written consent of Secured
Party. [Security interests granted to affiliates of
the Secured Party shall not constitute a default
hereunder.]
ARTICLE VI
Receivables
6.01 The Borrower represents and warrants that
each Receivable (i) will cover a bona fide sale by the
Company or the rendition by the Company of services to
customers in the ordinary course of business, (ii) will
be for a liquidated amount maturing substantially as
reported to Secured Party, and (iii) will not be
subject to any material {rights of} offset, deduction,
counterclaim, lien or other adverse condition.
6.02 The collection and disbursement of any
Receivables now or hereafter payable to the Company
pursuant to provisions of the Clearinghouse Agreement
shall be subject to and shall be made only in
accordance with the Deposit Agreement. The Company may
collect Receivables other than those payable pursuant
to the Clearinghouse Agreement in the ordinary course
of business; provided, however, that upon the
occurrence of an Event of Default under Section 8.01,
Secured Party may revoke such right and may notify the
account debtors and obligors thereof to pay directly to
Secured Party.
6.03 In addition to the Monthly Market Pair
[Summaries] the Company shall, at the written request
of Secured Party, deliver to Secured Party from time to
time hereafter at such intervals as requested and
determined by Secured Party, copies of all invoices,
reports to the Clearinghouse and other documents
relating to Receivables.
6.04 Upon the occurrence and continuance of a
default hereunder, at the written request of Secured
Party:
(a) The Company shall keep all collections
separate and apart from all other funds and property.
Such funds shall be delivered to Secured Party at the
time and in the form designated in the written request;
(b) All collections of Receivables shall be set
forth on itemized schedules delivered to Secured Party
on or before the fifteenth (15th) day of each month,
showing the name of the account debtor, the amount of
each payment, and such information as Secured Party may
request;
(c) The proceeds of the collections when
received by Secured Party shall be deposited into such
account as is designated by Secured Party. This
account shall be subject to
5
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the sole control of Secured Party and Secured Party
shall have the right at all times, in Secured Party's
sole discretion, to apply all or part of the monies in
said account on payment of the Liabilities. Secured
Party may release to the Company all or any part of the
monies held in said account which are not applied
against the Liabilities.
6.05 Secured Party shall have the right, upon
the occurrence and continuance of an Event of Default
hereunder, at any time and from time to time, without
notice to the Company, to notify all account debtors
and obligors of Receivables that Secured Party has a
security interest in such Collateral and to direct any
and all such persons to make payments to Secured Party
of all sums owing by them to the Company; to settle,
compromise, sell, assign, extend or renew any debt
owing by any such account debtor or obligor; to sell of
discharge and release in the name of the Company and
Secured Party any such debt. Any and all disbursements
for costs and expenses incurred or paid by Secured
Party with respect to the enforcement, collection or
protection of its interest in the Collateral, whether
by action against the Company, notification of account
debtors and obligors or otherwise and including,
without limitation, reasonable attorneys' fees, court
costs and similar expenses, if any, shall become a part
of the Liabilities secured by the Collateral, payable
on demand.
ARTICLE VII
Taxes
7.01 The Company shall pay promptly, when due
or before any interest or penalties accrue thereon, all
sales, use, excise, personal property, income,
withholding, corporate franchise and all other taxes,
assessments and governmental charges upon and in
relation to its ownership or use of any of its assets,
income or gross receipts for which the Company is or
may be liable, except to the extent any such
liabilities are being contested in good faith and with
due diligence by the Company and the amount of said
liabilities, or the contest thereof, do not materially,
adversely affect the Company's financial condition, the
security interests of Secured Party upon the Collateral
or the priority of such security interests.
7.02 The Company shall not permit, or suffer to
remain, and will promptly discharge, any lien arising
from any unpaid tax, assessment, levy or governmental
charge unless the Company contests the same in good
faith, provides Secured Party with all facts concerning
the lien and provides Secured Party with a reasonable
bond to protect against such loss.
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7.03 In the event the Company shall fail to pay
any such tax, assessment, levy or governmental charge
or to discharge the same or contest the same in good
faith, then Secured Party, without waiving or releasing
any obligation or default of the Company hereunder, may
at any time or times hereafter, but shall be under no
obligation to do so, make such payment, settlement,
compromise or release or cause to be released any such
lien, levy, assessment or charge and take any other
action with respect thereto which Secured Party deems
advisable. All sums paid by Secured Party in
satisfaction of, or on account of any tax, levy or
assessment or governmental charge, or to discharge or
release any lien, and any expenses, including
reasonable attorneys' fees, court costs and other
charges relating thereto, shall become a part of the
Liabilities and immediately due and payable by the
Company to Secured Party and shall be secured by the
Collateral, payable on demand.
ARTICLE VIII
Default
8.01 Any one of the following events will
constitute an Event of Default hereunder:
(a) failure of the Company to pay as and when
due any of the Liabilities whether by acceleration or
otherwise;
(b) failure of the Company to comply with any
of the terms and conditions of this Security Agreement
within thirty (30) days of written notice to the
Company by Secured Party; or
(c) the occurrence of a "Default" or "Event of
Default" under any Other Agreement.
8.02 In the event of a default, Secured Party
may, at its election, declare the Liabilities to be
immediately due and payable.
8.03 Upon the occurrence of an uncured Event of
Default, Secured Party shall have, in addition to any
other rights and remedies contained in this Security
Agreement or in any Other Agreements, all the rights
and remedies of a secured party under the Uniform
Commercial Code, all of which shall be cumulative to
the extent permitted by law. The proceeds of any sale
or other disposition of all or any part of the
Collateral upon which Secured Party has a security
interest shall, after payment of all costs and expenses
thereof, including reasonable attorneys' fees, be
applied (or held for application) by Secured Party to
the then outstanding balance of the Liabilities and any
surplus shall be paid to the persons
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entitled thereto at law. The Company shall be liable
to Secured Party for any deficiency.
8.04 If at any time or times hereafter Secured
Party employs counsel for advice with respect to this
Security Agreement or any Other Agreements, or to
intervene, file a petition, answer, motion or other
pleading in any suit or proceeding relating to this
Security Agreement or any Other Agreements, or relating
to any Collateral, or to protect, take possession of,
or liquidate any Collateral, or to attempt to enforce
any security interest or lien in any Collateral, or to
represent Secured Party in any pending or threatened
litigation with respect to the affairs of the Company
in any way relating to any of the Collateral or to
enforce any rights of Secured Party by virtue of this
Security Agreement or any Other Agreement, instrument
or document now or hereafter delivered to Secured Party
by or for the benefit of the Company, then in any of
such events, the amount of all of the reasonable
attorneys' fees arising from such services, and any
expenses, costs and charges relating thereto, shall
upon demand become a part of the Liabilities secured by
the Collateral, payable on demand.
8.05 In the event of a default and after
written notice thereof, Secured Party shall have the
right to require the Company to assemble the Collateral
and make it reasonably available to Secured Party at
one or more places to be designated by Secured Party,
and to take possession of the Collateral and to enter
and remain upon the various premises of the Company
without cost or charge to Secured Party, and to use the
same, together with materials, supplies, books and
records of the Company for the purpose of liquidating
or collecting the Collateral, whether by foreclosure,
auction or otherwise. In addition, Secured Party may
remove from such premises the Collateral and any
records with respect thereto, to the premises of
Secured Party or any designated agent of Secured Party
for such time as Secured Party may desire, in order to
effectively collect or liquidate the Collateral.
8.06 Secured Party's failure at any time or
times hereafter to require strict performance by the
Company of any of the provisions, warranties, terms and
conditions contained in this Security Agreement or any
Other Agreement shall not waive, affect or diminish any
right of Secured Party at any time or times hereafter
to demand strict performance therewith and with respect
to any other provisions, warranties, terms and
conditions contained in this Agreement or any Other
Agreement, and any waiver of any event of default
shall not waive or affect any other event of default,
whether prior or subsequent thereto, and whether of the
same or a different type. None of the warranties,
conditions, provisions and terms contained in this
Security Agreement or any Other Agreement shall be
deemed
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to have been waived by any act or knowledge of
Secured Party, or their agents, officers or employees
except by an instrument in writing signed by an officer
of Secured Party and directed to the Company specifying
such waiver.
8.07 The Company hereby constitutes Secured
Party, or its designee, as the Company's
attorney-in-fact with power, upon the occurrence and
during the continuance of an Event of Default, to
endorse the Company's name upon any notes, acceptances,
checks, drafts, money orders, or other evidences of
payment or Collateral that may come into either its or
Secured Party's possession; to sign the name of the
Company on any invoice or bill of lading relating to
any of the Receivables, drafts against customers,
assignments and verifications of Receivables and
notices to customers; to send verifications of
Receivables; to notify the Post Office authorities to
change the address for delivery of mail addressed to
the Company to such address as Secured Party may
designate; to execute any of the documents referred to
in Section 2.02 hereof in order to perfect and/or
maintain the security interests and liens granted
herein by the Company to Secured Party; to do all other
acts and things necessary to carry out this Security
Agreement. All lawful acts of said attorney or
designee are hereby ratified and approved, and said
attorney or designee shall not be liable for any acts
of commission or omission (other than acts of gross
negligence or willful misconduct), nor for any error of
judgment or mistake of fact or law; this power being
coupled with an interest is irrevocable until all of
the Liabilities are paid in full and any and all
promissory notes executed in connection therewith are
terminated and satisfied.
ARTICLE IX
Miscellaneous
9.01 After the occurrence of an Event of
Default, the Company irrevocably waives the right to
direct the application of any and all payments
(including proceeds of Collateral) at any time or times
hereafter which may be received by Secured Party by or
for the benefit of the Company and the Company does
hereby irrevocably agree that Secured Party shall have
the continuing exclusive right to apply and reapply any
and all such payments received at any time or times
hereafter, notwithstanding any entry upon any of its
books and records.
9.02 This Security Agreement and any
instruments and documents executed and delivered
pursuant hereto or to consummate the transactions
contemplated hereunder shall be binding upon and inure
to the benefit of the successors and assigns of the
parties hereto.
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9.03 The internal laws and decisions of the
State of North Carolina shall govern and control the
construction, enforceability, validity and
interpretation of this Security Agreement.
9.04 All representations and warranties of the
Company and all terms, provisions, conditions and
agreements to be performed by the Company contained in
this Security Agreement, in any Other Agreements, and
in any other instrument or document executed heretofore
or concurrently herewith by the Company and delivered
to Secured Party, shall be true and correct at the time
of the execution of this Security Agreement, and shall
survive the execution and delivery of this Security
Agreement and all Other Agreements.
9.05 The rights and remedies of Secured Party
under this Security Agreement and any Other Agreements
shall be cumulative and not exclusive of any rights or
remedies which it would otherwise have, and no failure
or delay by Secured Party in exercising any right shall
operate as a waiver of such right, nor shall any single
or partial exercise of any power or right preclude its
other or further exercise or the exercise of any other
power or right.
9.06 Secured Party may appoint a sub-agent to
perform any and all of its duties and obligations and
to exercise all of its rights hereunder.
9.07 All notices, approvals, consents, requests
and other communications hereunder shall be give as set
forth in the Loan Agreement.
9.08 This Security Agreement may not be amended
or supplemented without the written consent of the
Secured Party and the Company.
9.09 This Security Agreement may be executed in
several counterparts, each of which shall be an
original and all of which shall constitute but one and
the same instrument.
9.10 In the event any term, provision or
covenant herein contained or the application thereof to
any circumstance or situation shall be invalid or
unenforceable in whole or in part, the remainder hereof
and the application of said term or provision or
covenant to any other circumstance or situation shall
not be affected thereby, and every other term,
provision or covenant herein shall be valid and
enforceable to the full extent permitted by law.
9.11 To the extent that any of the Liabilities
are now or hereafter secured by property other than the
Collateral, or by
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a guarantee, endorsement or property of any other
person, then Secured Party shall have the right to
proceed against such other property, guarantee or
endorsement upon the occurrence of any Event of
Default, and Secured Party shall have the right, in
Secured Party's sole discretion, to determine which
rights, security, liens, security interests or remedies
Secured Party shall at any time pursue, relinquish,
subordinate, modify or take any other action with
respect thereto, without in any way modifying or
affecting any of them or any of Secured Party's rights
or the Liabilities under this Security Agreement or
under any Other Agreements.
IN WITNESS WHEREOF, this Security Agreement has
been executed under seal as of the day and year first
above written by the duly authorized officers of the
parties hereto.
COMPANY:
ATTEST: CCAIR, INC., a Delaware corporation
By:
Secretary Title:
[CORPORATE SEAL]
SECURED PARTY:
JSX CAPITAL CORPORATION, a Delaware
corporation
By:
Title:
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EXHIBIT A
PRINCIPAL PLACE OF BUSINESS AND
LOCATION OF RECORDS
Second Floor
4700 Yorkmont Road
Charlotte, North Carolina 28208
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EXHIBIT B
Trade Names
CCAIR, Inc.
USAir Express
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<PAGE>
Exhibit 10.38(d)
AMENDED AND RESTATED
SPECIAL ACCOUNT
AND
DISBURSEMENT AUTHORIZATION AGREEMENT
THIS AMENDED AND RESTATED SPECIAL ACCOUNT AND
DISBURSEMENT AUTHORIZATION AGREEMENT (the "Agreement")
is made as of February , 1995, by and among
WACHOVIA BANK OF NORTH CAROLINA, N.A., a national bank
("Bank"), CCAIR, INC., a Delaware corporation (the
"Borrower"), BRITISH AEROSPACE HOLDINGS, INC., a
Delaware corporation ("BAH" and successor-in-interest
to British Aerospace, Inc., ("BAI")), JET ACCEPTANCE
CORPORATION, a Delaware corporation ("JACO") and JSX
CAPITAL CORPORATION, a Delaware corporation ("JSX")
(BAH, JACO and JSX are sometimes hereinafter referred
to collectively as "Creditors").
RECITALS:
1. Bank, Borrower, BAH and JACO entered
into a Special Account Disbursement Authorization
Agreement on or about January 20, 1995 (the "Existing
Account Agreement").
2. Borrower and BAH executed the Fourth
Modification and Extension Agreement pursuant to which
BAH advanced Borrower $1,450,000 which, together with
accrued interest and costs, is presently outstanding.
3. Pursuant to an Assignment and Bill of
Sale, BAH assigned to JSX all of its rights and
interests in the Loan as described therein.
4. Borrower has requested and JSX has
agreed to make available to Borrower additional
revolving credit pursuant to the Amended and Restated
Loan Agreement of even date (the "Loan Agreement").
5. Pursuant to the provisions of the Loan
Agreement and as a condition of extending credit to
Borrower, JSX, BAH and JACO require that Borrower and
Bank enter into this Agreement for the purposes of
confirming the continuing security interest in and lien
upon the "Special Account" (which was established by
the Existing Account Agreement) in favor of JSX, BAH
and JACO and for setting forth the procedure for
receiving and disbursing amounts henceforth deposited
into the Special Account.
NOW, THEREFORE, for Ten Dollars ($10.00) in
hand paid and in consideration of the premises and
other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the
parties hereto agree as follows:
<PAGE>
ARTICLE 1
Definitions
1.1. In addition to such terms as are
defined elsewhere in the Loan Agreement and this
Agreement, the following terms shall have the following
meanings ascribed to them:
"BAH Documents" shall mean all agreements, as
from time to time amended and having various effective
dates, between BAH and Borrower, including invoices,
statements of account and other evidences of
indebtedness pursuant to which Borrower is now or may
hereafter become indebted to BAH;
"BAH Obligations" shall mean all liabilities,
indebtedness and obligations now or hereafter from time
to time owing by Borrower to BAH under the BAH
Documents but excluding payments due to BAH pursuant to
Borrower's Confirmed Plan.
"Creditors" shall mean, collectively and
individually, JSX, BAH and JACO.
"Creditor Obligations" shall mean,
collectively, the amounts due under the Note and the
Loan Agreement, the BAH Obligations and the JACO
Obligations.
"Event of Default" shall mean the existence or
occurrence of any one or more of the following: (a)
default by Borrower in the observance or performance of
any of its obligations or covenants under this
Agreement; (b) the occurrence of an "Event of Default"
under (and is defined in) the Loan Agreement; or (c)
default by Borrower in the observance of any of its
obligations or covenants under the JACO Documents or
the BAH Documents.
"JACO Documents" shall mean the various lease
and sublease agreements as from time to time amended
and having various effective dates, entered into by
Borrower and JACO;
"JACO Obligations" shall mean all liabilities,
indebtedness and obligations now or hereafter from time
to time owing by Borrower to JACO under the JACO
Documents.
"Lien" shall mean any interest in property
securing an obligation owed to, or a claim by, a Person
other than the owner of the Property, whether such
interest is based on the common law, statute or
contract, and including, but not limited to, the
security interest, security title or lien arising from
a security agreement, mortgage, deed of trust, deed to
secure debt, encumbrance, pledge, conditional sale or
trusts receipt or a lease, consignment or bailment for
security purposes.
"Note" shall mean the Revolving Note as
provided for in the Loan Agreement.
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"Person" shall mean an individual,
partnership, corporation, joint venture, joint stock
company, land trust, business trust or unincorporated
organization, or a government or agency or political
subdivision thereof.
1.2. The terms "herein," "hereof" and
"hereunder" and other words of similar import refer to
this Agreement as a whole and not to any particular
section, paragraph or subdivision. Any pronouns used
shall be deemed to cover all genders. All references
to any instruments or agreements, including, without
limitation, references to this Agreement shall include
any and all modifications or amendments thereto and any
an all extensions or renewals thereof. The word
"including," whenever used in this Agreement, shall be
deemed to mean "including, without limitation." As
used herein, the phrase "attorneys' fees" and other
phrases of similar import shall mean attorneys' fees
(and related expenses) actually incurred by the
applicable party for services rendered by such party's
legal counsel at the hourly rates customarily charged
by such counsel for matters of the type or scope for
which the fees were incurred by such party.
ARTICLE 2
Collateral Assignments and Priority Agreement
2.1. Borrower hereby collaterally assigns,
transfers, pledges and conveys to each Creditor, and
grants to each Creditor a security interest in and Lien
upon, all right, title and interest of Borrower in and
to the following property, whether now owned or
hereafter acquired including all proceeds thereof in
any form (collectively, the "Collateral"):
(a) the Special Account, and all
Clearing House Funds from time to time
deposited thereto and all rights in connection
therewith;
(b) All certificates or
instruments purchased with funds deposited in
the Special Account, all renewals of such
certificates or instruments and replacements
thereof, whether in the form of certificates
of deposit or other instruments, notes,
securities or accounts and all interest earned
upon the Special Account in any form (all of
the foregoing being sometimes collectively
called the "Investments").
The foregoing assignment and grant of a
security interest is made to JSX, BAH and JACO as
security for payment by Borrower of the Creditor
Obligations.
2.2. Without the prior written consent of
Creditors, Borrower shall not grant any Lien upon or
permit any Lien to attach to any of the Collateral,
except in favor of Creditors pursuant to this
Agreement.
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<PAGE>
2.3. Creditors agree that,
notwithstanding the priorities that would ordinarily
apply under applicable law, the assignment and
Liens granted and conveyed by Borrower pursuant to
Section 2.1 hereof shall have the following order of
priority:
(a) To JSX, shall be first
priority interests in and Liens upon the
Collateral as security for the Borrower's
Obligations under the Note and Loan Agreement;
(b) To JACO, shall be second
priority interest in and Liens upon the
Collateral as security for the JACO
Obligations; and
(c) To BAH, shall be third
priority interests in and Liens upon the
Collateral as security for the BAH
Obligations.
2.4. In no event shall any party hereto
institute, or join in the institution of, or assist
in the prosecution of, any action, suit or proceeding
seeking a determination that any interest or Lien of
any other party hereto with respect to any of the
Collateral is invalid, unperfected or voidable or is or
should be subordinated to the interest of any Person
other than pursuant to this Article 2.
2.5. Upon or after the occurrence of an
Event of Default, the Creditors shall have, in
addition to any other rights and remedies contained in
this Agreement, the Creditor Documents and applicable
law, the right to foreclose their Liens upon the
Collateral and to receive from Bank a distribution
of all of the Collateral for application to the
Creditor Obligations, all of which rights may be
exercised concurrently or on separate occasions.
2.6. If at any time or times hereafter
the Creditors employ counsel to prepare or consider
waivers or consents or to intervene, file a
petition, answer, motion or other pleading in any
suit or proceeding relating to this Agreement or
relating to any Collateral, or to protect, take
possession of, or liquidate any Collateral, or to
attempt to enforce any security interest in or Lien
upon any Collateral, or to enforce any rights of or
to collect any of the Creditor Obligations, then
in any such event, all attorneys' fees arising from
such services, and all expenses, costs and charges
related thereto, shall become part of the Creditor
Obligations, shall be secured by all of the Collateral
and shall be payable on demand.
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<PAGE>
ARTICLE 3
Authorization and Instructions to Bank;
Duties of Bank With Respect to Special Account
3.1. Borrower and Creditors irrevocably
authorize and instruct Bank to distribute all monies
on deposit from time to time in the Special Account,
including any and all Clearing House Funds wired to
the Special Account, not later than one (1) Business
Day after Bank's receipt of written instructions from
JSX. Written disbursement instructions to Bank from
JSX shall be made by facsimile transaction and
shall be substantially in the form of Exhibit A,
attached hereto and incorporated herein by reference.
JSX shall endeavor to deliver such written
disbursement instructions at or about the
Clearinghouse Payment Date (as defined in the Loan
Agreement), but shall have no liability to Borrower
should JSX fail to do so. Bank shall not be
authorized to make any disbursements from the
Special Account until it has received written
disbursement instructions of JSX. JSX shall apply all
monies received from the Special Account to payment of
amounts due and owing under the Creditor
Obligations. Borrower hereby acknowledges and
agrees that Bank shall be entitled to rely on
absolutely, and without liability to Borrower for, the
accuracy and validity of each written disbursement
instruction so received by Bank from JSX, and
Borrower waives and releases any rights it may have
against Bank arising our of or relating to any
payment made by Bank to JSX, JACO or BAH from the
Special Account in accordance with JSX's instructions.
3.2. From and after Bank's receipt of
written notice from JSX of the existence of an Event
of Default, Bank shall forthwith wire transfer to JSX,
in immediately available federal funds, all monies
then on deposit in the Special Account and all
monies thereafter from time to time deposited to
the Special Account, which JSX may apply to the
Creditor Obligations until the same are paid in full.
3.3 Except for its usual and customary
fees and expenses in handling or administering the
Special Account and for the face amount of all checks
deposited into the Special Account that are dishonored
or returned, Bank shall not offset against the
Special Account any amounts from time to time
owing by Borrower or any other Person to Bank.
3.4. Bank shall not be liable to anyone for
any damages, losses, or expenses which they may incur
as a result of any act or omission of the Bank,
unless such damages, losses, or expenses are caused
by the Bank's willful default or gross negligence.
Accordingly, Bank shall not incur any such
liability with respect to (i) any action taken or
omitted in good faith upon the advice of counsel or
counsel for any other party hereto, given with
respect to any question relating to the duties and
responsibilities of the Bank under this Agreement or
(ii) any action taken or omitted in reliance upon
any instrument, its validity and effectiveness, but
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<PAGE>
also as to the truth and accuracy of any information
contained therein which Bank shall, in good faith,
believe to be genuine, to have been signed by a proper
person or persons and to conform to the provisions of
this Agreement. Creditors and Borrower hereby
jointly and severally agree to indemnify and hold
harmless the Bank against any and all costs, losses,
claims, damages, liabilities, expenses, including
reasonable costs of investigations, courts costs,
and attorney's fees, and disbursements, which may
be imposed upon the Bank in connection with its
acceptance of appointment as Bank hereunder,
including any litigation arising from this Agreement
or involving the subject matter hereof, and all such
costs, expenses and disbursements shall be for the
account of and shall be borne and paid by the Parties
as a condition to termination of this Agreement.
As between Creditors and Borrower, Borrower shall
be absolutely and unconditionally obligated to
reimburse each Creditor for any sum of money paid
by any Creditor to Bank pursuant to the terms of
this Section 3.4.
3.5. Bank acknowledges receipt of notice
of the security interest and Lien of each Creditor
in the Collateral and agrees, to the extent required
by applicable law to perfect the Liens of each
Creditor in the Collateral, to hold the Collateral,
while in its possession, as bailee and agent for each
Creditor.
3.6. Borrower acknowledges that the Special
Account shall be a blocked account and that Borrower
shall not have the right to withdraw any monies from
the Special Account for so long as this Agreement is in
effect without the prior written consent of Creditors.
3.7. Bank shall provide to Borrower and
JSX copies of all statements concerning the Special
Account in accordance with its customary practices and
procedures, but in no event less frequently than once
each month.
ARTICLE 4
Agreement Among Creditors Regarding
Disbursement Instructions
4.1. Creditors hereby agree, as among
themselves, and with Borrower hereby giving its
consent, that BAH's disbursement instructions provided
to Bank in accordance with Section 3.1 hereof shall
provide for disbursement by Bank of balances in the
Special Account in the following order of priority:
First, to Bank to pay all accrued
and unpaid customary fees, charges
and expenses relating to its handling
and administration of the Special
Account;
Second, to JSX, BAH and to JACO to
pay all fees and expenses owing to
the Creditors under Section 2.6
hereof;
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<PAGE>
Third, to JSX to pay all charges and
fees payable under the Loan Agreement;]
Fourth, to JSX to pay all accrued
and unpaid interest on the principal amount of the Note
and Loan Agreement;
Fifth, to JSX to pay the outstanding
principal amount of the Note and Loan
Agreement;
Sixth, to JACO to pay all amounts due
and owing under the JACO Obligations.
Seventh, to BAH to pay all amounts due
and owing under the BAH Obligations;
Eighth, the surplus, if any, to
Borrower.
The disbursement instructions to be provided
by JSX to Bank shall be based upon JSX's computation
of the then outstanding Creditor Obligations owed by
Borrower to JSX, BAH and JACO at the time of each
such disbursement.
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<PAGE>
ARTICLE 5
Special Covenants of Borrower
5.1. Borrower agrees that only payments
from ACH will be deposited into the Chase Account
and that Borrower will not deposit any other funds into
the Chase Account.
5.2. Borrower agrees that it will not
revoke any of the Wiring Instructions and that any
attempt to do so shall be null and void.
5.3. Borrower agrees that it shall remain
as a party to the Clearing House Agreement and will
not enter into any amendments to same without the prior
consent of Creditors.
5.4. Borrower agrees that only Clearing
House Funds will be deposited into the Special
Account and that Borrower will not deposit any other
funds into the Special Account.
5.5. If Bank shall give written notice of
termination of this Agreement or the Special Account
pursuant to Section 6.4 hereof, Borrower shall be
obligated to establish a new account, on the same
terms and conditions, with another financial
institution mutually acceptable to Creditors and to
cause such financial institution to enter into an
agreement in substantially the same form and
substances as this Agreement (and otherwise mutually
acceptable to Creditors) within ten (10) days after
the date of Borrower's receipt of such notice from
Bank.
ARTICLE 6
Miscellaneous
6.1. The internal laws and decisions of
the State of North Carolina shall govern and control
the construction, enforceability, validity and
interpretation of this Agreement excluding any choice
of law rule which would direct the application of the
law of any other jurisdiction.
6.2. To the extent that payment of any of
the Creditor Obligations are secured by property
other than the Collateral, or by a guaranty,
endorsement or property of any other Person, then, the
Creditors shall have the right but not the obligation
to proceed against such other property, guaranty or
endorsement then securing the Creditor Obligations
upon default in the payment of such Obligations, and
each such party shall have the right, in such
party's sole discretion to determine which rights,
Liens, security interests or remedies such party
shall at any time pursue, relinquish, subordinate,
modify or take any other action with respect to,
without in any way modifying or affecting any of
them or any of such party's rights or the
liabilities and obligations of Borrower under this
Agreement or any other documents executed in
connection therewith. Borrower expressly waives any
right to require the Creditors to marshall collateral.
-8-
<PAGE>
6.3. The rights and obligations of the
parties hereto shall be binding upon and inure to
the benefit of the parties hereto and their respective
successors and assigns.
6.4. This Agreement shall continue in full
force and effect until the soonest to occur of the
following: (a) the parties hereto mutually agree to
terminate this Agreement; or (b) all of the Creditor
Obligations are paid in full.
6.5. This Agreement may be executed in
one or more counterparts, each of which shall
constitute an original but all of which taken together
shall constitute one and the same instrument.
6.6. The parties hereby knowingly and
freely waive the right to trial by jury in any
action, suit, proceeding or counterclaim arising out of
or related to this Agreement.
6.7 This Agreement was fully negotiated
between the parties. In intrepreting or enforcing
this Agreement no presumption shall arise nor shall
any weight be given any evidence in favor of or
against any party because of such party's drafting or
not drafting this Agreement.
6.8 This Agreement cannot be changed
or terminated orally. This Agreement is the
entire agreement between the parties with respect to
the matters contained herein. The Recitals are a
material aspect of this Agreement and are expressly
incorporated by reference into the body of the
Agreement. This Agreement supersedes all prior
agreements, understandings and negotiations, if any,
which are merged into this Agreement.
IN WITNESS WHEREOF, the parties have caused
this Agreement to be executed by their duly
authorized officers under seal on or as of the day and
year first above written.
WACHOVIA BANK OF
NORTH CAROLINA, N.A.
By:
Title:
CCAIR, INC.
By:
Title:
Attest: Attest:
Secretary
[CORPORATE SEAL]
-9-
<PAGE>
BRITISH AEROSPACE HOLDINGS, INC.
By:
Title:
JET ACCEPTANCE CORPORATION
By:____________________________
Title:____________________
JSX CAPITAL CORPORATION
By:_____________________________
Title:_____________________
-10-
<PAGE>
EXHIBIT A
DISBURSEMENT INSTRUCTION NO. ____
Wachovia Bank of North Carolina, N.A.
301 North Church Street, Room 226
Winston Salem, NC 27101
Re: Disbursement from Account No. 34-83141-00
(the "Special Account")
Ladies and Gentlemen:
Pursuant to that certain Special Account and Disbursement
Authorization Agreement entered into by and among Wachovia Bank
of North Carolina, N.A. ("Bank"), CCAIR, Inc. (the "Borrower"),
British Aerospace Holdings, Inc. ("BAH"), Jet Acceptance
Corporation ("JACO") and JSX Capital Corporation ("JSX") dated
February __, 1995 (the "Agreement"), JSX hereby instructs Bank to
disburse from the Special Account the following sums:
(1) To JSX, $___________________ as follows:
Wachovia Bank of N.C.
Winston-Salem, N.C.
ABA:
For the A/C of: JSX Capital Corporation
A/C #:
.
(2) To JACO, $___________________ as follows:
Wachovia Bank of N.C.
Winston-Salem, N.C.
ABA: 053-100494
For the A/C of: JSX Capital Corp.
A/C #: 8732-071529
(3) To BAH, $___________________ as follows:
Wachovia Bank of N.C.
Winston-Salem, N.C.
ABA: 053-100494
For the A/C of: British Aerospace
Holdings, Inc.
A/C #: 8734-015924
Bank is further instructed to disburse the balance in the
Special Account to Borrower as follows:
NationsBank, N.A. (Carolinas)
Charlotte, NC
ABA: 053-000196
For the A/C of: CCAIR, Inc.
A/C #: 001857101
-11-
<PAGE>
Date:______________________
Sincerely,
JSX Capital Corporation
By:_________________________________
Title:_______________________________
cc: CCAIR, Inc.
Attention: Kenneth W. Gann
-12-
<PAGE>
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation
by reference in this Registration Statement on Form S-2 (File No. 33-77574)
of our report dated October 12, 1994, included in the Company's Annual Report
on Form 10-K for the year ended June 30, 1994, and to all references to our
firm included in this Registration Statement.
(Arthur Andersen LLP signature appears here)
Charlotte, North Carolina,
July 26, 1995.
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
We consent to the incorporation by reference in the registration statement of
CCAir, Inc. on Form S-2 (File No. 33-77574) of our report dated October 8,
1993, which includes an explanatory paragraph emphasizing that the Company
previously filed a voluntary petition for protection under Chapter 11 of the
United States Bankruptcy Code, and that a Plan of Reorganization was confirmed
by the Bankruptcy Court effective September 3, 1991, on our audits of the
financial statements and financial statement schedules of CCAir, Inc. as of
June 30, 1993, and for the years ended June 30, 1993 and 1992.
(Coopers & Lybrand LLP signature appears here)
Charlotte, North Carolina
July 31, 1995
